G.R. No. 219340 , April 28, 2021
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. STANDARD INSURANCE CO., INC., RESPONDENT.

FACTS

Respondent Standard Insurance Co., Inc., a domestic non-life insurance company, received from the BIR a Preliminary Assessment Notice (PAN) for a deficiency documentary stamp tax (DST) for taxable year 2011. After contesting the PAN, it received a Formal Letter of Demand and later a Final Decision on Disputed Assessment (FDDA) confirming its liability. It also received demands for deficiency taxes for taxable years 2012 and 2013. Standard Insurance protested these assessments, arguing that the VAT and DST rates imposed on non-life insurance premiums under Sections 108 and 184 of the National Internal Revenue Code (NIRC) violated constitutional limitations on taxation, particularly in light of Republic Act No. 10001 which reduced the tax rate on life insurance premiums from 5% to 2%. On December 19, 2014, Standard Insurance filed a Petition for Declaratory Relief with the Regional Trial Court (RTC) of Makati, seeking a judicial determination of the constitutionality of Sections 108 and 184 of the NIRC and praying for injunctive relief. The RTC issued a Temporary Restraining Order and later a Writ of Preliminary Injunction. On May 8, 2015, the RTC rendered a Decision permanently enjoining the CIR from implementing Sections 108 and 184 of the NIRC against Standard Insurance until Congress enacts House Bill No. 3235 (which sought to rationalize taxes on non-life insurance policies) into law. The CIR filed a Petition for Review on Certiorari before the Supreme Court. On November 7, 2018, the Supreme Court granted the CIR’s petition, annulled the RTC Decision, dismissed the case for lack of jurisdiction, and quashed the writ of preliminary injunction. Standard Insurance filed a Motion for Reconsideration.

ISSUE

1. Whether the Petition must be dismissed on the ground of forum shopping and/or non-compliance with the certification against forum shopping requirement.
2. Whether the Petition must be dismissed on the ground of raising issues of fact, which are barred under a Rule 45 petition.
3. Whether the RTC had the jurisdiction to take cognizance of respondent’s petition for declaratory relief and issue injunctive relief against the implementation of Sections 108 and 184 of the NIRC.
4. Whether the RTC should have dismissed respondent’s petition for declaratory relief for failure to comply with the essential requisites of a petition for declaratory relief under Rule 63 of the Rules of Court.

RULING

The Supreme Court denied the Motion for Reconsideration for lack of merit.
1. The petitioner (CIR) is not guilty of forum shopping. The elements of litis pendentia or res judicata were not present. The CIR’s earlier Petition for Certiorari before the Court of Appeals (CA-G.R. SP No. 140403) sought to set aside the RTC’s orders granting the writ of preliminary injunction, while the Petition for Review on Certiorari before the Supreme Court assailed the RTC’s main Decision on the declaratory relief. The reliefs sought were different, and the certification against forum shopping requirement was complied with.
2. The Petition for Review on Certiorari properly raised only questions of law, which are allowed under Rule 45. The issues pertained to the RTC’s jurisdiction, the propriety of the action for declaratory relief, and the grant of injunctive relief—all questions of law.
3. The RTC had no jurisdiction to take cognizance of the petition for declaratory relief and to issue injunctive relief. Section 218 of the NIRC explicitly 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 imposed by this Code.” Furthermore, under Section 11 of Republic Act No. 1125 (the law creating the Court of Tax Appeals), the CTA has exclusive appellate jurisdiction to review decisions of the Commissioner of Internal Revenue on disputed assessments. The proper remedy for Standard Insurance was to appeal the FDDA to the CTA, not to file a declaratory relief action in the RTC. The RTC’s grant of injunctive relief violated the statutory prohibition.
4. The RTC should have dismissed the petition for declaratory relief for failure to comply with the essential requisites under Rule 63. An action for declaratory relief requires that there be no breach of the statute, ordinance, or contract in question. In this case, Sections 108 and 184 of the NIRC had already been allegedly infringed by Standard Insurance (as it was assessed for non-payment), and a tax assessment had already been issued, creating an actual controversy that was no longer appropriate for declaratory relief. The existence of an actual controversy meant the remedy was an ordinary action, not a declaratory one.