CLARK INVESTORS AND LOCATORS ASSOCIATION, INC. V.

SECRETARY OF
FINANCE, GR NO. 200670, JULY 6, 2015
Discussed Principles which are Relevant:
a. Hierarchy Of Courts Principles
b. Essential Requisites For Petition For Certiorari

FACTS CILA filed a petition for certiorari with a prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction to annul and set aside Revenue
Regulation (RR) No. 2-2012. The regulation imposed value-added tax (VAT) and excise
tax on importation of petroleum and petroleum products from overseas into the Freeport
or Economic Zones, which is said to be contrary to Republic Act (RA) No. 7227 Bases
Conversion and Development Act of 1992, as amended.

RA No. 7227 was enacted to convert the Subic military reservation into the Subic
Special Economic Zone. This was further extended to include Clark Freeport Zone via the
issuance of RA No. 9400. Under these laws, the special economic zone and the Freeport
zone can hand out tax incentives such as a preferential gross income tax rate of 5% in
lieu of all national and local taxes and exemption from the payment of all taxes and
duties on the importation of raw materials, capital, and equipment into the zone.

In 2012, the Department of Finance, (DoF) upon the recommendation of the Bureau
of Internal Revenue (BIR), issued RR No. 2-2012 which imposed VAT and excise tax on
petroleum products from overseas into the Freeport or Economic Zone. The regulation
further stated that the importer may claim a tax credit or refund with the Bureau of
Customs subject to favorable endorsement of the BIR after presentation of proof that
these are properly classified as 0% VAT.

With this issuance, CILA felt that the exemption from duties and taxes was ignored
and in turn it filed a petition for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure as amended, alleging that the respondents acted with grave abuse of
discretion in issuing RR 2-2012 since in effect it revoked the tax exemption granted by
RA 7227 and RA 9400. In response to such petition, the Office of the Solicitor General
(OSG) denied outright the special civil action for certiorari since the respondent was
exercising its quasi-legislative (i.e., rule making) powers and not exercising judicial or
quasi-judicial powers. This was differentiated by the OSG since a certiorari can only be
filed against a public officer exercising judicial or quasi-judicial powers.

ISSUE Can a special civil action for certiorari cannot be used to assail RR 2-2012 which
was issued by the respondents in the exercise of their quasi-legislative or rule-making
powers
HELD NO. THE COURT DENIES THE PETITION FOR IMPROPER REMEDY.
1. Respondents did not act in any judicial and quasi-judicial capacity.
A petition for certiorari under Rule 65 is a special civil action that maybe
invoked only against a tribunal, board, or officer exercising judicial or quasi-
judicial functions.
Respondents do not fall within the ambit of a tribunal, board, or officer
exercising judicial or quasi-judicial functions. They issued RR 2-2012 based on
Section 244 of the NIRC which states that “the Secretary of Finance, upon
recommendation of the Commisssioner, shall promulgate all needful rules and
regulations for the effective enforcement of the provisions of this Code”. Such is
 in the exercise of their quasi-legislative or rule-making powers, and not judicial or
quasi-judicial functions Verily, respondents did not adjudicate or determine the
rights of the parties.
2. The case seeks the declaration of the unconstitutionality and illegality of
the questioned rule, thus, partaking the nature, of one for declaratory
relie over which the court has only appellate, not original jurisdiction.
The Court does not have original jurisdiction over a petition for declaratory relief
even if only questions of law are involved. This is shared with the Regional Trial
Courts and with the Court of Appeals. This concurrence of jurisdiction is not, however
, to be treated that such would give the petitioner unrestricted freedom of choice of
court forum. The Court values the hierarchy of courts in that it shall not entertain a
direct resort unless the remedy cannot be obtained in the appropriate courts, and
exceptional and compelling circumstances, such as cases of national interest and of
serious implications, justify the availment of the extraordinary remedy of writ of
certiorari.
The case of Heirs of Bertuldo Hinog v Hon. Melicor explained the relevance of the
hierarchy of courts :
The hierarchy is determinative of the venue of appeals, and also serves as
a general determinant of the appropriate forum for petitions for the
extraordinary writs. A becoming regard for that judicial hierarchy most
certainly indicates that petitions for the issuance of extraordinary writs
against first level ("inferior") courts should be filed with the Regional Trial
Court, and those against the latter, with the Court of Appeals. A direct
invocation of the Supreme Court's original jurisdiction to issue these writs
should be allowed only when there are special and important reasons
therefor, clearly and specifically set out in the petition. This is [an]
established policy. It is a policy necessary to prevent inordinate demands
upon the Court's time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further over-
crowding of the Court's docket.
The rationale for this rule is two-fold: (1) it would be an imposition upon the precious
time of this Court; and (2) it would cause an inevitable and resultant delay, intended or
otherwise, in the adjudication of cases, which in some instances had to be remanded or
referred to the lower court as the proper forum under the rules of procedure, or as
better equipped to resolve the issues because this Court is not a trier of facts.

In view of the serious procedural and technical defects of the petition, we see
no need for this Court to resolve the other issues raised by the petitioner.
WHEREFORE, premises considered, the petition is DISMISSED.

Essential Requisites for Petition for Certiorari :