G.R. No. 212687 . July 20, 2022.
SECRETARY OF FINANCE, COMMISSIONER OF INTERNAL REVENUE, AND REVENUE REGIONAL DIRECTOR, BUREAU OF INTERNAL REVENUE (BIR), REVENUE REGION NO. 12, BACOLOD CITY, PETITIONERS, VS. HON. RENATO D. MUÑEZ, IN HIS CAPACITY AS EXECUTIVE JUDGE OF BRANCH 60, REGIONAL TRIAL COURT IN CADIZ CITY, NEGROS OCCIDENTAL, RURAL SUGAR PLANTERS’ ASSOCIATION, INC., NORTHERN NEGROS PLANTERS ASSOCIATION, INC., CONFEDERATION OF SUGAR PRODUCERS ASSOCIATIONS, INC., UNITED SUGAR PRODUCERS FEDERATION OF THE PHILIPPINES, INC., NATIONAL FEDERATION OF SUGAR PRODUCERS (NFSP), INC. AND ANTONIO G. TAMON, RESPONDENTS.

FACTS

The Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 13-2013, which amended the definition of “raw sugar” for Value-Added Tax (VAT) purposes. The new regulation defined raw sugar strictly as muscovado sugar produced by a simple process without mechanical devices, thereby excluding centrifugal sugar from the VAT exemption granted to agricultural products in their original state under the National Internal Revenue Code (NIRC). Various sugar planters’ associations filed a petition for declaratory relief before the Regional Trial Court (RTC) of Cadiz City, challenging the validity of RR 13-2013 for allegedly violating due process, the rule on uniformity of taxation, and the statutory intent of the VAT exemption. The RTC granted a writ of preliminary injunction, enjoining the implementation of the regulation.
The petitioners, the Secretary of Finance and BIR officials, filed a Petition for Certiorari before the Supreme Court. They argued that the RTC committed grave abuse of discretion in issuing the injunction, primarily because Section 218 of the NIRC explicitly prohibits courts from granting injunctions to restrain the collection of taxes. They contended that the trial court lacked jurisdiction to issue the restraining order and the preliminary injunction against the enforcement of a revenue regulation.

ISSUE

Whether the Regional Trial Court committed grave abuse of discretion in issuing a writ of preliminary injunction to enjoin the implementation of RR No. 13-2013.

RULING

Yes, the RTC committed grave abuse of discretion. The Supreme Court granted the petition and nullified the RTC’s orders and the writ of preliminary injunction. The legal logic is anchored on the clear and explicit prohibition under Section 218 of the NIRC, which states that “no court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge.” This provision is a statutory rule of priority, mandating that tax collection must proceed unimpeded, and any legal challenges to the tax must be pursued without obstructing its collection. The RTC’s act of issuing an injunction directly contravened this specific legal injunction.
The Court emphasized that the prohibition under Section 218 is categorical and allows for no exceptions. The respondents’ remedy, if they believed the tax was invalid, was to pay under protest and then file a claim for refund or a judicial challenge, not to seek an injunction. The RTC’s exercise of its general jurisdiction to issue injunctions under Batas Pambansa Blg. 129 must yield to this specific and overriding statutory restriction. By disregarding this explicit legal barrier, the RTC acted in a capricious and whimsical manner, equivalent to a lack of jurisdiction, thus constituting grave abuse of discretion correctible by certiorari. The substantive arguments on the validity of RR