Wack Wack

SCA-INTERPLEADER,R62
EN BANC
[G.R. No. L-23851. March 26, 1976.]
WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff appellant, v. LEE E. WON alias
RAMON LEE and BIENVENIDO A. TAN, Defendants-Appellees.
Leonardo Abola, for Plaintiff-Appellant.
B.A. Tan, Jr. for defendant-appellee B.A. Tan.
Alfonso V. Agcaoli and Ramon A. Barcelona for defendant-appellee Lee E. Won.
SYNOPSIS
Lee E. Won and Bienvenido Tan both claimed ownership over Wack Wack Golf and Country
Club’s membership fee certificate 201, the former, by virtue of the decision rendered in Civil Case
26044 of the Court of First Instance of Manila and of membership fee certificate 201-serial No. 1478
issued pursuant to a court order in said case, and the latter by virtue of membership fee certificate
201-serial No. 1199 issued to him in July 1950 pursuant to an assignment made in his favor by the
original owner and holder thereof.
The corporation filed an action of interpleader in the court a quo to have defendants litigate
among themselves their conflicting claims of ownership. In separate motions, the defendants moved
to dismiss the complaint upon the grounds of res judicata, failure of the complainant to state a cause
of action, and bar by prescription. Finding the first two grounds well taken, the trial court dismissed
the complain. Hence, this appeal, the determinative issue of which is the timeless of the remedy of
interpleader availed of by the Corporation.
The Supreme Court held that because the Corporation had allowed itself to be sued to final
judgment and be made independently liable in civil case 26044 and the appellee Lee had already
established in said case his rights to membership fee certificate 201, its action of interpleader is
barred by laches.
Order affirmed.
SYLLABUS
1. SPECIAL CIVIL ACTION; INTERPLEADER; A REMEDY TO DETERMINE CONFLICTING CLAIMS ON

PROPERTY. — The actions of interpleader under Section 120 of the Code of Civil Procedure is a remedy
whereby a person who has personal property in his posession, 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 one or other thing. The remedy is
afforded to protect a person not against double liability but against double vexation in respect of one
liability.
2. ID.; ID.; PROCEDURE UNDER THE CODE OF CIVIL PROCEDURE AND NEW RULES OF COURT
DISTINGUISHED. — The procedure under Section 1 of Rule 63 of the Revised Rules of Court is the same as
that under Section 120 of the Code of Civil Procedure, 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.
3. ID.; ID.; ACTION TO BE FILED WITHIN A REASONABLE TIME AFTER A DISPUTE ARISES. — A stakeholder,
meaning a person entrusted with the custody of property or money that is subject of ligitation or of
contention between rival claimants in which the holder claims no right or property interest, should use
reasonable diligence to hale the contending claimants to court. He need not await actual institution of
independent suits against him before filing a bill of interpleader. 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. Otherwise, he may be barred by laches or undue delay. But where he acts with reasonable
diligence in view of the environmental circumstances, the remedy is not barred.
4. ID.; ID.; ACTION BARRED IF NOT TIMELY MADE. — When a stakeholder’s action is filed after judgment
has been rendered against him in favor of one of the contending claimants, 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, the interpleader suit is too late and will be
barred by laches or undue delay.
5. ID.; ID.; ID.; ID.; INSTANT CASE. — The Corporation was aware of the conflicting claims of the parties
with respect to the membership fee certificate 201 long before it filed its 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 26004) and to
defend itself therein. Final judgment was rendered against it and said judgment has already been executed.
It is now therefore too late for it to invoke the remedy of interpleader.
6. ID.; ID.; ID.; PARTY WHO HAS SUCCESSFULLY ESTABLISHED A RIGHT CANNOT BE LATTER IMPLEADED.
— 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.
DECISION
CASTRO, 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 v. 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 30, 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 by-laws; 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 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 party 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.
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 Corporation’s 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 no
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 the 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 one or the other 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 now therefore too late for it to invoke the remedy of interpleader.
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 one case, 15 it was declared: jgc:chan roble s.com.p h
"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." cralaw virtua1aw li bra ry
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 be entitled to this remedy the applicant must be able
to show that he 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
interpleader, 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 Producers 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 of 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. # 162; Mitfor’s Eq. Pleading (Tyler’s Ed.) 147 and 236; Langdell’s
Summary of Eq. Pleading, # 162; De Zouche v. Carrison, 140 Pa. 430, 21 A. 450." 17
"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 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 that judgment (the bank and Mrs. Pabb) and no
excuse is shown why he did not implead them in that suit." 18
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 facts, 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 established 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 Equity Jurisprudence (4th Ed.) 3172; 2
Lawrence on Equity 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 respects 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 relief has contested the
claim of one of the parties and suffered judgment to be taken.
"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 # 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; Yarborough v. Thompson, 3 Smedes & M. (11 Miss.) 291, 41 Am. Dec.
626. See, also 33 C.J. p. 447, # 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 possibility 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.
ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant’s costs.
Teehankee, Makasiar, Antonio, Esguerra, Muñoz Palma, Aquino and Concepcion, Jr., JJ., concur.
Barredo and Martin, JJ., took no part.
Fernando, J., is on official leave.
[G.R. No. 73794. September 19, 1988.]
ETERNAL GARDENS MEMORIAL PARKS CORPORATION, Petitioner, v. FIRST SPECIAL CASES

DIVISION INTERMEDIATE APPELLATE COURT and NORTH PHILIPPINE UNION MISSION OF THE
SEVENTH-DAY ADVENTISTS, Respondents.
SYLLABUS
1. REMEDIAL LAW; JUDGMENTS; AMENDMENTS ALLOWED BEFORE FINALITY TO MAKE JUDGMENT

CONFORMABLE TO THE LAW. — There is no question that courts have inherent power to amend their
judgments, to make them conformable to the law applicable provided that said judgments have not yet
attained finality (Villanueva v. Court of First Instance of Oriental Mindoro, Pinamalayan, Branch II, 119 SCRA
288 [1982]). In fact, motions for reconsideration are allowed to convince the courts that their rulings are
erroneous and improper (Siy v. Court of Appeals, 138 SCRA 543-544 [1985]; Guerra Enterprises Co., Inc. v.
CFI of Lanao del Sur (32 SCRA 317 [1970]) and in so doing, said courts are given sufficient opportunity to
correct their errors.
2. ID.; ID.; ID.; CORRECTION OF RESOLUTION REQUIRING DEPOSIT OF THE LARGE AMOUNT IN
LITIGATION, PROPER. — In the complaint for interpleader, petitioner claims that it has no interest in the
amount due from it and is willing to pay whoever is declared entitled to the said amounts. The appellate
court found that more than twenty million pesos are involved; so that on interest alone for savings or time
deposit would be considerable, now accruing in favor of the Eternal Gardens. Finding that such is violative of
the very essence of the complaint for interpleader as it clearly runs against the interest of justice in this
case, the Court of Appeals cannot be faulted for finding that the lower court committed a grave abuse of
discretion which requires correction by the requirement that a deposit of said amounts should be made to a
bank approved by the Court.
3. ID.; ID.; RES JUDICATA; REQUISITES. — The requisite of res judicata are: (1) the presence of a final
former judgment; (2) the former judgment was rendered by a court having jurisdiction over the subject
matter and the parties; (3) the former judgment is a judgment on the merits; and (4) there is between the
first and the second action identity of parties, of subject matter, and of causes of action (Arguson v. Miclat,
135 SCRA 678 [1985]; Carandang v. Venturanza, 133 SCRA 344 [1984]).
4. ID.; ID.; ID.; UNREVERSED DECISION IS CONCLUSIVE UPON PARTIES AND THOSE IN PRIVITY WITH
THEM. — There is no argument against the rule that parties should not be permitted to litigate the same
issue more than once and 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 in law or estate (Sy Kao v. Court of Appeals, 132 SCRA 302 [1984]).
5. ID.; ID.; ID.; NOT APPLICABLE TO CASE AT BAR. — In G.R. No 73569, the issue raised is the propriety of
the grant of the motion for reconsideration without a hearing thereon and the denial of the motion for
execution, while in the case at bar, what is assailed is the propriety of the order of respondent appellant
court that petitioner Eternal Gardens should deposit whatever amounts are due from it under the Land
Development Agreement with a reputable bank to be designated by the Court. In fact, there is a pending
trial on the merits in the trial court which the petitioner insists is a prejudicial question which should first be
resolved. Moreover, while there may be identity of parties and of subject matter, the Land Development
Contract, there is no identity of issues as clearly shown by the petitions filed.
DECISION
PARAS, J.:
This is a special civil action for certiorari, prohibition and mandamus seeking to set aside the two resolutions
of public respondent First Special Cases Division of the then Intermediate Appellate Court in AC-G.R. No.
04869 entitled "North Philippine Union Mission of the Seventh Day Adventists versus Hon. Antonia Corpus-
Macandog, Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City and Eternal Gardens Memorial
Park Corporation," : (a) dated September 5, 1985 (Rollo, pp. 21-25) reconsidering its Decision 1 of February
27, 1985 (Rollo, pp. 38-48) and ordering petitioner to deposit whatever amounts due from it under the Land
Development Agreement, and (b) dated February 13, 1986 (Rollo, p. 27) denying for lack of merit
petitioner’s motion for reconsideration. chan roble svirtualawl ibra ry
Petitioner Eternal Gardens Memorial Parks Corporation and private respondent North Philippine Union
Mission Corporation of the Seventh Day Adventists (MISSION for short) are corporations duly organized and
existing under and by virtue of the laws of the Republic of the Philippines.
They executed a Land Development Agreement (Rollo, pp. 179-182) on October 6, 1976 whereby the
former undertook to introduce and construct at its own expense and responsibility necessary improvements
on the property owned by private respondent into a memorial park to be subdivided into and sold as
memorial plot lots, at a stipulated area and price per lot. Out of the proceeds from the sale, private
respondent is entitled to receive 40% of the net gross collection from the project to be remitted monthly by
petitioner to private respondent through a designated depositary trustee bank. On the same date private
respondent executed in petitioner’s favor a Deed of Absolute Sale with Mortgage (Rollo, pp. 183-186) on the
lots with titles involved in the land development project. The deed was supplemented by a Sale of Real
Property with Mortgage and Special Conditions dated October 28, 1978 (Rollo, pp. 189-194). The amounts
totalling about P984,110.82 paid by petitioner were to be considered as part of the 40% due private
respondent under the Land Development Agreement. All went well until Maysilo Estate asserted its claim of
ownership over the parcel of land in question. Confronted with such conflicting claims, petitioner as plaintiff
filed a complaint for interpleader (Rollo, pp. 169-179) against private respondent MISSION and Maysilo
Estate, docketed as Special Court Case No. C-9556 of the then CFI of Rizal, Branch XII, Caloocan, alleging
among others, that in view of the conflicting claims of ownership of the defendants (herein private
respondent and Maysilo Estate) over the properties subject matter of the contracts, over which plaintiff
corporation (herein petitioner) has no claim of ownership except as a purchaser thereof, and to protect the
interests of plaintiff corporation which has no interest in the subject matter of the dispute and is willing to
pay whoever is entitled or declared to be the owners of said properties, the defendants should be required
to interplead and litigate their several claims between themselves (Rollo, p. 177).
An order was issued by the presiding judge 2 requiring defendants to interplead on October 22, 1981.
MISSION filed a motion to dismiss dated November 10, 1981 for lack of cause of action but also presented
an answer dated November 12, 1981. The motion to dismiss was denied in an Order dated January 12,
1982. The heirs of Maysilo Estate filed their own answer dated November 11, 1981 and an amended answer
dated October 20, 1983 thru the estate’s special receiver. The heirs of Pedro Banon filed an "Answer in
Intervention with Special and Affirmative Defenses" dated October 24, 1983, while Lilia B. Sevilla and
husband Jose Seelin filed their "Answer in Cross-claim" dated October 31, 1983 (Rollo, p. 30). The heirs of
Sofia O’Farrel y Patino, Et. Al. filed their Answer in Intervention dated November 10, 1983.
However, earlier on November 21, 1982, private respondent presented a motion for the placing on judicial
deposit the amounts due and unpaid from petitioner. Acting on such motion, the trial court 3 denied judicial
deposit in its order dated February 13, 1984, the decretal portion of which reads: jgc:chan roble s.com.p h
"PREMISES CONSIDERED, all or the full amount the plaintiff, Eternal Gardens Memorial Parks Corporation
have already paid the North Philippine Union Mission Corporation of the Seventh Day Adventist is hereby
ordered to deposit the same to this Court within thirty (30) days from receipt of this order considering that
real or true owner of the subject properties in question, due healing of this court has yet to be undergone in
order to decide as to who is the true owner which is a prejudicial question. Hence the motion dated
November 21, 1983 of the NPUM for the Eternal Gardens Corporation to deposit the balance due and unpaid
is hereby ordered denied and the opposition thereto dated December 19, 1983 is hereby ordered granted.
"The contract between the Eternal Gardens Corporation and the North Philippine Union Mission dated
October 1, 1976 is ordered and declared ineffective as of today, February 13, 1984 because the subject
matter of the sale is not existing between the contracting parties until after the question of ownership is
resolved by this court. The court will order the revival of the contract if the North Philippine Union Mission
will win.
"If not, the declared winner among the intervenors will be the party to enter into a contract of sale with the
plaintiff as aforementioned." (Rollo, p. 66).
Another order dated October 26, 1984 was issued amending the February 13, 1984 order and setting aside
the order for private respondent’s deposit of the amounts it had previously received from petitioner, thus: jgc:cha nrob les.com .ph
"WHEREFORE IN VIEW OF ALL THE FOREGOING CONSIDERATIONS the order of February 13, 1984, is
hereby ordered amended, reconsidered and modified by this same Court as follows: jgc:chan robl es.com.ph
"(a) The order directing the NORTH PHILIPPINE UNION MISSION CORPORATION OF SEVENTH-DAY
ADVENTISTS to deposit the amounts it received under the implementation of the LAND DEVELOPMENT
AGREEMENT which is not questioned by the plaintiff, Eternal Gardens, is hereby ordered set aside for the
reason that the titles to ownership, the North Philippine Union Mission Corporation of Seventh Day
Adventists on the lots subject-matter of the aforesaid agreement is not established invalid, and the alleged
titles of intervenors are not proven yet by competent evidence;
"(b) The motion to require Eternal Gardens to deposit the balance under the Land Development Agreement
is likewise hereby ordered denied considering the fact the aforesaid plaintiff had not denied its obligations
under the aforesaid contract; and
"(c) The trial or hearing is hereby ordered as scheduled to proceed on November 29, 1984 and on December
6, 1984 at 8:30 in the morning per order of this Court dated October 4, 1984 in order to determine the
alleged claims of ownership by the intervenors and all claims and allegations of each party to the instant
case will be considered and decided carefully by this court on just and meritorious grounds." (Rollo, p. 39)
Said Orders were assailed twice in the Intermediate Appellate Court (Court of Appeals) and in the Supreme
Court as follows:chanrob 1es vi rtual 1aw lib rary
In G.R. No. 73569 it appeared that on January 11, 1985, MISSION filed a motion to dismiss the Interpleader
and the claims of the Maysilo Estate and the Intervenors and to order the Eternal Gardens to comply with its
Land Management with MISSION.
On January 28, 1985, the trial court passed a resolution, the dispositive portion of which reads: jgc:chan roble s.com.p h
"WHEREFORE, premises considered, this Court, after a lengthy, careful judicious study and perusal of all the
stand of each and everyone of all the parties participating in this case, hereby orders the dismissal of the
interpleader, and the interventions filed by the intervenors, heirs of Pedro Banon, heirs of O’Farrel, heirs of
Rivera, heirs of Maria del Concepcion Vidal, consolidated with the Maysilo Estate as represented by receiver
Arturo Salientes, the heirs of Vicente Singson Encarnacion, and Lilia Sevilla Seeling.
"This Court likewise orders the plaintiff, Eternal Gardens Memorial Parks Corporation to comply with the
Land Development Agreement dated October 6, 1978, it entered into with the North Philippine Union Mission
Corporation of the Seventh-Day Adventists." (Rollo. p. 68).
The heirs of the Maysilo Estate moved for reconsideration of the aforementioned order of dismissal, the
hearing of which was requested to be set on February, 28, 1985. However, the trial judge, on February 14,
1985 issued the following orders: jgc:cha nro bles.c om.ph
"Considering Motions for Reconsideration filed, the Court resolves that the same be GRANTED and instead of
a hearing of the said motions on February 20, 1985, at 8:30 a.m., a hearing on the merits shall be held."
(Rollo, p. 68)
In spite of the February 14, 1985 order, MISSION filed on March 6, 1985 a motion for Writ of Execution of
the resolution of January 28, 1985. This was denied on June 25, 1985. The said court further set the case
for pre-trial and trial on July 18, 1985.
It was elevated on certiorari and mandamus to the Intermediate Appellate Court (Court of Appeals),
docketed as AC-G.R. Sp. No. 06696 "North Philippine Union Mission of the Seventh Day Adventists, v. Hon.
Antonia Corpus-Macandog, Presiding Judge, Branch CXX, Regional Trial Court, Caloocan City, Eternal
Gardens Memorial Parks Corporation, and Heirs of Vicente Singson Encarnacion." It was raffled to the
Second Special Division. MISSION assailed the February 14, 1985 and June 25, 1985 orders as violative of
due process and attended by grave abuse of discretion amounting to lack of jurisdiction.
The petition was however dismissed in the decision of said Appellate Court, promulgated on December 4,
1985, the dispositive portion of which reads: jgc:chanrob les.c om.ph
"WHEREFORE, for want of merit the petition for certiorari and mandamus under consideration cannot be
given due course and is accordingly, DISMISSED, without any pronouncement, as to costs. The restraining
order embodied in Our Resolution of July 31, 1985, is hereby lifted." (Rollo, G.R. No. 73569 p. 232)
The private respondent challenged the above decision in the Supreme Court in G.R. No. 73569. In its
resolution dated June 11, 1986, the Supreme Court denied the petition for review on certiorari for lack of
merit, as follows: jgc:cha nrob les.co m.ph
"G.R. No. 73569 (North Philippine Union Mission Corporation of the Seventh Day Adventists v. Intermediate
Appellate Court, Et. Al.) considering the allegations, issues, and arguments adduced in the petition for
review on certiorari, the Court Resolved to DENY the same for lack of merit." (Ibid p. 263)
Said resolution has become final and executory on July 16, 1986. (Ibid p. 269)
Earlier in 1983, the heirs of the late spouses Vicente Singson Encarnacion and Lucila Conde filed Civil Case
No. C-11836 for quieting of title with Branch CXXII, Regional Trial Court, Caloocan City, where petitioner
and private respondent were named as defendants.
Said case is still pending in the lower Court.

In the case at bar, G.R. No. 73794, MISSION, herein private respondent filed a petition for certiorariwith the
then Intermediate Appellate Court docketed as AC-G.R. No. 04869 praying that the aforementioned Orders
of February 13, 1984 and October 26, 1984 of the Regional Trial Court be set aside and that an order be
issued to deposit in court or in a depositor/trustee bank of any and all payments, plus interest thereon, due
the private respondent MISSION under the Land Development Agreement, said amounts deposited to be
paid to whomever may be found later to be entitled thereto, with costs. (Rollo, G.R. No. 73794 p. 38)
The Intermediate Appellate Court, acting through its First Special Cases Division, 4 dismissed the petition in
its decision on February 27, 1985 (Rollo, pp. 38-48). In its Resolution 5 promulgated on September 5, 1985,
the Court however, reversed its decision, thus: jgc:chan roble s.com.p h
"WHEREFORE, the Court reconsiders its decision of February 27, 1985, and sets aside the questioned
portions of the respondent Court’s orders of February 13 and October 26, 1984. The private respondent is
hereby ordered to deposit whatever amounts are due from it under the Land Development Agreement of
October 6, 1976 with a reputable bank to be designated by the respondent court to be the depository
trustee of the said amounts to be paid to whoever shall be found entitled thereto. No costs." (Rollo, p. 25)
Eternal Gardens moved for a reconsideration of the above decision but it was denied for lack of merit in a
resolution promulgated on February 13, 1986, which states: jgc:chan roble s.com.p h
"The private respondent Eternal Gardens Memorial Park Corporation’s Motion for Reconsideration of the
Court’s resolution promulgated September 5, 1985 requiring it ‘to deposit whatever amounts are due from it
under the Land Development Agreement of October 6, 1976 . . .,’ which was strongly opposed by the
petitioner North Philippine Union Mission of the Seventh Day Adventists, is hereby denied for lack of merit,
reiterating as it does, the very same issues and arguments that were passed upon and considered by the
Court in the very same resolution sought to be reconsidered." (Rollo, p. 27)
Hence, this petition.
On July 8, 1987, the Third Division of this Court issued the following resolution: jgc:c han robles. com.ph
". . . the court RESOLVED to give due course to this petition and require the parties to file memoranda.
"In the meantime, to avoid possible wastage of funds, the Court RESOLVED to require the private
respondent 6 to DEPOSIT its accruing installments within ten (10) days from notice with a reputable
commercial bank in a savings deposit account, in the name of the Supreme Court of the Philippines, with the
details to be reported or manifested to this Court within ten (10) days from the time the deposit/deposits
are made, such deposits not to be withdrawn without authority from this Court." (Rollo, p. 162).
Petitioner’s Memorandum With Prayer for the Deferment of Time to Make Deposit (Rollo, p. 218-236) was
filed on July 14, 1987. Its prayer was granted for a period of ten (10) days for the purpose, in the resolution
of July 29, 1987 (Rollo, p. 238). Private respondent filed its Opposition to Deferment of Time to Make
Deposit (Rollo, pp. 239-253) on July 24, 1987 to which petitioner filed its Reply to Opposition on August 4,
1987 (Rollo, pp. 256-267). Both were noted by the Court in its resolution dated September 7, 1987 (Rollo,
p. 270). On August 25, 1987, private respondent filed its Rejoinder to Petitioner’s Reply to Opposition (Rollo,
pp. 271-292).
Petitioner filed its Supplemental Memorandum with Reply to Opposition (To Deferment of time to Make
Deposit) on August 31, 1987 (Rollo, pp. 294-313) and a Sur-rejoinder on September 1, 1987 (Rollo, pp.
304-315).
The main issues in this case are: chanrob1es v irt ual 1aw li bra ry
Whether or not respondent Court of Appeals abused its discretion amounting to lack of jurisdiction in
reconsidering its resolution of February 27, 1985 and in requiring instead in the resolution of September 5,
1985, that petitioner Eternal Gardens deposit whatever amounts are due from it under the Land
Development Agreement with a reputable bank to be designated by the respondent court.
II
Whether or not the dismissal of AC-G.R. SP No. 06696 (North Philippine Union Mission of the Seventh Day
Adventists v. Hon. Macandog, Et. Al.) by the Second Special Cases Division of the IAC which was affirmed by
the Supreme Court in G.R. No. 73569 constitutes a basis for the dismissal of the case at bar on the ground
of res adjudicata.
There is no question that courts have inherent power to amend their judgments, to make them conformable
to the law applicable provided that said judgments have not yet attained finality (Villanueva v. Court of First
Instance of Oriental Mindoro, Pinamalayan, Branch II, 119 SCRA 288 [1982]). In fact, motions for
reconsideration are allowed to convince the courts that their rulings are erroneous and improper (Siy v.
Court of Appeals, 138 SCRA 543-544 [1985]; Guerra Enterprises Co., Inc. v. CFI of Lanao del Sur (32 SCRA
317 [1970]) and in so doing, said courts are given sufficient opportunity to correct their errors.
In the case at bar, a careful analysis of the records will show that petitioner admitted among others in its
complaint in Interpleader that it is still obligated to pay certain amounts to private respondent; that it claims
no interest in such amounts due and is willing to pay whoever is declared entitled to said amounts. Such
admissions in the complaint were reaffirmed in open court before the Court of Appeals as stated in the latter
court’s resolution dated September 5, 1985 in A.C. G.R. No. 04869 which states: jgc:chanroble s.com.p h
"The private respondent (MEMORIAL) then reaffirms before the Court its original position that it is a
disinterested party with respect to the property now the subject of the interpleader case . . .
"In the light of the willingness, expressly made before the court, affirming the complaint filed below, that
the private respondent (MEMORIAL) will pay whatever is due on the Land Development Agreement to the
rightful owner/owners, there is no reason why the amount due on subject agreement has not been placed in
the custody of the Court." (Rollo, p. 227).
Under the circumstances, there appears to be no plausible reason for petitioner’s objections to the deposit of
the amounts in litigation after having asked for the assistance of the lower court by filing a complaint for
interpleader where the deposit of aforesaid amounts is not only required by the nature of the action but is a
contractual obligation of the petitioner under the Land Development Program (Rollo, p. 252).
As correctly observed by the Court of Appeals, the essence of an interpleader, aside from the disavowal of
interest in the property in litigation on the part of the petitioner, is the deposit of the property or funds in
controversy with the court. it is a rule founded on justice and equity: "that the plaintiff may not continue to
benefit from the property or funds in litigation during the pendency of the suit at the expense of whoever
will ultimately be decided as entitled thereto." (Rollo, p. 24).
The case at bar was elevated to the Court of Appeals on certiorari with prohibitory and mandatory
injunction. Said appellate court found that more than twenty million pesos are involved; so that on interest
alone for savings or time deposit would be considerable, now accruing in favor of the Eternal Gardens.
Finding that such is violative of the very essence of the complaint for interpleader as it clearly runs against
the interest of justice in this case, the Court of Appeals cannot be faulted for finding that the lower court
committed a grave abuse of discretion which requires correction by the requirement that a deposit of said
amounts should be made to a bank approved by the Court. (Rollo, p. 25).
Petitioner would now compound the issue by its obvious turnabout, presently claiming in its memorandum
that there is a novation of contract so that the amounts due under the Land Development Agreement were
allegedly extinguished, and the requirement to make a deposit of said amounts in a depositary bank should
be held in abeyance until after the conflicting claims of ownership now on trial before Branch CXXII RTC-
Caloocan City, has finally been resolved.
All these notwithstanding, the need for the deposit in question has been established, not only in the lower
courts and in the Court of Appeals but also in the Supreme Court where such deposit was required in the
resolution of July 8, 1987 to avoid wastage of funds.
II
The claim that this case should be barred by res judicata is even more untenable.
The requisite of res judicata are: (1) the presence of a final former judgment; (2) the former judgment was
rendered by a court having jurisdiction over the subject matter and the parties; (3) the former judgment is
a judgment on the merits; and (4) there is between the first and the second action identity of parties, of
subject matter, and of causes of action (Arguson v. Miclat, 135 SCRA 678 [1985]; Carandang v. Venturanza,
133 SCRA 344 [1984]).
There is no argument against the rule that parties should not be permitted to litigate the same issue more
than once and 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 in law or estate (Sy Kao v. Court of Appeals, 132 SCRA 302 [1984]).
But a careful review of the records shows that there is no judgment on the merits in G.R. No. 73569 and in
the case at bar, G.R. No. 73794; both of which deal on mere incidents arising therefrom.
In G.R. No 73569, the issue raised is the propriety of the grant of the motion for reconsideration without a
hearing thereon and the denial of the motion for execution, while in the case at bar, what is assailed is the
propriety of the order of respondent appellant court that petitioner Eternal Gardens should deposit whatever
amounts are due from it under the Land Development Agreement with a reputable bank to be designated by
the Court. In fact, there is a pending trial on the merits in the trial court which the petitioner insists is a
prejudicial question which should first be resolved. Moreover, while there may be identity of parties and of
subject matter, the Land Development Contract, there is no identity of issues as clearly shown by the
petitions filed.
PREMISES CONSIDERED, (a) the petition is DISMISSED for lack of merit; (b) this case (together with all the
claims of the intervenors on the merits) is REMANDED to the lower court for further proceedings; and (c) the
resolution of the Third Division of this Court of July 8, 1987 requiring the deposit by the petitioner (see
footnote No. 6) of the amounts contested in a depositary bank STANDS (the Motion for Reconsideration
thereof being hereby DENIED for reasons already discussed) until after the decision on the merits shall have
become final and executory. chanroble s.com:c ralaw:re d
SO ORDERED.
Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.
THIRD DIVISION
[G.R. NO. 136409 : March 14, 2008]
SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, Petitioners, v. 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
For Rooms 22 and 24:
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 toP916,585.58.12 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 respondent's 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. Bautista's 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; andcra lawlib rary
(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorney's fees plus the costs
of this suit.
SO ORDERED.20
The court adopted the MeTC's 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. Bautista's 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
onCertiorari .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 attorney's 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. Bautista's 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 respondent's motion for execution and directed the RTC to issue a new writ of
execution of its decision, with the exception of the award of attorney's 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 corporation's attorney-in-fact - had no legal capacity to institute the ejectment suit,
independently of whether Director Pacana's Order setting aside the SEC revocation Order is a mere scrap of
paper.
II.
Whether the RTC's 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 "corporation's" 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. Bautista's 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 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 respondent's 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
respondent's certificate, rendering the issue moot and academic.36
We likewise affirm Ms. Bautista's 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 by-laws 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 Secretary's 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 petitioner's 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 manager's 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 judge's 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
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 possessor's 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
court's 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) respondent's refusal to turn over Rooms 36, 37 and 38; and 3)
respondent's 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,55nowhere 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 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:
xxx
(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. Ï‚Î· Î±Ã± rÎ¿bl Îµ Å¡ Î½Î¹râ€ Ï…Î±l l Î±Ï‰ l Î¹b rÎ± rÃ¿
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. Ï‚ Î·Î± Ã±rÎ¿b lÎµ Å¡ Î½ Î¹râ€ Ï… Î±l l Î±Ï‰ lÎ¹b rÎ±rÃ¿
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:
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.
SECOND DIVISION
G.R. Nos. 154470-71 : September 24, 2012
BANK OF COMMERCE, Petitioner, v. PLANTERS DEVELOPMENT BANK and BANGKO SENTRAL NG

