G.R. No. 250981. July 20, 2022.
NATIONAL STEEL CORPORATION, REPRESENTED BY ITS DULY APPOINTED LIQUIDATOR, ATTY. DANILO L. CONCEPCION, PETITIONER, VS. CITY OF ILIGAN, AS REPRESENTED BY MAYOR CELSO G. REGENCIA, AND THE CITY TREASURER OF ILIGAN, RESPONDENTS.

FACTS

National Steel Corporation (NSC), under liquidation, entered into a Tax Amnesty Agreement with the City of Iligan on October 13, 2004, to settle its real property tax arrears on its plant assets. The agreement required NSC to pay P177,527,351.99 in eight annual installments. NSC subsequently sold the plant assets to Global Steel, which assumed tax liabilities starting October 15, 2004. When Global Steel defaulted on current tax payments, the City issued delinquency notices and warrants of levy against NSC. NSC then filed a Complaint for Specific Performance with the Regional Trial Court (RTC) of Makati to compel the City to honor the amnesty agreement, arguing it had fully paid its obligations. The RTC ruled in NSC’s favor, a decision ultimately affirmed with finality by the Supreme Court in G.R. No. 216172.
Despite this final judgment, the City of Iligan refused to clear NSC’s tax records and continued its collection efforts. NSC filed a Petition for Prohibition with the Court of Appeals (CA) to enjoin these acts. The CA dismissed the petition on procedural grounds, citing forum shopping and failure to observe the hierarchy of courts. NSC elevated the case to the Supreme Court via a Petition for Review on Certiorari.

ISSUE

Whether the Court of Appeals erred in dismissing NSC’s Petition for Prohibition on the grounds of forum shopping and non-observance of the hierarchy of courts.

RULING

Yes, the Court of Appeals erred. The Supreme Court reversed the CA’s dismissal and granted the Petition for Prohibition. On forum shopping, the Court held there was none. Forum shopping exists when a party seeks substantially the same relief in different courts, grounded on the same cause of action, with the possibility of conflicting rulings. Here, the cause of action in the first case (Specific Performance) was the enforcement of the Tax Amnesty Agreement. The cause of action in the second case (Prohibition) was to enjoin the City’s acts of disregarding and violating the final and executory judgment from the first case. These are distinct causes of action. The first sought to establish a right under a contract; the second sought to stop acts in defiance of a final judicial declaration of that right.
Regarding the hierarchy of courts, the Court ruled that the doctrine admits exceptions, particularly when the case involves a direct enforcement of a fundamental right or when there are special and important reasons. This case presented such compelling reasons. The core issue was the City’s blatant refusal to abide by a final and executory judgment of the Supreme Court itself. This defiance strikes at the very heart of judicial finality and the rule of law. When a judgment becomes final, it becomes immutable and unalterable. The City’s continued collection efforts constituted an unlawful usurpation of judicial authority, as they effectively sought to re-litigate and nullify a settled matter. Allowing such conduct would undermine the integrity of the judiciary. Therefore, a direct recourse to the Supreme Court via a writ of prohibition was warranted to swiftly and decisively halt the City’s unlawful acts and to uphold the authority of its final judgments. The writ of prohibition was issued to permanently enjoin the respondents from taking any action to collect real property taxes from NSC for the period covered by the final RTC decision.