RCBC vs.
Metro Container Corporation
RCBC vs. METRO CONTAINER CORPORATION
G.R. No. 127913 September 13, 2001
Assailed in this petition for review on certiorari are the
Decision, promulgated on 18 October 1996 and the Resolution,
promulgated on 08 January 1997, of the Court of Appeals in CA-
G.R. SP No. 41294.
The facts of the case are as follows:
On 26 September 1990, Ley Construction Corporation
(LEYCON) contracted a loan from Rizal Commercial Banking
Corporation (RCBC) in the amount of Thirty Million Pesos
(P30,000,000.00). The loan was secured by a real estate mortgage
over a property, located in Barrio Ugong, Valenzuela, Metro Manila
(now Valenzuela City) and covered by TCT No. V-17223. LEYCON
failed to settle its obligations prompting RCBC to institute
extrajudicial foreclosure proceedings against it. After LEYCONs
legal attempts to forestall the action of RCBC failed, the foreclosure
took place on 28 December 1992 with RCBC as the highest bidder.
LEYCON promptly filed an action for Nullification of
Extrajudicial Foreclosure Sale and Damages against RCBC. The
case, docketed as Civil Case No. 4037-V-93, was raffled to the
Regional Trial Court (RTC) of Valenzuela, Branch 172. Meanwhile,
RCBC consolidated its ownership over the property due to
LEYCONs failure to redeem it within the 12-month redemption
period and TCT No. V-332432 was issued if favor of the bank. By
virtue thereof, RCBC demanded rental payments from Metro
Container Corporation (METROCAN) which was leasing the
property from LEYCON.
On 26 May 1994, LEYCON filed an action for Unlawful
Detainer, docketed as Civil Case No. 6202, against METROCAN
before the Metropolitan Trial Court (MeTC) of Valenzuela, Branch
82.
On 27 May 1994, METROCAN filed a complaint for
Interpleader, docketed as Civil Case No. 4398-V-94 before the
Regional Trial Court of Valenzuela, Metro Manila, Branch 75
against LEYCON and RCBC to compel them to interplead and
litigate their several claims among themselves and to determine
which among them shall rightfully receive the payment of monthly
rentals on the subject property. On 04 July 1995, during the pre-trial
conference in Civil Case No. 4398-V-94, the trial court ordered the
dismissal of the case insofar as METROCAN and LEYCON were
concerned in view of an amicable settlement they entered by virtue
of which METROCAN paid back rentals to LEYCON.
On 31 October 1995, judgment was rendered in Civil Case No.
6202, which among other things, ordered METROCAN to pay
LEYCON whatever rentals due on the subject premises. The MeTC
decision became final and executory.
On 01 February 1996, METROCAN moved for the dismissal of
Civil Case No. 4398-V-94 for having become moot and academic
due to the amicable settlement it entered with LEYCON on 04 July
1995 and the decision in Civil Case No. 6202 on 31 October
1995. LEYCON, likewise, moved for the dismissal of the case citing
the same grounds cited by METROCAN.
On 12 March 1996, the two motions were dismissed for lack of
merit. The motions for reconsideration filed by METROCAN and
LEYCON were also denied prompting METROCAN to seek relief
from the Court of Appeals via a petition for certiorari and
prohibition with prayer for the issuance of a temporary restraining
order and a writ of preliminary injunction. LEYCON, as private
respondent, also sought for the nullification of the RTC orders.
In its Decision, promulgated on 18 October 1996, the Court of
Appeals granted the petition and set aside the 12 March 1996 and 24
June 1996 orders of the RTC. The appellate court also ordered the
dismissal of Civil Case No. 4398-V-94. RCBCs motion for
reconsideration was denied for lack of merit in the resolution of 08
January 1997.
RULE 62 - INTERPLEADER
 RCBC vs. Metro Container Corporation
Hence, the present recourse.
RCBC alleged, that:
(1) THE DECISION OF THE METROPOLITAN TRIAL
COURT IN THE EJECTMENT CASE BETWEEN
METROCAN AND LEYCON DOES NOT AND
CANNOT RENDER THE INTERPLEADER
ACTION MOOT AND ACADEMIC.
(2) WHILE A PARTY WHO INITIATES AN
INTERPLEADER ACTION MAY NOT BE
COMPELLED TO LITIGATE IF HE IS NO
LONGER INTERESTED TO PURSUE SUCH
CAUSE OF ACTION, SAID PARTY MAY NOT
UNILATERALLY CAUSE THE DISMISSAL OF
THE CASE AFTER THE ANSWER HAVE BEEN
FILED. FURTHER, THE DEFENDANTS IN AN
INTERPLEADER SUIT SHOULD BE GIVEN FULL
OPPORTUNITY TO LITIGATE THEIR
RESPECTIVE CLAIMS.[1]
We sustain the Court of Appeals.
Section 1, Rule 63 of the Revised Rules of Court[2] provides:
Section 1. Interpleader when proper. - Whenever conflicting claims
upon the same subject matter are or may be made against a person,
who claims no interest whatever in the subject matter, or an interest
which in whole or in part is not disputed by the claimants, he may
bring an action against the conflicting claimants to compel them to
interplead and litigate their several claims among themselves.
In the case before us, it is undisputed that METROCAN filed
the interpleader action (Civil Case No. 4398-V-94) because it was
unsure which between LEYCON and RCBC was entitled to receive
the payment of monthly rentals on the subject property. LEYCON
was claiming payment of the rentals as lessor of the property while
RCBC was making a demand by virtue of the consolidation of the
title of the property in its name.
It is also undisputed that LEYCON, as lessor of the subject
property filed an action for unlawful detainer (Civil Case No. 6202)
against its lessee METROCAN. The issue in Civil Case No. 6202 is
limited to the question of physical or material possession of the
premises.[3] The issue of ownership is immaterial therein [4] and the
outcome of the case could not in any way affect conflicting claims of
ownership, in this case between RCBC and LEYCON. This was
made clear when the trial court, in denying RCBC's "Motion for
Inclusion x x x as an Indispensable Party" declared that "the final
determination of the issue of physical possession over the subject
premises between the plaintiff and the defendant shall not in any way
affect RCBC's claims of ownership over the said premises, since
RCBC is neither a co-lessor or co-lessee of the same, hence he has
no legal personality to join the parties herein with respect to the issue
of physical possession vis-a-vis the contract of lease between the
parties."[5] As aptly pointed by the MeTC, the issue in Civil Case No.
6202 is limited to the defendant LEYCON's breach of the provisions
of the Contract of Lease Rentals.[6]
Hence, the reason for the interpleader action ceased when the
MeTC rendered judgment in Civil Case No. 6202 whereby the court
directed METROCAN to pay LEYCON whatever rentals due on the
subject premises x x x. While RCBC, not being a party to Civil Case
No. 6202, could not be bound by the judgment therein, METROCAN
is bound by the MeTC decision. When the decision in Civil Case No.
6202 became final and executory, METROCAN has no other
alternative left but to pay the rentals to LEYCON. Precisely because
there was already a judicial fiat to METROCAN, there was no more
reason to continue with Civil Case No. 4398-V-94. Thus,
METROCAN moved for the dismissal of the interpleader action not
because it is no longer interested but because there is no more need
for it to pursue such cause of action.
It should be remembered that an action of interpleader is
afforded to protect a person not against double liability but against
RULE 62 - INTERPLEADER
 RCBC vs. Metro Container Corporation
double vexation in respect of one liability. [7] It requires, as an
indespensable requisite, that conflicting claims upon the same
subject matter are or may be made against the plaintiff-in-
interpleader who claims no interest whatever in the subject matter or
an interest which in whole or in part is not disputed by the claimants.
[8]
 The decision in Civil Case No. 6202 resolved the conflicting
claims insofar as payment of rentals was concerned.
Petitioner is correct in saying that it is not bound by the decision
in Civil Case No. 6202. It is not a party thereto. However, it could
not compel METROCAN to pursue Civil Case No. 4398-V-
94. RCBC has other avenues to prove its claim. Is not bereft of other
legal remedies. In fact, the issue of ownership can very well be
threshed out in Civil Case No. 4037-V-93, the case for Nullification
of Extrajudicial Foreclosure Sale and Damages filed by LEYCON
against RCBC.
WHEREFORE, the petition for review is DENIED and the
Decision of the Court of Appeals, promulgated on 18 October 1996,
as well as its Resolution promulgated on 08 January 1997, are
AFFIRMED.
SO ORDERED.

RULE 62 - INTERPLEADER
Lim vs. Continental Development Corporation

RULE 62 - INTERPLEADER
 Lim vs. Continental Development Corporation
4. That the defendant Zoila Co Lim, by letters sent to
G.R. No. L-41818 February 18, 1976 the plaintiff through her counsel, has laid claim and
persists in claiming the very same shares of stock
ZOILA CO LIM vs. CONTINENTAL DEVELOPMENT being demanded by the other defendant alleging that
CORPORATION said stocks really belonged to her mother So now
already deceased, and strongly denying her proclaim
These two petitions seek a review of the order dated March 12, 1974 to the same.
of the Judge presiding Branch XXVI of the Manila Court of First
Instance, dismissing petitioner Continental Development 5. That both defendants, through their respective
Corporation's complaint. The COURT resolved to treat these lawyers, threaten to take punitive measures against
petitions as special civil actions, the petition to dismiss filed by the the plaintiff company should it take any steps that
respondent Benito Gervasio Tan as answer and the cases as may prejudice their respective interests in so far as
submitted for decision. On November 26, 1973, herein petitioner the stocks in question are concerned.
Continental Development Corporation filed a complaint for
interpleader against the defendants Benito Gervasio Tan and Zoila 6. That plaintiff is not sufficiently informed of the
Co Lim, alleging among others: right of the respective claimants and therefore not in
a position to determine justly and correctly their
2. That in the books of the plaintiff, there appears the conflicting claims.
name of the defendant Benito Gervasio Tan as one
of its stockholders initially sometime in 1975 with 7. That the plaintiff company has no interest of any
fifty (50) common shares covered by stock Nos. 12 kind in said stocks and is ready and willing to
and 13, and subsequently credited with (75) shares deliver the corresponding certificates of ownership
by way of dividends covered by certificates of stock to whomsoever as this Honorable Court may direct.
Nos. 20 and 25, or an outstanding total stockholding (pp. 22-23, rec.)
of one hundred twenty-five (125) common shares of
the par value of Two Hundred Fifty Pesos (P250.00)
and praying that the defendants be directed to interplead and litigate
each.
their respective claims over the aforementioned shares of stock and
to determine their respective rights thereto.
3. That said defendant Benito Gervasio Tan,
personally or through his lawyer, has since
On January 7, 1974, herein respondent Benito Gervasio Tan, as
December, 1972, been demanding by letters and
defendant in the lower court, filed a motion to dismiss the complaint,
telegrams, the release to him of the certificates stock
on the ground, inter alia, that paragraph 2 of the complaint itself
aforesaid but which the plaintiff has not done so far
states that the shares of stock in question are recorded in the books of
and is prevented from doing so because of the
petitioner in the same of defendant Benito Gervasio Tan, who should
vehement and adverse claim thereto by the other
therefore be declared owner thereof pursuant to Section 52 of the
defendant, Zoila Co Lim.
Corporation Law (pp. 25-30, rec.).

RULE 62 - INTERPLEADER
 Lim vs. Continental Development Corporation
On January 14, 1974, defendant Zoila Co Lim filed her answer
expressly admitting paragraph 2 of the complaint, but alleging that
the said shares of stock had previously been delivered in trust to the
defendant Benito Gervasio Tan for her (Zoila's) mother, the late So
Bi, alias Tawa, the actual owner of the shares of stock; that now
Benito GervasioTan would want the re-issuance and release to him
of new replacement certificates, which petitioner has not so far done;
and that as the daughter and heir of said So Bi, alias Tawa, she is
now the owner of the said shares of stock, which should be delivered
to her (pp. 31-33, rec.).
On January 22, 1974, petitioner Continental Development
Corporation filed its opposition to Benito's motion to dismiss (pp.
34-40, G.R. No. L-41831).
In the questioned order dated March 12, 1974, the trial judge
dismissed the complaint for lack of cause of action, invoking Section
35 of Act No. 1459, as amended, otherwise known as the
Corporation Law (pp. 4142, G.R. No. L-41831).
Defendant Zoila Co Lim and herein petitioner as plaintiff, filed their
respective motions for reconsideration of the aforesaid order (pp. 43-
49, G.R. No. L-41831), to which the defendant Benito Gervasio Tan
filed his rejoinder (pp. 50-61, G.R. No. L-41831). Said motions
were denied in an order dated July 3, 1974.
Hence these petitions by Continental Development Corporation and
Zoila Co Lim.
It is patent from the pleadings in the lower court that both defendants
Benito Gervasio Tan and Zoila Co Lim assert conflicting rights to
the questioned shares of stock. Precisely in his motion to dismiss the
complaint for interpleader, defendant Benito Gervasio Tan states that
petitioner corporation, through its Vice-President, notified him on
July 23, 1973 "that the shares of stock are in the possession of its
treasurer, Mr. Ty Lim, and urged defendant to directly obtain them
from the former, who allegedly was on vacation at the time. Mr. Ty
Lim, on August 30, 1973, through counsel, replied to the defendant
Benito Gervasio Tan that said certificates were not in his possession
but surmised, without reference to any record, that the same might
have been delivered to the deceased So Bi. And, on October 29,
1973, same counsel of Mr. Ty Lim, wrote the corporation, in behalf
of defendant Zoila Co Lim, alleged heir of So Bi, claiming
ownership of the stocks" (pp. 26, 27, G.R. No. L-41831). Defendant
Zoila Co Lim, on the other hand. as heretofore stated, claims sole-
ownership of said shares of stock as inheritance from her late mother
So Bi, alias Tawa.
And petitioner Continental Development Corporation expressly
stated in the complaint that both defendants, through their respective
lawyers, threatened to take punitive measures against it should it
adopt any steps that may prejudice then respective interests in the
shares of stock in question; and that it is not sufficiently informed of
the rights of the respective claimants and therefore not in a position
to determine justly and correctly their conflicting claims (pars. 5, 6
and 7 of the complaint, p. 23, rec.)
And in its opposition to the motion to dismiss its complaint,
petitioner Continental Development Corporation s that it might be
liable to one defendant should it comply with the demands of the
other with respect to the transfer or entry of the shares of stock in the
books of the corporation.
Since there is an active conflict of interests between the two
defendants, now herein respondent Benito Gervasio Tan and
petitioner Zoila Co Lim, over the disputed shares of stock, the trial
court gravely abused its discretion in dismissing the complaint for
interpleader, which practically decided ownership of the shares of
stock in favor of defendant Benito Gervasio Tan. The two
defendants, now respondents in G.R. No. 
L-41831, should be given full opportunity to litigate their respective
claims.
RULE 62 - INTERPLEADER
 Lim vs. Continental Development Corporation
Rule 63, Section 1 of the New Rules of Court tells us when a cause
of action exists to support a complaint in interpleader:
Whenever conflicting claims upon the same subject
matter are or may be made against a person, who
claims no interest whatever in the subject matter, or
an interest which in whole or in part is not disputed
by the complainants to compel them to interplead
and litigate their several claims among themselves
(Italics supplied).
This provision only requires as an indispensable requisite:
that conflicting claims upon the same subject matter
are or may be made against the plaintiff-in-
interpleader who claims no interest whatever in the
subject matter or an interest which in whole or in
part is not disputed by the claimants (Beltran vs.
People's Homesite and Housing Corporation, No. L-
25138,29 SCRA 145).
This ruling, penned by Mr. Justice Tee the principle in Alvarez vs.
Commonwealth (65 Phil. 302), that
The action of interpleader under section 120, is a
remedy whereby a person who has personal property
in his possession, or an obligation to render wholly
or partially, without claiming any right in both
comes to court and asks that the persons who claim
the said personal property or who consider
themselves entitled to demand compliance with the
obligation, be required to litigate among themselves,
in order to determine finally who is entitled to one or
the other thing. The remedy is afforded not to protect
a person against a double liability but to protect him
against a double vexation in respect of one liability.
An interpleader merely demands as a sine qua non element
... that there be two or more claimants to the fund or
thing in dispute through separate and different
interests. The claims must be adverse before relief
can be granted and the parties sought to be
interpleaded must be in a position to make effective
claims (33 C.J. 430).
Additionally, the fund, thing, or duty over which the parties assert
adverse claims must be one and the same and derived from the same
source (33 C.J., 328; Martin, Rules of Court, 1969 ed., Vol. 3, 133-
134; Moran, Rules of Court, 1970 ed., Vol. 3, 134136).
Indeed, petitioner corporation is placed in the same situation as a
lessee who does not know the person to whom he will pay the rentals
due to the conflicting claims over the property leased, or a sheriff
who finds himself puzzled by conflicting claims to a property seized
by him. In these examples, the lessee (Pangkalinawan vs. Rodas, 80
Phil. 28) and the sheriff Sy-Quia vs. Sheriff, 46 Phil. 400) were each
allowed to file a complaint in interpleader to determine the respective
rights of the claimants.
WHEREFORE, THE PETITIONS ARE HEREBY GRANTED;
THE ORDER DATED MARCH 12, 1974 DISMISSING THE
COMPLAINT AND THE ORDER DATED JULY 3, 1974
DENYING THE MOTION FOR RECONSIDERATION OF THE
PETITIONERS IN THESE TWO CASES ARE HEREBY SET
ASIDE. WITH COSTS AGAINST RESPONDENT BENITO
GERVASIO TAN
RULE 62 - INTERPLEADER
 Sy-Quia vs. Sheriff of Ilocos Sur
G.R. No. L-22807             October 10, 1924
GREGORIO R. SY-QUIA, vs. THE SHERIFF OF ILOCOS
SUR and FILADELFO DE LEON
This is a petition for a writ of mandamus to compel the Sheriff of the
Province of Ilocos Sur to proceed with a chattel mortgage foreclosure
sale.
It appears from the record that on February 3, 1915, Miguel Aglipay
Cheng-Laco and Feliciano Reyes Cheng-Kiangco executed a chattel
mortgage in favor of the petitioner, Gregorio R. Sy-Quia on their
mercantile establishment, with all the merchandise therein contained,
as security for a debt of P6,000. The chattel mortgage was duly
recorded on the date of its execution and fell due on February 3,
1917. From its terms it may be inferred that it was the intention of
the parties that the mortgagors were to be permitted to sell the
merchandise replenishing their stock from time to time and that the
new stock brought in should also be subject to the mortgage.
On May 5, 1924, Miguel Aglipay Cheng-Laco executed another
chattel mortgage on the same establishment and all its contents in
favor of the respondent Filadelfo de Leon as security for the sum of
P4,900, which mortgage was recorded on May 4, 1924.
On the latter date of the petitioner, in writing, requested the sheriff to
take possession of the mortgaged property and to sell it at public
auction under the provisions of section 14 of the Chattel Mortgage
Law (Act No. 1508). The sheriff seized the establishment in question
as well as its contents and fixed the date of the sale at June 2, 1924.
In the meantime, Filadelfo de Leon presented an adverse claim to the
property by virtue of his chattel mortgage, alleging that all the goods
on which the chattel mortgage of Gregorio R. Sy-Quia was given had
been sold long before the chattel mortgage in favor of De Leon was
executed and that, therefore, the earlier chattel mortgage was of no
effect.
The sheriff being in doubt as to the priority of the conflicting claims,
suspended the foreclosure proceedings and brought an action under
section 120 of the Code of Civil Procedure requiring the two
claimants to interplead. Thereupon, the present proceeding that the
duty of the sheriff to proceed with the sale was a ministerial one and
praying that the sheriff be commanded to proceed.
Though it, perhaps, would have been better practice for the sheriff to
sell the property and hold the proceeds of the sale subject to the
outcome of the action of interpleader, we, nevertheless, are of the
opinion that the facts shown do not justify our interference by
mandamus. The sheriff might lay himself open to an action for
damages if he sold the goods without the consent of the holder of the
last mortgage, and it does not appear that the petitioner offered to
give bond to hold him harmless in such an event. In these
circumstances, his action in suspending the sale pending the
determination of the action of interpleader seems justified.
We may say further that in cases such as the present, the petition for
mandamus should be addressed to the Courts of First Instance rather
than to this court.
The petition is denied with the costs against the petitioner. So
ordered.
RULE 62 - INTERPLEADER
 Pagkalinawan vs. Rodas
G.R. No. L-1806             February 25, 1948
ALFONSO PAGKALINAWAN and MANUEL
PAGKALINAWAN vs.
SOTERO RODAS, Judge of First Instance of Manila, JOAQUIN
GARCIA, Sheriff of Manila, and MANUEL TAMBUNTING
In an ejectment suit between Manuel Tambunting, plaintiff, and
Alfonso Pagkalinawan and Manuel Pagkalinawan, defendants,
appealed from the municipal court to the Court of First Instance of
Manila, the latter court, after trial, rendered a decision dated July 3,
1947, sentencing the defendants to vacate the house in question and
to pay the plaintiff the rentals from November, 1946, at the rate of
P45 a month, plus the costs. Acting upon a motion for
reconsideration, filed by the defendants, the Court of First Instance
of Manila issued an order dated July 26, 1947, granting said motion,
setting aside the decision of July 3, 1947, and absolving the
defendants from the complaint. On motion for reconsideration in turn
filed by the plaintiff, an order dated August 16, 1947, was issued in
which the same court "dicta de nuevo sentencia en esta causa,
ordenando al Escribano pague al aqui domandante los alquileres
depositados por los demandados paguen al demandante directamenta
los alquileres, en caso contrario, el Juzgado ordenara su lanzamiento
de la finca en cuestion y les condenara al pago de las costas." This
decision appears to have become final, as a result of which, upon
petition of the plaintiff, the Court of First Instance of Manila ordered
the issuance of a writ of execution. The defendants sought to stay the
execution on the ground that they had in the meantime filed with the
same court an interpleader suit against the plaintiff and one Angel de
Leon Ong, praying that the latter two be ordered to litigate their
conflicting claims to the rentals due from the defendants for the
premises in question, it appearing that said defendants received a
notice from the Attorney of Angel de Leon Ong advising the
defendants to stop paying rentals to the plaintiff. The Court of First
Instance of Manila acceded to the motion for stay of execution, but,
at the instance of the plaintiff, it issued an order on November 1,
1947, directing that execution be proceeded with. Failing to obtain a
reconsideration of the latter order, the defendants instituted the
present petition for certiorari and prohibition, seeking from us an
order directing Hon. Sotero Rodas, Judge of the Court of First
Instance of Manila, and Joaquin Garcia, sheriff, to desist from
carrying out the writ of execution.
There is merit in the petition. It is true that the decision of the
respondent judge of August 16, 1947, orders the petitioners to pay
the rentals directly to the respondent Manuel Tambunting and
provides for their ejectment in case of default. But it appears that, in
connection with the interpleader suit filed by the herein petitioners in
the Court of First Instance of Manila, said rentals were deposited
with the clerk of court, of which fact the respondent judge was
informed by the petitioners in their constancia dated October 15,
1947. Such deposits, in our opinion, constitute a bona
fide compliance with the decision of the respondent judge, since it is
undeniable that the petitioners were warned by Angel de Leon Ong
not to pay rentals to the respondent Manuel Tambunting. That there
is really a conflicting claim between Angel de Leon Ong and
respondent Manuel Tambunting is evidenced by the fact that there
are pending in the Court of First Instance of Manila civil case No.
815, between Manuel Tambunting, plaintiff, and Angel de Leon Ong
and Ong Hoa, defendants, for the annulment of a contract of sale
involving the premises in question, and civil case No. 2690, between
Angel de Leon Ong, plaintiff, and Manuel Tambunting, defendant,
for the ejectment of Tambunting from the property located at Nos.
329 to 339 Tanduay Street, Manila, which includes the premises held
by the petitioners. Under the law, the latter have a right to file the
interpleader suit in view of the claim for rentals of Angel de Leon
Ong; and if the respondent Tambunting believes that he is legally
entitled to said rentals, he is free to move for withdrawal of the
deposits made by the petitioners.
RULE 62 - INTERPLEADER
 Pagkalinawan vs. Rodas
Wherefore, the petition is hereby granted and the respondent judge
and sheriff are ordered to desist form carrying out the writ of
execution issued in civil case No. 1489. So ordered, with costs
against the respondent Manuel Tambunting.

RULE 62 - INTERPLEADER
 UCPB vs. Intermediate Appellate Court
G.R. Nos. 72664-65 March 20, 1990
UNITED COCONUT PLANTERS BANK vs. HON.
INTERMEDIATE APPELLATE COURT and MAKATI BEL-
AIR CONDOMINIUM DEVELOPERS, INC.
Petitioner seeks review of the decision of the respondent appellate
court dated 27 June 1985 which annulled and set aside certain orders
of the then Court of First Instance (CFI) of Rizal, Branch 15, Makati
so far as said orders dismissed private respondents' counter-claim.
On 23 July 1979, petitioner United Coconut Planters Bank (Bank)
filed in the lower court a complaint-in-interpleader against private
respondent Makati Bel-Air Condominium Developers, Inc. (Makati
Bel-Air) and against Altiura Investors, Inc. (Altiura). The subject
matter of the complaint was a manager's check in the amount of
P494,000.00 issued by petitioner Bank payable to Makati Bel-Air,
having been purchased by Altiura. Altiura delivered the check to
Makati Bel-Air as part payment on an office condominium unit in
the Cacho-Gonzales Building, on 16 July 1979.
On 17 July 1979, petitioner Bank received from Altiura instructions
to hold payment on the manager's check, in view of a material
discrepancy in the area of the office unit purchased by Altiura which
unit actually measured 124.58 square meters, instead of 165 square
meters as stipulated in the contract of sale. Petitioner Bank
immediately requested private respondent Makati Bel-Air, by a letter
dated 17 July 1979, to advise the Bank why it should not issue the
stop payment order requested by Altiura.
The next day, 18 July 1975, petitioner Bank received a reply from
Makati Bel-Air explaining the latter's side of the controversy and at
the same proposing a possible reduction of the office unit's purchase
price.
On 19 July 1979, petitioner Bank received a letter from Altiura of
even date requesting the Bank to hold payment of its manager's
check while Altiura was discussing Makati Bel-Air's proposal for
reduction of the purchase price and requesting the Bank to give both
parties fifteen (15) days within which to settle their differences. By a
letter dated on the same date, petitioner Bank requested Makati Bel-
Air to hold in abeyance for a period not exceeding fifteen (15) days
the presentation of the manager's check, so that both parties could
settle their differences amicably.
On 20 July 1979, petitioner Bank was advised in writing by Makati
Bel-Air that the latter did not agree to the request of the Bank set out
in the latter's letter of 19 July 1979.
Thereupon, petitioner Bank filed a complaint-in-interpleader against
Altiura and Makati 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. The trial court
ordered the deposit of the funds into a special account with any
reputable banking institution subject to further orders of the court.
On 18 August 1979, Makati Bel-Air filed its answer and
incorporated therein a counter-claim against petitioner Bank and a
cross-claim against Altiura. In turn, Altiura filed an answer to the
complaint-in-interpleader, with motion to dismiss the crossclaim of
Makati Bel-Air.
Meantime, on 23 July 1979, Altiura had filed a complaint for
rescission of the contract of sale of the condominium unit, with
damages, against Makati Bel-Air docketed as Civil Case No. 33967,
which case was eventually consolidated with the interpleader case.
On 29 August 1979, petitioner Bank filed a "motion to withdraw
complaint and motion to dismiss counter-claim", stating that there
RULE 62 - INTERPLEADER
 UCPB vs. Intermediate Appellate Court
was no longer any conflict between Makati Bel-Air and Altiura as to
who was entitled to the funds covered by the manager's check, since
Makati Bel-Air in its answer had alleged that it had cancelled and
rescinded the sale of the condominium unit and had relinquished any
claim it had over the funds covered by the manager's check.
On 28 September 1979, Makati Bel-Air delivered to petitioner Bank
the original of the manager's check. On 18 February 1980, the trial
court in Civil Case No. 33961 issued an order directing the release of
the funds covered by the manager's check to Altiura.
On 28 April 1983, the trial court issued an order resolving petitioner
Bank's motion to withdraw complaint-in-interpleader and to dismiss
counter-claim, declaring that motion to withdraw the complaint-in-
interpleader had been rendered moot and academic by the court's
earlier order of 18 February 1980 directing petitioner Bank to release
to Altiura the P494,000.00 covered by the manager's check, which
Makati Bel-Air had not opposed nor appealed from. In the same
order, the trial court granted Makati Bel-Air's motion to consolidate
Civil Case No. 33961 (the interpleader case) and Civil Case No.
33967 (the rescission plus damages case).
On 12 July 1983, upon motion of petitioner Bank, the trial court
issued an order clarifying its 28 April 1983 order by stating that the
counter-claim of Makati Bel-Air was dismissed when the funds
covered by the manager's check were released to Altiura without
objection of Makati Bel-Air. At the same time, the order denied
Altiura's motion to dismiss Makati Bel-Air's cross-claim in Civil
Case No. 33961.
Makati Bel-Air moved for reconsideration of the 12 July 1983
clarificatory order of the trial court, without success.
Makati Bel-Air then went to the respondent appellate court on
petition for certiorari.
In its decision dated 27 June 1985, the appellate court
granted certiorari and nullified the trial court's orders of 12 July and
30 August 1983 to the extent that these had dismissed Makati Bel-
Air's counter-claim. The appellate court held that the withdrawal of
the complaint-in-interpleader and its dismissal as moot and academic
did not operate ipso facto to dismiss Makati Bel-Air's counter-claim
for the reason that said counter-claim was based on "an entirely
different cause of action from that in the complaint-[in]-
interpleader".
In the instant Petition for Review on Certiorari, petitioner Bank
argues that Makati Bel-Air's counter-claim was compulsory in nature
and had therefore been dissolved when the complaint-in-interpleader
was withdrawn and dismissed. Makati Bel-Air argues upon the other
hand, that its counterclaim was not a compulsory one.
Makati Bel-Air's counterclaim in the interpleader proceedings was
for damages in the amount of P5,000,000.00, based upon the theory
that petitioner Bank had violated its guarantee embodied in its
manager's check when it in effect stopped payment of said check,
allegedly causing damages to Makati Bel-Air the latter having
allegedly issued checks against said funds.
Under Section 4, Rule 9 of the Revised Rules of Court, a compulsory
counterclaim is "one which arises out of or is necessarily connected
with the transaction or occurrence that is the subject matter of the
opposing party's claim." 1Interpleader is a proper remedy where a
bank which had issued a manager's check is subjected to opposing
claims by persons who respectively claim a right to the funds
covered by the manager's check. 2 The Bank is entitled to take
necessary precautions so that, as far possible, it does not make a
mistake as to who is entitled to payment; the necessary precautions
include, precisely, recourse to an interpleader suit.
In the instant case, petitioner Bank having been informed by both
Altiura and Makati Bel-Air of their respective positions in their
RULE 62 - INTERPLEADER
 UCPB vs. Intermediate Appellate Court
controversy, and Makati Bel-Air having refused the Bank's respondent appellate court dated 27 June 1985 in AC-G.R. SP Nos.
suggestion voluntarily to refrain for fifteen (15) days from presenting 01669-70.
the check for payment, petitioner Bank felt compelled to resort to the
remedy of interpleader. It will be seen that Makati Bel-Air's counter-
claim arose out of or was necessarily connected with the recourse of
petitioner to this remedy of interpleader. Makati-Bel Air was in
effect claiming that petitioner Bank had in bad faith refused to honor
its undertaking to pay represented by the manager's check it had
issued. When the trial court granted petitioner's motion for
withdrawal of its complaint-in-interpleader, as having become moot
and academic by reason of Makati Bel-Air's having cancelled the
sale of the office unit to Altiura and having returned the manager's
check to the Bank and acquiesced in the release of the funds to
Altiura, the trial court in effect held that petitioner Bank's recourse to
interpleader was proper and not a frivolous or malicious maneuver to
evade its obligation to pay to the party lawfully entitled to the funds
represented by the manager's check. Having done so, the trial court
could not have logically allowed Makati Bel-Air to recover on its
counterclaim for damages against petitioner Bank.

There are other considerations supporting the conclusion reached by

this Court that respondent appellate court had committed reversible
error. Makati Bel-Air was a party to the contract of sale of an office
condominium unit to Altiura, for the payment of which the manager's
check was issued. Accordingly, Makati Bel-Air was fully aware, at
the time it had received the manager's check, that there was, or had
arisen, at least partial failure of consideration since it was unable to
comply with its obligation to deliver office space amounting to 165
square meters to Altiura. Makati Bel-Air was also aware that
petitioner Bank had been informed by Altiura of the claimed defect
in Makati Bel-Air's title to the manager's check or its right to the
proceeds thereof. Vis-a-vis both Altiura and petitioner Bank, Makati
Bel-Air was not a holder in due course 3 of the manager's check.

ACCORDINGLY, the Court Resolved to GRANT the Petition for

Review and to REVERSE and SET ASIDE the Decision of

RULE 62 - INTERPLEADER
 Del Carmen vs. Sps. Sabordo
G.R. No. 181723, August 11, 2014
ELIZABETH DEL CARMEN v. SPOUSES RESTITUTO
SABORDO AND MIMA MAHILUM-SABORDO
This treats of the petition for review on certiorari assailing the
Decision and Resolution of the Court of Appeals (CA), dated May
25, 2007 and January 24, 2008, respectively, in CA-G.R. CV No.
75013.
The factual and procedural antecedents of the case are as follows:
Sometime in 1961, the spouses Toribio and Eufrocina Suico (Suico
spouses), along with several business partners, entered into a
business venture by establishing a rice and corn mill at Mandaue
City, Cebu. As part of their capital, they obtained a loan from the
Development Bank of the Philippines (DBP), and to secure the said
loan, four parcels of land owned by the Suico spouses, denominated
as Lots 506, 512, 513 and 514, and another lot owned by their
business partner, Juliana Del Rosario, were mortgaged.
Subsequently, the Suico spouses and their business partners failed to
pay their loan obligations forcing DBP to foreclose the mortgage.
After the Suico spouses and their partners failed to redeem the
foreclosed properties, DBP consolidated its ownership over the same.
Nonetheless, DBP later allowed the Suico spouses and Reginald and
Beatriz Flores (Flores spouses), as substitutes for Juliana Del
Rosario, to repurchase the subject lots by way of a conditional sale
for the sum of P240,571.00. The Suico and Flores spouses were able
to pay the downpayment and the first monthly amortization, but no
monthly installments were made thereafter. Threatened with the
cancellation of the conditional sale, the Suico and Flores spouses
sold their rights over the said properties to herein respondents
Restituto and Mima Sabordo, subject to the condition that the latter
shall pay the balance of the sale price. On September 3, 1974,
respondents and the Suico and Flores spouses executed a
supplemental agreement whereby they affirmed that what was
actually sold to respondents were Lots 512 and 513, while Lots 506
and 514 were given to them as usufructuaries. DBP approved the sale
of rights of the Suico and Flores spouses in favor of herein
respondents. Subsequently, respondents were able to repurchase the
foreclosed properties of the Suico and Flores spouses.
On September 13, 1976, respondent Restituto Sabordo (Restituto)
filed with the then Court of First Instance of Negros Occidental an
original action for declaratory relief with damages and prayer for a
writ of preliminary injunction raising the issue of whether or not the
Suico spouses have the right to recover from respondents Lots 506
and 514.
In its Decision dated December 17, 1986, the Regional Trial Court
(RTC) of San Carlos City, Negros Occidental, ruled in favor of the
Suico spouses directing that the latter have until August 31, 1987
within which to redeem or buy back from respondents Lots 506 and
514.
On appeal, the CA, in its Decision in CA-G.R. CV No. 13785, dated
April 24, 1990, modified the RTC decision by giving the Suico
spouses until October 31, 1990 within which to exercise their option
to purchase or redeem the subject lots from respondents by paying
the sum of P127,500.00. The dispositive portion of the CA Decision
reads as follows:
xxxx
For reasons given, judgment is hereby rendered modifying the
dispositive portion of [the] decision of the lower court to read:
1) The defendants-appellees are granted up to October 31, 1990
within which to exercise their option to purchase from the plaintiff-
appellant Restituto Sabordo and Mima Mahilum Lot No. 506,
covered by Transfer Certificate of Title No. T-102598 and Lot No.
RULE 62 - INTERPLEADER
 Del Carmen vs. Sps. Sabordo
514, covered by Transfer Certificate of Title No. T-102599, both of
Escalante Cadastre, Negros Occidental by reimbursing or paying to
the plaintiff the sum of ONE HUNDRED TWENTY-SEVEN
THOUSAND FIVE HUNDRED PESOS (P127,500.00);
2) Within said period, the defendants-appellees shall continue to
have usufructuary rights on the coconut trees on Lots Nos. 506 and
514, Escalante Cadastre, Negros Occidental;
3) The Writ of Preliminary Injunction dated August 12, 1977 shall be
effective until defendants-appellees shall have exercised their option
to purchase within said period by paying or reimbursing to the
plaintiff-appellant the aforesaid amount.
No pronouncement as to costs.
SO ORDERED.
In a Resolution dated February 13, 1991, the CA granted the Suico
spouses an additional period of 90 days from notice within which to
exercise their option to purchase or redeem the disputed lots.
In the meantime, Toribio Suico (Toribio) died leaving his widow,
Eufrocina, and several others, including herein petitioner, as legal
heirs. Later, they discovered that respondents mortgaged Lots 506
and 514 with Republic Planters Bank (RPB) as security for a loan
which, subsequently, became delinquent.
Thereafter, claiming that they are ready with the payment of
P127,500.00, but alleging that they cannot determine as to whom
such payment shall be made, petitioner and her co-heirs filed a
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
abovementioned sum of money. The Complaint also prayed that
respondents be directed to substitute Lots 506 and 514 with other
real estate properties as collateral for their outstanding obligation
with RPB and that the latter be ordered to accept the substitute
collateral and release the mortgage on Lots 506 and 514. Upon filing
of their complaint, the heirs of Toribio deposited the amount of
P127,500.00 with the RTC of San Carlos City, Branch 59.
Respondents filed their Answer with Counterclaim praying for the
dismissal of the above Complaint on the grounds that (1) the action
for interpleader was improper since RPB is not laying any claim on
the sum of P127,500.00; (2) that the period within which the
complainants are allowed to purchase Lots 506 and 514 had already
expired; (3) that there was no valid consignation, and (4) that the
case is barred by litis pendencia or res judicata.
On the other hand, RPB filed a Motion to Dismiss the subject
Complaint on the ground that petitioner and her co-heirs had no valid
cause of action and that they have no primary legal right which is
enforceable and binding against RPB.
On December 5, 2001, the RTC rendered judgment, dismissing the
Complaint of petitioner and her co-heirs for lack of merit.
Respondents' Counterclaim was likewise dismissed.
Petitioner and her co-heirs filed an appeal with the CA contending
that the judicial deposit or consignation of the amount of
P127,500.00 was valid and binding and produced the effect of
payment of the purchase price of the subject lots.
In its assailed Decision, the CA denied the above appeal for lack of
merit and affirmed the disputed RTC Decision.
Petitioner and her co-heirs filed a Motion for Reconsideration, but it
was likewise denied by the CA.
Hence, the present petition for review on certiorari with a lone
Assignment of Error, to wit:
RULE 62 - INTERPLEADER
 Del Carmen vs. Sps. Sabordo
THE COURT OF APPEALS ERRED IN AFFIRMING THE
DECISION OF THE LOWER COURT WHICH HELD THAT THE
JUDICIAL DEPOSIT OF P127,500.00 MADE BY THE SUICOS
WITH THE CLERK OF COURT OF THE RTC, SAN CARLOS
CITY, IN COMPLIANCE WITH THE FINAL AND EXECUTORY
DECISION OF THE COURT OF APPEALS IN CA-G.R. CV-13785
WAS NOT VALID.
Petitioner's main contention is that the consignation which she and
her co-heirs made was a judicial deposit based on a final judgment
and, as such, does not require compliance with the requirements of
Articles 125611 and 1257 of the Civil Code.
The petition lacks merit.
At the outset, the Court quotes with approval the discussion of the
CA regarding the definition and nature of consignation, to wit:
… 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 case of Arzaga v. Rumbaoa, which was cited by petitioner in
support of his contention, this Court ruled that the deposit made with
the court by the plaintiff-appellee in the said case is considered a
valid payment of the amount adjudged, even without a prior tender of
payment thereof to the defendants-appellants, because the plaintiff-
appellee, upon making such deposit, expressly petitioned the court
that the defendants-appellees be notified to receive the tender of
payment. This Court held that while “[t]he deposit, by itself alone,
may not have been sufficient, but with the express terms of the
petition, there was full and complete offer of payment made directly
to defendants-appellants.” In the instant case, however, petitioner
and her co-heirs, upon making the deposit with the RTC, did not ask
the trial court that respondents be notified to receive the amount that
they have deposited. In fact, there was no tender of payment. Instead,
what petitioner and her co-heirs prayed for is that respondents and
RPB be directed to interplead with one another to determine their
alleged respective rights over the consigned amount; that respondents
be likewise directed to substitute the subject lots with other real
properties as collateral for their loan with RPB and that RPB be also
directed to accept the substitute real properties as collateral for the
said loan. Nonetheless, the trial court correctly ruled that interpleader
is not the proper remedy because RPB did not make any claim
whatsoever over the amount consigned by petitioner and her co-heirs
with the court.
In the cases of Del Rosario v. Sandico and Salvante v. Cruz, likewise
cited as authority by petitioner, this Court held that, for a
consignation or deposit with the court of an amount due on a
judgment to be considered as payment, there must be prior tender to
the judgment creditor who refuses to accept it. The same principle
was reiterated in the later case of Pabugais v. Sahijwani. As stated
above, tender of payment involves a positive and unconditional act
by the obligor of offering legal tender currency as payment to the
obligee for the former’s obligation and demanding that the latter
accept the same. In the instant case, the Court finds no cogent reason
to depart from the findings of the CA and the RTC that petitioner and
her co-heirs failed to make a prior valid tender of payment to
respondents.
RULE 62 - INTERPLEADER
 Del Carmen vs. Sps. Sabordo

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 the same right to collect; and (5) when the
title of the obligation has been lost. None of these instances are
present in the instant case. Hence, the fact that the subject lots are in
danger of being foreclosed does not excuse petitioner and her co-
heirs from tendering payment to respondents, as directed by the
court.

WHEREFORE, the instant petition is DENIED. The Decision of the

Court of Appeals, dated May 25, 2007, and its Resolution dated
January 24, 2008, both in CA-G.R. CV No. 75013, are AFFIRMED.

SO ORDERED.

