Mactel v. City Government of Makati
REITERATIONFacts
The Antecedents: Petitioner Mactel Corporation trades prepaid telecommunications products and previously secured a final and executory RTC judgment dated November 13, 2007 determining that petitioner's tax liability should be computed on its actual income (10% discount/commission) rather than on the face value of prepaid cards. Years later, respondent City Treasurer issued notices assessing petitioner on the face value of prepaid cards for subsequent taxable periods (2010-2013) and the City Administrator issued a billing statement for 2014, prompting petitioner to file protests and seek renewal of its business permit. While the administrative protest to the City Treasurer remained pending, petitioner filed a Petition for Declaratory Relief with application for temporary restraining order and preliminary mandatory and prohibitory injunctions before the RTC of Makati (Civil Case No. 15-177) to compel issuance of a temporary business permit and to enjoin respondents from proceeding with the assessments until the main case was resolved. Procedural History: The RTC of Makati, Branch 59 issued interlocutory orders (April 28, 2015; May 11, 2015) enjoining respondents from proceeding with the assessments and ordering issuance of a temporary business permit. Respondents filed a petition for certiorari under Rule 65 to the Court of Tax Appeals (CTA) assailing those interlocutory orders. The CTA Second Division dismissed respondents' petition for lack of jurisdiction (Decision dated February 9, 2016; Resolution denying reconsideration dated May 18, 2016). The CTA En Banc initially affirmed that dismissal (Decision dated February 14, 2018) but later issued an Amended Decision (October 9, 2018) reversing and holding it had jurisdiction, relying on CE Casecnan. The Supreme Court granted review and reversed the CTA En Banc Amended Decision, reinstating the CTA's February 14, 2018 decision and dismissing the CTA petition for lack of jurisdiction (Decision dated July 14, 2021). The Petition: Petitioner sought review of the CTA En Banc Amended Decision (October 9, 2018) and related Resolution (January 29, 2019) that asserted CTA jurisdiction. Petitioner contended the RTC action was civil in nature to enforce a final and executory judgment and to secure interim relief to permit business operations while administrative protest was pending, and thus not a "local tax case" within CTA appellate or special jurisdiction.
Issue(s)
Whether the Court of Tax Appeals has jurisdiction to entertain a petition for certiorari under Rule 65 assailing interlocutory orders of the Regional Trial Court in this case. Whether the petition filed by Mactel Corporation before the RTC constituted a "local tax case" within the meaning of Section 7(a)(3) of R.A. 1125 as amended by R.A. 9282 and Rule 4, Section 3(a)(3) of the 2005 Revised Rules of the Court of Tax Appeals. Whether the CTA En Banc erred in reversing its earlier decision by relying on CE Casecnan Water and Energy Co., Inc. v. Province of Nueva Ecija, and whether the principle of stare decisis compelled adoption of CE Casecnan in the circumstances of this case. Whether an action to enforce a final and executory judgment and to obtain interim injunctive relief to permit continued business operations is civil in nature and therefore outside the CTA's appellate/special jurisdiction. Whether the principle of stare decisis compelled adoption of CE Casecnan in the circumstances of this case.
Ruling
The Supreme Court held that the CTA En Banc Amended Decision dated October 9, 2018 is reversed and set aside. The Court reinstated the CTA En Banc Decision dated February 14, 2018 (which affirmed the CTA Second Division Decision dated February 9, 2016) holding that the Court of Tax Appeals had no jurisdiction over the petition for certiorari filed by respondents. Accordingly, respondents' petition for certiorari before the CTA is dismissed for lack of jurisdiction.
