G.R. No. 219340 - Commissioner of Internal Revenue vs. Standard Insurance Co., Inc.

Case Summary (G.R. No. 219340)

Key Dates and Documents

BIR issued a Preliminary Assessment Notice (PAN) to Standard Insurance on February 13, 2014 (DST deficiency for 2011). Final Decision on Disputed Assessment (FDDA) dated November 25, 2014, received December 4, 2014 (total liability for DST deficiency P418,830,567.46). Petitions, TRO and writ of preliminary injunction filed in RTC as Civil Case No. 14‑1330 in December 2014; RTC issued TRO (Dec. 23, 2014), granted WPI (Jan. 13–14, 2015), and rendered a Decision permanently enjoining the BIR from implementing Sections 108 and 184 (May 8, 2015). CIR filed Petition for Review on Certiorari in the Supreme Court; the Supreme Court granted the petition and annulled the RTC decision (Nov. 7, 2018). Motion for Reconsideration filed by Standard Insurance was denied by the Supreme Court (Resolution dated April 28, 2021).

Antecedent Facts and Respondent’s Claim

Standard Insurance received BIR assessments for documentary stamp tax (DST) deficiencies for taxable years 2011, 2012, and 2013, and for VAT and other taxes for 2012, which it protested. The company challenged the DST and VAT rates on non‑life insurance premiums under Sections 184 and 108 of the NIRC as violative of constitutional limitations on taxation and unequal treatment vis‑à‑vis life insurance companies following the enactment of RA 10001 (which reduced tax on life insurance premiums from 5% to 2%). While House Bill No. 3235 seeking parity for non‑life insurers was pending in Congress, Standard Insurance filed a Petition for Declaratory Relief in the RTC and sought TRO/WPI to enjoin enforcement of Sections 108 and 184 against it.

RTC Rulings and Relief Granted

The RTC issued a TRO (Dec. 23, 2014), then a writ of preliminary injunction (Jan. 13–14, 2015) after Standard Insurance posted bond, and ultimately a final decision (May 8, 2015) permanently enjoining the CIR and agents from implementing Sections 108 and 184 of the NIRC against Standard Insurance until Congress enacted HB 3235. The RTC concluded that a taxpayer’s right to contest tax assessments could be the basis for declaratory relief and that such contest did not bar judicial determination.

Court of Appeals Proceeding

The CIR filed a Rule 65 petition for certiorari with the Court of Appeals (CA) challenging interlocutory RTC orders related to the WPI; that petition (CA‑G.R. SP No. 140403) was later dismissed by the CA for failure to comply with a directive to submit pertinent pleadings. The CA dismissal did not resolve the merits of the underlying dispute and is part of the procedural posture considered by the Supreme Court.

Supreme Court Grant of Petition for Review on Certiorari

The Supreme Court granted the CIR’s Petition for Review on Certiorari under Rule 45, annulled and set aside the RTC decision, dismissed Civil Case No. 14‑1330 for lack of jurisdiction, and quashed the WPI for being issued without jurisdiction. The Court ordered respondent to pay costs of suit. The Court based its disposition primarily on jurisdictional and procedural grounds rather than resolving the constitutionality of the tax provisions on the merits.

Issues Raised in the Motion for Reconsideration

Standard Insurance’s motion for reconsideration argued (a) the CIR engaged in forum shopping and failed the certification against forum shopping; (b) the Supreme Court improperly entertained factual questions barred in a Rule 45 petition; (c) the RTC had jurisdiction to entertain declaratory relief and issue an injunction against alleged unconstitutional statutes; and (d) the respondent’s equal protection right and right to equal and uniform taxation were improperly disregarded.

Forum Shopping and Certification Analysis

The Court reiterated the constitutional and procedural test for forum shopping (identity of parties/interests, rights/causes of action, and reliefs sought). It found no forum shopping because the CIR’s CA petition challenged interlocutory orders concerning the WPI while the Rule 45 petition challenged the RTC’s final judgment that disposed of the main action — different orders, different reliefs, and different objectives. Regarding the certification requirement for Rule 45 petitions, the Court acknowledged an initial omission in a certification accompanying a motion for extension but accepted that the required sworn certification against forum shopping was timely attached to the filed petition itself, concluding compliant disclosure was made when required.

