DIGEST: Giselle Saguin: COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. STANDARD INSURANCE CO., INC., RESPONDENT.

G.R. No. 219340, November 07, 2018 

COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. STANDARD INSURANCE CO., INC., RESPONDENT.

FACTS: 

    The respondent on Feb. 13, 2014 received from the Bureau of Internal Revenue (BIR) a Preliminary Assessment Notice (PAN) regarding its liability arising from a deficiency in the payment of documentary stamp taxes (DST. They contested the PAN through its letter dated February 27, 2014, but the petitioner nonetheless sent to it a formal letter of demand dated March 27, 2014. 

    Although the respondent requested reconsideration on April 22, 2014 it received on December 4, 2014 the Final Decision on Disputed Assessment (FDDA) dated November 25, 2014, declaring its liability for the DST deficiency, including interest and compromise penalty, totaling P418,830,567.46.

    On December 11, 2014, it sought reconsideration of the FDDA, and objected to the tax imposed pursuant to Section 184 of the NIRC as violative of the constitutional limitations on taxation. The respondent also received a demand for the payment of its deficiency income tax, value-added tax, premium tax, DST, expanded withholding tax, and fringe benefit tax for taxable year 2012,[7] and deficiency DST for taxable year 2013. 

     On December 19, 2014, the respondent commenced Civil Case No. 14-1330 in the RTC (with prayer for issuance of a temporary restraining order (TRO) or of a writ of preliminary injunction) for the judicial determination of the constitutionality of Section 108 and Section 184 of the NIRC with respect to the taxes to be paid by non-life insurance companies. 

     In its petition, the respondent contended that the facts of the case must be appreciated in light of the effectivity of Republic Act (R.A.) No. 1000 I entitled An Act Reducing the Taxes on Life Insurance Policies, whereby the tax rate for life insurance premiums was reduced from 5% to 2%; and the pendency of deliberations on House Bill (H.B.) No. 3235 entitled An Act Rationalizing the Taxes Imposed on Non-Life Insurance Policies, whereby an equal treatment for both life and non-life companies was being sought as a response to the supposed inequality generated by the enactment of R.A. No. 10001. 

    On May 8, 2015, the RTC rendered the assailed judgment wherein it opined that although taxes were self-assessing, the tax system merely created liability on the part of the taxpayers who still retained the right to contest the particular application of the tax laws; and hol ding that the exercise of such right to contest was not considered a breach of the provision itself as to deter the action for declaratory relief 

ISSUE: 

WHETHER OR NOT THE DECLARATORY RELIEF IS APPLICABLE TO CONTEST TAX ASSESSMENTS. 

WHETHER OR NOT THE DECLARATORY RELIEF IS A PROPER REMEDY 

RULING: 

    Under the law, injunctive relief is not available as a remedy to assail the collection of a tax. An action for declaratory relief is governed by Section 1, Rule 63 of the Rules of Court.Under Section 218 of the NIRC, it expressly provides that "[n]o court shall have the authority to grant an injunction to restrain the collection of any national internal revenue tax, fee or charge imposed by th[e] [NIRC]." 

     On the other hand, the  action for declaratory relief is governed by Section 1, Rule 63 of the Rules of Court. It is predicated on the attendance of several requisites, specifically: (1) the subject matter of the controversy must be a deed, will, contract or other written instrument, statute, executive order or regulation, or ordinance; (2) the terms of said documents and the validity thereof are doubtful and require judicial construction; (3) there must have been no breach of the documents in question; (4) there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse; (5) the issue must be ripe for judicial determination; and (6) adequate relief is not available through other means or other forms of action or proceeding. The third, fourth, fifth and sixth requisites were patently wanting. 

    Firstly, the third requisite was not met due to the subject of the action (i.e. statute) having been infringed or transgressed prior to the institution of the action.The RTC's belief was absolutely devoid of legal foundation, however, simply because internal revenue taxes, being self-assessing, required no further assessment to give rise to the liability of the taxpayer. 

    The assessments for DST deficiencies of the respondent for the years 2011, 2012 and 2013, as imposed pursuant to Section 184 of the NIRC were the subject of the respondent's petition for declaratory relief. 

     The violation of Section 184 of the NIRC occurred upon the taxpayer's failure or refusal to pay the correct DST due at the time of issuing the non-life insurance policies. Inasmuch as the cause of action for the payment of the DSTs pursuant to Section 108[20] and Section 184 of the NIRC accrued upon the respondent's failure to pay the DST at least for taxable year 2011 despite notice and demand, the RTC could not procedurally take cognizance of the action for declaratory relief. 

 Secondly, the apprehension of the respondent that it could be rendered technically insolvent through the imposition of the iniquitous taxes imposed by Section 108 and Section 184 of the NIRC,[21] laws that were valid and binding, did not render the action for declaratory relief fall within the purview of an actual controversy that was ripe for judicial determination. 

    The respondent was engaging in speculation or conjecture, or arguing on probabilities, not actualities. Therein lay the prematurity of its action, for a justiciable controversy refers to an existing case or controversy that is appropriate or ripe for judicial determination, not one that is conjectural or merely anticipatory.

     Lastly, the respondent's adequate remedy upon receipt of the FDDA for the DST deficiency for taxable year 2011 was not the action for declaratory relief but an appeal taken in due course to the Court of Tax Appeals. Instead of appealing in due course to the CTA, however, it resorted to the RTC to seek and obtain declaratory relief. By choosing the wrong remedy, the respondent lost its proper and true recourse. With not all the requisites for the remedy of declaratory relief being present, the respondent's petition for declaratory relief had no legal support and should have been dismissed by the RTC.

