City of Manila v. De Lima

SECOND DIVISION [CA-G.R. SP NO. 139281. July 9, 2015.] CITY OF MANILA, represented by Mayor JOSEPH EJERCITO ESTRADA , petitioner-appellant , vs. HONORABLE LEILA M. DE LIMA, in her capacity as Secretary of Justice, MANDURRIAO STAR, INC.,METRO MANILA SHOPPING MECCA CORP.,SM MART, INC.,SUPERVALUE, INC.,and SUPER SHOPPING MARKET, INC. , * respondents-appellees . DECISION SALAZAR-FERNANDO , J p : Before this Court is a Certiorari on Appeal assailing the Decision 1 dated July 25, 2014 and Order 2 dated October 30, 2014 of the Regional Trial Court (RTC),National Capital Judicial Region, Branch 7, Manila in Civil Case No. 14-131817, entitled "CITY OF MANILA, represented by Mayor JOSEPH EJERCITO ESTRADA, Petitioner ,versus HONORABLE LEILA M. DE LIMA, in her capacity as Secretary of Justice, MANDURRIAO STAR, INC.,METRO MANILA SHOPPING MECCA CORP.,SM MART, INC.,SUPERVALUE, INC.,and SUPERVALUE ( sic ) SHOPPING MARKET, INC., Respondents .",the dispositive portions of which read: Decision dated July 25, 2014 "WHEREFORE, premises considered, the Petition for Review Ad Cautelam is hereby DISMISSED for lack of jurisdiction. SO ORDERED." 3 Order dated October 30, 2014 " WHEREFORE ,the Motion for Reconsideration filed by the petitioner is DENIED for lack of merit. SO ORDERED ." 4 The facts are: On November 26, 2013, the Sangguniang Panlungsod of the City of Manila passed Ordinance No. 8331, Series of 2013 entitled "An Ordinance Enacting the 2013 Omnibus Revenue Code of the City of Manila." Mayor Joseph Ejercito Estrada approved the said Ordinance on December 3, 2013, and was subsequently published in the Manila Times and Manila Standard on December 6, 7, and 8, 2013. 5 On January 6, 2014, private respondents-appellees Mandurriao Star, Inc.,Metro Manila Shopping Mecca Corp.,SM Mart, Inc.,Supervalue, Inc.,and Super Shopping Market, Inc. (private respondents-appellees for brevity),operators of retail businesses in the City of Manila, filed an Appeal 6 before public respondent-appellee Secretary of Justice pursuant to Section 187 of the Local Government Code questioning the constitutionality and legality of the said Ordinance. According to private respondents-appellees, Section 104 of Ordinance No. 8331 is unconstitutional and illegal, being violative of Sections 191, 130, and 186 of the Local Government Code as well as Section 5, Article X of the Constitution. These new tax rates are excessive and way beyond the maximum limits prescribed under the Local Government Code. CAIHTE Private respondents-appellees contended that petitioner-appellant City of Manila increased local business tax rates from 0.20% under the old Ordinance, to 3% and 1% under Ordinance No. 8331. The new rates exceeded 7 the 10% ceiling on increase, as mandated by Section 191 of the Local Government Code. Private respondents-appellees explained that Section 104 increases local business taxes by as much as 314.69%, which is clearly inequitable, unjust, excessive, oppressive, confiscatory, and in restraint of trade. On February 3, 2014, the Office of the Secretary of Justice issued on Order 8 requiring the officials of petitioner-appellant City of Manila to file their Comment. Accordingly, petitioner-appellant City of Manila filed its Comment 9 averring that: the local business tax rates under Section 104 of Ordinance No. 8331 are well within the limitations 10 set forth under the Local Government Code; the imposition of 3% and 1% tax rates on retailers is not a new tax nor an increase in rates, but merely a proper observance of Section 143 (d) in conjunction with Section 151 of the Local Government Code; and, Ordinance No. 8331 was enacted through the regular process of legislation and the required public hearings were conducted, hence, it carries with it the presumption of validity. On April 7, 2014, public respondent-appellee Secretary of Justice Leila M. De Lima issued a Resolution, 11 the decretal portion of which reads: " WHEREFORE ,premises considered, Section 104 of Ordinance No. 8331, series of 2013, of the City of Manila is HEREBY DECLARED VOID for being contrary to Section 191 of the Local Government Code. SO ORDERED." 