Case Summary (G.R. No. 127139)
Preparation, Publication, and Enactment of Revised Schedule
After securing funding, the City Assessor updated fair-market values, initially averaging a 1,700% increase but later moderating it to 1,020% to mitigate public backlash. The proposed schedule was submitted to the City Council, underwent three readings (Sept. 12, Oct. 28, Dec. 12, 1995), and was the subject of multiple public hearings. Publication occurred in two newspapers on Oct. 28 and Nov. 1, 1995. On Dec. 27, 1995, the Mayor approved Manila Ordinance No. 7894—“Revised Schedule of Fair Market Values of Real Properties”—which took effect on January 1, 1996, in compliance with Sections 212 and 223 of RA 7160.
Petitioner’s Challenge and Interim Measures
Implementation of Ordinance No. 7894 resulted in tax increases of 580% on land and 250% on improvements for petitioner’s property. On March 18, 1996, Lopez filed a special proceeding seeking nullity of the ordinance, alleging it was “unjust, excessive, oppressive or confiscatory.” Branch 5 of the RTC granted a TRO on April 10, 1996. That same day, the City enacted Ordinance No. 7905, retroactively halving assessment levels effective January 1, 1996, and capping increases at 200% for residential and 300% for commercial properties—thus reducing petitioner’s tax increases to 155% (land) and 82% (improvements).
Trial Court Proceedings and Dismissal
After a re-raffle to Branch 39, the RTC issued a preliminary injunction on May 9, 1996, and denied the City’s motion to dismiss. The City’s reconsideration motion invoked (1) petitioner’s failure to exhaust administrative remedies under RA 7160 and (2) mootness due to the enactment of Ordinance No. 7905. On October 24, 1996, the RTC granted the motion, dismissed the petition as moot and for non-exhaustion, and dissolved the injunction. The RTC also addressed all interlocking issues, finding no exception to the exhaustion rule and full compliance with statutory requirements for assessment revision.
Issue One: Exhaustion of Administrative Remedies
Lopez argued that once the RTC assumed jurisdiction, exhaustion became moot and that Section 187 of RA 7160 made administrative appeal to the Secretary of Justice “permissive.” The Supreme Court disagreed. It reaffirmed that taxpayers must first invoke available remedies under RA 7160—appeal to the Secretary of Justice within 30 days of an ordinance’s effectivity (Sec. 187), appeal to the Board of Assessment Appeals within 60 days of notice (Sec. 226), and payment-under-protest followed by appeal (Sec. 252)—before resorting to judicial relief. The rule of exhaustion serves separation of powers, allowing administrative bodies to correct errors and avoiding premature judicial interference. No exception applied: the petition raised mixed questions of fact and law, was not small in amount, did not involve patently illegal acts, nor urgent intervention, and adequate administrative remedies existed.
Issue Two: Compliance with Sections 212 and 221, RA 7160
Petitioner contended that Section 212 prohibits any revision before appr
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Background and Facts
- Republic Act No. 7160 (Local Government Code of 1991) mandated a general revision of real property assessments within two years after January 1, 1992, and every three years thereafter, but Manila continued using 1979 market values until 1995.
- In 1992, an updated schedule of values was prepared by the former city assessor, submitted to the City Council, but no action was taken; meanwhile the City Assessor’s office informally updated fair market values.
- In March 1995, City Assessor Lourdes Laderas received a Department of Finance memorandum on the failure of Metro Manila units to revise assessments and secured council funding to start a formal general revision.
- The initial valuation spike (600%–3,330%) over 1979 levels was averaged at 1,700% by the Assessor’s office, then reduced to a 1,020% increase to mitigate public backlash.
- Proposed fair market values were submitted to and acted upon by the Manila City Council through required public hearings (Sept–Nov 1995), three readings (Sept 12, Oct 28, Dec 12, 1995), and publication in Manila Standard and Balita.
- Manila Ordinance No. 7894 prescribing the revised schedule of fair market values was approved Dec 27, 1995, effective Jan 1, 1996; notices of revised assessments were sent pursuant to Sec. 223, RA 7160.
- Under Ordinance No. 7894, petitioner’s land tax rose by 580% and improvements tax by 250%; Lopez filed on March 18, 1996 a petition for nullity, injunctive relief, and TRO against Ordinance No. 7894 as “unjust, excessive, oppressive or confiscatory.”
- Branch 5 RTC issued TRO on April 10, 1996; on the same day Ordinance No. 7905 took effect, halving assessment levels retroactively to January 1, 1996, capping residential tax increases at 200% and commercial/industrial at 300%.
- Petitioner’s effective increases under Ordinance No. 7905 were reduced to 155% (land) and 82% (improvements) for residential, and 288%/72% for commercial portions.
- The presiding judge of Branch 5 inhibited herself; the case was re-raffled to Branch 39, where on May 9, 1996 the court granted injunctive relief and denied respondent’s motion to dismiss.
- Respondent filed a motion for reconsideration (May 22, 1996), arguing non‐exhaustion of administrative remedies and mootness due to Ordinance No. 7905; on October 24, 1996 Branch 39 granted the motion, dismissed the petition for failure to exhaust remedies and mootness, and dissolved the injunction.
- Lopez’s motion for reconsideration was denied; he elevated the case by petition for review on certiorari before the Supreme Court.
Legislative Framework
- RA 7160 Sec. 198(f)–(g): Definitions of “Assessment” and “Reassessment.”
- RA 7160 Sec. 212: Requires preparation and publication of a schedule of fair market values by assessors prior to any general revision.
- RA 7160 Sec. 219: Mandates general revision of real property assessments within two years of effectivity and every three years thereafter.
- RA 7160 Sec. 221: Provides that assessments made after January 1 of a year take effect the following January 1, with exceptions for major changes or abnormal causes.
- RA 7160 Sec. 187: Permits taxpayer appeals within 30 days from ordinance effectivity to the Secretary of Justice on legality or constitutionality of tax measures.
- RA 7160 Sec. 226: Gran