Digested by Giselle Saguin

DIGEST: HANNAH GARCIA /EDUARDO M. COJUANGCO, JR., ENRIQUE M. COJUANGCO, MANUEL M. COJUANGCO, ESTELITO P. MENDOZA and GABRIEL L. VILLAREAL vs. THE HON. SANDIGANBAYAN, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), JULIETA C. BERTUBEN, IDE C. TILLAH, EMMANUEL E. CRUZ, SERGIO OSMEÑA III AND TIRSO D. ANTIPORDA, JR.,

 

EDUARDO M. COJUANGCO, JR., ENRIQUE M. COJUANGCO, MANUEL M. COJUANGCO, ESTELITO P. MENDOZA and GABRIEL L. VILLAREAL
vs.
THE HON. SANDIGANBAYAN, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), JULIETA C. BERTUBEN, IDE C. TILLAH, EMMANUEL E. CRUZ, SERGIO OSMEÑA III AND TIRSO D. ANTIPORDA, JR., 

G.R. No. 120640 August 8, 1996

 

FACTS:

The filing of this petition was led when during the annual meeting of the stockholders of SMC on April 18, 1995, also happened the election of fifteen directors for the ensuing year. Petitioners with private respondents were among the nominees to the board. Subsequently, the respondents were nominated by Chairman Magtanggol Gunigundo of the Presidential Commission on Good Government (PCGG). During the election, the bulk of the votes cast by petitioner Mendoza in favor of his group had come from substantially the same sequestered corporate shares of SMC which were used by the PCGG in voting for the private respondents.

With the votes casted, private respondents were accordingly declared to have been the elected members of the SMC Board of Directors for the year 1995-1996. None of the petitioners were elected and included in the list. One of the petitioners questioned the results of the election contending that the votes he had cast, particularly those in representation of the corporate shares, had not been duly appreciated and reflected in the results, and that had said votes been properly counted Estelito Mendoza, Manuel Cojuangco and Enrique Cojuangco would have themselves been duly elected. SMC Corporate Secretary Jose Feria stood by his verbal ruling during the canvassing of votes that only the PCGG, through Chairman Gunigundo, could validly vote the sequestered shares.

With the aforementioned event, petitioners were caused to file a petition for quo warranto before the Sandiganbayan questioning the election of PCGG's nominees to the SMC Board and prayed that the respondents be ousted from the board and petitioners to be declared instead as members.

Petitioners questioned the dismissal of The Sandiganbayan of the petition and the rejection of its motion for reconsideration alleging that The Sandiganbayan: (1) erred in applying to S.B. Civil Case No. 0166 the new doctrine enunciated by the First Division of this Honorable court in the case of Garcia, Jr. vs Sandiganbayan et al., holding that The Sandiganbayan cannot exercise jurisdiction over a petition for Prohibition, Mandamus and Quo Warranto; (2) that in dismissing the petition for quo warranto, the Sandiganbayan ignored applicable decisions of this Honorable court rendered in several cases holding that the Sandiganbayan has exclusive and original jurisdiction over special civil actions, including petitions for quo warranto and over special civil actions involving the powers and functions of the PCGG.

ISSUE:

Whether or not The Sandiganbayan has jurisdiction over petitions for quo warranto.

RULING:

The Supreme Court ruled that the rule that the Sandiganbayan cannot exercise jurisdiction over petitions for quo warranto is not without exception, a situation which by now should be fairly evident from the Court's pronouncements in a number of cases. In various cases, the Court concluded that any attempt to remove special civil actions, similarly involving the powers and functions of the PCGG, from the Sandiganbayan's exclusive jurisdiction would be of no avail.

Cases from the Regional Trial Courts, as well as from the Securities and Exchange Commission, were subsequently filed with the Court. A supplemental petition was filed with the SEC by one of the stockholders of the SMC assailing the 1986 annual election of directors on the ground that PCGG voted the sequestered shares without authority. The SMC Board of Directors moved to dismiss the petition contending that SEC had no jurisdiction over the action. The motion was denied by the SEC declaring that what was being questioned were merely 'the acts of the Board of Directors of San Miguel Corporation and not the acts of the PCGG through its nominees,' a matter clearly within its statutorily prescribed competence. When this order of the SEC and those of the Regional Trial Courts in the other related cases were eventually elevated to this Court, we stressed that the exclusive jurisdiction conferred on the Sandiganbayan would evidently extend not only to the principal causes of action, the recovery of alleged ill-gotten wealth, but also to all incidents arising from, incidental to, or related to, such cases.

Hence, the Court ordered the dismissal of the cases without prejudice to the assertion and ventilation before the Sandiganbayan by the parties of their respective claims by such appropriate modes as prescribed by law. This petition is not just confined to the grievance of petitioners relative to the election of directors and the counting of the votes therein cast but directly challenges the power of the PCGG to vote, or to make use of, the sequestered shares of stock. While ordinarily the Sandiganbayan cannot exercise jurisdiction over petitions for quo warranto, it may, do so as an exception when it involves an incident arising from, or related to PCGG cases over alleged "ill-gotten wealth" within the context of Section 2 of Executive Order No. 14.

R.A. No. 7975 grants to the Sandiganbayan the power to issue writs of certiorari, prohibition, and mandamus in aid of its appellate jurisdiction.

Digest: Hannah Garcia

DIGET HANNAH GRACE/IN RE: THE PETITION FOR DECLARATORY RELIEF OF HOSPICIO OBILES AND FOR CANCELLATION OF ERRONEOUS REGISTRATION AS ALIEN. HOSPICIO OBILES, PETITIONER AND APPELLANT, VS. REPUBLIC OF THE PHILIPPINES, OPPOSITOR AND APPELLEE.

