G.R. No. L-49336 August 31, 1981
THE PROVINCE OF ABRA, represented by LADISLAO ANCHETA, Provincial Assessor, petitioner, vs. HONORABLE HAROLD M. HERNANDO, in his capacity as Presiding Judge of Branch I, Court of First Instance Abra; THE ROMAN CATHOLIC BISHOP OF BANGUED, INC., represented by Bishop Odilo Etspueler and Reverend Felipe Flores, respondents.

FACTS

The Province of Abra, through its Provincial Assessor, assessed real estate taxes on properties owned by the Roman Catholic Bishop of Bangued, Inc. The Bishop filed a petition for declaratory relief before the Court of First Instance of Abra, seeking a judicial declaration that its properties were exempt from taxation as they were allegedly used “actually, directly and exclusively” for religious purposes. The Province filed a motion to dismiss the petition on grounds of lack of jurisdiction, failure to exhaust administrative remedies under Presidential Decree No. 464 (the Real Property Tax Code), and improper remedy since a tax assessment had already been issued, constituting a breach. Respondent Judge Hernando denied the motion to dismiss and subsequently rendered a summary judgment granting the tax exemption without conducting a hearing or requiring the Province to file an answer.

ISSUE

Whether respondent Judge committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting summary judgment and declaring the subject properties tax-exempt without trial and in violation of procedural due process.

RULING

Yes. The Supreme Court granted the petition, annulled the summary judgment, and ordered the case to be heard on the merits. The Court ruled that respondent Judge gravely abused his discretion. First, the action for declaratory relief was improper as a tax assessment had already been made, constituting a breach or violation of the taxing statute; the proper recourse for the taxpayer was to exhaust administrative remedies and, if necessary, appeal under P.D. 464. Second, the grant of summary judgment violated the Province’s right to procedural due process. The Judge decided the case based solely on the Bishop’s allegations without allowing the Province to present evidence or be heard. The determination of whether the properties were “actually, directly, and exclusively” used for religious purposes, as required for exemption under the 1973 Constitution, is a question of fact that necessitates a full trial. Exemptions from taxation are strictly construed against the claimant, and the burden of proof rests upon the party claiming it. By denying the Province the opportunity to contest the factual allegations, the Judge precluded a proper determination of compliance with the stringent constitutional conditions for tax exemption.