FACTS
Due to the obsolete real property taxes values, which were still based on the 1978 revision, then President Corazon Aquino issued EO No. 73 in 1986, which ordered that beginning January 1, 1987, the1984 assessments shall be the basis of real property tax collection.
Francisco Chavez, in his capacity as a taxpayer and an owner of three parcels of land, challenged the constitutionality of said EO, arguing that the law resulted in an unreasonable increase in real property taxes – excessive increase in real property taxes by 100 percent to 400 percent on improvement and up to 100 percent on land.
This, he said, amounted to confiscation of property repugnant to the constitutional guarantee of due process.
RULING
The Supreme Court ruled for the Government.
The SC held that EO No. 73 does not impose new taxes nor increase taxes. It added that to continue collecting real property taxes based on valuations arrived at several years ago, in disregard of the increases in the value of real properties that have occurred since then, is not in consonance with a sound tax system, thereby resulting in the deprivation of the local government units of an additional source of revenue.
Fiscal adequacy, which is one of the characteristics of a sound tax system, requires that sources of revenues must be adequate to meet government expenditures and their variations.