Ratio Decidendi
On Whether the CTA has jurisdiction to entertain the petition for certiorari: The Court explained that jurisdiction depends on the nature of the action pleaded and the character of relief sought. Citing the statutory grant of jurisdiction under R.A. 1125 as amended by R.A. 9282 (Section 7) and Rule 4, Section 3(a)(3) of the 2005 Revised Rules of the Court of Tax Appeals, the Court held that CTA appellate jurisdiction over RTC rulings in local tax cases becomes operative only when the RTC has actually ruled on a local tax case. The Supreme Court therefore examined the RTC pleadings and reliefs and concluded that petitioner filed a petition for declaratory relief to enforce a prior final and executory judgment and to secure interim relief while the administrative protest was pending, which is civil in nature. The Court emphasized that the administrative protest to the City Treasurer over the 2010-2013 assessment was still pending within the 60-day decisional period under Section 195 of the Local Government Code at the time petitioner filed its declaratory relief petition; consequently, the RTC orders enjoining collection and ordering issuance of a temporary business permit were interlocutory orders issued in a civil proceeding. Applying this analysis, the Court concluded that the CTA lacks jurisdiction to entertain respondents' petition for certiorari under Rule 65 in these circumstances. On Whether the petition before the RTC was a local tax case under Section 7(a)(3) / Rule 4 Sec. 3(a)(3): The Court reasoned that a "local tax case" refers to a dispute in which the RTC has exercised original or appellate jurisdiction to decide issues that are essentially tax questions (e.g., protests of assessments, claims for refund, validity of tax ordinances). The Supreme Court found that petitioner’s primary relief was to enforce a final and executory judgment and to obtain injunctive relief to allow it to continue business operations, not to directly contest the administrative assessment under the tax code. The Court also found significant that the administrative protest procedure under Section 195 of the Local Government Code had not run its course at the time the petition for declaratory relief was filed; hence the case had not ripened into a local tax case for purposes of CTA jurisdiction. The Court therefore held that the petition was civil and not a local tax case, and CTA jurisdiction under Section 7(a)(3) did not attach. On the CTA En Banc's reliance on CE Casecnan and whether stare decisis applied: The Supreme Court distinguished CE Casecnan on its facts. In CE Casecnan there had been a final disputed assessment and a demand for collection, and the complaint sought to restrain collection of real property tax, which necessarily involved a challenge to the propriety of the assessment. Here, by contrast, the administrative protest to the City Treasurer remained pending and petitioner relied on a pre-existing final and executory judgment to enforce the correct tax basis; because of these factual differences the Court found CE Casecnan inapplicable. The Court therefore rejected the CTA En Banc's Amended Decision that had extended CE Casecnan to the present circumstances and held that stare decisis did not mandate application of CE Casecnan here. On whether enforcement of a final and executory judgment renders the case civil and outside CTA jurisdiction: The Supreme Court explained that petitioner sought to enforce rights under a prior final and executory judgment and to obtain provisional relief to prevent grave and irreparable injury while administrative remedies were pending; such relief is civil in character. The Court applied prior Supreme Court cases (including Ignacio and City of Manila v. Judge Grecia-Cuerdo) distinguishing cases that are tax in nature from those that are primarily civil or rooted in due process, and concluded that the RTC interlocutory orders at issue were not issued in a local tax case within the meaning of R.A. 9282 and the RRCTA. Therefore, CTA appellate jurisdiction did not attach. On whether the principle of stare decisis compelled adoption of CE Casecnan in the circumstances of this case: The Supreme Court distinguished CE Casecnan on its facts. In CE Casecnan there had been a final disputed assessment and a demand for collection, and the complaint sought to restrain collection of real property tax, which necessarily involved a challenge to the propriety of the assessment. Here, by contrast, the administrative protest to the City Treasurer remained pending and petitioner relied on a pre-existing final and executory judgment to enforce the correct tax basis; because of these factual differences the Court found CE Casecnan inapplicable. The Court therefore rejected the CTA En Banc's Amended Decision that had extended CE Casecnan to the present circumstances and held that stare decisis did not mandate application of CE Casecnan here.
Main Doctrine
The Court of Tax Appeals has no jurisdiction to entertain a petition for certiorari assailing interlocutory orders of the Regional Trial Court unless the RTC has issued a ruling in a local tax case; an action to enforce a final and executory judgment and to seek interim relief to enable continued business operations is civil in nature and not automatically a "local tax case."