RULE 62 - INTERPLEADER
 Pasricha vs. Don Luis Dison Realty, Inc.
SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA vs.
DON LUIS DISON REALTY, INC.,
G.R. No. 136409 March 14, 2008
This is a petition for review on certiorari under Rule 45 of the Rules
of Court seeking the reversal of the Decision of the Court of Appeals
(CA) dated May 26, 1998 and its Resolution dated December 10,
1998 in CA-G.R. SP No. 37739 dismissing the petition filed by
petitioners Josephine and Subhash Pasricha.
The facts of the case, as culled from the records, are as follows:
Respondent Don Luis Dison Realty, Inc. and petitioners executed
two Contracts of Lease whereby the former, as lessor, agreed to lease
to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San
Luis Building, located at 1006 M.Y. Orosa cor. T.M. Kalaw Streets,
Ermita, Manila. Petitioners, in turn, agreed to pay monthly rentals, as
follows:
For Rooms 32/35:
From March 1, 1991 to August 31, 1991 P5,000.00/P10,000.00
From September 1, 1991 to February 29, 1992 P5,500.00/P11,000.00
From March 1, 1992 to February 28, 1993 P6,050.00/P12,100.00
From March 1, 1993 to February 28, 1994 P6,655.00/P13,310.00
From March 1, 1994 to February 28, 1995 P7,320.50/P14,641.00
From March 1, 1995 to February 28, 1996 P8,052.55/P16,105.10
From March 1, 1996 to February 29, 1997 P8,857.81/P17,715.61
From March 1, 1997 to February 28, 1998 P9,743.59/P19,487.17
From March 1, 1998 to February 28, 1999 P10,717.95/P21,435.89
From March 1, 1999 to February 28, 2000 P11,789.75/P23,579.48[4]
For Rooms 22 and 24:
Effective July 1, 1992 P10,000.00 with an increment of 10% every
two years.
For Rooms 33 and 34:
Effective April 1, 1992 P5,000.00 with an increment of 10% every
two years.
For Rooms 36, 37 and 38:
Effective when tenants vacate said premises P10,000.00 with an
increment of 10% every two years.
Petitioners were, likewise, required to pay for the cost of electric
consumption, water bills and the use of telephone cables.
The lease of Rooms 36, 37 and 38 did not materialize leaving only
Rooms 22, 24, 32, 33, 34 and 35 as subjects of the lease contracts.
While the contracts were in effect, petitioners dealt with Francis
Pacheco (Pacheco), then General Manager of private respondent.
Thereafter, Pacheco was replaced by Roswinda Bautista (Ms.
Bautista). Petitioners religiously paid the monthly rentals until May
1992. After that, however, despite repeated demands, petitioners
continuously refused to pay the stipulated rent. Consequently,
respondent was constrained to refer the matter to its lawyer who, in
turn, made a final demand on petitioners for the payment of the
accrued rentals amounting to P916,585.58. Because petitioners still
refused to comply, a complaint for ejectment was filed by private
respondent through its representative, Ms. Bautista, before the
Metropolitan Trial Court (MeTC) of Manila. The case was raffled to
Branch XIX and was docketed as Civil Case No. 143058-CV.
Petitioners admitted their failure to pay the stipulated rent for the
leased premises starting July until November 1992, but claimed that
such refusal was justified because of the internal squabble in
respondent company as to the person authorized to receive payment.
To further justify their non-payment of rent, petitioners alleged that
they were prevented from using the units (rooms) subject matter of
the lease contract, except Room 35. Petitioners eventually paid their
monthly rent for December 1992 in the amount of P30,000.00, and
RULE 62 - INTERPLEADER
 Pasricha vs. Don Luis Dison Realty, Inc.
claimed that respondent waived its right to collect the rents for the
months of July to November 1992 since petitioners were prevented
from using Rooms 22, 24, 32, 33, and 34. However, they again
withheld payment of rents starting January 1993 because of
respondents refusal to turn over Rooms 36, 37 and 38. To show good
faith and willingness to pay the rents, petitioners alleged that they
prepared the check vouchers for their monthly rentals from January
1993 to January 1994. Petitioners further averred in their Amended
Answer that the complaint for ejectment was prematurely filed, as
the controversy was not referred to the barangay for conciliation.
For failure of the parties to reach an amicable settlement, the pre-trial
conference was terminated. Thereafter, they submitted their
respective position papers.
On November 24, 1994, the MeTC rendered a Decision dismissing
the complaint for ejectment. It considered petitioners’ non-payment
of rentals as unjustified. The court held that mere willingness to pay
the rent did not amount to payment of the obligation; petitioners
should have deposited their payment in the name of respondent
company. On the matter of possession of the subject premises, the
court did not give credence to petitioners claim that private
respondent failed to turn over possession of the premises. The court,
however, dismissed the complaint because of Ms. Bautista’s alleged
lack of authority to sue on behalf of the corporation.
Deciding the case on appeal, the Regional Trial Court (RTC) of
Manila, Branch 1, in Civil Case No. 94-72515, reversed and set aside
the MeTC Decision in this wise:
WHEREFORE, the appealed decision is hereby reversed and set
aside and another one is rendered ordering defendants-appellees and
all persons claiming rights under them, as follows:
(1) to vacate the leased premised (sic) and restore possession
thereof to plaintiff-appellant;
(2) to pay plaintiff-appellant the sum of P967,915.80 representing
the accrued rents in arrears as of November 1993, and the rents on
the leased premises for the succeeding months in the amounts stated
in paragraph 5 of the complaint until fully paid; and
(3) to pay an additional sum equivalent to 25% of the rent
accounts as and for attorneys’ fees plus the costs of this suit.
SO ORDERED.
The court adopted the MeTCs finding on petitioners unjustified
refusal to pay the rent, which is a valid ground for ejectment. It,
however, faulted the MeTC in dismissing the case on the ground of
lack of capacity to sue. Instead, it upheld Ms. Bautista’s authority to
represent respondent notwithstanding the absence of a board
resolution to that effect, since her authority was implied from her
power as a general manager/treasurer of the company.
Aggrieved, petitioners elevated the matter to the Court of Appeals in
a petition for review on certiorari. On March 18, 1998, petitioners
filed an Omnibus Motion to cite Ms. Bautista for contempt; to strike
down the MeTC and RTC Decisions as legal nullities; and to conduct
hearings and ocular inspections or delegate the reception of evidence.
Without resolving the aforesaid motion, on May 26, 1998, the CA
affirmed the RTC Decision but deleted the award of attorneys fees.
Petitioners moved for the reconsideration of the aforesaid decision.
Thereafter, they filed several motions asking the Honorable Justice
Ruben T. Reyes to inhibit from further proceeding with the case
allegedly because of his close association with Ms. Bautistas uncle-
in-law.
In a Resolution dated December 10, 1998, the CA denied the
motions for lack of merit. The appellate court considered said
motions as repetitive of their previous arguments, irrelevant and
obviously dilatory. As to the motion for inhibition of the Honorable
RULE 62 - INTERPLEADER
 Pasricha vs. Don Luis Dison Realty, Inc.
Justice Reyes, the same was denied, as the appellate court justice
stressed that the decision and the resolution were not affected by
extraneous matters. Lastly, the appellate court granted respondents
motion for execution and directed the RTC to issue a new writ of
execution of its decision, with the exception of the award of
attorneys fees which the CA deleted.
Petitioners now come before this Court in this petition for review on
certiorari raising the following issues:
I.
Whether this ejectment suit should be dismissed and whether
petitioners are entitled to damages for the unauthorized and
malicious filing by Rosario (sic) Bautista of this ejectment case, it
being clear that [Roswinda] whether as general manager or by virtue
of her subsequent designation by the Board of Directors as the
corporations attorney-in-fact had no legal capacity to institute the
ejectment suit, independently of whether Director Pacanas Order
setting aside the SEC revocation Order is a mere scrap of paper.
II.
Whether the RTCs and the Honorable Court of Appeals failure and
refusal to resolve the most fundamental factual issues in the instant
ejectment case render said decisions void on their face by reason of
the complete abdication by the RTC and the Honorable Justice
Ruben Reyes of their constitutional duty not only to clearly and
distinctly state the facts and the law on which a decision is based but
also to resolve the decisive factual issues in any given case.
III.
Whether the (1) failure and refusal of Honorable Justice Ruben
Reyes to inhibit himself, despite his admission by reason of his
silence of petitioners accusation that the said Justice enjoyed a
$7,000.00 scholarship grant courtesy of the uncle-in-law of
respondent corporations purported general manager and (2), worse,
his act of ruling against the petitioners and in favor of the respondent
corporation constitute an unconstitutional deprivation of petitioners
property without due process of law.[32]
In addition to Ms. Bautista’s lack of capacity to sue, petitioners insist
that respondent company has no standing to sue as a juridical person
in view of the suspension and eventual revocation of its certificate of
registration. They likewise question the factual findings of the court
on the bases of their ejectment from the subject premises.
Specifically, they fault the appellate court for not finding that: 1)
their non-payment of rentals was justified; 2) they were deprived of
possession of all the units subject of the lease contract except Room
35; and 3) respondent violated the terms of the contract by its
continued refusal to turn over possession of Rooms 36, 37 and 38.
Petitioners further prayed that a Temporary Restraining Order (TRO)
be issued enjoining the CA from enforcing its Resolution directing
the issuance of a Writ of Execution. Thus, in a Resolution dated
January 18, 1999, this Court directed the parties to maintain the
status quo effective immediately until further orders.
The petition lacks merit.
We uphold the capacity of respondent company to institute the
ejectment case. Although the Securities and Exchange Commission
(SEC) suspended and eventually revoked respondents certificate of
registration on February 16, 1995, records show that it instituted the
action for ejectment on December 15, 1993. Accordingly, when the
case was commenced, its registration was not yet revoked. Besides,
as correctly held by the appellate court, the SEC later set aside its
earlier orders of suspension and revocation of respondent’s
certificate, rendering the issue moot and academic.
RULE 62 - INTERPLEADER
 Pasricha vs. Don Luis Dison Realty, Inc.
We likewise affirm Ms. Bautista’s capacity to sue on behalf of the
company despite lack of proof of authority to so represent it. A
corporation has no powers except those expressly conferred on it by
the Corporation Code and those that are implied from or are
incidental to its existence. In turn, a corporation exercises said
powers through its board of directors and/or its duly authorized
officers and agents. Physical acts, like the signing of documents, can
be performed only by natural persons duly authorized for the purpose
by corporate by-laws or by a specific act of the board of directors.
Thus, any person suing on behalf of the corporation should present
proof of such authority. Although Ms. Bautista initially failed to
show that she had the capacity to sign the verification and institute
the ejectment case on behalf of the company, when confronted with
such question, she immediately presented the Secretary’s Certificate
confirming her authority to represent the company.
There is ample jurisprudence holding that subsequent and substantial
compliance may call for the relaxation of the rules of procedure in
the interest of justice. In Novelty Phils., Inc. v. Court of Appeals, the
Court faulted the appellate court for dismissing a petition solely on
petitioners failure to timely submit proof of authority to sue on
behalf of the corporation. In Pfizer, Inc. v. Galan, we upheld the
sufficiency of a petition verified by an employment specialist despite
the total absence of a board resolution authorizing her to act for and
on behalf of the corporation. Lastly, in China Banking Corporation v.
Mondragon International Philippines, Inc, we relaxed the rules of
procedure because the corporation ratified the managers status as an
authorized signatory. In all of the above cases, we brushed aside
technicalities in the interest of justice. This is not to say that we
disregard the requirement of prior authority to act in the name of a
corporation. The relaxation of the rules applies only to highly
meritorious cases, and when there is substantial compliance. While it
is true that rules of procedure are intended to promote rather than
frustrate the ends of justice, and while the swift unclogging of court
dockets is a laudable objective, we should not insist on strict
adherence to the rules at the expense of substantial justice. Technical
and procedural rules are intended to help secure, not suppress, the
cause of justice; and a deviation from the rigid enforcement of the
rules may be allowed to attain that prime objective, for, after all, the
dispensation of justice is the core reason for the existence of courts.
As to the denial of the motion to inhibit Justice Reyes, we find the
same to be in order. First, the motion to inhibit came after the
appellate court rendered the assailed decision, that is, after Justice
Reyes had already rendered his opinion on the merits of the case. It is
settled that a motion to inhibit shall be denied if filed after a member
of the court had already given an opinion on the merits of the case,
the rationale being that a litigant cannot be permitted to speculate on
the action of the court x x x (only to) raise an objection of this sort
after the decision has been rendered. Second, it is settled that mere
suspicion that a judge is partial to one of the parties is not enough;
there should be evidence to substantiate the suspicion. Bias and
prejudice cannot be presumed, especially when weighed against a
judges sacred pledge under his oath of office to administer justice
without regard for any person and to do right equally to the poor and
the rich. There must be a showing of bias and prejudice stemming
from an extrajudicial source, resulting in an opinion on the merits
based on something other than what the judge learned from his
participation in the case. We would like to reiterate, at this point, the
policy of the Court not to tolerate acts of litigants who, for just about
any conceivable reason, seek to disqualify a judge (or justice) for
their own purpose, under a plea of bias, hostility, prejudice or
prejudgment.
We now come to the more substantive issue of whether or not the
petitioners may be validly ejected from the leased premises.
Unlawful detainer cases are summary in nature. In such cases, the
elements to be proved and resolved are the fact of lease and the
expiration or violation of its terms. Specifically, the essential
requisites of unlawful detainer are: 1) the fact of lease by virtue of a
contract, express or implied; 2) the expiration or termination of the
RULE 62 - INTERPLEADER
 Pasricha vs. Don Luis Dison Realty, Inc.
possessors right to hold possession; 3) withholding by the lessee of
possession of the land or building after the expiration or termination
of the right to possess; 4) letter of demand upon lessee to pay the
rental or comply with the terms of the lease and vacate the premises;
and 5) the filing of the action within one year from the date of the
last demand received by the defendant.
It is undisputed that petitioners and respondent entered into two
separate contracts of lease involving nine (9) rooms of the San Luis
Building. Records, likewise, show that respondent repeatedly
demanded that petitioners vacate the premises, but the latter refused
to heed the demand; thus, they remained in possession of the
premises. The only contentious issue is whether there was indeed a
violation of the terms of the contract: on the part of petitioners,
whether they failed to pay the stipulated rent without justifiable
cause; while on the part of respondent, whether it prevented
petitioners from occupying the leased premises except Room 35.
This issue involves questions of fact, the resolution of which requires
the evaluation of the evidence presented. The MeTC, the RTC and
the CA all found that petitioners failed to perform their obligation to
pay the stipulated rent. It is settled doctrine that in a civil case, the
conclusions of fact of the trial court, especially when affirmed by the
Court of Appeals, are final and conclusive, and cannot be reviewed
on appeal by the Supreme Court. Albeit the rule admits of
exceptions, not one of them obtains in this case.
To settle this issue once and for all, we deem it proper to assess the
array of factual findings supporting the courts conclusion.
The evidence of petitioners’ non-payment of the stipulated rent is
overwhelming. Petitioners, however, claim that such non-payment is
justified by the following: 1) the refusal of respondent to allow
petitioners to use the leased properties, except room 35; 2)
respondent’s refusal to turn over Rooms 36, 37 and 38; and 3)
respondent’s refusal to accept payment tendered by petitioners.
Petitioners’ justifications are belied by the evidence on record. As
correctly held by the CA, petitioners communications to respondent
prior to the filing of the complaint never mentioned their alleged
inability to use the rooms. What they pointed out in their letters is
that they did not know to whom payment should be made, whether to
Ms. Bautista or to Pacheco. In their July 26 and October 30, 1993
letters, petitioners only questioned the method of computing their
electric billings without, however, raising a complaint about their
failure to use the rooms. Although petitioners stated in their
December 30, 1993 letter that respondent failed to fulfill its part of
the contract, nowhere did they specifically refer to their inability to
use the leased rooms. Besides, at that time, they were already in
default on their rentals for more than a year.
If it were true that they were allowed to use only one of the nine (9)
rooms subject of the contract of lease, and considering that the rooms
were intended for a business purpose, we cannot understand why
they did not specifically assert their right. If we believe petitioners’
contention that they had been prevented from using the rooms for
more than a year before the complaint for ejectment was filed, they
should have demanded specific performance from the lessor and
commenced an action in court. With the execution of the contract,
petitioners were already in a position to exercise their right to the use
and enjoyment of the property according to the terms of the lease
contract. As borne out by the records, the fact is that respondent
turned over to petitioners the keys to the leased premises and
petitioners, in fact, renovated the rooms. Thus, they were placed in
possession of the premises and they had the right to the use and
enjoyment of the same. They, likewise, had the right to resist any act
of intrusion into their peaceful possession of the property, even as
against the lessor itself. Yet, they did not lift a finger to protect their
right if, indeed, there was a violation of the contract by the lessor.
What was, instead, clearly established by the evidence was
petitioners’ non-payment of rentals because ostensibly they did not
RULE 62 - INTERPLEADER
 Pasricha vs. Don Luis Dison Realty, Inc.
know to whom payment should be made. However, this did not
justify their failure to pay, because if such were the case, they were
not without any remedy. They should have availed of the provisions
of the Civil Code of the Philippines on the consignation of payment
and of the Rules of Court on interpleader.
Article 1256 of the Civil Code provides:
Article 1256. If the creditor to whom tender of payment has been
made refuses without just cause to accept it, the debtor shall be
released from responsibility by the consignation of the thing or sum
due.
Consignation alone shall produce the same effect in the following
cases:
xxxx
(4) When two or more persons claim the same right to collect;
x x x x.
Consignation shall be made by depositing the things due at the
disposal of a judicial authority, before whom the tender of payment
shall be proved in a proper case, and the announcement of the
consignation in other cases.
In the instant case, consignation alone would have produced the
effect of payment of the rentals. The rationale for consignation is to
avoid the performance of an obligation becoming more onerous to
the debtor by reason of causes not imputable to him. Petitioners’
claim that they made a written tender of payment and actually
prepared vouchers for their monthly rentals. But that was insufficient
to constitute a valid tender of payment. Even assuming that it was
valid tender, still, it would not constitute payment for want of
consignation of the amount. Well-settled is the rule that tender of
payment must be accompanied by consignation in order that the
effects of payment may be produced.
Moreover, Section 1, Rule 62 of the Rules of Court provides:
Section 1. When interpleader proper. Whenever conflicting claims
upon the same subject matter are or may be made against a person
who claims no interest whatever in the subject matter, or an interest
which in whole or in part is not disputed by the claimants, he may
bring an action against the conflicting claimants to compel them to
interplead and litigate their several claims among themselves.
Otherwise stated, an action for interpleader is proper when the lessee
does not know to whom payment of rentals should be made due to
conflicting claims on the property (or on the right to collect). The
remedy is afforded not to protect a person against double liability but
to protect him against double vexation in respect of one liability.
Notably, instead of availing of the above remedies, petitioners opted
to refrain from making payments.
Neither can petitioners validly invoke the non-delivery of Rooms 36,
37 and 38 as a justification for non-payment of rentals. Although the
two contracts embraced the lease of nine (9) rooms, the terms of the
contracts - with their particular reference to specific rooms and the
monthly rental for each - easily raise the inference that the parties
intended the lease of each room separate from that of the others.
There is nothing in the contract which would lead to the conclusion
that the lease of one or more rooms was to be made dependent upon
the lease of all the nine (9) rooms. Accordingly, the use of each room
by the lessee gave rise to the corresponding obligation to pay the
monthly rental for the same. Notably, respondent demanded payment
of rentals only for the rooms actually delivered to, and used by,
petitioners.
RULE 62 - INTERPLEADER
 Pasricha vs. Don Luis Dison Realty, Inc.

It may also be mentioned that the contract specifically provides that

the lease of Rooms 36, 37 and 38 was to take effect only when the
tenants thereof would vacate the premises. Absent a clear showing
that the previous tenants had vacated the premises, respondent had
no obligation to deliver possession of the subject rooms to
petitioners. Thus, petitioners cannot use the non-delivery of Rooms
36, 37 and 38 as an excuse for their failure to pay the rentals due on
the other rooms they occupied.

In light of the foregoing disquisition, respondent has every right to

exercise his right to eject the erring lessees. The parties contracts of
lease contain identical provisions, to wit:
In case of default by the LESSEE in the payment of rental on the
fifth (5th) day of each month, the amount owing shall as penalty bear
interest at the rate of FOUR percent (4%) per month, to be paid,
without prejudice to the right of the LESSOR to terminate his
contract, enter the premises, and/or eject the LESSEE as hereinafter
set forth;[62]

Moreover, Article 1673[63] of the Civil Code gives the lessor the
right to judicially eject the lessees in case of non-payment of the
monthly rentals. A contract of lease is a consensual, bilateral,
onerous and commutative contract by which the owner temporarily
grants the use of his property to another, who undertakes to pay the
rent therefor. For failure to pay the rent, petitioners have no right to
remain in the leased premises.

WHEREFORE, premises considered, the petition is DENIED and the

Status Quo Order dated January 18, 1999 is hereby LIFTED. The
Decision of the Court of Appeals dated May 26, 1998 and its
Resolution dated December 10, 1998 in CA-G.R. SP No. 37739 are
AFFIRMED.

SO ORDERED.

RULE 62 - INTERPLEADER
 Arreza vs. Diaz, Jr.
[G.R. No. 133113. August 30, 2001]
EDGAR H. ARREZA vs. MONTANO M. DIAZ, JR.
This petition assails the decision[1] promulgated on December
24, 1997, and the resolution[2] dated March 6, 1998, by the Court of
Appeals in CA-G.R. SP No. 43895. That decision dismissed the
petition for certiorari questioning the order [3] dated February 4, 1997
of the Regional Trial Court of Makati City, Branch 59, in Civil Case
No. 96-1372, which had denied petitioners motion to dismiss the
complaint filed against him on ground of res adjudicata.
The factual antecedents of the present petition are culled from
the findings of the Court of Appeals.
Bliss Development Corporation is the owner of a housing unit
located at Lot 27, Block 30, New Capitol Estates I, Barangay
Matandang Balara, Quezon City. In the course of a case involving a
conflict of ownership between petitioner Edgar H. Arreza and
respondent Montano M. Diaz, Jr.,[4] docketed as Civil Case No. 94-
2086 before the Regional Trial Court of Makati, Branch 146, Bliss
Development Corporation filed a complaint for interpleader.
In a decision dated March 27, 1996, the trial court resolved the
conflict by decreeing as follows:
WHEREFORE, premises considered, the herein interpleader is
resolved in favor of defendant Edgar H. Arreza, and plaintiff Bliss
Development is granted cognizance of the May 6, 1991 transfer of
rights by Emiliano and Leonila Melgazo thru Manuel Melgazo, to
said defendant Edgar Arreza. The case is dismissed as against
defendant Montano M. Diaz, Jr.
The third-party complaint is likewise dismissed.
SO ORDERED.
The decision became final and was duly executed with Bliss
executing a Contract to Sell the aforementioned property to
petitioner Arreza. Respondent Diaz was constrained to deliver the
property with all its improvements to petitioner.
Thereafter respondent Diaz filed a complaint against Bliss
Development Corporation, Edgar H. Arreza, and Domingo Tapay in
the Regional Trial Court of Makati, Branch 59, docketed as Civil
Case No. 96-1372. He sought to hold Bliss Development
Corporation and petitioner Arreza liable for reimbursement to him of
P1,706,915.58 representing the cost of his acquisition and
improvements on the subject property with interest at 8% per annum.
Petitioner Arreza filed a Motion to Dismiss the case, citing as
grounds res adjudicata or conclusiveness of the judgment in the
interpleader case as well as lack of cause of action.
In an Order dated February 4, 1997, the motion was denied for
lack of merit.
A Motion for Reconsideration filed by Arreza was likewise
denied on March 20, 1997.
On April 16, 1997, Arreza filed a petition for certiorari before
the Court of Appeals alleging that the Orders dated February 4 and
March 20, 1997, were issued against clear provisions of pertinent
laws, the Rules of Court, and established jurisprudence such that
respondent court acted without or in excess of jurisdiction, or grave
abuse of discretion amounting to lack or excess of jurisdiction.
The petition was dismissed for lack of merit. The Court of
Appeals said:
The decision invoked by the petitioner as res adjudicata resolved
only the issue of who between Edgar H. Arreza and Montano Diaz
has the better right over the property under litigation. It did not
resolve the rights and obligations of the parties.
RULE 62 - INTERPLEADER
 Arreza vs. Diaz, Jr.
The action filed by Montano M. Diaz against Bliss Development
Corporation, et al. seeks principally the collection of damages in the
form of the payments Diaz made to the defendant and the value of
the improvements he introduced on the property matters that were
not adjudicated upon in the previous case for interpleader.
xxx
WHEREFORE, this petition is hereby DISMISSED with costs
against the petitioner.
SO ORDERED.[5]
Petitioners motion to reconsider the decision of the Court of
Appeals was denied.[6] Hence, the present petition, where petitioner
raises the following grounds for review:
I IV.
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC
CASE PERTAINING TO MR. DIAZS CLAIMS FOR
REIMBURSEMENT OF AMOUNTS WHICH HE ALLEGEDLY
PAID TO BLISS BY WAY OF PREMIUM OR INSTALLMENT
PAYMENTS FOR THE ACQUISITION OF THE PROPERTY
WAS ERRONEOUSLY BROUGHT AGAINST MR.
ARREZA. ALSO, SAID CLAIMS ARE BARRED BY RES
ADJUDICATA OR CONCLUSIVENESS OF A PRIOR
JUDGMENT IN THE PRIOR RTC CASE WHICH WAS
ULTIMATELY AFFIRMED BY THIS HONORABLE COURT IN
G.R. NO. 128726.
II.
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC
CASE PERTAINING TO MR. DIAZS CLAIMS FOR
REIMBURSEMENT OF THE COST OF IMPROVEMENTS HE
ALLEGEDLY INTRODUCED TO THE PROPERTY IS
LIKEWISE BARRED BY RES ADJUDICATA OR
CONCLUSIVENESS OF A PRIOR JUDGMENT IN THE PRIOR
RTC CASE WHICH WAS ULTIMATELY AFFIRMED BY THIS
HONORABLE COURT IN G.R. NO. 128726.
III.
THE RULING IN THE PRIOR CA PETITION (CA-G.R. SP. NO.
41974) WHICH WAS ULTIMATELY AFFIRMED BY THIS
HONORABLE COURT IN G.R. NO. 128726 THAT THE
DECISION IN THE PRIOR RTC CASE SETTLED ALL CLAIMS
WHICH MESSRS. DIAZ AND ARREZA HAD AGAINST EACH
OTHER CONSTITUTES THE LAW OF THE CASE BETWEEN
THEM AND SERVES AS BAR TO THE FILING OF THE
PRESENT RTC CASE INVOLVING THE SAME CLAIMS.
IN ITS ENTIRETY, THE AMENDED COMPLAINT IN THE
PRESENT RTC CASE IS DISMISSIBLE ON THE GROUND OF
LACK OF CAUSE OF ACTION.[7]
The issue for our resolution now is whether respondent Diazs
claims for reimbursement against petitioner Arreza are barred by res
adjudicata.
The elements of res adjudicata are: (a) that the former judgment
must be final; (b) the court which rendered judgment had jurisdiction
over the parties and the subject matter; (c) it must be a judgment on
the merits; and (d) there must be between the first and second causes
of action identity of parties, subject matter, and cause of action. [8]
Worthy of note, the prior case for interpleader filed with Branch
146 of the Regional Trial Court of Makati, Civil Case No. 94-2086,
was settled with finality with this Courts resolution in G.R. No.
128726.[9] The judgment therein is now final.
RULE 62 - INTERPLEADER
 Arreza vs. Diaz, Jr.
When the Regional Trial Court of Makati (Branch 146)
rendered judgment, it had priorly acquired jurisdiction over the
parties and the subject matter. Respondent, however, contends that
the trial court did not acquire jurisdiction over the property subject of
the action, as the action was instituted in Makati City while the
subject unit is situated in Quezon City.
We find, however, that in his answer to the complaint dated
October 3, 1994, respondent alleged:
20. That should the said additional provision be declared valid and in
the remote possibility that the alleged conflicting claimant is
adjudged to possess better right herein answering defendant is
asserting his right as a buyer for value and in good faith against all
persons/parties concerned.[10] (Italics supplied)
Respondent in his answer also prayed that:
D. Should the said additional provision be found valid and in the
event his co-defendant is found to possess better rights, to adjudge
him (Diaz) entitled to rights as a buyer in good faith and for value. [11]
By asserting his right as a buyer for value and in good faith of
the subject property, and asking for relief arising therefrom,
respondent invoked the jurisdiction of the trial court. Having invoked
the jurisdiction of the Regional Trial Court of Makati (Branch 146)
by filing his answer to secure affirmative relief against petitioner,
respondent is now estopped from challenging the jurisdiction of said
court after it had decided the case against him. Surely we cannot
condone here the undesirable practice of a party submitting his case
for decision and then accepting the judgment only if favorable, but
attacking it on grounds of jurisdiction when adverse.[12]
Respondent also claims that there is no identity of causes of
action between Civil Case No. 94-2086, the prior case, and Civil
Case No. 96-1372, the present case subject of this petition, as the
former involved a complaint for interpleader while the latter now
involves an action for a sum of money and damages. He avers that a
complaint for interpleader is nothing more than the determination of
rights over the subject matter involved.
In its assailed decision, respondent Court of Appeals pointed out
that the 1997 Rules of Civil Procedure provide that in a case for
interpleader, the court shall determine the respective rights and
obligations of the parties and adjudicate their respective claims.
[13]
 The appellate court noted, however, that the defendants in that
interpleader case, namely Diaz and Arreza, did not pursue the issue
of damages and reimbursement although the answer of respondent
Diaz did pray for affirmative relief arising out of the rights of a buyer
in good faith.[14]
Following the same tack, respondent Diaz now alleges that the
issues in the prior case, Civil Case No. 94-2086, were delimited by
the pre-trial order which did not include matters of damages and
reimbursement as an issue. He faults petitioner for not raising such
issues in the prior case, with the result that the trial court did not
resolve the rights and obligations of the parties. There being no such
resolution, no similar cause of action exists between the prior case
and the present case, according to respondent Diaz.
Respondent in effect argues that it was incumbent upon
petitioner as a party in Civil Case No. 94-2086 to put in issue
respondents demands for reimbursement. However, it was not
petitioners’ duty to do the lawyering for respondent. As stated by the
Court of Appeals, the court in a complaint for interpleader shall
determine the rights and obligations of the parties and adjudicate
their respective claims. Such rights, obligations and claims could
only be adjudicated if put forward by the aggrieved party in
assertion of his rights. That party in this case referred to respondent
Diaz. The second paragraph of Section 5 of Rule 62 of the 1997
Rules of Civil Procedure provides that the parties in an interpleader
action may file counterclaims, cross-claims, third party complaints
and responsive pleadings thereto, as provided by these Rules. The
second paragraph was added to Section 5 to expressly authorize the
RULE 62 - INTERPLEADER
 Arreza vs. Diaz, Jr.
additional pleadings and claims enumerated therein, in the interest of
a complete adjudication of the controversy and its incidents.[15]
Pursuant to said Rules, respondent should have filed his claims
against petitioner Arreza in the interpleader action. Having asserted
his rights as a buyer in good faith in his answer, and praying relief
therefor, respondent Diaz should have crystallized his demand into
specific claims for reimbursement by petitioner Arreza. This he
failed to do. Such failure gains significance in light of our ruling
in Baclayon vs. Court of Appeals, 182 SCRA 761, 771-772 (1990),
where this Court said:
A corollary question that We might as well resolve now (although
not raised as an issue in the present petition, but conformably with
Gayos, et al. v. Gayos, et al., G.R. No. L-27812, September 26, 1975,
67 SCRA 146, that it is a cherished rule of procedure that a court
should always strive to settle the entire controversy in a single
proceeding leaving no root or branch to bear the seeds in future
litigation) is whether or not the private respondents can still file a
separate complaint against the petitioners on the ground that they are
builders in good faith and consequently, recover the value of the
improvements introduced by them on the subject lot. The case of
Heirs of Laureano Marquez v. Valencia, 99 Phil. 740, provides the
answer:
If, aside from relying solely on the deed of sale with a right to
repurchase and failure on the part of the vendors to purchase it within
the period stipulated therein, the defendant had set up an alternative
though inconsistent defense that he had inherited the parcel of land
from his late maternal grandfather and presented evidence in support
of both defenses, the overruling of the first would not bar the
determination by the court of the second. The defendant having
failed to set up such alternative defenses and chosen or elected to
rely on one only, the overruling thereof was a complete
determination of the controversy between the parties which bars a
subsequent action based upon an unpleaded defense, or any other
cause of action, except that of failure of the complaint to state a
cause of action and of lack of jurisdiction of the Court.The
determination of the issue joined by the parties constitutes res
judicata. (italics supplied)
Although the alternative defense of being builders in good faith is
only permissive, the counterclaim for reimbursement of the value of
the improvements is in the nature of a compulsory counterclaim.
Thus, the failure by the private respondents to set it up bars their
right to raise it in a subsequent litigation (Rule 9, Section 4 of the
Rules of Court). While We realize the plight of the private
respondents, the rule on compulsory counterclaim is designed to
enable the disposition of the whole controversy at one time and in
one action. The philosophy of the rule is to discourage multiplicity of
suits. (Italics supplied)
Having failed to set up his claim for reimbursement, said claim
of respondent Diaz being in the nature of a compulsory counterclaim
is now barred.[16]
In cases involving res adjudicata, the parties and the causes of
action are identical or substantially the same in the prior as well as
the subsequent action. The judgment in the first action is conclusive
as to every matter offered and received therein and as to any other
matter admissible therein and which might have been offered for that
purpose, hence said judgment is an absolute bar to a subsequent
action for the same cause.[17] The bar extends to questions necessarily
involved in an issue, and necessarily adjudicated, or necessarily
implied in the final judgment, although no specific finding may have
been made in reference thereto, and although such matters were
directly referred to in the pleadings and were not actually or formally
presented.[18] Said prior judgment is conclusive in a subsequent suit
between the same parties on the same subject matter, and on the
same cause of action, not only as to matters which were decided in
the first action, but also as to every other matter which the
parties could have properly set up in the prior suit.[19]
RULE 62 - INTERPLEADER
 Arreza vs. Diaz, Jr.
In the present case, we find there is an identity of causes of
action between Civil Case No. 94-2086 and Civil Case No. 96-
1372. Respondent Diazs cause of action in the prior case, now the
crux of his present complaint against petitioner, was in the nature of
an unpleaded compulsory counterclaim, which is now barred. There
being a former final judgment on the merits in the prior case,
rendered in Civil Case No. 94-2086 by Branch 146 of the Regional
Trial Court of Makati, which acquired jurisdiction over the same
parties, the same subject property, and the same cause of action, the
present complaint of respondent herein (Diaz) against petitioner
Arreza docketed as Civil Case No. 96-1372 before the Regional Trial
of Makati, Branch 59 should be dismissed on the ground of res
adjudicata.
WHEREFORE, the instant petition is GRANTED. The
decision dated December 24, 1997 and the resolution dated March 6,
1998 of the Court of Appeals in CA-G.R. SP No. 43895 are
REVERSED and SET ASIDE. Civil Case No. 96-1372 before the
Regional Trial Court of Makati City, Branch 59, is hereby ordered
DISMISSED as against herein petitioner Edgar H. Arreza. Costs
against respondent.
SO ORDERED.

RULE 62 - INTERPLEADER
 Baclayon vs. CA
G.R. No. 89132 February 26, 1990
BACLAYON v. CA
This is a petition for review on certiorari of the decision of the Court
of Appeals dated April 28, 1989 ordering the trial court, in a hearing
supplementary to execution, to receive private respondents' evidence
to prove that they are builders in good faith of the improvements and
the value of said improvements, and its resolution dated June 20,
1989 denying the motion for reconsideration.
The antecedent facts are as follows:
On May 7, 1969, petitioners Leoncia, Martin, Policarpio, Hilarion,
Ireneo, Juliana and Tomas, all surnamed Baclayon; Rosendo,
Felicidad and Silvestra, all surnamed Abanes; and Tomasa, Leoncia,
Anacleto, Monica, Guillerma and Gertrudes all surnamed Abellare
filed with the then CFI-Cebu Branch 2, in Civil Case No. R-11185, a
complaint for recovery of ownership and possession, and damages,
against spouses Marciano Bacalso and Gregoria Sabandeja of Lot
No. 5528 of the Cebu Cadastre. The latter filed their answer thereto
on July 15, 1969.
On December 20, 1982, the trial court rendered a decision in favor of
the Bacalso spouses, declaring them owners of the subject lot, which
decision was appealed by the petitioners to the respondent Court of
Appeals. The case was docketed as AC-G.R. CV No. 04948.
On July 29, 1986, the respondent court rendered a decision reversing
the trial court, the dispositive portion of which reads as follows (p.
15, Rollo):
WHEREFORE, the decision a quo is hereby
reversed and set aside and another one is rendered
declaring plaintiffs-appellants as heirs of the late
Matias Baclayon the owners of Lot No. 5528 of the
Cebu Cadastre covered by Original Certificate of
Title No. 2726 (O-NA) of the Registry of Deeds of
Cebu (Exh. I) and ordering defendants to vacate the
lot and surrender the same to plaintiffs. No costs.
SO ORDERED.
The private respondents then elevated the case to this Court by filing
a petition for review which was, however, denied in the Resolution
dated May 27, 1987.
The decision in favor of the petitioners having become final and
executory, they filed a motion for execution of judgment and
possession which was opposed by the private respondents. The
opposition was based on the pronouncement of the respondent court
in its decision dated July 29, 1986, to wit (p. 16, Rollo):
No fraud or bad faith could be imputed on the part of
the Bacalso spouses. They believed the lot they
bought from Segundo Baclayon was the land they
occupied.
The private respondents argued that since they were found by the
respondent court as builders and/or planters in good faith and Article
546 of the Civil Code ordains that the necessary and useful expenses
for the improvements must be paid to the builders/planters in good
faith with right of retention, a reception of evidence to determine the
correct value of the necessary and useful improvements must be done
first before ordering the execution.
The RTC-Branch 15, Cebu City, presided by Judge German G. Lee,
Jr., in its order, dated March 8, 1988, granted the motion for
execution of judgment and possession, to wit (p. 16, Rollo):
ORDER
RULE 62 - INTERPLEADER
 Baclayon vs. CA
This is finally, acting on the Motion for Execution of
Judgment and Possession filed by Atty. Garcillano in
this case and the rejoinder of Atty. Nacua and the
plaintiffs' rejoinder dated February 11 and the
manifestation of Atty. Garcillano of February 26,
1988.
It appearing that the dispositive portion of the
decision of the Court of Appeals which is now being
enforced categorically declares plaintiffs/appellants
as heirs of the late Matias Baclayon, the owner of
Lot No. 5526 (sic) of the Cebu Cadastre, covered by
Original Certificate of Title No. 2728 (sic) (0-NA)
of the Registry of Deeds of Cebu (Exh. 1) and
ordering the defendants to vacate the lot and
surrender the same to the plaintiffs, this Court is not
in a position to entertain any further claims by any
parties in connection with said case.
However, if the clients of Atty. Nacua believe that
they can prove their claims, then they should file a
separate civil case to recover the same as this Court
cannot pass judgment anew on certain claims that
should have been interposed as counter-claims in
this case.
Wherefore, the Opposition to the issuance of the
Writ of execution is hereby DENIED, as the Clerk of
Court is hereby ordered to issue a writ of Execution
in this case.
SO ORDERED.
The private respondents appealed the said order of March 8, 1988 by
filing a notice of appeal dated March 30, 1988 which appeal was,
however, dismissed by Judge Lee in the order dated April 15, 1988.
On April 29, 1988, the petitioners filed a motion for writ of
possession and demolition to which motion the private respondents
filed their opposition reiterating the ground in the opposition to the
motion for execution and possession.
Judge Lee, thereafter, issued the order dated August 19, 1988, to wit
(p. 17, Rollo):
ORDER
An examination of the records of this case reveals
that until now, there is yet no action by the Court of
Appeals on the Clarificatory motion filed by the
losing party.
The Court has allowed this excuse to defer its
issuance of an order of demolition after the
prevailing party has prayed the Court to issue one.
With the long passage of time, since the judgment in
this case has become final, this Court cannot allow
any further delay in the enforcement of its judgment.
WHEREFORE, it is finally ordered that the losing
party in this case be given fifteen (15) days from
today within which to effect a voluntary removal of
any improvements that they have introduced in the
premises, considering that the prevailing party
refused to reimburse the losing party therefor, and if
they do not demolish it after the expiration of this 15
days, this Court will be constrained to order its
demolition as prayed for.
IT IS SO ORDERED.
RULE 62 - INTERPLEADER
 Baclayon vs. CA
On September 19, 1988, the private respondents filed a petition for
certiorari, mandamus and prohibition with the respondent court
concerning the orders dated March 8, 1988 and August 19, 1988.
On April 28, 1989, the respondent court granted the petition, the
dispositive portion of which reads as follows (p. 21, Rollo):
WHEREFORE, the orders of March 8,1988 and
August 19, 1988 issued in Civil Case No. R-11185
by the RTC-Cebu City, Branch 15, are hereby SET
ASIDE and ANNULLED. In a hearing
supplementary to execution, the said court is hereby
ordered to receive petitioners' evidence to prove that
they are builders in good faith of the improvements
and the value of the said improvements introduced
by them in the subject Lot 5528.
IT IS SO ORDERED.
The motion for reconsideration was denied. Hence, the present
petition.
The only issue is whether or not the private respondents should be
allowed, in a hearing supplementary to execution, to present
evidence to prove that they are builders in good faith of the
improvements and the value of said improvements.
Petitioners allege that the orders dated March 8, 1988 and August 19,
1988 are legitimate having been issued by a judge presiding a court
of competent jurisdiction, pursuant to his duties which are ministerial
in nature, to enforce a decision which is already final and executory.
In ordering the trial court to receive private respondent's evidence to
prove that they are builders in good faith of the improvements and
the value of said improvements, reliance was placed by the
respondent court in the cases of Naga Development Corporation v.
Court of Appeals, et al., G.R. No. L-28173, September 30, 1971, 41
SCRA 105 and Vda. de Chi v. Tanada, etc., et al., G.R. No. L-
27274, January 30, 1982, 111 SCRA 190.
We shall narrate the facts in these two cases in a nutshell:
1) In the former case, Pacific Merchandising
Corporation (Pacific) filed a complaint against Naga
Development Corporation (Naga) for the balance of
its indebtedness in the amount of P143,282.76. For
failure to file an answer within the period, Naga was
declared in default. In its affidavit of merit attached
to the motion to set aside the order of default, Naga
asserted that it had made certain payments to Pacific
which should be deducted from the amount of the
claim. The motion was denied. A judgment by
default was rendered ordering Naga to pay said
balance of indebtedness. The decision was affirmed
by the Court of Appeals and also by this Court, with
the qualification that Naga was allowed to prove,
during the process of execution of the judgment,
whatever payments it had made to Pacific, either
before or after the filing of the complaint, which
constitute a proper deduction from the principal sum
ordered to be paid. Thus, we rationalized (41 SCRA
115-116):
Bearing in mind the nature of the instant suit and
considering that the Court of Appeals' concurrence
in the trial court's assessment of the amount of
P143,282.76 is in the nature of a factual finding, this
Court cannot now pass upon its correctness. The two
courts below had before them the sales agreement
between the parties, and to what extent the parties
complied with their respective prestations thereunder
was purely a matter of evidence.
RULE 62 - INTERPLEADER
 Baclayon vs. CA
However, although we cannot pass upon the
correctness of the said assessment, it is quite obvious
that in the execution of its judgment as affirmed by
the Court of Appeals, the trial court cannot compel
the Naga to pay more than what it actually owes the
Pacific under the terms of their covenant. Deeply
imbedded in our legal system are the principles that
no man may unjustly enrich himself at the expense
of another, and that every person must, in the
exercise of his rights, act with justice, give everyone
his due, and observe honesty and good faith. ... .
2) In the latter case, an action for recovery of
damages as a result of a vehicular accident was filed
by Rosita Yap Vda. de Chi against Alfonso
Corominas, Jr., the owner of the bus, and Simplicio
Lawas, the driver. Since the vehicle was insured, a
third-party complaint was filed against the surety
company. The trial court rendered judgment against
Corominas, Jr. and Lawas by ordering them jointly
and severally to pay P40,302.31 to Vda. de Chi. In
turn, the surety company was ordered to indemnify
Corominas, Jr. by the same amount. A writ of
execution was issued against the defendants and the
surety company. The decision was only partially
satisfied because P6,700.00 has remained unpaid.
Later, upon motion of the Southern Islands Hospital,
the trial court ordered the surety company to pay
directly to the hospital the amount of P686.35 out of
the residue of the unpaid judgment; upon motion of
the Chong Hua Hospital, the trial court issued
another order requiring Corominas, Jr. and the surety
company to pay the hospital the amount of
P4,238.56. These two orders were questioned before
this Court by Vda. de Chi. We set aside said orders
and ordered the trial court to conduct a hearing, after
proper notice to the parties, to determine whether or
not the hospital bills incurred by Vda. de Chi have
been paid, and thereafter, to render a decision
accordingly. Thus, we explained (111 SCRA 196-
197):
Technically it was error for the respondent Court to
order the defendants and the surety company to pay
the respondents Southern Islands Hospital and
Chong Hua Hospital the amounts of P686.35 and
P4,238.56, respectively, from the balance of the
judgment yet to be paid to the herein petitioner by
the defendants and the surety company since the said
respondents are not parties in the case. The judgment
sought to be executed specifically ordered the
defendants Alfonso Corominas, Jr. and Simplicio
Lawas to pay, jointly and severally, the plaintiff
Rosita Yap Vda. de Chi, the amount of P40,302.31,
plus costs; and for the surety company to indemnify
the defendant Alfonso Corominas, Jr. the amount of
P40,302.31, which the said defendant is ordered to
pay the plaintiff. Consequently, to order the payment
of certain portions thereof to the herein respondent
hospitals, Southern Islands Hospital and Chong Hua
Hospital, would be to modify, alter, or vary the
terms of the judgment. While the said respondents
may have an interest over the said amounts claimed
by them, their remedy was not to file a mere ex-parte
motion before the court, but to file separate and
independent actions before courts of competent
jurisdiction, since the judgment rendered in the case
had already become final and almost executed and
the law allows no intervention after the trial has been
terminated.
RULE 62 - INTERPLEADER
 Baclayon vs. CA
On the other hand, it cannot also be denied that the
sums of money in question have been awarded to the
herein petitioner as expenses for her hospitalization
in the respondent hospitals and are based upon
petitioner's own evidence. To order the filing of a
separate and independent action to recover a claim
where the respondent hospitals concerned will have
to prove exactly a claim which had already been
tried, litigated and adjudged would unduly result in
multiplicity of suits. Considering that the herein
respondents claim that the herein petitioner has not
yet paid the amounts she incurred for hospitalization,
the interests of justice will be best served if a hearing
be conducted to determine whether or not the
hospital bills have been paid, instead of requiring the
respondent hospitals to file separate actions to
recover their respective claims.
The aforementioned reliance on these two cases was misplaced. The
common denominator between these two cases is the existence of a
defense/claim which has been raised/tried before the trial court. In
the Naga case, the defense of payments made to Pacific which are
properly deductible from the principal sum ordered to be paid by
Naga to Pacific was part of the issues which Naga was not allowed to
prove, being already in default. In the Vda. de Chi case, her claim of
hospitalization expenses incurred in the respondent hospital has been
litigated and adjudged. The respondent court failed to appreciate that
this shared denominator does not obtain in the present case. The
defense of builders in good faith of the improvements and evidence
of the value of said improvements were not raised/ presented before
the trial court.
More importantly, in the recent case of First Integrated Bonding and
Insurance Co., Inc., et al. v. Isnani, etc., et al., G.R. 70246, July 31,
1989, which involved a similar issue, We ruled:
Significantly, the decision of September 30, 1971
in Naga Development Corporation vs. Court of
Appeals, on which total reliance has been placed by
the petitioners, does not appear to have been
reaffirmed by this Court in subsequent cases. It is
Justice Antonio Barredo's dissent (quoted below)
that appears to have been firmed up in later
decisions of this Court:
"... I believe that since Naga has been declared in
default, and no grave abuse of discretion having
been found by the Court in that respect, the
judgment by default must stand and be executed, as
is. Whether or not Naga has partially paid was
part of the issue before the court before judgment
was rendered, Naga through its own fault was not
allowed to prove any such partial payment by the
trial court; surely, that issue cannot be reopened
during the execution because that would tend to
vary the terms of the judgment. The matters of
equity which can be raised in an execution
proceeding, cannot to my mind, refer to those
which the court could have passed upon before
judgment. Otherwise, there will be no end to
litigation, since conceivably the proof of partial
payments could be so seriously controversial as to
need another full blown trial, decision and appeal.
It is my view that under the circumstances, Naga
can do no more than address itself to the benignity
or conscience of the private respondent. (Emphasis
supplied; 41 SCRA 105, 119.)"
The rule is well established that once a decision has become final and
executory the only jurisdiction left with the trial court is to order its
execution. To require now the trial court in a hearing supplementary
to execution, to receive private respondents' evidence to prove that
RULE 62 - INTERPLEADER
 Baclayon vs. CA
they are builders in good faith of the improvements and the value of
said Improvements, is to disturb a final executory decision; which
may even cause its substantial amendment. It appears that the private
respondent's opposition to the motion for the execution of the
judgment, possession and demolition is their last straw to prevent the
satisfaction of the judgment. Sad to say, we have to cut this straw.
We disagree with the respondent court that any counterclaim for
reimbursement of the value of the improvements thereon by reason
of private respondents' being builders in good faith, which
presupposes that they are not the owners of the land, would run
counter to the defense of ownership and therefore could not have
been set up before the trial court. It should be emphasized that Rule
8, Section 2 of the Rules of Court allows a party to set forth two or
more statements of a claim or defense alternatively or hypothetically,
either in one cause of action or defense or in separate causes of
action or defenses. This Court, in Castle Bros., Wolf and Sons v. Go-
Juno, 7 Phil. 144, even held that inconsistent defenses may be
pleaded alternatively or hypothetically provided that each defense is
consistent with itself. Mention must also be made of the case
of Camara, et al. v. Aguilar, et al., 94 Phil. 527, where we ruled:
The contention that a counterclaim for expenses
incurred in clearing and cultivating the parcel of land
and planting coconut and other fruit-bearing trees
therein could not have been set up in the former case
because that would have been inconsistent with or
would have weakened the claim that they were
entitled to the parcel of land, is without merit,
because 'A party may set forth two or more
statements of a claim or defense alternatively or
hypothetically, either in one cause of action or
defense or in separate causes of action or
defenses.' Hence, the plaintiffs herein and
intervenors in the former case could have set up the
claim that they were entitled to the parcel of land
and alternatively that assuming (hypothetically) that
they were not entitled to the parcel of land at least
they were entitled as possessors in good faith to the
coconut and other fruit-bearing trees planted by
them in the parcel of land and their fruits or their
value. (Emphasis supplied)
A corollary question that We might as well resolve now (although
not raised as an issue in the present petition, but conformably
with Gayos, et al. v. Gayos, et al., G.R. No. L-27812, September 26,
1975, 67 SCRA 146, that it is a cherished rule of procedure that a
court should always strive to settle the entire controversy in a single
proceeding leaving no root or branch to bear the seeds of future
litigation) is whether or not the private respondents can still file a
separate complaint against the petitioners on the ground that they are
builders in good faith and consequently, recover the value of the
imprvements introduced by them on the subject lot. The case
of Heirs of Laureano Marquez v. Valencia, 99 Phil. 740, provides the
answer:
If, aside from relying solely on the deed of sale with
a right to repurchase and failure on the part of the
vendors to purchase it within the period stipulated
therein, the defendant had set up an alternative
though inconsistent defense that he had inherited the
parcel of land from his late maternal grandfather and
presented evidence in support of both defenses, the
overruling of the first would not bar the
determination by the court of the second. The
defendant having failed to set up such alternative
defenses and chosen or elected to rely on one only,
the overruling thereof was a complete determination
of the controversy between the parties which bats a
subsequent action based upon an unpleaded defense,
or any other cause of action, except that of failure of
the complaint to state a cause of action and of lack
RULE 62 - INTERPLEADER
 Baclayon vs. CA
of jurisdiction of the Court. The determination of the
issue joined by the parties constitutes res
judicata. (Emphasis supplied)

Although the alternative defense of being builders in good faith is

only permissive, the counterclaim for reimbursement of the value of
the improvements is in the nature of a compulsory counterclaim.
Thus, the failure by the private respondents to set it up bars their
right to raise it in a subsequent litigation (Rule 9, Section 4 of the
Rules of Court). We realize the plight of the private respondents, the
rule on comlpulsory counterclaim is designed to enable the
disposition of the whole controversy at one time and in one action.
The philosophy of the rule is to discourage multiplicity of suits.

ACCORDINGLY, the petition is hereby GRANTED. The decision

of the Court of Appeals dated April 28, 1989 and its resolution dated
June 20, 1989 are SET ASIDE and the orders dated March 8, 1988
and August 19, 1988 of the Regional Trial Court of Cebu City,
Branch 15 are REINSTATED.

SO ORDERED.