IN RE: THE PETITION FOR DECLARATORY RELIEF OF HOSPICIO OBILES AND FOR CANCELLATION OF ERRONEOUS REGISTRATION AS ALIEN. HOSPICIO OBILES, PETITIONER AND APPELLANT, VS. REPUBLIC OF THE PHILIPPINES, OPPOSITOR AND APPELLEE.

 

G. R. No. L-5204, March 27, 1953

 

FACTS:

This case commences from a petition filed by the petitioner who claims to be a Filipino citizen registered in 1941 as a Chinese alien with the office of the treasurer in a municipality because according to him, there was an "erroneous belief and fear of criminal prosecution." This case now presents a petition for declaratory relief that registration might involve the loss of his Filipino citizenship.

Particularly, this case is an appeal from a judgment of the Court of First Instance of Albay wherein it dismisses petitioner-appellant's petition for declaratory relief. The petitioner alleges that he is a Filipino citizen by birth and parentage, residing in Bacacay, Albay in the year 1941, because "of erroneous belief and fear of criminal prosecution," petitioner registered himself with the municipal treasurer of Bacacay as Chinese alien, but he never intended to give up his Filipino citizenship by said registration, and that he continued to hold himself out as a Filipino citizen.

The Solicitor-General then filed an opposition stating that the petition has no cause of action and that no actual controversy has arisen against anyone and if the petitioner desires to establish his Filipino citizenship, he should do so in another separate proceeding. The court sustained the opposition stating that there was no actual controversy involved in petitioner's petition because no one disputes the claim of the petitioner, that any declaration the court might render in the premises will not terminate the controversy, and it, therefore, dismissed the petition.

Petitioner claimed in this appeal stating (1) that the lower court erred in holding that no justiciable controversy existed, inasmuch as the Solicitor General, in representation of the Government, has joined issue by filing an opposition, an actual controversy has arisen which is concrete and real, which justifies every specific relief in the form of a pronouncement by the court as to whether the petitioner is a Filipino citizen or not and (2) that the decision will not terminate the controversy.

ISSUE:

Whether or not declaratory relief was the proper action to be instituted.

 

RULING:

The Supreme Court ruled that the registration is not a deed or written instrument on which an action for declaratory relief may be instituted and that the instrument is not a contract in which another party or person is involved. The registration was a unilateral act of the petitioner himself not affecting or binding anyone else but himself, nor creating any right or obligation on the part of any other party or on that of the State and therefore no one has an interest therein except himself. The supposed fear in the mind of the petitioner is not what the law considers as an actual controversy, or a justifiable controversy, which requires the intervention of the courts of justice to predetermine the rights, obligations or liabilities arising therefrom.

The Supreme Court further ruled that the Solicitor General's opposition was not presented to deny the allegations of his complaint but instead, show that he has no cause of action because nobody has ever contested petitioner’s pretensions.  The claim of the appellant that a controversy has arisen because the Solicitor General has opposed his petition is clearly unfounded.

Finally, what the petitioner desires is to be declared a Filipino citizen in spite of his registration as a Chinese citizen. By the contention of the Solicitor General, the petitioner’s remedy is clearly not by an action for declaratory relief.

DIGEST: SUZEYNE GARCIA /REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) v. HEIRS OF ELIGIO CRUZ, REPRESENTED BY CRISANTA OLIQUINO, AND HEIRS OF ELIGIO CRUZ, REPRESENTED BY MAXIMINO AGALABIA G.R. No. 208956 October 17, 2018

 

REPUBLIC OF THE PHILIPPINES REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS (DPWH) v. HEIRS OF ELIGIO CRUZ, REPRESENTED BY CRISANTA OLIQUINO, AND HEIRS OF ELIGIO CRUZ, REPRESENTED BY MAXIMINO AGALABIA

G.R. No. 208956

October 17, 2018

 

FACTS:

 

Sometime in 1977, the Department of Public Works and Highways (DPWH), then Ministry of Public Highways; conducted the widening of Visayas Avenue, Quezon City. The construction encroached upon a 4,757-square meter portion (Disputed Portion) of Lot 643. The Disputed Portion was subdivided, and thereafter registered in the name of the Republic. However, no payment of just compensation was made.

Crisanta Oliquino (Oliquino) filed with the DPWH a claim for payment of just compensation for and on behalf of several heirs of Eligio Cruz, namely, Nieves Cruz, Gregorio Cruz, Ester Cruz-Bernardino and Remigio Cruz (the Oliquino group).

Oliquino demanded just compensation for the Disputed Portion and engaged the services of Atty. Maximo Borja (Atty. Borja) to facilitate the claim. In exchange for Atty. Borja's services, Oliquino executed a Deed of Assignment ceding in his favor the amount of Php14,000,000.00 out of the Php71,355,000.00 she expected to receive from the Republic. However, for reasons not apparent in the records, Oliquino later repudiated the deed, prompting the Republic to release the partial payment of Php39,533,239.13 in Oliquino's favor.

 

Confronted with conflicting claims of ownership over the Disputed Portion of Lot 643 left unpaid, the Republic withheld further payments and demanded the claimants to settle their opposing claims through litigation. Since the claimants failed to do so, the Republic was constrained to file the Interpleader.

A compromise agreement was entered into by the Agalabia, who also claimed just compensation as heir so Eligio Cruze, and Oliquino groups to settle their claims. It was opposed by the De Leon group and Atty. Borja. Notwithstanding such opposition, the RTC issued a Partial Judgment Based on Compromise Agreement. The motions for reconsideration filed by the De Leon group and Atty. Borja were denied by the RTC. The RTC ruled in favor of the Oliquino and Agalabia groups and granted their motion for execution.

 

The Republic filed several motions to avert execution which the RTC denied for lack of merit.

 

The Republic filed before the CA a Petition for Certiorari with Prayer for Issuance of Writ of Preliminary Injunction and Temporary Restraining Order (petition for certiorari). Said petition for certiorari imputed grave abuse of discretion to the RTC.