12 Public respondent-appellee Secretary of Justice ruled that in the previous years, petitioner-appellant City of Manila itself elected to impose rates which are below what the Local Government Code allows. As such, having elected to impose graduated tax rates on retailers ranging from 75% of 1%, to 20% of 1% which petitioner-appellant City of Manila continuously enforced through the years, it is bound by such rates and any adjustment therein must comply with the limitations set forth by law. In essence, public respondent-appellee Secretary of Justice held that the new rates of 3% and 1% imposed under Section 104 of Ordinance No. 8331, while finding basis in Section 143 (d) in relation to Section 151 of the Local Government Code, nonetheless exceeded the ten percent (10%) limitation on increase provided under Section 191 of the same Code. On May 15, 2014, petitioner-appellant City of Manila filed the instant Petition for Review Ad Cautelam 13 before the RTC, Branch 7, Manila, seeking to annul the April 7, 2014 Resolution of public respondent-appellee Secretary of Justice and to declare as valid and enforceable Section 104 of Ordinance No. 8331. Petitioner-appellant City of Manila asserted that public respondent-appellee Secretary of Justice had no more authority and jurisdiction to decide the case, as the sixty (60)-day period under Section 187 of the Local Government Code for the Secretary to render a decision had already lapsed by the time she issued the April 7, 2014 Resolution. Private respondents-appellees filed their Comment 14 stating that petitioner-appellant City of Manila should have waited for public respondent-appellee Secretary of Justice to resolve its Motion for Reconsideration before filing the petition. Further, in the event of denial, the proper remedy was to appeal the same before the Office of the President, and not the RTC. Petitioner-appellant City of Manila thereafter filed its Reply. 15 On July 25, 2014, the lower court rendered the assailed Decision 16 dismissing the Petition for Review Ad Cautelam for lack of jurisdiction. The lower court ruled that the filing of the petition was premature and that petitioner-appellant City of Manila violated the principle of exhaustion of administrative remedies. As argued by private respondents-appellees, the proper remedy was to file a Motion for Reconsideration before public respondent-appellee Secretary of Justice, and then elevate the same to the Office of the President pursuant to Administrative Order No. 18, Series of 1987. Petitioner-appellant City of Manila filed a Motion for Reconsideration 17 which was denied by the lower court in its Order 18 dated October 30, 2014. Hence, this appeal raising the following issues: 19 "1. WHETHER OR NOT THE FILING OF THE INSTANT PETITION WAS PREMATURE. DETACa 2. WHETHER OR NOT THERE IS A VIOLATION OF THE PRINCIPLE OF EXHAUSTION OF ADMINISTRATIVE REMEDIES. 3. WHETHER OR NOT THE REGIONAL TRIAL COURT, BRANCH 7, MANILA, HAS JURISDICTION OVER THE INSTANT PETITION FOR CERTIORARI . 4. WHETHER OR NOT THE SECRETARY OF JUSTICE HAS JURISDICTION TO ISSUE THE ASSAILED RESOLUTION DATED APRIL 7, 2014, THIRTY (30) DAYS BEYOND THE SIXTY (60) DAY REGLEMENTARY PERIOD PRESCRIBED BY SECTION 187 OF THE LOCAL GOVERNMENT CODE WITHIN WHICH TO DECIDE AN APPEAL. 5. WHETHER OR NOT SECTION 104 OF ORDINANCE NO. 8331 OF THE CITY OF MANILA IS VALID AND ENFORCEABLE." The appeal is partly meritorious. In a nutshell, petitioner-appellant City of Manila maintains that: the citations and statutes relied upon by the lower court had long been superseded by the Local Government Code; there was no appeal available to the Office of the President, nor any plain, speedy, and adequate remedy in the ordinary course of law; an appeal to the Office of the President is not a remedy under Section 187 of the Local Government Code; public respondent-appellee Secretary of Justice had no jurisdiction to issue the April 7, 2014 Resolution after the sixty (60)-day period to decide the appeal had already expired; consequently, the April 7, 2014 Resolution is null and void ab initio as it was issued with grave abuse of discretion amounting to lack of jurisdiction; the local business tax rates in Section 104 of Ordinance No. 8331 are allowed under Sections 143 (d) and 151 of the Local Government Code; and, petitioner-appellant City of Manila complied with all the legal requirements in enacting its 2013 Omnibus Revenue Code. After a judicious review of the records of the case, as well as the pertinent laws and jurisprudence, this Court finds that the lower court committed reversible error in dismissing the petition for review ad cautelam for lack of jurisdiction. Nowhere in Section 187 of the Local Government does it mandate the filing of a Motion for Reconsideration before public respondent-appellee Secretary of Justice, nor the elevation of the case to the Office of the President. At the outset, the