CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
RULE 62: INTERPLEADER
ARTICLE 1256 OF THE NEW CIVIL CODE
GREGORIO R. SYQUIA, VS. THE SHERIFF OF ILOCOS SUR
AND FILADELFO DE LEON
FACTS: On February 3, 1915, Miguel Aglipay Cheng-Laco and
Feliciano Reyes Cheng-Kiango executed a chattel mortgage in
favor of the petitioner Gregorio R. Sy-Quia on their mercantile
establishment, with all the merchandise therein contained, as
security for a debt of F6,000. The chattel mortgage was duly
recorded on the date of its execution and fell due on February
3, 1917. From its terms it may be inferred that it was the
intention of the parties that the mortgagors were to be
permitted to sell the merchandise replenishing their stock
from time to time and that the new stock brought in should
also be subject to the mortgage.
On May 5, 1924, Miguel Aglipay Cheng-Laco executed
another chattel mortgage on the same establishment and all
its contents in favor of the respondent Filadelfo de Leon as
security for the sum of P4,900, which mortgage was recorded
on May 14, 1924.
On the latter date the petitioner, in writing, requested the
sheriff to take possession of the mortgaged property and to
sell it at public auction under the provisions of section 14 of
the Chattel Mortgage Law (Act No. 1508).
The sheriff seized the establishment in question as well as its
contents and fixed the date of the sale at June 2, 1924.
Filadelfo de Leon presented an adverse claim to the property
by virtue of his chattel mortgage.
The sheriff being in doubt as to the priority of the conflicting
claims, suspended the foreclosure proceedings and brought
an action under section 120 of the Code of Civil Procedure
requiring the two claimants to interplead.
ISSUE: Whether the petition for a writ of mandamus to compel
the Sheriff of the Province of Ilocos Sur to proceed with a
chattel mortgage foreclosure sale shall be granted
HELD: NO. The facts shown do not justify our interference by
mandamus. The sheriff might lay himself open to an action for
damages if he sold the goods without the consent of the
holder of the last mortgage, and it does not appear that the
petitioner offered to give bond to hold him harmless in such
an event. In these circumstances, his action in suspending the
sale pending the determination of the action of interpleader
seems justified.
UNITED COCONUT PLANTERS BANK VS. HON.
INTERMEDIATE APPELLATE COURT and MAKATI BEL-AIR
CONDOMINIUM DEVELOPERS, INC.
FACTS: On 23 July 1979, petitioner United Coconut Planters
Bank (Bank) filed in the lower court a complaint-in-
interpleader against private respondent Makati Bel-Air and
against Altiura Investors, Inc. (Altiura). The subject matter of
the complaint was a manager's check in the amount of
P494,000.00 issued by petitioner Bank payable to Makati Bel-
Air, having been purchased by Altiura who delivered the
check to Makati Bel-Air as part payment on an office
condominium unit in the Cacho-Gonzales Building, on 16 July
1979.
On 17 July 1979, petitioner Bank received from Altiura
instructions to hold payment on the manager's check, in view
of a material discrepancy in the area of the office unit
purchased by Altiura. Petitioner Bank immediately requested
Makati Bel-Air, to advise the Bank why it should not issue the
stop payment order requested by Altiura.
The next day, Petitioner Bank received a reply from Makati Bel-
Air explaining the latter's side of the controversy and at the
same proposing a possible reduction of the office unit's
purchase price.
On 20 July 1979, petitioner Bank was advised in writing by
Makati Bel-Air that the latter did not agree to the request of
the Bank set out in the latter's letter of 19 July 1979.
Thereupon, petitioner Bank filed a complaint-in-interpleader
against Altiura and Makati Bel-Air to require the latter to
litigate with each other their respective claims over the funds
represented by the manager's check involved, and at the same
time asking the court for authority to deposit the funds in a
special account until the conflicting claims shall have been
adjudicated.
On 29 August 1979, petitioner Bank filed a "motion to
withdraw complaint and motion to dismiss counter-claim",
stating that there was no longer any conflict between Makati
Bel-Air and Altiura as to who was entitled to the funds covered
by the manager's check, since Makati Bel-Air in its answer had
alleged that it had cancelled and rescinded the sale of the
condominium unit and had relinquished any claim it had over
the funds covered by the manager's check.
On 28 April 1983, the trial court issued an order resolving
petitioner Bank's motion to withdraw complaint-in-
interpleader and to dismiss counter-claim, declaring that
motion to withdraw the complaint-in-interpleader had been
rendered moot and academic by the court's earlier order of
18 February 1980 directing petitioner Bank to release to
Altiura the P494,000.00 covered by the manager's check,
which Makati Bel-Air had not opposed nor appealed from.
In the instant Petition for Review on Certiorari, petitioner Bank
argues that Makati Bel-Air's counter-claim was compulsory in
nature and had therefore been dissolved when the complaint-
in-interpleader was withdrawn and dismissed. Makati Bel-Air
argues upon the other hand, that its counterclaim was not a
compulsory one.
ISSUE: Whether the bank’s recourse to interpleader is proper
HELD: YES. Under Section 4, Rule 9 of the Revised Rules of
Court, a compulsory counterclaim is "one which arises out of
or is necessarily connected with the transaction or occurrence
that is the subject matter of the opposing party's
claim." Interpleader is a proper remedy where a bank which
had issued a manager's check is subjected to opposing claims
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
by persons who respectively claim a right to the funds covered
by the manager's check.
When the trial court granted petitioner's motion for
withdrawal of its complaint-in-interpleader, as having become
moot and academic by reason of Makati Bel-Air's having
cancelled the sale of the office unit to Altiura and having
returned the manager's check to the Bank and acquiesced in
the release of the funds to Altiura, the trial court in effect held
that petitioner Bank's recourse to interpleader was proper and
not a frivolous or malicious maneuver to evade its obligation
to pay to the party lawfully entitled the funds represented by
the manager's check. Having done so, the trial court could not
have logically allowed Makati Bel-Air to recover on its
counterclaim for damages against petitioner Bank.
ELIZABETH DEL CARMEN VS. SPOUSES RESTITUTO
SABORDO and MIMA MAHILUM-SABORDO
FACTS: In 1961, the spouses Toribio and Eufrocina Suico
(Suico spouses), along with several business partners, entered
into a business venture. As part of their capital, they obtained
a loan from the Development Bank of the Philippines (DBP),
and to secure the said loan, four parcels of land owned by the
Suico spouses, denominated as Lots 506, 512, 513 and 514,
and another lot owned by their business partner, Juliana Del
Rosario, were mortgaged.
Subsequently, the Suico spouses and their business partners
failed to pay their loan obligations forcing DBP to foreclose the
mortgage. After the Suico spouses and their partners failed to
redeem the foreclosed properties, DBP consolidated its
ownership over the same.
Nonetheless, DBP later allowed the Suico spouses and
Reginald and Beatriz Flores (Flores spouses), as substitutes for
Juliana Del Rosario, to repurchase the subject lots by way of a
conditional sale for the sum of ₱240,571.00. The Suico and
Flores spouses were able to pay the down payment and the
first monthly amortization, but no monthly installments were
made thereafter.
Threatened with the cancellation of the conditional sale, the
Suico and Flores spouses sold their rights over the said
properties to herein respondents Restituto and Mima
Sabordo, subject to the condition that the latter shall pay the
balance of the sale price. On September 3, 1974, respondents
and the Suico and Flores spouses executed a supplemental
agreement whereby they affirmed that what was sold to
respondents were Lots 512 and 513, while Lots 506 and 514
were given to them as usufructuaries.
On September 13, 1976, respondent Restituto Sabordo
(Restituto) filed with the then Court of First Instance of Negros
Occidental an original action for declaratory relief with
damages and prayer for a writ of preliminary injunction raising
the issue of whether or not the Suico spouses have the right to
recover from respondents Lots 506 and 514. RTC ruled in favor
of the Suicos.
On February 13, 1991, the CA granted the Suico spouses an
additional period of 90 days from notice within which to
exercise their option to purchase or redeem the disputed lots.
In the meantime, Toribio Suico (Toribio) died leaving his
widow, Eufrocina, and several others, including herein
petitioner, as legal heirs. Later, they discovered that
respondents mortgaged Lots 506 and 514 with Republic
Planters Bank (RPB) as security for a loan which, subsequently,
became delinquent.
Thereafter, claiming that they are ready with the payment of
₱127,500.00, but alleging that they cannot determine as to
whom such payment shall be made, petitioner and her co-
heirs filed a Complaint with the RTC of San Carlos City, Negros
Occidental seeking to compel herein respondents and RPB to
interplead and litigate between themselves their respective
interests on the money.
ISSUES:
A. Whether the consignation is valid
B. Whether the interpleader is proper
HELD:
(A) NO. Consignation is the act of depositing the thing due
with the court or judicial authorities whenever the creditor
cannot accept or refuses to accept payment, and it generally
requires a prior tender of payment. It should be distinguished
from tender of payment which is the manifestation by the
debtor to the creditor of his desire to comply with his
obligation, with the offer of immediate performance.
Tender is the antecedent of consignation, that is, an act
preparatory to the consignation, which is the principal, and
from which are derived the immediate consequences which
the debtor desires or seeks to obtain. Tender of payment may
be extrajudicial, while consignation is necessarily judicial, and
the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of
consignation. Tender and consignation, where validly made,
produces the effect of payment and extinguishes the
obligation.
In the cases of Del Rosario v. Sandico and Salvante v.
Cruz, Court held that for a consignation or deposit with the
court of an amount due on a judgment to be considered as
payment, there must be prior tender to the judgment creditor
who refuses to accept it.
It is settled that compliance with the requisites of a valid
consignation is mandatory. Failure to comply strictly with any
of the requisites will render the consignation void. One of
these requisites is a valid prior tender of payment.
Under Article 1256, the only instances where prior tender of
payment is excused are: (1) when the creditor is absent or
unknown, or does not appear at the place of payment; (2)
when the creditor is incapacitated to receive the payment at
the time it is due; (3) when, without just cause, the creditor
refuses to give a receipt; (4) when two or more persons claim
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
the same right to collect; and (5) when the title of the
obligation has been lost.
None of these instances are present in the instant case. Hence,
the fact that the subject lots are in danger of being foreclosed
does not excuse petitioner and her co-heirs from tendering
payment to respondents, as directed by the court.
(B) NO. In the instant case, petitioner and her co-heirs, upon
making the deposit with the RTC, did not ask the trial court that
respondents be notified to receive the amount that they have
deposited. In fact, there was no tender of payment. Instead,
what petitioner and her co-heirs prayed for is that respondents
and RPB be directed to interplead with one another to
determine their alleged respective rights over the consigned
amount.
The trial court correctly ruled that interpleader is not the
proper remedy because RPB did not make any claim
whatsoever over the amount consigned by petitioner and her
co-heirs with the court.
EDGAR H. ARREZA VS. MONTANO M. DIAZ, JR.
FACTS: Bliss Development Corporation is the owner of a
housing unit located at Lot 27. Block 30 New Capitol Estates I,
Barangay Matandang Balara, Quezon City. In the course of a
case involving a conflict of ownership between petitioner
Edgar H. Arreza and respondent Montano M. Diaz, Jr., Bliss
Development Corporation filed a complaint for interpleader.
The interpleader is resolved in favor of defendant Edgar H.
Arreza, and plaintiff Bliss Development is granted cognizance
of the May 6, 1991 transfer of rights to said defendant Edgar
Arreza. The case is dismissed as against defendant Montano
M. Diaz, Jr.
The decision became final and was duly executed with Bliss
executing a Contract to Sell the said property to petitioner
Arreza. Respondent Diaz was constrained to deliver the
property with all its improvements to petitioner.
