REPUBLIC OF THE PHILIPPINES

COURT OF TAX APPEALS

QUEZON CITY

SPECIAL SECOND DIVISION

NELIA A. BARLIS, in her CTA AC No. 247

capacity as the OIC-City (Civil Case No . 15-315)
Treasurer of the City of
Makati, and THE CITY OF
MAKATI,
Petitioners,
Members:

-ver su s- BACORRO-VILLENA, Acting Chairperson, and,

CUI-DAVID, JJ.

GF & PARTNERS, Promulgated:

ARCHITECTS, CO.,
Respondent.
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RESOLUTION

CUI-DAVID, J.:

For resolution of this Court is petitioners' Motion for

Reconsideration [of the Decision dated 16 September 2022]
("Motion"), with respondent's Comment [To Petitioners' Motion
for Reconsideration] ("Comment'') .

On 16 September 2022, the Court rendered its Decision

("assailed Decision" ) denying petition ers' Petition for Review for
lack of m erit. The dispositive portion reads:

WHEREFORE, in light of the foregoing, the instant

Petition for Review is DENIED for lack of merit.

Accordingly, the Decision dated 26 December 2019 and

the Order dated 25 January 2021 of the Regional Trial Court
of Makati City, Branch 139 in Civil Case No. 15-315, are
AFFIRMED.

SO ORDERED.
RESOLUTION
CTA AC No. 247
Nelia A. Barlis and the City of Makati vs. GF & Partners, Architects, Co.
Page 2 of7
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On 3 October 2022, petitioners filed the instant Motion, to
which respondent filed a Comment on 4 November 2022, 1 after
its Motion for Extension to File Comment2 and Motion to Admit
Comment were granted by the Court on its Resolutions dated 7
November 2022 and 27 December 2022, respectively.

Petitioners' Motion was submitted for resolution on 27

December 2022.

Petitioners argue that Section 7B.14(b) of the Revised

Makati Revenue Code ("RMRC") 3 is the procedural law
applicable in the instant case. 4 According to them, Section 187
of the Local Government Code ("LGC") remains the proper and
exclusive procedure to question the constitutionality or validity
of a tax ordinance or revenue measure. 5 Petitioners cite the
cases of Jardine Davies Insurance Brokers Inc. vs. Aliposa6 and
Reyes vs. Court of Appeals7 to support their contention.

Further, petitioners argue that respondent never

questioned the validity of the RMRC and its applicability to
themB and that the constitutionality or validity of laws cannot
be attacked collaterally.9

On the other hand, respondent argues that payment under

protest is not required 10 and that the applicable law is Section
195 of the LGC, 11 citing the City of Manila vs. Cosmos Bottling
Corporation.12

Respondent further contends that a local government

unit's power to tax is merely a grant of the sovereign, 13 and
thus, it must conform to the LGC. 14 Hence, according to
respondent, payment under protest, not a requirement imposed
on protest against local business tax assessments, should not
be imposed. 15

1
Filed through registered mail and received by the Court on II November 2022.
2 Filed on 27 October 2022.
3
Adopting the Revised Makati Revenue Code, Makati City Ordinance No. 025-A-04, 27 October 2005.
4
Motion for Reconsideration (of the Decision dated 16 September 2022), par. 5.
5 !d., pars. 6-7.
6
G.R. No. 118900, 27 February 2003, 446 SCRA 243-255.
7
G.R. No. 118233 (Resolution), 10 December 1999,378 SCRA 232-240.
8
Motion for Reconsideration (of the Decision dated 16 September 2022), par. 12.
9
/d., par. 13.
1
° Comment [To Petitioners' Motion for Reconsideration], par. 3.
11 !d., par. 4.
12
G.R. No. 196681, 27 June 2018.
13
Comment [To Petitioners' Motion for Reconsideration]. par.6.
14
/d.,par. 7.
15
/d., par. 8.
RESOLUTION
CTA AC No. 247
Nelia A. Bar!is and the City of Makati vs. GF & Partners, Architects, Co.
Page 3 of7
x------------------------------------------------------------------------------------------x

Accordingly, the sole issue to be resolved is whether

Section 7B.14(c) of the RMRC, which provides that protests
must come with a valid payment of the assessed taxes under
protest, applies to the instant case.

We resolve.

At the onset, we note that the arguments raised by

petitioners have already been judiciously passed upon in the
assailed Decision. Nevertheless, the Court still deems it proper
to discuss the applicability of Section 7B.14(c) of the RMRC
anew.

Section 7B.14(c) of the RMRC provides:

Section 78.14. Taxpayer's Remedies.- ...

(c) Payment under Protest. - No protest, however, shall

be entertained unless the taxpayer first pays the tax. There
shall be annotated on the tax receipt the words 'paid under
protest.' A copy of the tax receipt shall be attached to the
written protest contesting the assessment. [Emphasis and
underscoring supplied.]

