De Lima v. City of Manila
REITERATIONFacts
The Antecedents: This case concerns the validity of Manila City Ordinance No. 8331, enacted on November 26, 2013, which imposed a percentage tax on the gross sales of retailers. Specifically, Section 104 of the ordinance set this tax at rates ranging from 1% to 3%. Retail business operators within the City of Manila challenged this ordinance, arguing that the imposed tax rates were unconstitutional and illegal. They contended that the increase in local business tax rates, from previous levels to the rates in Ordinance No. 8331, exceeded the 10% limit on rate adjustments stipulated in Section 191 of the Local Government Code of 1991 (LGC). Procedural History: The retail business operators initially appealed to the Secretary of Justice, who declared Section 104 of Ordinance No. 8331 void for violating Section 191 of the LGC. The City of Manila then filed a Petition for Review Ad Cautelam with the Regional Trial Court (RTC) of Manila, seeking to annul the Secretary of Justice's resolution. The RTC dismissed this petition for lack of jurisdiction. The City of Manila appealed this dismissal to the Court of Appeals (CA) via certiorari. The CA set aside the RTC's decision and remanded the case for further proceedings, holding that the RTC erred in dismissing the petition for lack of jurisdiction. The CA subsequently denied the motion for reconsideration filed by the Secretary of Justice. The Petition: The Secretary of Justice, as petitioner, filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court. The petition seeks to annul the CA's decision and resolution. The core arguments raised are: (1) whether the CA erred in ruling that the RTC had jurisdiction to entertain the City of Manila's petition for review, and (2) whether the CA erred in ruling that the City of Manila did not commit forum shopping by filing its petition before the RTC while a motion for reconsideration was pending before the Secretary of Justice. The petitioner argues that a certiorari petition before the RTC was not the proper remedy and that a motion for reconsideration was required. The Supreme Court, in its ruling, addressed both the procedural issues and the substantive validity of the ordinance.
Issue(s)
Whether the Court of Appeals erred in ruling that the Regional Trial Court has jurisdiction to resolve an appeal from the resolution of the Secretary of Justice and whether the appeal before the RTC was timely filed. Whether the Court of Appeals erred in ruling that the respondent did not commit forum shopping. Whether Section 104 of Ordinance No. 8331 is valid and enforceable.
Ruling
The Supreme Court ruled that the petition is partly meritorious. It affirmed that the Court of Appeals has exclusive original jurisdiction over petitions for certiorari against quasi-judicial agencies, thus the RTC erred in taking cognizance of the case. However, the Court found that the appeal to the RTC was timely filed. The Court also ruled that Section 104 of Ordinance No. 8331 is partially invalid as it exceeds the 10% limitation on adjustment mandated by the LGC.
Ratio Decidendi
On the jurisdiction of the RTC, the proper remedy, and timeliness of the appeal: The Court held that the determination by the Secretary of Justice of the constitutionality or legality of a tax ordinance involves an exercise of quasi-judicial power. Such decisions, when tainted with grave abuse of discretion, are subject to a special civil action for certiorari under Rule 65. While certiorari is a proper remedy, the venue for such petitions against quasi-judicial agencies is exclusively the Court of Appeals, not the RTC. Therefore, the RTC correctly dismissed the petition for review ad cautelam (which was treated as a petition for certiorari) for having been filed before the wrong court. The CA erred in remanding the case to the RTC, as it should have taken cognizance of the petition itself. The Court also found that the appeal before the RTC was timely filed. Ordinance No. 8331 became effective on December 9, 2013. The retail business operators filed their appeal to the Secretary of Justice on January 6, 2014, within the 30-day period. The Secretary of Justice issued a resolution on April 7, 2014, which the City of Manila received on April 15, 2014. The City of Manila filed its petition before the RTC on May 15, 2014, exactly 30 days from receipt of the Secretary's resolution, thus complying with the 30-day period prescribed by Section 187 of the LGC for appealing the Secretary's decision to the courts. On forum shopping: The Court found that the respondent did not commit forum shopping. The petition for review ad cautelam was filed before the RTC after the respondent had filed a Motion for Reconsideration before the Secretary of Justice, but before the latter acted upon it. The Court noted that the LGC does not explicitly require a motion for reconsideration before filing an appeal to the courts, and the filing of the petition before the RTC was done ad cautelam (precautionary). On the validity of Section 104 of Ordinance No. 8331: The Court ruled that Section 104 of Ordinance No. 8331 is partially invalid. Section 191 of the LGC limits any adjustment of tax rates to not more than ten percent (10%) of the rates fixed under the Code. The Court found that the tax rates imposed by Ordinance No. 8331, when compared to the rates imposed by previous ordinances (Ordinance No. 7794 and its amendment, Ordinance No. 7807), represented an increase beyond the permissible 10% ceiling. Therefore, the imposition of tax on retailers under Ordinance No. 8331 was partially invalid for exceeding the statutory limitation.
Main Doctrine
The Court of Appeals has exclusive original jurisdiction over petitions for certiorari under Rule 65 questioning the acts of quasi-judicial agencies, including the Secretary of Justice's resolution on the legality of tax ordinances. The Regional Trial Court erred in taking cognizance of such a petition.