Thereafter, respondent Diaz filed a complaint against Bliss
Development Corporation, Edgar H. Arreza, and Domingo
Tapay seeking to hold Bliss Development Corporation and
petitioner Arreza liable for reimbursement to him of
P1,706,915;58 representing the cost of his acquisition and
improvements on the subject property with interest at 8% per
annum.
Petitioner Arreza filed a Motion to Dismiss the case, citing as
grounds res adjudicata or conclusiveness of the judgment in
the interpleader case as well as lack of cause of action.
ISSUE: Whether the case is barred by res judicata
HELD: YES. Worthy of note, the prior case for interpleader was
settled with finality.
The elements of res adjudicata are: (a) that the former
judgment must be final; (b) the court which rendered
judgment had jurisdiction over the parties and the subject
matter; (c) it must be a judgment on the merits; and (d) there
must be between the first and second causes of action identity
of the parties, subject matter, and cause of action.
As stated by the Court of Appeals, the court in a complaint for
interpleader shall determine the rights and obligations of the
parties and adjudicate their respective claims. Such rights,
obligations, and claims could only be adjudicated if put
forward by the aggrieved party in assertion of his rights. That
party in this case referred to respondent Diaz.
The second paragraph of Section 5 of Rule 62 of the 1997
Rules of Civil Procedure provides that the parties in an
interpleader action may file counterclaims, cross-claims, third
party complaints and responsive pleadings thereto, "as
provided by these Rules." The second paragraph was added
to Section 5 to expressly authorize the additional pleadings
and claims enumerated therein, in the interest of a complete
adjudication of the controversy and its incidents.
Although the alternative defense of being builders in good
faith is only permissive, the counterclaim for reimbursement of
the value of the improvements is in the nature of a compulsory
counterclaim. Thus, the failure by the private respondents to
set it up bars their right to raise it in a subsequent litigation
(Rule 9, Section 4 of the Rules of Court.)
In cases involving res adjudicata, the parties and the causes of
action are identical or substantially the same in the prior as well
as the subsequent action. The judgment in the first action is
conclusive as to every matter offered and received therein and
as to any other matter admissible therein and which might
have been offered for that purpose, hence said judgment is an
absolute bar to a subsequent action for the same cause. The
bar extends to questions "necessarily involved in an issue, and
necessarily adjudicated, or necessarily implied in the final
judgment, although no specific finding may have been made
in reference thereto, and although such matters were directly
referred to in the pleadings and were not actually or formally
presented." Said prior judgment is conclusive in a subsequent
suit between the same parties on the same subject matter, and
on the same cause of action, not only as to matters which were
decided in the first action, but also as to every other matter
which the parties could have properly set up in the prior suit.
LUI ENTERPRISES, INC. VS. ZUELLIG
FACTS: Lui Enterprises, Inc. and Zuellig Pharma Corporation
entered into a "10-year contract of lease over a parcel of land.
Zuellig received a letter from the Philippine Bank of
Communications. Claiming to be the new owner of the leased
property, the bank asked Zuellig to pay rent directly to it.
Zuellig promptly informed Lui Enterprises of the Bank’s claim.
Lui Enterprises wrote to Zuellig and insisted on its right to
collect the leased property’s rent.
Due to the conflicting claims of Lui Enterprises and the
PBCOM over the rental payments, Zuellig pharma filed a
complaint for interpleader with the RTC of Makati. Zuellig
prayed that it be allowed to consign in court its succeeding
monthly rental payments and that Lui Enterprises and the
PBCOM be ordered to litigate their conflicting claims.
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
Lui Enterprises filed a motion to dismiss on the ground that
Zuellig’s alleged representative did not have authority to file
the complaint for interpleader on behalf of the corporation.
According to Lui Enterprises, an earlier filed nullification of
deed of dation in payment case pending with the RTC of
Davao barred the filing of the interpleader case. Lui
Enterprises filed this nullification case against the PBCOM with
respect to several properties it dationed to the bank in
payment of its obligations. The property leased by Zuellig was
among those allegedly dationed to the PBCOM.
In the nullification of deed of dation in payment case, Lui
Enterprises raised the issue of which corporation had the
better right over the rental payments. Lui Enterprises argued
that the same issue was involved in the interpleader case. To
avoid possible conflicting decisions of the Davao trial court
and the Makati trial court on the same issue, Lui Enterprises
argued that the subsequently filed interpleader case be
dismissed. Zuellig argued that the motion to dismiss should
be denied for having been filed late. With respect to the
nullification of deed of dation in payment case, Zuellig argued
that its pendency did not bar the filing of the interpleader case.
It was not a party to the nullification case.
The PBCOM joined Zuellig in moving to declare Lui
Enterprises in default, and in moving for the denial of Lui
Enterprises’ motion to dismiss.
The RTC of Makati found that Lui Enterprises failed to file its
motion to dismiss within the reglementary period. Thus, the
trial court denied Lui Enterprises’ motion to dismiss and
declared it in default. Lui Enterprises did not move for the
reconsideration of the order. Thus, the Makati trial court heard
the interpleader case without Lui Enterprises’ participation.
Despite having been declared in default, Lui Enterprises filed
the manifestation with prayer to observe status quo with
regard to the rental payments and continue remitting their
rental payments to Lui Enterprises while the nullification of
deed of dation in payment case was being resolved. Lui
Enterprises argued that its failure to file a motion to dismiss on
time was caused by the negligence of its former counsel. This
negligence was allegedly excusable because Lui Enterprises
was pre1udiced and prevented from fairly presenting its case.
Zuellig argued that a counsel’s failure to file a timely answer
was inexcusable negligence which bound his client. Further,
Zuellig argued that the pending case for nullification of deed
of dation in payment did not preclude Zuellig from seeking the
relief prayed for in the interpleader case. Makati trial court
denied the manifestation with motion to dismiss the ground
that Lui Enterprises already lost its standing in court. The lower
court ruled that Lui Enterprises was barred from any claim in
respect of the rental payments since it was declared in default.
Lui Enterprises appealed to the CA which sustained the trial
court. The CA found Lui Enterprises’ appellant’s brief
insufficient. The CA found that Lui Enterprises filed its motion
to dismiss four days late. Lui Enterprises filed a motion for
reconsideration. The CA denied Lui Enterprises’ motion for
reconsideration.
Issues:
I. Whether the CA erred in dismissing Lui
Enterprises’ appeal for lack of subject index,
page references to the record, table of cases,
textbooks and statutes cited, and the statement
of issues in Lui Enterprises’ appellant’s brief;
II. whether the RTC of Makati erred in denying Lui
Enterprises’ motion to set aside order of default;
III. Whether the annulment of deed of dation in
payment pending in the Regional Trial Court of
Davao barred the subsequent filing of the
interpleader case in the Regional Trial Court of
Makati
Lui Enterprises’ petition for review on certiorari is without
merit.
I. Lui Enterprises did not comply with the rules
on the contents of the appellant’s brief
In this case, Lui Enterprises did not substantially comply with
the rules on the contents of the appellant’s brief. It admitted
that its appellant’s brief lacked the required subject index,
page references to the record, and table of cases, textbooks,
and statutes cited. However, it did not even correct its
admitted “technical omissions” by filing an amended
appellant’s brief with the required contents. Thus, this case
does not allow a relaxation of the rules.
II. Lui Enterprises failed to show that its failure to
answer the complaint within the required
period was due to excusable negligence
When a defendant is served with summons and a copy of the
complaint, he or she is required to answer within "15 days from
the day he or she was served with summons. The defendant
may also move to dismiss the complaint within the time for but
before filing the answer. Fifteen days is sufficient time for a
defendant to answer with good defenses against the plaintiff’s
allegations in the complaint. Thus, a defendant who fails to
answer within 15 days from service of summons either
presents no defenses against the plaintiff’s allegations in the
complaint or was prevented from filing his or her answer within
the required period due to fraud, accident, mistake or
excusable negligence.
In either case, the court may declare the defendant in default
on plaintiff’s motion and notice to defendant. The court shall
then try the case until judgment without defendant’s
participation and grant the plaintiff such relief as his or her
complaint may warrant. A defendant declared in default loses
his or her standing in court. However, the defendant declared
in default does not waive all of his or her rights. He or she still
has the right to receive notice of subsequent proceedings.
Also, the plaintiff must still present evidence supporting his or
her allegations despite the default of the defendant. Thus,
should a defendant prefer to present evidence on his or her
behalf, he or she must file either a motion to set aside order of
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
default, motion for new trial, or a petition for relief from
judgment.
In this case, Lui Enterprises had discovered its default before
the RTC of Makati rendered judgment. Thus, it timely filed a
motion to set aside order of default, raising the ground of
excusable negligence.
Excusable negligence is one which ordinary diligence and
prudence could not have guarded against. The circumstances
should be properly alleged and proved. In this case, we find
that Lui Enterprises’ failure to answer within the required
period is inexcusable. Thus, the RTC of Makati did not err in
refusing to set aside the order of default. Lui Enterprises never
explained why its counsel failed to file the motion to dismiss
on time. It just argued that courts should be liberal in setting
aside orders of default. Even if it had a meritorious defense
and that its representative and counsel had to fly in from
Davao to Makati to personally appear and manifest in court its
meritorious defense, Lui Enterprises must first show that its
failure to answer was due to fraud, accident, mistake or
excusable negligence. This Lui Enterprises did not do. Lui
Enterprises argued that Zuellig filed the interpleader case to
compel Lui Enterprises and the PBCOM to litigate their claims.
Under Rule 62 Section 1 of the Rules of Civil procedure, a
person may file a special civil action for interpleader if
conflicting claims are made against him or her over a subject
matter in which he or she has no interest. An interpleader
complaint may be filed by a lessee against those who have
conflicting claims over the rent due for the property leased.
This remedy is for the lessee to protect him or her from double
vexation in respect of one liability. He or she may file the
interpleader case to extinguish his or her obligation to pay
rent, remove him or her from the adverse claimants’ dispute,
and compel the parties with conflicting claims to litigate
among themselves.
In this case, Zuellig Pharma filed the interpleader case to
extinguish its obligation to pay rent. Its purpose in filing the
interpleader case “was not defeated” when the Makati trial
court declared Lui Enterprises in default. The RTC of Makati
declared Lui Enterprises in default when it failed to answer the
complaint within the required period. Lui Enterprises filed a
motion to set aside order of default without an acceptable
excuse why its counsel failed to answer the complaint. It failed
to prove the excusable negligence. Thus, the Makati trial court
did not err in refusing to set aside the order of default.
III. The nullification of deed in dation in payment
case did not bar the filing of the interpleader
case. Litis pendentia is not present in this
case.
In this case, there is no litis pendentia since there is no identity
of parties in the nullification of deed of dation in payment case
and the interpleader case. Zuellig Pharma is not a party to the
nullification case filed in the Davao trial court. There is also no
identity of rights asserted and reliefs prayed for. The
interpleader case was necessary and was not instituted to
harass either Lui Enterprises or the PBCOM. Thus, the pending
nullification case did not bar the filing of the interpleader case.
In this case, the nullification of deed of dation in payment case
was filed by Lui Enterprises against the PBCOM. The
interpleader case was filed by Zuellig against Lui Enterprises
and the PBCOM. A different plaintiff filed the interpleader case
against Lui Enterprises and the PBCOM. Thus, there is no
identity of parties, and the first requisite of litis pendentia is
absent.
Wherefore the petition is denied.
G.R. No. L-23851 March 26, 1976
WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-
appellant, vs. LEE E. WON alias RAMON LEE and
BIENVENIDO A. TAN, defendants-appellees.