preliminary issue that should be resolved is whether it is the Court of Tax Appeals and not this Court which has jurisdiction to entertain the instant appeal involving a tax ordinance, as private respondents-appellees raise 20 in their Memorandum. Private respondents-appellees asseverate that under Section 7 (a) (3) of Republic Act No. 1125, as amended by Republic Act No. 9282 and Republic Act No. 9503, it is the Court of Tax Appeals which exercises exclusive appellate jurisdiction over decisions, orders, or resolutions of the RTC in local tax cases, whether decided in the exercise of its original or appellate jurisdiction. Private respondents-appellees' contention is unavailing. The subject matter of this appeal is not merely a local tax case per se but relates to the validity or constitutionality of an Ordinance, the resolution of which is outside the scope of the jurisdiction of the Court of Tax Appeals. Significantly, in Smart Communications, Inc. v. Municipality of Malvar, Batangas , 21 the CTA En Banc ruled that the issue on the validity or constitutionality of an Ordinance is not within its jurisdiction, but with the regular courts. The CTA elucidated that while Section 7 of Republic Act No. 9282 confers it appellate jurisdiction over the RTC in local tax cases, the same does not confer the CTA with jurisdiction in cases where the constitutionality of a law or rule is challenged, citing British American Tobacco v. Jose Isidro Camacho . 22 The CTA held that it is a court of special jurisdiction and as such, can take cognizance only of such matters which are clearly within its jurisdiction. aDSIHc The said ruling of the CTA En Banc in Smart Communications dismissing the case for lack of jurisdiction was later affirmed by the Supreme Court. 23 There are also cases where this Court took cognizance of appeals involving the validity of local tax ordinances, such as City of Olongapo v. Stallholders of the East Bajac-Bajac Public Market , 24 Cagayan Electric Power and Light Co., Inc. v. City of Cagayan De Oro , 25 and Antonio Reyes v. Court of Appeals , 26 among others. Going to another point, petitioner-appellant City of Manila argues that public respondent-appellee Secretary of Justice was divested of jurisdiction to decide the case when the sixty (60)-day period provided under Section 187 of the Local Government Code for her to resolve the appeal expired. This Court is not persuaded. Section 187 of the Local Government Code provides: "SEC. 187. Procedure for Approval and Effectivity of Tax Ordinances and Revenue Measures; Mandatory Public Hearings . The procedure for approval of local tax ordinances and revenue measures shall be in accordance with the provisions of this Code: Provided, That public hearings shall be conducted for the purpose prior to the enactment thereof: Provided further, That any question on the constitutionality or legality of tax ordinances or revenue measures may be raised on appeal within thirty (30) days from the effectivity thereof to the Secretary of Justice who shall render a decision within sixty (60) days from the date of receipt of the appeal: Provided, however, That such appeal shall not have the effect of suspending the effectivity of the ordinance and the accrual and payment of the tax, fee, or charge levied therein: Provided, finally, That within thirty (30) days after receipt of the decision or the lapse of the sixty-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction ." (Emphasis supplied) It is a settled doctrine that a statute requiring rendition of judgment within a specified time is generally construed to be merely directory, so that non-compliance therewith does not invalidate the judgment on the theory that if the statute had intended such result, it would have clearly indicated it . 27 In this case, there is nothing in Section 187 that supports petitioner-appellant City of Manila's contention that public respondent-appellee Secretary of Justice lost jurisdiction over the case sixty (60) days after her receipt of the appeal. Well-entrenched is the principle that once jurisdiction is acquired and vested in a court, said court maintains its jurisdiction until judgment is had. The same rationale should apply to public respondent-appellee Secretary of Justice. In Bernardino Marcelino v. Fernando Cruz, Jr. , 28 the Supreme Court held that if non-compliance by the courts with the constitutional time limit to render a decision would result in loss of jurisdiction, this would make the courts, through which conflicts are resolved, the