PILIPINAS, Respondent.
G.R. Nos. 154589-90
BANGKO SENTRAL NG PILIPINAS, Petitioner, v. PLANTERS DEVELOPMENT BANK, Respondent.
DECISION
BRION, J.:
Before the Court are two consolidated petitions for review on certiorari under Rule 45,1 on pure questions of Ï‚rÎ½l l
law, filed by the petitioners Bank of Commerce (BOC) and the Bangko Sentral ng Pilipinas (BSP). They assail
the January 10, 2002 and July 23, 2002 Orders (assailed orders) of the Regional Trial Court (RTC) of Makati
City, Branch 143, in Civil Case Nos. 94-3233 and 94-3254. These orders dismissed (i) the petition filed by
the Planters Development Bank (PDB), (ii) the "counterclaim" filed by the BOC, and (iii) the counter-
complaint/cross-claim for interpleader filed bythe BSP; and denied the BOCs and the BSPs motions for
reconsideration.
THE ANTECEDENTS
The Central Bank bills
I. First set of CB bills
The Rizal Commercial Banking Corporation (RCBC) was the registered owner of seven Central Bank (CB)
bills with a total face value of P 70 million, issued on January 2, 1994 and would mature on January 2,
1995.2 As evidenced by a "Detached Assignment" dated April 8, 1994,3 the RCBC sold these CB bills to the
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BOC.4 As evidenced by another "Detached Assignment"5 of even date, the BOC, in turn, sold these CB bills
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to the PDB.6 The BOC delivered the Detached Assignments to the PDB.7
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On April 15, 1994 (April 15 transaction), the PDB, in turn, sold to the BOC Treasury Bills worth P 70 million,
with maturity date of June 29, 1994, as evidenced by a Trading Order8 and a Confirmation of
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Sale.9 However, instead of delivering the Treasury Bills, the PDB delivered the seven CB bills to the BOC, as
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evidenced by a PDB Security Delivery Receipt, bearing a "note: ** substitution in lieu of 06-29-94" referring
to the Treasury Bills.10 Nevertheless, the PDB retained possession of the Detached Assignments. It is
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basically the nature of this April 15 transaction that the PDB and the BOC cannot agree on.
The transfer of the first set of seven CB bills
i. CB bill nos. 45351-53
On April 20, 1994, according to the BOC, it "sold back"11 to the PDB three of the seven CB bills. In turn, the
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PDB transferred these three CB bills to Bancapital Development Corporation (Bancap). On April 25, 1994,
the BOC bought the three CB bills from Bancap so, ultimately, the BOC reacquired these three CB
bills,12 particularly described as follows:
Ï‚ rÎ½ll
Serial No.: 2BB XM 045351

2BB XM 045352
2BB XM 045353
Quantity: Three (3)
Denomination: Php 10 million
Total Face Value: Php 30 million
ii. CB bill nos. 45347-50
On April 20, 1994, the BOC sold the remaining four (4) CB bills to Capital One Equities Corporation13 which
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transferred them to All-Asia Capital and Trust Corporation (All Asia). On September 30, 1994, All Asia
further transferred the four CB bills back to the RCBC.14 Ï‚rÎ½l l
On November 16, 1994, the RCBC sold back to All Asia one of these 4 CB bills. When the BSP refused to
release the amount of this CB bill on maturity, the BOC purchased from All Asia this lone CB
bill,15 particularly described as follows:16
Ï‚ rÎ½ll Ï‚ rÎ½ll
Serial No.: 2BB XM 045348

Quantity: One (1)
Total Face Value: Php 10 million
As the registered owner of the remaining three CB bills, the RCBC sold them to IVI Capital and Insular
Savings Bank. Again, when the BSP refused to release the amount of this CB bill on maturity, the RCBC paid
back its transferees, reacquired these three CB bills and sold them to the BOC ultimately, the BOC acquired
these three CB bills.
All in all, the BOC acquired the first set of seven CB bills.
II. Second set of CB bills
On April 19, 1994, the RCBC, as registered owner, (i) sold two CB bills with a total face value of P 20 million
to the PDB and (ii) delivered to the PDB the corresponding Detached Assignment.17 The two CB bills were
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particularly described as follows:
Serial No.: BB XM 045373

BB XM 045374
Issue date: January 3, 1994
Maturity date: January 2, 1995
Total Face value: Php 20 million
On even date, the PDB delivered to Bancap the two CB bills18 (April 19 transaction). In turn, Bancap sold
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the CB bills to Al-Amanah Islamic Investment Bank of the Philippines, which in turn sold it to the BOC.19 Ï‚rÎ½ ll
PDBs move against the transfer of
the first and second sets of CB bills
On June 30, 1994, upon learning of the transfers involving the CB bills, the PDB informed20 the Officer-in- Ï‚ rÎ½ll
Charge of the BSPs Government Securities Department,21 Lagrimas Nuqui, of the PDBs claim over these CB Ï‚rÎ½l l
bills, based on the Detached Assignments in its possession. The PDB requested the BSP22 to record its claim Ï‚rÎ½l l
in the BSPs books, explaining that its non-possession of the CB bills is "on account of imperfect negotiations
thereof and/or subsequent setoff or transfer."23 Ï‚rÎ½ ll
Nuqui denied the request, invoking Section 8 of CB Circular No. 28 (Regulations Governing Open Market
Operations, Stabilization of the Securities Market, Issue, Servicing and Redemption of the Public
Debt)24 which requires the presentation of the bond before a registered bond may be transferred on the
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books of the BSP.25 Ï‚rÎ½ ll
In a July 25, 1994 letter, the PDB clarified to Nuqui that it was not "asking for the transfer of the CB Bills.
rather it intends to put the BSP on formal notice that whoever is in possession of said bills is not a holder in
due course," and, therefore the BSP should not make payment upon the presentation of the CB bills on
maturity.26 Nuqui responded that the BSP was "not in a position at that point in time to determine who is
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and who is not the holder in due course since it is not privy to all acts and time involving the transfers or
negotiation" of the CB bills. Nuqui added that the BSPs action shall be governed by CB Circular No. 28, as
amended.27 Ï‚rÎ½l l
On November 17, 1994, the PDB also asked BSP Deputy Governor Edgardo Zialcita that (i) a notation in the
BSPs books be made against the transfer, exchange, or payment of the bonds and the payment of interest
thereon; and (ii) the presenter of the bonds upon maturity be required to submit proof as a holder in due
course (of the first set of CB bills). The PDB relied on Section 10 (d) 4 of CB Circular No. 28.28 This Ï‚rÎ½ll
provision reads: c hanro blesvi rt uallawl ibra ry
(4) Assignments effected by fraud Where the assignment of a registered bond is secured by fraudulent
representations, the Central Bank can grant no relief if the assignment has been honored without notice of
fraud. Otherwise, the Central Bank, upon receipt of notice that the assignment is claimed to have been
secured by fraudulent representations, or payment of the bond the payment of interest thereon, and when
the bond is presented, will call upon the owner and the person presenting the bond to substantiate their
respective claims.If it then appears that the person presenting the bond stands in the position of bonafide
holder for value, the Central Bank, after giving the owner an opportunity to assert his claim, will pass the
bond for transfer, exchange or payments, as the case may be, without further question.
In a December 29, 1994 letter, Nuqui again denied the request, reiterating the BSPs previous stand.
In light of these BSP responses and the impending maturity of the CB bills, the PDB filed29 with the RTC two Ï‚ rÎ½ll
separate petitions for Mandamus, Prohibition and Injunction with prayer for Preliminary Injunction and
Temporary Restraining Order, docketed as Civil Case No. 94-3233 (covering the first set of CB bills) and
Civil Case 94-3254 (covering the second set of CB bills) against Nuqui, the BSP and the RCBC.30 Ï‚rÎ½ll
The PDB essentially claims that in both the April 15 transaction (involving the first set of CB bills) and the
April 19 transaction (involving the second set of CB bills), there was no intent on its part to transfer title of
the CB bills, as shown by its non-issuance of a detached assignment in favor of the BOC and Bancap,
respectively. The PDB particularly alleges that it merely "warehoused"31 the first set of CB bills with the Ï‚rÎ½ ll
BOC, as security collateral.
On December 28, 1994, the RTC temporarily enjoined Nuqui and the BSP from paying the face value of the
CB bills on maturity.32 On January 10, 1995, the PDB filed an Amended Petition, additionally impleading the
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BOC and All Asia.33 In a January 13, 1995 Order, the cases were consolidated.34 On January 17, 1995, the
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RTC granted the PDBs application for a writ of preliminary prohibitory injunction.35 In both petitions, the Ï‚ rÎ½ll
PDB identically prayed: chan roble svirtuallaw lib rary
WHEREFORE, it is respectfully prayed x x x that, after due notice and hearing, the Writs of Mandamus,
Prohibition and Injunction, be issued; (i) commanding the BSP and Nuqui, or whoever may take her place -
(a) to record forthwith in the books of BSP the claim of x x x PDB on the [two sets of] CB Bills in accordance
with Section 10 (d) (4) of revised C.B. Circular No. 28; and
(b) also pursuant thereto, when the bills are presented on maturity date for payment, to call (i) x x x PDB,
(ii) x x x RCBC x x x, (iii) x x x BOC x x x, and (iv) x x x ALL-ASIA x x x; or whoever will present the [first
and second sets of] CB Bills for payment, to submit proof as to who stands as the holder in due course of
said bills, and, thereafter, act accordingly;
and (ii) ordering the BSP and Nuqui to pay jointly and severally to x x x PDB the following:
(a) the sum of P 100,000.00, as and for exemplary damages;
(b) the sum of at least P 500,000.00, or such amount as shall be proved at the trial, as and for attorneys
fees;
(c) the legal rate of interest from the filing of this Petition until full payment of the sums mentioned in this
Petition; and
(d) the costs of suit.36 Ï‚rÎ½ll
After the petitions were filed, the BOC acquired/reacquired all the nine CB bills the first and second sets of
CB bills (collectively, subject CB bills).
Defenses of the BSP and of the BOC37 Ï‚rÎ½l l
The BOC filed its Answer, praying for the dismissal of the petition. It argued that the PDB has no cause of
action against it since the PDB is no longer the owner of the CB bills. Contrary to the PDBs "warehousing
theory,"38 the BOC asserted that the (i) April 15 transaction and the (ii) April 19 transaction covering both
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sets of CB bills - were valid contracts of sale, followed by a transfer of title (i) to the BOC (in the April 15
transaction) upon the PDBs delivery of the 1st set of CB bills in substitution of the Treasury Bills the PDB
originally intended to sell, and (ii) to Bancap (in the April 19 transaction) upon the PDBs delivery of the 2nd
set of CB bills to Bancap, likewise by way of substitution.
The BOC adds that Section 10 (d) 4 of CB Circular No. 28 cannot apply to the PDBs case because (i) the PDB
is not in possession of the CB bills and (ii) the BOC acquired these bills from the PDB, as to the 1st set of CB
bills, and from Bancap, as to the 2nd set of CB bills, in good faith and for value. The BOC also asserted a
compulsory counterclaim for damages and attorneys fees.
On the other hand, the BSP countered that the PDB cannot invoke Section 10 (d) 4 of CB Circular No. 28
because this section applies only to an "owner" and a "person presenting the bond," of which the PDB is
neither. The PDB has not presented to the BSP any assignment of the subject CB bills, duly recorded in the
BSPs books, in its favor to clothe it with the status of an "owner."39 According to the BSP
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Section 10 d. (4) applies only to a registered bond which is assigned. And the issuance of CB Bills x x x are
required to be recorded/registered in BSPs books. In this regard, Section 4 a. (1) of CB Circular 28 provides
that registered bonds "may be transferred only by an assignment thereon duly executed by the registered
owner or his duly authorized representative x x x and duly recorded on the books of the Central Bank."
xxxx
The alleged assignment of subject CB Bills in PDBs favor is not recorded/registered in BSPs
books.40 (underscoring supplied)
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Consequently, when Nuqui and the BSP refused the PDBs request (to record its claim), they were merely
performing their duties in accordance with CB Circular No. 28.
Alternatively, the BSP asked that an interpleader suit be allowed between and among the claimants to the
subject CB bills on the position that while it is able and willing to pay the subject CB bills face value, it is
duty bound to ensure that payment is made to the rightful owner. The BSP prayed that judgment be
rendered:
a. Ordering the dismissal of the PDBs petition for lack of merit;
b. Determining which between/among [PDB] and the other claimants is/are lawfully entitled to the
ownership of the subject CB bills and the proceeds thereof;
c. x x x;
d. Ordering PDB to pay BSP and Nuqui such actual/compensatory and exemplary damages as the RTC may
deem warranted; and
e. Ordering PDB to pay Nuqui moral damages and to pay the costs of the suit.41 Ï‚rÎ½l l
Subsequent events
The PDB agreed with the BSPs alternative response for an interpleader
4. PDB agrees that the various claimants should now interplead and substantiate their respective claims on
the subject CB bills. However, the total face value of the subject CB bills should be deposited in escrow with
a private bank to be disposed of only upon order of the RTC.42 Ï‚rÎ½ll
Accordingly, on June 9, 199543 and August 4, 1995,44 the BOC and the PDB entered into two separate
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Escrow Agreements.45 The first agreement covered the first set of CB bills, while the second agreement
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covered the second set of CB bills. The parties agreed to jointly collect from the BSP the maturity proceeds
of these CB bills and to deposit said amount in escrow, "pending final determination by Court judgment, or
amicable settlement as to who shall be eventually entitled thereto."46 The BOC and the PDB filed a Joint Ï‚rÎ½ ll
Motion,47 submitting these Escrow Agreements for court approval. The RTC gave its approval to the parties
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Joint Motion.48 Accordingly, the BSP released the maturity proceeds of the CB bills by crediting the Demand
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Deposit Account of the PDB and of the BOC with 50% each of the maturity proceeds of the amount in
escrow.49 Ï‚ rÎ½ ll
In view of the BOCs acquisition of all the CB bills, All Asia50 moved to be dropped as a respondent (with the Ï‚rÎ½l l
PDBs conformity51 ), which the RTC granted.52 The RCBC subsequently followed suit.53
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In light of the developments, on May 4, 1998, the RTC required the parties to manifest their intention
regarding the case and to inform the court of any amicable settlement; "otherwise, th[e] case shall be
dismissed for lack of interest."54 Complying with the RTCs order, the BOC moved (i) that the case be set for
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pre-trial and (ii) for further proceeding to resolve the remaining issues between the BOC and the PDB,
particularly on "who has a better right over the subject CB bills."55 The PDB joined the BOC in its motion.56 Ï‚rÎ½l l Ï‚rÎ½l l
On September 28, 2000, the RTC granted the BSPs motion to interplead and, accordingly, required the BOC
to amend its Answer and for the conflicting claimants to comment thereon.57 In October 2000, the BOC filed Ï‚rÎ½l l
its Amended Consolidated Answer with Compulsory Counterclaim, reiterating its earlier arguments asserting
ownership over the subject CB bills.58 Ï‚ rÎ½ ll
In the alternative, the BOC added that even assuming that there was no effective transfer of the nine CB
bills ultimately to the BOC, the PDB remains obligated to deliver to the BOC, as buyer in the April 15
transaction and ultimate successor-in-interest of the buyer (Bancap) in the April 19 transaction, either the
original subjects of the sales or the value thereof, plus whatever income that may have been earned during
the pendency of the case.59 Ï‚rÎ½ ll
That BOC prayed:

1. To declare BOC as the rightful owner of the nine (9) CB bills and as the party entitled to the proceeds
thereof as well as all income earned pursuant to the two (2) Escrow Agreements entered into by BOC and
PDB.
2. In the alternative, ordering PDB to deliver the original subject of the sales transactions or the value
thereof and whatever income earned by way of interest at prevailing rate.
Without any opposition or objection from the PDB, on February 23, 2001, the RTC admitted60 the BOCs Ï‚rÎ½l l
Amended Consolidated Answer with Compulsory Counterclaims.
In May 2001, the PDB filed an Omnibus Motion,61 questioning the RTCs jurisdiction over the BOCs Ï‚rÎ½l l
"additional counterclaims." The PDB argues that its petitions pray for the BSP (not the RTC) to determine
who among the conflicting claimants to the CB bills stands in the position of the bona fide holder for value.
The RTC cannot entertain the BOCs counterclaim, regardless of its nature, because it is the BSP which has
jurisdiction to determine who is entitled to receive the proceeds of the CB bills.
The BOC opposed62 the PDBs Omnibus Motion. The PDB filed its Reply.63
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In a January 10, 2002 Order, the RTC dismissed the PDBs petition, the BOCs counterclaim and the BSPs
counter-complaint/cross-claim for interpleader, holding that under CB Circular No. 28, it has no jurisdiction
(i) over the BOCs "counterclaims" and (ii) to resolve the issue of ownership of the CB bills.64 With the denial Ï‚rÎ½l l
of their separate motions for Reconsideration,65 the BOC and the BSP separately filed the present petitions
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for review on certiorari.66 Ï‚rÎ½l l
THE BOCS and THE BSPS PETITIONS
The BOC argues that the present cases do not fall within the limited provision of Section 10 (d) 4 of CB
Circular No. 28, which contemplates only of three situations: first, where the fraudulent assignment is not
coupled with a notice to the BSP, it can grant no relief; second, where the fraudulent assignment is coupled
with a notice of fraud to the BSP, it will make a notation against the assignment and require the owner and
the holder to substantiate their claims; and third, where the case does not fall on either of the first two
situations, the BSP will have to await action on the assignment pending settlement of the case, whether by
agreement or by court order.
The PDBs case cannot fall under the first two situations. With particular regard to the second situation, CB
Circular No. 28 requires that the conflict must be between an "owner" and a "holder," for the BSP to
exercise its limited jurisdiction to resolve conflicting claims; and the word "owner" here refers to the
registered owner giving notice of the fraud to the BSP. The PDB, however, is not the registered owner nor is
it in possession (holder) of the CB bills.67 Consequently, the PDBs case can only falls under the third
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situation which leaves the RTC, as a court of general jurisdiction, with the authority to resolve the issue of
ownership of a registered bond (the CB bills) not falling in either of the first two situations.
The BOC asserts that the policy consideration supportive of its interpretation of CB Circular No. 28 is to have
a reliable system to protect the registered owner; should he file a notice with the BSP about a fraudulent
assignment of certain CB bills, the BSP simply has to look at its books to determine who is the owner of the
CB bills fraudulently assigned. Since it is only the registered owner who complied with the BSPs requirement
of recording an assignment in the BSPs books, then "the protective mantle of administrative proceedings"
should necessarily benefit him only, without extending the same benefit to those who chose to ignore the
Circulars requirement, like the PDB.68 Ï‚rÎ½l l
Assuming arguendo that the PDBs case falls under the second situation i.e., the BSP has jurisdiction to
resolve the issue of ownership of the CB bills the more recent CB Circular No. 769-80 (Rules and Regulations
Governing Central Bank Certificates of Indebtedness) already superseded CB Circular No. 28, and, in
particular, effectively amended Section 10 (d) 4 of CB Circular No. 28. The pertinent provisions of CB
Circular No. 769-80 read: chan roblesv irtuallawl ib ra ry
Assignment Affected by Fraud. Any assignment for transfer of ownership of registered certificate obtained
through fraudulent representation if honored by the Central Bank or any of its authorized service agencies
shall not make the Central Bank or agency liable therefore unless it has previous formal notice of the fraud.
The Central Bank, upon notice under oath that the assignment was secured through fraudulent means, shall
immediately issue and circularize a "stop order" against the transfer, exchange, redemption of the
Certificate including the payment of interest coupons. The Central Bank or service agency concerned shall
continue to withhold action on the certificate until such time that the conflicting claims have been finally
settled either by amicable settlement between the parties or by order of the Court.
Unlike CB Circular No. 28, CB Circular No. 769-80 limited the BSPs authority to the mere issuance and
circularization of a "stop order" against the transfer, exchange and redemption upon sworn notice of a
fraudulent assignment. Under this Circular, the BSP shall only continue to withhold action until the dispute is
ended by an amicable settlement or by judicial determination. Given the more passive stance of the BSP the
very agency tasked to enforce the circulars involved - under CB Circular No. 769-80, the RTCs dismissal of
the BOCs counterclaims is palpably erroneous.
Lastly, since Nuquis office (Government Securities Department) had already been abolished,69 it can no
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longer adjudicate the dispute under the second situation covered by CB Circular No. 28. The abolition of
Nuquis office is not only consistent with the BSPs Charter but, more importantly, with CB Circular No. 769-
80, which removed the BSPs adjudicative authority over fraudulent assignments.
THE PDBS COMMENT
The PDB claims that jurisdiction is determined by the allegations in the complaint/petition and not by the
defenses set up in the answer.70 In filing the petition with the RTC, the PDB merely seeks to compel the
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BSP to determine, pursuant to CB Circular No. 28, the party legally entitled to the proceeds of the subject
CB bills, which, as the PDB alleged, have been transferred through fraudulent representations an allegation
which properly recognized the BSPs jurisdiction to resolve conflicting claims of ownership over the CB bills.
The PDB adds that under the doctrine of primary jurisdiction, courts should refrain from determining a
controversy involving a question whose resolution demands the exercise of sound administrative discretion.
In the present case, the BSPs special knowledge and experience in resolving disputes on securities, whose
assignment and trading are governed by the BSPs rules, should be upheld.
The PDB counters that the BOCs tri-fold interpretation of Section 10 (d) 4 of CB Circular No. 28 sanctions
split jurisdiction which is not favored;but even this tri-fold interpretation which, in the second situation,
limits the meaning of the "owner" to the registered owner is flawed. Section 10 (d) 4 aims to protect not
just the registered owner but anyone who has been deprived of his bond by fraudulent representation in
order to deter fraud in the secondary trading of government securities.
The PDB asserts that the existence of CB Circular No. 769-80 or the abolition of Nuquis office does not result
in depriving the BSP of its jurisdiction: first, CB Circular No. 769-80 expressly provides that CB Circular No.
28 shall have suppletory application to CB Circular No. 769-80; and second, the BSP can always designate
an office to resolve the PDBs claim over the CB bills.
Lastly, the PDB argues that even assuming that the RTC has jurisdiction to resolve the issue of ownership of
the CB bills, the RTC has not acquired jurisdiction over the BOCs so-called "compulsory" counterclaims
(which in truth is merely "permissive") because of the BOCs failure to pay the appropriate docket fees.
These counterclaims should, therefore, be dismissed and expunged from the record.
THE COURTS RULING
We grant the petitions.
At the outset, we note that the parties have not raised the validity of either CB Circular No. 28 or CB Circular
No. 769-80 as an issue. What the parties largely contest is the applicable circular in case of an allegedly
fraudulently assigned CB bill. The applicable circular, in turn, is determinative of the proper remedy available
to the PDB and/or the BOC as claimants to the proceeds of the subject CB bills.
Indisputably, at the time the PDB supposedly invoked the jurisdiction of the BSP in 1994 (by requesting for
the annotation of its claim over the subject CB bills in the BSPs books), CB Circular No. 769-80 has long
been in effect. Therefore, the parties respective interpretations of the provision of Section 10 (d) 4 of CB
Circular No. 28 do not have any significance unless it is first established that that Circular governs the
resolution of their conflicting claims of ownership. This conclusion is important, given the supposed repeal or
modification of Section 10 (d) 4 of CB Circular No. 28 by the following provisions of CB Circular No. 769-80:
ARTICLE XI
SUPPLEMENTAL RULES
Section 1. Central Bank Circular No. 28 The provisions of Central Bank Circular No. 28 shall have suppletory
application to matters not specially covered by these Rules.
ARTICLE XII
EFFECTIVITY
Effectivity The rules and regulations herein prescribed shall take effect upon approval by the Monetary
Board, Central Bank of the Philippines, and all circulars, memoranda, or office orders inconsistent herewith
are revoked or modified accordingly. (Emphases added)
We agree with the PDB that in view of CB Circular No. 28s suppletory application, an attempt to harmonize
the apparently conflicting provisions is a prerequisite before one may possibly conclude that an amendment
or a repeal exists.71 Interestingly, however, even the PDB itself failed to submit an interpretation based on
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its own position of harmonization.
The repealing clause of CB Circular No. 769-80 obviously did not expressly repeal CB Circular No. 28; in
fact, it even provided for the suppletory application of CB Circular No. 28 on "matters not specially covered
by" CB Circular No. 769-80. While no express repeal exists, the intent of CB Circular No. 769-80 to operate
as an implied repeal,72 or at least to amend earlier CB circulars, is supported by its text "revoking" or
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"modif[ying" "all circulars" which are inconsistent with its terms.
At the outset, we stress that none of the parties disputes that the subject CB bills fall within the category of
a certificate or evidence of indebtedness and that these were issued by the Central Bank, now the BSP.
Thus, even without resorting to statutory construction aids, matters involving the subject CB bills should
necessarily be governed by CB Circular No. 769-80. Even granting, however, that reliance on CB Circular
No. 769-80 alone is not enough, we find that CB Circular No. 769-80 impliedly repeals CB Circular No. 28.
An implied repeal transpires when a substantial conflict exists between the new and the prior laws. In the
absence of an express repeal, a subsequent law cannot be construed as repealing a prior law unless an
irreconcilable inconsistency and repugnancy exist in the terms of the new and the old laws.73 Repeal by
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implication is not favored, unless manifestly intended by the legislature, or unless it is convincingly and
unambiguously demonstrated, that the laws or orders are clearly repugnant and patently inconsistent with
one another so that they cannot co-exist; the legislature is presumed to know the existing law and would
express a repeal if one is intended.74 Ï‚ rÎ½ll
There are two instances of implied repeal. One takes place when the provisions in the two acts on the same
subject matter are irreconcilably contradictory, in which case, the later act, to the extent of the conflict,
constitutes an implied repeal of the earlier one. The other occurs when the later act covers the whole
subject of the earlier one and is clearly intended as a substitute; thus, it will operate to repeal the earlier
law.75
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A general reading of the two circulars shows that the second instance of implied repeal is present in this
case. CB Circular No. 28, entitled "Regulations Governing Open Market Operations, Stabilization of Securities
Market, Issue, Servicing and Redemption of Public Debt," is a regulation governing the servicing and
redemption of public debt, including the issue, inscription, registration, transfer, payment and replacement
of bonds and securities representing the public debt.76 On the other hand, CB Circular No. 769-80, entitled
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"Rules and Regulations Governing Central Bank Certificate of Indebtedness," is the governing regulation on
matters77 (i) involving certificate of indebtedness78 issued by the Central Bank itself and (ii) which are
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similarly covered by CB Circular No. 28.

