City of Manila vs. Grecia-Cuerdo

The Court of Tax Appeals has jurisdiction to issue writs of certiorari assailing interlocutory orders issued by the Regional Trial Court in local tax cases falling within its exclusive appellate jurisdiction, as an incident of and in aid of that appellate jurisdiction, even though no statute expressly grants such power; the rule requiring express conferment of certiorari power remains limited to quasi-judicial tribunals.

The City of Manila, through its treasurer, administers the Revised Revenue Code of Manila, which imposes local business taxes on establishments operating in the city. Private respondents are business establishments assessed under that Code. The controversy implicated Section 143(h) of Republic Act No. 7160, which limits local taxation, and the jurisdiction of the Court of Tax Appeals as expanded by Republic Act No. 9282 over local tax cases decided by the Regional Trial Court. Ordinance No. 8011, which amended pertinent portions of the RRCM, was alleged to have been declared illegal and unconstitutional by the Department of Justice.

The City of Manila, through its treasurer Liberty M. Toledo, assessed local business taxes for January to December 2002 against SM Mart, Inc., SM Prime Holdings, Inc., Star Appliances Center, Supervalue, Inc., Ace Hardware Philippines, Inc., Watsons Personal Care Stores Phils., Inc., Jollimart Philippines Corp., Surplus Marketing Corp., and Signature Lines. The assessment covered taxes purportedly due under Sections 14, 15, 16, and 17 of the Revised Revenue Code of Manila, in addition to local business taxes under Section 21. Because payment was a precondition for the issuance of their business permits, the establishments paid the assessment of ₱19,316,458.77 under protest.

On January 24, 2004, the establishments filed a complaint with the RTC of Pasay City, Branch 112, denominated as one for refund or recovery of illegally and/or erroneously collected local business tax, prohibition, with prayer for TRO and writ of preliminary injunction, docketed as Civil Case No. 04-0019-CFM. In their amended complaint filed on February 16, 2004, they alleged that, in relation to Section 21, Sections 14, 15, 16, 17, 18, 19, and 20 of the RRCM violated the limitations and guidelines under Section 143(h) of Republic Act No. 7160 on double taxation. They further averred that Ordinance No. 8011, which amended pertinent portions of the RRCM, had already been declared illegal and unconstitutional by the Department of Justice.

On July 9, 2004, the RTC granted the application for a writ of preliminary injunction. Petitioners filed a motion for reconsideration, but the RTC denied it on October 15, 2004. Petitioners then filed a special civil action for certiorari with the CA assailing both orders. On April 6, 2006, the CA dismissed the petition, holding that it had no jurisdiction because appellate jurisdiction over the tax refund complaint was vested in the CTA under RA 9282, and that a petition for certiorari seeking nullification of an interlocutory order in that case should likewise be filed with the CTA. The CA denied reconsideration on November 29, 2006.

Petitioners then filed the present special civil action for certiorari under Rule 65 with the Supreme Court. While the petition was pending, the RTC rendered a decision on August 13, 2007 in the main case in favor of the plaintiffs, granting a tax refund or credit for taxes paid under Section 21 of the RRCM for 2002 in the total amount of ₱19,316,458.77 and enjoining the defendants from collecting taxes under Section 21 from the plaintiffs. The decision became final and executory, as shown by the Certificate of Finality issued on October 20, 2008, and a Writ of Execution was issued on November 25, 2009. The parties did not inform the Supreme Court of these developments, which the Court discovered from the records.

• Jurisdiction of the CA: Petitioners argued that the CA gravely erred in dismissing the case for lack of jurisdiction.
• Grave Abuse of Discretion in Enjoining Section 21: Petitioners maintained that the RTC gravely abused its discretion in enjoining them, their agents, and/or authorized representatives from implementing Section 21 of the Revised Revenue Code of Manila, as amended, against private respondents.
• Failure to Make Written Claim for Tax Credit or Refund: Petitioners argued that the RTC gravely abused its discretion in issuing the writ of injunction despite private respondents’ failure to make a written claim for tax credit or refund with the City Treasurer of Manila.
• Collecting Agents Under Section 21: Petitioners argued that the RTC gravely abused its discretion considering that under Section 21 of the Manila Revenue Code, as amended, they are mere collecting agents of the City Government.
• Greater Damage and Prejudice: Petitioners argued that the RTC gravely abused its discretion in issuing the writ of injunction because the City of Manila and its constituents would suffer greater damage and prejudice.

