FACTS:

Equitable PCI Bank, Inc. filed a petition for rehabilitation of Steel Corporation of the Philippines (STEELCORP) before the Regional Trial Court (RTC) of Batangas City. The court granted the petition and issued an order staying all claims against STEELCORP. While the rehabilitation proceedings were ongoing, the Financial Rehabilitation and Insolvency Act (FRIA) of 2010 was enacted.

In line with Section 19 of the FRIA, the Municipality of Balayan, Batangas waived the taxes and fees due from STEELCORP from the year 2011 until the rehabilitation plan is approved. STEELCORP also sought to avail of the tax waivers under Section 19 by filing a letter to the Bureau of Customs (BOC). The BOC approved the waiver of taxes and fees due to STEELCORP, but the Department of Finance (DOF) later disapproved the recommendation of the BOC commissioner. STEELCORP appealed the disapproval to the Office of the President (OP), but the Undersecretary of the DOF moved to dismiss the appeal for lack of jurisdiction.

Steel Corporation (STEELCORP) filed a complaint against the respondents before the Regional Trial Court (RTC), seeking to restrain the assessment and collection of taxes and fees due to the national government. The RTC issued a temporary restraining order (TRO) and a status quo order, which were later extended. Meanwhile, the Office of the President (OP) deferred the resolution of the case until the resolution of the civil case.

The RTC subsequently ordered the Manila International Container Port (MICP) District Collector of Customs to comply with the status quo order and release the raw materials of STEELCORP without payment of duties and taxes. The respondents filed a motion to dismiss (MTD) arguing that the RTC had no jurisdiction over the case. The RTC denied the MTD and issued a writ of preliminary injunction. Various motions were subsequently filed, leading to the RTC's resolution denying some motions and granting others. Aggrieved, STEELCORP filed an appeal before the Court of Appeals (CA) challenging the RTC's orders.

The petitioner in this case, STEELCORP, filed a complaint for injunction against the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR) to restrain them from collecting customs duties and taxes on its importations. STEELCORP argued that it should be exempted from such collection because it is a corporation under corporate rehabilitation.

The Office of the Solicitor General (OSG) and the BIR filed separate motions for reconsideration, seeking the dismissal of the complaint. STEELCORP objected to the motions, claiming that they were filed beyond the prescribed period and on days that were declared national holidays. The Regional Trial Court (RTC) gave due course to the motions and eventually lifted the preliminary injunction it previously issued.

STEELCORP appealed the RTC's ruling to the Court of Appeals (CA), raising two main issues: 1) the alleged procedural and jurisdictional infirmities in the notices of hearing of the motions, and 2) the trial court's dismissal of the complaint. The CA dismissed the appeal, stating that STEELCORP had sufficient time to oppose the motions and that the dispute should have been brought before the Court of Tax Appeals (CTA) instead of the RTC.

STEELCORP filed a motion for reconsideration, which was subsequently denied. As a result, STEELCORP filed a petition with the Supreme Court, arguing that the CA erred in sustaining the trial court's actions and insisting that the matter falls within the jurisdiction of the RTC, as the interpretation of the relevant law is a legal question. STEELCORP emphasized that it is not disputing the amount or collectibility of the taxes and duties, but rather seeking compliance from the respondents in fulfilling their obligations.

ISSUES:

1. Whether or not the trial court erred in giving due course to the motions filed by the OSG and BIR.

2. Whether or not a corporation under corporate rehabilitation can avail the benefits of Section 19 of R.A. No. 10142.

3. Whether there was substantial compliance with the rules on notice of hearing on a motion.

4. Whether the Court of Appeals (CA) erred in affirming the order of the Regional Trial Court (RTC) that dissolved the writ of preliminary injunction and dismissed the complaint for lack of jurisdiction.

5. Whether the Court of Tax Appeals has jurisdiction to pass upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an assessment or claiming a refund.

6. Whether the Court of Tax Appeals may take cognizance of cases directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance.

7. Whether the Court of Tax Appeals has exclusive jurisdiction to resolve all tax problems and to hear petitions for writs of certiorari against the acts and omissions of quasi-judicial agencies.

8. Whether actions directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance may be filed directly before the Court of Tax Appeals.

9. Whether the Court of Tax Appeals has appellate jurisdiction over the determination of the validity of administrative issuances.

10. Whether or not the Court of Tax Appeals has the authority to issue injunctive writs to restrain the collection of tax and dispense with the deposit of the amount claimed or the filing of a required bond.

11. Whether or not the bond requirement under Section 11 of R.A. No. 1125 should be dispensed with when the method employed by the Collector of Internal Revenue in the collection of tax is not sanctioned by law.