The CB Monetary Board issued CB Circular No. 28 to regulate the servicing and redemption of public debt,
pursuant to Section 124 (now Section 119 of Republic Act R.A. No. 7653) of the old Central Bank
law79 which provides that "the servicing and redemption of the public debt shall also be effected through the
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Bangko Sentral." However, even as R.A. No. 7653 continued to recognize this role by the BSP, the law
required a phase-out of all fiscal agency functions by the BSP, including Section 119 of R.A. No. 7653.
In other words, even if CB Circular No. 28 applies broadly to both government-issued bonds and securities
and Central Bank-issued evidence of indebtedness, given the present state of law, CB Circular No. 28 and
CB Circular No. 769-80 now operate on the same subject Central Bank-issued evidence of indebtedness.
Under Section 1, Article XI of CB Circular No. 769-80, the continued relevance and application of CB Circular
No. 28 would depend on the need to supplement any deficiency or silence in CB Circular No. 769-80 on a
particular matter.
In the present case, both CB Circular No. 28 and CB Circular No. 769-80 provide the BSP with a course of
action in case of an allegedly fraudulently assigned certificate of indebtedness. Under CB Circular No. 28, in
case of fraudulent assignments, the BSP would have to "call upon the owner and the person presenting the
bond to substantiate their respective claims" and, from there, determine who has a better right over the
registered bond. On the other hand, under CB Circular No. 769-80, the BSP shall merely "issue and
circularize a stop order against the transfer, exchange, redemption of the [registered] certificate" without
any adjudicative function (which is the precise root of the present controversy). As the two circulars stand,
the patent irreconcilability of these two provisions does not require elaboration. Section 5, Article V of CB
Circular No. 769-80 inescapably repealed Section 10 (d) 4 of CB Circular No. 28.
The issue of BSPs jurisdiction, lay hidden
On that note, the Court could have written finis to the present controversy by simply sustaining the BSPs
hands-off approach to the PDBs problem under CB Circular No. 769-80. However, the jurisdictional provision
of CB Circular No. 769-80 itself, in relation to CB Circular No. 28, on the matter of fraudulent assignment,
has given rise to a question of jurisdiction - the core question of law involved in these petitions - which the
Court cannot just treat sub-silencio.
Broadly speaking, jurisdiction is the legal power or authority to hear and determine a cause.80 In the Ï‚rÎ½l l
exercise of judicial or quasi-judicial power, it refers to the authority of a court to hear and decide a
case.81 In the context of these petitions, we hark back to the basic principles governing the question of
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jurisdiction over the subject matter.
First, jurisdiction over the subject matter is determined only by the Constitution and by law.82 As a matter
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of substantive law, procedural rules alone can confer no jurisdiction to courts or administrative
agencies.83 In fact, an administrative agency, acting in its quasi-judicial capacity, is a tribunal of limited
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jurisdiction and, as such, could wield only such powers that are specifically granted to it by the enabling
statutes. In contrast, an RTC is a court of general jurisdiction, i.e., it has jurisdiction over cases whose
subject matter does not fall within the exclusive original jurisdiction of any court, tribunal or body exercising
judicial or quasi-judicial functions.84 Ï‚rÎ½ ll
Second, jurisdiction over the subject matter is determined not by the pleas set up by the defendant in his
answer85 but by the allegations in the complaint,86 irrespective of whether the plaintiff is entitled to
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favorable judgment on the basis of his assertions.87 The reason is that the complaint is supposed to contain
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a concise statement of the ultimate facts constituting the plaintiff's causes of action.88Ï‚ rÎ½ ll
Third, jurisdiction is determined by the law in force at the time of the filing of the complaint.89 Ï‚ rÎ½ ll
Parenthetically, the Court observes that none of the parties ever raised the issue of whether the BSP can
simply disown its jurisdiction, assuming it has, by the simple expedient of promulgating a new circular
(specially applicable to a certificate of indebtedness issued by the BSP itself), inconsistent with an old
circular, assertive of its limited jurisdiction over ownership issues arising from fraudulent assignments of a
certificate of indebtedness. The PDB, in particular, relied solely and heavily on CB Circular No. 28.
In light of the above principles pointing to jurisdiction as a matter of substantive law, the provisions of the
law itself that gave CB Circular 769-80 its life and jurisdiction must be examined.
The Philippine Central Bank
On January 3, 1949, Congress created the Central Bank of the Philippines (Central Bank) as a corporate
body with the primary objective of (i) maintaining the internal and external monetary stability in the
Philippines; and (ii) preserving the international value and the convertibility of the peso.90 In line with these
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broad objectives, the Central Bank was empowered to issue rules and regulations "necessary for the
effective discharge of the responsibilities and exercise of the powers assigned to the Monetary Board and to
the Central Bank."91 Specifically, the Central Bank is authorized to organize (other) departments for the
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efficient conduct of its business and whose powers and duties "shall be determined by the Monetary Board,
within the authority granted to the Board and the Central Bank"92 under its original charter.
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With the 1973 Constitution, the then Central Bank was constitutionally made as the countrys central
monetary authority until such time that Congress93 shall have established a central bank. The 1987
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Constitution continued to recognize this function of the then Central Bank until Congress, pursuant to the
Constitution, created a new central monetary authority which later came to be known as the Bangko Sentral
ng Pilipinas.
Under the New Central Bank Act (R.A. No. 7653),94 the BSP is given the responsibility of providing policy
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directions in the areas of money, banking and credit; it is given, too, the primary objective of maintaining
price stability, conducive to a balanced and sustainable growth of the economy, and of promoting and
maintaining monetary stability and convertibility of the peso.95 Ï‚rÎ½ ll
The Constitution expressly grants the BSP, as the countrys central monetary authority, the power of
supervision over the operation of banks, while leaving with Congress the authority to define the BSPs
regulatory powers over the operations of finance companies and other institutions performing similar
functions. Under R.A. No. 7653, the BSPs powers and functions include (i) supervision over the operation of
banks; (ii) regulation of operations of finance companies and non-bank financial institutions performing
quasi banking functions; (iii) sole power and authority to issue currency within the Philippine territory; (iv)
engaging in foreign exchange transactions; (v) making rediscounts, discounts, loans and advances to
banking and other financial institutions to influence the volume of credit consistent with the objective of
achieving price stability; (vi) engaging in open market operations; and (vii) acting as banker and financial
advisor of the government.
On the BSPs power of supervision over the operation of banks, Section 4 of R.A. No. 8791 (The General
Banking Law of 2000) elaborates as follows:
CHAPTER II
AUTHORITY OF THE BANGKO SENTRAL
SECTION 4. Supervisory Powers. The operations and activities of banks shall be subject to supervision of the
Bangko Sentral. "Supervision" shall include the following:
4.1. The issuance of rules of conduct or the establishment of standards of operation for uniform application
to all institutions or functions covered, taking into consideration the distinctive character of the operations of
institutions and the substantive similarities of specific functions to which such rules, modes or standards are
to be applied;
4.2. The conduct of examination to determine compliance with laws and regulations if the circumstances so
warrant as determined by the Monetary Board;
4.3. Overseeing to ascertain that laws and regulations are complied with;
4.4. Regular investigation which shall not be oftener than once a year from the last date of examination to
determine whether an institution is conducting its business on a safe or sound basis: Provided, That the
deficiencies/irregularities found by or discovered by an audit shall be immediately addressed;
4.5. Inquiring into the solvency and liquidity of the institution (2-D); or
4.6. Enforcing prompt corrective action. (n)
The Bangko Sentral shall also have supervision over the operations of and exercise regulatory powers over
quasi-banks, trust entities and other financial institutions which under special laws are subject to Bangko
Sentral supervision. (2-Ca)
For the purposes of this Act, "quasi-banks" shall refer to entities engaged in the borrowing of funds through
the issuance, endorsement or assignment with recourse or acceptance of deposit substitutes as defined in
Section 95 of Republic Act No. 7653 (hereafter the "New Central Bank Act") for purposes of relending or
purchasing of receivables and other obligations. [emphasis ours]
While this provision empowers the BSP to oversee the operations and activities of banks to "ascertain that
laws and regulations are complied with," the existence of the BSPs jurisdiction in the present dispute cannot
rely on this provision. The fact remains that the BSP already made known to the PDB its unfavorable
position on the latters claim of fraudulent assignment due to the latters own failure to comply96 with Ï‚ rÎ½ll
existing regulations: chan roble svirtual lawlib rary
In this connection, Section 10 (b) 2 also requires that a "Detached assignment will be recognized or
accepted only upon previous notice to the Central Bank x x x." In fact, in a memo dated September 23,
1991 xxx then CB Governor Jose L. Cuisia advised all banks (including PDB) xxx as follows: c hanro blesvi rt uallawl ibra ry
In view recurring incidents ostensibly disregarding certain provisions of CB circular No. 28 (as amended)
covering assignments of registered bonds, all banks and all concerned are enjoined to observe strictly the
pertinent provisions of said CB Circular as hereunder quoted: chan roble svirtual lawlib rary
xxxx
Under Section 10.b. (2)
x x x Detached assignment will be recognized or accepted only upon previous notice to the Central Bank and
its use is authorized only under the following circumstances:
(a) x x x
(b) x x x
(c) assignments of treasury notes and certificates of indebtedness in registered form which are not provided
at the back thereof with assignment form.
(d) Assignment of securities which have changed ownership several times.
(e) x x x
Non-compliance herewith will constitute a basis for non-action or withholding of action on

redemption/payment of interest coupons/transfer transactions or denominational exchange that may be
directly affected thereby. [Boldfacing supplied]
Again, the books of the BSP do not show that the supposed assignment of subject CB Bills was ever
recorded in the BSPs books. [Boldfacing supplied]
However, the PDB faults the BSP for not recording the assignment of the CB bills in the PDBs favor despite
the fact that the PDB already requested the BSP to record its assignment in the BSPs books as early as June
30, 1994.97 Ï‚rÎ½l l
The PDBs claim is not accurate. What the PDB requested the BSP on that date was not the recording of the
assignment of the CB bills in its favor but the annotation of its claim over the CB bills at the time when (i) it
was no longer in possession of the CB bills, having been transferred from one entity to another and (ii) all it
has are the detached assignments, which the PDB has not shown to be compliant with Section 10 (b) 2
above-quoted. Obviously, the PDB cannot insist that the BSP take cognizance of its plaint when the basis of
the BSPs refusal under existing regulation, which the PDB is bound to observe, is the PDBs own failure to
comply therewith.
True, the BSP exercises supervisory powers (and regulatory powers) over banks (and quasi banks). The
issue presented before the Court, however, does not concern the BSPs supervisory power over banks as this
power is understood under the General Banking Law. In fact, there is nothing in the PDBs petition (even
including the letters it sent to the BSP) that would support the BSPs jurisdiction outside of CB Circular No.
28, under its power of supervision, over conflicting claims to the proceeds of the CB bills.
BSP has quasi-judicial powers over a

class of cases which does not include
the adjudication of ownership of the
CB bills in question
In United Coconut Planters Bank v. E. Ganzon, Inc.,98 the Court considered the BSP as an administrative
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agency,99 exercising quasi-judicial functions through its Monetary Board. It held:

Ï‚rÎ½ll chanrob lesvi rtua llawli bra ry
A quasi-judicial agency or body is an organ of government other than a court and other than a legislature,
which affects the rights of private parties through either adjudication or rule-making. The very definition of
an administrative agency includes its being vested with quasi-judicial powers. The ever increasing variety of
powers and functions given to administrative agencies recognizes the need for the active intervention of
administrative agencies in matters calling for technical knowledge and speed in countless controversies
which cannot possibly be handled by regular courts. A "quasi-judicial function" is a term which applies to the
action, discretion, etc., of public administrative officers or bodies, who are required to investigate facts, or
ascertain the existence of facts, hold hearings, and draw conclusions from them, as a basis for their official
action and to exercise discretion of a judicial nature.
Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-judicial powers or
functions. As aptly observed by the Court of Appeals, the BSP Monetary Board is an independent central
monetary authority and a body corporate with fiscal and administrative autonomy, mandated to provide
policy directions in the areas of money, banking and credit. It has power to issue subpoena, to sue for
contempt those refusing to obey the subpoena without justifiable reason, to administer oaths and compel
presentation of books, records and others, needed in its examination, to impose fines and other sanctions
and to issue cease and desist order. Section 37 of Republic Act No. 7653, in particular, explicitly provides
that the BSP Monetary Board shall exercise its discretion in determining whether administrative sanctions
should be imposed on banks and quasi-banks, which necessarily implies that the BSP Monetary Board must
conduct some form of investigation or hearing regarding the same. [citations omitted]
The BSP is not simply a corporate entity but qualifies as an administrative agency created, pursuant to
constitutional mandate,100 to carry out a particular governmental function.101 To be able to perform its role
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as central monetary authority, the Constitution granted it fiscal and administrative autonomy. In general,
administrative agencies exercise powers and/or functions which may be characterized as administrative,
investigatory, regulatory, quasi-legislative, or quasi-judicial, or a mix of these five, as may be conferred by
the Constitution or by statute.102 Ï‚ rÎ½ll
While the very nature of an administrative agency and the raison d're for its creation103 and proliferation Ï‚ rÎ½ ll
dictate a grant of quasi-judicial power to it, the matters over which it may exercise this power must find
sufficient anchorage on its enabling law, either by express provision or by necessary implication. Once
found, the quasi-judicial power partakes of the nature of a limited and special jurisdiction, that is, to hear
and determine a class of cases within its peculiar competence and expertise. In other words, the provisions
of the enabling statute are the yardsticks by which the Court would measure the quantum of quasi-judicial
powers an administrative agency may exercise, as defined in the enabling act of such agency.104 Ï‚rÎ½ll
Scattered provisions in R.A. No. 7653 and R.A. No. 8791, inter alia, exist, conferring jurisdiction on the BSP
on certain matters.105 For instance, under the situations contemplated under Section 36, par. 2106 (where a
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bank or quasi bank persists in carrying on its business in an unlawful or unsafe manner) and Section
37107 (where the bank or its officers willfully violate the banks charter or by-laws, or the rules and
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regulations issued by the Monetary Board) of R.A. No. 7653, the BSP may place an entity under receivership
and/or liquidation or impose administrative sanctions upon the entity or its officers or directors.
Among its several functions under R.A. No. 7653, the BSP is authorized to engage in open market
operations and thereby "issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko
Sentral" in the following manner.
SEC. 90. Principles of Open Market Operations. The open market purchases and sales of securities by the
Bangko Sentral shall be made exclusively in accordance with its primary objective of achieving price
stability.
xxxx
SEC. 92. Issue and Negotiation of Bangko Sentral Obligations. In order to provide the Bangko Sentral with
effective instruments for open market operations, the Bangko Sentral may, subject to such rules and
regulations as the Monetary Board may prescribe and in accordance with the principles stated in Section 90
of this Act, issue, place, buy and sell freely negotiable evidences of indebtedness of the Bangko Sentral:
Provided, That issuance of such certificates of indebtedness shall be made only in cases of extraordinary
movement in price levels. Said evidences of indebtedness may be issued directly against the international
reserve of the Bangko Sentral or against the securities which it has acquired under the provisions of Section
91 of this Act, or may be issued without relation to specific types of assets of the Bangko Sentral.
The Monetary Board shall determine the interest rates, maturities and other characteristics of said
obligations of the Bangko Sentral, and may, if it deems it advisable, denominate the obligations in gold or
foreign currencies.
Subject to the principles stated in Section 90 of this Act, the evidences of indebtedness of the Bangko
Sentral to which this section refers may be acquired by the Bangko Sentral before their maturity, either
through purchases in the open market or through redemptions at par and by lot if the Bangko Sentral has
reserved the right to make such redemptions. The evidences of indebtedness acquired or redeemed by the
Bangko Sentral shall not be included among its assets, and shall be immediately retired and
cancelled.108 (italics supplied; emphases ours)
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The primary objective of the BSP is to maintain price stability.109 The BSP has a number of monetary policy
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instruments at its disposal to promote price stability. To increase or reduce liquidity in the financial system,
the BSP uses open market operations, among others.110 Open market operation is a monetary tool where
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the BSP publicly buys or sells government securities111 from (or to) banks and financial institutions in order
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to expand or contract the supply of money. By controlling the money supply, the BSP is able to exert some
influence on the prices of goods and services and achieve its inflation objectives.112 Ï‚ rÎ½ll
Once the issue and/or sale of a security is made, the BSP would necessarily make a determination, in
accordance with its own rules, of the entity entitled to receive the proceeds of the security upon its maturity.
This determination by the BSP is an exercise of its administrative powers113 under the law as an incident to
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its power to prescribe rules and regulations governing open market operations to achieve the "primary
objective of achieving price stability."114 As a matter of necessity, too, the same rules and regulations
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facilitate transaction with the BSP by providing for an orderly manner of, among others, issuing,
transferring, exchanging and paying securities representing public debt.
Significantly, when competing claims of ownership over the proceeds of the securities it has issued are
brought before it, the law has not given the BSP the quasi-judicial power to resolve these competing claims
as part of its power to engage in open market operations. Nothing in the BSPs charter confers on the BSP
the jurisdiction or authority to determine this kind of claims, arising out of a subsequent transfer or
assignment of evidence of indebtedness a matter that appropriately falls within the competence of courts of
general jurisdiction. That the statute withholds this power from the BSP is only consistent with the
fundamental reasons for the creation of a Philippine central bank, that is, to lay down stable monetary policy
and exercise bank supervisory functions. Thus, the BSPs assumption of jurisdiction over competing claims
cannot find even a stretched-out justification under its corporate powers "to do and perform any and all
things that may be necessary or proper to carry out the purposes" of R.A. No. 7653. 115 Ï‚ rÎ½ ll
To reiterate, open market operation is a monetary policy instrument that the BSP employs, among others, to
regulate the supply of money in the economy to influence the timing, cost and availability of money and
credit, as well as other financial factors, for the purpose of stabilizing the price level.116 What the law grants
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the BSP is a continuing role to shape and carry out the countrys monetary policy not the authority to
adjudicate competing claims of ownership over the securities it has issued since this authority would not fall
under the BSPs purposes under its charter.
While R.A. No. 7653117 empowers the BSP to conduct administrative hearings and render judgment for or
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against an entity under its supervisory and regulatory powers and even authorizes the BSP Governor to
"render decisions, or rulings x x x on matters regarding application or enforcement of laws pertaining to
institutions supervised by the BSP and laws pertaining to quasi-banks, as well as regulations, policies or
instructions issued by the Monetary Board," it is precisely the text of the BSPs own regulation (whose
validity is not here raised as an issue) that points to the BSPs limited role in case of an allegedly fraudulent
assignment to simply (i) issuing and circularizing a "stop order" against the transfer, exchange, redemption
of the certificate of indebtedness, including the payment of interest coupons, and (ii) withholding action on
the certificate.
A similar conclusion can be drawn from the BSPs administrative adjudicatory power in cases of "willful failure
or refusal to comply with, or violation of, any banking law or any order, instruction or regulation issued by
the Monetary Board, or any order, instruction or ruling by the Governor."118 The non-compliance with the
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pertinent requirements under CB Circular No. 28, as amended, deprives a party from any right to demand
payment from the BSP.
In other words, the grant of quasi-judicial authority to the BSP cannot possibly extend to situations which do
not call for the exercise by the BSP of its supervisory or regulatory functions over entities within its
jurisdiction.119
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The fact alone that the parties involved are banking institutions does not necessarily call for the exercise by
the BSP of its quasi-judicial powers under the law.120 Ï‚ rÎ½ll
The doctrine of primary jurisdiction/>argues against BSPs purported/>authority to adjudicate

ownership/>issues over the disputed CB bills
Given the preceding discussions, even the PDBs invocation of the doctrine of primary jurisdiction is
misplaced.
In the exercise of its plenary legislative power, Congress may create administrative agencies endowed with
quasi-legislative and quasi-judicial powers. Necessarily, Congress likewise defines the limits of an agencys
jurisdiction in the same manner as it defines the jurisdiction of courts.121 As a result, it may happen that
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either a court or an administrative agency has exclusive jurisdiction over a specific matter or both have
concurrent jurisdiction on the same. It may happen, too, that courts and agencies may willingly relinquish
adjudicatory power that is rightfully theirs in favor of the other. One of the instances when a court may
properly defer to the adjudicatory authority of an agency is the applicability of the doctrine of primary
jurisdiction.122
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As early as 1954, the Court applied the doctrine of primary jurisdiction under the following terms: c hanroblesv irt uallawl ibra ry
6. In the fifties, the Court taking cognizance of the move to vest jurisdiction in administrative commissions
and boards the power to resolve specialized disputes xxx ruled that Congress in requiring the Industrial
Court's intervention in the resolution of labor-management controversies xxx meant such jurisdiction to be
exclusive, although it did not so expressly state in the law. The Court held that under the "sense-making
and expeditious doctrine of primary jurisdiction ... the courts cannot or will not determine a controversy
involving a question which is within the jurisdiction of an administrative tribunal, where the question
demands the exercise of sound administrative discretion requiring the special knowledge, experience, and
services of the administrative tribunal to determine technical and intricate matters of fact, and a uniformity
of ruling is essential to comply with the purposes of the regulatory statute administered."123 (emphasis Ï‚ rÎ½ll
ours)
In Industrial Enterprises, Inc. v. Court of Appeals,124 the Court ruled that while an action for rescission of a
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contract between coal developers appears to be an action cognizable by regular courts, the trial court
remains to be without jurisdiction to entertain the suit since the contract sought to be rescinded is
"inextricably tied up with the right to develop coal-bearing lands and the determination of whether or not
the reversion of the coal operating contract over the subject coal blocks to [the plaintiff] would be in line
with the countrys national program and objective on coal-development and over-all coal-supply-demand
balance." It then applied the doctrine of primary jurisdiction
In recent years, it has been the jurisprudential trend to apply the doctrine of primary jurisdiction in many
cases involving matters that demand the special competence of administrative agencies. It may occur that
the Court has jurisdiction to take cognizance of a particular case, which means that the matter involved is
also judicial in character. However, if the case is such that its determination requires the expertise,
specialized skills and knowledge of the proper administrative bodies because technical matters or intricate
questions of facts are involved, then relief must first be obtained in an administrative proceeding before a
remedy will be supplied by the courts even though the matter is within the proper jurisdiction of a court.
This is the doctrine of primary jurisdiction. It applies "where a claim is originally cognizable in the courts,
and comes into play whenever enforcement of the claim requires the resolution of issues which, under a
regulatory scheme, have been placed within the special competence of an administrative body."
Clearly, the doctrine of primary jurisdiction finds application in this case since the question of what coal
areas should be exploited and developed and which entity should be granted coal operating contracts over
said areas involves a technical determination by the Bureau of Energy Development as the administrative
agency in possession of the specialized expertise to act on the matter. The Trial Court does not have the
competence to decide matters concerning activities relative to the exploration, exploitation, development
and extraction of mineral resources like coal. These issues preclude an initial judicial determination.
[emphases ours]
The absence of any express or implied statutory power to adjudicate conflicting claims of ownership or
entitlement to the proceeds of its certificates of indebtedness finds complement in the similar absence of
any technical matter that would call for the BSPs special expertise or competence.125 In fact, what the PDBs
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petitions bear out is essentially the nature of the transaction it had with the subsequent transferees of the
subject CB bills (BOC and Bancap) and not any matter more appropriate for special determination by the
BSP or any administrative agency.
In a similar vein, it is well-settled that the interpretation given to a rule or regulation by those charged with
its execution is entitled to the greatest weight by the courts construing such rule or regulation.126 While
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there are exceptions127 to this rule, the PDB has not convinced us that a departure is warranted in this case.
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Given the non-applicability of the doctrine of primary jurisdiction, the BSPs own position, in light of Circular
No. 769-80, deserves respect from the Court.
Ordinarily, cases involving the application of doctrine of primary jurisdiction are initiated by an action
invoking the jurisdiction of a court or administrative agency to resolve the substantive legal conflict between
the parties. In this sense, the present case is quite unique since the courts jurisdiction was, originally,
invoked to compel an administrative agency (the BSP) to resolve the legal conflict of ownership over the CB
bills - instead of obtaining a judicial determination of the same dispute.
The remedy of interpleader
Based on the unique factual premise of the present case, the RTC acted correctly in initially assuming
jurisdiction over the PDBs petition for mandamus, prohibition and injunction.128 While the RTC agreed
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(albeit erroneously) with the PDBs view (that the BSP has jurisdiction), it, however, dismissed not only the
BOCs/the BSPs counterclaims but the PDBs petition itself as well, on the ground that it lacks jurisdiction.
This is plain error.
Not only the parties themselves, but more so the courts, are bound by the rule on non-waiver of
jurisdiction.129 believes that jurisdiction over the BOCs counterclaims and the BSPs counterclaim/crossclaim
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for interpleader calls for the application of the doctrine of primary jurisdiction, the allowance of the PDBs
petition even becomes imperative because courts may raise the issue of primary jurisdiction sua sponte.130 Ï‚ rÎ½ ll
Of the three possible options available to the RTC, the adoption of either of these two would lead the trial
court into serious legal error: first, if it granted the PDBs petition, its decision would have to be set aside on
appeal because the BSP has no jurisdiction as previously discussed; and second when it dismissed the PDBs
petitions and the BOCs counterclaims on the ground that it lacks jurisdiction, the trial court seriously erred
because precisely, the resolution of the conflicting claims over the CB bills falls within its general jurisdiction.
Without emasculating its jurisdiction, the RTC could have properly dismissed the PDBs petition but on the
ground that mandamus does not lie against the BSP; but even this correct alternative is no longer plausible
since the BSP, as a respondent below, already properly brought before the RTC the remaining conflicting
claims over the subject CB bills by way of a counterclaim/crossclaim for interpleader. Section 1, Rule 62 of
the Rules of Court provides when an interpleader is proper: cha nrob lesvi rtua llawli bra ry
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.
The remedy of an action of interpleader131 is designed to protect a person against double vexation in
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respect of a single liability.7 It requires, as an indispensable requisite, that conflicting claims upon the same
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subject matter are or may be made against the stakeholder (the possessor of the subject matter) who
claims no interest whatever in the subject matter or an interest which in whole or in part is not disputed by
the claimants.132Ï‚rÎ½ll
Through this remedy, the stakeholder can join all competing claimants in a single proceeding to determine
conflicting claims without exposing the stakeholder to the possibility of having to pay more than once on a
single liability.133
Ï‚rÎ½ll
When the court orders that the claimants litigate among themselves, in reality a new action arises,134 where Ï‚rÎ½l l
the claims of the interpleaders themselves are brought to the fore, the stakeholder as plaintiff is relegated
merely to the role of initiating the suit. In short, the remedy of interpleader, when proper, merely provides
an avenue for the conflicting claims on the same subject matter to be threshed out in an action. Section 2 of
Rule 62 provides: cha nrob lesvi rtua llawli bra ry
SEC. 2. Order. Upon the filing of the complaint, the court shall issue an order requiring the conflicting
claimants to interplead with one another. If the interests of justice so require, the court may direct in such
order that the subject matter be paid or delivered to the court.
This is precisely what the RTC did by granting the BSPs motion to interplead. The PDB itself "agreed that the
various claimants should now interplead." Thus, the PDB and the BOC subsequently entered into two
separate escrow agreements, covering the CB bills, and submitted them to the RTC for approval.
In granting the BSPs motion, the RTC acted on the correct premise that it has jurisdiction to resolve the
parties conflicting claims over the CB bills - consistent with the rules and the parties conduct - and
accordingly required the BOC to amend its answer and for the PDB to comment thereon. Suddenly, however,
the PDB made an about-face and questioned the jurisdiction of the RTC. Swayed by the PDBs argument, the
RTC dismissed even the PDBs petition - which means that it did not actually compel the BSP to resolve the
BOCs and the PDBs claims.
Without the motion to interplead and the order granting it, the RTC could only dismiss the PDBs petition
since it is the RTC which has jurisdiction to resolve the parties conflicting claims not the BSP. Given that the
motion to interplead has been actually filed, the RTC could not have really granted the relief originally
sought in the PDBs petition since the RTCs order granting the BSPs motion to interplead - to which the PDB
in fact acquiesced into - effectively resulted in the dismissal of the PDBs petition. This is not altered by the
fact that the PDB additionally prayed in its petition for damages, attorneys fees and costs of suit "against
the public respondents" because the grant of the order to interplead effectively sustained the propriety of
the BSPs resort to this procedural device.
Interpleader
1. as a special civil action
What is quite unique in this case is that the BSP did not initiate the interpleader suit through an original
complaint but through its Answer. This circumstance becomes understandable if it is considered that insofar
as the BSP is concerned, the PDB does not possess any right to have its claim recorded in the BSPs books;
consequently, the PDB cannot properly be considered even as a potential claimant to the proceeds of the CB
bills upon maturity. Thus, the interpleader was only an alternative position, made only in the BSPs
Answer.135 Ï‚rÎ½ll
The remedy of interpleader, as a special civil action, is primarily governed by the specific provisions in Rule
62 of the Rules of Court and secondarily by the provisions applicable to ordinary civil actions.136 Indeed,Ï‚rÎ½l l
Rule 62 does not expressly authorize the filing of a complaint-in-interpleader as part of, although separate
and independent from, the answer. Similarly, Section 5, Rule 6, in relation to Section 1, Rule 9 of the Rules
of Court137 does not include a complaint-in-interpleader as a claim,138 a form of defense,139 or as an
Ï‚rÎ½ll Ï‚rÎ½ ll Ï‚ rÎ½ ll
objection that a defendant may be allowed to put up in his answer or in a motion to dismiss. This does not
mean, however, that the BSPs "counter-complaint/cross-claim for interpleader" runs counter to general
procedures.
Apart from a pleading,140 the rules141 allow a party to seek an affirmative relief from the court through the
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procedural device of a motion. While captioned "Answer with counter complaint/cross-claim for
interpleader," the RTC understood this as in the nature of a motion,142 seeking relief which essentially
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consists in an order for the conflicting claimants to litigate with each other so that "payment is made to the
rightful or legitimate owner"143 of the subject CB bills.
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The rules define a "civil action" as "one by which a party sues another for the enforcement or protection of a
right, or the prevention or redress of a wrong." Interpleader may be considered as a stakeholders remedy to
prevent a wrong, that is, from making payment to one not entitled to it, thereby rendering itself vulnerable
to lawsuit/s from those legally entitled to payment.
Interpleader is a civil action made special by the existence of particular rules to govern the uniqueness of its
application and operation. Under Section 2, Rule 6 of the Rules of Court, governing ordinary civil actions, a
partys claim is asserted "in a complaint, counterclaim, cross-claim, third (fourth, etc.)-party complaint, or
complaint-in-intervention." In an interpleader suit, however, a claim is not required to be contained in any of
these pleadings but in the answer-(of the conflicting claimants)-in-interpleader. This claim is different from
the counter-claim (or cross-claim, third party-complaint) which is separately allowed under Section 5, par. 2
of Rule 62.
2. the payment of docket fees covering BOCs counterclaim
The PDB argues that, even assuming that the RTC has jurisdiction over the issue of ownership of the CB
bills, the BOCs failure to pay the appropriate docket fees prevents the RTC from acquiring jurisdiction over
the BOCs "counterclaims."
We disagree with the PDB.
To reiterate and recall, the order granting the "PDBs motion to interplead," already resulted in the dismissal
of the PDBs petition. The same order required the BOC to amend its answer and for the conflicting claimants
to comment, presumably to conform to the nature of an answer-in interpleader. Perhaps, by reason of the
BOCs denomination of its claim as a "compulsory counterclaim" and the PDBs failure to fully appreciate the
RTCs order granting the "BSPs motion for interpleader" (with the PDBs conformity), the PDB mistakenly
treated the BOCs claim as a "permissive counterclaim" which necessitates the payment of docket fees.
As the preceding discussions would show, however, the BOCs "claim" - i.e., its assertion of ownership over
the CB bills is in reality just that, a "claim" against the stakeholder and not as a "counterclaim,"144 whether Ï‚rÎ½l l
compulsory145 or permissive. It is only the BOCs alternative prayer (for the PDB to deliver to the BOC, as
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the buyer in the April 15 transaction and the ultimate successor-in-interest of the buyer in the April 19
transaction, either the original subjects of the sales or the value thereof plus whatever income that may
have been earned pendente lite) and its prayer for damages that are obviously compulsory counterclaims
against the PDB and, therefore, does not require payment of docket fees.146 Ï‚rÎ½l l
The PDB takes a contrary position through its insistence that a compulsory counterclaim should be one
where the presence of third parties, of whom the court cannot acquire jurisdiction, is not required. It
reasons out that since the RCBC and All Asia (the intervening holders of the CB bills) have already been
dropped from the case, then the BOCs counterclaim must only be permissive in nature and the BOC should
have paid the correct docket fees.
We see no reason to belabor this claim. Even if we gloss over the PDBs own conformity to the dropping of
these entities as parties, the BOC correctly argues that a remedy is provided under the Rules. Section 12,
Rule 6 of the Rules of Court reads: chan roblesv irtuallaw lib rary
SEC. 12. Bringing new parties. When the presence of parties other than those to the original action is
required for the granting of complete relief in the determination of a counterclaim or cross-claim, the court
shall order them to be brought in as defendants, if jurisdiction over them can be obtained.
Even then, the strict characterization of the BOCs counterclaim is no longer material in disposing of the PDBs
argument based on non-payment of docket fees.
When an action is filed in court, the complaint must be accompanied by the payment of the requisite docket
and filing fees by the party seeking affirmative relief from the court. It is the filing of the complaint or
appropriate initiatory pleading, accompanied by the payment of the prescribed docket fee, that vests a trial
court with jurisdiction over the claim or the nature of the action.147 However, the non-payment of the
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docket fee at the time of filing does not automatically cause the dismissal of the case, so long as the fee is
paid within the applicable prescriptive or reglementary period, especially when the claimant demonstrates a
willingness to abide by the rules prescribing such payment.148 Ï‚rÎ½l l
In the present case, considering the lack of a clear guideline on the payment of docket fee by the claimants
in an interpleader suit, compounded by the unusual manner in which the interpleader suit was initiated and
the circumstances surrounding it, we surely cannot deduce from the BOCs mere failure to specify in its
prayer the total amount of the CB bills it lays claim to (or the value of the subjects of the sales in the April
15 and April 19 transactions, in its alternative prayer) an intention to defraud the government that would
warrant the dismissal of its claim.149 Ï‚ rÎ½ll
At any rate, regardless of the nature of the BOCs "counterclaims," for purposes of payment of filing fees,
both the BOC and the PDB, properly as defendants-in-interpleader, must be assessed the payment of the
correct docket fee arising from their respective claims. The seminal case of Sun Insurance Office, Ltd. v.
Judge Asuncion150 provides us guidance in the payment of docket fees, to wit:
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1. x x x Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive or reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall
not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow
payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or
reglementary period. [underscoring ours]
This must be the rule considering that Section 7, Rule 62 of which reads: chanro blesvi rtua llawli bra ry
SEC. 7. Docket and other lawful fees, costs and litigation expenses as liens. The docket and other lawful fees
paid by the party who filed a complaint under this Rule, as well as the costs and litigation expenses, shall
constitute a lien or charge upon the subject matter of the action, unless the court shall order otherwise.
only pertain to the docket and lawful fees to be paid by the one who initiated the interpleader suit, and who,
under the Rules, actually "claims no interest whatever in the subject matter." By constituting a lien on the
subject matter of the action, Section 7 in effect only aims to actually compensate the complainant-in-
interpleader, who happens to be the stakeholder unfortunate enough to get caught in a legal crossfire
between two or more conflicting claimants, for the faultless trouble it found itself into. Since the defendants-
in-interpleader are actually the ones who make a claim - only that it was extraordinarily done through the
procedural device of interpleader - then to them devolves the duty to pay the docket fees prescribed under
Rule 141 of the Rules of Court, as amended.151 Ï‚rÎ½ ll
The importance of paying the correct amount of docket fee cannot be overemphasized: chan roble svirtual lawlib rary
The matter of payment of docket fees is not a mere triviality. These fees are necessary to defray court
expenses in the handling of cases. Consequently, in order to avoid tremendous losses to the judiciary, and
to the government as well, the payment of docket fees cannot be made dependent on the outcome of the
case, except when the claimant is a pauper-litigant.152 Ï‚rÎ½l l
WHEREFORE, premises considered the consolidated PETITIONS are GRANTED. The Planters Development
Bank is hereby REQUIRED to file with the Regional Trial Court its comment or answer-in-interpleader to
Bank of Commerces Amended Consolidated Answer with Compulsory Counterclaim, as previously ordered by
the Regional Trial Court. The Regional Trial Court of Makati City, Branch 143, is hereby ORDERED to assess
the docket fees due from Planters Development Bank and Bank of Commerce and order their payment, and
to resolve with DELIBERATE DISPATCH the parties conflicting claims of ownership over the proceeds of the
Central Bank bills.
The Clerk of Court of the Regional Trial Court of Makati City, Branch 143, or his duly authorized
representative is hereby ORDERED to assess and collect the appropriate amount of docket fees separately
due the Bank of Commerce and Planters Development Bank as conflicting claimants in Bangko Sentral ng
Pilipinas interpleader suit, in accordance with this decision. Ï‚rÎ± lÎ±Ï‰l Î¹brÎ±r
SO ORDERED.
SCA-DECLARATORY RELIEF/ SIMILAR REMEDIES, R63
THIRD DIVISION
[G.R. NO. 150806 - January 28, 2008]
EUFEMIA ALMEDA and ROMEL ALMEDA, Petitioners, v. BATHALA MARKETING INDUSTRIES,