• Propriety of Remedy: Whether the special civil action for certiorari under Rule 65 was the proper remedy to assail the CA Resolutions dismissing the petition and denying reconsideration.
• Mootness: Whether the petition should be denied as moot and academic because the RTC decision in the main case had become final and executory.
• Jurisdiction over Certiorari Against Interlocutory Orders in Local Tax Cases: Whether the CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case, such that the CA correctly dismissed the petition for lack of jurisdiction.
• Grave Abuse of Discretion in Enjoining Section 21: Whether the RTC gravely abused its discretion in enjoining petitioners from implementing Section 21 of the RRCM against private respondents.
• Written Claim for Tax Credit or Refund: Whether the RTC gravely abused its discretion in issuing the writ despite private respondents’ failure to make a written claim for tax credit or refund with the City Treasurer.
• Collecting Agents Under Section 21: Whether the RTC gravely abused its discretion considering that under Section 21 of the Manila Revenue Code, as amended, petitioners are mere collecting agents of the City Government.
• Greater Damage and Prejudice: Whether the RTC gravely abused its discretion in issuing the writ because the City of Manila and its constituents would suffer greater damage and prejudice.

• Propriety of Remedy: No. The CA Resolutions were final orders, so the proper remedy was a Rule 45 petition; however, the Court treated the Rule 65 petition as a Rule 45 petition because it was timely, averred errors of judgment, and involved a significant jurisdictional issue.
• Mootness: Yes. The petition was denied as moot and academic because the RTC decision in the main case had become final and executory, leaving no justiciable controversy; the Court nevertheless resolved the jurisdictional issue for future guidance.
• Jurisdiction over Certiorari Against Interlocutory Orders in Local Tax Cases: Yes. The CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case, as an incident of its exclusive appellate jurisdiction under RA 9282 and its inherent power to effectuate that jurisdiction.
• Grave Abuse of Discretion in Enjoining Section 21: Not resolved; moot and academic. The Court did not resolve the remaining issues because the main case had become final and executory.
• Written Claim for Tax Credit or Refund: Not resolved; moot and academic.
• Collecting Agents Under Section 21: Not resolved; moot and academic.
• Greater Damage and Prejudice: Not resolved; moot and academic.

• Propriety of Remedy: The assailed CA Resolutions disposed of the petition completely and were final in nature. Under settled rules, the remedy from a final judgment or order is appeal, not Rule 65 certiorari. Rule 65 is an original or independent action based on grave abuse of discretion and lies only if there is no appeal or other plain, speedy, and adequate remedy; it cannot substitute for a lost appeal. Nonetheless, the Court may treat a petition for certiorari as a petition for review on certiorari if (1) it was filed within the reglementary period for Rule 45, (2) errors of judgment are averred, and (3) there is sufficient reason to relax the rules. All three were present, so the Court treated the petition as one under Rule 45.
• Mootness: The RTC rendered a decision on the merits on August 13, 2007, granting the refund or credit and enjoining collection under Section 21. The decision became final and executory per Certificate of Finality on October 20, 2008, and a Writ of Execution issued on November 25, 2009. The issues raised in the petition concerned only the preliminary injunction incident. Because the main case had been finally resolved, there was no justiciable controversy and resolution of the petition would have no practical use or value. The Court nevertheless applied the exception that courts may decide a moot question capable of repetition yet evading review, and because of the significance of the jurisdictional issue for bench and bar.
• Jurisdiction over Certiorari Against Interlocutory Orders in Local Tax Cases: RA 1125 created the CTA; RA 9282 expanded its jurisdiction. Section 7 of RA 9282 grants the CTA exclusive appellate jurisdiction over decisions, orders, or resolutions of the RTCs in local tax cases originally decided or resolved by them in the exercise of original or appellate jurisdiction. While neither RA 1125 nor RA 9282 expressly grants the CTA power to issue certiorari against interlocutory orders, the prevailing doctrine requiring express conferment of certiorari power applies to quasi-judicial tribunals, not to the CTA as a court. Section 1, Article VIII of the 1987 Constitution vests judicial power in the Supreme Court and lower courts established by law, including the duty to determine grave abuse of discretion. The CTA’s power includes determining whether the RTC gravely abused its discretion in issuing an interlocutory order in cases within the CTA’s exclusive appellate jurisdiction. An appellate court must have authority to issue certiorari in aid of its appellate jurisdiction; the grant of appellate jurisdiction carries with it necessary and incidental powers to effectuate it. J.M. Tuason & Co., Inc. vs. Jaramillo held that if a case may be appealed to a court, that court has jurisdiction to issue certiorari in aid of its appellate jurisdiction; De Jesus vs. Court of Appeals affirmed this. Section 6, Rule 135 provides that when jurisdiction is conferred, all auxiliary writs necessary to carry it into effect may be employed. Allowing the CA to take cognizance would create split jurisdiction between the CA and CTA over the same subject matter, which is anathema to orderly administration of justice. The CTA, as the tribunal with specialized competence over tax matters, should exercise judicial review over local tax cases, including incidents. Its supervisory power to issue certiorari should co-exist with and complement its appellate jurisdiction. RA 9282 states the CTA is of the same level as the CA and possesses all inherent powers of a court of justice. Courts have inherent powers necessary for the efficient exercise of jurisdiction, including power to maintain jurisdiction and render it effective. Thus, the authority of the CTA to take cognizance of certiorari petitions questioning interlocutory orders of the RTC in local tax cases is included in the powers granted by the Constitution and inherent in its appellate jurisdiction. The rule for quasi-judicial tribunals remains.
• Grave Abuse of Discretion in Enjoining Section 21: The Court did not resolve this issue because the petition was moot and academic. The RTC decision on the merits had become final and executory, and the Court limited its resolution to the jurisdictional question for future guidance.
• Written Claim for Tax Credit or Refund: Not resolved for the same reason.
• Collecting Agents Under Section 21: Not resolved for the same reason.
• Greater Damage and Prejudice: Not resolved for the same reason.

