Galita, Chloe Anne Sy

Requisites of a Declaratory Relief

COMMISSIONER OF INTERNAL REVENUE vs STANDARD INSURANCE CO.,
INC.
GR No. 219340
Nov 07, 2018
Ponente: Bersamin (First Division)

Facts:

On February 13, 2014, Standard received from the Bureau of Internal Revenue (BIR) a
Preliminary Assessment Notice (PAN) regarding its liability amounting to
P377,038,679.55 arising from a deficiency in the payment of documentary stamp taxes
(DST) for taxable year 2011. The Standard contested the PAN through its letter dated
February 27, 2014, but the CIR nonetheless sent to it a formal letter of demand dated
March 27, 2014. Although Standard 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. On December 19,
2014, Standard 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,
Standard contended that the facts of the case must be appreciated in light of the
effectivity of Republic Act (R.A.) No. 10001 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, opining 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 holding 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. Thus, the RTC permanently enjoined the CIR from
proceeding with the enforcement of Sections 108 and 184 of the National Internal
Revenue Code against Standard until the Congress shall have enacted and passed into law
House Bill No. 3235. The CIR directly appealed to the CIR.

Issue:

WoN declaratory relief is procedurally proper as a remedy.

Held:
NO. An 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 ofthe action. Specifically, the
assessments for DST deficiencies of Standard for the years 2011, 2012 and 2013, as
imposed pursuant to Section 184 of the NIRC were the subject of the Standard's petition
for declaratory relief. Said legal provision states:

Section 184. Stamp Tax on Policies of Insurance Upon Property.- On all policies of
insurance or other instruments by whatever name the same may be called, by which
insurance shall be made or renewed upon property of any description, including rents or
profits, against peril by sea or on inland waters, or by fire or lightning, there shall be
collected a documentary stamp tax of Fifty centavos (P0.50) on each Four pesos (P4.00),
or fractional part thereof, of the amount of premium charged: Provided, however, That no
documentary stamp tax shall be collected on reinsurance contracts or on any instrument
by which cession or acceptance of insurance risks under any reinsurance agreement is
effected or recorded.

What was being thereby taxed was the privilege of issuing insurance policies; hence, the
taxes accrued at the time the insurance policies were issued. Verily, 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 and Section 184 of the NIRC
accrued upon the Standard'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 Standard that it could be rendered technically insolvent
through the imposition of the iniquitous taxes imposed by Section 108 and Section 184 of
the NIRC, 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 Standard was thereby engaging in speculation or conjecture, or
arguing on probabilities, not actualities.

Admittedly, the Standard sought in the RTC the determination of its right to be assessed
the correct taxes under Section 108 and Section 184 of the NIRC by contending said tax
provisions to be invalid and unconstitutional for their unequal treatment of life and non-
life insurance policies. The Standard cited R.A. No. 10001 and House Bill No. 3235 in
support of its contention. Obviously, the challenge mounted by the Standard against the
tax provisions in question could be said to be based on a contingency that might or might
not occur.

Lastly, Standard'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.
Galita, Chloe Anne Sy
Requisites of a Declaratory Relief
REPUBLIC OF THE G.R. No. 204603 PHILIPPINES, vs. HERMINIO HARRY
ROQUE,
G.R. No. 204603
September 24, 2013
PERLAS-BERNABE, J.:

Facts:

On July 17, 2007, private respondents filed a Petition for declaratory relief before the
RTC, assailing the constitutionality of the following sections of RA 9372: (a) Section 3,
for being void for vagueness; (b) Section 7, for violating the right to privacy of
communication and due process and the privileged nature of priest-penitent relationships;
(c)Section 18, for violating due process, the prohibition against ex post facto laws or bills
of attainder, the Universal Declaration of Human Rights, and the International Covenant
on Civil and Political Rights, as well as for contradicting Article 125 of the Revised Penal
Code, as amended; (d) Section 26, for violating the right to travel; and (e) Section 27, for
violating the prohibition against unreasonable searches and seizures.

Petitioners moved to suspend the proceedings, averring that certain petitions (SC
petitions) raising the issue of RA 9372’s constitutionality have been lodged before the
Court. The said motion was granted in an Order dated October 19, 2007.
On October 5, 2010, the Court promulgated its Decision in the Southern Hemisphere
cases and thereby dismissed the SC petitions.
On February 27, 2012, petitioners filed the subject motion to dismiss, contending that
private respondents failed to satisfy the requisites for declaratory relief.

Issue:

WON the requisites for declaratory relief were met.

Held:

Case law states that the following are the requisites for an action for declaratory relief:

first , the subject matter of the controversy must be a deed, will, contract or other written
instrument, statute, executive order or regulation, or ordinance; second , the terms of said
documents and the validity thereof are doubtful and require judicial construction; third ,
there must have been no breach of the documents in question; fourth , there must be an
actual justiciable controversy or the "ripening seeds" of one between persons whose
interests are adverse; fifth , the issue must be ripe for judicial determination; and sixth ,
adequate relief is not available through other means or other forms of action or
proceeding.34
Based on a judicious review of the records, the Court observes that while the first,35
second,36 and third37 requirements appear to exist in this case, the fourth, fifth, and sixth
requirements, however, remain wanting.