INC., Respondent.
DECISION
NACHURA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, of the Decision1 of the Court
of Appeals (CA), dated September 3, 2001, in CA-G.R. CV No. 67784, and its Resolution2 dated November
19, 2001. The assailed Decision affirmed with modification the Decision3 of the Regional Trial Court (RTC),
Makati City, Branch 136, dated May 9, 2000 in Civil Case No. 98-411.
Sometime in May 1997, respondent Bathala Marketing Industries, Inc., as lessee, represented by its
president Ramon H. Garcia, renewed its Contract of Lease4 with Ponciano L. Almeda (Ponciano), as lessor,
husband of petitioner Eufemia and father of petitioner Romel Almeda. Under the said contract, Ponciano
agreed to lease a portion of the Almeda Compound, located at 2208 Pasong Tamo Street, Makati City,
consisting of 7,348.25 square meters, for a monthly rental of P1,107,348.69, for a term of four (4) years
from May 1, 1997 unless sooner terminated as provided in the contract.5 The contract of lease contained the
following pertinent provisions which gave rise to the instant case:
SIXTH - It is expressly understood by the parties hereto that the rental rate stipulated is based on the
present rate of assessment on the property, and that in case the assessment should hereafter be increased
or any new tax, charge or burden be imposed by authorities on the lot and building where the leased
premises are located, LESSEE shall pay, when the rental herein provided becomes due, the additional rental
or charge corresponding to the portion hereby leased; provided, however, that in the event that the present
assessment or tax on said property should be reduced, LESSEE shall be entitled to reduction in the
stipulated rental, likewise in proportion to the portion leased by him;
SEVENTH - In case an extraordinary inflation or devaluation of Philippine Currency should supervene, the
value of Philippine peso at the time of the establishment of the obligation shall be the basis of payment;6
During the effectivity of the contract, Ponciano died. Thereafter, respondent dealt with petitioners. In a
letter7 dated December 29, 1997, petitioners advised respondent that the former shall assess and collect
Value Added Tax (VAT) on its monthly rentals. In response, respondent contended that VAT may not be
imposed as the rentals fixed in the contract of lease were supposed to include the VAT therein, considering
that their contract was executed on May 1, 1997 when the VAT law had long been in effect.8
On January 26, 1998, respondent received another letter from petitioners informing the former that its
monthly rental should be increased by 73% pursuant to condition No. 7 of the contract and Article 1250 of
the Civil Code. Respondent opposed petitioners' demand and insisted that there was no extraordinary
inflation to warrant the application of Article 1250 in light of the pronouncement of this Court in various
cases.9
Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but continued to pay
the stipulated amount set forth in their contract.
On February 18, 1998, respondent instituted an action for declaratory relief for purposes of determining the
correct interpretation of condition Nos. 6 and 7 of the lease contract to prevent damage and prejudice.10 The
case was docketed as Civil Case No. 98-411 before the RTC of Makati.
On March 10, 1998, petitioners in turn filed an action for ejectment, rescission and damages against
respondent for failure of the latter to vacate the premises after the demand made by the former.11Before
respondent could file an answer, petitioners filed a Notice of Dismissal.12 They subsequently refiled the
complaint before the Metropolitan Trial Court of Makati; the case was raffled to Branch 139 and was
docketed as Civil Case No. 53596.
Petitioners later moved for the dismissal of the declaratory relief case for being an improper remedy
considering that respondent was already in breach of the obligation and that the case would not end the
litigation and settle the rights of the parties. The trial court, however, was not persuaded, and consequently,
denied the motion.
After trial on the merits, on May 9, 2000, the RTC ruled in favor of respondent and against petitioners. The
pertinent portion of the decision reads:
WHEREFORE, premises considered, this Court renders judgment on the case as follows:
1) declaring that plaintiff is not liable for the payment of Value-Added Tax (VAT) of 10% of the rent for [the]
use of the leased premises;
2) declaring that plaintiff is not liable for the payment of any rental adjustment, there being no
[extraordinary] inflation or devaluation, as provided in the Seventh Condition of the lease contract, to justify
the same;
3) holding defendants liable to plaintiff for the total amount of P1,119,102.19, said amount representing
payments erroneously made by plaintiff as VAT charges and rental adjustment for the months of January,
February and March, 1999; and cralawlib rary
4) holding defendants liable to plaintiff for the amount of P1,107,348.69, said amount representing the
balance of plaintiff's rental deposit still with defendants.
SO ORDERED.13
The trial court denied petitioners their right to pass on to respondent the burden of paying the VAT since it
was not a new tax that would call for the application of the sixth clause of the contract. The court, likewise,
denied their right to collect the demanded increase in rental, there being no extraordinary inflation or
devaluation as provided for in the seventh clause of the contract. Because of the payment made by
respondent of the rental adjustment demanded by petitioners, the court ordered the restitution by the latter
to the former of the amounts paid, notwithstanding the well-established rule that in an action for declaratory
relief, other than a declaration of rights and obligations, affirmative reliefs are not sought by or awarded to
the parties.
Petitioners elevated the aforesaid case to the Court of Appeals which affirmed with modification the RTC
decision. The fallo reads:
WHEREFORE, premises considered, the present appeal is DISMISSED and the appealed decision in Civil Case
No. 98-411 is hereby AFFIRMED with MODIFICATION in that the order for the return of the balance of the
rental deposits and of the amounts representing the 10% VAT and rental adjustment, is hereby DELETED.
No pronouncement as to costs.
SO ORDERED.14
The appellate court agreed with the conclusions of law and the application of the decisional rules on the
matter made by the RTC. However, it found that the trial court exceeded its jurisdiction in granting
affirmative relief to the respondent, particularly the restitution of its excess payment.
Petitioners now come before this Court raising the following issues:
I.
WHETHER OR NOT ARTICLE 1250 OF THE NEW CIVIL CODE IS APPLICABLE TO THE CASE AT BAR.
II.
WHETHER OR NOT THE DOCTRINE ENUNCIATED IN FILIPINO PIPE AND FOUNDRY CORP. v. NAWASA CASE,
161 SCRA 32 AND COMPANION CASES ARE (sic) APPLICABLE IN THE CASE AT BAR.
III.
WHETHER OR NOT IN NOT APPLYING THE DOCTRINE IN THE CASE OF DEL ROSARIO v. THE SHELL
COMPANY OF THE PHILIPPINES, 164 SCRA 562, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED
ON A QUESTION OF LAW.
IV.
WHETHER OR NOT THE FINDING OF THE HONORABLE COURT OF APPEALS THAT RESPONDENT IS NOT
LIABLE TO PAY THE 10% VALUE ADDED TAX IS IN ACCORDANCE WITH THE MANDATE OF RA 7716.
V.
WHETHER OR NOT DECLARATORY RELIEF IS PROPER SINCE PLAINTIFF-APPELLEE WAS IN BREACH WHEN
THE PETITION FOR DECLARATORY RELIEF WAS FILED BEFORE THE TRIAL COURT.
In fine, the issues for our resolution are as follows: 1) whether the action for declaratory relief is proper; 2)
whether respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716; and 3) whether the
amount of rentals due the petitioners should be adjusted by reason of extraordinary inflation or devaluation.
Declaratory relief is defined as an action by any person interested in a deed, will, contract or other written
instrument, executive order or resolution, to determine any question of construction or validity arising from
the instrument, executive order or regulation, or statute, and for a declaration of his rights and duties
thereunder. The only issue that may be raised in such a petition is the question of construction or validity of
provisions in an instrument or statute. Corollary is the general rule that such an action must be justified, as
no other adequate relief or remedy is available under the circumstances.15
Decisional law enumerates the requisites of an action for declaratory relief, as follows: 1) the subject matter
of the controversy must be a deed, will, contract or other written instrument, statute, executive order or
regulation, or ordinance; 2) the terms of said documents and the validity thereof are doubtful and require
judicial construction; 3) there must have been no breach of the documents in question; 4) there must be an
actual justiciable controversy or the "ripening seeds" of one between persons whose interests are adverse;
5) the issue must be ripe for judicial determination; and 6) adequate relief is not available through other
means or other forms of action or proceeding.16
It is beyond cavil that the foregoing requisites are present in the instant case, except that petitioners insist
that respondent was already in breach of the contract when the petition was filed.
We do not agree.
After petitioners demanded payment of adjusted rentals and in the months that followed, respondent
complied with the terms and conditions set forth in their contract of lease by paying the rentals stipulated
therein. Respondent religiously fulfilled its obligations to petitioners even during the pendency of the present
suit. There is no showing that respondent committed an act constituting a breach of the subject contract of
lease. Thus, respondent is not barred from instituting before the trial court the petition for declaratory relief.
Petitioners claim that the instant petition is not proper because a separate action for rescission, ejectment
and damages had been commenced before another court; thus, the construction of the subject contractual
provisions should be ventilated in the same forum.
We are not convinced.
It is true that in Panganiban v. Pilipinas Shell Petroleum Corporation17 we held that the petition for
declaratory relief should be dismissed in view of the pendency of a separate action for unlawful detainer.
However, we cannot apply the same ruling to the instant case. In Panganiban, the unlawful detainer case
had already been resolved by the trial court before the dismissal of the declaratory relief case; and it was
petitioner in that case who insisted that the action for declaratory relief be preferred over the action for
unlawful detainer. Conversely, in the case at bench, the trial court had not yet resolved the
rescission/ejectment case during the pendency of the declaratory relief petition. In fact, the trial court,
where the rescission case was on appeal, itself initiated the suspension of the proceedings pending the
resolution of the action for declaratory relief.
We are not unmindful of the doctrine enunciated in Teodoro, Jr. v. Mirasol18 where the declaratory relief
action was dismissed because the issue therein could be threshed out in the unlawful detainer suit. Yet,
again, in that case, there was already a breach of contract at the time of the filing of the declaratory relief
petition. This dissimilar factual milieu proscribes the Court from applying Teodoro to the instant case.
Given all these attendant circumstances, the Court is disposed to entertain the instant declaratory relief
action instead of dismissing it, notwithstanding the pendency of the ejectment/rescission case before the
trial court. The resolution of the present petition would write finis to the parties' dispute, as it would settle
once and for all the question of the proper interpretation of the two contractual stipulations subject of this
controversy.
Now, on the substantive law issues.
Petitioners repeatedly made a demand on respondent for the payment of VAT and for rental adjustment
allegedly brought about by extraordinary inflation or devaluation. Both the trial court and the appellate court
found no merit in petitioners' claim. We see no reason to depart from such findings.
As to the liability of respondent for the payment of VAT, we cite with approval the ratiocination of the
appellate court, viz.:
Clearly, the person primarily liable for the payment of VAT is the lessor who may choose to pass it on to the
lessee or absorb the same. Beginning January 1, 1996, the lease of real property in the ordinary course of
business, whether for commercial or residential use, when the gross annual receipts exceed P500,000.00, is
subject to 10% VAT. Notwithstanding the mandatory payment of the 10% VAT by the lessor, the actual
shifting of the said tax burden upon the lessee is clearly optional on the part of the lessor, under the terms
of the statute. The word "may" in the statute, generally speaking, denotes that it is directory in nature. It is
generally permissive only and operates to confer discretion. In this case, despite the applicability of the rule
under Sec. 99 of the NIRC, as amended by R.A. 7716, granting the lessor the option to pass on to the lessee
the 10% VAT, to existing contracts of lease as of January 1, 1996, the original lessor, Ponciano L. Almeda
did not charge the lessee-appellee the 10% VAT nor provided for its additional imposition when they
renewed the contract of lease in May 1997. More significantly, said lessor did not actually collect a 10% VAT
on the monthly rental due from the lessee-appellee after the execution of the May 1997 contract of lease.
The inevitable implication is that the lessor intended not to avail of the option granted him by law to shift
the 10% VAT upon the lessee-appellee. x x x.19
In short, petitioners are estopped from shifting to respondent the burden of paying the VAT.
Petitioners' reliance on the sixth condition of the contract is, likewise, unavailing. This provision clearly
states that respondent can only be held liable for new taxes imposed after the effectivity of the contract of
lease, that is, after May 1997, and only if they pertain to the lot and the building where the leased premises
are located. Considering that RA 7716 took effect in 1994, the VAT cannot be considered as a "new tax" in
May 1997, as to fall within the coverage of the sixth stipulation.
Neither can petitioners legitimately demand rental adjustment because of extraordinary inflation or
devaluation.
Petitioners contend that Article 1250 of the Civil Code does not apply to this case because the contract
stipulation speaks of extraordinary inflation or devaluation while the Code speaks of extraordinary inflation
or deflation. They insist that the doctrine pronounced in Del Rosario v. The Shell Company, Phils.
Limited20 should apply.
Essential to contract construction is the ascertainment of the intention of the contracting parties, and such
determination must take into account the contemporaneous and subsequent acts of the parties. This
intention, once ascertained, is deemed an integral part of the contract.21
While, indeed, condition No. 7 of the contract speaks of "extraordinary inflation or devaluation" as compared
to Article 1250's "extraordinary inflation or deflation," we find that when the parties used the term
"devaluation," they really did not intend to depart from Article 1250 of the Civil Code. Condition No. 7 of the
contract should, thus, be read in harmony with the Civil Code provision.
That this is the intention of the parties is evident from petitioners' letter22 dated January 26, 1998, where, in
demanding rental adjustment ostensibly based on condition No. 7, petitioners made explicit reference to
Article 1250 of the Civil Code, even quoting the law verbatim. Thus, the application of Del Rosario is not
warranted. Rather, jurisprudential rules on the application of Article 1250 should be considered.
Article 1250 of the Civil Code states:
In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value of the
currency at the time of the establishment of the obligation shall be the basis of payment, unless there is an
agreement to the contrary.
Inflation has been defined as the sharp increase of money or credit, or both, without a corresponding
increase in business transaction. There is inflation when there is an increase in the volume of money and
credit relative to available goods, resulting in a substantial and continuing rise in the general price level.23 In
a number of cases, this Court had provided a discourse on what constitutes extraordinary inflation, thus:
[E]xtraordinary inflation exists when there is a decrease or increase in the purchasing power of the
Philippine currency which is unusual or beyond the common fluctuation in the value of said currency, and
such increase or decrease could not have been reasonably foreseen or was manifestly beyond the
contemplation of the parties at the time of the establishment of the obligation.24
The factual circumstances obtaining in the present case do not make out a case of extraordinary inflation or
devaluation as would justify the application of Article 1250 of the Civil Code. We would like to stress that the
erosion of the value of the Philippine peso in the past three or four decades, starting in the mid-sixties, is
characteristic of most currencies. And while the Court may take judicial notice of the decline in the
purchasing power of the Philippine currency in that span of time, such downward trend of the peso cannot
be considered as the extraordinary phenomenon contemplated by Article 1250 of the Civil Code.
Furthermore, absent an official pronouncement or declaration by competent authorities of the existence of
extraordinary inflation during a given period, the effects of extraordinary inflation are not to be applied.25
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-
G.R. CV No. 67784, dated September 3, 2001, and its Resolution dated November 19, 2001, areAFFIRMED.
SO ORDERED.
FIRST DIVISION
[G.R. NO. 154380 October 5, 2005]
REPUBLIC OF THE PHILIPPINES, Petitioner, v. CIPRIANO ORBECIDO III, Respondent.
DECISION
QUISUMBING, J.:
Given a valid marriage between two Filipino citizens, where one party is later naturalized as a foreign citizen
and obtains a valid divorce decree capacitating him or her to remarry, can the Filipino spouse likewise
remarry under Philippine law? cralawlib ra ry
Before us is a case of first impression that behooves the Court to make a definite ruling on this apparently
novel question, presented as a pure question of law.
In this Petition for Review , the Solicitor General assails the Decision1 dated May 15, 2002, of the Regional
Trial Court of Molave, Zamboanga del Sur, Branch 23 and its Resolution2 dated July 4, 2002 denying the
motion for reconsideration. The court a quo had declared that herein respondent Cipriano Orbecido III is
capacitated to remarry. The fallo of the impugned Decision reads:
WHEREFORE, by virtue of the provision of the second paragraph of Art. 26 of the Family Code and by reason
of the divorce decree obtained against him by his American wife, the petitioner is given the capacity to
remarry under the Philippine Law.
IT IS SO ORDERED.3
The factual antecedents, as narrated by the trial court, are as follows.
On May 24, 1981, Cipriano Orbecido III married Lady Myros M. Villanueva at the United Church of Christ in
the Philippines in Lam-an, Ozamis City. Their marriage was blessed with a son and a daughter, Kristoffer
Simbortriz V. Orbecido and Lady Kimberly V. Orbecido.
In 1986, Cipriano's wife left for the United States bringing along their son Kristoffer. A few years later,
Cipriano discovered that his wife had been naturalized as an American citizen.
Sometime in 2000, Cipriano learned from his son that his wife had obtained a divorce decree and then
married a certain Innocent Stanley. She, Stanley and her child by him currently live at 5566 A. Walnut
Grove Avenue, San Gabriel, California.
Cipriano thereafter filed with the trial court a petition for authority to remarry invoking Paragraph 2 of Article
26 of the Family Code. No opposition was filed. Finding merit in the petition, the court granted the same.
The Republic, herein petitioner, through the Office of the Solicitor General (OSG), sought reconsideration but
it was denied.
In this petition, the OSG raises a pure question of law:
WHETHER OR NOT RESPONDENT CAN REMARRY UNDER ARTICLE 26 OF THE FAMILY CODE4
The OSG contends that Paragraph 2 of Article 26 of the Family Code is not applicable to the instant case
because it only applies to a valid mixed marriage; that is, a marriage celebrated between a Filipino citizen
and an alien. The proper remedy, according to the OSG, is to file a petition for annulment or for legal
separation.5 Furthermore, the OSG argues there is no law that governs respondent's situation. The OSG
posits that this is a matter of legislation and not of judicial determination.6
For his part, respondent admits that Article 26 is not directly applicable to his case but insists that when his
naturalized alien wife obtained a divorce decree which capacitated her to remarry, he is likewise capacitated
by operation of law pursuant to Section 12, Article II of the Constitution.7
At the outset, we note that the petition for authority to remarry filed before the trial court actually
constituted a petition for declaratory relief. In this connection, Section 1, Rule 63 of the Rules of Court
provides:
RULE 63
DECLARATORY RELIEF AND SIMILAR REMEDIES
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 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.
...
The requisites of a petition for declaratory relief are: (1) there must be a justiciable controversy; (2) the
controversy must be between persons whose interests are adverse; (3) that the party seeking the relief has
a legal interest in the controversy; and (4) that the issue is ripe for judicial determination.8
This case concerns the applicability of Paragraph 2 of Article 26 to a marriage between two Filipino citizens
where one later acquired alien citizenship, obtained a divorce decree, and remarried while in the U.S.A. The
interests of the parties are also adverse, as petitioner representing the State asserts its duty to protect the
institution of marriage while respondent, a private citizen, insists on a declaration of his capacity to remarry.
Respondent, praying for relief, has legal interest in the controversy. The issue raised is also ripe for judicial
determination inasmuch as when respondent remarries, litigation ensues and puts into question the validity
of his second marriage.
Coming now to the substantive issue, does Paragraph 2 of Article 26 of the Family Code apply to the case of
respondent? Necessarily, we must dwell on how this provision had come about in the first place, and what
was the intent of the legislators in its enactment?
Brief Historical Background
On July 6, 1987, then President Corazon Aquino signed into law Executive Order No. 209, otherwise known
as the "Family Code," which took effect on August 3, 1988. Article 26 thereof states:
All marriages solemnized outside the Philippines in accordance with the laws in force in the country where
they were solemnized, and valid there as such, shall also be valid in this country, except those prohibited
under Articles 35, 37, and 38.
On July 17, 1987, shortly after the signing of the original Family Code, Executive Order No. 227 was likewise
signed into law, amending Articles 26, 36, and 39 of the Family Code. A second paragraph was added to
Article 26. As so amended, it now provides:
ART. 26. All marriages solemnized outside the Philippines in accordance with the laws in force in the country
where they were solemnized, and valid there as such, shall also be valid in this country, except those
prohibited under Articles 35(1), (4), (5) and (6), 36, 37 and 38.
Where a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter
validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall
have capacity to remarry under Philippine law. (Emphasis supplied) Ï‚ rÎ±l Î±Ï‰lÎ¹b rÎ± rÃ¿
On its face, the foregoing provision does not appear to govern the situation presented by the case at hand.
It seems to apply only to cases where at the time of the celebration of the marriage, the parties are a
Filipino citizen and a foreigner. The instant case is one where at the time the marriage was solemnized, the
parties were two Filipino citizens, but later on, the wife was naturalized as an American citizen and
subsequently obtained a divorce granting her capacity to remarry, and indeed she remarried an American
citizen while residing in the U.S.A.
Noteworthy, in the Report of the Public Hearings9 on the Family Code, the Catholic Bishops' Conference of
the Philippines (CBCP) registered the following objections to Paragraph 2 of Article 26:
1. The rule is discriminatory. It discriminates against those whose spouses are Filipinos who divorce them
abroad. These spouses who are divorced will not be able to re-marry, while the spouses of foreigners who
validly divorce them abroad can.
2. This is the beginning of the recognition of the validity of divorce even for Filipino citizens. For those whose
foreign spouses validly divorce them abroad will also be considered to be validly divorced here and can re-
marry. We propose that this be deleted and made into law only after more widespread consultation.
(Emphasis supplied.)
Legislative Intent
Records of the proceedings of the Family Code deliberations showed that the intent of Paragraph 2 of Article
26, according to Judge Alicia Sempio-Diy, a member of the Civil Code Revision Committee, is to avoid the
absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a
divorce, is no longer married to the Filipino spouse.
Interestingly, Paragraph 2 of Article 26 traces its origin to the 1985 case of Van Dorn v.
Romillo, Jr.10The Van Dorn case involved a marriage between a Filipino citizen and a foreigner. The Court
held therein that a divorce decree validly obtained by the alien spouse is valid in the Philippines, and
consequently, the Filipino spouse is capacitated to remarry under Philippine law.
Does the same principle apply to a case where at the time of the celebration of the marriage, the parties
were Filipino citizens, but later on, one of them obtains a foreign citizenship by naturalization?cralawl ibra ry
The jurisprudential answer lies latent in the 1998 case of Quita v. Court of Appeals.11 In Quita, the parties
were, as in this case, Filipino citizens when they got married. The wife became a naturalized American
citizen in 1954 and obtained a divorce in the same year. The Court therein hinted, by way ofobiter dictum,
that a Filipino divorced by his naturalized foreign spouse is no longer married under Philippine law and can
thus remarry.
Thus, taking into consideration the legislative intent and applying the rule of reason, we hold that Paragraph
2 of Article 26 should be interpreted to include cases involving parties who, at the time of the celebration of
the marriage were Filipino citizens, but later on, one of them becomes naturalized as a foreign citizen and
obtains a divorce decree. The Filipino spouse should likewise be allowed to remarry as if the other party
were a foreigner at the time of the solemnization of the marriage. To rule otherwise would be to sanction
absurdity and injustice. Where the interpretation of a statute according to its exact and literal import would
lead to mischievous results or contravene the clear purpose of the legislature, it should be construed
according to its spirit and reason, disregarding as far as necessary the letter of the law. A statute may
therefore be extended to cases not within the literal meaning of its terms, so long as they come within its
spirit or intent.12
If we are to give meaning to the legislative intent to avoid the absurd situation where the Filipino spouse
remains married to the alien spouse who, after obtaining a divorce is no longer married to the Filipino
spouse, then the instant case must be deemed as coming within the contemplation of Paragraph 2 of Article
26.
In view of the foregoing, we state the twin elements for the application of Paragraph 2 of Article 26 as
follows:
1. There is a valid marriage that has been celebrated between a Filipino citizen and a foreigner; and cralawl ib rary
2. A valid divorce is obtained abroad by the alien spouse capacitating him or her to remarry.
The reckoning point is not the citizenship of the parties at the time of the celebration of the marriage, but
their citizenship at the time a valid divorce is obtained abroad by the alien spouse capacitating the latter to
remarry.
In this case, when Cipriano's wife was naturalized as an American citizen, there was still a valid marriage
that has been celebrated between her and Cipriano. As fate would have it, the naturalized alien wife
subsequently obtained a valid divorce capacitating her to remarry. Clearly, the twin requisites for the
application of Paragraph 2 of Article 26 are both present in this case. Thus Cipriano, the "divorced" Filipino
spouse, should be allowed to remarry.
We are also unable to sustain the OSG's theory that the proper remedy of the Filipino spouse is to file either
a petition for annulment or a petition for legal separation. Annulment would be a long and tedious process,
and in this particular case, not even feasible, considering that the marriage of the parties appears to have all
the badges of validity. On the other hand, legal separation would not be a sufficient remedy for it would not
sever the marriage tie; hence, the legally separated Filipino spouse would still remain married to the
naturalized alien spouse.
However, we note that the records are bereft of competent evidence duly submitted by respondent
concerning the divorce decree and the naturalization of respondent's wife. It is settled rule that one who
alleges a fact has the burden of proving it and mere allegation is not evidence.13
Accordingly, for his plea to prosper, respondent herein must prove his allegation that his wife was
naturalized as an American citizen. Likewise, before a foreign divorce decree can be recognized by our own
courts, the party pleading it must prove the divorce as a fact and demonstrate its conformity to the foreign
law allowing it.14 Such foreign law must also be proved as our courts cannot take judicial notice of foreign
laws. Like any other fact, such laws must be alleged and proved.15Furthermore, respondent must also show
that the divorce decree allows his former wife to remarry as specifically required in Article 26. Otherwise,
there would be no evidence sufficient to declare that he is capacitated to enter into another marriage.
Nevertheless, we are unanimous in our holding that Paragraph 2 of Article 26 of the Family Code (E.O. No.
209, as amended by E.O. No. 227), should be interpreted to allow a Filipino citizen, who has been divorced
by a spouse who had acquired foreign citizenship and remarried, also to remarry. However, considering that
in the present petition there is no sufficient evidence submitted and on record, we are unable to declare,
based on respondent's bare allegations that his wife, who was naturalized as an American citizen, had
obtained a divorce decree and had remarried an American, that respondent is now capacitated to remarry.
Such declaration could only be made properly upon respondent's submission of the aforecited evidence in
his favor.
ACCORDINGLY, the petition by the Republic of the Philippines is GRANTED. The assailed Decisiondated
May 15, 2002, and Resolutiondated July 4, 2002, of the Regional Trial Court of Molave, Zamboanga del Sur,
Branch 23, are hereby SET ASIDE.
No pronouncement as to costs.
SO ORDERED.
THIRD DIVISION
[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, v. 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 Damages2against
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, Consuelo's 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
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 latter's 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 latter's 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 attorney's fees, because the latter's 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 thanP20,000.00; 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. Petitioner's 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.
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.18The 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:
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 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 exceedP20,000.00,
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:
xxx
(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, attorney's 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 latter's 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 one's recovery of possession over the real property as
owner.27 Ï‚Î· Î±Ã± rÎ¿bl Îµ Å¡ Î½Î¹râ€ Ï… Î±l lÎ± Ï‰ l Î¹brÎ±rÃ¿
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
EN BANC
G.R. NO. 202242 : April 16, 2013
FRANCISCO I. CHAVEZ, Petitioner, v. JUDICIALAND BAR COUNCIL, SEN. FRANCIS JOSEPH G.

