G.R. No.

127913

September 13, 2001

RIZAL COMMERCIAL BANKING CORPORATION, petitioner,

vs.
METRO CONTAINER CORPORATION, respondent.
KAPUNAN, J.:
Assailed in this petition for review on certiorari are the Decision, promulgated on 18 October
1996 and the Resolution, promulgated on 08 January 1997, of the Court of Appeals in CAG.R. SP No. 41294.
The facts of the case are as follows:
On 26 September 1990, Ley Construction Corporation (LEYCON) contracted a loan from Rizal
Commercial Banking Corporation (RCBC) in the amount of Thirty Million Pesos
(P30,000,000.00). The loan was secured by a real estate mortgage over a property, located
in Barrio Ugong, Valenzuela, Metro Manila (now Valenzuela City) and covered by TCT No. V17223. LEYCON failed to settle its obligations prompting RCBC to institute an extrajudicial
foreclosure proceedings against it.
After LEYCON's legal attempts to forestall the action of RBCB failed, the foreclosure took
place on 28 December 1992 with RCBC as the highest bidder.
LEYCON promptly filed an action for Nullification of Extrajudicial Foreclosure Sale and
Damages against RCBC. The case, docketed as Civil Case No. 4037-V-93, was raffled to the
Regional Trial Court (RTC) of Valenzuela, Branch 172. Meanwhile, RCBC consolidated its
ownership over the property due to LEYCON's failure to redeem it within the 12-month
redemption period and TCT No. V-332432 was issued if favor of the bank. By virtue thereof,
RCBC demanded rental payments from Metro Container Corporation (METROCAN) which was
leasing the property from LEYCON.
On 26 May 1994, LEYCON filed an action for Unlawful Detainer, docketed as Civil Case No.
6202, against METROCAN before the Metropolitan Trial Court (MeTC) of Valenzuela, Branch
82.
On 27 May 1994, METROCAN filed a complaint for Interpleader, docketed as Civil Case No.
4398-V-94 before the Regional Trial Court of Valenzuela, Metro Manila; Branch 75 against
LEYCON and RCBC to compel them to interplead and litigate their several claims among
themselves and to determine which among them shall rightfully receive the payment of
monthly rentals on the subject property .On 04 July 1995, during the pre-trial conference in
Civil Case No. 4398-V-94, the trial court ordered the dismissal of the case insofar as
METROCAN and LEYCON were concerned in view of an amicable settlement they entered by
virtue of which METROCAN paid back rentals to LEYCON.
On 31 October 1995, judgment was rendered in Civil Case No.6202, which among other
things, ordered METROCAN to pay LEYCON whatever rentals due on the subject premises.
The MeTC decision became final and executory.
On 01 February 1996, METROCAN moved for the dismissal of Civil Case No. 4398-V-94 for
having become moot and academic due to the amicable settlement it entered with LEYCON
on 04 July 1995 and the decision in Civil Case No. 6202 on 31 October 1995. LEYCON,
likewise, moved for the dismissal of the case citing the same grounds cited by METROCAN.
On 12 March 1996, the two motions were dismissed for lack of merit. The motions for
reconsideration filed by METROCAN and LEYCON were also denied prompting METROCAN to
seek relief from the Court of Appeals via a petition for certiorari and prohibition with prayer
for the issuance of a temporary restraining order and a writ of preliminary injunction.
LEYCON, as private respondent, also sought for the nullification of the RTC orders.
In its Decision, promulgated on 18 October 1996, the Court of Appeals granted the petition
and set aside the 12 March 1996 and 24 June 1996 orders of the RTC. The appellate court
also ordered the dismissal of Civil Case No. 4398-V-94. RCBC's motion for reconsideration
was denied for lack of merit in the resolution of 08 January 1997.
Hence, the present recourse.

RCBC alleged, that:

(1) THE DECISION OF THE METROPOLITAN TRIAL COURT IN THE EJECTMENT CASE BETWEEN
METROCAN AND LEYCON DOES NOT AND CANNOT RENDER THE INTERPLEADER ACTION
MOOT AND ACADEMIC.
(2) WHILE A PARTY WHO INITIATES AN INTERPLEADER ACTION MAY NOT BE COMPELLED TO
LITIGATE IF HE IS NO LONGER INTERESTED TO PURSUE SUCH CAUSE OF ACTION, SAID PARTY
MAY NOT UNILATERALLY CAUSE THE DISMISSAL OF THE CASE AFTER THE ANSWER HA VE
BEEN FILED. FURTHER, THE DEFENDANTS IN AN INTERPLEADER SUIT SHOULD BE GIVEN FULL
OPPORTUNITY TO LITIGATE THEIR RESPECTIVE CLAIMS.1
We sustain the Court of Appeals.
Section 1, Rule 63 of the Revised Rules of Court2 provides:
Section 1. - Interpleader when proper. - Whenever conflicting claims upon the same subject
matter are or may be made against a person, who claims no interest whatever in the subject
matter, or an interest which in whole or in part is not disputed by the claimants, he may
bring an action against the conflicting claimants to compel them to interplead and litigate
their several claims among themselves.
In the case before us, it is undisputed that METROCAN filed the interpleader action (Civil
Case No. 4398-V-94) because it was unsure which between LEYCON and RCBC was entitled
to receive the payment of monthly rentals on the subject property. LEYCON was claiming
payment of the rentals as lessor of the property while RCBC was making a demand by virtue
of the consolidation of the title of the property in its name.
It is also undisputed that LEYCON, as lessor of the subject property filed an action for
unlawful detainer (Civil Case No. 6202) against its lessee METROCAN. The issue in Civil Case
No. 6202 is limited to the question of physical or material possession of the premises.3 The
issue of ownership is immaterial therein4 and the outcome of the case could not in any way
affect conflicting claims of ownership, in this case between RCBC and LEYCON. This was
made clear when the trial court, in denying RCBC's "Motion for Inclusion x x x as an
Indispensable Party" declared that "the final determination of the issue of physical
possession over the subject premises between the plaintiff and the defendant shall not in
any way affect RCBC's claims of ownership over the said premises, since RCBC is neither a
co-lessor or co- lessee of the same, hence he has no legal personality to join the parties
herein with respect to the issue of physical possession vis-a-vis the contract of lease
between the parties."5 As aptly pointed by the MeTC, the issue in Civil Case No. 6202 is
limited to the defendant LEYCON's breach of the provisions of the Contract of Lease
Rentals.6
Hence, the reason for the interpleader action ceased when the MeTC rendered judgment in
Civil Case No. 6202 whereby the court directed METROCAN to pay LEYCON "whatever rentals
due on the subject premises x x x." While RCBC, not being a party to Civil Case No. 6202,
could not be bound by the judgment therein, METROCAN is bound by the MeTC decision .
When the decision in Civil Case No. 6202 became final and executory, METROCAN has no
other alternative left but to pay the rentals to LEYCON. Precisely because there was already
a judicial fiat to METROCAN, there was no more reason to continue with Civil Case No. 4398V-94. Thus, METROCAN moved for the dismissal of the interpleader action not because it is
no longer interested but because there is no more need for it to pursue such cause of action.
It should be remembered that an action of interpleader is afforded to protect a person not
against double liability but against double vexation in respect of one liability.7 It requires, as
an indespensable requisite, that "conflicting claims upon the same subject matter are or
may be made against the plaintiff-in-interpleader who claims no interest whatever in the
subject matter or an interest which in whole or in part is not disputed by the claimants."8
The decision in Civil Case No. 6202 resolved the conflicting claims insofar as payment of
rentals was concerned.
Petitioner is correct in saying that it is not bound by the decision in Civil Case No. 6202. It is
not a party thereto. However, it could not compel METROCAN to pursue Civil Case No. 4398V-94. RCBC has other avenues to prove its claim. Is not bereft of other legal remedies. In
fact, he issue of ownership can very well be threshed out in Civil Case No. 4037-V-93, the
case for Nullification of Extrajudicial foreclosure Sale and Damages filed by LEYCON against
RCBC.1wphi1.nt

WHEREFORE, the petition for review is DENIED and the Decision of the Court of Appeals,
promulgated on 18 October 1996, as well as its Resolution promulgated on 08 January 1997,
are AFFIRMED.
SO ORDERED.
G.R. No. L-41831

February 18, 1976

CONTINENTAL DEVELOPMENT CORPORATION, petitioner,

vs.
BENITO GERVASIO TAN and ZOILA CO LIM, respondents.
MAKASIAR, J.:
These two petitions seek a review of the order dated March 12, 1974 of the Judge presiding
Branch XXVI of the Manila Court of First Instance, dismissing petitioner Continental
Development Corporation's complaint. The COURT resolved to treat these petitions as
special civil actions, the petition to dismiss filed by the respondent Benito Gervasio Tan as
answer and the cases as submitted for decision. On November 26, 1973, herein petitioner
Continental Development Corporation filed a complaint for interpleader against the
defendants Benito Gervasio Tan and Zoila Co Lim, alleging among others:
2.
That in the books of the plaintiff, there appears the name of the defendant Benito
Gervasio Tan as one of its stockholders initially sometime in 1975 with fifty (50) common
shares covered by of stock Nos. 12 and 13, and subsequently credited with (75) shares by
way of dividends covered by certificates of stock Nos. 20 and 25, or an outstanding total
stockholding of one hundred twenty five (125) common shares of the par value of Two
Hundred Fifty Pesos (P250.00) each.
3.
That said defendant Benito Gervasio Tan, personally or through his lawyer, has since
December, 1972, been demanding from by letters and telegrams, the release to him of the
certificates stock aforesaid but which the plaintiff has not done so far and is prevented from
doing so because of the vehement and adverse claim thereto by the other defendant, Zoila
Co Lim.
4.
That the defendant Zoila Co Lim, by letters sent to the plaintiff through her counsel,
has laid claim and persists in claiming the very same shares of stock being demanded by the
other defendant alleging that said stocks really belonged to her mother So now already
deceased, and strongly denying her proclaim to the same.
5.
That both defendants, through their respective lawyers, threaten to take punitive
measures against the plaintiff company should it take any steps that may prejudice their
respective interests in so far as the stocks in question are concerned.
6.
That plaintiff is not sufficiently informed of the right of the respective claimants and
therefore not in a position to determine justly and correctly their conflicting claims.
7.
That the plaintiff company has no interest of any kind in said stocks and is ready and
willing to deliver the corresponding certificates of ownership to whomsoever as this
Honorable Court may direct. (pp. 22-23, rec.)
and praying that the defendants be directed to interplead and litigate their respective claims
over the aforementioned shares of stock and to determine their respective rights thereto.
On January 7, 1974, herein respondent Benito Gervasio Tan, as defendant in the lower court,
filed a motion to dismiss the complaint, on the ground, inter alia, that paragraph 2 of the
complaint itself states that the shares of stock in question are recorded in the books of
petitioner in the same of defendant Benito Gervasio Tan, who should therefore be declared
owner thereof pursuant to Section 52 of the Corporation Law (pp. 25-30, rec.).
On January 14, 1974, defendant Zoila Co Lim filed her answer expressly admitting paragraph
2 of the complaint, but alleging that the said shares of stock had previously been delivered
in trust to the defendant Benito Gervasio Tan for her (Zoila's) mother, the late So Bi, alias
Tawa, the actual owner of the shares of stock; that now Benito GervasioTan would want the
re-issuance and release to him of new replacement certificates, which petitioner has not so

far done; and that as the daughter and heir of said So Bi, alias Tawa, she is now the owner of
the said shares of stock, which should be delivered to her (pp. 31-33, rec.).
On January 22, 1974, petitioner Continental Development Corporation filed its opposition to
Benito's motion to dismiss (pp. 34-40, G.R. No. L-41831).
In the questioned order dated March 12, 1974, the trial judge dismissed the complaint for
lack of cause of action, invoking Section 35 of Act No. 1459, as amended, otherwise known
as the Corporation Law (pp. 4142, G.R. No. L-41831).
Defendant Zoila Co Lim and herein petitioner as plaintiff, filed their respective motions for
reconsideration of the aforesaid order (pp. 43-49, G.R. No. L-41831), to which the defendant
Benito Gervasio Tan filed his rejoinder (pp. 50-61, G.R. No.
L-41831). Said motions were denied in an order dated July 3, 1974.
Hence these petitions by Continental Development Corporation and Zoila Co Lim.
It is patent from the pleadings in the lower court that both defendants Benito Gervasio Tan
and Zoila Co Lim assert conflicting rights to the questioned shares of stock. Precisely in his
motion to dismiss the complaint for interpleader, defendant Benito Gervasio Tan states that
petitioner corporation, through its Vice-President, notified him on July 23, 1973 "that the
shares of stock are in the possession of its treasurer, Mr. Ty Lim, and urged defendant to
directly obtain them from the former, who allegedly was on vacation at the time. Mr. Ty Lim,
on August 30, 1973, through counsel, replied to the defendant Benito Gervasio Tan that said
certificates were not in his possession but surmised, without reference to any record, that
the same might have been delivered to the deceased So Bi. And, on October 29, 1973, same
counsel of Mr. Ty Lim, wrote the corporation, in behalf of defendant Zoila Co Lim, alleged heir
of So Bi, claiming ownership of the stocks" (pp. 26, 27, G.R. No. L-41831). Defendant Zoila
Co Lim, on the other hand. as heretofore stated, claims sole-ownership of said shares of
stock as inheritance from her late mother So Bi, alias Tawa.
And petitioner Continental Development Corporation expressly stated in the complaint that
both defendants, through their respective lawyers, threatened to take punitive measures
against it should it adopt any steps that may prejudice then respective interests in the
shares of stock in question; and that it is not sufficiently informed of the rights of the
respective claimants and therefore not in a position to determine justly and correctly their
conflicting claims (pars. 5, 6 and 7 of the complaint, p. 23, rec.)
And in its opposition to the motion to dismiss its complaint, petitioner Continental
Development Corporation s that it might be liable to one defendant should it comply with
the demands of the other with respect to the transfer or entry of the shares of stock in the
books of the corporation.
Since there is an active conflict of interests between the two defendants, now herein
respondent Benito Gervasio Tan and petitioner Zoila Co Lim, over the disputed shares of
stock, the trial court gravely abused its discretion in dismissing the complaint for
interpleader, which practically decided ownership of the shares of stock in favor of
defendant Benito Gervasio Tan. The two defendants, now respondents in G.R. No.
L-41831, should be given full opportunity to litigate their respective claims.
Rule 63, Section 1 of the New Rules of Court tells us when a cause of action exists to support
a complaint in interpleader:
Whenever conflicting claims upon the same subject matter are or may be made against a
person, who claims no interest whatever in the subject matter, or an interest which in whole
or in part is not disputed by the complainants to compel them to interplead and litigate their
several claims among themselves (Italics supplied).
This provision only requires as an indispensable requisite:
that conflicting claims upon the same subject matter are or may be made against the
plaintiff-in-interpleader who claims no interest whatever in the subject matter or an interest
which in whole or in part is not disputed by the claimants (Beltran vs. People's Homesite and
Housing Corporation, No. L-25138,29 SCRA 145).
This ruling, penned by Mr. Justice Tee the principle in Alvarez vs. Commonwealth (65 Phil.
302), that

The action of interpleader under section 120, is a remedy whereby a person who has
personal property in his possession, or an obligation to render wholly or partially, without
claiming any right in both comes to court and asks that the persons who claim the said
personal property or who consider themselves entitled to demand compliance with the
obligation, be required to litigate among themselves, in order to determine finally who is
entitled to one or the other thing. The remedy is afforded not to protect a person against a
double liability but to protect him against a double vexation in respect of one liability'
An interpleader merely demands as a sine qua non element
... that there be two or more claimants to the fund or thing in dispute through separate and
different interests. The claims must be adverse before relief can be granted and the parties
sought to be interpleaded must be in a position to make effective claims (33 C.J. 430).
Additionally, the fund, thing, or duty over which the parties assert adverse claims must be
one and the same and derived from the same source (33 C.J., 328; Martin, Rules of Court,
1969 ed., Vol. 3, 133-134; Moran, Rules of Court, 1970 ed., Vol. 3, 134136).
Indeed, petitioner corporation is placed in the same situation as a lessee who does not know
the person to whom he will pay the rentals due to the conflicting claims over the property
leased, or a sheriff who finds himself puzzled by conflicting claims to a property seized by
him. In these examples, the lessee (Pangkalinawan vs. Rodas, 80 Phil. 28) and the sheriff SyQuia vs. Sheriff, 46 Phil. 400) were each allowed to file a complaint in interpleader to
determine the respective rights of the claimants.
WHEREFORE, THE PETITIONS ARE HEREBY GRANTED; THE ORDER DATED MARCH 12, 1974
DISMISSING THE COMPLAINT AND THE ORDER DATED JULY 3, 1974 DENYING THE MOTION
FOR RECONSIDERATION OF THE PETITIONERS IN THESE TWO CASES ARE HEREBY SET ASIDE.
WITH COSTS AGAINST RESPONDENT BENITO GERVASIO TAN.
Teehankee (Chairman), Esguerra, Muoz Palma and Martin, JJ., concur.
G.R. No. L-22807

October 10, 1924

GREGORIO R. SY-QUIA, petitioner,

vs.
THE SHERIFF OF ILOCOS SUR and FILADELFO DE LEON, respondents.
OSTRAND, J.:
This is a petition for a writ of mandamus to compel the Sheriff of the Province of Ilocos Sur to
proceed with a chattel mortgage foreclosure sale.
It appears from the record that on February 3, 1915, Miguel Aglipay Cheng-Laco and
Feliciano Reyes Cheng-Kiangco executed a chattel mortgage in favor of the petitioner,
Gregorio R. Sy-Quia on their mercantile, establishment, with all the merchandise therein
contained, as security for a debt of P6,000. The chattel mortgage was duly recorded on the
date of its execution and fell due on February 3, 1917. From its terms it may be inferred that
it was the intention of the parties that the mortgagors were to be permitted to sell the
merchandise replenishing their stock from time to time and that the new stock brought in
should also be subject to the mortgage.
On May 5, 1924, Miguel Aglipay Cheng-Laco executed another chattel mortgage on the
same establishment and all its contents in favor of the respondent Filadelfo de Leon as
security for the sum of P4,900, which mortgage was recorded on May 4, 1924.
On the latter date of the petitioner, in writing, requested the sheriff to take possession of the
mortgaged property and to sell it at public auction under the provisions of section 14 of the
Chattel Mortgage Law (Act No. 1508). The sheriff seized the establishment in question as
well as its contents and fixed the date of the sale at June 2, 1924. In the meantime Filadelfo
de Leon presented an adverse claim to the property by virtue of his chattel mortgage,
alleging that all the goods on which the chattel mortgage of Gregorio R. Sy-Quia was given
had been sold long before the chattel mortgage in favor of De Leon was executed and that,
therefore, the earlier chattel mortgage was of no effect.

The sheriff being in doubt as to the priority of the conflicting claims, suspended the
foreclosure proceedings and brought an action under section 120 of the Code of Civil
Procedure requiring the two claimants to interplead. Thereupon, the present proceeding that
the duty of the sheriff to proceed with the sale was a ministerial one and praying that the
sheriff be commanded to proceed.1awph!l.net
Though it, perhaps, would have been better practice for the sheriff to sell the property and
hold the proceeds of the sale subject to the outcome of the action of interpleader, we,
nevertheless, are of the opinion that the facts shown do not justify our interference by
mandamus. The sheriff might lay himself open to an action for damages if he sold the goods
without the consent of the holder of the last mortgage, and it does not appear that the
petitioner offered to give bond to hold him harmless in such an event. In these
circumstances, his action in suspending the sale pending the determination of the action of
interpleader seems justified.
We may say further that in cases such as the present, the petition for mandamus should be
addressed to the Courts of First Instance rather than to this court.
The petition is denied with the costs against the petitioner. So ordered.
G.R. No. L-1806

February 25, 1948

ALFONSO PAGKALINAWAN and MANUEL PAGKALINAWAN, petitioners,

vs.
SOTERO RODAS, Judge of First Instance of Manila, JOAQUIN GARCIA, Sheriff of
Manila, and MANUEL TAMBUNTING, respondents.
PARAS, J.:
In an ejectment suit between Manuel Tambunting, plaintiff, and Alfonso Pagkalinawan and
Manuel Pagkalinawan, defendants, appealed from the municipal court to the Court of First
Instance of Manila, the latter court, after trial, rendered a decision dated July 3, 1947,
sentencing the defendants to vacate the house in question and to pay the plaintiff the
rentals from November, 1946, at the rate of P45 a month, plus the costs. Acting upon a
motion for reconsideration, filed by the defendants, the Court of First Instance of Manila
issued an order dated July 26, 1947, granting said motion, setting aside the decision of July
3, 1947, and absolving the defendants from the complaint. On motion for reconsideration in
turn filed by the plaintiff, an order dated August 16, 1947, was issued in which the same
court "dicta de nuevo sentencia en esta causa, ordenando al Escribano pague al aqui
domandante los alquileres depositados por los demandados paguen al demandante
directamenta los alquileres, en caso contrario, el Juzgado ordenara su lanzamiento de la
finca en cuestion y les condenara al pago de las costas." This decision appears to have
become final, as a result of which, upon petition of the plaintiff, the Court of First Instance of
Manila ordered the issuance of a writ of execution. The defendants sought to stay the
execution on the ground that they had in the meantime filed with the same court an
interpleader suit against the plaintiff and one Angel de Leon Ong, praying that the latter two
be ordered to litigate their conflicting claims to the rentals due from the defendants for the
premises in question, it appearing that said defendants received a notice from the Attorney
of Angel de Leon Ong advising the defendants to stop paying rentals to the plaintiff. The
Court of First Instance of Manila acceded to the motion for stay of execution, but, at the
instance of the plaintiff, it issued an order on November 1, 1947, directing that execution be
proceeded with. Failing to obtain a reconsideration of the latter order, the defendants
instituted the present petition for certiorari and prohibition, seeking from us an order
directing Hon. Sotero Rodas, Judge of the Court of First Instance of Manila, and Joaquin
Garcia, sheriff, to desist from carrying out the writ of execution.
There is merit in the petition. It is true that the decision of the respondent judge of August
16, 1947, orders the petitioners to pay the rentals directly to the respondent Manuel
Tambunting and provides for their ejectment in case of default. But it appears that, in
connection with the interpleader suit filed by the herein petitioners in the Court of First
Instance of Manila, said rentals were deposited with the clerk of court, of which fact the
respondent judge was informed by the petitioners in their constancia dated October 15,
1947. Such deposits, in our opinion, constitute a bona fide compliance with the decision of
the respondent judge, since it is undeniable that the petitioners were warned by Angel de
Leon Ong not to pay rentals to the respondent Manuel Tambunting. That there is really a
conflicting claim between Angel de Leon Ong and respondent Manuel Tambunting is
evidenced by the fact that there are pending in the Court of First Instance of Manila civil

case No. 815, between Manuel Tambunting, plaintiff, and Angel de Leon Ong and Ong Hoa,
defendants, for the annulment of a contract of sale involving the premises in question, and
civil case No. 2690, between Angel de Leon Ong, plaintiff, and Manuel Tambunting,
defendant, for the ejectment of Tambunting from the property located at Nos. 329 to 339
Tanduay Street, Manila, which includes the premises held by the petitioners. Under the law,
the latter have a right to file the interpleader suit in view of the claim for rentals of Angel de
Leon Ong; and if the respondent Tambunting believes that he is legally entitled to said
rentals, he is free to move for withdrawal of the deposits made by the petitioners.
Wherefore, the petition is hereby granted and the respondent judge and sheriff are ordered
to desist form carrying out the writ of execution issued in civil case No. 1489. So ordered,
with costs against the respondent Manuel Tambunting.
G.R. Nos. 72664-65

March 20, 1990

UNITED COCONUT PLANTERS BANK, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT and MAKATI BEL-AIR CONDOMINIUM
DEVELOPERS, INC., respondents.
FELICIANO, J.:
Petitioner seeks review of the decision of the respondent appellate court dated 27 June 1985
which annulled and set aside certain orders of the then Court of First Instance (CFI) of Rizal,
Branch 15, Makati so far as said orders dismissed private respondents' counter-claim.
On 23 July 1979, petitioner United Coconut Planters Bank (Bank) filed in the lower court a
complaint-in-interpleader against private respondent Makati Bel-Air Condominium
Developers, Inc. (Makati Bel-Air) and against Altiura Investors, Inc. (Altiura). The subject
matter of the complaint was a manager's check in the amount of P494,000.00 issued by
petitioner Bank payable to Makati Bel-Air, having been purchased by Altiura. Altiura
delivered the check to Makati Bel-Air as part payment on an office condominium unit in the
Cacho-Gonzales Building, on 16 July 1979.
On 17 July 1979, petitioner Bank received from Altiura instructions to hold payment on the
manager's check, in view of a material discrepancy in the area of the office unit purchased
by Altiura which unit actually measured 124.58 square meters, instead of 165 square meters
as stipulated in the contract of sale. Petitioner Bank immediately requested private
respondent Makati Bel-Air, by a letter dated 17 July 1979, to advise the Bank why it should
not issue the stop payment order requested by Altiura.
The next day, 18 July 1975, petitioner Bank received a reply from Makati Bel-Air explaining
the latter's side of the controversy and at the same proposing a possible reduction of the
office unit's purchase price.
On 19 July 1979, petitioner Bank received a letter from Altiura of even date requesting the
Bank to hold payment of its manager's check while Altiura was discussing Makati Bel-Air's
proposal for reduction of the purchase price and requesting the Bank to give both parties
fifteen (15) days within which to settle their differences. By a letter dated on the same date,
petitioner Bank requested Makati Bel-Air to hold in abeyance for a period not exceeding
fifteen (15) days the presentation of the manager's check, so that both parties could settle
their differences amicably.
On 20 July 1979, petitioner Bank was advised in writing by Makati Bel-Air that the latter did
not agree to the request of the Bank set out in the latter's letter of 19 July 1979.
Thereupon, petitioner Bank filed a complaint-in-interpleader against Altiura and Makati BelAir to require the latter to litigate with each other their respective claims over the funds
represented by the manager's check involved, and at the same time asking the court for
authority to deposit the funds in a special account until the conflicting claims shall have
been adjudicated. The trial court ordered the deposit of the funds into a special account with
any reputable banking institution subject to further orders of the court.
On 18 August 1979, Makati Bel-Air filed its answer and incorporated therein a counter-claim
against petitioner Bank and a cross-claim against Altiura. In turn, Altiura filed an answer to
the complaint-in-interpleader, with motion to dismiss the crossclaim of Makati Bel-Air.

Meantime, on 23 July 1979, Altiura had filed a complaint for rescission of the contract of sale
of the condominium unit, with damages, against Makati Bel-Air docketed as Civil Case No.
33967, which case was eventually consolidated with the interpleader case.
On 29 August 1979, petitioner Bank filed a "motion to withdraw complaint and motion to
dismiss counter-claim", stating that there was no longer any conflict between Makati Bel-Air
and Altiura as to who was entitled to the funds covered by the manager's check, since
Makati Bel-Air in its answer had alleged that it had cancelled and rescinded the sale of the
condominium unit and had relinquished any claim it had over the funds covered by the
manager's check
.
On 28 September 1979, Makati Bel-Air delivered to petitioner Bank the original of the
manager's check. On 18 February 1980, the trial court in Civil Case No. 33961 issued an
order directing the release of the funds covered by the manager's check to Altiura.
On 28 April 1983, the trial court issued an order resolving petitioner Bank's motion to
withdraw complaint-in-interpleader and to dismiss counter-claim, declaring that motion to
withdraw the complaint-in-interpleader had been rendered moot and academic by the
court's earlier order of 18 February 1980 directing petitioner Bank to release to Altiura the
P494,000.00 covered by the manager's check, which Makati Bel-Air had not opposed nor
appealed from. In the same order, the trial court granted Makati Bel-Air's motion to
consolidate Civil Case No. 33961 (the interpleader case) and Civil Case No. 33967 (the
rescission plus damages case).
On 12 July 1983, upon motion of petitioner Bank, the trial court issued an order clarifying its
28 April 1983 order by stating that the counter-claim of Makati Bel-Air was dismissed when
the funds covered by the manager's check were released to Altiura without objection of
Makati Bel-Air. At the same time, the order denied Altiura's motion to dismiss Makati Bel-Air's
cross-claim in Civil Case No. 33961.
Makati Bel-Air moved for reconsideration of the 12 July 1983 clarificatory order of the trial
court, without success.
Makati Bel-Air then went to the respondent appellate court on petition for certiorari.
In its decision dated 27 June 1985, the appellate court granted certiorari and nullified the
trial court's orders of 12 July and 30 August 1983 to the extent that these had dismissed
Makati Bel-Air's counter-claim. The appellate court held that the withdrawal of the complaintin-interpleader and its dismissal as moot and academic did not operate ipso facto to dismiss
Makati Bel-Air's counter-claim for the reason that said counter-claim was based on "an
entirely different cause of action from that in the complaint-[in]-interpleader".
In the instant Petition for Review on Certiorari, petitioner Bank argues that Makati Bel-Air's
counter-claim was compulsory in nature and had therefore been dissolved when the
complaint-in-interpleader was withdrawn and dismissed. Makati Bel-Air argues upon the
other hand, that its counterclaim was not a compulsory one.
Makati Bel-Air's counterclaim in the interpleader proceedings was for damages in the
amount of P5,000,000.00, based upon the theory that petitioner Bank had violated its
guarantee embodied in its manager's check when it in effect stopped payment of said
check, allegedly causing damages to Makati Bel-Air the latter having allegedly issued checks
against said funds.
Under Section 4, Rule 9 of the Revised Rules of Court, a compulsory counterclaim is "one
which arises out of or is necessarily connected with the transaction or occurrence that is the
subject matter of the opposing party's claim." 1 Interpleader is a proper remedy where a
bank which had issued a manager's check is subjected to opposing claims by persons who
respectively claim a right to the funds covered by the manager's check. 2 The Bank is
entitled to take necessary precautions so that, as far possible, it does not make a mistake as
to who is entitled to payment; the necessary precautions include, precisely, recourse to an
interpleader suit.
In the instant case, petitioner Bank having been informed by both Altiura and Makati Bel-Air
of their respective positions in their controversy, and Makati Bel-Air having refused the
Bank's suggestion voluntarily to refrain for fifteen (15) days from presenting the check for
payment, petitioner Bank felt compelled to resort to the remedy of interpleader. It will be
seen that Makati Bel-Air's counter-claim arose out of or was necessarily connected with the

recourse of petitioner to this remedy of interpleader. Makati-Bel Air was in effect claiming
that petitioner Bank had in bad faith refused to honor its undertaking to pay represented by
the manager's check it had issued. When the trial court granted petitioner's motion for
withdrawal of its complaint-in-interpleader, as having become moot and academic by reason
of Makati Bel-Air's having cancelled the sale of the office unit to Altiura and having returned
the manager's check to the Bank and acquiesced in the release of the funds to Altiura, the
trial court in effect held that petitioner Bank's recourse to interpleader was proper and not a
frivolous or malicious maneuver to evade its obligation to pay to the party lawfully entitled
the funds represented by the manager's check. Having done so, the trial court could not
have logically allowed Makati Bel-Air to recover on its counterclaim for damages against
petitioner Bank.
There are other considerations supporting the conclusion reached by this Court that
respondent appellate court had committed reversible error. Makati Bel-Air was a party to the
contract of sale of an office condominium unit to Altiura, for the payment of which the
manager's check was issued. Accordingly, Makati Bel-Air was fully aware, at the time it had
received the manager's check, that there was, or had arisen, at least partial failure of
consideration since it was unable to comply with its obligation to deliver office space
amounting to 165 square meters to Altiura. Makati Bel-Air was also aware that petitioner
Bank had been informed by Altiura of the claimed defect in Makati Bel-Air's title to the
manager's check or its right to the proceeds thereof. Vis-a-vis both Altiura and petitioner
Bank, Makati Bel-Air was not a holder in due course 3 of the manager's check.
ACCORDINGLY, the Court Resolved to GRANT the Petition for Review and to REVERSE and
SET ASIDE the Decision of respondent appellate court dated 27 June 1985 in AC-G.R. SP Nos.
01669-70.
G.R. No. 181723, August 11, 2014
ELIZABETH DEL CARMEN, Petitioner, v. SPOUSES RESTITUTO SABORDO AND MIMA
MAHILUM-SABORDO, Respondents.
DECISION
PERALTA, J.:
This treats of the petition for review on certiorari assailing the Decision1 and Resolution2 of
the Court of Appeals (CA), dated May 25, 2007 and January 24, 2008, respectively, in CAG.R. CV No. 75013.
The factual and procedural antecedents of the case are as follows:cralawlawlibrary
Sometime in 1961, the spouses Toribio and Eufrocina Suico (Suico spouses), along with
several business partners, entered into a business venture by establishing a rice and corn
mill at Mandaue City, Cebu. As part of their capital, they obtained a loan from the
Development Bank of the Philippines (DBP), and to secure the said loan, four parcels of land
owned by the Suico spouses, denominated as Lots 506, 512, 513 and 514, and another lot
owned by their business partner, Juliana Del Rosario, were mortgaged. Subsequently, the
Suico spouses and their business partners failed to pay their loan obligations forcing DBP to
foreclose the mortgage. After the Suico spouses and their partners failed to redeem the
foreclosed properties, DBP consolidated its ownership over the same. Nonetheless, DBP later
allowed the Suico spouses and Reginald and Beatriz Flores (Flores spouses), as substitutes
for Juliana Del Rosario, to repurchase the subject lots by way of a conditional sale for the
sum of P240,571.00. The Suico and Flores spouses were able to pay the downpayment and
the first monthly amortization, but no monthly installments were made thereafter.
Threatened with the cancellation of the conditional sale, the Suico and Flores spouses sold
their rights over the said properties to herein respondents Restituto and Mima Sabordo,
subject to the condition that the latter shall pay the balance of the sale price. On September
3, 1974, respondents and the Suico and Flores spouses executed a supplemental agreement
whereby they affirmed that what was actually sold to respondents were Lots 512 and 513,
while Lots 506 and 514 were given to them as usufructuaries. DBP approved the sale of
rights of the Suico and Flores spouses in favor of herein respondents. Subsequently,
respondents were able to repurchase the foreclosed properties of the Suico and Flores
spouses.
On September 13, 1976, respondent Restituto Sabordo (Restituto) filed with the then Court
of First Instance of Negros Occidental an original action for declaratory relief with damages

and prayer for a writ of preliminary injunction raising the issue of whether or not the Suico
spouses have the right to recover from respondents Lots 506 and 514.
In its Decision dated December 17, 1986, the Regional Trial Court (RTC) of San Carlos City,
Negros Occidental, ruled in favor of the Suico spouses directing that the latter have until
August 31, 1987 within which to redeem or buy back from respondents Lots 506 and 514.
On appeal, the CA, in its Decision3 in CA-G.R. CV No. 13785, dated April 24, 1990, modified
the RTC decision by giving the Suico spouses until October 31, 1990 within which to exercise
their option to purchase or redeem the subject lots from respondents by paying the sum of
P127,500.00.
The
dispositive
portion
of
the
CA
Decision
reads
as
follows:chanRoblesvirtualLawlibrary
xxxx
For reasons given, judgment is hereby rendered modifying the dispositive portion of [the]
decision of the lower court to read:chanRoblesvirtualLawlibrary
1) The defendants-appellees are granted up to October 31, 1990 within which to exercise
their option to purchase from the plaintiff-appellant Restituto Sabordo and Mima Mahilum Lot
No. 506, covered by Transfer Certificate of Title No. T-102598 and Lot No. 514, covered by
Transfer Certificate of Title No. T-102599, both of Escalante Cadastre, Negros Occidental by
reimbursing or paying to the plaintiff the sum of ONE HUNDRED TWENTY-SEVEN THOUSAND
FIVE HUNDRED PESOS (P127,500.00);chanroblesvirtuallawlibrary
2) Within said period, the defendants-appellees shall continue to have usufructuary rights on
the coconut trees on Lots Nos. 506 and 514, Escalante Cadastre, Negros
Occidental;chanroblesvirtuallawlibrary
3) The Writ of Preliminary Injunction dated August 12, 1977 shall be effective until
defendants-appellees shall have exercised their option to purchase within said period by
paying or reimbursing to the plaintiff-appellant the aforesaid amount.
No pronouncement as to costs.
SO ORDERED.4
In a Resolution5 dated February 13, 1991, the CA granted the Suico spouses an additional
period of 90 days from notice within which to exercise their option to purchase or redeem
the disputed lots.
In the meantime, Toribio Suico (Toribio) died leaving his widow, Eufrocina, and several
others, including herein petitioner, as legal heirs. Later, they discovered that respondents
mortgaged Lots 506 and 514 with Republic Planters Bank (RPB) as security for a loan which,
subsequently, became delinquent.
Thereafter, claiming that they are ready with the payment of P127,500.00, but alleging that
they cannot determine as to whom such payment shall be made, petitioner and her co-heirs
filed a Complaint6 with the RTC of San Carlos City, Negros Occidental seeking to compel
herein respondents and RPB to interplead and litigate between themselves their respective
interests on the abovementioned sum of money. The Complaint also prayed that
respondents be directed to substitute Lots 506 and 514 with other real estate properties as
collateral for their outstanding obligation with RPB and that the latter be ordered to accept
the substitute collateral and release the mortgage on Lots 506 and 514. Upon filing of their
complaint, the heirs of Toribio deposited the amount of P127,500.00 with the RTC of San
Carlos City, Branch 59.
Respondents filed their Answer7 with Counterclaim praying for the dismissal of the above
Complaint on the grounds that (1) the action for interpleader was improper since RPB is not
laying any claim on the sum of P127,500.00; (2) that the period within which the
complainants are allowed to purchase Lots 506 and 514 had already expired; (3) that there
was no valid consignation, and (4) that the case is barred by litis pendencia or res judicata.
On the other hand, RPB filed a Motion to Dismiss the subject Complaint on the ground that
On December 5, 2001, the RTC rendered judgment, dismissing the Complaint of petitioner
and her co-heirs for lack of merit.8 Respondents' Counterclaim was likewise dismissed.

10

Petitioner and her co-heirs filed an appeal with the CA contending that the judicial deposit or
consignation of the amount of P127,500.00 was valid and binding and produced the effect of
payment of the purchase price of the subject lots.
In its assailed Decision, the CA denied the above appeal for lack of merit and affirmed the
disputed RTC Decision.
Petitioner and her co-heirs filed a Motion for Reconsideration,9 but it was likewise denied by
the CA.
Hence, the present petition for review on certiorari with a lone Assignment of Error, to
wit:chanRoblesvirtualLawlibrary
THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE LOWER COURT WHICH
HELD THAT THE JUDICIAL DEPOSIT OF P127,500.00 MADE BY THE SUICOS WITH THE CLERK
OF COURT OF THE RTC, SAN CARLOS CITY, IN COMPLIANCE WITH THE FINAL AND EXECUTORY
DECISION OF THE COURT OF APPEALS IN CA-G.R. CV-13785 WAS NOT VALID.10
Petitioner's main contention is that the consignation which she and her co-heirs made was a
judicial deposit based on a final judgment and, as such, does not require compliance with
the requirements of Articles 125611 and 125712 of the Civil Code.
The petition lacks merit.
At the outset, the Court quotes with approval the discussion of the CA regarding the
definition and nature of consignation, to wit:chanRoblesvirtualLawlibrary
consignation [is] the act of depositing the thing due with the court or judicial authorities
whenever the creditor cannot accept or refuses to accept payment, and it generally requires
a prior tender of payment. It should be distinguished from tender of payment which is the
manifestation by the debtor to the creditor of his desire to comply with his obligation, with
the offer of immediate performance. Tender is the antecedent of consignation, that is, an act
preparatory to the consignation, which is the principal, and from which are derived the
immediate consequences which the debtor desires or seeks to obtain. Tender of payment
may be extrajudicial, while consignation is necessarily judicial, and the priority of the first is
the attempt to make a private settlement before proceeding to the solemnities of
consignation. Tender and consignation, where validly made, produces the effect of payment
and extinguishes the obligation.13
In the case of Arzaga v. Rumbaoa,14 which was cited by petitioner in support of his
contention, this Court ruled that the deposit made with the court by the plaintiff-appellee in
the said case is considered a valid payment of the amount adjudged, even without a prior
tender of payment thereof to the defendants-appellants, because the plaintiff-appellee, upon
making such deposit, expressly petitioned the court that the defendants-appellees be
notified to receive the tender of payment. This Court held that while [t]he deposit, by itself
alone, may not have been sufficient, but with the express terms of the petition, there was
full and complete offer of payment made directly to defendants-appellants.15 In the instant
case, however, petitioner and her co-heirs, upon making the deposit with the RTC, did not
ask the trial court that respondents be notified to receive the amount that they have
deposited. In fact, there was no tender of payment. Instead, what petitioner and her co-heirs
prayed for is that respondents and RPB be directed to interplead with one another to
determine their alleged respective rights over the consigned amount; that respondents be
likewise directed to substitute the subject lots with other real properties as collateral for
their loan with RPB and that RPB be also directed to accept the substitute real properties as
collateral for the said loan. Nonetheless, the trial court correctly ruled that interpleader is
not the proper remedy because RPB did not make any claim whatsoever over the amount
consigned by petitioner and her co-heirs with the court.
In the cases of Del Rosario v. Sandico16 and Salvante v. Cruz,17 likewise cited as authority
by petitioner, this Court held that, for a consignation or deposit with the court of an amount
due on a judgment to be considered as payment, there must be prior tender to the
judgment creditor who refuses to accept it. The same principle was reiterated in the later
case of Pabugais v. Sahijwani.[18 As stated above, tender of payment involves a positive
and unconditional act by the obligor of offering legal tender currency as payment to the
obligee for the formers obligation and demanding that the latter accept the same.19 In the
instant case, the Court finds no cogent reason to depart from the findings of the CA and the

11

RTC that petitioner and her co-heirs failed to make a prior valid tender of payment to
respondents.
It is settled that compliance with the requisites of a valid consignation is mandatory.20
Failure to comply strictly with any of the requisites will render the consignation void. One of
these requisites is a valid prior tender of payment.21cralawred
Under Article 1256, the only instances where prior tender of payment is excused are: (1)
when the creditor is absent or unknown, or does not appear at the place of payment; (2)
when the creditor is incapacitated to receive the payment at the time it is due; (3) when,
without just cause, the creditor refuses to give a receipt; (4) when two or more persons
claim the same right to collect; and (5) when the title of the obligation has been lost. None
of these instances are present in the instant case. Hence, the fact that the subject lots are
in danger of being foreclosed does not excuse petitioner and her co-heirs from tendering
payment to respondents, as directed by the court.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals, dated
May 25, 2007, and its Resolution dated January 24, 2008, both in CA-G.R. CV No. 75013, are
AFFIRMED.
SO ORDERED.
G.R. No. 136409

March 14, 2008

SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, Petitioners,

vs.
DON LUIS DISON REALTY, INC., Respondent.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the
reversal of the Decision1 of the Court of Appeals (CA) dated May 26, 1998 and its
Resolution2 dated December 10, 1998 in CA-G.R. SP No. 37739 dismissing the petition filed
by petitioners Josephine and Subhash Pasricha.
The facts of the case, as culled from the records, are as follows:
Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease3
whereby the former, as lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36,
37 and 38 of the San Luis Building, located at 1006 M.Y. Orosa cor. T.M. Kalaw Streets,
Ermita, Manila. Petitioners, in turn, agreed to pay monthly rentals, as follows:
For Rooms 32/35:
From March 1, 1991 to August 31, 1991 P5,000.00/P10,000.00
From September 1, 1991 to February 29, 1992 P5,500.00/P11,000.00
From March 1, 1992 to February 28, 1993 P6,050.00/P12,100.00
From March 1, 1993 to February 28, 1994 P6,655.00/P13,310.00
From March 1, 1994 to February 28, 1995 P7,320.50/P14,641.00
From March 1, 1995 to February 28, 1996 P8,052.55/P16,105.10
From March 1, 1996 to February 29, 1997 P8,857.81/P17,715.61
From March 1, 1997 to February 28, 1998 P9,743.59/P19,487.17
From March 1, 1998 to February 28, 1999 P10,717.95/P21,435.89
From March 1, 1999 to February 28, 2000 P11,789.75/P23,579.484
For Rooms 22 and 24:

12

Effective July 1, 1992 P10,000.00 with an increment of 10% every two years.5
For Rooms 33 and 34:
Effective April 1, 1992 P5,000.00 with an increment of 10% every two years.6
For Rooms 36, 37 and 38:
Effective when tenants vacate said premises P10,000.00 with an increment of 10% every
two years.7
Petitioners were, likewise, required to pay for the cost of electric consumption, water bills
and the use of telephone cables.8
The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34
and 35 as subjects of the lease contracts.9 While the contracts were in effect, petitioners
dealt with Francis Pacheco (Pacheco), then General Manager of private respondent.
Thereafter, Pacheco was replaced by Roswinda Bautista (Ms. Bautista).10 Petitioners
religiously paid the monthly rentals until May 1992.11 After that, however, despite repeated
demands, petitioners continuously refused to pay the stipulated rent. Consequently,
respondent was constrained to refer the matter to its lawyer who, in turn, made a final
demand on petitioners for the payment of the accrued rentals amounting to P916,585.58.12
Because petitioners still refused to comply, a complaint for ejectment was filed by private
respondent through its representative, Ms. Bautista, before the Metropolitan Trial Court
(MeTC) of Manila.13 The case was raffled to Branch XIX and was docketed as Civil Case No.
143058-CV.
Petitioners admitted their failure to pay the stipulated rent for the leased premises starting
July until November 1992, but claimed that such refusal was justified because of the internal
squabble in respondent company as to the person authorized to receive payment.14 To
further justify their non-payment of rent, petitioners alleged that they were prevented from
using the units (rooms) subject matter of the lease contract, except Room 35. Petitioners
eventually paid their monthly rent for December 1992 in the amount of P30,000.00, and
claimed that respondent waived its right to collect the rents for the months of July to
November 1992 since petitioners were prevented from using Rooms 22, 24, 32, 33, and
34.15 However, they again withheld payment of rents starting January 1993 because of
respondents refusal to turn over Rooms 36, 37 and 38.16 To show good faith and willingness
to pay the rents, petitioners alleged that they prepared the check vouchers for their monthly
rentals from January 1993 to January 1994.17 Petitioners further averred in their Amended
Answer18 that the complaint for ejectment was prematurely filed, as the controversy was
not referred to the barangay for conciliation.
For failure of the parties to reach an amicable settlement, the pre-trial conference was
terminated. Thereafter, they submitted their respective position papers.
On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for
ejectment.19 It considered petitioners non-payment of rentals as unjustified. The court held
that mere willingness to pay the rent did not amount to payment of the obligation;
petitioners should have deposited their payment in the name of respondent company. On
the matter of possession of the subject premises, the court did not give credence to
petitioners claim that private respondent failed to turn over possession of the premises. The
court, however, dismissed the complaint because of Ms. Bautistas alleged lack of authority
to sue on behalf of the corporation.
Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case
No. 94-72515, reversed and set aside the MeTC Decision in this wise:
WHEREFORE, the appealed decision is hereby reversed and set aside and another one is
rendered ordering defendants-appellees and all persons claiming rights under them, as
follows:
(1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant;
(2) to pay plaintiff-appellant the sum of P967,915.80 representing the accrued rents in
arrears as of November 1993, and the rents on the leased premises for the succeeding
months in the amounts stated in paragraph 5 of the complaint until fully paid; and

13

(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorneys
fees plus the costs of this suit.
SO ORDERED.20
The court adopted the MeTCs finding on petitioners unjustified refusal to pay the rent,
which is a valid ground for ejectment. It, however, faulted the MeTC in dismissing the case
on the ground of lack of capacity to sue. Instead, it upheld Ms. Bautistas authority to
represent respondent notwithstanding the absence of a board resolution to that effect, since
her authority was implied from her power as a general manager/treasurer of the company.21
Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on
certiorari.22 On March 18, 1998, petitioners filed an Omnibus Motion23 to cite Ms. Bautista
for contempt; to strike down the MeTC and RTC Decisions as legal nullities; and to conduct
hearings and ocular inspections or delegate the reception of evidence. Without resolving the
aforesaid motion, on May 26, 1998, the CA affirmed24 the RTC Decision but deleted the
award of attorneys fees.25
Petitioners moved for the reconsideration of the aforesaid decision.26 Thereafter, they filed
several motions asking the Honorable Justice Ruben T. Reyes to inhibit from further
proceeding with the case allegedly because of his close association with Ms. Bautistas
uncle-in-law.27
In a Resolution28 dated December 10, 1998, the CA denied the motions for lack of merit.
The appellate court considered said motions as repetitive of their previous arguments,
irrelevant and obviously dilatory.29 As to the motion for inhibition of the Honorable Justice
Reyes, the same was denied, as the appellate court justice stressed that the decision and
the resolution were not affected by extraneous matters.30 Lastly, the appellate court
granted respondents motion for execution and directed the RTC to issue a new writ of
execution of its decision, with the exception of the award of attorneys fees which the CA
deleted.31
Petitioners now come before this Court in this petition for review on certiorari raising the
following issues:
I.
Whether this ejectment suit should be dismissed and whether petitioners are entitled to
damages for the unauthorized and malicious filing by Rosario (sic) Bautista of this ejectment
case, it being clear that [Roswinda] whether as general manager or by virtue of her
subsequent designation by the Board of Directors as the corporations attorney-in-fact had
no legal capacity to institute the ejectment suit, independently of whether Director Pacanas
Order setting aside the SEC revocation Order is a mere scrap of paper.
II.
Whether the RTCs and the Honorable Court of Appeals failure and refusal to resolve the
most fundamental factual issues in the instant ejectment case render said decisions void on
their face by reason of the complete abdication by the RTC and the Honorable Justice Ruben
Reyes of their constitutional duty not only to clearly and distinctly state the facts and the law
on which a decision is based but also to resolve the decisive factual issues in any given case.
III.
Whether the (1) failure and refusal of Honorable Justice Ruben Reyes to inhibit himself,
despite his admission by reason of his silence of petitioners accusation that the said
Justice enjoyed a $7,000.00 scholarship grant courtesy of the uncle-in-law of respondent
"corporations" purported general manager and (2), worse, his act of ruling against the
petitioners and in favor of the respondent "corporation" constitute an unconstitutional
deprivation of petitioners property without due process of law.32
In addition to Ms. Bautistas lack of capacity to sue, petitioners insist that respondent
company has no standing to sue as a juridical person in view of the suspension and eventual
revocation of its certificate of registration.33 They likewise question the factual findings of
the court on the bases of their ejectment from the subject premises. Specifically, they fault
the appellate court for not finding that: 1) their non-payment of rentals was justified; 2) they

14

were deprived of possession of all the units subject of the lease contract except Room 35;
and 3) respondent violated the terms of the contract by its continued refusal to turn over
possession of Rooms 36, 37 and 38. Petitioners further prayed that a Temporary Restraining
Order (TRO) be issued enjoining the CA from enforcing its Resolution directing the issuance
of a Writ of Execution. Thus, in a Resolution34 dated January 18, 1999, this Court directed
the parties to maintain the status quo effective immediately until further orders.
The petition lacks merit.
We uphold the capacity of respondent company to institute the ejectment case. Although
the Securities and Exchange Commission (SEC) suspended and eventually revoked
respondents certificate of registration on February 16, 1995, records show that it instituted
the action for ejectment on December 15, 1993. Accordingly, when the case was
commenced, its registration was not yet revoked.35 Besides, as correctly held by the
appellate court, the SEC later set aside its earlier orders of suspension and revocation of
respondents certificate, rendering the issue moot and academic.36
We likewise affirm Ms. Bautistas capacity to sue on behalf of the company despite lack of
proof of authority to so represent it. A corporation has no powers except those expressly
conferred on it by the Corporation Code and those that are implied from or are incidental to
its existence. In turn, a corporation exercises said powers through its board of directors
and/or its duly authorized officers and agents. Physical acts, like the signing of documents,
can be performed only by natural persons duly authorized for the purpose by corporate bylaws or by a specific act of the board of directors.37 Thus, any person suing on behalf of the
corporation should present proof of such authority. Although Ms. Bautista initially failed to
show that she had the capacity to sign the verification and institute the ejectment case on
behalf of the company, when confronted with such question, she immediately presented the
Secretarys Certificate38 confirming her authority to represent the company.
There is ample jurisprudence holding that subsequent and substantial compliance may call
for the relaxation of the rules of procedure in the interest of justice.39 In Novelty Phils., Inc.
v. Court of Appeals,40 the Court faulted the appellate court for dismissing a petition solely
on petitioners failure to timely submit proof of authority to sue on behalf of the corporation.
In Pfizer, Inc. v. Galan,41 we upheld the sufficiency of a petition verified by an employment
specialist despite the total absence of a board resolution authorizing her to act for and on
behalf of the corporation. Lastly, in China Banking Corporation v. Mondragon International
Philippines, Inc,42 we relaxed the rules of procedure because the corporation ratified the
managers status as an authorized signatory. In all of the above cases, we brushed aside
technicalities in the interest of justice. This is not to say that we disregard the requirement
of prior authority to act in the name of a corporation. The relaxation of the rules applies only
to highly meritorious cases, and when there is substantial compliance. While it is true that
rules of procedure are intended to promote rather than frustrate the ends of justice, and
while the swift unclogging of court dockets is a laudable objective, we should not insist on
strict adherence to the rules at the expense of substantial justice.43 Technical and
procedural rules are intended to help secure, not suppress, the cause of justice; and a
deviation from the rigid enforcement of the rules may be allowed to attain that prime
objective, for, after all, the dispensation of justice is the core reason for the existence of
courts.44
As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First,
the motion to inhibit came after the appellate court rendered the assailed decision, that is,
after Justice Reyes had already rendered his opinion on the merits of the case. It is settled
that a motion to inhibit shall be denied if filed after a member of the court had already given
an opinion on the merits of the case, the rationale being that "a litigant cannot be permitted
to speculate on the action of the court x x x (only to) raise an objection of this sort after the
decision has been rendered."45 Second, it is settled that mere suspicion that a judge is
partial to one of the parties is not enough; there should be evidence to substantiate the
suspicion. Bias and prejudice cannot be presumed, especially when weighed against a
judges sacred pledge under his oath of office to administer justice without regard for any
person and to do right equally to the poor and the rich. There must be a showing of bias and
prejudice stemming from an extrajudicial source, resulting in an opinion on the merits based
on something other than what the judge learned from his participation in the case.46 We
would like to reiterate, at this point, the policy of the Court not to tolerate acts of litigants
who, for just about any conceivable reason, seek to disqualify a judge (or justice) for their
own purpose, under a plea of bias, hostility, prejudice or prejudgment.47

15

We now come to the more substantive issue of whether or not the petitioners may be validly
ejected from the leased premises.
Unlawful detainer cases are summary in nature. In such cases, the elements to be proved
and resolved are the fact of lease and the expiration or violation of its terms.48 Specifically,
the essential requisites of unlawful detainer are: 1) the fact of lease by virtue of a contract,
express or implied; 2) the expiration or termination of the possessors right to hold
possession; 3) withholding by the lessee of possession of the land or building after the
expiration or termination of the right to possess; 4) letter of demand upon lessee to pay the
rental or comply with the terms of the lease and vacate the premises; and 5) the filing of the
action within one year from the date of the last demand received by the defendant.49
It is undisputed that petitioners and respondent entered into two separate contracts of lease
involving nine (9) rooms of the San Luis Building. Records, likewise, show that respondent
repeatedly demanded that petitioners vacate the premises, but the latter refused to heed
the demand; thus, they remained in possession of the premises. The only contentious issue
is whether there was indeed a violation of the terms of the contract: on the part of
petitioners, whether they failed to pay the stipulated rent without justifiable cause; while on
the part of respondent, whether it prevented petitioners from occupying the leased premises
except Room 35.
This issue involves questions of fact, the resolution of which requires the evaluation of the
evidence presented. The MeTC, the RTC and the CA all found that petitioners failed to
perform their obligation to pay the stipulated rent. It is settled doctrine that in a civil case,
the conclusions of fact of the trial court, especially when affirmed by the Court of Appeals,
are final and conclusive, and cannot be reviewed on appeal by the Supreme Court.50 Albeit
the rule admits of exceptions, not one of them obtains in this case.51
To settle this issue once and for all, we deem it proper to assess the array of factual findings
supporting the courts conclusion.
The evidence of petitioners non-payment of the stipulated rent is overwhelming. Petitioners,
however, claim that such non-payment is justified by the following: 1) the refusal of
respondent to allow petitioners to use the leased properties, except room 35; 2)
respondents refusal to turn over Rooms 36, 37 and 38; and 3) respondents refusal to
accept payment tendered by petitioners.
Petitioners justifications are belied by the evidence on record. As correctly held by the CA,
petitioners communications to respondent prior to the filing of the complaint never
mentioned their alleged inability to use the rooms.52 What they pointed out in their letters
is that they did not know to whom payment should be made, whether to Ms. Bautista or to
Pacheco.53 In their July 26 and October 30, 1993 letters, petitioners only questioned the
method of computing their electric billings without, however, raising a complaint about their
failure to use the rooms.54 Although petitioners stated in their December 30, 1993 letter
that respondent failed to fulfill its part of the contract,55 nowhere did they specifically refer
to their inability to use the leased rooms. Besides, at that time, they were already in default
on their rentals for more than a year.
If it were true that they were allowed to use only one of the nine (9) rooms subject of the
contract of lease, and considering that the rooms were intended for a business purpose, we
cannot understand why they did not specifically assert their right. If we believe petitioners
contention that they had been prevented from using the rooms for more than a year before
the complaint for ejectment was filed, they should have demanded specific performance
from the lessor and commenced an action in court. With the execution of the contract,
petitioners were already in a position to exercise their right to the use and enjoyment of the
property according to the terms of the lease contract.56 As borne out by the records, the
fact is that respondent turned over to petitioners the keys to the leased premises and
petitioners, in fact, renovated the rooms. Thus, they were placed in possession of the
premises and they had the right to the use and enjoyment of the same. They, likewise, had
the right to resist any act of intrusion into their peaceful possession of the property, even as
against the lessor itself. Yet, they did not lift a finger to protect their right if, indeed, there
was a violation of the contract by the lessor.
What was, instead, clearly established by the evidence was petitioners non-payment of
rentals because ostensibly they did not know to whom payment should be made. However,
this did not justify their failure to pay, because if such were the case, they were not without

16

any remedy. They should have availed of the provisions of the Civil Code of the Philippines
on the consignation of payment and of the Rules of Court on interpleader.
Article 1256 of the Civil Code provides:
Article 1256. If the creditor to whom tender of payment has been made refuses without just
cause to accept it, the debtor shall be released from responsibility by the consignation of the
thing or sum due.
Consignation alone shall produce the same effect in the following cases:
xxxx
(4) When two or more persons claim the same right to collect;
x x x x.
Consignation shall be made by depositing the things due at the disposal of a judicial
authority, before whom the tender of payment shall be proved in a proper case, and the
announcement of the consignation in other cases.57
In the instant case, consignation alone would have produced the effect of payment of the
rentals. The rationale for consignation is to avoid the performance of an obligation becoming
more onerous to the debtor by reason of causes not imputable to him.58 Petitioners claim
that they made a written tender of payment and actually prepared vouchers for their
monthly rentals. But that was insufficient to constitute a valid tender of payment. Even
assuming that it was valid tender, still, it would not constitute payment for want of
consignation of the amount. Well-settled is the rule that tender of payment must be
accompanied by consignation in order that the effects of payment may be produced.59
Moreover, Section 1, Rule 62 of the Rules of Court provides:
Section 1. When interpleader proper. Whenever conflicting claims upon the same subject
matter are or may be made against a person who claims no interest whatever in the subject
matter, or an interest which in whole or in part is not disputed by the claimants, he may
bring an action against the conflicting claimants to compel them to interplead and litigate
their several claims among themselves.
Otherwise stated, an action for interpleader is proper when the lessee does not know to
whom payment of rentals should be made due to conflicting claims on the property (or on
the right to collect).60 The remedy is afforded not to protect a person against double liability
but to protect him against double vexation in respect of one liability.61
Notably, instead of availing of the above remedies, petitioners opted to refrain from making
payments.
Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a
justification for non-payment of rentals. Although the two contracts embraced the lease of
nine (9) rooms, the terms of the contracts - with their particular reference to specific rooms
and the monthly rental for each - easily raise the inference that the parties intended the
lease of each room separate from that of the others.lavvphil There is nothing in the contract
which would lead to the conclusion that the lease of one or more rooms was to be made
dependent upon the lease of all the nine (9) rooms. Accordingly, the use of each room by the
lessee gave rise to the corresponding obligation to pay the monthly rental for the same.
Notably, respondent demanded payment of rentals only for the rooms actually delivered to,
and used by, petitioners.
It may also be mentioned that the contract specifically provides that the lease of Rooms 36,
37 and 38 was to take effect only when the tenants thereof would vacate the premises.
Absent a clear showing that the previous tenants had vacated the premises, respondent had
no obligation to deliver possession of the subject rooms to petitioners. Thus, petitioners
cannot use the non-delivery of Rooms 36, 37 and 38 as an excuse for their failure to pay the
rentals due on the other rooms they occupied.1avvphil
In light of the foregoing disquisition, respondent has every right to exercise his right to eject
the erring lessees. The parties contracts of lease contain identical provisions, to wit:

17

In case of default by the LESSEE in the payment of rental on the fifth (5th) day of each
month, the amount owing shall as penalty bear interest at the rate of FOUR percent (4%) per
month, to be paid, without prejudice to the right of the LESSOR to terminate his contract,
enter the premises, and/or eject the LESSEE as hereinafter set forth;62
Moreover, Article 167363 of the Civil Code gives the lessor the right to judicially eject the
lessees in case of non-payment of the monthly rentals. A contract of lease is a consensual,
bilateral, onerous and commutative contract by which the owner temporarily grants the use
of his property to another, who undertakes to pay the rent therefor.64 For failure to pay the
rent, petitioners have no right to remain in the leased premises.
WHEREFORE, premises considered, the petition is DENIED and the Status Quo Order dated
January 18, 1999 is hereby LIFTED. The Decision of the Court of Appeals dated May 26, 1998
and its Resolution dated December 10, 1998 in CA-G.R. SP No. 37739 are AFFIRMED.
SO ORDERED.
G.R. No. 133113

August 30, 2001

EDGAR H. ARREZA, petitioner,

vs.
MONTANO M. DIAZ, JR., respondent.
QUISUMBING, J.:
This petition assails the decision 1 promulgated on December 24, 1997, and the resolution 2
dated March 6, 1998, by the Court of Appeals in CA-G.R SP No. 43895. That decision
dismissed the petition for certiorari questioning the order 3 dated February 4, 1997 of the
Regional Trial Court of Makati City, Branch 59, in Civil Case No. 96-1372, which had denied
petitioner's motion to dismiss the complaint filed against him on grounds of res adjudicata.
The factual antecedents of the present petition are culled from the findings of the Court of
Appeals.
Bliss Development Corporation is the owner of a housing unit located at Lot 27. Block 30
New Capitol Estates I, Barangay Matandang Balara, Quezon City. In the course of a case
involving a conflict of ownership between petitioner Edgar H. Arreza and respondent
Montano M. Diaz, Jr., 4 docketed as Civil Case No. 94-2086 before the Regional Trial Court of
Makati, Branch 146, Bliss Development Corporation filed a complaint for interpleader.
In a decision dated March 27, 1996, the trial court resolved the conflict by decreeing as
follows:
WHEREFORE, premises considered, the herein interpleader is resolved in favor of defendant
Edgar H. Arreza, and plaintiff Bliss Development is granted cognizance of the May 6, 1991
transfer of rights by Emiliano and Leonila Melgazo thru Manuel Melgazo, to said defendant
Edgar Arreza. The case is dismissed as against defendant Montano M. Diaz, Jr.
The third-party complaint is likewise dismissed.
SO ORDERED.
The decision became final and was duly executed with Bliss executing a Contract to Sell the
aforementioned property to petitioner Arreza. Respondent Diaz was constrained to deliver
the property with all its improvements to petitioner.
Thereafter respondent Diaz filed a complaint against Bliss Development Corporation, Edgar
H. Arreza, and Domingo Tapay in the Regional Trial Court of Makati, Branch 59, docketed as
Civil Case No. 96-1372. He sought to hold Bliss Development Corporation and petitioner
Arreza liable for reimbursement to him of P1,706,915;58 representing the cost of his
acquisition and improvements on the subject property with interest at 8% per annum.
Petitioner Arreza filed a Motion to Dismiss the case, citing as grounds res adjudicata or
conclusiveness of the judgment in the interpleader case as well as lack of cause of action.
In an Order dated February 4, 1997, the motion was denied for lack of merit.