Questions of Law vs. Questions of Fact Under Rule 45

The Court affirmed that a Rule 45 petition must raise only questions of law. It characterized the CIR’s challenges as legal in nature: whether declaratory relief is an appropriate vehicle to contest tax assessments; whether the petition met Rule 63 requisites for declaratory relief; whether Sections 108 and 184 violate equal protection; and whether injunctive relief was proper notwithstanding Section 218 of the NIRC and the rule that judicial decisions must finally determine rights and obligations. These are legal issues amenable to review without re‑weighing factual evidence, and thus properly raised under Rule 45.

Jurisdictional Bar: CA 55 and Section 218 of the NIRC

The Court emphasized that CA 55 excludes petitions for declaratory relief from cases where a taxpayer questions his liability for payment of any tax administered by the BIR or Bureau of Customs. The Court further relied on Section 218 of the NIRC, which expressly precludes courts from granting injunctions to restrain collection of national internal revenue taxes, fees, or charges. Together, those provisions operate to deny jurisdiction to general trial courts to entertain petitions for declaratory relief or grant injunctive relief that would restrain tax collection. The only statutory exception recognized is under Section 11 of RA 1125 (pertaining to the Court of Tax Appeals), which allows the CTA to suspend collection when it finds that collection may jeopardize the government’s and/or taxpayer’s interest, subject to deposit or bond requirements.

Application of Jurisdictional Principles to the Case

The Court found that Standard Insurance had already been assessed and received demand notices before filing its Petition for Declaratory Relief. By invoking declaratory relief and seeking injunctive protection to halt enforcement of the assessments, the respondent effectively sought to restrain tax collection through a forum (RTC) that lacked jurisdiction under CA 55 and Section 218. The RTC therefore acted without jurisdiction in taking cognizance of the petition and in issuing the WPI and the permanent injunction. The proper course for disputing the assessments would have been the remedies prescribed under the tax laws and RA 1125 procedures, including appeals or petitions to the Court of Tax Appeals.

Requisites of a Petition for Declaratory Relief and Their Absence

The Court reviewed the six requisites for declaratory relief: (1) subject matter is a written instrument, statute, or similar; (2) terms and validity are doubtful and require judicial construction; (3) no breach has occurred; (4) an actual justiciable controversy exists between adverse interests; (5) the issue is ripe for judicial determination; and (6) adequate relief is not

Case Syllabus (G.R. No. 219340)

Parties and Court

Petitioner: Commissioner of Internal Revenue (CIR), head of the Bureau of Internal Revenue (BIR), charged with assessing and collecting national internal revenue taxes, fees, and charges.
Respondent: Standard Insurance Co., Inc., a domestic corporation organized under Philippine law engaged in non-life insurance business.
Judicial bodies involved: Regional Trial Court (RTC), Branch 66, Makati City; Court of Appeals (CA); Supreme Court of the Philippines, Third Division.
Author of the Motion for Reconsideration resolution: Justice Hernando. Concurrence in the resolution by Justices Leonen (Chairperson), Inting, Delos Santos, and J. Lopez.
Related Supreme Court Decision (the assailed Decision) was penned by Chief Justice Lucas P. Bersamin and concurred in by Associate Justices Francis H. Jardeleza, Noel Gimenez Tijam, and Andres B. Reyes, Jr.; Associate Justice Alexander G. Gesmundo was on wellness leave.

Case Citation and Procedural Posture

G.R. No.: 219340.
Date of Supreme Court resolution on the Motion for Reconsideration: April 28, 2021.
The Supreme Court had earlier rendered a Decision on November 7, 2018 granting petitioner’s Petition for Review on Certiorari and annulling the RTC Decision of May 8, 2015 and RTC Order of July 10, 2015.
The Motion for Reconsideration dated from respondent sought reconsideration of the November 7, 2018 Decision; the Motion for Reconsideration was denied in the present resolution.