ESCUDERO and REP. NIEL C. TUPAS, JR., Respondents.
RESOLUTION
MENDOZA, J.:
This resolves the Motion for Reconsideration1 filed by the Office of the Solicitor General (OSG) on behalf of
the respondents, Senator Francis Joseph G. Escudero and Congressman Niel C. Tupas, Jr. (respondents),
duly opposed2 by the petitioner, former Solicitor General Francisco I. Chavez (petitioner).
By way of recapitulation, the present action stemmed from the unexpected departure of former Chief Justice
Renato C. Corona on May 29, 2012, and the nomination of petitioner, as his potential successor. In his
initiatory pleading, petitioner asked the Court to determine 1] whether the first paragraph of Section 8,
Article VIII of the 1987 Constitution allows more than one (1) member of Congress to sit in the JBC; and 2]
if the practice of having two (2) representatives from each House of Congress with one (1) vote each is
sanctioned by the Constitution.
On July 17, 2012, the Court handed down the assailed subject decision, disposing the same in the following
manner: chanrob lesvi rtua lawlib rary
WHEREFORE, the petition is GRANTED. The current numerical composition of the Judicial and Bar Council is
declared UNCONSTITUTIONAL. The Judicial and Bar Council is hereby enjoined to reconstitute itself so that
only one (1) member of Congress will sit as a representative in its proceedings, in accordance with Section
8(1), Article VIII of the 1987 Constitution.
This disposition is immediately executory.
SO ORDERED.
On July 31, 2012, following respondents' motion for reconsideration and with due regard to Senate
Resolution Nos. 111,3 112,4 113,5 and 114,6 the Court set the subject motion for oral arguments on August
2, 2012.7 On August 3, 2012, the Court discussed the merits of the arguments and agreed, in the
meantime, to suspend the effects of the second paragraph of the dispositive portion of the July 17, 2012
Decision which decreed that it was immediately executory. The decretal portion of the August 3, 2012
Resolution8 reads: c hanroblesv irt ualawli bra ry
WHEREFORE, the parties are hereby directed to submit their respective MEMORANDA within ten (10) days
from notice. Until further orders, the Court hereby SUSPENDS the effect of the second paragraph of the
dispositive portion of the Court's July 17, 2012 Decision, which reads: "This disposition is immediately
executory."9 chanrob lesvi rtualaw lib rary
Pursuant to the same resolution, petitioner and respondents filed their respective memoranda.10 chanroble svi rtualawl ibrary
Brief Statement of the Antecedents
In this disposition, it bears reiterating that from the birth of the Philippine Republic, the exercise of
appointing members of the Judiciary has always been the exclusive prerogative of the executive and
legislative branches of the government. Like their progenitor of American origins, both the Malolos
Constitution11 and the 1935 Constitution12 vested the power to appoint the members of the Judiciary in the
President, subject to confirmation by the Commission on Appointments. It was during these times that the
country became witness to the deplorable practice of aspirants seeking confirmation of their appointment in
the Judiciary to ingratiate themselves with the members of the legislative body.13 chan roble svirtualawl ibra ry
Then, under the 1973 Constitution,14 with the fusion of the executive and legislative powers in one body, the
appointment of judges and justices ceased to be subject of scrutiny by another body. The power became
exclusive and absolute to the Executive, subject only to the condition that the appointees must have all the
qualifications and none of the disqualifications.
Prompted by the clamor to rid the process of appointments to the Judiciary of the evils of political pressure
and partisan activities,15 the members of the Constitutional Commission saw it wise to create a separate,
competent and independent body to recommend nominees to the President.
Thus, it conceived of a body, representative of all the stakeholders in the judicial appointment process, and
called it the Judicial and Bar Council (JBC). The Framers carefully worded Section 8, Article VIII of the 1987
Constitution in this wise: chan roble svirtualawl ibra ry
Section 8. (1) A Judicial and Bar Council is hereby created under the supervision of the Supreme Court
composed of the Chief Justice as ex officio Chairman, the Secretary of Justice, and a representative of the
Congress as ex officio Members, a representative of the Integrated Bar, a professor of law, a retired Member
of the Supreme Court, and a representative of the private sector.
From the moment of the creation of the JBC, Congress designated one (1) representative to sit in the JBC to
act as one of the ex-officio members.16 Pursuant to the constitutional provision that Congress is entitled to
one (1) representative, each House sent a representative to the JBC, not together, but alternately or by
rotation.
In 1994, the seven-member composition of the JBC was substantially altered. An eighth member was added
to the JBC as the two (2) representatives from Congress began sitting simultaneously in the JBC, with each
having one-half (1/2) of a vote.17chan roblesv irtualawli bra ry
In 2001, the JBC En Banc decided to allow the representatives from the Senate and the House of
Representatives one full vote each.18 It has been the situation since then.
Grounds relied upon by Respondents
Through the subject motion, respondents pray that the Court reconsider its decision and dismiss the petition
on the following grounds: 1] that allowing only one representative from Congress in the JBC would lead to
absurdity considering its bicameral nature; 2] that the failure of the Framers to make the proper adjustment
when there was a shift from unilateralism to bicameralism was a plain oversight; 3] that two representatives
from Congress would not subvert the intention of the Framers to insulate the JBC from political partisanship;
and 4] that the rationale of the Court in declaring a seven-member composition would provide a solution
should there be a stalemate is not exactly correct.
While the Court may find some sense in the reasoning in amplification of the third and fourth grounds listed
by respondents, still, it finds itself unable to reverse the assailed decision on the principal issues covered by
the first and second grounds for lack of merit. Significantly, the conclusion arrived at, with respect to the
first and second grounds, carries greater bearing in the final resolution of this case.
As these two issues are interrelated, the Court shall discuss them jointly.
Ruling of the Court
The Constitution evinces the direct action of the Filipino people by which the fundamental powers of
government are established, limited and defined and by which those powers are distributed among the
several departments for their safe and useful exercise for the benefit of the body politic.19 The Framers
reposed their wisdom and vision on one suprema lex to be the ultimate expression of the principles and the
framework upon which government and society were to operate. Thus, in the interpretation of the
constitutional provisions, the Court firmly relies on the basic postulate that the Framers mean what they
say. The language used in the Constitution must be taken to have been deliberately chosen for a definite
purpose. Every word employed in the Constitution must be interpreted to exude its deliberate intent which
must be maintained inviolate against disobedience and defiance. What the Constitution clearly says,
according to its text, compels acceptance and bars modification even by the branch tasked to interpret it.
For this reason, the Court cannot accede to the argument of plain oversight in order to justify constitutional
construction. As stated in the July 17, 2012 Decision, in opting to use the singular letter "a" to describe
"representative of Congress," the Filipino people through the Framers intended that Congress be entitled to
only one (1) seat in the JBC. Had the intention been otherwise, the Constitution could have, in no uncertain
terms, so provided, as can be read in its other provisions.
A reading of the 1987 Constitution would reveal that several provisions were indeed adjusted as to be in
tune with the shift to bicameralism. One example is Section 4, Article VII, which provides that a tie in the
presidential election shall be broken "by a majority of all the Members of both Houses of the Congress,
voting separately."20 Another is Section 8 thereof which requires the nominee to replace the Vice-President
to be confirmed "by a majority of all the Members of both Houses of the Congress, voting
separately."21 Similarly, under Section 18, the proclamation of martial law or the suspension of the privilege
of the writ of habeas corpus may be revoked or continued by the Congress, voting separately, by a vote of
at least a majority of all its Members."22 In all these provisions, the bicameral nature of Congress was
recognized and, clearly, the corresponding adjustments were made as to how a matter would be handled
and voted upon by its two Houses.
Thus, to say that the Framers simply failed to adjust Section 8, Article VIII, by sheer inadvertence, to their
decision to shift to a bicameral form of the legislature, is not persuasive enough. Respondents cannot just
lean on plain oversight to justify a conclusion favorable to them. It is very clear that the Framers were not
keen on adjusting the provision on congressional representation in the JBC because it was not in the
exercise of its primary function to legislate. JBC was created to support the executive power to appoint, and
Congress, as one whole body, was merely assigned a contributory non-legislative function.
The underlying reason for such a limited participation can easily be discerned. Congress has two (2) Houses.
The need to recognize the existence and the role of each House is essential considering that the Constitution
employs precise language in laying down the functions which particular House plays, regardless of whether
the two Houses consummate an official act by voting jointly or separately. Whether in the exercise of its
legislative23 or its non-legislative functions such as inter alia, the power of appropriation,24 the declaration
of an existence of a state of war,25 canvassing of electoral returns for the President and Vice-
President,26 and impeachment,27 the dichotomy of each House must be acknowledged and recognized
considering the interplay between these two Houses. In all these instances, each House is constitutionally
granted with powers and functions peculiar to its nature and with keen consideration to 1) its relationship
with the other chamber; and 2) in consonance with the principle of checks and balances, as to the other
branches of government.
In checkered contrast, there is essentially no interaction between the two Houses in their participation in the
JBC. No mechanism is required between the Senate and the House of Representatives in the screening and
nomination of judicial officers. Rather, in the creation of the JBC, the Framers arrived at a unique system by
adding to the four (4) regular members, three (3) representatives from the major branches of government -
the Chief Justice as ex-officio Chairman (representing the Judicial Department), the Secretary of Justice
(representing the Executive Department), and a representative of the Congress (representing the Legislative
Department). The total is seven (7), not eight. In so providing, the Framers simply gave recognition to the
Legislature, not because it was in the interest of a certain constituency, but in reverence to it as a major
branch of government.
On this score, a Member of Congress, Hon. Simeon A. Datumanong, from the Second District of
Maguindanao, submitted his well-considered position28 to then Chief Justice Reynato S. Puno: chanrob lesvi rtualaw lib rary
I humbly reiterate my position that there should be only one representative of Congress in the JBC in
accordance with Article VIII, Section 8 (1) of the 1987 Constitution x x x.
The aforesaid provision is clear and unambiguous and does not need any further interpretation. Perhaps, it
is apt to mention that the oft-repeated doctrine that "construction and interpretation come only after it has
been demonstrated that application is impossible or inadequate without them."
Further, to allow Congress to have two representatives in the Council, with one vote each, is to negate the
principle of equality among the three branches of government which is enshrined in the Constitution.
In view of the foregoing, I vote for the proposition that the Council should adopt the rule of single
representation of Congress in the JBC in order to respect and give the right meaning to the above-quoted
provision of the Constitution. (Emphases and underscoring supplied)
On March 14, 2007, then Associate Justice Leonardo A. Quisumbing, also a JBC Consultant, submitted to the
Chief Justice and ex-officio JBC Chairman his opinion,29 which reads: chan roblesv irt ualawli bra ry
8. Two things can be gleaned from the excerpts and citations above: the creation of the JBC is intended to
curtail the influence of politics in Congress in the appointment of judges, and the understanding is that
seven (7) persons will compose the JBC. As such, the interpretation of two votes for Congress runs counter
to the intendment of the framers. Such interpretation actually gives Congress more influence in the
appointment of judges. Also, two votes for Congress would increase the number of JBC members to eight,
which could lead to voting deadlock by reason of even-numbered membership, and a clear violation of 7
enumerated members in the Constitution. (Emphases and underscoring supplied)
In an undated position paper,30 then Secretary of Justice Agnes VST Devanadera opined: cha nrob lesvi rtua lawlib rary
As can be gleaned from the above constitutional provision, the JBC is composed of seven (7) representatives
coming from different sectors. From the enumeration it is patent that each category of members pertained
to a single individual only. Thus, while we do not lose sight of the bicameral nature of our legislative
department, it is beyond dispute that Art. VIII, Section 8 (1) of the 1987 Constitution is explicit and specific
that "Congress" shall have only "xxx a representative." Thus, two (2) representatives from Congress would
increase the number of JBC members to eight (8), a number beyond what the Constitution has
contemplated. (Emphases and underscoring supplied)
In this regard, the scholarly dissection on the matter by retired Justice Consuelo Ynares-Santiago, a former
JBC consultant, is worth reiterating.31 Thus:chanrob lesvi rtua lawlib rary
A perusal of the records of the Constitutional Commission reveals that the composition of the JBC reflects
the Commission's desire "to have in the Council a representation for the major elements of the community."
xxx The ex-officio members of the Council consist of representatives from the three main branches of
government while the regular members are composed of various stakeholders in the judiciary. The
unmistakeable tenor of Article VIII, Section 8(1) was to treat each ex-officio member as representing one
co-equal branch of government. xxx Thus, the JBC was designed to have seven voting members with the
three ex-officio members having equal say in the choice of judicial nominees.
xxx
No parallelism can be drawn between the representative of Congress in the JBC and the exercise by
Congress of its legislative powers under Article VI and constituent powers under Article XVII of the
Constitution. Congress, in relation to the executive and judicial branches of government, is constitutionally
treated as another co-equal branch in the matter of its representative in the JBC. On the other hand, the
exercise of legislative and constituent powers requires the Senate and the House of Representatives to
coordinate and act as distinct bodies in furtherance of Congress' role under our constitutional scheme. While
the latter justifies and, in fact, necessitates the separateness of the two Houses of Congress as they relate
inter se, no such dichotomy need be made when Congress interacts with the other two co-equal branches of
government.
It is more in keeping with the co-equal nature of the three governmental branches to assign the same
weight to considerations that any of its representatives may have regarding aspiring nominees to the
judiciary. The representatives of the Senate and the House of Representatives act as such for one branch
and should not have any more quantitative influence as the other branches in the exercise of prerogatives
evenly bestowed upon the three. Sound reason and principle of equality among the three branches support
this conclusion. [Emphases and underscoring supplied]
The argument that a senator cannot represent a member of the House of Representatives in the JBC and
vice-versa is, thus, misplaced. In the JBC, any member of Congress, whether from the Senate or the House
of Representatives, is constitutionally empowered to represent the entire Congress. It may be a constricted
constitutional authority, but it is not an absurdity.
From this score stems the conclusion that the lone representative of Congress is entitled to one full vote.
This pronouncement effectively disallows the scheme of splitting the said vote into half (1/2), between two
representatives of Congress. Not only can this unsanctioned practice cause disorder in the voting process, it
is clearly against the essence of what the Constitution authorized. After all, basic and reasonable is the rule
that what cannot be legally done directly cannot be done indirectly. To permit or tolerate the splitting of one
vote into two or more is clearly a constitutional circumvention that cannot be countenanced by the Court.
Succinctly put, when the Constitution envisioned one member of Congress sitting in the JBC, it is sensible to
presume that this representation carries with him one full vote.
It is also an error for respondents to argue that the President, in effect, has more influence over the JBC
simply because all of the regular members of the JBC are his appointees. The principle of checks and
balances is still safeguarded because the appointment of all the regular members of the JBC is subject to a
stringent process of confirmation by the Commission on Appointments, which is composed of members of
Congress.
Respondents' contention that the current irregular composition of the JBC should be accepted, simply
because it was only questioned for the first time through the present action, deserves scant consideration.
Well-settled is the rule that acts done in violation of the Constitution no matter how frequent, usual or
notorious cannot develop or gain acceptance under the doctrine of estoppel or laches, because once an act
is considered as an infringement of the Constitution it is void from the very beginning and cannot be the
source of any power or authority.
It would not be amiss to point out, however, that as a general rule, an unconstitutional act is not a law; it
confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it
has not been passed at all. This rule, however, is not absolute. Under the doctrine of operative facts, actions
previous to the declaration of unconstitutionality are legally recognized. They are not nullified. This is
essential in the interest of fair play. To reiterate the doctrine enunciated in Planters Products, Inc. v.
Fertiphil Corporation:32chan roble svi rtualawl ib rary
The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair
play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a
determination of unconstitutionality is an operative fact and may have consequences which cannot always
be ignored. The past cannot always be erased by a new judicial declaration. The doctrine is applicable when
a declaration of unconstitutionality will impose an undue burden on those who have relied on the invalid law.
Thus, it was applied to a criminal case when a declaration of unconstitutionality would put the accused in
double jeopardy or would put in limbo the acts done by a municipality in reliance upon a law creating it.33 chanrob lesvi rtualaw lib rary
Under the circumstances, the Court finds the exception applicable in this case and holds that
notwithstanding its finding of unconstitutionality in the current composition of the JBC, all its prior official
actions are nonetheless valid.
Considering that the Court is duty bound to protect the Constitution which was ratified by the direct action
of the Filipino people, it cannot correct what respondents perceive as a mistake in its mandate. Neither can
the Court, in the exercise of its power to interpret the spirit of the Constitution, read into the law something
that is contrary to its express provisions and justify the same as correcting a perceived inadvertence. To do
so would otherwise sanction the Court action of making amendment to the Constitution through a judicial
pronouncement.
In other words, the Court cannot supply the legislative omission. According to the rule of casus omissus "a
case omitted is to be held as intentionally omitted."34 "The principle proceeds from a reasonable certainty
that a particular person, object or thing has been omitted from a legislative enumeration."35 Pursuant to
this, "the Court cannot under its power of interpretation supply the omission even though the omission may
have resulted from inadvertence or because the case in question was not foreseen or contemplated."36 "The
Court cannot supply what it thinks the legislature would have supplied had its attention been called to the
omission, as that would be judicial legislation."37 chan roble svi rtualaw lib rary
Stated differently, the Court has no power to add another member by judicial construction.
The call for judicial activism fails to stir the sensibilities of the Court tasked to guard the Constitution against
usurpation. The Court remains steadfast in confining its powers in the sphere granted by the Constitution
itself. Judicial activism should never be allowed to become judicial exuberance.38 In cases like this, no
amount of practical logic or convenience can convince the Court to perform either an excision or an insertion
that will change the manifest intent of the Framers. To broaden the scope of congressional representation in
the JBC is tantamount to the inclusion of a subject matter which was not included in the provision as
enacted. True to its constitutional mandate, the Court cannot craft and tailor constitutional provisions in
order to accommodate all of situations no matter how ideal or reasonable the proposed solution may sound.
To the exercise of this intrusion, the Court declines.
WHEREFORE, the Motion for Reconsideration filed by respondents is hereby DENIED.
The suspension of the effects of the second paragraph of the dispositive portion of the July 17, 2012
Decision of the Court, which reads, "This disposition is immediately executory," is hereby LIFTED.
SO ORDERED.
SECOND DIVISION
G.R. No. 181359, August 05, 2013
SPOUSES CLEMENCIO C. SABITSANA, JR. AND MA. ROSARIO M.

SABITSANA, Petitioners, v.JUANITO F. MUERTEGUI, REPRESENTED BY HIS
ATTORNEY-IN-FACT DOMINGO A. MUERTEGUI, JR., Respondent.
DECISION
DEL CASTILLO, J.:
A lawyer may not, for his own personal interest and benefit, gamble on his client’s word, believing it at one
time and disbelieving it the next. He owes his client his undivided loyalty.
Assailed in this Petition for Review on Certiorari1 are the January 25, 2007 Decision2 of the Court of Appeals
(CA) which denied the appeal in CA-G.R. CV No. 79250, and its January 11, 2008 Resolution3denying
petitioner’s Motion for Reconsideration.4 cralaw virtualaw l ibra ry
Factual Antecedents
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized Deed of Sale5 in favor of
respondent Juanito Muertegui6 (Juanito) over a 7,500-square meter parcel of unregistered land (the lot)
located in Dalutan Island, Talahid, Almeira, Biliran, Leyte del Norte covered by Tax Declaration (TD) No.
1996 issued in 1985 in Garcia’s name.7 cralaw virtua law lib rary
Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother Domingo Jr. took actual possession of
the lot and planted thereon coconut and ipil-ipil trees. They also paid the real property taxes on the lot for
the years 1980 up to 1998.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer, petitioner Atty. Clemencio C.
Sabitsana, Jr. (Atty. Sabitsana), through a notarized deed of absolute sale.8 The sale was registered with
the Register of Deeds on February 6, 1992.9 TD No. 1996 was cancelled and a new one, TD No.
5327,10 was issued in Atty. Sabitsana’s name. Although Domingo Jr. and Sr. paid the real estate taxes,
Atty. Sabitsana also paid real property taxes in 1992, 1993, and 1999. In 1996, he introduced concrete
improvements on the property, which shortly thereafter were destroyed by a typhoon.
When Domingo Sr. passed away, his heirs applied for registration and coverage of the lot under the Public
Land Act or Commonwealth Act No. 141. Atty. Sabitsana, in a letter11 dated August 24, 1998 addressed to
the Department of Environment and Natural Resources’ CENRO/PENRO office in Naval, Biliran, opposed the
application, claiming that he was the true owner of the lot. He asked that the application for registration be
held in abeyance until the issue of conflicting ownership has been resolved.
On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Civil Case No. B-109712 for
quieting of title and preliminary injunction, against herein petitioners Atty. Sabitsana and his wife, Rosario,
claiming that they bought the lot in bad faith and are exercising acts of possession and ownership over the
same, which acts thus constitute a cloud over his title. The Complaint13 prayed, among others, that the
Sabitsana Deed of Sale, the August 24, 1998 letter, and TD No. 5327 be declared null and void and of no
effect; that petitioners be ordered to respect and recognize Juanito’s title over the lot; and that moral and
exemplary damages, attorney’s fees, and litigation expenses be awarded to him.
In their Answer with Counterclaim,14 petitioners asserted mainly that the sale to Juanito is null and void
absent the marital consent of Garcia’s wife, Soledad Corto (Soledad); that they acquired the property in
good faith and for value; and that the Complaint is barred by prescription and laches. They likewise insisted
that the Regional Trial Court (RTC) of Naval, Biliran did not have jurisdiction over the case, which involved
title to or interest in a parcel of land the assessed value of which is merely P1,230.00.
The evidence and testimonies of the respondent’s witnesses during trial reveal that petitioner Atty.
Sabitsana was the Muertegui family’s lawyer at the time Garcia sold the lot to Juanito, and that as such, he
was consulted by the family before the sale was executed; that after the sale to Juanito, Domingo Sr.
entered into actual, public, adverse and continuous possession of the lot, and planted the same to coconut
and ipil-ipil; and that after Domingo Sr.’s death, his wife Caseldita, succeeded him in the possession and
exercise of rights over the lot.
On the other hand, Atty. Sabitsana testified that before purchasing the lot, he was told by a member of the
Muertegui family, Carmen Muertegui Davies (Carmen), that the Muertegui family had bought the lot, but she
could not show the document of sale; that he then conducted an investigation with the offices of the
municipal and provincial assessors; that he failed to find any document, record, or other proof of the sale by
Garcia to Juanito, and instead discovered that the lot was still in the name of Garcia; that given the
foregoing revelations, he concluded that the Muerteguis were merely bluffing, and that they probably did not
want him to buy the property because they were interested in buying it for themselves considering that it
was adjacent to a lot which they owned; that he then proceeded to purchase the lot from Garcia; that after
purchasing the lot, he wrote Caseldita in October 1991 to inform her of the sale; that he then took
possession of the lot and gathered ipil-ipil for firewood and harvested coconuts and calamansi from the lot;
and that he constructed a rip-rap on the property sometime in 1996 and 1997.
Ruling of the Regional Trial Court
On October 28, 2002, the trial court issued its Decision15 which decrees as follows:
WHEREFORE, in view of the foregoing considerations, this Court finds in favor of the plaintiff and against the
defendants, hereby declaring the Deed of Sale dated 2 September 1981 as valid and preferred while the
Deed of Absolute Sale dated 17 October 1991 and Tax Declaration No. 5327 in the name of Atty. Clemencio
C. Sabitsana, Jr. are VOID and of no legal effect.
The Provincial Assessor and the Municipal Assessor of Naval are directed to cancel Tax Declaration No. 5327
as void and done in bad faith.
Further, Atty. Clemencio C. Sabitsana, Jr. is ordered to pay plaintiff Juanito Muertigui, represented by his
attorney-in-fact Domingo Muertigui, Jr. the amount[s] of: cralawl ibra ry
a) P30,000.00 [as] attorney’s fees; chanr0ble svirtualawl ibra ry
b) P10,000.00 [as] litigation expenses; and
c) Costs.
SO ORDERED.16 cralaw virtua law lib rary
The trial court held that petitioners are not buyers in good faith. Petitioner Atty. Sabitsana was the
Muertegui family’s lawyer, and was informed beforehand by Carmen that her family had purchased the lot;
thus, he knew of the sale to Juanito. After conducting an investigation, he found out that the sale was not
registered. With this information in mind, Atty. Sabitsana went on to purchase the same lot and raced to
register the sale ahead of the Muerteguis, expecting that his purchase and prior registration would prevail
over that of his clients, the Muerteguis. Applying Article 1544 of the Civil Code,17 the trial court declared
that even though petitioners were first to register their sale, the same was not done in good faith. And
because petitioners’ registration was not in good faith, preference should be given to the sale in favor of
Juanito, as he was the first to take possession of the lot in good faith, and the sale to petitioners must be
declared null and void for it casts a cloud upon the Muertegui title.
Petitioners filed a Motion for Reconsideration18 but the trial court denied19 the same.
Ruling of the Court of Appeals