This is an appeal from the order of the Court of First Instance
of Rizal, in civil case 7656, dismissing the plaintiff-appellant's
complaint of interpleader upon the grounds of failure to state
a cause of action and res judicata.
In its amended and supplemental complaint of October 23,
1963, the Wack Wack Golf & Country Club, Inc., a non-stock,
civic and athletic corporation duly organized under the laws of
the Philippines, with principal office in Mandaluyong, Rizal
(hereinafter referred to as the Corporation), alleged, for its first
cause of action, that the defendant Lee E. Won claims
ownership of its membership fee certificate 201, by virtue of
the decision rendered in civil case 26044 of the CFI of Manila,
entitled "Lee E. Won alias Ramon Lee vs. Wack Wack Golf &
Country Club, Inc." and also by virtue of membership fee
certificate 201-serial no. 1478 issued on October 17, 1963 by
Ponciano B. Jacinto, deputy clerk of court of the said CFI of
Manila, for and in behalf of the president and the secretary of
the Corporation and of the People's Bank & Trust Company as
transfer agent of the said Corporation, pursuant to the order
of September 23, 1963 in the said case; that the defendant
Bienvenido A. Tan, on the other hand, claims to be lawful
owner of its aforesaid membership fee certificate 201 by virtue
of membership fee certificate 201-serial no. 1199 issued to
him on July 24, 1950 pursuant to an assignment made in his
favor by "Swan, Culbertson and Fritz," the original owner and
holder of membership fee certificate 201; that under its
articles of incorporation and by-laws the Corporation is
authorized to issue a maximum of 400 membership fee
certificates to persons duly elected or admitted to proprietary
membership, all of which have been issued as early as
December 1939; that it claims no interest whatsoever in the
said membership fee certificate 201; that it has no means of
determining who of the two defendants is the lawful owner
thereof; that it is without power to issue two separate
certificates for the same membership fee certificate 201, or to
issue another membership fee certificate to the defendant
Lee, without violating its articles of incorporation and 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 court of the CFI of Manila in behalf of the
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
Corporation is null and void because issued in violation of its
by-laws, which require the surrender and cancellation of the
outstanding membership fee certificate 201 before issuance
may be made to the transferee of a new certificate duly signed
by its president and secretary, aside from the fact that the
decision of the CFI of Manila in civil case 26044 is not binding
upon the defendant Tan, holder of membership fee certificate
201-serial no. 1199; that Tan is made a party because of his
refusal to join it in this action or bring a separate action to
protect his rights despite the fact that he has a legal and
beneficial interest in the subject matter of this litigation; and
that he is made a part so that complete relief may be accorded
herein.
The Corporation prayed that (a) an order be issued requiring
Lee and Tan to interplead and litigate their conflicting claims;
and (b) judgment. be rendered, after hearing, declaring who
of the two is the lawful owner of membership fee certificate
201, and ordering the surrender and cancellation of
membership fee certificate 201-serial no. 1478 issued in the
name of Lee.
In separate motions the defendants moved to dismiss the
complaint upon the grounds of res judicata, failure of the
complaint to state a cause of action, and bar by
prescription. 1 These motions were duly opposed by the
Corporation. Finding the grounds of bar by prior judgment
and failure to state a cause of action well taken, the trial court
dismissed the complaint, with costs against the Corporation.
In this appeal, the Corporation contends that the court a
quo erred (1) in finding that the allegations in its amended and
supplemental complaint do not constitute a valid ground for
an action of interpleader, and in holding that "the principal
motive for the present action is to reopen the Manila Case and
collaterally attack the decision of the said Court"; (2) in finding
that the decision in civil case 26044 of the CFI of Manila
constitutes res judicata and bars its present action; and (3) in
dismissing its action instead of compelling the appellees to
interplead and litigate between themselves their respective
claims.
The Corporations position may be stated elsewise as follows:
The trial court erred in dismissing the complaint, instead of
compelling the appellees to interplead because there actually
are conflicting claims between the latter with respect to the
ownership of membership fee certificate 201, and, as there is
not Identity of parties, of subject-matter, and of cause of
action, between civil case 26044 of the CFI of Manila and the
present action, the complaint should not have been dismissed
upon the ground of res judicata.
On the other hand, the appellees argue that the trial court
properly dismissed the complaint, because, having the effect
of reopening civil case 26044, the present action is barred
by res judicata.
Although res judicata or bar by a prior judgment was the
principal ground availed of by the appellees in moving for the
dismissal of the complaint and upon which the trial court
actually dismissed the complaint, the determinative issue, as
can be gleaned from the pleadings of the parties, relates to
the propriety and timeliness of the remedy of interpleader.
The action of interpleader, under section 120 of the Code of
Civil Procedure, 2 is a remedy whereby a person who has
personal property in his possession, or an obligation to render
wholly or partially, without claiming any right to either, comes
to court and asks that the persons who claim the said personal
property or who consider themselves entitled to demand
compliance with the obligation, be required to litigate among
themselves in order to determine finally who is entitled to tone
or the one thing. The remedy is afforded to protect a person
not against double liability but against double vexation in
respect of one liability. 3 The procedure under the Rules of
Court 4 is the same as that under the Code of Civil
Procedure, 5 except that under the former the remedy of
interpleader is available regardless of the nature of the
subject-matter of the controversy, whereas under the latter an
interpleader suit is proper only if the subject-matter of the
controversy is personal property or relates to the performance
of an obligation.
There is no question that the subject matter of the present
controversy, i.e., the membership fee certificate 201, is proper
for an interpleader suit. What is here disputed is the propriety
and timeliness of the remedy in the light of the facts and
circumstances obtaining.
A stakeholder 6 should use reasonable diligence to hale the
contending claimants to court. 7 He need not await actual
institution of independent suits against him before filing a bill
of interpleader. 8 He should file an action of interpleader
within a reasonable time after a dispute has arisen without
waiting to be sued by either of the contending
claimants. 9 Otherwise, he may be barred by laches 10 or
undue delay. 11 But where he acts with reasonable diligence in
view of the environmental circumstances, the remedy is not
barred. 12
Has the Corporation in this case acted with diligence, in view
of all the circumstances, such that it may properly invoke the
remedy of interpleader? We do not think so. It was aware of
the conflicting claims of the appellees with respect to the
membership fee certificate 201 long before it filed the present
interpleader suit. It had been recognizing Tan as the lawful
owner thereof. It was sued by Lee who also claimed the same
membership fee certificate. Yet it did not interplead Tan. It
preferred to proceed with the litigation (civil case 26044) and
to defend itself therein. As a matter of fact, final judgment was
rendered against it and said judgment has already been
executed. It is not therefore too late for it to invoke the remedy
of interpleader.
It has been held that a stakeholder's action of interpleader is
too late when filed after judgment has been rendered against
him in favor of one of the contending claimants, 13 especially
where he had notice of the conflicting claims prior to the
rendition of the judgment and neglected the opportunity to
implead the adverse claimants in the suit where judgment was
entered. This must be so, because once judgment is obtained
against him by one claimant he becomes liable to the
latter. 14 In once case, 15 it was declared:
The record here discloses that long before
the rendition of the judgment in favor of
relators against the Hanover Fire Insurance
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
Company the latter had notice of the
adverse claim of South to the proceeds of
the policy. No reason is shown why the
Insurance Company did not implead South
in the former suit and have the conflicting
claims there determined. The Insurance
Company elected not to do so and that suit
proceeded to a final judgment in favor of
relators. The Company thereby became
independently liable to relators. It was then
too late for such company to invoke the
remedy of interpleader
The Corporation has not shown any justifiable reason why it
did not file an application for interpleader in civil case 26044
to compel the appellees herein to litigate between themselves
their conflicting claims of ownership. It was only after adverse
final judgment was rendered against it that the remedy of
interpleader was invoked by it. By then it was too late, because
to he entitled to this remedy the applicant must be able to
show that lie has not been made independently liable to any
of the claimants. And since the Corporation is already liable to
Lee under a final judgment, the present interpleader suit is
clearly improper and unavailing.
It is the general rule that before a person will
be deemed to be in a position to ask for an
order of intrepleader, he must be prepared
to show, among other prerequisites, that he
has not become independently liable to any
of the claimants. 25 Tex. Jur. p. 52, Sec. 3; 30
Am. Jur. p. 218, Section 8.
It is also the general rule that a bill of
interpleader comes too late when it is filed
after judgment has been rendered in favor
of one of the claimants of the fund, this being
especially true when the holder of the funds
had notice of the conflicting claims prior to
the rendition of the judgment and had an
opportunity to implead the adverse
claimants in the suit in which the judgment
was rendered. United Procedures Pipe Line
Co. v. Britton, Tex. Civ. App. 264 S.W.
176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d
1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex.
Jur. p. 56, Sec. 5; 108 A.L.R., note 5, p. 275. 16
Indeed, if a stakeholder defends a suit filed by one of the
adverse claimants and allows said suit to proceed to final
judgment against him, he cannot later on have that part of the
litigation repeated in an interpleader suit. In the case at hand,
the Corporation allowed civil case 26044 to proceed to final
judgment. And it offered no satisfactory explanation for its
failure to implead Tan in the same litigation. In this factual
situation, it is clear that this interpleader suit cannot prosper
because it was filed much too late.
If a stakeholder defends a suit by one
claimant and allows it to proceed so far as a
judgment against him without filing a bill of
interpleader, it then becomes too late for
him to do so. Union Bank v. Kerr, 2 Md. Ch.
460; Home Life Ins. Co. v. Gaulk, 86 Md. 385,
390, 38 A. 901; Gonia v. O'Brien, 223 Mass.
177, 111 N.E. 787. It is one o the main offices
of a bill of interpleader to restrain a separate
proceeding at law by claimant so as to avoid
the resulting partial judgment; and if the
stakeholder acquiesces in one claimant's
trying out his claim and establishing it at law,
he cannot then have that part of the litigation
repeated in an interpleader suit. 4
Pomeroy's Eq. Juris. No. 162; Mitfor's Eq.
Pleading (Tyler's Ed.) 147 and 236;
Langdell's Summary of Eq. Pleading, No.
162' De Zouche v. Garrizon, 140 Pa. 430, 21
A/450. 17
It is the general rule that a bill of interpleader
comes too late when application therefore is
delayed until after judgment has been
rendered in favor of one of the claimants of
the fund, and that this is especially true
where the holder of the fund had notice of
the conflicting claims prior to the rendition
of such judgment and an opportunity to
implead the adverse claimants in the suit in
which such judgment was rendered. (See
notes and cases cited 36 Am. Dec. 703, Am.
St. Rep. 598, also 5 Pomeroy's Eq. Juris. Sec.
41.)
The evidence in the opinion of the majority
shows beyond dispute that the appellant
permitted the Parker county suit to proceed
to judgment in favor of Britton with full
notice of the adverse claims of the
defendants in the present suit other than the
assignees of the judgment (the bank and
Mrs. Pabb) and no excuse is shown why he
did not implead them in the suit. 18
To now permit the Corporation to bring Lee to court after the
latter's successful establishment of his rights in civil case 26044
to the membership fee certificate 201, is to increase instead of
to diminish the number of suits, which is one of the purposes
of an action of interpleader, with the possibility that the latter
would lose the benefits of the favorable judgment. This cannot
be done because having elected to take its chances of success
in said civil case 26044, with full knowledge of all the fact, the
Corporation must submit to the consequences of defeat.
The act providing for the proceeding has
nothing to say touching the right of one,
after contesting a claim of one of the
claimants to final judgment unsuccessfully,
to involve the successful litigant in litigation
anew by bringing an interpleader action.
The question seems to be one of first
impression here, but, in other jurisdictions,
from which the substance of the act was
apparently taken, the rule prevails that the
action cannot be resorted to after an
unsuccessful trial against one of the
claimants.