RULE 62 - INTERPLEADER
 Beltran vs. People’s Homesite & Housing Corporation
G.R. No. L-25138             August 28, 1969
JOSE A. BELTRAN, ET AL vs. PEOPLE'S HOMESITE &
HOUSING CORPORATION
Appeal on purely questions of law from an order of dismissal of the
complaint for interpleader, on the ground that it does not state a
cause of action, as certified to this Court by the Court of Appeals.
We affirm the dismissal on the ground that where the defendants
sought to be interpleaded as conflicting claimants have no conflicting
claims against plaintiff, as correctly found by the trial court, the
special civil action of interpleader will not lie.
This interpleader suit was filed on August 21, 1962, by plaintiffs in
their own behalf and in behalf of all residents of Project 4 in Quezon
City, praying that the two defendant-government corporations be
compelled to litigate and interplead between themselves their alleged
conflicting claims involving said Project 4.
Plaintiffs' principal allegations in their complaint were as follows:
Since they first occupied in 1953 their respective housing units at
Project 4, under lease from the People's Homesite & Housing
Corporation (PHHC) and paying monthly rentals therefor, they were
assured by competent authority that after five years of continuous
occupancy, they would be entitled to purchase said units. On
February 21, 1961, the PHHC announced to the tenants that the
management, administration and ownership of Project 4 would be
transferred by the PHHC to the Government Service Insurance
System (GSIS) in payment of PHHC debts to the GSIS. In the same
announcement, the PHHC also asked the tenants to signify their
conformity to buy the housing units at the selling price indicated on
the back thereof, agreeing to credit the tenants, as down payment on
the selling price, thirty (30%) percent of what had been paid by them
as rentals. The tenants accepted the PHHC offer, and on March 27,
1961, the PHHC announced in another circular that all payments
made by the tenants after March 31, 1961 would be considered as
amortizations or installment payments. The PHHC furthermore
instructed the Project Housing Manager in a memorandum of May
16, 1961 to accept as installments on the selling price the payments
made after March 31, 1961 by tenants who were up-to-date in their
accounts as of said date. In September, 1961, pursuant to the PHHC-
GSIS arrangement, collections from tenants on rentals and/or
installment payments were delivered by the PHHC to the GSIS. On
December 27, 1961, the agreement of turnover of administration and
ownership of PHHC properties, including Project 4 was executed by
PHHC in favor of GSIS, pursuant to the release of mortgage and
amicable settlement of the extrajudicial foreclosure proceedings
instituted in May, 1960 by GSIS against PHHC. Subsequently,
however, PHHC through its new Chairman-General Manager,
Esmeraldo Eco, refused to recognize all agreements and
undertakings previously entered into with GSIS, while GSIS insisted
on its legal rights to enforce the said agreements and was upheld in
its contention by both the Government Corporate Counsel and the
Secretary of Justice. Plaintiffs thus claimed that these conflicting
claims between the defendants-corporations caused them great
inconvenience and incalculable moral and material damage, as they
did not know to whom they should pay the monthly amortizations or
payments. They further alleged that as the majority of them were
GSIS policy holders, they preferred to have the implementation of
the outright sale in their favor effected by the GSIS, since the GSIS
was "legally entitled to the management, administration and
ownership of the PHHC properties in question." 1
Upon urgent ex parte motion of plaintiffs, the trial Court issued on
August 23, 1962 its Order designating the People's First Savings
Bank at Quezon City "to receive in trust the payments from the
plaintiffs on their monthly amortizations on PHHC lots and to be
released only upon proper authority of the Court." 2
On August 29, 1962, the two defendant corporations represented by
the Government Corporate Counsel filed a Motion to Dismiss the
RULE 62 - INTERPLEADER
 Beltran vs. People’s Homesite & Housing Corporation
complaint for failure to state a cause of action as well as to lift the
Court's order designating the People's First Savings Bank as trustee
to receive the tenants' payments on the PHHC lots.
The trial Court heard the motion on September 1, 1962 in the
presence of all the parties, and thereafter issued its Order of
September 6, 1962, dismissing the Complaint, ruling that: "During
the hearing of the said motion and opposition thereto, the counsel
for the defendants ratified the allegations in his motion and made of
record that the defendant Government Service Insurance System has
no objection that payments on the monthly amortizations from the
residents of Project 4 be made directly to the defendant People's
Homesite and Housing Corporation. From what appears in said
motion and the statement made in open court by the counsel for
defendants that there is no dispute as to whom the residents of
Project 4 should make their monthly amortizations payments, there
is, therefore, no cause of action for interpleading and that the order
of August 23, 1962 is not warranted by the circumstances
surrounding the case. In so far as payments are concerned, defendant
GSIS has expressed its conformity that they be made directly to
defendant PHHC. Counsel for defendants went further to say that
whatever dispute, if any, may exist between the two corporations
over the lots and buildings in Project 4, payments made to the PHHC
will not and cannot in any way affect or prejudice the rights of the
residents thereof as they will be credited by either of the two
defendants." 3
Plaintiffs subsequently filed their motion for reconsideration and the
trial court, "with a view to thresh out the matter once and for all,"
called the Managers of the two defendants-corporations and the
counsels for the parties to appear before it for a conference on
October 24, 1962. "During the conference," the trial court related in
its Order of November 20, 1962, denying plaintiffs' Motion for
Reconsideration, "Manager Diaz of the GSIS made of record that he
has no objection that payments be made to the PHHC. On the other
hand, Manager Eco of the PHHC made of record that at present
there is a standing arrangement between the GSIS and the PHHC that
as long as there is showing that the PHHC has remitted 100% of the
total purchase price of a given lot to the GSIS, the latter corporation
shall authorize the issuance of title to the corresponding lot. It was
also brought out in said conference that there is a new arrangement
being negotiated between the two corporations that only 50% of the
purchase price be remitted to the GSIS by the PHHC, instead of the
100%. At any rate the two Managers have assured counsel for the
plaintiffs that upon payment of the whole purchase price of a given
lot, the title corresponding to said lot will be issued." 4
On appeal, plaintiffs claim that the trial Court erred in dismissing
their suit, contending the allegations in their complaint "raise
questions of fact that can be established only by answer and trial on
the merits and not by a motion to dismiss heard by mere oral
manifestations in open court," and that they "do not know who, as
between the GSIS and the PHHC, is the right and lawful party to
receive their monthly amortizations as would eventually entitle them
to a clear title to their dwelling units." 5
Plaintiffs entirely miss the vital element of an action of interpleader.
Rule 63, section 1 of the Revised Rules of Court (formerly Rule 14)
requires as an indispensable element that "conflicting claims upon
the same subject matter are or may be made" against the plaintiff-in-
interpleader "who claims no interest whatever in the subject matter
or an interest which in whole or in part is not disputed by the
claimants." While the two defendant corporations may have
conflicting claims between themselves with regard to the
management, administration and ownership of Project 4, such
conflicting claims are not against the plaintiffs nor do they involve or
affect the plaintiffs. No allegation is made in their complaint that any
corporation other than the PHHC which was the only entity privy to
their lease-purchase agreement, ever made on them any claim or
demand for payment of the rentals or amortization payments. The
questions of fact raised in their complaint concerning the
enforceability, and recognition or non-enforceability and non-
RULE 62 - INTERPLEADER
 Beltran vs. People’s Homesite & Housing Corporation
recognition of the turnover agreement of December 27, 1961
between the two defendant corporations are irrelevant to their action
of interpleader, for these conflicting claims, loosely so-called, are
between the two corporations and not against plaintiffs. Both
defendant corporations were in conformity and had no dispute, as
pointed out by the trial court that the monthly payments and
amortizations should be made directly to the PHHC alone.
The record rejects plaintiffs' claim that the trial courts order was
based on "mere oral manifestations in court." The Reply to
Opposition of September 11, 1962 filed by the Government
Corporate Counsel expressly "reiterates his manifestation in open
court that no possible injustice or prejudice would result in plaintiffs
by continuing to make payments of such rentals or amortizations to
defendant PHHC because any such payments will be recognized as
long as they are proper, legal and in due course by anybody who
might take over the property. Specifically, any such payments will be
recognized by the GSIS in the event that whatever conflict there
might be (and this is only on the hypothetical assumption that such
conflict exists) between the PHHC and the GSIS should finally be
resolved in favor of the GSIS". 6 The assurances and undertakings to
the same affect given by the Managers of the defendants-
corporations at the conference held by the trial Court are expressly
embodied in the Court's Order of November 20, 1962 quoted above.
The GSIS' undertaking to recognize and respect the previous
commitments of PHHC towards its tenants is expressly set forth in
Par. III, section M of the turnover agreement, Annex "F" of plaintiffs'
complaint, wherein it is provided that "GSIS shall recognize and
respect all awards, contracts of sale, lease agreements and transfer of
rights to lots and housing units made and approved by PHHC,
subsisting as of the signing of this agreement, and PHHC
commitment to sell its housing projects 4, 6 and 8-A at the selling
prices less rental credits fixed by PHHC and as finally approved by
the OEC. PHHC, however, shall be liable and answerable for any
and all claims and consequences arising from double or multiple
awards or in the case of awards of non-existing houses and/or lots."  7
In fine, the record shows clearly that there were no conflicting claims
by defendant corporations as against plaintiff-tenants, which they
may properly be compelled in an interpleader suit to interplead and
litigate among themselves. Both defendant corporations were agreed
that PHHC should continue receiving the tenants' payments, and that
such payments would be duly recognized even if the GSIS should
eventually take over Project 4 by virtue of their turnover agreement
of December 27, 1961. As held by this Court in an early case, the
action of interpleader is a remedy whereby a person who has
property in his possession or has an obligation to render wholly or
partially, without claiming any right in both, comes to court and asks
that the defendants who have made upon him conflicting claims upon
the same property or who consider themselves entitled to demand
compliance with the obligation be required to litigate among
themselves in order to determine who is entitled to the property or
payment of the obligation. "The remedy is afforded not to protect a
person against a double liability but to protect him against a double
vexation in respect of one liability." 8 Thus, in another case, where
the occupants of two different parcels of land adjoining each other
belonging to two separate plaintiffs, but on which the occupants had
constructed a building encroaching upon both parcels of land, faced
two ejectment suits from the plaintiffs, each plaintiff claiming the
right of possession and recovery over his respective portion of the
lands encroached upon, this Court held that the occupants could not
properly file an interpleader suit, against the plaintiffs, to litigate
their alleged conflicting claims; for evidently, the two plaintiff did
not have any conflicting claims upon the same subject matter against
the occupants, but were enforcing separate and distinct claims on
their respective properties. 9
Plaintiffs' other contention in their appeal is that notwithstanding that
the issue as to which of the defendants is authorized to receive the
tenants' payments was resolved in favor of the PHHC, they had
raised other issues that were not resolved and would require rendition
of judgment after trial on the merits, such as "the issue of the right of
ownership over the houses and lots in Project 4 (and) the issue of the
RULE 62 - INTERPLEADER
 Beltran vs. People’s Homesite & Housing Corporation
status of the commitment agreements and undertakings made by the
previous PHHC Administration, particularly those of the then PHHC
General Manager Bernardo Torres." 10 This contention is without
merit, for no conflicting claims have been made with regard to such
issues upon plaintiffs by defendant corporations, who both bound
themselves to recognize and respect the rights of plaintiffs-tenants.
The resolution of such issues affecting the defendant corporations
exclusively may not properly be sought through the special civil
action of interpleader. Should there be a breach of the PHHC
undertakings towards plaintiffs, plaintiffs' recourse would be an
ordinary action of specific performance or other appropriate suit
against either the PHHC or GSIS or both, as the circumstances
warrant.

We find no error, therefore, in the trial court's order of dismissal of

the complaint for interpleader and the lifting, as a consequence, of its
other order designating the People's First Savings Bank as trustee to
receive the tenants' payments on the PHHC lots.

ACCORDINGLY, the trial Court's order of dismissal is hereby

affirmed. Without costs.

RULE 62 - INTERPLEADER
 Wack Wack Golf & Country Club, Inc. vs. Won
G.R. No. L-23851 March 26, 1976
WACK WACK GOLF & COUNTRY CLUB, INC. vs. LEE E.
WON alias RAMON LEE and BIENVENIDO A. TAN
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 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
RULE 62 - INTERPLEADER
 Wack Wack Golf & Country Club, Inc. vs. Won
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
RULE 62 - INTERPLEADER
 Wack Wack Golf & Country Club, Inc. vs. Won
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 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.
RULE 62 - INTERPLEADER
 Wack Wack Golf & Country Club, Inc. vs. Won
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.
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
RULE 62 - INTERPLEADER
 Wack Wack Golf & Country Club, Inc. vs. Won
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,
RULE 62 - INTERPLEADER
 Wack Wack Golf & Country Club, Inc. vs. Won
and this is especially true where the holder of the case, its action of interpleader was filed inexcusably late, for which
fund had notice of the conflicting claims prior to the reason it is barred by laches or unreasonable delay.
rendition of such judgment and an opportunity to
implead the adverse claimants in the suit in which ACCORDINGLY, the order of May 28, 1964, dismissing the
such judgment was rendered. See notes and cases complaint, is affirmed, at appellant's cost.
cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5
Pomeroy's Equity Jurisprudence No. 41.'

The principle thus stated has been recognized in

many cases in other jurisdictions, among which may
be cited American Surety Co. v. O'Brien, 223 Mass.
177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157,
129 A. 18; Moore v. Hill, 59 Ga. 760,
761; Yearborough v. Thompson, 3 Smedes & M. (11
Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p.
447, No. 30; Nash v. McCullum, (Tex. Civ. App.) 74
S.W. 2d 1042, 1047.

It would seem that this rule should logically follow

since, after the recovery of judgment, the
interpleading of the judgment creditor is in effect a
collateral attack upon the judgment. 21

In fine, the instant interpleader suit cannot prosper because the

Corporation had already been made independently liable in civil case
26044 and, therefore, its present application for interpleader would in
effect be a collateral attack upon the final judgment in the said civil
case; the appellee Lee had already established his rights to
membership fee certificate 201 in the aforesaid civil case and,
therefore, this interpleader suit would compel him to establish his
rights anew, and thereby increase instead of diminish litigations,
which is one of the purposes of an interpleader suit, with the
possiblity that the benefits of the final judgment in the said civil case
might eventually be taken away from him; and because the
Corporation allowed itself to be sued to final judgment in the said

RULE 62 - INTERPLEADER
 Danao vs. Tappa
DANAO vs. TAPPA
G.R. No. 181303 September 17, 2009
This is a Petition for Certiorari under Rule 65 of the Rules of Court,
assailing the Orders[1] dated 4 May 2007, 30 May 2007, and 31
October 2007, rendered by Branch 3 of the Regional Trial Court
(RTC) of Tuguegarao City, which dismissed, for lack of jurisdiction,
the Complaint of petitioners Carmen Danao Malana, Leticia Danao,
Maria Danao Accorda, Evelyn Danao, Fermina Danao, and Leonora
Danao, against respondents Benigno Tappa, Jerry Reyna, Saturnino
Cambri, Francisco Ligutan and Maria Ligutan, in Civil Case No.
6868.
 
Petitioners filed before the RTC their Complaint for
Reivindicacion, Quieting of Title, and Damages [2] against
respondents on 27 March 2007, docketed as Civil Case No.
6868. Petitioners alleged in their Complaint that they are the owners
of a parcel of land covered by Transfer Certificate of Title (TCT) No.
T-127937[3] situated in Tuguegarao City, Cagayan (subject
property). Petitioners inherited the subject property from Anastacio
Danao (Anastacio), who died intestate. [4] During the lifetime of
Anastacio, he had allowed Consuelo Pauig (Consuelo), who was
married to Joaquin Boncad, to build on and occupy the southern
portion of the subject property. Anastacio and Consuelo agreed that
the latter would vacate the said land at any time that Anastacio and
his heirs might need it.[5]
 
Petitioners claimed that respondents, Consuelos family
members,[6] continued to occupy the subject property even after her
death, already building their residences thereon using permanent
materials. Petitioners also learned that respondents were claiming
ownership over the subject property. Averring that they already
needed it, petitioners demanded that respondents vacate the
same. Respondents, however, refused to heed petitioners demand. [7]
Petitioners referred their land dispute with respondents to
the Lupong Tagapamayapa of Barangay Annafunan West for
conciliation. During the conciliation proceedings, respondents
asserted that they owned the subject property and presented
documents ostensibly supporting their claim of ownership.
 
According to petitioners, respondents’ documents were
highly dubious, falsified, and incapable of proving the latters claim
of ownership over the subject property; nevertheless, they created a
cloud upon petitioners’ title to the property. Thus, petitioners were
compelled to file before the RTC a Complaint to remove such cloud
from their title.[8] Petitioners additionally sought in their Complaint
an award against respondents for actual damages, in the amount
of P50,000.00, resulting from the latters baseless claim over the
subject property that did not actually belong to them, in violation of
Article 19 of the Civil Code on Human Relations. [9] Petitioners
likewise prayed for an award against respondents for exemplary
damages, in the amount of P50,000.00, since the latter had acted in
bad faith and resorted to unlawful means to establish their claim over
the subject property. Finally, petitioners asked to recover from
respondents P50,000.00 as attorneys fees, because the latters refusal
to vacate the property constrained petitioners to engage the services
of a lawyer.[10]
 
Before respondents could file their answer, the RTC issued
an Order dated 4 May 2007 dismissing petitioners Complaint on the
ground of lack of jurisdiction. The RTC referred to Republic Act No.
7691,[11] amending Batas Pambansa Blg. 129, otherwise known as the
Judiciary Reorganization Act of 1980, which vests the RTC with
jurisdiction over real actions, where the assessed value of the
property involved exceeds P20,000.00. It found that the subject
property had a value of less than P20,000.00; hence, petitioners
action to recover the same was outside the jurisdiction of the
RTC. The RTC decreed in its 4 May 2007 Order that:
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Danao vs. Tappa
The Court has no jurisdiction over the
action, it being a real action involving a real property
with assessed value less than P20,000.00 and hereby
dismisses the same without prejudice.[12]  jurisdiction. The RTC dissected Section 1, Rule 63 of the Rules of
 
Petitioners filed a Motion for Reconsideration of the
aforementioned RTC Order dismissing their Complaint. They argued
that their principal cause of action was for quieting of title;
the accion reivindicacion was included merely to enable them to
seek complete relief from respondents. Petitioners Complaint should
not have been dismissed, since Section 1, Rule 63 of the Rules of
Court[13] states that an action to quiet title falls under the jurisdiction
of the RTC.[14]
 
In an Order dated 30 May 2007, the RTC denied petitioners
Motion for Reconsideration. It reasoned that an action to quiet title is
a real action. Pursuant to Republic Act No. 7691, it is the Municipal
Trial Court (MTC) that exercises exclusive jurisdiction over real
actions where the assessed value of real property does not
exceed P20,000.00. Since the assessed value of subject property per
Tax Declaration No, 02-48386 was P410.00, the real action
involving the same was outside the jurisdiction of the RTC. [15]
 
Petitioners filed another pleading, simply designated as
Motion, in which they prayed that the RTC Orders dated 4 May
2007 and 30 May 2007, dismissing their Complaint, be set
aside. They reiterated their earlier argument that Section 1, Rule 63
of the Rules of Court states that an action to quiet title falls under the
exclusive jurisdiction of the RTC. They also contended that there
was no obstacle to their joining the two causes of action, i.e.,
quieting of title and reivindicacion, in a single Complaint,
citing Rumarate v. Hernandez.[16] And even if the two causes of
action could not be joined, petitioners maintained that the misjoinder
of said causes of action was not a ground for the dismissal of their
Complaint.[17]
 
The RTC issued an Order dated 31 October 2007 denying
petitioners Motion. It clarified that their Complaint was dismissed,
not on the ground of misjoinder of causes of action, but for lack of
Court, which provides:
 
Section 1. Who may file petition. Any person
interested under a deed, will, contract or other
written instrument, or whose rights are affected by a
statute, executive order or regulation, ordinance, or
any other governmental regulation may, before
breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any
question of construction or validity arising, and for a
declaration of his rights or duties, thereunder.
 
An action for the reformation of an
instrument, to quiet title to real property or remove
clouds therefrom, or to consolidate ownership under
Article 1607 of the Civil Code, may be brought
under this Rule. 
 
The RTC differentiated between the first and the second
paragraphs of Section 1, Rule 63 of the Rules of Court. The first
paragraph refers to an action for declaratory relief, which should be
brought before the RTC. The second paragraph, however, refers to a
different set of remedies, which includes an action to quiet title to
real property. The second paragraph must be read in relation to
Republic Act No. 7691, which vests the MTC with jurisdiction over
real actions, where the assessed value of the real property involved
does not exceed P50,000.00 in Metro Manila and P20,000.00 in all
other places.[18] The dispositive part of the 31 October 2007 Order of
the RTC reads:
 
This Court maintains that an action to quiet
title is a real action. [Herein petitioners] do not
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Danao vs. Tappa
dispute the assessed value of the property at P410.00
under Tax Declaration No. 02-48386.Hence, it has
no jurisdiction over the action.
 
In view of the foregoing considerations, the
Motion is hereby denied.[19]
 
 
Hence, the present Petition, where petitioners raise the sole
issue of:  Any person interested under a deed, will,
 
I are affected by a statute, executive order or
WHETHER OR NOT THE RESPONDENT JUDGE
COMMITTED GRAVE ABUSE OF DISCRETION
IN DISMISSING THE COMPLAINT OF THE
PETITIONERS MOTU PROPRIO.[20]
 
 
Petitioners statement of the issue is misleading. It would
seem that they are only challenging the fact that their Complaint was
dismissed by the RTC motu proprio. Based on the facts and
arguments set forth in the instant Petition, however, the Court
determines that the fundamental issue for its resolution is whether the
RTC committed grave abuse of discretion in dismissing petitioners
Complaint for lack of jurisdiction.
 
The Court rules in the negative.
 
An action for declaratory relief should be filed by a person
interested under a deed, a will, a contract or other written instrument,
and whose rights are affected by a statute, an executive order, a
regulation or an ordinance. The relief sought under this remedy
includes the interpretation and determination of the validity of the
written instrument and the judicial declaration of the parties rights or
duties thereunder.[21]
 
Petitions for declaratory relief are governed by Rule 63 of
the Rules of Court. The RTC correctly made a distinction between
the first and the second paragraphs of Section 1, Rule 63 of the Rules
of Court.
 
The first paragraph of Section 1, Rule 63 of the Rules of
Court, describes the general circumstances in which a person may
file a petition for declaratory relief, to wit:
 
contract or other written instrument, or whose rights
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
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Danao vs. Tappa
instrument, recognized under Articles 1359 to 1369 of the Civil
Code; (2) an action to quiet title, authorized by Articles 476 to 481 of
the Civil Code; and (3) an action to consolidate ownership required
by Article 1607 of the Civil Code in a sale with a right to
repurchase. These three remedies are considered similar to
declaratory relief because they also result in the adjudication of the
legal rights of the litigants, often without the need of execution to
carry the judgment into effect.[22]
 
To determine which court has jurisdiction over the actions
identified in the second paragraph of Section 1, Rule 63 of the Rules
of Court, said provision must be read together with those of the
Judiciary Reorganization Act of 1980, as amended.
It is important to note that Section 1, Rule 63 of the Rules of
Court does not categorically require that an action to quiet title be
filed before the RTC. It repeatedly uses the word may that an action
for quieting of title may be brought under [the] Rule on petitions for
declaratory relief, and a person desiring to file a petition for
declaratory relief may x x x bring an action in the appropriate
Regional Trial Court. The use of the word may in a statute denotes
that the provision is merely permissive and indicates a mere
possibility, an opportunity or an option.[23]
 
In contrast, the mandatory provision of the Judiciary
Reorganization Act of 1980, as amended, uses the word shall and
explicitly requires the MTC to exercise exclusive original
jurisdiction over all civil actions which involve title to or possession
of real property where the assessed value does not
exceed P20,000.00, thus:
 
Section 33. Jurisdiction of Metropolitan
Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts in Civil Cases.Metropolitan
Trial Courts, Municipal Trial Courts and Municipal
Circuit Trial Courts shall exercise:
 
xxxx
(3) Exclusive original jurisdiction in all civil
actions which involve title to, possession of, real
property, or any interest therein where the assessed
value of the property or interest therein does not
exceed Twenty thousand pesos (P20,000.00) or, in
civil actions in Metro Manila, where such assessed
value does not exceeds Fifty thousand pesos
(P50,000.00) exclusive of interest, damages of
whatever kind, attorneys fees, litigation expenses
and costs: x x x (Emphasis ours.)
 
As found by the RTC, the assessed value of the subject
property as stated in Tax Declaration No. 02-48386 is only P410.00;
therefore, petitioners Complaint involving title to and possession of
the said property is within the exclusive original jurisdiction of the
MTC, not the RTC.
 
Furthermore, an action for declaratory relief presupposes that
there has been no actual breach of the instruments involved or of
rights arising thereunder. [24] Since the purpose of an action for
declaratory relief is to secure an authoritative statement of the rights
and obligations of the parties under a statute, deed, or contract for
their guidance in the enforcement thereof, or compliance therewith,
and not to settle issues arising from an alleged breach thereof, it may
be entertained only before the breach or violation of the statute,
deed, or contract to which it refers. A petition for declaratory relief
gives a practical remedy for ending controversies that have not
reached the state where another relief is immediately available; and
supplies the need for a form of action that will set controversies at
rest before they lead to a repudiation of obligations, an invasion
of rights, and a commission of wrongs.[25]
 
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Danao vs. Tappa
Where the law or contract has already been contravened
prior to the filing of an action for declaratory relief, the courts can no
longer assume jurisdiction over the action. In other words, a court
has no more jurisdiction over an action for declaratory relief if its
subject has already been infringed or transgressed before the
institution of the action.[26]
 
In the present case, petitioners Complaint for quieting of title
was filed after petitioners already demanded and respondents
refused to vacate the subject property. In fact, said Complaint was
filed only subsequent to the latters express claim of ownership over
the subject property before the Lupong Tagapamayapa, in direct
challenge to petitioners title.
 
Since petitioners averred in the Complaint that they had
already been deprived of the possession of their property, the proper
remedy for them is the filing of an accion publiciana or an accion
reivindicatoria, not a case for declaratory relief. An accion
publiciana is a suit for the recovery of possession, filed one year
after the occurrence of the cause of action or from the unlawful
withholding of possession of the realty. An accion reivindicatoria is
a suit that has for its object ones recovery of possession over the real
property as owner.[27]
 
Petitioners Complaint contained sufficient allegations for
an accion reivindicatoria. Jurisdiction over such an action would
depend on the value of the property involved. Given that the subject
property herein is valued only at P410.00, then the MTC, not the
RTC, has jurisdiction over an action to recover the same. The RTC,
therefore, did not commit grave abuse of discretion in dismissing,
without prejudice, petitioners Complaint in Civil Case No. 6868 for
lack of jurisdiction.
 
As for the RTC dismissing petitioners Complaint motu
proprio, the following pronouncements of the Court in Laresma v.
Abellana[28] proves instructive:
 
It is axiomatic that the nature of an action
and the jurisdiction of a tribunal are determined by
the material allegations of the complaint and the law
at the time the action was commenced.  Jurisdiction
of the tribunal over the subject matter or nature of an
action is conferred only by law and not by the
consent or waiver upon a court which, otherwise,
would have no jurisdiction over the subject matter or
nature of an action. Lack of jurisdiction of the court
over an action or the subject matter of an action
cannot be cured by the silence, acquiescence, or
even by express consent of the parties.  If the court
has no jurisdiction over the nature of an action, it
may dismiss the same ex mero motu or motu
proprio. x x x. (Emphasis supplied.)
 
 
Since the RTC, in dismissing petitioners Complaint, acted in
complete accord with law and jurisprudence, it cannot be said to
have done so with grave abuse of discretion amounting to lack or
excess of jurisdiction. An act of a court or tribunal may only be
considered to have been committed in grave abuse of discretion
when the same was performed in a capricious or whimsical exercise
of judgment, which is equivalent to lack of jurisdiction. The abuse of
discretion must be so patent and gross as to amount to an evasion of
a positive duty or to a virtual refusal to perform a duty enjoined by
law or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion or
personal hostility.[29] No such circumstances exist herein as to justify
the issuance of a writ of certiorari.
 
IN VIEW OF THE FOREGOING, the instant Petition
is DISMISSED. The Orders dated 4 May 2007, 30 May 2007 and 31
October 2007 of the Regional Trial Court ofTuguegarao City, Branch
3, dismissing the Complaint in Civil Case No. 6868, without
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Danao vs. Tappa
prejudice, are AFFIRMED. The Regional Trial Court is ordered
to REMAND the records of this case to the Municipal Trial Court or
the court of proper jurisdiction for proper disposition. Costs against
the petitioners. SO ORDERED.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Velarde vs. Social Justice Society
[G.R. No. 159357. April 28, 2004]
Brother MARIANO MIKE Z. VELARDE vs. SOCIAL
JUSTICE SOCIETY
A decision that does not conform to the form and substance
required by the Constitution and the law is void and deemed legally
inexistent. To be valid, decisions should comply with the form, the
procedure and the substantive requirements laid out in the
Constitution, the Rules of Court and relevant circulars/orders of the
Supreme Court. For the guidance of the bench and the bar, the Court
hereby discusses these forms, procedures and requirements.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules
of Court, assailing the June 12, 2003 Decision [2] and July 29, 2003
Order[3] of the Regional Trial Court (RTC) of Manila (Branch 49). [4]
The challenged Decision was the offshoot of a Petition for
Declaratory Relief[5] filed before the RTC-Manila by herein
Respondent Social Justice Society (SJS) against herein Petitioner
Mariano Mike Z. Velarde, together with His Eminence, Jaime
Cardinal Sin, Executive Minister Erao Manalo, Brother Eddie
Villanueva and Brother Eliseo F. Soriano as co-respondents. 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 x x x.[6]
Alleging that the questioned Decision did not contain a
statement of facts and a dispositive portion, herein petitioner filed a
Clarificatory Motion and Motion for Reconsideration before the trial
court. Soriano, his co-respondent, similarly filed a separate Motion
for Reconsideration. In response, the trial court issued the assailed
Order, which held as follows:
x x x [T]his Court cannot reconsider, because what it was asked to
do, was only to clarify a Constitutional provision and to declare
whether acts are violative thereof. The Decision did not make a
dispositive portion because a dispositive portion is required only in
coercive reliefs, where a redress from wrong suffered and the benefit
that the prevailing party wronged should get. The step that these
movants have to take, is direct appeal under Rule 45 of the Rules of
Court, for a conclusive interpretation of the Constitutional provision
to the Supreme Court.[7]
The Antecedent Proceedings
On January 28, 2003, SJS filed a Petition for Declaratory Relief
(SJS Petition) before the RTC-Manila against Velarde and his
aforesaid co-respondents. SJS, a registered political party, sought the
interpretation of several constitutional provisions, [8] specifically on
the separation of church and state; and a declaratory judgment on the
constitutionality of the acts of religious leaders endorsing a candidate
for an elective office, or urging or requiring the members of their
flock to vote for a specified candidate.
The subsequent proceedings were recounted in the challenged
Decision in these words:
x x x. Bro. Eddie Villanueva submitted, within the original period [to
file an Answer], a Motion to Dismiss. Subsequently, Executive
Minister Erao Manalo and Bro. Mike Velarde, filed their Motions to
Dismiss. While His Eminence Jaime Cardinal L. Sin, filed a
Comment and Bro. Eli Soriano, filed an Answer within the extended
period and similarly prayed for the dismissal of the Petition. All
sought the dismissal of the Petition on the common grounds that it
does not state a cause of action and that there is no justiciable
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
controversy. They were ordered to submit a pleading by way of
advisement, which was closely followed by another Order denying
all the Motions to Dismiss. Bro. Mike Velarde, Bro. Eddie
Villanueva and Executive Minister Erao Manalo moved to reconsider
the denial. His Eminence Jaime Cardinal L. Sin, asked for extension
to file memorandum. Only Bro. Eli Soriano complied with the first
Order by submitting his Memorandum. x x x.
x x x the Court denied the Motions to Dismiss, and the Motions for
Reconsideration filed by Bro. Mike Velarde, Bro. Eddie Villanueva
and Executive Minister Erao Manalo, which raised no new
arguments other than those already considered in the motions to
dismiss x x x.[9]
After narrating the above incidents, the trial court said that it
had jurisdiction over the Petition, because in praying for a
determination as to whether the actions imputed to the respondents
are violative of Article II, Section 6 of the Fundamental Law, [the
Petition] has raised only a question of law. [10] It then proceeded to a
lengthy discussion of the issue raised in the Petition the separation of
church and state even tracing, to some extent, the historical
background of the principle. Through its discourse, the court a
quo opined at some point that the [e]ndorsement of specific
candidates in an election to any public office is a clear violation of
the separation clause.[11]
After its essay on the legal issue, however, the trial court failed
to include a dispositive portion in its assailed Decision. Thus,
Velarde and Soriano filed separate Motions for Reconsideration
which, as mentioned earlier, were denied by the lower court.
Hence, this Petition for Review.[12]
This Court, in a Resolution[13] dated September 2, 2003, required
SJS and the Office of the Solicitor General (OSG) to submit their
respective comments. In the same Resolution, the Court gave the
other parties -- impleaded as respondents in the original case below
--the opportunity to comment, if they so desired.
On April 13, 2004, the Court en banc conducted an Oral
Argument.[14]
The Issues
In his Petition, Brother Mike Velarde submits the following
issues for this Courts resolution:
1. Whether or not the Decision dated 12 June 2003
rendered by the court a quo was proper and valid;
2. Whether or not there exists justiceable controversy in
herein respondents Petition for declaratory relief;
3. Whether or not herein respondent has legal interest in
filing the Petition for declaratory relief;
4. Whether or not the constitutional question sought to be
resolved by herein respondent is ripe for judicial
determination;
5. Whether or not there is adequate remedy other than the
declaratory relief; and,
6. Whether or not the court a quo has jurisdiction over the
Petition for declaratory relief of herein respondent. [15]
During the Oral Argument, the issues were narrowed down and
classified as follows:
A. Procedural Issues
Did the Petition for Declaratory Relief raise a
justiciable controversy? Did it state a cause of
action? Did respondent have any legal standing to
file the Petition for Declaratory Relief?
B. Substantive Issues
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
1. Did the RTC Decision conform to the form and
substance required by the Constitution, the
law and the Rules of Court?
2. May religious leaders like herein petitioner, Bro.
Mike Velarde, be prohibited from endorsing
candidates for public office? Corollarily,
may they be banned from campaigning
against said candidates?
The Court’s Ruling
The Petition of Brother Mike Velarde is meritorious.
Procedural Issues:
Requisites of Petitions
for Declaratory Relief
Section 1 of Rule 63 of the Rules of Court, which deals with
petitions for declaratory relief, provides in part:
Section 1. Who may file petition.- Any person interested under a
deed, will, contract or other written instrument, whose rights are
affected by a statute, executive order or regulation, ordinance, or any
other governmental regulation may, before breach or violation
thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a
declaration of his rights or duties thereunder.
Based on the foregoing, an action for declaratory relief should
be filed by a person interested under a deed, a will, a contract or
other written instrument, and whose rights are affected by a statute,
an executive order, a regulation or an ordinance. The purpose of the
remedy is to interpret or to determine the validity of the written
instrument and to seek a judicial declaration of the parties rights or
duties thereunder.[16] The essential requisites of the action are as
follows: (1) there is a justiciable controversy; (2) the controversy is
between persons whose interests are adverse; (3) the party seeking
the relief has a legal interest in the controversy; and (4) the issue is
ripe for judicial determination.[17]
Justiciable Controversy
Brother Mike Velarde contends that the SJS Petition failed to
allege, much less establish before the trial court, that there existed a
justiciable controversy or an adverse legal interest between them;
and that SJS had a legal right that was being violated or threatened to
be violated by petitioner. On the contrary, Velarde alleges that SJS
premised its action on mere speculations, contingent events, and
hypothetical issues that had not yet ripened into an actual
controversy. Thus, its Petition for Declaratory Relief must fail.
A justiciable controversy refers to an existing case or
controversy that is appropriate or ripe for judicial determination, not
one that is conjectural or merely anticipatory. [18] The SJS Petition for
Declaratory Relief fell short of this test. It miserably failed to allege
an existing controversy or dispute between the petitioner and the
named respondents therein. Further, the Petition did not sufficiently
state what specific legal right of the petitioner was violated by the
respondents therein; and what particular act or acts of the latter were
in breach of its rights, the law or the Constitution.
As pointed out by Brother Eliseo F. Soriano in his Comment,
[19]
 what exactly has he done that merited the attention of SJS? He
confesses that he does not know the answer, because the SJS Petition
(as well as the assailed Decision of the RTC) yields nothing in this
respect. His Eminence, Jaime Cardinal Sin, adds that, at the time SJS
filed its Petition on January 28, 2003, the election season had not
even started yet; and that, in any event, he has not been actively
involved in partisan politics.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
An initiatory complaint or petition filed with the trial court
should contain a plain, concise and direct statement of the ultimate
facts on which the party pleading relies for his claim x x x. [20]Yet, the
SJS Petition stated no ultimate facts.
Indeed, SJS merely speculated or anticipated without factual
moorings that, as religious leaders, the petitioner and his co-
respondents below had endorsed or threatened to endorse a candidate
or candidates for elective offices; and that such actual or threatened
endorsement will enable [them] to elect men to public office who
[would] in turn be forever beholden to their leaders, enabling them to
control the government[;][21] and pos[ing] a clear and present danger
of serious erosion of the peoples faith in the electoral process[;] and
reinforc[ing] their belief that religious leaders determine the ultimate
result of elections,[22] which would then be violative of the separation
clause.
Such premise is highly speculative and merely theoretical, to
say the least. Clearly, it does not suffice to constitute a justiciable
controversy. The Petition does not even allege any indication or
manifest intent on the part of any of the respondents below to
champion an electoral candidate, or to urge their so-called flock to
vote for, or not to vote for, a particular candidate.It is a time-honored
rule that sheer speculation does not give rise to an actionable right.
Obviously, there is no factual allegation that SJS rights are
being subjected to any threatened, imminent and inevitable violation
that should be prevented by the declaratory relief sought.The judicial
power and duty of the courts to settle actual controversies involving
rights that are legally demandable and enforceable [23] cannot be
exercised when there is no actual or threatened violation of a legal
right.
All that the 5-page SJS Petition prayed for was that the question
raised in paragraph 9 hereof be resolved. [24] In other words, it merely
sought an opinion of the trial court on whether the speculated acts of
religious leaders endorsing elective candidates for political offices
violated the constitutional principle on the separation of church and
state. SJS did not ask for a declaration of its rights and duties; neither
did it pray for the stoppage of any threatened violation of its declared
rights. Courts, however, are proscribed from rendering an advisory
opinion.[25]
Cause of Action
Respondent SJS asserts that in order to maintain a petition for
declaratory relief, a cause of action need not be alleged or
proven. Supposedly, for such petition to prosper, there need not be
any violation of a right, breach of duty or actual wrong committed by
one party against the other.
Petitioner, on the other hand, argues that the subject matter of an
action for declaratory relief should be a deed, a will, a contract (or
other written instrument), a statute, an executive order, a regulation
or an ordinance. But the subject matter of the SJS Petition is the
constitutionality of an act of a religious leader to endorse the
candidacy of a candidate for elective office or to urge or require the
members of the flock to vote for a specified candidate. [26] According
to petitioner, this subject matter is beyond the realm of an action for
declaratory relief.[27] Petitioner avers that in the absence of a valid
subject matter, the Petition fails to state a cause of action and, hence,
should have been dismissed outright by the court a quo.
A cause of action is an act or an omission of one party in
violation of the legal right or rights of another, causing injury to the
latter.[28] Its essential elements are the following: (1) a right in favor
of the plaintiff; (2) an obligation on the part of the named defendant
to respect or not to violate such right; and (3) such defendants act or
omission that is violative of the right of the plaintiff or constituting a
breach of the obligation of the former to the latter. [29]
The failure of a complaint to state a cause of action is a ground
for its outright dismissal.[30] However, in special civil actions for
declaratory relief, the concept of a cause of action under ordinary
civil actions does not strictly apply. The reason for this exception is
that an action for declaratory relief presupposes that there has been
no actual breach of the instruments involved or of rights arising
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
thereunder.[31] Nevertheless, a breach or violation should be
impending, imminent or at least threatened.
A perusal of the Petition filed by SJS before the RTC discloses
no explicit allegation that the former had any legal right in its favor
that it sought to protect. We can only infer the interest, supposedly in
its favor, from its bare allegation that it has thousands of members
who are citizens-taxpayers-registered voters and who are keenly
interested in a judicial clarification of the constitutionality of the
partisan participation of religious leaders in Philippine politics and in
the process to insure adherence to the Constitution by everyone x x
x.[32]
Such general averment does not, however, suffice to constitute a
legal right or interest. Not only is the presumed interest not personal
in character; it is likewise too vague, highly speculative and
uncertain.[33] The Rules require that the interest must be material to
the issue and affected by the questioned act or instrument, as
distinguished from simple curiosity or incidental interest in the
question raised.[34]
To bolster its stance, SJS cites the Corpus Juris Secundum and
submits that the [p]laintiff in a declaratory judgment action does not
seek to enforce a claim against [the] defendant, but seeks a judicial
declaration of [the] rights of the parties for the purpose of guiding
[their] future conduct, and the essential distinction between a
declaratory judgment action and the usual action is that no actual
wrong need have been committed or loss have occurred in order to
sustain the declaratory judgment action, although there must be no
uncertainty that the loss will occur or that the asserted rights will be
invaded.[35]
SJS has, however, ignored the crucial point of its own
reference that there must be no uncertainty that the loss will occur or
that the asserted rights will be invaded. Precisely, as discussed
earlier, it merely conjectures that herein petitioner (and his co-
respondents below) might actively participate in partisan politics, use
the awesome voting strength of its faithful flock [to] enable it to elect
men to public office x x x, enabling [it] to control the government. [36]
During the Oral Argument, though, Petitioner Velarde and his
co-respondents below all strongly asserted that they had not in any
way engaged or intended to participate in partisan politics. They all
firmly assured this Court that they had not done anything to trigger
the issue raised and to entitle SJS to the relief sought.
Indeed, the Court finds in the Petition for Declaratory Relief no
single allegation of fact upon which SJS could base a right of relief
from the named respondents. In any event, even granting that it
sufficiently asserted a legal right it sought to protect, there was
nevertheless no certainty that such right would be invaded by the
said respondents. Not even the alleged proximity of the elections to
the time the Petition was filed below (January 28, 2003) would have
provided the certainty that it had a legal right that would be
jeopardized or violated by any of those respondents.
Legal Standing
Legal standing or locus standi has been defined as a personal
and substantial interest in the case, such that the party has sustained
or will sustain direct injury as a result of the challenged act.
[37]
 Interest means a material interest in issue that is affected by the
questioned act or instrument, as distinguished from a mere incidental
interest in the question involved.[38]
Petitioner alleges that [i]n seeking declaratory relief as to the
constitutionality of an act of a religious leader to endorse, or require
the members of the religious flock to vote for a specific candidate,
herein Respondent SJS has no legal interest in the controversy; [39] it
has failed to establish how the resolution of the proffered question
would benefit or injure it.
Parties bringing suits challenging the constitutionality of a law,
an act or a statute must show not only that the law [or act] is invalid,
but also that [they have] sustained or [are] in immediate or imminent
danger of sustaining some direct injury as a result of its enforcement,
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
and not merely that [they] suffer thereby in some indefinite way.
[40]
 They must demonstrate that they have been, or are about to be,
denied some right or privilege to which they are lawfully entitled, or
that they are about to be subjected to some burdens or penalties by
reason of the statute or act complained of. [41]
First, parties suing as taxpayers must specifically prove that
they have sufficient interest in preventing the illegal expenditure of
money raised by taxation.[42] A taxpayers action may be properly
brought only when there is an exercise by Congress of its taxing or
spending power.[43] In the present case, there is no allegation, whether
express or implied, that taxpayers money is being illegally disbursed.
Second, there was no showing in the Petition for Declaratory
Relief that SJS as a political party or its members as registered voters
would be adversely affected by the alleged acts of the respondents
below, if the question at issue was not resolved. There was no
allegation that SJS had suffered or would be deprived of votes due to
the acts imputed to the said respondents. Neither did it allege that
any of its members would be denied the right of suffrage or the
privilege to be voted for a public office they are seeking.
Finally, the allegedly keen interest of its thousands of members
who are citizens-taxpayers-registered voters is too general [44] and
beyond the contemplation of the standards set by our
jurisprudence. Not only is the presumed interest impersonal in
character; it is likewise too vague, highly speculative and uncertain
to satisfy the requirement of standing.[45]
Transcendental Importance
In any event, SJS urges the Court to take cognizance of the
Petition, even sans legal standing, considering that the issues raised
are of paramount public interest.
In not a few cases, the Court has liberalized the locus
standi requirement when a petition raises an issue of transcendental
significance or paramount importance to the people. [46]Recently, after
holding that the IBP had no locus standi to bring the suit, the Court
in IBP v. Zamora[47] nevertheless entertained the Petition therein. It
noted that the IBP has advanced constitutional issues which deserve
the attention of this Court in view of their seriousness, novelty and
weight as precedents.[48]
Similarly in the instant case, the Court deemed the
constitutional issue raised in the SJS Petition to be of paramount
interest to the Filipino people. The issue did not simply concern a
delineation of the separation between church and state, but ran smack
into the governance of our country. The issue was both
transcendental in importance and novel in nature, since it had never
been decided before.
The Court, thus, called for Oral Argument to determine with
certainty whether it could resolve the constitutional issue despite the
barren allegations in the SJS Petition as well as the abbreviated
proceedings in the court below. Much to its chagrin, however,
counsels for the parties -- particularly for Respondent SJS -- made no
satisfactory allegations or clarifications that would supply the
deficiencies hereinabove discussed. Hence, even if the Court would
exempt this case from the stringent locus standi requirement, such
heroic effort would be futile because the transcendental issue cannot
be resolved anyway.
Proper Proceedings Before the Trial Court
To prevent a repetition of this waste of precious judicial time
and effort, and for the guidance of the bench and the bar, the Court
reiterates the elementary procedure[49] that must be followed by trial
courts in the conduct of civil cases.[50]
Prefatorily, the trial court may -- motu proprio or upon motion
of the defendant -- dismiss a complaint [51] (or petition, in a special
civil action) that does not allege the plaintiffs (or petitioners) cause
or causes of action.[52] A complaint or petition should contain a plain,
concise and direct statement of the ultimate facts on which the party
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
pleading relies for his claim or defense. [53] It should likewise clearly
specify the relief sought.[54]
Upon the filing of the complaint/petition and the payment of the
requisite legal fees, the clerk of court shall forthwith issue the
corresponding summons to the defendants or the respondents, with a
directive that the defendant answer[55] within 15 days, unless a
different period is fixed by the court. [56] The summons shall also
contain a notice that if such answer is not filed, the
plaintiffs/petitioners shall take a judgment by default and may be
granted the relief applied for. [57] The court, however, may -- upon
such terms as may be just -- allow an answer to be filed after the time
fixed by the Rules.[58]
If the answer sets forth a counterclaim or cross-claim, it must be
answered within ten (10) days from service. [59] A reply may be filed
within ten (10) days from service of the pleading responded to. [60]
When an answer fails to tender an issue or admits the material
allegations of the adverse partys pleading, the court may, on motion
of that party, direct judgment on such pleading (except in actions for
declaration of nullity or annulment of marriage or for legal
separation).[61] Meanwhile, a party seeking to recover upon a claim, a
counterclaim or crossclaim -- or to obtain a declaratory relief -- may,
at any time after the answer thereto has been served, move for a
summary judgment in its favor.[62] Similarly, a party against whom a
claim, a counterclaim or crossclaim is asserted -- or a declaratory
relief sought -- may, at any time, move for a summary judgment in
its favor.[63] After the motion is heard, the judgment sought shall be
rendered forthwith if there is a showing that, except as to the amount
of damages, there is no genuine issue as to any material fact; and that
the moving party is entitled to a judgment as a matter of law. [64]
Within the time for -- but before -- filing the answer to the
complaint or petition, the defendant may file a motion to dismiss
based on any of the grounds stated in Section 1 of Rule 16 of the
Rules of Court. During the hearing of the motion, the parties shall
submit their arguments on the questions of law, and their evidence on
the questions of fact.[65] After the hearing, the court may dismiss the
action or claim, deny the motion, or order the amendment of the
pleadings. It shall not defer the resolution of the motion for the
reason that the ground relied upon is not indubitable. In every case,
the resolution shall state clearly and distinctly the reasons therefor. [66]
If the motion is denied, the movant may file an answer within
the balance of the period originally prescribed to file an answer, but
not less than five (5) days in any event, computed from the receipt of
the notice of the denial. If the pleading is ordered to be amended, the
defendant shall file an answer within fifteen (15) days, counted from
the service of the amended pleading, unless the court provides a
longer period.[67]
After the last pleading has been served and filed, the case shall
be set for pretrial,[68] which is a mandatory proceeding. [69] A
plaintiffs/ petitioners (or its duly authorized representatives) non-
appearance at the pretrial, if without valid cause, shall result in the
dismissal of the action with prejudice, unless the court orders
otherwise. A similar failure on the part of the defendant shall be a
cause for allowing the plaintiff/petitioner to present evidence ex
parte, and the court to render judgment on the basis thereof. [70]
The parties are required to file their pretrial briefs; failure to do
so shall have the same effect as failure to appear at the pretrial.
[71]
 Upon the termination thereof, the court shall issue an order
reciting in detail the matters taken up at the conference; the action
taken on them, the amendments allowed to the pleadings; and the
agreements or admissions, if any, made by the parties regarding any
of the matters considered. [72] The parties may further avail
themselves of any of the modes of discovery, [73] if they so wish.
Thereafter, the case shall be set for trial, [74] in which the parties
shall adduce their respective evidence in support of their claims
and/or defenses. By their written consent or upon the application of
either party, or on its own motion, the court may also order any or all
of the issues to be referred to a commissioner, who is to be appointed
by it or to be agreed upon by the parties. [75] The trial or hearing
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 Velarde vs. Social Justice Society
before the commissioner shall proceed in all respects as it would if
held before the court.[76]
Upon the completion of such proceedings, the commissioner
shall file with the court a written report on the matters referred by the
parties.[77] The report shall be set for hearing, after which the court
shall issue an order adopting, modifying or rejecting it in whole or in
part; or recommitting it with instructions; or requiring the parties to
present further evidence before the commissioner or the court. [78]
Finally, a judgment or final order determining the merits of the
case shall be rendered. The decision shall be in writing, personally
and directly prepared by the judge, stating clearly and distinctly the
facts and the law on which it is based, signed by the issuing
magistrate, and filed with the clerk of court. [79]
Based on these elementary guidelines, let us examine the
proceedings before the trial court in the instant case.
First, with respect to the initiatory pleading of the SJS. Even a
cursory perusal of the Petition immediately reveals its gross
inadequacy. It contained no statement of ultimate facts upon which
the petitioner relied for its claim. Furthermore, it did not specify the
relief it sought from the court, but merely asked it to answer a
hypothetical question.
Relief, as contemplated in a legal action, refers to a specific
coercive measure prayed for as a result of a violation of the rights of
a plaintiff or a petitioner.[80] As already discussed earlier, the Petition
before the trial court had no allegations of fact [81] or of any specific
violation of the petitioners rights, which the respondents had a duty
to respect. Such deficiency amounted to a failure to state a cause of
action; hence, no coercive relief could be sought and
adjudicated. The Petition evidently lacked substantive requirements
and, we repeat, should have been dismissed at the outset.
Second, with respect to the trial court proceedings. Within the
period set to file their respective answers to the SJS Petition,
Velarde, Villanueva and Manalo filed Motions to Dismiss; Cardinal
Sin, a Comment; and Soriano, within a priorly granted extended
period, an Answer in which he likewise prayed for the dismissal of
the Petition.[82] SJS filed a Rejoinder to the Motion of Velarde, who
subsequently filed a Sur-Rejoinder. Supposedly, there were several
scheduled settings, in which the [c]ourt was apprised of the
respective positions of the parties. [83] The nature of such settings --
whether pretrial or trial hearings -- was not disclosed in the
records. Before ruling on the Motions to Dismiss, the trial court
issued an Order[84] dated May 8, 2003, directing the parties to submit
their memoranda. Issued shortly thereafter was another
Order[85] dated May 14, 2003, denying all the Motions to Dismiss.
In the latter Order, the trial court perfunctorily ruled:
The Court now resolves to deny the Motions to Dismiss, and after all
the memoranda are submitted, then, the case shall be deemed as
submitted for resolution.[86]
Apparently, contrary to the requirement of Section 2 of Rule 16
of the Rules of Court, the Motions were not heard. Worse, the Order
purportedly resolving the Motions to Dismiss did not state any
reason at all for their denial, in contravention of Section 3 of the said
Rule 16. There was not even any statement of the grounds relied
upon by the Motions; much less, of the legal findings and
conclusions of the trial court.
Thus, Velarde, Villanueva and Manalo moved for
reconsideration. Pending the resolution of these Motions for
Reconsideration, Villanueva filed a Motion to suspend the filing of
the parties memoranda. But instead of separately resolving the
pending Motions fairly and squarely, the trial court again
transgressed the Rules of Court when it immediately proceeded to
issue its Decision, even before tackling the issues raised in those
Motions.
Furthermore, the RTC issued its Decision without allowing the
parties to file their answers. For this reason, there was no joinder of
the issues. If only it had allowed the filing of those answers, the trial
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 Velarde vs. Social Justice Society
court would have known, as the Oral Argument revealed, that the
petitioner and his co-respondents below had not committed or
threatened to commit the act attributed to them (endorsing
candidates) -- the act that was supposedly the factual basis of the
suit.
Parenthetically, the court a quo further failed to give a notice of
the Petition to the OSG, which was entitled to be heard upon
questions involving the constitutionality or validity of statutes and
other measures.[87]
Moreover, as will be discussed in more detail, the questioned
Decision of the trial court was utterly wanting in the requirements
prescribed by the Constitution and the Rules of Court.
All in all, during the loosely abbreviated proceedings of the
case, the trial court indeed acted with inexplicable haste, with total
ignorance of the law -- or, worse, in cavalier disregard of the rules of
procedure -- and with grave abuse of discretion.
Contrary to the contentions of the trial judge and of SJS,
proceedings for declaratory relief must still follow the process
described above -- the petition must state a cause of action; the
proceedings must undergo the procedure outlined in the Rules of
Court; and the decision must adhere to constitutional and legal
requirements.
First Substantive Issue:
Fundamental Requirements of a Decision
The Constitution commands that [n]o decision shall be rendered
by any court without expressing therein clearly and distinctly the
facts and the law on which it is based. No petition for review or
motion for reconsideration of a decision of the court shall be refused
due course or denied without stating the basis therefor. [88]
Consistent with this constitutional mandate, Section 1 of Rule
36 of the Rules on Civil Procedure similarly provides:
Sec. 1. Rendition of judgments and final orders. A judgment or final
order determining the merits of the case shall be in writing
personally and directly prepared by the judge, stating clearly and
distinctly the facts and the law on which it is based, signed by him
and filed with the clerk of court.
In the same vein, Section 2 of Rule 120 of the Rules of Court on
Criminal Procedure reads as follows:
Sec. 2. Form and contents of judgments. -- The judgment must be
written in the official language, personally and directly prepared by
the judge and signed by him and shall contain clearly and distinctly a
statement of the facts proved or admitted by the accused and the law
upon which the judgment is based.
x x x x x x x x x.
Pursuant to the Constitution, this Court also issued on January
28, 1988, Administrative Circular No. 1, prompting all judges to
make complete findings of facts in their decisions, and scrutinize
closely the legal aspects of the case in the light of the evidence
presented. They should avoid the tendency to generalize and form
conclusions without detailing the facts from which such conclusions
are deduced.
In many cases,[89] this Court has time and time again reminded
magistrates to heed the demand of Section 14, Article VIII of the
Constitution. The Court, through Chief Justice Hilario G. Davide Jr.
in Yao v. Court of Appeals,[90] discussed at length the implications of
this provision and strongly exhorted thus:
Faithful adherence to the requirements of Section 14, Article VIII of
the Constitution is indisputably a paramount component of due
process and fair play. It is likewise demanded by the due process
clause of the Constitution. The parties to a litigation should be
informed of how it was decided, with an explanation of the factual
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
and legal reasons that led to the conclusions of the court. The court
cannot simply say that judgment is rendered in favor of X and
against Y and just leave it at that without any justification
whatsoever for its action. The losing party is entitled to know why he
lost, so he may appeal to the higher court, if permitted, should he
believe that the decision should be reversed. A decision that does not
clearly and distinctly state the facts and the law on which it is based
leaves the parties in the dark as to how it was reached and is
precisely prejudicial to the losing party, who is unable to pinpoint the
possible errors of the court for review by a higher tribunal. More
than that, the requirement is an assurance to the parties that, in
reaching judgment, the judge did so through the processes of legal
reasoning. It is, thus, a safeguard against the impetuosity of the
judge, preventing him from deciding ipse dixit. Vouchsafed neither
the sword nor the purse by the Constitution but nonetheless vested
with the sovereign prerogative of passing judgment on the life,
liberty or property of his fellowmen, the judge must ultimately
depend on the power of reason for sustained public confidence in the
justness of his decision.
In People v. Bugarin,[91] the Court also explained:
The requirement that the decisions of courts must be in writing and
that they must set forth clearly and distinctly the facts and the law on
which they are based serves many functions. It is intended, among
other things, to inform the parties of the reason or reasons for the
decision so that if any of them appeals, he can point out to the
appellate court the finding of facts or the rulings on points of law
with which he disagrees. More than that, the requirement is an
assurance to the parties that, in reaching judgment, the judge did so
through the processes of legal reasoning. x x x.
Indeed, elementary due process demands that the parties to a
litigation be given information on how the case was decided, as well
as an explanation of the factual and legal reasons that led to the
conclusions of the court.[92]
In Madrid v. Court of Appeals,[93] this Court had instructed
magistrates to exert effort to ensure that their decisions would
present a comprehensive analysis or account of the factual and legal
findings that would substantially address the issues raised by the
parties.
In the present case, it is starkly obvious that the assailed
Decision contains no statement of facts -- much less an assessment or
analysis thereof -- or of the courts findings as to the probable
facts. The assailed Decision begins with a statement of the nature of
the action and the question or issue presented. Then follows a brief
explanation of the constitutional provisions involved, and what the
Petition sought to achieve. Thereafter, the ensuing procedural
incidents before the trial court are tracked. The Decision proceeds to
a full-length opinion on the nature and the extent of the separation of
church and state. Without expressly stating the final conclusion she
has reached or specifying the relief granted or denied, the trial judge
ends her Decision with the clause SO ORDERED.
What were the antecedents that necessitated the filing of the
Petition? What exactly were the distinct facts that gave rise to the
question sought to be resolved by SJS? More important, what were
the factual findings and analysis on which the trial court based its
legal findings and conclusions? None were stated or implied. Indeed,
the RTCs Decision cannot be upheld for its failure to express clearly
and distinctly the facts on which it was based. Thus, the trial court
clearly transgressed the constitutional directive.
The significance of factual findings lies in the value of the
decision as a precedent. How can it be so if one cannot apply the
ruling to similar circumstances, simply because such circumstances
are unknown? Otherwise stated, how will the ruling be applied in the
future, if there is no point of factual comparison?
Moreover, the court a quo did not include a resolutory or
dispositive portion in its so-called Decision. The importance of such
portion was explained in the early case Manalang v. Tuason de
Rickards,[94] from which we quote:
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 Velarde vs. Social Justice Society
The resolution of the Court on a given issue as embodied in the
dispositive part of the decision or order is the investitive or
controlling factor that determines and settles the rights of the parties
and the questions presented therein, notwithstanding the existence of
statements or declaration in the body of said order that may be
confusing.
The assailed Decision in the present case leaves us in the dark
as to its final resolution of the Petition. To recall, the original Petition
was for declaratory relief. So, what relief did the trial court grant or
deny? What rights of the parties did it conclusively declare? Its final
statement says, SO ORDERED. But what exactly did the court
order? It had the temerity to label its issuance a Decision, when
nothing was in fact decided.
Respondent SJS insists that the dispositive portion can be found
in the body of the assailed Decision. It claims that the issue is
disposed of and the Petition finally resolved by the statement of the
trial court found on page 10 of its 14-page Decision, which reads:
Endorsement of specific candidates in an election to any public
office is a clear violation of the separation clause. [95]
We cannot agree.
In Magdalena Estate, Inc. v. Caluag,[96] the obligation of the
party imposed by the Court was allegedly contained in the text of the
original Decision. The Court, however, held:
x x x The quoted finding of the lower court cannot supply
deficiencies in the dispositive portion. It is a mere opinion of the
court and the rule is settled that where there is a conflict between
the dispositive partand the opinion, the former must prevail over the
latter on the theory that the dispositive portion is the final order while
the opinion is merely a statement ordering nothing. (Italics in the
original)
Thus, the dispositive portion cannot be deemed to be the
statement quoted by SJS and embedded in the last paragraph of page
10 of the assailed 14-page Decision. If at all, that statement is merely
an answer to a hypothetical legal question and just a part of the
opinion of the trial court. It does not conclusively declare the rights
(or obligations) of the parties to the Petition. Neither does it grant
any -- much less, the proper -- relief under the circumstances, as
required of a dispositive portion.
Failure to comply with the constitutional injunction is a grave
abuse of discretion amounting to lack or excess of
jurisdiction. Decisions or orders issued in careless disregard of the
constitutional mandate are a patent nullity and must be struck down
as void.[97]
Parts of a Decision
In general, the essential parts of a good decision consist of the
following: (1) statement of the case; (2) statement of facts; (3) issues
or assignment of errors; (4) court ruling, in which each issue is, as a
rule, separately considered and resolved; and, finally, (5) dispositive
portion. The ponente may also opt to include an introduction or a
prologue as well as an epilogue, especially in cases in which
controversial or novel issues are involved.[98]
An introduction may consist of a concise but comprehensive
statement of the principal factual or legal issue/s of the case. In some
cases -- particularly those concerning public interest; or involving
complicated commercial, scientific, technical or otherwise rare
subject matters -- a longer introduction or prologue may serve to
acquaint readers with the specific nature of the controversy and the
issues involved. An epilogue may be a summation of the important
principles applied to the resolution of the issues of paramount public
interest or significance. It may also lay down an enduring philosophy
of law or guiding principle.
Let us now, again for the guidance of the bench and the bar,
discuss the essential parts of a good decision.
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 Velarde vs. Social Justice Society
1. Statement of the Case
The Statement of the Case consists of a legal definition of the
nature of the action. At the first instance, this part states whether the
action is a civil case for collection, ejectment, quieting of title,
foreclosure of mortgage, and so on; or, if it is a criminal case, this
part describes the specific charge -- quoted usually from the
accusatory portion of the information -- and the plea of the
accused. Also mentioned here are whether the case is being decided
on appeal or on a petition for certiorari, the court of origin, the case
number in the trial court, and the dispositive portion of the assailed
decision.
In a criminal case, the verbatim reproduction of the criminal
information serves as a guide in determining the nature and the
gravity of the offense for which the accused may be found
culpable. As a rule, the accused cannot be convicted of a crime
different from or graver than that charged.
Also, quoting verbatim the text of the information is especially
important when there is a question on the sufficiency of the charge,
or on whether qualifying and modifying circumstances have been
adequately alleged therein.
To ensure that due process is accorded, it is important to give a
short description of the proceedings regarding the plea of the
accused. Absence of an arraignment, or a serious irregularity therein,
may render the judgment void, and further consideration by the
appellate court would be futile. In some instances, especially in
appealed cases, it would also be useful to mention the fact of the
appellants detention, in order to dispose of the preliminary query --
whether or not they have abandoned their appeal by absconding or
jumping bail.
Mentioning the court of origin and the case number originally
assigned helps in facilitating the consolidation of the records of the
case in both the trial and the appellate courts, after entry of final
judgment.
Finally, the reproduction of the decretal portion of the assailed
decision informs the reader of how the appealed case was decided by
the court a quo.
2. Statement of Facts
There are different ways of relating the facts of the case. First,
under the objective or reportorial method, the judge summarizes --
without comment -- the testimony of each witness and the contents
of each exhibit. Second, under the synthesis method, the factual
theory of the plaintiff or prosecution and then that of the defendant or
defense is summarized according to the judges best light. Third, in
the subjective method, the version of the facts accepted by the judge
is simply narrated without explaining what the parties versions
are. Finally, through a combination of objective and subjective
means, the testimony of each witness is reported and the judge then
formulates his or her own version of the facts.
In criminal cases, it is better to present both the version of the
prosecution and that of the defense, in the interest of fairness and due
process. A detailed evaluation of the contentions of the parties must
follow. The resolution of most criminal cases, unlike civil and other
cases, depends to a large extent on the factual issues and the
appreciation of the evidence. The plausibility or the implausibility of
each version can sometimes be initially drawn from a reading of the
facts. Thereafter, the bases of the court in arriving at its findings and
conclusions should be explained.
On appeal, the fact that the assailed decision of the lower court
fully, intelligently and correctly resolved all factual and legal issues
involved may partly explain why the reviewing court finds no reason
to reverse the findings and conclusions of the former. Conversely,
the lower courts patent misappreciation of the facts or misapplication
of the law would aid in a better understanding of why its ruling is
reversed or modified.
In appealed civil cases, the opposing sets of facts no longer need
to be presented. Issues for resolution usually involve questions of
law, grave abuse of discretion, or want of jurisdiction; hence, the
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
facts of the case are often undisputed by the parties. With few
exceptions, factual issues are not entertained in non-criminal
cases. Consequently, the narration of facts by the lower court, if
exhaustive and clear, may be reproduced; otherwise, the material
factual antecedents should be restated in the words of the reviewing
magistrate.
In addition, the reasoning of the lower court or body whose
decision is under review should be laid out, in order that the parties
may clearly understand why the lower court ruled in a certain way,
and why the reviewing court either finds no reason to reverse it or
concludes otherwise.
3. Issues or Assignment of Errors
Both factual and legal issues should be stated. On appeal, the
assignment of errors, as mentioned in the appellants brief, may be
reproduced in toto and tackled seriatim, so as to avoid motions for
reconsideration of the final decision on the ground that the court
failed to consider all assigned errors that could affect the outcome of
the case. But when the appellant presents repetitive issues or when
the assigned errors do not strike at the main issue, these may be
restated in clearer and more coherent terms.
Though not specifically questioned by the parties, additional
issues may also be included, if deemed important for substantial
justice to be rendered. Note that appealed criminal cases are given de
novo review, in contrast to noncriminal cases in which the reviewing
court is generally limited to issues specifically raised in the
appeal. The few exceptions are errors of jurisdiction; questions not
raised but necessary in arriving at a just decision on the case; or
unassigned errors that are closely related to those properly assigned,
or upon which depends the determination of the question properly
raised.
4. The Courts Ruling
This part contains a full discussion of the specific errors or
issues raised in the complaint, petition or appeal, as the case may be;
as well as of other issues the court deems essential to a just
disposition of the case. Where there are several issues, each one of
them should be separately addressed, as much as practicable. The
respective contentions of the parties should also be mentioned here.
When procedural questions are raised in addition to substantive ones,
it is better to resolve the former preliminarily.
5. The Disposition or Dispositive Portion
In a criminal case, the disposition should include a finding of
innocence or guilt, the specific crime committed, the penalty
imposed, the participation of the accused, the modifying
circumstances if any, and the civil liability and costs. In case an
acquittal is decreed, the court must order the immediate release of the
accused, if detained, (unless they are being held for another cause)
and order the director of the Bureau of Corrections (or wherever the
accused is detained) to report, within a maximum of ten (10) days
from notice, the exact date when the accused were set free.
In a civil case as well as in a special civil action, the disposition
should state whether the complaint or petition is granted or denied,
the specific relief granted, and the costs. The following test of
completeness may be applied. First, the parties should know their
rights and obligations. Second, they should know how to execute the
decision under alternative contingencies. Third,there  should be no
need for further proceedings to dispose of the issues. Fourth, the case
should be terminated by according the proper relief. The proper relief
usually depends upon what the parties seek in their pleadings. It may
declare their rights and duties, command the performance of positive
prestations, or order them to abstain from specific acts. The
disposition must also adjudicate costs.
The foregoing parts need not always be discussed in
sequence. But they should all be present and plainly identifiable in
the decision. Depending on the writers character, genre and style, the
language should be fresh and free-flowing, not necessarily
stereotyped or in a fixed form; much less highfalutin, hackneyed and
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Velarde vs. Social Justice Society
pretentious. At all times, however, the decision must be clear, inexistent.Consequently, there is nothing for this Court to review,
concise, complete and correct. affirm, reverse or even just modify.
Regrettably, it is not legally possible for the Court to take up, on
the merits, the paramount question involving a constitutional
Second Substantive Issue: principle. It is a time-honored rule that the constitutionality of a
Religious Leaders Endorsement statute [or act] will be passed upon only if, and to the extent that, it is
of Candidates for Public Office directly and necessarily involved in a justiciable controversy and is
essential to the protection of the rights of the parties concerned. [100]
The basic question posed in the SJS Petition -- WHETHER WHEREFORE, the Petition for Review of Brother Mike
ENDORSEMENTS OF CANDIDACIES BY RELIGIOUS Velarde is GRANTED. The assailed June 12, 2003 Decision and July
LEADERS IS UNCONSTITUTIONAL -- undoubtedly deserves 29, 2003 Order of the Regional Trial Court of Manila (Branch 49)
serious consideration. As stated earlier, the Court deems this are hereby DECLARED NULL AND VOID and thus SET
constitutional issue to be of paramount interest to the Filipino ASIDE. The SJS Petition for Declaratory Relief is DISMISSED for
citizenry, for it concerns the governance of our country and its failure to state a cause of action.
people.Thus, despite the obvious procedural transgressions by both
SJS and the trial court, this Court still called for Oral Argument, so Let a copy of this Decision be furnished the Office of the Court
as not to leave any doubt that there might be room to entertain and Administrator to evaluate and recommend whether the trial judge
dispose of the SJS Petition on the merits. may, after observing due process, be held administratively liable for
rendering a decision violative of the Constitution, the Rules of Court
Counsel for SJS has utterly failed, however, to convince the and relevant circulars of this Court. No costs.
Court that there are enough factual and legal bases to resolve the
paramount issue. On the other hand, the Office of the Solicitor SO ORDERED.
General has sided with petitioner insofar as there are no facts
supporting the SJS Petition and the assailed Decision.
We reiterate that the said Petition failed to state directly the
ultimate facts that it relied upon for its claim. During the Oral
Argument, counsel for SJS candidly admitted that there were no
factual allegations in its Petition for Declaratory Relief. Neither were
there factual findings in the assailed Decision. At best, SJS merely
asked the trial court to answer a hypothetical question.In effect, it
merely sought an advisory opinion, the rendition of which was
beyond the courts constitutional mandate and jurisdiction. [99]
Indeed, the assailed Decision was rendered in clear violation of
the Constitution, because it made no findings of facts and final
disposition. Hence, it is void and deemed legally

