Case Summary (G.R. No. 229701)
Events Prompting Judicial Action
Following the promulgation of RR 13‑2013, several sugar producer associations and related entities (the respondents) filed a petition for declaratory relief in the RTC (SCA No. 88‑C) on October 3, 2013, challenging RR 13‑2013 as unconstitutional and asserting violations of due process, the rule on uniformity of taxation, and industry and tariff definitions of raw sugar. The respondents obtained an initial 72‑hour TRO from the trial court on October 3, 2013, which was later extended by the trial court pending further hearing and resolution.
Trial Court Proceedings and Orders
The RTC conducted summary proceedings and, by Consolidated Order dated October 22, 2013, granted a writ of preliminary injunction restraining implementation of RR 13‑2013. The court required respondents to post a surety bond in the amount of P1,000,000.00, which it subsequently approved on October 23, 2013. The writ of preliminary injunction issued on October 23, 2013 enjoined the petitioners from implementing RR 13‑2013 and preserved the status quo ante pending adjudication of the main action. The trial court denied petitioners’ motion for reconsideration by Order dated January 14, 2014.
Grounds Advanced by Petitioners in the Supreme Court
Petitioners elevated the matter to the Supreme Court by a petition for certiorari under Rule 65, contending that the trial court committed grave abuse of discretion: (1) Section 218 of the NIRC forbids issuance of an injunction to restrain collection of national internal revenue taxes (the “no injunction” rule); (2) a preliminary injunction effectively disposes of the main case without trial; (3) respondents failed to establish the requisite elements for injunctive relief; (4) the surety bond amount was grossly inadequate given alleged government revenue losses; (5) the TRO and injunction were extended and issued beyond the original TRO’s duration; and (6) the injunction improperly bound officials (Secretary of Finance, Commissioner of Internal Revenue) outside the RTC’s territorial jurisdiction.
Respondents’ Opposition and Contentions Below
Respondents countered that the “no injunction” rule applies only to collection, not to imposition or implementation of a regulation; that RR 13‑2013 would immediately subject them to VAT and irreparably harm them; that procedural defects alleged by petitioners (notice of hearing, incomplete petition copies) were cured by active participation and inadvertence; that the trial court properly required a bond and fixed its amount within discretion; and that any injunction against national officials is effective only within the territorial jurisdiction of the issuing court (i.e., the RTC’s jurisdiction).
Supervening Regulatory Development (RR 8‑2015) and Judicial Implications
While the case remained pending, the Department of Finance, upon recommendation of the Commissioner of Internal Revenue, issued RR 8‑2015 (May 22, 2015), which amended RR 13‑2008’s definition of raw sugar to expressly include specified classes of muscovado and set polarimeter and color specifications. RR 8‑2015 restored the VAT‑exempt status of raw cane sugar as previously recognized, and the petitioners later confirmed compliance with RR 8‑2015. This regulatory change materially altered the dispute’s practical stakes because the challenged regulatory provision (RR 13‑2013) was superseded by RR 8‑2015.
Supreme Court’s Legal Analysis on Mootness
The Supreme Court dismissed the petition on the ground of mootness. Relying on established doctrine (citing Oclarino v. Navarro and related jurisprudence), the Court explained that an actual case or controversy is a precondition to judicial adjudication and that a case becomes moot when supervening events eliminate the justiciable controversy so that judicial declaration would be of no practical effect. The issuance of RR 8‑2015, which restored the VAT‑exempt status of raw sugar and thus removed the practical injury the respondents sought to avert, was a supervening event that rendered the main declaratory action academic. The Court noted the limited exceptions permitting adjudication of moot questions (grave constitutional violations, exceptional character, paramount public interest, instructive value for bench/bar/public, or issu
...continue readingCase Syllabus (G.R. No. 229701)
Case Caption and Nature of the Proceeding
- Petition for Certiorari under Rule 65 of the Rules of Court, with Urgent Application for Temporary Restraining Order and/or Writ of Preliminary Injunction, filed by petitioners through the Office of the Solicitor General (OSG).
- Petition seeks nullification of specific dispositions of the Regional Trial Court (RTC), Branch 60, Cadiz City, in Special Civil Action (SCA) No. 88-C entitled “In the Matter of Declaratory Relief on the Validity of BIR Revenue Regulations No. 13-2013”:
- Consolidated Orders dated October 22, 2013 granting application for a Writ of Preliminary Injunction against implementation of RR No. 13-2013 (imposition of VAT on sale of raw sugar).
- Order dated October 23, 2013 approving respondents’ surety bond in the amount of P1,000,000.00.
- The Writ of Preliminary Injunction enjoining petitioners from implementing RR 13-2013 and preserving the status quo ante bellum pending determination on the merits.
- Order dated January 14, 2014 denying petitioners’ motion for reconsideration.
- The petition alleges grave abuse of discretion amounting to excess or lack of jurisdiction by the trial court in issuing the writ of preliminary injunction.
Parties
- Petitioners:
- Secretary of Finance (Cesar V. Purisima at the time of the issuance of RR 13-2013).