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
It is well settled, both by reasons and
authority, that one who asks the
interposition of a court of equity to compel
others, claiming property in his hands, to
interplead, must do so before putting them
to the test of trials at law. Yarborough v.
Thompson, 3 Smedes & M. 291 (41 Am. Dec.
626); Gornish v. Tanner, 1 You. & Jer.
333; Haseltine v. Brickery, 16 Grat. (Va.) 116.
The remedy by interpleader is afforded to
protect the party from the annoyance and
hazard of two or more actions touching the
same property or demand; but one who,
with knowledge of all the facts, neglects to
avail himself of the relief, or elects to take the
chances for success in the actions at law,
ought to submit to the consequences of
defeat. To permit an unsuccessful defendant
to compel the successful plaintiffs to
interplead, is to increase instead of to
diminish the number of suits; to put upon
the shoulders of others the burden which he
asks may be taken from his own. ....'
It is urged, however, that the American
Surety Company of New York was not in
position to file an interpleader until it had
tested the claim of relatrix to final judgment,
and that, failing to meet with success, it
promptly filed the interpleader. The reason
why, it urges, it was not in such position until
then is that had it succeeded before this
court in sustaining its construction of the
bond and the law governing the bond, it
would not have been called upon to file an
interpleader, since there would have been
sufficient funds in its hands to have satisfied
all lawful claimants. It may be observed,
however, that the surety company was
acquainted with all of the facts, and hence
that it simply took its chances of meeting
with success by its own construction of the
bond and the law. Having failed to sustain it,
it cannot now force relatrix into litigation
anew with others, involving most likely a
repetition of what has been decided, or
force her to accept a pro rata part of a fund,
which is far from benefits of the judgment. 19
Besides, a successful litigant cannot later be impleaded by his
defeated adversary in an interpleader suit and compelled to
prove his claim anew against other adverse claimants, as that
would in effect be a collateral attack upon the judgment.
The jurisprudence of this state and the
common law states is well-settled that a
claimant who has been put to test of a trial
by a surety, and has establish his claim, may
not be impleaded later by the surety in an
interpleader suit, and compelled to prove
his claim again with other adverse
claimants. American Surety Company of
New York v. Brim, 175 La. 959, 144 So.
727; American Surety Company of New York
v. Brim (In Re Lyong Lumber Company), 176
La. 867, 147 So. 18; Dugas v. N.Y. Casualty
Co., 181 La. 322, 159 So. 572; 15 Ruling
Case Law, 228; 33 Corpus Juris, 477; 4
Pomeroy's Jurisprudence, 1023; Royal
Neighbors of America v. Lowary (D.C.) 46
F2d 565; Brackett v. Graves, 30 App. Div.
162, 51 N.Y.S. 895; De Zouche v. Garrison,
140 Pa. 430, 21 A. 450, 451; Manufacturer's
Finance Co. v. W.I. Jones Co. 141 Ga., 519,
81 S.E. 1033; Hancock Mutual Life Ins. Co. v.
Lawder, 22 R.I. 416, 84 A. 383.
There can be no doubt that relator's claim
has been finally and definitely established,
because that matter was passed upon by
three courts in definitive judgments. The
only remaining item is the value of the use of
the land during the time that relator
occupied it. The case was remanded solely
and only for the purpose of determining the
amount of that credit. In all other aspects the
judgment is final. 20
It is generally held by the cases it is the office
of interpleader to protect a party, not against
double liability, but against double vexation
on account of one liability. Gonia v. O'Brien,
223 Mass. 177, 111 N.E. 787. And so it is said
that it is too late for the remedy of
interpleader if the party seeking this relef
has contested the claim of one of the parties
and suffered judgment to be taken.
In United P.P.I. Co. v. Britton (Tex. Civ. App.)
264 S.W. 576. 578, it was said: 'It is the
general rule that a bill of interpleader comes
too late when application therefor is delayed
until after judgment has been rendered in
favor of one of the claimants of the fund, and
this is especially true where the holder of the
fund had notice of the conflicting claims
prior to the rendition of such judgment and
an opportunity to implead the adverse
claimants in the suit in which such judgment
was rendered. See notes and cases cited 35
Am. Dec. 703; 91 An. St. Rep. 598; also 5
Pomeroy's Equity Jurisprudence No. 41.'
The principle thus stated has been
recognized in many cases in other
jurisdictions, among which may be
cited American Surety Co. v. O'Brien, 223
Mass. 177, 111 N.E. 787; Phillips v. Taylor,
148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga.
760, 761; Yearborough v. Thompson, 3
Smedes & M. (11 Miss.) 291, 41 Am. Dec.
626. See, also, 33 C.J. p. 447, No. 30; Nash
v. McCullum, (Tex. Civ. App.) 74 S.W. 2d
1042, 1047.
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
It would seem that this rule should logically
follow since, after the recovery of judgment,
the interpleading of the judgment creditor is
in effect a collateral attack upon the
judgment. 21
In fine, the instant interpleader suit cannot prosper because
the Corporation had already been made independently liable
in civil case 26044 and, therefore, its present application for
interpleader would in effect be a collateral attack upon the
final judgment in the said civil case; the appellee Lee had
already established his rights to membership fee certificate
201 in the aforesaid civil case and, therefore, this interpleader
suit would compel him to establish his rights anew, and
thereby increase instead of diminish litigations, which is one of
the purposes of an interpleader suit, with the possiblity that
the benefits of the final judgment in the said civil case might
eventually be taken away from him; and because the
Corporation allowed itself to be sued to final judgment in the
said case, its action of interpleader was filed inexcusably late,
for which reason it is barred by laches or unreasonable delay.
ACCORDINGLY, the order of May 28, 1964, dismissing the
complaint, is affirmed, at appellant's cost.
RCBC vs. METRO CONTAINER CORPORATION
G.R. No. 127913 September 13, 2001
FACTS: Ley Construction contracted a loan from RCBC
secured by a real estate mortgage. Because of Leycon’s failure
to pay, RCBC instituted extrajudicial foreclosure proceedings
against it. RCBC emerged as the highest bidder. Leycon filed
an action to nullify the extrajudicial foreclosure sale.
Meanwhile, RCBC consolidated its ownership over the
property since Leycon failed to redeem the same within the
redemption period. Thus, RCBC demanded rental payments
from Metro Container Corporation, Leycon’s lessee of the
property.
Later, Leycon filed a case for unlawful detainer against Metro.
Not knowing whom to pay, Metro filed a case for interpleader
to compel Leycon and RCBC to litigate among themselves and
to determine which among them shall rightfully receive the
monthly rentals. Leycon and Metro entered into an amicable
settlement which led to the dismissal of the interpleader case
insofar as they were concerned. Judgment was subsequently
rendered in the unlawful detainer case, ordering Metro to pay
Leycon. They both moved for the dismissal of the case due to
the amicable settlement. Both motions were dismissed. The
MRs were also denied. The CA granted the petition for
certiorari and set aside the orders of the RTC.
ISSUE: Whether or not the decision in the unlawful detainer
case rendered the interpleader action moot and academic.
HELD: YES. METRO filed the interpleader action because it
was unsure which between LEYCON and RCBC was entitled to
receive the payment of monthly rentals on the subject
property. LEYCON was claiming payment of the rentals as
lessor of the property while RCBC was making a demand by
virtue of the consolidation of the title of the property in its
name. The reason for the interpleader action ceased when the
MeTC rendered judgment whereby the court directed METRO
to pay LEYCON whatever rentals due on the subject premises
While RCBC, not being a party to such case, could not be
bound by the judgment therein, METRO is bound by the
MeTC decision. When the decision in the unlawful detainer
case became final and executory, METRO has no other
alternative left but to pay the rentals to LEYCON. Precisely
because there was already a judicial fiat to METRO, there was
no more reason to continue with the interpleader case. Thus,
METRO moved for the dismissal of the interpleader action not
because it is no longer interested but because there is no
more need for it to pursue such cause of action.
UCPB v. IAC (supra)
RULE 63: DECLARATORY RELIEF AND SIMILAR REMEDIES
ARTICLE 476 AND 1607 OF THE NEW CIVIL CODE
VERLADE v. SOCIAL JUSTICE SOCIETY
G.R. No. 159357 ; 28 April 2004
FACTS: Social Justice Society filed a petition for declaratory
relief before the RTC against Mike Velarde, Cardinal Sin, Exec.
Minister Erao Manalo, Bro. Eddie Villanueva and Vro. Eliseo
Soriano. The Petition prayed for the resolution of the question
whether or not the act of a religious leader like any of herein
respondents, in endorsing the candidacy of a candidate for
elective office or in urging or requiring the members of his
flock to vote for a specified candidate, is violative of the letter
or spirit of the constitutional provisions on the separation of
church and state.
All the respondents sought the dismissal of the petition on the
ground that it does not state a cause of action and that there
is no justiciable controversy.
ISSUE: Whether or not SJS has a legal interest in filing a
petition for declaratory relief.
HELD: NONE. An action for declaratory relief should be filed
by a person interested under a deed, a will, a contract or other
written instrument, and whose rights are affected by a statute,
an executive order, a regulation or an ordinance. The purpose
of the remedy is to interpret or to determine the validity of the
written instrument and to seek a judicial declaration of the
parties rights or duties thereunder. The essential requisites of
the action are as follows: (1) there is a justiciable controversy;
(2) the controversy is between persons whose interests are
adverse; (3) the party seeking the relief has a legal interest in
the controversy; and (4) the issue is ripe for judicial
determination.
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. The SJS Petition for Declaratory Relief fell short of
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
this test. It miserably failed to allege an existing controversy or
dispute between the petitioner and the named respondents
therein. Further, the Petition did not sufficiently state what
specific legal right of the petitioner was violated by the
respondents therein; and what particular act or acts of the
latter were in breach of its rights, the law or the Constitution.
Parties bringing suits challenging the constitutionality of a law,
an act or a statute must show not only that the law or act is
invalid, but also that they have sustained or are in immediate
or imminent danger of sustaining some direct injury as a result
of its enforcement, and not merely that they suffer thereby in
some indefinite way. There was no allegation that SJS had
suffered or would be deprived of votes due to the acts
imputed to the said respondents. Neither did it allege that any
of its members would be denied the right of suffrage or the
privilege to be voted for a public office they are seeking.
ANTONIO P. TAMBUNTING, JR. and COMMERCIAL
HOUSE OF FINANCE, INC., Petitioners, vs. SPOUSES
EMILIO SUMABAT and ESPERANZA BAELLO, Respondent.
G.R. No. 144101; September 16, 2005
FACTS: Spouses Sumabat and Baello were the registered
landowners of a parcel of land in Caloocan. In May 1973, and
in order to obtain a P7,727.95 loan from petitioner
Tambunting, the spouses mortgaged said land to the former.
Subsequently, Tambunting assigned his rights to the
mortgaged to Commercial House Finance (CHFI). And
because respondent spouses have not been paying their
monthly amortizations, they were informed that their
indebtedness has ballooned to P15k.
And so, CHFI and Tambunting filed a case for foreclosure but
was restrained by Branch 33 of the RTC of Caloocan. The
reason for the restraint was because the respondents were
able to file an action for declaratory relief with said RTC. In their
action, respondents were praying that the court rule on the
extent or amount of their actual indebtedness.
In said RTC case, which was filed March 1979, herein
petitioners were declared in default. Thus, even when the
Tambunting, et al moved for the dismissal of the case on the
ground that “mortgaged deed/contract had already been
breached prior to the action”, said motion was denied for
having been filed out of time.