Petitioners appealed to the CA20 asserting that the sale to Juanito was null and void for lack of marital
consent; that the sale to them is valid; that the lower court erred in applying Article 1544 of the Civil Code;
that the Complaint should have been barred by prescription, laches and estoppel; that respondent had no
cause of action; that respondent was not entitled to an award of attorney’s fees and litigation expenses; and
that they should be the ones awarded attorney’s fees and litigation expenses.
The CA, through its questioned January 25, 2007 Decision,21 denied the appeal and affirmed the trial court’s
Decision in toto. It held that even though the lot admittedly was conjugal property, the absence of Soledad’s
signature and consent to the deed did not render the sale to Juanito absolutely null and void, but merely
voidable. Since Garcia and his wife were married prior to the effectivity of the Family Code, Article 173 of
the Civil Code22 should apply; and under the said provision, the disposition of conjugal property without the
wife’s consent is not void, but merely voidable. In the absence of a decree annulling the deed of sale in
favor of Juanito, the same remains valid.
The CA added that the fact that the Deed of Sale in favor of Juanito was not notarized could not affect its
validity. As against the notarized deed of sale in favor of petitioners, the CA held that the sale in favor of
Juanito still prevails. Applying Article 1544 of the Civil Code, the CA said that the determining factor is
petitioners’ good faith, or the lack of it. It held that even though petitioners were first to register the sale in
their favor, they did not do so in good faith, for they already knew beforehand of Garcia’s prior sale to
Juanito. By virtue of Atty. Sabitsana’s professional and confidential relationship with the Muertegui family,
petitioners came to know about the prior sale to the Muerteguis and the latter’s possession of the lot, and
yet they pushed through with the second sale. Far from acting in good faith, petitioner Atty. Sabitsana used
his legal knowledge to take advantage of his clients by registering his purchase ahead of them.
Finally, the CA declared that Juanito, as the rightful owner of the lot, possessed the requisite cause of action
to institute the suit for quieting of title and obtain judgment in his favor, and is entitled as well to an award
for attorney’s fees and litigation expenses, which the trial court correctly held to be just and equitable under
the circumstances.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is DENIED and the Decision dated October 28, 2002
of the Regional Trial Court, 8th Judicial Region, Branch 16, Naval[,] Biliran, is hereby AFFIRMED. Costs
against defendants-appellants.
SO ORDERED.23 cralaw virtua law lib rary
Issues
Petitioners now raise the following issues for resolution:
I. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE REGIONAL TRIAL COURT DID NOT
HAVE JURISDICTION OVER THE CASE IN VIEW OF THE FACT THAT THE ASSESSED VALUE OF THE
SUBJECT LAND WAS ONLY P1,230.00 (AND STATED MARKET VALUE OF ONLY P3,450.00).
II. THE COURT OF APPEALS ERRED IN APPLYING ART. 1544 OF THE CIVIL CODE INSTEAD OF THE
PROPERTY REGISTRATION DECREE (P.D. NO. 1529) CONSIDERING THAT THE SUBJECT LAND WAS
UNREGISTERED.
III. THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE COMPLAINT WAS ALREADY BARRED
[BY] LACHES AND THE STATUTE OF LIMITATIONS.
IV. THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE REGIONAL TRIAL COURT
ORDERING THE PETITIONERS TO PAY ATTORNEY’S FEES AND LITIGATION EXPENSES TO THE
RESPONDENT.24 cralaw virtua law lib rary
Petitioners’ Arguments
Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over the case. They argue that
since the assessed value of the lot was a mere P1,230.00, jurisdiction over the case lies with the first level
courts, pursuant to Republic Act No. 7691,25 which expanded their exclusive original jurisdiction to include
“all civil actions which involve title to, or 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 exceed Fifty thousand pesos
(P50,000.00) exclusive of interest, damages of whatever kind, attorney’s fees, litigation expenses and
costs.”26 Petitioners thus conclude that the Decision in Civil Case No. B-1097 is null and void for lack of
jurisdiction.
Petitioners next insist that the lot, being unregistered land, is beyond the coverage of Article 1544 of the
Civil Code, and instead, the provisions of Presidential Decree (PD) No. 1529 should apply. This being the
case, the Deed of Sale in favor of Juanito is valid only as between him and the seller Garcia, pursuant to
Section 113 of PD 1529;27 it cannot affect petitioners who are not parties thereto.
On the issue of estoppel, laches and prescription, petitioners insist that from the time they informed the
Muerteguis in writing about their purchase of the lot, or in October 1991, the latter did not notify them of
their prior purchase of the lot, nor did respondent interpose any objection to the sale in their favor. It was
only in 1998 that Domingo Jr. showed to petitioners the unnotarized deed of sale. According to petitioners,
this seven-year period of silence and inaction on the Muerteguis’ part should be taken against them and
construed as neglect on their part to assert their rights for an unreasonable length of time. As such, their
action to quiet title should be deemed barred by laches and estoppel.
Lastly, petitioners take exception to the award of attorney’s fees and litigation expenses, claiming that since
there was no bad faith on their part, such award may not be considered just and equitable under the
circumstances. Still, an award of attorney’s fees should remain the exception rather than the rule; and in
awarding the same, there must have been an express finding of facts and law justifying such award, a
requirement that is absent in this case.
Petitioners thus pray for the reversal of the questioned CA Decision and Resolution; the dismissal of the
Complaint in Civil Case No. B-1097; the deletion of the award of attorney’s fees and litigation expenses in
respondent’s favor; and a declaration that they are the true and rightful owners of the lot.
Respondent’s Arguments
Respondent, on the other hand, counters that a suit for quieting of title is one whose subject matter is
incapable of pecuniary estimation, and thus falls within the jurisdiction of the RTC. He likewise insists that
Article 1544 applies to the case because there is a clear case of double sale of the same property to different
buyers, and the bottom line thereof lies in petitioners’ lack of good faith in entering into the subsequent
sale. On the issue of laches/estoppel, respondent echoes the CA’s view that he was persistent in the
exercise of his rights over the lot, having previously filed a complaint for recovery of the lot, which
unfortunately was dismissed based on technicality.
On the issue of attorney’s fees and litigation expenses, respondent finds refuge in Article 2208 of the Civil
Code,28 citing three instances which fortify the award in his favor – petitioners’ acts compelled him to
litigate and incur expenses to protect his interests; their gross and evident bad faith in refusing to recognize
his ownership and possession over the lot; and the justness and equitableness of his case.
Our Ruling
The Petition must be denied.
The Regional Trial Court has jurisdiction over the suit for quieting of title.
On the question of jurisdiction, it is clear under the Rules that an action for quieting of title may be
instituted in the RTCs, regardless of the assessed value of the real property in dispute. Under Rule 63 of the
Rules of Court,29 an action to quiet title to real property or remove clouds therefrom may be brought in the
appropriate RTC.
It must be remembered that the suit for quieting of title was prompted by petitioners’ August 24, 1998
letter-opposition to respondent’s application for registration. Thus, in order to prevent30 a cloud from being
cast upon his application for a title, respondent filed Civil Case No. B-1097 to obtain a declaration of his
rights. In this sense, the action is one for declaratory relief, which properly falls within the jurisdiction of the
RTC pursuant to Rule 63 of the Rules.
Article 1544 of the Civil Code does not apply to sales involving unregistered land.
Both the trial court and the CA are, however, wrong in applying Article 1544 of the Civil Code. Both courts
seem to have forgotten that the provision does not apply to sales involving unregistered land. Suffice it to
state that the issue of the buyer’s good or bad faith is relevant only where the subject of the sale is
registered land, and the purchaser is buying the same from the registered owner whose title to the land is
clean. In such case, the purchaser who relies on the clean title of the registered owner is protected if he is a
purchaser in good faith for value.31 cralaw virtualaw li bra ry
Act No. 3344 applies to sale of unregistered lands.
What applies in this case is Act No. 3344,32 as amended, which provides for the system of recording of
transactions over unregistered real estate. Act No. 3344 expressly declares that any registration made shall
be without prejudice to a third party with a better right. The question to be resolved therefore is: who
between petitioners and respondent has a better right to the disputed lot?
Respondent has a better right to the lot.
The sale to respondent Juanito was executed on September 2, 1981 via an unnotarized deed of sale, while
the sale to petitioners was made via a notarized document only on October 17, 1991, or ten years
thereafter. Thus, Juanito who was the first buyer has a better right to the lot, while the subsequent sale to
petitioners is null and void, because when it was made, the seller Garcia was no longer the owner of the
lot. Nemo dat quod non habet.
The fact that the sale to Juanito was not notarized does not alter anything, since the sale between him and
Garcia remains valid nonetheless. Notarization, or the requirement of a public document under the Civil
Code,33 is only for convenience, and not for validity or enforceability.34 And because it remained valid as
between Juanito and Garcia, the latter no longer had the right to sell the lot to petitioners, for his ownership
thereof had ceased.
Nor can petitioners’ registration of their purchase have any effect on Juanito’s rights. The mere registration
of a sale in one’s favor does not give him any right over the land if the vendor was no longer the owner of
the land, having previously sold the same to another even if the earlier sale was unrecorded.35 Neither
could it validate the purchase thereof by petitioners, which is null and void. Registration does not vest title;
it is merely the evidence of such title. Our land registration laws do not give the holder any better title than
what he actually has.36 cralaw virt ualaw lib ra ry
Specifically, we held in Radiowealth Finance Co. v. Palileo37 that:
Under Act No. 3344, registration of instruments affecting unregistered lands is ‘without prejudice to a third
party with a better right.’ The aforequoted phrase has been held by this Court to mean that the mere
registration of a sale in one’s favor does not give him any right over the land if the vendor was not anymore
the owner of the land having previously sold the same to somebody else even if the earlier sale was
unrecorded.
Petitioners’ defense of prescription, laches and estoppel are unavailing since their claim is based on a null
and void deed of sale. The fact that the Muerteguis failed to interpose any objection to the sale in
petitioners’ favor does not change anything, nor could it give rise to a right in their favor; their purchase
remains void and ineffective as far as the Muerteguis are concerned.
The award of attorney’s fees and litigation expenses is proper because of petitioners’ bad faith.
Petitioners’ actual and prior knowledge of the first sale to Juanito makes them purchasers in bad faith. It
also appears that petitioner Atty. Sabitsana was remiss in his duties as counsel to the Muertegui family.
Instead of advising the Muerteguis to register their purchase as soon as possible to forestall any legal
complications that accompany unregistered sales of real property, he did exactly the opposite: taking
advantage of the situation and the information he gathered from his inquiries and investigation, he bought
the very same lot and immediately caused the registration thereof ahead of his clients, thinking that his
purchase and prior registration would prevail. The Court cannot tolerate this mercenary attitude. Instead of
protecting his client’s interest, Atty. Sabitsana practically preyed on him.
Petitioner Atty. Sabitsana took advantage of confidential information disclosed to him by his client, using the
same to defeat him and beat him to the draw, so to speak. He rushed the sale and registration thereof
ahead of his client. He may not be afforded the excuse that he nonetheless proceeded to buy the lot
because he believed or assumed that the Muerteguis were simply bluffing when Carmen told him that they
had already bought the same; this is too convenient an excuse to be believed. As the Muertegui family
lawyer, he had no right to take a position, using information disclosed to him in confidence by his client, that
would place him in possible conflict with his duty. He may not, for his own personal interest and benefit,
gamble on his client’s word, believing it at one time and disbelieving it the next. He owed the Muerteguis
his undivided loyalty. He had the duty to protect the client, at all hazards and costs even to himself.38 cralaw virtua law lib rary
Petitioner Atty. Sabitsana is enjoined to “look at any representation situation from the point of view that
there are possible conflicts, and further to think in terms of impaired loyalty, that is[,] to evaluate if his
representation in any way will impair his loyalty to a client.”39 cralaw virtualaw l ibra ry
Moreover, as the Muertegui family’s lawyer, Atty. Sabitsana was under obligation to safeguard his client’s
property, and not jeopardize it. Such is his duty as an attorney, and pursuant to his general agency.40 cralaw virtualaw li bra ry
Even granting that Atty. Sabitsana has ceased to act as the Muertegui family’s lawyer, he still owed them his
loyalty. The termination of attorney-client relation provides no justification for a lawyer to represent an
interest adverse to or in conflict with that of the former client on a matter involving confidential information
which the lawyer acquired when he was counsel. The client’s confidence once reposed should not be
divested by mere expiration of professional employment.41 This is underscored by the fact that Atty.
Sabitsana obtained information from Carmen which he used to his advantage and to the detriment of his
client.
From the foregoing disquisition, it can be seen that petitioners are guilty of bad faith in pursuing the sale of
the lot despite being apprised of the prior sale in respondent’s favor. Moreover, petitioner Atty. Sabitsana
has exhibited a lack of loyalty toward his clients, the Muerteguis, and by his acts, jeopardized their interests
instead of protecting them. Over and above the trial court’s and the CA’s findings, this provides further
justification for the award of attorney’s fees, litigation expenses and costs in favor of the respondent.
Thus said, judgment must be rendered in favor of respondent to prevent the petitioners’ void sale from
casting a cloud upon his valid title.
WHEREFORE, premises considered, the Petition is DENIED. The January 25, 2007 Decision and the
January 11, 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 79250 are AFFIRMED. Costs against
petitioners.
SO ORDERED.
Carpio (Chairperson), Brion, Perez, and Perlas-Bernabe, JJ., concur.
EN BANC
G.R. No. 204603, September 24, 2013
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE EXECUTIVE SECRETARY, THE SECRETARY

OF JUSTICE, THE SECRETARY OF FOREIGN AFFAIRS, THE SECRETARY OF NATIONAL DEFENSE,
THE SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT THE SECRETARY OF FINANCE, THE
NATIONAL SECURITY ADVISER, THE SECRETARY OF BUDGET AND MANAGEMENT THE
TREASURER. OF THE PHILIPPINES, THE CHIEF OF STAFF OF THE ARMED FORCES OF THE
PHILIPPINES, AND THE CHIEF OF THE PHILIPPINE NATIONAL POLICE, Petitioners, v. HERMINIO
HARRY ROQUE, MORO CHRISTIAN PEOPLE'S ALLIANCE, FR. JOE DIZON, RODINIE SORIANO,
STEPHANIE ABIERA, MARIA LOURDES ALCAIN, VOLTAIRE ALFEREZ, CZARINA MAY ALTEZ,
SHERYL BALOT, RENIZZA BATACAN, EDAN MARRI CANETE, LEANA CARAMOAN, ALDWIN
CAMANCE, RENE DELORINO, PAULYN MAY DUMAN, RODRIGO FAJARDO III, ANNA MARIE GO,
ANNA ARMINDA JIMENEZ, MARY ANN LEE, LUISA MANALAYSAY, MIGUEL MUSNGI, MICHAEL
OCAMPO, NORMAN ROLAND OCANA III, WILLIAM RAGAMAT, MARICAR RAMOS, CHERRY LOU
REYES, MELISSA ANN SICAT, CRISTINE MAE TABING, VANESSA TORNO, AND HON. JUDGE
ELEUTERIO L. BATHAN, AS PRESIDING JUDGE OF REGIONAL TRIAL COURT, QUEZON CITY,
BRANCH 92, Respondents.
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. Q-07-60778, 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;15and (e) Section 27,16 for violating the
prohibition against unreasonable searches and seizures.17 cralaw vi rtua law lib rary
Petitioners moved to suspend the proceedings,18 averring that certain petitions (SC petitions) raising the
issue of RA 9372’s constitutionality have been lodged before the Court.19 The said motion was granted in an
Order dated October 19, 2007.20 cralaw vi rtua law lib rary
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 9372’s 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 law’s implementation
considering that the case is of paramount impact to the Filipino people.27 cra law virt ualaw li bra ry
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.
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 RTC’s part.
The Court’s 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 wellsettled
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 RTC’s 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 c ralaw vi rtualaw lib rary
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
cralaw vi rt ualaw lib rary
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 untrammelled. 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 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: c hanrobles vi rt ua1aw 1ib ra ry
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.
The possibility of abuse in the implementation of RA 9372 does 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 c ralaw vi rtualaw l ibra ry
As to the fifth requisite for an action for declaratory relief, neither can it be inferred that the controversy at
hand is ripe for adjudication since the possibility of abuse, based on the above-discussed allegations in
private respondents’ petition, remain highly-speculative and merely theorized. It is well-settled that a
question is ripe for adjudication when the act being challenged has had a direct adverse effect on the
individual challenging it.47 This private respondents failed to demonstrate in the case at bar.
Finally, as regards the sixth requisite, the Court finds it irrelevant to proceed with a discussion on the
availability of adequate reliefs since no impending threat or injury to the private respondents exists in the
first place.
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 April 23, 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. chanrob lesvi rtua lawlib rary
SO ORDERED.
EN BANC
G.R. No. 178552 : October 5, 2010

SOUTHERN HEMISPHERE ENGAGEMENT NETWORK, INC., on behalf of the South-South Network
(SSN) for Non-State Armed Group Engagement, and ATTY. SOLIMAN M. SANTOS,
JR., Petitioners, v. ANTI-TERRORISM COUNCIL, THE EXECUTIVE SECRETARY, THE SECRETARY OF
JUSTICE, THE SECRETARY OF FOREIGN AFFAIRS, THE SECRETARY OF NATIONAL DEFENSE, THE
SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT, THE SECRETARY OF FINANCE, THE
NATIONAL SECURITY ADVISER, THE CHIEF OF STAFF OF THE ARMED FORCES OF THE
PHILIPPINES, AND THE CHIEF OF THE PHILIPPINE NATIONAL POLICE, Respondents. cralaw
G.R. No. 178554
KILUSANG MAYO UNO (KMU), represented by its Chairperson Elmer Labog, NATIONAL
FEDERATION OF LABOR UNIONS-KILUSANG MAYO UNO (NAFLU-KMU), represented by its
National President Joselito V. Ustarez and Secretary General Antonio C. Pascual, and CENTER FOR
TRADE UNION AND HUMAN RIGHTS, represented by its Executive Director Daisy
Arago,Petitioners, v. HON. EDUARDO ERMITA, in his capacity as Executive Secretary, NORBERTO
GONZALES, in his capacity as Acting Secretary of National Defense, HON. RAUL GONZALES, in his
capacity as Secretary of Justice, HON. RONALDO PUNO, in his capacity as Secretary of the
Interior and Local Government, GEN. HERMOGENES ESPERON, in his capacity as AFP Chief of
Staff, and DIRECTOR GENERAL OSCAR CALDERON, in his capacity as PNP Chief of
Staff, Respondents.
cra law
G.R. No. 178581
BAGONG ALYANSANG MAKABAYAN (BAYAN), GENERAL ALLIANCE BINDING WOMEN FOR

REFORMS, INTEGRITY, EQUALITY, LEADERSHIP AND ACTION (GABRIELA), KILUSANG
MAGBUBUKID NG PILIPINAS (KMP), MOVEMENT OF CONCERNED CITIZENS FOR CIVIL LIBERTIES
(MCCCL), CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF GOVERNMENT
EMPLOYEES (COURAGE), KALIPUNAN NG DAMAYANG MAHIHIRAP (KADAMAY), SOLIDARITY OF
CAVITE WORKERS, LEAGUE OF FILIPINO STUDENTS (LFS), ANAKBAYAN, PAMBANSANG LAKAS
NG KILUSANG MAMAMALAKAYA (PAMALAKAYA), ALLIANCE OF CONCERNED TEACHERS (ACT),
MIGRANTE, HEALTH ALLIANCE FOR DEMOCRACY (HEAD), AGHAM, TEOFISTO GUINGONA, JR., DR.
BIENVENIDO LUMBERA, RENATO CONSTANTINO, JR., SISTER MARY JOHN MANANSAN OSB, DEAN
CONSUELO PAZ, ATTY. JOSEFINA LICHAUCO, COL. GERRY CUNANAN (ret.), CARLITOS SIGUION-
REYNA, DR. CAROLINA PAGADUAN-ARAULLO, RENATO REYES, DANILO RAMOS, EMERENCIANA DE
LESUS, RITA BAUA, REY CLARO CASAMBRE, Petitioners, v. GLORIA MACAPAGAL-ARROYO, in her
capacity as President and Commander-in-Chief, EXECUTIVE SECRETARY EDUARDO ERMITA,
DEPARTMENT OF JUSTICE SECRETARY RAUL GONZALES, DEPARTMENT OF FOREIGN AFFAIRS
SECRETARY ALBERTO ROMULO, DEPARTMENT OF NATIONAL DEFENSE ACTING SECRETARY
NORBERTO GONZALES, DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT SECRETARY
RONALDO PUNO. DEPARTMENT OF FINANCE SECRETARY MARGARITO TEVES, NATIONAL
SECURITY ADVISER NORBERTO GONZALES, THE NATIONAL INTELLIGENCE COORDINATING
AGENCY (NICA), THE NATIONAL BUREAU OF INVESTIGATION (NBI), THE BUREAU OF
IMMIGRATION, THE OFFICE OF CIVIL DEFENSE, THE INTELLIGENCE SERVICE OF THE ARMED
FORCES OF THE PHILIPPINES (ISAFP), THE ANTI-MONEY LAUNDERING COUNCIL (AMLC), THE
PHILIPPINE CENTER ON TRANSNATIONAL CRIME, THE CHIEF OF THE PHILIPPINE NATIONAL
POLICE GEN. OSCAR CALDERON, THE PNP, including its intelligence and investigative elements,
AFP CHIEF GEN. HERMOGENES ESPERON, Respondents. cralaw
G.R. No. 178890
KARAPATAN, ALLIANCE FOR THE ADVANCEMENT OF PEOPLE'S RIGHTS, represented herein by Dr.
Edelina de la Paz, and representing the following organizations: HUSTISYA, represented by
Evangeline Hernandez and also on her own behalf; DESAPARECIDOS, represented by Mary Guy
Portajada and also on her own behalf, SAMAHAN NG MGA EX-DETAINEES LABAN SA DETENSYON
AT PARA SA AMNESTIYA (SELDA), represented by Donato Continente and also on his own behalf,
ECUMENICAL MOVEMENT FOR JUSTICE AND PEACE (EMJP), represented by Bishop Elmer M.
Bolocon, UCCP, and PROMOTION OF CHURCH PEOPLE'S RESPONSE, represented by Fr. Gilbert
Sabado, OCARM, Petitioners, v. GLORIA MACAPAGAL-ARROYO, in her capacity as President and
Commander-in-Chief, EXECUTIVE SECRETARTY EDUARDO ERMITA, DEPARTMENT OF JUSTICE
SECRETARY RAUL GONZALEZ, DEPARTMENT OF FOREIGN AFFAIRS SECRETARY ALBERTO
ROMULO, DEPARTMENT OF NATIONAL DEFENSE ACTING SECRETARY NORBERTO GONZALES,
DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT SECRETARY RONALDO PUNO,
DEPARTMENT OF FINANCE SECRETARY MARGARITO TEVES, NATIONAL SECURITY ADVISER
NORBERTO GONZALES, THE NATIONAL INTELLIGENCE COORDINATING AGENCY (NICA), THE
NATIONAL BUREAU OF INVESTIGATION (NBI), THE BUREAU OF IMMIGRATION, THE OFFICE OF
CIVIL DEFENSE, THE INTELLIGENCE SERVICE OF THE ARMED FORCES OF THE PHILIPPINES
(ISAFP), THE ANTI-MONEY LAUNDERING COUNCIL (AMLC), THE PHILIPPINE CENTER ON
TRANSNATIONAL CRIME, THE CHIEF OF THE PHILIPPINE NATIONAL POLICE GEN. OSCAR
CALDERON, THE PNP, including its intelligence and investigative elements, AFP CHIEF GEN.
HERMOGENES ESPERON, Respondents. cralaw
G.R. No. 179157
THE INTEGRATED BAR OF THE PHILIPPINES (IBP), represented by Atty. Feliciano M. Bautista,
COUNSELS FOR THE DEFENSE OF LIBERTY (CODAL), SEN. MA. ANA CONSUELO A.S. MADRIGAL
and FORMER SENATORS SERGIO OSMEÑA III and WIGBERTO E. TAÑADA,Petitioners, v. EXECUTIVE
SECRETARY EDUARDO ERMITA AND THE MEMBERS OF THE ANTI-TERRORISM COUNCIL
(ATC), Respondents. cralaw
G.R. No. 179461
BAGONG ALYANSANG MAKABAYAN-SOUTHERN TAGALOG (BAYAN-ST), GABRIELA-ST, KATIPUNAN

NG MGA SAMAHYANG MAGSASAKA-TIMOG KATAGALUGAN (KASAMA-TK), MOVEMENT OF
CONCERNED CITIZENS FOR CIVIL LIBERTIES (MCCCL), PEOPLES MARTYRS, ANAKBAYAN-ST,
PAMALAKAYA-ST, CONFEDERATION FOR UNITY, RECOGNITION AND ADVANCEMENT OF
GOVERNMENT EMPLOYEES (COURAGE-ST), PAGKAKAISA'T UGNAYAN NG MGA MAGBUBUKID SA
LAGUNA (PUMALAG), SAMAHAN NG MGA MAMAMAYAN SA TABING RILES (SMTR-ST), LEAGUE OF
FILIPINO STUDENTS (LFS), BAYAN MUNA-ST, KONGRESO NG MGA MAGBUBUKID PARA SA
REPORMANG AGRARYO KOMPRA, BIGKIS AT LAKAS NG MGA KATUTUBO SA TIMOG
KATAGALUGAN (BALATIK), SAMAHAN AT UGNAYAN NG MGA MAGSASAKANG KABABAIHAN SA
TIMOG KATAGALUGAN (SUMAMAKA-TK), STARTER, LOSÑOS RURAL POOR ORGANIZATION FOR
PROGRESS & EQUALITY, CHRISTIAN NIÑO LAJARA, TEODORO REYES, FRANCESCA B. TOLENTINO,
JANNETTE E. BARRIENTOS, OSCAR T. LAPIDA, JR., DELFIN DE CLARO, SALLY P. ASTRERA, ARNEL
SEGUNE BELTRAN, Petitioners, v. GLORIA MACAPAGAL-ARROYO, in her capacity as President and
Commander-in-Chief, EXECUTIVE SECRETARY EDUARDO ERMITA, DEPARTMENT OF JUSTICE
SECRETARY RAUL GONZALEZ, DEPARTMENT OF FOREIGN AFFAIRS SECRETARY ALBERTO
ROMULO, DEPARTMENT OF NATIONAL DEFENSE ACTING SECRETARY NORBERTO GONZALES,
DEPARTMENT OF INTERIOR AND LOCAL GOVERNMEN T SECRETARY RONALDO PUNO,
DEPARTMENT OF FINCANCE SECRETARY MARGARITO TEVES, NATIONAL SECURITY ADVISER
NORBERTO GONZALES, THE NATIONAL INTELLIGENCE COORDINATING AGENCY (NICA), THE
NATIONAL BUREAU OF INVESTIGATION (NBI), THE BUREAU OF IMMIGRATION, THE OFFICE OF
CIVIL DEFENSE, THE INTELLIGENCE SERVICE OF THE ARMED FORCES OF THE PHILIPPINES
(ISAFP), THE ANTI-MONEY LAUNDERING COUNCIL (AMLC), THE PHILIPPINE CENTER ON
TRANSNATIONAL CRIME, THE CHIEF OF THE PHILIPPINE NATIONAL POLICE GEN. OSCAR
CALDERON, THE PNP, including its intelligence and investigative elements, AFP CHIEF GEN.
HERMOGENES ESPERON, Respondents. cralaw
DECISION
CARPIO MORALES, J.:
Before the Court are six petitions challenging the constitutionality of Republic Act No. 9372 (RA 9372), "An
Act to Secure the State and Protect our People from Terrorism," otherwise known as the Human Security Act
of 2007,1 signed into law on March 6, 2007.
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Following the effectivity of RA 9372 on July 15, 2007,2 petitioner Southern Hemisphere Engagement
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Network, Inc., a non-government organization, and Atty. Soliman Santos, Jr., a concerned citizen, taxpayer
and lawyer, filed a petition for certiorari and prohibition on July 16, 2007 docketed as G.R. No. 178552. On
even date, petitioners Kilusang Mayo Uno (KMU), National Federation of Labor Unions-Kilusang Mayo Uno
(NAFLU-KMU), and Center for Trade Union and Human Rights (CTUHR), represented by their respective
officers3 who are also bringing the action in their capacity as citizens, filed a petition for certiorari and
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prohibition docketed as G.R. No. 178554.
The following day, July 17, 2007, organizations Bagong Alyansang Makabayan (BAYAN), General Alliance
Binding Women for Reforms, Integrity, Equality, Leadership and Action (GABRIELA), Kilusang Magbubukid
ng Pilipinas (KMP), Movement of Concerned Citizens for Civil Liberties (MCCCL), Confederation for Unity,
Recognition and Advancement of Government Employees (COURAGE), Kalipunan ng Damayang Mahihirap
(KADAMAY), Solidarity of Cavite Workers (SCW), League of Filipino Students (LFS), Anakbayan,
Pambansang Lakas ng Kilusang Mamamalakaya (PAMALAKAYA), Alliance of Concerned Teachers (ACT),
Migrante, Health Alliance for Democracy (HEAD), and Agham, represented by their respective officers,4 and c ra1aw
joined by concerned citizens and taxpayers Teofisto Guingona, Jr., Dr. Bienvenido Lumbera, Renato
Constantino, Jr., Sister Mary John Manansan, OSB, Dean Consuelo Paz, Atty. Josefina Lichauco, Retired Col.
Gerry Cunanan, Carlitos Siguion-Reyna, Dr. Carolina Pagaduan-Araullo, Renato Reyes, Danilo Ramos,
Emerenciana de Jesus, Rita Baua and Rey Claro Casambre filed a petition for certiorari and prohibition
docketed as G.R. No. 178581.
On August 6, 2007, Karapatan and its alliance member organizations Hustisya, Desaparecidos, Samahan ng
mga Ex-Detainees Laban sa Detensyon at para sa Amnestiya (SELDA), Ecumenical Movement for Justice and
Peace (EMJP), and Promotion of Church Peoples Response (PCPR), which were represented by their
respective officers5 who are also bringing action on their own behalf, filed a petition for certiorari and
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prohibition docketed as G.R. No. 178890.
On August 29, 2007, the Integrated Bar of the Philippines (IBP), Counsels for the Defense of Liberty
(CODAL),6 Senator Ma. Ana Consuelo A.S. Madrigal, Sergio Osmeña III, and Wigberto E. Tañada filed a
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petition for certiorari and prohibition docketed as G.R. No. 179157.
Bagong Alyansang Makabayan-Southern Tagalog (BAYAN-ST), other regional chapters and organizations
mostly based in the Southern Tagalog Region,7 and individuals8 followed suit by filing on September 19,
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2007 a petition for certiorari and prohibition docketed as G.R. No. 179461 that replicates the allegations
raised in the BAYAN petition in G.R. No. 178581.
Impleaded as respondents in the various petitions are the Anti-Terrorism Council9 composed of, at the time
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of the filing of the petitions, Executive Secretary Eduardo Ermita as Chairperson, Justice Secretary Raul
Gonzales as Vice Chairperson, and Foreign Affairs Secretary Alberto Romulo, Acting Defense Secretary and
National Security Adviser Norberto Gonzales, Interior and Local Government Secretary Ronaldo Puno, and
Finance Secretary Margarito Teves as members. All the petitions, except that of the IBP, also impleaded
Armed Forces of the Philippines (AFP) Chief of Staff Gen. Hermogenes Esperon and Philippine National Police
(PNP) Chief Gen. Oscar Calderon.
The Karapatan, BAYAN and BAYAN-ST petitions likewise impleaded President Gloria Macapagal-Arroyo and
the support agencies for the Anti-Terrorism Council like the National Intelligence Coordinating Agency,
National Bureau of Investigation, Bureau of Immigration, Office of Civil Defense, Intelligence Service of the
AFP, Anti-Money Laundering Center, Philippine Center on Transnational Crime, and the PNP intelligence and
investigative elements.
The petitions fail.
Petitioners resort to certiorari is improper
Preliminarily, certiorari does not lie against respondents who do not exercise judicial or quasi-judicial
functions. Section 1, Rule 65 of the Rules of Court is clear:chanro blesvi rt ualawlib ra ry
Section 1. Petition for certiorari.When any tribunal, board or officer exercising judicial or quasi-judicial
functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper
court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may
require. (Emphasis and underscoring supplied)
Parenthetically, petitioners do not even allege with any modicum of particularity how respondents acted
without or in excess of their respective jurisdictions, or with grave abuse of discretion amounting to lack or
excess of jurisdiction.
The impropriety of certiorari as a remedy aside, the petitions fail just the same.
In constitutional litigations, the power of judicial review is limited by four exacting requisites, viz: (a) there
must be an actual case or controversy; (b) petitioners must possess locus standi; (c) the question of
constitutionality must be raised at the earliest opportunity; and (d) the issue of constitutionality must be the
lis mota of the case.10
chanroblesv irtuallaw lib rary
In the present case, the dismal absence of the first two requisites, which are the most essential, renders the
discussion of the last two superfluous.
Petitioners lack locus standi
Locus standi or legal standing requires a personal stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for
illumination of difficult constitutional questions.11 chan roble svi rtual lawlib rary
Anak Mindanao Party-List Group v. The Executive Secretary12 summarized the rule on locus standi, thus:
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Locus standi or legal standing has been defined as a personal and substantial interest in a case such that the
party has sustained or will sustain direct injury as a result of the governmental act that is being challenged.
The gist of the question on standing is whether a party alleges such personal stake in the outcome of the
controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which
the court depends for illumination of difficult constitutional questions.
[A] party who assails the constitutionality of a statute must have a direct and personal interest. It must
show not only that the law or any governmental act is invalid, but also that it sustained or is in immediate
danger of sustaining some direct injury as a result of its enforcement, and not merely that it suffers thereby
in some indefinite way. It must show that it has been or is about to be denied some right or privilege to
which it is lawfully entitled or that it is about to be subjected to some burdens or penalties by reason of the
statute or act complained of.
For a concerned party to be allowed to raise a constitutional question, it must show that (1) it haspersonally
suffered some actual or threatened injury as a result of the allegedly illegal conduct of the government, (2)
the injury is fairly traceable to the challenged action, and (3) the injury is likely to be redressed by a
favorable action. (emphasis and underscoring supplied.)
Petitioner-organizations assert locus standi on the basis of being suspected "communist fronts" by the
government, especially the military; whereas individual petitioners invariably invoke the "transcendental
importance" doctrine and their status as citizens and taxpayers.
While Chavez v. PCGG13 holds that transcendental public importance dispenses with the requirement that
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petitioner has experienced or is in actual danger of suffering direct and personal injury, cases involving the
constitutionality of penal legislation belong to an altogether different genus of constitutional litigation.
Compelling State and societal interests in the proscription of harmful conduct, as will later be elucidated,
necessitate a closer judicial scrutiny of locus standi.
Petitioners have not presented any personal stake in the outcome of the controversy. None of them faces
any charge under RA 9372.
KARAPATAN, Hustisya, Desaparecidos, SELDA, EMJP and PCR, petitioners in G.R. No. 178890, allege that
they have been subjected to "close security surveillance by state security forces," their members followed by
"suspicious persons" and "vehicles with dark windshields," and their offices monitored by "men with military
build." They likewise claim that they have been branded as "enemies of the [S]tate."14 chanrob lesvi rtua llawli bra ry
Even conceding such gratuitous allegations, the Office of the Solicitor General (OSG) correctly points out
that petitioners have yet to show any connection between the
purported "surveillance" and theimplementation of RA 9372.
BAYAN, GABRIELA, KMP, MCCCL, COURAGE, KADAMAY, SCW, LFS, Anakbayan, PAMALAKAYA, ACT,
Migrante, HEAD and Agham, petitioner-organizations in G.R. No. 178581, would like the Court to take
judicial notice of respondents alleged action of tagging them as militant organizations fronting for the
Communist Party of the Philippines (CPP) and its armed wing, the National Peoples Army (NPA). The
tagging, according to petitioners, is tantamount to the effects of proscription without following the procedure
under the law.15 The petition of BAYAN-ST, et al. in G.R. No. 179461 pleads the same allegations.
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The Court cannot take judicial notice of the alleged "tagging" of petitioners.
Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of
common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal
guide in determining what facts may be assumed to be judicially known is that of notoriety. Hence, it can be
said that judicial notice is limited to facts evidenced by public records and facts of general notoriety.
Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1)
generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready
determination by resorting to sources whose accuracy cannot reasonably be questionable.
Things of "common knowledge," of which courts take judicial matters coming to the knowledge of men
generally in the course of the ordinary experiences of life, or they may be matters which are generally
accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which
are universally known, and which may be found in encyclopedias, dictionaries or other publications, are
judicially noticed, provided, they are of such universal notoriety and so generally understood that they may
be regarded as forming part of the common knowledge of every person. As the common knowledge of man
ranges far and wide, a wide variety of particular facts have been judicially noticed as being matters of
common knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent on the
existence or non-existence of a fact of which the court has no constructive knowledge.16 (emphasis and cra 1aw
underscoring supplied.)
No ground was properly established by petitioners for the taking of judicial notice. Petitioners apprehension
is insufficient to substantiate their plea. That no specific charge or proscription under RA 9372 has been filed
against them, three years after its effectivity, belies any claim of imminence of their perceived threat
emanating from the so-called tagging.
The same is true with petitioners KMU, NAFLU and CTUHR in G.R. No. 178554, who merely harp as well on
their supposed "link" to the CPP and NPA. They fail to particularize how the implementation of specific
provisions of RA 9372 would result in direct injury to their organization and members.
While in our jurisdiction there is still no judicially declared terrorist organization, the United States of
America17 (US) and the European Union18 (EU) have both classified the CPP, NPA and Abu Sayyaf Group as
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foreign terrorist organizations. The Court takes note of the joint statement of Executive Secretary Eduardo
Ermita and Justice Secretary Raul Gonzales that the Arroyo Administration would adopt the US and EU
classification of the CPP and NPA as terrorist organizations.19 Such statement notwithstanding, there is yet
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to be filed before the courts an application to declare the CPP and NPA organizations as domestic terrorist or
outlawed organizations under RA 9372. Again, RA 9372 has been in effect for three years now. From July
2007 up to the present, petitioner-organizations have conducted their activities fully and freely without any
threat of, much less an actual, prosecution or proscription under RA 9372.
Parenthetically, the Fourteenth Congress, in a resolution initiated by Party-list Representatives Saturnino

