Tax Ordinance Enactment: Presumption of Validity and Notice Requirements

The Supreme Court recently settled an important question for local governments and property owners alike: when a city updates its real property values for taxation, what procedural rules must it follow? In City of Batangas v. Tolentino (G.R. No. 228489, May 5, 2021), the Court ruled that an ordinance revising real property values is a tax ordinance, but the notice and public hearing requirements for general tax measures do not automatically apply to it.

The Case: Batangas City's Revised Property Values

In 2013, the Sangguniang Panlungsod of Batangas City enacted Ordinance No. 20, series of 2013, which updated real property values based on a new schedule of fair market values prepared by the City Assessor. The ordinance was part of a general revision of property assessments required every three years under the Local Government Code.

Before enactment, the city conducted public hearings on five separate dates and sent notices to various stakeholders. After approval, the ordinance was published in a local newspaper on three consecutive weeks.

A taxpayer, Jose Virgilio Tolentino, appealed to the Secretary of Justice, claiming the new values were excessive, inequitable, and confiscatory, and that no written notice was sent to affected residents. The Secretary of Justice declared the ordinance void for failing to comply with notice requirements under the Local Government Code's Implementing Rules and Regulations. The Court of Appeals affirmed.

The Issue: Which Rules Apply?

The Supreme Court had to resolve two questions: First, is an ordinance revising real property values a tax ordinance subject to appeal to the Secretary of Justice? Second, does it need to follow the notice and public hearing requirements of the Local Government Code's general tax provisions?

The Ruling: A Tax Ordinance, But Different Rules

The Court first confirmed that the ordinance is indeed a tax ordinance. While it does not directly impose a tax, its purpose is revenue generation—the ordinance explicitly states it will "generate more revenue for the City." Citing settled doctrine, the Court noted that "if the purpose is primarily revenue, or if revenue is, at least, one of the real and substantial purposes, then the exaction is properly called a tax."

However, the Court drew a crucial distinction. The Local Government Code has two separate titles: "Local Government Taxation" and "Real Property Taxation." An ordinance on general revision of real property values falls under the latter. Therefore, the governing provisions are those on preparation of schedules of fair market values and general revision of assessments, not the notice requirements for general tax ordinances.

The Code requires the schedule of fair market values to be published in a newspaper of general circulation or posted in conspicuous public places. It does not require public hearings or written notices to affected parties. The Implementing Rules likewise state that no public hearing is required before the enactment of a local tax ordinance levying the basic real property tax.

The Presumption of Validity

The Court also corrected the lower tribunals' approach to the burden of proof. Legislative acts, including ordinances, carry a strong presumption of validity. The party challenging an ordinance must show clear and unequivocal proof of invalidity—not merely assert it.

Here, Tolentino failed to present sufficient evidence of noncompliance. In fact, records showed he attended the November 11, 2013 hearing and voiced his objections. The city presented certifications that public hearings were conducted and notices sent to stakeholders. Since the challenger did not overcome the presumption, the ordinance should have been upheld.

Practical Takeaways

• Real property valuation ordinances are tax ordinances. They may be appealed to the Secretary of Justice within 30 days of effectivity under the Local Government Code.
• But they follow special rules. General revision of real property values is governed by the Code's provisions on real property taxation—not the notice and hearing requirements for general tax measures.
• No public hearing is required for ordinances revising real property values or levying the basic real property tax, per the Implementing Rules.
• Publication is the key requirement. The schedule of fair market values must be published in a newspaper of general circulation or posted in conspicuous public places before enactment.
• Ordinances enjoy a presumption of validity. Challengers bear the burden of proving invalidity with clear evidence; mere allegations of noncompliance are insufficient.

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.