G.R. No. 244602 , July 14, 2021
Mactel Corporation, Petitioner, vs. The City Government of Makati, The City Treasurer of Makati City and the Officer-in-Charge of the Office of the City Administrator and Head of Business Permits Office, Respondents.

FACTS

Petitioner Mactel Corporation is engaged in trading, particularly distributing telecommunication products like electronic load and prepaid call cards. On August 1, 2005, the City Treasurer of Makati issued a Notice of Assessment for deficiency taxes from 2001-2004 based on the gross sales/receipts from the face value of the call cards. Petitioner protested, arguing the tax base should be its actual income (the 10% discount from the face value). The protest was denied. Petitioner appealed to the RTC of Makati, Branch 148 (Civil Case No. 05-1040). On November 13, 2007, the RTC ruled in favor of petitioner, directing that the assessment should only cover the actual income derived (the 10% discount). This decision became final and executory as respondents did not appeal. For several years, respondents accepted petitioner’s tax submissions based on discounts.
However, on January 14, 2015, the City Treasurer issued a new Notice of Assessment for deficiencies from 2010-2013, again based on the face value of the prepaid cards. Respondents also refused to renew petitioner’s business permit due to an alleged tax deficiency for 2014. Petitioner protested the assessment. While the protest was pending, on March 4, 2015, petitioner filed a Petition for Declaratory Relief with application for injunction (Civil Case No. 15-177) before the RTC of Makati, Branch 59, seeking to compel respondents to apply the final 2007 RTC decision and to issue a business permit. On April 28, 2015, the RTC Branch 59 issued an Order enjoining respondents from proceeding with the tax assessment and ordering them to issue a temporary business permit. Respondents filed a Petition for Certiorari under Rule 65 before the Court of Tax Appeals (CTA), assailing the RTC’s interlocutory orders. The CTA Second Division dismissed the petition for lack of jurisdiction, ruling the case was not a local tax case but one for enforcement of a final judgment. The CTA En Banc initially affirmed but later reversed this in an Amended Decision, taking jurisdiction. Petitioner elevated the case to the Supreme Court.

ISSUE

Whether the Court of Tax Appeals has jurisdiction over the Petition for Certiorari filed by respondents assailing the interlocutory orders of the Regional Trial Court in a declaratory relief case that seeks to enforce a final and executory judgment on a local tax assessment.

RULING

No. The Supreme Court ruled that the CTA has no jurisdiction over the case. The Petition for Certiorari filed by respondents before the CTA assailed the interlocutory orders of the RTC in a Petition for Declaratory Relief (Civil Case No. 15-177). The nature of the main action before the RTC is determinative of jurisdiction. That main action is not a tax collection case or a case involving the assessment or collection of local taxes. Instead, it is a special civil action for declaratory relief aimed at enforcing the final and executory Decision dated November 13, 2007 from Civil Case No. 05-1040, which ruled that petitioner’s local business tax should be based on its actual income (the 10% discount) and not on the gross receipts from the face value of the cards. The RTC Branch 59’s orders (to desist from assessment and to issue a permit) were issued in the context of this enforcement proceeding. Since the principal relief sought before the RTC is the execution and application of a final judgment, not the review of an assessment or collection of taxes, the case does not fall under the CTA’s exclusive appellate jurisdiction over local tax cases. Therefore, the CTA correctly dismissed the petition for lack of jurisdiction. The Supreme Court reversed the CTA En Banc’s Amended Decision and reinstated the CTA Second Division’s Decision dismissing the certiorari petition.