- Commissioner of Internal Revenue (Kim S. Jacinto-Henares at the time).
- Revenue Regional Director, Bureau of Internal Revenue (BIR), Revenue Region No. 12, Bacolod City (Perfecto L. Aranas named in the underlying declaratory relief petition).
- Respondents:
- Hon. Renato D. Muaez (in his capacity as Executive Judge of Branch 60, RTC Cadiz City) as respondent judge in certiorari.
- 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.
- Antonio G. Tamon (joined after motion for intervention granted).
- Supreme Court disposition authored by Justice Lazaro-Javier; concurrence by Leonen, SAJ. (Chairperson), M. Lopez, J. Lopez, and Kho, Jr., JJ.
Antecedent Regulatory Framework (RR No. 13-2008)
- RR No. 13-2008 issued September 19, 2008, titled “Consolidated Regulations on Advance Value Added Tax on the Sale of Refined Sugar; Amending and/or Revoking All Revenue Issuances Issued to this Effect, and for Other Related Purposes.”
- RR 13-2008:
- Prescribed updated and consolidated policies and procedures for advance payment of VAT on sale of refined sugar pursuant to Republic Act No. 9337 (Reformed VAT Law).
- Included policies and procedures for recognition/classification of sugar and for monitoring processing of raw sugar into refined sugar, and withdrawal from refineries/mills.
- Section 2(b) defined “raw sugar” as sugar whose sucrose content by weight in dry state corresponds to a polarimeter reading of less than 99.5A, and provided internal revenue classifications for cane sugar as “A” (export to US), “B” (domestic market), “C” (reserved/not yet matured for domestic release), “D” (export to world market), and “E” (reclassified D for sale to food processors/exporters in CBW or enterprises in special processing export zone).
Change in Definition: Revenue Regulations No. 13-2013
- RR 13-2013 issued September 20, 2013 by Secretary Cesar V. Purisima upon recommendation of Commissioner Kim S. Jacinto-Henares; captioned “Amending Section 2(b) of Revenue Regulations No. 13-08, Relative to the Definition of Raw Sugar for Value Added Tax Purposes.”
- Scope clause cites Sections 6 and 244 in relation to Sections 106 and 109(1)(A) of the NIRC of 1997, as amended.
- Section 2 amends Section 2(b) of RR 13-08 to read (as promulgated):
- “(b) Raw Sugar refers to sugar produced by simple process of conversion of sugar cane without a need of any of mechanical or similar device such as muscovado. For this purpose, raw sugar refers only to muscovado sugar. Centrifugal process of producing sugar is not in itself a simple process. Therefore, any type of sugar produced therefrom is not exempt from VAT.”
- Repealing clause: inconsistent rules repealed, amended or modified accordingly.
- Effectivity: provisions take effect 15 days following publication in a newspaper of general circulation.
Underlying Petition for Declaratory Relief (SCA No. 88-C)
- Filed October 3, 2013 by respondents (sugar industry associations and NFSP, Inc.) seeking declaration that RR 13-2013 is unconstitutional.
- Principal assertions by respondents:
- RR 13-2013 violated due process because issuance was not preceded by notice, hearing, and publication.
- The RR’s definition of raw sugar violated uniformity of taxation and contravened the intent of paragraph 2, Section 109(1)(A) of the NIRC (exempt transactions) and the technical meaning of raw sugar as commonly understood by industry and as reflected in Tariff and Customs Code and RR 13-2008.
- RTC Branch 60, Cadiz City docketed the case; trial court issued a 72-hour temporary restraining order (TRO) on October 3, 2013.
Procedural History in Trial Court (TRO and Writ of Preliminary Injunction)
- Summary hearing on TRO conducted; by October 7, 2013 TRO extended to 17 days (until October 23, 2013), two days before RR 13-2013’s scheduled effectivity (October 9, 2013).
- Petitioners filed a Motion for Reconsideration with Urgent Motion for Dissolution of TRO (arguing invalid TRO extension, defective notice, incomplete copies of petition, failure to show unmistakable right or irreparable injury) and an Urgent Motion for Early Resolution (October 9 & 14, 2013).
- Respondents’ October 17, 2013 Comment/Opposition countered:
- Petitioners actively participated in injunction hearing — any notice defect cured by cognizance of the trial court;
- Incomplete petition copy due to inadvertence;
- RR 13-2013’s implementation would subject respondents to VAT and cause injury.
- Petitioners’ October 18, 2013 motion for dissolution and opposition argued:
- TRO had expired; no rule permitting injunction against tax collection (citing Section 218 NIRC); respondents failed to establish right in esse for injunctive relief.
Trial Court Ruling (Orders of October 22 and 23, 2013; January 14, 2014 Denial of Reconsideration)
- Consolidated Order dated October 22, 2013 granted Writ of Preliminary Injunction enjoining implementation of RR 13-2013; required P1,000,000.00 surety bond.
- Trial court found the verified petition sufficient per Section 6, Rule 58 of the Rules of Court.
- Trial court con