18

A Motion for Reconsideration filed by Arreza was likewise denied on March 20, 1997.
On April 16, 1997, Arreza filed a petition for certiorari before the Court of Appeals alleging
that the Orders dated February 4 and March 20, 1997, were issued against clear provisions
of pertinent laws, the Rules of Court, and established jurisprudence such that respondent
court acted without or in excess of jurisdiction, or grave abuse of discretion amounting to
lack or excess of jurisdiction.
The petition was dismissed for lack of merit. The Court of Appeals said:
The decision invoked by the petitioner as res adjudicata resolved only the issue of who
between Edgar H. Arreza and Montano Diaz has the better right over the property under
litigation. It did not resolve the rights and obligations of the parties.
The action filed by Montano M. Diaz against Bliss Development Corporation, et al. seeks
principally the collection of damages in the form of the payments Diaz made to the
defendant and the value of the improvements he introduced on the property matters that
were not adjudicated upon in the previous case for interpleader.
xxx

xxx

xxx

WHEREFORE, this petition is hereby DISMISSED with costs against the petitioner.
SO ORDERED.5
Petitioner's motion to reconsider the decision of the Court of Appeals was denied.6 Hence,
the present petition, where petitioner raises the following grounds for review:
I
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC CASE PERTAINING TO MR. DIAZ'S
CLAIMS FOR REIMBURSEMENT OF AMOUNTS WHICH HE ALLEGEDLY PAID TO BLISS BY WAY
OF PREMIUM OR INSTALLMENT PAYMENTS FOR THE ACQUISITION OF THE PROPERTY WAS
ERRONEOUSLY BROUGHT AGAINST MR. ARREZA. ALSO, SAID CLAIMS ARE BARRED BY RES
ADJUDICATA OR CONCLUSIVENESS OF A PRIOR JUDGMENT IN THE PRIOR RTC CASE WHICH
WAS ULTIMATELY AFFIRMED BY THIS HONORABLE COURT IN G.R. NO. 128726.
II
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC CASE PERTAINING TO MR. DIAZ'S
CLAIMS FOR REIMBURSEMENT OF THE COST OF IMPROVEMENTS HE ALLEGEDLY
INTRODUCED TO THE PROPERTY IS LIKEWISE BARRED BY RES ADJUDICATA OR
CONCLUSIVENESS OF A PRIOR JUDGMENT IN THE PRIOR RTC CASE WHICH WAS ULTIMATELY
AFFIRMED BY THIS HONORABLE COURT IN G.R NO. 128726.
III.
THE RULING IN THE PRIOR CA PETITION (CA-G.R. SP. NO. 41974) WHICH WAS ULTIMATELY
AFFIRMED BY THIS HONORABLE COURT IN G.R. NO. 128726 THAT THE DECISION IN THE
PRIOR RTC CASE SETTLED ALL CLAIMS WHICH MESSRS. DIAZ AND ARREZA HAD AGAINST
EACH OTHER CONSTITUTES THE LAW OF THE CASE BETWEEN THEM AND SERVES AS BAR TO
THE FILING OF THE PRESENT RTC CASE INVOLVING THE SAME CLAIMS.
IV.
IN ITS ENTIRETY, THE AMENDED COMPLAINT IN THE PRESENT RTC CASE IS DISMISSIBLE ON
THE GROUND OF LACK OF CAUSE OF ACTION.7
The issue for our resolution now is whether respondent Diaz's claims for reimbursement
against petitioner Arreza are barred by res adjudicata.
The elements of res adjudicata are: (a) that the former judgment must be final; (b) the court
which rendered judgment had jurisdiction over the parties and the subject matter; (c) it
must be a judgment on the merits; and (d) there must be between the first and second
causes of action identity of the parties, subject matter, and cause of action.8

19

Worthy of note, the prior case for interpleader filed with Branch 146 of the Regional Trial
Court of Makati, Civil Case No. 94-2086, was settled with finality with this Court's resolution
in G.R. No. 128726. 9 The judgment therein is now final.
When the Regional Trial Court of Makati (Branch 146) rendered judgment, it had priorly
acquired jurisdiction over the parties and the subject matter. Respondent, however,
contends that the trial court did not acquire jurisdiction over the property subject of the
action, as the action was instituted in Makati City while the subject unit is situated in Quezon
City.
We find, however, that in his answer to the complaint dated October 3, 1994, respondent
alleged:
20.
That should the said additional provision be declared valid and in the remote
possibility that the alleged conflicting claimant is adjudged to possess better right herein
answering defendant is asserting his right as a buyer for value and in good faith against all
persons/parties concerned.10 (Italics supplied)
Respondent in his answer also prayed that:
D.
Should the said additional provision be found valid and in the event his co-defendant
is found to possess better rights, to adjudge him (Diaz) entitled to rights as a buyer in good
faith and for value.11
By asserting his right as a buyer for value and in good faith of the subject property, and
asking for relief arising therefrom, respondent invoked the jurisdiction of the trial court.
Having invoked the jurisdiction of the Regional Trial Court of Makati (Branch 146) by filing his
answer to secure affirmative relief against petitioner, respondent is now estopped from
challenging the jurisdiction of said court after it had decided the case against him. Surely we
cannot condone here the undesirable practice of a party submitting his case for decision and
then accepting the judgment only if favorable, but attacking it on grounds of jurisdiction
when adverse.12
Respondent also claims that there is no identity of causes of action between Civil Case No.
94-2086, the prior case, and Civil Case No. 96-1372, the present case subject of this petition,
as the former involved a complaint for interpleader while the latter now involves an action
for a sum of money and damages. He avers that a complaint for interpleader is nothing
more than the determination of rights over the subject matter involved.
In its assailed decision, respondent Court of Appeals pointed out that the 1997 Rules of Civil
Procedure provide that in a case for interpleader, the court shall determine the respective
rights and obligations of the parties and adjudicate their respective claims.13 The appellate
court noted, however, that the defendants in that interpleader case, namely Diaz and
Arreza, did not pursue the issue of damages and reimbursement although the answer of
respondent Diaz did pray for affirmative relief arising out of the rights of a buyer in good
faith.14
Following the same tack, respondent Diaz now alleges that the issues in the prior case, Civil
Case No. 94-2086, were delimited by the pre-trial order which did not include matters of
damages and reimbursement as an issue. He faults petitioner for not raising such issues in
the prior case, with the result that the trial court did not resolve the rights and obligations of
the parties. There being no such resolution, no similar cause of action exists between the
prior case and the present case, according to respondent Diaz.
Respondent in effect argues that it was incumbent upon petitioner as a party in Civil Case
No. 94-2086 to put in issue respondent's demands for reimbursement. However, it was not
petitioner's duty to do the lawyering for respondent. As stated by the Court of Appeals, the
court in a complaint for interpleader shall determine the rights and obligations of the parties
and adjudicate their respective claims. Such rights, obligations, and claims could only be
adjudicated if put forward by the aggrieved party in assertion of his rights. That party in this
case referred to respondent Diaz. The second paragraph of Section 5 of Rule 62 of the 1997
Rules of Civil Procedure provides that the parties in an interpleader action may file
counterclaims, cross-claims, third party complaints and responsive pleadings thereto, "as
provided by these Rules." The second paragraph was added to Section 5 to expressly
authorize the additional pleadings and claims enumerated therein, in the interest of a
complete adjudication of the controversy and its incidents.15

20

Pursuant to said Rules, respondent should have filed his claims against petitioner Arreza in
the interpleader action. Having asserted his rights as a buyer in good faith in his answer,
and praying relief therefor, respondent Diaz should have crystallized his demand into
specific claims for reimbursement by petitioner Arreza. This he failed to do. Such failure
gains significance in light of our ruling in Baclayon vs. Court of Appeals, 182 SCRA 761, 771772 (1990), where this Court said:
A corollary question that We might as well resolve now (although not raised as an issue in
the present petition, but conformably with Gayos, et al. v. Gayos, et al., G.R. No. L-27812,
September 26, 197S, 67 SCRA 146, that it is a cherished rule of procedure that a court
should always strive to settle the entire controversy in a single proceeding leaving no root or
branch to bear the seeds in future litigation) is whether or not the private respondents can
still file a separate complaint against the petitioners on the ground that they are builders in
good faith and consequently, recover the value of the improvements introduced by them on
the subject lot. The case of Heirs of Laureano Marquez v. Valencia, 99 Phil. 740, provides the
answer:
If, aside from relying solely on the deed of sale with a right to repurchase and failure on the
part of the vendors to purchase it within the period stipulated therein, the defendant had set
up an alternative though inconsistent defense that he had inherited the parcel of land from
his late maternal grandfather and presented evidence in support of both defenses, the
overruling of the first would not bar the determination by the court of the second. The
defendant having failed to set up such alternative defenses and chosen or elected to rely on
one only, the overruling thereof was a complete determination of the controversy between
the parties which bars a subsequent action based upon an unpleaded defense, or any other
cause of action, except that of Failure of the complaint to state a cause of action and of lack
of jurisdiction of the Court. The determination of the issue joined by the parties constitutes
res judicata. (Italics supplied)
Although the alternative defense of being builders in good faith is only permissive, the
counterclaim for reimbursement of the value of the improvements is in the nature of a
compulsory counterclaim. Thus, the failure by the private respondents to set it up bars their
right to raise it in a subsequent litigation (Rule 9, Section 4 of the Rules of Court). While We
realize the plight of the private respondents, the rule on compulsory counterclaim is
designed to enable the disposition of the whole controversy at one time and in one action.
The philosophy of the rule is to discourage multiplicity of suits. (Italics supplied)
Having failed to set up his claim for reimbursement, said claim of respondent Diaz being in
the nature of a compulsory counterclaim is now barred.16
In cases involving res adjudicata, the parties and the causes of action are identical or
substantially the same in the prior as well as the subsequent action. The judgment in the
first action is conclusive as to every matter offered and received therein and as to any other
matter admissible therein and which might have been offered for that purpose, hence said
judgment is an absolute bar to a subsequent action for the same cause.17 The bar extends
to questions "necessarily involved in an issue, and necessarily adjudicated, or necessarily
implied in the final judgment, although no specific finding may have been made in reference
thereto, and although such matters were directly referred to in the pleadings and were not
actually or formally presented"18 Said prior judgment is conclusive in a subsequent suit
between the same parties on the same subject matter, and on the same cause of action, not
only as to matters which were decided in the first action, but also as to every other matter
which the parties could have properly set up in the prior suit.19
In the present case, we find there is an identity of causes of action between Civil Case No.
94-2086 and Civil Case No. 96-1372. Respondent Diaz's cause of action in the prior case,
now the crux of his present complaint against petitioner, was in the nature of an unpleaded
compulsory counterclaim, which is now barred. There being a former final judgment on the
merits in the prior case, rendered in Civil Case No. 94-2086 by Branch 146 of the Regional
Trial Court of Makati, which acquired jurisdiction over the same parties, the same subject
property, and the same cause of action, the present complaint of respondent herein (Diaz)
against petitioner Arreza docketed as Civil Case No. 96-1372 before the Regional Trial of
Makati, Branch 59 should be dismissed on the ground of res adjudicata.
WHEREFORE, the instant petition is GRANTED. The decision dated December 24, 1997 and
the resolution dated March 6, 1998 of the Court of Appeals in CA-G.R. SP No. 43895 are
REVERSED and SET ASIDE. Civil Case No. 96-1372 before the Regional Trial Court of Makati

21

City, Branch 59, is hereby ordered DISMISSED as against herein petitioner Edgar H. Arreza.
Costs against respondent.
SO ORDERED.
G.R. No. 89132

February 26, 1990

LEONCIA, MANUEL, DIOSDADA, ANTONIA, ISIDRO, GERONIMO, CRESENCIO,

ALEJANDRO, BONIFACIA, AURELIO, EPIFANIO, POLICARPO, IRENEO, ALL SURNAMED
BACLAYON; HRS. of AGRIPINA BACLAYON, rep. by LUCIA BACLAYON; HRS. of
MODESTA BACLAYON, rep. by FILING BACLAYON; HRS. OF HIPOLITO BACLAYON,
rep. BY MARIO BACLAYON; HRS. OF TOMAS BACLAYON, rep. by CRISTITO
BACLAYON; SILVESTRE ABANES; HRS. of LEONICA ABELLARE, rep. by FELIX
BACLAYON; CECILIA, HERMINIA, FELIX, CONCORDIA, all surnamed DELA VICTORIA;
and THE HON. JUDGE GERMAN LEE, JR., Presiding Judge of Branch XV, RTC, Cebu,
petitioners,
vs.
THE HON. COURT OF APPEALS, HEIRS OF SPOUSES MARCIANO BACALSO AND
GREGORIA SABANDEJA, namely, ARCADIA, FRANCISCA, JOSEFA, DIONESIA,
VALENTINA, ANGELA, VENANCIO, DOMINGA and FELIMON, all surnamed BACALSO,
respondents.
Leonardo Garcillano for petitioners.
Jesus N. Borromeo for private respondents.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals dated April
28, 1989 ordering the trial court, in a hearing supplementary to execution, to receive private
respondents' evidence to prove that they are builders in good faith of the improvements and
the value of said improvements, and its resolution dated June 20, 1989 denying the motion
for reconsideration.
The antecedent facts are as follows:
On May 7, 1969, petitioners Leoncia, Martin, Policarpio, Hilarion, Ireneo, Juliana and Tomas,
all surnamed Baclayon; Rosendo, Felicidad and Silvestra, all surnamed Abanes; and Tomasa,
Leoncia, Anacleto, Monica, Guillerma and Gertrudes all surnamed Abellare filed with the then
CFI-Cebu Branch 2, in Civil Case No. R-11185, a complaint for recovery of ownership and
possession, and damages, against spouses Marciano Bacalso and Gregoria Sabandeja of Lot
No. 5528 of the Cebu Cadastre. The latter filed their answer thereto on July 15, 1969.
On December 20, 1982, the trial court rendered a decision in favor of the Bacalso spouses,
declaring them owners of the subject lot, which decision was appealed by the petitioners to
the respondent Court of Appeals. The case was docketed as AC-G.R. CV No. 04948.
On July 29, 1986, the respondent court rendered a decision reversing the trial court, the
dispositive portion of which reads as follows (p. 15, Rollo):
WHEREFORE, the decision a quo is hereby reversed and set aside and another one is
rendered declaring plaintiffs-appellants as heirs of the late Matias Baclayon the owners of
Lot No. 5528 of the Cebu Cadastre covered by Original Certificate of Title No. 2726 (O-NA) of
the Registry of Deeds of Cebu (Exh. I) and ordering defendants to vacate the lot and
surrender the same to plaintiffs. No costs.
SO ORDERED.
The private respondents then elevated the case to this Court by filing a petition for review
which was, however, denied in the Resolution dated May 27, 1987.
The decision in favor of the petitioners having become final and executory, they filed a
motion for execution of judgment and possession which was opposed by the private
respondents. The opposition was based on the pronouncement of the respondent court in its
decision dated July 29, 1986, to wit (p. 16, Rollo):

22

No fraud or bad faith could be imputed on the part of the Bacalso spouses. They believed
the lot they bought from Segundo Baclayon was the land they occupied.
The private respondents argued that since they were found by the respondent court as
builders and/or planters in good faith and Article 546 of the Civil Code ordains that the
necessary and useful expenses for the improvements must be paid to the builders/planters
in good faith with right of retention, a reception of evidence to determine the correct value
of the necessary and useful improvements must be done first before ordering the execution.
The RTC-Branch 15, Cebu City, presided by Judge German G. Lee, Jr., in its order, dated
March 8, 1988, granted the motion for execution of judgment and possession, to wit (p. 16,
Rollo):
ORDER
This is finally, acting on the Motion for Execution of Judgment and Possession filed by Atty.
Garcillano in this case and the rejoinder of Atty. Nacua and the plaintiffs' rejoinder dated
February 11 and the manifestation of Atty. Garcillano of February 26, 1988.
It appearing that the dispositive portion of the decision of the Court of Appeals which is now
being enforced categorically declares plaintiffs/appellants as heirs of the late Matias
Baclayon, the owner of Lot No. 5526 (sic) of the Cebu Cadastre, covered by Original
Certificate of Title No. 2728 (sic) (0-NA) of the Registry of Deeds of Cebu (Exh. 1) and
ordering the defendants to vacate the lot and surrender the same to the plaintiffs, this Court
is not in a position to entertain any further claims by any parties in connection with said
case.
However, if the clients of Atty. Nacua believe that they can prove their claims, then they
should file a separate civil case to recover the same as this Court cannot pass judgment
anew on certain claims that should have been interposed as counter-claims in this case.
Wherefore, the Opposition to the issuance of the Writ of execution is hereby DENIED, as the
Clerk of Court is hereby ordered to issue a writ of Execution in this case.
SO ORDERED.
The private respondents appealed the said order of March 8, 1988 by filing a notice of
appeal dated March 30, 1988 which appeal was, however, dismissed by Judge Lee in the
order dated April 15, 1988.
On April 29, 1988, the petitioners filed a motion for writ of possession and demolition to
which motion the private respondents filed their opposition reiterating the ground in the
opposition to the motion for execution and possession.
Judge Lee, thereafter, issued the order dated August 19, 1988, to wit (p. 17, Rollo):
ORDER
An examination of the records of this case reveals that until now, there is yet no action by
the Court of Appeals on the Clarificatory motion filed by the losing party.
The Court has allowed this excuse to defer its issuance of an order of demolition after the
prevailing party has prayed the Court to issue one.
With the long passage of time, since the judgment in this case has become final, this Court
cannot allow any further delay in the enforcement of its judgment.
WHEREFORE, it is finally ordered that the losing party in this case be given fifteen (15) days
from today within which to effect a voluntary removal of any improvements that they have
introduced in the premises, considering that the prevailing party refused to reimburse the
losing party therefor, and if they do not demolish it after the expiration of this 15 days, this
Court will be constrained to order its demolition as prayed for.
IT IS SO ORDERED.

23

On September 19, 1988, the private respondents filed a petition for certiorari, mandamus
and prohibition with the respondent court concerning the orders dated March 8, 1988 and
August 19, 1988.
On April 28, 1989, the respondent court granted the petition, the dispositive portion of which
reads as follows (p. 21, Rollo):
WHEREFORE, the orders of March 8,1988 and August 19, 1988 issued in Civil Case No. R11185 by the RTC-Cebu City, Branch 15, are hereby SET ASIDE and ANNULLED. In a hearing
supplementary to execution, the said court is hereby ordered to receive petitioners'
evidence to prove that they are builders in good faith of the improvements and the value of
the said improvements introduced by them in the subject Lot 5528.
IT IS SO ORDERED.
The motion for reconsideration was denied. Hence, the present petition.
The only issue is whether or not the private respondents should be allowed, in a hearing
supplementary to execution, to present evidence to prove that they are builders in good
faith of the improvements and the value of said improvements.
Petitioners allege that the orders dated March 8, 1988 and August 19, 1988 are legitimate
having been issued by a judge presiding a court of competent jurisdiction, pursuant to his
duties which are ministerial in nature, to enforce a decision which is already final and
executory.
In ordering the trial court to receive private respondent's evidence to prove that they are
builders in good faith of the improvements and the value of said improvements, reliance was
placed by the respondent court in the cases of Naga Development Corporation v. Court of
Appeals, et al., G.R. No. L-28173, September 30, 1971, 41 SCRA 105 and Vda. de Chi v.
Tanada, etc., et al., G.R. No. L-27274, January 30, 1982, 111 SCRA 190.
We shall narrate the facts in these two cases in a nutshell:
1)
In the former case, Pacific Merchandising Corporation (Pacific) filed a complaint
against Naga Development Corporation (Naga) for the balance of its indebtedness in the
amount of P143,282.76. For failure to file an answer within the period, Naga was declared in
default. In its affidavit of merit attached to the motion to set aside the order of default, Naga
asserted that it had made certain payments to Pacific which should be deducted from the
amount of the claim. The motion was denied. A judgment by default was rendered ordering
Naga to pay said balance of indebtedness. The decision was affirmed by the Court of
Appeals and also by this Court, with the qualification that Naga was allowed to prove, during
the process of execution of the judgment, whatever payments it had made to Pacific, either
before or after the filing of the complaint, which constitute a proper deduction from the
principal sum ordered to be paid. Thus, We rationalized (41 SCRA 115-116):
Bearing in mind the nature of the instant suit and considering that the Court of Appeals'
concurrence in the trial court's assessment of the amount of P143,282.76 is in the nature of
a factual finding, this Court cannot now pass upon its correctness. The two courts below had
before them the sales agreement between the parties, and to what extent the parties
complied with their respective prestations thereunder was purely a matter of evidence.
However, although we cannot pass upon the correctness of the said assessment, it is quite
obvious that in the execution of its judgment as affirmed by the Court of Appeals, the trial
court cannot compel the Naga to pay more than what it actually owes the Pacific under the
terms of their covenant. Deeply imbedded in our legal system are the principles that no man
may unjustly enrich himself at the expense of another, and that every person must, in the
exercise of his rights, act with justice, give everyone his due, and observe honesty and good
faith. ... .
2)
In the latter case, an action for recovery of damages as a result of a vehicular
accident was filed by Rosita Yap Vda. de Chi against Alfonso Corominas, Jr., the owner of the
bus, and Simplicio Lawas, the driver. Since the vehicle was insured, a third-party complaint
was filed against the surety company. The trial court rendered judgment against Corominas,
Jr. and Lawas by ordering them jointly and severally to pay P40,302.31 to Vda. de Chi. In
turn, the surety company was ordered to indemnify Corominas, Jr. by the same amount. A
writ of execution was issued against the defendants and the surety company. The decision

24

was only partially satisfied because P6,700.00 has remained unpaid. Later, upon motion of
the Southern Islands Hospital, the trial court ordered the surety company to pay directly to
the hospital the amount of P686.35 out of the residue of the unpaid judgment; upon motion
of the Chong Hua Hospital, the trial court issued another order requiring Corominas, Jr. and
the surety company to pay the hospital the amount of P4,238.56. These two orders were
questioned before this Court by Vda. de Chi. We set aside said orders and ordered the trial
court to conduct a hearing, after proper notice to the parties, to determine whether or not
the hospital bills incurred by Vda. de Chi have been paid, and thereafter, to render a
decision accordingly. Thus, We explained (111 SCRA 196-197):
Technically it was error for the respondent Court to order the defendants and the surety
company to pay the respondents Southern Islands Hospital and Chong Hua Hospital the
amounts of P686.35 and P4,238.56, respectively, from the balance of the judgment yet to be
paid to the herein petitioner by the defendants and the surety company since the said
respondents are not parties in the case. The judgment sought to be executed specifically
ordered the defendants Alfonso Corominas, Jr. and Simplicio Lawas to pay, jointly and
severally, the plaintiff Rosita Yap Vda. de Chi, the amount of P40,302.31, plus costs; and for
the surety company to indemnify the defendant Alfonso Corominas, Jr. the amount of
P40,302.31, which the said defendant is ordered to pay the plaintiff. Consequently, to order
the payment of certain portions thereof to the herein respondent hospitals, Southern Islands
Hospital and Chong Hua Hospital, would be to modify, alter, or vary the terms of the
judgment. While the said respondents may have an interest over the said amounts claimed
by them, their remedy was not to file a mere ex-parte motion before the court, but to file
separate and independent actions before courts of competent jurisdiction, since the
judgment rendered in the case had already become final and almost executed and the law
allows no intervention after the trial has been terminated.
On the other hand, it cannot also be denied that the sums of money in question have been
awarded to the herein petitioner as expenses for her hospitalization in the respondent
hospitals and are based upon petitioner's own evidence. To order the filing of a separate and
independent action to recover a claim where the respondent hospitals concerned will have
to prove exactly a claim which had already been tried, litigated and adjudged would unduly
result in multiplicity of suits. Considering that the herein respondents claim that the herein
petitioner has not yet paid the amounts she incurred for hospitalization, the interests of
justice will be best served if a hearing be conducted to determine whether or not the
hospital bills have been paid, instead of requiring the respondent hospitals to file separate
actions to recover their respective claims.
The aforementioned reliance on these two cases was misplaced. The common denominator
between these two cases is the existence of a defense/claim which has been raised/tried
before the trial court. In the Naga case, the defense of payments made to Pacific which are
properly deductible from the principal sum ordered to be paid by Naga to Pacific was part of
the issues which Naga was not allowed to prove, being already in default. In the Vda. de Chi
case, her claim of hospitalization expenses incurred in the respondent hospital has been
litigated and adjudged. The respondent court failed to appreciate that this shared
denominator does not obtain in the present case. The defense of builders in good faith of the
improvements and evidence of the value of said improvements were not raised/ presented
before the trial court.
More importantly, in the recent case of First Integrated Bonding and Insurance Co., Inc., et
al. v. Isnani, etc., et al., G.R. 70246, July 31, 1989, which involved a similar issue, We ruled:
Significantly, the decision of September 30, 1971 in Naga Development Corporation vs.
Court of Appeals, on which total reliance has been placed by the petitioners, does not
appear to have been reaffirmed by this Court in subsequent cases. It is Justice Antonio
Barredo's dissent (quoted below) that appears to have been firmed up in later decisions of
this Court:
"... I believe that since Naga has been declared in default, and no grave abuse of discretion
having been found by the Court in that respect, the judgment by default must stand and be
executed, as is. Whether or not Naga has partially paid was part of the issue before the court
before judgment was rendered, Naga through its own fault was not allowed to prove any
such partial payment by the trial court; surely, that issue cannot be reopened during the
execution because that would tend to vary the terms of the judgment. The matters of equity
which can be raised in an execution proceeding, cannot to my mind, refer to those which the
court could have passed upon before judgment. Otherwise, there will be no end to litigation,
since conceivably the proof of partial payments could be so seriously controversial as to

25

need another full blown trial, decision and appeal. It is my view that under the
circumstances, Naga can do no more than address itself to the benignity or conscience of
the private respondent. (Emphasis supplied; 41 SCRA 105, 119.)"
The rule is well established that once a decision has become final and executory the only
jurisdiction left with the trial court is to order its execution. To require now the trial court in a
hearing supplementary to execution, to receive private respondents' evidence to prove that
they are builders in good faith of the improvements and the value of said Improvements, is
to disturb a final executory decision; which may even cause its substantial amendment. It
appears that the private respondent's opposition to the motion for the execution of the
judgment, possession and demolition is their last straw to prevent the satisfaction of the
judgment. Sad to say, We have to cut this straw.
We disagree with the respondent court that any counterclaim for reimbursement of the value
of the improvements thereon by reason of private respondents' being builders in good faith,
which presupposes that they are not the owners of the land, would run counter to the
defense of ownership and therefore could not have been set up before the trial court. It
should be emphasized that Rule 8, Section 2 of the Rules of Court allows a party to set forth
two or more statements of a claim or defense alternatively or hypothetically, either in one
cause of action or defense or in separate causes of action or defenses. This Court, in Castle
Bros., Wolf and Sons v. Go-Juno, 7 Phil. 144, even held that inconsistent defenses may be
pleaded alternatively or hypothetically provided that each defense is consistent with itself.
Mention must also be made of the case of Camara, et al. v. Aguilar, et al., 94 Phil. 527,
where We ruled:
The contention that a counterclaim for expenses incurred in clearing and cultivating the
parcel of land and planting coconut and other fruit-bearing trees therein could not have been
set up in the former case because that would have been inconsistent with or would have
weakened the claim that they were entitled to the parcel of land, is without merit, because
'A party may set forth two or more statements of a claim or defense alternatively or
hypothetically, either in one cause of action or defense or in separate causes of action or
defenses.' Hence, the plaintiffs herein and intervenors in the former case could have set up
the claim that they were entitled to the parcel of land and alternatively that assuming
(hypothetically) that they were not entitled to the parcel of land at least they were entitled
as possessors in good faith to the coconut and other fruit-bearing trees planted by them in
the parcel of land and their fruits or their value. (Emphasis supplied)
A corollary question that We might as well resolve now (although not raised as an issue in
the present petition, but conformably with Gayos, et al. v. Gayos, et al., G.R. No. L-27812,
September 26, 1975, 67 SCRA 146, that it is a cherished rule of procedure that a court
should always strive to settle the entire controversy in a single proceeding leaving no root or
branch to bear the seeds of future litigation) is whether or not the private respondents can
still file a separate complaint against the petitioners on the ground that they are builders in
good faith and consequently, recover the value of the impr vements introduced by them on
the subject lot. The case of Heirs of Laureano Marquez v. Valencia, 99 Phil. 740, provides the
answer:
If, aside from relying solely on the deed of sale with a right to repurchase and failure on the
part of the vendors to purchase it within the period stipulated therein, the defendant had set
up an alternative though inconsistent defense that he had inherited the parcel of land from
his late maternal grandfather and presented evidence in support of both defenses, the
overruling of the first would not bar the determination by the court of the second. The
defendant having failed to set up such alternative defenses and chosen or elected to rely on
one only, the overruling thereof was a complete determination of the controversy between
the parties which bats a subsequent action based upon an unpleaded defense, or any other
cause of action, except that of failure of the complaint to state a cause of action and of lack
of jurisdiction of the Court. The determination of the issue joined by the parties constitutes
res judicata. (Emphasis supplied)
Although the alternative defense of being builders in good faith is only permissive, the
counterclaim for reimbursement of the value of the improvements is in the nature of a
compulsory counterclaim. Thus, the failure by the private respondents to set it up bars their
right to raise it in a subsequent litigation (Rule 9, Section 4 of the Rules of Court). We realize
the plight of the private respondents, the rule on comlpulsory counterclaim is designed to
enable the disposition of the whole controversy at one time and in one action. The
philosophy of the rule is to discourage multiplicity of suits.

26

ACCORDINGLY, the petition is hereby GRANTED. The decision of the Court of Appeals dated
April 28, 1989 and its resolution dated June 20, 1989 are SET ASIDE and the orders dated
March 8, 1988 and August 19, 1988 of the Regional Trial Court of Cebu City, Branch 15 are
REINSTATED.
SO ORDERED.
Cruz, Gancayco, and Grio-Aquino, JJ., concur.
Separate Opinions
NARVASA, J., concurring:
The principal issue in this case arising in the process of execution of a judgment declaring
plaintiffs owners of the disputed land and ordering the defendants to vacate the same, the
latter having been pronounced to be builders and/or planters in good faith, but not owners of
the property is the propriety of allowing said defendants, after the judgment has become
final, to present evidence on and be adjudged entitled to the value of the necessary and
useful improvements made by them, payable before they are required to vacate the land.
The main opinion ruled in the negative, on the authority chiefly of the separate opinion 1 in
Naga Development Corporation v. C.A. et al., 41 SCRA 105, and First Integrated Bonding &
Insurance Co., Inc., et al. v. Hon. Asaali S. Isnani, etc., et al., G.R. No. 70246, July 31, 1989.
1.
In Naga, this Court, while affirming the correctness of the declaration of default and
the judgment by default against the defendant, resolved to allow the latter who, because
declared in default, had been unable to prove payments on account of his indebtedness
to prove before the Court a quo his claim of having made such payments, which reduced the
amount specified in the judgment by default, it being quite obvious
.. that in the execution of its judgment as affirmed by the Court of Appeals, the trial court
cannot compel the Naga to pay more than what it actually owes the Pacific under the terms
of their covenant. Deeply imbedded in our legal system are the principles that no man may
unjustly enrich himself at the expense of another, and that every person must, in the
exercise of his lights, act with justice, give everyone his due, and observe honesty and good
faith.
The separate opinion in Naga, however, made the point that
.. Whether or not Naga has partially paid was part of the issue before the court before
judgment was rendered; Naga through its own fault was not allowed to prove any such
partial payment by the trial court surely, that issue cannot be reopened during the execution
because that would tend to vary the terms of the judgment. The matters of equity which can
be raised in an execution proceeding, cannot to my mind, refer to those which the court
could have passed upon before judgment. Otherwise, there will be no end to litigation, since
conceivably the proof of partial payments could be so seriously controversial as to need
another full blown trial, decision and appeal. It is my view that under the circumstances,
Naga can do no more than address itself to the benignity or conscience of the private
respondent.
2.
In First Integrated Bonding & Insurance Co., Inc., et al. v. Hon. Asaali S. Isnani, etc., et
al., after a judgment for recovery of the deficiency in an extrajudicial foreclosure of
mortgage had become executory, and a writ of execution had issued for its enforcement, the
judgment debtors (principal and surety) filed separate motions to quash the writ on the
ground that the total payments made on account of the mortgage debt had resulted in an
excess of payment rather than a deficiency, and they were entitled to reimbursement of the
excess. The Trial Court's denial of the motions because "the payment sought to be
credited has been duly presented (in the answer), hence, could have been considered and
appreciated by the Court at the time of the decision" was sustained by this Court, which
pointed out that the evidence adduced before the Trial Court really failed to substantiate the
defendants' claim of payment and that it is the separate concurring opinion, rather than the
majority opinion in Naga, supra, "that appears to have been firmed up in later decisions of
this Court."
I agree with the disposition in the main opinion. I have drawn up this separate opinion
merely to make a few further observations on the matter to the end that the rule might be

27

placed in clearer perspective vis a vis the doctrine of stay of execution on equitable
considerations set out in several decisions of this Court.
It is axiomatic that once a judgment has become executory, its enforcement becomes a
ministerial, mandatory duty on the part of the Court; and the order of execution is and
should be unappealable or not otherwise subject of review by a higher tribunal if the
desideratum of writing finis to litigation at some definite point is to be achieved.
Equally settled, however, is that the rule admits of exceptions which in the course of time,
this Court has come to specifically identify. One of these is when facts and events transpire
after a judgment has become executory which on equitable grounds render its execution
impossible or unjust, in which case a stay or preclusion of execution may properly be sought.
The principle is well illustrated in an early case decided in 1938, Chua A.H. Lee v. Mapa. 2
There judgment was rendered for plaintiff declaring defendants to be liable to repay loans
secured by pledges of personal property. After execution had issued out, the defendants
manifested willingness to pay the amount of the loans and accrued interests thereon
provided the pledges were returned to them. The request for return of the pledges having
unaccountably been rejected by the plaintiff, the latter was thereupon sued by the
defendants in a separate action for the recovery of damages arising from the loss of the
pledges. The defendants also asked for stay of the execution pending final determination of
their separate action. This was granted, upon bond to answer for the judgment. This Court
upheld such stay, ruling that the Trial Court had acted "advisedly" and within its jurisdiction.
This Court pointed out that "a stay may be allowed on grounds which are in their nature
peculiarly equitable, as for instance to give defendant an opportunity to set off a claim
against plaintiff," that the ground relied upon for the stay of execution, and which is the
foundation of the new action "is such that it could not have been foreseen at the time of the
trial of the case," having indeed "arisen subsequent to the remanding of the record from the
Supreme Court to the trial court," and could not therefore be regarded as an attempt "to
interpret or to reverse the judgment of the higher court."
In De la Costa v. Cleofas, 3 decided in 1939, this Court held that
Obviously a prevailing party ill a civil action is entitled to a writ of execution of the final
judgment obtained by him within five years from its entry (section 443, Code of Civil
Procedure). But it has been repeatedly held, and it is now well-settled in this jurisdiction, that
when after judgment has been rendered and the latter has become final, facts and
circumstances transpire which render its execution impossible or unjust, the interested party
may ask the court to modify or alter the judgment to harmonize the same with justice and
the facts. (Molina vs. de la Riva, 8 Phil. 569; Behn, Meyer & Co. vs. McMicking, 11 Phil., 276;
Warner, Barnes & Co. vs. Jaucian, 13 Phil. 4; Espiritu vs. Crossfield and Guash, 14 Phil. 588;
Flor Mata vs. Lichauco and Salinas, 36 Phil. 809). ... .
De la Costa was reiterated in a 1955 case, Ocampo v. Sanchez, 4 in which this Court upheld
the order of respondent Judge who, on the basis of "facts and circumstances which
transpired after judgment," authorized slight deviations by the defendants from a judgment
on compromise "so as to harmonize the judgment 'with justice and the facts.' "
De la Costa was also applied in (1) City of Butuan v. Ortiz, 3 SCRA 659 (1961) in which this
Court held that the executory judgment of a Court of First Instance for the reinstatement of a
suspended police corporal, the 60-day period therefor having lapsed, should not be executed
because "a supervening cause or reason had arisen," i.e., the decision subsequently
rendered by the Commissioner of Civil Service affirming the corporal's separation from the
service; and (2) a 1975 case, City of Cebu v. Mendoza, 5 which also adverted to Abellana v.
Dosdos, 13 SCRA 244, 248, 6 to the effect that "After a judgment has become final, if there
is evidence of an event or circumstance which would affect or change the rights of the
parties thereto, the court should be allowed to admit evidence of such new facts and
circumstances, and thereafter suspend its execution and grant relief as the new facts and
circumstances warrant."
In fine, a suspension or refusal of execution of a final and executory judgment or order on
equitable grounds can only be justified upon facts and events transpiring after the judgment
or order had become executory, materially affecting the judgment obligation.
Conversely, attempts to frustrate or put off enforcement of an executory judgment on the
basis of facts or events occurring before the judgment became final cannot meet with
success. Facts or events bearing on the substance of the obligation subject of the action

28

should ordinarily be alleged during the issue-formulation stage or otherwise by proper

amendment, and proved at the trial; if discovered after the case has been submitted but
before decision is rendered, proved after obtaining a reopening of the case; and if
discovered after judgment has been rendered but before it becomes final, substantiated at a
new trial which the court in its discretion may grant on the ground of newly discovered
evidence, pursuant to Rule 37, Rules of Court. Once the judgment becomes executory, the
only other remedy left to attempt a material alteration thereof is that provided for in Rule 38
of the Rules of Court (governing petitions for relief from judgments), or an action to set aside
the judgment on account of extrinsic, collateral fraud. 7 There is no other permissible mode
of preventing or delaying execution on equitable grounds predicated on facts occurring
before finality of judgment.
In the case at bar, the defendants should have alleged their status as builders in good faith
with respect to the land in dispute and presented evidence thereon during the original
proceedings in the Trial Court. Assuming they were precluded from doing so by some
insuperable cause, 8 they should have in the appellate proceedings, or after being
declared to be builders in good faith by the judgment of the Court of Appeals and before it
became final sought leave to present proof of the value of the necessary and useful
expenses put up by them on the land in line with Article 546 of the Civil Code. 9 To offer to
do so after the judgment had become executory and been remanded to the Trial Court for
enforcement, is much too late. The law no longer affords them any other remedy, not even
the filing of a separate suit for the purpose, as suggested by the Trial Court, because the
subject of that separate action had been, or should have been set up as a compulsory
counterclaim in the original suit (alternatively to the defense of ownership [Sec. 2, Rule 8,
Rules of Court]) and not having been so set up, became forever barred (Sec. 4, Rule 9, Rules
of Court).
G.R. No. L-25138

August 28, 1969

JOSE A. BELTRAN, ET AL., plaintiffs-appellants,

vs.
PEOPLE'S HOMESITE & HOUSING CORPORATION, defendants-appellees.
TEEHANKEE, J.:
Appeal on purely questions of law from an order of dismissal of the complaint for
interpleader, on the ground that it does not state a cause of action, as certified to this Court
by the Court of Appeals. We affirm the dismissal on the ground that where the defendants
sought to be interpleaded as conflicting claimants have no conflicting claims against
plaintiff, as correctly found by the trial court, the special civil action of interpleader will not
lie.
This interpleader suit was filed on August 21, 1962, by plaintiffs in their own behalf and in
behalf of all residents of Project 4 in Quezon City, praying that the two defendantgovernment corporations be compelled to litigate and interplead between themselves their
alleged conflicting claims involving said Project 4.
Plaintiffs' principal allegations in their complaint were as follows: Since they first occupied in
1953 their respective housing units at Project 4, under lease from the People's Homesite &
Housing Corporation (PHHC) and paying monthly rentals therefor, they were assured by
competent authority that after five years of continuous occupancy, they would be entitled to
purchase said units. On February 21, 1961, the PHHC announced to the tenants that the
management, administration and ownership of Project 4 would be transferred by the PHHC
to the Government Service Insurance System (GSIS) in payment of PHHC debts to the GSIS.
In the same announcement, the PHHC also asked the tenants to signify their conformity to
buy the housing units at the selling price indicated on the back thereof, agreeing to credit
the tenants, as down payment on the selling price, thirty (30%) percent of what had been
paid by them as rentals. The tenants accepted the PHHC offer, and on March 27, 1961, the
PHHC announced in another circular that all payments made by the tenants after March 31,
1961 would be considered as amortizations or installment payments. The PHHC furthermore
instructed the Project Housing Manager in a memorandum of May 16, 1961 to accept as
installments on the selling price the payments made after March 31, 1961 by tenants who
were up-to-date in their accounts as of said date. In September, 1961, pursuant to the
PHHC-GSIS arrangement, collections from tenants on rentals and/or installment payments
were delivered by the PHHC to the GSIS. On December 27, 1961, the agreement of turnover
of administration and ownership of PHHC properties, including Project 4 was executed by
PHHC in favor of GSIS, pursuant to the release of mortgage and amicable settlement of the

29

extrajudicial foreclosure proceedings instituted in May, 1960 by GSIS against PHHC.

Subsequently, however, t
, while GSIS insisted on its legal rights to enforce the said
agreements and was upheld in its contention by both the Government Corporate Counsel
and the Secretary of Justice. Plaintiffs thus claimed that these conflicting claims between the
defendants-corporations caused them great inconvenience and incalculable moral and
material damage, as they did not know to whom they should pay the monthly amortizations
or payments. They further alleged that as the majority of them were GSIS policy holders,
they preferred to have the implementation of the outright sale in their favor effected by the
GSIS, since the GSIS was "legally entitled to the management, administration and ownership
of the PHHC properties in question." 1
Upon urgent ex parte motion of plaintiffs, the trial Court issued on August 23, 1962 its Order
designating the People's First Savings Bank at Quezon City "to receive in trust the payments
from the plaintiffs on their monthly amortizations on PHHC lots and to be released only upon
proper authority of the Court." 2
On August 29, 1962, the two defendant corporations represented by the Government
Corporate Counsel filed a Motion to Dismiss the complaint for failure to state a cause of
action as well as to lift the Court's order designating the People's First Savings Bank as
trustee to receive the tenants' payments on the PHHC lots.
The trial Court heard the motion on September 1, 1962 in the presence of all the parties,
and thereafter issued its Order of September 6, 1962, dismissing the Complaint, ruling that:
"During the hearing of the said motion and opposition thereto, the counsel for the
defendants ratified the allegations in his motion and made of record that the defendant
Government Service Insurance System has no objection that payments on the monthly
amortizations from the residents of Project 4 be made directly to the defendant People's
Homesite and Housing Corporation. From what appears in said motion and the statement
made in open court by the counsel for defendants that there is no dispute as to whom the
residents of Project 4 should make their monthly amortizations payments, there is, therefore,
no cause of action for interpleading and that the order of August 23, 1962 is not warranted
by the circumstances surrounding the case. In so far as payments are concerned, defendant
GSIS has expressed its conformity that they be made directly to defendant PHHC. Counsel
for defendants went further to say that whatever dispute, if any, may exist between the two
corporations over the lots and buildings in Project 4, payments made to the PHHC will not
and cannot in any way affect or prejudice the rights of the residents thereof as they will be
credited by either of the two defendants." 3
Plaintiffs subsequently filed their motion for reconsideration and the trial court, "with a view
to thresh out the matter once and for all," called the Managers of the two defendantscorporations and the counsels for the parties to appear before it for a conference on October
24, 1962. "During the conference," the trial court related in its Order of November 20, 1962,
denying plaintiffs' Motion for Reconsideration, "Manager Diaz of the GSIS made of record
that he has no objection that payments be made to the PHHC. On the other hand, Manager
Eco of the PHHC made of record that at present there is a standing arrangement between
the GSIS and the PHHC that as long as there is showing that the PHHC has remitted 100% of
the total purchase price of a given lot to the GSIS, the latter corporation shall authorize the
issuance of title to the corresponding lot. It was also brought out in said conference that
there is a new arrangement being negotiated between the two corporations that only 50% of
the purchase price be remitted to the GSIS by the PHHC, instead of the 100%. At any rate
the two Managers have assured counsel for the plaintiffs that upon payment of the whole
purchase price of a given lot, the title corresponding to said lot will be issued." 4
On appeal, plaintiffs claim that the trial Court erred in dismissing their suit, contending the
allegations in their complaint "raise questions of fact that can be established only by answer
and trial on the merits and not by a motion to dismiss heard by mere oral manifestations in
open court," and that they "do not know who, as between the GSIS and the PHHC, is the
right and lawful party to receive their monthly amortizations as would eventually entitle
them to a clear title to their dwelling units." 5
Plaintiffs entirely miss the vital element of an action of interpleader. Rule 63, section 1 of the
Revised Rules of Court (formerly Rule 14) requires as an indispensable element that
"conflicting claims upon the same subject matter are or may be made" against the plaintiffin-interpleader "who claims no interest whatever in the subject matter or an interest which
in whole or in part is not disputed by the claimants." While the two defendant corporations
may have conflicting claims between themselves with regard to the management,
administration and ownership of Project 4, such conflicting claims are not against the

30

plaintiffs nor do they involve or affect the plaintiffs. No allegation is made in their complaint
that any corporation other than the PHHC which was the only entity privy to their leasepurchase agreement, ever made on them any claim or demand for payment of the rentals or
amortization payments. The questions of fact raised in their complaint concerning the
enforceability, and recognition or non-enforceability and non-recognition of the turnover
agreement of December 27, 1961 between the two defendant corporations are irrelevant to
their action of interpleader, for these conflicting claims, loosely so-called, are between the
two corporations and not against plaintiffs. Both defendant corporations were in conformity
and had no dispute, as pointed out by the trial court that the monthly payments and
amortizations should be made directly to the PHHC alone.
The record rejects plaintiffs' claim that the trial courts order was based on "mere oral
manifestations in court." The Reply to Opposition of September 11, 1962 filed by the
Government Corporate Counsel expressly "reiterates his manifestation in open court that no
possible injustice or prejudice would result in plaintiffs by continuing to make payments of
such rentals or amortizations to defendant PHHC because any such payments will be
recognized as long as they are proper, legal and in due course by anybody who might take
over the property. Specifically, any such payments will be recognized by the GSIS in the
event that whatever conflict there might be (and this is only on the hypothetical assumption
that such conflict exists) between the PHHC and the GSIS should finally be resolved in favor
of the GSIS". 6 The assurances and undertakings to the same affect given by the Managers
of the defendants-corporations at the conference held by the trial Court are expressly
embodied in the Court's Order of November 20, 1962 quoted above. The GSIS' undertaking
to recognize and respect the previous commitments of PHHC towards its tenants is expressly
set forth in Par. III, section M of the turnover agreement, Annex "F" of plaintiffs' complaint,
wherein it is provided that "GSIS shall recognize and respect all awards, contracts of sale,
lease agreements and transfer of rights to lots and housing units made and approved by
PHHC, subsisting as of the signing of this agreement, and PHHC commitment to sell its
housing projects 4, 6 and 8-A at the selling prices less rental credits fixed by PHHC and as
finally approved by the OEC. PHHC, however, shall be liable and answerable for any and all
claims and consequences arising from double or multiple awards or in the case of awards of
non-existing houses and/or lots." 7
In fine, the record shows clearly that there were no conflicting claims by defendant
corporations as against plaintiff-tenants, which they may properly be compelled in an
interpleader suit to interplead and litigate among themselves. Both defendant corporations
were agreed that PHHC should continue receiving the tenants' payments, and that such
payments would be duly recognized even if the GSIS should eventually take over Project 4
by virtue of their turnover agreement of December 27, 1961. As held by this Court in an
early case, the action of interpleader is a remedy whereby a person who has property in his
possession or has an obligation to render wholly or partially, without claiming any right in
both, comes to court and asks that the defendants who have made upon him conflicting
claims upon the same property or who consider themselves entitled to demand compliance
with the obligation be required to litigate among themselves in order to determine who is
entitled to the property or payment of the obligation. "The remedy is afforded not to protect
a person against a double liability but to protect him against a double vexation in respect of
one liability." 8 Thus, in another case, where the occupants of two different parcels of land
adjoining each other belonging to two separate plaintiffs, but on which the occupants had
constructed a building encroaching upon both parcels of land, faced two ejectment suits
from the plaintiffs, each plaintiff claiming the right of possession and recovery over his
respective portion of the lands encroached upon, this Court held that the occupants could
not properly file an interpleader suit, against the plaintiffs, to litigate their alleged conflicting
claims; for evidently, the two plaintiff did not have any conflicting claims upon the same
subject matter against the occupants, but were enforcing separate and distinct claims on
their respective properties. 9
Plaintiffs' other contention in their appeal is that notwithstanding that the issue as to which
of the defendants is authorized to receive the tenants' payments was resolved in favor of
the PHHC, they had raised other issues that were not resolved and would require rendition of
judgment after trial on the merits, such as "the issue of the right of ownership over the
houses and lots in Project 4 (and) the issue of the status of the commitment agreements and
undertakings made by the previous PHHC Administration, particularly those of the then
PHHC General Manager Bernardo Torres." 10 This contention is without merit, for no
conflicting claims have been made with regard to such issues upon plaintiffs by defendant
corporations, who both bound themselves to recognize and respect the rights of plaintiffstenants. The resolution of such issues affecting the defendant corporations exclusively may
not properly be sought through the special civil action of interpleader. Should there be a

31

breach of the PHHC undertakings towards plaintiffs, plaintiffs' recourse would be an ordinary
action of specific performance or other appropriate suit against either the PHHC or GSIS or
both, as the circumstances warrant.
We find no error, therefore, in the trial court's order of dismissal of the complaint for
interpleader and the lifting, as a consequence, of its other order designating the People's
First Savings Bank as trustee to receive the tenants' payments on the PHHC lots.
ACCORDINGLY, the
costs.1wph1.t
G.R. No. L-23851

trial

Court's

order

of

dismissal

is

hereby

affirmed.

Without

March 26, 1976

WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant,

vs.
LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.
CASTRO, C.J.:
This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656,
dismissing the plaintiff-appellant's complaint of interpleader upon the grounds of failure to
state a cause of action and res judicata.
In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf &
Country Club, Inc., a non-stock, civic and athletic corporation duly organized under the laws
of the Philippines, with principal office in Mandaluyong, Rizal (hereinafter referred to as the
Corporation), alleged, for its first cause of action, that the defendant Lee E. Won claims
ownership of its membership fee certificate 201, by virtue of the decision rendered in civil
case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf &
Country Club, Inc." and also by virtue of membership fee certificate 201-serial no. 1478
issued on October 17, 1963 by Ponciano B. Jacinto, deputy clerk of court of the said CFI of
Manila, for and in behalf of the president and the secretary of the Corporation and of the
People's Bank & Trust Company as transfer agent of the said Corporation, pursuant to the
order of September 23, 1963 in the said case; that the defendant Bienvenido A. Tan, on the
other hand, claims to be lawful owner of its aforesaid membership fee certificate 201 by
virtue of membership fee certificate 201-serial no. 1199 issued to him on July 24, 1950
pursuant to an assignment made in his favor by "Swan, Culbertson and Fritz," the original
owner and holder of membership fee certificate 201; that under its articles of incorporation
and by-laws the Corporation is authorized to issue a maximum of 400 membership fee
certificates to persons duly elected or admitted to proprietary membership, all of which have
been issued as early as December 1939; that it claims no interest whatsoever in the said
membership fee certificate 201; that it has no means of determining who of the two
defendants is the lawful owner thereof; that it is without power to issue two separate
certificates for the same membership fee certificate 201, or to issue another membership
fee certificate to the defendant Lee, without violating its articles of incorporation and bylaws; and that the membership fee certificate 201-serial no. 1199 held by the defendant Tan
and the membership fee certificate 201-serial No. 1478 issued to the defendant Lee proceed
from the same membership fee certificate 201, originally issued in the name of "Swan,
Culbertson and Fritz".
For its second cause of action. it alleged that the membership fee certificate 201-serial no.
1478 issued by the deputy clerk of court of court of the CFI of Manila in behalf of the
Corporation is null and void because issued in violation of its by-laws, which require the
surrender and cancellation of the outstanding membership fee certificate 201 before
issuance may be made to the transferee of a new certificate duly signed by its president and
secretary, aside from the fact that the decision of the CFI of Manila in civil case 26044 is not
binding upon the defendant Tan, holder of membership fee certificate 201-serial no. 1199;
that Tan is made a party because of his refusal to join it in this action or bring a separate
action to protect his rights despite the fact that he has a legal and beneficial interest in the
subject matter of this litigation; and that he is made a part so that complete relief may be
accorded herein.
The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and
litigate their conflicting claims; and (b) judgment. be rendered, after hearing, declaring who
of the two is the lawful owner of membership fee certificate 201, and ordering the surrender
and cancellation of membership fee certificate 201-serial no. 1478 issued in the name of
Lee.

32

In separate motions the defendants moved to dismiss the complaint upon the grounds of res
judicata, failure of the complaint to state a cause of action, and bar by prescription. 1 These
motions were duly opposed by the Corporation. Finding the grounds of bar by prior judgment
and failure to state a cause of action well taken, the trial court dismissed the complaint, with
costs against the Corporation.
In this appeal, the Corporation contends that the court a quo erred (1) in finding that the
allegations in its amended and supplemental complaint do not constitute a valid ground for
an action of interpleader, and in holding that "the principal motive for the present action is
to reopen the Manila Case and collaterally attack the decision of the said Court"; (2) in
finding that the decision in civil case 26044 of the CFI of Manila constitutes res judicata and
bars its present action; and (3) in dismissing its action instead of compelling the appellees to
interplead and litigate between themselves their respective claims.
The Corporations position may be stated elsewise as follows: The trial court erred in
dismissing the complaint, instead of compelling the appellees to interplead because there
actually are conflicting claims between the latter with respect to the ownership of
membership fee certificate 201, and, as there is not Identity of parties, of subject-matter,
and of cause of action, between civil case 26044 of the CFI of Manila and the present action,
the complaint should not have been dismissed upon the ground of res judicata.
On the other hand, the appellees argue that the trial court properly dismissed the complaint,
because, having the effect of reopening civil case 26044, the present action is barred by res
judicata.
Although res judicata or bar by a prior judgment was the principal ground availed of by the
appellees in moving for the dismissal of the complaint and upon which the trial court
actually dismissed the complaint, the determinative issue, as can be gleaned from the
pleadings of the parties, relates to the propriety and timeliness of the remedy of
interpleader.
The action of interpleader, under section 120 of the Code of Civil Procedure, 2 is a remedy
whereby a person who has personal property in his possession, or an obligation to render
wholly or partially, without claiming any right to either, comes to court and asks that the
persons who claim the said personal property or who consider themselves entitled to
demand compliance with the obligation, be required to litigate among themselves in order to
determine finally who is entitled to tone or the one thing. The remedy is afforded to protect
a person not against double liability but against double vexation in respect of one liability. 3
The procedure under the Rules of Court 4 is the same as that under the Code of Civil
Procedure, 5 except that under the former the remedy of interpleader is available regardless
of the nature of the subject-matter of the controversy, whereas under the latter an
interpleader suit is proper only if the subject-matter of the controversy is personal property
or relates to the performance of an obligation.
There is no question that the subject matter of the present controversy, i.e., the membership
fee certificate 201, is proper for an interpleader suit. What is here disputed is the propriety
and timeliness of the remedy in the light of the facts and circumstances obtaining.
A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. 7
He need not await actual institution of independent suits against him before filing a bill of
interpleader. 8 He should file an action of interpleader within a reasonable time after a
dispute has arisen without waiting to be sued by either of the contending claimants. 9
Otherwise, he may be barred by laches 10 or undue delay. 11 But where he acts with
reasonable diligence in view of the environmental circumstances, the remedy is not barred.
12
Has the Corporation in this case acted with diligence, in view of all the circumstances, such
that it may properly invoke the remedy of interpleader? We do not think so. It was aware of
the conflicting claims of the appellees with respect to the membership fee certificate 201
long before it filed the present interpleader suit. It had been recognizing Tan as the lawful
owner thereof. It was sued by Lee who also claimed the same membership fee certificate.
Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and
to defend itself therein. As a matter of fact, final judgment was rendered against it and said
judgment has already been executed. It is not therefore too late for it to invoke the remedy
of interpleader.

33

It has been held that a stakeholder's action of interpleader is too late when filed after
judgment has been rendered against him in favor of one of the contending claimants, 13
especially where he had notice of the conflicting claims prior to the rendition of the
judgment and neglected the opportunity to implead the adverse claimants in the suit where
judgment was entered. This must be so, because once judgment is obtained against him by
one claimant he becomes liable to the latter. 14 In once case, 15 it was declared:
The record here discloses that long before the rendition of the judgment in favor of relators
against the Hanover Fire Insurance Company the latter had notice of the adverse claim of
South to the proceeds of the policy. No reason is shown why the Insurance Company did not
implead South in the former suit and have the conflicting claims there determined. The
Insurance Company elected not to do so and that suit proceeded to a final judgment in favor
of relators. The Company thereby became independently liable to relators. It was then too
late for such company to invoke the remedy of interpleader
The Corporation has not shown any justifiable reason why it did not file an application for
interpleader in civil case 26044 to compel the appellees herein to litigate between
themselves their conflicting claims of ownership. It was only after adverse final judgment
was rendered against it that the remedy of interpleader was invoked by it. By then it was too
late, because to he entitled to this remedy the applicant must be able to show that lie has
not been made independently liable to any of the claimants. And since the Corporation is
already liable to Lee under a final judgment, the present interpleader suit is clearly improper
and unavailing.
It is the general rule that before a person will be deemed to be in a position to ask for an
order of intrepleader, he must be prepared to show, among other prerequisites, that he has
not become independently liable to any of the claimants. 25 Tex. Jur. p. 52, Sec. 3; 30 Am.
Jur. p. 218, Section 8.
It is also the general rule that a bill of interpleader comes too late when it is filed after
judgment has been rendered in favor of one of the claimants of the fund, this being
especially true when the holder of the funds had notice of the conflicting claims prior to the
rendition of the judgment and had an opportunity to implead the adverse claimants in the
suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton, Tex. Civ.
App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11;
25 Tex. Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275. 16
Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said
suit to proceed to final judgment against him, he cannot later on have that part of the
litigation repeated in an interpleader suit. In the case at hand, the Corporation allowed civil
case 26044 to proceed to final judgment. And it offered no satisfactory explanation for its
failure to implead Tan in the same litigation. In this factual situation, it is clear that this
interpleader suit cannot prosper because it was filed much too late.
If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment
against him without filing a bill of interpleader, it then becomes too late for him to do so.
Union Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901;
Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is one o the main offices of a bill of
interpleader to restrain a separate proceeding at law by claimant so as to avoid the resulting
partial judgment; and if the stakeholder acquiesces in one claimant's trying out his claim
and establishing it at law, he cannot then have that part of the litigation repeated in an
interpleader suit. 4 Pomeroy's Eq. Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and
236; Langdell's Summary of Eq. Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21
A/450. 17
It is the general rule that a bill of interpleader comes too late when application therefore is
delayed until after judgment has been rendered in favor of one of the claimants of the fund,
and that this is especially true where the holder of the fund had notice of the conflicting
claims prior to the rendition of such judgment and an opportunity to implead the adverse
claimants in the suit in which such judgment was rendered. (See notes and cases cited 36
Am. Dec. 703, Am. St. Rep. 598, also 5 Pomeroy's Eq. Juris. Sec. 41.)
The evidence in the opinion of the majority shows beyond dispute that the appellant
permitted the Parker county suit to proceed to judgment in favor of Britton with full notice of
the adverse claims of the defendants in the present suit other than the assignees of the
judgment (the bank and Mrs. Pabb) and no excuse is shown why he did not implead them in
the suit. 18

34

To now permit the Corporation to bring Lee to court after the latter's successful
establishment of his rights in civil case 26044 to the membership fee certificate 201, is to
increase instead of to diminish the number of suits, which is one of the purposes of an action
of interpleader, with the possibility that the latter would lose the benefits of the favorable
judgment. This cannot be done because having elected to take its chances of success in said
civil case 26044, with full knowledge of all the fact, the Corporation must submit to the
consequences of defeat.
The act providing for the proceeding has nothing to say touching the right of one, after
contesting a claim of one of the claimants to final judgment unsuccessfully, to involve the
successful litigant in litigation anew by bringing an interpleader action. The question seems
to be one of first impression here, but, in other jurisdictions, from which the substance of the
act was apparently taken, the rule prevails that the action cannot be resorted to after an
unsuccessful trial against one of the claimants.
It is well settled, both by reasons and authority, that one who asks the interposition of a
court of equity to compel others, claiming property in his hands, to interplead, must do so
before putting them to the test of trials at law. Yarborough v. Thompson, 3 Smedes & M. 291
(41 Am. Dec. 626); Gornish v. Tanner, 1 You. & Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.)
116. The remedy by interpleader is afforded to protect the party from the annoyance and
hazard of two or more actions touching the same property or demand; but one who, with
knowledge of all the facts, neglects to avail himself of the relief, or elects to take the
chances for success in the actions at law, ought to submit to the consequences of defeat. To
permit an unsuccessful defendant to compel the successful plaintiffs to interplead, is to
increase instead of to diminish the number of suits; to put upon the shoulders of others the
burden which he asks may be taken from his own. ....'
It is urged, however, that the American Surety Company of New York was not in position to
file an interpleader until it had tested the claim of relatrix to final judgment, and that, failing
to meet with success, it promptly filed the interpleader. The reason why, it urges, it was not
in such position until then is that had it succeeded before this court in sustaining its
construction of the bond and the law governing the bond, it would not have been called
upon to file an interpleader, since there would have been sufficient funds in its hands to
have satisfied all lawful claimants. It may be observed, however, that the surety company
was acquainted with all of the facts, and hence that it simply took its chances of meeting
with success by its own construction of the bond and the law. Having failed to sustain it, it
cannot now force relatrix into litigation anew with others, involving most likely a repetition of
what has been decided, or force her to accept a pro rata part of a fund, which is far from
benefits of the judgment. 19
Besides, a successful litigant cannot later be impleaded by his defeated adversary in an
interpleader suit and compelled to prove his claim anew against other adverse claimants, as
that would in effect be a collateral attack upon the judgment.
The jurisprudence of this state and the common law states is well-settled that a claimant
who has been put to test of a trial by a surety, and has establish his claim, may not be
impleaded later by the surety in an interpleader suit, and compelled to prove his claim again
with other adverse claimants. American Surety Company of New York v. Brim, 175 La. 959,
144 So. 727; American Surety Company of New York v. Brim (In Re Lyong Lumber Company),
176 La. 867, 147 So. 18; Dugas v. N.Y. Casualty Co., 181 La. 322, 159 So. 572; 15 Ruling
Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroy's Jurisprudence, 1023; Royal Neighbors of
America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De
Zouche v. Garrison, 140 Pa. 430, 21 A. 450, 451; Manufacturer's Finance Co. v. W.I. Jones Co.
141 Ga., 519, 81 S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383.
There can be no doubt that relator's claim has been finally and definitely established,
because that matter was passed upon by three courts in definitive judgments. The only
remaining item is the value of the use of the land during the time that relator occupied it.
The case was remanded solely and only for the purpose of determining the amount of that
credit. In all other aspects the judgment is final. 20
It is generally held by the cases it is the office of interpleader to protect a party, not against
double liability, but against double vexation on account of one liability. Gonia v. O'Brien, 223
Mass. 177, 111 N.E. 787. And so it is said that it is too late for the remedy of interpleader if
the party seeking this relef has contested the claim of one of the parties and suffered
judgment to be taken.