• Moot and Academic Principle — Where issues have become moot and academic, there is no justiciable controversy, rendering resolution of the same of no practical use or value. The Court applied this principle because the RTC decision in the main case had become final and executory, with a Certificate of Finality and a Writ of Execution, leaving only the preliminary injunction incident for review.
• Exception to Mootness: Capable of Repetition Yet Evading Review — Courts will decide a question otherwise moot and academic if it is capable of repetition, yet evading review. The Court invoked this exception, along with the significance of the jurisdictional issue for future guidance of both bench and bar, to resolve whether the CTA has jurisdiction over certiorari against interlocutory orders in local tax cases.
• Propriety of Rule 65 and Substitution by Rule 45 — A special civil action for certiorari under Rule 65 is an original or independent action based on grave abuse of discretion amounting to lack or excess of jurisdiction and lies only if there is no appeal or other plain, speedy, and adequate remedy; it cannot substitute for a lost appeal. However, the Court may treat a petition for certiorari as a petition for review on certiorari under Rule 45 if (1) the petition was filed within the reglementary period for Rule 45, (2) errors of judgment are averred, and (3) there is sufficient reason to justify relaxation of the rules.
• Express Conferment of Certiorari Power over Quasi-Judicial Tribunals — The authority to issue writs of certiorari involves the exercise of original jurisdiction, which must be expressly conferred by the Constitution or by law and cannot be implied from the mere existence of appellate jurisdiction. This doctrine remains applicable to quasi-judicial tribunals, but not to the CTA as a court exercising appellate jurisdiction over local tax cases.
• Incidental and Inherent Powers in Aid of Appellate Jurisdiction — A court with appellate jurisdiction has the power to issue a writ of certiorari in aid of that appellate jurisdiction. If a case may be appealed to a particular court or judicial tribunal or body, then that court or tribunal has jurisdiction to issue the extraordinary writ of certiorari in aid of its appellate jurisdiction. The grant of appellate jurisdiction carries with it the power necessary to exercise it effectively, to preserve the subject of the action, and to give effect to the final determination of the appeal.
• No Split Jurisdiction — The exercise by two judicial bodies of jurisdiction over basically the same subject matter is a split-jurisdiction situation anathema to the orderly administration of justice. The Court held that allowing the CA to take cognizance of certiorari against interlocutory orders in local tax cases while the CTA hears the appeal in the main case would create such an absurd split.
• CTA’s Expanded Jurisdiction over Local Tax Cases — Under RA 9282, the CTA has exclusive appellate jurisdiction over decisions, orders, or resolutions of the RTCs in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction. The CTA is of the same level as the CA and possesses all the inherent powers of a court of justice. Its authority to issue certiorari against interlocutory orders of the RTC in local tax cases is included in the powers granted by the Constitution and inherent in its appellate jurisdiction.