RULING:

1. The court denies the petition. Even if the motion filed by the OSG and BIR failed to comply with the requirements of notice and scheduling prescribed by the rules, it was considered by the court and the adverse party was notified of its existence. Therefore, there was substantial compliance with the rules.

2. The court denies the petition. The issue of whether or not a corporation under corporate rehabilitation can avail the benefits of Section 19 of R.A. No. 10142 falls under the jurisdiction of the RTC and its decision may be appealed to the CA or the Supreme Court. It does not fall under the jurisdiction of the CTA.

3. There was substantial compliance with the rules on notice of hearing on a motion. The test is the presence of the opportunity to be heard and to have time to study the motion and meaningfully oppose or controvert the grounds upon which it is based. The requirements of procedural due process were substantially complied with, justifying a departure from a literal application of the rules.

4. The CA did not err in affirming the RTC's order. The consent of the parties does not confer jurisdiction over the subject matter. Jurisdiction cannot be waived, and it is determined by the allegations in the complaint and the relief sought. The CTA has exclusive jurisdiction to determine the constitutionality or validity of tax laws, rules and regulations, and other administrative issuances.

5. Yes, the Court of Tax Appeals has jurisdiction to pass upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an assessment or claiming a refund.

6. Yes, the Court of Tax Appeals may take cognizance of cases directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance.

7. Yes, the Court of Tax Appeals has exclusive jurisdiction to resolve all tax problems and to hear petitions for writs of certiorari against the acts and omissions of quasi-judicial agencies.

8. Yes, actions directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance may be filed directly before the Court of Tax Appeals.

9. Yes, the Court of Tax Appeals has appellate jurisdiction over the determination of the validity of administrative issuances.

10. Yes, the Court of Tax Appeals has the authority to issue injunctive writs to restrain the collection of tax and dispense with the deposit of the amount claimed or the filing of a required bond. This authority is not only confined to cases where prescription has set in, but also extends to cases where the method employed by the Collector of Internal Revenue in the collection of tax is not sanctioned by law.

11. Yes, the bond requirement under Section 11 of R.A. No. 1125 should be dispensed with if it is determined by the courts that the method employed by the Collector of Internal Revenue in the collection of tax is not sanctioned by law. The purpose of the rule is to prevent jeopardizing the interest of the taxpayer and to avoid requiring the taxpayer to deposit or file a bond as a prerequisite for the issuance of a writ of injunction, which would contradict the court's declaration that the collection methods are violative of the law.

PRINCIPLES:

• It is the law that confers jurisdiction and not experience, practice, or tradition.

• A liberal construction of the rules and pleadings is the controlling principle to effect substantial justice.

• The court may find substantial compliance with the rules if the adverse party was otherwise notified of the existence of the pleading, even if there was a defect in the notice or scheduling.

• Rules should be liberally construed to promote a just, speedy, and inexpensive disposition of every action and proceeding.

• The opportunity to be heard and time to study a motion are essential factors in determining compliance with the rules on notice of hearing.

• Jurisdiction cannot be waived and is not dependent on the consent or objection of the parties. It is conferred by the Constitution or law, as well as determined by the allegations in the complaint and the relief sought.

• The Court of Tax Appeals has jurisdiction to pass upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an assessment or claiming a refund.

• The Court of Tax Appeals may take cognizance of cases directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance.

• The Court of Tax Appeals has exclusive jurisdiction to resolve all tax problems and to hear petitions for writs of certiorari against the acts and omissions of quasi-judicial agencies.

• Actions directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance may be filed directly before the Court of Tax Appeals.

• The Court of Tax Appeals has appellate jurisdiction over the determination of the validity of administrative issuances.

• The Court of Tax Appeals has jurisdiction over cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or other matters arising under the National Internal Revenue or other laws administered by the Bureau of Internal Revenue.

• The Authority of the Court of Tax Appeals to issue injunctive writs to restrain the collection of tax and dispense with the deposit of the amount claimed or the filing of a required bond is not limited to cases where prescription has set in but also extends to cases where the method employed by the Collector of Internal Revenue in the collection of tax is not sanctioned by law.

• The bond requirement under Section 11 of R.A. No. 1125 should be dispensed with whenever the court determines that the method employed by the Collector of Internal Revenue in the collection of tax is not sanctioned by law. This is to avoid jeopardizing the interest of the taxpayer and to prevent an absurd situation wherein the court declares the collection methods as violative of the law while still requiring the taxpayer to deposit or file a bond as a prerequisite for the issuance of a writ of injunction.