35

In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general
rule that a bill of interpleader comes too late when application therefor is delayed until after
judgment has been rendered in favor of one of the claimants of the fund, and this is
especially true where the holder of the fund had notice of the conflicting claims prior to the
rendition of such judgment and an opportunity to implead the adverse claimants in the suit
in which such judgment was rendered. See notes and cases cited 35 Am. Dec. 703; 91 An.
St. Rep. 598; also 5 Pomeroy's Equity Jurisprudence No. 41.'
The principle thus stated has been recognized in many cases in other jurisdictions, among
which may be cited American Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v.
Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761; Yearborough v. Thompson, 3
Smedes & M. (11 Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v.
McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042, 1047.
It would seem that this rule should logically follow since, after the recovery of judgment, the
interpleading of the judgment creditor is in effect a collateral attack upon the judgment. 21
In fine, the instant interpleader suit cannot prosper because the Corporation had already
been made independently liable in civil case 26044 and, therefore, its present application for
interpleader would in effect be a collateral attack upon the final judgment in the said civil
case; the appellee Lee had already established his rights to membership fee certificate 201
in the aforesaid civil case and, therefore, this interpleader suit would compel him to
establish his rights anew, and thereby increase instead of diminish litigations, which is one
of the purposes of an interpleader suit, with the possiblity that the benefits of the final
judgment in the said civil case might eventually be taken away from him; and because the
Corporation allowed itself to be sued to final judgment in the said case, its action of
interpleader was filed inexcusably late, for which reason it is barred by laches or
unreasonable delay.
G.R. No. 181303

September 17, 2009

CARMEN DANAO MALANA, MARIA DANAO ACORDA, EVELYN DANAO, FERMINA

DANAO, LETICIA DANAO and LEONORA DANAO, the last two are represented
herein by their Attorney-in-Fact, MARIA DANAO ACORDA, Petitioners,
vs.
BENIGNO TAPPA, JERRY REYNA, SATURNINO CAMBRI and SPOUSES FRANCISCO
AND MARIA LIGUTAN, Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Certiorari under Rule 65 of the Rules of Court, assailing the Orders1
dated 4 May 2007, 30 May 2007, and 31 October 2007, rendered by Branch 3 of the
Regional Trial Court (RTC) of Tuguegarao City, which dismissed, for lack of jurisdiction, the
Complaint of petitioners Carmen Danao Malana, Leticia Danao, Maria Danao Accorda, Evelyn
Danao, Fermina Danao, and Leonora Danao, against respondents Benigno Tappa, Jerry
Reyna, Saturnino Cambri, Francisco Ligutan and Maria Ligutan, in Civil Case No. 6868.
Petitioners filed before the RTC their Complaint for Reivindicacion, Quieting of Title, and
Damages2 against respondents on 27 March 2007, docketed as Civil Case No. 6868.
Petitioners alleged in their Complaint that they are the owners of a parcel of land covered by
Transfer Certificate of Title (TCT) No. T-1279373 situated in Tuguegarao City, Cagayan
(subject property). Petitioners inherited the subject property from Anastacio Danao
(Anastacio), who died intestate.4 During the lifetime of Anastacio, he had allowed Consuelo
Pauig (Consuelo), who was married to Joaquin Boncad, to build on and occupy the southern
portion of the subject property. Anastacio and Consuelo agreed that the latter would vacate
the said land at any time that Anastacio and his heirs might need it.5
Petitioners claimed that respondents, Consuelos family members,6 continued to occupy the
subject property even after her death, already building their residences thereon using
permanent materials. Petitioners also learned that respondents were claiming ownership
over the subject property. Averring that they already needed it, petitioners demanded that
respondents vacate the same. Respondents, however, refused to heed petitioners
demand.7

36

Petitioners referred their land dispute with respondents to the Lupong Tagapamayapa of
Barangay Annafunan West for conciliation. During the conciliation proceedings, respondents
asserted that they owned the subject property and presented documents ostensibly
supporting their claim of ownership.
According to petitioners, respondents documents were highly dubious, falsified, and
incapable of proving the latters claim of ownership over the subject property; nevertheless,
they created a cloud upon petitioners title to the property. Thus, petitioners were compelled
to file before the RTC a Complaint to remove such cloud from their title.8 Petitioners
additionally sought in their Complaint an award against respondents for actual damages, in
the amount of P50,000.00, resulting from the latters baseless claim over the subject
property that did not actually belong to them, in violation of Article 19 of the Civil Code on
Human Relations.9 Petitioners likewise prayed for an award against respondents for
exemplary damages, in the amount of P50,000.00, since the latter had acted in bad faith
and resorted to unlawful means to establish their claim over the subject property. Finally,
petitioners asked to recover from respondents P50,000.00 as attorneys fees, because the
latters refusal to vacate the property constrained petitioners to engage the services of a
lawyer.10
Before respondents could file their answer, the RTC issued an Order dated 4 May 2007
dismissing petitioners Complaint on the ground of lack of jurisdiction. The RTC referred to
Republic Act No. 7691,11 amending Batas Pambansa Blg. 129, otherwise known as the
Judiciary Reorganization Act of 1980, which vests the RTC with jurisdiction over real actions,
where the assessed value of the property involved exceeds P20,000.00. It found that the
subject property had a value of less than P20,000.00; hence, petitioners action to recover
the same was outside the jurisdiction of the RTC. The RTC decreed in its 4 May 2007 Order
that:
The Court has no jurisdiction over the action, it being a real action involving a real property
with assessed value less than P20,000.00 and hereby dismisses the same without
prejudice.12
Petitioners filed a Motion for Reconsideration of the aforementioned RTC Order dismissing
their Complaint. They argued that their principal cause of action was for quieting of title; the
accion reivindicacion was included merely to enable them to seek complete relief from
respondents. Petitioners Complaint should not have been dismissed, since Section 1, Rule
63 of the Rules of Court13 states that an action to quiet title falls under the jurisdiction of
the RTC.14
In an Order dated 30 May 2007, the RTC denied petitioners Motion for Reconsideration. It
reasoned that an action to quiet title is a real action. Pursuant to Republic Act No. 7691, it is
the Municipal Trial Court (MTC) that exercises exclusive jurisdiction over real actions where
the assessed value of real property does not exceed P20,000.00. Since the assessed value of
subject property per Tax Declaration No, 02-48386 was P410.00, the real action involving the
same was outside the jurisdiction of the RTC.15
Petitioners filed another pleading, simply designated as Motion, in which they prayed that
the RTC Orders dated 4 May 2007 and 30 May 2007, dismissing their Complaint, be set
aside. They reiterated their earlier argument that Section 1, Rule 63 of the Rules of Court
states that an action to quiet title falls under the exclusive jurisdiction of the RTC. They also
contended that there was no obstacle to their joining the two causes of action, i.e., quieting
of title and reivindicacion, in a single Complaint, citing Rumarate v. Hernandez.16 And even
if the two causes of action could not be joined, petitioners maintained that the misjoinder of
said causes of action was not a ground for the dismissal of their Complaint.17
The RTC issued an Order dated 31 October 2007 denying petitioners Motion. It clarified that
their Complaint was dismissed, not on the ground of misjoinder of causes of action, but for
lack of jurisdiction. The RTC dissected Section 1, Rule 63 of the Rules of Court, which
provides:
Section 1. Who may file petition. Any person interested under a deed, will, contract or other
written instrument, or whose rights are affected by a statute, executive order or regulation,
ordinance, or any other governmental regulation may, before breach or violation thereof,
bring an action in the appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or duties, thereunder.

37

An action for the reformation of an instrument, to quiet title to real property or remove
clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be
brought under this Rule.
The RTC differentiated between the first and the second paragraphs of Section 1, Rule 63 of
the Rules of Court. The first paragraph refers to an action for declaratory relief, which should
be brought before the RTC. The second paragraph, however, refers to a different set of
remedies, which includes an action to quiet title to real property. The second paragraph must
be read in relation to Republic Act No. 7691, which vests the MTC with jurisdiction over real
actions, where the assessed value of the real property involved does not exceed P50,000.00
in Metro Manila and P20,000.00 in all other places.18 The dispositive part of the 31 October
2007 Order of the RTC reads:
This Court maintains that an action to quiet title is a real action. [Herein petitioners] do not
dispute the assessed value of the property at P410.00 under Tax Declaration No. 02-48386.
Hence, it has no jurisdiction over the action.
In view of the foregoing considerations, the Motion is hereby denied.19
Hence, the present Petition, where petitioners raise the sole issue of:
I
WHETHER OR NOT THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN
DISMISSING THE COMPLAINT OF THE PETITIONERS MOTU PROPRIO.20
Petitioners statement of the issue is misleading. It would seem that they are only
challenging the fact that their Complaint was dismissed by the RTC motu proprio. Based on
the facts and arguments set forth in the instant Petition, however, the Court determines that
the fundamental issue for its resolution is whether the RTC committed grave abuse of
discretion in dismissing petitioners Complaint for lack of jurisdiction.
The Court rules in the negative.
An action for declaratory relief should be filed by a person interested under a deed, a will, a
contract or other written instrument, and whose rights are affected by a statute, an
executive order, a regulation or an ordinance. The relief sought under this remedy includes
the interpretation and determination of the validity of the written instrument and the judicial
declaration of the parties rights or duties thereunder.21
Petitions for declaratory relief are governed by Rule 63 of the Rules of Court. The RTC
correctly made a distinction between the first and the second paragraphs of Section 1, Rule
63 of the Rules of Court.
The first paragraph of Section 1, Rule 63 of the Rules of Court, describes the general
circumstances in which a person may file a petition for declaratory relief, to wit:
Any person interested under a deed, will, contract or other written instrument, or whose
rights are affected by a statute, executive order or regulation, ordinance, or any other
governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising,
and for a declaration of his rights or duties, thereunder. (Emphasis ours.)
As the afore-quoted provision states, a petition for declaratory relief under the first
paragraph of Section 1, Rule 63 may be brought before the appropriate RTC.
Section 1, Rule 63 of the Rules of Court further provides in its second paragraph that:
An action for the reformation of an instrument, to quiet title to real property or remove
clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be
brought under this Rule. (Emphasis ours.)
The second paragraph of Section 1, Rule 63 of the Rules of Court specifically refers to (1) an
action for the reformation of an instrument, recognized under Articles 1359 to 1369 of the
Civil Code; (2) an action to quiet title, authorized by Articles 476 to 481 of the Civil Code;
and (3) an action to consolidate ownership required by Article 1607 of the Civil Code in a
sale with a right to repurchase. These three remedies are considered similar to declaratory

38

relief because they also result in the adjudication of the legal rights of the litigants, often
without the need of execution to carry the judgment into effect.22
To determine which court has jurisdiction over the actions identified in the second paragraph
of Section 1, Rule 63 of the Rules of Court, said provision must be read together with those
of the Judiciary Reorganization Act of 1980, as amended.
It is important to note that Section 1, Rule 63 of the Rules of Court does not categorically
require that an action to quiet title be filed before the RTC. It repeatedly uses the word
"may" that an action for quieting of title "may be brought under [the] Rule" on petitions for
declaratory relief, and a person desiring to file a petition for declaratory relief "may x x x
bring an action in the appropriate Regional Trial Court." The use of the word "may" in a
statute denotes that the provision is merely permissive and indicates a mere possibility, an
opportunity or an option.23
In contrast, the mandatory provision of the Judiciary Reorganization Act of 1980, as
amended, uses the word "shall" and explicitly requires the MTC to exercise exclusive original
jurisdiction over all civil actions which involve title to or possession of real property where
the assessed value does not exceed P20,000.00, thus:
Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in Civil Cases.Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts shall exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, possession of, real
property, or any interest therein where the assessed value of the property or interest therein
does not exceed Twenty thousand pesos (P20,000.00) or, in civil actions in Metro Manila,
where such assessed value does not exceeds Fifty thousand pesos (P50,000.00) exclusive of
interest, damages of whatever kind, attorneys fees, litigation expenses and costs: x x x
(Emphasis ours.)
As found by the RTC, the assessed value of the subject property as stated in Tax Declaration
No. 02-48386 is only P410.00; therefore, petitioners Complaint involving title to and
possession of the said property is within the exclusive original jurisdiction of the MTC, not
the RTC.
Furthermore, an action for declaratory relief presupposes that there has been no actual
breach of the instruments involved or of rights arising thereunder.24 Since the purpose of an
action for declaratory relief is to secure an authoritative statement of the rights and
obligations of the parties under a statute, deed, or contract for their guidance in the
enforcement thereof, or compliance therewith, and not to settle issues arising from an
alleged breach thereof, it may be entertained only before the breach or violation of the
statute, deed, or contract to which it refers. A petition for declaratory relief gives a practical
remedy for ending controversies that have not reached the state where another relief is
immediately available; and supplies the need for a form of action that will set controversies
at rest before they lead to a repudiation of obligations, an invasion of rights, and a
commission of wrongs.25
Where the law or contract has already been contravened prior to the filing of an action for
declaratory relief, the courts can no longer assume jurisdiction over the action. In other
words, a court has no more jurisdiction over an action for declaratory relief if its subject has
already been infringed or transgressed before the institution of the action.26
In the present case, petitioners Complaint for quieting of title was filed after petitioners
already demanded and respondents refused to vacate the subject property. In fact, said
Complaint was filed only subsequent to the latters express claim of ownership over the
subject property before the Lupong Tagapamayapa, in direct challenge to petitioners title.
Since petitioners averred in the Complaint that they had already been deprived of the
possession of their property, the proper remedy for them is the filing of an accion publiciana
or an accion reivindicatoria, not a case for declaratory relief. An accion publiciana is a suit for
the recovery of possession, filed one year after the occurrence of the cause of action or from
the unlawful withholding of possession of the realty. An accion reivindicatoria is a suit that
has for its object ones recovery of possession over the real property as owner.271avvphi1

39

Petitioners Complaint contained sufficient allegations for an accion reivindicatoria.

Jurisdiction over such an action would depend on the value of the property involved. Given
that the subject property herein is valued only at P410.00, then the MTC, not the RTC, has
jurisdiction over an action to recover the same. The RTC, therefore, did not commit grave
abuse of discretion in dismissing, without prejudice, petitioners Complaint in Civil Case No.
6868 for lack of jurisdiction.
As for the RTC dismissing petitioners Complaint motu proprio, the following pronouncements
of the Court in Laresma v. Abellana28 proves instructive:
It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined
by the material allegations of the complaint and the law at the time the action was
commenced. Jurisdiction of the tribunal over the subject matter or nature of an action is
conferred only by law and not by the consent or waiver upon a court which, otherwise, would
have no jurisdiction over the subject matter or nature of an action. Lack of jurisdiction of the
court over an action or the subject matter of an action cannot be cured by the silence,
acquiescence, or even by express consent of the parties. If the court has no jurisdiction over
the nature of an action, it may dismiss the same ex mero motu or motu proprio. x x x.
(Emphasis supplied.)
Since the RTC, in dismissing petitioners Complaint, acted in complete accord with law and
jurisprudence, it cannot be said to have done so with grave abuse of discretion amounting to
lack or excess of jurisdiction. An act of a court or tribunal may only be considered to have
been committed in grave abuse of discretion when the same was performed in a capricious
or whimsical exercise of judgment, which is equivalent to lack of jurisdiction. The abuse of
discretion must be so patent and gross as to amount to an evasion of a positive duty or to a
virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, as
where the power is exercised in an arbitrary and despotic manner by reason of passion or
personal hostility.29 No such circumstances exist herein as to justify the issuance of a writ of
certiorari.
IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED. The Orders dated 4 May
2007, 30 May 2007 and 31 October 2007 of the Regional Trial Court of Tuguegarao City,
Branch 3, dismissing the Complaint in Civil Case No. 6868, without prejudice, are AFFIRMED.
The Regional Trial Court is ordered to REMAND the records of this case to the Municipal Trial
Court or the court of proper jurisdiction for proper disposition. Costs against the petitioners.
SO ORDERED.
G.R. No. 159357

April 28, 2004

Brother MARIANO "MIKE" Z. VELARDE, petitioner,

vs.
SOCIAL JUSTICE SOCIETY, respondent.
DECISION
PANGANIBAN, J.:
A decision that does not conform to the form and substance required by the Constitution and
the law is void and deemed legally inexistent. To be valid, decisions should comply with the
form, the procedure and the substantive requirements laid out in the Constitution, the Rules
of Court and relevant circulars/orders of the Supreme Court. For the guidance of the bench
and the bar, the Court hereby discusses these forms, procedures and requirements.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the June 12,
2003 Decision2 and July 29, 2003 Order3 of the Regional Trial Court (RTC) of Manila (Branch
49).4
The challenged Decision was the offshoot of a Petition for Declaratory Relief5 filed before the
RTC-Manila by herein Respondent Social Justice Society (SJS) against herein Petitioner
Mariano "Mike" Z. Velarde, together with His Eminence, Jaime Cardinal Sin, Executive
Minister Erao Manalo, Brother Eddie Villanueva and Brother Eliseo F. Soriano as corespondents. The Petition prayed for the resolution of the question "whether or not the act of
a religious leader like any of herein respondents, in endorsing the candidacy of a candidate

40

for elective office or in urging or requiring the members of his flock to vote for a specified
candidate, is violative of the letter or spirit of the constitutional provisions x x x."6
Alleging that the questioned Decision did not contain a statement of facts and a dispositive
portion, herein petitioner filed a Clarificatory Motion and Motion for Reconsideration before
the trial court. Soriano, his co-respondent, similarly filed a separate Motion for
Reconsideration. In response, the trial court issued the assailed Order, which held as follows:
"x x x [T]his Court cannot reconsider, because what it was asked to do, was only to clarify a
Constitutional provision and to declare whether acts are violative thereof. The Decision did
not make a dispositive portion because a dispositive portion is required only in coercive
reliefs, where a redress from wrong suffered and the benefit that the prevailing party
wronged should get. The step that these movants have to take, is direct appeal under Rule
45 of the Rules of Court, for a conclusive interpretation of the Constitutional provision to the
Supreme Court."7
The Antecedent Proceedings
On January 28, 2003, SJS filed a Petition for Declaratory Relief ("SJS Petition") before the RTCManila against Velarde and his aforesaid co-respondents. SJS, a registered political party,
sought the interpretation of several constitutional provisions,8 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 subsequent proceedings were recounted in the challenged Decision in these words:
"x x x. Bro. Eddie Villanueva submitted, within the original period [to file an Answer], a
Motion to Dismiss. Subsequently, Executive Minister Erao Manalo and Bro. Mike Velarde,
filed their Motions to Dismiss. While His Eminence Jaime Cardinal L. Sin, filed a Comment
and Bro. Eli Soriano, filed an Answer within the extended period and similarly prayed for the
dismissal of the Petition. All sought the dismissal of the Petition on the common grounds that
it does not state a cause of action and that there is no justiciable controversy. They were
ordered to submit a pleading by way of advisement, which was closely followed by another
Order denying all the Motions to Dismiss. Bro. Mike Velarde, Bro. Eddie Villanueva and
Executive Minister Erao Manalo moved to reconsider the denial. His Eminence Jaime
Cardinal L. Sin, asked for extension to file memorandum. Only Bro. Eli Soriano complied with
the first Order by submitting his Memorandum. x x x.
"x x x the Court denied the Motions to Dismiss, and the Motions for Reconsideration filed by
Bro. Mike Velarde, Bro. Eddie Villanueva and Executive Minister Erao Manalo, which raised
no new arguments other than those already considered in the motions to dismiss x x x."9
After narrating the above incidents, the trial court said that it had jurisdiction over the
Petition, because "in praying for a determination as to whether the actions imputed to the
respondents are violative of Article II, Section 6 of the Fundamental Law, [the Petition] has
raised only a question of law."10 It then proceeded to a lengthy discussion of the issue
raised in the Petition the separation of church and state even tracing, to some extent, the
historical background of the principle. Through its discourse, the court a quo opined at some
point that the "[e]ndorsement of specific candidates in an election to any public office is a
clear violation of the separation clause."11
After its essay on the legal issue, however, the trial court failed to include a dispositive
portion in its assailed Decision. Thus, Velarde and Soriano filed separate Motions for
Reconsideration which, as mentioned earlier, were denied by the lower court.
Hence, this Petition for Review.12
This Court, in a Resolution13 dated September 2, 2003, required SJS and the Office of the
Solicitor General (OSG) to submit their respective comments. In the same Resolution, the
Court gave the other parties -- impleaded as respondents in the original case below --the
opportunity to comment, if they so desired.
On April 13, 2004, the Court en banc conducted an Oral Argument.14
The Issues

41

In his Petition, Brother Mike Velarde submits the following issues for this Courts resolution:
"1. Whether or not the Decision dated 12 June 2003 rendered by the court a quo was proper
and valid;
"2. Whether or not there exists justiceable controversy in herein respondents Petition for
declaratory relief;
"3. Whether or not herein respondent has legal interest in filing the Petition for declaratory
relief;
"4. Whether or not the constitutional question sought to be resolved by herein respondent is
ripe for judicial determination;
"5. Whether or not there is adequate remedy other than the declaratory relief; and,
"6. Whether or not the court a quo has jurisdiction over the Petition for declaratory relief of
herein respondent."15
During the Oral Argument, the issues were narrowed down and classified as follows:
"A. Procedural Issues
"Did the Petition for Declaratory Relief raise a justiciable controversy? Did it state a cause of
action? Did respondent have any legal standing to file the Petition for Declaratory Relief?
"B. Substantive Issues
"1. Did the RTC Decision conform to the form and substance required by the Constitution,
the law and the Rules of Court?
"2. May religious leaders like herein petitioner, Bro. Mike Velarde, be prohibited from
endorsing candidates for public office? Corollarily, may they be banned from campaigning
against said candidates?"
The Courts Ruling
The Petition of Brother Mike Velarde is meritorious.
Procedural Issues:
Requisites of Petitions for Declaratory Relief
Section 1 of Rule 63 of the Rules of Court, which deals with petitions for declaratory relief,
provides in part:
"Section 1. Who may file petition.- Any person interested under a deed, will, contract or
other written instrument, whose rights are affected by a statute, executive order or
regulation, ordinance, or any other governmental regulation may, before breach or violation
thereof, bring an action in the appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or duties thereunder."
Based on the foregoing, an action for declaratory relief should be filed by a person
interested under a deed, a will, a contract or other written instrument, and whose rights are
affected by a statute, an executive order, a regulation or an ordinance. The purpose of the
remedy is to interpret or to determine the validity of the written instrument and to seek a
judicial declaration of the parties rights or duties thereunder.16 The essential requisites of
the action are as follows: (1) there is a justiciable controversy; (2) the controversy is
between persons whose interests are adverse; (3) the party seeking the relief has a legal
interest in the controversy; and (4) the issue is ripe for judicial determination.17
Justiciable Controversy
Brother Mike Velarde contends that the SJS Petition failed to allege, much less establish
before the trial court, that there existed a justiciable controversy or an adverse legal interest
between them; and that SJS had a legal right that was being violated or threatened to be
violated by petitioner. On the contrary, Velarde alleges that SJS premised its action on mere

42

speculations, contingent events, and hypothetical issues that had not yet ripened into an
actual controversy. Thus, its Petition for Declaratory Relief must fail.
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.18 The SJS
Petition for Declaratory Relief fell short of this test. It miserably failed to allege an existing
controversy or dispute between the petitioner and the named respondents therein. Further,
the Petition did not sufficiently state 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.
As pointed out by Brother Eliseo F. Soriano in his Comment,19 what exactly has he done that
merited the attention of SJS? He confesses that he does not know the answer, because the
SJS Petition (as well as the assailed Decision of the RTC) "yields nothing in this respect." His
Eminence, Jaime Cardinal Sin, adds that, at the time SJS filed its Petition on January 28,
2003, the election season had not even started yet; and that, in any event, he has not been
actively involved in partisan politics.
An initiatory complaint or 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 x x
x."20 Yet, the SJS Petition stated no ultimate facts.
Indeed, SJS merely speculated or anticipated without factual moorings that, as religious
leaders, the petitioner and his co-respondents below had endorsed or threatened to endorse
a candidate or candidates for elective offices; and that such actual or threatened
endorsement "will enable [them] to elect men to public office who [would] in turn be forever
beholden to their leaders, enabling them to control the government"[;]21 and "pos[ing] a
clear and present danger of serious erosion of the peoples faith in the electoral process[;]
and reinforc[ing] their belief that religious leaders determine the ultimate result of
elections,"22 which would then be violative of the separation clause.
Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does
not suffice to constitute a justiciable controversy. The Petition does not even allege any
indication or manifest intent on the part of any of the respondents below to champion an
electoral candidate, or to urge their so-called flock to vote for, or not to vote for, a particular
candidate. It is a time-honored rule that sheer speculation does not give rise to an
actionable right.
Obviously, there is no factual allegation that SJS rights are being subjected to any
threatened, imminent and inevitable violation that should be prevented by the declaratory
relief sought. The judicial power and duty of the courts to settle actual controversies
involving rights that are legally demandable and enforceable23 cannot be exercised when
there is no actual or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9
hereof be resolved."24 In other words, it merely sought an opinion of the trial court on
whether the speculated acts of religious leaders endorsing elective candidates for political
offices violated the constitutional principle on the separation of church and state. SJS did not
ask for a declaration of its rights and duties; neither did it pray for the stoppage of any
threatened violation of its declared rights. Courts, however, are proscribed from rendering
an advisory opinion.25
Cause of Action
Respondent SJS asserts that in order to maintain a petition for declaratory relief, a cause of
action need not be alleged or proven. Supposedly, for such petition to prosper, there need
not be any violation of a right, breach of duty or actual wrong committed by one party
against the other.
Petitioner, on the other hand, argues that the subject matter of an action for declaratory
relief should be a deed, a will, a contract (or other written instrument), a statute, an
executive order, a regulation or an ordinance. But the subject matter of the SJS Petition is
"the constitutionality of an act of a religious leader to endorse the candidacy of a candidate
for elective office or to urge or require the members of the flock to vote for a specified
candidate."26 According to petitioner, this subject matter is "beyond the realm of an action
for declaratory relief."27 Petitioner avers that in the absence of a valid subject matter, the

43

Petition fails to state a cause of action and, hence, should have been dismissed outright by
the court a quo.
A cause of action is an act or an omission of one party in violation of the legal right or rights
of another, causing injury to the latter.28 Its essential elements are the following: (1) a right
in favor of the plaintiff; (2) an obligation on the part of the named defendant to respect or
not to violate such right; and (3) such defendants act or omission that is violative of the
right of the plaintiff or constituting a breach of the obligation of the former to the latter.29
The failure of a complaint to state a cause of action is a ground for its outright dismissal.30
However, in special civil actions for declaratory relief, the concept of a cause of action under
ordinary civil actions does not strictly apply. The reason for this exception is that an action
for declaratory relief presupposes that there has been no actual breach of the instruments
involved or of rights arising thereunder.31 Nevertheless, a breach or violation should be
impending, imminent or at least threatened.
A perusal of the Petition filed by SJS before the RTC discloses no explicit allegation that the
former had any legal right in its favor that it sought to protect. We can only infer the
interest, supposedly in its favor, from its bare allegation that it "has thousands of members
who are citizens-taxpayers-registered voters and who are keenly interested in a judicial
clarification of the constitutionality of the partisan participation of religious leaders in
Philippine politics and in the process to insure adherence to the Constitution by everyone x x
x."32
Such general averment does not, however, suffice to constitute a legal right or interest. Not
only is the presumed interest not personal in character; it is likewise too vague, highly
speculative and uncertain.33 The Rules require that the interest must be material to the
issue and affected by the questioned act or instrument, as distinguished from simple
curiosity or incidental interest in the question raised.34
To bolster its stance, SJS cites the Corpus Juris Secundum and submits that the "[p]laintiff in
a declaratory judgment action does not seek to enforce a claim against [the] defendant, but
seeks a judicial declaration of [the] rights of the parties for the purpose of guiding [their]
future conduct, and the essential distinction between a declaratory judgment action and
the usual action is that no actual wrong need have been committed or loss have occurred
in order to sustain the declaratory judgment action, although there must be no uncertainty
that the loss will occur or that the asserted rights will be invaded."35
SJS has, however, ignored the crucial point of its own reference that there must be no
uncertainty that the loss will occur or that the asserted rights will be invaded. Precisely, as
discussed earlier, it merely conjectures that herein petitioner (and his co-respondents below)
might actively participate in partisan politics, use "the awesome voting strength of its
faithful flock [to] enable it to elect men to public office x x x, enabling [it] to control the
government."36
During the Oral Argument, though, Petitioner Velarde and his co-respondents below all
strongly asserted that they had not in any way engaged or intended to participate in
partisan politics. They all firmly assured this Court that they had not done anything to trigger
the issue raised and to entitle SJS to the relief sought.
Indeed, the Court finds in the Petition for Declaratory Relief no single allegation of fact upon
which SJS could base a right of relief from the named respondents. In any event, even
granting that it sufficiently asserted a legal right it sought to protect, there was nevertheless
no certainty that such right would be invaded by the said respondents. Not even the alleged
proximity of the elections to the time the Petition was filed below (January 28, 2003) would
have provided the certainty that it had a legal right that would be jeopardized or violated by
any of those respondents.
Legal Standing
Legal standing or locus standi has been defined as a personal and substantial interest in the
case, such that the party has sustained or will sustain direct injury as a result of the
challenged act.37 Interest means a material interest in issue that is affected by the
questioned act or instrument, as distinguished from a mere incidental interest in the
question involved.38

44

Petitioner alleges that "[i]n seeking declaratory relief as to the constitutionality of an act of a
religious leader to endorse, or require the members of the religious flock to vote for a
specific candidate, herein Respondent SJS has no legal interest in the controversy";39 it has
failed to establish how the resolution of the proffered question would benefit or injure it.
Parties bringing suits challenging the constitutionality of a law, an act or a statute must
show "not only that the law [or act] is invalid, but also that [they have] sustained or [are] in
immediate or imminent danger of sustaining some direct injury as a result of its
enforcement, and not merely that [they] suffer thereby in some indefinite way."40 They
must demonstrate that they have been, or are about to be, denied some right or privilege to
which they are lawfully entitled, or that they are about to be subjected to some burdens or
penalties by reason of the statute or act complained of.41
First, parties suing as taxpayers must specifically prove that they have sufficient interest in
preventing the illegal expenditure of money raised by taxation.42 A taxpayers action may
be properly brought only when there is an exercise by Congress of its taxing or spending
power.43 In the present case, there is no allegation, whether express or implied, that
taxpayers money is being illegally disbursed.
Second, there was no showing in the Petition for Declaratory Relief that SJS as a political
party or its members as registered voters would be adversely affected by the alleged acts of
the respondents below, if the question at issue was not resolved. There was no allegation
that SJS had suffered or would be deprived of votes due to the acts imputed to the said
respondents. Neither did it allege that any of its members would be denied the right of
suffrage or the privilege to be voted for a public office they are seeking.
Finally, the allegedly keen interest of its "thousands of members who are citizens-taxpayersregistered voters" is too general44 and beyond the contemplation of the standards set by
our jurisprudence. Not only is the presumed interest impersonal in character; it is likewise
too vague, highly speculative and uncertain to satisfy the requirement of standing.45
Transcendental Importance
In any event, SJS urges the Court to take cognizance of the Petition, even sans legal
standing, considering that "the issues raised are of paramount public interest."
In not a few cases, the Court has liberalized the locus standi requirement when a petition
raises an issue of transcendental significance or paramount importance to the people.46
Recently, after holding that the IBP had no locus standi to bring the suit, the Court in IBP v.
Zamora47 nevertheless entertained the Petition therein. It noted that "the IBP has advanced
constitutional issues which deserve the attention of this Court in view of their seriousness,
novelty and weight as precedents."48
Similarly in the instant case, the Court deemed the constitutional issue raised in the SJS
Petition to be of paramount interest to the Filipino people. The issue did not simply concern a
delineation of the separation between church and state, but ran smack into the governance
of our country. The issue was both transcendental in importance and novel in nature, since it
had never been decided before.
The Court, thus, called for Oral Argument to determine with certainty whether it could
resolve the constitutional issue despite the barren allegations in the SJS Petition as well as
the abbreviated proceedings in the court below. Much to its chagrin, however, counsels for
the parties -- particularly for Respondent SJS -- made no satisfactory allegations or
clarifications that would supply the deficiencies hereinabove discussed. Hence, even if the
Court would exempt this case from the stringent locus standi requirement, such heroic effort
would be futile because the transcendental issue cannot be resolved anyway.
Proper Proceedings Before the Trial Court
To prevent a repetition of this waste of precious judicial time and effort, and for the guidance
of the bench and the bar, the Court reiterates the elementary procedure49 that must be
followed by trial courts in the conduct of civil cases.50
Prefatorily, the trial court may -- motu proprio or upon motion of the defendant -- dismiss a
complaint51 (or petition, in a special civil action) that does not allege the plaintiffs (or
petitioners) cause or causes of action.52 A complaint or petition should contain "a plain,

45

concise and direct statement of the ultimate facts on which the party pleading relies for his
claim or defense."53 It should likewise clearly specify the relief sought.54
Upon the filing of the complaint/petition and the payment of the requisite legal fees, the
clerk of court shall forthwith issue the corresponding summons to the defendants or the
respondents, with a directive that the defendant answer55 within 15 days, unless a different
period is fixed by the court.56 The summons shall also contain a notice that if such answer is
not filed, the plaintiffs/petitioners shall take a judgment by default and may be granted the
relief applied for.57 The court, however, may -- upon such terms as may be just -- allow an
answer to be filed after the time fixed by the Rules.58
If the answer sets forth a counterclaim or cross-claim, it must be answered within ten (10)
days from service.59 A reply may be filed within ten (10) days from service of the pleading
responded to.60
When an answer fails to tender an issue or admits the material allegations of the adverse
partys pleading, the court may, on motion of that party, direct judgment on such pleading
(except in actions for declaration of nullity or annulment of marriage or for legal
separation).61 Meanwhile, a party seeking to recover upon a claim, a counterclaim or
crossclaim -- or to obtain a declaratory relief -- may, at any time after the answer thereto
has been served, move for a summary judgment in its favor.62 Similarly, a party against
whom a claim, a counterclaim or crossclaim is asserted -- or a declaratory relief sought -may, at any time, move for a summary judgment in its favor.63 After the motion is heard,
the judgment sought shall be rendered forthwith if there is a showing that, except as to the
amount of damages, there is no genuine issue as to any material fact; and that the moving
party is entitled to a judgment as a matter of law.64
Within the time for -- but before -- filing the answer to the complaint or petition, the
defendant may file a motion to dismiss based on any of the grounds stated in Section 1 of
Rule 16 of the Rules of Court. During the hearing of the motion, the parties shall submit their
arguments on the questions of law, and their evidence on the questions of fact.65 After the
hearing, the court may dismiss the action or claim, deny the motion, or order the
amendment of the pleadings. It shall not defer the resolution of the motion for the reason
that the ground relied upon is not indubitable. In every case, the resolution shall state
clearly and distinctly the reasons therefor.66
If the motion is denied, the movant may file an answer within the balance of the period
originally prescribed to file an answer, but not less than five (5) days in any event, computed
from the receipt of the notice of the denial. If the pleading is ordered to be amended, the
defendant shall file an answer within fifteen (15) days, counted from the service of the
amended pleading, unless the court provides a longer period.67
After the last pleading has been served and filed, the case shall be set for pretrial,68 which
is a mandatory proceeding.69 A plaintiffs/ petitioners (or its duly authorized
representatives) non-appearance at the pretrial, if without valid cause, shall result in the
dismissal of the action with prejudice, unless the court orders otherwise. A similar failure on
the part of the defendant shall be a cause for allowing the plaintiff/petitioner to present
evidence ex parte, and the court to render judgment on the basis thereof.70
The parties are required to file their pretrial briefs; failure to do so shall have the same effect
as failure to appear at the pretrial.71 Upon the termination thereof, the court shall issue an
order reciting in detail the matters taken up at the conference; the action taken on them, the
amendments allowed to the pleadings; and the agreements or admissions, if any, made by
the parties regarding any of the matters considered.72 The parties may further avail
themselves of any of the modes of discovery,73 if they so wish.
Thereafter, the case shall be set for trial,74 in which the parties shall adduce their respective
evidence in support of their claims and/or defenses. By their written consent or upon the
application of either party, or on its own motion, the court may also order any or all of the
issues to be referred to a commissioner, who is to be appointed by it or to be agreed upon
by the parties.75 The trial or hearing before the commissioner shall proceed in all respects
as it would if held before the court.76
Upon the completion of such proceedings, the commissioner shall file with the court a
written report on the matters referred by the parties.77 The report shall be set for hearing,
after which the court shall issue an order adopting, modifying or rejecting it in whole or in

46

part; or recommitting it with instructions; or requiring the parties to present further evidence
before the commissioner or the court.78
Finally, a judgment or final order determining the merits of the case shall be rendered. The
decision shall be in writing, personally and directly prepared by the judge, stating clearly and
distinctly the facts and the law on which it is based, signed by the issuing magistrate, and
filed with the clerk of court.79
Based on these elementary guidelines, let us examine the proceedings before the trial court
in the instant case.
First, with respect to the initiatory pleading of the SJS. Even a cursory perusal of the Petition
immediately reveals its gross inadequacy. It contained no statement of ultimate facts upon
which the petitioner relied for its claim. Furthermore, it did not specify the relief it sought
from the court, but merely asked it to answer a hypothetical question.
Relief, as contemplated in a legal action, refers to a specific coercive measure prayed for as
a result of a violation of the rights of a plaintiff or a petitioner.80 As already discussed
earlier, the Petition before the trial court had no allegations of fact81 or of any specific
violation of the petitioners rights, which the respondents had a duty to respect. Such
deficiency amounted to a failure to state a cause of action; hence, no coercive relief could
be sought and adjudicated. The Petition evidently lacked substantive requirements and, we
repeat, should have been dismissed at the outset.
Second, with respect to the trial court proceedings. Within the period set to file their
respective answers to the SJS Petition, Velarde, Villanueva and Manalo filed Motions to
Dismiss; Cardinal Sin, a Comment; and Soriano, within a priorly granted extended period, an
Answer in which he likewise prayed for the dismissal of the Petition.82 SJS filed a Rejoinder
to the Motion of Velarde, who subsequently filed a Sur-Rejoinder. Supposedly, there were
"several scheduled settings, in which the "[c]ourt was apprised of the respective positions of
the parties."83 The nature of such settings -- whether pretrial or trial hearings -- was not
disclosed in the records. Before ruling on the Motions to Dismiss, the trial court issued an
Order84 dated May 8, 2003, directing the parties to submit their memoranda. Issued shortly
thereafter was another Order85 dated May 14, 2003, denying all the Motions to Dismiss.
In the latter Order, the trial court perfunctorily ruled:
"The Court now resolves to deny the Motions to Dismiss, and after all the memoranda are
submitted, then, the case shall be deemed as submitted for resolution."86
Apparently, contrary to the requirement of Section 2 of Rule 16 of the Rules of Court, the
Motions were not heard. Worse, the Order purportedly resolving the Motions to Dismiss did
not state any reason at all for their denial, in contravention of Section 3 of the said Rule 16.
There was not even any statement of the grounds relied upon by the Motions; much less, of
the legal findings and conclusions of the trial court.
Thus, Velarde, Villanueva and Manalo moved for reconsideration. Pending the resolution of
these Motions for Reconsideration, Villanueva filed a Motion to suspend the filing of the
parties memoranda. But instead of separately resolving the pending Motions fairly and
squarely, the trial court again transgressed the Rules of Court when it immediately
proceeded to issue its Decision, even before tackling the issues raised in those Motions.
Furthermore, the RTC issued its "Decision" without allowing the parties to file their answers.
For this reason, there was no joinder of the issues. If only it had allowed the filing of those
answers, the trial court would have known, as the Oral Argument revealed, that the
petitioner and his co-respondents below had not committed or threatened to commit the act
attributed to them (endorsing candidates) -- the act that was supposedly the factual basis of
the suit.
Parenthetically, the court a quo further failed to give a notice of the Petition to the OSG,
which was entitled to be heard upon questions involving the constitutionality or validity of
statutes and other measures.87
Moreover, as will be discussed in more detail, the questioned Decision of the trial court was
utterly wanting in the requirements prescribed by the Constitution and the Rules of Court.

47

All in all, during the loosely abbreviated proceedings of the case, the trial court indeed acted
with inexplicable haste, with total ignorance of the law -- or, worse, in cavalier disregard of
the rules of procedure -- and with grave abuse of discretion.
Contrary to the contentions of the trial judge and of SJS, proceedings for declaratory relief
must still follow the process described above -- the petition must state a cause of action; the
proceedings must undergo the procedure outlined in the Rules of Court; and the decision
must adhere to constitutional and legal requirements.
First Substantive Issue:
Fundamental Requirements of a Decision
The Constitution commands that "[n]o decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based. No
petition for review or motion for reconsideration of a decision of the court shall be refused
due course or denied without stating the basis therefor."88
Consistent with this constitutional mandate, Section 1 of Rule 36 of the Rules on Civil
Procedure similarly provides:
"Sec. 1. Rendition of judgments and final orders. A judgment or final order determining the
merits of the case shall be in writing personally and directly prepared by the judge, stating
clearly and distinctly the facts and the law on which it is based, signed by him and filed with
the clerk of court."
In the same vein, Section 2 of Rule 120 of the Rules of Court on Criminal Procedure reads as
follows:
"Sec. 2. Form and contents of judgments. -- The judgment must be written in the official
language, personally and directly prepared by the judge and signed by him and shall contain
clearly and distinctly a statement of the facts proved or admitted by the accused and the
law upon which the judgment is based.
"x x x

xxx

x x x."

Pursuant to the Constitution, this Court also issued on January 28, 1988, Administrative
Circular No. 1, prompting all judges "to make complete findings of facts in their decisions,
and scrutinize closely the legal aspects of the case in the light of the evidence presented.
They should avoid the tendency to generalize and form conclusions without detailing the
facts from which such conclusions are deduced."
In many cases,89 this Court has time and time again reminded "magistrates to heed the
demand of Section 14, Article VIII of the Constitution." The Court, through Chief Justice
Hilario G. Davide Jr. in Yao v. Court of Appeals,90 discussed at length the implications of this
provision and strongly exhorted thus:
"Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is
indisputably a paramount component of due process and fair play. It is likewise demanded
by the due process clause of the Constitution. The parties to a litigation should be informed
of how it was decided, with an explanation of the factual and legal reasons that led to the
conclusions of the court. The court cannot simply say that judgment is rendered in favor of X
and against Y and just leave it at that without any justification whatsoever for its action. The
losing party is entitled to know why he lost, so he may appeal to the higher court, if
permitted, should he believe that the decision should be reversed. A decision that does not
clearly and distinctly state the facts and the law on which it is based leaves the parties in
the dark as to how it was reached and is precisely prejudicial to the losing party, who is
unable to pinpoint the possible errors of the court for review by a higher tribunal. More than
that, the requirement is an assurance to the parties that, in reaching judgment, the judge
did so through the processes of legal reasoning. It is, thus, a safeguard against the
impetuosity of the judge, preventing him from deciding ipse dixit. Vouchsafed neither the
sword nor the purse by the Constitution but nonetheless vested with the sovereign
prerogative of passing judgment on the life, liberty or property of his fellowmen, the judge
must ultimately depend on the power of reason for sustained public confidence in the
justness of his decision."
In People v. Bugarin,91 the Court also explained:

48

"The requirement that the decisions of courts must be in writing and that they must set forth
clearly and distinctly the facts and the law on which they are based serves many functions.
It is intended, among other things, to inform the parties of the reason or reasons for the
decision so that if any of them appeals, he can point out to the appellate court the finding of
facts or the rulings on points of law with which he disagrees. More than that, the
requirement is an assurance to the parties that, in reaching judgment, the judge did so
through the processes of legal reasoning. x x x."
Indeed, elementary due process demands that the parties to a litigation be given
information on how the case was decided, as well as an explanation of the factual and legal
reasons that led to the conclusions of the court.92
In Madrid v. Court of Appeals,93 this Court had instructed magistrates to exert effort to
ensure that their decisions would present a comprehensive analysis or account of the factual
and legal findings that would substantially address the issues raised by the parties.
In the present case, it is starkly obvious that the assailed Decision contains no statement of
facts -- much less an assessment or analysis thereof -- or of the courts findings as to the
probable facts. The assailed Decision begins with a statement of the nature of the action and
the question or issue presented. Then follows a brief explanation of the constitutional
provisions involved, and what the Petition sought to achieve. Thereafter, the ensuing
procedural incidents before the trial court are tracked. The Decision proceeds to a full-length
opinion on the nature and the extent of the separation of church and state. Without
expressly stating the final conclusion she has reached or specifying the relief granted or
denied, the trial judge ends her "Decision" with the clause "SO ORDERED."
What were the antecedents that necessitated the filing of the Petition? What exactly were
the distinct facts that gave rise to the question sought to be resolved by SJS? More
important, what were the factual findings and analysis on which the trial court based its
legal findings and conclusions? None were stated or implied. Indeed, the RTCs Decision
cannot be upheld for its failure to express clearly and distinctly the facts on which it was
based. Thus, the trial court clearly transgressed the constitutional directive.
The significance of factual findings lies in the value of the decision as a precedent. How can
it be so if one cannot apply the ruling to similar circumstances, simply because such
circumstances are unknown? Otherwise stated, how will the ruling be applied in the future, if
there is no point of factual comparison?
Moreover, the court a quo did not include a resolutory or dispositive portion in its so-called
Decision. The importance of such portion was explained in the early case Manalang v.
Tuason de Rickards,94 from which we quote:
"The resolution of the Court on a given issue as embodied in the dispositive part of the
decision or order is the investitive or controlling factor that determines and settles the rights
of the parties and the questions presented therein, notwithstanding the existence of
statements or declaration in the body of said order that may be confusing."
The assailed Decision in the present case leaves us in the dark as to its final resolution of the
Petition. To recall, the original Petition was for declaratory relief. So, what relief did the trial
court grant or deny? What rights of the parties did it conclusively declare? Its final statement
says, "SO ORDERED." But what exactly did the court order? It had the temerity to label its
issuance a "Decision," when nothing was in fact decided.
Respondent SJS insists that the dispositive portion can be found in the body of the assailed
Decision. It claims that the issue is disposed of and the Petition finally resolved by the
statement of the trial court found on page 10 of its 14-page Decision, which reads:
"Endorsement of specific candidates in an election to any public office is a clear violation of
the separation clause."95
We cannot agree.
In Magdalena Estate, Inc. v. Caluag,96 the obligation of the party imposed by the Court was
allegedly contained in the text of the original Decision. The Court, however, held:
"x x x The quoted finding of the lower court cannot supply deficiencies in the dispositive
portion. It is a mere opinion of the court and the rule is settled that where there is a conflict

49

between the dispositive part and the opinion, the former must prevail over the latter on the
theory that the dispositive portion is the final order while the opinion is merely a statement
ordering nothing." (Italics in the original)
Thus, the dispositive portion cannot be deemed to be the statement quoted by SJS and
embedded in the last paragraph of page 10 of the assailed 14-page Decision. If at all, that
statement is merely an answer to a hypothetical legal question and just a part of the opinion
of the trial court. It does not conclusively declare the rights (or obligations) of the parties to
the Petition. Neither does it grant any -- much less, the proper -- relief under the
circumstances, as required of a dispositive portion.
Failure to comply with the constitutional injunction is a grave abuse of discretion amounting
to lack or excess of jurisdiction. Decisions or orders issued in careless disregard of the
constitutional mandate are a patent nullity and must be struck down as void.97
Parts of a Decision
In general, the essential parts of a good decision consist of the following: (1) statement of
the case; (2) statement of facts; (3) issues or assignment of errors; (4) court ruling, in which
each issue is, as a rule, separately considered and resolved; and, finally, (5) dispositive
portion. The ponente may also opt to include an introduction or a prologue as well as an
epilogue, especially in cases in which controversial or novel issues are involved.98
An introduction may consist of a concise but comprehensive statement of the principal
factual or legal issue/s of the case. In some cases -- particularly those concerning public
interest; or involving complicated commercial, scientific, technical or otherwise rare subject
matters -- a longer introduction or prologue may serve to acquaint readers with the specific
nature of the controversy and the issues involved. An epilogue may be a summation of the
important principles applied to the resolution of the issues of paramount public interest or
significance. It may also lay down an enduring philosophy of law or guiding principle.
Let us now, again for the guidance of the bench and the bar, discuss the essential parts of a
good decision.
1. Statement of the Case
The Statement of the Case consists of a legal definition of the nature of the action. At the
first instance, this part states whether the action is a civil case for collection, ejectment,
quieting of title, foreclosure of mortgage, and so on; or, if it is a criminal case, this part
describes the specific charge -- quoted usually from the accusatory portion of the
information -- and the plea of the accused. Also mentioned here are whether the case is
being decided on appeal or on a petition for certiorari, the court of origin, the case number
in the trial court, and the dispositive portion of the assailed decision.
In a criminal case, the verbatim reproduction of the criminal information serves as a guide in
determining the nature and the gravity of the offense for which the accused may be found
culpable. As a rule, the accused cannot be convicted of a crime different from or graver than
that charged.
Also, quoting verbatim the text of the information is especially important when there is a
question on the sufficiency of the charge, or on whether qualifying and modifying
circumstances have been adequately alleged therein.
To ensure that due process is accorded, it is important to give a short description of the
proceedings regarding the plea of the accused. Absence of an arraignment, or a serious
irregularity therein, may render the judgment void, and further consideration by the
appellate court would be futile. In some instances, especially in appealed cases, it would
also be useful to mention the fact of the appellants detention, in order to dispose of the
preliminary query -- whether or not they have abandoned their appeal by absconding or
jumping bail.
Mentioning the court of origin and the case number originally assigned helps in facilitating
the consolidation of the records of the case in both the trial and the appellate courts, after
entry of final judgment.
Finally, the reproduction of the decretal portion of the assailed decision informs the reader of
how the appealed case was decided by the court a quo.

50

2. Statement of Facts
There are different ways of relating the facts of the case. First, under the objective or
reportorial method, the judge summarizes -- without comment -- the testimony of each
witness and the contents of each exhibit. Second, under the synthesis method, the factual
theory of the plaintiff or prosecution and then that of the defendant or defense is
summarized according to the judges best light. Third, in the subjective method, the version
of the facts accepted by the judge is simply narrated without explaining what the parties
versions are. Finally, through a combination of objective and subjective means, the
testimony of each witness is reported and the judge then formulates his or her own version
of the facts.
In criminal cases, it is better to present both the version of the prosecution and that of the
defense, in the interest of fairness and due process. A detailed evaluation of the contentions
of the parties must follow. The resolution of most criminal cases, unlike civil and other cases,
depends to a large extent on the factual issues and the appreciation of the evidence. The
plausibility or the implausibility of each version can sometimes be initially drawn from a
reading of the facts. Thereafter, the bases of the court in arriving at its findings and
conclusions should be explained.
On appeal, the fact that the assailed decision of the lower court fully, intelligently and
correctly resolved all factual and legal issues involved may partly explain why the reviewing
court finds no reason to reverse the findings and conclusions of the former. Conversely, the
lower courts patent misappreciation of the facts or misapplication of the law would aid in a
better understanding of why its ruling is reversed or modified.
In appealed civil cases, the opposing sets of facts no longer need to be presented. Issues for
resolution usually involve questions of law, grave abuse of discretion, or want of jurisdiction;
hence, the facts of the case are often undisputed by the parties. With few exceptions, factual
issues are not entertained in non-criminal cases. Consequently, the narration of facts by the
lower court, if exhaustive and clear, may be reproduced; otherwise, the material factual
antecedents should be restated in the words of the reviewing magistrate.
In addition, the reasoning of the lower court or body whose decision is under review should
be laid out, in order that the parties may clearly understand why the lower court ruled in a
certain way, and why the reviewing court either finds no reason to reverse it or concludes
otherwise.
3. Issues or Assignment of Errors
Both factual and legal issues should be stated. On appeal, the assignment of errors, as
mentioned in the appellants brief, may be reproduced in toto and tackled seriatim, so as to
avoid motions for reconsideration of the final decision on the ground that the court failed to
consider all assigned errors that could affect the outcome of the case. But when the
appellant presents repetitive issues or when the assigned errors do not strike at the main
issue, these may be restated in clearer and more coherent terms.
Though not specifically questioned by the parties, additional issues may also be included, if
deemed important for substantial justice to be rendered. Note that appealed criminal cases
are given de novo review, in contrast to noncriminal cases in which the reviewing court is
generally limited to issues specifically raised in the appeal. The few exceptions are errors of
jurisdiction; questions not raised but necessary in arriving at a just decision on the case; or
unassigned errors that are closely related to those properly assigned, or upon which
depends the determination of the question properly raised.
4. The Courts Ruling
This part contains a full discussion of the specific errors or issues raised in the complaint,
petition or appeal, as the case may be; as well as of other issues the court deems essential
to a just disposition of the case. Where there are several issues, each one of them should be
separately addressed, as much as practicable. The respective contentions of the parties
should also be mentioned here. When procedural questions are raised in addition to
substantive ones, it is better to resolve the former preliminarily.
5. The Disposition or Dispositive Portion

51

In a criminal case, the disposition should include a finding of innocence or guilt, the specific
crime committed, the penalty imposed, the participation of the accused, the modifying
circumstances if any, and the civil liability and costs. In case an acquittal is decreed, the
court must order the immediate release of the accused, if detained, (unless they are being
held for another cause) and order the director of the Bureau of Corrections (or wherever the
accused is detained) to report, within a maximum of ten (10) days from notice, the exact
date when the accused were set free.
In a civil case as well as in a special civil action, the disposition should state whether the
complaint or petition is granted or denied, the specific relief granted, and the costs. The
following test of completeness may be applied. First, the parties should know their rights and
obligations. Second, they should know how to execute the decision under alternative
contingencies. Third, there should be no need for further proceedings to dispose of the
issues. Fourth, the case should be terminated by according the proper relief. The "proper
relief" usually depends upon what the parties seek in their pleadings. It may declare their
rights and duties, command the performance of positive prestations, or order them to
abstain from specific acts. The disposition must also adjudicate costs.
The foregoing parts need not always be discussed in sequence. But they should all be
present and plainly identifiable in the decision. Depending on the writers character, genre
and style, the language should be fresh and free-flowing, not necessarily stereotyped or in a
fixed form; much less highfalutin, hackneyed and pretentious. At all times, however, the
decision must be clear, concise, complete and correct.
Second Substantive Issue:
Religious Leaders Endorsement
of Candidates for Public Office
The basic question posed in the SJS Petition -- WHETHER ENDORSEMENTS OF CANDIDACIES
BY RELIGIOUS LEADERS IS UNCONSTITUTIONAL -- undoubtedly deserves serious
consideration. As stated earlier, the Court deems this constitutional issue to be of
paramount interest to the Filipino citizenry, for it concerns the governance of our country
and its people. Thus, despite the obvious procedural transgressions by both SJS and the trial
court, this Court still called for Oral Argument, so as not to leave any doubt that there might
be room to entertain and dispose of the SJS Petition on the merits.
Counsel for SJS has utterly failed, however, to convince the Court that there are enough
factual and legal bases to resolve the paramount issue. On the other hand, the Office of the
Solicitor General has sided with petitioner insofar as there are no facts supporting the SJS
Petition and the assailed Decision.
We reiterate that the said Petition failed to state directly the ultimate facts that it relied upon
for its claim. During the Oral Argument, counsel for SJS candidly admitted that there were no
factual allegations in its Petition for Declaratory Relief. Neither were there factual findings in
the assailed Decision. At best, SJS merely asked the trial court to answer a hypothetical
question. In effect, it merely sought an advisory opinion, the rendition of which was beyond
the courts constitutional mandate and jurisdiction.99
Indeed, the assailed Decision was rendered in clear violation of the Constitution, because it
made no findings of facts and final disposition. Hence, it is void and deemed legally
inexistent. Consequently, there is nothing for this Court to review, affirm, reverse or even
just modify.
Regrettably, it is not legally possible for the Court to take up, on the merits, the paramount
question involving a constitutional principle. It is a time-honored rule that "the
constitutionality of a statute [or act] will be passed upon only if, and to the extent that, it is
directly and necessarily involved in a justiciable controversy and is essential to the
protection of the rights of the parties concerned."100
WHEREFORE, the Petition for Review of Brother Mike Velarde is GRANTED. The assailed June
12, 2003 Decision and July 29, 2003 Order of the Regional Trial Court of Manila (Branch 49)
are hereby DECLARED NULL AND VOID and thus SET ASIDE. The SJS Petition for Declaratory
Relief is DISMISSED for failure to state a cause of action.

52

Let a copy of this Decision be furnished the Office of the Court Administrator to evaluate and
recommend whether the trial judge may, after observing due process, be held
administratively liable for rendering a decision violative of the Constitution, the Rules of
Court and relevant circulars of this Court. No costs.
SO ORDERED.
G.R. No. 144101 September 16, 2005
ANTONIO P. TAMBUNTING, JR. and COMMERCIAL HOUSE OF FINANCE, INC.,
Petitioners,
vs.
SPOUSES EMILIO SUMABAT and ESPERANZA BAELLO, Respondent.
DECISION
CORONA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court assails the February
11, 2000 decision of the Regional Trial Court (RTC) of Caloocan City, Branch 120, in Civil Case
No. C-16822.
This case involves a dispute over a parcel of land situated in Caloocan City covered by TCT
No. (87655) 18837. It was previously registered in the names of respondents, spouses Emilio
Sumabat and Esperanza Baello. On May 3, 1973, respondents mortgaged it to petitioner
Antonio Tambunting, Jr. to secure the payment of a P7,727.95 loan. In August 1976,
respondents were informed that their indebtedness had ballooned to P15,000 for their failure
to pay the monthly amortizations. In May 1977, because respondents defaulted in their
obligation, petitioner Commercial House of Finance, Inc. (CHFI), as assignee of the mortgage,
initiated foreclosure proceedings on the mortgaged property but the same did not push
through. It was restrained by the then Court of First Instance (CFI) of Caloocan City, Branch
33 (now RTC Branch 123) in Civil Case No. C-6329, a complaint for injunction filed by
respondents against petitioners. However, the case was subsequently dismissed for failure
of the parties to appear at the hearing on November 9, 1977.
On March 16, 1979, respondents filed an action for declaratory relief with the CFI of
Caloocan City, Branch 33, seeking a declaration of the extent of their actual indebtedness. It
was docketed as Civil Case No. C-7496. Petitioners were declared in default for failure to file
an answer within the reglementary period. They moved for the dismissal of the action on the
ground that its subject, the mortgage deed, had already been breached prior to the filing of
the action. The motion was denied for having been filed out of time and petitioners had
already been declared in default.
On January 8, 1981, the CFI rendered its decision. It fixed respondents liability at P15,743.83
and authorized them to consign the amount to the court for proper disposition. In
compliance with the decision, respondents consigned the required amount on January 9,
1981.
In March 1995, respondents received a notice of sheriffs sale indicating that the mortgage
had been foreclosed by CHFI on February 8, 1995 and that an extrajudicial sale of the
property would be held on March 27, 1995.
On March 27, 1995, respondents instituted Civil Case No. C-16822, a petition for preliminary
injunction, damages and cancellation of annotation of encumbrance with prayer for the
issuance of a temporary restraining order, with the RTC of Caloocan City, Branch 120.
However, the public auction scheduled on that same day proceeded and the property was
sold to CHFI as the highest bidder. Respondents failed to redeem the property during the
redemption period. Hence, title to the property was consolidated in favor of CHFI and a new
certificate of title (TCT No. 310191) was issued in its name. In view of these developments,
respondents amended their complaint to an action for nullification of foreclosure, sheriffs
sale and consolidation of title, reconveyance and damages.
On February 11, 2000, the RTC issued the assailed decision. It ruled that the 1981 CFI
decision in Civil Case No. C-7496 (fixing respondents liability at P15,743.83 and authorizing
consignation) had long attained finality. The mortgage was extinguished when respondents
paid their indebtedness by consigning the amount in court. Moreover, the ten-year period
within which petitioners should have foreclosed the property was already barred by

53

prescription. They abused their right to foreclose the property and exercised it in bad faith.
As a consequence, the trial court nullified the foreclosure and extrajudicial sale of the
property, as well as the consolidation of title in CHFIs name in 1995. It then ordered the
register of deeds of Caloocan City to cancel TCT No. 310191 and to reconvey the property to
respondents. It also held petitioners liable for moral damages, exemplary damages and
attorneys fees.
Petitioners moved for a reconsideration of the trial courts decision but it was denied. Hence,
this petition.
Petitioners claim that the trial court erred when it affirmed the validity of the consignation.
They insist that the CFI was 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. Respondents also fault the trial court
for holding that their right to foreclose the property had already prescribed.
True, the trial court erred when it ruled that the 1981 CFI decision in Civil Case No. C-7496
was already final and executory.
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.1 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.2 It may be entertained only before the breach
or violation of the statute, deed, contract, etc. to which it refers.3 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.4 In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject, i.e., the statute, deed, contract,
etc., has already been infringed or transgressed before the institution of the action. Under
such circumstances, inasmuch as a cause of action has already accrued in favor of one or
the other party, there is nothing more for the court to explain or clarify short of a judgment
or final order.
Here, an infraction of the mortgage terms had already taken place before the filing of Civil
Case No. C-7496. Thus, the CFI lacked jurisdiction when it took cognizance of the case in
1979. And in the absence of jurisdiction, its decision was void and without legal effect. As
this Court held in Arevalo v. Benedicto:5
Furthermore, the want of jurisdiction by a court over the subject-matter renders its judgment
void and a mere nullity, and considering that a void judgment is in legal effect no judgment,
by which no rights are divested, from which no rights can be obtained, which neither binds
nor bars any one, and under which all acts performed and all claims flowing out of are void,
and considering further, that the decision, for want of jurisdiction of the court, is not a
decision in contemplation of law, and, hence, can never become executory, it follows that
such a void judgment cannot constitute a bar to another case by reason of res judicata.
Nonetheless, the petition must fail.
Article 1142 of the Civil Code is clear. A mortgage action prescribes after ten years.
An action to enforce a right arising from a mortgage should be enforced within ten years
from the time the right of action accrues.6 Otherwise, it will be barred by prescription and
the mortgage creditor will lose his rights under the mortgage.
Here, petitioners right of action accrued in May 1977 when respondents defaulted in their
obligation to pay their loan amortizations. It was from that time that the ten-year period to
enforce the right under the mortgage started to run. The period was interrupted when
respondents filed Civil Case No. C-6329 sometime after May 1977 and the CFI restrained the
intended foreclosure of the property. However, the period commenced to run again on
November 9, 1977 when the case was dismissed.
The respondents institution of Civil Case No. C-7496 in the CFI on March 16, 1979 did not
interrupt the running of the ten-year prescriptive period because, as discussed above, the
court lacked jurisdiction over the action for declaratory relief. All proceedings therein were

54

without legal effect. Thus, petitioners could have enforced their right under the mortgage,
including its foreclosure, only until November 7, 1987, the tenth year from the dismissal of
Civil Case No. C-6329. Thereafter, their right to do so was already barred by prescription.
The foreclosure held on February 8, 1995 was therefore some seven years too late. The
same thing can be said about the public auction held on March 27, 1995, the consolidation
of title in CHFIs favor and the issuance of TCT No. 310191 in its name. They were all void
and did not exist in the eyes of the law.
WHEREFORE, the petition is hereby DENIED.
G.R. No. 157866

February 14, 2007

AUGUSTO MANGAHAS and MARILOU VERDEJO, petitioners,

vs.
Hon. JUDGE VICTORIA ISABEL PAREDES, Presiding Judge, Br. 124, Regional Trial
Court, Caloocan City; SHERIFF ERLITO BACHO, Br. 124, Regional Trial Court,
Caloocan City; and AVELINO BANAAG, Respondents.
DECISION
CHICO-NAZARIO, J.:
This petition for Declaratory Relief, Certiorari, Prohibition With Prayer For Provisional Remedy
filed by petitioners Augusto Mangahas and Marilou Verdejo seeks to nullify and set aside the
14 February 2003 Order1 of the Regional Trial Court (RTC), Branch 124, Caloocan City,
denying their Motion to Suspend Execution in Civil Case No. C-19097.
The instant controversy arose from a verified complaint for Ejectment filed by private
respondent Avelino Banaag on 31 January 1997 before the Metropolitan Trial Court (MeTC),
Branch 49, Caloocan City, against petitioners. Private respondent alleged that he is the
registered owner of the disputed property identified as Lot 4, Block 21, located in Maligaya
Park Subdivision, Caloocan City, as evidenced by Transfer Certificate of Title (TCT) No.
196025 of the Registry of Deeds of Caloocan City. Private respondent averred that
petitioners constructed houses on the property without his knowledge and consent and that
several demands were made, but the same fell on deaf ears as petitioners refused to vacate
the premises. This prompted private respondent to refer the matter to the Lupon
Tagapayapa for conciliation. The recourse proved futile since the parties were not able to
settle amicably. Private respondent then filed an ejectment suit before the MeTC.
On 23 April 1997, petitioners filed their answer denying having unlawfully deprived private
respondent possession of the contested property. Petitioners claimed that they have resided
in the subject lot with the knowledge and conformity of the true owner thereof,
Pinagkamaligan Indo-Agro Development Corporation (PIADECO), as evidenced by a
Certificate of Occupancy signed by PIADECOs president in their favor.
On 10 July 1997, petitioners filed a Manifestation And Motion To Suspend Proceedings on the
ground that the subject property is part of the Tala Estate and that the RTC of Quezon City,
Branch 85, in Civil Case No. Q-96-29810 issued a Writ of Preliminary Injunction dated 10
November 1997, enjoining the MeTCs of Quezon City and Caloocan City from ordering the
eviction and demolition of all occupants of the Tala Estate. They posited that the injunction
issued by the Quezon City RTC is enforceable in Caloocan City because both cities are
situated within the National Capital Region.
In an order dated 7 August 1997, the MeTC denied said manifestation and
motion.1awphi1.net It ratiocinated that the injunction issued by the Quezon City RTC has
binding effect only within the territorial boundaries of the said court and since Caloocan City
is not within the territorial area of same, the injunction it issued is null and void for lack of
jurisdiction.
For failure of the parties to arrive at a compromise agreement during the preliminary
conference, they were required to submit their respective position papers containing their
positions on the following issues: (a) whether or not the torrens title of private respondent is
a valid basis of his right to eject petitioners, (b) whether the MeTC has jurisdiction to hear
and decide the case, and (c) whether either the private respondent or petitioners are
entitled to their respective claims for damages.