As to the fourth requisite, there is serious doubt that an actual justiciable controversy or
the "ripening seeds" of one exists in this case.
Pertinently, 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.38 Corollary thereto, by "ripening seeds" it is meant, not that sufficient
accrued facts may be dispensed with, but that a dispute may be tried at its inception
before it has accumulated the asperity, distemper, animosity, passion, and violence of a
full blown battle that looms ahead. The concept describes a state of facts indicating
imminent and inevitable litigation provided that the issue is not settled and stabilized by
tranquilizing declaration.39

Without any justiciable controversy, the petitions have become pleas for declaratory
relief, over which the Court has no original jurisdiction. Then again, declaratory actions
characterized by "double contingency," where both the activity the petitioners intend to
undertake and the anticipated reaction to it of a public official are merely theorized, lie
beyond judicial review for lack of ripeness.

As to the fifth requisite for an action for declaratory relief, neither can it be inferred that
the controversy at hand is ripe for adjudication since the possibility of abuse, based on the
above-discussed allegations in private respondents’ petition, remain highly-speculative
and merely theorized. It is well-settled that a question is ripe for adjudication when the
act being challenged has had a direct adverse effect on the individual challenging it.47
This private respondents failed to demonstrate in the case at bar.

Finally, as regards the sixth requisite, the Court finds it irrelevant to proceed with a
discussion on the availability of adequate reliefs since no impending threat or injury to
the private respondents exists in the first place.1âwhkhphhihi1
Galita, Chloe Anne Sy
Requisites of a Declaratory Relief
Mike Velarde vs. SOCIAL JUSTICE SOCIETY
G.R. No. 159357
April 28, 2004
Ponente: J. Panganiban

Facts:

On January 28, 2003, SJS filed a Petition for Declaratory Relief before the RTC-Manila
against Velarde and his co-respondents Eminence, Jaime Cardinal Sin, Executive
Minister Eraño Manalo, Brother Eddie Villanueva and Brother Eliseo F. Soriano. SJS, a
registered political party, sought the interpretation of several constitutional provisions,
specifically on the separation of church and state; and a declaratory judgment on the
constitutionality of the acts of religious leaders endorsing a candidate for an elective
office, or urging or requiring the members of their flock to vote for a specified candidate.

The petitioner filed a Motion to dismiss before the trial court owing to the fact that
alleged that the questioned SJS Petition did not state a cause of action and that there was
no justiciable controversy.

Issue:

Whether or not the Petition for Declaratory Relief raise a justiciable controversy?
Procedural Issues:

Held:

NO. A justiciable controversy to an existing case or controversy that is appropriate or

ripe for judicial determination, not one that is conjectural or merely anticipatory. A
petition filed with the trial court should contain a plain, concise and direct statement of
the ultimate facts on which the party pleading relies for his claim.

The SJS Petition fell short of the requirements to constitutue a jusiciable controversy due
to the following reasons.

It stated no ultimate facts. The petition simply theorized that the people elected
who were endorsed by these religious leaders might become beholden to the latter. It did
not sufficiently state a declaration of its rights and duties, what specific legal right of the
petitioner was violated by the respondents therein, and what particular act or acts of the
latter were in breach of its rights, the law or the constitution. The petition did not pray for
a stoppage of violated rights. It merely sought an opinion of the trial court.
Galita, Chloe Anne Sy
Requisites of a Declaratory Relief
RAFAEL R. MARTELINO vs. NATIONAL HOME MORTGAGE FINANCE
CORPORATION and HOME DEVELOPMENT MUTUAL FUND,
G.R. No. 160208
June 30, 2008

FACTS:

Petitioners filed a petition for declaratory relief and prohibition with urgent prayer for the
issuance of a TRO and/or preliminary injunction filed before the RTC of Caloocan City
against the NHMFC and HDMF and Sheriff Alberto A. Castillo.

Petitioners alleged that they obtained housing loans from respondents who directly
released the proceeds to the subdivision developer, Shelter Philippines, Inc. (Shelter).

However, Shelter failed to complete the subdivision according to the subdivision plan.
Petitioners spent their own resources to improve the subdivision roads and alleys, and to
install individual water facilities. Respondents failed to ensure Shelter’s completion of
the subdivision.

Respondents ignored their right to suspend amortization payments for Shelter’s failure to
complete the subdivision, charged interests and penalties on their outstanding loans,
threatened to foreclose their mortgages and initiated foreclosure proceedings against
petitioner Rafael Martelino.

Hence, they prayed that respondents be restrained from foreclosing their mortgages.

The RTC set the PI hearing, but said order, including the summons and petition, were
served only on the NHMFC and Sheriff Castillo. Subsequently, the RTC
ordered that a writ of preliminary injunction be issued restraining the respondents from
foreclosing the mortgages on petitioners’ houses.