Antecedent Facts

On February 13, 2014, Standard Insurance received a Preliminary Assessment Notice (PAN) from the BIR for a documentary stamp tax (DST) deficiency for taxable year 2011 in the amount of P377,038,679.55.
Standard Insurance contested the PAN, but the CIR issued a formal letter of demand.
Respondent sought reconsideration; notwithstanding, on December 4, 2014, Standard Insurance received a Final Decision on Disputed Assessment (FDDA), dated November 25, 2014, declaring liability for the DST deficiency including interest and compromise penalty totaling P418,830,567.46.
On December 11, 2014, Standard Insurance sought reconsideration of the FDDA and objected to the tax imposed pursuant to Section 184 of the NIRC as allegedly violative of constitutional limitations on taxation.
Standard Insurance also received demands for deficiency income tax, value-added tax (VAT), premium tax, DST, expanded withholding tax, and fringe benefit tax for taxable year 2012, which it protested on December 10, 2014, arguing that the VAT and DST rates on premiums for non-life property insurance under Sections 108 and 184 of the NIRC were violative of constitutional limitations on taxation.
A demand for deficiency DST for taxable year 2013 was also received by respondent.
On December 19, 2014, Standard Insurance filed Civil Case No. 14-1330 in the RTC praying for a temporary restraining order (TRO) and writ of preliminary injunction (WPI), seeking judicial determination of the constitutionality of Sections 108 and 184 of the NIRC as applied to non-life insurance companies.
In its petition, Standard Insurance framed the case in light of Republic Act No. 10001 (reducing life insurance premium tax from 5% to 2%) and the pendency of deliberations on House Bill No. 3235 seeking to rationalize taxes on non-life insurance policies to achieve equal treatment between life and non-life insurers.

RTC Proceedings and Rulings

December 23, 2014: RTC issued a TRO enjoining the BIR and its agents from implementing the NIRC provisions in relation to the FDDA for 2011 and pending assessments for 2012 and 2013.
January 13, 2015: RTC issued an Order granting respondent’s application for a WPI, ordering the CIR and representatives to refrain from enforcing Sections 108 and 184 of the NIRC until further orders, conditioned upon respondent’s posting of the requisite bond.
January 14, 2015: The WPI was issued.
February 18, 2015: RTC issued an Order that (a) dismissed the CIR’s motion to set hearing for dismissal as issues could be resolved with the main case, (b) denied CIR’s motion for reconsideration of the WPI grant, and (c) denied Standard Insurance’s motion to declare petitioner in default.
May 8, 2015: RTC rendered its Decision holding that although taxes are self-assessing, taxpayers retain the right to contest particular applications of tax laws and that such contest is not a breach deterring declaratory relief; the RTC permanently enjoined the implementation or enforcement of Sections 108 and 184 of the NIRC against Standard Insurance until Congress shall enact and pass HB 3235 into law. The dispositive language read:
- “the respondent, its agents, representatives, or any persons acting on its behalf is hereby permanently enjoined from proceeding with the implementation or enforcement of Sections 108 and 184 of the National Internal Revenue Code against petitioner Standard Insurance Co., Inc. until the Congress shall have enacted and passed into law House Bill No. 3235 in conformity with the provisions of the Constitution.”
July 10, 2015: The RTC denied the CIR’s motion for reconsideration for lack of merit.

Court of Appeals Proceedings

Petitioner filed a Petition for Certiorari pursuant to Rule 65 seeking to set aside the RTC Orders dated January 13 and February 18, 2015 and to dissolve the WPI.
The Petition in the CA was docketed as CA-G.R. SP No. 140403.
October 30, 2015: The CA dismissed the petition for failure of petitioner to comply with the CA’s August 19, 2015 Resolution to submit copies of pertinent pleadings.

Petition for Review on Certiorari to the Supreme Court and Assailed Decision

September 7, 2015: Petitioner filed a Petition for Review on Certiorari before the Supreme Court seeking reversal of the RTC Decision and RTC Order on grounds:
- (a) Petition for Declaratory Relief is not applicable to contest tax assessments and petition failed to satisfy Rule 63 requisites;
- (b) RTC erred adjudging Sections 108 and 184 of the NIRC violative of equal protection;
- (c) RTC gravely erred in granting injunctive relief prohibited by Section 218 of the NIRC and absent a clear legal right;
- (d) RTC’s relief fell outside the scope of declaratory relief and violated the rule that judicial decisions must finally determine parties’ rights, obligations, and responsibilities.
November 7, 2018: The Supreme Court rendered a Decision granting the petition for review on certiorari, annulling and setting aside the RTC Decision in Civil Case No. 14-1330, dismissing the case for lack of jurisdiction, quashing the WPI for being issued without jurisdiction, and ordering respondent to pay costs of suit. The Court held that the RTC grossly erred and acted without jurisdiction in giving due course to the declaratory relief petition and permanently enjoining enforcement of Sections 108 and 184 of the NIRC in violation of Section 218 of the NIRC and Section 11 of Republic Act No. 1125.
The Supreme Court opined that respondent’s petition for declaratory relief failed to comply with requisites bec