55

In their position paper, petitioners insisted that they are entitled to the possession of the
land because they have been occupants thereof as early as 1978, long before the property
was acquired by private respondent. Since they possessed the property for that long, the
MeTC has no jurisdiction to hear and decide the case as ejectment suit applies only to
instances where possession of the land lasted for a period of not more than one year . In
addition, they claimed that private respondent has not proffered any evidence that he has
prior physical possession over the property. Petitioners reiterated their posture in the motion
to suspend proceedings wherein they urged the MeTC to respect the Writ of Preliminary
Injunction issued by the Quezon City RTC. They also alleged that private respondents
certificate of title originated from a fictitious title.
In a decision dated 5 October 1999, the MeTC ruled for private respondent. It opined that
TCT No. 196025 in private respondents name was an indefeasible proof of his ownership of
the lot and his inherent right to possess the same. This title entitled private respondent
better right to possess the subject property over petitioners Certificate of Occupancy
executed in their favor by PIADECO. It held that it has jurisdiction over the controversy since
private respondent filed the case within one year from the time the demand to vacate was
given to petitioners. The decretal portion of the decision reads:
Wherefore, judgment is hereby rendered for the plaintiff, ordering defendants Augusto
Mangahas, Victor Solis, Elisa M. Dionila, Joselito Mangahas and Rogelio Verdejo and all
persons claiming right under them as follows:
1) To vacate the lot in question by removing their houses erected thereat and restore
possession of the lot to the plaintiff;
2) To pay plaintiff a reasonable compensation for their use of the premises for the period
from August, 1996 until the property is vacated at the rate of two thousand (P2,000.00)
pesos per month;
3) To reimburse to plaintiff the sum of ten thousand (P10,000.00) pesos as and for attorneys
fees; [and]
4) To pay the costs of this suit.2
On 2 December 1999, petitioners appealed to the RTC, which case was docketed as Civil
Case No. C-19097. In a Decision dated 16 November 2000, the trial court affirmed in toto the
MeTC decision. It ruled that the MeTC was correct in denying petitioners motion to suspend
proceedings anchored on the Writ of Preliminary Injunction issued by the Quezon City RTC
reasoning that the writ of the latter court is limited only to its territorial area, thus, the same
has no binding effect on the MeTC of Caloocan City. It sustained the MeTCs ruling that the
latter court has jurisdiction over the case as the same has been filed within the
reglementary period from the date of demand to vacate. Furthermore, the RTC stated that
the validity of private respondents title cannot be assailed collaterally in the instant case.
On 18 December 2000, petitioners filed a motion for reconsideration which the RTC denied in
a resolution dated 1 June 2001.
Unfazed, petitioners appealed the ruling of the RTC to the Court of Appeals on 6 June 2001
which was docketed as CA-G.R. SP No. 65076.
In a Decision3 dated 25 April 2002, the Court of Appeals affirmed the ruling of the RTC.
Petitioners Motion for Reconsideration was, likewise, denied in a Resolution dated 20
November 2002.
The decision of the Court of Appeals became final and executory on 13 December 2002.
Meanwhile, on 11 December 2000, private respondent filed with the RTC a motion for
execution pending appeal which was opposed by petitioners. In an order dated 12
September 2001, the RTC granted the motion.
To implement and enforce its decision, the same court on 27 September 2001 issued a Writ
of Execution. On 28 September 2001, petitioners filed a Motion to Reconsider Order dated 12
September 2001 which was denied in an order dated 5 February 2002.

56

On 17 January 2003, petitioners filed a Motion to Suspend Execution before the RTC. Said
motion was denied in an order dated 14 February 2003. On 05 March 2003, Sheriff Erlito
Bacho implemented and enforced the writ of execution.
Hence, the instant recourse.
At the outset it must be pointed out that petitioners direct recourse to this Court via petition
for Declaratory Relief, Certiorari, Prohibition With Prayer For Provisional Remedy is an utter
disregard of the hierarchy of courts and should have been dismissed outright. This Courts
original jurisdiction to issue writs of certiorari, prohibition, mandamus, quo warranto, habeas
corpus and injunction is not exclusive.4 It is shared by this Court with the Regional Trial
Courts and the Court of Appeals.5 Such concurrence of jurisdiction does not give the
petitioners unbridled freedom of choice of court forum.6 A direct recourse of the Supreme
Courts original jurisdiction to issue these writs should be allowed only when there are
special and important reasons therefor, clearly and specifically set out in the petition.7
In the instant case, petitioners have not offered any exceptional or compelling reason not to
observe the hierarchy of courts. Hence, the petition should have been filed with the Regional
Trial Court.
Equally noteworthy is petitioners resort to this Court through petition for declaratory relief.
This action is not among the petitions within the original jurisdiction of the Supreme Court.8
Rule 63 of the Rules of Court which deals with actions for declaratory relief, enumerates the
subject matter thereof, i.e., deed, will, contract or other written instrument, the construction
or validity of statute or ordinance. Inasmuch as this enumeration is exclusive, petitioners
action to declare the RTC order denying their motion to suspend execution, not being one of
those enumerated, should warrant the outright dismissal of this case.9
At any rate, since the complete records of this case have already been elevated, this Court
deems it wise to resolve the controversy on the merits.
Petitioners assail the Order dated 14 February 2003 of the RTC Caloocan City and its
Decision dated 16 November 2000 on the sole ground that the said court is precluded from
issuing said Order and Decision by virtue of the Writ of Injunction issued on 10 November
1997 by the Quezon City RTC.
It must be remembered that the issue on the enforceability of the injunction order
originating from the Quezon City RTC had already been litigated and finally decided when
the Court of Appeals in CA-G.R. SP No. 65076 affirmed the Decision of the RTC in Civil Case
No. C-19097. Said Decision had become final and executory per Entry of Judgment dated 25
April 2002.10 The relevant portion of the Court of Appeals Decision reads:
The petitioners postulate that the Writ of Preliminary Injunction dated November 10, 1997
which emanated from the Regional Trial Court of Quezon City should have prompted the
Regional Trial Court of Caloocan City to suspend the ejectment proceedings then pending
before it. It was the petitioners contention that the injunction writ issued in Quezon City is
enforceable also in Caloocan City inasmuch [as] both cities are situated within the National
Capital Region.
Under Sec. 17 of B.P. 129, the exercise of jurisdiction of the Regional Trial Courts and their
judges is basically regional in scope (Malaoan vs. Court of Appeals, 232 SCRA 249), but
under Sec. 18, it may be limited to the territorial area of the branch in which the judges sits
(OCA vs. Matas, August 2, 1995).
Sec. 18 of B.P. 129 states:
"Sec. 18. Authority to define territory appurtenant to each branch. The Supreme Court
shall define the territory over which a branch of the Regional Trial Court shall exercise its
authority. The territory thus defined shall be deemed to be the territorial area of the branch
concerned for purposes of determining the venue of all suits, proceedings or actions,
whether civil or criminal, as well as determining the Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts over which the said branch may exercise appellate
jurisdiction. xxx"
Taking Our bearings from the above pronouncement, the Regional Trial Court of Caloocan
City could not be deemed to have committed a reversible error when it denied the
petitioners Motion to Suspend Proceedings. Apparently, the extent of the enforceability of

57

an injunction writ issued by the Regional Trial Court is defined by the territorial region where
the magistrate presides.11
Consequently, the issue involving the binding effect of the injunction issued by the Quezon
City RTC became the law of the case between the parties. Under this legal principle,
whatever is irrevocably established as the controlling legal rule or decision between the
parties in the same case continues to be the law of the case, so long as the facts on which
the decision was predicated continue.12 Stated otherwise, the doctrine holds that once an
appellate court has declared the law in a case that declaration continues to hold even in
subsequent appeal.13 The reason lies in the fact that public policy dictates that litigations
must be terminated at some definite time and that the prevailing party should not be denied
the fruits of his victory by some subterfuge devised by the losing party.14
Petitioners are therefore barred from assailing the ruling that the injunction issued by the
Quezon City RTC has no binding effect to the courts of Caloocan City as this issue had
already been passed upon with finality. Issues should be laid to rest at some point; otherwise
there would be no end to litigation. As elucidated in Hufana v. Genato15 :
It is well established that when a right or fact has been judicially tried and determined by a
court of competent jurisdiction, so long as it remains unreversed, it should be conclusive
upon the parties and those in privity with them. The dictum therein laid down became the
law of the case and what was once irrevocably established as the controlling legal rule or
decision, continues to be binding between the same parties as long as the facts on which
the decision was predicated, continue to be the facts of the case before the court. Hence,
the binding effect and enforceability of that dictum can no longer be relitigated anew since
said issue had already been resolved and finally laid to rest in that aforementioned case
(Miranda v. CA, 141 SCRA 306 [1986]), if not by the principle of res judicata, but at least by
conclusiveness of judgment.
Quite conspicuously, the instant petition assailing the order of the RTC denying petitioners
motion to suspend execution is a ploy to deprive private respondent of the fruits of his hardwon case. It must be stressed that once a decision becomes final and executory, it is the
ministerial duty of the presiding judge to issue a writ of execution except in certain cases, as
when subsequent events would render execution of judgment unjust.16 Petitioners did not
allege nor proffer any evidence that this case falls within the exception. Hence, there is no
reason to vacate the writ of execution issued by the RTC.
WHEREFORE, the petition is DENIED. The Order of the Regional Trial Court, Branch 124,
Caloocan City, denying petitioners Motion to Supend Execution dated 14 February 2003 in
Civil Case No. C-19097 is AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 184203, November 26, 2014
CITY OF LAPU-LAPU, Petitioner, v. PHILIPPINE ECONOMIC ZONE AUTHORITY,
Respondent.
G.R. NO. 187583
PROVINCE OF BATAAN, REPRESENTED BY GOVERNOR ENRIQUE T. GARCIA, JR., AND
EMERLINDA S. TALENTO, IN HER CAPACITY AS PROVINCIAL TREASURER OF
BATAAN, Petitioners, v. PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
DECISION
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real property taxes.
These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the
Province of Bataan separately filed against the Philippine Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals decision2
dated January 11, 2008 and resolution3 dated August 6, 2008, dismissing the Citys appeal

58

for being the wrong mode of appeal. The City appealed the Regional Trial Court, Branch 111,
Pasay Citys decision finding the PEZA exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals
decision4 dated August 27, 2008 and resolution5 dated April 16, 2009, granting the PEZAs
petition for certiorari. The Court of Appeals ruled that the Regional Trial Court, Branch 115,
Pasay City gravely abused its discretion in finding the PEZA liable for real property taxes to
the Province of Bataan.
Facts common to the consolidated petitions
In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential
Decree No. 66 in 1972, declaring as government policy the establishment of export
processing zones in strategic locations in the Philippines. Presidential Decree No. 66 aimed
to encourage and promote foreign commerce as a means of making the Philippines a
center of international trade, of strengthening our export trade and foreign exchange
position, of hastening industrialization, of reducing domestic unemployment, and of
accelerating the development of the country.7chanRoblesvirtualLawlibrary
To carry out this policy, the Export Processing Zone Authority (EPZA) was created to operate,
administer, and manage the export processing zones established in the Port of Mariveles,
Bataan8 and such other export processing zones that may be created by virtue of the
decree.9chanRoblesvirtualLawlibrary
The decree declared the EPZA non-profit in character10 with all its revenues devoted to its
development, improvement, and maintenance.11 To maintain this non-profit character, the
EPZA was declared exempt from all taxes that may be due to the Republic of the Philippines,
its provinces, cities, municipalities, and other government agencies and instrumentalities.12
Specifically, Section 21 of Presidential Decree No. 66 declared the EPZA exempt from
payment of real property taxes:chanroblesvirtuallawlibrary
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall
be non-profit and shall devote and use all its returns from its capital investment, as well as
excess revenues from its operations, for the development, improvement and maintenance
and other related expenditures of the Authority to pay its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in Section 1 of this
Decree.
In
consonance
therewith,
the
Authority
is
hereby
declared
exempt:ChanRoblesVirtualawlibrary
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and
licenses to be paid to the National Government, its provinces, cities, municipalities and other
government agencies and instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811, establishing the Mactan Export
Processing Zone. Certain parcels of land of the public domain located in the City of LapuLapu in Mactan, Cebu were reserved to serve as site of the Mactan Export Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No. 7916 or the Special Economic
Zone Act of 199513 to operate, administer, manage, and develop economic zones in the
country.14 The PEZA was granted the power to register, regulate, and supervise the
enterprises located in the economic zones.15 By virtue of the law, the export processing
zone in Mariveles, Bataan became the Bataan Economic Zone16 and the Mactan Export
Processing Zone the Mactan Economic Zone.17chanRoblesvirtualLawlibrary
As for the EPZA, the law required it to evolve into the PEZA in accordance with the
guidelines and regulations set forth in an executive order issued for [the]
purpose.18chanRoblesvirtualLawlibrary
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the
PEZA to assume and exercise all of the EPZAs powers, functions, and responsibilities as
provided in Presidential Decree No. 66, as amended, insofar as they are not inconsistent with
the powers, functions, and responsibilities of the PEZA, as mandated under [the Special
Economic Zone Act of 1995].19 All of EPZAs properties, equipment, and assets, among
others, were ordered transferred to the PEZA.20chanRoblesvirtualLawlibrary
Facts of G.R. No. 184203

59

In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through the Office of the
Treasurer, demanded from the PEZA ?32,912,350.08 in real property taxes for the period
from 1992 to 1998 on the PEZAs properties located in the Mactan Economic Zone.
The City reiterated its demand in the letter22 dated May 21, 1998. It cited Sections 193 and
234 of the Local Government Code of 1991 that withdrew the real property tax exemptions
previously granted to or presently enjoyed by all persons. The City pointed out that no
provision in the Special Economic Zone Act of 1995 specifically exempted the PEZA from
payment of real property taxes, unlike Section 21 of Presidential Decree No. 66 that
explicitly provided for EPZAs exemption. Since no legal provision explicitly exempted the
PEZA from payment of real property taxes, the City argued that it can tax the PEZA.
The City made subsequent demands23 on the PEZA. In its last reminder24 dated May 13,
2002, the City assessed the PEZA ?86,843,503.48 as real property taxes for the period from
1992 to 2002.
On September 11, 2002, the PEZA filed a petition for declaratory relief25 with the Regional
Trial Court of Pasay City, praying that the trial court declare it exempt from payment of real
property taxes. The case was raffled to Branch 111.
The City answered26 the petition, maintaining that the PEZA is liable for real property taxes.
To support its argument, the City cited a legal opinion dated September 6, 1999 issued by
the Department of Justice,27 which stated that the PEZA is not exempt from payment of real
property taxes. The Department of Justice based its opinion on Sections 193 and 234 of the
Local Government Code that withdrew the tax exemptions, including real property tax
exemptions, previously granted to all persons.
A
reply28
was
filed
by
the
rejoinder.29chanRoblesvirtualLawlibrary

PEZA

to

which

the

City

filed

Pursuant to Rule 63, Section 3 of Rules of Court,30 the Office of the Solicitor General filed a
comment31 on the PEZAs petition for declaratory relief. It agreed that the PEZA is exempt
from payment of real property taxes, citing Sections 24 and 51 of the Special Economic Zone
Act of 1995.
The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone
Act of 1995 provides:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real property taxes on land
owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the ECOZONE shall be paid and remitted as
follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.
Section 51 of the law, on the other hand, provides:chanroblesvirtuallawlibrary
SEC. 51. Ipso-Facto Clause. All privileges, benefits, advantages or exemptions granted to
special economic zones under Republic Act No. 7227, shall ipso-facto be accorded to special
economic zones already created or to be created under this Act. The free port status shall
not be vested upon new special economic zones.
Based on Section 51, the trial court held that all privileges, benefits, advantages, or
exemptions granted to special economic zones created under the Bases Conversion and
Development Act of 1992 apply to special economic zones created under the Special
Economic Zone Act of 1995. Since these benefits include exemption from payment of
national or local taxes, these benefits apply to special economic zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the
Special Economic Zone Act of 1995. It ruled that Section 24, which taxes real property
owned by developers of economic zones, only applies to private developers of economic

60

zones, not to public developers like the PEZA.

property taxes on the land it owns.

The PEZA, therefore, is not liable for real

Characterizing the PEZA as an agency of the National Government, the trial court ruled that
the City had no authority to tax the PEZA under Sections 133(o) and 234(a) of the Local
Government Code of 1991.
In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for
declaratory relief and declared it exempt from payment of real property taxes.
The City filed a motion for reconsideration,33 which the trial court denied in its resolution34
dated September 26, 2006.
The City then appealed35 to the Court of Appeals.
The Court of Appeals noted the following issues the City raised in its appellants brief: (1)
whether the trial court had jurisdiction over the PEZAs petition for declaratory relief; (2)
whether the PEZA is a government agency performing governmental functions; and (3)
whether the PEZA is exempt from payment of real property taxes.
The issues presented by the City, according to the Court of Appeals, are pure questions of
law which should have been raised in a petition for review on certiorari directly filed before
this court. Since the City availed itself of the wrong mode of appeal, the Court of Appeals
dismissed the Citys appeal in the decision36 dated January 11, 2008.
The City filed a motion for extension of time to file a motion for reconsideration,37 which the
Court of Appeals denied in the resolution38 dated April 11, 2008.
Despite the denial of its motion for extension, the City filed a motion for reconsideration.39
In the resolution40 dated August 6, 2008, the Court of Appeals denied that motion.
In its petition for review on certiorari with this court,41 the City argues that the Court of
Appeals hid under the skirts of technical rules42 in resolving its appeal. The City
maintains that its appeal involved mixed questions of fact and law. According to the City,
whether the PEZA performed governmental functions cannot completely be addressed by
law
but
[by]
the
factual
and
actual
activities
[the
PEZA
is]
carrying
out.43chanRoblesvirtualLawlibrary
Even assuming that the petition involves pure questions of law, the City contends that the
subject matter of the case is of extreme importance with [far-reaching] consequence that
[its magnitude] would surely shape and determine the course of our nations future.44 The
Court of Appeals, the City argues, should have resolved the case on the merits.
The City insists that the trial court had no jurisdiction to hear the PEZAs petition for
declaratory relief. According to the City, the case involves real property located in the City
of Lapu-Lapu. The petition for declaratory relief should have been filed before the Regional
Trial Court of the City of Lapu-Lapu.45chanRoblesvirtualLawlibrary
Moreover, the Province of Bataan, the City of Baguio, and the Province of Cavite allegedly
demanded real property taxes from the PEZA. The City argues that the PEZA should have
likewise impleaded these local government units as respondents in its petition for
declaratory relief. For its failure to do so, the PEZA violated Rule 63, Section 2 of the Rules of
Court, and the trial court should have dismissed the petition.46chanRoblesvirtualLawlibrary
This court ordered the PEZA to comment on the Citys petition for review on
certiorari.47chanRoblesvirtualLawlibrary
At the outset of its comment, the PEZA argues that the Court of Appeals decision dated
January 11, 2008 had become final and executory. After the Court of Appeals had denied the
Citys appeal, the City filed a motion for extension of time to file a motion for
reconsideration. Arguing that the time to file a motion for reconsideration is not extendible,
the PEZA filed its motion for reconsideration out of time. The City has no more right to
appeal to this court.48chanRoblesvirtualLawlibrary
The PEZA maintains that the City availed itself of the wrong mode of appeal before the Court
of Appeals. Since the City raised pure questions of law in its appeal, the PEZA argues that
the proper remedy is a petition for review on certiorari with this court, not an ordinary

61

appeal before the appellate court. The Court of Appeals, therefore, correctly dismissed
outright the Citys appeal under Rule 50, Section 2 of the Rules of
Court.49chanRoblesvirtualLawlibrary
On the merits, the PEZA argues that it is an agency and instrumentality of the National
Government. It is therefore exempt from payment of real property taxes under Sections
133(o) and 234(a) of the Local Government Code.50 It adds that the tax privileges under
Sections 24 and 51 of the Special Economic Zone Act of 1995 applied to
it.51chanRoblesvirtualLawlibrary
Considering that the site of the Mactan Economic Zone is a reserved land under
Proclamation No. 1811, the PEZA claims that the properties sought to be taxed are lands of
public dominion exempt from real property taxes.52chanRoblesvirtualLawlibrary
As to the jurisdiction issue, the PEZA counters that the Regional Trial Court of Pasay had
jurisdiction to hear its petition for declaratory relief under Rule 63, Section 1 of the Rules of
Court.53 It also argued that it need not implead the Province of Bataan, the City of Baguio,
and the Province of Cavite as respondents considering that their demands came after the
PEZA had already filed the petition in court.54chanRoblesvirtualLawlibrary
Facts of G.R. No. 187583
After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA,
the Province of Bataan followed suit. In its letter55 dated May 29, 2003, the Province,
through the Office of the Provincial Treasurer, informed the PEZA that it would be sending a
real property tax billing to the PEZA. Arguing that the PEZA is a developer of economic
zones, the Province claimed that the PEZA is liable for real property taxes under Section 24
of the Special Economic Zone Act of 1995.
In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the
service of the real property tax billing. It cited its petition for declaratory relief against the
City of Lapu-Lapu pending before the Regional Trial Court, Branch 111, Pasay City as basis.
The Province argued that serving a real property tax billing on the PEZA would not in any
way affect [its] petition for declaratory relief before [the Regional Trial Court] of Pasay
City.57 Thus, in its letter58 dated June 27, 2003, the Province notified the PEZA of its real
property tax liabilities for June 1, 1995 to December 31, 2002 totalling ?110,549,032.55.
After having been served a tax billing, the PEZA again requested the Province to suspend
collecting its alleged real property tax liabilities until the Regional Trial Court of Pasay City
resolves its petition for declaratory relief.59chanRoblesvirtualLawlibrary
The Province ignored the PEZAs request. On January 20, 2004, the Province served on the
PEZA a statement of unpaid real property tax for the period from June 1995 to December
2004.60chanRoblesvirtualLawlibrary
The PEZA again requested the Province to suspend collecting its alleged real property
taxes.61 The Province denied the request in its letter62 dated January 29, 2004, then
served on the PEZA a warrant of levy63 covering the PEZAs real properties located in
Mariveles, Bataan.
The PEZAs subsequent requests64 for suspension of collection were all denied by the
Province.65 The Province then served on the PEZA a notice of delinquency in the payment
of real property taxes66 and a notice of sale of real property for unpaid real property tax.67
The Province finally sent the PEZA a notice of public auction of the latters properties in
Mariveles, Bataan.68chanRoblesvirtualLawlibrary
On June 14, 2004, the PEZA filed a petition for injunction69 with prayer for issuance of a
temporary restraining order and/or writ of preliminary injunction before the Regional Trial
Court of Pasay City, arguing that it is exempt from payment of real property taxes. It added
that the notice of sale issued by the Province was void because it was not published in a
newspaper of general circulation as required by Section 260 of the Local Government
Code.70chanRoblesvirtualLawlibrary
The case was raffled to Branch 115.

62

In its order71 dated June 18, 2004, the trial court issued a temporary restraining order
against the Province. After the PEZA had filed a P100,000.00 bond,72 the trial court issued a
writ of preliminary injunction,73 enjoining the Province from selling the PEZAs real
properties at public auction.
On March 3, 2006, the PEZA and Province both manifested that each would file a
memorandum after which the case would be deemed submitted for decision. The parties
then filed their respective memoranda.74chanRoblesvirtualLawlibrary
In the order75 dated January 31, 2007, the trial court denied the PEZAs petition for
injunction. The trial court ruled that the PEZA is not exempt from payment of real property
taxes. According to the trial court, Sections 193 and 234 of the Local Government Code had
withdrawn the real property tax exemptions previously granted to all persons, whether
natural or juridical.76 As to the tax exemptions under Section 51 of the Special Economic
Zone Act of 1995, the trial court ruled that the provision only applies to businesses operating
within the economic zones, not to the PEZA.77chanRoblesvirtualLawlibrary
The PEZA filed before the Court of Appeals a petition for certiorari78 with prayer for issuance
of a temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining the Province and its
Provincial Treasurer from selling PEZA's properties at public auction scheduled on October
17, 2007.79 It also ordered the Province to comment on the PEZAs petition.
In its comment,80 the Province alleged that it received a copy of the temporary restraining
order only on October 18, 2007 when it had already sold the PEZAs properties at public
auction. Arguing that the act sought to be enjoined was already fait accompli, the Province
prayed for the dismissal of the petition for certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus81
against the Province, arguing that the Provincial Treasurer of Bataan acted with grave abuse
of discretion in issuing the notice of delinquency and notice of sale. It maintained that it is
exempt from payment of real property taxes because it is a government instrumentality. It
added that its lands are property of public dominion which cannot be sold at public auction.
The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining
order and a writ of preliminary injunction to enjoin the Province from consolidating title over
the PEZAs properties.
In its resolution83 dated January 16, 2008, the Court of Appeals admitted the supplemental
petition for certiorari, prohibition, and mandamus. It required the Province to comment on
the supplemental petition and to file a memorandum on the PEZAs prayer for issuance of
temporary restraining order.
The Province commented84 on the PEZAs supplemental petition, to which the PEZA
replied.85chanRoblesvirtualLawlibrary
The Province then filed a motion86 for leave to admit attached rejoinder with motion to
dismiss. In the rejoinder with motion to dismiss,87 the Province argued for the first time that
the Court of Appeals had no jurisdiction over the subject matter of the action.
According to the Province, the PEZA erred in filing a petition for certiorari. Arguing that the
PEZA sought to reverse a Regional Trial Court decision in a local tax case, the Province
claimed that the court with appellate jurisdiction over the action is the Court of Tax Appeals.
The PEZA then prayed that the Court of Appeals dismiss the petition for certiorari for lack of
jurisdiction over the subject matter of the action.
The Court of Appeals held that the issue before it was whether the trial court judge gravely
abused his discretion in dismissing the PEZAs petition for prohibition. This issue, according
to the Court of Appeals, is properly addressed in a petition for certiorari over which it has
jurisdiction to resolve. It, therefore, maintained jurisdiction to resolve the PEZAs petition for
certiorari.88chanRoblesvirtualLawlibrary
Although it admitted that appeal, not certiorari, was the PEZAs proper remedy to reverse
the trial courts decision,89 the Court of Appeals proceeded to decide the petition for
certiorari in the broader interest of justice.90chanRoblesvirtualLawlibrary

63

The Court of Appeals ruled that the trial court judge gravely abused his discretion in
dismissing the PEZAs petition for prohibition. It held that Section 21 of Presidential Decree
No. 66 and Section 51 of the Special Economic Zone Act of 1995 granted the PEZA
exemption from payment of real property taxes.91 Based on the criteria set in Manila
International Airport Authority v. Court of Appeals,92 the Court of Appeals found that the
PEZA is an instrumentality of the national government. No taxes, therefore, could be levied
on it by local government units.93chanRoblesvirtualLawlibrary
In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZAs petition
for certiorari.
It set aside the trial courts decision and nullified all the Provinces
proceedings with respect to the collection of real property taxes from the PEZA.
The Province filed a motion for reconsideration,95 which the Court of Appeals denied in the
resolution96 dated April 16, 2009 for lack of merit.
In its petition for review on certiorari with this court,97 the Province of Bataan insists that
the Court of Appeals had no jurisdiction to take cognizance of the PEZAs petition for
certiorari. The Province maintains that the Court of Tax Appeals had jurisdiction to hear the
PEZAs petition since it involved a local tax case decided by a Regional Trial
Court.98chanRoblesvirtualLawlibrary
The Province reiterates that the PEZA is not exempt from payment of real property taxes.
The Province points out that the EPZA, the PEZAs predecessor, had to be categorically
exempted from payment of real property taxes. The EPZA, therefore, was not inherently
exempt from payment of real property taxes and so is the PEZA. Since Congress omitted
from the Special Economic Zone Act of 1995 a provision specifically exempting the PEZA
from payment of real property taxes, the Province argues that the PEZA is a taxable entity.
It cited the rule in statutory construction that provisions omitted in revised statutes are
deemed repealed.99chanRoblesvirtualLawlibrary
With respect to Sections 24 and 51 of the Special Economic Zone Act of 1995 granting tax
exemptions and benefits, the Province argues that these provisions only apply to business
establishments operating within special economic zones,100 not to the PEZA.
This court ordered the PEZA to comment on the Provinces petition for review on
certiorari.101chanRoblesvirtualLawlibrary
In its comment,102 the PEZA argues that the Court of Appeals had jurisdiction to hear its
petition for certiorari since the issue was whether the trial court committed grave abuse of
discretion in denying its petition for injunction. The PEZA maintains that it is exempt from
payment of real property taxes under Section 21 of Presidential Decree No. 66 and Section
51 of the Special Economic Zone Act of 1995.
The Province filed its reply,103 reiterating its arguments in its petition for review on
certiorari.
On the PEZAs motion,104 this court consolidated the petitions filed by the City of Lapu-Lapu
and the Province of Bataan.105chanRoblesvirtualLawlibrary
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapus appeal for raising
pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try, and
decide the City of Lapu-Lapus petition for declaratory relief;
III. Whether the petition for injunction filed before the Regional Trial Court, Branch 115, Pasay
City, is a local tax case appealable to the Court of Tax Appeals; and
IV. Whether the PEZA is exempt from payment of real property taxes.
We deny the consolidated petitions.
I.

64

The Court of Appeals did not err in

dismissing the City of Lapu-Lapus
appeal for raising pure questions of law
Under the Rules of Court, there are three modes of appeal from Regional Trial Court
decisions. The first mode is through an ordinary appeal before the Court of Appeals where
the decision assailed was rendered in the exercise of the Regional Trial Courts original
jurisdiction. Ordinary appeals are governed by Rule 41, Sections 3 to 13 of the Rules of
Court. In ordinary appeals, questions of fact or mixed questions of fact and law may be
raised.106chanRoblesvirtualLawlibrary
The second mode is through a petition for review before the Court of Appeals where the
decision assailed was rendered by the Regional Trial Court in the exercise of its appellate
jurisdiction. Rule 42 of the Rules of Court governs petitions for review before the Court of
Appeals. In petitions for review under Rule 42, questions of fact, of law, or mixed questions
of fact and law may be raised.107chanRoblesvirtualLawlibrary
The third mode is through an appeal by certiorari before this court under Rule 45 where only
questions of law shall be raised.108chanRoblesvirtualLawlibrary
A question of fact exists when there is doubt as to the truth or falsity of the alleged facts.109
On the other hand, there is a question of law if the appeal raises doubt as to the applicable
law on a certain set of facts.110chanRoblesvirtualLawlibrary
Under Rule 50, Section 2, an improper appeal before the Court of Appeals is dismissed
outright and shall not be referred to the proper court:chanroblesvirtuallawlibrary
SEC. 2. Dismissal of improper appeal to the Court of Appeals. An appeal under Rule 41
taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall
be dismissed, issues purely of law not being reviewable by said court. Similarly, an appeal by
notice of appeal instead of by petition for review from the appellate judgment of a Regional
Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be transferred to the
appropriate court but shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of Court, which provided
that improper appeals to the Court of Appeals shall not be dismissed but shall be certified to
the proper court for resolution:chanroblesvirtuallawlibrary
Sec. 3. Where appealed case erroneously, brought. Where the appealed case has been
erroneously brought to the Court of Appeals, it shall not dismiss the appeal, but shall certify
the case to the proper court, with a specific and clear statement of the grounds therefor.
With respect to appeals by certiorari directly filed before this court but which raise questions
of fact, paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that this court
retains the option, in the exercise of its sound discretion and considering the attendant
circumstances, either itself to take cognizance of and decide such issues or to refer them to
the Court of Appeals for determination.
In Indoyon, Jr. v. Court of Appeals,111 we said that this court cannot tolerate ignorance of
the law on appeals.112 It is not this courts task to determine for litigants their proper
remedies under the Rules.113chanRoblesvirtualLawlibrary
We agree that the City availed itself of the wrong mode of appeal before the Court of
Appeals. The City raised pure questions of law in its appeal. The issue of whether the
Regional Trial Court of Pasay had jurisdiction over the PEZAs petition for declaratory relief is
a question of law, jurisdiction being a matter of law.114 The issue of whether the PEZA is a
government instrumentality exempt from payment of real property taxes is likewise a
question of law since this question is resolved by examining the provisions of the PEZAs
charter as well as other laws relating to the PEZA.115chanRoblesvirtualLawlibrary
The Court of Appeals, therefore, did not err in dismissing the Citys appeal pursuant to Rule
50, Section 2 of the Rules of Court.
Nevertheless, considering the important questions involved in this case, we take cognizance
of the Citys petition for review on certiorari in the interest of justice.

65

In Municipality of Pateros v. The Honorable Court of Appeals,116 the Municipality of Pateros

filed an appeal under Rule 42 before the Court of Appeals, which the Court of Appeals denied
outright for raising pure questions of law. This court agreed that the Municipality of Pateros
committed a procedural infraction117 and should have directly filed a petition for review
on certiorari before this court. Nevertheless, in the interest of justice and in order to write
finis to [the] controversy,118 this court opt[ed] to relax the rules119 and proceeded to
decide the case. This court said:chanroblesvirtuallawlibrary
While it is true that rules of procedure are intended to promote rather than frustrate the
ends of justice, and while the swift unclogging of the dockets of the courts is a laudable
objective, it nevertheless must not be met at the expense of substantial justice.
The Court has allowed some meritorious cases to proceed despite inherent procedural
defects and lapses. This is in keeping with the principle that rules of procedure are mere
tools designed to facilitate the attainment of justice, and that strict and rigid application of
rules which should result in technicalities that tend to frustrate rather than promote
substantial justice must always be avoided. It is a far better and more prudent cause of
action for the court to excuse a technical lapse and afford the parties a review of the case to
attain the ends of justice, rather than dispose of the case on technicality and cause grave
injustice to the parties, giving a false impression of speedy disposal of cases while actually
resulting in more delay, if not a miscarriage of justice.120
Similar to Municipality of Pateros, we opt to relax the rules in this case. The PEZA operates
or otherwise administers special economic zones all over the country. Resolving the
substantive issue of whether the PEZA is taxable for real property taxes will clarify the taxing
powers of all local government units where special economic zones are operated. This case,
therefore, should be decided on the merits.
II.
The Regional Trial Court of Pasay had
no jurisdiction to hear, try, and decide
the PEZAs petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63
provides:chanroblesvirtuallawlibrary
SECTION 1. Who may file petition. Any person interested under a deed, will, contract or
other written instrument, or whose rights are affected by a statute, executive order or
regulation, ordinance, or any other governmental regulation may, before breach or violation,
thereof, bring an action in the appropriate Regional Trial Court to determine any question of
construction or validity arising, and for a declaration of his rights or duties, thereunder.
An action for reformation of an instrument, to quiet title to real property or remove clouds
therefrom, or to consolidate ownership under Article 1607 of the Civil Code, may be brought
under this Rule.
The court with jurisdiction over petitions for declaratory relief is the Regional Trial Court, the
subject matter of litigation in an action for declaratory relief being incapable of pecuniary
estimation.121
Section 19 of the Judiciary Reorganization Act of 1980
provides:chanroblesvirtuallawlibrary
SEC. 19. Jurisdiction in Civil Cases. Regional Trial Courts shall exercise exclusive original
jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable of pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory relief is filed in the
appropriate Regional Trial Court.122
A special civil action for declaratory relief is filed for a judicial determination of any question
of construction or validity arising from, and for a declaration of rights and duties, under any
of the following subject matters: a deed, will, contract or other written instrument, statute,
executive order or regulation, ordinance, or any other governmental regulation.123
However, a declaratory judgment may issue only if there has been no breach of the

66

documents in question.124 If the contract or statute subject matter of the action has
already been breached, the appropriate ordinary civil action must be filed.125 If adequate
relief is available through another form of action or proceeding, the other action must be
preferred over an action for declaratory relief.126chanRoblesvirtualLawlibrary
In Ollada v. Central Bank of the Philippines,127 the Central Bank issued CB-IED Form No. 5
requiring certified public accountants to submit an accreditation under oath before they
were allowed to certify financial statements submitted to the bank. Among those financial
statements the Central Bank disallowed were those certified by accountant Felipe B. Ollada.
128chanRoblesvirtualLawlibrary
Claiming that the requirement restrained the legitimate pursuit of ones trade,129 Ollada
filed a petition for declaratory relief against the Central Bank.
This court ordered the dismissal of Olladas petition without prejudice to [his] seeking relief
in another appropriate action.130 According to this court, Olladas right had already been
violated when the Central Bank refused to accept the financial statements he prepared.
Since there was already a breach, a petition for declaratory relief was not proper. Ollada
must pursue the appropriate ordinary civil action or proceeding.131
This court
explained:chanroblesvirtuallawlibrary
Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief
under the provisions of Rule 66 of the Rules of Court. On the question of when a special civil
action of this nature would prosper, we have already held that the complaint for declaratory
relief will not prosper if filed after a contract, statute or right has been breached or violated.
In the present case such is precisely the situation arising from the facts alleged in the
petition for declaratory relief. As vigorously claimed by petitioner himself, respondent had
already invaded or violated his right and caused him injury all these giving him a
complete cause of action enforceable in an appropriate ordinary civil action or proceeding.
The dismissal of the action was, therefore, proper in the light of our ruling in De Borja vs.
Villadolid, 47 O.G. (5) p. 2315, and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where
we held that an action for declaratory relief should be filed before there has been a breach
of a contract, statutes or right, and that it is sufficient to bar such action, that there had
been a breach which would constitute actionable violation. The rule is that an action for
Declaratory Relief is proper only if adequate relief is not available through the means of
other existing forms of action or proceeding (1 C.J.S. 1027-1028). 132
It is also required that the parties to the action for declaratory relief be those whose rights or
interests are affected by the contract or statute in question.133 There must be an actual
justiciable controversy or the ripening seeds of one134 between the parties. The issue
between the parties must be ripe for judicial determination.135 An action for declaratory
relief based on theoretical or hypothetical questions cannot be filed for our courts are not
advisory courts.136chanRoblesvirtualLawlibrary
In Republic v. Roque,137 this court dismissed respondents petition for declaratory relief for
lack of justiciable controversy.
According to this court, [the respondents] fear of
prospective prosecution [under the Human Security Act] was solely based on remarks of
certain
government
officials
which
were
addressed
to
the
general
public.138chanRoblesvirtualLawlibrary
In Velarde v. Social Justice Society,139 this court refused to resolve the issue of whether or
not [a religious leaders endorsement] of a candidate for elective office or in urging or
requiring the members of his flock to vote for a specific candidate is violative [of the
separation clause].140 According to the court, there was no justiciable controversy and
ordered the dismissal of the Social Justice Societys petition for declaratory relief. This court
explained:chanroblesvirtuallawlibrary
Indeed, SJS merely speculated or anticipated without factual moorings that, as religious
leaders, the petitioner and his co-respondents below had endorsed or threatened to endorse
a candidate or candidates for elective offices; and that such actual or threatened
endorsement "will enable [them] to elect men to public office who [would] in turn be forever
beholden to their leaders, enabling them to control the government"[;] and "pos[ing] a clear
and present danger of serious erosion of the peoples faith in the electoral process[;] and
reinforc[ing] their belief that religious leaders determine the ultimate result of elections,"
which would then be violative of the separation clause.

67

Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does
not suffice to constitute a justiciable controversy. The Petition does not even allege any
indication or manifest intent on the part of any of the respondents below to champion an
electoral candidate, or to urge their so-called flock to vote for, or not to vote for, a particular
candidate. It is a time-honored rule that sheer speculation does not give rise to an
actionable right.
Obviously, there is no factual allegation that SJS rights are being subjected to any
threatened, imminent and inevitable violation that should be prevented by the declaratory
relief sought. The judicial power and duty of the courts to settle actual controversies
involving rights that are legally demandable and enforceable cannot be exercised when
there is no actual or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9
hereof be resolved." In other words, it merely sought an opinion of the trial court on whether
the speculated acts of religious leaders endorsing elective candidates for political offices
violated the constitutional principle on the separation of church and state. SJS did not ask for
a declaration of its rights and duties; neither did it pray for the stoppage of any threatened
violation of its declared rights. Courts, however, are proscribed from rendering an advisory
opinion.141
In sum, a petition for declaratory relief must satisfy six requisites:chanroblesvirtuallawlibrary
[F]irst, 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.142 (Emphases
omitted)
We rule that the PEZA erred in availing itself of a petition for declaratory relief against the
City. The City had already issued demand letters and real property tax assessment against
the PEZA, in violation of the PEZAs alleged tax-exempt status under its charter. The Special
Economic Zone Act of 1995, the subject matter of PEZAs petition for declaratory relief, had
already been breached. The trial court, therefore, had no jurisdiction over the petition for
declaratory relief.
There are several aspects of jurisdiction.143 Jurisdiction over the subject matter is the
power to hear and determine cases of the general class to which the proceedings in question
belong.144 It is conferred by law, which may either be the Constitution or a statute.145
Jurisdiction over the subject matter means the nature of the cause of action and the relief
sought.146 Thus, the cause of action and character of the relief sought as alleged in the
complaint are examined to determine whether a court had jurisdiction over the subject
matter.147 Any decision rendered by a court without jurisdiction over the subject matter of
the action is void.148chanRoblesvirtualLawlibrary
Another aspect of jurisdiction is jurisdiction over the person. It is the power of [a] court to
render a personal judgment or to subject the parties in a particular action to the judgment
and other rulings rendered in the action.149 A court automatically acquires jurisdiction
over the person of the plaintiff upon the filing of the initiatory pleading.150 With respect to
the defendant, voluntary appearance in court or a valid service of summons vests the court
with jurisdiction over the defendants person.151 Jurisdiction over the person of the
defendant is indispensable in actions in personam or those actions based on a partys
personal liability.152 The proceedings in an action in personam are void if the court had no
jurisdiction over the person of the defendant.153chanRoblesvirtualLawlibrary
Jurisdiction over the res or the thing under litigation is acquired either by the seizure of the
property under legal process, whereby it is brought into actual custody of the law; or as a
result of the institution of legal proceedings, in which the power of the court is recognized
and made effective.154 Jurisdiction over the res is necessary in actions in rem or those
actions directed against the thing or property or status of a person and seek judgments
with respect thereto as against the whole world.155 The proceedings in an action in rem
are
void
if
the
court
had
no
jurisdiction
over
the
thing
under
litigation.156chanRoblesvirtualLawlibrary

68

In the present case, the Regional Trial Court had no jurisdiction over the subject matter of
the action, specifically, over the remedy sought. As this court explained in Malana v.
Tappa:157chanRoblesvirtualLawlibrary
. . . an action for declaratory relief presupposes that there has been no actual breach of the
instruments involved or of rights arising thereunder. Since the purpose of an action for
declaratory relief is to secure an authoritative statement of the rights and obligations of the
parties under a statute, deed, or contract for their guidance in the enforcement thereof, or
compliance therewith, and not to settle issues arising from an alleged breach thereof, it may
be entertained only before the breach or violation of the statute, deed, or contract to which
it refers. A petition for declaratory relief gives a practical remedy for ending controversies
that have not reached the state where another relief is immediately available; and supplies
the need for a form of action that will set controversies at rest before they lead to a
repudiation of obligations, an invasion of rights, and a commission of wrongs.
Where the law or contract has already been contravened prior to the filing of an action for
declaratory relief, the courts can no longer assume jurisdiction over the action. In other
words, a court has no more jurisdiction over an action for declaratory relief if its subject has
already been infringed or transgressed before the institution of the action.158 (Emphasis
supplied)
The trial court should have dismissed the PEZAs petition for declaratory relief for lack of
jurisdiction.
Once an assessment has already been issued by the assessor, the proper remedy of a
taxpayer depends on whether the assessment was erroneous or illegal.
An erroneous assessment presupposes that the taxpayer is subject to the tax but is
disputing the correctness of the amount assessed.159 With an erroneous assessment, the
taxpayer claims that the local assessor erred in determining any of the items for computing
the real property tax, i.e., the value of the real property or the portion thereof subject to tax
and the proper assessment levels. In case of an erroneous assessment, the taxpayer must
exhaust the administrative remedies provided under the Local Government Code before
resorting to judicial action.
The taxpayer must first pay the real property tax under protest. Section 252 of the Local
Government Code provides:chanroblesvirtuallawlibrary
SECTION 252. Payment Under Protest. -(a) No protest shall be entertained unless the
taxpayer first pays the tax. There shall be annotated on the tax receipts the words "paid
under protest". The protest in writing must be filed within thirty (30) days from payment of
the tax to the provincial, city treasurer or municipal treasurer, in the case of a municipality
within Metropolitan Manila Area, who shall decide the protest within sixty (60) days from
receipt.
(b) The tax or a portion thereof paid under protest, shall be held in trust by the treasurer
concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or
portion of the tax protested shall be refunded to the protestant, or applied as tax credit
against his existing or future tax liability.
(d) In the event that the protest is denied or upon the lapse of the sixty day period
prescribed in subparagraph (a), the taxpayer may avail of the remedies as provided for in
Chapter 3, Title II, Book II of this Code.
Should the taxpayer find the action on the protest unsatisfactory, the taxpayer may appeal
with the Local Board of Assessment Appeals within 60 days from receipt of the decision on
the protest:chanroblesvirtuallawlibrary
SECTION 226. Local Board of Assessment Appeals. - Any owner or person having legal
interest in the property who is not satisfied with the action of the provincial, city or municipal
assessor in the assessment of his property may, within sixty (60) days from the date of
receipt of the written notice of assessment, appeal to the Board of Assessment Appeals of
the provincial or city by filing a petition under oath in the form prescribed for the purpose,
together with copies of the tax declarations and such affidavits or documents submitted in
support of the appeal.

69

Payment under protest and appeal to the Local Board of Assessment Appeals are
successive administrative remedies to a taxpayer who questions the correctness of an
assessment.160 The Local Board Assessment Appeals shall not entertain an appeal
without the action of the local assessor161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local Board of Assessment
Appeals, the taxpayer may appeal with the Central Board of Assessment Appeals within 30
days from receipt of the Local Boards decision:chanroblesvirtuallawlibrary
SECTION 229. Action by the Local Board of Assessment Appeals. - (a) The Board shall decide
the appeal within one hundred twenty (120) days from the date of receipt of such appeal.
The Board, after hearing, shall render its decision based on substantial evidence or such
relevant evidence on record as a reasonable mind might accept as adequate to support the
conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have the power to summon
witnesses, administer oaths, conduct ocular inspection, take depositions, and issue
subpoena and subpoena duces tecum. The proceedings of the Board shall be conducted
solely for the purpose of ascertaining the facts without necessarily adhering to technical
rules applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property or the person having
legal interest therein and the provincial or city assessor with a copy of the decision of the
Board. In case the provincial or city assessor concurs in the revision or the assessment, it
shall be his duty to notify the owner of the property or the person having legal interest
therein of such fact using the form prescribed for the purpose. The owner of the property or
the person having legal interest therein or the assessor who is not satisfied with the decision
of the Board, may, within thirty (30) days after receipt of the decision of said Board, appeal
to the Central Board of Assessment Appeals, as herein provided. The decision of the Central
Board shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without authority under the
law.162 In case of an illegal assessment, the taxpayer may directly resort to judicial action
without paying under protest the assessed tax and filing an appeal with the Local and
Central Board of Assessment Appeals.
In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of
assessment with respect to Tys real properties in Pasig.
Without resorting to the
administrative remedies under the Local Government Code, Ty filed before the Regional Trial
Court a petition, praying that the trial court nullify the notice of assessment. In assessing
the real property taxes due, the Municipal Assessor used a schedule of market values solely
prepared by him. This, Ty argued, was void for being contrary to the Local Government Code
requiring that the schedule of market values be jointly prepared by the provincial, city, and
municipal assessors of the municipalities within the Metropolitan Manila Area.
This court ruled that the assessment was illegal for having been issued without authority of
the Municipal Assessor. Reconciling provisions of the Real Property Tax Code and the Local
Government Code, this court held that the schedule of market values must be jointly
prepared by the provincial, city, and municipal assessors of the municipalities within the
Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held that Ty did not err in
directly resorting to judicial action. According to this court, payment under protest is
required only where there is a question as to the reasonableness of the amount
assessed.164 As to appeals before the Local and Central Board of Assessment Appeals,
they are fruitful only where questions of fact are involved.165chanRoblesvirtualLawlibrary
Ty raised the issue of the legality of the notice of assessment, an issue that did not go into
the reasonableness of the amount assessed. Neither did the issue involve a question of fact.
Ty raised a question of law and, therefore, need not resort to the administrative remedies
provided under the Local Government Code.
In the present case, the PEZA did not avail itself of any of the remedies against a notice of
assessment. A petition for declaratory relief is not the proper remedy once a notice of
assessment was already issued.

70

Instead of a petition for declaratory relief, the PEZA should have directly resorted to a
judicial action. The PEZA should have filed a complaint for injunction, the appropriate
ordinary civil action166 to enjoin the City from enforcing its demand and collecting the
assessed taxes from the PEZA. After all, a declaratory judgment as to the PEZAs taxexempt status is useless unless the City is enjoined from enforcing its demand.
Injunction is a judicial writ, process or proceeding whereby a party is ordered to do or
refrain from doing a certain act.167 It may be the main action or merely a provisional
remedy for and as incident in the main action.168 The essential requisites of a writ of
injunction are: (1) there must be a right in esse or the existence of a right to be protected;
and (2) the act against which the injunction is directed to constitute a violation of such
right.169chanRoblesvirtualLawlibrary
We note, however, that the City confused the concepts of jurisdiction and venue in
contending that the Regional Trial Court of Pasay had no jurisdiction because the real
properties involved in this case are located in the City of Lapu-Lapu.
On the one hand, jurisdiction is the power to hear and determine cases of the general class
to which the proceedings in question belong.170 Jurisdiction is a matter of substantive
law.171 Thus, an action may be filed only with the court or tribunal where the Constitution
or a statute says it can be brought.172 Objections to jurisdiction cannot be waived and may
be brought at any stage of the proceedings, even on appeal.173 When a case is filed with a
court which has no jurisdiction over the action, the court shall motu proprio dismiss the
case.174chanRoblesvirtualLawlibrary
On the other hand, venue is the place of trial or geographical location in which an action or
proceeding should be brought.175 In civil cases, venue is a matter of procedural law.176 A
partys objections to venue must be brought at the earliest opportunity either in a motion to
dismiss or in the answer; otherwise the objection shall be deemed waived.177 When the
venue of a civil action is improperly laid, the court cannot motu proprio dismiss the
case.178chanRoblesvirtualLawlibrary
The venue of an action depends on whether the action is a real or personal action. Should
the action affect title to or possession of real property, or interest therein, it is a real action.
The action should be filed in the proper court which has jurisdiction over the area wherein
the real property involved, or a portion thereof, is situated.179 If the action is a personal
action, the action shall be filed with the proper court where the plaintiff or any of the
principal plaintiffs resides, or where the defendant or any of the principal defendants
resides, or in the case of a non-resident defendant where he may be found, at the election of
the plaintiff.180chanRoblesvirtualLawlibrary
The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial
Court of Pasay. In essence, the City was contending that the PEZAs petition is a real action
as it affects title to or possession of real property, and, therefore, the PEZA should have filed
the petition with the Regional Trial Court of Lapu-Lapu City where the real properties are
located.
However, whatever objections the City has against the venue of the PEZAs action for
declaratory relief are already deemed waived. Objections to venue must be raised at the
earliest possible opportunity.181 The City did not file a motion to dismiss the petition on the
ground that the venue was improperly laid. Neither did the City raise this objection in its
answer.
In any event, the law sought to be judicially interpreted in this case had already been
breached. The Regional Trial Court of Pasay, therefore, had no jurisdiction over the PEZAs
petition for declaratory relief against the City.
III.
The Court of Appeals had no jurisdiction
over the PEZAs petition for certiorari
against the Province of Bataan
Appeal is the remedy to obtain a reversal or modification of a judgment on the merits.182
A judgment on the merits is one which determines the rights and liabilities of the parties
based on the disclosed facts, irrespective of the formal, technical or dilatory objections.183

71

It is not even necessary that the case proceeded to trial.184 So long as the judgment is
general185 and the parties had a full legal opportunity to be heard on their respective
claims and contentions, 186 the judgment is on the merits.
On the other hand, certiorari is a special civil action filed to annul or modify a proceeding of
a tribunal, board, or officer exercising judicial or quasi-judicial functions.187 Certiorari,
which in Latin means to be more fully informed,188 was originally a remedy in the
common law. This court discussed the history of the remedy of certiorari in Spouses Delos
Santos v. Metropolitan Bank and Trust Company:189chanRoblesvirtualLawlibrary
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was
issued out of Chancery, or the Kings Bench, commanding agents or officers of the inferior
courts to return the record of a cause pending before them, so as to give the party more
sure and speedy justice, for the writ would enable the superior court to determine from an
inspection of the record whether the inferior courts judgment was rendered without
authority. The errors were of such a nature that, if allowed to stand, they would result in a
substantial injury to the petitioner to whom no other remedy was available. If the inferior
court acted without authority, the record was then revised and corrected in matters of law.
The writ of certiorari was limited to cases in which the inferior court was said to be
exceeding its jurisdiction or was not proceeding according to essential requirements of law
and would lie only to review judicial or quasi-judicial acts.190
In our jurisdiction, the term certiorari is used in two ways. An appeal before this court
raising pure questions of law is commenced by filing a petition for review on certiorari under
Rule 45 of the Rules of Court. An appeal by certiorari, which continues the proceedings
commenced before the lower courts,191 is filed to reverse or modify judgments or final
orders.192 Under the Rules, an appeal by certiorari must be filed within 15 days from notice
of the judgment or final order, or of the denial of the appellants motion for new trial or
reconsideration.193chanRoblesvirtualLawlibrary
A petition for certiorari under Rule 65, on the other hand, is an independent and original
action filed to set aside proceedings conducted without or in excess of jurisdiction or with
grave abuse of discretion amounting to lack or excess of jurisdiction.194 Under the Rules, a
petition for certiorari may only be filed if there is no appeal or any plain, speedy, or
adequate remedy in the ordinary course of law.195 The petition must be filed within 60
days from notice of the judgment, order, or resolution.196chanRoblesvirtualLawlibrary
Because of the longer period to file a petition for certiorari, some litigants attempt to file
petitions for certiorari as substitutes for lost appeals by certiorari. However, Rule 65 is clear
that a petition for certiorari will not prosper if appeal is available. Appeal is the proper
remedy even if the error, or one of the errors, raised is grave abuse of discretion on the part
of the court rendering judgment.197 If appeal is available, a petition for certiorari cannot be
filed.
In this case, the trial courts decision dated January 31, 2007 is a judgment on the merits.
Based on the facts disclosed by the parties, the trial court declared the PEZA liable to the
Province of Bataan for real property taxes. The PEZAs proper remedy against the trial
courts decision, therefore, is appeal.
Since the PEZA filed a petition for certiorari against the trial courts decision, it availed itself
of the wrong remedy. As the Province of Bataan contended, the trial courts decision dated
January 31, 2007 is only an error of judgment appealable to the higher level court and may
not be corrected by filing a petition for certiorari.198 That the trial court judge allegedly
committed grave abuse of discretion does not make the petition for certiorari the correct
remedy. The PEZA should have raised this ground in an appeal filed within 15 days from
notice of the assailed resolution.
This court, in the liberal spirit pervading the Rules of Court and in the interest of substantial
justice,199 has treated petitions for certiorari as an appeal: (1) if the petition for certiorari
was filed within the reglementary period within which to file a petition for review on
certiorari; (2) when errors of judgment are averred; and (3) when there is sufficient reason to
justify the relaxation of the rules.200 Considering that the nature of an action is
determined by the allegations of the complaint or the petition and the character of the relief
sought,201 a petition which actually avers errors of judgment rather than errors than that
of jurisdiction202 may be considered a petition for review.

72

However, suspending the application of the Rules has its disadvantages.

Relaxing
procedural rules may reduce the effective enforcement of substantive rights,203 leading
to arbitrariness, caprice, despotism, or whimsicality in the settlement of disputes.204
Therefore, for this court to suspend the application of the Rules, the accomplishment of
substantial justice must outweigh the importance of predictability of court procedures.
The PEZAs petition for certiorari may be treated as an appeal. First, the petition for
certiorari was filed within the 15-day reglementary period for filing an appeal. The PEZA
filed its petition for certiorari before the Court of Appeals on October 15, 2007,205 which
was 12 days from October 3, 2007206 when the PEZA had notice of the trial courts order
denying the motion for reconsideration.
Second, the petition for certiorari raised errors of judgment. The PEZA argued that the trial
court erred in ruling that it is not exempt from payment of real property taxes given Section
21 of Presidential Decree No. 66 and Sections 11 and 51 of the Special Economic Zone Act of
1995.207chanRoblesvirtualLawlibrary
Third, there is sufficient reason to relax the rules given the importance of the substantive
issue presented in this case.
However, the PEZAs petition for certiorari was filed before the wrong court.
should have filed its petition before the Court of Tax Appeals.