In dismissing the case, the RTC ruled that the issue of non-completion of the subdivision
should have been brought before the HLURB. It also ruled that no judicial declaration
can be made because the petition was vague. The RTC assumed that the subject of the
petition was Republic Act No. 8501 (Housing Loan Condonation Act of 1998) which was
cited by petitioners. But the RTC pointed out that petitioners failed to state which section
of the law affected their rights and needed judicial declaration. Moreover, the RTC noted
that respondents still foreclosed their mortgages, a breach of said law which rendered the
petition for declaratory relief improper. The proper remedy was an ordinary civil action.

The Court of Appeals affirmed the RTC Order.

Issue:
WON the petition for declaratory relief and prohibition was properly dismissed

Held:

No. The ruling that the Petition for Declaratory Relief and Prohibition is improper is
correct, because the Petition must be filed before the occurrence of breach or any
violation. Under §1, Rule 63, a person must file a petition for declaratory relief before
breach or violation of a deed, will, contract, other written instrument, statute, executive
order, regulation, ordinance or any other governmental regulation.

However, petitioners had already suspended payment of amortizations. Clearly giving the
HDMF a right to foreclose the mortgage for failure to pay the debt secured by the
mortgage. Petitioners’ actual suspension of payments defeated the purpose of the action
to secure an authoritative declaration of their supposed right to suspend payment, for their
guidance.

Thus, the RTC could no longer assume jurisdiction over the action for declaratory relief
because there was an occurrence of breach before filing the action.
Galita, Chloe Anne Sy
Requisites of a Declaratory Relief
ANTONIO P. TAMBUNTING, JR vs. SPOUSES EMILIO SUMABAT and
ESPERANZA BAELLO,
G.R. No. 144101
September 16, 2005
CORONA, J.:

Facts:

Facts: Spouses Sumabat and Baello were the registered land owners of a
parcel of land in Caloocan. In May 1973, and in order to obtain a P7,727.95 loan
from petitioner Tambunting, the spouses mortgaged said land to the former.
Subsequently, Tambunting assigned his rights to the mortgaged to Commercial House
Finance (CHFI). And because respondent spouses have not been paying their
monthly amortizations, they were informed that their indebtedness has ballooned to
P15k. And so, CHFI and Tambunting filed a case for foreclosure but was restrained by
Branch 33 of the RTC of Caloocan. The reason for the restraint was because the
respondents were able to file an action for declaratory relief with said RTC. In their
action, respondents were praying that the court rule on the extent or amount of their
actual indebtedness.

In said RTC case, which was filed March 1979, herein petitioners were declared in
default. Thus, even when the Tambunting, et al moved for the dismissal of the case on
the ground that “mortgaged deed/contract had already been breached prior to the
action”, said motion was denied for having been filed out of time.
On Jan. 1981, the RTC rendered a decision finding that respondents liability, by virtue
of their mortgage deed/contract, was P15,743.83. Pursuant to this decision, the
respondents made a consignation with the RTC in said amount.

After almost 14 years, or on Feb 1995, CHFI again foreclosed on the contested land.
The respondents came to know of this because they received a notice of foreclosure
sale, to be conducted by the sheriff, of the land in question. This time, the petitioners filed
an action with Branch 120 of the RTC of Caloocan for injunction against the foreclosure
sale. But, the sale still pushed thru, with CHFI being declared the highest bidder. A new
TCT was then issued to CHFI. Thus, respondent spouses amended their complaint to an
action for nullification of the foreclosure/sheriff’s sale, the new TCT of CHFI, as well as
reconveyance. On Feb 2000, Branch 120 of the RTC declared the foreclosure sale as void.
It likewise ruled that reconveyance of the property should be made to the respondents.
This decision was grounded on the fact that consignation of P15k has already been made
by CHFI pursuant to the earlier decision of the Branch 33 of the RTC.

Issue:

Was the decision of Branch 120 of the RTC wrong when it ordered the nullification
of the foreclosure sale on the ground that consignation has already been made in a
previous case.

Held:

The trial court erred when it affirmed the validity of the consignation. The RTC
should have been barred from taking cognizance of the action for declaratory relief
since petitioners, being already in default in their loan amortizations, there existed a
violation of the mortgage deed even before the institution of the action. Hence, the CFI
could not have rendered a valid judgment in Civil Case No. C-7496, and the
consignation made pursuant to a void judgment was likewise void.

An action for declaratory relief should be filed by a person interested under a deed,
will, contract or other written instrument, and whose rights are affected by a statute,
executive order, regulation or ordinance before breach or violation thereof. The
purpose of the action is to secure an authoritative statement of the rights and
obligations of the parties under a statute, deed, contract, etc. for their guidance in its
enforcement or compliance and not to settle issues arising from its alleged breach. It
may be entertained only before the breach or violation of the statute, deed, contract,
etc. to which it refers. Where the law or contract has already been contravened prior
to the filing of an action for declaratory relief, the court can no longer assume
jurisdiction over the action.