In contrast, Section 195 of the LGC provides:

Section 195. Protest of Assessment. - When the local

treasurer or his duly authorized representative finds that
correct taxes, fees, or charges have not been paid, he shall
issue a notice of assessment stating the nature of the tax, fee,
or charge, the amount of deficiency, the surcharges, interests
and penalties. Within sixty (60) days from the receipt of the
notice of assessment, the taxpayer may file a written protest
with the local treasurer contesting the assessment; otherwise,
the assessment shall become final and executory. The local
treasurer shall decide the protest within sixty (60) days from
the time of its filing .... The taxpayer shall have thirty (30) days
from the receipt of the denial of the protest or from the lapse of
the sixty (60)-day period prescribed herein within which to
appeal with the court of competent jurisdiction otherwise the
assessment becomes conclusive and unappealable.

As stated in the assailed Decision, Section 195 of the LGC

does not require the prior payment of the assessed tax in
protesting local tax assessments. As respondent correctly
argued, this is in contradistinction with Section 252(a) of the
LGC 16 pertaining to protests against a real property tax
16
Section 252. Payment Under Protest. -
RESOLUTION
CTA AC No. 247
Nelia A. Barlis and the City of Makati vs. GF & Partners, Architects, Co.
Page 4 of7
x------------------------------------------------------------------------------------------x
assessment. This has been settled in the City of Manila vs.
Cosmos Bottling Corporation, 17 which We likewise quoted in the
assailed Decision. We once again quote:

Clearly, when a taxpayer is assessed a deficiency local

tax, fee, or charge, he may protest it under Section 195 even
without making payment of such assessed tax, fee or
charge. This is because the law on local government
taxation, save in the case of real property tax, does not
expressly require "payment under protest" as a procedure
prior to instituting the appropriate proceeding in court.
This implies that the success of a judicial action
questioning the validity or correctness of the assessment
is not necessarily hinged on the previous payment of the
tax under protest.

Where an assessment is to be protested or disputed, the

taxpayer may proceed (a) without payment, or (b) with payment
of the assessed tax, fee or charge. Whether there is payment of
the assessed tax or not, it is clear that the protest in writing
must be made within sixty (60) days from receipt of the notice
of assessment; otherwise, the assessment shall become final
and conclusive. Additionally, the subsequent court action
must be initiated within thirty (30) days from denial or inaction
by the local treasurer, otherwise, the assessment becomes
conclusive and unappealable.

(a) Where no payment is made, the taxpayer's

procedural remedy is governed strictly by Section 195.
That is, in case of whole of partial denial of the protest, of
inaction by the local treasurer, the taxpayer's only recourse is
to appeal the assessment with the court of competent
jurisdiction ....

(b) Where payment was made, the taxpayer may

thereafter maintain an action in court questioning the validity
and correctness of the assessment (Section 195, LGC) and at
the same time seeking a refund of the taxes .... IB

Clearly, Section 7B.14(c) of the RMRC is in opposition with

Section 195 of the LGC as the former provision requires the
payment of tax as a condition sine qua non for a valid protest of
a local business tax assessment.

(a) No protest shall be entertained unless the taxpayer first pays the tax. There shall be annotated on the tax receipts the
words "paid under protest". The protest in writing must be tiled within thirty (30) days from payment of the tax to the
provincial, city treasurer or municipal treasurer, in the case of a municipality within Metropolitan Manila Area, who
shall decide the protest within sixty (60) days from receipt.
17
G.R. No. 196681,27 June 2018.
18
Emphasis and underscoring supplied.
RESOLUTION
CTA AC No. 247
Nelia A. Barlis and the City of Makati vs. GF & Partners, Architects, Co.
Page 5 of7
x------------------------------------------------------------------------------------------x

In the assailed Decision, We ruled that Section 7B.14(c)

of the RMRC must be set aside, for it traverses beyond the
provision of its enabling law, i.e., the LGC. We mentioned:

For an ordinance to be valid, it must not only be within

the corporate powers of the LGU to enact and be passed
according to the procedure prescribed by law, it must also,
among others, not contravene the Constitution or any
statute. 19 The requirement that the enactment must not
violate existing law gives stress to the precept that local
government units are able to legislate only by virtue of their
derivative legislative power, a delegation of legislative power
from the national legislature. 2o The delegate cannot be
superior to the principal or exercise powers higher than the
latter.2 1 Simply put, an ordinance that is incompatible with
any existing law or statute is ultra vires, hence, null and
void.22

At this juncture, there is no question that Section 7B.14(c)

of the RMRC is inconsistent with Section 195 of the LGC, and
petitioners do not refute it. The issue at hand is whether Section
7B.14(c) of the RMRC can still apply to the instant case,
notwithstanding its inconsistency with the LGC, considering
that it has yet to be nullified and its validity was not directly
assailed. It is petitioners' supposition that such is the applicable
remedy considering that the provision is still valid.