On January 1981, the RTC rendered a decision finding that
respondent’s liability, by virtue of their mortgage
deed/contract, was P15,743.83. Pursuant to this decision, the
respondents made a consignation with the RTC in said
amount.
After almost 14 years, or on Feb 1995, CHFI again foreclosed
on the contested land. The respondents came to know of this
because they received a notice of foreclosure sale, to be
conducted by the sheriff, of the land in question
This time, the petitioners filed an action with Branch 120 of the
RTC of Caloocan for injunction against the foreclosure sale.
But the sale still pushed through, with CHFI being declared the
highest bidder. A new TCT was then issued to CHFI. Thus,
respondent spouses amended their complaint to an action for
nullification of the foreclosure/sheriff’s sale, the new TCT of
CHFI, as well as reconveyance.
On February 2000, Branch 120 of the RTC declared the
foreclosure sale as void. It likewise ruled that reconveyance of
the property should be made to the respondents. This
decision was grounded on the fact that consignation of P15k
has already been made by CHFI pursuant to the earlier
decision of the Branch 33 of the RTC.
After a denial of petitioner’s MR, they filed petition for review
on certiorari with the SC. The petitioners argued that RTC,
Branch 33, erred when it ordered the consignation of P15k. As
earlier pointed out, the action in first case was for declaratory
relief. But petitioner points out the fact that respondents are
not entitled anymore to file an action for declaratory relief
because there had already been a violation of the mortgaged
contract when the spouses defaulted on their amortizations.
Furthermore, the action for foreclosure by CHFI on 1995 has
already prescribed
ISSUES:
1. Was the decision of Branch 120 of the RTC wrong when it
ordered the nullification of the foreclosure sale on the ground
that consignation has already been made in a previous case?
2. Was the foreclosure action in 1995 and subsequent sale of
the property already barred by prescription?
3. Should the action for nullification and reconveyance filed by
the respondents be dismissed?
HELD: The trial court erred when it affirmed the validity of the
consignation. The RTC should have been barred from taking
cognizance of the action for declaratory relief since
petitioners, being already in default in their loan amortizations,
there existed a violation of the mortgage deed even before
the institution of the action. Hence, the CFI could not have
rendered a valid judgment in Civil Case No. C-7496, and the
consignation made pursuant to a void judgment was likewise
void.
An action for declaratory relief should be filed by a person
interested under a deed, will, contract or other written
instrument, and whose rights are affected by a statute,
executive order, regulation or ordinance before breach or
violation thereof. The purpose of the action is to secure an
authoritative statement of the rights and obligations of the
parties under a statute, deed, contract, etc. for their guidance
in its enforcement or compliance and not to settle issues
arising from its alleged breach. It may be entertained only
before the breach or violation of the statute, deed, contract,
etc. to which it refers. Where the law or contract has already
been contravened prior to the filing of an action for
declaratory relief, the court can no longer assume jurisdiction
over the action.
Nonetheless, the petition must fail.
Article 1142 of the Civil Code is clear. A mortgage action
prescribes after ten years.
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
Here, petitioners’ right of action accrued in May 1977 when
respondents defaulted in their obligation to pay their loan
amortizations. It was from that time that the ten-year period to
enforce the right under the mortgage started to run. The
period was interrupted when respondents filed Civil Case No.
C-6329 sometime after May 1977 and the CFI restrained the
intended foreclosure of the property. However, the period
commenced to run again on November 9, 1977 when the case
was dismissed.
Nature of Declaratory Relief:
An action for declaratory relief should be filed by a person
interested under a deed, will, contract or other written
instrument, and whose rights are affected by a statute,
executive order, regulation or ordinance before breach or
violation thereof.
Purpose of Declaratory Relief:
The purpose of the action is to secure an authoritative
statement of the rights and obligations of the parties under a
statute, deed, contract, etc. for their guidance in its
enforcement or compliance and not to settle issues arising
from its alleged breach. It may be entertained only before the
breach or violation of the statute, deed, contract, etc. to which
it refers.
CARMEN DANAO MALANA et al, Petitioners, vs. BENIGNO
TAPPA, JERRY REYNA, SATURNINO CAMBRI and
SPOUSES FRANCISCO AND MARIA
LIGUTAN, Respondents.
G.R. No. 181303; September 17, 2009
FACTS: Petitioners alleged that they are the owners of a parcel
of land situated in Tuguegarao City, Cagayan as they inherited
the subject property from late Anastacio Danao. During the
lifetime of Anastacio, he had allowed Consuelo Pauig to build
on and occupy the southern portion of the subject property on
agreement that the latter would vacate the said land at any
time that Anastacio and his heirs might need it. Averring that
they already needed it, petitioners demanded that
respondents vacate the same. Respondents, however, refused
to heed petitioners’ demand. The petitioners referred their
land dispute with respondents to the Barangay. During the
conciliation proceedings, respondents asserted that they
owned the subject property and presented documents
ostensibly supporting their claim of ownership, enough to
create clouds on their title. Thus, petitioners filed before the
RTC of Tuguegarao City Complaint for Reivindicacion,
Quieting of Title, and Damages.
The RTC dismissed petitioners’ complaint on the ground of
lack of jurisdiction.
Petitioners filed two pleadings. A Motion for Reconsideration
and another simply designated as motion. They argued,
among others, 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.
Their complaint should not have been dismissed, since
Section 1, Rule 63 of the Rules of Court states that an action to
quiet title falls under the jurisdiction of the RTC.
Both Motions were denied by the RTC. 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.
It reasoned that an action to quiet title is a real action under
second paragraph of the Sec.1, Rule 63 and since the assessed
value of subject property per Tax Declaration was P410.00, the
real action involving the same was outside the jurisdiction of
the RTC.
ISSUE: Whether the RTC committed grave abuse of discretion
in dismissing petitioners’ complaint for lack of jurisdiction.
HELD: No. The RTC correctly made a distinction between the
first and the second paragraphs of Section 1, Rule 63 of the
Rules of Court. As the provision states, a petition for
declaratory relief under the first paragraph of Section 1, Rule
63 may be brought before the appropriate RTC. And 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.
Furthermore, an action for declaratory relief presupposes that
there has been no actual breach of the instruments involved
or of rights arising thereunder. 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.
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.
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
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
discretion in dismissing, without prejudice, petitioners’
Complaint in Civil Case No. 6868 for lack of jurisdiction
Distinction between the first and the second paragraphs of
Section 1, Rule 63 of the Rules of Court (Declaratory Relief):
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.
Jurisdiction of Section 1, par.2 of Rule 63:
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.
In contrast, the mandatory provision of the Judiciary
Reorganization Act of 1980, as amended, uses the word "shall"
and explicitly requires the MTC to exercise exclusive original
jurisdiction over all civil actions which involve title to or
possession of real property where the assessed value does not
exceed P20,000.00.
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.
CITY OF LAPU-LAPU, Petitioner, v. PHILIPPINE ECONOMIC
ZONE AUTHORITY, Respondent.
G.R. No. 184203; November 26, 2014
FACTS: These are consolidated petitions for review on
certiorari the City of Lapu-Lapu and the Province of Bataan
separately filed against the Philippine Economic Zone
Authority (PEZA).
Facts common to both cases: President Ferdinand E. Marcos
issued Presidential Decree No. 66 in 1972, declaring as
government policy the establishment of export processing
zones in strategic locations in the Philippines. To carry such
policy, the Export Processing Zone Authority was created. The
said decree declared that EPZA will be a non-profit entity and
was also declared to be exempt from taxes.
In 1995, the PEZA was created by virtue of Republic Act No.
7916 or “the Special Economic Zone Act of 1995” to operate,
administer, manage, and develop economic zones in the
country. The PEZA was granted the power to register,
regulate, and supervise the enterprises located in the
economic zones. By virtue of the law, the export processing
zone in Mariveles, Bataan became the Bataan Economic Zone
and the Mactan Export Processing Zone the Mactan Economic
Zone.
As for the EPZA, the law required it to “evolve into the PEZA in
accordance with the guidelines and regulations set forth in an
executive order issued for [the] purpose.”
On October 30, 1995, President Fidel V. Ramos issued
Executive Order No. 282, directing the PEZA to assume and
exercise all of the EPZA’s powers, functions, and
responsibilities.
Facts of G.R. No. 184203: On March 25, 1998, the City of
Lapu-Lapu, through the Office of the Treasurer, demanded
from the PEZA PHP 32,912,350.08 in real property taxes for the
period from 1992 to 1998 on the PEZA’s properties located in
the Mactan Economic Zone. The City pointed out that no
provision in the Special Economic Zone Act of 1995
specifically exempted the PEZA from payment of real property
taxes, unlike Section 21 of Presidential Decree No. 66 that
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
explicitly provided for EPZA’s exemption. Since no legal
provision explicitly exempted the PEZA from payment of real
property taxes, the City argued that it can tax the PEZA.
On September 11, 2002, the PEZA filed a petition for
declaratory relief with the Regional Trial Court of Pasay City,
praying that the trial court declare it exempt from payment of
real property taxes. Pursuant to Rule 63, Section 3 of Rules of
Court, the Office of the Solicitor General filed a comment31
on the PEZA’s petition for declaratory relief. It agreed that the
PEZA is exempt from payment of real property taxes, citing
Sections 24 and 51 of the Special Economic Zone Act of 1995.
Characterizing the PEZA as an agency of the National
Government, the trial court ruled that the City had no authority
to tax the PEZA under Sections 133(o) and 234(a) of the Local
Government Code of 1991. In the resolution dated June 14,
2006, the trial court granted the PEZA’s petition for declaratory
relief and declared it exempt from payment of real property
taxes.
Facts of G.R. No. 187583: After the City of Lapu-Lapu had
demanded payment of real property taxes from the PEZA, the
Province of Bataan followed suit. Arguing that the PEZA is a
developer of economic zones, the Province claimed that the
PEZA is liable for real property taxes under Section 24 of the
Special Economic Zone Act of 1995.
PEZA requested the Province to suspend the service of the real
property tax billing. It cited its petition for declaratory relief
against the City of Lapu-Lapu pending before the Regional
Trial Court, Branch 111, Pasay City as basis.
The Province argued that serving a real property tax billing on
the PEZA “would not in any way affect its petition for
declaratory relief before the RTC of Pasay City.” PEZA
requested the Province to suspend collecting its alleged real
property tax liabilities until the Regional Trial Court of Pasay
City resolves its petition for declaratory relief.
The PEZA’s subsequent requests for suspension of collection
were all denied by the Province. PEZA filed a petition for
injunction with prayer for issuance of a temporary restraining
order and/or writ of preliminary injunction before the Regional
Trial Court of Pasay City, arguing that it is exempt from
payment of real property taxes.
ISSUE: WON the RTC had jurisdiction to hear and decide on
the petition of declaratory relief by PEZA against the City of
Lapu-Lapu
HELD: The Regional Trial Court of Pasay had no jurisdiction to
hear, try, and decide the PEZA’s petition for declaratory relief
against the City of Lapu-Lapu
PEZA erred in availing itself of a petition for declaratory relief
against the City. The City had already issued demand letters
and real property tax assessment against the PEZA, in violation
of the PEZA’s alleged tax-exempt status under its charter. The
Special Economic Zone Act of 1995, the subject matter of
PEZA’s petition for declaratory relief, had already been
breached. The trial court, therefore, had no jurisdiction over
the petition for declaratory relief.
A special civil action for declaratory relief is filed for a judicial
determination of any question of construction or validity
arising from, and for a declaration of rights and duties, under
any of the following subject matters: a deed, will, contract or
other written instrument, statute, executive order or
regulation, ordinance, or any other governmental regulation.