Ocampo, Teodoro Casiño, Rafael Mariano and Luzviminda Ilagan,20 urged the government to resume peace
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negotiations with the NDF by removing the impediments thereto, one of which is the adoption of designation
of the CPP and NPA by the US and EU as foreign terrorist organizations. Considering the policy statement of
the Aquino Administration21 of resuming peace talks with the NDF, the government is not imminently
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disposed to ask for the judicial proscription of the CPP-NPA consortium and its allied organizations.
More important, there are other parties not before the Court with direct and specific interests in the
questions being raised.22 Of recent development is the filing of the first case for proscription under Section
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1723 of RA 9372 by the Department of Justice before the Basilan Regional Trial Court against the Abu
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Sayyaf Group.24 Petitioner-organizations do not in the least allege any link to the Abu Sayyaf Group.
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Some petitioners attempt, in vain though, to show the imminence of a prosecution under RA 9372 by
alluding to past rebellion charges against them.
In Ladlad v. Velasco,25 the Court ordered the dismissal of rebellion charges filed in 2006 against then Party-
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List Representatives Crispin Beltran and Rafael Mariano of Anakpawis, Liza Maza of GABRIELA, and Joel
Virador, Teodoro Casiño and Saturnino Ocampo of Bayan Muna. Also named in the dismissed rebellion
charges were petitioners Rey Claro Casambre, Carolina Pagaduan-Araullo, Renato Reyes, Rita Baua,
Emerencia de Jesus and Danilo Ramos; and accused of being front organizations for the Communist
movement were petitioner-organizations KMU, BAYAN, GABRIELA, PAMALAKAYA, KMP, KADAMAY, LFS and
COURAGE.26 chanrob lesvi rtual lawlib rary
The dismissed rebellion charges, however, do not save the day for petitioners. For one, those charges
were filed in 2006, prior to the enactment of RA 9372, and dismissed by this Court. For another, rebellion is
defined and punished under the Revised Penal Code. Prosecution for rebellion is not made more imminent by
the enactment of RA 9372, nor does the enactment thereof make it easier to charge a person with rebellion,
its elements not having been altered.
Conversely, previously filed but dismissed rebellion charges bear no relation to prospective charges under
RA 9372. It cannot be overemphasized that three years after the enactment of RA 9372, none of petitioners
has been charged.
Petitioners IBP and CODAL in G.R. No. 179157 base their claim of locus standi on their sworn duty to uphold
the Constitution. The IBP zeroes in on Section 21 of RA 9372 directing it to render assistance to those
arrested or detained under the law.
The mere invocation of the duty to preserve the rule of law does not, however, suffice to clothe the IBP or
any of its members with standing.27 The IBP failed to sufficiently demonstrate how its mandate under the
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assailed statute revolts against its constitutional rights and duties. Moreover, both the IBP and CODAL have
not pointed to even a single arrest or detention effected under RA 9372.
Former Senator Ma. Ana Consuelo Madrigal, who claims to have been the subject of "political surveillance,"
also lacks locus standi. Prescinding from the veracity, let alone legal basis, of the claim of "political
surveillance," the Court finds that she has not shown even the slightest threat of being charged under RA
9372. Similarly lacking in locus standi are former Senator Wigberto Tañada and Senator Sergio Osmeña III,
who cite their being respectively a human rights advocate and an oppositor to the passage of RA 9372.
Outside these gratuitous statements, no concrete injury to them has been pinpointed.
Petitioners Southern Hemisphere Engagement Network and Atty. Soliman Santos Jr. in G.R. No. 178552 also
conveniently state that the issues they raise are of transcendental importance, "which must be settled early"
and are of "far-reaching implications," without mention of any specific provision of RA 9372 under which
they have been charged, or may be charged. Mere invocation of human rights advocacy has nowhere been
held sufficient to clothe litigants with locus standi. Petitioners must show an actual, or immediate danger of
sustaining, direct injury as a result of the laws enforcement. 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.
Neither can locus standi be conferred upon individual petitioners as taxpayers and citizens. A taxpayer suit is
proper only when there is an exercise of the spending or taxing power of Congress,28 whereas citizen cra1aw
standing must rest on direct and personal interest in the proceeding.29 chan roblesv irtuallawl ib rary
RA 9372 is a penal statute and does not even provide for any appropriation from Congress for its
implementation, while none of the individual petitioner-citizens has alleged any direct and personal interest
in the implementation of the law.
It bears to stress that generalized interests, albeit accompanied by the assertion of a public right, do not
establish locus standi. Evidence of a direct and personal interest is key.
Petitioners fail to present an actual case or controversy
By constitutional fiat, judicial power operates only when there is an actual case or controversy.
Section 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be
established by law.
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which
are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government.30 (emphasis and underscoring supplied.) cra1aw
As early as Angara v. Electoral Commission,31 the Court ruled that the power of judicial review is limited to cra1aw
actual cases or controversies to be exercised after full opportunity of argument by the parties. Any attempt
at abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to
actualities.
An actual case or controversy means an existing case or controversy that is appropriate or ripe for
determination, not conjectural or anticipatory, lest the decision of the court would amount to an advisory
opinion.32cha nrob lesvi rtua llawli bra ry
Information Technology Foundation of the Philippines v. COMELEC33 cannot be more emphatic: cra1aw chanro blesvi rt ualawlib ra ry
[C]ourts do not sit to adjudicate mere academic questions to satisfy scholarly interest, however intellectually
challenging. The controversy must be justiciabledefinite and concrete, touching on the legal relations of
parties having adverse legal interests. In other words, the pleadings must show an active antagonistic
assertion of a legal right, on the one hand, and a denial thereof on the other hand; that is, it must concern a
real and not merely a theoretical question or issue. There ought to be anactual and substantial
controversy admitting of specific relief through a decree conclusive in nature, as distinguished from an
opinion advising what the law would be upon a hypothetical state of facts. (Emphasis and underscoring
supplied)
Thus, a petition to declare unconstitutional a law converting the Municipality of Makati into a Highly
Urbanized City was held to be premature as it was tacked on uncertain, contingent events.34 Similarly, a cra1aw
petition that fails to allege that an application for a license to operate a radio or television station has been
denied or granted by the authorities does not present a justiciable controversy, and merely wheedles the
Court to rule on a hypothetical problem.35 ch anro blesvi rt uallawli bra ry
The Court dismissed the petition in Philippine Press Institute v. Commission on Elections36 for failure to cite cra1aw
any specific affirmative action of the Commission on Elections to implement the assailed resolution. It
refused, in Abbas v. Commission on Elections,37 to rule on the religious freedom claim of the therein cra1aw
petitioners based merely on a perceived potential conflict between the provisions of the Muslim Code and
those of the national law, there being no actual controversy between real litigants.
The list of cases denying claims resting on purely hypothetical or anticipatory grounds goes on ad infinitum.
The Court is not unaware that a reasonable certainty of the occurrence of a perceived threat to any
constitutional interest suffices to provide a basis for mounting a constitutional challenge. This, however, is
qualified by the requirement that there must be sufficient facts to enable the Court to intelligently adjudicate
the issues.38 chan roblesv irt uallawl ibra ry
Very recently, the US Supreme Court, in Holder v. Humanitarian Law Project,39 allowed the pre- cra1aw
enforcement review of a criminal statute, challenged on vagueness grounds, since plaintiffs faced a "credible
threat of prosecution" and "should not be required to await and undergo a criminal prosecution as the sole
means of seeking relief."40 The plaintiffs therein filed an action before a federal court to assail the
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constitutionality of the material support statute, 18 U.S.C. 2339B (a) (1),41 proscribing the provision of cra1aw
material support to organizations declared by the Secretary of State as foreign terrorist organizations. They
claimed that they intended to provide support for the humanitarian and political activities of two such
organizations.
Prevailing American jurisprudence allows an adjudication on the merits when an anticipatory petition clearly
shows that the challenged prohibition forbids the conduct or activity that a petitioner seeks to do, as there
would then be a justiciable controversy.42 chan roblesv irtuallaw lib rary
Unlike the plaintiffs in Holder, however, herein petitioners have failed to show that the challenged provisions
of RA 9372 forbid constitutionally protected conduct or activity that they seek to do. No demonstrable threat
has been established, much less a real and existing one.
Petitioners obscure allegations of sporadic "surveillance" and supposedly being tagged as "communist fronts"
in no way approximate a credible threat of prosecution. From these allegations, the Court is being lured to
render an advisory opinion, which is not its function.43 chanrob lesvi rtua llawli brary
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.44 chan rob lesvi rtual lawlib rary
The possibility of abuse in the implementation of RA 9372 does 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.45 Allegations of abuse must be anchored on real events before
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courts may step in to settle actual controversies involving rights which are legally demandable and
enforceable.
A facial invalidation of a statute is allowed only in free speech cases, wherein certain rules of
constitutional litigation are rightly excepted
Petitioners assail for being intrinsically vague and impermissibly broad the definition of the crime of
terrorism46 under RA 9372 in that terms like "widespread and extraordinary fear and panic among the
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populace" and "coerce the government to give in to an unlawful demand" are nebulous, leaving law
enforcement agencies with no standard to measure the prohibited acts.
Respondents, through the OSG, counter that the doctrines of void-for-vagueness and overbreadth find no
application in the present case since these doctrines apply only to free speech cases; and that RA 9372
regulates conduct, not speech.
For a jurisprudentially guided understanding of these doctrines, it is imperative to outline the schools of
thought on whether the void-for-vagueness and overbreadth doctrines are equally applicable grounds to
assail a penal statute.
Respondents interpret recent jurisprudence as slanting toward the idea of limiting the application of the two
doctrines to free speech cases. They particularly cite Romualdez v. Hon. Sandiganbayan47 and Estrada v. cra1aw
Sandiganbayan.48 chanrob lesvi rtua llawli bra ry
The Court clarifies.
At issue in Romualdez v. Sandiganbayan was whether the word "intervene" in Section 549 of the Anti-Graft cra1aw
and Corrupt Practices Act was intrinsically vague and impermissibly broad. The Court stated that "the
overbreadth and the vagueness doctrines have special application only to free-speech cases," and are "not
appropriate for testing the validity of penal statutes."50 It added that, at any rate, the challenged provision,
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under which the therein petitioner was charged, is not vague.51 chanrob lesvi rtua llawli bra ry
While in the subsequent case of Romualdez v. Commission on Elections,52 the Court stated that a facialcra1aw
invalidation of criminal statutes is not appropriate, it nonetheless proceeded to conduct a vagueness

analysis, and concluded that the therein subject election offense53 under the Voters Registration Act of
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1996, with which the therein petitioners were charged, is couched in precise language.54 chan roble svirtual lawlib rary
The two Romualdez cases rely heavily on the Separate Opinion55 of Justice Vicente V. Mendoza in
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the Estrada case, where the Court found the Anti-Plunder Law (Republic Act No. 7080) clear and free from
ambiguity respecting the definition of the crime of plunder.
The position taken by Justice Mendoza in Estrada relates these two doctrines to the concept of a "facial"
invalidation as opposed to an "as-applied" challenge. He basically postulated that allegations that a penal
statute is vague and overbroad do not justify a facial review of its validity. The pertinent portion of the
Concurring Opinion of Justice Mendoza, which was quoted at length in the main Estrada decision, reads:
A facial challenge is allowed to be made to a vague statute and to one which is overbroad because of
possible "chilling effect" upon protected speech. The theory is that "[w]hen statutes regulate or proscribe
speech and no readily apparent construction suggests itself as a vehicle for rehabilitating the statutes in a
single prosecution, the transcendent value to all society of constitutionally protected expression is deemed
to justify allowing attacks on overly broad statutes with no requirement that the person making the attack
demonstrate that his own conduct could not be regulated by a statute drawn with narrow specificity." The
possible harm to society in permitting some unprotected speech to go unpunished is outweighed by the
possibility that the protected speech of others may be deterred and perceived grievances left to fester
because of possible inhibitory effects of overly broad statutes.
This rationale does not apply to penal statutes. Criminal statutes have general in terrorem effect resulting
from their very existence, and, if facial challenge is allowed for this reason alone, the State may well be
prevented from enacting laws against socially harmful conduct. In the area of criminal law, the law cannot
take chances as in the area of free speech.
The overbreadth and vagueness doctrines then have special application only to free speech cases. They are
inapt for testing the validity of penal statutes. As the U.S. Supreme Court put it, in an opinion by Chief
Justice Rehnquist, "we have not recognized an 'overbreadth' doctrine outside the limited context of the First
Amendment." In Broadrick v. Oklahoma, the Court ruled that "claims of facial overbreadth have been
entertained in cases involving statutes which, by their terms, seek to regulate only spoken words" and,
again, that "overbreadth claims, if entertained at all, have been curtailed when invoked against ordinary
criminal laws that are sought to be applied to protected conduct." For this reason, it has been held that "a
facial challenge to a legislative act is the most difficult challenge to mount successfully, since the challenger
must establish that no set of circumstances exists under which the Act would be valid." As for the vagueness
doctrine, it is said that a litigant may challenge a statute on its face only if it is vague in all its possible
applications. "A plaintiff who engages in some conduct that is clearly proscribed cannot complain of the
vagueness of the law as applied to the conduct of others."
In sum, the doctrines of strict scrutiny, overbreadth, and vagueness are analytical tools developed for
testing "on their faces" statutes in free speech cases or, as they are called in American law, First
Amendment cases. They cannot be made to do service when what is involved is a criminal statute. With
respect to such statute, the established rule is that "one to whom application of a statute is constitutional
will not be heard to attack the statute on the ground that impliedly it might also be taken as applying to
other persons or other situations in which its application might be unconstitutional." As has been pointed
out, "vagueness challenges in the First Amendment context, like overbreadth challenges typically produce
facial invalidation, while statutes found vague as a matter of due process typically are invalidated [only] 'as
applied' to a particular defendant." Consequently, there is no basis for petitioner's claim that this Court
review the Anti-Plunder Law on its face and in its entirety.
Indeed, "on its face" invalidation of statutes results in striking them down entirely on the ground that they
might be applied to parties not before the Court whose activities are constitutionally protected. It constitutes
a departure from the case and controversy requirement of the Constitution and permits decisions to be
made without concrete factual settings and in sterile abstract contexts. But, as the U.S. Supreme Court
pointed out in Younger v. Harris
[T]he task of analyzing a proposed statute, pinpointing its deficiencies, and requiring correction of these
deficiencies before the statute is put into effect, is rarely if ever an appropriate task for the judiciary. The
combination of the relative remoteness of the controversy, the impact on the legislative process of the relief
sought, and above all the speculative and amorphous nature of the required line-by-line analysis of detailed
statutes, . . . ordinarily results in a kind of case that is wholly unsatisfactory for deciding constitutional
questions, whichever way they might be decided.
For these reasons, "on its face" invalidation of statutes has been described as "manifestly strong medicine,"
to be employed "sparingly and only as a last resort," and is generally disfavored. In determining the
constitutionality of a statute, therefore, its provisions which are alleged to have been violated in a case must
be examined in the light of the conduct with which the defendant is charged.56 (Underscoring supplied.) cra1aw
The confusion apparently stems from the interlocking relation of the overbreadth and vagueness doctrines
as grounds for a facial or as-applied challenge against a penal statute (under a claim of violation of due
process of law) or a speech regulation (under a claim of abridgement of the freedom of speech and cognate
rights).
To be sure, the doctrine of vagueness and the doctrine of overbreadth do not operate on the same plane.
A statute or act suffers from the defect of vagueness when it lacks comprehensible standards that men of
common intelligence must necessarily guess at its meaning and differ as to its application. It is repugnant to
the Constitution in two respects: (1) it violates due process for failure to accord persons, especially the
parties targeted by it, fair notice of the conduct to avoid; and (2) it leaves law enforcers unbridled discretion
in carrying out its provisions and becomes an arbitrary flexing of the Government
muscle.57 The overbreadth doctrine, meanwhile, decrees that a governmental purpose to control or prevent
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activities constitutionally subject to state regulations may not be achieved by means which sweep
unnecessarily broadly and thereby invade the area of protected freedoms.58 cha nrob lesvi rtua llawlib ra ry
As distinguished from the vagueness doctrine, the overbreadth doctrine assumes that individuals will
understand what a statute prohibits and will accordingly refrain from that behavior, even though some of it
is protected.59 c hanro blesvi rt uallawl ibra ry
A "facial" challenge is likewise different from an "as-applied" challenge.
Distinguished from an as-applied challenge which considers only extant facts affecting real litigants,
afacial invalidation is an examination of the entire law, pinpointing its flaws and defects, not only on the
basis of its actual operation to the parties, but also on the assumption or prediction that its very existence
may cause others not before the court to refrain from constitutionally protected speech or activities.60 cha nrob lesvi rtua llawlib ra ry
Justice Mendoza accurately phrased the subtitle61 in his concurring opinion that the vagueness and
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overbreadth doctrines, as grounds for a facial challenge, are not applicable to penal laws. A litigant cannot
thus successfully mount a facial challenge against a criminal statute on either vagueness or overbreadth
grounds.
The allowance of a facial challenge in free speech cases is justified by the aim to avert the "chilling effect" on
protected speech, the exercise of which should not at all times be abridged.62 As reflected earlier, this cra 1aw
rationale is inapplicable to plain penal statutes that generally bear an "in terrorem effect" in deterring
socially harmful conduct. In fact, the legislature may even forbid and penalize acts formerly considered
innocent and lawful, so long as it refrains from diminishing or dissuading the exercise of constitutionally
protected rights.63 c hanroblesv irt uallawl ibra ry
The Court reiterated that there are "critical limitations by which a criminal statute may be challenged" and
"underscored that an on-its-face invalidation of penal statutes x x x may not be allowed."64 chanro blesvi rtu allawli bra ry
[T]he rule established in our jurisdiction is, only statutes on free speech, religious freedom, and other
fundamental rights may be facially challenged. Under no case may ordinary penal statutes be subjected to a
facial challenge. The rationale is obvious. If a facial challenge to a penal statute is permitted, the
prosecution of crimes may be hampered. No prosecution would be possible. A strong criticism against
employing a facial challenge in the case of penal statutes, if the same is allowed, would effectively go
against the grain of the doctrinal requirement of an existing and concrete controversy before judicial power
may be appropriately exercised. A facial challenge against a penal statute is, at best, amorphous and
speculative. It would, essentially, force the court to consider third parties who are not before it. As I have
said in my opposition to the allowance of a facial challenge to attack penal statutes, such a test will impair
the States ability to deal with crime. If warranted, there would be nothing that can hinder an accused from
defeating the States power to prosecute on a mere showing that, as applied to third parties, the penal
statute is vague or overbroad, notwithstanding that the law is clear as applied to him.65 (Emphasis and cra1aw
underscoring supplied)
It is settled, on the other hand, that the application of the overbreadth doctrine is limited to a facial
kind of challenge and, owing to the given rationale of a facial challenge, applicable only to free
speech cases.
By its nature, the overbreadth doctrine has to necessarily apply a facial type of invalidation in order to plot
areas of protected speech, inevitably almost always under situations not before the court, that are
impermissibly swept by the substantially overbroad regulation. Otherwise stated, a statute cannot be
properly analyzed for being substantially overbroad if the court confines itself only to facts as applied to the
litigants.
The most distinctive feature of the overbreadth technique is that it marks an exception to some of the usual
rules of constitutional litigation. Ordinarily, a particular litigant claims that a statute is unconstitutional as
applied to him or her; if the litigant prevails, the courts carve away the unconstitutional aspects of the law
by invalidating its improper applications on a case to case basis. Moreover, challengers to a law are not
permitted to raise the rights of third parties and can only assert their own interests. In overbreadth analysis,
those rules give way; challenges are permitted to raise the rights of third parties; and the court invalidates
the entire statute "on its face," not merely"as applied for" so that the overbroad law becomes unenforceable
until a properly authorized court construes it more narrowly. The factor that motivates courts to depart from
the normal adjudicatory rules is the concern with the "chilling;" deterrent effect of the overbroad statute on
third parties not courageous enough to bring suit. The Court assumes that an overbroad laws "very
existence may cause others not before the court to refrain from constitutionally protected speech or
expression." An overbreadth ruling is designed to remove that deterrent effect on the speech of those third
parties.66 (Emphasis in the original omitted; underscoring supplied.)
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In restricting the overbreadth doctrine to free speech claims, the Court, in at least two cases,67 observed cra1aw
that the US Supreme Court has not recognized an overbreadth doctrine outside the limited context of the
First Amendment,68 and that claims of facial overbreadth have been entertained in cases involving statutes
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which, by their terms, seek to regulate only spoken words.69 In Virginia v. Hicks,70 it was held that rarely,
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if ever, will an overbreadth challenge succeed against a law or regulation that is not specifically addressed
to speech or speech-related conduct. Attacks on overly broad statutes are justified by the "transcendent
value to all society of constitutionally protected expression."71 chanroble svirtual lawlib rary
Since a penal statute may only be assailed for being vague as applied to petitioners, alimited
vagueness analysis of the definition of "terrorism" in RA 9372 is legally impermissible absent an actual or
imminent charge against them
While Estrada did not apply the overbreadth doctrine, it did not preclude the operation of the vagueness test
on the Anti-Plunder Law as applied to the therein petitioner, finding, however, that there was no basis to
review the law "on its face and in its entirety."72 It stressed that "statutes found vague as a matter of due
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process typically are invalidated only 'as applied' to a particular defendant."73 chanroble svirtuallaw lib rary
American jurisprudence74 instructs that "vagueness challenges that do not involve the First Amendment
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must be examined in light of the specific facts of the case at hand and not with regard to the statute's facial
validity."
For more than 125 years, the US Supreme Court has evaluated defendants claims that criminal statutes are
unconstitutionally vague, developing a doctrine hailed as "among the most important guarantees of liberty
under law."75 chanrob lesvi rtua llawlib ra ry
In this jurisdiction, the void-for-vagueness doctrine asserted under the due process clause has been utilized
in examining the constitutionality of criminal statutes. In at least three cases,76 the Court brought the
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doctrine into play in analyzing an ordinance penalizing the non-payment of municipal tax on fishponds, the
crime of illegal recruitment punishable under Article 132(b) of the Labor Code, and the vagrancy provision
under Article 202 (2) of the Revised Penal Code. Notably, the petitioners in these three cases, similar to
those in the two Romualdez and Estrada cases, were actually chargedwith the therein assailed penal
statute, unlike in the present case.
There is no merit in the claim that RA 9372 regulates speech so as to permit a facial analysis of its validity
From the definition of the crime of terrorism in the earlier cited Section 3 of RA 9372, the following elements
may be culled: (1) the offender commits an act punishable under any of the cited provisions of the Revised
Penal Code, or under any of the enumerated special penal laws; (2) the commission of the predicate crime
sows and creates a condition of widespread and extraordinary fear and panic among the populace; and (3)
the offender is actuated by the desire to coerce the government to give in to an unlawful demand.
In insisting on a facial challenge on the invocation that the law penalizes speech, petitioners contend that
the element of "unlawful demand" in the definition of terrorism77 must necessarily be transmitted through
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some form of expression protected by the free speech clause.
The argument does not persuade. What the law seeks to penalize is conduct, not speech.
Before a charge for terrorism may be filed under RA 9372, there must first be a predicate crime actually
committed to trigger the operation of the key qualifying phrases in the other elements of the crime,
including the coercion of the government to accede to an "unlawful demand." Given the presence of the first
element, any attempt at singling out or highlighting the communicative component of the prohibition cannot
recategorize the unprotected conduct into a protected speech.
Petitioners notion on the transmission of message is entirely inaccurate, as it unduly focuses on just one
particle of an element of the crime. Almost every commission of a crime entails some mincing of words on
the part of the offender like in declaring to launch overt criminal acts against a victim, in haggling on the
amount of ransom or conditions, or in negotiating a deceitful transaction. An analogy in one U.S.
case78 illustrated that the fact that the prohibition on discrimination in hiring on the basis of race will
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require an employer to take down a sign reading "White Applicants Only" hardly means that the law should
be analyzed as one regulating speech rather than conduct.
Utterances not elemental but inevitably incidental to the doing of the criminal conduct alter neither the
intent of the law to punish socially harmful conduct nor the essence of the whole act as conduct and not
speech. This holds true a fortiori in the present case where the expression figures only as an inevitable
incident of making the element of coercion perceptible.
[I]t is true that the agreements and course of conduct here were as in most instances brought about
through speaking or writing. But it has never been deemed an abridgement of freedom of speech or press to
make a course of conduct illegal merely because the conduct was, in part, initiated,evidenced, or carried
out by means of language, either spoken, written, or printed. Such an expansive interpretation of the
constitutional guaranties of speech and press would make it practically impossible ever to enforce laws
against agreements in restraint of trade as well as many other agreements and conspiracies deemed
injurious to society.79 (italics and underscoring supplied)
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Certain kinds of speech have been treated as unprotected conduct, because they merely evidence a
prohibited conduct.80 Since speech is not involved here, the Court cannot heed the call for a facial analysis.
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IN FINE, Estrada and the other cited authorities engaged in a vagueness analysis of the therein subject
penal statute as applied to the therein petitioners inasmuch as they were actually charged with the pertinent
crimes challenged on vagueness grounds. The Court in said cases, however, found no basis to review the
assailed penal statute on its face and in its entirety.
In Holder, on the other hand, the US Supreme Court allowed the pre-enforcement review of a criminal
statute, challenged on vagueness grounds, since the therein plaintiffs faced a "credible threat of
prosecution" and "should not be required to await and undergo a criminal prosecution as the sole means of
seeking relief."
As earlier reflected, petitioners have established neither an actual charge nor a credible threat of
prosecution under RA 9372. Even a limited vagueness analysis of the assailed definition of "terrorism" is
thus legally impermissible. The Court reminds litigants that judicial power neither contemplates speculative
counseling on a statutes future effect on hypothetical scenarios nor allows the courts to be used as an
extension of a failed legislative lobbying in Congress.
WHEREFORE, the petitions are DISMISSED.
SO ORDERED.
SECOND DIVISION
G.R. No. 209331, August 24, 2015
DEPARTMENT OF FINANCE, REPRESENTED BY HON. CESAR V. PURISIMA IN HIS OFFICIAL

