FERRER v.

BAUTISTA
G.R. No. 210551, 30 June 2015

STATEMENT OF THE CASE:

Before this Court is a petition for certiorari under Rule 65 of the Rules of Court
with prayer for the issuance of a temporary restraining order (TRO) seeking to declare
unconstitutional and illegal Ordinance Nos. SP-2095, S-2011 and SP-2235, S-2013 on
the Socialized Housing Tax and Garbage Fee, respectively, which are being imposed
by the respondents.

STATEMENT OF THE FACTS:

Respondent Quezon City Council enacted Ordinance No. SP-2095, S-2011, or

the Socialized Housing Tax of Quezon City, Section 3 of which provides:

SECTION 3. IMPOSITION. A special assessment equivalent to one-half percent

(0.5%) on the assessed value of land in excess of One Hundred Thousand
Pesos (Php100,000.00) shall be collected by the City Treasurer which shall
accrue to the Socialized Housing Programs of the Quezon City Government. The
special assessment shall accrue to the General Fund under a special account to
be established for the purpose.

Effective for five (5) years, the Socialized Housing Tax ( SHT ) shall be utilized by
the Quezon City Government for the following projects: (a) land purchase/land banking;
(b) improvement of current/existing socialized housing facilities; (c) land development;
(d) construction of core houses, sanitary cores, medium-rise buildings and other similar
structures; and (e) financing of public-private partners hip agreement of the Quezon City
Government and National Housing Authority ( NHA ) with the private sector.

On the other hand, Ordinance No. SP-2235, S-20135 was enacted on December
16, 2013 and took effect ten days after when it was approved by respondent City Mayor.
The proceeds collected from the garbage fees on residential properties shall be
deposited solely and exclusively in an earmarked special account under the general
fund to be utilized for garbage collections. Section 1 of the Ordinance set forth the
schedule and manner for the collection of garbage fees.

Petitioner alleges that he is a registered owner of a 371 square-meter residential

property in Quezon City and that; he paid his realty tax which already included the
garbage fee.

On the contrary, petitioner claims that the collection of the SHT is tantamount to
a penalty imposed on real property owners due to the failure of respondent Quezon City
Mayor and Council to perform their duty to secure and protect real property owners from

Submitted by: Hulipas, Jamiah O.

Juris Doctor 1
informal settlers, thereby burdening them with the expenses to provide funds for
housing. For petitioner, the SHT cannot be viewed as a "charity" from real property
owners since it is forced, not voluntary.

As to the rationale of SHT stated in Ordinance No. SP-2095, which, in turn, was
based on Section 43 of the UDHA, petitioner asserts that there is no specific provision
in the 1987 Constitution stating that the ownership and enjoyment of property bear a
social function. And even if there is, it is seriously doubtful and far-fetched that the
principle means that property owners should provide funds for the housing of informal
settlers and for home site development. Social justice and police power, petitioner
believes, does not mean imposing a tax on one, or that one has to give up something,
for the benefit of another. At best, the principle that property ownership and enjoyment
bear a social function is but a reiteration of the Civil Law principle that property should
not be enjoyed and abused to the injury of other properties and the community, and that
the use of the property may be restricted by police power, the exercise of which is not
involved in this case.

Respondents claim that Ordinance No. S-2235, which is an exercise of police

power, collects on the average from every household a garbage fee in the meager
amount of thirty-three centavos per day compared with the sum of ₱1,659.83 that the
Quezon City Government annually spends for every household for garbage collection
and waste management.

In addition, there is no double taxation because the ordinance involves a fee.

Even assuming that the garbage fee is a tax, the same cannot be a direct duplicate tax
as it is imposed on a different subject matter and is of a different kind or character.
Based on Villanueva, et al. v. City of Iloilo and Victorias Milling Co., Inc. v. Municipality
of Victorias, etc.,there is no "taxing twice" because the real property tax is imposed on
ownership based on its assessed value, while the garbage fee is required on the
domestic household. The only reference to the property is the determination of the
applicable rate and the facility of collection.

Petitioner argues, however, that Ordinance No. S-2235 cannot be justified as an

exercise of police power. The cases of Calalang v. Williams, Patalinghug v. Court of
Appeals, and Social Justice Society (SJS), et al. v. Hon. Atienza, Jr., which were cited
by respondents, are inapplicable since the assailed ordinance is a revenue measure
and does not regulate the disposal or other aspect of garbage.

ISSUE:

1. Whether or not Ordinance No. SP-2095, S-2011, the Socialized Housing Tax is
valid.

Submitted by: Hulipas, Jamiah O.

Juris Doctor 1
 2. Whether or not Ordinance No. SP-2235, S-2013, which collects an annual
garbage fee on all domestic households in Quezon City is constitutional and
legal.

RULING:
1. Whether or not Ordinance No. SP-2095, S-2011, the Socialized Housing Tax
is valid.

Yes. Pursuant to the Local Government Code, the LGUs were delegated
powers, such included the power of taxation which is indubitably the most
effective instrument to raise needed revenues in financing and supporting myriad
activities of the LGUs for the delivery of basic services essential to the promotion
of the general welfare and the enhancement of peace, progress, and prosperity
of the people. In this case, the ordinance is found to be in consistent with the
Constitution and in accordance to the delegated powers vested to the LGUs by
the Congress, on its delegated taxing powers.

2. Whether or not Ordinance No. SP-2235, S-2013, which collects an annual

garbage fee on all domestic households in Quezon City is constitutional
and legal.