very instruments to foster unresolved cases by merely having failed to render a decision within the allotted term. Analogously, the Supreme Court's pronouncement in Jesus Estanislao v. Amado Costales 29 pertinently holds, thus: "...Public respondent Zamboanga City concurs in the position of the respondent judge that since the Minister of Finance failed to act or otherwise suspend the effectivity of the tax ordinance within 120 days from receipt of a copy thereof, said Ordinance is valid and remains in force. There is no authority under Section 44 of the Local Tax Code for this conclusion. All that is provided therein is that if the Secretary of Finance "takes no action as authorized in this section, the tax ordinance shall remain in force. Even if the Secretary of Finance failed to review or act on the Ordinance within the prescribed period of 120 days it does not follow as a legal consequence thereof that an otherwise invalid ordinance is thereby validated. ETHIDa Much less can it be interpreted to mean that the Secretary of Finance can no longer act by suspending and/or revoking an invalid ordinance even after the lapse of the 120-day period .All that the law says is that after said period the tax ordinance shall remain in force. The prescribed period for review is only directory and the Secretary of Finance may still review the ordinance and act accordingly even after the lapse of the said period provided he acts within a reasonable time . Consequently even after the prescribed period has lapsed , should the Secretary of Finance, upon review, find that the tax or fee levied or imposed is unjust, excessive, oppressive, confiscatory, or not among those that the particular local government may impose in the exercise of its power in accordance with this Code; or when the tax ordinance is, in whole or in part, contrary to the declared national economic policy; or when the ordinance is discriminatory in nature on the conduct of business or calling or in restraint of trade, the Secretary of Finance may certainly suspend the effectivity of such ordinance and revoke the same, without prejudice to the right to appeal to the courts within 30 days after receipt of the notice of suspension. The same rule should apply to the provincial and city treasurers , as the case may be, under Section 44 of the Local Tax Code." (Emphasis supplied) This Court finds that public respondent-appellee Secretary of Justice acted within a reasonable time to resolve petitioner-appellant City of Manila's appeal. On February 3, 2014, public respondent-appellee Secretary of Justice acted on the appeal and issued an Order 30 directing petitioner-appellant City of Manila to file its Comment, after which the appeal was deemed submitted for decision. There was no intention to delay the proceedings, and the business tax provisions being questioned is not a simple subject matter, with both parties citing provisions of the Local Government Code as their legal bases. To have a thorough review of the case, public respondent-appellee Secretary of Justice was justified in waiting for petitioner-appellant City of Manila's Comment before proceeding to resolve the appeal. Ultimately, justice should not be sacrificed for expediency. In fine, public respondent-appellee Secretary of Justice cannot be said to be divested of her jurisdiction simply because she rendered her decision beyond the sixty (60)-day period, especially in this case where she nonetheless was able to arrive at a Decision more than a month before the petition for review ad cautelam was filed by petitioner-appellant City of Manila before the RTC. Parenthetically, this Court notes that petitioner-appellant City of Manila cannot properly invoke the lapse of the sixty (60)-day period under Section 187 of the Local Government Code and at the same time pursue its petition for review ad cautelam before the RTC, because the application of Section 187 would mean that the said petition was belatedly filed. Section 187 of the Local Government Code provides that in case of inaction by public respondent-appellee Secretary of Justice, "appropriate proceedings" should be filed within thirty (30) days from the lapse of the sixty (60)-day period. According to petitioner-appellant City of Manila, it filed its appeal with public respondent-appellee Secretary of Justice on January 6, 2014. 