• "The basic question posed before this Court is whether or not the CTA has jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case. This Court rules in the affirmative." — This passage states the central issue and the Court’s direct holding on the CTA’s jurisdiction over certiorari against interlocutory orders in local tax cases.
• "The prevailing doctrine is that the authority to issue writs of certiorari involves the exercise of original jurisdiction which must be expressly conferred by the Constitution or by law and cannot be implied from the mere existence of appellate jurisdiction." — This passage states the general rule on express conferment of certiorari power, which the Court clarified applies to quasi-judicial tribunals and not to the CTA in this context.
• "On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA includes that of determining whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with jurisdiction to issue writs of certiorari in these cases." — This is the ratio decidendi: the CTA’s certiorari power is derived from the Constitution and is necessary to effectuate its exclusive appellate jurisdiction over local tax cases.
• "If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA, this Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the same subject matter – precisely the split-jurisdiction situation which is anathema to the orderly administration of justice." — This passage explains the policy reason against split jurisdiction and supports the holding that the CTA, not the CA, should resolve incidents of local tax cases.

• J.M. Tuason & Co., Inc. vs. Jaramillo, et al., 118 Phil. 1022 (1963) — Held that if a case may be appealed to a particular court or judicial tribunal or body, then that court or tribunal has jurisdiction to issue the extraordinary writ of certiorari in aid of its appellate jurisdiction; relied upon by the Court to support the CTA’s certiorari power.
• De Jesus vs. Court of Appeals, G.R. No. 101630, August 24, 1992, 212 SCRA 823 — Affirmed that a court may issue a writ of certiorari in aid of its appellate jurisdiction if it has jurisdiction to review, by appeal or writ of error, the final orders or decisions of the lower court.
• Galang, Jr. vs. Geronimo, G.R. No. 192793, February 22, 2011, 643 SCRA 631 — Reiterated the principle that the court with appellate jurisdiction may issue certiorari in aid of that jurisdiction.
• Bulilis vs. Nuez, G.R. No. 195953, August 9, 2011, 655 SCRA 241 — Reiterated the same principle on certiorari in aid of appellate jurisdiction.
• Department of Agrarian Reform Adjudication Board vs. Lubrica, 497 Phil. 313 (2005) — Cited for the rule that the authority to issue writs of certiorari must be expressly conferred by the Constitution or by law and cannot be implied from the mere existence of appellate jurisdiction; the Court clarified this applies to quasi-judicial tribunals.
• Veloria vs. COMELEC, G.R. No. 94771, July 29, 1992, 211 SCRA 907 — Cited for the same express-conferment rule regarding certiorari power over quasi-judicial bodies.
• Garcia vs. Sandiganbayan, G.R. No. 114135, October 7, 1994, 237 SCRA 552 — Cited among cases on express conferment; the Court noted that Republic Act No. 8249 now expressly grants the Sandiganbayan original jurisdiction over certiorari and other ancillary writs in aid of its appellate jurisdiction.
• Garcia vs. De Jesus, G.R. Nos. 88158 and 97108-09, March 4, 1992, 206 SCRA 779 — Cited for the rule against implied certiorari jurisdiction over quasi-judicial tribunals.
• Pimentel vs. COMELEC, 189 Phil. 581 (1980) — Cited for the rule that the authority to issue writs of certiorari must be expressly conferred and cannot be implied from mere appellate jurisdiction.
• Breslin vs. Luzon Stevedoring Company, 84 Phil. 618 (1949) — Held that a grant of appellate jurisdiction implies the power necessary to exercise it effectively, including authority to control auxiliary and incidental matters.
• Santiago vs. Vasquez, G.R. Nos. 99289-90, January 27, 1993, 217 SCRA 633 — Cited on the inherent powers of courts necessary for the ordinary and efficient exercise of jurisdiction.
• Southern Cross Cement Corporation vs. Philippine Cement Manufacturers Corp., 478 Phil. 85 (2004) — Cited for the principle that split jurisdiction is anathema to the orderly administration of justice.
• Garcia vs. COMELEC, 328 Phil. 288 (1996) — Cited for the rule that where issues have become moot and academic, there is no justiciable controversy.
• Caneland Sugar Corporation vs. Alon, G.R. No. 142896, September 12, 2007, 533 SCRA 28 — Cited for the exception that courts will decide a moot question if it is capable of repetition yet evading review.
• Republic of the Philippines vs. Bayao, G.R. No. 179492, June 5, 2013 — Cited for the rule that where an assailed judgment or order is final, the remedy is appeal.
• Mendez vs. Court of Appeals, G.R. No. 174937, June 13, 2012, 672 SCRA 200 — Cited for the rule that a special civil action for certiorari under Rule 65 cannot substitute for a lost appeal.
• Tagle vs. Equitable PCI Bank, G.R. No. 172299, April 22, 2008, 552 SCRA 424 — Cited for the circumstances under which a petition for certiorari may be treated as a petition for review on certiorari.