However, a declaratory judgment may issue only if there has
been “no breach of the documents in question.” If the contract
or statute subject matter of the action has already been
breached, the appropriate ordinary civil action must be filed.
If adequate relief is available through another form of action
or proceeding, the other action must be preferred over an
action for declaratory relief. In the present case, the Regional
Trial Court had no jurisdiction over the subject matter of the
action, specifically, over the remedy sought.
In sum, a petition for declaratory relief must satisfy six
requisites: 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.
PEZA erred in availing itself of a petition for declaratory relief
against the City. The City had already issued demand letters
and real property tax assessment against the PEZA, in violation
of the PEZA’s alleged tax-exempt status under its charter. The
Special Economic Zone Act of 1995, the subject matter of
PEZA’s petition for declaratory relief, had already been
breached. The trial court, therefore, had no jurisdiction over
the petition for declaratory relief.
In the present case, the Regional Trial Court had no jurisdiction
over the subject matter of the action, specially, over the
remedy. The trial court should have dismissed the PEZA’s
petition for declaratory relief for lack of jurisdiction. In any
event, the law sought to be judicially interpreted in this case
had already been breached. The Regional Trial Court of
Pasay, therefore, had no jurisdiction over the PEZA’s petition
for declaratory relief against the City.
CJH DEVELOPMENT CORPORATION, petitioner, vs.
BUREAU OF INTERNAL REVENUE, BUREAU OF CUSTOMS,
and DISTRICT COLLECTOR OF CUSTOMS EDWARD O.
BALTAZAR, respondents.
G.R. No. 172457; December 24, 2008
FACTS: Proclamation No. 420 (the Proclamation) was issued
by then President Fidel V. Ramos to create a Special Economic
Zone (SEZ) in a portion of Camp John Hay in Baguio City.
Section 3 of the Proclamation granted to the newly created
SEZ the same incentives then already enjoyed by the Subic
SEZ. Among these incentives are the exemption from the
payment of taxes, both local and national, for businesses
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
located inside the SEZ, and the operation of the SEZ as a
special customs territory providing for tax and duty free
importations of raw materials, capital and equipment.
Subsequently, however, Section 3 of the Proclamation was
declared unconstitutional in part by the Court. The decision
attained finality when the Court en banc denied the motion for
reconsideration through a resolution dated 29 March 2005.
While the motion for reconsideration was pending with the
Court, on 16 January 2004 the Office of the City Treasurer of
Baguio sent statements of real property taxes due on CJH. The
BOC followed suit and also demanded payment of duties and
taxes made by CJH. Then, the BIR sent a letter where it treated
CJH as an ordinary corporation subject to corporate income
and value added taxes.
CJH questioned the retroactive application by the BOC of the
decision of this Court in G.R. No. 119775. It claimed that the
assessment was null and void because it violated the non-
retroactive principle under the Tariff and Customs Code.
The Office of the Solicitor General (OSG) filed a motion to
dismiss. The OSG claimed that the remedy of declaratory relief
is inapplicable because an assessment is not a proper subject
of such petition. It further alleged that there are administrative
remedies which were available to CJH.
The RTC held that the decision in G.R. No. 119775 applies
retroactively because the tax exemption granted by
Proclamation No. 420 is null and void from the beginning. The
RTC also ruled that the petition for declaratory relief is not the
appropriate remedy. A judgment of the court cannot be the
proper subject of a petition for declaratory relief; the
enumeration in Rule 64 is exclusive. Moreover, the RTC held
that Commonwealth Act No. 55 (CA No. 55) which proscribes
the use of declaratory relief in cases where a taxpayer
questions his tax liability is still in force and effect.
ISSUE: Is the remedy of declaratory relief proper in this case?
HELD: No. The requisites for a petition for declaratory relief to
prosper are: (1) there must be a justiciable controversy; (2) the
controversy must be between persons whose interests are
adverse; (3) the party seeking declaratory relief must have a
legal interest in the controversy; and (4) the issue involved
must be ripe for judicial determination.
CJH alleges that CA No. 55 has already been repealed by the
Rules of Court; thus, the remedy of declaratory relief against
the assessment made by the BOC is proper. It cited the
commentaries of Moran allegedly to the effect that declaratory
relief lies against assessments made by the BIR and BOC. Yet
in National Dental Supply Co. v. Meer, this Court held that:
From the opinion of the former Chief Justice Moran may be
deduced that the failure to incorporate the above proviso [CA
No. 55] in section 1, rule 66, [now Rule 64] is not due to an
intention to repeal it but rather to the desire to leave its
application to the sound discretion of the court, which is the
sole arbiter to determine whether a case is meritorious or not.
And even if it be desired to incorporate it in rule 66, it is
doubted if it could be done under the rule-making power of the
Supreme Court considering that the nature of said proviso
is substantive and not adjective, its purpose being to lay down
a policy as to the right of a taxpayer to contest the collection of
taxes on the part of a revenue officer or of the Government.
With the adoption of said proviso, our law-making body has
asserted its policy on the matter, which is to prohibit a taxpayer
to question his liability for the payment of any tax that may be
collected by the Bureau of Internal Revenue. As this Court well
said, quoting from several American cases, "The Government
may fix the conditions upon which it will consent to litigate the
validity of its original taxes..." "The power of taxation being
legislative, all incidents are within the control of the
Legislature." In other words, it is our considered opinion that
the proviso contained in Commonwealth Act No. 55 is still in
full force and effect and bars the plaintiff from filing the present
action.
As a substantive law that has not been repealed by another
statute, CA No. 55 is still in effect and holds sway. Precisely, it
has removed from the courts’ jurisdiction over petitions for
declaratory relief involving tax assessments. The Court cannot
repeal, modify or alter an act of the Legislature.
Moreover, the proper subject matter of a declaratory relief is a
deed, will, contract, or other written instrument, or the
construction or validity of statute or ordinance. CJH hinges its
petition on the demand letter or assessment sent to it by the
BOC. However, it is really not the demand letter which is the
subject matter of the petition. Ultimately, this Court is asked to
determine whether the decision of the Court en banc in G.R.
No. 119775 has a retroactive effect. This approach cannot be
countenanced. A petition for declaratory relief cannot
properly have a court decision as its subject matter. In Tanda
v. Aldaya, we ruled that:
A court decision cannot be interpreted as included within the
purview of the words "other written instrument," as contended
by appellant, for the simple reason that the Rules of Court
already provide[s] for the ways by which an ambiguous or
doubtful decision may be corrected or clarified without need
of resorting to the expedient prescribed by Rule 66 [now Rule
64].
There are other remedies available to a party who is not
agreeable to a decision whether it be a question of law or fact.
If it involves a decision of an appellate court, the party may file
a motion for reconsideration or new trial in order that the
defect may be corrected. In case of ambiguity of the decision,
a party may file a motion for a clarificatory judgment. One of
the requisites of a declaratory relief is that the issue must be
ripe for judicial determination. This means that litigation is
inevitable or there is no adequate relief available in any other
form or proceeding.
However, CJH is not left without recourse. The Tariff and
Customs Code (TCC) provides for the administrative and
judicial remedies available to a taxpayer who is minded to
contest an assessment, subject of course to certain
reglementary periods. The TCC provides that a protest can be
raised provided that payment first be made of the amount
due. The decision of the Collector can be reviewed by the
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
Commissioner of Customs who can approve, modify or
reverse the decision or action of the Collector. If the party is
not satisfied with the ruling of the Commissioner, he may file
the necessary appeal to the Court of Tax Appeals. Afterwards,
the decision of the Court of Tax Appeals can be appealed to
this Court.
FELIPE B. OLLADA, etc., petitioner-appellant, vs. CENTRAL
BANK OF THE PHILIPPINES, respondent-appellee.
G.R. No. L-11357; May 31, 1962
FACTS: Felipe B. Ollada is a certified public accountant,
having passed the examination given by the Board of
Accountancy, and is duly qualified to practice his profession.
On July 22, 1952, his name was placed in the rolls of certified
public accountants authorized and accredited to practice
accountancy in the office of the Central Bank of the
Philippines. In December 1955, by reason of a requirement of
the Import-Export Department of said bank that CPAs submit
to an accreditation under oath before they could certify
financial statements of their clients applying for import dollar
allocations with its office, Ollada's previous accreditation was
nullified.
Assailing said accreditation requirement on the ground that it
was (a) an unlawful invasion of the jurisdiction of the Board of
Accountancy, (b) in excess of the powers of the Central Bank
and (c) unconstitutional in that it unlawfully restrained the
legitimate pursuit of one's trade, Ollada, for himself and
allegedly on behalf of numerous other CPAs, filed a petition
for Declaratory Relief in the Court of First Instance of Manila to
nullify said accreditation requirement.
The Central Bank filed a motion to dismiss the petition for
Declaratory Relief for lack of cause of action. Its main
contention was that the Central Bank has the responsibility of
administering the Monetary Banking System of the Republic
and that the purpose of such requirement is not to regulate
the practice of accountancy in the Philippines but only the
manner in which certified public accountants should transact
business with the Central Bank.
Ollada applied for a writ of preliminary injunction to restrain
the respondent Central Bank of the Philippines from enforcing
the accreditation requirement aforesaid until final
adjudication of the case. All this notwithstanding, in the
interests of its clients, filed his application for accreditation
with the CB under protest.
The CFI dismissed Ollada’s complaint and stated that
respondent is not barred from promulgating internal rules and
regulations necessary to carry out its purpose pursuant to the
charter creating it provided, however, that such rules and
regulations are not contrary to law, public morals or public
policy.
ISSUE: Whether upon the facts alleged in the petition for
Declaratory Relief and others elicited from the parties and
made of record by them, the CFI properly dismissed the case
HELD: Yes. Petitioner commenced this action as, and clearly
intended it to be one for Declaratory Relief under the
provisions of Rule 66 of the Rules of Court. On the question of
when a special civil action of this nature would prosper, we
have already held that the complaint for declaratory relief will
not prosper if filed after a contract, statute or right has been
breached or violated. In the present case such is precisely the
situation arising from the facts alleged in the petition for
declaratory relief. As vigorously claimed by petitioner himself,
respondent had already invaded or violated his right and
caused him injury — all these giving him a complete cause of
action enforceable in an appropriate ordinary civil action or
proceeding. The dismissal of the action was, therefore, proper
in the light of our ruling in De Borja vs. Villadolid, 47 O.G. (5)
p. 2315, and Samson vs. Andal, G.R. No. L-3439, July 31, 1951,
where we held that an action for declaratory relief should be
filed before there has been a breach of a contract, statutes or
right, and that it is sufficient to bar such action, that there had
been a breach — which would constitute actionable violation.
The rule is that an action for Declaratory Relief is proper only if
adequate relief is not available through the means of other
existing forms of action or proceeding (1 C.J.S. 1027-1028).
The Monetary Board of the Central Bank has authority to
prepare and issue such rules and regulations it may consider
necessary for the effective discharge of the responsibilities
and exercise of the powers assigned to it and to the Central
Bank under the provisions of Section 1 (a), Republic Act No.
265. The Governor of the Central Bank is also authorized to
delegate his power to represent the Bank "to other officers of
the Bank upon his own responsibility" (See. 17[d], Rep. Act
265).
To implement its authority to temporarily suspend or restrict
sales of exchange by the Central Bank and subject all
transactions in gold and foreign exchange to license by the
latter (Sec. 74, Rep. Act 265), the Monetary Board, approved
Resolution No. 1528, Minutes No. 80 dated August 30, 1955
authorizing the Import-Export Department to revise quota
allocations and to prepare revised procedures for the
determination of violations of Central Bank Import-Export
regulations. Among the revised procedures adopted by the
aforesaid Department was its accreditation system, the
purpose of which was to correct certain irregularities
committed by some CPAs in their certification of the financial
statements of their clients applying for dollar allocations.