31 Under Section 187, the sixty (60)-day period given to public respondent-appellee Secretary of Justice to act on the case expired on March 7, 2014. Thus, from the said lapse, petitioner-appellant City of Manila had thirty (30) days, or until April 6, 2014 to file the appropriate proceedings with a court of competent jurisdiction. The instant petition for review ad cautelam ,however, was filed by petitioner-appellant City of Manila before the RTC only on May 15, 2014. 32 This means that if petitioner-appellant City of Manila anchors its petition before the RTC on the basis of the lapse of the period given to public respondent-appellee Secretary of Justice, the petition can be said to have already prescribed as it was filed beyond the required thirty (30)-day period, or beyond April 6, 2014. From a reading of Section 187 of the Local Government Code, this Court opines that petitioner-appellant City of Manila cannot appeal from the assailed April 7, 2014 Resolution of public respondent-appellee Secretary of Justice and at the same time argue that the sixty (60)-day period to render the same already lapsed, as these remedies are inconsistent with each other. Petitioner-appellant City of Manila can either appeal from the April 7, 2014 Resolution or from the lapse of the sixty (60)-day period, but it cannot do both. cSEDTC Simply put, in anchoring its appeal on the April 7, 2014 Resolution and in reckoning the applicable period to appeal from its receipt of the same, not from the lapse, petitioner-appellant City of Manila should be deemed precluded from raising any issue pertaining to the lapse of the period. As the sixty (60)-day period allegedly expired, petitioner-appellant City of Manila could have filed the petition before the RTC as early as March 10, 2014, as March 8 and 9 fell on a weekend. Yet, petitioner-appellant City of Manila filed its petition before the RTC only on May 15, or a month after the disputed April 7, 2014 Resolution was rendered by public respondent-appellee Secretary of Justice. Under the circumstances, this Court is inclined to believe that petitioner-appellant City of Manila appears to have raised the expiration of the sixty (60)-day period as a mere afterthought, because it in effect waited for the Decision of public respondent-appellee Secretary of Justice and allowed the thirty (30)-day period to file the appropriate proceedings to expire, before deciding to file the petition before the RTC when public respondent-appellee Secretary of Justice ruled against it. To reiterate, as petitioner-appellant City of Manila appealed from the rendition of the April 7, 2014 Resolution and not from the lapse that transpired on March 7, 2014 it is deemed to have countenanced any delay on the part of public respondent-appellee Secretary of Justice. In any case, as earlier discussed, public respondent-appellee Secretary of Justice was not divested of jurisdiction to decide the case beyond the sixty (60)-day period provided under Section 187 of the Local Government Code. Therefore, the reckoning of the period to appeal from petitioner-appellant City of Manila's receipt of the April 7, 2014 Resolution was proper. Moving on, petitioner-appellant City of Manila is correct in its position that the lower court erred in dismissing the petition for review ad cautelam for lack of jurisdiction, as a Motion for Reconsideration was not required to be filed with public respondent-appellee Secretary of Justice, and that the doctrine of exhaustion of administrative remedies finds no application in this case. A plain reading of Section 187 of the Local Government Code states that "within thirty (30) days after receipt of the decision or the lapse of the sixty (60)-day period without the Secretary of Justice acting upon the appeal, the aggrieved party may file appropriate proceedings with a court of competent jurisdiction." Clearly, nowhere in Section 187 is it stated that a Motion for Reconsideration should first be filed with public respondent-appellee Secretary of Justice. The provision even explicitly requires that petitioner-appellant City of Manila should file the case within thirty (30) days from receipt of the April 7, 2014 Resolution, which is what it did. Incidentally, it may be well to note that the action filed by petitioner-appellant City of Manila is denominated as a "petition for review ad cautelam ." At any rate, the rule that a motion for reconsideration is a condition sine qua non for the filing of a petition for certiorari is circumscribed by well-defined exceptions, such as: (a) where the order is a patent nullity, as where the court a quo had no jurisdiction; (b) where the questions raised in the certiorari proceeding have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; (c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the action is perishable; (d) where, under the circumstances, a motion for reconsideration would be useless; (e) where petitioner was deprived of due process and there is extreme urgency for relief; (f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; (g) where the proceedings in the lower court are a nullity for lack of due process; (h) where the proceedings were ex parte ,or in which the petitioner had no opportunity to object; and (i) where the issue raised is one purely of law or where public interest is involved. 