The PEZA

The Court of Tax Appeals has the exclusive appellate jurisdiction over local tax cases decided
by Regional Trial Courts. Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended
by Republic Act No. 9282, provides:chanroblesvirtuallawlibrary
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as
amended, include cases involving real property taxes. Real property taxation is governed by
Book II of the Local Government Code on Local Taxation and Fiscal Matters. Real property
taxes are collected by the Local Treasurer,208 not by the Bureau of Internal Revenue in
charge
of
collecting
national
internal
revenue
taxes,
fees,
and
charges.209chanRoblesvirtualLawlibrary
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by Republic Act No. 9282,
separately provides for the exclusive appellate jurisdiction of the Court of Tax Appeals over
decisions of the Central Board of Assessment Appeals involving the assessment or collection
of real property taxes:chanroblesvirtuallawlibrary
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
5. Decisions of the Central Board of Assessment Appeals in the exercise of its appellate
jurisdiction over cases involving the assessment and taxation of real property originally
decided by the provincial or city board of assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax Appeals from taking
cognizance of trial court decisions involving the collection of real property tax cases.
Sections 256210 and 266211 of the Local Government Code expressly allow local
government units to file in any court of competent jurisdiction civil actions to collect basic
real property taxes. Should the trial court rule against them, local government units cannot
be barred from appealing before the Court of Tax Appeals the highly specialized body
specifically created for the purpose of reviewing tax cases.212chanRoblesvirtualLawlibrary

73

We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the exclusive
original jurisdiction over petitions for certiorari assailing interlocutory orders issued by
Regional Trial Courts in a local tax case. We explained in The City of Manila v. Hon. GreciaCuerdo213 that while the Court of Tax Appeals has no express grant of power to issue writs
of certiorari under Republic Act No. 1125,214 as amended, the tax courts judicial power as
defined in the Constitution215 includes the power to determine whether or not there has
been grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the
[Regional Trial Court] in issuing an interlocutory order of jurisdiction in cases falling within
the
exclusive
appellate
jurisdiction
of
the
tax
court.216
We
further
elaborated:chanroblesvirtuallawlibrary
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it
must have the authority to issue, among others, a writ of certiorari. In transferring exclusive
jurisdiction over appealed tax cases to the CTA, it can reasonably be assumed that the law
intended to transfer also such power as is deemed necessary, if not indispensable, in aid of
such appellate jurisdiction. There is no perceivable reason why the transfer should only be
considered as partial, not total.
....
If this Court were to sustain petitioners' contention that jurisdiction over their certiorari
petition lies with the CA, this Court would be confirming the exercise by two judicial bodies,
the CA and the CTA, of jurisdiction over basically the same subject matter precisely the
split-jurisdiction situation which is anathema to the orderly administration of justice. The
Court cannot accept that such was the legislative motive, especially considering that the law
expressly confers on the CTA, the tribunal with the specialized competence over tax and
tariff matters, the role of judicial review over local tax cases without mention of any other
court that may exercise such power. Thus, the Court agrees with the ruling of the CA that
since appellate jurisdiction over private respondents' complaint for tax refund is vested in
the CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order
issued in the said case should, likewise, be filed with the same court. To rule otherwise would
lead to an absurd situation where one court decides an appeal in the main case while
another court rules on an incident in the very same case.
Stated differently, it would be somewhat incongruent with the pronounced judicial
abhorrence to split jurisdiction to conclude that the intention of the law is to divide the
authority over a local tax case filed with the RTC by giving to the CA or this Court jurisdiction
to issue a writ of certiorari against interlocutory orders of the RTC but giving to the CTA the
jurisdiction over the appeal from the decision of the trial court in the same case. It is more in
consonance with logic and legal soundness to conclude that the grant of appellate
jurisdiction to the CTA over tax cases filed in and decided by the RTC carries with it the
power to issue a writ of certiorari when necessary in aid of such appellate jurisdiction. The
supervisory power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate
jurisdiction should co-exist with, and be a complement to, its appellate jurisdiction to review,
by appeal, the final orders and decisions of the RTC, in order to have complete supervision
over the acts of the latter.217 (Citations omitted)
In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a
local tax case originally decided by the trial court in its original jurisdiction. Since the PEZA
assailed a judgment, not an interlocutory order, of the Regional Trial Court, the PEZAs
proper remedy was an appeal to the Court of Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of
all other courts, the Court of Appeals had no jurisdiction to take cognizance of the PEZAs
petition. The Court of Appeals acted without jurisdiction in rendering the decision in CA-G.R.
SP
No.
100984.
Its
decision
in
CA-G.R.
SP
No.
100984
is
void.218chanRoblesvirtualLawlibrary
The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the
decision of the Regional Trial Court, Branch 115, Pasay City, became final and executory
after the lapse of the 15th day from the PEZAs receipt of the trial courts decision.219 The
denial of the petition for injunction became final and executory.
IV.
The remedy of a taxpayer depends on the

74

stage in which the local government unit is

enforcing its authority to impose real
property taxes
The proper remedy of a taxpayer depends on the stage in which the local government unit is
enforcing its authority to collect real property taxes. For the guidance of the members of the
bench and the bar, we reiterate the taxpayers remedies against the erroneous or illegal
assessment of real property taxes.
Exhaustion of administrative remedies under the Local Government Code is necessary in
cases of erroneous assessments where the correctness of the amount assessed is assailed.
The taxpayer must first pay the tax then file a protest with the Local Treasurer within 30
days from date of payment of tax.220 If protest is denied or upon the lapse of the 60-day
period to decide the protest, the taxpayer may appeal to the Local Board of Assessment
Appeals within 60 days from the denial of the protest or the lapse of the 60-day period to
decide the protest.221 The Local Board of Assessment Appeals has 120 days to decide the
appeal.222chanRoblesvirtualLawlibrary
If the taxpayer is unsatisfied with the Local Boards decision, the taxpayer may appeal
before the Central Board of Assessment Appeals within 30 days from receipt of the Local
Boards decision.223chanRoblesvirtualLawlibrary
The decision of the Central Board of Assessment Appeals is appealable before the Court of
Tax Appeals En Banc.224 The appeal before the Court of Tax Appeals shall be filed following
the procedure under Rule 43 of the Rules of Court.225chanRoblesvirtualLawlibrary
The Court of Tax Appeals decision may then be appealed before this court through a petition
for review on certiorari under Rule 45 of the Rules of Court raising pure questions of
law.226chanRoblesvirtualLawlibrary
In case of an illegal assessment where the assessment was issued without authority,
exhaustion of administrative remedies is not necessary and the taxpayer may directly resort
to judicial action.227 The taxpayer shall file a complaint for injunction before the Regional
Trial Court228 to enjoin the local government unit from collecting real property taxes.
The party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a
petition for certiorari, before the Court of Tax Appeals, the complaint being a local tax case
decided by the Regional Trial Court.229 The appeal shall be filed within fifteen (15) days
from notice of the trial courts decision.
The Court of Tax Appeals decision may then be appealed before this court through a petition
for review on certiorari under Rule 45 of the Rules of Court raising pure questions of
law.230chanRoblesvirtualLawlibrary
In case the local government unit has issued a notice of delinquency, the taxpayer may file a
complaint for injunction to enjoin the impending sale of the real property at public auction.
In case the local government unit has already sold the property at public auction, the
taxpayer must first deposit with the court the amount for which the real property was sold,
together with interest of 2% per month from the date of sale to the time of the institution of
action. The taxpayer may then file a complaint to assail the validity of the public
auction.231 The decisions of the Regional Trial Court in these cases shall be appealable
before the Court of Tax Appeals,232 and the latters decisions appealable before this court
through a petition for review on certiorari under Rule 45 of the Rules of
Court.233chanRoblesvirtualLawlibrary
V.
The PEZA is exempt from payment
of real property taxes
The jurisdictional errors in this case render these consolidated petitions moot. We do not
review void decisions rendered without jurisdiction.
However, the PEZA alleged that several local government units, including the City of Baguio
and the Province of Cavite, have issued their respective real property tax assessments
against the PEZA. Other local government units will likely follow suit, and either the PEZA or

75

the local government units taxing the PEZA may file their respective actions against each
other.
In the interest of judicial economy234 and avoidance of conflicting decisions involving the
same issues,235 we resolve the substantive issue of whether the PEZA is exempt from
payment of real property taxes.
Real property taxes are annual taxes levied on real property such as lands, buildings,
machinery, and other improvements not otherwise specifically exempted under the Local
Government Code.236 Real property taxes are ad valorem, with the amount charged based
on a fixed proportion of the value of the property.237 Under the law, provinces, cities, and
municipalities within the Metropolitan Manila Area have the power to levy real property taxes
within their respective territories.238chanRoblesvirtualLawlibrary
The general rule is that real properties are subject to real property taxes. This is true
especially since the Local Government Code has withdrawn exemptions from real property
taxes of all persons, whether natural or juridical:chanroblesvirtuallawlibrary
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of
real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to
a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,
nonprofit or religious cemeteries and all lands, buildings, and improvements actually,
directly, and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local
water districts and government-owned or controlled corporations engaged in the supply
and distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property taxes previously
granted to, or presently enjoyed by, all persons, whether natural or juridical, including
government-owned or -controlled corporations are hereby withdrawn upon the effectivity of
this Code. (Emphasis supplied)
The person liable for real property taxes is the taxable person who had actual or beneficial
use and possession [of the real property for the taxable period,] whether or not [the person
owned the property for the period he or she is being taxed].239chanRoblesvirtualLawlibrary
The exceptions to the rule are provided in the Local Government Code. Under Section
133(o), local government units have no power to levy taxes of any kind on the national
government,
its
agencies
and
instrumentalities
and
local
government
units:chanroblesvirtuallawlibrary
SEC. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless
otherwise provided herein, the exercise of taxing powers of provinces, cities, municipalities,
and barangays shall not extend to the levy of the following:
....
(o) Taxes, fees or charges of any kind on the National Government, its agencies and
instrumentalities and local government units.
Specifically on real property taxes, Section 234 enumerates the persons and real property
exempt from real property taxes:chanroblesvirtuallawlibrary
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of
real property tax:

76

(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to
a taxable person;
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,
nonprofit or religious cemeteries and all lands, buildings, and improvements actually,
directly, and exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and exclusively used by local
water districts and government-owned or controlled corporations engaged in the supply
and distribution of water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and
(e) Machinery and equipment used for pollution control and environmental protection.
Except as provided herein, any exemption from payment of real property tax previously
granted to, or presently enjoyed by, all persons, whether natural or juridical, including all
government-owned or -controlled corporations are hereby withdrawn upon the effectivity of
this Code. (Emphasis supplied)
For persons granted tax exemptions or incentives before the effectivity of the Local
Government Code, Section 193 withdrew these tax exemption privileges. These persons
consist of both natural and juridical persons, including government-owned or controlled
corporations:chanroblesvirtuallawlibrary
SEC. 193. Withdrawal of Tax Exemption Privileges. Unless otherwise provided in this code,
tax exemptions or incentives granted to or presently enjoyed by all persons, whether natural
or juridical, including government-owned or controlled corporations, except local water
districts, cooperatives duly registered under R.A. 6938, non stock and non profit hospitals
and educational institutions, are hereby withdrawn upon effectivity of this Code.
As discussed, Section 234 withdrew all tax privileges with respect to real property taxes.
Nevertheless, local government units may grant tax exemptions under such terms and
conditions as they may deem necessary:chanroblesvirtuallawlibrary
SEC. 192. Authority to Grant Tax Exemption Privileges. Local government units may,
through ordinances duly approved, grant tax exemptions, incentives or reliefs under such
terms and conditions as they may deem necessary.
In Mactan Cebu International Airport Authority v. Hon. Marcos,240 this court classified the
exemptions from real property taxes into ownership, character, and usage exemptions.
Ownership exemptions are exemptions based on the ownership of the real property. The
exemptions of real property owned by the Republic of the Philippines, provinces, cities,
municipalities,
barangays,
and
registered
cooperatives
fall
under
this
classification.241chanRoblesvirtualLawlibrary
Character exemptions are exemptions based on the character of the real property. Thus, no
real property taxes may be levied on charitable institutions, houses and temples of prayer
like churches, parsonages, or convents appurtenant thereto, mosques, and non profit or
religious cemeteries.242chanRoblesvirtualLawlibrary
Usage exemptions are exemptions based on the use of the real property. Thus, no real
property taxes may be levied on real property such as: (1) lands and buildings actually,
directly, and exclusively used for religious, charitable or educational purpose; (2)
machineries and equipment actually, directly and exclusively used by local water districts or
by government-owned or controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power; and (3) machinery and
equipment
used
for
pollution
control
and
environmental
protection.243chanRoblesvirtualLawlibrary
Persons may likewise be exempt from payment of real properties if their charters, which
were enacted or reenacted after the effectivity of the Local Government Code, exempt them
payment of real property taxes.244chanRoblesvirtualLawlibrary

77

V. (A)
The PEZA is an instrumentality of the national government
An instrumentality is any agency of the National Government, not integrated within the
department framework, vested with special functions or jurisdiction by law, endowed with
some if not all corporate powers, administering special funds, and enjoying operational
autonomy, usually through a charter.245chanRoblesvirtualLawlibrary
Examples of instrumentalities of the national government are the Manila International
Airport Authority,246 the Philippine Fisheries Development Authority,247 the Government
Service Insurance System,248 and the Philippine Reclamation Authority.249 These entities
are not integrated within the department framework but are nevertheless vested with
special functions to carry out a declared policy of the national government.
Similarly, the PEZA is an instrumentality of the national government. It is not integrated
within the department framework but is an agency attached to the Department of Trade and
Industry.250 Book IV, Chapter 7, Section 38(3)(a) of the Administrative Code of 1987 defines
attachment:chanroblesvirtuallawlibrary
SEC. 38. Definition of Administrative Relationship. Unless otherwise expressly stated in the
Code or in other laws defining the special relationships of particular agencies, administrative
relationships shall be categorized and defined as follows:
....
(3) Attachment.(a) This refers to the lateral relationship between the department or its
equivalent and the attached agency or corporation for purposes of policy and program
coordination. The coordination may be accomplished by having the department represented
in the governing board of the attached agency or corporation, either as chairman or as a
member, with or without voting rights, if this is permitted by the charter; having the
attached corporation or agency comply with a system of periodic reporting which shall
reflect the progress of the programs and projects; and having the department or its
equivalent provide general policies through its representative in the board, which shall serve
as the framework for the internal policies of the attached corporation or agency[.]
Attachment, which enjoys a larger measure of independence251 compared with other
administrative relationships such as supervision and control, is further explained in Beja, Sr.
v. Court of Appeals:252chanRoblesvirtualLawlibrary
An attached agency has a larger measure of independence from the Department to which it
is attached than one which is under departmental supervision and control or administrative
supervision. This is borne out by the lateral relationship between the Department and the
attached agency. The attachment is merely for policy and program coordination. With
respect to administrative matters, the independence of an attached agency from
Departmental control and supervision is further reinforced by the fact that even an agency
under a Departments administrative supervision is free from Departmental interference
with respect to appointments and other personnel actions in accordance with the
decentralization of personnel functions under the Administrative Code of 1987. Moreover,
the Administrative Code explicitly provides that Chapter 8 of Book IV on supervision and
control shall not apply to chartered institutions attached to a Department.253
With the PEZA as an attached agency to the Department of Trade and Industry, the 13person PEZA Board is chaired by the Department Secretary.254 Among the powers and
functions of the PEZA is its ability to coordinate with the Department of Trade and Industry
for policy and program formulation and implementation.255 In strategizing and prioritizing
the development of special economic zones, the PEZA coordinates with the Department of
Trade and Industry.256chanRoblesvirtualLawlibrary
The PEZA also administers its own funds and operates autonomously, with the PEZA Board
formulating and approving the PEZAs annual budget.257
Appointments and other
personnel actions in the PEZA are also free from departmental interference, with the PEZA
Board having the exclusive and final authority to promote, transfer, assign and reassign
officers of the PEZA.258chanRoblesvirtualLawlibrary

78

As an instrumentality of the national government, the PEZA is vested with special functions
or jurisdiction by law. Congress created the PEZA to operate, administer, manage and
develop special economic zones in the Philippines.259 Special economic zones are areas
with highly developed or which have the potential to be developed into agro-industrial,
industrial tourist/recreational, commercial, banking, investment and financial centers.260
By operating, administering, managing, and developing special economic zones which
attract investments and promote use of domestic labor, the PEZA carries out the following
policy of the Government:chanroblesvirtuallawlibrary
SECTION 2. Declaration of Policy. It is the declared policy of the government to translate
into practical realities the following State policies and mandates in the 1987 Constitution,
namely:
(a) The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments. (Sec. 20, Art. II)
(b) The State shall promote the preferential use of Filipino labor, domestic materials and
locally produced goods, and adopt measures that help make them competitive. (Sec. 12,
Art. XII)
In pursuance of these policies, the government shall actively encourage, promote, induce
and accelerate a sound and balanced industrial, economic and social development of the
country in order to provide jobs to the people especially those in the rural areas, increase
their productivity and their individual and family income, and thereby improve the level and
quality of their living condition through the establishment, among others, of special
economic zones in suitable and strategic locations in the country and through measures that
shall effectively attract legitimate and productive foreign investments.261
Being an instrumentality of the national government, the PEZA cannot be taxed by local
government units.
Although a body corporate vested with some corporate powers,262 the PEZA is not a
government-owned or controlled corporation taxable for real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative Code of 1987 defines the
term government-owned or controlled corporation:chanroblesvirtuallawlibrary
SEC. 2. General Terms Defined. Unless the specific words of the text, or the context as a
whole, or a particular statute, shall require a different meaning:
....
(13) Government-owned or controlled corporation refers to any agency organized as a stock
or non-stock corporation, vested with functions relating to public needs whether
governmental or proprietary in nature, and owned by the Government directly or through its
instrumentalities either wholly, or, where applicable as in the case of stock corporations, to
the extent of at least fifty-one (51) per cent of its capital stock: Provided, That governmentowned or controlled corporations may be further categorized by the Department of the
Budget, the Civil Service Commission, and the Commission on Audit for purposes of the
exercise and discharge of their respective powers, functions and responsibilities with respect
to such corporations.
Government entities are created by law, specifically, by the Constitution or by statute. In
the case of government-owned or controlled corporations, they are incorporated by virtue of
special charters263 to participate in the market for special reasons which may be related to
dysfunctions or inefficiencies of the market structure. This is to adjust reality as against the
concept of full competition where all market players are price takers. Thus, under the
Constitution, government-owned or controlled corporations are created in the interest of the
common good and should satisfy the test of economic viability.264 Article XII, Section 16 of
the Constitution provides:chanroblesvirtuallawlibrary
Section 16. The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or controlled
corporations may be created or established by special charters in the interest of the
common good and subject to the test of economic viability.

79

Economic viability is the capacity to function efficiently in business.265

To be
economically viable, the entity should not go into activities which the private sector can do
better.266chanRoblesvirtualLawlibrary
To be considered a government-owned or controlled corporation, the entity must have been
organized as a stock or non-stock corporation.267chanRoblesvirtualLawlibrary
Government instrumentalities, on the other hand, are also created by law but partake of
sovereign functions. When a government entity performs sovereign functions, it need not
meet the test of economic viability. In Manila International Airport Authority v. Court of
Appeals,268 this court explained:chanroblesvirtuallawlibrary
In contrast, government instrumentalities vested with corporate powers and performing
governmental or public functions need not meet the test of economic viability. These
instrumentalities perform essential public services for the common good, services that every
modern State must provide its citizens. These instrumentalities need not be economically
viable since the government may even subsidize their entire operations. These
instrumentalities are not the "government-owned or controlled corporations" referred to in
Section 16, Article XII of the 1987 Constitution.
Thus, the Constitution imposes no limitation when the legislature creates government
instrumentalities vested with corporate powers but performing essential governmental or
public functions. Congress has plenary authority to create government instrumentalities
vested with corporate powers provided these instrumentalities perform essential
government functions or public services. However, when the legislature creates through
special charters corporations that perform economic or commercial activities, such entities
known as "government-owned or controlled corporations" must meet the test of
economic viability because they compete in the market place.
....
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the
Constitutional Commission the purpose of this test, as follows:chanroblesvirtuallawlibrary
MR. OPLE: Madam President, the reason for this concern is really that when the government
creates a corporation, there is a sense in which this corporation becomes exempt from the
test of economic performance. We know what happened in the past. If a government
corporation loses, then it makes its claim upon the taxpayers' money through new equity
infusions from the government and what is always invoked is the common good. That is the
reason why this year, out of a budget of P115 billion for the entire government, about P28
billion of this will go into equity infusions to support a few government financial institutions.
And this is all taxpayers' money which could have been relocated to agrarian reform, to
social services like health and education, to augment the salaries of grossly underpaid public
employees. And yet this is all going down the drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common
good," this becomes a restraint on future enthusiasts for state capitalism to excuse
themselves from the responsibility of meeting the market test so that they become viable.
And so, Madam President, I reiterate, for the committee's consideration and I am glad that I
am joined in this proposal by Commissioner Foz, the insertion of the standard of "ECONOMIC
VIABILITY OR THE ECONOMIC TEST," together with the common good.
....
Clearly, the test of economic viability does not apply to government entities vested with
corporate powers and performing essential public services. The State is obligated to render
essential public services regardless of the economic viability of providing such service. The
non-economic viability of rendering such essential public service does not excuse the State
from withholding such essential services from the public.269 (Emphases and citations
omitted)
The law created the PEZAs charter. Under the Special Economic Zone Act of 1995, the PEZA
was established primarily to perform the governmental function of operating, administering,
managing, and developing special economic zones to attract investments and provide
opportunities for preferential use of Filipino labor.

80

Under its charter, the PEZA was created a body corporate endowed with some corporate
powers. However, it was not organized as a stock270 or non-stock271 corporation. Nothing
in the PEZAs charter provides that the PEZAs capital is divided into shares.272 The PEZA
also has no members who shall share in the PEZAs profits.
The PEZA does not compete with other economic zone authorities in the country. The
government may even subsidize the PEZAs operations. Under Section 47 of the Special
Economic Zone Act of 1995, any sum necessary to augment [the PEZAs] capital outlay
shall be included in the General Appropriations Act to be treated as an equity of the national
government.273chanRoblesvirtualLawlibrary
The PEZA, therefore, need not be economically viable.
controlled corporation liable for real property taxes.

It is not a government-owned or

V. (B)
The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA
The PEZAs predecessor, the EPZA, was declared non-profit in character with all its revenues
devoted for its development, improvement, and maintenance. Consistent with this nonprofit character, the EPZA was explicitly declared exempt from real property taxes under its
charter. Section 21 of Presidential Decree No. 66 provides:chanroblesvirtuallawlibrary
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall
be non-profit and shall devote and use all its returns from its capital investment, as well as
excess revenues from its operations, for the development, improvement and maintenance
and other related expenditures of the Authority to pay its indebtedness and obligations and
in furtherance and effective implementation of the policy enunciated in Section 1 of this
Decree.
In
consonance
therewith,
the
Authority
is
hereby
declared
exempt:ChanRoblesVirtualawlibrary
....
(b) From all income taxes, franchise taxes, realty taxes and all other kinds of taxes and
licenses to be paid to the National Government, its provinces, cities, municipalities and other
government agencies and instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the
PEZA from payment of real property taxes.
Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its
charter. A provision in the Special Economic Zone Act of 1995 explicitly exempting the PEZA
is unnecessary. The PEZA assumed the real property exemption of the EPZA under
Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA to evolve into the
PEZA in accordance with the guidelines and regulations set forth in an executive order
issued for this purpose. President Ramos then issued Executive Order No. 282 in 1995,
ordering the PEZA to assume the EPZAs powers, functions, and responsibilities under
Presidential Decree No. 66 not inconsistent with the Special Economic Zone Act of
1995:chanroblesvirtuallawlibrary
SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the powers, functions
and responsibilities of EPZA as provided under its Charter, Presidential Decree No. 66, as
amended, insofar as they are not inconsistent with the powers, functions and responsibilities
of the PEZA, as mandated under Republic Act No. 7916, shall hereafter be assumed and
exercised by the PEZA. Henceforth, the EPZA shall be referred to as the PEZA.
The following sections of the Special Economic Zone Act of 1995 provide for the PEZAs
powers, functions, and responsibilities:chanroblesvirtuallawlibrary
SEC. 5. Establishment of ECOZONES. To ensure the viability and geographical dispersal of
ECOZONES through a system of prioritization, the following areas are initially identified as
ECOZONES, subject to the criteria specified in Section 6:
....

81

The metes and bounds of each ECOZONE are to be delineated and more particularly
described in a proclamation to be issued by the President of the Philippines, upon the
recommendation of the Philippine Economic Zone Authority (PEZA), which shall be
established under this Act, in coordination with the municipal and / or city council, National
Land Use Coordinating Committee and / or the Regional Land Use Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. In addition to the ECOZONES
identified in Section 5 of this Act, other areas may be established as ECOZONES in a
proclamation to be issued by the President of the Philippines subject to the evaluation and
recommendation of the PEZA, based on a detailed feasibility and engineering study which
must conform to the following criteria:
(a) The proposed area must be identified as a regional growth center in the Medium-Term
Philippine Development Plan or by the Regional Development Council;
(b) The existence of required infrastructure in the proposed ECOZONE, such as roads,
railways, telephones, ports, airports, etc., and the suitability and capacity of the proposed
site to absorb such improvements;
(c) The availability of water source and electric power supply for use of the ECOZONE;
(d) The extent of vacant lands available for industrial and commercial development and
future expansion of the ECOZONE as well as of lands adjacent to the ECOZONE available for
development of residential areas for the ECOZONE workers;
(e) The availability of skilled, semi-skilled and non-skilled trainable labor force in and around
the ECOZONE;
(f) The area must have a significant incremental advantage over the existing economic
zones and its potential profitability can be established;
(g) The area must be strategically located; and
(h) The area must be situated where controls can easily be established to curtail smuggling
activities.
Other areas which do not meet the foregoing criteria may be established as ECOZONES:
Provided, That the said area shall be developed only through local government and/or
private sector initiative under any of the schemes allowed in Republic Act No. 6957 (the
build-operate-transfer law), and without any financial exposure on the part of the national
government: Provided, further, That the area can be easily secured to curtail smuggling
activities: Provided, finally, That after five (5) years the area must have attained a
substantial degree of development, the indicators of which shall be formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial, Commercial / Trading,
Tourist, Investment and Financial Community. - Within the framework of the Constitution, the
interest of national sovereignty and territorial integrity of the Republic, ECOZONE shall be
developed, as much as possible, into a decentralized, self-reliant and self-sustaining
industrial, commercial/trading, agro-industrial, tourist, banking, financial and investment
center with minimum government intervention. Each ECOZONE shall be provided with
transportation, telecommunications, and other facilities needed to generate linkage with
industries and employment opportunities for its own inhabitants and those of nearby towns
and cities.
The ECOZONE shall administer itself on economic, financial, industrial, tourism development
and such other matters within the exclusive competence of the national government.
The ECOZONE may establish mutually beneficial economic relations with other entities
within the country, or, subject to the administrative guidance of the Department of Foreign
Affairs and/or the Department of Trade and Industry, with foreign entities or enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever proportion may set up
enterprises in the ECOZONE, either by themselves or in joint venture with Filipinos in any
sector of industry, international trade and commerce within the ECOZONE. Their assets,
profits and other legitimate interests shall be protected: Provided, That the ECOZONE
through the PEZA may require a minimum investment for any ECOZONE enterprises in freely

82

convertible currencies: Provided, further, That the new investment shall fall under the
priorities, thrusts and limits provided for in the Act.
SEC. 8. ECOZONE to be Operated and Managed as Separate Customs Territory. The
ECOZONE shall be managed and operated by the PEZA as separate customs territory.
The PEZA is hereby vested with the authority to issue certificate of origin for products
manufactured or processed in each ECOZONE in accordance with the prevailing rules or
origin, and the pertinent regulations of the Department of Trade and Industry and/or the
Department of Finance.
SEC. 9. Defense and Security. The defense of the ECOZONE and the security of its
perimeter fence shall be the responsibility of the national government in coordination with
the PEZA. Military forces sent by the national government for the purpose of defense shall
not interfere in the internal affairs of any of the ECOZONE and expenditure for these military
forces shall be borne by the national government. The PEZA may provide and establish the
ECOZONES internal security and firefighting forces.
SEC. 10. Immigration. Any investor within the ECOZONE whose initial investment shall not
be less than One Hundred Fifty Thousand Dollars ($150,000.00), his/her spouse and
dependent children under twenty-one (21) years of age shall be granted permanent resident
status within the ECOZONE. They shall have freedom of ingress and egress to and from the
ECOZONE without any need of special authorization from the Bureau of Immigration.
The PEZA shall issue working visas renewable every two (2) years to foreign executives and
other aliens, processing highly-technical skills which no Filipino within the ECOZONE
possesses, as certified by the Department of Labor and Employment. The names of aliens
granted permanent resident status and working visas by the PEZA shall be reported to the
Bureau of Immigration within thirty (30) days after issuance thereof.
SEC. 13. General Powers and Functions of the Authority. The PEZA shall have the following
powers and functions:
(a) To operate, administer, manage and develop the ECOZONE according to the principles
and provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and
decentralized manner;
(c) To coordinate with local government units and exercise general supervision over the
development, plans, activities and operations of the ECOZONES, industrial estates, export
processing zones, free trade zones, and the like;
(d) In coordination with local government units concerned and appropriate agencies, to
construct, acquire, own, lease, operate and maintain on its own or through contract,
franchise, license, bulk purchase from the private sector and build-operate-transfer scheme
or joint venture, adequate facilities and infrastructure, such as light and power systems,
water supply and distribution systems, telecommunication and transportation, buildings,
structures, warehouses, roads, bridges, ports and other facilities for the operation and
development of the ECOZONE;
(e) To create, operate and/or contract to operate such agencies and functional units or
offices of the authority as it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease, own or otherwise dispose
of personal or real property; sue and be sued; and otherwise carry out its duties and
functions as provided for in this Act;
(g) To coordinate the formulation and preparation of the development plans of the different
entities mentioned above;
(h) To coordinate with the National Economic Development Authority (NEDA), the
Department of Trade and Industry (DTI), the Department of Science and Technology (DOST),
and the local government units and appropriate government agencies for policy and
program formulation and implementation; and

83

(i) To monitor and evaluate the development and requirements of entities in subsection (a)
and recommend to the local government units or other appropriate authorities the location,
incentives, basic services, utilities and infrastructure required or to be made available for
said entities.
SEC. 17. Investigation and Inquiries. Upon a written formal complaint made under oath,
which on its face provides reasonable basis to believe that some anomaly or irregularity
might have been committed, the PEZA or the administrator of the ECOZONE concerned,
shall have the power to inquire into the conduct of firms or employees of the ECOZONE and
to conduct investigations, and for that purpose may subpoena witnesses, administer oaths,
and compel the production of books, papers, and other evidences: Provided, That to arrive at
the truth, the investigator(s) may grant immunity from prosecution to any person whose
testimony or whose possessions of documents or other evidence is necessary or convenient
to determine the truth in any investigation conducted by him or under the authority of the
PEZA or the administrator of the ECOZONE concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy and priority of development
of each ECOZONE established pursuant to this Act shall be formulated by the PEZA, in
coordination with the Department of Trade and Industry and the National Economic and
Development Authority; Provided, That such development strategy is consistent with the
priorities of the national government as outlined in the medium-term Philippine development
plan. It shall be the policy of the government and the PEZA to encourage and provide
Incentives and facilitate private sector participation in the construction and operation of
public utilities and infrastructure in the ECOZONE, using any of the schemes allowed in
Republic Act No. 6957 (the build-operate-transfer law).
SEC. 22. Survey of Resources. The PEZA shall, in coordination with appropriate authorities
and neighboring cities and
municipalities, immediately conduct a survey of the physical, natural assets and
potentialities of the ECOZONE areas under its
jurisdiction.
SEC. 26. Domestic Sales. Goods manufactured by an ECOZONE enterprise shall be made
available for immediate retail sales in the domestic market, subject to payment of
corresponding taxes on the raw materials and other regulations that may be adopted by the
Board of the PEZA.
However, in order to protect the domestic industry, there shall be a negative list of
Industries that will be drawn up by the PEZA. Enterprises engaged in the industries included
in the negative list shall not be allowed to sell their products locally. Said negative list shall
be regularly updated by the PEZA.
The PEZA, in coordination with the Department of Trade and Industry and the Bureau of
Customs, shall jointly issue the necessary implementing rules and guidelines for the
effective Implementation of this section.
SEC. 29. Eminent Domain. The areas comprising an ECOZONE may be expanded or
reduced when necessary. For this purpose, the government shall have the power to acquire,
either by purchase, negotiation or condemnation proceedings, any private lands within or
adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b. Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to the prosperity of the
ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person or group of persons who
has been occupying a parcel of land within the Zone has to be evicted, the PEZA shall
provide the person or group of persons concerned with proper disturbance compensation:
Provided, however, That in the case of displaced agrarian reform beneficiaries, they shall be
entitled to the benefits under the Comprehensive Agrarian Reform Law, including but not
limited to Section 36 of Republic Act No. 3844, in addition to a homelot in the relocation site
and preferential employment in the project being undertaken.

84

SEC. 32. Shipping and Shipping Register. Private shipping and related business including
private container terminals may operate freely in the ECOZONE, subject only to such
minimum reasonable regulations of local application which the PEZA may prescribe.
The PEZA shall, in coordination with the Department of Transportation and Communications,
maintain a shipping register for each ECOZONE as a business register of convenience for
ocean-going vessels and issue related certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the
ECOZONE, subject only to such reasonable requirement as may be prescribed by the PEZA In
coordination with the appropriate agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate
agencies, shall take concrete and appropriate steps and enact the proper measure for the
protection of the local environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE who desire to terminate
business or operations shall comply with such requirements and procedures which the PEZA
shall set, particularly those relating to the clearing of debts. The assets of the closed
enterprise can be transferred and the funds con be remitted out of the ECOZONE subject to
the rules, guidelines and procedures prescribed jointly by the Bangko Sentral ng Pilipinas,
the Department of Finance and the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises within a designated
ECOZONE shall register with the PEZA to avail of all incentives and benefits provided for in
this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the
purpose of facilitating the registration of new enterprises in the ECOZONE. Thus, all
appropriate government agencies that are Involved In registering, licensing or issuing
permits to investors shall assign their representatives to the ECOZONE to attend to
Investors requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of
Tabor and Employment, shall prescribe a master employment contract for all ECOZONE
enterprise staff members and workers, the terms of which provide salaries and benefits not
less than those provided under this Act, the Philippine Labor Code, as amended, and other
relevant issuances of the national government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the Department of Labor and
Employment, shall promulgate appropriate measures and programs leading to the expansion
of the services of the ECOZONE to help the local governments of nearby areas meet the
needs of the migrant workers.
SEC. 42. Incentive Scheme. - An additional deduction equivalent to one- half (1/2) of the
value of training expenses incurred in developing skilled or unskilled labor or for managerial
or other management development programs incurred by enterprises in the ECOZONE can
be deducted from the national government's share of three percent (3%) as provided In
Section 24.
The PEZA, the Department of Labor and Employment, and the Department of Finance shall
jointly make a review of the incentive scheme provided In this section every two (2) years or
when circumstances so warrant.
SEC. 43. Relationship with the Regional Development Council. - The PEZA shall determine
the development goals for the ECOZONE within the framework of national development
plans, policies and goals, and the administrator shall, upon approval by the PEZA Board,
submit the ECOZONE plans, programs and projects to the regional development council for
inclusion in and as inputs to the overall regional development plan.
SEC. 44. Relationship with the Local Government Units. - Except as herein provided, the local
government units comprising the ECOZONE shall retain their basic autonomy and identity.
The cities shall be governed by their respective charters and the municipalities shall operate
and function In accordance with Republic Act No. 7160, otherwise known as the Local
Government

85

Code of 1991.
SEC. 45. Relationship of PEZA to Privately-Owned Industrial Estates. Privately-owned
industrial estates shall retain their autonomy and independence and shall be monitored by
the PEZA for the implementation of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over
industrial estates and agri-export processing estates shall be transferred to the PEZA. The
resources of government-owned Industrial estates and similar bodies except the Bases
Conversion Development Authority and those areas identified under Republic Act No. 7227,
are hereby transferred to the PEZA as the holding agency. They are hereby detached from
their mother agencies and attached to the PEZA for policy, program and operational
supervision.
The Boards of the affected government-owned industrial estates shall be phased out and
only the management level and an appropriate number of personnel shall be retained.
Government personnel whose services are not retained by the PEZA or any government
office within the ECOZONE shall be entitled to separation pay and such retirement and other
benefits they are entitled to under the laws then in force at the time of their separation:
Provided, That in no case shall the separation pay be less than one and one-fourth (1 1/4)
month of every year of service.
The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent
with any of the powers, functions, and responsibilities of the PEZA. The EPZAs non-profit
character, including the EPZAs exemption from real property taxes, must be deemed
assumed by the PEZA.
In addition, the Local Government Code exempting instrumentalities of the national
government from real property taxes was already in force274 when the PEZAs charter was
enacted in 1995. It would have been redundant to provide for the PEZAs exemption in its
charter considering that the PEZA is already exempt by virtue of Section 133(o) of the Local
Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the
EPZAs charter was enacted. Unlike the Local Government Code, Commonwealth Act No.
470 does not contain a provision specifically exempting instrumentalities of the national
government from payment of real property taxes.275 It was necessary to put an exempting
provision in the EPZAs charter.
Contrary to the PEZAs claim, however, Section 24 of the Special Economic Zone Act of 1995
is not a basis for the PEZAs exemption. Section 24 of the Special Economic Zone Act of 1995
provides:chanroblesvirtuallawlibrary
Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land
owned by developers, no taxes, local and national, shall be imposed on business
establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the ECOZONE shall be paid and remitted as
follows:chanroblesvirtuallawlibrary
(a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer's office of the municipality or city where the enterprise is located. (Emphasis
supplied)
Tax exemptions provided under Section 24 apply only to business establishments operating
within economic zones. Considering that the PEZA is not a business establishment but an
instrumentality performing governmental functions, Section 24 is inapplicable to the PEZA.
Also, contrary to the PEZAs claim, developers of economic zones, whether public or private
developers, are liable for real property taxes on lands they own. Section 24 does not
distinguish between a public and private developer. Thus, courts cannot distinguish.276
Unless the public developer is exempt under the Local Government Code or under its charter
enacted after the Local Government Codes effectivity, the public developer must pay real
property taxes on their land.

86

At any rate, the PEZA cannot be taxed for real property taxes even if it acts as a developer
or operator of special economic zones. The PEZA is an instrumentality of the national
government exempt from payment of real property taxes under Section 133(o) of the Local
Government Code. As this court said in Manila International Airport Authority, there must
be express language in the law empowering local governments to tax national government
instrumentalities.
Any doubt whether such power exists is resolved against local
governments.277chanRoblesvirtualLawlibrary
V. (C)
Real properties under the PEZAs title are owned by the Republic of the Philippines
Under Section 234(a) of the Local Government Code, real properties owned by the Republic
of the Philippines are exempt from real property taxes:chanroblesvirtuallawlibrary
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of
real property tax:
(a) Real property owned by the Republic of the Philippines or any of its political subdivisions
except when the beneficial use thereof has been granted, for consideration or otherwise, to
a taxable person[.]
Properties owned by the state are either property of public dominion or patrimonial property.
Article 420 of the Civil Code of the Philippines enumerates property of public
dominion:chanroblesvirtuallawlibrary
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers, torrents, ports and bridges
constructed by the State, banks, shores, roadsteads, and others of similar character;
(2) Those which belong to the State, without belonging for public use, and are intended for
some public service or for the development of the national wealth.
Properties of public dominion are outside the commerce of man. These properties are
exempt from levy, encumbrance or disposition through public or private sale.278 As this
court explained in Manila International Airport Authority:chanroblesvirtuallawlibrary
Properties of public dominion, being for public use, are not subject to levy, encumbrance or
disposition through public or private sale. Any encumbrance, levy on execution or auction
sale of any property of public dominion is void for being contrary to public policy. Essential
public services will stop if properties of public dominion are subject to encumbrances,
foreclosures and auction sale[.]279
On the other hand, all other properties of the state that are not intended for public use or
are not intended for some public service or for the development of the national wealth are
patrimonial
properties.
Article
421
of
the
Civil
Code
of
the
Philippines
provides:chanroblesvirtuallawlibrary
Art. 421. All other property of the State, which is not of the character stated in the preceding
article, is patrimonial property.
Patrimonial properties are also properties of the state, but the state may dispose of its
patrimonial property similar to private persons disposing of their property. Patrimonial
properties are within the commerce of man and are susceptible to prescription, unless
otherwise provided.280chanRoblesvirtualLawlibrary
In this case, the properties sought to be taxed are located in publicly owned economic
zones. These economic zones are property of public dominion. The City seeks to tax
properties located within the Mactan Economic Zone,281 the site of which was reserved by
President Marcos under Proclamation No. 1811, Series of 1979. Reserved lands are lands of
the public domain set aside for settlement or public use, and for specific public purposes by
virtue of a presidential proclamation.282 Reserved lands are inalienable and outside the
commerce of man,283 and remain property of the Republic until withdrawn from public use
either by law or presidential proclamation.284 Since no law or presidential proclamation has

87

been issued withdrawing the site of the Mactan Economic Zone from public use, the property
remains reserved land.
As for the Bataan Economic Zone, the law consistently characterized the property as a port.
Under Republic Act No. 5490, Congress declared Mariveles, Bataan a principal port of
entry285 to serve as site of a foreign trade zone where foreign and domestic merchandise
may be brought in without being subject to customs and internal revenue laws and
regulations of the Philippines.286 Section 4 of Republic Act No. 5490 provided that the
foreign trade zone in Mariveles, Bataan shall at all times remain to be owned by the
Government:chanroblesvirtuallawlibrary
SEC. 4. Powers and Duties. The Foreign Trade Zone Authority shall have the following
powers and duties:
To fix and delimit the site of the Zone which at all times remain to be owned by the
Government, and which shall have a contiguous and adequate area with well defined and
policed boundaries, with adequate enclosures to segregate the Zone from the customs
territory for protection of revenues, together with suitable provisions for ingress and egress
of persons, conveyance, vessels and merchandise sufficient for the purpose of this Act[.]
(Emphasis supplied)
The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special
Economic Zone Act of 1995.287 Republic Act No. 9728 then converted the Bataan Economic
Zone into the Freeport Area of Bataan.288chanRoblesvirtualLawlibrary
A port of entry, where imported goods are unloaded then introduced in the market for public
consumption, is considered property for public use. Thus, Article 420 of the Civil Code
classifies a port as property of public dominion. The Freeport Area of Bataan, where the
government allows tax and duty-free importation of goods,289 is considered property of
public dominion. The Freeport Area of Bataan is owned by the state and cannot be taxed
under Section 234(a) of the Local Government Code.
Properties of public dominion, even if titled in the name of an instrumentality as in this case,
remain owned by the Republic of the Philippines. If property registered in the name of an
instrumentality is conveyed to another person, the property is considered conveyed on
behalf of the Republic of the Philippines.
Book I, Chapter 12, Section 48 of the
Administrative Code of 1987 provides:chanroblesvirtuallawlibrary
SEC. 48. Official Authorized to Convey Real Property. Whenever real property of the
government is authorized by law to be conveyed, the deed of conveyance shall be executed
in behalf of the government by the following:
....
(2) For property belonging to the Republic of the Philippines, but titled in the name of any
political subdivision or of any corporate agency or instrumentality, by the executive head of
the agency or instrumentality. (Emphasis supplied)
In Manila International Airport Authority, this court explained:chanroblesvirtuallawlibrary
[The exemption under Section 234(a) of the Local Government Code] should be read in
relation with Section 133(o) of the same Code, which prohibits local governments from
imposing [t]axes, fess or charges of any kind on the National Government, its agencies and
instrumentalities x x x. The real properties owned by the Republic are titled either in the
name of the Republic itself or in the name of agencies or instrumentalities of the National
Government. The Administrative Code allows real property owned by the Republic to be
titled in the name of agencies or instrumentalities of the national government. Such real
properties remained owned by the Republic of the Philippines and continue to be exempt
from real estate tax.
The Republic may grant the beneficial use of its real property to an agency or
instrumentality of the national government. This happens when title of the real property is
transferred to an agency or instrumentality even as the Republic remains the owner of the
real property. Such arrangement does not result in the loss of the tax exemption/ Section
234(a) of the Local Government Code states that real property owned by the Republic loses
its tax exemption only if the beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person. . . .290 (Emphasis in the original; italics supplied)

88

Even the PEZAs lands and buildings whose beneficial use have been granted to other
persons may not be taxed with real property taxes. The PEZA may only lease its lands and
buildings to PEZA-registered economic zone enterprises and entities.291 These PEZAregistered enterprises and entities, which operate within economic zones, are not subject to
real property taxes. Under Section 24 of the Special Economic Zone Act of 1995, no taxes,
whether local or national, shall be imposed on all business establishments operating within
the economic zones:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned
by developers, no taxes, local and national, shall be imposed on business establishments
operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned
by all business enterprises within the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.292 (Emphasis
supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5%
final tax on gross income paid by all business establishments operating within the Mactan
Economic Zone:chanroblesvirtuallawlibrary
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned
by developers, no taxes, local and national, shall be imposed on business establishments
operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned
by all business enterprises within the ECOZONE shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.293 (Emphasis
supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid
by
all
business
establishments
operating
within
the
Freeport
Area
of
Bataan:chanroblesvirtuallawlibrary
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross Income Earned. - No taxes,
local and national, shall be imposed on business establishments operating within the FAB. In
lieu thereof, said business establishments shall pay a five percent (5%) final tax on their
gross income earned in the following percentages:
(a) One per centum (1%) to the National Government;
(b) One per centum (1%) to the Province of Bataan;
(c) One per centum (1%) to the treasurer's office of the Municipality of Mariveles; and
(d) Two per centum (2%) to the Authority of the Freeport of Area of Bataan.294 (Emphasis
supplied)
Petitioners, therefore, are not deprived of revenues from the operations of economic zones
within their respective territorial jurisdictions. The national government ensured that local
government units comprising economic zones shall retain their basic autonomy and
identity.295chanRoblesvirtualLawlibrary
All told, the PEZA is an instrumentality of the national government. Furthermore, the lands
owned by the PEZA are real properties owned by the Republic of the Philippines. The City of
Lapu-Lapu and the Province of Bataan cannot collect real property taxes from the
PEZA.chanrobleslaw
WHEREFORE, the consolidated petitions are DENIED.
SO ORDERED
G.R. No. 172457

December 24, 2008

89

CJH DEVELOPMENT CORPORATION, petitioner,

vs.
BUREAU OF INTERNAL REVENUE, BUREAU OF CUSTOMS, and DISTRICT COLLECTOR
OF CUSTOMS EDWARD O. BALTAZAR, respondents.
DECISION
TINGA, J.:
Before us is a petition for review on certiorari1 seeking the reversal of the orders dated 14
October 20052 and 04 April 20063 of the Regional Trial Court (RTC) of Baguio City, Branch 5.
The RTC dismissed the petition for declaratory relief filed by petitioner CJH Development
Corporation (CJH). This petition was brought directly to this Court since it involves a pure
question of law in accordance with Rule 50 of the 1997 Revised Rules of Court.
Proclamation No. 420 (the Proclamation) was issued by then President Fidel V. Ramos to
create a Special Economic Zone (SEZ) in a portion of Camp John Hay in Baguio City. Section
34 of the Proclamation granted to the newly created SEZ the same incentives then already
enjoyed by the Subic SEZ. Among these incentives are the exemption from the payment of
taxes, both local and national, for businesses located inside the SEZ, and the operation of
the SEZ as a special customs territory providing for tax and duty free importations of raw
materials, capital and equipment.5
In line with the Proclamation, the Bureau of Internal Revenue (BIR) issued Revenue
Regulations No. 12-976 while the Bureau of Customs (BOC) issued Customs Administrative
Order No. 2-98.7 The two issuances provided the rules and regulations to be implemented
within the Camp John Hay SEZ. Subsequently, however, Section 3 of
the Proclamation was declared unconstitutional in part by the Court en banc in John Hay
Peoples Alternative Coalition v. Lim, 8 when it ruled that:
WHEREORE, the second sentence of Section 3 of Proclamation No. 420 is hereby declared
NULL and VOID and is accordingly declared of no legal force and effect. Public respondents
are hereby enjoined from implementing the aforesaid void provision.
Proclamation No. 420, without the invalidated portion, remains valid and effective.9
The decision attained finality when the Court en banc denied the motion for reconsideration
through a resolution dated 29 March 2005.10
While the motion for reconsideration was pending with the Court, on 16 January 2004 the
Office of the City Treasurer of Baguio sent a demand letter11 which stated that:
In view of the Supreme Court decision dated October 24, 2003 on G.R. No. 119775, declaring
null and void Section 3 of Proclamation 420 on applicable incentives of Special Economic
Zones, we are sending you updated statements of real property taxes due on real estate
properties declared under the names of the Bases Conversion and Development Authority
and Camp John Hay Development Corporation totaling P101,935,634.17 inclusive of
penalties, as of January 10, 2004.
May we request for the immediate settlement of the above indebtedness, otherwise this
office shall be constrained to hold the processing of your business permit pursuant to
Section 2 C c.1 of Tax Ordinance 2000-001 of Baguio City.
Five months later, on 26 May 2005, the BOC followed suit and demanded12 of CJH the
payment of P71,983,753.00 representing the duties and taxes due on all the importations
made by CJH from 1998 to 2004. For its part, the BIR sent a letter dated 23 May 2005 to CJH
wherein it treated CJH as an ordinary corporation subject to the regular corporate income tax
as well as to the Value Added Tax of 1997.13
CJH questioned the retroactive application by the BOC of the decision of this Court in G.R.
No. 119775. It claimed that the assessment was null and void because it violated the nonretroactive principle under the Tariff and Customs Code.14
The Office of the Solicitor General (OSG) filed a motion to dismiss.15 The OSG claimed that
the remedy of declaratory relief is inapplicable because an assessment is not a proper

90

subject of such petition. It further alleged that there are administrative remedies which were
available to CJH.
In an Order16 dated 28 June 2005, the RTC dropped the City of Baguio as a party to the
case. The remaining parties were required to submit their respective memoranda. On 14
October 2005, the RTC rendered its assailed order.17 It held that the decision in G.R. No.
119775 applies retroactively because the tax exemption granted by Proclamation No. 420 is
null and void from the beginning. The RTC also ruled that the petition for declaratory relief is
not the appropriate remedy. A judgment of the court cannot be the proper subject of a
petition for declaratory relief; the enumeration in Rule 64 is exclusive. Moreover, the RTC
held that Commonwealth Act No. 55 (CA No. 55) which proscribes the use of declaratory
relief in cases where a taxpayer questions his tax liability is still in force and effect.
CJH filed a motion for reconsideration but the RTC denied it.18 Hence this petition, which, as
earlier stated, was filed directly to this Court, raising as it does only pure questions of law.
There are two issues raised in this petition, one procedural and the other substantive. First,
is the remedy of declaratory relief proper in this case? Second, can the decision in G.R. No.
119775 be applied retroactively?
The requisites for a petition for declaratory relief to prosper are: (1) there must be a
justiciable controversy; (2) the controversy must be between persons whose interests are
adverse; (3) the party seeking declaratory relief must have a legal interest in the
controversy; and (4) the issue involved must be ripe for judicial determination.19
CJH alleges that CA No. 5520 has already been repealed by the Rules of Court; thus, the
remedy of declaratory relief against the assessment made by the BOC is proper. It cited the
commentaries of Moran allegedly to the effect that declaratory relief lies against
assessments made by the BIR and BOC. Yet in National Dental Supply Co. v. Meer,21 this
Court held that:
From the opinion of the former Chief Justice Moran may be deduced that the failure to
incorporate the above proviso [CA No. 55] in section 1, rule 66, [now Rule 64] is not due to
an intention to repeal it but rather to the desire to leave its application to the sound
discretion of the court, which is the sole arbiter to determine whether a case is meritorious
or not. And even if it be desired to incorporate it in rule 66, it is doubted if it could be done
under the rule-making power of the Supreme Court considering that the nature of said
proviso is substantive and not adjective, its purpose being to lay down a policy as to the
right of a taxpayer to contest the collection of taxes on the part of a revenue officer or of the
Government. With the adoption of said proviso, our law-making body has asserted its policy
on the matter, which is to prohibit a taxpayer to question his liability for the payment of any
tax that may be collected by the Bureau of Internal Revenue. As this Court well said, quoting
from several American cases, "The Government may fix the conditions upon which it will
consent to litigate the validity of its original taxes..." "The power of taxation being
legislative, all incidents are within the control of the Legislature." In other words, it is our
considered opinion that the proviso contained in Commonwealth Act No. 55 is still in full
force and effect and bars the plaintiff from filing the present action.22 (Emphasis supplied)
(Citations omitted.)
As a substantive law that has not been repealed by another statute, CA No. 55 is still in
effect and holds sway. Precisely, it has removed from the courts jurisdiction over petitions
for declaratory relief involving tax assessments. The Court cannot repeal, modify or alter an
act of the Legislature.
Moreover, the proper subject matter of a declaratory relief is a deed, will, contract, or other
written instrument, or the construction or validity of statute or ordinance.23 CJH hinges its
petition on the demand letter or assessment sent to it by the BOC. However, it is really not
the demand letter which is the subject matter of the petition. Ultimately, this Court is asked
to determine whether the decision of the Court en banc in G.R. No. 119775 has a retroactive
effect. This approach cannot be countenanced. A petition for declaratory relief cannot
properly have a court decision as its subject matter. In Tanda v. Aldaya,24 we ruled that:
x x x [A] court decision cannot be interpreted as included within the purview of the words
"other written instrument," as contended by appellant, for the simple reason that the Rules
of Court already provide[s] for the ways by which an ambiguous or doubtful decision may be
corrected or clarified without need of resorting to the expedient prescribed by Rule 66 [now
Rule 64].25

91

There are other remedies available to a party who is not agreeable to a decision whether it
be a question of law or fact. If it involves a decision of an appellate court, the party may file
a motion for reconsideration or new trial in order that the defect may be corrected.26 In
case of ambiguity of the decision, a party may file a motion for a clarificatory judgment.27
One of the requisites of a declaratory relief is that the issue must be ripe for judicial
determination. This means that litigation is inevitable28 or there is no adequate relief
available in any other form or proceeding.29
However, CJH is not left without recourse. The Tariff and Customs Code (TCC) provides for
the administrative and judicial remedies available to a taxpayer who is minded to contest an
assessment, subject of course to certain reglementary periods. The TCC provides that a
protest can be raised provided that payment first be made of the amount due.30 The
decision of the Collector can be reviewed by the Commissioner of Customs who can approve,
modify or reverse the
decision or action of the Collector.31 If the party is not satisfied with the ruling of the
Commissioner, he may file the necessary appeal to the Court of Tax Appeals.32 Afterwards,
the decision of the Court of Tax Appeals can be appealed to this Court.
With the foregoing disquisition on the first issue, there is no need to delve into the second
issue at this juncture. It should be noted though, as admitted by CJH in its Certificate of NonForum Shopping,33 that even before the filing of this petition, it already had a pending
petition for review with this Court, docketed as G.R. No. 16923434 and entitled, Camp John
Hay Development Corporation v. Central Board of Assessment Appeals, et al. That case
emanated from assessments made in 2002 for real estate taxes on CJH by the City of
Baguio. Said assessments were duly challenged before the Local Board of Assessment
Appeals, the Central Board of Assessment Appeals and the Court of Tax Appeals. The petition
in G.R. No. 169234 was filed with this Court in September 2005, or after our 2003 Decision in
John Hay Peoples Alternative Coalition had attained finality. CJH therein raised the same
question of law, as in this case, whether the doctrine of operative fact applies to G.R. No.
119775. Clearly, the Court in G.R. No. 169234 is better positioned to resolve that question of
law, there being no antecedent jurisdictional defects that would preclude the Court from
squarely deciding that particular issue. CJH is free to reiterate this current point of
clarification as it litigates the petition in G.R. No. 169234.
WHEREFORE, the Petition is DENIED.
SO ORDERED.
G.R. No. L-11357

May 31, 1962

FELIPE B. OLLADA, etc., petitioner-appellant,

vs.
CENTRAL BANK OF THE PHILIPPINES, respondent-appellee.
DIZON, J.:
Felipe B. Ollada is a certified public accountant, having passed the examination given by the
Board of Accountancy, and is duly qualified to practice his profession. On July 22, 1952, his
name was placed in the rolls of certified public accountants authorized and accredited to
practice accountancy in the office of the Central Bank of the Philippines. In December, 1955,
by reason of a requirement of the Import-Export Department of said bank that CPAs submit
to an accreditation under oath before they could certify financial statements of their clients
applying for import dollar allocations with its office, Ollada's previous accreditation was
nullified.
Pursuant to the new requirement, the Import-Export Department of the Central Bank issued
APPLICATION FOR ACCREDITATION OF CERTIFIED PUBLIC ACCOUNTANTS (CB-IED Form No. 5)
and ACCREDITATION CARD FOR CERTIFIED PUBLIC ACCOUNTANTS (CB-IED, Form No. 6) for
CPAs to accomplish under oath. Assailing said accreditation requirement on the ground that
it was (a) an unlawful invasion of the jurisdiction of the Board of Accountancy, (b) in excess
of the powers of the Central Bank and (c) unconstitutional in that it unlawfully restrained the
legitimate pursuit of one's trade, Ollada, for himself and allegedly on behalf of numerous
other CPAs, filed a petition for Declaratory Relief in the Court of First Instance of Manila to
nullify said accreditation requirement.

92

On April 16, 1956 the Central Bank filed a motion to dismiss the petition for Declaratory
Relief for lack of cause of action. Its main contention was that the Central Bank has the
responsibility of administering the Monetary Banking System of the Republic and is
authorized to prepare and issue, through its Monetary Board, rules and regulations to make
effective the discharge of such responsibility; that the accreditation requirement alleged in
the petition was issued in the exercise of such power and authority; that the purpose of such
requirement is not to regulate the practice of accountancy in the Philippines but only the
manner in which certified public accountants should transact business with the Central
Bank.
On May 3, 1956, petitioner Ollada applied for a writ of preliminary injunction to restrain the
respondent Central Bank of the Philippines from enforcing the accreditation requirement
aforesaid until final adjudication of the case. In a memorandum submitted by said
respondent opposing the issuance of the writ, it manifested that it was willing to delete
paragraph 13 from its CB-IED Form No. 5 (Application for accreditation of certified public
accountants), which required CPAs to answer the query whether they agreed, if accredited
with the Import-Export Department, Central Bank of the Philippines, to follow strictly the
rules and regulations promulgated by the Philippine Institute of Accountants and, if not, to
state their reasons therefor, and that it was also willing to modify paragraph 14 of the same
form to read as follows:
14. Do you agree, if accredited with the Import-Export Department, to follow strictly the
rules and regulations of the Central Bank of the Philippines concerning the practice of your
profession as CPA, with reference to its importing licensing functions which may hereinafter
be promulgated and which are not inconsistent with the rules and regulations promulgated
by the Board of Accountancy of the Philippines, and to give written notice(s) of any
change(s) in your professional status as practitioner, or the name and style under which you
practice your profession as Certified Public Accountant(s)? . . . If not, state your reasons: . . .
On May 22, 1956 the trial court required respondent to submit within ten days from notice,
proof that it had deleted paragraph 13 and modified paragraph 14 of its CB-IED Form No. 5,
as manifested in its memorandum, otherwise the writ of preliminary injunction prayed for by
petitioner would be granted. Having complied with said order by submitting CB-ID Form No.
5 (formerly CB-IED Form No. 5) showing that paragraph 13 of CB-IED Form No. 5 had been
deleted, and paragraph 14 thereof had been modified, the court, on June 27, 1956, denied
the petition for preliminary injunction. On June 29, 1956, petitioner filed a motion for
reconsideration alleging that, despite the deletion of paragraph 13 from respondent's CB-IED
Form No. 5, it was still enforcing the rules and regulations of the Philippine Institute of
Accountants in its CB-IED Form No. 6 (ACCREDITATION CARD FOR CERTIFIED PUBLIC
ACCOUNTANTS) which was still a part of the questioned accreditation requirement. All this
notwithstanding, however, on July 5, 1956 petitioner, in the interests of its clients, filed his
application for accreditation with the CB under protest.1wph1.t
On July 7, 1956, the court reconsidered its previous order and issued another granting the
petition for the writ of preliminary injunction upon the filing of a bond in the sum of
P2,000.00 on the ground that CPAs applying for accreditation with respondent were still
required to execute under oath CB-IED Form No. 6 (Accreditation card for certified public
accountants) to be governed by the rules and regulations of the Philippine Institute of
Accountants. In a motion for the reconsideration of this last order, respondent stated that
CB-IED Form No. 6 of its Import-Export Department had been modified by CB-ID Form No. 6
wherein the requirement that the applicant should sign a statement under oath has been
eliminated, and that, upon accreditation, a CPA would be governed by the rules and
regulations of the Central Bank and not by those of the Philippine Institute of Accountants.
The modified form (CB-ID Form No. 6) read as follows:
I/We hereby agree to be governed by your rules and regulations relating to the practice of
my/our profession as Certified Public Accountant(s), particularly Memorandum to Accredited
CPAs No. 1 of the Central Bank of the Philippines dated June 15, 1956. Please recognize
my/our certification(s) of exhibit(s), of statement(s), schedule(s), or other form(s) of
accountancy work issued in behalf of my/our clients under the following signature(s).
Consequently, on July 12, 1956, the court set aside its order of July 7, 1956 granting the writ
of preliminary injunction.
Finally, on July 31, 1956, the lower court, resolving the motion to dismiss filed by
respondent, dismissed the complaint. The order to that effect says, in part, the following:

93

The only issue in this case is whether or not the respondent Central Bank of the Philippines
has the authority under its charter to require petitioner and all other certified public
accountants to accredit themselves before they can transact business with respondent's
Import and Export Department.
This Court is of the opinion that the respondent is not barred from promulgating internal
rules and regulations necessary to carry out its purpose pursuant to the charter creating it
provided, however, that such rules and regulations are not contrary to law, public morals or
public policy.
The only objectionable features of respondent's aforementioned requirement have already
been eliminated by said respondent having deleted from its CB-IED Form No. 5, known as
Application for Accreditation of Certified Public Accountants (Annex B of petitioner's Petition),
paragraph 13 and modified paragraph 14 thereof, as well as by modifying CB-IED Form No. 6
known as Accreditation Card for Certified Public Accountants (Annex C of Petitioner's
Petition).
It appears, therefore, that after respondent had eliminated said objectionable features, the
petition for declaratory relief has become groundless and should be dismissed.
Upon motion of petitioner, We issued a resolution dated November 5, 1956 granting a writ of
preliminary injunction restraining respondent from requiring CPAs to comply with the
accreditation requirement of its Import-Export Department, on the ground that there was
nothing in the record showing that the same was issued by its Monetary Board or by
someone else duly authorized by the latter.
The main issue involved in this appeal is whether upon the facts alleged in the petition for
Declaratory Relief and others elicited from the parties and made of record by them prior to
the issuance of the order appealed from, this case was properly dismissed.
The Monetary Board of the Central Bank has authority to prepare and issue such rules and
regulations it may consider necessary for the effective discharge of the responsibilities and
exercise of the powers assigned to it and to the Central Bank under the provisions of Section
1 (a), Republic Act No. 265. The Governor of the Central Bank is also authorized to delegate
his power to represent the Bank "to other officers of the Bank upon his own responsibility"
(See. 17[d], Rep. Act 265).
To implement its authority to temporarily suspend or restrict sales of exchange by the
Central Bank and subject all transactions in gold and foreign exchange to license by the
latter (Sec. 74, Rep. Act 265), the Monetary Board, approved Resolution No. 1528, Minutes
No. 80 dated August 30, 1955 authorizing the Import-Export Department to revise quota
allocations and to prepare revised procedures for the determination of violations of Central
Bank Import-Export regulations. Among the revised procedures adopted by the aforesaid
Department was its accreditation system, the purpose of which was to correct certain
irregularities committed by some CPAs in their certification of the financial statements of
their clients applying for dollar allocations.
As held by the lower court, "the only objectionable feature of respondent's aforementioned
requirement had already been eliminated . . . from its CB-IED Form No. 5" and that CB-IED
form No. 6 had also been modified. For this reason, the court held that "the petition for
declaratory relief has become groundless" and, as a result, ordered its dismissal.
Without deciding the question of whether the petition under consideration has, in reality
"become groundless", we believe that, upon the facts appearing of record, said petition was
correctly dismissed.
As stated heretofore, in connection with the motion to dismiss filed by respondent, petitioner
filled a written opposition in which he alleged that his petition
has sufficiently alleged ultimate facts which violated his right as a duly qualified and
accredited Certified Public Accountant by the Board of Accountancy (which is the only
Government body with absolute powers to regulate the practice of CPAs), and in addition to
such allegations, he has also alleged that by virtue of the violation of his right and that of
numerous CPAs, he has suffered serious injury in that the questioned requirement which is
collaterally attacked by this action (in the honest belief of the petitioner that the same) is an
unlawful restraint of the fee pursuit and practice of petitioner's profession as a CPA; and also
that the action of the respondent Central Bank of the Philippines complained of, is also an

94

unlawful invasion into the exclusive jurisdiction of the Board of Accountancy as the sole body
vested by our laws to lay down rules and regulations for the practice of public accountancy
in the Philippines. . . .
In order to dismiss an action under the aforecited ground, Sutherland, Code of Pleadings,
Practice and Form, 167, has laid down the essential test which should serve as the
controlling guide in determining whether a petition states a cause of action, to wit:
1. Does the complaint show the plaintiff suffered an injury?
2. Is it an injury the law recognizes as a wrong?
3. Is the defendant liable for the alleged wrong?
4. If the defendant is liable, to what extent is he liable and what will be the legal remedy
from such injury? (Sutherland, Code of Pleadings, supra.)
It is clear from the allegations of the petition that the petitioner has sufficiently stated facts
to satisfy the foregoing requisites of a pleading in order that petitioner's action should be
given due course by this Court.
Petitioner submits that the respondent's requirement complained of (CB-IED Forms Nos. 5
and 6) is an act of constituting a violation of the Constitution and also a violation of the
petitioners right to freely practice his profession anywhere and in any government office in
the Philippines .... It is undisputed that the only body that can regulate the practice of
accountancy in the Philippines is the Board of Accountancy. The action thus of the
respondent in requiring the accreditation of CPAs before they can practice with the Central
Bank of the Philippines is an unlawful invasion into the exclusive jurisdiction of the said
Board of Accountancy. Why was petitioner's right as a CPA violated by the respondent?
Because the respondent's placing of a ban to CPAs including the petitioner with respect to
certification of financial statements of their clients applying for dollar(s) allocation in the
Central Bank of the Philippines has resulted in the unlawful restraint in the practice of CPAs
in the office of the Central Bank of the Philippines. (Emphasis supplied.) (Rec. on Appeal, pp.
17, 18-20.)
Again, in his brief petitioner reiterates the same view in the following language:
On April 20, 1956, petitioner-appellant filed his opposition to respondent's motion to dismiss
on the simple and fundamental ground that, from its face, the complaint's allegations of
facts make clear showing of petitioner's rights having been violated by respondent, and that
the (petitioner) has suffered serious injury therefrom that such injury is recognized by law as
a wrong, and that the respondent is liable therefrom to a great extent. (Emphasis supplied.)
(Petitioner's brief, p. 5.)
Petitioner commenced this action as, and clearly intended it to be one for Declaratory Relief
under the provisions of Rule 66 of the Rules of Court. On the question of when a special civil
action of this nature would prosper, we have already held that the complaint for declaratory
relief will not prosper if filed after a contract, statute or right has been breached or violated.
In the present case such is precisely the situation arising from the facts alleged in the
petition for declaratory relief. As vigorously claimed by petitioner himself, respondent had
already invaded or violated his right and caused him injury all these giving him a
complete cause of action enforceable in an appropriate ordinary civil action or proceeding.
The dismissal of the action was, therefore, proper in the light of our ruling in De Borja vs.
Villadolid, 47 O.G. (5) p. 2315, and Samson vs. Andal, G.R. No. L-3439, July 31, 1951, where
we held that an action for declaratory relief should be filed before there has been a breach
of a contract, statutes or right, and that it is sufficient to bar such action, that there had
been a breach which would constitute actionable violation. The rule is that an action for
Declaratory Relief is proper only if adequate relief is not available through the means of
other existing forms of action or proceeding (1 C.J.S. 1027-1028).
WHEREFORE, the order of dismissal appealed from is hereby affirmed, without prejudice to
the aggrieved party seeking relief in another appropriate action. The writ of preliminary
injunction issued by Us on November 5, 1956 is hereby set aside, and the motion for
contempt filed by petitioner on September 30, 1957 is denied. With costs against appellant.
G.R. No. 204603

September 24, 2013

95

REPUBLIC v. ROQUE
RESOLUTION
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the April 23, 20122 and July 31, 20123 Orders of
the Regional Trial Court of Quezon City, Branch 92(RTC) in Special Civil Action (SCA) No. Q07-60778, denying petitioners motion to dismiss (subject motion to dismiss) based on the
following grounds: (a) that the Court had yet to pass upon the constitutionality of Republic
Act No. (RA) 9372,4 otherwise known as the "Human Security Act of 2007," in the
consolidated cases of Southern Hemisphere Engagement Network, Inc. v. Anti-Terrorism
Council5 (Southern Hemisphere); and (b) that private respondents petition for declaratory
relief was proper.
The Facts
On July 17, 2007, private respondents filed a Petition6 for declaratory relief before the RTC,
assailing the constitutionality of the following sections of RA 9372: (a) Section 3,7 for being
void for vagueness;8 (b) Section 7,9 for violating the right to privacy of communication and
due process and the privileged nature of priest-penitent relationships;10 (c)Section 18,11 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 12512 of the Revised Penal Code, as amended;13
(d) Section 26,14 for violating the right to travel;15 and (e) Section 27,16 for violating the
prohibition against unreasonable searches and seizures.17
Petitioners moved to suspend the proceedings,18 averring that certain petitions (SC
petitions) raising the issue of RA 9372s constitutionality have been lodged before the
Court.19 The said motion was granted in an Order dated October 19, 2007.20
On October 5, 2010, the Court promulgated its Decision21 in the Southern Hemisphere
cases and thereby dismissed the SC petitions.
On February 27, 2012, petitioners filed the subject motion to dismiss,22 contending that
private respondents failed to satisfy the requisites for declaratory relief. Likewise, they
averred that the constitutionality of RA 9372 had already been upheld by the Court in the
Southern Hemisphere cases.
In their Comment/Opposition,23 private respondents countered that: (a) the Court did not
resolve the issue of RA 9372s constitutionality in Southern Hemisphere as the SC petitions
were dismissed based purely on technical grounds; and (b) the requisites for declaratory
relief were met.
The RTC Ruling
On April 23, 2012, the RTC issued an Order24 which denied the subject motion to dismiss,
finding that the Court did not pass upon the constitutionality of RA 9372 and that private
respondents petition for declaratory relief was properly filed.
Petitioners moved for reconsideration25 which was, however, denied by the RTC in an Order
dated July 31, 2012.26 The RTC observed that private respondents have personal and
substantial interests in the case and that it would be illogical to await the adverse
consequences of the aforesaid laws implementation considering that the case is of
paramount impact to the Filipino people.27
Hence, the instant petition.
The Issues Before the Court
The present controversy revolves around the issue of whether or not the RTC gravely abused
its discretion when it denied the subject motion to dismiss.
Asserting the affirmative, petitioners argue that private respondents failed to satisfy the
requirements for declaratory relief and that the Court had already sustained with finality the
constitutionality of RA 9372.