• Section 143(h), Republic Act No. 7160 (Local Government Code) — Invoked by private respondents as the limitation and guideline on local taxation, particularly on double taxation; the complaint alleged that Sections 14 to 20 of the RRCM, in relation to Section 21, violated this provision. The Court did not resolve this issue because the petition was moot and academic.
• Sections 14, 15, 16, 17, 18, 19, 20, and 21, Revised Revenue Code of Manila — The local business tax provisions under which the City of Manila assessed private respondents; Section 21 was the subject of the injunction and the refund or credit granted by the RTC, while the other sections were alleged to violate the Local Government Code.
• Republic Act No. 1125 — Created the Court of Tax Appeals and originally conferred on it jurisdiction over decisions of the Collector of Internal Revenue, Commissioner of Customs, and provincial or city boards of assessment appeals.
• Republic Act No. 9282 — Amended RA 1125 by expanding the jurisdiction of the CTA, enlarging its membership, and elevating its rank to the level of a collegiate court with special jurisdiction. Section 7 grants the CTA exclusive appellate jurisdiction over decisions, orders, or resolutions of the RTCs in local tax cases originally decided or resolved by them. Section 1 states that the CTA shall be of the same level as the CA and shall possess all the inherent powers of a court of justice.
• Section 1, Article VIII, 1987 Constitution — Vests judicial power in one Supreme Court and in such lower courts as may be established by law; judicial power includes the duty to settle actual controversies and to determine whether there has been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. The Court relied on this to interpret the CTA’s power to issue certiorari in aid of its appellate jurisdiction.
• Section 5(1), Article VIII, 1987 Constitution — Grants the Supreme Court original jurisdiction to issue writs of certiorari, prohibition, and mandamus.
• Section 9(1), Batas Pambansa Blg. 129 — Grants the Court of Appeals original jurisdiction to issue, among others, a writ of certiorari, whether or not in aid of its appellate jurisdiction.
• Section 21, Batas Pambansa Blg. 129 — Provides the Regional Trial Courts with the power to issue a writ of certiorari in the exercise of their original jurisdiction.
• Section 6, Rule 135, Rules of Court — Provides that when by law jurisdiction is conferred on a court or judicial officer, all auxiliary writs, processes, and other means necessary to carry it into effect may be employed by such court or officer.
• Rule 65, Rules of Court — Governs the special civil action for certiorari; the Court held that it was the wrong remedy for assailing the final CA Resolutions, but treated the petition as one for review on certiorari under Rule 45.
• Rule 45, Rules of Court — Governs petitions for review on certiorari; the proper remedy from final judgments or orders, and the Court treated the instant petition as one under this Rule.
• Republic Act No. 8249 — Provides that the Sandiganbayan has exclusive original jurisdiction over petitions for the issuance of the writs of mandamus, prohibition, certiorari, habeas corpus, injunctions, and other ancillary writs and processes in aid of its appellate jurisdiction.

Maria Lourdes P. A. Sereno (Chief Justice), Antonio T. Carpio, Presbitero J. Velasco, Jr., Teresita J. Leonardo-De Castro, Arturo D. Brion, Lucas P. Bersamin, Roberto A. Abad, Martin S. Villarama, Jr., Jose Portugal Perez, Jose Catral Mendoza, Bienvenido L. Reyes, Estela M. Perlas-Bernabe, and Marvic Mario Victor F. Leonen. Mariano C. Del Castillo took no part. No separate concurring opinions are summarized in the text.