Petitioners contend that Section 187 of the LGC remains

the proper and exclusive procedure to question the
constitutionality or validity of a tax ordinance or revenue
measure 23 and that the constitutionality or validity of laws
cannot be attacked collaterally.24

We rule in the negative.

Section 187 of the LGC provides:

Section 187. Procedure for Approval and Effectivity of

Tax, Ordinances and Revenue Measures; Mandatory Public
Hearings. - x x x 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

19
Social Justice Society vs. Atienza, Jr .. G.R. No. 156052 (Resolution), 13 February 2008,568 SCRA 658-724.
20
City of Manila vs. Laguio, Jr., G.R. No. 118127, 12 April 2005, 495 SCRA 289-338.
21
Magtajas vs. Pryce Properties Corp .. Inc., G.R. No. 111097,20 July 1994, 304 SCRA 428-454.
22
Manila Electric Co. vs. City of Muntinlupa, G.R. No. 198529, 9 February 2021.
23 Supra at note 5.
24
Supra at note 9.
RESOLUTION
CTA AC No. 247
Nelia A. Barlis and the City of Makati vs. GF & Partners, Architects, Co.
Page 6 of7
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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. [Emphasis and
underscoring supplied.]

The invocation of Section 187 of the LGC 1s utterly

misplaced.

It has long been settled in jurisprudence that the nature

of the action, as well as the court or body which has jurisdiction
over it, is defined by the material allegations in the complaint,
as well as the character of the relief sought.25

A perusal of the decision of the Regional Trial Court -

Makati City Branch 139 reveals that the petition is for
"cancellation of local business tax assessment."26 Further, it
was the inaction of petitioners in relation to respondent's
protest that respondent elevated the matter to the court a quo.

Given that respondent's prayer and material allegations all

point towards the cancellation of petitioners' assessment and
not the validity of the provisions of the RMRC itself, this Court
finds that Section 187 of the LGC is not applicable in the instant
case. Further, the cases of Jardine Davies Insurance Brokers
Inc. vs. Aliposa 27 and Reyes vs. Court of Appeals, 28 which
petitioners cited, do not find application.

Finally, We adhere to the hierarchy of legal rules -

municipal ordinances are inferior in status and subordinate to
the laws of the State. Thus, in case of conflict between an
ordinance and a statute, the ordinance must be set aside.29

It is a fundamental principle that municipal ordinances

are inferior in status and subordinate to the laws of the state.
An ordinance in conflict with a state law of general character

25
See De Vera vs. Spouses Santiago, Sr., G.R. No. 179457, 22 June 2015; Samson vs. Spouses Gabor, G.R. No.
182970, 23 July 2014; Ruby Shelter Builders and Realty Development Corporation vs. Hon. Formaran 111, G.R. No.
175914, 10 February 2009; Spouses Mansalud vs. National Housing Authority, G.R. No. 167181,23 December 2008;
Villena vs. Payoyo, G.R. No. 163021,27 April2007; Huguete vs. Embudo, G.R. No. 149554, I July 2003; and Caiza
vs. Court of Appeals, G.R. No. I 10427, 24 February 1997.1
26
Rollo, p. 23.
27
G.R. No. 118900, 27 February 2003, 446 SCRA 243-255.
28
G.R. No. 118233 (Resolution), 10 December 1999,378 SCRA 232-240.
29
Municipality ofTupi vs. Faustino, G.R. No. 231896, 20 August 2019.
RESOLUTION
CTA AC No. 247
Nelia A. Barlis and the City of Makati vs. GF & Partners, Architects, Co.
Page 7 of7
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and statewide application is universally held to be invalid. The

principle is frequently expressed in the declaration that
municipal authorities, under a general grant of power, cannot
adopt ordinances that infringe the spirit of a state law or are
repugnant to the state's general policy. In every power to pass
ordinances given to a municipality, there is an implied
restriction that the ordinances shall be consistent with the
general law. 3D

Accordingly, contrary to petitioners' supposition, payment

under protest is not necessary for respondent to file a valid
protest as provided under Section 195 of the LGC. As such, the
local business tax assessment against respondent has not yet
become final and executory, and this Court has jurisdiction to
rule on the merits of the assessment. As We have ruled in the
assailed Decision, respondent is not liable to pay the local
business tax imposed under Section 3A.02(g) of the RMRC.

WHEREFORE, premises considered, petitioners' Motion

for Reconsideration (ofthe Decision dated 16 September 2022) is
DENIED for lack of merit.

SO ORDERED.

~AAAAA"MJ~
LA~~~~UI-DAVID
Associate Justice

I Concur:

30
Batangas CATV. Inc. vs. Court ofAppeals, G.R. No. 138810,29 September 2004.482 SCRA 544·571.