G.R. No. L-49336 - Province of Abra vs. Herdo

Case Summary (G.R. No. L-49336)

Factual Background

The Roman Catholic Bishop of Bangued, Inc. filed a petition for declaratory relief seeking exemption from real estate taxation on certain parcels it owned. The Provincial Assessor of The Province of Abra made tax assessments against those properties. The action reached Branch I of the Court of First Instance of Abra, where respondent judge proceeded to deny a motion to dismiss filed by petitioner and thereafter entered a summary judgment granting the claimed exemption without affording petitioner an opportunity to answer or to be heard on the merits.

Trial Court Proceedings

Respondent Honorable Harold M. Hernando gave due course to the petition for declaratory relief and adjudged the case in favor of private respondent by summary disposition. In his comment the judge stated, in substance, that there was no dispute that the properties were the respondent corporation's and that they were "actually, directly and exclusively used" for religious or charitable purposes. He further expressed the view that the proper remedy of petitioner was appeal rather than a special civil action. Petitioner objected to these proceedings and moved to dismiss, invoking lack of jurisdiction and asserting that the assessment should be attacked administratively.

The Parties' Contentions

The Province of Abra argued that the court lacked jurisdiction to entertain the action because the validity of the tax assessment must be questioned before the Local Board of Assessment Appeals and because administrative remedies under Presidential Decree No. 464 had not been exhausted. Petitioner also argued that declaratory relief was improper under the circumstances and that respondent judge had violated procedural due process by deciding the case without affording a hearing. The Roman Catholic Bishop of Bangued, Inc. maintained that the issue presented a pure question of law and that its allegations that the properties were "actually, directly and exclusively" used for religious and charitable purposes required no further proof. Respondent judge defended his disposition on the ground that the factual predicates for exemption were undisputed.

Issues Presented

The principal issues were whether respondent judge violated the constitutional guarantee of procedural due process by granting declaratory relief and summary judgment without hearing petitioner, and whether, under the constitutional text and controlling doctrine, exemption from taxation required proof of actual and direct use for religious or charitable purposes and compliance with administrative prerequisites under Presidential Decree No. 464.

Ruling of the Supreme Court

The petition for certiorari and mandamus was granted. The Supreme Court set aside the resolution of June 19, 1978. The Court ordered respondent judge, or his acting representative, to hear the case on the merits. No costs were assessed. Justices Barredo, Concepcion, Jr., and De Castro concurred. Justice Aquino concurred in the result. Justice Abad Santos was on official leave.

Legal Basis and Reasoning

The Court reprimanded respondent judge for failing to observe the Rules of Court and for wantonly violating petitioner's right to procedural due process by adjudicating the case without permitting an answer or holding any hearing. The Court emphasized the changed constitutional wording governing tax exemption. It contrasted Article VI, Section 22, par. (3) of the 1935 Constitution, which exempted "lands, buildings, and improvements used exclusively for religious, charitable, or educational purposes," with the "present Constitution" provision quoted in the opinion, Article VIII, Section 17, par. (3), which added "charitable institutions, mosques, and non-profit cemeteries" and required that lands, buildings, and improvements be "actually, directly, and exclusively used for religious or charitable purposes." The Court held that the additional adjectives "actually" and "directly" altered the standard and imposed a requirement of proof of actual and direct use for exemption to obtain application.

The Court reiterated settled doctrine that exemption from taxation is not favored and must be strictly construed. It cited Commissioner of Internal Revenue v. Guerrero for the proposition that tax exemptions are never presumed and must be construed strictissimi juris. The Court concluded that, given the constitutional language and controlling jurisprudence, proof was necessary to establish entitlement to exemption. The Court found error in respondent judge's acceptance, at face value, of the petition's allegations that the properties were "actually, directly and exclusively" used for religious or charitable purposes and in deciding the case without affording petitioner a hearing.

The Court also noted petitioner's invocation of procedural and jurisdictional objections, including the mandate in Section 64 of Presidential Decree No. 464 that "No court shall entertain any suit assailing the validity of a tax assessed under this Code until the

Case Syllabus (G.R. No. L-49336)

Parties and Posture

Province of Abra filed a petition for certiorari and mandamus challenging actions of the trial judge in Branch I of the Court of First Instance of Abra.
Ladislao Ancheta appeared as Provincial Assessor and as the representative of Province of Abra in the petition.
Honorable Harold M. Hernando was the presiding judge whose rulings were assailed in the petition.
The Roman Catholic Bishop of Bangued, Inc. was the private respondent and was represented by Bishop Odilo Etspueler and Reverend Felipe Flores.
The petition attacked the denial of a motion to dismiss and the entry of a summary judgment granting tax exemption without hearing the Province of Abra.
The petition sought to set aside the trial court resolution of June 19, 1978 and to compel the trial court to hear the case on its merits.

Key Facts

The Roman Catholic Bishop of Bangued, Inc. alleged ownership of several parcels of land and averred that the properties were used "actually, directly and exclusively" for religious or charitable purposes.
The Provincial Assessor made tax assessments on the properties which gave rise to the controversy.
Honorable Harold M. Hernando denied the motion to dismiss filed by the Province of Abra and entered summary judgment granting the exemption without affording the Province of Abra an opportunity to answer or to be heard.
The Acting Provincial Fiscal, acting as counsel for the Province of Abra, contended that the trial judge ignored the Rules of Court and wantonly violated the right to due process.
The Province of Abra asserted that administrative remedies under Presidential Decree No. 464 were not exhausted before resort to court and that the suit was not the proper proceeding to challenge the tax assessment.

Issues

Whether the trial judge violated procedural due process by adjudging tax-exemption claims without hearing the Province of Abra.
Whether an action for declaratory relief was proper in the circumstances alleged by The Roman Catholic Bishop of Bangued, Inc..
Whether failure to exhaust administrative remedies under Presidential Decree No. 464 barred the judicial action assailing the tax assessment.
Whether the trial judge correctly applied the constitutional standard for tax exemption of lands, buildings, and improvements.

Contentions of Parties

Province of Abra contended that the trial judge disregarded Rule 64, Section 1, Rules of Court, failed to require exhaustion of administrative remedies under Presidential Decree No. 464, and violated the Province of Abra's right to procedural due process by deciding without a hearing.
Honorable Harold M. Hernando contended that there was no dispute that the properties were owned by The Roman Catholic Bishop of Bangued, Inc. and that the properties were "actually, directly and exclusively" used for religious or charitable purposes, and that the proper remedy for the Province of Abra was appeal rather than the