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Tambunting vs. Sumabat
TAMBUNTING vs. SUMABAT
G.R. No. 144101 September 16, 2005
This petition for review on certiorari under Rule 45 of the
Rules of Court assails the February 11, 2000 decision of the Regional
Trial Court (RTC) of Caloocan City, Branch 120, in Civil Case No.
C-16822.
 
This case involves a dispute over a parcel of land situated in
Caloocan City covered by TCT No. (87655) 18837. It was previously
registered in the names of respondents, spouses Emilio Sumabat and
Esperanza Baello. On May 3, 1973, respondents mortgaged it to
petitioner Antonio Tambunting, Jr. to secure the payment of
a P7,727.95 loan. In August 1976, respondents were informed that
their indebtedness had ballooned to P15,000 for their failure to pay
the monthly amortizations. In May 1977, because respondents
defaulted in their obligation, petitioner Commercial House of
Finance, Inc. (CHFI), as assignee of the mortgage, initiated
foreclosure proceedings on the mortgaged property but the same did
not push through. It was restrained by the then Court of First
Instance (CFI) of Caloocan City, Branch 33 (now RTC Branch 123)
in Civil Case No. C-6329, a complaint for injunction filed by
respondents against petitioners. However, the case was subsequently
dismissed for failure of the parties to appear at the hearing on
November 9, 1977.
 
On March 16, 1979, respondents filed an action for
declaratory relief with the CFI of Caloocan City, Branch 33, seeking
a declaration of the extent of their actual indebtedness. It was
docketed as Civil Case No. C-7496. Petitioners were declared in
default for failure to file an answer within the reglementary period.
They moved for the dismissal of the action on the ground that its
subject, the mortgage deed, had already been breached prior to the
filing of the action. The motion was denied for having been filed out
of time and petitioners had already been declared in default.
 
On January 8, 1981, the CFI rendered its decision. It fixed
respondents liability at P15,743.83 and authorized them to consign
the amount to the court for proper disposition. In compliance with
the decision, respondents consigned the required amount on January
9, 1981.
 
In March 1995, respondents received a notice of sheriff’s
sale indicating that the mortgage had been foreclosed by CHFI on
February 8, 1995 and that an extrajudicial sale of the property would
be held on March 27, 1995.
 
On March 27, 1995, respondents instituted Civil Case No. C-
16822, a petition for preliminary injunction, damages and
cancellation of annotation of encumbrance with prayer for the
issuance of a temporary restraining order, with the RTC of Caloocan
City, Branch 120. However, the public auction scheduled on that
same day proceeded and the property was sold to CHFI as the
highest bidder. Respondents failed to redeem the property during the
redemption period. Hence, title to the property was consolidated in
favor of CHFI and a new certificate of title (TCT No. 310191) was
issued in its name. In view of these developments, respondents
amended their complaint to an action for nullification of foreclosure,
sheriffs sale and consolidation of title, reconveyance and damages.
 
On February 11, 2000, the RTC issued the assailed decision.
It ruled that the 1981 CFI decision in Civil Case No. C-7496 (fixing
respondents liability at P15,743.83 and authorizing consignation) had
long attained finality. The mortgage was extinguished when
respondents paid their indebtedness by consigning the amount in
court. Moreover, the ten-year period within which petitioners should
have foreclosed the property was already barred by prescription.
They abused their right to foreclose the property and exercised it in
bad faith. As a consequence, the trial court nullified the foreclosure
and extrajudicial sale of the property, as well as the consolidation of
title in CHFIs name in 1995. It then ordered the register of deeds of
Caloocan City to cancel TCT No. 310191 and to reconvey the
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Tambunting vs. Sumabat
property to respondents. It also held petitioners liable for moral
damages, exemplary damages and attorneys fees.
Petitioners moved for a reconsideration of the trial courts decision
but it was denied. Hence, this petition.
 
Petitioners claim that the trial court erred when it affirmed
the validity of the consignation. They insist that the CFI was barred
from taking cognizance of the action for declaratory relief since,
petitioners being already in default in their loan amortizations, there
existed a violation of the mortgage deed even before the institution
of the action. Hence, the CFI could not have rendered a valid
judgment in Civil Case No. C-7496 and the consignation made
pursuant to a void judgment was likewise void. Respondents also
fault the trial court for holding that their right to foreclose the
property had already prescribed.
 
True, the trial court erred when it ruled that the 1981 CFI
decision in Civil Case No. C-7496 was already final and executory.
 
An action for declaratory relief should be filed by a person
interested under a deed, will, contract or other written instrument,
and whose rights are affected by a statute, executive order, regulation
or ordinance before breach or violation thereof. [1] The purpose of the
action is to secure an authoritative statement of the rights and
obligations of the parties under a statute, deed, contract, etc. for their
guidance in its enforcement or compliance and not to settle issues
arising from its alleged breach. [2] It may be entertained only before
the breach or violation of the statute, deed, contract, etc. to which it
refers.[3] Where the law or contract has already been contravened
prior to the filing of an action for declaratory relief, the court can no
longer assume jurisdiction over the action. [4] In other words, a court
has no more jurisdiction over an action for declaratory relief if its
subject, i.e., the statute, deed, contract, etc., has already been
infringed or transgressed before the institution of the action. Under
such circumstances, inasmuch as a cause of action has already
accrued in favor of one or the other party, there is nothing more for
the court to explain or clarify short of a judgment or final order.
Here, an infraction of the mortgage terms had already taken
place before the filing of Civil Case No. C-7496. Thus, the CFI
lacked jurisdiction when it took cognizance of the case in 1979. And
in the absence of jurisdiction, its decision was void and without legal
effect. As this Court held in Arevalo v. Benedicto:[5]
 
Furthermore, the want of jurisdiction by a court over
the subject-matter renders its judgment void and a
mere nullity, and considering that a void judgment is
in legal effect no judgment, by which no rights are
divested, from which no rights can be obtained,
which neither binds nor bars any one, and under
which all acts performed and all claims flowing out
of are void, and considering further, that the
decision, for want of jurisdiction of the court, is not
a decision in contemplation of law, and, hence, can
never become executory, it follows that such a void
judgment cannot constitute a bar to another case by
reason of res judicata.
Nonetheless, the petition must fail.
 
Article 1142 of the Civil Code is clear. A mortgage action
prescribes after ten years.
An action to enforce a right arising from a mortgage should
be enforced within ten years from the time the right of action
accrues.[6]Otherwise, it will be barred by prescription and the
mortgage creditor will lose his rights under the mortgage.
 
Here, petitioners right of action accrued in May 1977 when
respondents defaulted in their obligation to pay their loan
amortizations. It was from that time that the ten-year period to
enforce the right under the mortgage started to run. The period was
interrupted when respondents filed Civil Case No. C-6329 sometime
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Tambunting vs. Sumabat
after May 1977 and the CFI restrained the intended foreclosure of the
property. However, the period commenced to run again on
November 9, 1977 when the case was dismissed.
 
The respondents institution of Civil Case No. C-7496 in the
CFI on March 16, 1979 did not interrupt the running of the ten-year
prescriptive period because, as discussed above, the court lacked
jurisdiction over the action for declaratory relief. All proceedings
therein were without legal effect. Thus, petitioners could have
enforced their right under the mortgage, including its foreclosure,
only until November 7, 1987, the tenth year from the dismissal of
Civil Case No. C-6329. Thereafter, their right to do so was already
barred by prescription.
 
The foreclosure held on February 8, 1995 was therefore
some seven years too late. The same thing can be said about the
public auction held on March 27, 1995, the consolidation of title in
CHFIs favor and the issuance of TCT No. 310191 in its name. They
were all void and did not exist in the eyes of the law.
 