96

On the contrary, private respondents maintain that the requirements for declaratory relief
have been satisfied and that the Court has yet to resolve the constitutionality of RA 9372,
negating any grave abuse of discretion on the RTCs part.
The Courts Ruling
The petition is meritorious.
An act of a court or tribunal can only be considered as with grave abuse of discretion when
such act is done in a capricious or whimsical exercise of judgment as is equivalent to lack of
jurisdiction.28 It is well-settled that the abuse of discretion to be qualified as "grave" must
be so patent or gross as to constitute an evasion of a positive duty or a virtual refusal to
perform the duty or to act at all in contemplation of law.29 In this relation, case law states
that not every error in the proceedings, or every erroneous conclusion of law or fact,
constitutes grave abuse of discretion.30 The degree of gravity, as above-described, must be
met.
Applying these principles, the Court observes that while no grave abuse of discretion could
be ascribed on the part of the RTC when it found that the Court did not pass upon the
constitutionality of RA 9372 in the Southern Hemisphere cases, it, however, exceeded its
jurisdiction when it ruled that private respondents petition had met all the requisites for an
action for declaratory relief. Consequently, its denial of the subject motion to dismiss was
altogether improper.
To elucidate, it is clear that the Court, in Southern Hemisphere, did not make any definitive
ruling on the constitutionality of RA 9372. The certiorari petitions in those consolidated cases
were dismissed based solely on procedural grounds, namely: (a) the remedy of certiorari was
improper;31 (b) petitioners therein lack locus standi;32 and (c) petitioners therein failed to
present an actual case or controversy.33 Therefore, there was no grave abuse of discretion.
The same conclusion cannot, however, be reached with regard to the RTCs ruling on the
sufficiency of private respondents petition for declaratory relief.
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
A perusal of private respondents petition for declaratory relief would show that they have
failed to demonstrate how they are left to sustain or are in immediate danger to sustain
some direct injury as a result of the enforcement of the assailed provisions of RA 9372. Not
far removed from the factual milieu in the Southern Hemisphere cases, private respondents
only assert general interests as citizens, and taxpayers and infractions which the
government could prospectively commit if the enforcement of the said law would remain
untrammeled. As their petition would disclose, private respondents fear of prosecution was
solely based on remarks of certain government officials which were addressed to the general

97

public.40 They, however, failed to show how these remarks tended towards any
prosecutorial or governmental action geared towards the implementation of RA 9372 against
them. In other words, there was no particular, real or imminent threat to any of them. As
held in Southern Hemisphere:
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.1wphi1
The possibility of abuse in the implementation of RA 9372does not avail to take the present
petitions out of the realm of the surreal and merely imagined. Such possibility is not peculiar
to RA 9372 since the exercise of any power granted by law may be abused. Allegations of
abuse must be anchored on real events before courts may step in to settle actual
controversies involving rights which are legally demandable and enforceable.41 (Emphasis
supplied; citations omitted)
Thus, in the same light that the Court dismissed the SC petitions in the Southern
Hemisphere cases on the basis of, among others, lack of actual justiciable controversy (or
the ripening seeds of one), the RTC should have dismissed private respondents petition for
declaratory relief all the same.
It is well to note that private respondents also lack the required locus standi to mount their
constitutional challenge against the implementation of the above-stated provisions of RA
9372 since they have not shown any direct and personal interest in the case.42 While it has
been previously held that transcendental public importance dispenses with the requirement
that the petitioner has experienced or is in actual danger of suffering direct and personal
injury,43 it must be stressed that cases involving the constitutionality of penal legislation
belong to an altogether different genus of constitutional litigation.44 Towards this end,
compelling State and societal interests in the proscription of harmful conduct necessitate a
closer judicial scrutiny of locus standi,45 as in this case. To rule otherwise, would be to
corrupt the settled doctrine of locus standi, as every worthy cause is an interest shared by
the general public.46
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.1wphi1 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.
All told, in view of the absence of the fourth and fifth requisites for an action for declaratory
relief, as well as the irrelevance of the sixth requisite, private respondents petition for
declaratory relief should have been dismissed. Thus, by giving due course to the same, it
cannot be gainsaid that the RTC gravely abused its discretion.
WHEREFORE, the petition is GRANTED. Accordingly, the April23, 2012 and July 31, 2012
Orders of the Regional Trial Court of Quezon City, Branch 92 in SCA No. Q-07-60778 are
REVERSED and SET ASIDE and the petition for declaratory relief before the said court is
hereby DISMISSED.
SO ORDERED.
[G.R. Nos. L-9322-23. January 30, 1956.]
TEODORO
Appellee.

TANDA,

Plaintiff-Appellant,

vs.

DECISION
BAUTISTA ANGELO, J.:

98

NARCISO

N.

ALDAYA,

Defendant-

The present appeal concerns a review of an order entered by the Court of First Instance of
Cavite on June 12, 1953 which dismisses the complaint in Civil Case No. 5113 instituted to
obtain from the court a declaratory relief on certain matters pleaded therein while it grants
the plea prayed for in Civil Case No. 4606 of the same court for withdrawal of Original
Certificate of Title No. 114 in order that the Register of Deeds may effect the registration of
the document of consolidation of ownership and issuance of the necessary title in favor of
the winning party. Another order appealed from is that of August 26, 1953, but, being merely
corollary, discussion thereof is deemed unnecessary.
For a clear understanding of the issues raised herein, it is necessary to make a brief
statement of the factual background and the different steps taken by the parties leading to
the issuance of the order subject of the present review.
On April 10, 1948, Appellant instituted in the Court of First Instance of Cavite an action for
the annulment of a certain contract of sale with pacto de retro (Civil Case No. 4606). On May
11, 1949, the trial court rendered a decision declaring the contract valid and absolving
Appellee of the complaint. After a motion to set aside judgment and a motion for new trial
filed by Appellant were denied by the trial court, Appellant brought the case on appeal to the
Supreme Court. On July 23, 1951, the Supreme Court affirmed the decision appealed from
particularly with regard to the validity of the contract which is disputed by Appellant. After
the two motions for reconsideration filed by Appellant were denied, the decision became
final and executory and the record was returned to the court of origin; chan
roblesvirtualawlibrarybut, on November 8, 1951, Appellant initiated the present case for
declaratory relief. Considering that this action is purposeless because, while outwardly its
aim is to seek a declaratory relief on certain matters but in effect its purpose is to nullify the
judgment rendered in the previous case (Civil Case No. 4606) which was affirmed by the
Supreme Court (G. R. No. L-3278), * Appellee filed a motion to dismiss on the ground that
the case states no cause of action. In the meantime, Appellee moved to withdraw the
original of Title No. 114 which was presented in the case as evidence in order that his
ownership may be consolidated and a new title issued in his name it appearing that case has
been finally terminated (Civil Case No. 4606). The trial court, acting on the two motions,
entered an order on June 12, 1953 granting the motion to dismiss and allowing the
withdrawal of the original title as already adverted to in the early part of this decision.
The case was originally taken to the Court of Appeals wherein Appellant assigned nine errors
as allegedly committed by the trial court but, after a cursory reading of the errors assigned,
that court certified the case to us on the ground that the questions to be resolved are purely
of law.
The purpose of the case which gave rise to the present appeal is avowedly for declaratory
relief instituted under Section 1, Rule 66 of the Rules of Court which provides that Any
person interested under a deed, will, contract or other written instrument, or whose rights
are affected by a statute or ordinance, may bring an action to determine any question of
construction or validity arising under the instrument or statute and for a declaration of his
rights or duties thereunder. And, it is claimed, this case comes under its purview because
its purpose is to obtain a clarification of the decision of this Court in G. R. No. L-3278 which
in the opinion of Appellant, is vague and susceptible of double interpretation. Appellant
contends that the words other written instrument should be interpreted as including a
court decision regardless of whether it is final in character or otherwise.
We do not subscribe to the foregoing view. Evidently, a court decision cannot be interpreted
as included within the purview of the words other written instrument, as contended by
Appellant, for the simple reason that the Rules of Court already provide for the ways by
which an ambiguous or doubtful decision may be corrected or clarified without need of
resorting to the expedient prescribed by Rule 66. Thus, if a party is not agreeable to a
decision either on questions of law or of fact, he may file with the trial court a motion for
reconsideration or a new trial in order that the defect may be corrected (Section 1, Rule 37).
The same remedy may be pursued by a party with regard to a decision of the Court of
Appeals or of the Supreme Court (section 1, Rule 54, section 1, Rule 55, in connection with
section 1, Rule 58). A party may even seek relief from a judgment or order of an inferior
court on the ground of fraud, accident, mistake or excusable negligence if he avails of that
remedy within the terms prescribed by section 1, Rule 38. Apparently, Appellant has already
availed of some of these legal remedies but that he was denied relief because his claim was
found unmeritorious.
But the fundamental reason why the decision of this Court in the original case (G. R. No. L3278) cannot be the subject of declaratory relief is predicated upon the principle of res

99

judicata which stamps the mark of finality on a case which has been fully and definitely
litigated in court. This principle is sound. It avoids multiplicity of actions. It commands that
once a case is definitely litigated it should not be reopened. Thus, it has been held that The
foundation principle upon which the doctrine of res judicata rests is that parties ought not to
be permitted to litigate the same issue more than once; chan roblesvirtualawlibrarythat,
when a right or fact has been judicially tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so
long as it remains unreversed, should be conclusive upon the parties, and those in privity
with them in law or estate. It is considered that a judgment presents evidence of the facts of
so high a nature that nothing which could be proved by evidence aliunde would be sufficient
to overcome it; chan roblesvirtualawlibraryand therefore it would be useless for a party
against whom it can be properly applied to adduce any such evidence, and accordingly he is
estopped or precluded by law from doing so. Such is the character of an estoppel by matter
of record, as in case of an issue on a question of fact, judicially tried and decided. (Oberiano
vs. Sobremesana, G. R. No. L-4622, May 30, 1952.)
We may mention in passing that the claim of Appellant that the decision of this Court above
referred to suffers from contradiction or inconsistency is rather equivocal for he mistook a
restatement made therein of a portion of the argument of Appellant as a finding of fact
made by the Court which is not the case. A more discerning appreciation of the decision
would bear this out. The truth of the matter is that the Court concluded that the contract in
dispute was valid as may be inferred from the portion of the decision which we
quote:chanroblesvirtuallawlibrary
The second or supplemental motion for a new trial, the denial of which is the subject of the
fourth assignment of error, added a new ground to the first motion for new trial and assailed
the validity of the contract of sale for supposed lack of valuable consideration or because
the consideration was false and illicit. Here is what we make out of the Plaintiffs line of
reasoning, which is none too easy to understand:chanroblesvirtuallawlibrary
At the start and through the greater part of the Japanese occupation, the Japanese war
notes were at par with the Commonwealth currency and were so understood and recognized
both by the Philippine Executive Commission and the Japanese-sponsored Philippine
Republic. By the contract in question the parties reduced the rate of exchange between the
two currencies from par to one to ten. This reduction is contrary to the law or public policy
promulgated by the Japanese Military authorities, or the Philippine Executive Commission.
Therefore the consideration was false and illicit and the contract was void ab initio,
according to Articles 1255, 1275, 1276, and 1278 of the Civil Code.
What the Plaintiff would want the court to do as a result of the contracts alleged nullity is
not stated or made clear. However, that may be, the contract was not void. It was licit for
the parties to agree that the vendor should pay the purchaser only P2,000 instead of
P20,000 as price of repurchase regardless of the currency received by the vendor. In this
case the Plaintiff, who is a full-pledged lawyer and appeared below in his own behalf and
filed the brief in this instance, drew the deed of sale himself, according to the lower courts
finding, and the fixing of the ratio of ten to one between the Japanese war notes and the
Commonwealth money must have been his own idea and certainly was for his own benefit. If
the devaluation of the Japanese money bothered the Plaintiffs conscience, there was no law
to prevent him from redeeming the land for P20,000, or P15,000 which he admitted having
received. (Italics supplied)
With regard to the portion of the order which allows the withdrawal of the original certificate
of title in order that the Register of Deeds may effect the consolidation of ownership and
issuance of a new title in favor of Appellee as requested, we do not also find any justification
for its reversal, as we are urged, it appearing that the decision in the original case (Civil
Case No. 466) has become final and executory and no further step need be taken therein
affecting the equities of the parties. The case is closed and no reason is seen why the
evidence that has been presented cannot be withdrawn.
Finding no merit in this appeal, we hereby affirm the order appealed from, with costs against
Appellant.
G.R. No. 126911

April 30, 2003

PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner,

vs.

100

THE HONORABLE COURT OF APPEALS and JOSE ABAD, LEONOR ABAD, SABINA
ABAD, JOSEPHINE "JOSIE" BEATA ABAD-ORLINA, CECILIA ABAD, PIO ABAD,
DOMINIC ABAD, TEODORA ABAD, respondents.
CARPIO MORALES, J.:
The present petition for review assails the decision of the Court of Appeals affirming that of
the Regional Trial Court of Iloilo City, Branch 30, finding petitioner Philippine Deposit
Insurance Corporation (PDIC) liable, as statutory insurer, for the value of 20 Golden Time
Deposits belonging to respondents Jose Abad, Leonor Abad, Sabina Abad, Josephine "Josie"
Beata Abad-Orlina, Cecilia Abad, Pio Abad, Dominic Abad, and Teodora Abad at the Manila
Banking Corporation (MBC), Iloilo Branch.
Prior to May 22, 1997, respondents had, individually or jointly with each other, 71
certificates of time deposits denominated as "Golden Time Deposits" (GTD) with an
aggregate face value of P1,115,889.96.1
On May 22, 1987, a Friday, the Monetary Board (MB) of the Central Bank of the
Philippines, now Bangko Sentral ng Pilipinas, issued Resolution 5052 prohibiting MBC to do
business in the Philippines, and placing its assets and affairs under receivership. The
Resolution, however, was not served on MBC until Tuesday the following week, or on May 26,
1987, when the designated Receiver took over.3
On May 25, 1987, the next banking day following the issuance of the MB Resolution,
respondent Jose Abad was at the MBC at 9:00 a.m. for the purpose of pre-terminating the 71
aforementioned GTDs and re-depositing the fund represented thereby into 28 new GTDs in
denominations of P40,000.00 or less under the names of herein respondents individually or
jointly with each other.4 Of the 28 new GTDs, Jose Abad pre-terminated 8 and withdrew the
value thereof in the total amount of P320,000.00.5
Respondents thereafter filed their claims with the PDIC for the payment of the remaining 20
insured GTDs.6
On February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount of
P120,000.00. PDIC, however, withheld payment of the 17 remaining claims after Washington
Solidum, Deputy Receiver of MBC-Iloilo, submitted a report to the PDIC7 that there was
massive conversion and substitution of trust and deposit accounts on May 25, 1987 at MBCIloilo.8 The pertinent portions of the report stated:
xxx

xxx

xxx

On May 25, 1987 (Monday) or a day prior to the official announcement and take-over by CB
of the assets and liabilities of The Manila Banking Corporation, the Iloilo Branch was found to
have recorded an unusually heavy movements in terms of volume and amount for all types
of deposits and trust accounts. It appears that the impending receivership of TMBC was
somehow already known to many depositors on account of the massive withdrawals paid on
this day which practically wiped out the branch's entire cash position. . . .
xxx

xxx

xxx

. . . The intention was to maximize the availment of PDIC coverage limited to P40,000 by
spreading out big accounts to as many certificates under various nominees. . . .9
xxx

xxx

xxx

Because of the report, PDIC entertained serious reservation in recognizing respondents'

GTDs as deposit liabilities of MBC-Iloilo. Thus, on August 30, 1991, it filed a petition for
declaratory relief against respondents with the Regional Trial Court (RTC) of Iloilo City, for a
judicial declaration determination of the insurability of respondents' GTDs at MBC-Iloilo.10
In their Answer filed on October 24, 1991 and Amended Answer11 filed on January 9, 1992,
respondents set up a counterclaim against PDIC whereby they asked for payment of their
insured deposits.12
In its Decision of February 22, 1994,13 Branch 30 of the Iloilo RTC declared the 20 GTDs of
respondents to be deposit liabilities of MBC, hence, are liabilities of PDIC as statutory insurer.
It accordingly disposed as follows:

101

WHEREFORE, premises considered, judgment is hereby rendered:

1.
Declaring the 28 GTDs of the Abads which were issued by the TMBC-Iloilo on May 25,
1987 as deposits or deposit liabilities of the bank as the term is defined under Section 3 (f)
of R.A. No. 3591, as amended;
2.
Declaring PDIC, being the statutory insurer of bank deposits, liable to the Abads for
the value of the remaining 20 GTDs, the other 8 having been paid already by TMBC Iloilo on
May 25,1987;
3.
Ordering PDIC to pay the Abads the value of said 20 GTDs less the value of 3 GTDs it
paid on February 11, 1988, and the amounts it may have paid the Abads pursuant to the
Order of this Court dated September 8, 1992;
4.
Ordering PDIC to pay immediately the Abads the balance of its admitted liability as
contained in the aforesaid Order of September 8, 1992, should there be any, subject to
liquidation when this case shall have been finally decide; and
5.
Ordering PDIC to pay legal interest on the remaining insured deposits of the Abads
from February 11, 1988 until they are fully paid.
SO ORDERED.
On appeal, the Court of Appeals, by the assailed Decision of October 21, 1996,14 affirmed
the trial court's decision except as to the award of legal interest which it deleted.
Hence, PDIC's present Petition for Review which sets forth this lone assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF THE TRIAL
COURT THAT THE AMOUNT REPRESENTED IN THE FACES OF THE SO CALLED "GOLDEN TIME
DEPOSITS" WERE INSURED DEPOSITS EVEN AS THEY WERE MERE DERIVATIVES OF
RESPONDENTS'
PREVIOUS
ACCOUNT
BALANCES
WHICH
WERE
PRETERMINATED/TERMINATED AT THE TIME THE MANILA BANKING CORPORATION WAS ALREADY
IN SERIOUS FINANCIAL DISTRESS.
In its supplement to the petition, PDIC adds the following assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF THE TRIAL
COURT ORDERING PETITIONER TO PAY RESPONDENTS' CLAIMS FOR PAYMENT OF INSURED
DEPOSITS FOR THE REASON THAT AN ACTION FOR DECLARATORY RELIEF DOES NOT
ESSENTIALLY ENTAIL AN EXECUTORY PROCESS AS THE ONLY RELIEF THAT SHOULD HAVE
BEEN GRANTED BY THE TRIAL COURT IS A DECLARATION OF THE RIGHTS AND DUTIES OF
PETITIONER UNDER R.A. 3591, AS AMENDED, PARTICULARLY SECTION 3(F) THEREOF AS
CONSIDERED AGAINST THE SURROUNDING CIRCUMSTANCES OF THE MATTER IN ISSUE
SOUGHT TO BE CONSTRUED WITHOUT PREJUDICE TO OTHER MATTERS THAT NEED TO BE
CONSIDERED BY PETITIONER IN THE PROCESSING OF RESPONDENTS' CLAIMS.
Under its charter,15 PDIC (hereafter petitioner) is liable only for deposits received by a bank
"in the usual course of business."16 Being of the firm conviction that, as the reported May
25, 1987 bank transactions were so massive, hence, irregular, petitioner essentially seeks a
judicial declaration that such transactions were not made "in the usual course of business"
and, therefore, it cannot be made liable for deposits subject thereof.17
Petitioner points that as MBC was prohibited from doing further business by MB Resolution
505 as of May 22, 1987, all transactions subsequent to such date were not done "in the
usual course of business."
Petitioner further posits that there was no consideration for the 20 GTDs subject of
respondents' claim. In support of this submission, it states that prior to March 25, 1987,
when the 20 GTDs were made, MBC had been experiencing liquidity problems, e.g., at the
start of banking operations on March 25, 1987, it had only P2,841,711.90 cash on hand and
at the end of the day it was left with P27,805.81 consisting mostly of mutilated bills and
coins.18 Hence, even if respondents had wanted to convert the face amounts of the GTDs to
cash, MBC could not have complied with it.

102

Petitioner theorizes that after MBC had exhausted its cash and could no longer sustain
further withdrawal transactions, it instead issued new GTDs as "payment" for the preterminated GTDs of respondents to make sure that all the newly-issued GTDs have face
amounts which are within the statutory coverage of deposit insurance.
Petitioner concludes that since no cash was given by respondents and none was received by
MBC when the new GTDs were transacted, there was no consideration therefor and, thus,
they were not validly transacted "in the usual course of business" and no liability for deposit
insurance was created.19
Petitioner's position does not persuade.
While the MB issued Resolution 505 on May 22, 1987, a copy thereof was served on MBC
only on May 26, 1987. MBC and its clients could be given the benefit of the doubt that they
were not aware that the MB resolution had been passed, given the necessity of
confidentiality of placing a banking institution under receivership.20
The evident implication of the law, therefore, is that the appointment of a receiver may be
made by the Monetary Board without notice and hearing but its action is subject to judicial
inquiry to insure the protection of the banking institution. Stated otherwise, due process
does not necessarily require a prior hearing; a hearing or an opportunity to be heard may be
subsequent to the closure. One can just imagine the dire consequences of a prior hearing:
bank runs would be the order of the day, resulting in panic and hysteria. In the process,
fortunes may be wiped out, and disillusionment will run the gamut of the entire banking
community. (Emphasis supplied).21
Mere conjectures that MBC had actual knowledge of its impending closure do not suffice. The
MB resolution could not thus have nullified respondents' transactions which occurred prior to
May 26, 1987.
That no actual money in bills and/or coins was handed by respondents to MBC does not
mean that the transactions on the new GTDs did not involve money and that there was no
consideration therefor. For the outstanding balance of respondents' 71 GTDs in MBC prior to
May 26, 198722 in the amount of P1,115,889.15 as earlier mentioned was re-deposited by
respondents under 28 new GTDs. Admittedly, MBC had P2,841,711.90 cash on hand more
than double the outstanding balance of respondent's 71 GTDs at the start of the banking
day on May 25, 1987. Since respondent Jose Abad was at MBC soon after it opened at 9:00
a.m. of that day, petitioner should not presume that MBC had no cash to cover the new
GTDs of respondents and conclude that there was no consideration for said GTDs.
Petitioner having failed to overcome the presumption that the ordinary course of business
was followed,23 this Court finds that the 28 new GTDs were deposited "in the usual course
of business" of MBC.
In its second assignment of error, petitioner posits that the trial court erred in ordering it to
pay the balance of the deposit insurance to respondents, maintaining that the instant
petition stemmed from a petition for declaratory relief which does not essentially entail an
executory process, and the only relief that should have been granted by the trial court is a
declaration of the parties' rights and duties. As such, petitioner continues, no order of
payment may arise from the case as this is beyond the office of declaratory relief
proceedings.24
Without doubt, a petition for declaratory relief does not essentially entail an executory
process. There is nothing in its nature, however, that prohibits a counterclaim from being
set-up in the same action.25
Now, there is nothing in the nature of a special civil action for declaratory relief that
proscribes the filing of a counterclaim based on the same transaction, deed or contract
subject of the complaint. A special civil action is after all not essentially different from an
ordinary civil action, which is generally governed by Rules 1 to 56 of the Rules of Court,
except that the former deals with a special subject matter which makes necessary some
special regulation. But the identity between their fundamental nature is such that the same
rules governing ordinary civil suits may and do apply to special civil actions if not
inconsistent with or if they may serve to supplement the provisions of the peculiar rules
governing special civil actions.26

103

Petitioner additionally submits that the issue of determining the amount of deposit insurance
due respondents was never tried on the merits since the trial dwelt only on the
"determination of the viability or validity of the deposits" and no evidence on record sustains
the holding that the amount of deposit due respondents had been finally determined.27 This
issue was not raised in the court a quo, however, hence, it cannot be raised for the first time
in the petition at bar.28
Finally, petitioner faults respondents for availing of the statutory limits of the PDIC law,
presupposing that, based on the conduct of respondent Jose Abad on March 25, 1987, he
and his co respondents "somehow knew" of the impending closure of MBC. Petitioner
ascribes bad faith to respondent Jose Abad in transacting the questioned deposits, and seeks
to disqualify him from availing the benefits under the law. 29
Good faith is presumed. This, petitioner failed to overcome since it offered mere
presumptions as evidence of bad faith.
WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
G.R. No. L-28138

August 13, 1986

MATALIN COCONUT CO., INC., petitioner-appellee,

vs.
THE MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR, AMIR M. BALINDONG
and HADJI PANGILAMUN MANALOCON, MUNICIPAL MAYOR and MUNICIPAL
TREASURER OF MALABANG, LANAO DEL SUR, respondents-appellants. PURAKAN
PLANTATION COMPANY, intervenor-appellee.
YAP, J.:
On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur, invoking the
authority of Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act,
enacted Municipal Ordinance No. 45-46, entitled "AN ORDINANCE IMPOSING A POLICE
INSPECTION FEE OF P.30 PER SACK OF CASSAVA STARCH PRODUCED AND SHIPPED OUT OF
THE MUNICIPALITY OF MALABANG AND IMPOSING PENALTIES FOR VIOLATIONS THEREOF."
The ordinance made it unlawful for any person, company or group of persons "to ship out of
the Municipality of Malabang, cassava starch or flour without paying to the Municipal
Treasurer or his authorized representatives the corresponding fee fixed by (the) ordinance."
It imposed a "police inspection fee" of P.30 per sack of cassava starch or flour, which shall be
paid by the shipper before the same is transported or shipped outside the municipality. Any
person or company or group of individuals violating the ordinance "is liable to a fine of not
less than P100.00, but not more than P1,000.00, and to pay Pl.00 for every sack of flour
being illegally shipped outside the municipality, or to suffer imprisonment of 20 days, or
both, in the discretion of the court.
The validity of the ordinance was challenged by the Matalin Coconut, Inc. in a petition for
declaratory relief filed with the then Court of First Instance of Lanao del Sur against the
Municipal Council, the Municipal Mayor and the Municipal Treasurer of Malabang, Lanao del
Sur. Alleging among others that the ordinance is not only ultra vires, being violative of
Republic Act No. 2264, but also unreasonable, oppressive and confiscatory, the petitioner
prayed that the ordinance be declared null and void ab initio, and that the respondent
Municipal Treasurer be ordered to refund the amounts paid by petitioner under the
ordinance. The petitioner also prayed that during the pendency of the action, a preliminary
injunction be issued enjoining the respondents from enforcing the ordinance. The application
for preliminary injunction, however, was denied by the trial court; instead respondent
Municipal Treasurer was ordered to allow payment of the taxes imposed by the ordinance
under protest.
Claiming that it was also adversely affected by the ordinance, Purakan Plantation Company
was granted leave to intervene in the action. The intervenor alleged that while its cassava
flour factory was situated in another municipality, i.e., Balabagan, Lanao del Sur, it had to
transport the cassava starch and flour it produced to the seashore through the Municipality
of Malabang for loading in coastwise vessels; that the effect of the enactment of Ordinance
No. 45-46, is that intervenor had to refrain from transporting its products through the
Municipality of Malabang in order to ship them by sea to other places.

104

After trial, the Court a quo rendered a decision declaring the municipal ordinance in question
null and void; ordering the respondent Municipal Treasurer to refund to the petitioner the
payments it made under the said ordinance from September 27, 1966 to May 2, 1967,
amounting to P 25,500.00, as well as all payments made subsequently thereafter; and
enjoining and prohibiting the respondents, their agents or deputies, from collecting the tax
of P.30 per bag on the cassava flour or starch belonging to intervenor, Purakan Plantation
Company, manufactured or milled in the Municipality of Balabagan, but shipped out through
the Municipality of Malabang.
After the promulgation of the decision, the Trial Court issued a writ of preliminary mandatory
injunction, upon motion of petitioner, requiring the respondent Municipal Treasurer to
deposit with the Philippine National Bank, Iligan Branch, in the name of the Municipality of
Malabang, whatever amounts the petitioner had already paid or shall pay pursuant to the
ordinance in question up to and until final termination of the case; the deposit was not to be
withdrawn from the said bank without any order from the court. On motion for
reconsideration by respondents, the writ was subsequently modified on July 20, 1967, to
require the deposit only of amounts paid from the effectivity of the writ up to and until the
final termination of the suit.
From the decision of the trial court, the respondents appealed to this Court.
A motion to dismiss appeal filed by petitioner-appellee, was denied by this court in its
resolution of October 31, 1967. Subsequently, respondents-appellants filed a motion to
dissolve the writ of preliminary mandatory injunction issued by the trial court on July 20,
1967. This motion was also denied by this Court on January 10, 1968.
Of the assignments of error raised by the appellants in their Brief, only the following need be
discussed: (1) that the trial court erred in adjudicating the money claim of the petitioner in
an action for declaratory relief; and (2) that the trial court erred in declaring the municipal
ordinance in question null and void.
The respondents-appellants maintain that it was error for the trial court, in an action for
declaratory relief, to order the refund to petitioner-appellee of the amounts paid by the latter
under the municipal ordinance in question. It is the contention of respondents-appellants
that in an action for declaratory relief, all the court can do is to construe the validity of the
ordinance in question and declare the rights of those affected thereby. The court cannot
declare the ordinance illegal and at the same time order the refund to petitioner of the
amounts paid under the ordinance, without requiring petitioner to file an ordinary action to
claim the refund after the declaratory relief judgment has become final. Respondents
maintain that under Rule 64 of the Rules of Court, the court may advise the parties to file
the proper pleadings and convert the hearing into an ordinary action, which was not done in
this case.
We find no merit in such contention. Under Sec. 6 of Rule 64, the action for declaratory relief
may be converted into an ordinary action and the parties allowed to file such pleadings as
may be necessary or proper, if before the final termination of the case "a breach or violation
of an...ordinance, should take place." In the present case, no breach or violation of the
ordinance occurred. The petitioner decided to pay "under protest" the fees imposed by the
ordinance. Such payment did not affect the case; the declaratory relief action was still
proper because the applicability of the ordinance to future transactions still remained to be
resolved, although the matter could also be threshed out in an ordinary suit for the recovery
of taxes paid (Shell Co. of the Philippines, Ltd. vs. Municipality of Sipocot, L-12680, March 20,
1959). In its petition for declaratory relief, petitioner-appellee alleged that by reason of the
enforcement of the municipal ordinance by respondents it was forced to pay under protest
the fees imposed pursuant to the said ordinance, and accordingly, one of the reliefs prayed
for by the petitioner was that the respondents be ordered to refund all the amounts it paid to
respondent Municipal Treasurer during the pendency of the case. The inclusion of said
allegation and prayer in the petition was not objected to by the respondents in their answer.
During the trial, evidence of the payments made by the petitioner was introduced.
Respondents were thus fully aware of the petitioner's claim for refund and of what would
happen if the ordinance were to be declared invalid by the court.
Respondents' contention, if sustained, would in effect require a separate suit for the
recovery of the fees paid by petitioner under protest. Multiplicity of suits should not be
allowed or encouraged and, in the context of the present case, is clearly uncalled for and
unnecessary.

105

The main issue to be resolve in this case whether not Ordinance No. 45-66 enacted by
respondent Municipal Council of Malabang, Lanao del Sur, is valid. The respondentsappellants contend that the municipality has the power and authority to approve the
ordinance in question pursuant to Section 2 of the Local Autonomy Act (Republic Act No.
2264).
Since the enactment of the Local Autonomy Act, a liberal rule has been followed by this
Court in construing municipal ordinances enacted pursuant to the taxing power granted
under Section 2 of said law. This Court has construed the grant of power to tax under the
above-mentioned provision as sufficiently plenary to cover "everything, excepting those
which are mentioned" therein, subject only to the limitation that the tax so levied is for
public purposes, just and uniform (Nin Bay Mining Company vs. Municipality of Roxas,
Province of Palawan, 14 SCRA 661; C.N. Hodges vs. Municipal Board, Iloilo City, et al., 19
SCRA 28).
We agree with the finding of the trial court that the amount collected under the ordinance in
question partakes of the nature of a tax, although denominated as "police inspection fee"
since its undeniable purpose is to raise revenue. However, we cannot agree with the trial
court's finding that the tax imposed by the ordinance is a percentage tax on sales which is
beyond the scope of the municipality's authority to levy under Section 2 of the Local
Autonomy Act. Under the said provision, municipalities and municipal districts are prohibited
from imposing" any percentage tax on sales or other taxes in any form based thereon. " The
tax imposed under the ordinance in question is not a percentage tax on sales or any other
form of tax based on sales. It is a fixed tax of P.30 per bag of cassava starch or flour
"shipped out" of the municipality. It is not based on sales.
However, the tax imposed under the ordinance can be stricken down on another ground.
According to Section 2 of the abovementioned Act, the tax levied must be "for public
purposes, just and uniform" (Emphasis supplied.) As correctly held by the trial court, the socalled "police inspection fee" levied by the ordinance is "unjust and unreasonable." Said the
court a quo:
... It has been proven that the only service rendered by the Municipality of Malabang, by way
of inspection, is for the policeman to verify from the driver of the trucks of the petitioner
passing by at the police checkpoint the number of bags loaded per trip which are to be
shipped out of the municipality based on the trip tickets for the purpose of computing the
total amount of tax to be collect (sic) and for no other purpose. The pretention of
respondents that the police, aside from counting the number of bags shipped out, is also
inspecting the cassava flour starch contained in the bags to find out if the said cassava flour
starch is fit for human consumption could not be given credence by the Court because, aside
from the fact that said purpose is not so stated in the ordinance in question, the policemen
of said municipality are not competent to determine if the cassava flour starch are fit for
human consumption. The further pretention of respondents that the trucks of the petitioner
hauling the bags of cassava flour starch from the mill to the bodega at the beach of
Malabang are escorted by a policeman from the police checkpoint to the beach for the
purpose of protecting the truck and its cargoes from molestation by undesirable elements
could not also be given credence by the Court because it has been shown, beyond doubt,
that the petitioner has not asked for the said police protection because there has been no
occasion where its trucks have been molested, even for once, by bad elements from the
police checkpoint to the bodega at the beach, it is solely for the purpose of verifying the
correct number of bags of cassava flour starch loaded on the trucks of the petitioner as
stated in the trip tickets, when unloaded at its bodega at the beach. The imposition,
therefore, of a police inspection fee of P.30 per bag, imposed by said ordinance is unjust and
unreasonable.
The Court finally finds the inspection fee of P0.30 per bag, imposed by the ordinance in
question to be excessive and confiscatory. It has been shown by the petitioner, Matalin
Coconut Company, Inc., that it is merely realizing a marginal average profit of P0.40, per
bag, of cassava flour starch shipped out from the Municipality of Malabang because the
average production is P15.60 per bag, including transportation costs, while the prevailing
market price is P16.00 per bag. The further imposition, therefore, of the tax of P0.30 per
bag, by the ordinance in question would force the petitioner to close or stop its cassava flour
starch milling business considering that it is maintaining a big labor force in its operation,
including a force of security guards to guard its properties. The ordinance, therefore, has an
adverse effect on the economic growth of the Municipality of Malabang, in particular, and of
the nation, in general, and is contrary to the economic policy of the government.

106

Having found the ordinance in question to be invalid, we find it unnecessary to rule on the
other errors assigned by the appellants.
WHEREFORE, petition is dismissed. The decision of the court a quo is hereby affirmed. No
costs.
SO ORDERED.
DEPARTMENT OF BUDGET AND MANAGEMENT, represented by SECRETARY ROMULO
L. NERI, PHILIPPINE NATIONAL POLICE, represented by POLICE DIRECTOR GENERAL
ARTURO L. LOMIBAO, NATIONAL POLICE COMMISSION, represented by CHAIRMAN
ANGELO T. REYES, AND CIVIL SERVICE COMMISSION, represented by CHAIRPERSON
KARINA C. DAVID,
Petitioners,
- versus MANILAS FINEST RETIREES ASSOCIATION, INC., represented by P/COL. FELICISIMO
G. LAZARO (RET.), AND ALL THE OTHER INP RETIREES,
Respondents.
G.R. No. 169466

May 9, 2007

DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review on certiorari under Rule 45 of
the Rules of Court are the following issuances of the Court of Appeals (CA) in CA-G.R. CV No.
78203, to wit:
1.
Decision[1] dated July 7, 2005 which affirmed in toto the decision of the
Regional Trial Court of Manila, Branch 32, in Civil Case No. 02-103702, a suit for declaratory
relief, declaring the herein respondents entitled to the same retirement benefits accorded
upon retirees of the Philippine National Police (PNP) under Republic Act (R.A.) No. 6975, as
amended by R.A. No. 8551, and ordering the herein petitioners to implement the proper
adjustments on respondents retirement benefits; and
2.
Resolution[2] dated August 24, 2005 which denied the petitioners motion for
reconsideration.

The antecedent facts:

In 1975, Presidential Decree (P.D.) No. 765 was issued constituting the Integrated National
Police (INP) to be composed of the Philippine Constabulary (PC) as the nucleus and the
integrated police forces as components thereof. Complementing P.D. No. 765 was P.D. No.
1184[3] dated August 26, 1977 (INP Law, hereinafter) issued to professionalize the INP and
promote career development therein.
On December 13, 1990, Republic Act (R.A.) No. 6975, entitled AN ACT ESTABLISHING THE
PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR AND
LOCAL GOVERNMENT, AND FOR OTHER PURPOSES, hereinafter referred to as PNP Law, was
enacted. Under Section 23 of said law, the Philippine National Police (PNP) would initially
consist of the members of the INP, created under P.D. No. 765, as well as the officers and
enlisted personnel of the PC. In part, Section 23 reads:
SEC. 23. Composition. Subject to the limitation provided for in this Act, the Philippine
National Police, hereinafter referred to as the PNP, is hereby established, initially consisting
of the members of the police forces who were integrated into the Integrated National Police
(INP) pursuant to Presidential Decree No. 765, and the officers and enlisted personnel of the
Philippine Constabulary (PC).
A little less than eight (8) years later, or on February 25, 1998, R.A. No. 6975 was amended
by R.A. No. 8551, otherwise known as the PHILIPPINE NATIONAL POLICE REFORM AND
REORGANIZATION ACT OF 1998. Among other things, the amendatory law reengineered the
retirement scheme in the police organization. Relevantly, PNP personnel, under the new law,

107

stood to collect more retirement benefits than what INP members of equivalent rank, who
had retired under the INP Law, received.
The INP retirees illustrated the resulting disparity in the retirement benefits between them
and the PNP retirees as follows:[4]

Hence, on June 3, 2002, in the Regional Trial Court (RTC) of Manila, all INP retirees,
spearheaded by the Manilas Finest Retirees Association, Inc., or the MFRAI (hereinafter
collectively referred to as the INP Retirees), filed a petition for declaratory relief,[5]
thereunder impleading, as respondents, the Department of Budget and Management (DBM),
the PNP, the National Police Commission (NAPOLCOM), the Civil Service Commission (CSC)
and the Government Service Insurance System (GSIS). Docketed in the RTC as Civil Case No.
02-103702, which was raffled to Branch 22 thereof, the petition alleged in gist that INP
retirees were equally situated as the PNP retirees but whose retirement benefits prior to the
enactment of R.A. No. 6975, as amended by R.A. No. 8551, were unconscionably and
arbitrarily excepted from the higher rates and adjusted benefits accorded to the PNP
retirees. Accordingly, in their petition, the petitioning INP retirees pray that a
DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty that they, as
INP-retirees, are truly absorbed and equally considered as PNP-retirees and thus, entitled to
enjoy the SAME or IDENTICAL retirement benefits being bestowed to PNP-retirees by virtue
of said PNP Law or Republic Act No. 6975, as amended by Republic Act 8551, with the
corollary mandate for the respondents-government agencies to effect the immediate
adjustment on their previously received disparate retirement benefits, retroactive to its
effectivity, and with due payment thereof.
The GSIS moved to dismiss the petition on grounds of lack of jurisdiction and cause of
action. On the other hand, the CSC, DBM, NAPOLCOM and PNP, in their respective answers,
asserted that the petitioners could not claim the more generous retirement benefits under
R.A. No. 6975 because at no time did they become PNP members, having retired prior to the
enactment of said law. DBM, NAPOLCOM and PNP afterwards filed their respective pre-trial
briefs.
The ensuing legal skirmish is not relevant to the disposition of the instant case. The bottom
line is that, on March 21, 2003, the RTC came out with its decision[6] holding that R.A. No.
6975, as amended, did not abolish the INP but merely provided for the absorption of its
police functions by the PNP, and accordingly rendered judgment for the INP retirees, to wit:
WHEREFORE, this Court hereby renders JUDGMENT DECLARING the INP Retirees entitled to
the same or identical retirement benefits and such other benefits being granted, accorded
and bestowed upon the PNP Retirees under the PNP Law (RA No. 6975, as amended).
The respondents Government Departments and Agencies shall IMMEDIATELY EFFECT and
IMPLEMENT the proper adjustments on the INP Retirees retirement and such other benefits,
RETROACTIVE to its date of effectivity, and RELEASE and PAY to the INP Retirees the due
payments of the amounts.
SO ORDERED.
On April 2, 2003, the trial court issued what it denominated as Supplement to the Decision
whereunder it granted the GSIS motion to dismiss and thus considered the basic petition as
withdrawn with respect to the latter.
From the adverse decision of the trial court, the remaining respondents, namely, DBM, PNP,
NAPOLCOM and CSC, interposed an appeal to the CA whereat their appellate recourse was
docketed as CA-G.R. CV No. 78203.
As stated at the threshold hereof, the CA, in its decision of July 7, 2005,[7] affirmed that of
the trial court upholding the entitlement of the INP retirees to the same or identical
retirement benefits accorded upon PNP retirees under R.A. No. 6975, as amended.
Their motion for reconsideration having been denied by the CA in` its equally assailed
resolution of August 24, 2005,[8] herein petitioners are now with this Court via the instant
recourse on their singular submission that -

108

THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN LAW IN AFFIRMING THE DECISION
OF THE TRIAL COURT NOTWITHSTANDING THAT IT IS CONTRARY TO LAW AND ESTABLISHED
JURISPRUDENCE.
We DENY.
In the main, it is petitioners posture that R.A. No. 6975 clearly abolished the INP and created
in its stead a new police force, the PNP. Prescinding therefrom, petitioners contend that since
the PNP is an organization entirely different from the INP, it follows that INP retirees never
became PNP members. Ergo, they cannot avail themselves of the retirement benefits
accorded to PNP members under R.A. No. 6975 and its amendatory law, R.A. No. 8551.
A flashback at history is proper.
As may be recalled, R.A. No. 6975 was enacted into law on December 13, 1990, or just about
four (4) years after the 1986 Edsa Revolution toppled down the dictatorship regime. Egged
on by the current sentiment of the times generated by the long period of martial rule during
which the police force, the PC-INP, had a military character, being then a major service of
the Armed Forces of the Philippines, and invariably moved by a fresh constitutional mandate
for the establishment of one police force which should be national in scope and, most
importantly, purely civilian in character,[9] Congress enacted R.A. No. 6975 establishing the
PNP and placing it under the Department of Interior and Local Government. To underscore
the civilian character of the PNP, R.A. No. 6975 made it emphatically clear in its declaration
of policy the following:
Section 2. Declaration of policy - It is hereby declared to be the policy of the State to
promote peace and order, ensure public safety and further strengthen local government
capability aimed towards the effective delivery of the basic services to the citizenry through
the establishment of a highly efficient and competent police force that is national in scope
and civilian in character. xxx.
The police force shall be organized, trained and equipped primarily for the performance of
police functions. Its national scope and civilian character shall be paramount. No element of
the police force shall be military nor shall any position thereof be occupied by active
members of the [AFP]. (Emphasis and word in bracket supplied.)
Pursuant to Section 23, supra, of R.A. No. 6975, the PNP initially consisted of the members of
the police forces who were integrated into the INP by virtue of P.D. No. 765, while Section
86[10] of the same law provides for the assumption by the PNP of the police functions of the
INP and its absorption by the former, including its appropriations, funds, records, equipment,
etc., as well as its personnel.[11] And to govern the statutes implementation, Section 85 of
the Act spelled out the following absorption phases:
Phase I Exercise of option by the uniformed members of the [PC], the PC elements assigned
with the Narcotics Command, CIS, and the personnel of the technical services of the AFP
assigned with the PC to include the regular CIS investigating agents and the operatives and
agents of the NAPOLCOM Inspection. Investigation and Intelligence Branch, and the
personnel of the absorbed National Action Committee on Anti-Hijacking (NACAH) of the
Department of National Defense to be completed within six (6) months from the date of the
effectivity of this Act. At the end of this phase, all personnel from the INP, PC, AFP Technical
Services, NACAH, and NAPOLCOM Inspection, Investigation and Intelligence Branch shall
have been covered by official orders assigning them to the PNP, Fire and Jail Forces by their
respective units.
Phase II Approval of the table of organization and equipment of all bureaus and offices
created under this Act, preparation and filling up of their staffing pattern, transfer of assets
to the [DILG] and organization of the Commission, to be completed within twelve (12)
months from the effectivity date hereof. At the end of this phase, all personnel to be
absorbed by the [DILG] shall have been issued appointment papers, and the organized
Commission and the PNP shall be fully operational.
The PC officers and enlisted personnel who have not opted to join the PNP shall be
reassigned to the Army, Navy or Air Force, or shall be allowed to retire under existing AFP
rules and regulations. Any PC-INP officer or enlisted personnel may, within the twelve-month
period from the effectivity of this Act, retire and be paid retirement benefits corresponding to
a position two (2) ranks higher than his present grade, subject to the conditions that at the

109

time he applies for retirement, he has rendered at least twenty (20) years of service and still
has, at most, twenty-four (24) months of service remaining before the compulsory
retirement age as provided by existing law for his office.
Phase III Adjustment of ranks and establishment of one (1) lineal roster of officers and
another for non-officers, and the rationalization of compensation and retirement systems;
taking into consideration the existing compensation schemes and retirement and separation
benefit systems of the different components of the PNP, to ensure that no member of the
PNP shall suffer any diminution in basic longevity and incentive pays, allowances and
retirement benefits due them before the creations of the PNP, to be completed within
eighteen (18) months from the effectivity of this Act. xxx.
Upon the effectivity of this Act, the [DILG] Secretary shall exercise administrative supervision
as well as operational control over the transferred, merged and/or absorbed AFP and INP
units. The incumbent Director General of the PC-INP shall continue to act as Director General
of the PNP until replaced . (Emphasis and words in brackets supplied.)

From the foregoing, it appears clear to us that the INP was never, as posited by the
petitioners, abolished or terminated out of existence by R.A. No. 6975. For sure, nowhere in
R.A. No. 6975 does the words abolish or terminate appear in reference to the INP. Instead,
what the law provides is for the absorption, transfer, and/or merger of the INP, as well as the
other offices comprising the PC-INP, with the PNP. To abolish is to do away with, to annul,
abrogate or destroy completely;[12] to absorb is to assimilate, incorporate or to take in.[13]
Merge means to cause to combine or unite to become legally absorbed or extinguished by
merger[14] while transfer denotes movement from one position to another. Clearly, abolition
cannot be equated with absorption.
True it is that Section 90[15] of R.A. No. 6975 speaks of the INP [ceasing] to exist upon the
effectivity of the law. It ought to be stressed, however, that such cessation is but the logical
consequence of the INP being absorbed by the PNP.
Far from being abolished then, the INP, at the most, was merely transformed to become the
PNP, minus of course its military character and complexion.
Even the petitioners effort at disclosing the legislative intent behind the enactment of R.A.
No. 6975 cannot support their theory of abolition. Rather, the Senate and House
deliberations on the bill that eventually became R.A. No. 6975 reveal what has correctly
been held by the CA in its assailed decision: that the PNP was precisely created to erase the
stigma spawned by the militarization of the police force under the PC-INP structure. The
rationale behind the passage of R.A. No. 6975 was adequately articulated by no less than
the sponsor[16] of the corresponding House bill in his sponsorship speech, thus:
By removing the police force from under the control and supervision of military officers, the
bill seeks to restore and underscore the civilian character of police work - an otherwise
universal concept that was muddled up by the martial law years.
Indeed, were the legislative intent was for the INPs abolition such that nothing would be left
of it, the word abolish or what passes for it could have easily found its way into the very text
of the law itself, what with the abundant use of the word during the legislative deliberations.
But as can be gleaned from said deliberations, the lawmakers concern centered on the fact
that if the entire PC-INP corps join the PNP, then the PC-INP will necessarily be abolished, for
who then would be its members? Of more consequence, the lawmakers were one in saying
that there should never be two national police agencies at the same time.
With the conclusion herein reached that the INP was not in fact abolished but was merely
transformed to become the PNP, members of the INP which include the herein respondents
are, therefore, not excluded from availing themselves of the retirement benefits accorded to
PNP retirees under Sections 74[17] and 75[18] of R.A. No. 6975, as amended by R.A. No.
8551. It may be that respondents were no longer in the government service at the time of
the enactment of R.A. No. 6975. This fact, however, without more, would not pose as an
impediment to the respondents entitlement to the new retirement scheme set forth under
the aforecited sections. As correctly ratiocinated by the CA to which we are in full accord:

For sure, R.A. No. 6975 was not a retroactive statute since it did not impose a new obligation
to pay the INP retirees the difference between what they received when they retired and
what would now be due to them after R.A. No. 6975 was enacted. Even so, that did not
render the RTCs interpretation of R.A. No. 6975 any less valid. The [respondents] retirement

110

prior to the passage of R.A. No. 6975 did not exclude them from the benefits provided by
R.A. No. 6975, as amended by R.A. No. 8551, since their membership in the INP was an
antecedent fact that nonetheless allowed them to avail themselves of the benefits of the
subsequent laws. R.A. No. 6975 considered them as PNP members, always referring to their
membership and service in the INP in providing for their retirement benefits. [19]

Petitioners maintain, however, that NAPOLCOM Resolution No. 8,[20] particularly Section
11[21] thereof, bars the payment of any differential in retirement pay to officers and nonofficers who are already retired prior to the effectivity of R.A. No. 6975.
The contention does not commend itself for concurrence.
Under the amendatory law (R.A. No. 8551), the application of rationalized retirement
benefits to PNP members who have meanwhile retired before its (R.A. No. 8551) enactment
was not prohibited. In fact, its Section 38[22] explicitly states that the rationalized
retirement benefits schedule and program shall have retroactive effect in favor of PNP
members and officers retired or separated from the time specified in the law. To us, the
aforesaid provision should be made applicable to INP members who had retired prior to the
effectivity of R.A. No. 6975. For, as afore-held, the INP was, in effect, merely absorbed by the
PNP and not abolished.
Indeed, to bar payment of retirement pay differential to INP members who were already
retired before R.A. No. 6975 became effective would even run counter to the purpose of
NAPOLCOM Resolution No. 8 itself, as expressed in its preambulatory clause, which is to
rationalize the retirement system of the PNP taking into consideration existing retirement
and benefit systems (including R.A. No. 6975 and P.D. No. 1184) of the different components
thereof to ensure that no member of the PNP shall suffer any diminution in the retirement
benefits due them before the creation of the PNP.[23]
Most importantly, the perceived restriction could not plausibly preclude the respondents
from asserting their entitlement to retirement benefits adjusted to the level when R.A. No.
6975 took effect. Such adjustment hews with the constitutional warrant that the State shall,
from time to time, review to upgrade the pensions and other benefits due to retirees of both
the government and private sectors,[24] and the implementing mandate under the Senior
Citizens Law[25] that to the extent practicable and feasible, retirement benefits xxx shall be
upgraded to be at par with the current scale enjoyed by those in actual service.
Certainly going for the respondents in their bid to enjoy the same retirement benefits
granted to PNP retirees, either under R.A. No. 6975 or R.A. No. 8551, is Section 34 of the
latter law which amended Section 75 of R.A. No. 6975 by adding thereto the following
proviso:
Section 75. Retirement benefits. x x x: Provided, finally, That retirement pay of the
officers/non-officers of the PNP shall be subject to adjustments based on the prevailing scale
of base pay of police personnel in the active service.

Then, too, is the all familiar rule that:

Retirement laws should be liberally construed in favor of the retiree because their intention
is to provide for his sustenance and hopefully, even comfort, when he no longer has the
stamina to continue earning his livelihood. The liberal approach aims to achieve the
humanitarian purposes of the law in order that efficiency, security and well-being of
government employees may be enhanced.[26]
The petitioners parlay the notion of prospective application of statutes, noting in this regard
that R.A. No. 6975, as amended, cannot be applied retroactively, there being no provision to
that effect.
We are not persuaded.
As correctly found by the appellate court, R.A. No. 6975 itself contextually provides for its
retroactive application to cover those who had retired prior to its effectivity. In this regard,

111

we invite attention to the three (3) phases of implementation under Section 85 for the
absorption and continuation in the service of, among others, the INP members under the
newly-established PNP.
In a further bid to scuttle respondents entitlement to the desired retirement benefits, the
petitioners fault the trial court for ordering the immediate adjustments of the respondents
retirement benefits when the basic petition filed before it was one for declaratory relief. To
the petitioners, such petition does not essentially entail an executory process, the only relief
proper under that setting being a declaration of the parties rights and duties.
Petitioners above posture is valid to a point. However, the execution of judgments in a
petition for declaratory relief is not necessarily indefensible. In Philippine Deposit Insurance
Corporation[PDIC] v. Court of Appeals,[27] wherein the Court affirmed the order for the
petitioners therein to pay the balance of the deposit insurance to the therein respondents,
we categorically ruled:
Now, there is nothing in the nature of a special civil action for declaratory relief that
proscribes the filing of a counterclaim based on the same transaction, deed or contract
subject of the complaint. A special civil action is after all not essentially different from an
ordinary civil action, which is generally governed by Rules 1 to 56 of the Rules of Court,
except that the former deals with a special subject matter which makes necessary some
special regulation. But the identity between their fundamental nature is such that the same
rules governing ordinary civil suits may and do apply to special civil actions if not
inconsistent with or if they may serve to supplement the provisions of the peculiar rules
governing special civil actions.[28]

Similarly, in Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del Sur:[29]
the Court upheld the lower courts order for a party to refund the amounts paid by the
adverse party under the municipal ordinance therein questioned, stating:
x x x Under Sec. 6 of Rule 64, the action for declaratory relief may be converted into an
ordinary action and the parties allowed to file such pleadings as may be necessary or
proper, if before the final termination of the case "a breach or violation of an ordinance,
should take place." In the present case, no breach or violation of the ordinance occurred.
The petitioner decided to pay "under protest" the fees imposed by the ordinance. Such
payment did not affect the case; the declaratory relief action was still proper because the
applicability of the ordinance to future transactions still remained to be resolved, although
the matter could also be threshed out in an ordinary suit for the recovery of taxes paid . In
its petition for declaratory relief, petitioner-appellee alleged that by reason of the
enforcement of the municipal ordinance by respondents it was forced to pay under protest
the fees imposed pursuant to the said ordinance, and accordingly, one of the reliefs prayed
for by the petitioner was that the respondents be ordered to refund all the amounts it paid to
respondent Municipal Treasurer during the pendency of the case. The inclusion of said
allegation and prayer in the petition was not objected to by the respondents in their answer.
During the trial, evidence of the
payments made by the petitioner was introduced. Respondents were thus fully aware of the
petitioner's claim for refund and of what would happen if the ordinance were to be declared
invalid by the court.
The Court sees no reason for treating this case differently from PDIC and Matalin. This
disposition becomes all the more appropriate considering that the respondents, as
petitioners in the RTC, pleaded for the immediate adjustment of their retirement benefits
which, significantly, the herein petitioners, as respondents in the same court, did not object
to. Being aware of said prayer, the petitioners then already knew the logical consequence if,
as it turned out, a declaratory judgment is rendered in the respondents favor.
At bottom then, the trial courts judgment forestalled multiplicity of suits which, needless to
stress, would only entail a long and arduous process. Considering their obvious advanced
years, the respondents can hardly afford another protracted proceedings. It is thus for this
Court to already write finis to this case.

WHEREFORE, the instant petition is DENIED and the assailed decision and resolution of the
CA, respectively dated July 7, 2005 and August 24, 2005, are AFFIRMED.