CAPACITY AS SECRETARY, AND THE BUREAU OF CUSTOMS, REPRESENTED BY HON. ROZZANO
RUFINO B. BIAZON, IN HIS OFFICIAL CAPACITY AS COMMISSIONER OF
CUSTOMS, Petitioners,v. HON. MARINO M. DELA CRUZ, JR., IN HIS CAPACITY AS EXECUTIVE
JUDGE, REGIONAL TRIAL COURT, MANILA, HON. FELICITAS O. LARON-CACANINDIN, IN HER
CAPACITY AS PRESIDING JUDGE, REGIONAL TRIAL COURT, MANILA, BRANCH 17, RONNIE C.
SILVESTRE, EDWARD P. DELA CUESTA, ROGEL C. GATCHALIAN, IMELDA D.CRUZ, LILIBETH S.
SANDAG, RAYMOND P. VENTURA, MA. LIZA S. TORRES, ARNEL C. ALCARAZ, MA. LOURDES V.
MANGAOANG, FRANCIS AGUSTIN Y. ERPE, CARLOS T. SO, MARIETTA D. ZAMORANOS, CARMELITA
M. TALUSAN,1] AREFILES H. CARREON,2] AND ROMALINO G. VALDEZ, Respondents.
DECISION
CARPIO, J.:
The Case
Petitioners assail the Order dated 4 October 20133 issued by Judge Felicitas O. Laron-Cacanindin (Judge
Laron-Cacanindin) of the Regional Trial Court of Manila, Branch 17 (RTC Branch 17), in Civil Case No. 13-
130820. The Order extended the 72-hour Temporary Restraining Order (TRO) issued by Executive Judge
Marino M. Dela Cruz, Jr. (Executive Judge Dela Cruz) in favor of respondents Silvestre, et al.4 to 20 days or
until 21 October 2013 without need of posting bond.
The Antecedent Facts
The case stemmed from the issuance of Executive Order No. 140 (EO 140) on 2 September 2013, which
created the Customs Policy Research Office (CPRO) in the Department of Finance (DOF). EO 140 states that
the CPRO "shall be responsible for reviewing the customs administration policies, rules and procedures, and
thereafter providing sound recommendations for the improvement of the same." Section 3 of EO 140
provides that "CPRO shall be composed of its organic personnel, as approved by the Department of Budget
and Management (DBM) upon recommendation of the DOF Secretary, augmented and reinforced by DOF
and BOC personnel as well as those detailed or seconded from other agencies, whether attached to the DOF
or not. x x x." Section 9 of EO 140 states that it shall "take effect immediately upon publication in two (2)
newspapers of general circulation." EO 140 was published in Manila Bulletin and Philippine Star on 17
September 2013.
On the same day of the publication of EO 140, Bureau of Customs (BOC) Commissioner Rozzano Rufino B.
Biazon (Commissioner Biazon) issued Customs Personnel Order No. B-189-2013 (CPO 189-2013) detailing
27 BOC personnel holding the positions of Collector of Customs V and VI, including respondents in this case,
to CPRO "effective immediately and valid until sooner revoked." CPO 189-2013 was approved by DOF
Secretary Cesar V. Purisima (Secretary Purisima).
On 30 September 2013, respondents filed an action for Declaratory Relief with Application for Temporary
Restraining Order and/or Writ of Preliminary Injunction before the Regional Trial Court (RTC) of Manila. On 1
October 2013, Executive Judge Dela Cruz issued a TRO for a period of 72 hours enjoining petitioners or any
person acting for and in their behalf from implementing CPO 189-2013. Thereafter, the case was raffled to
the sala of Judge Laron-Cacanindin.
In the assailed Order of 4 October 2013, Judge Laron-Cacanindin extended Executive Judge Dela Cruz's 72-
hour TRO for 20 days or until 21 October 2013. She then set the hearing for the issuance of a preliminary
injunction on 18 October 2013.
On 21 October 2013, petitioners filed a Petition for Certiorari and Prohibition before this Court, with prayer
for the issuance of a TRO or a writ of preliminary mandatory injunction. Petitioners alleged that the case
involves personnel action affecting public officers which is under the exclusive jurisdiction of the Civil Service
Commission (CSC). Petitioners also alleged that respondents failed to exhaust all administrative remedies
available to them before filing the petition before the RTC. Petitioners also alleged that CPO 189-2013 is an
internal personnel order with application that is limited to and only within BOC and as such, it cannot be the
subject of an action for declaratory relief.
In their Comment, respondents alleged that the case involves the validity and constitutionality of CPO 189-
2013, and thus, it is beyond the jurisdiction of the CSC. Respondents further alleged that EO 140 violated
Article 2 of the Civil Code when it became effective immediately after its publication.
In their Reply, petitioners alleged that respondents only assailed the validity of EO 140 to justify their filing
of an action for declaratory relief. As regards its effectivity, petitioners alleged that EO 140 states that it
shall "take effect immediately upon publication in two (2) newspapers of general circulation."
In an Order dated 21 October 2013, Judge Laron-Cacanindin denied respondents' application for the
issuance of a writ of preliminary injunction.
In an Order dated 5 November 2013, Judge Laron-Cacanindin inhibited herself from further hearing the
case.
The Issues
The issues for determination by this Court are the following: cralawlaw lib rary
1. Whether the RTC has jurisdiction over the action for declaratory relief filed by respondents;
2. Whether respondents failed to exhaust administrative remedies in filing the action before the RTC;
3. Whether EO 140 violated Article 2 of the Civil Code when it became effective immediately after its
publication; and
4. Whether CPO 189-2013 was validly issued.
The Ruling of this Court
Jurisdiction over the Petition
The CSC has jurisdiction over all employees of government branches, subdivisions, instrumentalities, and
agencies, including government-owned or controlled corporations with original charters.5 The CSC is the sole
arbiter of controversies relating to the civil service.6 The rule is that disciplinary cases and cases involving
personnel actions, including "appointment through certification, promotion, transfer, reinstatement,
reemployment, detail, reassignment, demotion, and separation," are within the exclusive jurisdiction of the
CSC.7 This rule is embodied in Section 1, Rule V of the Omnibus Rules Implementing Book V of Executive
Order No. 292 and Other Pertinent Civil Service Laws (Omnibus Rules) which states: cra lawlawlib rary
SECTION 1. x x x.
As used in these Rules, any action denoting movement or progress of personnel in the civil service shall be
known as personnel action. Such action shall include promotion, transfer, reinstatement, reemployment,
detail, secondment, reassignment, demotion and separation, x x x.
Under Section 8, Rule VII of the Omnibus Rules, "[a] detail is the movement of an employee from one
department or agency which is temporary in nature, which does not involve a reduction in rank, status or
salary and does not require the issuance of another appointment." CPO 189-2013 is an order detailing
personnel from the BOC to CPRO under the DOF.
A reading of the petition filed before the RTC shows that respondents were questioning their mass detail and
reassignment to CPRO. According to respondents, their detail was carried out in bad faith and was meant to
remove them from their permanent positions in the BOC. The action appears to be a personnel action under
the jurisdiction of the CSC.
However, the petition went beyond questioning the detail of respondents. Respondents further assailed the
validity and constitutionality of CPO 189-2013. Respondents alleged that CPO 189-2013 was issued even
before EC) 140, pursuant to which CPO 189-2013 was issued, became effective. Respondents alleged that
CPO 189-2013 was issued to beat the deadline of the Commission on Elections' ban on personnel movement
from 28 September 2013 to 20 October 2013 due to the scheduled barangay elections. When respondents
raised the issue of validity and constitutionality of CPO 189-2013, the issue took the case beyond the scope
of the CSC's jurisdiction because the matter is no longer limited to personnel action. Thus, the RTC did not
abuse its discretion in taking cognizance of the action.
Failure to Exhaust Administrative Remedies
Petitioners allege that respondents failed to exhaust their administrative remedies before filing the case with
the RTC.
The doctrine of exhaustion of administrative remedies allows administrative agencies to carry out their
functions and discharge their responsibilities within the specialized areas of their respective
competence.8 The doctrine entails lesser expenses and provides for the speedier resolution of
controversies.9 Therefore, direct recourse to the trial court, when administrative remedies are available, is a
ground for dismissal of the action.
The doctrine, however, is not without exceptions. Among the exceptions are: (1) where there is estoppel on
the part of the party invoking the doctrine; (2) where the challenged administrative act is patently illegal,
amounting to lack of jurisdiction; (3) where there is unreasonable delay or official inaction that will
irretrievably prejudice the complainant; (4) where the amount involved is relatively so small as to make the
rule impractical and oppressive; (5) where the question involved is purely legal and will ultimately have to
be decided by the courts of justice; (6) where judicial intervention is urgent; (7) where the application of the
doctrine may cause great and irreparable damage; (8) where the controverted acts violate due process; (9)
where the issue of non-exhaustion of administrative remedies had been rendered moot; (10) where there is
no other plain, speedy and adequate remedy; (11) where strong public interest is involved; and (12) in quo
warranto proceedings.10 cra lawredna d
In this case, respondents allege that CPO 189-2013 is contrary to law and unconstitutional. Respondents
assail CPO 189-2013 as patently illegal, arbitrary, and oppressive. This case clearly falls within the
exceptions where exhaustion of administrative remedies need not be resorted to by respondents.
Effectivity of EO 140
Respondents allege that EO 140 took effect only on 2 October 2013, fifteen days after its publication in two
newspapers of general circulation. Hence, respondents argue that when CPO 189-2013 was issued, EO 140
was not yet effective.
Article 2 of the Civil Code of the Philippines, as amended by Executive Order No. 200,11 is clear on this issue.
It states:
cralawlawlib rary
Art. 2. Laws shall take effect after fifteen days following the completion of their publication either in the
Official Gazette, or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.
The proviso "unless it is otherwise provided" refers to an effectivity date other than after fifteen days
following the completion of the law's publication.12 Thus, it is within the discretion of the legislature, or the
Executive Department in this case, whether to shorten or extend the fifteen-day period13 as long as there is
compliance with the requirement of publication.
Here, Section 9 of EO 140 provides that the "order shall take effect immediately upon publication in two (2)
newspapers of general circulation." EO 140 was published in Manila Bulletin and Philippine Staron 17
September 2013. As such, EO 140 took effect on 17 September 2013.
In addition, the Court already ruled that "[interpretative regulations and those merely internal in nature,
that is, regulating only the personnel of the administrative agency and not the public, need not be
published."14 EO 140 is an internal regulation that affects primarily the personnel of the DOF and the BOC. It
remains valid even without publication.
Validity of CPO 189-2013
Respondents assail the validity of CPO 189-2013. Respondents allege that under EO 140, CPRO shall be
composed of its organic personnel, as approved by the DBM upon recommendation of the DOF Secretary.
The organic personnel was supposed to be augmented and reinforced by DOF and BOC personnel.
Respondents allege that they were detailed to CPRO even before its organic personnel could be constituted.
We rule for respondents.
Section 3 of EO 140 provides: cralawlawl ib rary
SECTION 3. Personnel and Staffing Complement. The CPRO shall be composed of its organic personnel, as
approved by the Department of Budget and Management (DBM) upon recommendation of the DOF
Secretary, augmented and reinforced by DOF and BOC personnel as well as those detailed or seconded from
other agencies, whether attached to the DOF or not. In addition, the CPRO, upon approval of the DOF
Secretary, may hire or engage technical consultants to provide necessary support in the performance of its
mandate.
Respondents were supposed to augment and reinforce the existing organic personnel of CPRO. Yet, at the
time of respondents' detail, CPRO had not been formally organized. CPRO had no organic personnel that had
been approved by the DBM upon recommendation of the DOF Secretary. The DOF Secretary had yet to
promulgate rules and regulations and to prescribe procedures and processes to enable CPRO to effectively
exercise its powers and duties, as required by Section 4 of EO 140.
In addition, under Section 8, Rule VII of the Omnibus Rules, a detail is temporary in nature. In fact, detail of
employees is only allowed for a maximum, period for those occupying professional, technical, and scientific
positions.15 Section 8, Rule VII of the Omnibus Rules provides: c ralawlawli bra ry
SEC. 8. A detail is the movement of an employee from one department or agency to another which is
temporary in nature, which does not involve a reduction in rank, status or salary and does not require the
issuance of another appointment.
The employee detailed receives his salary only from his mother unit/agency.
Detail shall be allowed only for a maximum period in the case of employees occupying professional,
technical and scientific position. If the employee believes that there is no justification for the detail, he may
appeal his case to the Commission. Pending appeal, the decision to detail the employee shall be executory
unless otherwise ordered by the Commission.
Section 2 of CSC Resolution No. 021181, dated 13 September 2002,16 clarified the maximum period of detail
of employees. It states:cralawlawlib ra ry
Section 2. Duration of the detail. The detail shall be allowed only for a maximum period of one year. Details
beyond one year may be allowed provided it is with the consent of the detailed employee. The extension or
renewal of the period of the detail shall be within the authority of the mother agency.
If the employee believes that there is no justification for the detail, he/she may appeal his/her case to the
proper Civil Service Commission Regional Office. Pending appeal, the detail shall be executory unless
otherwise ordered by said regional office. Decision of said regional office may be further appealed to the
Commission en banc.
In this case, CPO 189-2013 did not provide for the period of respondents' detail. It only provided that the
order "shall be effective immediately and valid until sooner revoked," making the detail of respondents
indefinite. There was nothing to show that respondents were occupying professional, technical, and scientific
positions that would have allowed their detail for the maximum period provided under Section 8, Rule VII of
the Omnibus Rules. Further, CSC Resolution No. 021181 did not distinguish between an ordinary employee
and an employee occupying professional, technical, and scientific position. Hence, it should have been
specified that the maximum period of respondents' detail should not exceed one year.
Petitioners assert, and we quote: cralawlaw lib rary
There is a cancer of corruption we must extinguish. The drive to rid the government of graft and corruption
deserves the support of everyone.
The principle of good governance cannot, should not, be trivialized nor oversimplified by tenuous
whimpering and individualism intended to detract from the urgent need to cleanse the Republic from a
mainstream culture of unabated corruption, perpetuated with impunity and sense of self-entitlement. The
issue at hand is not about who, but what; it is not about individual loss, but about national gain. Whether
from the birth pains of reform, this nation can gain a foothold, nay, a stride into restoring this nation into its
prideful place from the clutches of a "kleptocratic mafia" that had gained a strangehold into one of the
nation's primary sources of revenue.17
Indeed, we commend and support the reforms being undertaken in the different agencies of the
government. However, we cannot allow department heads to take shortcuts that will undermine and
disregard the basic procedures of the law.
WHEREFORE, we PARTIALLY GRANT the petition. We sustain the validity of Executive Order No. 140. We
rule that the Regional Trial Court has jurisdiction over the action for declaratory relief filed by respondents.
We further rule that Customs Personnel Order No. B-189-2013 was not validly issued.
SO ORDERED. cha
SCA-REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA, R64
EN BANC
G.R. No. 206987, September 10, 2013
ALLIANCE FOR NATIONALISM AND DEMOCRACY (ANAD), Petitioner, v. COMMISSION ON

ELECTIONS, Respondent.
DECISION
PEREZ, J.:
Before the Court is a Petition for Certiorari with Urgent Prayer for the Issuance of a Temporary Restraining
Order and Writ of Mandamus, seeking to compel the Commission on Elections (COMELEC) to canvass the
votes cast for petitioner Alliance for Nationalism and Democracy (ANAD) in the recently held 2013 Party-List
Elections.
On 7 November 2012, the COMELEC En Banc promulgated a Resolution cancelling petitioner’s Certificate of
Registration and/or Accreditation on three grounds, to wit:1
I.
Petitioner ANAD does not belong to, or come within the ambit of, the marginalized and underrepresented
sectors enumerated in Section 5 of R.A. No. 7941 and espoused in the cases of Ang Bagong Bayani-OFW
Labor Party v. Commission on Elections andAng Ladlad LGBT Party v. Commission on Elections.
II.
There is no proof showing that nominees Arthur J. Tariman and Julius D. Labandria are actually nominated
by ANAD itself. The Certificate of Nomination, subscribed and sworn to by Mr. Domingo M. Balang, shows
that ANAD submitted only the names of Pastor Montero Alcover, Jr., Baltaire Q. Balangauan and Atty. Pedro
Leslie B. Salva. It necessarily follows, that having only three (3) nominees, ANAD failed to comply with the
procedural requirements set forth in Section 4, Rule 3 of Resolution No. 9366.
III.
ANAD failed to submit its Statement of Contributions and Expenditures for the 2007 National and Local
Elections as required by Section 14 of Republic Act No. 7166 (“R.A. No. 7166”).
ANAD went before this Court challenging the above-mentioned resolution. In Atong Paglaum, Inc. v.
Comelec,2 the Court remanded the case to the COMELEC for re-evaluation in accordance with the
parameters prescribed in the aforesaid decision.
In the assailed Resolution dated 11 May 2013,3 the COMELEC affirmed the cancellation of petitioner’s
Certificate of Registration and/or Accreditation and disqualified it from participating in the 2013 Elections.
The COMELEC held that while ANAD can be classified as a sectoral party lacking in well-defined political
constituencies, its disqualification still subsists for violation of election laws and regulations, particularly for
its failure to submit at least five nominees, and for its failure to submit its Statement of Contributions and
Expenditures for the 2007 Elections.
Hence, the present petition raising the issues of whether or not the COMELEC gravely abused its discretion
in promulgating the assailed Resolution without the benefit of a summary evidentiary hearing mandated by
the due process clause, and whether or not the COMELEC erred in finding that petitioner submitted only
three nominees and that it failed to submit its Statement of Contributions and Expenditures in the 2007
Elections.4cra law virt ualaw lib ra ry
We dismiss the petition.
The only question that may be raised in a petition for certiorari under Section 2, Rule 64 of the Rules of
Court is whether or not the COMELEC acted with grave abuse of discretion amounting to lack or excess of
jurisdiction. For a petition for certiorari to prosper, there must be a clear showing of caprice and
arbitrariness in the exercise of discretion.5 c ralaw virtualaw l ibra ry
“Grave abuse of discretion,” under Rule 65, has a specific meaning. It is the arbitrary or despotic exercise of
power due to passion, prejudice or personal hostility; or the whimsical, arbitrary, or capricious exercise of
power that amounts to an evasion or a refusal to perform a positive duty enjoined by law or to act at all in
contemplation of law. For an act to be struck down as having been done with grave abuse of discretion, the
abuse of discretion must be patent and gross.6 cralaw virtua law lib rary
ANAD claims that the COMELEC gravely abused its discretion when it promulgated the assailed Resolution
without giving ANAD the benefit of a summary evidentiary hearing, thus violating its right to due process. It
is to be noted, however, that ANAD was already afforded a summary hearing on 23 August 2013, during
which Mr. Domingo M. Balang, ANAD’s president, authenticated documents and answered questions from
the members of the COMELEC pertinent to ANAD’s qualifications.7 cralaw vi rtualaw l ibra ry
ANAD, nonetheless, insists that the COMELEC should have called for another summary hearing after this
Court remanded the case to the COMELEC for re-evaluation in accordance with the parameters laid down
in Atong Paglaum, Inc. v. Comelec. This is a superfluity.
ANAD was already given the opportunity to prove its qualifications during the summary hearing of 23 August
2012, during which ANAD submitted documents and other pieces of evidence to establish said qualifications.
In re-evaluating ANAD’s qualifications in accordance with the parameters laid down inAtong Paglaum, Inc. v.
COMELEC, the COMELEC need not have called another summary hearing. The Comelec could, as in fact it
did,8 readily resort to documents and other pieces of evidence previously submitted by petitioners in re-
appraising ANAD’s qualifications. After all, it can be presumed that the qualifications, or lack thereof, which
were established during the summary hearing of 23 August 2012 continued until election day and even
thereafter.
As to ANAD’s averment that the COMELEC erred in finding that it violated election laws and regulations, we
hold that the COMELEC, being a specialized agency tasked with the supervision of elections all over the
country, its factual findings, conclusions, rulings and decisions rendered on matters falling within its
competence shall not be interfered with by this Court in the absence of grave abuse of discretion or any
jurisdictional infirmity or error of law.9cralaw vi rtualaw l ibra ry
As found by the COMELEC, ANAD, for unknown reasons, submitted only three nominees instead of five, in
violation of Sec. 8 of R.A. No. 7941 (An Act Providing for the Election of Party-List Representatives through
the Party-List System, and Appropriating Funds Therefor).10 Such factual finding of the COMELEC was based
on the Certificate of Nomination presented and marked by petitioner during the 22 and 23 August 2012
summary hearings.11 cralaw virt ualaw lib ra ry
Compliance with Section 8 of R.A. No. 7941 is essential as the said provision is a safeguard against
arbitrariness. Section 8 of R.A. No. 7941 rids a party-list organization of the prerogative to substitute and
replace its nominees, or even to switch the order of the nominees, after submission of the list to the
COMELEC.
In Lokin, Jr. v. Comelec,12 the Court discussed the importance of Sec. 8 of R.A. No. 7941 in this wise: c hanro bles vi rtua 1aw 1ib rary
The prohibition is not arbitrary or capricious; neither is it without reason on the part of lawmakers. The
COMELEC can rightly presume from the submission of the list that the list reflects the true will of the party-
list organization. The COMELEC will not concern itself with whether or not the list contains the real intended
nominees of the party-list organization, but will only determine whether the nominees pass all the
requirements prescribed by the law and whether or not the nominees possess all the qualifications and none
of the disqualifications. Thereafter, the names of the nominees will be published in newspapers of general
circulation. Although the people vote for the party-list organization itself in a party-list system of election,
not for the individual nominees, they still have the right to know who the nominees of any particular party-
list organization are. The publication of the list of the party-list nominees in newspapers of general
circulation serves that right of the people, enabling the voters to make intelligent and informed choices. In
contrast, allowing the party-list organization to change its nominees through withdrawal of their
nominations, or to alter the order of the nominations after the submission of the list of nominees
circumvents the voters’ demand for transparency. The lawmakers’ exclusion of such arbitrary withdrawal
has eliminated the possibility of such circumvention.
Moreover, the COMELEC also noted ANAD’s failure to submit a proper Statement of Contributions and
Expenditures for the 2007 Elections, in violation of COMELEC Resolution No. 9476, viz: chan roble s virtua1aw 1 ibra ry
Rule 8, Sec. 3. Form and contents of statements. – The statement required in next preceding section shall
be in writing, subscribed and sworn to by the candidate or by the treasurer of the party. It shall set forth in
detail the following:
a. The amount of contribution, the date of receipt, and the full name, profession, business, taxpayer
identification number (TIN) and exact home and business address of the person or entity from
whom the contribution was received; (See Schedule of Contributions Received, Annex “G”)
b. The amount of every expenditure, the date thereof, the full name and exact address of the person
or entity to whom payment was made, and the purpose of the expenditure; (See Schedule of
Expenditures, Annex “H”)
A Summary Report of Lawful Expenditure categorized according to the list specified above shall be
submitted by the candidate or party treasurer within thirty (30) days after the day of the election.
The prescribed form for this Summary Report is hereby attached to these Rules as Annex “H-1.”
c. Any unpaid obligation, its nature and amount, the full name and exact home and business address
of the person or entity to whom said obligation is owing; and (See Schedule of Unpaid Obligations,
Annex “I”)
d. If the candidate or treasurer of the party has received no contribution, made no expenditure, or has
no pending obligation, the statement shall reflect such fact;
e. And such other information that the Commission may require.
The prescribed form for the Statement of Election Contributions and Expenses is attached to these
Rules as Annex “F.” The Schedules of Contributions and Expenditures (Annexes “G” and “H”,
respectively) should be supported and accompanied by certified true copies of official receipts,
invoices and other similar documents.
An incomplete statement, or a statement that does not contain all the required information and
attachments, or does not conform to the prescribed form, shall be considered as not filed and shall
subject the candidate or party treasurer to the penalties prescribed by law.
As found by the COMELEC, ANAD failed to comply with the above-mentioned requirements as the exhibits
submitted by ANAD consisted mainly of a list of total contributions from other persons, a list of official
receipts and amounts without corresponding receipts, and a list of expenditures based on order slips and
donations without distinction as to whether the amounts listed were advanced subject to reimbursement or
donated.13 This factual finding was neither contested nor rebutted by ANAD.
We herein take the opportunity to reiterate the well-established principle that the rule that factual findings
of administrative bodies will not be disturbed by the courts of justice except when there is absolutely no
evidence or no substantial evidence in support of such findings should be applied with greater force when it
concerns the COMELEC, as the framers of the Constitution intended to place the COMELEC – created and
explicitly made independent by the Constitution itself – on a level higher than statutory administrative
organs. The COMELEC has broad powers to ascertain the true results of the election by means available to
it. For the attainment of that end, it is not strictly bound by the rules of evidence.14 c ralaw vi rtual aw libra ry
As empowered by law, the COMELEC may motu proprio cancel, after due notice and hearing, the registration
of any party-list organization if it violates or fails to comply with laws, rules or regulations relating to
elections.15 Thus, we find no grave abuse of discretion on the part of the COMELEC when it issued the
assailed Resolution dated 11 May 2013.
In any event, the official tally results of the COMELEC show that ANAD garnered 200,972 votes.16 As such,
even if petitioner is declared qualified and the votes cast for it are canvassed, statistics show that it will still
fail to qualify for a seat in the House of Representatives.
WHEREFORE, premises considered, the Court Resolves to DISMISS the Petition, finding no grave abuse of
discretion on the part of the Commission on Elections. chanroble svi rtualaw li brary
SO ORDERED.

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SCA-INTERPLEADER,R62

[G.R. No. L-23851. March 26, 1976.]

Leonardo Abola, for Plaintiff-Appellant.

B.A. Tan, Jr. for defendant-appellee B.A. Tan.

Alfonso V. Agcaoli and Ramon A. Barcelona for defendant-appellee Lee E. Won.

1. SPECIAL CIVIL ACTION; INTERPLEADER; A REMEDY TO DETERMINE CONFLICTING CLAIMS ON

Barredo and Martin, JJ., took no part.

Fernando, J., is on official leave.

[G.R. No. 73794. September 19, 1988.]

ETERNAL GARDENS MEMORIAL PARKS CORPORATION, Petitioner, v. FIRST SPECIAL CASES

1. REMEDIAL LAW; JUDGMENTS; AMENDMENTS ALLOWED BEFORE FINALITY TO MAKE JUDGMENT

Said case is still pending in the lower Court.

Hence, this petition.

Melencio-Herrera, Padilla, Sarmiento and Regalado, JJ., concur.

[G.R. NO. 136409 : March 14, 2008]

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:

For Rooms 33 and 34:

For Rooms 36, 37 and 38:

The petition lacks merit.

Article 1256 of the Civil Code provides:

Moreover, Section 1, Rule 62 of the Rules of Court provides:

G.R. Nos. 154470-71 : September 24, 2012

BANK OF COMMERCE, Petitioner, v. PLANTERS DEVELOPMENT BANK and BANGKO SENTRAL NG

G.R. Nos. 154589-90

BANGKO SENTRAL NG PILIPINAS, Petitioner, v. PLANTERS DEVELOPMENT BANK, Respondent.

The Central Bank bills

I. First set of CB bills

The transfer of the first set of seven CB bills

i. CB bill nos. 45351-53

Serial No.: 2BB XM 045351

ii. CB bill nos. 45347-50

Serial No.: 2BB XM 045348

II. Second set of CB bills

particularly described as follows:

Serial No.: BB XM 045373

books of the BSP.25 Ï‚rÎ½ ll

provision reads: c hanro blesvi rt uallawl ibra ry

BOC, as security collateral.

PDB identically prayed: chan roble svirtuallaw lib rary

(a) the sum of P 100,000.00, as and for exemplary damages;

(d) the costs of suit.36 Ï‚rÎ½ll

Defenses of the BSP and of the BOC37 Ï‚rÎ½l l

a. Ordering the dismissal of the PDBs petition for lack of merit;

That BOC prayed:

Amended Consolidated Answer with Compulsory Counterclaims.

for review on certiorari.66 Ï‚rÎ½l l

THE BOCS and THE BSPS PETITIONS

THE PDBS COMMENT

THE COURTS RULING

We grant the petitions.

its own position of harmonization.

"modif[ying" "all circulars" which are inconsistent with its terms.