Allied Digest

ALLIED BANKING VS THE QUEZON CITY GOVERNMENT, ET AL. (G.R. NO. 154126, OCTOBER 11, 2005) Facts: On December 1995, the Quezon City government enacted Ordinance No. 357. The second sentence of Section 3 of the ordinance for a general revision of real property assessments. It also provided that parcels of land conveyed for remuneratory consideration after the effectivity of said revision shall be subject to real estate tax based on the actual amount reflected in the deed of conveyance or the current approved zonal valuation of the BIR prevailing at the time of conveyance, whichever is higher. On 1998, Allied Bank purchased from Natividad et al. a parcel of land on Quezon City worth P38,000,000.00. Prior to the sale, Natividad et al. had been paying the annual real property tax based on the property’s fair market value of  P4,500,000.00. Allied Bank was then later required to pay P102,600.00 as quarterly real estate tax which pegged the market value of the property at P38,000,000.00. It paid the quarterly real estate tax for the property from the 1st quarter of 1999 up to the 3rd quarter of 2000 with some payments made under protest. It then sent a demand letter to the Quezon City Treasurer’s Office seeking a refund of the real estate taxes which was denied. Allied Bank then filed a petition for prohibition and declaratory relief  before the RTC for the declaration of nullity of Section 3 of the ordinance as it is an invalid classification of real properties which are conveyed and those which are not, the latter remaining to be valued and assessed in accordance with the general revisions of assessments of real properties. Quezon City later enacted Ordinance No. SP-1032 which repealed the assailed proviso in Section 3 of the 1995 Ordinance as it violated the uniformity rule of taxation which is guaranteed by the Constitution. Petitioner subsequently moved to declare respondents in default but respondents moved to dismiss the petition, averring that the passage of the repealing ordinance had rendered the petition moot and academic. Petitioner opposed the motion claiming its claim for refund and attorney’s fees had not been mooted, and the trial court still had to determine if Section 3 of the ordinance is null and void ab initio. The trial court granted respondents’ motion to dismiss saying that there is no need to resolve whether the ordinance is null and void as the same was already declared violative of  the “uniformity rule” on taxation by the Quezon City Council itself and as for the claim for refund, the RTC did not take cognizance cogn izance of the case as an administrative remedy was still available. Allied Bank filed a Motion for Reconsideration which was denied so it went to the Supreme Court on appeal by certiorari under Rule 45.

Issue: WHETHER OR NOT SECTION 3, QUEZON CITY ORDINANCE NO. 357, SERIES OF 1995, WHICH WAS W AS ABROGATED FOR BEING UNCONSTITUTIONAL CAN BE THE BASIS OF COLLECTING REAL R EAL ESTATE TAXES PRIOR TO ITS REPEAL

Held: The second sentence of Section 3 of the Ordinance is null and void ab initio for  being ultra vires and for contravening the provisions of the Local Government Code. It acquired no legal effect and conferred no rights from its inception. Under the Local Government Code, real properties shall be appraised at the current and fair market value prevailing in the locality where the property is situated and classified for  assessment purposes on the basis of its actual use. It further held that the proviso directing that the real property tax be based on the actual amount reflected in the deed of conveyance or the prevailing BIR zonal value is invalid not only because it mandates an exclusive rule in determining the fair market value but more so because it departs from the established procedures stated in the Local Assessment Regulations No. 1-92 and unduly interferes with the duties statutorily placed upon the local assessor by completely dispensing with his analysis and discretion which the Code and the regulations regulations require to be exercised. exercised. An ordinance that contravenes any statute is ultra vires and void.