PHILIPPINE DEPOSIT INSURANCE
CORPORATION, petitioner, vs. THE HONORABLE COURT
OF APPEALS and JOSE ABAD, LEONOR ABAD, SABINA
ABAD, JOSEPHINE "JOSIE" BEATA ABAD-ORLINA,
CECILIA ABAD, PIO ABAD, DOMINIC ABAD, TEODORA
ABAD, respondents. G.R. No. 126911; April 30, 2003
FACTS: Respondents had 71 certificates of time deposits
denominated as Golden Time Deposits (GTD) with an
aggregate face value of P1,115,889.96. However, BSP issued
a memorandum prohibiting the Manila Banking Corporation
to do business in the Philippines and placed it assets and
affairs in receivership. The memorandum was not served until
the following week when the designated receiver took over.
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
The next banking day following the issuance of the memo,
respondent Jose Abad was at the MBC at 9:00 a.m. for the
purpose of pre-terminating the 71 aforementioned GTDs and
re-depositing the fund represented thereby into 28 new GTDs
in denominations of P40,000.00 or less under the names of
herein respondents individually or jointly with each other. Of
the 28 new GTDs, Jose Abad pre-terminated 8 and withdrew
the value thereof in the total amount of P320,000.00.
Respondents thereafter filed their claims with the PDIC for the
payment of the remaining 20 insured GTDs.
PDIC paid respondents the value of 3 claims in the total
amount of P120,000.00. PDIC, however, withheld payment of
the 17 remaining claims after Washington Solidum, Deputy
Receiver of MBC-Iloilo, submitted a report to the PDIC that
there was massive conversion and substitution of trust and
deposit accounts.
Because of the report, PDIC entertained serious reservation in
recognizing respondents' GTDs as deposit liabilities of MBC-
Iloilo. Thus, on August 30, 1991, it filed a petition for
declaratory relief against respondents with the Regional Trial
Court (RTC) of Iloilo City, for a judicial declaration
determination of the insurability of respondents' GTDs at
MBC-Iloilo.
Respondents set up a counterclaim against PDIC whereby
they asked for payment of their insured deposits. The RTC
declared the 20 GTDs of respondents to be deposit liabilities
of MBC, hence, are liabilities of PDIC as statutory insurer. It
ordered PDIC to pay the deposit insurance to the
respondents.
ISSUE: Whether or not the trial court erred in ordering the
payment of the deposit insurance since a petition for
declaratory relief does not essentially entail an executory
process – the only relief being granted is a declaration of rights
and duties
HELD: No. The RTC’s decision was proper. Without doubt, a
petition for declaratory relief does not essentially entail an
executory process. There is nothing in its nature, however, that
prohibits a counterclaim from being set-up in the same action.
There is nothing in the nature of a special civil action for
declaratory relief that proscribes the filing of a counterclaim
based on the same transaction, deed or contract subject of the
complaint. A special civil action is after all not essentially
different from an ordinary civil action, which is generally
governed by Rules 1 to 56 of the Rules of Court, except that
the former deals with a special subject matter which makes
necessary some special regulation. But the identity between
their fundamental nature is such that the same rules governing
ordinary civil suits may and do apply to special civil actions if
not inconsistent with or if they may serve to supplement the
provisions of the peculiar rules governing special civil actions.
Petitioner additionally submits that the issue of determining
the amount of deposit insurance due respondents was never
tried on the merits since the trial dwelt only on the
"determination of the viability or validity of the deposits" and
no evidence on record sustains the holding that the amount of
deposit due respondents had been finally determined. This
issue was not raised in the court a quo; however, hence, it
cannot be raised for the first time in the petition at bar.
MATALIN COCONUT CO., INC. vs. THE MUNICIPAL
COUNCIL OF MALABANG
(G. R. No. L-28138, Aug. 13, 1986)
FACTS: On August 24, 1966, the Municipal Council of
Malabang, Lanao del Sur, invoking the authority of Section 2
of Republic Act No. 2264, otherwise known as the Local
Autonomy Act, enacted Municipal Ordinance No. 45-46,
entitled "AN ORDINANCE IMPOSING A POLICE INSPECTION
FEE OF P.30 PER SACK OF CASSAVA STARCH PRODUCED
AND SHIPPED OUT OF THE MUNICIPALITY OF MALABANG
AND IMPOSING PENALTIES FOR VIOLATIONS THEREOF."
The ordinance made it unlawful for any person, company or
group of persons "to ship out of the Municipality of Malabang,
cassava starch or flour without paying to the Municipal
Treasurer or his authorized representatives the corresponding
fee fixed by (the) ordinance." It imposed a "police inspection
fee" of P.30 per sack of cassava starch or flour, which shall be
paid by the shipper before the same is transported or shipped
outside the municipality. Any person or company or group of
individuals violating the ordinance "is liable to a fine of not less
than P100.00, but not more than P1,000.00, and to pay Pl.00
for every sack of flour being illegally shipped outside the
municipality, or to suffer imprisonment of 20 days, or both, in
the discretion of the court.
The validity of the ordinance was challenged by the Matalin
Coconut, Inc. in a petition for declaratory relief filed with the
then CFI of Lanao del Sur against the Municipal Council, the
Municipal Mayor and the Municipal Treasurer of Malabang,
Lanao del Sur. Alleging among others that the ordinance is not
only ultra vires, being violative of Republic Act No. 2264, but
also unreasonable, oppressive and confiscatory, the petitioner
prayed that the ordinance be declared null and void ab initio,
and that the respondent Municipal Treasurer be ordered to
refund the amounts paid by petitioner under the ordinance.
After trial, the Court a quo rendered a decision declaring the
municipal ordinance in question null and void; ordering the
respondent Municipal Treasurer to refund to the petitioner the
payments it made under the said ordinance from September
27, 1966 to May 2, 1967, amounting to P 25,500.00, as well as
all payments made subsequently thereafter. After the
promulgation of the decision, the Trial Court issued a writ of
preliminary mandatory injunction against respondents-
appellants.
ISSUE: Whether or not the trial court erred in adjudicating the
money claim of the petitioner in an action for declaratory relief
HELD: NO. Under Sec. 6 of Rule 64, the action for declaratory
relief may be converted into an ordinary action and the parties
allowed to file such pleadings as may be necessary or proper,
if before the final termination of the case "a breach or violation
of an...ordinance, should take place." In the present case, no
breach or violation of the ordinance occurred. The petitioner
decided to pay "under protest" the fees imposed by the
ordinance. Such payment did not affect the case; the
declaratory relief action was still proper because the
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
applicability of the ordinance to future transactions still
remained to be resolved, although the matter could also be
threshed out in an ordinary suit for the recovery of taxes paid.
In its petition for declaratory relief, petitioner-appellee alleged
that by reason of the enforcement of the municipal ordinance
by respondents it was forced to pay under protest the fees
imposed pursuant to the said ordinance, and accordingly, one
of the reliefs prayed for by the petitioner was that the
respondents be ordered to refund all the amounts it paid to
respondent Municipal Treasurer during the pendency of the
case. The inclusion of said allegation and prayer in the petition
was not objected to by the respondents in their answer.
During the trial, evidence of the payments made by the
petitioner was introduced. Respondents were thus fully aware
of the petitioner's claim for refund and of what would happen
if the ordinance were to be declared invalid by the court.
DEPARTMENT OF BUDGET AND MANAGEMENT vs.
MANILA'S FINEST RETIREES ASSOCIATION, INC.
(G. R. No. 169466, May 9, 2007)
FACTS: In 1975, Presidential Decree (P.D.) No. 765 was issued
constituting the Integrated National Police (INP) to be
composed of the Philippine Constabulary (PC) as the nucleus
and the integrated police forces as components thereof.
Complementing P.D. No. 765 was P.D. No. 11843 dated
August 26, 1977 (INP Law) issued to professionalize the INP
and promote career development therein.
On December 13, 1990, Republic Act (R.A.) No. 6975, entitled
"AN ACT ESTABLISHING THE PHILIPPINE NATIONAL POLICE
UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR
AND LOCAL GOVERNMENT, AND FOR OTHER PURPOSES,"
hereinafter referred to as PNP Law, was enacted. Under
Section 23 of said law, the Philippine National Police (PNP)
would initially consist of the members of the INP, created
under P.D. No. 765, as well as the officers and enlisted
personnel of the PC. In part, Section 23 reads:
SEC. 23. Composition. – Subject to the limitation provided for
in this Act, the Philippine National Police, hereinafter referred
to as the PNP, is hereby established, initially consisting of the
members of the police forces who were integrated into the
Integrated National Police (INP) pursuant to Presidential
Decree No. 765, and the officers and enlisted personnel of the
Philippine Constabulary (PC).
On February 25, 1998, R.A. No. 6975 was amended by R.A.
No. 8551, otherwise known as the "PHILIPPINE NATIONAL
POLICE REFORM AND REORGANIZATION ACT OF 1998."
Among other things, the amendatory law reengineered the
retirement scheme in the police organization. Relevantly, PNP
personnel, under the new law, stood to collect more
retirement benefits than what INP members of equivalent rank,
who had retired under the INP Law, received.
Hence, on June 3, 2002, in the RTC of Manila, all INP retirees,
spearheaded by the Manila’s Finest Retirees Association, Inc.,
or the MFRAI, filed a petition for declaratory relief, thereunder
impleading, as respondents, the DBM, the PNP, the National
Police Commission (NAPOLCOM), the CSC and the GSIS. The
petition alleged in gist that INP retirees were equally situated
as the PNP retirees but whose retirement benefits prior to the
enactment of R.A. No. 6975, as amended by R.A. No. 8551,
were unconscionably and arbitrarily excepted from the higher
rates and adjusted benefits accorded to the PNP retirees.
Accordingly, in their petition, the petitioning INP retirees pray
that a –
DECLARATORY JUDGMENT be rendered in their favor,
DECLARING with certainty that they, as INP-retirees, are truly
absorbed and equally considered as PNP-retirees and thus,
entitled to enjoy the SAME or IDENTICAL retirement benefits
being bestowed to PNP-retirees by virtue of said PNP Law or
Republic Act No. 6975, as amended by Republic Act 8551,
with the corollary mandate for the respondents-government
agencies to effect the immediate adjustment on their
previously received disparate retirement benefits, retroactive
to its effectivity, and with due payment thereof.
The RTC ruled in favor of the INP Retirees. The CA affirmed the
RTC ruling.
ISSUE: Whether or not the trial court erred in ordering the
immediate adjustments of the respondents’ retirement
benefits when the basic petition filed before it was one for
declaratory relief
HELD: NO. The execution of judgments in a petition for
declaratory relief is not necessarily indefensible. There is
nothing in the nature of a special civil action for declaratory
relief that proscribes the filing of a counterclaim based on the
same transaction, deed or contract subject of the complaint. A
special civil action is after all not essentially different from an
ordinary civil action, which is generally governed by Rules 1 to
56 of the Rules of Court, except that the former deals with a
special subject matter which makes necessary some special
regulation. But the identity between their fundamental nature
is such that the same rules governing ordinary civil suits may
and do apply to special civil actions if not inconsistent with or
if they may serve to supplement the provisions of the peculiar
rules governing special civil actions.
This disposition becomes all the more appropriate
considering that the respondents, as petitioners in the RTC,
pleaded for the immediate adjustment of their retirement
benefits which, significantly, the herein petitioners, as
respondents in the same court, did not object to. Being aware
of said prayer, the petitioners then already knew the logical
consequence if, as it turned out, a declaratory judgment is
rendered in the respondents’ favor.