 

In said petition for certiorari, the Republic averred that the orders directing the execution of the Partial Judgment are premature and were issued without legal basis, since the Partial Judgment “did not adjudicate nor settle the conflicting adversarial claims of the other impleaded defendants who are not parties to the Compromise Agreement,” namely, Atty. Borja and the De Leon group.

 

The CA dismissed the Republic’s petition for certiorari and subsequent motion for reconsideration. The Republic then filed the present petition.

 

ISSUE:

WON the orders directing the execution of the Partial Judgment are premature and were issued without legal basis, since the Partial Judgment “did not adjudicate nor settle the conflicting adversarial claims of the other impleaded defendants who are not parties to the Compromise Agreement”.

 

RULING:

            Yes, the orders directing the execution of the Partial Judgment are premature and were issued without legal basis, since the Partial Judgment did not adjudicate nor settle the conflicting adversarial claims of the other impleaded defendants who are not parties to the Compromise Agreement.

 

The Compromise Agreement divides the Republic's entire remaining balance between and among the defendants, in accordance with the terms agreed upon by the Oliquino and Agalabia groups. The allocation of the remaining balance was determined without the participation of all other claimants who likewise stand as parties to the Interpleader.

 

Clearly, the immediate execution of the Partial Judgment approving the Compromise Agreement facilitates the premature distribution of the Republic's remaining balance without affording the De Leon group and Atty. Borja of the opportunity to establish their entitlement, if any, to compensation beyond the amounts unilaterally set by the Oliquino and Agalabia groups. This defeats the very purpose for which the Republic's Interpleader had been filed, as it opens the portals to protracted litigation not only among the opposing claimants, but also between said claimants and the Republic.

DIGEST: SUZENNE GARCIA/LUISK. LOKIN, JR. and TERESITA F. PLANAS v. COMMISSION ON ELECTIONS (COMELEC), CITIZENS’ BATTLE AGAINST CORRUPTION PARTY LIST represented by VIRGINIA S. JOSE SHERWIN N. TUGNA, and CINCHONA CRUZ-GONZALES G.R. No. 193808 June 26, 2012

 

LUISK. LOKIN, JR. and TERESITA F. PLANAS v. COMMISSION ON ELECTIONS (COMELEC), CITIZENS’ BATTLE AGAINST CORRUPTION PARTY LIST represented by VIRGINIA S. JOSE SHERWIN N. TUGNA, and CINCHONA CRUZ-GONZALES

G.R. No. 193808              

June 26, 2012

 

FACTS:

            On 5 July 2010, the COMELEC First Division issued a Resolution expunging the Certificate of Nomination which included herein petitioners as representatives of the party-list group known as Citizens’ Battle Against Corruption (CIBAC). The COMELEC en banc affirmed the said Resolution, prompting Luis Lokin, Jr. and Teresita F. Planas to file the present Petition for Certiorari. Petitioners allege grave abuse of discretion on the part of the COMELEC in issuing both Resolutions.

           

Petitioners contend that the COMELEC never should have taken cognizance of respondents’ Petition to Expunge and/or for Disqualification. They have reached this conclusion by characterizing the present matter as an intra-corporate dispute and, thus, cognizable only by special commercial courts, particularly the designated commercial court in this case, the Regional Trial Court in Pasig City.

 

Petitioner received a copy of the first assailed Resolution on 12 July 2010. Upon the Motion for Reconsideration filed by petitioners on 15 July 2010, the COMELEC en banc issued the second assailed Resolution on 31 August 2010. This per curiam Resolution was received by petitioners on 1 September 2010. Petitioners filed the present Petition only on 1 October 2010.

 

ISSUE:

WON the petition was filed outside of the requisite period.

 

RULING:

 

Yes, the petition was filed outside of the requisite period.

 

The Court held that the review by of judgments and final orders of the COMELEC is governed specifically by Rule 64 of the Rules of Court, which states:

 

Sec. 1. Scope. This rule shall govern the review of judgments and final orders or resolutions of the Commission on Elections and the Commission on Audit.

 

Sec. 2. Mode of review. A judgment or final order or resolution of the Commission on Elections and the Commission on Audit may be brought by the aggrieved party to the Supreme Court on certiorari under Rule 65, except as hereinafter provided.

 

The exception referred to in Section 2 of this Rule refers precisely to the immediately succeeding provision, Section 3:

 

SEC. 3. Time to file petition.—The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the petition within the remaining period, but which shall not be less than five (5) days in any event, reckoned from notice of denial.

 

            The above provision allows for a different period within which to file petitions for certiorari from judgments of both the COMELEC and the Commission on Audit. While Rule 65 provides for a period of 60 days from notice of judgment sought to be assailed in the Supreme Court, Section 3 of Rule 64 expressly provides for only 30 days.

 

            Petitioner received a copy of the first assailed Resolution on 12 July 2010. Upon the Motion for Reconsideration filed by petitioners on 15 July 2010, the COMELEC en banc issued the second assailed Resolution on 31 August 2010. This per curiam Resolution was received by petitioners on 1 September 2010. Petitioners filed the present Petition only on 1 October 2010, outside of the required period.

