St. Mary's Academy Caloocan City v. Henares
REITERATIONFacts
The Antecedents: St. Mary's Academy of Caloocan City, a non-stock, non-profit educational institution, received a letter from the Bureau of Internal Revenue (BIR) Revenue District Officer demanding compliance with Revenue Memorandum Order No. 20-2013 (RMO No. 20-2013) and Revenue Memorandum Circular No. 52-2013 (RMC No. 52-2013). RMO No. 20-2013 provided guidelines for processing tax exemption applications and re-validating tax exemption rulings, while RMC No. 52-2013 clarified the validity of unused receipts and invoices, setting deadlines for their validity and requiring new authority to print for subsequent issuances. The BIR asserted that St. Mary's Academy's existing receipts were no longer valid and demanded payment of penalties for failure to secure a new authority to print, despite the Academy's claim of tax exemption and non-engagement in business. Procedural History: St. Mary's Academy filed a Petition for Injunction and Prohibition before the Regional Trial Court (RTC) of Quezon City, seeking to declare RMO No. 20-2013 and RMC No. 52-2013 unconstitutional and illegal as applied to non-stock, non-profit educational institutions. The RTC issued a preliminary injunction and subsequently a resolution declaring the issuances unconstitutional and illegal. The Commissioner of Internal Revenue, the Regional Director, the Revenue District Officer, and the Republic of the Philippines appealed this decision to the Court of Appeals (CA). The CA granted the appeal, set aside the RTC's orders, and dismissed St. Mary's Academy's petition, ruling that the RTC lacked jurisdiction. St. Mary's Academy sought reconsideration, but the CA denied it, leading to the present petition before the Supreme Court. The Petition: St. Mary's Academy filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals' decision. The petitioner argues that the CA erred in deciding the case purely on procedural grounds without addressing the substantive issues of the constitutionality and legality of the BIR issuances. It contends that the CA should have dismissed the appeal outright as only questions of law were involved. Furthermore, the petitioner asserts that the RTC had jurisdiction to rule on the constitutionality of the administrative issuances due to the expanded powers of judicial review. Substantively, it maintains its tax-exempt status and argues that the assailed regulations impose additional, unconstitutional requirements that erode this privilege and subject it to undue penalties. The petitioner seeks to have RMO No. 20-2013 and RMC No. 52-2013 declared unconstitutional and illegal as applied to non-stock, non-profit educational institutions.
Issue(s)
Whether the Regional Trial Court has jurisdiction to rule on the constitutionality and validity of revenue issuances by the Commissioner of Internal Revenue. Whether Revenue Memorandum Order No. 20-2013 and Revenue Memorandum Circular No. 52-2013 are constitutional and valid as applied to non-stock, non-profit educational institutions.
Ruling
The Petition is DENIED. The Resolution of the Regional Trial Court declaring RMO No. 20-2013 as unconstitutional and RMC No. 52-2013 as illegal is void for having been issued without jurisdiction. The Court of Appeals correctly dismissed the petition for injunction and prohibition filed before the Regional Trial Court.
Ratio Decidendi
On the jurisdiction of the Regional Trial Court: The Supreme Court reiterated that the Court of Tax Appeals (CTA), not the regional trial courts (RTCs), has exclusive jurisdiction to rule on the constitutionality and validity of revenue issuances by the Commissioner of Internal Revenue. This jurisdiction is conferred by law, specifically Section 7 of Republic Act No. 1125, as amended by Republic Act No. 9282. The Court cited previous cases such as Blaquera v. Rodriguez, Commissioner of Internal Revenue v. Leal, and Asia International Auctioneers v. Parayno which consistently held that the CTA has exclusive appellate jurisdiction to review decisions of the CIR involving disputed assessments, refunds, penalties, or other matters arising under the NIRC. While acknowledging a deviation in British American Tobacco v. Camacho, the Court clarified in Banco de Oro v. Republic and COURAGE v. Commissioner of Internal Revenue that the prevailing rule is the exclusive jurisdiction of the CTA over such matters. Therefore, the RTC acted without jurisdiction when it declared the revenue issuances unconstitutional and illegal, rendering its resolution void. The Court of Appeals correctly dismissed the case for lack of jurisdiction of the lower court. On the constitutionality and validity of RMO No. 20-2013 and RMC No. 52-2013: Since the RTC lacked jurisdiction to pass upon the constitutionality and validity of the revenue issuances, the Supreme Court did not rule on the substantive merits of the case. The Court emphasized that before it exercises its review powers on matters involving the constitutionality and validity of acts of a co-equal branch, the case must first be heard on both law and facts by the appropriate trial court, which in this instance is the Court of Tax Appeals. The Court's pronouncement on jurisdiction is dispositive of the petition, as any further disquisition on the merits by the Supreme Court would be obiter dictum given the void ruling of the RTC.
Main Doctrine
The Court of Tax Appeals, and not the regional trial courts, has the exclusive jurisdiction to rule on the constitutionality and validity of revenue issuances by the Commissioner of Internal Revenue.