WHEREFORE, the petition is hereby DENIED.
Costs against petitioners.
SO ORDERED.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Mangahas vs. Paredes
G.R. No. 157866             February 14, 2007
MANGAHAS vs. PAREDES
This petition for Declaratory Relief, Certiorari, Prohibition With
Prayer For Provisional Remedy filed by petitioners Augusto
Mangahas and Marilou Verdejo seeks to nullify and set aside the 14
February 2003 Order1 of the Regional Trial Court (RTC), Branch
124, Caloocan City, denying their Motion to Suspend Execution in
Civil Case No. C-19097.
The instant controversy arose from a verified complaint for
Ejectment filed by private respondent Avelino Banaag on 31 January
1997 before the Metropolitan Trial Court (MeTC), Branch 49,
Caloocan City, against petitioners. Private respondent alleged that he
is the registered owner of the disputed property identified as Lot 4,
Block 21, located in Maligaya Park Subdivision, Caloocan City, as
evidenced by Transfer Certificate of Title (TCT) No. 196025 of the
Registry of Deeds of Caloocan City. Private respondent averred that
petitioners constructed houses on the property without his knowledge
and consent and that several demands were made, but the same fell
on deaf ears as petitioners refused to vacate the premises. This
prompted private respondent to refer the matter to the Lupon
Tagapayapa for conciliation. The recourse proved futile since the
parties were not able to settle amicably. Private respondent then filed
an ejectment suit before the MeTC.
On 23 April 1997, petitioners filed their answer denying having
unlawfully deprived private respondent possession of the contested
property. Petitioners claimed that they have resided in the subject lot
with the knowledge and conformity of the true owner thereof,
Pinagkamaligan Indo-Agro Development Corporation (PIADECO),
as evidenced by a Certificate of Occupancy signed by PIADECO’s
president in their favor.
On 10 July 1997, petitioners filed a Manifestation And Motion To
Suspend Proceedings on the ground that the subject property is part
of the Tala Estate and that the RTC of Quezon City, Branch 85, in
Civil Case No. Q-96-29810 issued a Writ of Preliminary Injunction
dated 10 November 1997, enjoining the MeTCs of Quezon City and
Caloocan City from ordering the eviction and demolition of all
occupants of the Tala Estate. They posited that the injunction issued
by the Quezon City RTC is enforceable in Caloocan City because
both cities are situated within the National Capital Region.
In an order dated 7 August 1997, the MeTC denied said
manifestation and motion. It ratiocinated that the injunction issued by
the Quezon City RTC has binding effect only within the territorial
boundaries of the said court and since Caloocan City is not within the
territorial area of same, the injunction it issued is null and void for
lack of jurisdiction.
For failure of the parties to arrive at a compromise agreement during
the preliminary conference, they were required to submit their
respective position papers containing their positions on the following
issues: (a) whether or not the torrens title of private respondent is a
valid basis of his right to eject petitioners, (b) whether the MeTC has
jurisdiction to hear and decide the case, and (c) whether either the
private respondent or petitioners are entitled to their respective
claims for damages.
In their position paper, petitioners insisted that they are entitled to the
possession of the land because they have been occupants thereof as
early as 1978, long before the property was acquired by private
respondent. Since they possessed the property for that long, the
MeTC has no jurisdiction to hear and decide the case as ejectment
suit applies only to instances where possession of the land lasted for
a period of not more than one year. In addition, they claimed that
private respondent has not proffered any evidence that he has prior
physical possession over the property. Petitioners reiterated their
posture in the motion to suspend proceedings wherein they urged the
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Mangahas vs. Paredes
MeTC to respect the Writ of Preliminary Injunction issued by the
Quezon City RTC. They also alleged that private respondent’s
certificate of title originated from a fictitious title.
In a decision dated 5 October 1999, the MeTC ruled for private
respondent. It opined that TCT No. 196025 in private respondent’s
name was an indefeasible proof of his ownership of the lot and his
inherent right to possess the same. This title entitled private
respondent better right to possess the subject property over
petitioners’ Certificate of Occupancy executed in their favor by
PIADECO. It held that it has jurisdiction over the controversy since
private respondent filed the case within one year from the time the
demand to vacate was given to petitioners. The decretal portion of
the decision reads:
Wherefore, judgment is hereby rendered for the plaintiff, ordering
defendants Augusto Mangahas, Victor Solis, Elisa M. Dionila,
Joselito Mangahas and Rogelio Verdejo and all persons claiming
right under them as follows:
1) To vacate the lot in question by removing their houses
erected thereat and restore possession of the lot to the
plaintiff;
2) To pay plaintiff a reasonable compensation for their use of
the premises for the period from August, 1996 until the
property is vacated at the rate of two thousand (P2,000.00)
pesos per month;
3) To reimburse to plaintiff the sum of ten thousand
(P10,000.00) pesos as and for attorney’s fees; [and]
4) To pay the costs of this suit.2
On 2 December 1999, petitioners appealed to the RTC, which case
was docketed as Civil Case No. C-19097. In a Decision dated 16
November 2000, the trial court affirmed in toto the MeTC decision.
It ruled that the MeTC was correct in denying petitioners’ motion to
suspend proceedings anchored on the Writ of Preliminary Injunction
issued by the Quezon City RTC reasoning that the writ of the latter
court is limited only to its territorial area, thus, the same has no
binding effect on the MeTC of Caloocan City. It sustained the
MeTC’s ruling that the latter court has jurisdiction over the case as
the same has been filed within the reglementary period from the date
of demand to vacate. Furthermore, the RTC stated that the validity of
private respondent’s title cannot be assailed collaterally in the instant
case.
On 18 December 2000, petitioners filed a motion for reconsideration
which the RTC denied in a resolution dated 1 June 2001.
Unfazed, petitioners appealed the ruling of the RTC to the Court of
Appeals on 6 June 2001 which was docketed as CA-G.R. SP No.
65076.
In a Decision3 dated 25 April 2002, the Court of Appeals affirmed
the ruling of the RTC. Petitioners’ Motion for Reconsideration was,
likewise, denied in a Resolution dated 20 November 2002.
The decision of the Court of Appeals became final and executory on
13 December 2002.
Meanwhile, on 11 December 2000, private respondent filed with the
RTC a motion for execution pending appeal which was opposed by
petitioners. In an order dated 12 September 2001, the RTC granted
the motion.
To implement and enforce its decision, the same court on 27
September 2001 issued a Writ of Execution. On 28 September 2001,
petitioners filed a Motion to Reconsider Order dated 12 September
2001 which was denied in an order dated 5 February 2002.
On 17 January 2003, petitioners filed a Motion to Suspend Execution
before the RTC. Said motion was denied in an order dated 14
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Mangahas vs. Paredes
February 2003. On 05 March 2003, Sheriff Erlito Bacho
implemented and enforced the writ of execution.
Hence, the instant recourse.
At the outset it must be pointed out that petitioners’ direct recourse to
this Court via petition for Declaratory Relief, Certiorari, Prohibition
With Prayer For Provisional Remedy is an utter disregard of the
hierarchy of courts and should have been dismissed outright. This
Court’s original jurisdiction to issue writs of certiorari, prohibition,
mandamus, quo warranto, habeas corpus and injunction is not
exclusive.4 It is shared by this Court with the Regional Trial Courts
and the Court of Appeals.5 Such concurrence of jurisdiction does not
give the petitioners unbridled freedom of choice of court forum. 6 A
direct recourse of the Supreme Court’s original jurisdiction to issue
these writs should be allowed only when there are special and
important reasons therefor, clearly and specifically set out in the
petition.7
In the instant case, petitioners have not offered any exceptional or
compelling reason not to observe the hierarchy of courts. Hence, the
petition should have been filed with the Regional Trial Court.
Equally noteworthy is petitioners’ resort to this Court through
petition for declaratory relief. This action is not among the petitions
within the original jurisdiction of the Supreme Court.8 Rule 63 of the
Rules of Court which deals with actions for declaratory relief,
enumerates the subject matter thereof, i.e., deed, will, contract or
other written instrument, the construction or validity of statute or
ordinance. Inasmuch as this enumeration is exclusive, petitioners’
action to declare the RTC order denying their motion to suspend
execution, not being one of those enumerated, should warrant the
outright dismissal of this case.9
At any rate, since the complete records of this case have already been
elevated, this Court deems it wise to resolve the controversy on the
merits.
Petitioners assail the Order dated 14 February 2003 of the RTC
Caloocan City and its Decision dated 16 November 2000 on the sole
ground that the said court is precluded from issuing said Order and
Decision by virtue of the Writ of Injunction issued on 10 November
1997 by the Quezon City RTC.
It must be remembered that the issue on the enforceability of the
injunction order originating from the Quezon City RTC had already
been litigated and finally decided when the Court of Appeals in CA-
G.R. SP No. 65076 affirmed the Decision of the RTC in Civil Case
No. C-19097. Said Decision had become final and executory per
Entry of Judgment dated 25 April 2002. 10 The relevant portion of the
Court of Appeals’ Decision reads:
The petitioners postulate that the Writ of Preliminary Injunction
dated November 10, 1997 which emanated from the Regional Trial
Court of Quezon City should have prompted the Regional Trial
Court of Caloocan City to suspend the ejectment proceedings then
pending before it. It was the petitioners’ contention that the
injunction writ issued in Quezon City is enforceable also in Caloocan
City inasmuch [as] both cities are situated within the National
Capital Region.
Under Sec. 17 of B.P. 129, the exercise of jurisdiction of the
Regional Trial Courts and their judges is basically regional in scope
(Malaoan vs. Court of Appeals, 232 SCRA 249), but under Sec. 18,
it may be limited to the territorial area of the branch in which the
judges sits (OCA vs. Matas, August 2, 1995).
Sec. 18 of B.P. 129 states:
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Mangahas vs. Paredes
"Sec. 18. Authority to define territory appurtenant to each branch. –
The Supreme Court shall define the territory over which a branch of
the Regional Trial Court shall exercise its authority. The territory
thus defined shall be deemed to be the territorial area of the branch
concerned for purposes of determining the venue of all suits,
proceedings or actions, whether civil or criminal, as well as
determining the Metropolitan Trial Courts, Municipal Trial Courts
and Municipal Circuit Trial Courts over which the said branch may
exercise appellate jurisdiction. xxx"
Taking Our bearings from the above pronouncement, the Regional
Trial Court of Caloocan City could not be deemed to have committed
a reversible error when it denied the petitioners’ Motion to Suspend
Proceedings. Apparently, the extent of the enforceability of an
injunction writ issued by the Regional Trial Court is defined by the
territorial region where the magistrate presides. 11
Consequently, the issue involving the binding effect of the injunction
issued by the Quezon City RTC became the law of the case between
the parties. Under this legal principle, whatever is irrevocably
established as the controlling legal rule or decision between the
parties in the same case continues to be the law of the case, so long
as the facts on which the decision was predicated continue. 12 Stated
otherwise, the doctrine holds that once an appellate court has
declared the law in a case that declaration continues to hold even in
subsequent appeal.13 The reason lies in the fact that public policy
dictates that litigations must be terminated at some definite time and
that the prevailing party should not be denied the fruits of his victory
by some subterfuge devised by the losing party.14
Petitioners are therefore barred from assailing the ruling that the
injunction issued by the Quezon City RTC has no binding effect to
the courts of Caloocan City as this issue had already been passed
upon with finality. Issues should be laid to rest at some point;
otherwise there would be no end to litigation. As elucidated in
Hufana v. Genato15 :
It is well established that when a right or fact has been judicially
tried and determined by a court of competent jurisdiction, so long as
it remains unreversed, it should be conclusive upon the parties and
those in privity with them. The dictum therein laid down became the
law of the case and what was once irrevocably established as the
controlling legal rule or decision, continues to be binding between
the same parties as long as the facts on which the decision was
predicated, continue to be the facts of the case before the court.
Hence, the binding effect and enforceability of that dictum can no
longer be relitigated anew since said issue had already been resolved
and finally laid to rest in that aforementioned case (Miranda v. CA,
141 SCRA 306 [1986]), if not by the principle of res judicata, but at
least by conclusiveness of judgment.
Quite conspicuously, the instant petition assailing the order of the
RTC denying petitioners’ motion to suspend execution is a ploy to
deprive private respondent of the fruits of his hard-won case. It must
be stressed that once a decision becomes final and executory, it is the
ministerial duty of the presiding judge to issue a writ of execution
except in certain cases, as when subsequent events would render
execution of judgment unjust.16 Petitioners did not allege nor proffer
any evidence that this case falls within the exception. Hence, there is
no reason to vacate the writ of execution issued by the RTC.
WHEREFORE, the petition is DENIED. The Order of the Regional
Trial Court, Branch 124, Caloocan City, denying petitioners’ Motion
to Supend Execution dated 14 February 2003 in Civil Case No. C-
19097 is AFFIRMED. Costs against petitioners.
SO ORDERED.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
CITY OF LAPU-LAPU v. PHILIPPINE ECONOMIC ZONE
AUTHORITY
G.R. NO. 187583 November 26, 2014
The Philippine Economic Zone Authority is exempt from payment of
real property taxes.
These are consolidated1 petitions for review on certiorari the City of
Lapu-Lapu and the Province of Bataan separately filed against the
Philippine Economic Zone Authority (PEZA).
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the
Court of Appeals’ decision2 dated January 11, 2008 and
resolution3 dated August 6, 2008, dismissing the City’s appeal for
being the wrong mode of appeal.  The City appealed the Regional
Trial Court, Branch 111, Pasay City’s decision finding the PEZA
exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails
the Court of Appeals’ decision4 dated August 27, 2008 and
resolution5 dated April 16, 2009, granting the PEZA’s petition for
certiorari.  The Court of Appeals ruled that the Regional Trial Court,
Branch 115, Pasay City gravely abused its discretion in finding the
PEZA liable for real property taxes to the Province of Bataan.
Facts common to the consolidated petitions
6
In the exercise of his legislative powers,  President Ferdinand E.
Marcos issued Presidential Decree No. 66 in 1972, declaring as
government policy the establishment of export processing zones in
strategic locations in the Philippines.  Presidential Decree No. 66
aimed “to encourage and promote foreign commerce as a means of
making the Philippines a center of international trade, of
strengthening our export trade and foreign exchange position, of
hastening industrialization, of reducing domestic unemployment, and
of accelerating the development of the country.” 7
To carry out this policy, the Export Processing Zone Authority
(EPZA) was created to operate, administer, and manage the export
processing zones established in the Port of Mariveles, Bataan 8 and
such other export processing zones that may be created by virtue of
the decree.9
The decree declared the EPZA non-profit in character 10 with all its
revenues devoted to its development, improvement, and
maintenance.11  To maintain this non-profit character, the EPZA was
declared exempt from all taxes that may be due to the Republic of
the Philippines, its provinces, cities, municipalities, and other
government agencies and instrumentalities.12  Specifically, Section
21 of Presidential Decree No. 66 declared the EPZA exempt from
payment of real property taxes:
Section 21. Non-profit Character of the Authority; Exemption from
Taxes. The Authority shall be non-profit and shall devote and use all
its returns from its capital investment, as well as excess revenues
from its operations, for the development, improvement and
maintenance and other related expenditures of the Authority to pay
its indebtedness and obligations and in furtherance and effective
implementation of the policy enunciated in Section 1 of this Decree.
In consonance therewith, the Authority is hereby declared exempt:
....
(b) From all income taxes, franchise taxes, realty taxes and all other
kinds of taxes and licenses to be paid to the National Government, its
provinces, cities, municipalities and other government agencies and
instrumentalities[.]
In 1979, President Marcos issued Proclamation No. 1811,
establishing the Mactan Export Processing Zone.  Certain parcels of
land of the public domain located in the City of Lapu-Lapu in
Mactan, Cebu were reserved to serve as site of the Mactan Export
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
Processing Zone.
In 1995, the PEZA was created by virtue of Republic Act No.  7916
or “the Special Economic Zone Act of 1995”13 to operate, administer,
manage, and develop economic zones in the country.14  The PEZA
was granted the power to register, regulate, and supervise the
enterprises located in the economic zones.15  By virtue of the law, the
export processing zone in Mariveles, Bataan became the Bataan
Economic Zone16 and the Mactan Export Processing Zone the
Mactan Economic Zone.17
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.”18
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 “as provided in
Presidential Decree No. 66, as amended, insofar as they are not
inconsistent with the powers, functions, and responsibilities of the
PEZA, as mandated under [the Special Economic Zone Act of
1995].”19  All of EPZA’s properties, equipment, and assets, among
others, were ordered transferred to the PEZA. 20
Facts of G.R. No. 184203
In the letter21 dated March 25, 1998, the City of Lapu-Lapu, through
the Office of the Treasurer, demanded from the PEZA ?
32,912,350.08 in real property taxes for the period from 1992 to
1998 on the PEZA’s properties located in the Mactan Economic
Zone.
The City reiterated its demand in the letter22 dated May 21, 1998.  It
cited Sections 193 and 234 of the Local Government Code of 1991
that withdrew the real property tax exemptions previously granted to
or presently enjoyed by all persons.  The City pointed out that no
provision in the Special Economic Zone Act of 1995 specifically
exempted the PEZA from payment of real property taxes, unlike
Section 21 of Presidential Decree No. 66 that explicitly provided for
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.
The City made subsequent demands23 on the PEZA.  In its last
reminder24 dated May 13, 2002, the City assessed the PEZA ?
86,843,503.48 as real property taxes for the period from 1992 to
2002.
On September 11, 2002, the PEZA filed a petition for declaratory
relief25 with the Regional Trial Court of Pasay City, praying that the
trial court declare it exempt from payment of real property taxes. 
The case was raffled to Branch 111.
The City answered26 the petition, maintaining that the PEZA is liable
for real property taxes.  To support its argument, the City cited a
legal opinion dated September 6, 1999 issued by the Department of
Justice,27 which stated that the PEZA is not exempt from payment of
real property taxes.  The Department of Justice based its opinion on
Sections 193 and 234 of the Local Government Code that withdrew
the tax exemptions, including real property tax exemptions,
previously granted to all persons.
A reply28 was filed by the PEZA to which the City filed a rejoinder. 29
Pursuant to Rule 63, Section 3 of Rules of Court,30 the Office of the
Solicitor General filed a comment31on 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.
The trial court agreed with the Solicitor General. Section 24 of the
Special Economic Zone Act of 1995 provides:
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
SEC. 24. Exemption from National and Local Taxes. – Except for
real property taxes on land owned by developers, no taxes, local and
national, shall be imposed on business establishments operating
within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the ECOZONE
shall be paid and remitted as follows:
a.  Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurer’s office of the municipality or city
where the enterprise is located.
Section 51 of the law, on the other hand, provides:
SEC. 51. Ipso-Facto Clause. – All privileges, benefits, advantages or
exemptions granted to special economic zones under Republic Act
No. 7227, shall ipso-facto be accorded to special economic zones
already created or to be created under this Act. The free port status
shall not be vested upon new special economic zones.
Based on Section 51, the trial court held that all privileges, benefits,
advantages, or exemptions granted to special economic zones created
under the Bases Conversion and Development Act of 1992 apply to
special economic zones created under the Special Economic Zone
Act of 1995.  Since these benefits include exemption from payment
of national or local taxes, these benefits apply to special economic
zones owned by the PEZA.
According to the trial court, the PEZA remained tax-exempt
regardless of Section 24 of the Special Economic Zone Act of 1995.  for reconsideration.39  In the resolution40 dated August 6, 2008, the
It ruled that Section 24, which taxes real property owned by
developers of economic zones, only applies to private developers of
economic zones, not to public developers like the PEZA.  The PEZA,
therefore, is not liable for real property taxes on the land it owns.
Characterizing the PEZA as an agency of the National Government,
the trial court ruled that the City had no authority to tax the PEZA
under Sections 133(o) and 234(a) of the Local Government Code of
1991.
In the resolution32 dated June 14, 2006, the trial court granted the
PEZA’s petition for declaratory relief and declared it exempt from
payment of real property taxes.
The City filed a motion for reconsideration,33 which the trial court
denied in its resolution34 dated September 26, 2006.
The City then appealed35 to the Court of Appeals.
The Court of Appeals noted the following issues the City raised in its
appellant’s brief: (1) whether the trial court had jurisdiction over the
PEZA’s petition for declaratory relief; (2) whether the PEZA is a
government agency performing governmental functions; and (3)
whether the PEZA is exempt from payment of real property taxes.
The issues presented by the City, according to the Court of Appeals,
are pure questions of law which should have been raised in a petition
for review on certiorari directly filed before this court. Since the City
availed itself of the wrong mode of appeal, the Court of Appeals
dismissed the City’s appeal in the decision36 dated January 11, 2008.
The City filed a motion for extension of time to file a motion for
reconsideration,37 which the Court of Appeals denied in the
resolution38 dated April 11, 2008.
Despite the denial of its motion for extension, the City filed a motion
Court of Appeals denied that motion.
In its petition for review on certiorari with this court, 41 the City
argues that the Court of Appeals “hid under the skirts of technical
rules”42 in resolving its appeal.  The City maintains that its appeal
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 City of Lapu-Lapu vs. PEZA
involved mixed questions of fact and law.  According to the City,
whether the PEZA performed governmental functions “cannot
completely be addressed by law but [by] the factual and actual
activities [the PEZA is] carrying out.”43
Even assuming that the petition involves pure questions of law, the
City contends that the subject matter of the case “is of extreme
importance with [far-reaching] consequence that [its magnitude]
would surely shape and determine the course of our nation’s
future.”44  The Court of Appeals, the City argues, should have
resolved the case on the merits.
The City insists that the trial court had no jurisdiction to hear the
PEZA’s petition for declaratory relief.  According to the City, the
case involves real property located in the City of Lapu-Lapu.  The
petition for declaratory relief should have been filed before the
Regional Trial Court of the City of Lapu-Lapu.45
Moreover, the Province of Bataan, the City of Baguio, and the
Province of Cavite allegedly demanded real property taxes from the
PEZA.  The City argues that the PEZA should have likewise
impleaded these local government units as respondents in its petition
for declaratory relief.  For its failure to do so, the PEZA violated
Rule 63, Section 2 of the Rules of Court, and the trial court should
have dismissed the petition.46
This court ordered the PEZA to comment on the City’s petition for
review on certiorari.47
At the outset of its comment, the PEZA argues that the Court of
Appeals’ decision dated January 11, 2008 had become final and
executory.  After the Court of Appeals had denied the City’s appeal,
the City filed a motion for extension of time to file a motion for
reconsideration.  Arguing that the time to file a motion for
reconsideration is not extendible, the PEZA filed its motion for
reconsideration out of time.  The City has no more right to appeal to
this court.48
The PEZA maintains that the City availed itself of the wrong mode
of appeal before the Court of Appeals.  Since the City raised pure
questions of law in its appeal, the PEZA argues that the proper
remedy is a petition for review on certiorari with this court, not an
ordinary appeal before the appellate court.  The Court of Appeals,
therefore, correctly dismissed outright the City’s appeal under Rule
50, Section 2 of the Rules of Court.49
On the merits, the PEZA argues that it is an agency and
instrumentality of the National Government.  It is therefore exempt
from payment of real property taxes under Sections 133(o) and
234(a) of the Local Government Code.50  It adds that the tax
privileges under Sections 24 and 51 of the Special Economic Zone
Act of 1995 applied to it.51
Considering that the site of the Mactan Economic Zone is a reserved
land under Proclamation No. 1811, the PEZA claims that the
properties sought to be taxed are lands of public dominion exempt
from real property taxes.52
As to the jurisdiction issue, the PEZA counters that the Regional
Trial Court of Pasay had jurisdiction to hear its petition for
declaratory relief under Rule 63, Section 1 of the Rules of Court. 53  It
also argued that it need not implead the Province of Bataan, the City
of Baguio, and the Province of Cavite as respondents considering
that their demands came after the PEZA had already filed the petition
in court.54
Facts of G.R. No. 187583
After the City of Lapu-Lapu had demanded payment of real property
taxes from the PEZA, the Province of Bataan followed suit.  In its
letter55 dated May 29, 2003, the Province, through the Office of the
Provincial Treasurer, informed the PEZA that it would be sending a
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 City of Lapu-Lapu vs. PEZA
real property tax billing to the PEZA.  Arguing that the PEZA is a
developer of economic zones, the Province claimed that the PEZA is
liable for real property taxes under Section 24 of the Special
Economic Zone Act of 1995.
56
In its reply letter  dated June 18, 2003, the PEZA requested the
Province to suspend the service of the real property tax billing.  It
cited its petition for declaratory relief against the City of Lapu-Lapu
pending before the Regional Trial Court, Branch 111, Pasay City as
basis.
The Province argued that serving a real property tax billing on the
PEZA “would not in any way affect [its] petition for declaratory
relief before [the Regional Trial Court] of Pasay City.” 57  Thus, in its
letter58dated June 27, 2003, the Province notified the PEZA of its real
property tax liabilities for June 1, 1995 to December 31, 2002
totalling ?110,549,032.55.
After having been served a tax billing, the PEZA again requested the
Province to suspend collecting its alleged real property tax liabilities
until the Regional Trial Court of Pasay City resolves its petition for
declaratory relief.59
The Province ignored the PEZA’s request.  On January 20, 2004, the
Province served on the PEZA a statement of unpaid real property tax
for the period from June 1995 to December 2004.60
The PEZA again requested the Province to suspend collecting its
alleged real property taxes.61  The Province denied the request in its
letter62 dated January 29, 2004, then served on the PEZA a warrant of
levy63 covering the PEZA’s real properties located in Mariveles,
Bataan.
The PEZA’s subsequent requests64 for suspension of collection were
all denied by the Province.65  The Province then served on the PEZA
a notice of delinquency in the payment of real property taxes 66 and a
notice of sale of real property for unpaid real property tax. 67  The
Province finally sent the PEZA a notice of public auction of the
latter’s properties in Mariveles, Bataan.68
On June 14, 2004, the PEZA filed a petition for injunction69 with
prayer for issuance of a temporary restraining order and/or writ of
preliminary injunction before the Regional Trial Court of Pasay City,
arguing that it is exempt from payment of real property taxes.  It
added that the notice of sale issued by the Province was void because
it was not published in a newspaper of general circulation as required
by Section 260 of the Local Government Code.70
The case was raffled to Branch 115.
In its order71 dated June 18, 2004, the trial court issued a temporary
restraining order against the Province.  After the PEZA had filed a
P100,000.00 bond,72 the trial court issued a writ of preliminary
injunction,73 enjoining the Province from selling the PEZA’s real
properties at public auction.
On March 3, 2006, the PEZA and Province both manifested that each
would file a memorandum after which the case would be deemed
submitted for decision.  The parties then filed their respective
memoranda.74
In the order75 dated January 31, 2007, the trial court denied the
PEZA’s petition for injunction. The trial court ruled that the PEZA is
not exempt from payment of real property taxes.  According to the
trial court, Sections 193 and 234 of the Local Government Code had
withdrawn the real property tax exemptions previously granted to all
persons, whether natural or juridical.76  As to the tax exemptions
under Section 51 of the Special Economic Zone Act of 1995, the trial
court ruled that the provision only applies to businesses operating
within the economic zones, not to the PEZA.77
The PEZA filed before the Court of Appeals a petition for
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 City of Lapu-Lapu vs. PEZA
certiorari78 with prayer for issuance of a temporary restraining order.
The Court of Appeals issued a temporary restraining order, enjoining
the Province and its Provincial Treasurer from selling PEZA's
properties at public auction scheduled on October 17, 2007. 79  It also
ordered the Province to comment on the PEZA’s petition.
In its comment,80 the Province alleged that it received a copy of the
temporary restraining order only on October 18, 2007 when it had
already sold the PEZA’s properties at public auction.  Arguing that
the act sought to be enjoined was already fait accompli, the Province
prayed for the dismissal of the petition for certiorari.
The PEZA then filed a supplemental petition for certiorari,
prohibition, and mandamus81 against the Province, arguing that the
Provincial Treasurer of Bataan acted with grave abuse of discretion
in issuing the notice of delinquency and notice of sale.  It maintained
that it is exempt from payment of real property taxes because it is a
government instrumentality.  It added that its lands are property of
public dominion which cannot be sold at public auction.
The PEZA also filed a motion82 for issuance of an order affirming the
temporary restraining order and a writ of preliminary injunction to
enjoin the Province from consolidating title over the PEZA’s
properties.
In its resolution83 dated January 16, 2008, the Court of Appeals
admitted the supplemental petition for certiorari, prohibition, and
mandamus.  It required the Province to comment on the
supplemental petition and to file a memorandum on the PEZA’s
prayer for issuance of temporary restraining order.
The Province commented84 on the PEZA’s supplemental petition, to
which the PEZA replied.85
86
The Province then filed a motion  for leave to admit attached
rejoinder with motion to dismiss.  In the rejoinder with motion to
dismiss,87 the Province argued for the first time that the Court of
Appeals had no jurisdiction over the subject matter of the action.
According to the Province, the PEZA erred in filing a petition for
certiorari.  Arguing that the PEZA sought to reverse a Regional Trial
Court decision in a local tax case, the Province claimed that the court
with appellate jurisdiction over the action is the Court of Tax
Appeals.  The PEZA then prayed that the Court of Appeals dismiss
the petition for certiorari for lack of jurisdiction over the subject
matter of the action.
The Court of Appeals held that the issue before it was whether the
trial court judge gravely abused his discretion in dismissing the
PEZA’s petition for prohibition.  This issue, according to the Court
of Appeals, is properly addressed in a petition for certiorari over
which it has jurisdiction to resolve.  It, therefore, maintained
jurisdiction to resolve the PEZA’s petition for certiorari. 88
Although it admitted that appeal, not certiorari, was the PEZA’s
proper remedy to reverse the trial court’s decision, 89 the Court of
Appeals proceeded to decide the petition for certiorari in “the
broader interest of justice.”90
The Court of Appeals ruled that the trial court judge gravely abused
his discretion in dismissing the PEZA’s petition for prohibition.  It
held that Section 21 of Presidential Decree No. 66 and Section 51 of
the Special Economic Zone Act of 1995 granted the PEZA
exemption from payment of real property taxes. 91  Based on the
criteria set in Manila International Airport Authority v. Court of
Appeals,92 the Court of Appeals found that the PEZA is an
instrumentality of the national government.  No taxes, therefore,
could be levied on it by local government units.93
In the decision94 dated August 27, 2008, the Court of Appeals
granted the PEZA’s petition for certiorari.  It set aside the trial
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 City of Lapu-Lapu vs. PEZA
court’s decision and nullified all the Province’s proceedings with
respect to the collection of real property taxes from the PEZA.
The Province filed a motion for reconsideration, 95 which the Court of
Appeals denied in the resolution96dated April 16, 2009 for lack of
merit.
In its petition for review on certiorari with this court, 97 the Province
of Bataan insists that the Court of Appeals had no jurisdiction to take
cognizance of the PEZA’s petition for certiorari.  The Province
maintains that the Court of Tax Appeals had jurisdiction to hear the
PEZA’s petition since it involved a local tax case decided by a
Regional Trial Court.98
The Province reiterates that the PEZA is not exempt from payment
of real property taxes.  The Province points out that the EPZA, the
PEZA’s predecessor, had to be categorically exempted from payment
of real property taxes.  The EPZA, therefore, was not inherently
exempt from payment of real property taxes and so is the PEZA.  for declaratory relief;
Since Congress omitted from the Special Economic Zone Act of
1995 a provision specifically exempting the PEZA from payment of
real property taxes, the Province argues that the PEZA is a taxable
entity.  It cited the rule in statutory construction that provisions
omitted in revised statutes are deemed repealed. 99
With respect to Sections 24 and 51 of the Special Economic Zone
Act of 1995 granting tax exemptions and benefits, the Province
argues that these provisions only apply to business establishments
operating within special economic zones,100 not to the PEZA.
This court ordered the PEZA to comment on the Province’s petition
for review on certiorari.101
In its comment,102 the PEZA argues that the Court of Appeals had
jurisdiction to hear its petition for certiorari since the issue was
whether the trial court committed grave abuse of discretion in
denying its petition for injunction.  The PEZA maintains that it is
exempt from payment of real property taxes under Section 21 of
Presidential Decree No. 66 and Section 51 of the Special Economic
Zone Act of 1995.
The Province filed its reply,103 reiterating its arguments in its petition
for review on certiorari.
On the PEZA’s motion,104 this court consolidated the petitions filed
by the City of Lapu-Lapu and the Province of Bataan.105
The issues for our resolution are the following:
I. Whether the Court of Appeals erred in dismissing the City of
Lapu-Lapu’s appeal for raising pure questions of law;
II. Whether the Regional Trial Court, Branch 111, Pasay City had
jurisdiction to hear, try, and decide the City of Lapu-Lapu’s petition
III. Whether the petition for injunction filed before the Regional
Trial Court, Branch 115, Pasay City, is a local tax case appealable to
the Court of Tax Appeals; and
IV. Whether the PEZA is exempt from payment of real property
taxes.
We deny the consolidated petitions.
I. The Court of Appeals did not err in  dismissing the City of
Lapu-Lapu’s  appeal for raising pure questions of law
Under the Rules of Court, there are three modes of appeal from
Regional Trial Court decisions.  The first mode is through an
ordinary appeal before the Court of Appeals where the decision
assailed was rendered in the exercise of the Regional Trial Court’s
original jurisdiction.  Ordinary appeals are governed by Rule 41,
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 City of Lapu-Lapu vs. PEZA
Sections 3 to 13 of the Rules of Court.  In ordinary appeals,
questions of fact or mixed questions of fact and law may be raised. 106
The second mode is through a petition for review before the Court of
Appeals where the decision assailed was rendered by the Regional
Trial Court in the exercise of its appellate jurisdiction.  Rule 42 of
the Rules of Court governs petitions for review before the Court of
Appeals.  In petitions for review under Rule 42, questions of fact, of
law, or mixed questions of fact and law may be raised. 107
The third mode is through an appeal by certiorari before this court
under Rule 45 where only questions of law shall be raised. 108
A question of fact exists when there is doubt as to the truth or falsity
of the alleged facts.109  On the other hand, there is a question of law if
the appeal raises doubt as to the applicable law on a certain set of
facts.110
Under Rule 50, Section 2, an improper appeal before the Court of
Appeals is dismissed outright and shall not be referred to the proper
court:
SEC. 2. Dismissal of improper appeal to the Court of Appeals. – An
appeal under Rule 41 taken from the Regional Trial Court to the
Court of Appeals raising only questions of law shall be dismissed,
issues purely of law not being reviewable by said court. Similarly, an
appeal by notice of appeal instead of by petition for review from the
appellate judgment of a Regional Trial Court shall be dismissed.
An appeal erroneously taken to the Court of Appeals shall not be
transferred to the appropriate court but shall be dismissed outright.
Rule 50, Section 2 repealed Rule 50, Section 3 of the 1964 Rules of
Court, which provided that improper appeals to the Court of Appeals
shall not be dismissed but shall be certified to the proper court for
resolution:
Sec. 3. Where appealed case erroneously, brought. — Where the
appealed case has been erroneously brought to the Court of Appeals,
it shall not dismiss the appeal, but shall certify the case to the proper
court, with a specific and clear statement of the grounds therefor.
With respect to appeals by certiorari directly filed before this court
but which raise questions of fact, paragraph 4(b) of Circular No. 2-90
dated March 9, 1990 states that this court “retains the option, in the
exercise of its sound discretion and considering the attendant
circumstances, either itself to take cognizance of and decide such
issues or to refer them to the Court of Appeals for determination.”
In Indoyon, Jr. v. Court of Appeals,111 we said that this court “cannot
tolerate ignorance of the law on appeals.”112  It is not this court’s task
to determine for litigants their proper remedies under the Rules. 113
We agree that the City availed itself of the wrong mode of appeal
before the Court of Appeals. The City raised pure questions of law in
its appeal.  The issue of whether the Regional Trial Court of Pasay
had jurisdiction over the PEZA’s petition for declaratory relief is a
question of law, jurisdiction being a matter of law. 114  The issue of
whether the PEZA is a government instrumentality exempt from
payment of real property taxes is likewise a question of law since this
question is resolved by examining the provisions of the PEZA’s
charter as well as other laws relating to the PEZA. 115
The Court of Appeals, therefore, did not err in dismissing the City’s
appeal pursuant to Rule 50, Section 2 of the Rules of Court.
Nevertheless, considering the important questions involved in this
case, we take cognizance of the City’s petition for review on
certiorari in the interest of justice.
In Municipality of Pateros v. The Honorable Court of Appeals,116 the
Municipality of Pateros filed an appeal under Rule 42 before the
Court of Appeals, which the Court of Appeals denied outright for
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 City of Lapu-Lapu vs. PEZA
raising pure questions of law.  This court agreed that the
Municipality of Pateros “committed a procedural infraction” 117 and
should have directly filed a petition for review on certiorari before
this court.  Nevertheless, “in the interest of justice and in order to
write finis to [the] controversy,”118 this court “opt[ed] to relax the
rules”119 and proceeded to decide the case.  This court said:
While it is true that rules of procedure are intended to promote rather
than frustrate the ends of justice, and while the swift unclogging of
the dockets of the courts is a laudable objective, it nevertheless must
not be met at the expense of substantial justice.
The Court has allowed some meritorious cases to proceed despite
inherent procedural defects and lapses. This is in keeping with the
principle that rules of procedure are mere tools designed to facilitate
the attainment of justice, and that strict and rigid application of rules
which should result in technicalities that tend to frustrate rather than
promote substantial justice must always be avoided. It is a far better
and more prudent cause of action for the court to excuse a technical
lapse and afford the parties a review of the case to attain the ends of
justice, rather than dispose of the case on technicality and cause
grave injustice to the parties, giving a false impression of speedy
disposal of cases while actually resulting in more delay, if not a
miscarriage of justice.120
Similar to Municipality of Pateros, we opt to relax the rules in this
case.  The PEZA operates or otherwise administers special economic
zones all over the country.  Resolving the substantive issue of
whether the PEZA is taxable for real property taxes will clarify the
taxing powers of all local government units where special economic
zones are operated.  This case, therefore, should be decided on the
merits.
II. The Regional Trial Court of Pasay had no jurisdiction to
hear, try, and decide the PEZA’s petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief.
Section 1 of Rule 63 provides:
SECTION 1. Who may file petition. – Any person interested under a
deed, will, contract or other written instrument, or whose rights are
affected by a statute, executive order or regulation, ordinance, or any
other governmental regulation may, before breach or violation,
thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a
declaration of his rights or duties, thereunder.
An action for reformation of an instrument, to quiet title to real
property or remove clouds therefrom, or to consolidate ownership
under Article 1607 of the Civil Code, may be brought under this
Rule.
The court with jurisdiction over petitions for declaratory relief is the
Regional Trial Court, the subject matter of litigation in an action for
declaratory relief being incapable of pecuniary estimation. 121  Section
19 of the Judiciary Reorganization Act of 1980 provides:
SEC. 19. Jurisdiction in Civil Cases. – Regional Trial Courts shall
exercise exclusive original jurisdiction:
(1) In all civil actions in which the subject of litigation is incapable
of pecuniary estimation[.]
Consistent with the law, the Rules state that a petition for declaratory
relief is filed “in the appropriate Regional Trial Court.” 122
A special civil action for declaratory relief is filed for a judicial
determination of any question of construction or validity arising
from, and for a declaration of rights and duties, under any of the
following subject matters: a deed, will, contract or other written
instrument, statute, executive order or regulation, ordinance, or any
other governmental regulation.123  However, a declaratory judgment
may issue only if there has been “no breach of the documents in
question.”124  If the contract or statute subject matter of the action has
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 City of Lapu-Lapu vs. PEZA
already been breached, the appropriate ordinary civil action must be
filed.125  If adequate relief is available through another form of action
or proceeding, the other action must be preferred over an action for
declaratory relief.126
In Ollada v. Central Bank of the Philippines,127 the Central Bank
issued CB-IED Form No. 5 requiring certified public accountants to
submit an accreditation under oath before they were allowed to
certify financial statements submitted to the bank.  Among those
financial statements the Central Bank disallowed were those certified
by accountant Felipe B. Ollada. 128
Claiming that the requirement “restrained the legitimate pursuit of
one’s trade,”129 Ollada filed a petition for declaratory relief against
the Central Bank.
This court ordered the dismissal of Ollada’s petition “without
prejudice to [his] seeking relief in another appropriate action.” 130  In Republic v. Roque,137 this court dismissed respondents’ petition for
According to this court, Ollada’s right had already been violated
when the Central Bank refused to accept the financial statements he
prepared.  Since there was already a breach, a petition for declaratory
relief was not proper. Ollada must pursue the “appropriate ordinary
civil action or proceeding.”131  This court explained:
Petitioner commenced this action as, and clearly intended it to be one
for Declaratory Relief under the provisions of Rule 66 of the Rules
of Court. On the question of when a special civil action of this nature
would prosper, we have already held that the complaint for
declaratory relief will not prosper if filed after a contract, statute or
right has been breached or violated. In the present case such is
precisely the situation arising from the facts alleged in the petition
for declaratory relief. As vigorously claimed by petitioner himself,
respondent had already invaded or violated his right and caused him
injury — all these giving him a complete cause of action enforceable
in an appropriate ordinary civil action or proceeding. The dismissal
of the action was, therefore, proper in the light of our ruling in De
Borja vs. Villadolid, 47 O.G. (5) p. 2315, and Samson vs. Andal,
G.R. No. L-3439, July 31, 1951, where we held that an action for
declaratory relief should be filed before there has been a breach of a
contract, statutes or right, and that it is sufficient to bar such action,
that there had been a breach — which would constitute actionable
violation. The rule is that an action for Declaratory Relief is proper
only if adequate relief is not available through the means of other
existing forms of action or proceeding (1 C.J.S. 1027-1028). 132
It is also required that the parties to the action for declaratory relief
be those whose rights or interests are affected by the contract or
statute in question.133  “There must be an actual justiciable
controversy or the ‘ripening seeds’ of one”134 between the parties. 
The issue between the parties “must be ripe for judicial
determination.”135  An action for declaratory relief based on
theoretical or hypothetical questions cannot be filed for our courts
are not advisory courts.136
declaratory relief for lack of justiciable controversy.  According to
this court, “[the respondents’] fear of prospective prosecution [under
the Human Security Act] was solely based on remarks of certain
government officials which were addressed to the general public.” 138
In Velarde v. Social Justice Society,139 this court refused to resolve
the issue of “whether or not [a religious leader’s endorsement] of a
candidate for elective office or in urging or requiring the members of
his flock to vote for a specific candidate is violative [of the
separation clause].”140  According to the court, there was no
justiciable controversy and ordered the dismissal of the Social Justice
Society’s petition for declaratory relief. This court explained:
Indeed, SJS merely speculated or anticipated without factual
moorings that, as religious leaders, the petitioner and his co-
respondents below had endorsed or threatened to endorse a candidate
or candidates for elective offices; and that such actual or threatened
endorsement "will enable [them] to elect men to public office who
[would] in turn be forever beholden to their leaders, enabling them to
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 City of Lapu-Lapu vs. PEZA
control the government"[;] and "pos[ing] a clear and present danger
of serious erosion of the people’s faith in the electoral process[;] and
reinforc[ing] their belief that religious leaders determine the ultimate
result of elections," which would then be violative of the separation
clause.
Such premise is highly speculative and merely theoretical, to say the
least. Clearly, it does not suffice to constitute a justiciable
controversy. The Petition does not even allege any indication or
manifest intent on the part of any of the respondents below to
champion an electoral candidate, or to urge their so-called flock to
vote for, or not to vote for, a particular candidate. It is a time-
honored rule that sheer speculation does not give rise to an
actionable right.
Obviously, there is no factual allegation that SJS’ rights are being
subjected to any threatened, imminent and inevitable violation that
should be prevented by the declaratory relief sought. The judicial
power and duty of the courts to settle actual controversies involving
rights that are legally demandable and enforceable cannot be
exercised when there is no actual or threatened violation of a legal
right.
All that the 5-page SJS Petition prayed for was "that the question
raised in paragraph 9 hereof be resolved." In other words, it merely
sought an opinion of the trial court on whether the speculated acts of
religious leaders endorsing elective candidates for political offices
violated the constitutional principle on the separation of church and
state. SJS did not ask for a declaration of its rights and duties; neither
did it pray for the stoppage of any threatened violation of its declared
rights. Courts, however, are proscribed from rendering an advisory
opinion.141
In sum, a petition for declaratory relief must satisfy six requisites:
[F]irst, the subject matter of the controversy must be a deed, will,
contract or other written instrument, statute, executive order or
regulation, or ordinance; second, the terms of said documents and the
validity thereof are doubtful and require judicial construction; third,
there must have been no breach of the documents in question; fourth,
there must be an actual justiciable controversy or the "ripening
seeds" of one between persons whose interests are adverse; fifth, the
issue must be ripe for judicial determination; and sixth, adequate
relief is not available through other means or other forms of action or
proceeding.142 (Emphases omitted)
We rule that the PEZA erred in availing itself of a petition for
declaratory relief against the City.  The City had already issued
demand letters and real property tax assessment against the PEZA, in
violation of the 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.
There are several aspects of jurisdiction. 143  Jurisdiction over the
subject matter is “the power to hear and determine cases of the
general class to which the proceedings in question belong.” 144  It is
conferred by law, which may either be the Constitution or a
statute.145  Jurisdiction over the subject matter means “the nature of
the cause of action and the relief sought.”146  Thus, the cause of
action and character of the relief sought as alleged in the complaint
are examined to determine whether a court had jurisdiction over the
subject matter.147  Any decision rendered by a court without
jurisdiction over the subject matter of the action is void. 148
Another aspect of jurisdiction is jurisdiction over the person.  It is
“the power of [a] court to render a personal judgment or to subject
the parties in a particular action to the judgment and other rulings
rendered in the action.”149  A court automatically acquires
jurisdiction over the person of the plaintiff upon the filing of the
initiatory pleading.150  With respect to the defendant, voluntary
appearance in court or a valid service of summons vests the court
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 City of Lapu-Lapu vs. PEZA
with jurisdiction over the defendant’s person.151  Jurisdiction over the
person of the defendant is indispensable in actions in personam or
those actions based on a party’s personal liability. 152  The
proceedings in an action in personam are void if the court had no
jurisdiction over the person of the defendant.153
Jurisdiction over the res or the thing under litigation is acquired
either “by the seizure of the property under legal process, whereby it
is brought into actual custody of the law; or as a result of the
institution of legal proceedings, in which the power of the court is
recognized and made effective.”154  Jurisdiction over the res is
necessary in actions in rem or those actions “directed against the
thing or property or status of a person and seek judgments with
respect thereto as against the whole world.”155  The proceedings in an
action in rem are void if the court had no jurisdiction over the thing
under litigation.156
In the present case, the Regional Trial Court had no jurisdiction over
the subject matter of the action, specifically, over the remedy
sought.  As this court explained in Malana v. Tappa:157
. . . an action for declaratory relief presupposes that there has been
no actual breach of the instruments involved or of rights arising
thereunder.  Since the purpose of an action for declaratory relief is
to secure an authoritative statement of the rights and obligations of
the parties under a statute, deed, or contract for their guidance in
the enforcement thereof, or compliance therewith, and not to settle
issues arising from an alleged breach thereof, it may be entertained
only before the breach or violation of the statute, deed, or contract
to which it refers.  A petition for declaratory relief gives a practical
remedy for ending controversies that have not reached the state
where another relief is immediately available; and supplies the need
for a form of action that will set controversies at rest before they lead
to a repudiation of obligations, an invasion of rights, and a
commission of wrongs.
Where the law or contract has already been contravened prior to the
filing of an action for declaratory relief, the courts can no longer
assume jurisdiction over the action.  In other words, a court has no
more jurisdiction over an action for declaratory relief if its subject
has already been infringed or transgressed before the institution of
the action.158(Emphasis supplied)
The trial court should have dismissed the PEZA’s petition for
declaratory relief for lack of jurisdiction.
Once an assessment has already been issued by the assessor, the
proper remedy of a taxpayer depends on whether the assessment was
erroneous or illegal.
An erroneous assessment “presupposes that the taxpayer is subject to
the tax but is disputing the correctness of the amount assessed.” 159 
With an erroneous assessment, the taxpayer claims that the local
assessor erred in determining any of the items for computing the real
property tax, i.e., the value of the real property or the portion thereof
subject to tax and the proper assessment levels.  In case of an
erroneous assessment, the taxpayer must exhaust the administrative
remedies provided under the Local Government Code before
resorting to judicial action.
The taxpayer must first pay the real property tax under protest.
Section 252 of the Local Government Code provides:
SECTION 252. Payment Under Protest. -(a) No protest shall be
entertained unless the taxpayer first pays the tax. There shall be
annotated on the tax receipts the words "paid under protest". The
protest in writing must be filed within thirty (30) days from payment
of the tax to the provincial, city treasurer or municipal treasurer, in
the case of a municipality within Metropolitan Manila Area, who
shall decide the protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paid under protest, shall be held in
trust by the treasurer concerned.
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(c) In the event that the protest is finally decided in favor of the
taxpayer, the amount or portion of the tax protested shall be refunded
to the protestant, or applied as tax credit against his existing or future
tax liability.
(d) In the event that the protest is denied or upon the lapse of the
sixty day period prescribed in subparagraph (a), the taxpayer may
avail of the remedies as provided for in Chapter 3, Title II, Book II of
this Code.
Should the taxpayer find the action on the protest unsatisfactory, the
taxpayer may appeal with the Local Board of Assessment Appeals
within 60 days from receipt of the decision on the protest:
SECTION 226. Local Board of Assessment Appeals. - Any owner or
person having legal interest in the property who is not satisfied with
the action of the provincial, city or municipal assessor in the
assessment of his property may, within sixty (60) days from the date
of receipt of the written notice of assessment, appeal to the Board of
Assessment Appeals of the provincial or city by filing a petition
under oath in the form prescribed for the purpose, together with
copies of the tax declarations and such affidavits or documents
submitted in support of the appeal.
Payment under protest and appeal to the Local Board of Assessment
Appeals are “successive administrative remedies to a taxpayer who
questions the correctness of an assessment.” 160  The Local Board
Assessment Appeals shall not entertain an appeal “without the action
of the local assessor”161 on the protest.
If the taxpayer is still unsatisfied after appealing with the Local
Board of Assessment Appeals, the taxpayer may appeal with the
Central Board of Assessment Appeals within 30 days from receipt of
the Local Board’s decision:
SECTION 229. Action by the Local Board of Assessment Appeals. -
(a) The Board shall decide the appeal within one hundred twenty
(120) days from the date of receipt of such appeal. The Board, after
hearing, shall render its decision based on substantial evidence or
such relevant evidence on record as a reasonable mind might accept
as adequate to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall have
the power to summon witnesses, administer oaths, conduct ocular
inspection, take depositions, and issue subpoena and subpoena duces
tecum. The proceedings of the Board shall be conducted solely for
the purpose of ascertaining the facts without necessarily adhering to
technical rules applicable in judicial proceedings.
(c) The secretary of the Board shall furnish the owner of the property
or the person having legal interest therein and the provincial or city
assessor with a copy of the decision of the Board. In case the
provincial or city assessor concurs in the revision or the assessment,
it shall be his duty to notify the owner of the property or the person
having legal interest therein of such fact using the form prescribed
for the purpose. The owner of the property or the person having
legal interest therein or the assessor who is not satisfied with the
decision of the Board, may, within thirty (30) days after receipt of
the decision of said Board, appeal to the Central Board of
Assessment Appeals, as herein provided. The decision of the Central
Board shall be final and executory. (Emphasis supplied)
On the other hand, an assessment is illegal if it was made without
authority under the law.162  In case of an illegal assessment, the
taxpayer may directly resort to judicial action without paying under
protest the assessed tax and filing an appeal with the Local and
Central Board of Assessment Appeals.
In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro
B. Ty a notice of assessment with respect to Ty’s real properties in
Pasig.  Without resorting to the administrative remedies under the
Local Government Code, Ty filed before the Regional Trial Court a
petition, praying that the trial court nullify the notice of assessment. 
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 City of Lapu-Lapu vs. PEZA
In assessing the real property taxes due, the Municipal Assessor used
a schedule of market values solely prepared by him.  This, Ty
argued, was void for being contrary to the Local Government Code
requiring that the schedule of market values be jointly prepared by
the provincial, city, and municipal assessors of the municipalities
within the Metropolitan Manila Area.
This court ruled that the assessment was illegal for having been
issued without authority of the Municipal Assessor.  Reconciling
provisions of the Real Property Tax Code and the Local Government
Code, this court held that the schedule of market values must be
jointly prepared by the provincial, city, and municipal assessors of
the municipalities within the Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court
held that Ty did not err in directly resorting to judicial action.  On the one hand, jurisdiction is “the power to hear and determine
According to this court, payment under protest is required only
“where there is a question as to the reasonableness of the amount
assessed.”164  As to appeals before the Local and Central Board of
Assessment Appeals, they are “fruitful only where questions of fact
are involved.”165
Ty raised the issue of the legality of the notice of assessment, an
issue that did not go into the reasonableness of the amount assessed.  proprio dismiss the case.174
Neither did the issue involve a question of fact.  Ty raised a question
of law and, therefore, need not resort to the administrative remedies
provided under the Local Government Code.
In the present case, the PEZA did not avail itself of any of the
remedies against a notice of assessment.  A petition for declaratory
relief is not the proper remedy once a notice of assessment was
already issued.
Instead of a petition for declaratory relief, the PEZA should have
directly resorted to a judicial action.  The PEZA should have filed a
complaint for injunction, the “appropriate ordinary civil action” 166 to
enjoin the City from enforcing its demand and collecting the assessed
enforcing its demand.
Injunction “is a judicial writ, process or proceeding whereby a party
is ordered to do or refrain from doing a certain act.” 167  “It may be the
main action or merely a provisional remedy for and as incident in the
main action.”168  The essential requisites of a writ of injunction are:
“(1) there must be a right in esse or the existence of a right to be
protected; and (2) the act against which the injunction is directed to
constitute a violation of such right.”169
We note, however, that the City confused the concepts of jurisdiction
and venue in contending that the Regional Trial Court of Pasay had
no jurisdiction because the real properties involved in this case are
located in the City of Lapu-Lapu.
cases of the general class to which the proceedings in question
belong.”170 Jurisdiction is a matter of substantive law.171  Thus, an
action may be filed only with the court or tribunal where the
Constitution or a statute says it can be brought.172  Objections to
jurisdiction cannot be waived and may be brought at any stage of the
proceedings, even on appeal.173  When a case is filed with a court
which has no jurisdiction over the action, the court shall motu
On the other hand, venue is “the place of trial or geographical
location in which an action or proceeding should be brought.” 175  In
civil cases, venue is a matter of procedural law. 176  A party’s
objections to venue must be brought at the earliest opportunity either
in a motion to dismiss or in the answer; otherwise the objection shall
be deemed waived.177  When the venue of a civil action is improperly
laid, the court cannot motu proprio dismiss the case.178
The venue of an action depends on whether the action is a real or
personal action.  Should the action affect title to or possession of real
property, or interest therein, it is a real action.  The action should be
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
filed in the proper court which has jurisdiction over the area wherein
the real property involved, or a portion thereof, is situated. 179  If the
action is a personal action, the action shall be filed with the proper
court where the plaintiff or any of the principal plaintiffs resides, or
where the defendant or any of the principal defendants resides, or in
the case of a non-resident defendant where he may be found, at the
election of the plaintiff.180
The City was objecting to the venue of the action, not to the
jurisdiction of the Regional Trial Court of Pasay.  In essence, the
City was contending that the PEZA’s petition is a real action as it
affects title to or possession of real property, and, therefore, the
PEZA should have filed the petition with the Regional Trial Court of
Lapu-Lapu City where the real properties are located.
However, whatever objections the City has against the venue of the
PEZA’s action for declaratory relief are already deemed waived.  such a nature that, if allowed to stand, they would result in a
Objections to venue must be raised at the earliest possible
opportunity.181  The City did not file a motion to dismiss the petition
on the ground that the venue was improperly laid.  Neither did the
City raise this objection in its answer.
In any event, the law sought to be judicially interpreted in this case
had already been breached.  The Regional Trial Court of Pasay,
therefore, had no jurisdiction over the PEZA’s petition for
declaratory relief against the City.
III. The Court of Appeals had no jurisdiction over the PEZA’s
petition for certiorari  against the Province of Bataan
Appeal is the remedy “to obtain a reversal or modification of a
judgment on the merits.”182  A judgment on the merits is one which
“determines the rights and liabilities of the parties based on the
disclosed facts, irrespective of the formal, technical or dilatory
objections.”183  It is not even necessary that the case proceeded to
trial.184  So long as the “judgment is general”185 and “the parties had a
full legal opportunity to be heard on their respective claims and
contentions,” 186 the judgment is on the merits.
On the other hand, certiorari is a special civil action filed to annul or
modify a proceeding of a tribunal, board, or officer exercising
judicial or quasi-judicial functions.187  Certiorari, which in Latin
means “to be more fully informed,”188 was originally a remedy in the
common law.  This court discussed the history of the remedy of
certiorari in Spouses Delos Santos v. Metropolitan Bank and Trust
Company:189
In the common law, from which the remedy of certiorari evolved, the
writ of certiorari was issued out of Chancery, or the King’s Bench,
commanding agents or officers of the inferior courts to return the
record of a cause pending before them, so as to give the party more
sure and speedy justice, for the writ would enable the superior court
to determine from an inspection of the record whether the inferior
court’s judgment was rendered without authority. The errors were of
substantial injury to the petitioner to whom no other remedy was
available. If the inferior court acted without authority, the record was
then revised and corrected in matters of law. The writ of certiorari
was limited to cases in which the inferior court was said to be
exceeding its jurisdiction or was not proceeding according to
essential requirements of law and would lie only to review judicial or
quasi-judicial acts.190
In our jurisdiction, the term “certiorari” is used in two ways.  An
appeal before this court raising pure questions of law is commenced
by filing a petition for review on certiorari under Rule 45 of the
Rules of Court.  An appeal by certiorari, which continues the
proceedings commenced before the lower courts, 191is filed to reverse
or modify judgments or final orders.192  Under the Rules, an appeal
by certiorari must be filed within 15 days from notice of the
judgment or final order, or of the denial of the appellant’s motion for
new trial or reconsideration.193
A petition for certiorari under Rule 65, on the other hand, is an
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
independent and original action filed to set aside proceedings
conducted without or in excess of jurisdiction or with grave abuse of
discretion amounting to lack or excess of jurisdiction. 194  Under the
Rules, a petition for certiorari may only be filed if there is no appeal
or any plain, speedy, or adequate remedy in the ordinary course of
law.195  The petition must be filed within 60 days from notice of the
judgment, order, or resolution.196
Because of the longer period to file a petition for certiorari, some
litigants attempt to file petitions for certiorari as substitutes for lost
appeals by certiorari.  However, Rule 65 is clear that a petition for
certiorari will not prosper if appeal is available.  Appeal is the proper
remedy even if the error, or one of the errors, raised is grave abuse of
discretion on the part of the court rendering judgment. 197  If appeal is
available, a petition for certiorari cannot be filed.
In this case, the trial court’s decision dated January 31, 2007 is a
judgment on the merits.  Based on the facts disclosed by the parties,
the trial court declared the PEZA liable to the Province of Bataan for
real property taxes.  The PEZA’s proper remedy against the trial
court’s decision, therefore, is appeal.
Since the PEZA filed a petition for certiorari against the trial court’s
decision, it availed itself of the wrong remedy.  As the Province of
Bataan contended, the trial court’s decision dated January 31, 2007
“is only an error of judgment appealable to the higher level court and
may not be corrected by filing a petition for certiorari.” 198  That the
trial court judge allegedly committed grave abuse of discretion does
not make the petition for certiorari the correct remedy.  The PEZA
should have raised this ground in an appeal filed within 15 days from
notice of the assailed resolution.
This court, “in the liberal spirit pervading the Rules of Court and in
the interest of substantial justice,”199has treated petitions
for certiorari as an appeal: “(1) if the petition for certiorari was filed
within the reglementary period within which to file a petition for
review on certiorari; (2) when errors of judgment are averred; and
the allegations of the complaint or the petition and the character of
the relief sought,”201 a petition which “actually avers errors of
judgment rather than errors than that of jurisdiction” 202 may be
considered a petition for review.
However, suspending the application of the Rules has its
disadvantages.  Relaxing procedural rules may reduce the “effective
enforcement of substantive rights,”203 leading to “arbitrariness,
caprice, despotism, or whimsicality in the settlement of disputes.” 204 
Therefore, for this court to suspend the application of the Rules, the
accomplishment of substantial justice must outweigh the importance
of predictability of court procedures.
The PEZA’s petition for certiorari may be treated as an appeal.  First,
the petition for certiorari was filed within the 15-day reglementary
period for filing an appeal.  The PEZA filed its petition for certiorari
before the Court of Appeals on October 15, 2007,205 which was 12
days from October 3, 2007206 when the PEZA had notice of the trial
court’s order denying the motion for reconsideration.
Second, the petition for certiorari raised errors of judgment.  The
PEZA argued that the trial court erred in ruling that it is not exempt
from payment of real property taxes given Section 21 of Presidential
Decree No. 66 and Sections 11 and 51 of the Special Economic Zone
Act of 1995.207
Third, there is sufficient reason to relax the rules given the
importance of the substantive issue presented in this case.
However, the PEZA’s petition for certiorari was filed before the
wrong court.  The PEZA should have filed its petition before the
Court of Tax Appeals.
The Court of Tax Appeals has the exclusive appellate jurisdiction
over local tax cases decided by Regional Trial Courts.  Section 7,
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 City of Lapu-Lapu vs. PEZA
paragraph (a)(3) of Republic Act No. 1125, as amended by Republic
Act No. 9282, provides:
Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein
provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in
local tax cases originally decided or resolved by them in the exercise
of their original or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of
Republic Act No. 1125, as amended, include cases involving real
property taxes.  Real property taxation is governed by Book II of the
Local Government Code on “Local Taxation and Fiscal Matters.”  Hon. Grecia-Cuerdo213 that while the Court of Tax Appeals has no
Real property taxes are collected by the Local Treasurer, 208 not by the
Bureau of Internal Revenue in charge of collecting national internal
revenue taxes, fees, and charges.209
Section 7, paragraph (a)(5) of Republic Act No. 1125, as amended by
Republic Act No. 9282, separately provides for the exclusive
appellate jurisdiction of the Court of Tax Appeals over decisions of
the Central Board of Assessment Appeals involving the assessment
or collection of real property taxes:
Sec. 7. Jurisdiction. – The [Court of Tax Appeals] shall exercise:
a. Exclusive appellate jurisdiction to review by appeal, as herein
provided:
....
5. Decisions of the Central Board of Assessment Appeals in the
exercise of its appellate jurisdiction over cases involving the
assessment and taxation of real property originally decided by the
provincial or city board of assessment appeals[.]
This separate provision, nevertheless, does not bar the Court of Tax
Appeals from taking cognizance of trial court decisions involving the
collection of real property tax cases.  Sections 256210 and 266211 of
the Local Government Code expressly allow local government units
to file “in any court of competent jurisdiction” civil actions to collect
basic real property taxes.  Should the trial court rule against them,
local government units cannot be barred from appealing before the
Court of Tax Appeals – the “highly specialized body specifically
created for the purpose of reviewing tax cases.” 212
We have also ruled that the Court of Tax Appeals, not the Court of
Appeals, has the exclusive original jurisdiction over petitions for
certiorari assailing interlocutory orders issued by Regional Trial
Courts in a local tax case.  We explained in The City of Manila v.
express grant of power to issue writs of certiorari under Republic Act
No. 1125,214 as amended, the tax court’s judicial power as defined in
the Constitution215 includes the power to determine “whether or not
there has been grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of the [Regional Trial Court] in issuing an
interlocutory order of jurisdiction in cases falling within the
exclusive appellate jurisdiction of the tax court.”216  We further
elaborated:
Indeed, in order for any appellate court to effectively exercise its
appellate jurisdiction, it must have the authority to issue, among
others, a writ of certiorari. In transferring exclusive jurisdiction over
appealed tax cases to the CTA, it can reasonably be assumed that the
law intended to transfer also such power as is deemed necessary, if
not indispensable, in aid of such appellate jurisdiction. There is no
perceivable reason why the transfer should only be considered as
partial, not total.
....
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 City of Lapu-Lapu vs. PEZA
If this Court were to sustain petitioners' contention that jurisdiction
over their certiorari petition lies with the CA, this Court would be
confirming the exercise by two judicial bodies, the CA and the CTA,
of jurisdiction over basically the same subject matter – precisely the
split-jurisdiction situation which is anathema to the orderly
administration of justice. The Court cannot accept that such was the
legislative motive, especially considering that the law expressly
confers on the CTA, the tribunal with the specialized competence
over tax and tariff matters, the role of judicial review over local tax
cases without mention of any other court that may exercise such
power. Thus, the Court agrees with the ruling of the CA that since
appellate jurisdiction over private respondents' complaint for tax
refund is vested in the CTA, it follows that a petition for certiorari
seeking nullification of an interlocutory order issued in the said case
should, likewise, be filed with the same court. To rule otherwise
would lead to an absurd situation where one court decides an appeal
in the main case while another court rules on an incident in the very
same case.
Stated differently, it would be somewhat incongruent with the
pronounced judicial abhorrence to split jurisdiction to conclude that
the intention of the law is to divide the authority over a local tax case
filed with the RTC by giving to the CA or this Court jurisdiction to
issue a writ of certiorari against interlocutory orders of the RTC but
giving to the CTA the jurisdiction over the appeal from the decision
of the trial court in the same case. It is more in consonance with logic
and legal soundness to conclude that the grant of appellate
jurisdiction to the CTA over tax cases filed in and decided by the
RTC carries with it the power to issue a writ of certiorari when
necessary in aid of such appellate jurisdiction. The supervisory
power or jurisdiction of the CTA to issue a writ of certiorari in aid of
its appellate jurisdiction should co-exist with, and be a complement
to, its appellate jurisdiction to review, by appeal, the final orders and
decisions of the RTC, in order to have complete supervision over the
acts of the latter.217 (Citations omitted)
In this case, the petition for injunction filed before the Regional Trial
Court of Pasay was a local tax case originally decided by the trial
court in its original jurisdiction.  Since the PEZA assailed a
judgment, not an interlocutory order, of the Regional Trial Court, the
PEZA’s proper remedy was an appeal to the Court of Tax Appeals.
Considering that the appellate jurisdiction of the Court of Tax
Appeals is to the exclusion of all other courts, the Court of Appeals
had no jurisdiction to take cognizance of the PEZA’s petition.  The
Court of Appeals acted without jurisdiction in rendering the decision
in CA-G.R. SP No. 100984.  Its decision in CA-G.R. SP No. 100984
is void.218
The filing of appeal in the wrong court does not toll the period to
appeal.  Consequently, the decision of the Regional Trial Court,
Branch 115, Pasay City, became final and executory after the lapse
of the 15th day from the PEZA’s receipt of the trial court’s
decision.219  The denial of the petition for injunction became final
and executory.
IV. The remedy of a taxpayer depends on the  stage in which the
local government unit is enforcing its authority to impose real
property taxes
The proper remedy of a taxpayer depends on the stage in which the
local government unit is enforcing its authority to collect real
property taxes.  For the guidance of the members of the bench and
the bar, we reiterate the taxpayer’s remedies against the erroneous or
illegal assessment of real property taxes.
Exhaustion of administrative remedies under the Local Government
Code is necessary in cases of erroneous assessments where the
correctness of the amount assessed is assailed.  The taxpayer must
first pay the tax then file a protest with the Local Treasurer within 30
days from date of payment of tax.220  If protest is denied or upon the
lapse of the 60-day period to decide the protest, the taxpayer may
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
appeal to the Local Board of Assessment Appeals within 60 days
from the denial of the protest or the lapse of the 60-day period to
decide the protest.221  The Local Board of Assessment Appeals has
120 days to decide the appeal.222
If the taxpayer is unsatisfied with the Local Board’s decision, the
taxpayer may appeal before the Central Board of Assessment
Appeals within 30 days from receipt of the Local Board’s decision. 223
The decision of the Central Board of Assessment Appeals is
appealable before the Court of Tax Appeals En Banc. 224  The appeal
before the Court of Tax Appeals shall be filed following the
procedure under Rule 43 of the Rules of Court.225
The Court of Tax Appeals’ decision may then be appealed before
this court through a petition for review on certiorari under Rule 45 of
the Rules of Court raising pure questions of law.226
In case of an illegal assessment where the assessment was issued
without authority, exhaustion of administrative remedies is not
necessary and the taxpayer may directly resort to judicial action. 227  respective actions against each other.
The taxpayer shall file a complaint for injunction before the Regional
Trial Court228 to enjoin the local government unit from collecting real
property taxes.
The party unsatisfied with the decision of the Regional Trial Court
shall file an appeal, not a petition for certiorari, before the Court of
Tax Appeals, the complaint being a local tax case decided by the
Regional Trial Court.229  The appeal shall be filed within fifteen (15)
days from notice of the trial court’s decision.
The Court of Tax Appeals’ decision may then be appealed before
this court through a petition for review on certiorari under Rule 45 of
the Rules of Court raising pure questions of law.230
In case the local government unit has issued a notice of delinquency,
local government unit has already sold the property at public auction,
the taxpayer must first deposit with the court the amount for which
the real property was sold, together with interest of 2% per month
from the date of sale to the time of the institution of action.  The
taxpayer may then file a complaint to assail the validity of the public
auction.231  The decisions of the Regional Trial Court in these cases
shall be appealable before the Court of Tax Appeals, 232 and the
latter’s decisions appealable before this court through a petition for
review on certiorari under Rule 45 of the Rules of Court. 233
V. The PEZA is exempt from payment of real property taxes
The jurisdictional errors in this case render these consolidated
petitions moot.  We do not review void decisions rendered without
jurisdiction.
However, the PEZA alleged that several local government units,
including the City of Baguio and the Province of Cavite, have issued
their respective real property tax assessments against the PEZA. 
Other local government units will likely follow suit, and either the
PEZA or the local government units taxing the PEZA may file their
In the interest of judicial economy234 and avoidance of conflicting
decisions involving the same issues,235 we resolve the substantive
issue of whether the PEZA is exempt from payment of real property
taxes.
Real property taxes are annual taxes levied on real property such as
lands, buildings, machinery, and other improvements not otherwise
specifically exempted under the Local Government Code. 236  Real
property taxes are ad valorem, with the amount charged based on a
fixed proportion of the value of the property.237  Under the law,
provinces, cities, and municipalities within the Metropolitan Manila
Area have the power to levy real property taxes within their
respective territories.238
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 City of Lapu-Lapu vs. PEZA
The general rule is that real properties are subject to real property
taxes.  This is true especially since the Local Government Code has
withdrawn exemptions from real property taxes of all persons,
whether natural or juridical:
SEC. 234. Exemptions from Real Property Tax. – The following are
exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions except when the beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, nonprofit or religious cemeteries and
all lands, buildings, and improvements actually, directly, and
exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or –
controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as
provided under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real
property taxes previously granted to, or presently enjoyed by, all
persons, whether natural or juridical, including government-owned
or -controlled corporations are hereby withdrawn upon the
effectivity of this Code. (Emphasis supplied)
The person liable for real property taxes is the “taxable person who
had actual or beneficial use and possession [of the real property for
the taxable period,] whether or not [the person owned the property
for the period he or she is being taxed].”239
The exceptions to the rule are provided in the Local Government
Code.  Under Section 133(o), local government units have no power
to levy taxes of any kind on the national government, its agencies
and instrumentalities and local government units:
SEC. 133. Common Limitations on the Taxing Powers of Local
Government Units. – Unless otherwise provided herein, the exercise
of taxing powers of provinces, cities, municipalities, and barangays
shall not extend to the levy of the following:
....
(o) Taxes, fees or charges of any kind on the National Government,
its agencies and instrumentalities and local government units.
Specifically on real property taxes, Section 234 enumerates the
persons and real property exempt from real property taxes:
SEC. 234. Exemptions from Real Property Tax. – The following are
exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions except when the beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person;
(b) Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, nonprofit or religious cemeteries and
all lands, buildings, and improvements actually, directly, and
exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or –
controlled corporations engaged in the supply and distribution of
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 City of Lapu-Lapu vs. PEZA
water and/or generation and transmission of electric power;
(d) All real property owned by duly registered cooperatives as
provided under R.A. No. 6938; and
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real
property tax previously granted to, or presently enjoyed by, all
persons, whether natural or juridical, including all government-
owned or -controlled corporations are hereby withdrawn upon the
effectivity of this Code. (Emphasis supplied)
For persons granted tax exemptions or incentives before the
effectivity of the Local Government Code, Section 193 withdrew
these tax exemption privileges.  These persons consist of both natural
and juridical persons, including government-owned or controlled
corporations:
SEC. 193. Withdrawal of Tax Exemption Privileges. – Unless
otherwise provided in this code, tax exemptions or incentives granted
to or presently enjoyed by all persons, whether natural or juridical,
including government-owned or controlled corporations, except local
water districts, cooperatives duly registered under R.A. 6938, non
stock and non profit hospitals and educational institutions, are hereby
withdrawn upon effectivity of this Code.
As discussed, Section 234 withdrew all tax privileges with respect to
real property taxes.
Nevertheless, local government units may grant tax exemptions
under such terms and conditions as they may deem necessary:
SEC. 192. Authority to Grant Tax Exemption Privileges. – Local
government units may, through ordinances duly approved, grant tax
exemptions, incentives or reliefs under such terms and conditions as
they may deem necessary.
In Mactan Cebu International Airport Authority v. Hon.
Marcos,240 this court classified the exemptions from real property
taxes into ownership, character, and usage exemptions.
Ownership exemptions are exemptions based on the ownership of the
real property.  The exemptions of real property owned by the
Republic of the Philippines, provinces, cities, municipalities,
barangays, and registered cooperatives fall under this
classification.241
Character exemptions are exemptions based on the character of the
real property.  Thus, no real property taxes may be levied on
charitable institutions, houses and temples of prayer like churches,
parsonages, or convents appurtenant thereto, mosques, and non profit
or religious cemeteries.242
Usage exemptions are exemptions based on the use of the real
property.  Thus, no real property taxes may be levied on real property
such as: (1) lands and buildings actually, directly, and exclusively
used for religious, charitable or educational purpose; (2) machineries
and equipment actually, directly and exclusively used by local water
districts or by government-owned or controlled corporations engaged
in the supply and distribution of water and/or generation and
transmission of electric power; and (3) machinery and equipment
used for pollution control and environmental protection. 243
Persons may likewise be exempt from payment of real properties if
their charters, which were enacted or reenacted after the effectivity
of the Local Government Code, exempt them payment of real
property taxes.244
V. (A)
The PEZA is an instrumentality of the national government
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 City of Lapu-Lapu vs. PEZA
An instrumentality is “any agency of the National Government, not
integrated within the department framework, vested with special
functions or jurisdiction by law, endowed with some if not all
corporate powers, administering special funds, and enjoying
operational autonomy, usually through a charter.”245
Examples of instrumentalities of the national government are the
Manila International Airport Authority,246 the Philippine Fisheries
Development Authority,247 the Government Service Insurance
System,248 and the Philippine Reclamation Authority.249  These
entities are not integrated within the department framework but are
nevertheless vested with special functions to carry out a declared
policy of the national government.
Similarly, the PEZA is an instrumentality of the national
government.  It is not integrated within the department framework
but is an agency attached to the Department of Trade and Industry. 250  agency under a Department’s administrative supervision is free from
Book IV, Chapter 7, Section 38(3)(a) of the Administrative Code of
1987 defines “attachment”:
SEC. 38. Definition of Administrative Relationship. – Unless
otherwise expressly stated in the Code or in other laws defining the
special relationships of particular agencies, administrative
relationships shall be categorized and defined as follows:
....
(3) Attachment.–(a) This refers to the lateral relationship between the
department or its equivalent and the attached agency or corporation
for purposes of policy and program coordination. The coordination
may be accomplished by having the department represented in the
governing board of the attached agency or corporation, either as
chairman or as a member, with or without voting rights, if this is
permitted by the charter; having the attached corporation or agency
comply with a system of periodic reporting which shall reflect the
progress of the programs and projects; and having the department or
its equivalent provide general policies through its representative in
the board, which shall serve as the framework for the internal
policies of the attached corporation or agency[.]
Attachment, which enjoys “a larger measure of
independence”251 compared with other administrative relationships
such as supervision and control, is further explained in Beja, Sr. v.
Court of Appeals:252
An attached agency has a larger measure of independence from the
Department to which it is attached than one which is under
departmental supervision and control or administrative supervision.
This is borne out by the “lateral relationship” between the
Department and the attached agency. The attachment is merely for
“policy and program coordination.” With respect to administrative
matters, the independence of an attached agency from Departmental
control and supervision is further reinforced by the fact that even an
Departmental interference with respect to appointments and other 
personnel actions “in accordance with the decentralization of
personnel functions” under the Administrative Code of 1987.
Moreover, the Administrative Code explicitly provides that Chapter
8 of Book IV on supervision and control shall not apply to chartered
institutions attached to a Department.253
With the PEZA as an attached agency to the Department of Trade
and Industry, the 13-person PEZA Board is chaired by the
Department Secretary.254  Among the powers and functions of the
PEZA is its ability to coordinate with the Department of Trade and
Industry for policy and program formulation and implementation. 255 
In strategizing and prioritizing the development of special economic
zones, the PEZA coordinates with the Department of Trade and
Industry.256
The PEZA also administers its own funds and operates
autonomously, with the PEZA Board formulating and approving the
PEZA’s annual budget.257  Appointments and other personnel actions
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 City of Lapu-Lapu vs. PEZA
in the PEZA are also free from departmental interference, with the
PEZA Board having the exclusive and final authority to promote,
transfer, assign and reassign officers of the PEZA. 258
As an instrumentality of the national government, the PEZA is
vested with special functions or jurisdiction by law. Congress created
the PEZA to operate, administer, manage and develop special
economic zones in the Philippines.259  Special economic zones are
areas with highly developed or which have the potential to be
developed into agro-industrial, industrial tourist/recreational,
commercial, banking, investment and financial centers. 260  By
operating, administering, managing, and developing special
economic zones which attract investments and promote use of
domestic labor, the PEZA carries out the following policy of the
Government:
SECTION 2. Declaration of Policy. — It is the declared policy of the
government to translate into practical realities the following State
policies and mandates in the 1987 Constitution, namely:
(a) “The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed
investments.” (Sec. 20, Art. II)
(b) “The State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods, and adopt measures
that help make them competitive.” (Sec. 12, Art. XII)
In pursuance of these policies, the government shall actively
encourage, promote, induce and accelerate a sound and balanced
industrial, economic and social development of the country in order
to provide jobs to the people especially those in the rural areas,
increase their productivity and their individual and family income,
and thereby improve the level and quality of their living condition
through the establishment, among others, of special economic zones
in suitable and strategic locations in the country and through
measures that shall effectively attract legitimate and productive
foreign investments.261
Being an instrumentality of the national government, the PEZA
cannot be taxed by local government units.
Although a body corporate vested with some corporate powers, 262 the
PEZA is not a government-owned or controlled corporation taxable
for real property taxes.
Section 2(13) of the Introductory Provisions of the Administrative
Code of 1987 defines the term “government-owned or controlled
corporation”:
SEC. 2. General Terms Defined. – Unless the specific words of the
text, or the context as a whole, or a particular statute, shall require a
different meaning:
....
(13) Government-owned or controlled corporation refers to any
agency organized as a stock or non-stock corporation, vested with
functions relating to public needs whether governmental or
proprietary in nature, and owned by the Government directly or
through its instrumentalities either wholly, or, where applicable as in
the case of stock corporations, to the extent of at least fifty-one (51)
per cent of its capital stock: Provided, That government-owned or
controlled corporations may be further categorized by the
Department of the Budget, the Civil Service Commission, and the
Commission on Audit for purposes of the exercise and discharge of
their respective powers, functions and responsibilities with respect to
such corporations.
Government entities are created by law, specifically, by the
Constitution or by statute.  In the case of government-owned or
controlled corporations, they are incorporated by virtue of special
charters263 to participate in the market for special reasons which may
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
be related to dysfunctions or inefficiencies of the market structure. 
This is to adjust reality as against the concept of full competition
where all market players are price takers.  Thus, under the
Constitution, government-owned or controlled corporations are
created in the interest of the common good and should satisfy the test
of economic viability.264  Article XII, Section 16 of the Constitution
provides:
Section 16. The Congress shall not, except by general law, provide
for the formation, organization, or regulation of private corporations.
Government-owned or controlled corporations may be created or
established by special charters in the interest of the common good
and subject to the test of economic viability.
Economic viability is “the capacity to function efficiently in
business.”265  To be economically viable, the entity “should not go
into activities which the private sector can do better.” 266
To be considered a government-owned or controlled corporation, the
entity must have been organized as a stock or non-stock
corporation.267
Government instrumentalities, on the other hand, are also created by
law but partake of sovereign functions.  When a government entity
performs sovereign functions, it need not meet the test of economic
viability.  In Manila International Airport Authority v. Court of
Appeals,268 this court explained:
In contrast, government instrumentalities vested with corporate
powers and performing governmental or public functions need not
meet the test of economic viability. These instrumentalities perform
essential public services for the common good, services that every
modern State must provide its citizens. These instrumentalities need
not be economically viable since the government may even subsidize
their entire operations. These instrumentalities are not the
"government-owned or controlled corporations" referred to in
Section 16, Article XII of the 1987 Constitution.
Thus, the Constitution imposes no limitation when the legislature
creates government instrumentalities vested with corporate powers
but performing essential governmental or public functions. Congress
has plenary authority to create government instrumentalities vested
with corporate powers provided these instrumentalities perform
essential government functions or public services. However, when
the legislature creates through special charters corporations that
perform economic or commercial activities, such entities — known
as "government-owned or controlled corporations" — must meet the
test of economic viability because they compete in the market place.
....
Commissioner Blas F. Ople, proponent of the test of economic
viability, explained to the Constitutional Commission the purpose of
this test, as follows:
MR. OPLE: Madam President, the reason for this concern is really
that when the government creates a corporation, there is a sense in
which this corporation becomes exempt from the test of economic
performance. We know what happened in the past. If a government
corporation loses, then it makes its claim upon the taxpayers' money
through new equity infusions from the government and what is
always invoked is the common good. That is the reason why this
year, out of a budget of P115 billion for the entire government, about
P28 billion of this will go into equity infusions to support a few
government financial institutions. And this is all taxpayers' money
which could have been relocated to agrarian reform, to social
services like health and education, to augment the salaries of grossly
underpaid public employees. And yet this is all going down the
drain.
Therefore, when we insert the phrase "ECONOMIC VIABILITY"
together with the "common good," this becomes a restraint on future
enthusiasts for state capitalism to excuse themselves from the
responsibility of meeting the market test so that they become viable.
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 City of Lapu-Lapu vs. PEZA
And so, Madam President, I reiterate, for the committee's
consideration and I am glad that I am joined in this proposal by
Commissioner Foz, the insertion of the standard of "ECONOMIC
VIABILITY OR THE ECONOMIC TEST," together with the
common good.
....
Clearly, the test of economic viability does not apply to government
entities vested with corporate powers and performing essential public
services. The State is obligated to render essential public services
regardless of the economic viability of providing such service. The
non-economic viability of rendering such essential public service
does not excuse the State from withholding such essential services
from the public.269 (Emphases and citations omitted)
The law created the PEZA’s charter. Under the Special Economic
Zone Act of 1995, the PEZA was established primarily to perform
the governmental function of operating, administering, managing,
and developing special economic zones to attract investments and
provide opportunities for preferential use of Filipino labor.
Under its charter, the PEZA was created a body corporate endowed
with some corporate powers.  However, it was not organized as a
stock270 or non-stock271 corporation.  Nothing in the PEZA’s charter
provides that the PEZA’s capital is divided into shares. 272  The PEZA
also has no members who shall share in the PEZA’s profits.
The PEZA does not compete with other economic zone authorities in
the country.  The government may even subsidize the PEZA’s
operations.  Under Section 47 of the Special Economic Zone Act of
1995, “any sum necessary to augment [the PEZA’s] capital outlay
shall be included in the General Appropriations Act to be treated as
an equity of the national government.”273
The PEZA, therefore, need not be economically viable.  It is not a
government-owned or controlled corporation liable for real property
taxes.
V. (B)
The PEZA assumed the non-profit character, including the tax
exempt status, of the EPZA
The PEZA’s predecessor, the EPZA, was declared non-profit in
character with all its revenues devoted for its development,
improvement, and maintenance.  Consistent with this non-profit
character, the EPZA was explicitly declared exempt from real
property taxes under its charter. Section 21 of Presidential Decree
No. 66 provides:
Section 21. Non-profit Character of the Authority; Exemption from
Taxes. The Authority shall be non-profit and shall devote and use all
its returns from its capital investment, as well as excess revenues
from its operations, for the development, improvement and
maintenance and other related expenditures of the Authority to pay
its indebtedness and obligations and in furtherance and effective
implementation of the policy enunciated in Section 1 of this Decree.
In consonance therewith, the Authority is hereby declared
exempt:ChanRoblesVirtualawlibrary
....
(b) From all income taxes, franchise taxes, realty taxes and all other
kinds of taxes and licenses to be paid to the National Government, its
provinces, cities, municipalities and other government agencies and
instrumentalities[.]
The Special Economic Zone Act of 1995, on the other hand, does not
specifically exempt the PEZA from payment of real property taxes.
Nevertheless, we rule that the PEZA is exempt from real property
taxes by virtue of its charter.  A provision in the Special Economic
Zone Act of 1995 explicitly exempting the PEZA is unnecessary. 
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 City of Lapu-Lapu vs. PEZA
The PEZA assumed the real property exemption of the EPZA under
Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the
EPZA “to evolve into the PEZA in accordance with the guidelines
and regulations set forth in an executive order issued for this
purpose.”  President Ramos then issued Executive Order No. 282 in
1995, ordering the PEZA to assume the EPZA’s powers, functions,
and responsibilities under Presidential Decree No. 66 not
inconsistent with the Special Economic Zone Act of 1995:
SECTION 1.  Assumption of EPZA’s Powers and Functions by
PEZA. All the powers, functions and responsibilities of EPZA as
provided under its Charter, Presidential Decree No. 66, as amended,
insofar as they are not inconsistent with the powers, functions and
responsibilities of the PEZA, as mandated under Republic Act No.
7916, shall hereafter be assumed and exercised by the PEZA.
Henceforth, the EPZA shall be referred to as the PEZA.
The following sections of the Special Economic Zone Act of 1995
provide for the PEZA’s powers, functions, and responsibilities:
SEC. 5. Establishment of ECOZONES. – To ensure the viability and
geographical dispersal of ECOZONES through a system of
prioritization, the following areas are initially identified as
ECOZONES, subject to the criteria specified in Section 6:
....
The metes and bounds of each ECOZONE are to be delineated and
more particularly described in a proclamation to be issued by the
President of the Philippines, upon the recommendation of the
Philippine Economic Zone Authority (PEZA), which shall be
established under this Act, in coordination with the municipal and /
or city council, National Land Use Coordinating Committee and / or
the Regional Land Use Committee.
SEC. 6. Criteria for the Establishment of Other ECOZONES. – In
addition to the ECOZONES identified in Section 5 of this Act, other
areas may be established as ECOZONES in a proclamation to be
issued by the President of the Philippines subject to the evaluation
and recommendation of the PEZA, based on a detailed feasibility and
engineering study which must conform to the following criteria:
(a) The proposed area must be identified as a regional growth center
in the Medium-Term Philippine Development Plan or by the
Regional Development Council;
(b) The existence of required infrastructure in the proposed
ECOZONE, such as roads, railways, telephones, ports, airports, etc.,
and the suitability and capacity of the proposed site to absorb such
improvements;
(c) The availability of water source and electric power supply for use
of the ECOZONE;
(d) The extent of vacant lands available for industrial and
commercial development and future expansion of the ECOZONE as
well as of lands adjacent to the ECOZONE available for
development of residential areas for the ECOZONE workers;
(e) The availability of skilled, semi-skilled and non-skilled trainable
labor force in and around the ECOZONE;
(f) The area must have a significant incremental advantage over the
existing economic zones and its potential profitability can be
established;
(g) The area must be strategically located; and
(h) The area must be situated where controls can easily be
established to curtail smuggling activities.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
Other areas which do not meet the foregoing criteria may be
established as ECOZONES: Provided, That the said area shall be
developed only through local government and/or private sector
initiative under any of the schemes allowed in Republic Act No.
6957 (the build-operate-transfer law), and without any financial
exposure on the part of the national government: Provided, further,
That the area can be easily secured to curtail smuggling activities:
Provided, finally, That after five (5) years the area must have
attained a substantial degree of development, the indicators of which
shall be formulated by the PEZA.
SEC. 7. ECOZONE to be a Decentralized Agro-Industrial, Industrial,
Commercial / Trading, Tourist, Investment and Financial
Community. - Within the framework of the Constitution, the interest
of national sovereignty and territorial integrity of the Republic,
ECOZONE shall be developed, as much as possible, into a
decentralized, self-reliant and self-sustaining industrial,
commercial/trading, agro-industrial, tourist, banking, financial and
investment center with minimum government intervention. Each
ECOZONE shall be provided with transportation,
telecommunications, and other facilities needed to generate linkage
with industries and employment opportunities for its own inhabitants
and those of nearby towns and cities.
The ECOZONE shall administer itself on economic, financial,
industrial, tourism development and such other matters within the
exclusive competence of the national government.
The ECOZONE may establish mutually beneficial economic
relations with other entities within the country, or, subject to the
administrative guidance of the Department of Foreign Affairs and/or
the Department of Trade and Industry, with foreign entities or
enterprises.
Foreign citizens and companies owned by non-Filipinos in whatever
proportion may set up enterprises in the ECOZONE, either by
themselves or in joint venture with Filipinos in any sector of
industry, international trade and commerce within the ECOZONE.
Their assets, profits and other legitimate interests shall be protected:
Provided, That the ECOZONE through the PEZA may require a
minimum investment for any ECOZONE enterprises in freely
convertible currencies: Provided, further, That the new investment
shall fall under the priorities, thrusts and limits provided for in the
Act.
SEC. 8. ECOZONE to be Operated and Managed as Separate
Customs Territory. – The ECOZONE shall be managed and operated
by the PEZA as separate customs territory.
The PEZA is hereby vested with the authority to issue certificate of
origin for products manufactured or processed in each ECOZONE in
accordance with the prevailing rules or origin, and the pertinent
regulations of the Department of Trade and Industry and/or the
Department of Finance.
SEC. 9. Defense and Security. – The defense of the ECOZONE and
the security of its perimeter fence shall be the responsibility of the
national government in coordination with the PEZA. Military forces
sent by the national government for the purpose of defense shall not
interfere in the internal affairs of any of the ECOZONE and
expenditure for these military forces shall be borne by the national
government. The PEZA may provide and establish the ECOZONES’
internal security and firefighting forces.
SEC. 10. Immigration. – Any investor within the ECOZONE whose
initial investment shall not be less than One Hundred Fifty Thousand
Dollars ($150,000.00), his/her spouse and dependent children under
twenty-one (21) years of age shall be granted permanent resident
status within the ECOZONE. They shall have freedom of ingress and
egress to and from the ECOZONE without any need of special
authorization from the Bureau of Immigration.
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 City of Lapu-Lapu vs. PEZA
The PEZA shall issue working visas renewable every two (2) years
to foreign executives and other aliens, processing highly-technical
skills which no Filipino within the ECOZONE possesses, as certified
by the Department of Labor and Employment. The names of aliens
granted permanent resident status and working visas by the PEZA
shall be reported to the Bureau of Immigration within thirty (30)
days after issuance thereof.
SEC. 13. General Powers and Functions of the Authority. – The
PEZA shall have the following powers and functions:
(a) To operate, administer, manage and develop the ECOZONE
according to the principles and provisions set forth in this Act;
(b) To register, regulate and supervise the enterprises in the
ECOZONE in an efficient and decentralized manner;
(c) To coordinate with local government units and exercise general
supervision over the development, plans, activities and operations of
the ECOZONES, industrial estates, export processing zones, free
trade zones, and the like;
(d) In coordination with local government units concerned and
appropriate agencies, to construct, acquire, own, lease, operate and
maintain on its own or through contract, franchise, license, bulk
purchase from the private sector and build-operate-transfer scheme
or joint venture, adequate facilities and infrastructure, such as light
and power systems, water supply and distribution systems,
telecommunication and transportation, buildings, structures,
warehouses, roads, bridges, ports and other facilities for the
operation and development of the ECOZONE;
(e) To create, operate and/or contract to operate such agencies and
functional units or offices of the authority as it may deem necessary;
(f) To adopt, alter and use a corporate seal; make contracts, lease,
own or otherwise dispose of personal or real property; sue and be
sued; and otherwise carry out its duties and functions as provided for
in this Act;
(g) To coordinate the formulation and preparation of the
development plans of the different entities mentioned above;
(h) To coordinate with the National Economic Development
Authority (NEDA), the Department of Trade and Industry (DTI), the
Department of Science and Technology (DOST), and the local
government units and appropriate government agencies for policy
and program formulation and implementation; and
(i) To monitor and evaluate the development and requirements of
entities in subsection (a) and recommend to the local government
units or other appropriate authorities the location, incentives, basic
services, utilities and infrastructure required or to be made available
for said entities.
SEC. 17. Investigation and Inquiries. – Upon a written formal
complaint made under oath, which on its face provides reasonable
basis to believe that some anomaly or irregularity might have been
committed, the PEZA or the administrator of the ECOZONE
concerned, shall have the power to inquire into the conduct of firms
or employees of the ECOZONE and to conduct investigations, and
for that purpose may subpoena witnesses, administer oaths, and
compel the production of books, papers, and other evidences:
Provided, That to arrive at the truth, the investigator(s) may grant
immunity from prosecution to any person whose testimony or whose
possessions of documents or other evidence is necessary or
convenient to determine the truth in any investigation conducted by
him or under the authority of the PEZA or the administrator of the
ECOZONE concerned.
SEC. 21. Development Strategy of the ECOZONE. - The strategy
and priority of development of each ECOZONE established pursuant
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
to this Act shall be formulated by the PEZA, in coordination with the
Department of Trade and Industry and the National Economic and
Development Authority; Provided, That such development strategy is
consistent with the priorities of the national government as outlined
in the medium-term Philippine development plan. It shall be the
policy of the government and the PEZA to encourage and provide
Incentives and facilitate private sector participation in the
construction and operation of public utilities and infrastructure in the
ECOZONE, using any of the schemes allowed in Republic Act No.
6957 (the build-operate-transfer law).
SEC. 22. Survey of Resources. The PEZA shall, in coordination with
appropriate authorities and neighboring cities and
municipalities, immediately conduct a survey of the physical, natural
assets and potentialities of the ECOZONE areas under its
jurisdiction.
SEC. 26. Domestic Sales. – Goods manufactured by an ECOZONE
enterprise shall be made available for immediate retail sales in the
domestic market, subject to payment of corresponding taxes on the
raw materials and other regulations that may be adopted by the
Board of the PEZA.
However, in order to protect the domestic industry, there shall be a
negative list of Industries that will be drawn up by the PEZA.
Enterprises engaged in the industries included in the negative list
shall not be allowed to sell their products locally. Said negative list
shall be regularly updated by the PEZA.
The PEZA, in coordination with the Department of Trade and
Industry and the Bureau of Customs, shall jointly issue the necessary
implementing rules and guidelines for the effective Implementation
of this section.
SEC. 29. Eminent Domain. – The areas comprising an ECOZONE
may be expanded or reduced when necessary. For this purpose, the
government shall have the power to acquire, either by purchase,
negotiation or condemnation proceedings, any private lands within or
adjacent to the ECOZONE for:
a. Consolidation of lands for zone development purposes;
b.  Acquisition of right of way to the ECOZONE; and
c. The protection of watershed areas and natural assets valuable to
the prosperity of the ECOZONE.
If in the establishment of a publicly-owned ECOZONE, any person
or group of persons who has been occupying a parcel of land within
the Zone has to be evicted, the PEZA shall provide the person or
group of persons concerned with proper disturbance compensation:
Provided, however, That in the case of displaced agrarian reform
beneficiaries, they shall be entitled to the benefits under the
Comprehensive Agrarian Reform Law, including but not limited to
Section 36 of Republic Act No. 3844, in addition to a homelot in the
relocation site and preferential employment in the project being
undertaken.
SEC. 32. Shipping and Shipping Register. – Private shipping and
related business including private container terminals may operate
freely in the ECOZONE, subject only to such minimum reasonable
regulations of local application which the PEZA may prescribe.
The PEZA shall, in coordination with the Department of
Transportation and Communications, maintain a shipping register for
each ECOZONE as a business register of convenience for ocean-
going vessels and issue related certification.
Ships of all sizes, descriptions and nationalities shall enjoy access to
the ports of the ECOZONE, subject only to such reasonable
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
requirement as may be prescribed by the PEZA In coordination with
the appropriate agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination
with the appropriate agencies, shall take concrete and appropriate
steps and enact the proper measure for the protection of the local
environment.
SEC. 34. Termination of Business. - Investors In the ECOZONE
who desire to terminate business or operations shall comply with
such requirements and procedures which the PEZA shall set,
particularly those relating to the clearing of debts. The assets of the
closed enterprise can be transferred and the funds con be remitted out
of the ECOZONE subject to the rules, guidelines and procedures
prescribed jointly by the Bangko Sentral ng Pilipinas, the
Department of Finance and the PEZA.
SEC. 35. Registration of Business Enterprises. - Business enterprises
within a designated ECOZONE shall register with the PEZA to avail
of all incentives and benefits provided for in this Act.
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one
stop shop center for the purpose of facilitating the registration of new
enterprises in the ECOZONE. Thus, all appropriate government
agencies that are Involved In registering, licensing or issuing permits
to investors shall assign their representatives to the ECOZONE to
attend to Investor’s requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in
coordination with the Department of Tabor and Employment, shall
prescribe a master employment contract for all ECOZONE enterprise
staff members and workers, the terms of which provide salaries and
benefits not less than those provided under this Act, the Philippine
Labor Code, as amended, and other relevant issuances of the national
government.
SEC. 41. Migrant Worker. - The PEZA, in coordination with the
Department of Labor and Employment, shall promulgate appropriate
measures and programs leading to the expansion of the services of
the ECOZONE to help the local governments of nearby areas meet
the needs of the migrant workers.
SEC. 42. Incentive Scheme. - An additional deduction equivalent to
one- half (1/2) of the value of training expenses incurred in
developing skilled or unskilled labor or for managerial or other
management development programs incurred by enterprises in the
ECOZONE can be deducted from the national government's share of
three percent (3%) as provided In Section 24.
The PEZA, the Department of Labor and Employment, and the
Department of Finance shall jointly make a review of the incentive
scheme provided In this section every two (2) years or when
circumstances so warrant.
SEC. 43. Relationship with the Regional Development Council. -
The PEZA shall determine the development goals for the ECOZONE
within the framework of national development plans, policies and
goals, and the administrator shall, upon approval by the PEZA
Board, submit the ECOZONE plans, programs and projects to the
regional development council for inclusion in and as inputs to the
overall regional development plan.
SEC. 44. Relationship with the Local Government Units. - Except as
herein provided, the local government units comprising the
ECOZONE shall retain their basic autonomy and identity. The cities
shall be governed by their respective charters and the municipalities
shall operate and function In accordance with Republic Act No.
7160, otherwise known as the Local Government
Code of 1991.
SEC. 45. Relationship of PEZA to Privately-Owned Industrial
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
Estates. – Privately-owned industrial estates shall retain their
autonomy and independence and shall be monitored by the PEZA for
the implementation of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the
Board of Investments over industrial estates and agri-export
processing estates shall be transferred to the PEZA. The resources of
government-owned Industrial estates and similar bodies except the
Bases Conversion Development Authority and those areas identified
under Republic Act No. 7227, are hereby transferred to the PEZA as
the holding agency. They are hereby detached from their mother
agencies and attached to the PEZA for policy, program and
operational supervision.
The Boards of the affected government-owned industrial estates shall
be phased out and only the management level and an appropriate
number of personnel shall be retained.
Government personnel whose services are not retained by the PEZA
or any government office within the ECOZONE shall be entitled to
separation pay and such retirement and other benefits they are
entitled to under the laws then in force at the time of their separation:
Provided, That in no case shall the separation pay be less than one
and one-fourth (1 1/4) month of every year of service.
The non-profit character of the EPZA under Presidential Decree No.
66 is not inconsistent with any of the powers, functions, and
responsibilities of the PEZA.  The EPZA’s non-profit character,
including the EPZA’s exemption from real property taxes, must be
deemed assumed by the PEZA.
In addition, the Local Government Code exempting instrumentalities
of the national government from real property taxes was already in
force274 when the PEZA’s charter was enacted in 1995.  It would
have been redundant to provide for the PEZA’s exemption in its
charter considering that the PEZA is already exempt by virtue of
Section 133(o) of the Local Government Code.
As for the EPZA, Commonwealth Act No. 470 or the Assessment
Law was in force when the EPZA’s charter was enacted.  Unlike the
Local Government Code, Commonwealth Act No. 470 does not
contain a provision specifically exempting instrumentalities of the
national government from payment of real property taxes. 275  It was
necessary to put an exempting provision in the EPZA’s charter.
Contrary to the PEZA’s claim, however, Section 24 of the Special
Economic Zone Act of 1995 is not a basis for the PEZA’s
exemption. Section 24 of the Special Economic Zone Act of 1995
provides:
Sec. 24. Exemption from National and Local Taxes. — Except for
real property taxes on land owned by developers, no taxes, local and
national, shall be imposed on business establishments operating
within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the
ECOZONE shall be paid and remitted as follows:
(a) Three percent (3%) to the National Government;
(b) Two percent (2%) which shall be directly remitted by the
business establishments to the treasurer's office of the municipality
or city where the enterprise is located. (Emphasis supplied)
Tax exemptions provided under Section 24 apply only to business
establishments operating within economic zones.  Considering that
the PEZA is not a business establishment but an instrumentality
performing governmental functions, Section 24 is inapplicable to the
PEZA.
Also, contrary to the PEZA’s claim, developers of economic zones,
whether public or private developers, are liable for real property
taxes on lands they own.  Section 24 does not distinguish between a
public and private developer.  Thus, courts cannot distinguish.276 
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
Unless the public developer is exempt under the Local Government
Code or under its charter enacted after the Local Government Code’s
effectivity, the public developer must pay real property taxes on their
land.
At any rate, the PEZA cannot be taxed for real property taxes even if
it acts as a developer or operator of special economic zones.  The
PEZA is an instrumentality of the national government exempt from
payment of real property taxes under Section 133(o) of the Local
Government Code.  As this court said in Manila International
Airport Authority, “there must be express language in the law
empowering local governments to tax national government
instrumentalities.  Any doubt whether such power exists is resolved
against local governments.”277
V. (C)
Real properties under the PEZA’s title are owned by the
Republic of the Philippines
Under Section 234(a) of the Local Government Code, real properties
owned by the Republic of the Philippines are exempt from real
property taxes:
SEC. 234. Exemptions from Real Property Tax. – The following are
exempted from payment of real property tax:
(a) Real property owned by the Republic of the Philippines or any of
its political subdivisions except when the beneficial use thereof has
been granted, for consideration or otherwise, to a taxable person[.]
Properties owned by the state are either property of public dominion
or patrimonial property.  Article 420 of the Civil Code of the
Philippines enumerates property of public dominion:
Art. 420. The following things are property of public dominion:
(1) Those intended for public use, such as roads, canals, rivers,
torrents, ports and bridges constructed by the State, banks, shores,
roadsteads, and others of similar character;
(2) Those which belong to the State, without belonging for public
use, and are intended for some public service or for the development
of the national wealth.
Properties of public dominion are outside the commerce of man. 
These properties are exempt from “levy, encumbrance or disposition
through public or private sale.”278  As this court explained in Manila
International Airport Authority:
Properties of public dominion, being for public use, are not subject to
levy, encumbrance or disposition through public or private sale. Any
encumbrance, levy on execution or auction sale of any property of
public dominion is void for being contrary to public policy. Essential
public services will stop if properties of public dominion are subject
to encumbrances, foreclosures and auction sale[.] 279
On the other hand, all other properties of the state that are not
intended for public use or are not intended for some public service or
for the development of the national wealth are patrimonial properties.
Article 421 of the Civil Code of the Philippines provides:
Art. 421. All other property of the State, which is not of the character
stated in the preceding article, is patrimonial property.
Patrimonial properties are also properties of the state, but the state
may dispose of its patrimonial property similar to private persons
disposing of their property.  Patrimonial properties are within the
commerce of man and are susceptible to prescription, unless
otherwise provided.280
In this case, the properties sought to be taxed are located in publicly
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
owned economic zones.  These economic zones are property of
public dominion.  The City seeks to tax properties located within the
Mactan Economic Zone,281 the site of which was reserved by
President Marcos under Proclamation No. 1811, Series of 1979.  No. 9728 then converted the Bataan Economic Zone into the
Reserved lands are lands of the public domain set aside for
settlement or public use, and for specific public purposes by virtue of
a presidential proclamation.282  Reserved lands are inalienable and
outside the commerce of man,283 and remain property of the Republic
until withdrawn from public use either by law or presidential
proclamation.284  Since no law or presidential proclamation has been
issued withdrawing the site of the Mactan Economic Zone from
public use, the property remains reserved land.
As for the Bataan Economic Zone, the law consistently characterized
the property as a port.  Under Republic Act No. 5490, Congress
declared Mariveles, Bataan “a principal port of entry” 285 to serve as
site of a foreign trade zone where foreign and domestic merchandise
may be brought in without being subject to customs and internal
revenue laws and regulations of the Philippines. 286  Section 4 of
Republic Act No. 5490 provided that the foreign trade zone in
Mariveles, Bataan “shall at all times remain to be owned by the
Government”:
SEC. 4. Powers and Duties. – The Foreign Trade Zone Authority
shall have the following powers and duties:
a. To fix and delimit the site of the Zone which at all
times remain to be owned by the Government, and
which shall have a contiguous and adequate area
with well defined and policed boundaries, with
adequate enclosures to segregate the Zone from the
customs territory for protection of revenues, together
with suitable provisions for ingress and egress of
persons, conveyance, vessels and merchandise
sufficient for the purpose of this Act[.] (Emphasis
supplied)
The port in Mariveles, Bataan then became the Bataan Economic
Zone under the Special Economic Zone Act of 1995.287  Republic Act
Freeport Area of Bataan.288
A port of entry, where imported goods are unloaded then introduced
in the market for public consumption, is considered property for
public use.  Thus, Article 420 of the Civil Code classifies a port as
property of public dominion.  The Freeport Area of Bataan, where
the government allows tax and duty-free importation of goods, 289 is
considered property of public dominion.  The Freeport Area of
Bataan is owned by the state and cannot be taxed under Section
234(a) of the Local Government Code.
Properties of public dominion, even if titled in the name of an
instrumentality as in this case, remain owned by the Republic of the
Philippines.  If property registered in the name of an instrumentality
is conveyed to another person, the property is considered conveyed
on behalf of the Republic of the Philippines.  Book I, Chapter 12,
Section 48 of the Administrative Code of 1987 provides:
SEC. 48. Official Authorized to Convey Real Property. – Whenever
real property of the government is authorized by law to be
conveyed, the deed of conveyance shall be executed in behalf of the
government by the following:
....
(2) For property belonging to the Republic of the Philippines, but
titled in the name of any political subdivision or of any corporate
agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
In Manila International Airport Authority, this court explained:
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA
[The exemption under Section 234(a) of the Local Government
Code] should be read in relation with Section 133(o) of the same
Code, which prohibits local governments from imposing “[t]axes,
fess or charges of any kind on the National Government, its agencies
and instrumentalities x x x.” The real properties owned by the
Republic are titled either in the name of the Republic itself or in the
name of agencies or instrumentalities of the National Government.
The Administrative Code allows real property owned by the
Republic to be titled in the name of agencies or instrumentalities of
the national government. Such real properties remained owned by the
Republic of the Philippines and continue to be exempt from real
estate tax.
The Republic may grant the beneficial use of its real property to an
agency or instrumentality of the national government. This happens
when title of the real property is transferred to an agency or
instrumentality even as the Republic remains the owner of the real
property. Such arrangement does not result in the loss of the tax
exemption/ Section 234(a) of the Local Government Code states that
real property owned by the Republic loses its tax exemption only if
the “beneficial use thereof has been granted, for consideration or
otherwise, to a taxable person.” . . .290 (Emphasis in the original;
italics supplied)
Even the PEZA’s lands and buildings whose beneficial use have
been granted to other persons may not be taxed with real property
taxes.  The PEZA may only lease its lands and buildings to PEZA-
registered economic zone enterprises and entities. 291  These PEZA-
registered enterprises and entities, which operate within economic
zones, are not subject to real property taxes.  Under Section 24 of the
Special Economic Zone Act of 1995, no taxes, whether local or
national, shall be imposed on all business establishments operating
within the economic zones:
SEC. 24. Exemption from National and Local Taxes. – Except for
real property on land owned by developers, no taxes, local and
national, shall be imposed on business establishments operating
within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the ECOZONE
shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurer’s office of the municipality or city
where the enterprise is located.292(Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu
collects two-fifths of 5% final tax on gross income paid by all
business establishments operating within the Mactan Economic
Zone:
SEC. 24. Exemption from National and Local Taxes. – Except for
real property on land owned by developers, no taxes, local and
national, shall be imposed on business establishments operating
within the ECOZONE. In lieu thereof, five percent (5%) of the gross
income earned by all business enterprises within the ECOZONE
shall be paid and remitted as follows:
a. Three percent (3%) to the National Government;
b. Two percent (2%) which shall be directly remitted by the business
establishments to the treasurer’s office of the municipality or city
where the enterprise is located.293(Emphasis supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax
on gross income paid by all business establishments operating within
the Freeport Area of Bataan:
Section 6. Imposition of a Tax Rate of Five Percent (5%) on Gross
Income Earned. - No taxes, local and national, shall be imposed on
business establishments operating within the FAB. In lieu thereof,
said business establishments shall pay a five percent (5%) final tax
on their gross income earned in the following percentages:
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 City of Lapu-Lapu vs. PEZA