DIGEST: CHARLES GILAGA/IN THE MATTER OF DECLARATORY RELIEF ON THE VALIDITY OF BIR REVENUE MEMORANDUM CIRCULAR NO. 65-2012 "CLARIFYING THE TAXABILITY OF ASSOCIATION DUES, MEMBERSHIP FEES AND OTHER ASSESSMENTS/CHARGES COLLECTED BY CONDOMINIUM CORPORATIONS"

FIRST DIVISION

[ G.R. No. 215801, January 15, 2020 ]

IN THE MATTER OF DECLARATORY RELIEF ON THE VALIDITY OF BIR REVENUE MEMORANDUM CIRCULAR NO. 65-2012 "CLARIFYING THE TAXABILITY OF ASSOCIATION DUES, MEMBERSHIP FEES AND OTHER ASSESSMENTS/CHARGES COLLECTED BY CONDOMINIUM CORPORATIONS"

G.R. No. 218924

BUREAU OF INTERNAL REVENUE (BIR), AS HEREIN REPRESENTED BY ITS COMMISSIONER KIM S. JACINTO-HENARES AND REVENUE DISTRICT OFFICER (RDO) RICARDO B. ESPIRITU, PETITIONER, VS. FIRST E-BANK TOWER CONDOMINIUM CORP., RESPONDENT.

IN THE MATTER OF DECLARATORY RELIEF ON THE VALIDITY OF BIR REVENUE MEMORANDUM CIRCULAR NO. 65-2012 "CLARIFYING THE TAXABILITY OF ASSOCIATION DUES, MEMBERSHIP FEES AND OTHER ASSESSMENTS/CHARGES COLLECTED BY CONDOMINIUM CORPORATIONS"

FIRST E-BANK TOWER CONDOMINIUM CORP., PETITIONER, VS. BUREAU OF INTERNAL REVENUE (BIR), AS HEREIN REPRESENTED BY ITS COMMISSIONER KIM S. JACINTO-HENARES,* RESPONDENT.

 

 

These twin cases refer to the: 1) Petition for Review filed by the Bureau of Intemal Revenue (BIR) (G.R. No. 215801); and 2) Special Civil Action for Certiorari initiated by the First E-Bank Tower Condominium Corp. (First E-Bank) (G.R. No. 218924). Both cases assail the following dispositions of the Court of Appeals in CA-G.R. CV No. 102266.

 

Facts:

            The first E- bank filed a petition for declaratory relief seeking to declare as invalid Revenue Memorandum Circular No. 65-2012 (RMC No. 65-2012). RMC No. 65-2012 entitled "Clarifying the Taxability of Association Dues, Membership Fees and Other Assessments/ Charges Collected by Condominium Corporations” which provides:

            Income Tax -- The amounts paid in as dues or fees by members and tenants of a condominium corporation form part of the gross income of the latter subject to income tax.

Value-Added Tax (VAT) -Association dues, membership fees, and other assessments/charges collected by a condominium corporation are subject to VAT since they constitute income payment or compensation for the beneficial services it provides to its members and tenants.

Section 105 paragraph 3 of the National Internal Revenue Code of 1997, as amended, provides:

The phrase "in the course of trade or business" means the regular conduct or pursuit of a commercial or an economic activity, including transactions incidental thereto, by any person regardless of whether or not the person engaged therein is a nonstock, nonprofit private organization (irrespective of the disposition of its net income and whether or not it sells exclusively to members or their guests), or government entity.

In this provision it is clear that even a non-stock, non-profit organization or government entity is liable to pay VAT on the sale of goods or services. This conclusion was affirmed by the Supreme Court in Commissioner of Internal Revenue v. Court of Appeals and Commonwealth Management and Services Corporation, G.R. No. 125355, March 30, 2000. 

In its Petition, the First E-Bank essentially alleged: It was a non-stock non-profit condominium corporation. It owned and possessed, through its members, a condominium office building. RMC No. 65-2012 imposed on it two (2) tax liabilities: 1) value-added tax (VAT) of P118,971. 53 and b) income tax ofP665,904.12. That RMC No. 65-2012 burdened the owners of the condominium units with income tax and VAT, and that RMC No. 65-2012 was oppressive and confiscatory because it required condominium unit owners to produce additional amounts for the thirty-two percent (32%) income tax and twelve percent (12%) VAT.

So it sent a Letter dated December 5, 2012 to the BIR Commissioner requesting deferment of RMC No. 65-2012. The BIR and RDO Espiritu through the Office of the Solicitor General (OSG) riposted that declaratory relief was no longer proper here considering that RMC No. 65-2012 already took effect on October 31, 2012. The alleged injury which the First E-Bank sought to prevent had already arisen as of that date.

The Trial Court ruled the First E-Bank correctly resorted to a petition for declaratory relief for the purpose of invalidating RMC No. 65-2012. On this score, the trial court declared as invalid RMC No.

The BIR et al. moved for reconsideration. The trial court denied the parties' respective motions for reconsideration. 

The Court of Appeals dismissed the appeal of the First E-Bank and the joint appeal of the BIR et al. on ground of lack of jurisdiction. It emphasized that jurisdiction over the case was exclusively vested in the Court of Tax Appeals since the trial court's impugned resolution involved a tax matter.

In G.R. No. 218924, the First E-Bank initiated, on alleged ground of grave abuse of discretion, a Special Civil Action for Certiorari to nullify the assailed dispositions of the Court of Appeals. 

In G.R. No. 215801, the BIR et al. availed ofRu1e 45 of the Revised Rules of Court. They plead the same legal issue pertaining to which court has jurisdiction over the trial court's decision.

 

Issue:

Is a petition for declaratory relief proper for the purpose of invalidating RMC No. 65-2012?

Ruling:

 

No. A petition for declaratory relief is not the proper remedy.

            Declaratory relief requires the following elements:

(1) the subject matter of the controversy must be a deed, will, contract or other written instrument, statute, executive order or regulation, or ordinance; (2) the terms of said documents and the validity thereof are doubtful and require judicial construction; (3) there must have been no breach of the documents in question; (4) there must be an actual justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse; (5) the issue must be ripe for judicial determination; and (6) adequate relief is not available through other means or other forms of action or proceeding.