112

No costs.
SO ORDERED.
G.R. No. L-20014

November 27, 1968

FRANCISCO CRISOLOGO and CONSOLACION FLORENTINO CRISOLOGO, petitionersappellants,

vs.
ISAAC CENTENO and ASUNCION AQUINO CENTENO, oppositors-appellees.
B. Martinez for petitioners-appellants.
Luis Bello, Jr. for oppositors-appellees.
CAPISTRANO, J.:
On January 18, 1955, the spouses Francisco Crisologo and Consolacion Florentino filed in the
Court of First Instance of Ilocos Sur an ex parte petition for consolidation of ownership in
them as vendees a retro of two parcels of land situated at Barrio Lapting, Lapog, Ilocos Sur,
on the ground that the vendors, the spouses Isaac Centeno and Asuncion Aquino, have failed
to exercise their right of repurchase within the periods stipulated in the two contracts of sale
with pacto de retro. On January 28, 1955, after hearing at which the petitioners presented
evidence in support of the petition, the court a quo, through Judge Francisco Geronimo,
granted the petition. On July 19, 1956, the vendors filed a motion to set aside the Order of
January 28, 1955, and on July 27, 1956, the court a quo, through Judge Felix Q. Antonio,
granted the motion on the ground that the movants had not been duly notified of the
hearing. On motion by the petitioners to set aside the Order of July 27, 1956, on the ground
that the vendors had been notified by registered mail of the hearing, the lower court, by its
Order of February 27, 1957, granted the motion and set aside the Order of July 27, 1956. The
vendors appealed the Order of February 27, 1957, to the Court of Appeals. On June 27, 1958,
the Court of Appeals rendered judgment in the appeal setting aside the lower court's Order
of February 27, 1957, after holding that the vendors had not been legally notified of the
petition and the hearing, and that the Order of January 28, 1955, was a patent nullity. The
Court of Appeals remanded the record to the lower court for reopening and for further
proceedings. Accordingly, after the vendors had been duly summoned as respondents, they
filed their answer alleging that the two contracts of sale with pacto de retro were really
intended as equitable mortgages as securities for usurious loans. After trial, the lower court
rendered its decision on October 26, 1960, holding that respondents' allegation was
substantiated by their evidence. Judgment was rendered in favor of the respondents as
follows:
WHEREFORE, in view of the foregoing, the Court hereby renders judgment declaring that
Exhibits 2 and 3 are actually intended by the parties to be Deeds of Equitable Mortgage, and
as such respondents are entitled to redeem the lands described therein, by paying to the
petitioners whatever balance remains of the principal and interest thereon at 12%, after
deducting therefrom the excess interest paid on November 11, 1952 and September 10,
1953, and the value of the produce taken from those properties by petitioners in accordance
with the above findings from 1955 until the possession of these properties are returned to
respondents and upon such settlement, the petitioners are ordered to execute the
corresponding release of mortgage.
Petition for consolidation of title is therefore denied, with costs against petitioners.
The petitioners appealed to the Supreme Court on questions of law.
Appellants contend that the lower court erred in not finding that the Order of January 28,
1955, was valid, final and executory and that all proceedings thereafter taken, including the
vendors' appeal to the Court of Appeals and its decision rendered in said appeal setting
aside the Order of February 27, 1957, and remanding the case reopening and further
proceedings, as well as the proceedings thereafter taken including the decision of October
26, 1960, are null and void. The contention is untenable in view of the following
considerations:
(1) Article 1607 of the Civil Code which provides that:

113

In case of real property, the consolidation of ownership in the vendee by virtue of the failure
of the vendor to comply with the provisions of article 1616 shall not be recorded in the
Registry of Property without a judicial order, after the vendor has been duly heard.
contemplates a contentious proceeding wherein the vendor a retro must be named
respondent in the caption and title of the petition for consolidation of ownership and has
been duly heard.
In the instant case, the caption and title of the petition for consolidation of ownership named
the vendees as petitioners, but did not name the vendors as respondents, and said vendors
were not duly summoned and heard. In view thereof, the Order of January 28, 1955, was a
patent nullity having been issued contrary to the contentious proceeding contemplated in
Article 1607 of the Civil Code, and the lower court not having acquired jurisdiction over the
persons of the vendors;
(2) The judgment of the Court of Appeals setting aside the Order of February 27, 1957, and
in consequence thereof the Order of January 28, 1955, as a patent nullity on the ground that
the lower court did not acquire jurisdiction over the persons of the vendors because they
had not been duly summoned is res judicata on the question of nullity of said orders; and.
(3) After the remand to the court below, the proceedings further taken wherein the vendors
were named as respondents and duly summoned and heard, after which on October 26,
1960, the appealed judgment was rendered in favor of the respondents, were valid, being in
accordance with the contentious proceeding provided for in Article 1607 of the Civil Code.
IN VIEW OF ALL THE FOREGOING, the judgment of the lower court of October 26,1960, is
hereby affirmed in all its parts, with costs against the petitioners-appellants..
G.R. No. L-42108

May 10, 1995

OSCAR D. RAMOS and LUZ AGUDO, petitioners,

vs.
HON. COURT OF APPEALS, ADELAIDA RAMOS and LAZARO MENESES, respondents.
RESOLUTION
REGALADO, J.:
The legal heirs of private respondents Adelaida
motion for clarification of the decision of this
which sustained the judgment of respondent
affirming in toto the judgment rendered by the
Case No. 4168 in favor of private respondents.

Ramos and Lazaro Meneses filed the instant

Court promulgated on December 29, 1989
Court of Appeals in CA-G.R. No. 49345-R
then Court of First Instance of Tarlac in Civil

This supervening controversy had its roots in two deeds of conditional sale dated May 27,
1959 and August 30, 1959 executed by the late private respondent Adelaida Ramos as
collateral for loans amounting to P14,000.00 in favor of her brother, Oscar D. Ramos, as
creditor thereof. Said security consisted of Adelaida Ramos' rights, interests and
participation in and over Lot No. 4033, under Original Certificate of Title No. 5125, and Lot
No. 4221, covered by Transfer Certificate of Title No. 10788. At that time, Lot No. 4033 was
registered in the name of Valente Ramos and Margarita Denoga, the late parents of Adelaida
and Oscar Ramos, while Lot No. 4221 was in the name of Adelaida Ramos, Josefina Ramos,
and Socorro Ramos. 1
When Adelaida Ramos failed to exercise her right of repurchase as vendor a retro, Oscar
Ramos and his wife, Luz Agudo, proceeded to consolidate through legal suits their ownership
over the two lots. Eventually, the then Court of First instance of Tarlac acting as probate
court in Special Proceedings No. 5174, entitled "Intestate Estate of the Late Margarita
Denoga," confirmed herein petitioners' ownership over Lot No. 4033 in an order dated
January 22, 1960. The same court, this time exercising jurisdiction as a cadastral court in
G.L.R.O. Cadastral Record No. 395, likewise affirmed the petition for consolidation of
ownership of said Ramos spouses over Lot No. 4221 in a similar order dated April 18, 1990. 2
Despite these setbacks, private respondents remained in possession of said properties until
1964 when petitioners took possession of the lots. Sometime in 1968, however, private
respondents instituted Civil Case No. 4168 against petitioners in the then Court of First

114

Instance of Tarlac for declaration of nullity of orders, reformation of instrument, and recovery
of possession, with prayer for preliminary injunction and damages. The complaint therein
alleged in the main that the two deeds of conditional sale were in fact equitable mortgages
and were vitiated by misrepresentation, fraud and undue influence. 3 On May 17, 1971, the
trial court rendered judgment with the following fallo:
WHEREFORE, judgment is hereby rendered:
1)

Denying defendant's motion to dismiss of February 23, 1970;

2)
Denying Exhibits "B", "B-1", and "G" as loan transaction secured by real estate
mortgages;
3)

Annulling and setting aside Exhibits "D", "D-1", "I", "I-1" and "I-2";

4)
Ordering plaintiffs, jointly and severally to pay (within ninety [90] days from receipt of
a copy of this judgment) defendant the sum of P5,000.00 specified in Exhibit "B", with
interest thereon at the legal rate from November 28, 1959 until full payment together with
the sum of P9,308.00 specified in Exhibit "G" with interest thereon at the legal rate from
December 1, 1959 until full payment, and in default of such payment, let the properties
mortgaged under Exhibit "B", "B-1" and "G" be sold to realize the mortgage debt and costs;
and
5)

Dismissing defendant's counterclaim.

With costs against defendants. 4

On appeal to the Court of Appeals, said judgment of the trial court was affirmed in all
respects by the appellate court in its decision of October 7, 1975. After the motion for
reconsideration filed by petitioners went for naught, petitioners sought this Court's favorable
adjudication through a petition for review on certiorari, with the principal argument that
respondent appellate court erred in ruling that the aforementioned deeds of conditional sale
were actually equitable mortgages . This Court, however, affirmed the questioned judgment
of respondent court in its decision of December 29, 1989 which, as earlier stated, is now the
subject of this motion for clarification filed by the heirs of the late Adelaida Ramos and
Lazaro Meneses. The dispositive portion of this Court's aforesaid decision decreed:
WHEREFORE, the instant petition is hereby DENIED and the assailed decision of the Court of
Appeals is hereby AFFIRMED.
SO ORDERED. 5
When private respondent Adelaida Ramos, who in the interim had taken up residence in the
United States and whose husband had passed away, was apprised of the long awaited legal
victory, she immediately came home to the Philippines for the enforcement of this Court's
judgment which had become final and executory on February 7, 1990. She was, however,
grossly disappointed when she learned that petitioners had subdivided and transferred the
titles to the two lots in their respective names and also in the names of third persons. Upon
the advice of her lawyer, she complied with the May 17, 1971 decision of the trial court by
tendering payment, through a representative, amounting to P40,432.11 pursuant to
paragraph 4 of the trial court's aforequoted judgment. Said tender was, however, refused by
petitioner spouses resulting in the consignation of the money in court. 6
In November, 1993, respondent Adelaida Ramos passed away. Due to inattention on the part
of her lawyer, the execution of this Court's judgment ground to a halt. On February 16, 1994,
her heirs Walfrido, Myrna, Zorayda, Vilma and Youlivia filed a "Motion for Substitution of
Party-Plaintiffs" and a "Motion to Issue Writ of Execution" before Branch 63 of the Regional
Trial Court of Tarlac. These motions were granted and on May 18, 1994, a deputy sheriff of
Quezon City served the writ of execution at the residence of petitioners and thereafter
executed the sheriff's return thereon. 7
It was at this point that the heirs of the private respondents came to perceive a seeming
omission in the basic judgment in this case as formulated by the trial court. Thus, in their
own submission:
. . . the dispositive portion of the lower court's decision, affirmed by the Court of Appeals and
this Honorable Court, did not direct the Spouses Oscar Ramos and Luz Agudo to restore

115

possession of the properties to Adelaida Ramos; and/or failed to instruct the Register of
Deeds of Tarlac to cancel the titles issued to Oscar Amos and Luz Agudo, to the extent of the
shares of Adelaida Ramos in the properties originally covered by Original Certificate of Title
No. 5125 and Transfer Certificate of Title No. 10788, Lots No. 4033 and 4221 of the Cadastral
Survey of Paniqui, Tarlac, respectively. 8
Hence, in this motion for clarification, they now pray that said judgment of the trial court,
specifically the third paragraph thereof, be accordingly amended.
The Court is willing to accommodate the motion although, as correctly pointed out by the
movant heirs, the declaration of nullity by the then Court of First Instance of Tarlac in its
decision in Civil Case No. 4168 of the earlier orders of approval and consolidation of
dominion 9 marked as Exhibits "D", "D-1", "I", "I-1" and "I-2" necessarily carries with it the
restoration by petitioners of the physical possession of the subject properties to Adelaida
Ramos, now represented by her heirs. That is as it should be, for those very same exhibits
had been the bases for the transfer and registration by petitioners of the subject lots in their
names and in the names of third persons to the prejudice of private respondent Adelaida
Ramos. Moreover, private respondents had, as a matter of fact, expressly sought as a relief
such restoration of possession to them in the complaint that they filed in the court a quo.
It should, of course, be emphasized and noted that the amendment now being sought by the
movants, although coming long after the subject judgment had matured into finality, would
not at all be unauthorized or improper considering the peculiar but compelling
circumstances under and by reason of which such an amendment is necessitated. We need
only to advert to what this Court emphatically pronounced in Republic Surety and Insurance
Co., Inc., et al. vs. Intermediate Appellate Court, et al., 10 on which the movant heirs also
rely, in support of and to demonstrate the validity and regularity of such amendment in the
present situation. Thus:
In the exercise of the broad jurisdiction of this Court, we treat the "Very Urgent Clarificatory
Inquiry" of the respondent-spouses as a motion for clarification of the resolutions of this
Court dated 21 July 1985 and 4 September 1985 where we denied the Petition for Review
and affirmed the underlying decision of the Rizal Court of First Instance. We clarify, in other
words, what we did affirm. What is involved here is not what is ordinarily regarded as a
clerical error in the dispositive part of the decision of the Court of First Instance, which type
of error is perhaps best typified by an error in arithmetical computation. At the same time,
what is involved here is not an erroneous judgement or dispositive portion of judgment.
What we believe is involved here is in the nature of an inadvertent omission on the part of
the Court of First Instance (which should have been noticed by private respondents' counsel
who had prepared the complaint), of what might be described as a logical follow-through, or
translation into, operation or behavioral terms, of the annulment of the Deed of Sale with
Assumption of Mortgage, from which petitioner's title or claim of title embodied in TCT
133153 flows. The dispositive portion of the decision itself declares the nullity ab initio of the
simulated Deed of Sale with Assumption of Mortgage and instructed the petitioners and all
persons claiming under them to vacate the subject premises and to turn over possession
thereof to the respondent-spouses. . . .
To repeat, ineluctably involved by necessary implication in the judgment in Civil Case No.
4168, nullifying the orders of approval and consolidation of ownership in favor of petitioners
in Special Proceedings No. 5174 and G.L.R.O. Cadastral Record No. 395, is the correlative
vesting of proportionate dominion over the lots in question in favor of private respondents,
and this includes the right to the possession thereof. Where title to real property is
adjudicated in favor of a party, the judgment must be enforced by giving the enjoyment
thereof to that party, 11 as an inevitable consequence of that judgment. 12
By the same token, the legal bases for the issuance of certificates of title to the lots in favor
of petitioners and third persons having been set aside by the judgment of the trial court in
said Civil Case No. 4168, with its recognition of corresponding rights thereover by private
respondents, this again ineluctably implies that the corresponding certificates of title
thereover be issued in favor of private respondents or their successors, and that the
certificates of title of petitioners and their transferees be consequently canceled.
Stated elsewise, the Court is now being asked to merely clarify via this nunc pro tunc
amendment, what in fact it did actually affirm and as a logical follow through of the express
or intended operational terms of said judgment in Civil Case No. 4168. In any event, just to
write finis to what in actuality is an unnecessary dispute between the parties and to forestall
the possibility of another one, contrived or otherwise, we accede to the supplication of

116

movants for what amounts to a clarificatory adgment explicitly articulating what was already
implicitly assumed.
ON THE FOREGOING PREMISES, and as prayed for, the dispositive portion of the decision
dated May 17, 1971, specifically paragraph 3 thereof, rendered by the then Court of First
Instance of Tarlac, now Branch 63 of the Regional Trial Court of said province, in Civil Case
No. 4168 and as then affirmed by respondent court and this Court, is hereby AMENDED to
provide as follows:
WHEREFORE, judgment is hereby rendered:
xxx

xxx

xxx

3.

Annulling and setting aside exhibits "D", "D-1", "I", "I-1" and "I-2", and

3.1)
Ordering the spouses Oscar and Luz Agudo-Ramos, their heirs and successors or
assigns, to restore actual physical possession of the subject properties to Adelaida Ramos,
her heirs, successors or assigns, consisting of said Adelaida Ramos' undivided share of onesixth (1/6) in Lot No. 4033, originally covered by OCT No. 5125, and one-third (1/3) share in
Lot No. 4221, covered by TCT No. 10788. both of the Cadastral Survey of Paniqui, Tarlac;
3.2)
Ordering the Sheriff of Branch 63 of the now Regional Trial Court of Tarlac to
implement the corresponding and appropriate writ execution pursuant to the preceding
paragraph; and
3.3)
Ordering the Register of Deeds of Tarlac to cancel the titles issued in the names of
Oscar Ramos and Luz Agudo-Ramos or their transferees or assigns, where proper, to the
extent of the one-sixth (1/6) share of Adelaida Ramos in Lot No. 4033, originally covered by
OCT No. 5125, and her one-third (1/3) share in Lot No. 4221, originally registered under TCT
No. 10788, and to accordingly issue new titles therefor in the name of Adelaida Ramos,
married to Lazaro E. Meneses, or her legal heirs and successors in interest.
xxx

xxx

xxx

SO ORDERED.
G.R. No. 183110

October 7, 2013

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
AZUCENA SAAVEDRA BATUGAS, Respondent.
DECISION
DEL CASTILLO, J.:
"It is universally accepted that a State, in extending the privilege of citizenship to an alien
wife of one of its citizens could have had no other objective than to maintain a unity of
allegiance among the members of the family."1
This Petition for Review on Certiorari2 assails the May 23, 2008 Decision3 of the Court of
Appeals (CA) G.R. CV No. 00523, which affirmed the January 31, 2005 Decision4 of the
Regional Trial Court (RTC), Branch 29, Zamboanga del Sur that granted the Petition for
Naturalization5 of respondent Azucena Saavedra Batuigas (Azucena).
Factual Antecedents
On December 2, 2002, Azucena filed a Petition for Naturalization before the RTC of
Zamboanga del Sur. The case was docketed as Naturalization Case No. 03-001 and raffled to
Branch 29 of said court.
Azucena alleged in her Petition that she believes in the principles underlying the Philippine
Constitution; that she has conducted herself in a proper and irreproachable manner during
the period of her stay in the Philippines, as well as in her relations with the constituted
Government and with the community in which she is living; that she has mingled socially
with the Filipinos and has evinced a sincere desire to learn and embrace their customs,

117

traditions, and ideals; that she has all the qualifications required under Section 2 and none
of the disqualifications enumerated in Section 4 of Commonwealth Act No. 473 (CA473);6
that she is not opposed to organized government nor is affiliated with any association or
group of persons that uphold and teach doctrines opposing all organized governments; that
she is not defending or teaching the necessity or propriety of violence, personal assault, or
assassination for the success and predominance of mens ideas; that she is neither a
polygamist nor believes in polygamy; that the nation of which she is a subject is not at war
with the Philippines; that she intends in good faith to become a citizen of the Philippines and
to renounce absolutely and forever all allegiance and fidelity to any foreign prince,
potentate, state or sovereignty, and particularly to China; and that she will reside
continuously in the Philippines from the time of the filing of her Petition up to the time of her
naturalization.
After all the jurisdictional requirements mandated by Section 97 of CA 473had been
complied with, the Office of the Solicitor General (OSG) filed its Motion to Dismiss8 on the
ground that Azucena failed to allege that she is engaged in a lawful occupation or in some
known lucrative trade. Finding the grounds relied upon by the OSG to be evidentiary in
nature, the RTC denied said Motion.9 Thereafter, the hearing for the reception of Azucenas
evidence was then set on May 18, 2004.10
Neither the OSG nor the Office of the Provincial Prosecutor appeared on the day of the
hearing. Hence, Azucenas counsel moved that the evidence be presented ex-parte, which
the RTC granted. Accordingly, the RTC designated its Clerk of Court as Commissioner to
receive Azucenas evidence.11 During the November 5, 2004 ex-parte hearing, no
representative from the OSG appeared despite due notice.12
Born in Malangas, Zamboanga del Sur on September 28, 1941 to Chinese parents,13
Azucena has never departed the Philippines since birth. She has resided in Malangas,
Zamboanga del Sur from 1941-1942; in Margosatubig, Zamboanga del Sur from 1942-1968;
in Bogo City for nine months; in Ipil, Zamboanga del Sur from 1969-1972; in Talisayan,
Misamis Oriental from 1972-1976; and, in Margosatubig, Zamboanga del Sur, thereafter, up
to the filing of her Petition.
Azucena can speak English, Tagalog, Visayan, and Chavacano. Her primary, secondary, and
tertiary education were taken in Philippine schools,i.e., Margosatubig Central Elementary
School in 1955,14 Margosatubig Academy in1959,15 and the Ateneo de Zamboanga in
1963,16 graduating with a degree in Bachelor of Science in Education. She then practiced
her teaching profession at the Pax High School for five years, in the Marian Academy in Ipil
for two years, and in Talisayan High School in Misamis Oriental for another two years.17
In 1968, at the age of 26, Azucena married Santiago Batuigas18 (Santiago),a natural-born
Filipino citizen.19 They have five children, namely Cynthia, Brenda, Aileen, Dennis
Emmanuel, and Edsel James.20 All of them studied in Philippine public and private schools
and are all professionals, three of whom are now working abroad.21
After her stint in Talisayan High School, Azucena and her husband, as conjugal partners,
engaged in the retail business of and later on in milling/distributing rice, corn, and copra. As
proof of their income, Azucena submitted their joint annual tax returns and balance sheets
from 2000-200222 and from 2004-2005.23 The business name and the business permits
issued to the spouses store, Azucenas General Merchandising, are registered in Santiagos
name,24 and he is also the National Food Authority licensee for their rice and corn
business.25 During their marital union, the Batuigas spouses bought parcels of land in Barrio
Lombog, Margosatubig.26
To prove that she has no criminal record, Azucena submitted clearances issued by the
Philippine National Police of Zamboanga del Sur Provincial Office and by the National Bureau
of Investigation.27 She also presented her Health Examination Record28 declaring her as
physically and mentally fit.
To further support Azucenas Petition, Santiago and witnesses Eufemio Miniao and Irineo
Alfaro testified.
Ruling of the Regional Trial Court
On January 31, 2005, the RTC found that Azucena has amply supported the allegations in her
Petition. Among these are her lack of a derogatory record, her support for an organized
government, that she is in perfect health, that she has mingled with Filipinos since birth and

118

can speak their language, that she has never had any transgressions and has been a law
abiding citizen, that she has complied with her obligations to the government involving her
business operations, and that the business and real properties she and Santiago own provide
sufficient income for her and her family. Thus, the RTC ruled:
x x x In sum, the petitioner has all the qualifications and none of the disqualifications to be
admitted as citizen of the Philippines in accordance with the provisions of the Naturalization
Law.
WHEREFORE, premises considered, the petition is hereby granted.
SO ORDERED.29
In its Omnibus Motion,30 the OSG argued that the ex-parte presentation of evidence before
the Branch Clerk of Court violates Section 10 of CA 473,31 as the law mandates public
hearing in naturalization cases.
Rejecting this argument in its March 21, 2005 Order,32 the RTC held that the public has been
fully apprised of the naturalization proceedings and was free to intervene. The OSG and its
delegate, the Provincial Prosecutor, are the only officers authorized by law to appear on
behalf of the State, which represents the public. Thus, when the OSG was furnished with a
copy of the notice of hearing for the reception of evidence ex-parte, there was already a
sufficient compliance with the requirement of a public hearing.
The OSG then appealed the RTC judgment to the CA,33 contending that Azucena failed to
comply with the income requirement under CA 473. The OSG maintained that Azucena is not
allowed under the Retail Trade Law (Republic Act No. 1180) to engage directly or indirectly in
the retail trade. Hence, she cannot possibly meet the income requirement. And even if she is
allowed, her business is not a "lucrative trade" within the contemplation of the law or that
which has an appreciable margin of income over expenses in order to provide for adequate
support in the event of unemployment, sickness, or disability to work. The OSG likewise
disputed Azucenas claim that she owns real property because aliens are precluded from
owning lands in the country.
The OSG further asserted that the ex-parte proceeding before the commissioner is not a
"public hearing" as ex-parte hearings are usually done in chambers, without the public in
attendance. It claimed that the State was denied its day in court because the RTC, during
the May 18, 2004 initial hearing, immediately allowed the proceeding to be conducted exparte without even giving the State ample opportunity to be present.
Azucena countered that although she is a teacher by profession, she had to quit to help in
the retail business of her husband, and they were able to send all their children to school.34
It is highly unlikely that she will become a public charge as she and her spouse have enough
savings and could even be given sufficient support by their children. She contended that the
definition of "lucrative trade/income" should not be strictly applied to her. Being the wife and
following Filipino tradition, she should not be treated like male applicants for naturalization
who are required to have their own "lucrative trade."
Azucena denied that the hearing for her Petition was not made public, as the hearing before
the Clerk of Court was conducted in the courts session hall. Besides, the OSG cannot claim
that it was denied its day in court as notices have always been sent to it. Hence, its failure to
attend is not the fault of the RTC.
Ruling of the Court of Appeals
In dismissing the OSGs appeal,35 the CA found that Azucenas financial condition permits
her and her family to live with reasonable comfort in accordance with the prevailing
standard of living and consistent with the demands of human dignity. It said:
Considering the present high cost of living, which cost of living tends to increase rather than
decrease, and the low purchasing power of the Philippine currency, petitioner-appellee,
together with her Filipino husband, nonetheless, was able to send all her children to college,
pursue a lucrative business and maintain a decent existence. The Supreme Court, in recent
decisions, adopted a higher standard in determining whether a petitioner for Philippine
citizenship has a lucrative trade or profession that would qualify him/her for admission to
Philippine citizenship and to which petitioner has successfully convinced this Court of her

119

ability to provide for herself and avoid becoming a public charge or a financial burden to her
community. x x x36
As for the other issue the OSG raised, the CA held that the RTC had complied with the
mandate of the law requiring notice to the OSG and the Provincial Prosecutor of its
scheduled hearing for the Petition.
Thus, the instant Petition wherein the OSG recapitulates the same arguments it raised before
the CA, i.e., the alleged failure of Azucena to meet the income and public hearing
requirements of CA 473.
Our Ruling
The Petition lacks merit.
Under existing laws, an alien may acquire Philippine citizenship through either judicial
naturalization under CA 473 or administrative naturalization under Republic Act No. 9139
(the "Administrative Naturalization Law of 2000"). A third option, called derivative
naturalization, which is available to alien women married to Filipino husbands is found under
Section 15 of CA 473, which provides that:
"any woman who is now or may hereafter be married to a citizen of the Philippines and who
might herself be lawfully naturalized shall be deemed a citizen of the Philippines."
Under this provision, foreign women who are married to Philippine citizens may be deemed
ipso facto Philippine citizens and it is neither necessary for them to prove that they possess
other qualifications for naturalization at the time of their marriage nor do they have to
submit themselves to judicial naturalization. Copying from similar laws in the United States
which has since been amended, the Philippine legislature retained Section 15 of CA 473,
which then reflects its intent to confer Filipino citizenship to the alien wife thru derivative
naturalization.37
Thus, the Court categorically declared in Moy Ya Lim Yao v. Commissioner of Immigration:38
Accordingly, We now hold, all previous decisions of this Court indicating otherwise
notwithstanding, that under Section 15 of Commonwealth Act 473, an alien woman marrying
a Filipino, native born or naturalized, becomes ipso facto a Filipina provided she is not
disqualified to be a citizen of the Philippines under Section 4 of the same law. Likewise, an
alien woman married to an alien who is subsequently naturalized here follows the Philippine
citizenship of her husband the moment he takes his oath as Filipino citizen, provided that
she does not suffer from any of the disqualifications under said Section 4.39
As stated in Moy Ya Lim Yao, the procedure for an alien wife to formalize the conferment of
Filipino citizenship is as follows:
Regarding the steps that should be taken by an alien woman married to a Filipino citizen in
order to acquire Philippine citizenship, the procedure followed in the Bureau of Immigration
is as follows: The alien woman must file a petition for the cancellation of her alien certificate
of registration alleging, among other things, that she is married to a Filipino citizen and that
she is not disqualified from acquiring her husbands citizenship pursuant to Section 4 of
Commonwealth Act No. 473, as amended. Upon the filing of said petition, which should be
accompanied or supported by the joint affidavit of the petitioner and her Filipino husband to
the effect that the petitioner does not belong to any of the groups disqualified by the cited
section from becoming naturalized Filipino citizen x x x, the Bureau of Immigration conducts
an investigation and thereafter promulgates its order or decision granting or denying the
petition.40
Records however show that in February 1980, Azucena applied before the then Commission
on Immigration and Deportation (CID) for the cancellation of her Alien Certificate of
Registration (ACR) No. 03070541 by reason of her marriage to a Filipino citizen. The CID
granted her application. However, the Ministry of Justice set aside the ruling of the CID as it
found no sufficient evidence that Azucenas husband is a Filipino citizen42 as only their
marriage certificate was presented to establish his citizenship.
Having been denied of the process in the CID, Azucena was constrained to file a Petition for
judicial naturalization based on CA 473. While this would have been unnecessary if the
process at the CID was granted in her favor, there is nothing that prevents her from seeking

120

acquisition of Philippine citizenship through regular naturalization proceedings available to

all qualified foreign nationals. The choice of what option to take in order to acquire Philippine
citizenship rests with the applicant. In this case, Azucena has chosen to file a Petition for
judicial naturalization under CA 473. The fact that her application for derivative
naturalization under Section 15 of CA 473 was denied should not prevent her from seeking
judicial naturalization under the same law. It is to be remembered that her application at the
CID was denied not because she was found to be disqualified, but because her husbands
citizenship was not proven. Even if the denial was based on other grounds, it is proper, in a
judicial naturalization proceeding, for the courts to determine whether there are in fact
grounds to deny her of Philippine citizenship based on regular judicial naturalization
proceedings.
As the records before this Court show, Santiagos Filipino citizenship has been adequately
proven. Under judicial proceeding, Santiago submitted his birth certificate indicating therein
that he and his parents are Filipinos. He also submitted voters registration, land titles, and
business registrations/licenses, all of which are public records. He has always comported
himself as a Filipino citizen, an operative fact that should have enabled Azucena to avail of
Section 15 of CA473. On the submitted evidence, nothing would show that Azucena suffers
from any of the disqualifications under Section 4 of the same Act.
However, the case before us is a Petition for judicial naturalization and is not based on
Section 15 of CA 473 which was denied by the then Ministry of Justice. The lower court which
heard the petition and received evidence of her qualifications and absence of
disqualifications to acquire Philippine citizenship, has granted the Petition, which was
affirmed by the CA. We will not disturb the findings of the lower court which had the
opportunity to hear and scrutinize the evidence presented during the hearings on the
Petition, as well as determine, based on Azucenas testimony and deportment during the
hearings, that she indeed possesses all the qualifications and none of the disqualifications
for acquisition of Philippine citizenship.
The OSG has filed this instant Petition on the ground that Azucena does not have the
qualification required in no. 4 of Section 2 of CA 473 as she does not have any lucrative
income, and that the proceeding in the lower court was not in the nature of a public hearing.
The OSG had the opportunity to contest the qualifications of Azucena during the initial
hearing scheduled on May 18, 2004.However, the OSG or the Office of the Provincial
Prosecutor failed to appear in said hearing, prompting the lower court to order ex parte
presentation of evidence before the Clerk of Court on November 5, 2004. The OSG was also
notified of the ex parte proceeding, but despite notice, again failed to appear. The OSG had
raised this same issue at the CA and was denied for the reasons stated in its Decision. We
find no reason to disturb the findings of the CA on this issue. Neither should this issue
further delay the grant of Philippine citizenship to a woman who was born and lived all her
life, in the Philippines, and devoted all her life to the care of her Filipino family. She has more
than demonstrated, under judicial scrutiny, her being a qualified Philippine citizen. On the
second issue, we also affirm the findings of the CA that since the government who has an
interest in, and the only one who can contest, the citizenship of a person, was duly notified
through the OSG and the Provincial Prosecutors office, the proceedings have complied with
the public hearing requirement under CA 473.
No. 4, Section 2 of CA 473 provides as qualification to become a Philippine citizen:
4. He must own real estate in the Philippines worth not less than five thousand pesos,
Philippine currency, or must have known lucrative trade, profession, or lawful occupation.
Azucena is a teacher by profession and has actually exercised her profession before she had
to quit her teaching job to assume her family duties and take on her role as joint provider,
together with her husband, in order to support her family. Together, husband and wife were
able to raise all their five children, provided them with education, and have all become
professionals and responsible citizens of this country. Certainly, this is proof enough of both
husband and wifes lucrative trade. Azucena herself is a professional and can resume
teaching at anytime. Her profession never leaves her, and this is more than sufficient
guarantee that she will not be a charge to the only country she has known since birth.
Moreover, the Court acknowledged that the main objective of extending the citizenship
privilege to an alien wife is to maintain a unity of allegiance among family members, thus:
It is, therefore, not congruent with our cherished traditions of family unity and identity that a
husband should be a citizen and the wife an alien, and that the national treatment of one

121

should be different from that of the other. Thus, it cannot be that the husbands interests in
property and business activities reserved by law to citizens should not form part of the
conjugal partnership and be denied to the wife, nor that she herself cannot, through her own
efforts but for the benefit of the partnership, acquire such interests. Only in rare instances
should the identity of husband and wife be refused recognition, and we submit that in
respect of our citizenship laws, it should only be in the instances where the wife suffers from
the disqualifications stated in Section 4 of the Revised Naturalization Law.43
We are not unmindful of precedents to the effect that there is no proceeding authorized by
the law or by the Rules of Court, for the judicial declaration of the citizenship of an
individual.44 "Such judicial declaration of citizenship cannot even be decreed pursuant to an
alternative prayer therefor in a naturalization proceeding."45
This case however is not a Petition for judicial declaration of Philippine citizenship but rather
a Petition for judicial naturalization under CA 473. In the first, the petitioner believes he is a
Filipino citizen and asks a court to declare or confirm his status as a Philippine citizen. In the
second, the petitioner acknowledges he is an alien, and seeks judicial approval to acquire
the privilege of be coming a Philippine citizen based on requirements required under CA
473.Azucena has clearly proven, under strict judicial scrutiny, that she is qualified for the
grant of that privilege, and this Court will not stand in the way of making her a part of a truly
Filipino family.
WHEREFORE, the Petition is DENIED. The May 23, 2008 Decision of the Court of Appeals in
CA-G.R. CV No. 00523 which affirmed the January 31,2005 Decision of the Regional Trial
Court, Branch 29, Zamboanga del Sur that granted the Petition for Naturalization, is hereby
AFFIRMED. Subject to compliance with the period and the requirements under Republic Act
No. 530which supplements the Revised Naturalization Law, let a Certificate of Naturalization
be issued to AZUCENA SAAVEDRA BATUIGAS after taking an oath of allegiance to the
Republic of the Philippines. Thereafter, her Alien Certificate of Registration should be
cancelled.
SO ORDERED.
G.R. No. L-16108

October 31, 1961

IN THE MATTER OF THE PETITION FOR DECLARATORY RELIEF REGARDING CIVIL

STATUS, ELEUTERIA FELISETA TAN, petitioner-appellee,
vs.
REPUBLIC OF THE PHILIPPINES, oppositor-appellant.
Valeriano S. Kaamino for petitioner-appellee.
Office of the Solicitor General for oppositor-appellant.
LABRADOR, J.:
Appeal from a decision of the Court of First Instance of Misamis Occidental, Hon. Patricio C.
Ceniza, presiding, the dispositive part of which reads as follows:
WHEREFORE, premises considered, the court hereby renders judgment declaring said
Eleuteria Feliseta Tan a Filipino citizen; that her registration as an alien has been a clear
mistake on her part and on the part of the City Treasurer of Ozamis City and therefore, the
Commissioner of Immigration is hereby ordered to cancel the Alien Certificate of Registration
of the herein petitioner as well as those of her children born out her relationship as husband
and wife without benefit of marriage with Tan King Pock, namely: Loreta Tan, Nenita Tan,
Lourdes Tan, Leonila Tan, Tan King Pock, Jr., and William Tan. (ROA, pp. 29-30).
The case originated with the presentation of a petition to the Court of First Instance of
Misamis Occidental, alleging that petitioner Eleuteria Feliseta Tan is the common-law wife of
Tan King Pock, a Chinaman, and that nine minor children were born to them out of wedlock;
that she and her children are registered as aliens; that she had asked the Commissioner of
Immigration to cancel her registration and that of her children as aliens, but that the
Commissioner refused to grant her petition. Therefore, she prayed that the cancellation of
the alien certificate of registration of herself and her children be ordered.

122

The petition is dated September 8, 1958, and on September 17, 1958, the court issued an
order suggesting that the petitioner amend her petition into one for declaratory relief. The
order reads thus:
After considering carefully the merits of the petition, the Court finds and so holds that the
same cannot be granted in view of the decision rendered by the Supreme Court on February
5, 1954, in G.R. No. L-5609, entitled Ty Kong Tin vs. Republic of the Philippines.
It is suggested, therefore, that the herein petitioner amends her petition into that of
declaratory relief within a period of fifteen (15) days from receipt a copy of this order,
otherwise this case will be dismissed. (ROA, p. 5).
Pursuant to the suggestion, petitioner through counsel, amended her original petition
converting it into one for declaratory judgment, alleging that petitioner is a Filipino citizen
being the illegitimate child of a Chinaman by the name of Sy Siwa and Benita Feliseta, a
Filipina, without benefit of marriage; that the children mentioned in the petition are children
of herself and Tan King Pock and their registration as aliens has been a mistake; that she had
asked the Commissioner of Immigration for the cancellation of their alien certificate of
registration but the Commissioner had denied her petition, so she prayed that her alien
certificate of registration be cancelled.
The Solicitor General presented an answer asking for the denial of the petition because the
petition is not based upon any of the grounds required by the rules as a ground for
declaratory judgment; that there is no need for the present action for the cancellation of
their alien certificate of registration; and that the petition is evidently one which seeks a
judicial pronouncement as to petitioner's claim for citizenship, which matter should be
threshed out in a proper action. The provincial fiscal also prayed that the petition be denied,
alleging that the petition is not in order; that the children are not represented by a guardian,
and that the end sought in the petition should be threshed out in a proper action. After
hearing the petition and the arguments, the court below entered the order already quoted
above.
The judgment or order appealed from must be set aside.
Declaratory relief in this jurisdiction is a special civil action which may lie only when "any
person interested under a deed, will, contract or other written instrument, or whose rights
are affected by statute or ordinance," demands construction thereof for a declaration of his
rights thereunder. None of the above circumstances exists in the case under consideration.
And this Court has already held that there is no proceeding established by law or the rules
by which any person claiming to be a citizen may get a declaration in a court of justice to
that effect or in regard to his citizenship.
Under our laws, there can be no action or proceeding for the judicial declaration of the
citizenship of an individual. Courts of justice exist for the settlement of justiciable
controversies, which imply a given right, legally demandable and enforceable, an act or
omission violative of said right, and a remedy, granted or sanctioned by law, for said breach
of right. As an incident only of the adjudication of the rights of the parties to a controversy,
the court may pass upon, and make a pronouncement relative to, their status. Otherwise,
such a pronouncement is beyond judicial power. Thus, for instance, no action or proceeding
may be instituted for a declaration to the effect that plaintiff or petitioner is married, or
single or a legitimate child, although a finding thereon may be made as a necessary premise
to justify a given relief available only to one enjoying said status. At times, the law permits
the acquisition of a given status, such as naturalization, by judicial decree. But, there is no
similar legislation authorizing the institution of a judicial proceeding to declare that a given
person is part of our citizenry. (Tan vs. Republic, G.R. No. L-14159, April 18, 1960, reiterated
in G.R. No. L-15775, April 29, 1961).
If the petition be considered as one for declaratory judgment, the facts do not warrant the
filing of the said special civil action. If the petition seeks to compel the Commissioner of
Immigration to cancel her and her children's alien certificate of registration, this petition
would not lie because such a remedy of cancellation of alien certificate of registration can
only be had by virtue of a judgment of a competent court, in an action where the citizenship
of parties is a material matter in issue, declaring the Filipino citizenship of the petitioner and
her children, and such declaration cannot be obtained directly because there is no
proceeding at present provided by law or the rules for such purpose.

123

WHEREFORE, the judgment appealed from should be, as it is hereby, set aside, and the
petition dismissed. With costs against petitioner-appellee.
RULE 64 : REVIEW OF FINAL JUDGEMENTS AND ORDER OF THE COMELEC
AND COA
G.R. No. 184915

June 30, 2009

NILO T. PATES, Petitioner,

vs.
COMMISSION ON ELECTIONS and EMELITA B. ALMIRANTE, Respondents.
RESOLUTION
BRION, J.:
Our Resolution of November 11, 2008 dismissed the petition in caption pursuant to Section
3, Rule 64 of the Rules of Court which provides:
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.
taking into account the following material antecedents:
a. February 1, 2008 The COMELEC First Division issued its Resolution (assailed in the
petition);
b. February 4, 2008 The counsel for petitioner Nilo T. Pates (petitioner) received a copy of
the February 1, 2008 Resolution;
c. February 8, 2008 The petitioner filed his motion for reconsideration (MR) of the February
1, 2008 Resolution (4 days from receipt of the February 1, 2008 Resolution)
d. September 18, 2008 The COMELEC en banc issued a Resolution denying the petitioners
MR (also assailed in the petition).
e. September 22, 2008 The petitioner received the COMELEC en banc Resolution of
September 18, 2008
Under this chronology, the last day for the filing of a petition for certiorari, i.e., 30 days from
notice of the final COMELEC Resolution, fell on a Saturday (October 18, 2008), as the
petitioner only had the remaining period of 26 days to file his petition, after using up 4 days
in preparing and filing his Motion for Reconsideration. Effectively, the last day for filing was
October 20, 2008 the following Monday or the first working day after October 18, 2008.
The petitioner filed his petition with us on October 22, 2008 or two days late; hence, our
Resolution of dismissal of November 11, 2008.
The Motion for Reconsideration
The petitioner asks us in his "Urgent Motion for Reconsideration with Reiteration for the
Issuance of a Temporary Restraining Order" to reverse the dismissal of his petition, arguing
that the petition was seasonably filed under the fresh period rule enunciated by the
Supreme Court in a number of cases decided beginning the year 2005. The "fresh period"
refers to the original period provided under the Rules of Court counted from notice of the
ruling on the motion for reconsideration by the tribunal below, without deducting the period
for the preparation and filing of the motion for reconsideration.
He claims that, historically, the fresh period rule was the prevailing rule in filing petitions for
certiorari. This Court, he continues, changed this rule when it promulgated the 1997 Rules of
Civil Procedure and Circular No. 39-98, which both provided for the filing of petitions within
the remainder of the original period, the "remainder" being the original period less the days
used up in preparing and filing a motion for reconsideration. He then points out that on

124

September 1, 2000 or only three years after, this Court promulgated A.M. No. 00-02-03-SC
bringing back the fresh period rule. According to the petitioner, the reason for the change,
which we supposedly articulated in Narzoles v. National Labor Relations Commission,1 was
the tremendous confusion generated by Circular No. 39-98.
The fresh period rule, the petitioner further asserts, was subsequently applied by this Court
in the following cases:
(1) Neypes v. Court of Appeals2 which thenceforth applied the fresh
eriod rule to ordinary appeals of decisions of the Regional Trial Court to the Court of Appeals;
(2) Spouses de los Santos v. Vda. de Mangubat3 reiterating Neypes;
(3) Active Realty and Development Corporation v. Fernandez4 which, following Neypes,
applied the fresh period rule to ordinary appeals from the decisions of the Municipal Trial
Court to the Regional Trial Court; and
(4) Romero v. Court of Appeals5 which emphasized that A.M. No. 00-02-03-SC is a curative
statute that may be applied retroactively.
A reading of the ruling in these cases, the petitioner argues, shows that this Court has
consistently held that the order or resolution denying the motion for reconsideration or new
trial is considered as the final order finally disposing of the case, and the date of its receipt
by a party is the correct reckoning point for counting the period for appellate review.
The Respondents Comment
We asked the respondents to comment on the petitioners motion for reconsideration. The
Office of the Solicitor General (OSG), citing Section 5, Rule 65 of the Rules of Court and its
related cases, asked via a "Manifestation and Motion" that it be excused from filing a
separate comment. We granted the OSGs manifestation and motion.
For her part, respondent Emelita B. Almirante (respondent Almirante) filed a comment
stating that: (1) we are absolutely correct in concluding that the petition was filed out of
time; and (2) the petitioners reliance on Section 4, Rule 65 of the Rules of Court (as
amended by A.M. No. 00-02-03-SC) is totally misplaced, as Rule 64, not Rule 65, is the
vehicle for review of judgments and final orders or resolutions of the COMELEC. Respondent
Almirante points out that Rule 64 and Rule 65 are different; Rule 65 provides for a 60-day
period for filing petitions for certiorari, while Rule 64 provides for 30 days.
OUR RULING
We do not find the motion for reconsideration meritorious.
A. As a Matter of Law
Section 7, Article IX-A of the Constitution provides that unless otherwise provided by the
Constitution or by law, any decision, order, or ruling of each Commission may be brought to
the Court on certiorari by the aggrieved party within 30 days from receipt of a copy thereof.
For this reason, the Rules of Court provide for a separate rule (Rule 64) specifically
applicable only to decisions of the COMELEC and the Commission on Audit. This Rule
expressly refers to the application of Rule 65 in the filing of a petition for certiorari, subject
to the exception clause "except as hereinafter provided."6
Even a superficial reading of the motion for reconsideration shows that the petitioner has
not challenged our conclusion that his petition was filed outside the period required by
Section 3, Rule 64; he merely insists that the fresh period rule applicable to a petition for
certiorari under Rule 65 should likewise apply to petitions for certiorari of COMELEC rulings
filed under Rule 64.
Rule 64, however, cannot simply be equated to Rule 65 even if it expressly refers to the
latter rule. They exist as separate rules for substantive reasons as discussed below.
Procedurally, the most patent difference between the two i.e., the exception that Section 2,
Rule 64 refers to is Section 3 which provides for a special period for the filing of petitions
for certiorari from decisions or rulings of the COMELEC en banc. The period is 30 days from
notice of the decision or ruling (instead of the 60 days that Rule 65 provides), with the

125

intervening period used for the filing of any motion for reconsideration deductible from the
originally-granted 30 days (instead of the fresh period of 60 days that Rule 65 provides).
Thus, as a matter of law, our ruling of November 11, 2008 to dismiss the petition for late
filing cannot but be correct. This ruling is not without its precedent; we have previously
ordered a similar dismissal in the earlier case of Domingo v. Commission on Elections.7 The
Court, too, has countless times in the past stressed that the Rules of Court must be followed.
Thus, we had this to say in Fortich v. Corona:8
Procedural rules, we must stress, should be treated with utmost respect and due regard
since they are designed to facilitate the adjudication of cases to remedy the worsening
problem of delay in the resolution of rival claims and in the administration of justice. The
requirement is in pursuance to the bill of rights inscribed in the Constitution which
guarantees that "all persons shall have a right to the speedy disposition of their before all
judicial, quasi-judicial and administrative bodies," the adjudicatory bodies and the parties to
a case are thus enjoined to abide strictly by the rules. While it is true that a litigation is not a
game of technicalities, it is equally true that every case must be prosecuted in accordance
with the prescribed procedure to ensure an orderly and speedy administration of justice.
There have been some instances wherein this Court allowed a relaxation in the application of
the rules, but this flexibility was "never intended to forge a bastion for erring litigants to
violate the rules with impunity." A liberal interpretation and application of the rules of
procedure can be resorted to only in proper cases and under justifiable causes and
circumstances. (Emphasis supplied)
As emphasized above, exceptional circumstances or compelling reasons may have existed in
the past when we either suspended the operation of the Rules or exempted a particular case
from their application.9 But, these instances were the exceptions rather than the rule, and
we invariably took this course of action only upon a meritorious plea for the liberal
construction of the Rules of Court based on attendant exceptional circumstances. These
uncommon exceptions allowed us to maintain the stability of our rulings, while allowing for
the unusual cases when the dictates of justice demand a correspondingly different
treatment.
Under this unique nature of the exceptions, a party asking for the suspension of the Rules of
Court comes to us with the heavy burden of proving that he deserves to be accorded
exceptional treatment. Every plea for a liberal construction of the Rules must at least be
accompanied by an explanation of why the party-litigant failed to comply with the rules and
by a justification for the requested liberal construction.10
Significantly, the petitioner presented no exceptional circumstance or any compelling reason
to warrant the non-application of Section 3, Rule 64 to his petition. He failed to explain why
his filing was late. Other than his appeal to history, uniformity, and convenience, he did not
explain why we should adopt and apply the fresh period rule to an election case.
To us, the petitioners omissions are fatal, as his motion does not provide us any reason
specific to his case why we should act as he advocates.
B. As a Matter of Policy
In harking back to the history of the fresh period rule, what the petitioner apparently wants
for reasons of uniformity and convenience is the simultaneous amendment of Section 3,
Rule 64 and the application of his proposed new rule to his case. To state the obvious, any
amendment of this provision is an exercise in the power of this Court to promulgate rules on
practice and procedure as provided by Section 5(5), Article VIII of the Constitution. Our
rulemaking, as every lawyer should know, is different from our adjudicatory function.
Rulemaking is an act of legislation, directly assigned to us by the Constitution, that requires
the formulation of policies rather than the determination of the legal rights and obligations
of litigants before us. As a rule, rulemaking requires that we consult with our own
constituencies, not necessarily with the parties directly affected in their individual cases, in
order to ensure that the rule and the policy that it enunciates are the most reasonable that
we can promulgate under the circumstances, taking into account the interests of everyone
not the least of which are the constitutional parameters and guidelines for our actions. We
point these out as our adjudicatory powers should not be confused with our rulemaking
prerogative.lavvphil
We acknowledge that the avoidance of confusion through the use of uniform standards is not
without its merits. We are not unmindful, too, that no less than the Constitution requires that

126

"motions for reconsideration of [division] decisions shall be decided by the Commission en

banc."11 Thus, the ruling of the Commission en banc on reconsideration is effectively a new
ruling rendered separately and independently from that made by a division.
Counterbalanced against these reasons, however, are other considerations no less weighty,
the most significant of which is the importance the Constitution and this Court, in obedience
to the Constitution, accord to elections and the prompt determination of their results.lawphil
Section 3, Article IX-C of the Constitution expressly requires that the COMELECs rules of
procedure should expedite the disposition of election cases. This Court labors under the
same command, as our proceedings are in fact the constitutional extension of cases that
start with the COMELEC.
Based on these considerations, we do not find convenience and uniformity to be reasons
sufficiently compelling to modify the required period for the filing of petitions for certiorari
under Rule 64. While the petitioner is correct in his historical data about the Courts
treatment of the periods for the filing of the different modes of review, he misses out on the
reason why the period under Section 3, Rule 64 has been retained. The reason, as made
clear above, is constitutionally-based and is no less than the importance our Constitution
accords to the prompt determination of election results. This reason far outweighs
convenience and uniformity. We significantly note that the present petition itself, through its
plea for the grant of a restraining order, recognizes the need for haste in deciding election
cases.
C. Our Liberal Approach
Largely for the same reason and as discussed below, we are not inclined to suspend the
rules to come to the rescue of a litigant whose counsel has blundered by reading the wrong
applicable provision. The Rules of Court are with us for the prompt and orderly
administration of justice; litigants cannot, after resorting to a wrong remedy, simply cry for
the liberal construction of these rules.12 Our ruling in Lapid v. Laurea13 succinctly
emphasized this point when we said:
Members of the bar are reminded that their first duty is to comply with the rules of
procedure, rather than seek exceptions as loopholes. Technical rules of procedure are not
designed to frustrate the ends of justice. These are provided to effect the prompt, proper
and orderly disposition of cases and, thus, effectively prevent the clogging of court dockets.
Utter disregard of these rules cannot justly be rationalized by harking on the policy of liberal
construction. [Emphasis supplied.]
We add that even for this Court, liberality does not signify an unbridled exercise of
discretion. It has its limits; to serve its purpose and to preserve its true worth, it must be
exercised only in the most appropriate cases.14
WHEREFORE, premises considered, we DENY the motion for reconsideration for lack of merit.
Our Resolution of November 11, 2008 is hereby declared FINAL. Let entry of judgment be
made in due course.
SO ORDERED.
G.R. No. 126560

December 4, 1997

ATTY. ALFONSO PAA, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, CIVIL SERVICE COMMISSION and DIRECTOR
BARTOLOME C. AMOGUIS, respondents.
RESOLUTION
DAVIDE, JR., J.:
Petitioner urges us to set aside, on ground of grave abuse of discretion, the resolution of
respondent Court of Appeals of 30 April 1996 in CA-G.R. SP No. 40341 denying petitioner's
"Motion for Extension of Time to File Petition for Certiorari under Rule 45 of the Rules of
Court," and its resolution of 19 September 1996 denying the motion for reconsideration.

127

Petitioner was the Administrative Officer of Regional Office No. XI of the Department of Labor
and Employment (DOLE). In an Order dated 4 September 1992, then DOLE Secretary Ma.
Nieves R. Confesor ordered petitioner "DISMISSED from the service with forfeiture of leave
credits and retirement benefits and disqualification for (sic) re-employment in the
government service," for conduct grossly prejudicial to the best interest of the service,
frequent absences from duty during office hours, and violation of reasonable office rules and
regulations. Unsuccessful in his bid for reconsideration, petitioner appealed to the Civil
Service Commission.
In its Resolution No. 95-0230 of 12 January 1995, 1 the Civil Service Commission "found
[petitioner] guilty of being Notoriously Undesirable" and imposed upon him "the penalty of
dismissal from the service with all its accessories." Petitioner moved for reconsideration,
which, however, was denied by the Civil Service Commission in its Resolution No. 960987 of
13 February 1996. 2
On 12 April 1996, petitioner filed with the Court of Appeals a Motion for Extension of Time to
File Petition for Certiorari Under Rule 45 of the Rules of Court, 3 docketed by the Court of
Appeals as CA-G.R. SP No. 40341. He alleged that he received a copy of the 13 February
1996 Civil Service Commission resolution on 29 March 1996 and he had then "until 13 April
1996 within which to file a petition for review under Rule 45 of the Rules of Court as
amended;" and that he needed three (3) weeks to secure "certified true copies of the
resolutions and other pertinent documents [from] the Civil Service Commission, Quezon
City," which were to be attached to the petition. He thus asked for an extension of 30 days
from 13 April 1996 within which to file the petition.
On 30 April 1996, the Court of Appeals promulgated a Resolution 4 denying petitioner's
aforementioned Motion for Extension of Time to File Petition, decreeing:
The instant "Motion for Extension of Time to File Petition for Certiorari under Rule 45 of the
Rules of Court" filed on 12 April 1996 is hereby DENIED it being the wrong mode of appeal.
It is to be noted that the questioned resolution was rendered by the Civil Service
Commission; that the Supreme Court Revised Administrative Circular No. 1-95 (Revised
Circular No. 1-91) specifically provides that appeals from judgments or final orders or
resolutions of the quasi-judicial agencies (which includes the Civil Service Commission) is
Petition for Review. (Pars. 1 and 5, supra.)
Since the Court of Appeals denied his motion for reconsideration on 19 September 1996, 5
petitioner filed the instant petition, designating it in both the caption and the body as one
for "certiorari" under Rule 65 or Rule 45 of the Rules of Court as amended." Petitioner
alleges:
I
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO MYOPIC OR SHORT SIGHTEDNESS IN JUDGMENT IN ADHERING AND LIMITING
ITSELF ONLY TO APPEAL BY A PETITION FOR REVIEW UNDER SUPREME COURT REVISED
ADMINISTRATIVE CIRCULAR NO. 1-95 (REVISED CIRCULAR NO. 1-91) GROSSLY IGNORING
THAT AUTHORITY/POWER TO ISSUE WRITS OF MANDAMUS, PROHIBITION, CERTIORARI,
HABEAS CORPUS AND QUO WARRANTO AND AUXILIARY WRITS OR PROCESSES, WHETHER
OR NOT IN AID OF ITS APPELLATE JURISDICTION AS GRANTED UNDER PAR. (1), SEC. 9 OF
REPUBLIC ACT NO. 7902 IN CASES WHERE THE QUASI-JUDICIAL BODY COMMITS ULTRAVIREZ
[sic] ACTS TANTAMOUNT TO GRAVE ABUSE OF DISCRETION OR LACK/IN EXCESS OF
JURISDICTION AS IN THE INSTANT CASE WHERE THE CIVIL SERVICE COMMISSION FOR THE
FIRST TIME ON APPEAL CONSIDERED DOCUMENTS/ EVIDENCE WHICH WERE NEVER
INTRODUCED/ PRESENTED NOR ADMITTED DURING THE FORMAL HEARING OF THE
ADMINISTRATIVE CASE.
II
A QUESTION OF LAW AS TO WHETHER DECISIONS OR RESOLUTIONS OF THE CIVIL
SERVICE COMMISSION ISSUED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR
IN EXCESS OF JURISDICTION CAN NO LONGER BE REVIEWED BY THE HONORABLE COURT OF
APPEALS BY A PETITION FOR REVIEW UNDER RULE 45 OF 65 OF THE NEW RULES OF COURT
AS AMENDED DESPITE THE PATENT GRAVE ABUSE OF DISCRETION ON THE PART OF THE
CIVIL SERVICE COMMISSION IN DECIDING A CASE BASED ON DOCUMENTS/EVIDENCE
INTRODUCED FOR THE FIRST TIME ON APPEAL, ORDINARY APPEAL BOT [sic] BEING THE
PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW.
III
A QUESTION OF LAW AS TO WHETHER A PETITION FOR CERTIORARI UNDER RULE 45
OR 65 OF THE RULES OF COURT AS AMENDED CAN BE CONSIDERED A MODE OF APPEAL

128

AND IF SO CONSIDERED AS A MODE OF APPEAL WHETHER IT IS THE PROPER REMEDY TO

CORRECT SUPER [sic] GRAVE ABUSE OF DISCRETION OF THE CIVIL SERVICE COMMISSION IN
DECIDING A CASE BASED ON AN [sic] EVIDENCE NOT INTRODUCED DURING THE FORMAL
HEARING OF THE CASE IT APPEARING UNDER SUCH CIRCUMSTANCE THERE IS NO APPEAL,
NOR ANY PLAIN, SPEEDY, AND ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW THAT
CAN BE MADE AVAILABLE TO THE PETITIONER EXCEPT THE SAID PETITION FOR CERTIORARI
RULE 45 OR 65 OF THE RULED OF COURT AS AMENDED.
In its Comment, 6 the Office of the Solicitor General submits that the Court of Appeals did
not commit grave abuse of discretion as the petition which petitioner actually filed with the
Court of Appeals in CA-G.R. SP No. 40341 on 10 May 1996 was one for certiorari under Rule
65 of the Rules of Court, as clearly shown by the grounds petitioner relied upon, to wit:
I.
THE HONORABLE PUBLIC RESPONDENT NIEVES CONFESSOR IN HER CAPACITY AS
SECRETARY OF LABOR AND EMPLOYMENT AND REVIEWING OFFICER OF THE ADMINISTRATIVE
COMPLAINT AGAINST THE PETITIONER COMMITTED SUPER [sic] GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION [sic] WHEN THE
COMPLAINANTS IN SAID ADMINISTRATIVE CASE MERELY PETITIONED FOR THE DEMOTION OF
PETITIONER IN POSITION FROM CHIEF OF THE ADMINISTRATIVE SERVICES TO SUPERVISING
OFFICER OF THE INDUSTRIAL RELATIONS DIVISION OF THE SAME REGIONAL OFFICE, NO. XI,
DAVAO CITY, DEPARTMENT OF LABOR AND EMPLOYMENT BUT THE HONORABLE NIEVES
CONFESSOR CAPRICIOUSLY, WHIMSICALLY, ARROGANTLY, ULTRAVIREZLY [sic] WITHOUT
REGARD TO THE CARDINAL RULES OF PROCEDURE AND EVIDENCE RULED AND DECREED IN
ANNEX "A" TO ANNEX "A-10" LIKE AN EMPRESS THAT PETITIONER SHOULD BE DISMISSED
FROM THE SERVICE WHERE THE SAID PETITIONER SPENT THE BEST 23 YEARS OF HIS LIFE
HONESTLY, FAITHFULLY AND SINCERELY WITHOUT BEING CHARGED OF [sic] ANY SINGLE
CASE, ADMINISTRATIVE OR OTHERWISE, EXCEPT THE PRESENT HARASSMENT CASE UNLIKE
THE AFOREMENTIONED NIEVES CONFESSOR WHO IN HER SHORT STINT AS SECRETARY [OF]
LABOR AND EMPLOYMENT WAS CHARGED IN THE OFFICE OF THE OMBUDSMAN OF [sic]
SEVERAL CRIMINAL AND ADMINISTRATIVE CASES RANGING FROM CORRUPTION TO ALL
SORTS OF CASES INCLUDING HER INEXCUSABLE NEGLIGENCE OF [sic] THE FLOR
CONTEMPLACION AND OTHER SIMILAR CASES INVOLVING OVERSEAS CONTRACT WORKERS
ABROAD.
II.
THE HONORABLE PUBLIC RESPONDENT NIEVES CONFESSOR ACTED WITH SUPER [sic]
GRAVE ABUSE OF DISCRETION AMOUNTING TO FALSE NARRATION OF FACTS OR
UNTRUTHFUL STATEMENT IN THE NARRATION OF FACTS IN VIOLATION OF ART. 171 OF THE
REVISED PENAL CODE TANTAMOUNT TO FALSIFICATION OF QUASI JUDICIAL PUBLIC
DOCUMENTS WHEN IN THE QUESTIONED ORDER (ANNEX "A" TO "A-10") SHE ALTERED,
SUBSTITUTED AND CHANGED THE FINDINGS OF THE DEPARTMENT OF LABOR INVESTIGATOR
ATTY. JOEL MARTINEZ BY MAKING IT APPEAR THAT PETITIONER WAS FOUND TO BE
FREQUENTLY ABSENT, WAS DRUNK OF SLEEPING DURING REGULAR OFFICE HOURS WHEN
THE AFOREMENTIONED INVESTIGATING OFFICER HAS [sic] NOT MADE ANY OF THOSE
FINDINGS.
III.
THE HONORABLE NIEVES CONFESSOR COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION OF GROSS IGNORANCE OF THE LAW
WHEN SHE ISSUED THE SEPTEMBER 4, 1992 ORDER (ANNEX A TO ANNEX A-10) WHEREIN
SHE IMPOSED THE SUPREME PENALTY OF DISMISSAL WITH FORFEITURE OF RETIREMENT
BENEFITS AND LEAVE CREDITS ON THE PETITIONER WHICH IS GROSSLY DISPROPORTIONATE
TO PETITIONER'S ALLEGED FINDINGS OF GUILT FOR VIOLATION OF REASONABLE OFFICE
RULES AND REGULATIONS, FREQUENT ABSENCES FROM DUTY DURING REGULAR OFFICE
HOUSES [sic] AND CONDUCT PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE AND
PETITIONER FOR THE FIRST TIME IN HIS 23 YEARS OF SERVICE WITH THE DEPARTMENT OF
LABOR AND EMPLOYMENT WAS CONFRONTED WITH AN ADMINISTRATIVE HARASSMENT CASE
IN A PLACE SEVERAL HUNDRED KILOMETERS FROM HIS FAMILY WHEN UNDER THE CIVIL
SERVICE LAW (PRESIDENTIAL DECREE NO. 807) AND CODE OF CONDUCT OF GOVERNMENT
OFFICIALS AND EMPLOYEES (R.A. 6713) THE MAXIMUM PENALTY FOR FREQUENT
UNAUTHORIZED ABSENCES WHICH IS CONSIDERED A GRAVE OFFENSE IS ONLY SUSPENSION
FROM THE SERVICE FOR SIX MONTHS AND ONE DAY AND THE PENALTY FOR CONDUCT
PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE IS SIX MONTHS AND ONE DAY TO ONE
YEAR WHILE THE PENALTY FOR VIOLATION OF REASONABLE OFFICE RULES AND
REGULATIONS WHICH IS A LIGHT OFFENSE, IS ONLY A REPRIMAND.
IV.
THE HONORABLE NIEVES CONFESSOR COMMITTED GRAVE ABUSE OF DISCRETION IN
ISSUING THE SEPTEMBER 4, 1992 ORDER (ANNEX A TO ANNEX A-10) DISMISSING FROM THE
SERVICE THE HEREIN PETITIONER WITH FORFEITURE OF RETIREMENT BENEFITS AND LEAVE