(a) One per centum (1%) to the National Government;

(b) One per centum (1%) to the Province of Bataan;

(c) One per centum (1%) to the treasurer's office of the Municipality
of Mariveles; and

(d) Two per centum (2%) to the Authority of the Freeport of Area of
Bataan.294(Emphasis supplied)

Petitioners, therefore, are not deprived of revenues from the

operations of economic zones within their respective territorial
jurisdictions.  The national government ensured that local
government units comprising economic zones shall retain their basic
autonomy and identity.295

All told, the PEZA is an instrumentality of the national government. 

Furthermore, the lands owned by the PEZA are real properties
owned by the Republic of the Philippines.  The City of Lapu-Lapu
and the Province of Bataan cannot collect real property taxes from
the PEZA.chanrobleslaw

WHEREFORE, the consolidated petitions are DENIED.

SO ORDERED.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 CJH Development Corporation vs. BIR
CJH DEVELOPMENT CORPORATION vs. BIR
G.R. No. 172457 December 24, 2008
Before us is a petition for review on certiorari [1] seeking the reversal
of the orders dated 14 October 2005[2] and 04 April 2006[3] of the
Regional Trial Court (RTC) of Baguio City, Branch 5. The RTC
dismissed the petition for declaratory relief filed by petitioner CJH
Development Corporation (CJH). This petition was brought directly
to this Court since it involves a pure question of law in accordance
with Rule 50 of the 1997 Revised Rules of Court.
Proclamation No. 420 (the Proclamation) was issued by then
President Fidel V. Ramos to create a Special Economic Zone (SEZ)
in a portion of Camp John Hay in Baguio City. Section 3[4] of the
Proclamation granted to the newly created SEZ the same incentives
then already enjoyed by the Subic SEZ. Among these incentives are
the exemption from the payment of taxes, both local and national, for
businesses located inside the SEZ, and the operation of the SEZ as a
special customs territory providing for tax and duty free importations
of raw materials, capital and equipment.[5]
 
In line with the Proclamation, the Bureau of Internal Revenue (BIR)
issued Revenue Regulations No. 12-97 [6] while the Bureau of
Customs (BOC) issued Customs Administrative Order No. 2-98.
[7]
 The two issuances provided the rules and regulations to be
implemented within the Camp John Hay SEZ. Subsequently,
however, Section 3 of the Proclamation was declared
unconstitutional in part by the Court en banc in John Hay Peoples
Alternative Coalition v. Lim,  [8] when it ruled that:
 
WHEREORE, the second sentence of Section 3 of
Proclamation No. 420 is hereby declared NULL and VOID
and is accordingly declared of no legal force and effect.
Public respondents are hereby enjoined from implementing
the aforesaid void provision.
 
Proclamation No. 420, without the invalidated portion,
remains valid and effective.[9]
 
The decision attained finality when the Court en banc denied
the motion for reconsideration through a resolution dated 29 March
2005.[10]
 
While the motion for reconsideration was pending with the
Court, on 16 January 2004 the Office of the City Treasurer
of Baguio sent a demand letter[11] which stated that:
 
In view of the Supreme Court decision dated October 24,
2003 on G.R. No. 119775, declaring null and void Section
3 of Proclamation 420 on applicable incentives of Special
Economic Zones, we are sending you updated statements
of real property taxes due on real estate properties declared
under the names of the Bases Conversion and Development
Authority and Camp John Hay Development Corporation
totaling P101,935,634.17 inclusive of penalties, as of
January 10, 2004.
May we request for the immediate settlement of the above
indebtedness, otherwise this office shall be constrained to
hold the processing of your business permit pursuant to
Section 2 C c.1 of Tax Ordinance 2000-001
of Baguio City.
 
 
Five months later, on 26 May 2005, the BOC followed suit and
demanded[12] of CJH the payment of P71,983,753.00 representing the
duties and taxes due on all the importations made by CJH from 1998
to 2004. For its part, the BIR sent a letter dated 23 May 2005 to CJH
wherein it treated CJH as an ordinary corporation subject to the
regular corporate income tax as well as to the Value Added Tax of
1997.[13]
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 CJH Development Corporation vs. BIR
 
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.[14]
The Office of the Solicitor General (OSG) filed a motion to dismiss.
[15]
 The OSG claimed that the remedy of declaratory relief is
inapplicable because an assessment is not a proper subject of such
petition. It further alleged that there are administrative remedies
which were available to CJH.
 
In an Order[16] dated 28 June 2005, the RTC dropped the City
of Baguio as a party to the case. The remaining parties were required
to submit their respective memoranda. On 14 October 2005, the RTC
rendered its assailed order.[17] It held that the decision in G.R. No.
119775 applies retroactively because the tax exemption granted by
Proclamation No. 420 is null and void from the beginning. The RTC
also ruled that the petition for declaratory relief is not the appropriate
remedy. A judgment of the court cannot be the proper subject of a
petition for declaratory relief; the enumeration in Rule 64 is
exclusive. Moreover, the RTC held that Commonwealth Act No. 55
(CA No. 55) which proscribes the use of declaratory relief in cases
where a taxpayer questions his tax liability is still in force and effect.
 
CJH filed a motion for reconsideration but the RTC denied it.
[18] 
Hence this petition, which, as earlier stated, was filed directly to
this Court, raising as it does only pure questions of law.
 
There are two issues raised in this petition, one procedural and the
other substantive. First, is the remedy of declaratory relief proper in
this case? Second, can the decision in G.R. No. 119775 be applied
retroactively?
The requisites for a petition for declaratory relief to prosper are: (1)
there must be a justiciable controversy; (2) the controversy must be
between persons whose interests are adverse; (3) the party seeking
declaratory relief must have a legal interest in the controversy; and
(4) the issue involved must be ripe for judicial determination. [19]
 
CJH alleges that CA No. 55 [20] has already been repealed by the
Rules of Court; thus, the remedy of declaratory relief against the
assessment made by the BOC is proper. It cited the commentaries of
Moran allegedly to the effect that declaratory relief lies against
assessments made by the BIR and BOC. Yet in National Dental
Supply Co. v. Meer,[21] this Court held that:
 
From the opinion of the former Chief Justice
Moran may be deduced that the failure to incorporate the
above proviso [CA No. 55] in section 1, rule 66, [now Rule
64] is not due to an intention to repeal it but rather to the
desire to leave its application to the sound discretion of the
court, which is the sole arbiter to determine whether a case
is meritorious or not. And even if it be desired to
incorporate it in rule 66, it is doubted if it could be done
under the rule-making power of the Supreme Court
considering that the nature of said proviso
is substantive and not adjective, its purpose being to lay
down a policy as to the right of a taxpayer to contest the
collection of taxes on the part of a revenue officer or of the
Government. With the adoption of said proviso, our law-
making body has asserted its policy on the matter, which is
to prohibit a taxpayer to question his liability for the
payment of any tax that may be collected by the Bureau of
Internal Revenue. As this Court well said, quoting from
several American cases, The Government may fix the
conditions upon which it will consent to litigate the validity
of its original taxes... The power of taxation being
legislative, all incidents are within the control of the
Legislature. In other words, it is our considered opinion
that the proviso contained in Commonwealth Act No. 55 is
still in full force and effect and bars the plaintiff from filing
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 CJH Development Corporation vs. BIR
the present action.[22] (Emphasis supplied) (Citations
omitted.)
As a substantive law that has not been repealed by another
statute, CA No. 55 is still in effect and holds sway. Precisely, it has
removed from the courts jurisdiction over petitions for declaratory
relief involving tax assessments. The Court cannot repeal, modify or
alter an act of the Legislature.
 
Moreover, the proper subject matter of a declaratory relief is a deed,
will, contract, or other written instrument, or the construction or
validity of statute or ordinance. [23] CJH hinges its petition on the
demand letter or assessment sent to it by the BOC. However, it is
really not the demand letter which is the subject matter of the
petition. Ultimately, this Court is asked to determine whether the
decision of the Court en banc in G.R. No. 119775 has a retroactive
effect. This approach cannot be countenanced. A petition for
declaratory relief cannot properly have a court decision as its subject
matter. In Tanda v. Aldaya,[24] we ruled that:
 
x x x [A] court decision cannot be interpreted as
included within the purview of the words other
written instrument, as contended by appellant, for the
simple reason that the Rules of Court already
provide[s] for the ways by which an ambiguous or
doubtful decision may be corrected or clarified
without need of resorting to the expedient prescribed
by Rule 66 [now Rule 64].[25]
 
There are other remedies available to a party who is not agreeable to
a decision whether it be a question of law or fact. If it involves a
decision of an appellate court, the party may file a motion for
reconsideration or new trial in order that the defect may be corrected.
[26]
 In case of ambiguity of the decision, a party may file a motion for
a clarificatoryjudgment.[27] One of the requisites of a declaratory
relief is that the issue must be ripe for judicial determination. This
means that litigation is inevitable [28] or there is no adequate relief
available in any other form or proceeding.[29]
However, CJH is not left without recourse. The Tariff and Customs
Code (TCC) provides for the administrative and judicial remedies
available to a taxpayer who is minded to contest an assessment,
subject of course to certain reglementary periods. The TCC provides
that a protest can be raised provided that payment first be made of
the amount due.[30]The decision of the Collector can be reviewed by
the
Commissioner of Customs who can approve, modify or reverse the
decision or action of the Collector.[31] If the party is not satisfied with
the ruling of the Commissioner, he may file the necessary appeal to
the Court of Tax Appeals.[32]Afterwards, the decision of the Court of
Tax Appeals can be appealed to this Court.
With the foregoing disquisition on the first issue, there is no
need to delve into the second issue at this juncture. It should be noted
though, as admitted by CJH in its Certificate of Non-Forum
Shopping,[33] that even before the filing of this petition, it already had
a pending petition for review with this Court, docketed as G.R. No.
169234[34]and entitled, Camp John Hay Development Corporation v.
Central Board of Assessment Appeals, et al. That case emanated
from assessments made in 2002 for real estate taxes on CJH by the
City of Baguio. Said assessments were duly challenged before the
Local Board of Assessment Appeals, the Central Board of
Assessment Appeals and the Court of Tax Appeals. The petition in
G.R. No. 169234 was filed with this Court in September 2005, or
after our 2003 Decision in John Hay Peoples Alternative
Coalition had attained finality. CJH therein raised the same question
of law, as in this case, whether the doctrine of operative fact applies
to G.R. No. 119775. Clearly, the Court in G.R. No. 169234 is better
positioned to resolve that question of law, there being no antecedent
jurisdictional defects that would preclude the Court from squarely
deciding that particular issue. CJH is free to reiterate this current
point of clarification as it litigates the petition in G.R. No. 169234.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 CJH Development Corporation vs. BIR
 
WHEREFORE, the Petition is DENIED.
 