 

The Court rules that certiorari or prohibition, not declaratory relief, is the proper remedy to assail the validity or constitutionality of executive issuances.

DOTR v. PPSTA: There is no actual case involved in a Petition for Declaratory Relief. It cannot, therefore, be the proper vehicle to invoke the judicial review powers to declare a statute unconstitutional.

To question the constitutionality of the subject issuances, respondents should have invoked the expanded certiorari jurisdiction under Section 1 of Article VIII of the 1987 Constitution . The adverted section defines judicial power as the power not only "to settle actual controversies involving rights which are legally demandable and enforceable," but also "to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government."

"the remedies of certiorari and prohibition are necessarily broader in scope and reach, and the writ of certiorari or prohibition may be issued to correct errors of jurisdiction committed not only by a tribunal, corporation, board or officer exercising judicial, quasi-judicial or ministerial functions, but also to set right, undo[,] and restrain any act of grave abuse of discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the Government, even if the latter does not exercise judicial, quasi-judicial or ministerial functions." Thus, petitions for certiorari and prohibition are the proper remedies where an action of the legislative branch is seriously alleged to have infringed the Constitution.

 

G.R. No. 218924

The First E-Bank faults the Court of Appeals with grave abuse of discretion amounting to lack or excess of jurisdiction when the latter dismissed the former's appeal from the trial court's Resolution. A petition for certiorari is proper where the impugned dispositions, as in this case, are tainted with grave abuse of discretion amounting to lack or excess of jurisdiction.

 

G.R. No. 215801

On the part of the BIR et al., they pursued the regular route under Rule 45 of the Revised Rules of Court. Being the beneficiary of the taxes paid by the First E-Bank, the State has no compelling need to avail of the extraordinary remedy under Rule 65. Rule 45 is undoubtedly an available remedy in the ordinary course of law.

DIGEST: ANA KRISTEL ANGELES/DECLARATORY RELIEF: ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., APL CO. PTE LTD., AND MAERSK-FILIPINAS, INC., PETITIONERS, VS. SECRETARY OF FINANCE AND COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

 DECLARATORY RELIEF:

ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., APL CO. PTE LTD., AND MAERSK-FILIPINAS, INC., PETITIONERS, VS. SECRETARY OF FINANCE AND COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.

FACTS:

On July 1, 2005, Republic Act No. 9337 (RA 9337) was enacted amending certain provisions of the  National Internal Revenue Code.

On January 30, 2008, Commissioner of Internal Revenue (CIR) Lilian Hefti issued Revenue Memorandum Circular No. 31-2008 (RMC 31-2008) seeking to clarify certain provisions of the NIRC. One of the  questions by the petitioners was the imposition of  regular tax rate of 30% and 12% VAT on the demurrage and detention fees collected by international shipping carriers from shippers or consignees.

On December 6, 2010, petitioners Association of International Shipping Lines, Inc. (AISL), APL Co. Pte. Ltd. (APL) and Maersk-Filipinas, Inc. (Maersk) sought to nullify RMC No. 31-2008 via a petition for declaratory relief under Civil Case No. Q-09-64241 praying for the issuance of a writ of preliminary injunction enjoining then CIR and her agents from implementing, enforcing or acting pursuant to or on the basis of the challenged provisions of RMC 31-2008 and render judgment declaring these challenged provisions void.

It alleged that RMC 31-2008 was void as it imposed regular tax rate of 30% and 12% VAT on the demurrage and detention fees collected by international shipping carriers from shippers or consignees for delay in the return of containers, on the domestic portion of services to persons engaged in international shipping operations, and on commission income received by local shipping agents from international shipping carriers or in connection with inbound shipments.

On May 18, 2012, RTC Branch 98 in Civil Case No. Q-09-64241 declared as invalid the challenged provisions of RMC 31-2008 insofar as it subjects demurrage and detention fees to the regular corporate income tax under Section 28(A)(1) and 12% VAT.

On March 7, 2013, RA 10378 was enacted amending Section 28 (A)(3)(a) of the NIRC.

On December 4, 2013, petitioners initiated a petition for declaratory relief challenging Section 4.4 of RR 15-2013 (implementing rules of RA 10378) and impleading both the Secretary of Finance and CIR.

On September 15, 2015, RTC dismissed the petition for declaratory relief and granted the motion for judicial notice of the existence of RMC 31-2008, May 18, 2012 RTC Order in Civil Case No. Q-09-64241 and the enactment of RA 10378 – all these being official acts of different branches of government

The RTC also declared that it had no jurisdiction over the petition for declaratory relief pursuant to CA 55 which removed from RTC the authority to rule on cases involving one’s liability for tax, duty, or charge collectible under any law administered by the Bureau of Customs (BOC) or BIR.

On January 8, 2016, petitioners’ partial motion for reconsideration was denied.

Petitioners, on pure questions of law, sought for Supreme Court’s discretionary appellate jurisdiction to review.  They reiterated the arguments raised in their petition for declaratory relief. 

ISSUE:

Whether a petition for declaratory relief proper for the purpose of invalidating RR 15-2013

RULING:

No.

One of the requisites for an action for declaratory relief is that it must be filed before any breach or violation of an obligation as stated under the Rules. Thus, there is no actual case involved in a Petition for Declaratory Relief. It cannot, therefore, be the proper vehicle to invoke the judicial review powers to declare a statute unconstitutional. As decreed in DOTR v. PPSTA (G.R. No. 230107, July 24, 2018), the proper remedy is certiorari or prohibition.

