GR 222886; (October, 2018) (Digest)
G.R. No. 222886. October 17, 2018
HONORABLE LEILA M. DE LIMA, IN HER CAPACITY AS SECRETARY OF JUSTICE, PETITIONER, V. CITY OF MANILA, REPRESENTED BY MAYOR JOSEPH EJERCITO ESTRADA, RESPONDENT.
FACTS
The City of Manila enacted Ordinance No. 8331, its 2013 Omnibus Revenue Code, which included Section 104 imposing a percentage tax on retailers’ gross sales. Several retail business operators appealed to the Secretary of Justice, arguing the tax rates violated the Local Government Code (LGC). Secretary Leila De Lima, in a Resolution, declared Section 104 void for contravening Section 191 of the LGC, which caps rate increases at 10% over the previous ordinance. The City of Manila filed a Motion for Reconsideration but, without awaiting its resolution, filed a Petition for Review Ad Cautelam before the Regional Trial Court (RTC). The RTC treated it as a petition for certiorari but dismissed it for lack of jurisdiction, holding the City should have first exhausted administrative remedies by awaiting the Secretary’s action on the motion. The City elevated the case to the Court of Appeals.
ISSUE
Whether the Court of Appeals erred in reversing the RTC’s dismissal and ordering remand, specifically on the question of whether the RTC correctly dismissed the City’s petition for failure to exhaust administrative remedies.
RULING
The Supreme Court affirmed the Court of Appeals’ decision to remand the case to the RTC. The legal logic centered on the proper interpretation of the exhaustion of administrative remedies doctrine within the context of appeals from the Secretary of Justice’s review of local tax ordinances under the LGC. The Court clarified that while a motion for reconsideration is generally a prerequisite for a judicial appeal, the LGC’s specific procedural framework governs this case. Under Section 187 of the LGC, any question on the constitutionality or legality of a tax ordinance may be raised on appeal within thirty days to the Secretary of Justice, whose decision may thereafter be appealed to a court of competent jurisdiction. The law does not explicitly require the filing of a motion for reconsideration with the Secretary before resorting to the courts.
The Court held that the RTC erred in dismissing the petition based on a perceived failure to exhaust remedies. The City’s filing of a motion for reconsideration with the Secretary did not, under the LGC’s scheme, make the awaiting of its resolution a mandatory step before judicial recourse. The legislative intent is to provide a direct and timely judicial review after the Secretary’s initial decision to ensure the speedy resolution of disputes affecting local fiscal autonomy and taxpayer rights. Therefore, the CA correctly set aside the RTC’s dismissal on a technicality. The substantive issue of the ordinance’s validity, involving the application of Section 191’s cap on tax rate increases, was a matter for the RTC to resolve on remand after conducting proper proceedings. The Supreme Court’s ruling reinforces that procedural rules must yield to the specific statutory intent of the LGC, which aims for an expeditious resolution of challenges to local revenue measures.