G.R. No. 230651 - Alliance of Quezon City Homeowners' Association, Inc. vs. Quezon City Government

Title: Alliance of Quezon City Homeowners' Association, Inc. vs. Quezon City Government

Case: G.R. No. 230651

Decision Date: Sep 18, 2018

Quezon City's 2016 property tax ordinance challenged for excessive rates; petition dismissed due to petitioner's lack of legal capacity to sue.

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Case Digest (G.R. No. 230651)
Legal Reasoning Model

Facts:

Background and Statutory Context

The case challenges Quezon City Ordinance No. SP-2556, Series of 2016 (the “2016 Ordinance”), which revises the schedule of Fair Market Values (FMVs) for lands and the Basic Unit Construction Cost for buildings and other structures in Quezon City.

The 2016 Ordinance is enacted pursuant to the Local Government Code of 1991 (RA 7160) as a response to the outdated assessment values established under the 1995 Ordinance.

Joint Memorandum Circular No. 2010-01 issued by the Department of Interior and Local Government and the Department of Finance mandated that assessors revise real property assessments every three (3) years, thereby providing the statutory impetus for the revision.

Development and Provisions of the 2016 Ordinance

The QC Assessor, acting on the directive for a three-yearly update, prepared a revised schedule of FMVs, which was submitted to the Sangguniang Panlungsod of Quezon City.

On December 5, 2016, the Sangguniang Panlungsod enacted the 2016 Ordinance that:

Approved the revised FMV schedule for all classifications of properties;

Set assessment levels at 5% for residential properties and 14% for commercial and industrial properties.

The revised schedule significantly increased the FMVs (allegedly up to 500% of the previous values) to reflect the current market prices.

The Ordinance provided that assessments for lands become demandable beginning January 1, 2017, and those for buildings and other structures take effect from 2018.

The Parties, Procedural History, and Alleged Irregularities

Petitioner's Identity:

Alliance of Quezon City Homeowners’ Association, Inc. (“Alliance”) is presented as a non-stock, non-profit corporation representing affected homeowners and taxpayers in Quezon City.

Alliance is alleged to have a membership comprising individuals whose real property interests would be adversely impacted by the increased tax base resulting from the reassessed FMVs.

Filing of the Petition:

On April 7, 2017, Alliance filed a petition for certiorari, prohibition, and mandamus, coupled with a prayer for a temporary restraining order (TRO) and/or writ of preliminary injunction.

The petition contended that the 2016 Ordinance was unconstitutional and illegal for (i) violating substantive due process by imposing an unjust, excessive, oppressive, arbitrary, and confiscatory tax burden, and (ii) violating Section 130 of the Local Government Code.

Alleged Procedural and Substantive Flaws in the 2016 Ordinance:

Lack of adequate and proper public consultation, as only a one-day hearing was conducted prior to its enactment despite claims of twenty-nine barangay consultations by respondents.

Questionable basis for the drastic increase in FMVs, with no clear standard or explanation on how the new values (up to 500% higher) were determined.

Abrupt effectivity of the ordinance that compelled residents to meet sudden tax obligations, which Alliance argued would result in properties being declared delinquent and eventually auctioned.

Respondents’ and Third-Party Comments:

Respondents (including the Quezon City Government, QC Assessor’s Office, and QC Treasurer’s Office) argued that Alliance failed to exhaust all administrative remedies provided under the Local Government Code (e.g., filing protests, appealing before the Secretary of Justice).

They also maintained that the petition violated the hierarchy of courts by directly filing before the Supreme Court and that Alliance lacked the legal capacity to sue because of its unregistered status and revoked SEC Certificate of Registration.

The Office of the Solicitor General (OSG) supported these procedural deficiencies, further noting the absence of a clear legal right to enjoin the implementation of the ordinance.

Alliance’s Counterarguments:

Alliance argued that the available administrative remedies were inadequate, as payment under protest was impractical for members unable to pay the increased taxes, and that an appeal to the Secretary of Justice would not suspend the ordinance’s effectivity.

It maintained that the petition raised an exclusively legal question of public interest regarding whether the purportedly arbitrary increase in FMVs amounted to confiscatory taxation which would affect a large number of residents in Quezon City.

Issue:

Procedural Issues

Whether the petition is procedurally infirm for failing to exhaust the required administrative remedies prescribed by the Local Government Code.

Whether the petition violates the hierarchy of courts doctrine by bypassing lower courts and seeking relief directly from the Supreme Court.

Whether Alliance has the requisite legal capacity to sue, given its status as an unregistered association with a revoked SEC registration and lack of separate juridical personality.

Substantive Issue

Whether the 2016 Ordinance is valid and constitutional, specifically in its imposition of increased FMVs that allegedly result in unjust, excessive, oppressive, arbitrary, and confiscatory taxation, and whether it complies with due process and other legal requirements under the Local Government Code.

Ruling:

(Subscriber-Only)

Ratio:

(Subscriber-Only)

Doctrine:

(Subscriber-Only)

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