Nonetheless, the court held in Diaz et al v. Secretary of Finance, et al (G.R. No. 193007, July 19, 2011): “But there are precedents for treating a petition for declaratory relief as one for prohibition if the case has far-reaching implications and raises questions that need to be resolved for the public good. The Court has also held that a petition for prohibition is a proper remedy to prohibit or nullify acts of executive officials that amount to usurpation of legislative authority. xxx Although the petition does not strictly comply with the requirements of Rule 65, the Court has ample power to waive such technical requirements when the legal questions to be resolved are of great importance to the public. The same may be said of the requirement of locus standi which is a mere procedural requisite.”

 

DIGEST:ANA KRISTEL ANGELES/INTERPLEADER: LUI ENTERPRISES, INC., petitioners, vs. ZUELLIG PHARMA CORPORATION and the PHILIPPINE BANK OF COMMUNICATIONS, respondents

 

INTERPLEADER:

LUI ENTERPRISES, INC., petitioners, vs. ZUELLIG PHARMA CORPORATION and the PHILIPPINE BANK OF COMMUNICATIONS, respondents

FACTS:

Lui Enterprises and Zuellig Pharma Corporation entered into a 10-year contract of lease over a parcel of land in Davao. Subsequently, Zuellig received a letter from the Philippine Bank of Communications. Claiming to be the new owner of the leased property, the bank asked Zuellig to pay rent directly to it. Zuellig promptly informed Lui Enterprises of the Philippine Bank of Communications’s claim. Lui Enterprises wrote to Zuellig and insisted on its right to collect the leased property.

Due to the conflicting claims of Lui Enterprises and Philippine Bank of Communications over the rental payments, Zuellig filed a complaint for interpleader with the RTC in Makati. In its complaint, Zuellig Pharma alleged that it already consigned in court P604,024.35 as rental payments. Zuellig Pharma prayed that it be allowed to consign in court its succeeding monthly rental payments and that Lui Enterprises and the Philippine Bank of Communications be ordered to litigate their conflicting claims.

Philippine Bank of Communications filed its answer to the complaint, while Lui Enterprises filed a motion to dismiss on the ground that Zuellig’s alleged representative did not have authority to file the complaint for interpleader on behalf of the corporation.

According to Lui Enterprises, an earlier filed nullification of deed of dation in payment case pending with the RTC of Davao barred the filing of the interpleader case. Lui Enterprises filed this case against the Philippine Bank of Communications with respect to several properties it dationed to the bank in payment of its obligations, one of which being the property leased to Zuellig.

In the nullification of deed of dation in payment case, Lui Enterprises raised the issue of which corporation had the better right over the rental payments, which, as Lui Enterprises argued, was the same issue involved in the interpleader case.

To avoid possible conflicting decisions of the Davao trial court and the Makati trial court on the same issue, Lui Enterprises argued that the subsequently filed interpleader case be dismissed. Zuellig filed its opposition to the motion to dismiss, arguing that the same should be dismissed for having been filed late. Considering that Lui Enterprises filed its motion to dismiss beyond the 15-day period to file an answer, Zuellig moved that Lui Enterprises be declared in default.

The RTC of Makati found that Lui Enterprises failed to file its motion to dismiss within the reglementary period, and denied its motion to dismiss and declared it in default.

It was only one year after the issuance of the order of default that Lui Enterprises filed a motion to set aside order of default in the RTC of Makati on the ground of excusable negligence. The RTC of Makati subsequently rendered a decision holding that Lui Enterprises was barred from any claim in respect of the rental payments since it was declared in default. Thus, according to the RTC, there was no issue as to which corporation had the better right over the rental payments. The trial court awarded the total consigned amount to the Philippine Bank of Communications. Lui Enterprises appealed to the CA, which found its appellant’s brief insufficient for non-compliance with Rule 44, Section 13 of the 1997 Rules of Civil Procedure. The CA dismissed Lui Enterprises’ appeal and affirmed the decision of the RTC of Makati.

ISSUE:

Whether the annulment of deed of dation in payment pending in the RTC of Davao barred the subsequent filing of the interpleader case in the RTC of Makati

RULING:

No.

The nullification of deed in dation in payment case did not bar the filing of the interpleader case. Litis pendentia is not present in this case.

Under Rule 16, Section 1, a motion to dismiss may be filed on the ground of litis pendentia. The requisites of litis pendentia are:

a. Identity of parties or at least such as represent the same interest in both actions;

b. Identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and

c. The identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res judicata in the other.

All of the requisites must be present. Absent one requisite, there is no litis pendentia.

In this case, there is no litis pendentia since there is no identity of parties in the nullification of deed of dation in payment case and the interpleader case. Zuellig Pharma is not a party to the nullification case filed in the Davao RTC.

There is also no identity of rights asserted and reliefs prayed for. Lui Enterprises filed the first case to nullify the deed of dation in payment it executed in favor of Philippine Bank of Communications. Zuellig subsequently filed the interpleader case to consign in court the rental payments and extinguish its obligation to pay rent. The interpleader case was necessary and was not instituted to harass either Lui Enterprises or the Philippine Bank of Communications. Thus, the pending nullification case did not bar the filing of the interpleader case.

DIGEST: (Charles Gilaga) THE LAW FIRM OF LAGUESMA MAGSALIN CONSULTA AND GASTARDO, Petitioner, vs. THE COMMISSION ON AUDIT and/or REYNALDO A. VILLAR and JUANITO G. ESPINO, JR. in their capacities as Chairman and Commissioner, respectively, Respondents. G.R. No. 185544

FACTS:

Officers of Clark Development Corporation (Clark Co.), a government-owned and controlled corporation, approached the law firm of Laguesma Magsalin Consulta and Gastardo for the assistance in handling the corporation’s labor cases. Clark Co. "sought from the Office of the Government Corporate Counsel [‘OGCC’] its approval for the engagement of [Laguesma Magsalin Consulta and Gastardo] as external counsel.