33 Given these parameters, the instant case could fall under (b),(c),and even (i) as the petition involves a matter of public interest. Besides, it is worth mentioning that petitioner-appellant City of Manila was able to file a Motion for Reconsideration which was denied by public respondent-appellee Secretary of Justice in her Resolution 34 dated May 28, 2014. On the alleged prematurity of the petition, this is inconsequential and not of much significance. In view of the encompassing importance of the petition's subject matter which is the local business tax rates in the entire City of Manila where there are countless retailers, the case cannot be allowed to be dismissed on such flimsy and tenuous ground. SDAaTC As for the non-applicability of the doctrine of exhaustion of administrative remedies, Section 187 of the Local Government Code once again clearly states that the remedy from the decision of public respondent-appellee Secretary of Justice lies with "a court of competent jurisdiction", which obviously is not the Office of the President. The provision is so plain and clear that this Court cannot fathom how an appeal to the Office of the President can be required if the law already explicitly provides for the available remedy. Even a review of the jurisprudential rulings on local tax ordinances, such as those earlier cited, shows that these cases never reached the Office of the President. In view of all the foregoing, this Court finds that the lower court erred in dismissing the case for lack of jurisdiction. Lastly, with respect to the question on the validity and enforceability of Section 104 of Ordinance No. 8331, such issues should be first threshed out in the lower court before any appeal on these matters can be had. As the lower court did not pass upon the merits of the case, it is more in accord with the interest of substantial justice that the case be remanded for the resolution of these contentious issues. 35 There is no basis for this Court to review the assailed Decision on these points considering that the petition for review ad cautelam was dismissed by the lower court purely on procedural grounds. WHEREFORE ,premises considered, the assailed Decision dated July 25, 2014 and Order dated October 30, 2014 of the RTC, Branch 7, Manila in Civil Case No. 14-131817 are hereby SET ASIDE .Let the case be REMANDED to the RTC, Branch 7, Manila to conduct further proceedings with dispatch. SO ORDERED . (SGD.) REMEDIOS A. SALAZAR-FERNANDO Associate Justice Chairperson Priscilla J. Baltazar-Padilla and Socorro B. Inting, JJ., concur. Footnotes * Mistakenly referred to as "Supervalue Shopping Market, Inc." in the assailed Decision and in petitioner-appellant's Memorandum. 1. Rollo ,pp. 3-9; Records ,pp. 190-196, penned by Judge Felixberto T. Olalia, Jr. 2. Records ,pp. 246-247. 3. Rollo ,p. 9. 4. Records ,p. 247. 5. Records ,p. 30. 6. Records ,pp. 27-44. 7. See Records ,pp. 34-35. 8. Records ,pp. 45-46. 9. Records ,pp. 47-51. 10. Records ,p. 48. 11. Records ,pp. 13-22. 12. Rollo ,p. 21. 13. Records ,pp. 1-12. 14. Records ,pp. 104-179. 15. Records ,pp. 180-189. 16. Records ,pp. 190-196. 17. Records ,pp. 197-202. 18. Records ,pp. 246-247. 19. Rollo ,p. 22. 20. Rollo ,p. 64. 21. C.T.A. EB No. 767 (C.T.A. AC No. 58),June 26, 2012. 22. G.R. No. 163583, August 20, 2008. 23. Smart Communications, Inc. v. Municipality of Malvar, Batangas , G.R. No. 204429, February 18, 2014. 24. G.R. No. 135337, October 19, 2000. 25. G.R. No. 191761, November 14, 2012. 26. G.R. No. 118233, December 10, 1999. 27. Imelda Romualdez-Marcos v. Commission on Elections , G.R. No. 119976, September 18, 1995. 28. G.R. No. L-42428, March 18, 1983. 29. G.R. No. 96516, May 8, 1991. 30. Records ,pp. 45-46. 31. Records ,p. 3. 32. Records ,p. 1. 33. Beatriz Siok Ping Tang v. Subic Bay Distribution, Inc. , G.R. No. 162575, December 15, 2010. 34. Records ,pp. 225-231. 35. Records ,pp. 7-8; 118-119.