At bottom then, the trial court’s judgment forestalled
multiplicity of suits which, needless to stress, would only entail
a long and arduous process. Considering their obvious
advanced years, the respondents can hardly afford another
protracted proceedings.
REPUBLIC vs. BATUIGAS
(G. R. No. 183110, Oct. 7, 2013)
FACTS:
On December 2, 2002, Azucena Saavedra Batuigas filed a
Petition for Naturalization before the RTC of Zamboanga del
Sur. After all the jurisdictional requirements mandated by
Section 9 of CA 473 had been complied with, the Office of the
Solicitor General (OSG) filed its Motion to Dismiss on the
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
ground that Azucena failed to allege that she is engaged in a
lawful occupation or in some known lucrative trade. Finding
the grounds relied upon by the OSG to be evidentiary in
nature, the RTC denied said Motion. Thereafter, the hearing
for the reception of Azucena’s evidence was then set on May
18, 2004.
Neither the OSG nor the Office of the Provincial Prosecutor
appeared on the day of the hearing. Hence, Azucena’s counsel
moved that the evidence be presented ex-parte, which the
RTC granted. Accordingly, the RTC designated its Clerk of
Court as Commissioner to receive Azucena’s evidence. During
the November 5, 2004 ex-parte hearing, no representative
from the OSG appeared despite due notice.
On January 31, 2005, the RTC found that Azucena has amply
supported the allegations in her Petition. Among these are her
lack of a derogatory record, her support for an organized
government, that she is in perfect health, that she has mingled
with Filipinos since birth and can speak their language, that
she has never had any transgressions and has been a law
abiding citizen, that she has complied with her obligations to
the government involving her business operations, and that
the business and real properties she and Santiago own
provide sufficient income for her and her family.
In dismissing the OSG’s appeal, the CA found that Azucena’s
financial condition permits her and her family to live with
reasonable comfort in accordance with the prevailing
standard of living and consistent with the demands of human
dignity.
ISSUE: Whether or not Azucena failed to meet the income and
public hearing requirements of CA 473
HELD: NO. Under existing laws, an alien may acquire
Philippine citizenship through either judicial naturalization
under CA 473 or administrative naturalization under Republic
Act No. 9139 (the "Administrative Naturalization Law of 2000").
A third option, called derivative naturalization, which is
available to alien women married to Filipino husbands is found
under Section 15 of CA 473, which provides that:
"any woman who is now or may hereafter be married to a
citizen of the Philippines and who might herself be lawfully
naturalized shall be deemed a citizen of the Philippines."
Under this provision, foreign women who are married to
Philippine citizens may be deemed ipso facto Philippine
citizens and it is neither necessary for them to prove that they
possess other qualifications for naturalization at the time of
their marriage nor do they have to submit themselves to
judicial naturalization. Copying from similar laws in the United
States which has since been amended, the Philippine
legislature retained Section 15 of CA 473, which then reflects
its intent to confer Filipino citizenship to the alien wife thru
derivative naturalization.
Thus, the Court categorically declared in Moy Ya Lim Yao v.
Commissioner of Immigration:
Accordingly, We now hold, all previous decisions of this Court
indicating otherwise notwithstanding, that under Section 15 of
Commonwealth Act 473, an alien woman marrying a Filipino,
native born or naturalized, becomes ipso facto a Filipina
provided she is not disqualified to be a citizen of the
Philippines under Section 4 of the same law. Likewise, an alien
woman married to an alien who is subsequently naturalized
here follows the Philippine citizenship of her husband the
moment he takes his oath as Filipino citizen, provided that she
does not suffer from any of the disqualifications under said
Section 4. (Italics supplied by me)
As stated in Moy Ya Lim Yao, the procedure for an alien wife
to formalize the conferment of Filipino citizenship is as follows:
Regarding the steps that should be taken by an alien woman
married to a Filipino citizen in order to acquire Philippine
citizenship, the procedure followed in the Bureau of
Immigration is as follows: The alien woman must file a petition
for the cancellation of her alien certificate of registration
alleging, among other things, that she is married to a Filipino
citizen and that she is not disqualified from acquiring her
husband’s citizenship pursuant to Section 4 of Commonwealth
Act No. 473, as amended. Upon the filing of said petition,
which should be accompanied or supported by the joint
affidavit of the petitioner and her Filipino husband to the effect
that the petitioner does not belong to any of the groups
disqualified by the cited section from becoming naturalized
Filipino citizen x x x, the Bureau of Immigration conducts an
investigation and thereafter promulgates its order or decision
granting or denying the petition.
Records however show that in February 1980, Azucena
applied before the then Commission on Immigration and
Deportation (CID) for the cancellation of her Alien Certificate
of Registration (ACR) by reason of her marriage to a Filipino
citizen. The CID granted her application. However, the Ministry
of Justice set aside the ruling of the CID as it found no sufficient
evidence that Azucena’s husband is a Filipino citizen as only
their marriage certificate was presented to establish his
citizenship.
Having been denied of the process in the CID, Azucena was
constrained to file a Petition for judicial naturalization based
on CA 473. The choice of what option to take in order to
acquire Philippine citizenship rests with the applicant. In this
case, Azucena has chosen to file a Petition for judicial
naturalization under CA 473. The fact that her application for
derivative naturalization under Section 15 of CA 473 was
denied should not prevent her from seeking judicial
naturalization under the same law. It is to be remembered that
her application at the CID was denied not because she was
found to be disqualified, but because her husband’s
citizenship was not proven. Even if the denial was based on
other grounds, it is proper, in a judicial naturalization
proceeding, for the courts to determine whether there are in
fact grounds to deny her of Philippine citizenship based on
regular judicial naturalization proceedings.
RULE 64: REVIEW OF FINAL JUDGMENTS AND FINAL
ORDERS OR RESOLUTIONS OF THE COMELEC AND THE
COA
FORTUNE LIFE INSURANCE COMPANY, INC. vs. COA
(G. R. No. 213525, Jan. 27, 2015)
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1
FACTS: Respondent Provincial Government of Antique (LGU)
and the petitioner executed a memorandum of agreement
concerning the life insurance coverage of qualified barangay
secretaries, treasurers and tanod, the former obligating
₱4,393,593.60 for the premium payment, and subsequently
submitting the corresponding disbursement voucher to COA
Antique for pre-audit.4 The latter office disallowed the
payment for lack of legal basis under Republic Act No. 7160
(Local Government Code). Respondent LGU appealed but its
appeal was denied.
Consequently, the petitioner filed its petition for money claim
in the COA.5 On November 15, 2012, the COA issued its
decision denying the petition,6 holding that under Section
447 and Section 458 of the Local Government Code only
municipal or city governments are expressly vested with the
power to secure group insurance coverage for barangay
workers; and noting the LGU’s failure to comply with the
requirement of publication under Section 21 of Republic Act
No. 9184 (Government Procurement Reform Act).
The petitioner received a copy of the COA decision on
December 14, 2012, and filed its motion for reconsideration
on January 14, 2013. However, the COA denied the motion,
the denial being received by the petitioner on July 14, 2014.
Hence, the petitioner filed the petition for certiorari on August
12, 2014, but the petition for certiorari was dismissed as earlier
stated through the resolution promulgated on August 19,
2014 for (a) the late filing of the petition; (b) the non-
submission of the proof of service and verified declaration;
and (c) the failure to show grave abuse of discretion on the part
of the respondents.
ISSUE: Whether or not the fresh period rule applies in Rule 64
HELD: NO. Fresh Period Rule under Neypes did not apply to
the petition for certiorari under Rule 64 of the Rules of Court.
There is no parity between the petition for review under Rule
42 and the petition for certiorari under Rule 64.
As to the nature of the procedures, Rule 42 governs an appeal
from the judgment or final order rendered by the Regional
Trial Court in the exercise of its appellate jurisdiction. Such
appeal is on a question of fact, or of law, or of mixed question
of fact and law, and is given due course only upon a prima
facie showing that the Regional Trial Court committed an error
of fact or law warranting the reversal or modification of the
challenged judgment or final order. In contrast, the petition for
certiorari under Rule 64 is similar to the petition for certiorari
under Rule 65, and assails a judgment or final order of the
Commission on Elections (COMELEC), or the Commission on
Audit (COA). The petition is not designed to correct only
errors of jurisdiction, not errors of judgment. Questions of fact
cannot be raised except to determine whether the COMELEC
or the COA were guilty of grave abuse of discretion amounting
to lack or excess of jurisdiction.
The reglementary periods under Rule 42 and Rule 64 are
different. In the former, the aggrieved party is allowed 15 days
to file the petition for review from receipt of the assailed
decision or final order, or from receipt of the denial of a motion
for new trial or reconsideration. In the latter, the petition is filed
within 30 days from notice of the judgment or final order or
resolution sought to be reviewed. The filing of a motion for
new trial or reconsideration, if allowed under the procedural
rules of the Commission concerned, interrupts the period;
hence, should the motion be denied, the aggrieved party may
file the petition within the remaining period, which shall not be
less than five days in any event, reckoned from the notice of
denial.
The petitioner filed its motion for reconsideration on January
14, 2013, which was 31 days after receiving the assailed
decision of the COA on December 14, 2012. Pursuant to
Section 3 of Rule 64, it had only five days from receipt of the
denial of its motion for reconsideration to file the petition.
Considering that it received the notice of the denial on July 14,
2014, it had only until July 19, 2014 to file the petition.
However, it filed the petition on August 13, 2014, which was
25 days too late.
PORMENTO vs. ESTRADA
(G. R. No. 191988, Aug. 31, 2010)
FACTS: The petition asks whether private respondent Joseph
Ejercito Estrada is covered by the ban on the President from
"any reelection." Private respondent was elected President of
the Republic of the Philippines in the general elections held on
May 11, 1998. He sought the presidency again in the general
elections held on May 10, 2010. Petitioner Atty. Evillo C.
Pormento opposed private respondent’s candidacy and filed
a petition for disqualification. However, his petition was
denied by the Second Division of public respondent
Commission on Elections (COMELEC). His motion for
reconsideration was subsequently denied by the COMELEC
en banc.
Petitioner filed the instant petition for certiorari on May 7,
2010. However, under the Rules of Court, the filing of such
petition would not stay the execution of the judgment, final
order or resolution of the COMELEC that is sought to be
reviewed. Besides, petitioner did not even pray for the
issuance of a temporary restraining order or writ of preliminary
injunction. Hence, private respondent was able to participate
as a candidate for the position of President in the May 10, 2010
elections where he garnered the second highest number of
votes.
ISSUE: What is the proper interpretation of the following
provision of Section 4, Article VII of the Constitution: "[t]he
President shall not be eligible for any reelection?"
HELD: The petition is dismissed. As a rule, this Court may only
adjudicate actual, ongoing controversies. The Court is not
empowered to decide moot questions or abstract
propositions, or to declare principles or rules of law which
cannot affect the result as to the thing in issue in the case
before it. In other words, when a case is moot, it becomes non-
justiciable.
An action is considered "moot" when it no longer presents a
justiciable controversy because the issues involved have
become academic or dead or when the matter in dispute has
already been resolved and hence, one is not entitled to judicial
intervention unless the issue is likely to be raised again
between the parties. There is nothing for the court to resolve
 CASE DIGESTS IN SPECIAL PROCEEDINGS
ASSIGNMENT NO. 1

as the determination thereof has been overtaken by

subsequent events.

Assuming an actual case or controversy existed prior to the

proclamation of a President who has been duly elected in the
May 10, 2010 elections, the same is no longer true today.
Following the results of that elections, private respondent was
not elected President for the second time. Thus, any
discussion of his "reelection" will simply be hypothetical and
speculative. It will serve no useful or practical purpose.