FACTS: On July 5, 1993, the Department of Justice (DOJ), on petition of the Philippine Racing Club, Inc., declared null and void Municipal Ordinance No. 922-072, otherwise known as the Makati Revenue Code, which provides, inter alia, for the schedule of real estate, business and franchise taxes in the Municipality of Makati at rates higher than those in the Metro Manila Revenue Code. Pending resolution of its motion for reconsideration of the Resolution of the DOJ, the respondent Makati filed a petitionad cautelam with the Regional Trial Court of Makati alleging validity of the Ordinance. In the meantime, respondent Makati continued to implement the ordinance. Petitioner was assessed and billed by the respondents for taxes, fees and charges under the ordinance for the second, third, and fourth quarters of 1993. Petitioner paid its quarterly business taxes without protest. On January 30, 1994, petitioner requested the respondent Makati to compute its business tax liabilities in accordance with the Metro Manila Revenue Code and not under the ordinance considering that it was already declared by the DOJ null and void. Petitioner asked that it be credited for the amount it overpaid or to refund its overpayment. When the respondent Makati denied the request, petitioner filed a complaint with the Regional Trial Court of Makati. The RTC dismissed the complaint on ground of prescription, holding that petitioner failed to file an opposition or protest within 60 days from the notice of assessment. Petitioner moved for reconsideration alleging that it was not required to first file a protest with the respondent Makati before instituting its action for a refund of its overpayment or for it to be credited for said overpayments. The motion for reconsideration was, however, denied by the trial court. Hence, petitioner brought the matter before the Supreme Court.


HELD: NO. POLITICAL LAW; LOCAL GOVERNMENT CODE;LOCAL TAXATION; TAX ORDINANCE; A TAXPAYER MAY FILE A COMPLAINT ASSAILING THE VALIDITY THEREOF AND PRAYING FOR A REFUND OF ITS PERCEIVED OVERPAYMENTS WITHOUT FIRST FILING A PROTEST. — The Court agrees with petitioner that as a general precept, a taxpayer may file a complaint assailing the validity of the ordinance and praying for a refund of its perceived overpayments without first filing a protest to the payment of taxes due under the ordinance. This was our ruling in Ty v. Judge Trampe: . . . Hence, if a taxpayer disputes the reasonableness of an increase in a real estate tax assessment, he is required to “first pay the tax” under protest. Otherwise, the city or municipal treasurer will not act on his protest. In the case at bench, however, the petitioners are questioning the very authority and power of the assessor, acting solely and independently, to impose the assessment and of the treasurer to collect the tax. These are not questions merely of amounts of the increase in the tax but attacks on the very validity of any increase.

ANY QUESTION AS TO CONSTITUTIONALITY OR LEGALITY THEREOF MUST BE RAISED ON APPEAL TO THE SECRETARY OF JUSTICE WITHIN THIRTY DAYS FROM EFFECTIVITY DATE THEREOF. — In this case, petitioner, relying on the resolution of the Secretary of Justice in The Philippine Racing Club, Inc. v. Municipality of Makati case, posited in its complaint that the ordinance which was the basis of respondent Makati for the collection of taxes from petitioner was null and void. However, the Court agrees with the contention of respondents that petitioner was proscribed from filing its complaint with the RTC of Makati for the reason that petitioner failed to appeal to the Secretary of Justice within 30 days from the effectivity date of the ordinance as mandated by Section 187 of the Local Government Code which reads: Sec. 187 — Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings. — The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction.

FAILURE OF A TAXPAYER TO INTERPOSE THE REQUISITE APPEAL TO THE SECRETARY OF JUSTICE IS FATAL TO ITS COMPLAINT FOR A REFUND. — In Reyes v. Court of Appeals, we ruled that failure of a taxpayer to interpose the requisite appeal to the Secretary of Justice is fatal to its complaint for a refund: Clearly, the law requires that the dissatisfied taxpayer who questions the validity or legality of a tax ordinance must file his appeal to the Secretary of Justice, within 30 days from effectivity thereof. In case the Secretary decides the appeal, a period also of 30 days is allowed for an aggrieved party to go to court. But if the Secretary does not act thereon, after the lapse of 60 days, a party could already proceed to seek relief in court. These three separate periods are clearly given for compliance as a prerequisite before seeking redress in a competent court. Such statutory periods are set to prevent delays as well as enhance the orderly and speedy discharge of judicial functions. For this reason the courts construe these provisions of statutes as mandatory. A municipal tax ordinance empowers a local government unit to impose taxes. The power to tax is the most effective instrument to raise needed revenues to finance and support the myriad activities of local government units for the delivery of basic services essential to the promotion of the general welfare and enhancement of peace, progress, and prosperity of the people. Consequently, any delay in implementing tax measures would be to the detriment of the public. It is for this reason that protests over tax ordinances are required to be done within certain time frames. In the instant case, it is our view that the failure of petitioners to appeal to the Secretary of Justice within 30 days as required by Sec. 187 of R.A. 7160 is fatal to their cause.