SO ORDERED.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Ollada vs. Central Bank

G.R. No. L-11357             May 31, 1962 responsibility; that the accreditation requirement alleged in the
petition was issued in the exercise of such power and authority; that
the purpose of such requirement is not to regulate the practice of
FELIPE B. OLLADA vs. CENTRAL BANK OF THE
accountancy in the Philippines but only the manner in which certified
PHILIPPINES
public accountants should transact business with the Central Bank.
Felipe B. Ollada is a certified public accountant, having passed the
On May 3, 1956, petitioner Ollada applied for a writ of preliminary
examination given by the Board of Accountancy, and is duly
injunction to restrain the respondent Central Bank of the Philippines
qualified to practice his profession. On July 22, 1952, his name was
from enforcing the accreditation requirement aforesaid until final
placed in the rolls of certified public accountants authorized and
adjudication of the case. In a memorandum submitted by said
accredited to practice accountancy in the office of the Central Bank
respondent opposing the issuance of the writ, it manifested that it
of the Philippines. In December, 1955, by reason of a requirement of
was willing to delete paragraph 13 from its CB-IED Form No. 5
the Import-Export Department of said bank that CPAs submit to an
(Application for accreditation of certified public accountants), which
accreditation under oath before they could certify financial
required CPAs to answer the query whether they agreed, if
statements of their clients applying for import dollar allocations with
accredited with the Import-Export Department, Central Bank of the
its office, Ollada's previous accreditation was nullified.
Philippines, to follow strictly the rules and regulations promulgated
by the Philippine Institute of Accountants and, if not, to state their
Pursuant to the new requirement, the Import-Export Department of reasons therefor, and that it was also willing to modify paragraph 14
the Central Bank issued APPLICATION FOR ACCREDITATION of the same form to read as follows:
OF CERTIFIED PUBLIC ACCOUNTANTS (CB-IED Form No. 5)
and ACCREDITATION CARD FOR CERTIFIED PUBLIC
14. Do you agree, if accredited with the Import-Export
ACCOUNTANTS (CB-IED, Form No. 6) for CPAs to accomplish
Department, to follow strictly the rules and regulations of the
under oath. Assailing said accreditation requirement on the ground
Central Bank of the Philippines concerning the practice of
that it was (a) an unlawful invasion of the jurisdiction of the Board of
your profession as CPA, with reference to its importing
Accountancy, (b) in excess of the powers of the Central Bank and (c)
licensing functions which may hereinafter be promulgated
unconstitutional in that it unlawfully restrained the legitimate pursuit
and which are not inconsistent with the rules and regulations
of one's trade, Ollada, for himself and allegedly on behalf of
promulgated by the Board of Accountancy of the
numerous other CPAs, filed a petition for Declaratory Relief in the
Philippines, and to give written notice(s) of any change(s) in
Court of First Instance of Manila to nullify said accreditation
your professional status as practitioner, or the name and style
requirement.
under which you practice your profession as Certified Public
Accountant(s)? . . . If not, state your reasons: . . .
On April 16, 1956 the Central Bank filed a motion to dismiss the
petition for Declaratory Relief for lack of cause of action. Its main
On May 22, 1956 the trial court required respondent to submit within
contention was that the Central Bank has the responsibility of
ten days from notice, proof that it had deleted paragraph 13 and
administering the Monetary Banking System of the Republic and is
modified paragraph 14 of its CB-IED Form No. 5, as manifested in
authorized to prepare and issue, through its Monetary Board, rules
its memorandum, otherwise the writ of preliminary injunction prayed
and regulations to make effective the discharge of such

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Ollada vs. Central Bank
for by petitioner would be granted. Having complied with said order
by submitting CB-ID Form No. 5 (formerly CB-IED Form No. 5)
showing that paragraph 13 of CB-IED Form No. 5 had been deleted,
and paragraph 14 thereof had been modified, the court, on June 27,
1956, denied the petition for preliminary injunction. On June 29,
1956, petitioner filed a motion for reconsideration alleging that,
despite the deletion of paragraph 13 from respondent's CB-IED Form
No. 5, it was still enforcing the rules and regulations of the
Philippine Institute of Accountants in its CB-IED Form No. 6
(ACCREDITATION CARD FOR CERTIFIED PUBLIC
ACCOUNTANTS) which was still a part of the questioned
accreditation requirement. All this notwithstanding, however, on July
5, 1956 petitioner, in the interests of its clients, filed his application
for accreditation with the CB under protest.
On July 7, 1956, the court reconsidered its previous order and issued
another granting the petition for the writ of preliminary injunction
upon the filing of a bond in the sum of P2,000.00 on the ground that
CPAs applying for accreditation with respondent were still required
to execute under oath CB-IED Form No. 6 (Accreditation card for
certified public accountants) to be governed by the rules and
regulations of the Philippine Institute of Accountants. In a motion for
the reconsideration of this last order, respondent stated that CB-IED
Form No. 6 of its Import-Export Department had been modified by
CB-ID Form No. 6 wherein the requirement that the applicant should
sign a statement under oath has been eliminated, and that, upon
accreditation, a CPA would be governed by the rules and regulations
of the Central Bank and not by those of the Philippine Institute of
Accountants. The modified form (CB-ID Form No. 6) read as
follows:
I/We hereby agree to be governed by your rules and
regulations relating to the practice of my/our profession as
Certified Public Accountant(s), particularly Memorandum to
Accredited CPAs No. 1 of the Central Bank of the
Philippines dated June 15, 1956. Please recognize my/our
certification(s) of exhibit(s), of statement(s), schedule(s), or
other form(s) of accountancy work issued in behalf of
my/our clients under the following signature(s).
Consequently, on July 12, 1956, the court set aside its order of July
7, 1956 granting the writ of preliminary injunction.
Finally, on July 31, 1956, the lower court, resolving the motion to
dismiss filed by respondent, dismissed the complaint. The order to
that effect says, in part, the following:
The only issue in this case is whether or not the respondent
Central Bank of the Philippines has the authority under its charter
to require petitioner and all other certified public accountants to
accredit themselves before they can transact business with
respondent's Import and Export Department.
This Court is of the opinion that the respondent is not barred from
promulgating internal rules and regulations necessary to carry out
its purpose pursuant to the charter creating it provided, however,
that such rules and regulations are not contrary to law, public
morals or public policy.
The only objectionable features of respondent's aforementioned
requirement have already been eliminated by said respondent
having deleted from its CB-IED Form No. 5, known as
Application for Accreditation of Certified Public Accountants
(Annex B of petitioner's Petition), paragraph 13 and modified
paragraph 14 thereof, as well as by modifying CB-IED Form No.
6 known as Accreditation Card for Certified Public Accountants
(Annex C of Petitioner's Petition).
It appears, therefore, that after respondent had eliminated said
objectionable features, the petition for declaratory relief has
become groundless and should be dismissed.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Ollada vs. Central Bank
Upon motion of petitioner, We issued a resolution dated November
5, 1956 granting a writ of preliminary injunction restraining
respondent from requiring CPAs to comply with the accreditation
requirement of its Import-Export Department, on the ground that
there was nothing in the record showing that the same was issued by
its Monetary Board or by someone else duly authorized by the latter.
The main issue involved in this appeal is whether upon the facts
alleged in the petition for Declaratory Relief and others elicited from
the parties and made of record by them prior to the issuance of the
order appealed from, this case was properly dismissed.
The Monetary Board of the Central Bank has authority to prepare
and issue such rules and regulations it may consider necessary for the
effective discharge of the responsibilities and exercise of the powers
assigned to it and to the Central Bank under the provisions of Section
1 (a), Republic Act No. 265. The Governor of the Central Bank is
also authorized to delegate his power to represent the Bank "to other
officers of the Bank upon his own responsibility" (See. 17[d], Rep.
Act 265).
To implement its authority to temporarily suspend or restrict sales of
exchange by the Central Bank and subject all transactions in gold
and foreign exchange to license by the latter (Sec. 74, Rep. Act 265),
the Monetary Board, approved Resolution No. 1528, Minutes No. 80
dated August 30, 1955 authorizing the Import-Export Department to
revise quota allocations and to prepare revised procedures for the
determination of violations of Central Bank Import-Export
regulations. Among the revised procedures adopted by the aforesaid
Department was its accreditation system, the purpose of which was
to correct certain irregularities committed by some CPAs in their
certification of the financial statements of their clients applying for
dollar allocations.
As held by the lower court, "the only objectionable feature of
respondent's aforementioned requirement had already been
eliminated . . . from its CB-IED Form No. 5" and that CB-IED form
No. 6 had also been modified. For this reason, the court held that
"the petition for declaratory relief has become groundless" and, as a
result, ordered its dismissal.
Without deciding the question of whether the petition under
consideration has, in reality "become groundless", we believe that,
upon the facts appearing of record, said petition was correctly
dismissed.
As stated heretofore, in connection with the motion to dismiss filed
by respondent, petitioner filled a written opposition in which he
alleged that his petition
has sufficiently alleged ultimate facts which violated his right as
a duly qualified and accredited Certified Public Accountant by
the Board of Accountancy (which is the only Government body
with absolute powers to regulate the practice of CPAs), and in
addition to such allegations, he has also alleged that by virtue of
the violation of his right and that of numerous CPAs, he has
suffered serious injury in that the questioned requirement which
is collaterally attacked by this action (in the honest belief of the
petitioner that the same) is an unlawful restraint of the fee
pursuit and practice of petitioner's profession as a CPA; and
also that the action of the respondent Central Bank of the
Philippines complained of, is also an unlawful invasion into the
exclusive jurisdiction of the Board of Accountancy as the sole
body vested by our laws to lay down rules and regulations for
the practice of public accountancy in the Philippines. . . .
In order to dismiss an action under the aforecited ground,
Sutherland, Code of Pleadings, Practice and Form, 167, has laid
down the essential test which should serve as the controlling
guide in determining whether a petition states a cause of action,
to wit:
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Ollada vs. Central Bank
1. Does the complaint show the plaintiff suffered an injury?
2. Is it an injury the law recognizes as a wrong?
3. Is the defendant liable for the alleged wrong?
4. If the defendant is liable, to what extent is he liable and what
will be the legal remedy from such injury? (Sutherland, Code of
Pleadings, supra.)
It is clear from the allegations of the petition that the petitioner
has sufficiently stated facts to satisfy the foregoing requisites of
a pleading in order that petitioner's action should be given due
course by this Court.
Petitioner submits that the respondent's requirement complained
of (CB-IED Forms Nos. 5 and 6) is an act of constituting a
violation of the Constitution and also a violation of the
petitioners right to freely practice his profession anywhere and
in any government office in the Philippines .... It is undisputed
that the only body that can regulate the practice of accountancy
in the Philippines is the Board of Accountancy. The action thus
of the respondent in requiring the accreditation of CPAs before
they can practice with the Central Bank of the Philippines is an
unlawful invasion into the exclusive jurisdiction of the said
Board of Accountancy. Why was petitioner's right as a CPA
violated by the respondent? Because the respondent's placing of
a ban to CPAs including the petitioner with respect to
certification of financial statements of their clients applying for
dollar(s) allocation in the Central Bank of the Philippines has
resulted in the unlawful restraint in the practice of CPAs in the
office of the Central Bank of the Philippines. (Emphasis
supplied.) (Rec. on Appeal, pp. 17, 18-20.)
Again, in his brief petitioner reiterates the same view in the
following language:
On April 20, 1956, petitioner-appellant filed his opposition
to respondent's motion to dismiss on the simple and
fundamental ground that, from its face, the complaint's
allegations of facts make clear showing of petitioner's rights
having been violated by respondent, and that the (petitioner)
has suffered serious injury therefrom that such injury is
recognized by law as a wrong, and that the respondent is
liable therefrom to a great extent. (Emphasis supplied.)
(Petitioner's brief, p. 5.)
Petitioner commenced this action as, and clearly intended it to be one
for Declaratory Relief under the provisions of Rule 66 of the Rules
of Court. On the question of when a special civil action of this nature
would prosper, we have already held that the complaint for
declaratory relief will not prosper if filed after a contract, statute or
right has been breached or violated. In the present case such is
precisely the situation arising from the facts alleged in the petition
for declaratory relief. As vigorously claimed by petitioner himself,
respondent had already invaded or violated his right and caused him
injury — all these giving him a complete cause of action enforceable
in an appropriate ordinary civil action or proceeding. The dismissal
of the action was, therefore, proper in the light of our ruling in De
Borja vs. Villadolid, 47 O.G. (5) p. 2315, and Samson vs. Andal,
G.R. No. L-3439, July 31, 1951, where we held that an action for
declaratory relief should be filed before there has been a breach of a
contract, statutes or right, and that it is sufficient to bar such action,
that there had been a breach — which would constitute actionable
violation. The rule is that an action for Declaratory Relief is proper
only if adequate relief is not available through the means of other
existing forms of action or proceeding (1 C.J.S. 1027-1028).
WHEREFORE, the order of dismissal appealed from is hereby
affirmed, without prejudice to the aggrieved party seeking relief in
another appropriate action. The writ of preliminary injunction issued
by Us on November 5, 1956 is hereby set aside, and the motion for
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Ollada vs. Central Bank
contempt filed by petitioner on September 30, 1957 is denied. With
costs against appellant.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Republic vs. Roque
G.R. No. 204603               September 24, 2013
REPUBLIC vs. ROQUE
Assailed in this petition for certiorari 1 are the April 23, 2012 2 and
July 31, 20123 Orders of the Regional Trial Court of Quezon City,
Branch 92(RTC) in Special Civil Action (SCA) No. Q-07-60778,
denying petitioners’ motion to dismiss (subject motion to dismiss)
based on the following grounds: (a) that the Court had yet to pass
upon the constitutionality of Republic Act No. (RA) 9372, 4 otherwise
known as the "Human Security Act of 2007," in the consolidated
cases of Southern Hemisphere Engagement Network, Inc. v. Anti-
Terrorism Council5 (Southern Hemisphere); and (b) that private
respondents’ petition for declaratory relief was proper.
The Facts
On July 17, 2007, private respondents filed a Petition 6 for declaratory
relief before the RTC, assailing the constitutionality of the following
sections of RA 9372: (a) Section 3, 7 for being void for
vagueness;8 (b) Section 7,9for violating the right to privacy of
communication and due process and the privileged nature of priest-
penitent relationships;10 (c)Section 18,11 for violating due process, the
prohibition against ex post facto laws or bills of attainder, the
Universal Declaration of Human Rights, and the International
Covenant on Civil and Political Rights, as well as for contradicting
Article 12512 of the Revised Penal Code, as amended; 13 (d) Section
26,14 for violating the right to travel; 15 and (e) Section 27,16 for
violating the prohibition against unreasonable searches and
seizures.17
Petitioners moved to suspend the proceedings, 18 averring that certain
petitions (SC petitions) raising the issue of RA 9372’s
constitutionality have been lodged before the Court. 19 The said
motion was granted in an Order dated October 19, 2007. 20
On October 5, 2010, the Court promulgated its Decision 21 in the
Southern Hemisphere cases and thereby dismissed the SC petitions.
On February 27, 2012, petitioners filed the subject motion to
dismiss,22 contending that private respondents failed to satisfy the
requisites for declaratory relief. Likewise, they averred that the
constitutionality of RA 9372 had already been upheld by the Court in
the Southern Hemisphere cases.
In their Comment/Opposition,23 private respondents countered that:
(a) the Court did not resolve the issue of RA 9372’s constitutionality
in Southern Hemisphere as the SC petitions were dismissed based
purely on technical grounds; and (b) the requisites for declaratory
relief were met.
The RTC Ruling
On April 23, 2012, the RTC issued an Order24 which denied the
subject motion to dismiss, finding that the Court did not pass upon
the constitutionality of RA 9372 and that private respondents’
petition for declaratory relief was properly filed.
Petitioners moved for reconsideration25 which was, however, denied
by the RTC in an Order dated July 31, 2012.26The RTC observed that
private respondents have personal and substantial interests in the
case and that it would be illogical to await the adverse consequences
of the aforesaid law’s implementation considering that the case is of
paramount impact to the Filipino people.27
Hence, the instant petition.
The Issues Before the Court
The present controversy revolves around the issue of whether or not
the RTC gravely abused its discretion when it denied the subject
motion to dismiss.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Roque
Asserting the affirmative, petitioners argue that private respondents
failed to satisfy the requirements for declaratory relief and that the
Court had already sustained with finality the constitutionality of RA
9372.
On the contrary, private respondents maintain that the requirements
for declaratory relief have been satisfied and that the Court has yet to
resolve the constitutionality of RA 9372, negating any grave abuse of
discretion on the RTC’s part.
The Court’s Ruling
The petition is meritorious.
An act of a court or tribunal can only be considered as with grave
abuse of discretion when such act is done in a capricious or
whimsical exercise of judgment as is equivalent to lack of
jurisdiction.28 It is well-settled that the abuse of discretion to be
qualified as "grave" must be so patent or gross as to constitute an
evasion of a positive duty or a virtual refusal to perform the duty or
to act at all in contemplation of law. 29 In this relation, case law states
that not every error in the proceedings, or every erroneous
conclusion of law or fact, constitutes grave abuse of discretion. 30The
degree of gravity, as above-described, must be met.
Applying these principles, the Court observes that while no grave
abuse of discretion could be ascribed on the part of the RTC when it
found that the Court did not pass upon the constitutionality of RA
9372 in the Southern Hemisphere cases, it, however, exceeded its
jurisdiction when it ruled that private respondents’ petition had met
all the requisites for an action for declaratory relief. Consequently, its
denial of the subject motion to dismiss was altogether improper.
To elucidate, it is clear that the Court, in Southern Hemisphere, did
not make any definitive ruling on the constitutionality of RA 9372.
The certiorari petitions in those consolidated cases were dismissed
based solely on procedural grounds, namely: (a) the remedy of
certiorari was improper;31 (b) petitioners therein lack locus
standi;32and (c) petitioners therein failed to present an actual case or
controversy.33 Therefore, there was no grave abuse of discretion.
The same conclusion cannot, however, be reached with regard to the
RTC’s ruling on the sufficiency of private respondents’ petition for
declaratory relief.
Case law states that the following are the requisites for an action for
declaratory relief:
first , the subject matter of the controversy must be a deed, will,
contract or other written instrument, statute, executive order or
regulation, or ordinance; second , the terms of said documents and
the validity thereof are doubtful and require judicial construction;
third , there must have been no breach of the documents in question;
fourth , there must be an actual justiciable controversy or the
"ripening seeds" of one between persons whose interests are adverse;
fifth , the issue must be ripe for judicial determination; and sixth ,
adequate relief is not available through other means or other forms of
action or proceeding.34
Based on a judicious review of the records, the Court observes that
while the first,35 second,36 and third37requirements appear to exist in
this case, the fourth, fifth, and sixth requirements, however, remain
wanting.
As to the fourth requisite, there is serious doubt that an actual
justiciable controversy or the "ripening seeds" of one exists in this
case.
Pertinently, a justiciable controversy refers to an existing case or
controversy that is appropriate or ripe for judicial determination, not
one that is conjectural or merely anticipatory. 38 Corollary thereto, by
"ripening seeds" it is meant, not that sufficient accrued facts may be
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Roque
dispensed with, but that a dispute may be tried at its inception before
it has accumulated the asperity, distemper, animosity, passion, and
violence of a full blown battle that looms ahead. The concept
describes a state of facts indicating imminent and inevitable litigation
provided that the issue is not settled and stabilized by tranquilizing
declaration.39
A perusal of private respondents’ petition for declaratory relief
would show that they have failed to demonstrate how they are left to
sustain or are in immediate danger to sustain some direct injury as a
result of the enforcement of the assailed provisions of RA 9372. Not
far removed from the factual milieu in the Southern Hemisphere
cases, private respondents only assert general interests as citizens,
and taxpayers and infractions which the government could
prospectively commit if the enforcement of the said law would
remain untrammeled. As their petition would disclose, private
respondents’ fear of prosecution was solely based on remarks of
certain government officials which were addressed to the general
public.40 They, however, failed to show how these remarks tended
towards any prosecutorial or governmental action geared towards the
implementation of RA 9372 against them. In other words, there was
no particular, real or imminent threat to any of them. As held in
Southern Hemisphere:
Without any justiciable controversy, the petitions have become pleas
for declaratory relief, over which the Court has no original
jurisdiction. Then again, declaratory actions characterized by "double
contingency," where both the activity the petitioners intend to
undertake and the anticipated reaction to it of a public official are
merely theorized, lie beyond judicial review for lack of
ripeness.1âwphi1
The possibility of abuse in the implementation of RA 9372does not
avail to take the present petitions out of the realm of the surreal and
merely imagined. Such possibility is not peculiar to RA 9372 since
the exercise of any power granted by law may be abused. Allegations
of abuse must be anchored on real events before courts may step in
to settle actual controversies involving rights which are legally
demandable and enforceable.41 (Emphasis supplied; citations
omitted)
Thus, in the same light that the Court dismissed the SC petitions in
the Southern Hemisphere cases on the basis of, among others, lack of
actual justiciable controversy (or the ripening seeds of one), the RTC
should have dismissed private respondents’ petition for declaratory
relief all the same.
It is well to note that private respondents also lack the required locus
standi to mount their constitutional challenge against the
implementation of the above-stated provisions of RA 9372 since they
have not shown any direct and personal interest in the case. 42 While it
has been previously held that transcendental public importance
dispenses with the requirement that the petitioner has experienced or
is in actual danger of suffering direct and personal injury, 43 it must be
stressed that cases involving the constitutionality of penal legislation
belong to an altogether different genus of constitutional
litigation.44 Towards this end, compelling State and societal interests
in the proscription of harmful conduct necessitate a closer judicial
scrutiny of locus standi,45 as in this case. To rule otherwise, would be
to corrupt the settled doctrine of locus standi, as every worthy cause
is an interest shared by the general public.46
As to the fifth requisite for an action for declaratory relief, neither
can it be inferred that the controversy at hand is ripe for adjudication
since the possibility of abuse, based on the above-discussed
allegations in private respondents’ petition, remain highly-
speculative and merely theorized.1âwphi1 It is well-settled that a
question is ripe for adjudication when the act being challenged has
had a direct adverse effect on the individual challenging it. 47 This
private respondents failed to demonstrate in the case at bar.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Roque
Finally, as regards the sixth requisite, the Court finds it irrelevant to
proceed with a discussion on the availability of adequate reliefs since
no impending threat or injury to the private respondents exists in the
first place.

All told, in view of the absence of the fourth and fifth requisites for
an action for declaratory relief, as well as the irrelevance of the sixth
requisite, private respondents’ petition for declaratory relief should
have been dismissed. Thus, by giving due course to the same, it
cannot be gainsaid that the RTC gravely abused its discretion.

WHEREFORE, the petition is GRANTED. Accordingly, the

April23, 2012 and July 31, 2012 Orders of the Regional Trial Court
of Quezon City, Branch 92 in SCA No. Q-07-60778 are REVERSED
and SET ASIDE and the petition for declaratory relief before the said
court is hereby DISMISSED.

SO ORDERED

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Tanda vs. Aldaya
[G.R. Nos. L-9322-23.  January 30, 1956.]
TEODORO TANDA vs. NARCISO N. ALDAYA
 The present appeal concerns a review of an order entered by the
Court of First Instance of Cavite on June 12, 1953 which dismisses
the complaint in Civil Case No. 5113 instituted to obtain from the
court a declaratory relief on certain matters pleaded therein while it
grants the plea prayed for in Civil Case No. 4606 of the same court
for withdrawal of Original Certificate of Title No. 114 in order that
the Register of Deeds may effect the registration of the document of
consolidation of ownership and issuance of the necessary title in
favor of the winning party. Another order appealed from is that of
August 26, 1953, but, being merely corollary, discussion thereof is
deemed unnecessary.
For a clear understanding of the issues raised herein, it is necessary
to make a brief statement of the factual background and the different
steps taken by the parties leading to the issuance of the order subject
of the present review.
On April 10, 1948, Appellant instituted in the Court of First Instance
of Cavite an action for the annulment of a certain contract of sale
with pacto de retro (Civil Case No. 4606). On May 11, 1949, the trial
court rendered a decision declaring the contract valid and
absolving Appellee of the complaint. After a motion to set aside
judgment and a motion for new trial filed by Appellant were denied
by the trial court, Appellant brought the case on appeal to the
Supreme Court. On July 23, 1951, the Supreme Court affirmed the
decision appealed from particularly with regard to the validity of the
contract which is disputed by Appellant. After the two motions for
reconsideration filed by Appellant were denied, the decision became
final and executory and the record was returned to the court of
origin; but, on November 8, 1951, Appellant initiated the present
case for declaratory relief. Considering that this action is purposeless
because, while outwardly its aim is to seek a declaratory relief on
certain matters but in effect its purpose is to nullify the judgment
rendered in the previous case (Civil Case No. 4606) which was
affirmed by the Supreme Court (G. R. No. L-3278), * Appellee filed
a motion to dismiss on the ground that the case states no cause of
action. In the meantime, Appellee moved to withdraw the original of
Title No. 114 which was presented in the case as evidence in order
that his ownership may be consolidated and a new title issued in his
name it appearing that case has been finally terminated (Civil Case
No. 4606). The trial court, acting on the two motions, entered an
order on June 12, 1953 granting the motion to dismiss and allowing
the withdrawal of the original title as already adverted to in the early
part of this decision.
The case was originally taken to the Court of Appeals
wherein Appellant assigned nine errors as allegedly committed by
the trial court but, after a cursory reading of the errors assigned, that
court certified the case to us on the ground that the questions to be
resolved are purely of law.
The purpose of the case which gave rise to the present appeal is
avowedly for declaratory relief instituted under Section 1, Rule 66 of
the Rules of Court which provides that “Any person interested under
a deed, will, contract or other written instrument, or whose rights are
affected by a statute or ordinance, may bring an action to determine
any question of construction or validity arising under the instrument
or statute and for a declaration of his rights or duties thereunder.”
And, it is claimed, this case comes under its purview because its
purpose is to obtain a clarification of the decision of this Court in G.
R. No. L-3278 which in the opinion of Appellant, is vague and
susceptible of double interpretation. Appellant contends that the
words “other written instrument” should be interpreted as including a
court decision regardless of whether it is final in character or
otherwise.
We do not subscribe to the foregoing view. Evidently, a court
decision cannot be interpreted as included within the purview of the
words “other written instrument”, as contended by Appellant, for the
simple reason that the Rules of Court already provide for the ways by
which an ambiguous or doubtful decision may be corrected or
clarified without need of resorting to the expedient prescribed by
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Tanda vs. Aldaya
Rule 66. Thus, if a party is not agreeable to a decision either on
questions of law or of fact, he may file with the trial court a motion
for reconsideration or a new trial in order that the defect may be
corrected (Section 1, Rule 37). The same remedy may be pursued by
a party with regard to a decision of the Court of Appeals or of the
Supreme Court (section 1, Rule 54, section 1, Rule 55, in connection
with section 1, Rule 58). A party may even seek relief from a
judgment or order of an inferior court on the ground of fraud,
accident, mistake or excusable negligence if he avails of that remedy
within the terms prescribed by section 1, Rule 38.
Apparently, Appellant has already availed of some of these legal
remedies but that he was denied relief because his claim was found
unmeritorious.
But the fundamental reason why the decision of this Court in the
original case (G. R. No. L-3278) cannot be the subject of declaratory
relief is predicated upon the principle of res judicata which stamps
the mark of finality on a case which has been fully and definitely
litigated in court. This principle is sound. It avoids multiplicity of
actions. It commands that once a case is definitely litigated it should
not be reopened. Thus, it has been held that “The foundation
principle upon which the doctrine of res judicata rests is that parties
ought not to be permitted to litigate the same issue more than once; 
that, when a right or fact has been judicially tried and determined by
a court of competent jurisdiction, or an opportunity for such trial has
been given, the judgment of the court, so long as it remains
unreversed, should be conclusive upon the parties, and those in
privity with them in law or estate. It is considered that a judgment
presents evidence of the facts of so high a nature that nothing which
could be proved by evidence aliunde would be sufficient to
overcome it; and therefore it would be useless for a party against
whom it can be properly applied to adduce any such evidence, and
accordingly he is estopped or precluded by law from doing so. Such
is the character of an estoppel by matter of record, as in case of an
issue on a question of fact, judicially tried and decided.” (Oberiano
vs. Sobremesana, G. R. No. L-4622, May 30, 1952.)
We may mention in passing that the claim of Appellant that the
decision of this Court above referred to suffers from contradiction or
inconsistency is rather equivocal for he mistook a restatement made
therein of a portion of the argument of Appellant as a finding of fact
made by the Court which is not the case. A more discerning
appreciation of the decision would bear this out. The truth of the
matter is that the Court concluded that the contract in dispute was
valid as may be inferred from the portion of the decision which we
quote:
“The second or supplemental motion for a new trial, the denial of
which is the subject of the fourth assignment of error, added a new
ground to the first motion for new trial and assailed the validity of
the contract of sale for supposed lack of valuable consideration or
because the consideration was ‘false and illicit’. Here is what we
make out of the Plaintiff’s line of reasoning, which is none too easy
to understand:
“At the start and through the greater part of the Japanese occupation,
the Japanese war notes were at par with the Commonwealth currency
and were so understood and recognized both by the Philippine
Executive Commission and the ‘Japanese-sponsored Philippine
Republic.’ By the contract in question the parties reduced the rate of
exchange between the two currencies from par to one to ten. ‘This
reduction is contrary to the law or public policy promulgated by the
Japanese Military authorities, or the Philippine Executive
Commission.’ Therefore the consideration was false and illicit and
the contract was void ab initio, according to Articles 1255, 1275,
1276, and 1278 of the Civil Code.
“What the Plaintiff would want the court to do as a result of the
contract’s alleged nullity is not stated or made clear. However, that
may be, the contract was not void. It was licit for the parties to agree
that the vendor should pay the purchaser only P2,000 instead of
P20,000 as price of repurchase regardless of the currency received by
the vendor. In this case the Plaintiff, who is a full-pledged lawyer
and appeared below in his own behalf and filed the brief in this
instance, drew the deed of sale himself, according to the lower
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Tanda vs. Aldaya
court’s finding, and the fixing of the ratio of ten to one between the
Japanese war notes and the Commonwealth money must have been
his own idea and certainly was for his own benefit. If the devaluation
of the Japanese money bothered the Plaintiff’s conscience, there was
no law to prevent him from redeeming the land for P20,000, or
P15,000 which he admitted having received.” (Italics supplied)
With regard to the portion of the order which allows the withdrawal
of the original certificate of title in order that the Register of Deeds
may effect the consolidation of ownership and issuance of a new title
in favor of Appellee as requested, we do not also find any
justification for its reversal, as we are urged, it appearing that the
decision in the original case (Civil Case No. 466) has become final
and executory and no further step need be taken therein affecting the
equities of the parties. The case is closed and no reason is seen why
the evidence that has been presented cannot be withdrawn.
Finding no merit in this appeal, we hereby affirm the order appealed
from, with costs against Appellant.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 PDIC vs. Court of Appeals
[G.R. No. 126911. April 30, 2003]
PDIC vs. CA
The present petition for review assails the decision of the Court
of Appeals affirming that of the Regional Trial Court of Iloilo City,
Branch 30, finding petitioner Philippine Deposit Insurance
Corporation (PDIC) liable, as statutory insurer, for the value of 20
Golden Time Deposits belonging to respondents Jose Abad, Leonor
Abad, Sabina Abad, Josephine Josie Beata Abad-Orlina, Cecilia
Abad, Pio Abad, Dominic Abad, and Teodora Abad at the Manila
Banking Corporation (MBC), Iloilo Branch.
Prior to May 22, 1997, respondents had, individually or jointly
with each other, 71 certificates of time deposits denominated as
Golden Time Deposits (GTD) with an aggregate face value
of P1,115,889.96.[1]
On May 22, 1987, a Friday, the Monetary Board (MB) of the
Central Bank of the Philippines, now Bangko Sentral ng
Pilipinas, issued Resolution 505[2] prohibiting MBC to do business in
the Philippines, and placing its assets and affairs under receivership.
The Resolution, however, was not served on MBC until Tuesday the
following week, or on May 26, 1987, when the designated Receiver
took over.[3]
On May 25, 1987, the next banking day following the issuance
of the MB Resolution, respondent Jose Abad was at the MBC at 9:00
a.m. for the purpose of pre-terminating the 71 aforementioned GTDs
and re-depositing the fund represented thereby into 28 new GTDs in
denominations of P40,000.00 or less under the names of herein
respondents individually or jointly with each other. [4] Of the 28 new
GTDs, Jose Abad pre-terminated 8 and withdrew the value thereof in
the total amount of P320,000.00.[5]
Respondents thereafter filed their claims with the PDIC for the
payment of the remaining 20 insured GTDs. [6]
On February 11, 1988, PDIC paid respondents the value of 3
claims in the total amount of P120,000.00. PDIC, however, withheld
payment of the 17 remaining claims after Washington Solidum,
Deputy Receiver of MBC-Iloilo, submitted a report to the
PDIC[7] that there was massive conversion and substitution of trust
and deposit accounts on May 25, 1987 at MBC-Iloilo. [8]The pertinent
portions of the report stated:
xxx
On May 25, 1987 (Monday) or a day prior to the official
announcement and take-over by CB of the assets and liabilities of
The Manila Banking Corporation, the Iloilo Branch was found to
have recorded an unusually heavy movements in terms of volume
and amount for all types of deposits and trust accounts. It appears
that the impending receivership of TMBC was somehow already
known to many depositors on account of the massive withdrawals
paid on this day which practically wiped out the branchs entire cash
position. . . .
xxx
. . . The intention was to maximize the availment of PDIC coverage
limited to P40,000 by spreading out big accounts to as many
certificates under various nominees. . . .[9]
xxx
Because of the report, PDIC entertained serious reservation in
recognizing respondents GTDs as deposit liabilities of MBC-Iloilo.
Thus, on August 30, 1991, it filed a petition for declaratory relief
against respondents with the Regional Trial Court (RTC) of Iloilo
City, for a judicial declaration determination of the insurability of
respondents GTDs at MBC-Iloilo.[10]
In their Answer filed on October 24, 1991 and Amended
Answer[11] filed on January 9, 1992, respondents set up
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 PDIC vs. Court of Appeals
a counterclaim against PDIC whereby they asked for payment of
their insured deposits.[12]
In its Decision of February 22, 1994,[13] Branch 30 of the Iloilo
RTC declared the 20 GTDs of respondents to be deposit liabilities of
MBC, hence, are liabilities of PDIC as statutory insurer. It
accordingly disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered:
1. Declaring the 28 GTDs of the Abads which were issued by the
TMBC-Iloilo on May 25, 1987 as deposits or deposit liabilities of the
bank as the term is defined under Section 3 (f) of R.A. No. 3591, as
amended;
2. Declaring PDIC, being the statutory insurer of bank deposits,
liable to the Abads for the value of the remaining 20 GTDs, the other
8 having been paid already by TMBC-Iloilo on May 25, 1987;
3. Ordering PDIC to pay the Abads the value of said 20 GTDs less
the value of 3 GTDs it paid on February 11, 1988, and the amounts it
may have paid the Abads pursuant to the Order of this Court dated
September 8, 1992;
4. Ordering PDIC to pay immediately the Abads the balance of its
admitted liability as contained in the aforesaid Order of September 8,
1992, should there be any, subject to liquidation when this case shall
have been finally decide; and
5. Ordering PDIC to pay legal interest on the remaining insured
deposits of the Abads from February 11, 1988 until they are fully
paid.
SO ORDERED.
On appeal, the Court of Appeals, by the assailed Decision of
October 21, 1996,[14] affirmed the trial courts decision except as to
the award of legal interest which it deleted.
Hence, PDICs present Petition for Review which sets forth this
lone assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE HOLDING OF THE TRIAL COURT THAT
THE AMOUNT REPRESENTED IN THE FACES OF THE SO
CALLED GOLDEN TIME DEPOSITS WERE INSURED
DEPOSITS EVEN AS THEY WERE MERE DERIVATIVES OF
RESPONDENTS PREVIOUS ACCOUNT BALANCES WHICH
WERE PRE-TERMINATED/TERMINATED AT THE TIME THE
MANILA BANKING CORPORATION WAS ALREADY IN
SERIOUS FINANCIAL DISTRESS.
In its supplement to the petition, PDIC adds the following
assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN
AFFIRMING THE HOLDING OF THE TRIAL COURT
ORDERING PETITIONER TO PAY RESPONDENTS CLAIMS
FOR PAYMENT OF INSURED DEPOSITS FOR THE REASON
THAT AN ACTION FOR DECLARATORY RELIEF DOES NOT
ESSENTIALLY ENTAIL AN EXECUTORY PROCESS AS THE
ONLY RELIEF THAT SHOULD HAVE BEEN GRANTED BY
THE TRIAL COURT IS A DECLARATION OF THE RIGHTS
AND DUTIES OF PETITIONER UNDER R.A. 3591, AS
AMENDED, PARTICULARLY SECTION 3(F) THEREOF AS
CONSIDERED AGAINST THE SURROUNDING
CIRCUMSTANCES OF THE MATTER IN ISSUE SOUGHT TO
BE CONSTRUED WITHOUT PREJUDICE TO OTHER
MATTERS THAT NEED TO BE CONSIDERED BY
PETITIONER IN THE PROCESSING OF RESPONDENTS
CLAIMS.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 PDIC vs. Court of Appeals
Under its charter,[15] PDIC (hereafter petitioner) is liable only for
deposits received by a bank in the usual course of business. [16] Being
of the firm conviction that, as the reported May 25, 1987 bank
transactions were so massive, hence, irregular, petitioner essentially
seeks a judicial declaration that such transactions were not made in
the usual course of business and, therefore, it cannot be made liable
for deposits subject thereof.[17]
Petitioner points that as MBC was prohibited from doing further
business by MB Resolution 505 as of May 22, 1987, all transactions
subsequent to such date were not done in the usual course of
business.
Petitioner further posits that there was no consideration for the
20 GTDs subject of respondents claim. In support of this submission,
it states that prior to March 25, 1987, when the 20 GTDs were made,
MBC had been experiencing liquidity problems, e.g., at the start of
banking operations on March 25, 1987, it had only P2,841,711.90
cash on hand and at the end of the day it was left with P27,805.81
consisting mostly of mutilated bills and coins. [18] Hence, even if
respondents had wanted to convert the face amounts of the GTDs to
cash, MBC could not have complied with it.
Petitioner theorizes that after MBC had exhausted its cash and
could no longer sustain further withdrawal transactions, it instead
issued new GTDs as payment for the pre-terminated GTDs of
respondents to make sure that all the newly-issued GTDs have face
amounts which are within the statutory coverage of deposit
insurance.
Petitioner concludes that since no cash was given by
respondents and none was received by MBC when the new GTDs
were transacted, there was no consideration therefor and, thus, they
were not validly transacted in the usual course of business and no
liability for deposit insurance was created. [19]
Petitioners position does not persuade.
While the MB issued Resolution 505 on May 22, 1987, a copy
thereof was served on MBC only on May 26, 1987. MBC and its
clients could be given the benefit of the doubt that they were not
aware that the MB resolution had been passed, given the necessity of
confidentiality of placing a banking institution under receivership. [20]
The evident implication of the law, therefore, is that the appointment
of a receiver may be made by the Monetary Board without notice and
hearing but its action is subject to judicial inquiry to insure the
protection of the banking institution. Stated otherwise, due process
does not necessarily require a prior hearing; a hearing or an
opportunity to be heard may be subsequent to the closure. One can
just imagine the dire consequences of a prior hearing:  bank runs
would be the order of the day, resulting in panic and hysteria.  In the
process, fortunes may be wiped out, and disillusionment will run the
gamut of the entire banking community. (Underlining supplied). [21]
Mere conjectures that MBC had actual knowledge of its
impending closure do not suffice. The MB resolution could not thus
have nullified respondents transactions which occurred prior to May
26, 1987.
That no actual money in bills and/or coins was handed by
respondents to MBC does not mean that the transactions on the new
GTDs did not involve money and that there was no consideration
therefor. For the outstanding balance of respondents 71 GTDs in
MBC prior to May 26, 1987[22] in the amount of P1,115,889.15 as
earlier mentioned was re-deposited by respondents under 28 new
GTDs. Admittedly, MBC had P2,841,711.90 cash on hand more than
double the outstanding balance of respondents 71 GTDs at the start
of the banking day on May 25, 1987. Since respondent Jose Abad
was at MBC soon after it opened at 9:00 a.m. of that day, petitioner
should not presume that MBC had no cash to cover the new GTDs of
respondents and conclude that there was no consideration for said
GTDs.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 PDIC vs. Court of Appeals
Petitioner having failed to overcome the presumption that the
ordinary course of business was followed, [23]this Court finds that the
28 new GTDs were deposited in the usual course of business of
MBC.
In its second assignment of error, petitioner posits that the trial
court erred in ordering it to pay the balance of the deposit insurance
to respondents, maintaining that the instant petition stemmed from a
petition for declaratory relief which does not essentially entail an
executory process, and the only relief that should have been granted
by the trial court is a declaration of the parties rights and duties. As
such, petitioner continues, no order of payment may arise from the
case as this is beyond the office of declaratory relief proceedings. [24]
Without doubt, a petition for declaratory relief does not
essentially entail an executory process. There is nothing in its nature,
however, that prohibits a counterclaim from being set-up in the same
action.[25]
determined.[27] This issue was not raised in the court a quo, however,
hence, it cannot be raised for the first time in the petition at bar. [28]
Finally, petitioner faults respondents for availing of the statutory
limits of the PDIC law, presupposing that, based on the conduct of
respondent Jose Abad on March 25, 1987, he and his co-respondents
somehow knew of the impending closure of MBC. Petitioner
ascribes bad faith to respondent Jose Abad in transacting the
questioned deposits, and seeks to disqualify him from availing the
benefits under the law.[29]
Good faith is presumed. This, petitioner failed to overcome
since it offered mere presumptions as evidence of bad faith.
WHEREFORE, the assailed decision of the Court of Appeals
is hereby AFFIRMED.
SO ORDERED

Now, there is nothing in thee nature of a special civil action for

declaratory relief that proscribes the filing of a counterclaim based
on the same transaction, deed or contract subject of the complaint. A
special civil action is after all not essentially different from an
ordinary civil action, which is generally governed by Rules 1 to 56 of
the Rules of Court, except that the former deals with a special subject
matter which makes necessary some special regulation. But the
identity between their fundamental nature is such that the same
rules governing ordinary civil suits may and do apply to special civil
actions if not inconsistent with or if they may serve to supplement
the provisions of the peculiar rules governing special civil actions. [26]

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

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Matalin Coconut Co. vs. Municipal Council of Lanao
G.R. No. L-28138 August 13, 1986
MATALIN COCONUT CO., INC. vs. THE MUNICIPAL
COUNCIL OF MALABANG, LANAO DEL SUR, AMIR M.
BALINDONG and HADJI PANGILAMUN MANALOCON,
MUNICIPAL MAYOR and MUNICIPAL TREASURER OF
MALABANG, LANAO DEL SUR
 On August 24, 1966, the Municipal Council of Malabang, Lanao del
Sur, invoking the authority of Section 2 of Republic Act No. 2264,
otherwise known as the Local Autonomy Act, enacted Municipal
Ordinance No. 45-46, entitled "AN ORDINANCE IMPOSING A
POLICE INSPECTION FEE OF P.30 PER SACK OF CASSAVA
STARCH PRODUCED AND SHIPPED OUT OF THE
MUNICIPALITY OF MALABANG AND IMPOSING
PENALTIES FOR VIOLATIONS THEREOF." The ordinance made
it unlawful for any person, company or group of persons "to ship out
of the Municipality of Malabang, cassava starch or flour without
paying to the Municipal Treasurer or his authorized representatives
the corresponding fee fixed by (the) ordinance." It imposed a "police
inspection fee" of P.30 per sack of cassava starch or flour, which
shall be paid by the shipper before the same is transported or shipped
outside the municipality. Any person or company or group of
individuals violating the ordinance "is liable to a fine of not less than
P100.00, but not more than P1,000.00, and to pay Pl.00 for every
sack of flour being illegally shipped outside the municipality, or to
suffer imprisonment of 20 days, or both, in the discretion of the
court.
The validity of the ordinance was challenged by the Matalin
Coconut, Inc. in a petition for declaratory relief filed with the then
Court of First Instance of Lanao del Sur against the Municipal
Council, the Municipal Mayor and the Municipal Treasurer of
Malabang, Lanao del Sur. Alleging among others that the ordinance
is not only ultra vires, being violative of Republic Act No. 2264, but
also unreasonable, oppressive and confiscatory, the petitioner prayed
that the ordinance be declared null and void ab initio, and that the
respondent Municipal Treasurer be ordered to refund the amounts
paid by petitioner under the ordinance. The petitioner also prayed
that during the pendency of the action, a preliminary injunction be
issued enjoining the respondents from enforcing the ordinance. The
application for preliminary injunction, however, was denied by the
trial court; instead respondent Municipal Treasurer was ordered to
allow payment of the taxes imposed by the ordinance under protest.
Claiming that it was also adversely affected by the ordinance,
Purakan Plantation Company was granted leave to intervene in the
action. The intervenor alleged that while its cassava flour factory was
situated in another municipality, i.e., Balabagan, Lanao del Sur, it
had to transport the cassava starch and flour it produced to the
seashore through the Municipality of Malabang for loading in
coastwise vessels; that the effect of the enactment of Ordinance No.
45-46, is that intervenor had to refrain from transporting its products
through the Municipality of Malabang in order to ship them by sea to
other places.
After trial, the Court a quo rendered a decision declaring the
municipal ordinance in question null and void; ordering the
respondent Municipal Treasurer to refund to the petitioner the
payments it made under the said ordinance from September 27, 1966
to May 2, 1967, amounting to P 25,500.00, as well as all payments
made subsequently thereafter; and enjoining and prohibiting the
respondents, their agents or deputies, from collecting the tax of P.30
per bag on the cassava flour or starch belonging to intervenor,
Purakan Plantation Company, manufactured or milled in the
Municipality of Balabagan, but shipped out through the Municipality
of Malabang.
After the promulgation of the decision, the Trial Court issued a writ
of preliminary mandatory injunction, upon motion of petitioner,
requiring the respondent Municipal Treasurer to deposit with the
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Matalin Coconut Co. vs. Municipal Council of Lanao
Philippine National Bank, Iligan Branch, in the name of the
Municipality of Malabang, whatever amounts the petitioner had
already paid or shall pay pursuant to the ordinance in question up to
and until final termination of the case; the deposit was not to be
withdrawn from the said bank without any order from the court. On
motion for reconsideration by respondents, the writ was subsequently
modified on July 20, 1967, to require the deposit only of amounts
paid from the effectivity of the writ up to and until the final
termination of the suit.
From the decision of the trial court, the respondents appealed to this
Court.
A motion to dismiss appeal filed by petitioner-appellee, was denied
by this court in its resolution of October 31, 1967. Subsequently,
respondents-appellants filed a motion to dissolve the writ of
preliminary mandatory injunction issued by the trial court on July 20,
1967. This motion was also denied by this Court on January 10,
1968.
Of the assignments of error raised by the appellants in their Brief,
only the following need be discussed: (1) that the trial court erred in
adjudicating the money claim of the petitioner in an action for
declaratory relief; and (2) that the trial court erred in declaring the
municipal ordinance in question null and void.
The respondents-appellants maintain that it was error for the trial
court, in an action for declaratory relief, to order the refund to
petitioner-appellee of the amounts paid by the latter under the
municipal ordinance in question. It is the contention of respondents-
appellants that in an action for declaratory relief, all the court can do
is to construe the validity of the ordinance in question and declare the
rights of those affected thereby. The court cannot declare the
ordinance illegal and at the same time order the refund to petitioner
of the amounts paid under the ordinance, without requiring petitioner
to file an ordinary action to claim the refund after the declaratory
relief judgment has become final. Respondents maintain that under
Rule 64 of the Rules of Court, the court may advise the parties to file
the proper pleadings and convert the hearing into an ordinary action,
which was not done in this case.
We find no merit in such contention. Under Sec. 6 of Rule 64, the
action for declaratory relief may be converted into an ordinary action
and the parties allowed to file such pleadings as may be necessary or
proper, if before the final termination of the case "a breach or
violation of an...ordinance, should take place." In the present case, no
breach or violation of the ordinance occurred. The petitioner decided
to pay "under protest" the fees imposed by the ordinance. Such
payment did not affect the case; the declaratory relief action was still
proper because the applicability of the ordinance to future
transactions still remained to be resolved, although the matter could
also be threshed out in an ordinary suit for the recovery of taxes paid
(Shell Co. of the Philippines, Ltd. vs. Municipality of Sipocot, L-
12680, March 20, 1959). In its petition for declaratory relief,
petitioner-appellee alleged that by reason of the enforcement of the
municipal ordinance by respondents it was forced to pay under
protest the fees imposed pursuant to the said ordinance, and
accordingly, one of the reliefs prayed for by the petitioner was that
the respondents be ordered to refund all the amounts it paid to
respondent Municipal Treasurer during the pendency of the case. The
inclusion of said allegation and prayer in the petition was not
objected to by the respondents in their answer. During the trial,
evidence of the payments made by the petitioner was introduced.
Respondents were thus fully aware of the petitioner's claim for
refund and of what would happen if the ordinance were to be
declared invalid by the court.
Respondents' contention, if sustained, would in effect require a
separate suit for the recovery of the fees paid by petitioner under
protest. Multiplicity of suits should not be allowed or encouraged
and, in the context of the present case, is clearly uncalled for and
unnecessary.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Matalin Coconut Co. vs. Municipal Council of Lanao
The main issue to be resolve in this case whether not Ordinance No.
45-66 enacted by respondent Municipal Council of Malabang, Lanao
del Sur, is valid. The respondents-appellants contend that the
municipality has the power and authority to approve the ordinance in
question pursuant to Section 2 of the Local Autonomy Act (Republic
Act No. 2264).
Since the enactment of the Local Autonomy Act, a liberal rule has
been followed by this Court in construing municipal ordinances
enacted pursuant to the taxing power granted under Section 2 of said
law. This Court has construed the grant of power to tax under the
above-mentioned provision as sufficiently plenary to cover
"everything, excepting those which are mentioned" therein, subject
only to the limitation that the tax so levied is for public purposes,
just and uniform (Nin Bay Mining Company vs. Municipality of
Roxas, Province of Palawan, 14 SCRA 661; C.N. Hodges vs.
Municipal Board, Iloilo City, et al., 19 SCRA 28).
We agree with the finding of the trial court that the amount collected
under the ordinance in question partakes of the nature of a tax,
although denominated as "police inspection fee" since its undeniable
purpose is to raise revenue. However, we cannot agree with the trial
court's finding that the tax imposed by the ordinance is a percentage
tax on sales which is beyond the scope of the municipality's authority
to levy under Section 2 of the Local Autonomy Act. Under the said
provision, municipalities and municipal districts are prohibited from
imposing" any percentage tax on sales or other taxes in any
form based thereon. " The tax imposed under the ordinance in
question is not a percentage tax on sales or any other form of tax
based on sales. It is a fixed tax of P.30 per bag of cassava starch or
flour "shipped out" of the municipality. It is not based on sales.
However, the tax imposed under the ordinance can be stricken down
on another ground. According to Section 2 of the abovementioned
Act, the tax levied must be "for public purposes, just and uniform"
(Emphasis supplied.) As correctly held by the trial court, the so-
called "police inspection fee" levied by the ordinance is "unjust and
unreasonable." Said the court a quo:
... It has been proven that the only service rendered
by the Municipality of Malabang, by way of
inspection, is for the policeman to verify from the
driver of the trucks of the petitioner passing by at the
police checkpoint the number of bags loaded per trip
which are to be shipped out of the municipality
based on the trip tickets for the purpose of
computing the total amount of tax to be collect (sic)
and for no other purpose. The pretention of
respondents that the police, aside from counting the
number of bags shipped out, is also inspecting the
cassava flour starch contained in the bags to find out
if the said cassava flour starch is fit for human
consumption could not be given credence by the
Court because, aside from the fact that said purpose
is not so stated in the ordinance in question, the
policemen of said municipality are not competent to
determine if the cassava flour starch are fit for
human consumption. The further pretention of
respondents that the trucks of the petitioner hauling
the bags of cassava flour starch from the mill to the
bodega at the beach of Malabang are escorted by a
policeman from the police checkpoint to the beach
for the purpose of protecting the truck and its
cargoes from molestation by undesirable elements
could not also be given credence by the Court
because it has been shown, beyond doubt, that the
petitioner has not asked for the said police protection
because there has been no occasion where its trucks
have been molested, even for once, by bad elements
from the police checkpoint to the bodega at the
beach, it is solely for the purpose of verifying the
correct number of bags of cassava flour starch
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Matalin Coconut Co. vs. Municipal Council of Lanao
loaded on the trucks of the petitioner as stated in the
trip tickets, when unloaded at its bodega at the
beach. The imposition, therefore, of a police
inspection fee of P.30 per bag, imposed by said
ordinance is unjust and unreasonable.

The Court finally finds the inspection fee of P0.30

per bag, imposed by the ordinance in question to be
excessive and confiscatory. It has been shown by the
petitioner, Matalin Coconut Company, Inc., that it is
merely realizing a marginal average profit of P0.40,
per bag, of cassava flour starch shipped out from the
Municipality of Malabang because the average
production is P15.60 per bag, including
transportation costs, while the prevailing market
price is P16.00 per bag. The further imposition,
therefore, of the tax of P0.30 per bag, by the
ordinance in question would force the petitioner to
close or stop its cassava flour starch milling business
considering that it is maintaining a big labor force in
its operation, including a force of security guards to
guard its properties. The ordinance, therefore, has an
adverse effect on the economic growth of the
Municipality of Malabang, in particular, and of the
nation, in general, and is contrary to the economic
policy of the government.

Having found the ordinance in question to be invalid, we find it

unnecessary to rule on the other errors assigned by the appellants.

WHEREFORE, petition is dismissed. The decision of the court a quo

is hereby affirmed. No costs.

SO ORDERED.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
 
DEPARTMENT OF BUDGET AND MANAGEMENT vs.
MANILA’S FINEST RETIREES ASSOCIATION, INC.
G.R. No. 169466
May 9, 2007
  
Assailed and sought to be set aside in this petition for review
on certiorari under Rule 45 of the Rules of Court are the following
issuances of the Court of Appeals (CA) in CA-G.R. CV No. 78203, to
wit:
[1]
1.                  Decision  dated July 7, 2005 which
affirmed in toto the decision of the Regional Trial
Court of Manila, Branch 32, in Civil Case No. 02-
103702, a suit for declaratory relief, declaring the
herein respondents entitled to the same retirement
benefits accorded upon retirees of the Philippine
National Police (PNP) under Republic Act (R.A.) No.
6975, as amended by R.A. No. 8551, and ordering the
herein petitioners to implement the proper adjustments
on respondents retirement benefits; and
 
2.                  Resolution[2] dated August 24, 2005 which
denied the petitioners motion for reconsideration.
The antecedent facts:
 
In 1975, Presidential Decree (P.D.) No. 765 was issued
constituting the Integrated National Police (INP) to be composed of
the Philippine Constabulary (PC) as the nucleus and the integrated
police forces as components thereof. Complementing P.D. No. 765
was P.D. No. 1184[3] dated August 26, 1977 (INP Law, hereinafter)
issued to professionalize the INP and promote career development
therein.
On December 13, 1990, Republic Act (R.A.) No. 6975,
entitled AN ACT ESTABLISHING THE PHILIPPINE NATIONAL
POLICE UNDER A REORGANIZED DEPARTMENT OF THE
INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER
PURPOSES, hereinafter referred to as PNP Law, was
enacted. Under Section 23 of said law, the Philippine National Police
(PNP) would initially consist of the members of the INP, created
under P.D. No. 765, as well as the officers and enlisted personnel of
the PC. In part, Section 23 reads:
SEC. 23. Composition. Subject to the limitation
provided for in this Act, the Philippine National Police,
hereinafter referred to as the PNP, is hereby established,
initially consisting of the members of the police forces who
were integrated into the Integrated National Police (INP)
pursuant to Presidential Decree No. 765, and the officers and
enlisted personnel of the Philippine Constabulary (PC).
A little less than eight (8) years later, or on February 25,
1998, R.A. No. 6975 was amended by R.A. No. 8551,
otherwise known as the PHILIPPINE NATIONAL POLICE
REFORM AND REORGANIZATION ACT OF 1998. Among other
things, the amendatory law reengineered the retirement scheme in the
police organization. Relevantly, PNP personnel, under the new law,
stood to collect more retirement benefits than what INP members of
equivalent rank, who had retired under the INP Law, received.
 