129

CREDITS AMOUNTING TO CAPRICIOUS, WHIMSICAL, ARROGANT AND ULTRAVIREZ [sic]

EXERCISE OF FUNCTIONS WHEN THE CHIEF OF THE LEGAL SERVICES, THE ASSISTANT
SECRETARY OF LABOR AND THE UNDERSECRETARY OF LABOR HAVE ALREADY INDORSED TO
HER FOR HER APPROVAL THE ORDER DISMISSING THE INSTANT ADMINISTRATIVE CASE AND
AT THE SAME TIME RECOMMENDED THE APPROVAL OF PETITIONER'S APPLICATION FOR
RETIREMENT.
V.
THE HONORABLE NIEVES CONFESSOR COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO VIOLATION OF PARAGRAPH (c), SEC. 4 OF R.A. 6713 WHICH IS THE CODE OF
CONDUCT AND ETHICAL STANDARDS FOR PUBLIC OFFICIALS AND EMPLOYEES CONSISTING
OF HER DELIBERATE MALICIOUS REFUSAL TO ACT WITH JUSTNESS AND SINCERITY [sic]
TOWARDS PETITIONER WHEN UNDER FALSE PRETEPSES [sic] SHE MISLEAD PETITIONER INTO
FILING OF [sic] HIS APPLICATION FOR RETIREMENT TO TAKE EFFECT ON APRIL 15, 1993 AND
AFTER PETITIONER FILED SUCH APPLICATION FOR RETIREMENT AND ACTUALLY STOPPED
WORKING IN [THE] OFFICE ON APRIL 15, 1993, THE SAID HONORABLE NIEVES CONFESSOR
DENIED PETITIONER'S MOTION FOR RECONSIDERATION (ANNEXES F, F-1, F-2, F-3, F-4, AND
F-5) AND RETIREMENT APPLICATION.
VI.
PUBLIC RESPONDENT CIVIL SERVICE COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING LIKEWISE TO FALSIFICATION OF QUASI JUDICIAL PUBLIC
DOCUMENTS WHEN IT ISSUED RESOLUTION NO. 95-0230 (ANNEX "B" TO "B-8" DATED
JANUARY 12, 1995) AFFIRMING THE ORDER OF HONORABLE PUBLIC RESPONDENT NIEVES
CONFESSOR WHEN THE SAID CIVIL SERVICE COMMISSION MADE IT APPEAR IN SAID
RESOLUTION THAT CERTAIN LETTERS AND MEMORANDA WERE PRESENTED DURING THE
FORMAL HEARING OF THE CASE SUCH AS THOSE LETTERS AND MEMORANDA ENUMERATED
FROM NO. 1 TO 19 OF PAGES 7 AND 8 OF THE QUESTIONED RESOLUTION NO. 95-0230 WHEN
NO SUCH LETTERS AND MEMORANDA WERE EVER PRESENTED IN THE FORMAL HEARING OF
THE ADMINISTRATIVE CASE AND HOW THE SAID DOCUMENTS FOUND THEIR WAY INTO THE
RECORDS OF THE CASE AND FOR THE FIRST TIME CONSIDERED ON APPEAL BY PUBLIC
RESPONDENT CIVIL SERVICE COMMISSION WHICH WAS THE BASIS OF AFFIRMING THE
QUESTIONED ORDER OF HON. NIEVES CONFESSOR (ANNEX "A" TO ANNEX "A-10") AS WELL
AS IN DECLARING PETITIONER NOTORIOUSLY UNDESIRABLE IS A "MIRACLE" WHICH HAS
NEVER BEEN DISCUSSED NOR EXPLAINED BY PUBLIC RESPONDENT IN THE QUESTIONED
RESOLUTION NO. 95-0230.
VII.
THE HONORABLE PUBLIC RESPONDENT CIVIL SERVICE COMMISSION COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO FALSIFICATION PUNISHABLE UNDER ART. 171
OF THE REVISED PENAL CODE WHEN IT DENIED PETITIONER'S MOTION FOR
RECONSIDERATION BY ISSUING RESOLUTION NO. 96-0987 DATED FEBRUARY 13, 1996 WHEN
IT CONSIDERED FOR THE FIRST TIME ON APPEAL THE QUESTIONED LETTERS AND
MEMORANDA WHICH WERE NEVER INTRODUCED DURING THE FORMAL HEARING OF THE
INSTANT ADMINISTRATIVE CASE.
VIII.
THE HONORABLE CIVIL SERVICE COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION IN ISSUING RESOLUTION NO. 95-0230 AND RESOLUTION NO. 96-0987
DECLARING PETITIONER AS NOTORIOUSLY UNDESIRABLE ON THE BASIS OF DOCUMENTS
NOT ADMITTED IN EVIDENCE NOR PASSED UPON IN THE FORMAL HEARING OF THE
ADMINISTRATIVE CASE BUT WHICH FOR THE FIRST TIME ON APPEAL WAS [sic]
MIRACULOUSLY INSERTED INTO THE RECORDS OF THE CASE IN THE CIVIL SERVICE
COMMISSION AND THESE CONSIST OF THE LETTERS AND MEMORANDA MENTIONED IN
PAGES 7 AND 8 OF THE QUESTIONED RESOLUTION NO. 95-0230 ENUMERATED AS NO. 1 TO
19.
IX.
THE HONORABLE CIVIL SERVICE COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO KNOWINGLY RENDERING [AN] UNJUST JUDGMENT WHEN
INSTEAD OF REVIEWING THE FINDINGS AND ORDER OF HONORABLE NIEVES CONFESSOR
(ANNEXES A TO A-10) DATED SEPTEMBER 4, 1992 IT PROCEEDED TO CONDUCT ITS OWN EXPARTE INFORMAL INQUIRY BY CONSIDERING DOCUMENTS OR SCRAP[S] OF PAPERS [sic]
MIRACULOUSLY INSERTED INTO THE RECORDS OF THE CASE IN THE CIVIL SERVICE
COMMISSION WHICH WERE FOR THE FIRST TIME TREATED ON APPEAL THEREBY ISSUING A
NEW FINDING THAT THE PETITIONER WAS NOTORIOUSLY UNDESIRABLE WHICH FINDING WAS
NEVER DREAMED NOR CONCEIVED OF BY ANY PARTY IN THE FORMAL HEARING OF THE
ADMINISTRATIVE CASE AND NOT EVEN BY THE OVER ZEALOUS, OVER VIGILANT, OVER
ACTING, OVERSPEEDING, OVER HONEST AND OVER INCORRUPTIBLE PUBLIC RESPONDENT
NIEVES CONFESSOR. 7

130

The Solicitor General then concluded that since under Revised Administrative Circular No. 195 of this Court appeals from judgments of quasi-judicial agencies such as the Civil Service
Commission should be by verified petition for review, and considering further that Circular
No. 2-90 of this Court provides that appeals taken to either this Court or the Court of Appeals
by the wrong or inappropriate mode of appeal shall be dismissed, then petitioner's motion
for extension of time to file petition for certiorari was correctly denied by the Court of
Appeals.
In its Comment 8 filed by its Office for Legal Affairs, respondent Civil Service Commission
claims as misplaced petitioner's reliance on Section 9(1) of B.P. Blg. 129 which vests upon
the Court of Appeals exclusive original jurisdiction to issue writs of mandamus, prohibition,
certiorari, habeas corpus, and quo warranto, whether or not in aid of its appellate
jurisdiction. Respondent Commission contends that the only mode of appeal from its
decisions is a petition for review, in accordance with Revised Circular No. 1-95 of this Court
and Section 9(3) of B.P. Bldg. 129, as amended by R.A. No. 7902. The latter provides:
Sec. 9. Jurisdiction. The Court of Appeals shall exercise:
xxx

xxx

xxx

(3)
Exclusive appellate jurisdiction over all final judgments, decisions, resolutions, orders
or awards of Regional Trial Courts and quasi-judicial agencies, instrumentalities, boards or
commissions, including the Securities and Exchange Commission, the Social Security
Commission, the Employees Compensation Commission and the Civil Service Commission,
except those falling within the appellate jurisdiction of the Supreme Court in accordance
with the Constitution, the Labor Code of the Philippines under the Presidential Decree No.
442, as amended, the provisions of this Act, and of subparagraph (1) of the third paragraph
and subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.
xxx

xxx

xxx

In his Consolidated Reply, 9 petitioner justified his filing a petition for certiorari under Rule
65 of the Rules of Court in light of the "super-grave abuse of discretion on the part of the . . .
Civil Service Commission" in issuing the challenged resolution, and that an ordinary appeal
was "not appropriate and sufficient to seek reddress [sic] . . . for the reason that it would in
effect impliedly give credence to the unlawful acts of the Civil Service Commission thus
admitting its despotic, arrogant exercise of authority . . ."
We rule against petitioner.
The Court of Appeals committed no error in denying petitioner's "Motion for Extension of
Time to File Petition for Certiorari under Rule 45 of the Rules of Court."
Prior to the effectivity of R.A. 7902, a party aggrieved by any decision, final order or
resolution of the Civil Service Commission had only one remedy, namely, a special civil
action for certiorari under Rule 65 of the Rules of
Court 10 to be filed with this Court pursuant to Section 7 of Article IX-A of the Constitution,
which reads, in part:
Sec. 7. . . . Unless otherwise provided by law this Constitution or by law, any decision, order,
or ruling of each Commission may be brought to the Supreme Court on certiorari by the
aggrieved party within thirty days from receipt of a copy thereof.
Conformably with its implied authority in this Section, Congress passed R.A. No. 7902
vesting upon the Court of Appeals appellate jurisdiction over cases decided or resolved by
the Civil Service Commission, but not the other two Constitutional Commissions treated
under Article IX. Pursuant to Revised Administrative Circular No. 1-95, the mode of appeal
from a decision of the Civil Service Commission, to bring it within the appellate jurisdiction of
the Court of Appeals, is a petition for review to be filed within the period therein fixed. This
petition for review is the same as that contemplated in Section 29 of the Judiciary Act of
1948 (R.A. No. 269), as amended, and in Circular No. 2-90, but not that treated in Rule 45 of
the Rules of Court which refers to petitions filed in the Supreme Court for the review of
decisions or final orders of the Court of Appeals.
Under the 1997 Rules of Civil Procedure, which took effect on 1 July 1997, a petition for
review as a mode of appeal to the Court of Appeals from decisions, final orders or resolutions

131

of the Court of Tax Appeals and quasi-judicial bodies, including the Civil Service Commission,
is governed by Rule 43 thereof.
Considering that petitioner announced in his motion for extension of time that he would be
filing a petition for review under Rule 45 of the Rules of Court, the Court of Appeals cannot
be faulted for peremptorily denying the motion.
Petitioner claims, however, that a petition for review was not his exclusive remedy, as he
could also avail of a special civil action for certiorari under Rule 65. There are, of course,
settled distinctions between a petition for review as a mode of appeal and a special civil
action for certiorari, thus:
a.
In appeal by certiorari, the petition is based on questions of law which the appellant
desires the appellate court to resolve. In certiorari as an original action, the petition raises
the issue as to whether the lower court acted without or in excess of jurisdiction or with
grave abuse of discretion.
b.
Certiorari, as a mode of appeal, involves the review of the judgment, award or final
order on the merits. The original action for certiorari may be directed against an
interlocutory order of the court prior to appeal from the judgment or where there is no
appeal or any other plain, speedy or adequate remedy.
c.
Appeal by certiorari must be made within the reglementary period for appeal. An
original action for certiorari may be filed not later than sixty (60) days from notice of the
judgment, order or resolution sought to be assailed.
d.
Appeal by certiorari stays the judgment, award or order appealed from. An original
action for certiorari, unless a writ of preliminary injunction or a temporary restraining order
shall have been issued, does not stay the challenged proceeding.
e.
In appeal by certiorari, the petitioner and respondent are the original parties to the
action, and the lower court or quasi-judicial agency is not to be impleaded. In certiorari as an
original action, the parties are the aggrieved, party against the lower court quasi-judicial
agency and the prevailing parties, who thereby respectively become the petitioner and
respondents.
f.
In certiorari for purposes of appeal, the prior filing of a motion for reconsideration is
not required (Sec. 1, Rule 45); while in certiorari as an original action, a motion for
reconsideration is a condition precedent (Villa-Rey Transit vs. Bello, L-18957, April 23, 1963),
subject to certain exceptions.
g.
In appeal by certiorari, the appellate court is in the exercise of its appellate
jurisdiction and power of review for, while in certiorari as an original action, the higher court
exercises original jurisdiction under its power of control and supervision over the
proceedings of lower courts. 11
The original jurisdiction of the Court of Appeals over special civil actions for, inter alia,
certiorari, is vested upon it in Section 9(1) of B.P. Blg. 129. This jurisdiction is concurrent with
the Supreme Court 12 and the Regional Trial Court. 13
If, indeed, petitioner initially believed that he had the alternative remedy of a special civil
action for certiorari which would have been more effective and adequate, then it was not
necessary for him to ask for an extension of time to file the petition. Under Rule 65 then, he
had a reasonable period from receipt of a copy of the Civil Service Commission resolution
denying his motion for reconsideration within which to file the petition. That reasonable
period has been interpreted to be ninety (90) days. 14 We are not, however, persuaded that
petitioner initially thought of filing a special civil action. All along, what he had in mind was a
petition for review, as evidenced by his express reference in his motion to a petition for
review under Rule 45 and his indication of the date he received a copy of the resolution, viz.,
29 March 1996, and the last day to file the petition, viz., 13 April 1996, which coincided with
the last day prescribed under Rule 45.
If petitioner then filed a special civil action for certiorari on 10 May 1996, it was only because
he had lost his right to appeal by way of the intended petition fore review. The proffered
justification then for his belated filing of a special action for certiorari was nothing but a
crude attempt to circumvent standing rules of procedure, which we cannot tolerate.

132

It is settled that a special civil action for certiorari will not lie as a substitute for the lost
remedy of appeal, 15 and we find no special nor compelling reasons why we should make
out an exception here.
In any case, even if we were to sympathize with petitioner and permit his recourse under
Rule 65, the end result would remain unchanged since a perusal of the challenged
resolutions of the Civil Service Commission fails to disclose any grave abuse of discretion on
its part.
WHEREFORE, the instant petition is DISMISSED.
Costs against petitioner.
SO ORDERED.
G.R. No. 193808

June 26, 2012

LUISK. LOKIN, JR. and TERESITA F. PLANAS, Petitioners,

vs.
COMMISSION ON ELECTIONS (COMELEC), CITIZENS BATTLE AGAINST CORRUPTION
PARTY LIST represented by VIRGINIA S. JOSE SHERWIN N. TUGNA, and CINCHONA
CRUZ-GONZALES, Respondents,
DECISION
SERENO, J.:
The present petition having been flied beyond the reglementary period, Rule 64 of the Rules
of Court compels a dismissal on this basis alone. Despite petitioner's inexplicable disregard
of basic concepts, this Court deems it appropriate to reiterate the specific procedure for the
review of judgments made by the Commission on Elections (COMELEC) as laid down in Rule
64, and how it is differentiated from the more general remedy afforded by Rule 65.
On 5 July 2010, the COMELEC First Division issued a Resolution1 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, praying that they be recognized as the legitimate nominees of CIBAC
party-list, and that petitioner Lokin, Jr. be proclaimed as the CIBAC party-list representative
to the House of Representatives.
Respondent CIBAC party-list is a multi-sectoral party registered2 under Republic Act No.
(R.A.) 7941, otherwise known as the Party- List System Act. As stated in its constitution and
bylaws, the platform of CIBAC is to fight graft and corruption and to promote ethical conduct
in the countrys public service.3 Under the leadership of the National Council, its highest
policymaking and governing body, the party participated in the 2001, 2004, and 2007
elections.4 On 20 November 2009, two different entities, both purporting to represent
CIBAC, submitted to the COMELEC a "Manifestation of Intent to Participate in the Party-List
System of Representation in the May 10, 2010 Elections." The first Manifestation5 was
signed by a certain Pia B. Derla, who claimed to be the partys acting secretary-general. At
1:30 p.m. of the same day, another Manifestation6 was submitted by herein respondents
Cinchona Cruz-Gonzales and Virginia Jose as the partys vice-president and secretarygeneral, respectively.
On 15 January 2010, the COMELEC issued Resolution No. 87447giving due course to CIBACs
Manifestation, "WITHOUT PREJUDICE TO the determination which of the two factions of the
registered party-list/coalitions/sectoral organizations which filed two (2) manifestations of
intent to participate is the official representative of said party-list/coalitions/sectoral
organizations xxx."8
On 19 January 2010, respondents, led by President and Chairperson Emmanuel Joel J.
Villanueva, submitted the Certificate of Nomination9 of CIBAC to the COMELEC Law
Department. The nomination was certified by Villanueva and Virginia S. Jose. On 26 March
2010, Pia Derla submitted a second Certificate of Nomination,10 which included petitioners

133

Luis Lokin, Jr. and Teresita Planas as party-list nominees. Derla affixed to the certification her
signature as "acting secretary-general" of CIBAC.
Claiming that the nomination of petitioners Lokin, Jr. and Planas was unauthorized,
respondents filed with the COMELEC a "Petition to Expunge From The Records And/Or For
Disqualification," seeking to nullify the Certificate filed by Derla. Respondents contended
that Derla had misrepresented herself as "acting secretary-general," when she was not even
a member of CIBAC; that the Certificate of Nomination and other documents she submitted
were unauthorized by the party and therefore invalid; and that it was Villanueva who was
duly authorized to file the Certificate of Nomination on its behalf.11
In the Resolution dated 5 July 2010, the COMELEC First Division granted the Petition, ordered
the Certificate filed by Derla to be expunged from the records, and declared respondents
faction as the true nominees of CIBAC.12 Upon Motion for Reconsideration separately filed
by the adverse parties, the COMELEC en banc affirmed the Divisions findings. In a per
curiam Resolution dated 31 August 2010,13 the Commission reiterated that Pia Derla was
unable to prove her authority to file the said Certificate, whereas respondents presented
overwhelming evidence that Villanueva deputized CIBAC Secretary General Virginia Jose to
submit the Certificate of Nomination pursuant to CIBACs Constitution and bylaws.
Petitioners now seek recourse with this Court in accordance with Rules 64 and 65 of the
Rules of Court, raising these issues: I) Whether the authority of Secretary General Virginia
Jose to file the partys Certificate of Nomination is an intra-corporate matter, exclusively
cognizable by special commercial courts, and over which the COMELEC has no jurisdiction;
and II) Whether the COMELEC erred in granting the Petition for Disqualification and
recognizing respondents as the properly authorized nominees of CIBAC party-list.
As earlier stated, this Court denies the petition for being filed outside the requisite period.
The review by this Court 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 thereof,14 which provides for the allowable period within
which to file petitions for certiorari from judgments of both the COMELEC and the
Commission on Audit. Thus, while Rule 64 refers to the same remedy of certiorari as the
general rule in Rule 65, they cannot be equated, as they provide for different reglementary
periods.15 Rule 65 provides for a period of 60 days from notice of judgment sought to be
assailed in the Supreme Court, while Section 3 expressly provides for only 30 days, viz:
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.
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 2010.16 Thus, pursuant to Section 3 above, deducting the three
days it took petitioners to file the Motion for Reconsideration, they had a remaining period of
27 days or until 28 September 2010 within which to file the Petition for Certiorari with this
Court.
However, petitioners filed the present Petition only on 1 October 2010, clearly outside the
required period. In Pates v. Commission on Elections and Domingo v. Commission on
Elections,17 we have established that the fresh-period rule used in Rule 65 does not
similarly apply to the timeliness of petitions under Rule 64. In Pates, this Court dismissed the
Petition for Certiorari on the sole ground that it was belatedly filed, reasoning thus:

134

x x x. While it is true that a litigation is not a game of technicalities, it is equally true that
every case must be prosecuted in accordance with the prescribed procedure to ensure an
orderly and speedy administration of justice. There have been some instances wherein this
Court allowed a relaxation in the application of the rules, but this flexibility was "never
intended to forge a bastion for erring litigants to violate the rules with impunity."
xxx

xxx

xxx

Under this unique nature of the exceptions, a party asking for the suspension of the Rules of
Court comes to us with the heavy burden of proving that he deserves to be accorded
exceptional treatment. Every plea for a liberal construction of the Rules must at least be
accompanied by an explanation of why the party-litigant failed to comply with the rules and
by a justification for the requested liberal construction.
xxx

xxx

xxx

x x x. Section 3, Article IX-C of the Constitution expressly requires that the COMELECs rules
of procedure should expedite the disposition of election cases. This Court labors under the
same command, as our proceedings are in fact the constitutional extension of cases that
start with the COMELEC.
Based on these considerations, we do not find convenience and uniformity to be reasons
sufficiently compelling to modify the required period for the filing of petitions for certiorari
under Rule 64. While the petitioner is correct in his historical data about the Courts
treatment of the periods for the filing of the different modes of review, he misses out on the
reason why the period under Section 3, Rule 64 has been retained. The reason, as made
clear above, is constitutionally-based and is no less than the importance our Constitution
accords to the prompt determination of election results.18 x x x. (Emphasis supplied,
footnotes omitted.)
In this case, petitioners do not even attempt to explain why the Petition was filed out of
time. Clearly, they are aware of the applicable period for filing, as they themselves invoke
the remedy under Rule 64 in conjunction with Rule 65. Hence, there is no acceptable reason
for their failure to comply with the proper procedure. But even if this Court were to apply
liberality and take cognizance of the late Petition, the arguments therein are flawed. The
COMELEC has jurisdiction over cases pertaining to party leadership and the nomination of
party-list representatives.
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.19 Pia Derla purportedly filed the Certificate of Nomination
pursuant to the authority granted by the Board of Trustees of the "CIBAC Foundation, Inc.,"
the non-stock entity that is registered with the Securities and Exchange Commission
(SEC).20
Thus, petitioners insist that the group that participated in the party-list system in the 2004
and 2007 elections was the SEC-registered entity, and not the National Council, which had
allegedly become defunct since 2003. That was the year when CIBAC Foundation, Inc. was
established and registered with the SEC.21 On the other hand, respondents counter that the
foundation was established solely for the purpose of acting as CIBACs legal and financial
arm, as provided by the partys Constitution and bylaws. It was never intended to substitute
for, or oust CIBAC, the party-list itself.22
Even as petitioners insisted on the purely intra-corporate nature of the conflict between
"CIBAC Foundation" and the CIBAC Sectoral Party, they submitted their Certificate of
Nomination and Manifestation of Intent to participate in the party-list elections. Precisely,
petitioners were seeking the COMELECs approval of their eligibility to participate in the
upcoming party-list elections. In effect, they invoke its authority under the Party-List System
Act.23 Contrary to their stance that the present dispute stemmed from an intra-corporate
matter, their submissions even recognize the COMELECs constitutional power to enforce
and administer all laws relative to the conduct of an election, plebiscite, initiative,
referendum, and recall.24 More specifically, as one of its constitutional functions, the
COMELEC is also tasked to "register, after sufficient publication, political parties,

135

organizations, or coalitions which, in addition to other requirements, must present their

platform or program of government."25
In any case, the COMELECs jurisdiction to settle the struggle for leadership within the party
is well established. This singular power to rule upon questions of party identity and
leadership is exercised by the COMELEC as an incident to its enforcement powers. In Laban
ng Demokratikong Pilipino v. Commission on Elections,26 the Court held:
x x x. Corollary to the right of a political party "to identify the people who constitute the
association and to select a standard bearer who best represents the partys ideologies and
preference" is the right to exclude persons in its association and to not lend its name and
prestige to those which it deems undeserving to represent its ideals. A certificate of
candidacy makes known to the COMELEC that the person therein mentioned has been
nominated by a duly authorized political group empowered to act and that it reflects
accurately the sentiment of the nominating body. A candidates political party affiliation is
also printed followed by his or her name in the certified list of candidates. A candidate
misrepresenting himself or herself to be a partys candidate, therefore, not only
misappropriates the partys name and prestige but foists a deception upon the electorate,
who may unwittingly cast its ballot for him or her on the mistaken belief that he or she
stands for the partys principles. To prevent this occurrence, the COMELEC has the power
and the duty to step in and enforce the law not only to protect the party but, more
importantly, the electorate, in line with the Commissions broad constitutional mandate to
ensure orderly elections.27 (Emphasis supplied.)
Similar to the present case, Laban delved into the issue of leadership for the purpose of
determining which officer or member was the duly authorized representative tasked with
filing the Certificate of Nomination, pursuant to its Constitution and bylaws, to wit:
The only issue in this case, as defined by the COMELEC itself, is who as between the Party
Chairman and the Secretary General has the authority to sign certificates of candidacy of
the official candidates of the party. Indeed, the petitioners Manifestation and Petition before
the
COMELEC merely asked the Commission to recognize only those certificates of candidacy
signed by petitioner Sen. Angara or his authorized representative, and no other.28
In the 2010 case Atienza v. Commission on Elections,29 it was expressly settled that the
COMELEC possessed the authority to resolve intra-party disputes as a necessary tributary of
its constitutionally mandated power to enforce election laws and register political parties.
The Court therein cited Kalaw v. Commission on Elections and Palmares v. Commission on
Elections, which uniformly upheld the COMELECs jurisdiction over intra-party disputes:
The COMELECs jurisdiction over intra-party leadership disputes has already been settled by
the Court. The Court ruled in Kalaw v. Commission on Elections that the COMELECs powers
and functions under Section 2, Article IX-C of the Constitution, "include the ascertainment of
the identity of the political party and its legitimate officers responsible for its acts." The
Court also declared in another case that the COMELECs power to register political parties
necessarily involved the determination of the persons who must act on its behalf. Thus, the
COMELEC may resolve an intra-party leadership dispute, in a proper case brought before it,
as an incident of its power to register political parties.30
Furthermore, matters regarding the nomination of party-list representatives, as well as their
individual qualifications, are outlined in the Party-List System Law. Sections 8 and 9 thereof
state: Sec. 8. Nomination of Party-List Representatives. Each registered party, organization
or coalition shall submit to the COMELEC not later than forty-five (45) days before the
election a list of names, not less than five (5), from which party-list representatives shall be
chosen in case it obtains the required number of votes.
A person may be nominated in one (1) list only. Only persons who have given their consent
in writing may be named in the list. The list shall not include any candidate for any elective
office or a person who has lost his bid for an elective office in the immediately preceding
election. No change of names or alteration of the order of nominees shall be allowed after
the same shall have been submitted to the COMELEC except in cases where the nominee
dies, or withdraws in writing his nomination, becomes incapacitated in which case the name
of the substitute nominee shall be placed last in the list. Incumbent sectoral representatives
in the House of Representatives who are nominated in the party-list system shall not be
considered resigned.

136

Sec. 9. Qualifications of Party-List Nominees. No person shall be nominated as party-list

representative unless he is a natural-born citizen of the Philippines, a registered voter, a
resident of the Philippines for a period of not less than one (1)year immediately preceding
the day of the election, able to read and write, a bona fide member of the party or
organization which he seeks to represent for at least ninety (90) days preceding the day of
the election, and is at least twenty-five (25) years of age on the day of the election.
By virtue of the aforesaid mandate of the Party-List Law vesting the COMELEC with
jurisdiction over the nomination of party-list representatives and prescribing the
qualifications of each nominee, the COMELEC promulgated its "Rules on Disqualification
Cases Against Nominees of Party-List Groups/ Organizations Participating in the 10 May 2010
Automated National and Local Elections."31 Adopting the same qualifications of party-list
nominees listed above, Section 6 of these Rules also required that:
The party-list group and the nominees must submit documentary evidence in consonance
with the Constitution, R.A. 7941 and other laws to duly prove that the nominees truly belong
to the marginalized and underrepresented sector/s, the sectoral party, organization, political
party or coalition they seek to represent, which may include but not limited to the following:
a. Track record of the party-list group/organization showing active participation of the
nominee/s in the undertakings of the party-list group/organization for the advancement of
the marginalized and underrepresented sector/s, the sectoral party, organization, political
party or coalition they seek to represent;
b. Proofs that the nominee/s truly adheres to the advocacies of the party-list
group/organizations (prior declarations, speeches, written articles, and such other positive
actions on the part of the nominee/s showing his/her adherence to the advocacies of the
party-list group/organizations);
c. Certification that the nominee/s is/are a bona fide member of the party-list group/
organization for at least ninety (90) days prior to the election; and
d. In case of a party-list group/organization seeking representation of the marginalized and
underrepresented sector/s, proof that the nominee/s is not only an advocate of the partylist/organization but is/are also a bona fide member/s of said marginalized and
underrepresented sector.
The Law Department shall require party-list group and nominees to submit the foregoing
documentary evidence if not complied with prior to the effectivity of this resolution not later
than three (3) days from the last day of filing of the list of nominees.
Contrary to petitioners stance, no grave abuse of discretion is attributable to the COMELEC
First Division and the COMELEC en banc.1wphi1 The tribunal correctly found that Pia
Derlas alleged authority as "acting secretary-general" was an unsubstantiated allegation
devoid of any supporting evidence. Petitioners did not submit any documentary evidence
that Derla was a member of CIBAC, let alone the representative authorized by the party to
submit its Certificate of Nomination.32 The COMELEC ruled:
A careful perusal of the records readily shows that Pia B. Derla, who has signed and
submitted, as the purported Acting Secretary General of CIBAC, the Certificates of
Nomination of Respondents, has no authority to do so. Despite Respondents repeated claim
that Ms. Derla is a member and officer of CIBAC, they have not presented any proof in
support of the same. We are at a loss as to the manner by which Ms. Derla has assumed the
post, and We see nothing but Respondents claims and writings/certifications by Ms. Derla
herself that point to that alleged fact. Surely, We cannot rely on these submissions, as they
are the very definition of self-serving declarations.
On the other handWe cannot help but be convinced that it was Emmanuel Joel J.
Villanueva, as the Party President and Chairman, who had been given the sole authority, at
least for the 10 May 2010 Elections, to submit the list of nominees for the Party. The records
would show that, in accordance with the Partys Constitution and by-laws, its National
Council, the highest policymaking and governing body of the Party, met on 12 November
2009 and there being a quorum, then proceeded to elect its new set of officers, which
included Mr. Villanueva as both Party President and Party Chairman, and Virginia S. Jose as
Party Secretary General. During the same meeting, the Partys New Electoral Congress,
which as per the CIBACs Constitution and By-Laws, was also composed of the National

137

Council Members and had the task of choosing the nominees for the Party in the Party-List
Elections, unanimously ruled to delegate to the Party President such latter function. This set
of facts, which had not been belied by concrete contrary evidence, weighed heavily against
Respondents and favorably for Petitioner.33
Pia Derla, who is not even a member of CIBAC, is thus a virtual stranger to the party-list, and
clearly not qualified to attest to petitioners as CIBAC nominees, or certify their nomination to
the COMELEC. Petitioners cannot use their registration with the SEC as a substitute for the
evidentiary requirement to show that the nominees, including Derla, are bona fide members
of the party. Petitioners Planas and Lokin, Jr. have not even presented evidence proving the
affiliation of the so-called Board of Trustees to the CIBAC Sectoral Party that is registered
with COMELEC.
Petitioners cannot draw authority from the Board of Trustees of the SEC-registered entity,
because the Constitution of CIBAC expressly mandates that it is the National Council, as the
governing body of CIBAC, that has the power to formulate the policies, plans, and programs
of the Party, and to issue decisions and resolutions binding on party members and
officers.34 Contrary to petitioners allegations, the National Council of CIBAC has not
become defunct, and has certainly not been replaced by the Board of Trustees of the SECregistered entity. The COMELEC carefully perused the documents of the organization and
outlined the process followed by the National Council before it complied with its task of
choosing the partys nominees.This was based on the "Minutes of Meeting of CIBAC PartyList National Council" held on 12 November 2009, which respondents attached to their
Memorandum.35
For its part, the COMELEC en banc also enumerated the documentary evidence that further
bolstered respondents claim that it is Chairman Villanueva and Secretary General Virginia
Jose who were duly authorized to submit the Certificate of Nomination to the COMELEC.36
These include:
a. The Joint Affidavit of Resolutions of the CIBAC National Council and the National Electoral
Congress of CIBAC dated 12 November 2009;
b. Certificate of Deputization and Delegation of Authority issued to CIBAC Secretary-General
Virginia S. Jose by the CIBAC President;
c. Constitution and By-Laws of CIBAC as annexed to its Petition for Registration as Sectoral
Organization Under the Party-List System filed by CIBAC on 13 November 2000; and
d. Manifestation dated 8 January 2010 by CIBACs Secretary General Virginia S. Jose
providing the official list of officers of CIBAC.37
WHEREFORE , finding no grave abuse of discretion on the part of the COMELEC in issuing the
assailed Resolutions, the instant Petition is DISMISSED. This Court AFFIRMS the judgment of
the COMELEC expunging from its records the Certificate of Nomination filed on 26 March
2010 by Pia B. Derla. The nominees, as listed in the Certificate of Nomination filed on 19
January 2010 by Emmanuel Joel J. Villanueva, President and Chairman of Citizens Battle
Against Corruption (CIBAC) Party List, are recognized as the legitimate nominees of the said
party.
SO ORDERED.
G.R. No. 213525

January 27, 2015

FORTUNE LIFE INSURANCE COMPANY, INC., Petitioner,

vs.
COMMISSION ON AUDIT (COA) PROPER; COA REGIONAL OFFICE NO. VI-WESTERN
VISAYAS; AUDIT GROUP LGS-B, PROVINCE OF ANTIQUE; AND PROVINCIAL
GOVERNMENT OF ANTIQUE, Respondents.
RESOLUTION
BERSAMIN, J.:
Petitioner Fortune Life Insurance Company, Inc. seeks the Reconsideration1 of the resolution
promulgated on August 19, 2014,2 whereby the Court dismissed its petition for certiorari

138

under Rule 64 in relation to Rule 65 of the Rules of Courtdue to its non-compliance with the
provisions of Rule 64, particularly for:(a) the late filing of the petition; (b) the non-submission
of the proof of service and verified declaration; and (c) the failure to show grave abuse of
discretion on the part of the respondents.3
Antecedents
Respondent Provincial Government of Antique (LGU) and the petitioner executed a
memorandum of agreement concerning the life insurance coverage of qualified
barangaysecretaries, treasurers and tanod, the former obligating P4,393,593.60for the
premium payment, and subsequently submitting the corresponding disbursement voucher to
COA Antique for pre-audit.4 The latter office disallowed the payment for lack of legal basis
under Republic Act No. 7160 (Local Government Code). Respondent LGU appealed but its
appeal was denied.
Consequently, the petitioner filed its petition for money claim in the COA.5 On November 15,
2012, the COA issued its decision denying the petition,6 holding that under Section 447 and
Section 458 of the Local Government Code only municipal or city governments are expressly
vested with the power to secure group insurance coverage for barangayworkers; and noting
the LGUs failure to comply with the requirement of publication under Section 21 of Republic
Act No. 9184 (Government Procurement Reform Act).
The petitioner received a copy of the COA decision on December 14, 2012,7 and filed its
motion for reconsideration on January 14, 2013.8 However, the COA denied the motion,9 the
denial being received by the petitioner on July 14, 2014.10
Hence, the petitioner filed the petition for certiorari on August 12, 2014, but the petition for
certiorari was dismissed as earlier stated through the resolution promulgated on August
19,2014 for (a) the late filing of the petition; (b) the non-submission of the proof of service
and verified declaration; and (c) the failure to show grave abuse of discretion on the part of
the respondents.
Issues
In its motion for reconsideration, the petitioner submits that it filed the petition for certiorari
within the reglementary period following the fresh period rule enunciated in Neypes v. Court
of Appeals;11 and that the petition for certiorari included an affidavit of service in
compliance with Section 3, Rule 13 of the Rules of Court. It admits having overlooked the
submission of a verified declaration; and prays that the declaration attached to the motion
for reconsideration be admitted by virtue of its substantial compliance with the Efficient Use
of Paper Rule12 by previously submitting a compact disc (CD) containing the petition for
certiorari and its annexes. It disagrees with the Court, insisting that it showed and proved
grave abuse of discretion on the part of the COA in issuing the assailed decision.
Ruling
We deny the motion for reconsideration for being without merit.
I
Petitioner did not comply with
the rule on proof of service
The petitioner claims that the affidavit of service attached to the petition for certiorari
complied with the requirement on proof of service.
The claim is unwarranted. The petitioner obviously ignores that Section 13, Rule 13 of the
Rules of Court concerns two types of proof of service, namely: the affidavit and the registry
receipt, viz: Section 13. Proof of Service. x x x. If service is made by registered mail, proof
shall be made by such affidavit and the registry receipt issued by the mailing office. The
registry return card shall be filed immediately upon its receipt by the sender, or in lieu
thereof the unclaimed letter together with the certified or sworn copy of the notice given by
the postmaster to the addressee. Section 13 thus requires that if the service is done by
registered mail, proof of service shall consist of the affidavit of the person effecting the
mailing and the registry receipt, both of which must be appended to the paper being served.
A compliance withthe rule is mandatory, such that

139

there is no proof of service if either or both are not submitted.13

Here, the petition for certiorari only carried the affidavit of service executed by one
Marcelino T. Pascua, Jr., who declared that he had served copies of the petition by registered
mail "under Registry Receipt Nos. 70449, 70453, 70458,70498 and 70524 attached tothe
appropriate spaces found on pages 64-65 of the petition."14 The petition only bore,
however, the cut print-outs of what appeared to be the registry receipt numbers of the
registered matters, not the registry receipts themselves. The rule requires to be appended
the registry receipts, nottheir reproductions. Hence, the cut print-outs did not substantially
comply with the rule. This was the reason why the Court held in the resolution of August 19,
2014 that the petitioner did not comply with the requirement of proof of service.15
II
Fresh Period Ruleunder Neypes
did not apply to the petition for certiorari
under Rule 64 of the Rules of Court
The petitioner posits that the fresh period rule applies because its Rule 64 petition is akin to
a petition for review brought under Rule 42 of the Rules of Court; hence, conformably with
the fresh period rule, the period to file a Rule 64 petition should also be reckoned from the
receipt of the order denying the motion for reconsideration or the motion for new trial.16
The petitioners position cannot be sustained.
There is no parity between the petition for review under Rule 42 and the petition for
certiorari under Rule 64.
As to the nature of the procedures, Rule 42 governs an appeal from the judgment or final
order rendered by the Regional Trial Court in the exercise of its appellate jurisdiction. Such
appeal is on a question of fact, or of law, or of mixed question of fact and law, and is given
due course only upon a prima facie showing that the Regional Trial Court committed an error
of fact or law warranting the reversal or modification of the challenged judgment or final
order.17 In contrast, the petition for certiorari under Rule 64 is similar to the petition for
certiorari under Rule 65, and assails a judgment or final order of the Commission on
Elections (COMELEC), or the Commission on Audit (COA). The petition is not designed to
correct only errors of jurisdiction, not errors of judgment.18 Questions of fact cannot be
raised except to determine whether the COMELEC or the COA were guilty of grave abuse of
discretion amounting to lack or excess of jurisdiction.
The reglementary periods under Rule42 and Rule 64 are different. In the former, the
aggrieved party is allowed 15 days to file the petition for review from receipt of the assailed
decision or final order, or from receipt of the denial of a motion for new trial or
reconsideration.19 In the latter, the petition is filed within 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, if allowed under the procedural rules of the Commission concerned,
interrupts the period; hence, should the motion be denied, the aggrieved party may file the
petition within the remaining period, which shall not be less than five days in any event,
reckoned from the notice of denial.20
The petitioner filed its motion for reconsideration on January 14, 2013, which was 31 days
after receiving the assailed decision of the COA on December 14, 2012.21 Pursuant to
Section 3 of Rule 64, it had only five days from receipt of the denial of its motion for
reconsideration to file the petition. Considering that it received the notice of the denial on
July 14, 2014, it had only until July19, 2014 to file the petition. However, it filed the petition
on August 13, 2014, which was 25 days too late.
We ruled in Pates v. Commission on Elections22 that the belated filing of the petition for
certiorari under Rule 64 on the belief that the fresh period ruleshould apply was fatal to the
recourse. As such, the petitioner herein should suffer the same fate for having wrongly
assumed that the fresh period rule under Neypes23 applied. Rules of procedure may be
relaxed only to relieve a litigant of an injustice that is not commensurate with the degree of
his thoughtlessness in not complying with the prescribed procedure.24 Absent this reason
for liberality, the petition cannot be allowed to prosper.
III

140

Petition for certiorari further lacked merit

The petition for certiorari is also dismissible for its lack of merit.
The petitioner insists on having fully shown that the COA committed grave abuse of
discretion, to wit: (1) the challenged decision was rendered by a divided COA proper; (2) the
COA took almost a year before promulgating its decision, and more thana year in resolving
the motion for reconsideration, in contravention of the express mandate of the Constitution;
(3) the resolution denying the motion for reconsideration was made up of only two
sentences; (4) the matter involved a novel issue that called for an interpretation of the
pertinent provisions of the Local Government Code; and (5) in issuing the resolution, COA
Commissioners Grace Pulido-Tan and Heidi L. Mendoza made it appear that they knew the
Local Government Code better than former Senator Aquilino Pimentel who offered an opinion
on the matter.25
Grave abuse of discretion implies such capricious and whimsical exercise of judgment as to
be equivalent to lack or excess of jurisdiction; in other words, power is exercised in an
arbitrary or despotic manner by reason of passion, prejudice, or personal hostility; and such
exercise is so patent or so gross as to amount to an evasion of a positive duty or to a virtual
refusal either to perform the duty enjoined or to act at all in contemplation of law.26
A close look indicates that the petition for certioraridid not sufficiently disclose how the COA
committed grave abuse of its discretion. For sure, the bases cited by the petitioner did not
approximate grave abuse of discretion. To start with, the supposed delays taken by the COA
in deciding the appeal were neither arbitrary nor whimsical on its part. Secondly, the mere
terseness of the denial of the motion for reconsideration was not a factor in demonstrating
an abuse of discretion. And, lastly, the fact that Senator Pimentel, even if he had been the
main proponent of the Local Government Codein the Legislature, expressed an opinion on
the issues different from the COA Commissioners own did not matter, for it was the latters
adjudication that had any value and decisiveness on the issues by virtue of their being the
Constitutionally officials entrusted with the authority for that purpose.
It is equally relevant to note that the COA denied the money claim of the petitioner for the
further reason of lack of sufficient publication as required by the Government Procurement
Act. In that light, the COA acted well within its authority in denying the petitioners claim.
IV
Petitioner and its counsel
exhibited harshness and disrespect
towards the Court and its Members
The petitioner contends that the Court erred in appreciating the petitioners non-compliance
with the requirement of the proof of service, alleging that even "a perfunctory scrutiny" of
the petition for certiorari and its annexes could have easily shown that it had attached an
affidavit of service to the petition. It goes on to make the following statements, viz:
25. Apparently, the staff of the Justice-in-charge failed to verify the PETITION and its annexes
up to its last page, thus, the erroneous finding that there was non-submission of the proof of
service; 26. In turn, the same omission was hoisted upon the other members of this
Honorable Court who took the observation from the office of the Justice-in-charge, to be the
obtaining fact, when in truth and in fact, it is not;27
The petitioner and its counsel thereby exhibited their plain inability to accept the ill
consequences of their own shortcomings, and instead showed an unabashed propensity to
readily lay blame on others like the Court and its Members. In doing so, they employed
harsh and disrespectful language that accused the Court and its Members of ignorance and
recklessness in the performance of their function of adjudication.
We do not tolerate such harsh and disrespectful language being uttered against the Court
and its Members. We consider the accusatory language particularly offensive because it was
unfounded and undeserved. As this resolution earlier clarifies, the petition for certiorari did
not contain a proper affidavit of service.We do not need to rehash the clarification. Had the
petitioner and its counsel been humbler to accept their self-inflicted situation and more
contrite, they would have desisted from their harshness and disrespect towards the Court
and its Members. Although we are not beyond error, we assure the petitioner and its counsel
that our resolutions and determinations are arrived at or reached with much care and

141

caution, aware that the lives, properties and rights of the litigants are always at stake. If
there be errors, they would be unintended, and would be the result of human oversight. But
in this instance the Court and its Members committed no error. The petition bore only cut
reproductions of the supposed registry receipts, which even a mere "perfunctory scrutiny"
would not pass as the original registry receipts required by the Rules of Court.
Accordingly, the petitioner and its counsel, Atty. Eduardo S. Fortaleza, should fully explain in
writing why they should not be punished for indirect contempt of court for their harsh and
disrespectful language towards the Court and its Members; and, in his case, Atty. Fortaleza
should further show cause why he should" not be disbarred.
WHEREFORE, the Court DENIES the Motion for Reconsideration for its lack of merit; ORDERS
the petitioner and its counsel, Atty. Eduardo S. Fortaleza, to show cause in writing within ten
(10) days from notice why they should not be punished for indirect contempt of court; and
FURTHER DIRECTS Atty. Fortaleza to show cause in the same period why he should not be
disbarred.
SO ORDERED.
G.R. No. 188818

May 31, 2011

TOMAS R. OSMEA, in his personal capacity and in his capacity as City Mayor of
Cebu City, Petitioner,
vs.
THE COMMISSION ON AUDIT, Respondent.
DECISION
BRION, J.:
Before the Court is the Petition for Certiorari1 filed by Tomas R. Osmea, former mayor of
the City of Cebu, under Rule 64 of the Rules of Court. The petition seeks the reversal of the
May 6, 2008 Decision2 and the June 8, 2009 Resolution3 of the respondent Commission on
Audit (COA), which disallowed the damages, attorneys fees and litigation expenses awarded
in favor of two construction companies in the collection cases filed against the City of Cebu,
and made these charges the personal liability of Osmea for his failure to comply with the
legal requirements for the disbursement of public funds.
BACKGROUND FACTS
The City of Cebu was to play host to the 1994 Palarong Pambansa (Palaro). In preparation for
the games, the City engaged the services of WT Construction, Inc. (WTCI) and Dakay
Construction and Development Company (DCDC) to construct and renovate the Cebu City
Sports Complex. Osmea, then city mayor, was authorized by the Sangguniang Panlungsod
(Sanggunian) of Cebu to represent the City and to execute the construction contracts.
While the construction was being undertaken, Osmea issued a total of 20 Change/Extra
Work Orders to WTCI, amounting to P35,418,142.42 (about 83% of the original contract
price), and to DCDC, amounting to P15,744,525.24 (about 31% of the original contract
price). These Change/Extra Work Orders were not covered by any Supplemental Agreement,
nor was there a prior authorization from the Sanggunian. Nevertheless, the work proceeded
on account of the "extreme urgency and need to have a suitable venue for the Palaro."4 The
Palaro was successfully held at the Cebu City Sports Complex during the first six months of
1994.
Thereafter, WTCI and DCDC demanded payment for the extra work they performed in the
construction and renovation of the sports complex. A Sanggunian member, Councilor
Augustus Young, sponsored a resolution authorizing Osmea to execute the supplemental
agreements with WTCI and DCDC to cover the extra work performed, but the other
Sanggunian members refused to pass the resolution. Thus, the extra work completed by
WTCI and DCDC was not covered by the necessary appropriation to effect payment,
prompting them to file two separate collection cases before the Regional Trial Court (RTC) of
Cebu City (Civil Case Nos. CEB-170045 and CEB-171556 ). The RTC found the claims
meritorious, and ordered the City to pay for the extra work performed. The RTC likewise
awarded damages, litigation expenses and attorneys fees in the amount of P2,514,255.40
to WTCI7 and P102,015.00 to DCDC.8 The decisions in favor of WTCI and DCDC were
affirmed on appeal, subject to certain modifications as to the amounts due, and have

142

become final. To satisfy the judgment debts, the Sanggunian finally passed the required
appropriation ordinances.
During post-audit, the City Auditor issued two notices disallowing the payment of litigation
expenses, damages, and attorneys fees to WTCI and DCDC.9 The City Auditor held Osmea,
the members of the Sanggunian, and the City Administrator liable for the P2,514,255.40 and
P102,015.00 awarded to WTCI and DCDC, respectively, as damages, attorneys fees, and
interest charges. These amounts, the City Auditor concluded, were unnecessary expenses
for which the public officers should be held liable in their personal capacities pursuant to the
law.
Osmea and the members of the Sanggunian sought reconsideration of the disallowance
with the COA Regional Office, which, through a 2nd Indorsement dated April 30, 2003,10
modified the City Auditors Decision by absolving the members of the sanggunian from any
liability. It declared that the payment of the amounts awarded as damages and attorneys
fees should solely be Osmeas liability, as it was him who ordered the change or extra work
orders without the supplemental agreement required by law, or the prior authorization from
the Sanggunian. The Sanggunian members cannot be held liable for refusing to enact the
necessary ordinance appropriating funds for the judgment award because they are supposed
to exercise their own judgment and discretion in the performance of their functions; they
cannot be mere "rubber stamps" of the city mayor.
The COA Regional Offices Decision was sustained by the COAs National Director for Legal
and Adjudication (Local Sector) in a Decision dated January 16, 2004.11 Osmea filed an
appeal against this Decision.
On May 6, 2008, the COA issued the assailed Decision which affirmed the notices of
disallowance.12 Osmea received a copy of the Decision on May 23, 2008. Eighteen days
after or on June 10, 2008, Osmea filed a motion for reconsideration of the May 6, 2008 COA
Decision.
The COA denied Osmeas motion via a Resolution dated June 8, 2009.13 The Office of the
Mayor of Cebu City received the June 8, 2009 Resolution of the COA on June 29, 2009. A day
before, however, Osmea left for the United States of America for his check-up after his
cancer surgery in April 2009 and returned to his office only on July 15, 2009. Thus, it was
only on July 27, 2009 that Osmea filed the present petition for certiorari under Rule 64 to
assail the COAs Decision of May 6, 2008 and Resolution of June 8, 2009.
THE PETITION
Rule 64 of the Rules of Court governs the procedure for the review of judgments and final
orders or resolutions of the Commission on Elections and the COA. Section 3 of the same
Rule provides for a 30-day period, counted from the notice of the judgment or final order or
resolution sought to be reviewed, to file the petition for certiorari. The Rule further states
that the filing of a motion for reconsideration of the said judgment or final order or resolution
interrupts the 30-day period.
Osmea filed his motion for reconsideration, of the COAs May 6, 2008 Decision, 18 days
from his receipt thereof, leaving him with 12 days to file a Rule 64 petition against the COA
ruling. He argues that the remaining period should be counted not from the receipt of the
COAs June 8, 2009 Resolution by the Office of the Mayor of Cebu City on June 29, 2009, but
from the time he officially reported back to his office on July 15, 2009, after his trip abroad.
Since he is being made liable in his personal capacity, he reasons that the remaining period
should be counted from his actual knowledge of the denial of his motion for reconsideration.
Corollary, he needed time to hire a private counsel who would review his case and prepare
the petition.
Osmea pleads that his petition be given due course for the resolution of the important
issues he raised. The damages and interest charges were awarded on account of the delay
in the payment of the extra work done by WTCI and DCDC, which delay Osmea attributes to
the refusal of the Sanggunian to appropriate the necessary amounts. Although Osmea
acknowledges the legal necessity for a supplemental agreement for any extra work
exceeding 25% of the original contract price, he justifies the immediate execution of the
extra work he ordered (notwithstanding the lack of the supplemental agreement) on the
basis of the extreme urgency to have the construction and repairs on the sports complex
completed in time for the holding of the Palaro. He claims that the contractors themselves

143

did not want to embarrass the City and, thus, proceeded to perform the extra work even
without the supplemental agreement.
Osmea also points out that the City was already adjudged liable for the principal sum due
for the extra work orders and had already benefitted from the extra work orders by
accepting and using the sports complex for the Palaro. For these reasons, he claims that all
consequences of the liability imposed, including the payment of damages and interest
charges, should also be shouldered by the City and not by him.
THE COURTS RULING
Relaxation of procedural rules to give effect to a partys right to appeal
Section 3, Rule 64 of the Rules of Court 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.
[Emphasis ours.]
Several times in the past, we emphasized that procedural rules should be treated with
utmost respect and due regard, since they are designed to facilitate the adjudication of
cases to remedy the worsening problem of delay in the resolution of rival claims and in the
administration of justice. From time to time, however, we have recognized exceptions to the
Rules but only for the most compelling reasons where stubborn obedience to the Rules
would defeat rather than serve the ends of justice. Every plea for a liberal construction of
the Rules must at least be accompanied by an explanation of why the party-litigant failed to
comply with the Rules and by a justification for the requested liberal construction.14 Where
strong considerations of substantive justice are manifest in the petition, this Court may relax
the strict application of the rules of procedure in the exercise of its legal jurisdiction.15
Osmea cites the mandatory medical check-ups he had to undergo in Houston, Texas after
his cancer surgery in April 2009 as reason for the delay in filing his petition for certiorari.
Due to his weakened state of health, he claims that he could not very well be expected to be
bothered by the affairs of his office and had to focus only on his medical treatment. He could
not require his office to attend to the case as he was being charged in his personal capacity.
We find Osmeas reasons sufficient to justify a relaxation of the Rules. Although the service
of the June 8, 2009 Resolution of the COA was validly made on June 29, 2009 through the
notice sent to the Office of the Mayor of Cebu City,16 we consider July 15, 2009 the date
he reported back to office as the effective date when he was actually notified of the
resolution, and the reckoning date of the period to appeal. If we were to rule otherwise, we
would be denying Osmea of his right to appeal the Decision of the COA, despite the merits
of his case.
Moreover, a certiorari petition filed under Rule 64 of the Rules of Court must be verified, and
a verification requires the petitioner to state under oath before an authorized officer that he
has read the petition and that the allegations therein are true and correct of his personal
knowledge. Given that Osmea was out of the country to attend to his medical needs, he
could not comply with the requirements to perfect his appeal of the Decision of the COA.
While the Court has accepted verifications executed by a petitioners counsel who personally
knows the truth of the facts alleged in the pleading, this was an alternative not available to
Osmea, as he had yet to secure his own counsel. Osmea could not avail of the services of
the City Attorney, as the latter is authorized to represent city officials only in their official
capacity.17 The COA pins liability for the amount of damages paid to WTCI and DCDC on
Osmea in his personal capacity, pursuant to Section 103 of Presidential Decree No. 1445
(PD 1445).18
Thus, the reckoning date to count the remaining 12 days to file his Rule 64 petition should
be counted from July 15, 2009, the date Osmea had actual knowledge of the denial of his
motion for reconsideration of the Decision of the COA and given the opportunity to
competently file an appeal thereto before the Court. The present petition, filed on July 27,
2009, was filed within the reglementary period.

144

Personal liability for expenditures of government fund when made in violation of law
The Courts decision to adopt a liberal application of the rules stems not only from
humanitarian considerations discussed earlier, but also on our finding of merit in the
petition.
Section 103 of PD 1445 declares that "[e]xpenditures of government funds or uses of
government property in violation of law or regulations shall be a personal liability of the
official or employee found to be directly responsible therefor." Notably, the public officials
personal liability arises only if the expenditure of government funds was made in violation of
law. In this case, the damages were paid to WTCI and DCDC pursuant to final judgments
rendered against the City for its unreasonable delay in paying its obligations. The COA,
however, declared that the judgments, in the first place, would not be rendered against the
City had it not been for the change and extra work orders that Osmea made which (a) it
considered as unnecessary, (b) were without the Sanggunians approval, and (c) were not
covered by a supplemental agreement.
The term "unnecessary," when used in reference to expenditure of funds or uses of property,
is relative. In Dr. Teresita L. Salva, etc. v. Guillermo N. Carague, etc., et al.,19 we ruled that
"[c]ircumstances of time and place, behavioural and ecological factors, as well as political,
social and economic conditions, would influence any such determination. x x x
[T]ransactions under audit are to be judged on the basis of not only the standards of legality
but also those of regularity, necessity, reasonableness and moderation." The 10-page letter
of City Administrator Juan Saul F. Montecillo to the Sanggunian explained in detail the
reasons for each change and extra work order; most of which were made to address security
and safety concerns that may arise not only during the holding of the Palaro, but also in
other events and activities that may later be held in the sports complex. Comparing this with
the COAs general and unsubstantiated declarations that the expenses were "not
essential"20 and not "dictated by the demands of good government,"21 we find that the
expenses incurred for change and extra work orders were necessary and justified.
The COA considers the change and extra work orders illegal, as these failed to comply with
Section III, C1 of the Implementing Rules and Regulations of Presidential Decree No. 1594,22
which states that:
5. Change Orders or Extra Work Orders may be issued on a contract upon the approval of
competent authorities provided that the cumulative amount of such Change Orders or Extra
Work Orders does not exceed the limits of the former's authority to approve original
contracts.
6. A separate Supplemental Agreement may be entered into for all Change Orders and Extra
Work Orders if the aggregate amount exceeds 25% of the escalated original contract price.
All change orders/extra work orders beyond 100% of the escalated original contract cost
shall be subject to public bidding except where the works involved are inseparable from the
original scope of the project in which case negotiation with the incumbent contractor may be
allowed, subject to approval by the appropriate authorities. [Emphases ours.]
Reviewing the facts of the case, we find that the prevailing circumstances at the time the
change and extra work orders were executed and completed indicate that the City of Cebu
tacitly approved these orders, rendering a supplemental agreement or authorization from
the Sanggunian unnecessary.1wphi1
The Pre-Qualification, Bids and Awards Committee (PBAC), upon the recommendation of the
Technical Committee and after a careful deliberation, approved the change and extra work
orders. It bears pointing out that two members of the PBAC were members of the
Sanggunian as well Rodolfo Cabrera (Chairman, Committee on Finance) and Ronald Cuenco
(Minority Floor Leader). A COA representative was also present during the deliberations of
the PBAC. None of these officials voiced any objection to the lack of a prior authorization
from the Sanggunian or a supplemental agreement. The RTC Decision in fact mentioned that
the Project Post Completion Report and Acceptance was approved by an authorized
representative of the City of Cebu on September 21, 1994.23 "[a]s the projects had been
completed, accepted and used by the [City of Cebu]," the RTC ruled that there is "no
necessity of [executing] a supplemental agreement."24 Indeed, as we declared in Mario R.
Melchor v. COA,25 a supplemental agreement to cover change or extra work orders is not
always mandatory, since the law adopts the permissive word "may." Despite its initial
refusal, the Sanggunian was eventually compelled to enact the appropriation ordinance in

145

order to satisfy the RTC judgments. Belated as it may be, the enactment of the appropriation
ordinance, nonetheless, constitutes as sufficient compliance with the requirements of the
law. It serves as a confirmatory act signifying the Sanggunians ratification of all the change
and extra work orders issued by Osmea. In National Power Corporation (NPC) v. Hon. Rose
Marie Alonzo-Legasto, etc., et al.,26 the Court considered the compromise agreement
between the NPC and the construction company as a ratification of the extra work
performed, without prior approval from the NPCs Board of Directors.
As in Melchor,27 we find it "unjust to order the petitioner to shoulder the expenditure when
the government had already received and accepted benefits from the utilization of the
[sports complex]," especially considering that the City incurred no substantial loss in paying
for the additional work and the damages awarded. Apparently, the City placed in a time
deposit the entire funds allotted for the construction and renovation of the sports complex.
The interest that the deposits earned amounted to P12,835,683.15, more than enough to
cover the damages awarded to WTCI (P2,514,255.40) and the DCDC (P102,015.00). There
was "no showing that [the] petitioner was ill-motivated, or that [the petitioner] had
personally profited or sought to profit from the transactions, or that the disbursements have
been made for personal or selfish ends."28 All in all, the circumstances showed that Osmea
issued the change and extra work orders for the Citys successful hosting of the Palaro, and
not for any other "nefarious endeavour."29
WHEREFORE, in light of the foregoing, we hereby GRANT the petitioners Petition for
Certiorari filed under Rule 64 of the Rules of Court. The respondents Decision of May 6,
2008 and Resolution of June 8, 2009 are SET ASIDE.
SO ORDERED.
G.R. No. 191988

August 31, 2010

ATTY. EVILLO C. PORMENTO, Petitioner,

vs.
JOSEPH "ERAP" EJERCITO ESTRADA
Respondents.

and

COMMISSION

ON

ELECTIONS,

RESOLUTION
CORONA, C.J.:
What is the proper interpretation of the following provision of Section 4, Article VII of the
Constitution: "[t]he President shall not be eligible for any reelection?"
The novelty and complexity of the constitutional issue involved in this case present a
temptation that magistrates, lawyers, legal scholars and law students alike would find hard
to resist. However, prudence dictates that this Court exercise judicial restraint where the
issue before it has already been mooted by subsequent events. More importantly, the
constitutional requirement of the existence of a "case" or an "actual controversy" for the
proper exercise of the power of judicial review constrains us to refuse the allure of making a
grand pronouncement that, in the end, will amount to nothing but a non-binding opinion.
The petition asks whether private respondent Joseph Ejercito Estrada is covered by the ban
on the President from "any reelection." Private respondent was elected President of the
Republic of the Philippines in the general elections held on May 11, 1998. He sought the
presidency again in the general elections held on May 10, 2010. Petitioner Atty. Evillo C.
Pormento opposed private respondents candidacy and filed a petition for disqualification.
However, his petition was denied by the Second Division of public respondent Commission
on Elections (COMELEC).1 His motion for reconsideration was subsequently denied by the
COMELEC en banc.2
Petitioner filed the instant petition for certiorari3 on May 7, 2010. However, under the Rules
of Court, the filing of such petition would not stay the execution of the judgment, final order
or resolution of the COMELEC that is sought to be reviewed.4 Besides, petitioner did not
even pray for the issuance of a temporary restraining order or writ of preliminary injunction.
Hence, private respondent was able to participate as a candidate for the position of
President in the May 10, 2010 elections where he garnered the second highest number of
votes.51avvphi1

146

Private respondent was not elected President the second time he ran. Since the issue on the
proper interpretation of the phrase "any reelection" will be premised on a persons second
(whether immediate or not) election as President, there is no case or controversy to be
resolved in this case. No live conflict of legal rights exists.6 There is in this case no definite,
concrete, real or substantial controversy that touches on the legal relations of parties having
adverse legal interests.7 No specific relief may conclusively be decreed upon by this Court in
this case that will benefit any of the parties herein.8 As such, one of the essential requisites
for the exercise of the power of judicial review, the existence of an actual case or
controversy, is sorely lacking in this case.
As a rule, this Court may only adjudicate actual, ongoing controversies.9 The Court is not
empowered to decide moot questions or abstract propositions, or to declare principles or
rules of law which cannot affect the result as to the thing in issue in the case before it.10 In
other words, when a case is moot, it becomes non-justiciable.11
An action is considered "moot" when it no longer presents a justiciable controversy because
the issues involved have become academic or dead or when the matter in dispute has
already been resolved and hence, one is not entitled to judicial intervention unless the issue
is likely to be raised again between the parties. There is nothing for the court to resolve as
the determination thereof has been overtaken by subsequent events.12
Assuming an actual case or controversy existed prior to the proclamation of a President who
has been duly elected in the May 10, 2010 elections, the same is no longer true today.
Following the results of that elections, private respondent was not elected President for the
second time. Thus, any discussion of his "reelection" will simply be hypothetical and
speculative. It will serve no useful or practical purpose.
Accordingly, the petition is denied due course and is hereby DISMISSED.
SO ORDERED.

147