No. Ordinance No. SP-2235, S-2013 is invalid. Although it does not violate
the rule on double taxation, it nonetheless violates the rule on equality.SP-2235
does not violate the rule on double taxation. The fee imposed for garbage
collections under Ordinance No. SP-2235 is a charge fixed for the regulation of
an activity. In Progressive Development Corporation v. Quezon City, the Court
declared that “if the generating of revenue is the primary purpose and regulation
is merely incidental, the imposition is a tax; but if regulation is the primary
purpose, the fact that incidentally revenue is also obtained does not make the
imposition a tax.” In a U.S. case, the garbage fee was considered as a "service
charge" rather than a tax as it was actually a fee for a service given by the city
which had previously been provided at no cost to its citizens. Hence, not being a
tax, the contention that the garbage fee under Ordinance No. SP-2235 violates
the rule on double taxation must necessarily fail.

However, SP-2235 violates the rule on equality. For the purpose of

garbage collection, there is, in fact, no substantial distinction between an
occupant of a lot, on one hand, and an occupant of a unit in a condominium,
socialized housing project or apartment, on the other hand. Most likely, garbage
output produced by these types of occupants is uniform and does not vary to a
large degree; thus, a similar schedule of fee is both just and equitable. The rates
being charged by the ordinance are unjust and inequitable: a resident of a 200
sq. m. unit in a condominium or socialized housing project has to pay twice the
amount than a resident of a lot similar in size; unlike unit occupants, all

Submitted by: Hulipas, Jamiah O.

Juris Doctor 1
 occupants of a lot with an area of 200 sq. m. and less have to pay a fixed rate of
Php100.00; and the same amount of garbage fee is imposed regardless of
whether the resident is from a condominium or from a socialized housing project.
Indeed, the classifications under Ordinance No. S-2235 is not germane to its
declared purpose of “promoting shared responsibility with the residents to attack
their common mindless attitude in over-consuming the present resources and in
generating waste.” Instead of simplistically categorizing the payee into land or
floor occupant of a lot or unit of a condominium, socialized housing project or
apartment, respondent City Council should have considered factors that could
truly measure the amount of wastes generated and the appropriate fee for its
collection. Factors include, among others, household age and size, accessibility
to waste collection, population density of the barangay or district, capacity to pay,
and actual occupancy of the property.

DOCTRINE:

For an ordinance to be valid though, it must not only be within the corporate
powers of the LGU to enact and must be passed according to the procedure prescribed
by law, it should also conform to the following requirements: (1) not contrary to the
Constitution or any statute; (2) not unfair or oppressive; (3) not partial or discriminatory;
(4) not prohibit but may regulate trade; (5) general and consistent with public policy; and
(6) not unreasonable. As jurisprudence indicates, the tests are divided into the formal
(i.e., whether the ordinance was enacted within the corporate powers of the LGU and
whether it was passed in accordance with the procedure prescribed by law), and the
substantive ( i.e., involving inherent merit, like the conformity of the ordinance with the
limitations under the Constitution and the statutes, as well as with the requirements of
fairness and reason, and its consistency with public policy).

An ordinance must pass muster under the test of constitutionality and the test of
consistency with the prevailing laws. If not, it is void.

Ordinance should uphold the principle of the supremacy of the Constitution.

LGUs are able to legislate only by virtue of a valid delegation of legislative power from
the national legislature; they are mere agents vested with what is called the power of
subordinate legislation. "Congress enacted the LGC as the implementing law for the
delegation to the various LGUs of the State’s great powers, namely: the police power,
the power of eminent domain, and the power of taxation. The LGC was fashioned to
delineate the specific parameters and limitations to be complied with by each LGU in
the exercise of these delegated powers with the view of making each LGU a fully
functioning subdivision of the State subject to the constitutional and statutory limitations.

Submitted by: Hulipas, Jamiah O.

Juris Doctor 1
 Specifically with regard to the power of taxation, Section 5, Article X of the 1987
Constitution, "the power to tax is no longer vested exclusively on Congress; local
legislative bodies are now given direct authority to levy taxes, fees and other charges."
Nevertheless, such authority is "subject to such guidelines and limitations as the
Congress may provide."

Indeed, LGUs have no inherent power to tax except to the extent that such power
might be delegated to them either by the basic law or by the statute. "Under the now
prevailing Constitution, where there is neither a grant nor a prohibition by statute, the
tax power must be deemed to exist although Congress may provide statutory limitations
and guidelines. The basic rationale for the current rule is to safeguard the viability and
self-sufficiency of local government units by directly granting them general and broad
tax powers. Nevertheless, the fundamental law did not intend the delegation to be
absolute and unconditional; the constitutional objective obviously is to ensure that, while
the local government units are being strengthened and made more autonomous , the
legislature must still see to it that (a) the taxpayer will not be over-burdened or saddled
with multiple and unreasonable impositions; (b) each local government unit will have its
fair share of available resources; (c) the resources of the national government will not
be unduly disturbed; and (d) local taxation will be fair, uniform, and just.

Subject to the provisions of the LGC and consistent with the basic policy of local
autonomy, every LGU is now empowered and authorized to create its own sources of
revenue and to levy taxes, fees, and charges which shall accrue exclusively to the local
government unit as well as to apply its resources and assets for productive,
developmental, or welfare purposes, in the exercise or furtherance of their
governmental or proprietary powers and functions.

Submitted by: Hulipas, Jamiah O.

Juris Doctor 1