On December 4, 2001, the Office of the Government Corporate Counsel denied the request. Clark Development Corporation then filed a request for reconsideration. The OGCC reconsidered the request and approved the engagement of Laguesma. It also furnished Clark Development Corporation a copy of a pro-forma retainership contract containing the suggested terms and conditions of the retainership. It instructed Clark Co to submit a copy of the contract to the OGCC after all the parties concerned have signed it.

In the meantime, Laguesma rendered legal services to Clark Co. Clark Co, through its Board of Directors, approved Laguesma’s engagement as private counsel.

Clark Development Corporation requested the Commission on Audit for concurrence of the retainership contract it executed with Laguesma. According to the law firm, it was only at this point when Clark Co informed them that the Commission on Audit required the clearance and approval of the OGCC before it could approve the release of Clark Co’s funds to settle the legal fees due to the law firm.

However, State Auditor IV Elvira G. Punzalan informed Clark Development Corporation that its request for clearance could not be acted upon until the OGCC approves the retainership contract with finality.

Clark Co sent a letter request to the OGCC for the final approval of the retainership contract, in compliance with the Commission on Audit’s requirements.

However, Government Corporate Counsel Devanadera denied Clark Co’s request for approval on the ground that the proforma retainership contract given to them was not "based on the premise that the monthly retainer’s fee and concomitant charges are reasonable and could pass in audit by COA." She found that Clark Co adopted instead the law firm’s proposals concerning the payment of a retainer’s fee on a per case basis without informing the OGCC. She, however, ruled that the law firm was entitled to payment under the principle of quantum meruit and subject to Clark Co Board’s approval and the usual government auditing rules and regulations.

            Clark Co relayed Government Corporate Counsel Devanadera’s letter to the Commission’s Audit Team Leader, highlighting the portion on the approval of payment to Laguesma on the basis of quantum meruit.

The Commission on Audit’s Office of the General Counsel, Legal and Adjudication Sector issued a "Third Indorsement" denying Clark Development Corporation’s request for clearance, citing its failure to secure a prior written concurrence of the COA and the approval with finality of the OGCC. It also stated that its request for concurrence was made three (3) years after engaging the legal services of the law firm.

            Laguesma appealed the "Third Indorsement" to the Commission on Audit and Clark Co also filed a motion for reconsideration.

The Commission on Audit denied the appeal and motion for reconsideration. It ruled that Clark Co violated Commission on Audit Circular No. 98-002 and Office of the President Memorandum Circular No. 9 when it engaged the legal services of Laguesma without the final approval and written concurrence of the Commission on Audit. It also ruled that it was not the government’s responsibility to pay the legal fees already incurred by Clark Co, but rather by the government officials who violated the regulations on the matter.

Clark Co and Laguesma separately filed motions for reconsideration, which the Commission on Audit denied. The resolution also disallowed the payment of legal fees to the law firm on the basis of quantum meruit since the Commission on Audit Circular No. 86-255 mandates that the engagement of private counsel without prior approval "shall be a personal liability of the officials concerned."

Laguesma filed this petition for certiorari. Petitioner states that it filed this petition under Rule XI, Section 1 of the 1997 Revised Rules of Procedure of the Commission on Audit.

 

Issues: 

1. Whether the petition was filed on time; and

2. Whether petitioner is the real party-in-interest.

 

Ruling:

 

Section 3 of Rule 64 of the Rules of Civil Procedure states:

SEC. 3. Time to file petition. — The petition shall be filed within thirty (30) days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the aggrieved party may file the petition within the remaining period, but which shall not be less than five (5) days in any event, reckoned from notice of denial.

Under this rule, a party may file a petition for review on certiorari within 30 days from notice of the judgment being assailed. The reglementary period includes the time taken to file the motion for reconsideration and is only interrupted once the motion is filed. If the motion is denied, the party may file the petition only within the period remaining from the notice of judgment.

In this case, petitioner received the decision of the Commission on Audit on October 16, 2007.It filed a motion for reconsideration on November 6, 2007, or after 21 days. It received notice of the denial of its motion on November 20, 2008.The receipt of this notice gave petitioner nine (9) days, or until November 29, 2008, to file a petition for certiorari. Since November 29, 2008 fell on a Saturday, petitioner could still have filed on the next working day, or on December 1, 2008. It, however, filed the petition on December 19, 2008, which was well beyond the reglementary period.

This petition could have been dismissed outright for being filed out of time. This court, however, recognizes that there are certain exceptions that allow a relaxation of the procedural rules.

In Sanchez v. Court of Appeals, the Court restated the reasons which may provide justification for a court to suspend a strict adherence to procedural rules, such as: (a) matters of life, liberty, honor or property[,] (b) the existence of special or compelling circumstances, (c) the merits of the case, (d) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules, (e) a lack of any showing that the review sought is merely frivolous and dilatory, and (f) the other party will not be unjustly prejudiced thereby.

Considering that the issues in this case involve the right of petitioner to receive due compensation on the one hand and respondents’ duty to prevent the unauthorized disbursement of public funds on the other, a relaxation of the technical rules is in order.

Petitioner is a real party-in-interest

Petitioner is a real party-in-interest, as defined in Rule 3, Section 2 of the 1997 Rules of Civil Procedure:

SEC. 2. Parties in interest.— A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest.

The net effect of upholding or setting aside the assailed Commission on Audit rulings would be to either disallow or allow the payment of legal fees to petitioner. Petitioner, therefore, stands to either be benefited or injured by the suit, or entitled to its avails. It is a real party-in-interest. Clark Development Corporation’s Board of Directors, on the other hand, should have been impleaded in this case as a necessary party.

A necessary party is defined as "one who is not indispensable but who ought to be joined as a party if complete relief is to be accorded as to those already parties, or for a complete determination or settlement of the claimed subject of the action."

digested by Charles Gilaga