The INP retirees illustrated the resulting disparity in the
retirement benefits between them and the PNP retirees as follows: [4]
 
Retirement Rank Monthly Pension Difference
INP PNP INP PNP  
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
Corporal SPO3 P 3,225.00 P P 8,095.00
11,310.00
Captain P. Sr. P 5,248.00 P P10,628.00
Insp. 15,976.00
Brig. P. P P P 8,033.76
Gen. Chief 10,054.24 18,088.00
Supt.
 
 
Hence, on June 3, 2002, in the Regional Trial Court (RTC)
of Manila, all INP retirees, spearheaded by the Manilas Finest
Retirees Association, Inc., or the MFRAI (hereinafter collectively
referred to as the INP Retirees), filed a petition for declaratory relief,
[5] 
thereunder impleading, as respondents, the Department of Budget
and Management (DBM), the PNP, the National Police Commission
(NAPOLCOM), the Civil Service Commission (CSC) and the
Government Service Insurance System (GSIS). Docketed in the RTC
as Civil Case No. 02-103702, which was raffled to Branch 22
thereof, the petition alleged in gist that INP retirees were equally
situated as the PNP retirees but whose retirement benefits prior to the
enactment of R.A. No. 6975, as amended by R.A. No. 8551, were
unconscionably and arbitrarily excepted from the higher rates and
adjusted benefits accorded to the PNP retirees. Accordingly, in their
petition, the petitioning INP retirees pray that a
 
DECLARATORY JUDGMENT be rendered
in their favor, DECLARING with certainty that they,
as INP-retirees, are truly absorbed and equally
considered as PNP-retirees and thus, entitled to
enjoy the SAME or IDENTICAL retirement benefits
being bestowed to PNP-retirees by virtue of said
PNP Law or Republic Act No. 6975, as amended by
Republic Act 8551, with the corollary mandate for
the respondents-government agencies to effect the
immediate adjustment on their previously received
disparate retirement benefits, retroactive to
its effectivity, and with due payment thereof.
 
The GSIS moved to dismiss the petition on grounds of lack
of jurisdiction and cause of action. On the other hand, the CSC,
DBM, NAPOLCOM and PNP, in their respective answers, asserted
that the petitioners could not claim the more generous retirement
benefits under R.A. No. 6975 because at no time did they become
PNP members, having retired prior to the enactment of said
law. DBM, NAPOLCOM and PNP afterwards filed their respective
pre-trial briefs.
 
The ensuing legal skirmish is not relevant to the disposition
of the instant case. The bottom line is that, on March 21, 2003, the
RTC came out with its decision [6] holding that R.A. No. 6975, as
amended, did not abolish the INP but merely provided for the
absorption of its police functions by the PNP, and accordingly
rendered judgment for the INP retirees, to wit:
 
WHEREFORE, this Court hereby renders
JUDGMENT DECLARING the INP Retirees
entitled to the same or identical retirement benefits
and such other benefits being granted, accorded and
bestowed upon the PNP Retirees under the PNP Law
(RA No. 6975, as amended).
 
The respondents Government Departments
and Agencies shall IMMEDIATELY EFFECT and
IMPLEMENT the proper adjustments on the INP
Retirees retirement and such other benefits,
RETROACTIVE to its date of effectivity, and
RELEASE and PAY to the INP Retirees the due
payments of the amounts.
 
SO ORDERED.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
On April 2, 2003, the trial court issued what it denominated
as Supplement to the Decision whereunder it granted the GSIS
motion to dismiss and thus considered the basic petition as
withdrawn with respect to the latter.
 
From the adverse decision of the trial court, the remaining
respondents, namely, DBM, PNP, NAPOLCOM and CSC,
interposed an appeal to the CA whereat their appellate recourse was
docketed as CA-G.R. CV No. 78203.
 
As stated at the threshold hereof, the CA, in its decision of
July 7, 2005,[7] affirmed that of the trial court upholding the
entitlement of the INP retirees to the same or identical retirement
benefits accorded upon PNP retirees under R.A. No. 6975, as
amended.
 
Their motion for reconsideration having been denied by
the CA in` its equally assailed resolution of August 24, 2005,
[8]
 herein petitioners are now with this Court via the instant
recourse on their singular submission that -
 
THE COURT OF APPEALS COMMITTED A
SERIOUS ERROR IN LAW IN AFFIRMING
THE DECISION OF THE TRIAL COURT
NOTWITHSTANDING THAT IT IS
CONTRARY TO LAW AND ESTABLISHED
JURISPRUDENCE.
We DENY.
 
In the main, it is petitioners posture that R.A. No. 6975
clearly abolished the INP and created in its stead a new police force,
the PNP. Prescinding therefrom, petitioners contend that since the
PNP is an organization entirely different from the INP, it follows
that INP retirees never became PNP members. Ergo, they cannot
avail themselves of the retirement benefits accorded to PNP
members under R.A. No. 6975 and its amendatory law, R.A. No.
8551.
 
A flashback at history is proper.
 
As may be recalled, R.A. No. 6975 was enacted into law
on December 13, 1990, or just about four (4) years after the 1986
Edsa Revolution toppled down the dictatorship regime. Egged on by
the current sentiment of the times generated by the long period of
martial rule during which the police force, the PC-INP, had a
military character, being then a major service of the Armed Forces of
the Philippines, and invariably moved by a fresh constitutional
mandate for the establishment of one police force which should be
national in scope and, most importantly, purely civilian in character,
[9]
 Congress enacted R.A. No. 6975 establishing the PNP and placing
it under the Department of Interior and Local Government. To
underscore the civilian character of the PNP, R.A. No. 6975 made it
emphatically clear in its declaration of policy the following:
 
Section 2. Declaration of policy - It is
hereby declared to be the policy of the State to
promote peace and order, ensure public safety and
further strengthen local government capability aimed
towards the effective delivery of the basic services to
the citizenry through the establishment of a highly
efficient and competent police force that is national
in scope and civilian in character. xxx.
The police force shall be organized, trained
and equipped primarily for the performance of
police functions. Its national scope and civilian
character shall be paramount. No element of the
police force shall be military nor shall any
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
position thereof be occupied by active members
of the [AFP]. (Emphasis and word in bracket
supplied.)
 
Pursuant to Section 23, supra, of R.A. No. 6975, the PNP
initially consisted of the members of the police forces who were
integrated into the INP by virtue of P.D. No. 765, while Section
86[10] of the same law provides for the assumption by the PNP of the
police functions of the INP and its absorption by the
former, including its appropriations, funds, records, equipment, etc.,
as well as its personnel.[11] And to govern the statutes
implementation, Section 85 of the Act spelled out the following
absorption phases:
 
Phase I Exercise of option by the uniformed
members of the [PC], the PC elements assigned with
the Narcotics Command, CIS, and the personnel of
the technical services of the AFP assigned with the
PC to include the regular CIS investigating agents
and the operatives and agents of the NAPOLCOM
Inspection. Investigation and Intelligence Branch,
and the personnel of the absorbed National Action
Committee on Anti-Hijacking (NACAH) of the
Department of National Defense to be completed
within six (6) months from the date of
the effectivity of this Act. At the end of this phase,
all personnel from the INP, PC, AFP Technical
Services, NACAH, and NAPOLCOM Inspection,
Investigation and Intelligence Branch shall have
been covered by official orders assigning them to
the PNP, Fire and Jail Forces by their respective
units.
 
Phase II Approval of the table of organization and
equipment of all bureaus and offices created under
this Act, preparation and filling up of their staffing
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
pattern, transfer of assets to the [DILG] and
organization of the Commission, to be completed
within twelve (12) months from the effectivity date
hereof. At the end of this phase, all personnel to be
absorbed by the [DILG] shall have been issued
appointment papers, and the organized Commission
and the PNP shall be fully operational.
 
The PC officers and enlisted personnel who
have not opted to join the PNP shall be reassigned to
the Army, Navy or Air Force, or shall be allowed to
retire under existing AFP rules and regulations. Any
PC-INP officer or enlisted personnel may, within
the twelve-month period from the effectivity of
this Act, retire and be paid retirement benefits
corresponding to a position two (2) ranks higher
than his present grade, subject to the conditions
that at the time he applies for retirement, he has
rendered at least twenty (20) years of service and
still has, at most, twenty-four (24) months of
service remaining before the compulsory
retirement age as provided by existing law for his
office.
 
Phase III Adjustment of ranks and
establishment of one (1) lineal roster of officers and
another for non-officers, and the rationalization of
compensation and retirement systems; taking into
consideration the existing compensation schemes
and retirement and separation benefit systems of the
different components of the PNP, to ensure that no
member of the PNP shall suffer any diminution in
basic longevity and incentive pays, allowances and
retirement benefits due them before the creations of
the PNP, to be completed within eighteen (18)
months from the effectivity of this Act. xxx.
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
Upon the effectivity of this Act, the [DILG]
Secretary shall exercise administrative supervision as
well as operational control over the transferred, merged
and/or absorbed AFP and INP units. The incumbent
Director General of the PC-INP shall continue to act as
Director General of the PNP until replaced . (Emphasis
and words in brackets supplied.)
 
 
From the foregoing, it appears clear to us that the INP was
never, as posited by the petitioners, abolished or terminated out of
existence by R.A. No. 6975. For sure, nowhere in R.A. No. 6975
does the words abolish or terminate appear in reference to the INP.
Instead, what the law provides is for the absorption, transfer, and/or
merger of the INP, as well as the other offices comprising the PC-
INP, with the PNP. To abolish is to do away with, to annul, abrogate
or destroy completely;[12] to absorb is to assimilate, incorporate or to
take in.[13] Merge means to cause to combine or unite to become
legally absorbed or extinguished by merger [14] while transfer denotes
movement from one position to another. Clearly, abolition cannot be
equated with absorption.
 
True it is that Section 90[15] of R.A. No. 6975 speaks of the
INP [ceasing] to exist upon the effectivity of the law. It ought to be
stressed, however, that such cessation is but the logical consequence
of the INP being absorbed by the PNP.  fact abolished but was merely transformed to become the PNP,
Far from being abolished then, the INP, at the most, was
merely transformed to become the PNP, minus of course its military
character and complexion.
 
Even the petitioners effort at disclosing the legislative intent
behind the enactment of R.A. No. 6975 cannot support their theory
of abolition. Rather, the Senate and House deliberations on the bill
that eventually became R.A. No. 6975 reveal what has correctly been
held by the CA in its assailed decision: that the PNP was precisely
created to erase the stigma spawned by the militarization of the
police force under the PC-INP structure. The rationale behind the
passage of R.A. No. 6975 was adequately articulated by no less than
the sponsor[16] of the corresponding House bill in his sponsorship
speech, thus:
 
By removing the police force from under the
control and supervision of military officers, the bill
seeks to restore and underscore the civilian
character of police work - an otherwise universal
concept that was muddled up by the martial law
years.
 
Indeed, were the legislative intent was for the INPs abolition
such that nothing would be left of it, the word abolish or what passes
for it could have easily found its way into the very text of the law
itself, what with the abundant use of the word during the legislative
deliberations. But as can be gleaned from said deliberations, the
lawmakers concern centered on the fact that if the entire PC-INP
corps join the PNP, then the PC-INP will necessarily be abolished,
for who then would be its members? Of more consequence, the
lawmakers were one in saying that there should never be two
national police agencies at the same time.
With the conclusion herein reached that the INP was not in
members of the INP which include the herein respondents are,
therefore, not excluded from availing themselves of the retirement
benefits accorded to PNP retirees under Sections 74 [17] and 75[18] of
R.A. No. 6975, as amended by R.A. No. 8551. It may be that
respondents were no longer in the government
service at the time of the enactment of R.A. No. 6975. This fact,
however, without more, would not pose as an impediment to the
respondents entitlement to the new retirement scheme set forth under
the aforecited sections. As correctly ratiocinated by the CA to which
we are in full accord:
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
 
 
For sure, R.A. No. 6975 was not a
retroactive statute since it did not impose a new
obligation to pay the INP retirees the difference
between what they received when they retired and
what would now be due to them after R.A. No. 6975
was enacted. Even so, that did not render
the RTCs interpretation of R.A. No. 6975 any less
valid. The [respondents] retirement prior to the
passage of R.A. No. 6975 did not exclude them from
the benefits provided by R.A. No. 6975, as amended
by R.A. No. 8551, since their membership in the
INP was an antecedent fact that nonetheless allowed
them to avail themselves of the benefits of the
subsequent laws. R.A. No. 6975 considered them as
PNP members, always referring to their membership
and service in the INP in providing for their
retirement benefits. [19]
 
Petitioners maintain, however, that NAPOLCOM Resolution
No. 8,[20] particularly Section 11[21] thereof, bars the payment of any
differential in retirement pay to officers and non-officers who are
already retired prior to the effectivity of R.A. No. 6975.
The contention does not commend itself for concurrence.
 
Under the amendatory law (R.A. No. 8551), the application
of rationalized retirement benefits to PNP members who have
meanwhile retired before its (R.A. No. 8551) enactment was not
prohibited. In fact, its Section 38 [22] explicitly states that the
rationalized retirement benefits schedule and program shall have
retroactive effect in favor of PNP members and officers retired or
separated from the time specified in the law. To us, the
aforesaid provision should be made applicable to INP members who
had retired prior to the effectivity of R.A. No. 6975. For, as afore-
held, the INP was, in effect, merely absorbed by the PNP and not
abolished.
 
Indeed, to bar payment of retirement pay differential to
INP members who were already retired before R.A. No. 6975
became effective would even run counter to the purpose of
NAPOLCOM Resolution No. 8 itself, as expressed in
its preambulatory clause, which is to rationalize the retirement
system of the PNP taking into consideration existing retirement and
benefit systems (including R.A. No. 6975 and P.D. No. 1184) of the
different components thereof to ensure that no member of the PNP
shall suffer any diminution in the retirement benefits due them before
the creation of the PNP.[23]
 
Most importantly, the perceived restriction could not
plausibly preclude the respondents from asserting their entitlement
to retirement benefits adjusted to the level when R.A. No. 6975 took
effect. Such adjustment hews with the constitutional warrant that the
State shall, from time to time, review to upgrade the pensions and
other benefits due to retirees of both the government and private
sectors,[24] and the implementing mandate under the Senior Citizens
Law[25] that to the extent practicable and feasible, retirement benefits
xxx shall be upgraded to be at par with the current scale enjoyed by
those in actual service.
 
Certainly going for the respondents in their bid to enjoy the
same retirement benefits granted to PNP retirees, either under R.A.
No. 6975 or R.A. No. 8551, is Section 34 of the latter law which
amended Section 75 of R.A. No. 6975 by adding thereto the
following proviso:
 
Section 75. Retirement benefits.
x x x: Provided, finally, That retirement pay of the
officers/non-officers of the PNP shall be subject to
adjustments based on the prevailing scale of base
pay of police personnel in the active service.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
 
 
Then, too, is the all familiar rule that:
 
Retirement laws should be liberally
construed in favor of the retiree because their
intention is to provide for his sustenance and
hopefully, even comfort, when he no longer has the
stamina to continue earning his livelihood. The
liberal approach aims to achieve the humanitarian
purposes of the law in order that efficiency, security
and well-being of government employees may be
enhanced.[26]
 
The petitioners parlay the notion of prospective
application of statutes, noting in this regard that R.A. No. 6975, as
amended, cannot be applied retroactively, there being no
provision to that effect.
 
We are not persuaded.
 
As correctly found by the appellate court, R.A. No. 6975
itself contextually provides for its retroactive application to cover
those who had retired prior to its effectivity. In this regard, we
invite attention to the three (3) phases of implementation under
Section 85 for the absorption and continuation in the service of,
among others, the INP members under the newly-established
PNP.
 
In a further bid to scuttle respondents entitlement to the
desired retirement benefits, the petitioners fault the trial court for
ordering the immediate adjustments of the respondents retirement
benefits when the basic petition filed before it was one for
declaratory relief. To the petitioners, such petition does not
essentially entail an executory process, the only relief proper
under that setting being a declaration of the parties rights and
duties.
 
Petitioners above posture is valid to a point. However, the
execution of judgments in a petition for declaratory relief is not
necessarily indefensible. In Philippine Deposit Insurance
Corporation[PDIC] v. Court of Appeals, [27] wherein the Court
affirmed the order for the petitioners therein to pay the balance of
the deposit insurance to the therein respondents, we categorically
ruled:
 
Now, there is nothing in the nature of a
special civil action for declaratory relief that
proscribes the filing of a counterclaim based on the
same transaction, deed or contract subject of the
complaint. A special civil action is after all not
essentially different from an ordinary civil action,
which is generally governed by Rules 1 to 56 of the
Rules of Court, except that the former deals with a
special subject matter which makes necessary some
special regulation. But the identity between their
fundamental nature is such that the same rules
governing ordinary civil suits may and do apply to
special civil actions if not inconsistent with or if they
may serve to supplement the provisions of the
peculiar rules governing special civil actions. [28]
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
 
 
Similarly, in Matalin Coconut Co., Inc. v. Municipal
Council of Malabang, Lanao del Sur:[29] the Court upheld the
lower courts order for a party to refund the amounts paid by the
adverse party under the municipal ordinance therein questioned,
stating:
 
x x x Under Sec. 6 of Rule 64, the action for
declaratory relief may be converted into an ordinary
action and the parties allowed to file such pleadings
as may be necessary or proper, if before the final
termination of the case "a breach or violation of an
ordinance, should take place." In the present case, no
breach or violation of the ordinance occurred. The
petitioner decided to pay "under protest" the fees
imposed by the ordinance. Such payment did not
affect the case; the declaratory relief action was still
proper because the applicability of the ordinance to
future transactions still remained to be resolved,
although the matter could also be threshed out in an
ordinary suit for the recovery of taxes paid . In its
petition for declaratory relief, petitioner-
appellee alleged that by reason of the enforcement of
the municipal ordinance by respondents it was
forced to pay under protest the fees imposed
pursuant to the said ordinance, and accordingly, one
of the reliefs prayed for by the petitioner was that the
respondents be ordered to refund all the amounts it
paid to respondent Municipal Treasurer during
the pendency of the case. The inclusion of said
allegation and prayer in the petition was not objected
to
by the respondents in their answer. During the trial, 
evidence of the payments made by the petitioner was
introduced. Respondents were thus fully aware of
the petitioner's claim for refund and of what would
happen if the ordinance were to be declared invalid
by the court.
 
The Court sees no reason for treating this case differently
from PDIC and Matalin. This disposition becomes all the more
appropriate considering that the respondents, as petitioners in the
RTC, pleaded for the immediate adjustment of their retirement
benefits which, significantly, the herein petitioners, as
respondents in the same court, did not object to. Being aware of
said prayer, the petitioners then already knew the logical
consequence if, as it turned out, a declaratory judgment is
rendered in the respondents favor.
 
At bottom then, the trial courts judgment forestalled
multiplicity of suits which, needless to stress, would only entail a
long and arduous process. Considering their obvious advanced
years, the respondents can hardly afford another protracted
proceedings. It is thus for this Court to already write finis to this
case.
 
 
WHEREFORE, the instant petition is DENIED and
the assailed decision and resolution of the CA, respectively
dated July 7, 2005 and August 24, 2005, are AFFIRMED.
 
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Department of Budget and Managament vs. Manila’s Finest Retirees Association, Inc.
No costs.

SO ORDERED

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Crisologo vs. Centeno
[G.R. No. 20014. November 27, 1968.]
FRANCISCO CRISOLOGO AND CONSOLACION
FLORENTINO CRISOLOGO v. ISAAC CENTENO and
ASUNCION AQUINO CENTENO
On January 18, 1955, the spouses Francisco Crisologo and
Consolacion Florentino filed in the Court of First Instance of Ilocos
Sur an ex parte petition for consolidation of ownership in them as
vendees a retro of two parcels of land situated at Barrio Lapting,
Lapog, Ilocos Sur, on the ground that the vendors, the spouses Isaac
Centeno and Asuncion Aquino, have failed to exercise their right of
repurchase within the periods stipulated in the two contracts of sale
with pacto de retro. On January 28, 1955, after hearing at which the
petitioners presented evidence in support of the petition, the court a
quo, through Judge Francisco Geronimo, granted the petition. On
July 19, 1956, the vendors filed a motion to set aside the Order of
January 28, 1955, and on July 27, 1956, the court a quo, through
Judge Felix Q. Antonio, granted the motion on the ground that the
movants had not been duly notified of the hearing. On motion by the
petitioners to set aside the Order of July 27, 1956, on the ground that
the vendors had been notified by registered mail of the hearing, the
lower court, by its Order of February 27, 1957, granted the motion
and set aside the Order of July 27, 1956. The vendors appealed the
Order of February 27, 1957, to the Court of Appeals. On June 27,
1958, the Court of Appeals rendered judgment in the appeal setting
aside the lower court’s Order of February 27, 1957, after holding that
the vendors had not been legally notified of the petition and the
hearing, and the Order of January 28, 1955, was a patent nullity. The
Court of Appeals remanded the record to the lower court for
reopening and for further proceedings. Accordingly, after the
vendors had been duly summoned as respondents, they filed their
answer alleging that the two contracts of sale with pacto de retro
were really intended as equitable mortgages as securities for usurious
loans. After trial, the lower court rendered its decision on October
26, 1960, holding that respondents’ allegation was substantiated by
their evidence. Judgment was rendered in favor of the respondents as
follows:
"WHEREFORE, in view of the foregoing, the Court hereby renders
judgment declaring that Exhibits 2 and 3 are actually intended by the
parties to be Deeds of Equitable Mortgage, and as such respondents
are entitled to redeem the lands described therein, by paying to the
petitioners whatever balance remains of the principal and interest
thereon at l2%, after deducting therefrom the excess interest paid on
November 11, 1952 and September 10, 1953, and the value of the
produce taken from those properties by petitioners in accordance
with the above findings from 1955 until the possession of these
properties are returned to respondents, and upon such settlement, the
petitioners are ordered to execute the corresponding release of
mortgage.
"Petition for consolidation of title is therefore denied, with costs
against petitioners."
The petitioners appealed to the Supreme Court on questions of law.
Appellants contend that the lower court erred in not finding that the
Order of January 28, 1955 was valid, final and executory, and that all
proceedings thereafter taken, including the vendors’ appeal to the
Court of Appeals and its decision rendered in said appeal setting
aside the Order of February 27, 1957, and remanding the case for
reopening and further proceedings, as well as the proceedings
thereafter taken, including the decision of October 26, 1960, are null
and void. The contention is untenable in view of the following
considerations:
(1) Article 1607 of the Civil Code which provides that:
"In case of real property, the consolidations of ownership in the
vendee by virtue of the failure of the vendor to comply with the
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Crisologo vs. Centeno
provisions of Article 1616 shall not be recorded in the Registry of
Property without a judicial order, after the vendor has been duly
heard."

contemplates a contentious proceeding wherein the vendor a retro

must be named respondent in the caption and title of the petition for
consolidation of ownership and duly summoned and heard.

In the instant case, the caption and title of the petition for
consolidation of ownership named the vendees as petitioners, but did
not name the vendors as respondents, the said vendors were not duly
summoned and heard. In view thereof, the Order of January 28,
1955, was a patent nullity having been issued contrary to the
contentious proceeding contemplated in Article 1607 of the Civil
Code, and the lower court not having acquired jurisdiction over the
persons of the vendors;

(2) The judgment of the Court of Appeals setting aside the Order of
February 27, 1957, and in consequence thereof the Order of January
28, 1955, as a patent nullity on the ground that the lower court did
not acquire jurisdiction over the persons of the vendors because they
had not been summoned is res judicata on the question of nullity of
said orders; and

(3) After the remand to the court below, the proceedings further
taken wherein the vendors were named as respondents and duly
summoned and heard, after which on October 26, 1960, the appealed
judgment was rendered in favor of the respondents, were valid, being
in accordance with the contentious proceeding provided for in
Article 1607 of the Civil Code.

IN VIEW OF ALL THE FOREGOING, the judgment of the lower

court of October 26, 1960, is hereby affirmed in all its parts, with
costs against the Petitioners-Appellants.

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Ramos vs. Court of Appeals
G.R. No. L-42108 May 10, 1995
OSCAR D. RAMOS and LUZ AGUDO vs. HON. COURT OF
APPEALS, ADELAIDA RAMOS and LAZARO MENESES
The legal heirs of private respondents Adelaida Ramos and Lazaro
Meneses filed the instant motion for clarification of the decision of
this Court promulgated on December 29, 1989 which sustained the
judgment of respondent Court of Appeals in CA-G.R. No. 49345-R
affirming in toto the judgment rendered by the then Court of First
Instance of Tarlac in Civil Case No. 4168 in favor of private
respondents.
This supervening controversy had its roots in two deeds of
conditional sale dated May 27, 1959 and August 30, 1959 executed
by the late private respondent Adelaida Ramos as collateral for loans
amounting to P14,000.00 in favor of her brother, Oscar D. Ramos, as
creditor thereof. Said security consisted of Adelaida Ramos' rights,
interests and participation in and over Lot No. 4033, under Original
Certificate of Title No. 5125, and Lot No. 4221, covered by Transfer
Certificate of Title No. 10788. At that time, Lot No. 4033 was
registered in the name of Valente Ramos and Margarita Denoga, the
late parents of Adelaida and Oscar Ramos, while Lot No. 4221 was
in the name of Adelaida Ramos, Josefina Ramos, and Socorro
Ramos. 1
When Adelaida Ramos failed to exercise her right of repurchase as
vendor a retro, Oscar Ramos and his wife, Luz Agudo, proceeded to
consolidate through legal suits their ownership over the two lots.
Eventually, the then Court of First instance of Tarlac acting as
probate court in Special Proceedings No. 5174, entitled "Intestate
Estate of the Late Margarita Denoga," confirmed herein petitioners'
ownership over Lot No. 4033 in an order dated January 22, 1960.
The same court, this time exercising jurisdiction as a cadastral court
in G.L.R.O. Cadastral Record No. 395, likewise affirmed the petition
for consolidation of ownership of said Ramos spouses over Lot No.
4221 in a similar order dated April 18, 1990. 2
Despite these setbacks, private respondents remained in possession
of said properties until 1964 when petitioners took possession of the
lots. Sometime in 1968, however, private respondents instituted Civil
Case No. 4168 against petitioners in the then Court of First Instance
of Tarlac for declaration of nullity of orders, reformation of
instrument, and recovery of possession, with prayer for preliminary
injunction and damages. The complaint therein alleged in the main
that the two deeds of conditional sale were in fact equitable
mortgages and were vitiated by misrepresentation, fraud and undue
influence. 3 On May 17, 1971, the trial court rendered judgment with
the following fallo:
WHEREFORE, judgment is hereby rendered:
1) Denying defendant's motion to dismiss of
February 23, 1970;
2) Denying Exhibits "B", "B-1", and "G" as loan
transaction secured by real estate mortgages;
3) Annulling and setting aside Exhibits "D", "D-1",
"I", "I-1" and "I-2";
4) Ordering plaintiffs, jointly and severally to pay
(within ninety [90] days from receipt of a copy of
this judgment) defendant the sum of P5,000.00
specified in Exhibit "B", with interest thereon at the
legal rate from November 28, 1959 until full
payment together with the sum of P9,308.00
specified in Exhibit "G" with interest thereon at the
legal rate from December 1, 1959 until full payment,
and in default of such payment, let the properties
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Ramos vs. Court of Appeals
mortgaged under Exhibit "B", "B-1" and "G" be sold
to realize the mortgage debt and costs; and
5) Dismissing defendant's counterclaim.
With costs against defendants. 4
On appeal to the Court of Appeals, said judgment of the trial court
was affirmed in all respects by the appellate court in its decision of
October 7, 1975. After the motion for reconsideration filed by
petitioners went for naught, petitioners sought this Court's favorable
adjudication through a petition for review on certiorari, with the
principal argument that respondent appellate court erred in ruling
that the aforementioned deeds of conditional sale were actually
equitable mortgages . This Court, however, affirmed the questioned
judgment of respondent court in its decision of December 29, 1989
which, as earlier stated, is now the subject of this motion for
clarification filed by the heirs of the late Adelaida Ramos and Lazaro
Meneses. The dispositive portion of this Court's aforesaid decision
decreed:
WHEREFORE, the instant petition is hereby
DENIED and the assailed decision of the Court of
Appeals is hereby AFFIRMED.
SO ORDERED. 5
When private respondent Adelaida Ramos, who in the interim had
taken up residence in the United States and whose husband had
passed away, was apprised of the long awaited legal victory, she
immediately came home to the Philippines for the enforcement of
this Court's judgment which had become final and executory on
February 7, 1990. She was, however, grossly disappointed when she
learned that petitioners had subdivided and transferred the titles to
the two lots in their respective names and also in the names of third
persons. Upon the advice of her lawyer, she complied with the May
17, 1971 decision of the trial court by tendering payment, through a
representative, amounting to P40,432.11 pursuant to paragraph 4 of
the trial court's aforequoted judgment. Said tender was, however,
refused by petitioner spouses resulting in the consignation of the
money in court. 6
In November, 1993, respondent Adelaida Ramos passed away. Due
to inattention on the part of her lawyer, the execution of this Court's
judgment ground to a halt. On February 16, 1994, her heirs Walfrido,
Myrna, Zorayda, Vilma and Youlivia filed a "Motion for Substitution
of Party-Plaintiffs" and a "Motion to Issue Writ of Execution" before
Branch 63 of the Regional Trial Court of Tarlac. These motions were
granted and on May 18, 1994, a deputy sheriff of Quezon City served
the writ of execution at the residence of petitioners and thereafter
executed the sheriff's return thereon. 7
It was at this point that the heirs of the private respondents came to
perceive a seeming omission in the basic judgment in this case as
formulated by the trial court. Thus, in their own submission:
. . . the dispositive portion of the lower court's
decision, affirmed by the Court of Appeals and this
Honorable Court, did not direct the Spouses Oscar
Ramos and Luz Agudo to restore possession of the
properties to Adelaida Ramos; and/or failed to
instruct the Register of Deeds of Tarlac to cancel the
titles issued to Oscar Amos and Luz Agudo, to the
extent of the shares of Adelaida Ramos in the
properties originally covered by Original Certificate
of Title No. 5125 and Transfer Certificate of Title
No. 10788, Lots No. 4033 and 4221 of the Cadastral
Survey of Paniqui, Tarlac, respectively. 8
Hence, in this motion for clarification, they now pray that said
judgment of the trial court, specifically the third paragraph thereof,
be accordingly amended.
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Ramos vs. Court of Appeals
The Court is willing to accommodate the motion although, as
correctly pointed out by the movant heirs, the declaration of nullity
by the then Court of First Instance of Tarlac in its decision in Civil
Case No. 4168 of the earlier orders of approval and consolidation of
dominion 9 marked as Exhibits "D", "D-1", "I", "I-1" and "I-2"
necessarily carries with it the restoration by petitioners of the
physical possession of the subject properties to Adelaida Ramos,
now represented by her heirs. That is as it should be, for those very
same exhibits had been the bases for the transfer and registration by
petitioners of the subject lots in their names and in the names of third
persons to the prejudice of private respondent Adelaida Ramos.
Moreover, private respondents had, as a matter of fact, expressly
sought as a relief such restoration of possession to them in the
complaint that they filed in the court a quo.
It should, of course, be emphasized and noted that the amendment
now being sought by the movants, although coming long after the
subject judgment had matured into finality, would not at all be
unauthorized or improper considering the peculiar but compelling
circumstances under and by reason of which such an amendment is
necessitated. We need only to advert to what this Court emphatically
pronounced in Republic Surety and Insurance Co., Inc., et al. vs.
Intermediate Appellate Court, et al., 10 on which the movant heirs
also rely, in support of and to demonstrate the validity and regularity
of such amendment in the present situation. Thus:
In the exercise of the broad jurisdiction of this Court,
we treat the "Very Urgent Clarificatory Inquiry" of
the respondent-spouses as a motion for clarification
of the resolutions of this Court dated 21 July 1985
and 4 September 1985 where we denied the Petition
for Review and affirmed the underlying decision of
the Rizal Court of First Instance. We clarify, in other
words, what we did affirm. What is involved here is
not what is ordinarily regarded as a clerical error in
the dispositive part of the decision of the Court of
First Instance, which type of error is perhaps best
typified by an error in arithmetical computation. At
the same time, what is involved here is not an
erroneous judgement or dispositive portion of
judgment. What we believe is involved here is in the
nature of an inadvertent omission on the part of the
Court of First Instance (which should have been
noticed by private respondents' counsel who had
prepared the complaint), of what might be described
as a logical follow-through, or translation into,
operation or behavioral terms, of the annulment of
the Deed of Sale with Assumption of Mortgage,
from which petitioner's title or claim of title
embodied in TCT 133153 flows. The dispositive
portion of the decision itself declares the nullity ab
initio of the simulated Deed of Sale with
Assumption of Mortgage and instructed the
petitioners and all persons claiming under them to
vacate the subject premises and to turn over
possession thereof to the respondent-spouses. . . .
To repeat, ineluctably involved by necessary implication in the
judgment in Civil Case No. 4168, nullifying the orders of approval
and consolidation of ownership in favor of petitioners in Special
Proceedings No. 5174 and G.L.R.O. Cadastral Record No. 395, is the
correlative vesting of proportionate dominion over the lots in
question in favor of private respondents, and this includes the right to
the possession thereof. Where title to real property is adjudicated in
favor of a party, the judgment must be enforced by giving the
enjoyment thereof to that party, 11 as an inevitable consequence of
that judgment. 12
By the same token, the legal bases for the issuance of certificates of
title to the lots in favor of petitioners and third persons having been
set aside by the judgment of the trial court in said Civil Case No.
4168, with its recognition of corresponding rights thereover by
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Ramos vs. Court of Appeals
private respondents, this again ineluctably implies that the
corresponding certificates of title thereover be issued in favor of
private respondents or their successors, and that the certificates of
title of petitioners and their transferees be consequently canceled.
Stated elsewise, the Court is now being asked to merely clarify via
this nunc pro tunc amendment, what in fact it did actually affirm and
as a logical follow through of the express or intended operational
terms of said judgment in Civil Case No. 4168. In any event, just to
write finis to what in actuality is an unnecessary dispute between the
parties and to forestall the possibility of another one, contrived or
otherwise, we accede to the supplication of movants for what
amounts to a clarificatory adgment explicitly articulating what was
already implicitly assumed.
ON THE FOREGOING PREMISES, and as prayed for, the
dispositive portion of the decision dated May 17, 1971, specifically
paragraph 3 thereof, rendered by the then Court of First Instance of
Tarlac, now Branch 63 of the Regional Trial Court of said province,
in Civil Case No. 4168 and as then affirmed by respondent court and
this Court, is hereby AMENDED to provide as follows:
WHEREFORE, judgment is hereby rendered:
SO ORDERED.
xxx xxx xxx
(1/3) share in Lot No. 4221, covered by TCT No.
10788. both of the Cadastral Survey of Paniqui,
Tarlac;
3.2) Ordering the Sheriff of Branch 63 of the now
Regional Trial Court of Tarlac to implement the
corresponding and appropriate writ execution
pursuant to the preceding paragraph; and
3.3) Ordering the Register of Deeds of Tarlac to
cancel the titles issued in the names of Oscar Ramos
and Luz Agudo-Ramos or their transferees or
assigns, where proper, to the extent of the one-sixth
(1/6) share of Adelaida Ramos in Lot No. 4033,
originally covered by OCT No. 5125, and her one-
third (1/3) share in Lot No. 4221, originally
registered under TCT No. 10788, and to accordingly
issue new titles therefor in the name of Adelaida
Ramos, married to Lazaro E. Meneses, or her legal
heirs and successors in interest.
xxx xxx xxx

3. Annulling and setting aside exhibits "D", "D-1",

"I", "I-1" and "I-2", and

3.1) Ordering the spouses Oscar and Luz Agudo-

Ramos, their heirs and successors or assigns, to
restore actual physical possession of the subject
properties to Adelaida Ramos, her heirs, successors
or assigns, consisting of said Adelaida Ramos'
undivided share of one-sixth (1/6) in Lot No. 4033,
originally covered by OCT No. 5125, and one-third

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Republic vs. Batugas
G.R. No. 183110               October 7, 2013
REPUBLIC OF THE PHILIPPINES vs. AZUCENA
SAAVEDRA BATUGAS
"It is universally accepted that a State, in extending the privilege of
citizenship to an alien wife of one of its citizens could have had no
other objective than to maintain a unity of allegiance among the
members of the family."1
This Petition for Review on Certiorari2 assails the May 23, 2008
Decision3 of the Court of Appeals (CA) G.R. CV No. 00523, which
affirmed the January 31, 2005 Decision 4 of the Regional Trial Court
(RTC), Branch 29, Zamboanga del Sur that granted the Petition for
Naturalization5 of respondent Azucena Saavedra Batuigas (Azucena).
Factual Antecedents
On December 2, 2002, Azucena filed a Petition for Naturalization
before the RTC of Zamboanga del Sur. The case was docketed as
Naturalization Case No. 03-001 and raffled to Branch 29 of said
court.
Azucena alleged in her Petition that she believes in the principles
underlying the Philippine Constitution; that she has conducted
herself in a proper and irreproachable manner during the period of
her stay in the Philippines, as well as in her relations with the
constituted Government and with the community in which she is
living; that she has mingled socially with the Filipinos and has
evinced a sincere desire to learn and embrace their customs,
traditions, and ideals; that she has all the qualifications required
under Section 2 and none of the disqualifications enumerated in
Section 4 of Commonwealth Act No. 473 (CA473); 6 that she is not
opposed to organized government nor is affiliated with any
association or group of persons that uphold and teach doctrines
opposing all organized governments; that she is not defending or
teaching the necessity or propriety of violence, personal assault, or
assassination for the success and predominance of men’s ideas; that
she is neither a polygamist nor believes in polygamy; that the nation
of which she is a subject is not at war with the Philippines; that she
intends in good faith to become a citizen of the Philippines and to
renounce absolutely and forever all allegiance and fidelity to any
foreign prince, potentate, state or sovereignty, and particularly to
China; and that she will reside continuously in the Philippines from
the time of the filing of her Petition up to the time of her
naturalization.
After all the jurisdictional requirements mandated by Section 9 7 of
CA 473had been complied with, the Office of the Solicitor General
(OSG) filed its Motion to Dismiss 8 on the ground that Azucena failed
to allege that she is engaged in a lawful occupation or in some
known lucrative trade. Finding the grounds relied upon by the OSG
to be evidentiary in nature, the RTC denied said Motion. 9 Thereafter,
the hearing for the reception of Azucena’s evidence was then set on
May 18, 2004.10
Neither the OSG nor the Office of the Provincial Prosecutor
appeared on the day of the hearing. Hence, 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. 11 During the
November 5, 2004 ex-parte hearing, no representative from the OSG
appeared despite due notice.12
Born in Malangas, Zamboanga del Sur on September 28, 1941 to
Chinese parents,13 Azucena has never departed the Philippines since
birth. She has resided in Malangas, Zamboanga del Sur from 1941-
1942; in Margosatubig, Zamboanga del Sur from 1942-1968; in
Bogo City for nine months; in Ipil, Zamboanga del Sur from 1969-
1972; in Talisayan, Misamis Oriental from 1972-1976; and, in
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Batugas
Margosatubig, Zamboanga del Sur, thereafter, up to the filing of her
Petition.
Azucena can speak English, Tagalog, Visayan, and Chavacano. Her
primary, secondary, and tertiary education were taken in Philippine
schools,i.e., Margosatubig Central Elementary School in
1955,14 Margosatubig Academy in1959,15 and the Ateneo de
Zamboanga in 1963,16 graduating with a degree in Bachelor of
Science in Education. She then practiced her teaching profession at
the Pax High School for five years, in the Marian Academy in Ipil
for two years, and in Talisayan High School in Misamis Oriental for
another two years.17
In 1968, at the age of 26, Azucena married Santiago
Batuigas18 (Santiago),a natural-born Filipino citizen.19 They have five
children, namely Cynthia, Brenda, Aileen, Dennis Emmanuel, and
Edsel James.20 All of them studied in Philippine public and private
schools and are all professionals, three of whom are now working
abroad.21
After her stint in Talisayan High School, Azucena and her husband,
as conjugal partners, engaged in the retail business of and later on in
milling/distributing rice, corn, and copra. As proof of their income,
Azucena submitted their joint annual tax returns and balance sheets
from 2000-200222 and from 2004-2005.23 The business name and the
business permits issued to the spouses’ store, ‘Azucena’s General
Merchandising,’ are registered in Santiago’s name, 24 and he is also
the National Food Authority licensee for their rice and corn
business.25 During their marital union, the Batuigas spouses bought
parcels of land in Barrio Lombog, Margosatubig.26
To prove that she has no criminal record, Azucena submitted
clearances issued by the Philippine National Police of Zamboanga
del Sur Provincial Office and by the National Bureau of
Investigation.27 She also presented her Health Examination
Record28 declaring her as physically and mentally fit.
To further support Azucena’s Petition, Santiago and witnesses
Eufemio Miniao and Irineo Alfaro testified.
Ruling of the Regional Trial Court
On January 31, 2005, the RTC found that Azucena has amply
supported the allegations in her Petition. Among these are her lack of
a derogatory record, her support for an organized government, that
she is in perfect health, that she has mingled with Filipinos since
birth and can speak their language, that she has never had any
transgressions and has been a law abiding citizen, that she has
complied with her obligations to the government involving her
business operations, and that the business and real properties she and
Santiago own provide sufficient income for her and her family. Thus,
the RTC ruled:
x x x In sum, the petitioner has all the qualifications and none of the
disqualifications to be admitted as citizen of the Philippines in
accordance with the provisions of the Naturalization Law.
WHEREFORE, premises considered, the petition is hereby granted.
SO ORDERED.29
In its Omnibus Motion,30 the OSG argued that the ex-parte
presentation of evidence before the Branch Clerk of Court violates
Section 10 of CA 473, 31 as the law mandates public hearing in
naturalization cases.
Rejecting this argument in its March 21, 2005 Order, 32 the RTC held
that the public has been fully apprised of the naturalization
proceedings and was free to intervene. The OSG and its delegate, the
Provincial Prosecutor, are the only officers authorized by law to
appear on behalf of the State, which represents the public. Thus,
when the OSG was furnished with a copy of the notice of hearing for
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Batugas
the reception of evidence ex-parte, there was already a sufficient
compliance with the requirement of a public hearing.
The OSG then appealed the RTC judgment to the CA, 33 contending
that Azucena failed to comply with the income requirement under
CA 473. The OSG maintained that Azucena is not allowed under the
Retail Trade Law (Republic Act No. 1180) to engage directly or
indirectly in the retail trade. Hence, she cannot possibly meet the
income requirement. And even if she is allowed, her business is not a
"lucrative trade" within the contemplation of the law or that which
has an appreciable margin of income over expenses in order to
provide for adequate support in the event of unemployment,
sickness, or disability to work. The OSG likewise disputed
Azucena’s claim that she owns real property because aliens are
precluded from owning lands in the country.
The OSG further asserted that the ex-parte proceeding before the
commissioner is not a "public hearing" as ex-parte hearings are
usually done in chambers, without the public in attendance. It
claimed that the State was denied its day in court because the RTC,
during the May 18, 2004 initial hearing, immediately allowed the
proceeding to be conducted ex-parte without even giving the State
ample opportunity to be present.
Azucena countered that although she is a teacher by profession, she
had to quit to help in the retail business of her husband, and they
were able to send all their children to school. 34 It is highly unlikely
that she will become a public charge as she and her spouse have
enough savings and could even be given sufficient support by their
children. She contended that the definition of "lucrative
trade/income" should not be strictly applied to her. Being the wife
and following Filipino tradition, she should not be treated like male
applicants for naturalization who are required to have their own
"lucrative trade."
Azucena denied that the hearing for her Petition was not made
public, as the hearing before the Clerk of Court was conducted in the
court’s session hall. Besides, the OSG cannot claim that it was
denied its day in court as notices have always been sent to it. Hence,
its failure to attend is not the fault of the RTC.
Ruling of the Court of Appeals
In dismissing the OSG’s appeal,35 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. It said:
Considering the present high cost of living, which cost of living
tends to increase rather than decrease, and the low purchasing power
of the Philippine currency, petitioner-appellee, together with her
Filipino husband, nonetheless, was able to send all her children to
college, pursue a lucrative business and maintain a decent existence.
The Supreme Court, in recent decisions, adopted a higher standard in
determining whether a petitioner for Philippine citizenship has a
lucrative trade or profession that would qualify him/her for
admission to Philippine citizenship and to which petitioner has
successfully convinced this Court of her ability to provide for herself
and avoid becoming a public charge or a financial burden to her
community. x x x36
As for the other issue the OSG raised, the CA held that the RTC had
complied with the mandate of the law requiring notice to the OSG
and the Provincial Prosecutor of its scheduled hearing for the
Petition.
Thus, the instant Petition wherein the OSG recapitulates the same
arguments it raised before the CA, i.e., the alleged failure of Azucena
to meet the income and public hearing requirements of CA 473.
Our Ruling
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Batugas
The Petition lacks merit.
Under existing laws, an alien may acquire Philippine citizenship
through either judicial naturalization under CA 473 or administrative
naturalization under Republic Act No. 9139 (the "Administrative
Naturalization Law of 2000"). A third option, called derivative
naturalization, which is available to alien women married to Filipino
husbands is found under Section 15 of CA 473, which provides that:
"any woman who is now or may hereafter be married to a citizen of
the Philippines and who might herself be lawfully naturalized shall
be deemed a citizen of the Philippines."
Under this provision, foreign women who are married to Philippine
citizens may be deemed ipso facto Philippine citizens and it is
neither necessary for them to prove that they possess other
qualifications for naturalization at the time of their marriage nor do
they have to submit themselves to judicial naturalization. Copying
from similar laws in the United States which has since been
amended, the Philippine legislature retained Section 15 of CA 473,
which then reflects its intent to confer Filipino citizenship to the
alien wife thru derivative naturalization.37
Thus, the Court categorically declared in Moy Ya Lim Yao v.
Commissioner of Immigration:38
Accordingly, we now hold, all previous decisions of this Court
indicating otherwise notwithstanding, that under Section 15 of
Commonwealth Act 473, an alien woman marrying a Filipino, native
born or naturalized, becomes ipso facto a Filipina provided she is not
disqualified to be a citizen of the Philippines under Section 4 of the
same law. Likewise, an alien woman married to an alien who is
subsequently naturalized here follows the Philippine citizenship of
her husband the moment he takes his oath as Filipino citizen,
provided that she does not suffer from any of the disqualifications
under said Section 4.39
As stated in Moy Ya Lim Yao, the procedure for an alien wife to
formalize the conferment of Filipino citizenship is as follows:
Regarding the steps that should be taken by an alien woman married
to a Filipino citizen in order to acquire Philippine citizenship, the
procedure followed in the Bureau of Immigration is as follows: The
alien woman must file a petition for the cancellation of her alien
certificate of registration alleging, among other things, that she is
married to a Filipino citizen and that she is not disqualified from
acquiring her 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. 40
Records however show that in February 1980, Azucena applied
before the then Commission on Immigration and Deportation (CID)
for the cancellation of her Alien Certificate of Registration (ACR)
No. 03070541 by reason of her marriage to a Filipino citizen. The
CID granted her application. However, the Ministry of Justice set
aside the ruling of the CID as it found no sufficient evidence that
Azucena’s husband is a Filipino citizen 42 as only their marriage
certificate was presented to establish his citizenship.
Having been denied of the process in the CID, Azucena was
constrained to file a Petition for judicial naturalization based on CA
473. While this would have been unnecessary if the process at the
CID was granted in her favor, there is nothing that prevents her from
seeking acquisition of Philippine citizenship through regular
naturalization proceedings available to all qualified foreign nationals.
The choice of what option to take in order to acquire Philippine
citizenship rests with the applicant. In this case, Azucena has chosen
to file a Petition for judicial naturalization under CA 473. The fact
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Batugas
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.
As the records before this Court show, Santiago’s Filipino
citizenship has been adequately proven. Under judicial proceeding,
Santiago submitted his birth certificate indicating therein that he and
his parents are Filipinos. He also submitted voter’s registration, land
titles, and business registrations/licenses, all of which are public
records. He has always comported himself as a Filipino citizen, an
operative fact that should have enabled Azucena to avail of Section
15 of CA473. On the submitted evidence, nothing would show that
Azucena suffers from any of the disqualifications under Section 4 of
the same Act.
However, the case before us is a Petition for judicial naturalization
and is not based on Section 15 of CA 473 which was denied by the
then Ministry of Justice. The lower court which heard the petition
and received evidence of her qualifications and absence of
disqualifications to acquire Philippine citizenship, has granted the
Petition, which was affirmed by the CA. We will not disturb the
findings of the lower court which had the opportunity to hear and
scrutinize the evidence presented during the hearings on the Petition,
as well as determine, based on Azucena’s testimony and deportment
during the hearings, that she indeed possesses all the qualifications
and none of the disqualifications for acquisition of Philippine
citizenship.
The OSG has filed this instant Petition on the ground that Azucena
does not have the qualification required in no. 4 of Section 2 of CA
473 as she does not have any lucrative income, and that the
proceeding in the lower court was not in the nature of a public
hearing. The OSG had the opportunity to contest the qualifications of
Azucena during the initial hearing scheduled on May 18,
2004.However, the OSG or the Office of the Provincial Prosecutor
failed to appear in said hearing, prompting the lower court to order
ex parte presentation of evidence before the Clerk of Court on
November 5, 2004. The OSG was also notified of the ex parte
proceeding, but despite notice, again failed to appear. The OSG had
raised this same issue at the CA and was denied for the reasons
stated in its Decision. We find no reason to disturb the findings of the
CA on this issue. Neither should this issue further delay the grant of
Philippine citizenship to a woman who was born and lived all her
life, in the Philippines, and devoted all her life to the care of her
Filipino family. She has more than demonstrated, under judicial
scrutiny, her being a qualified Philippine citizen. On the second
issue, we also affirm the findings of the CA that since the
government who has an interest in, and the only one who can contest,
the citizenship of a person, was duly notified through the OSG and
the Provincial Prosecutor’s office, the proceedings have complied
with the public hearing requirement under CA 473.
No. 4, Section 2 of CA 473 provides as qualification to become a
Philippine citizen:
4. He must own real estate in the Philippines worth not less than five
thousand pesos, Philippine currency, or must have known lucrative
trade, profession, or lawful occupation.
Azucena is a teacher by profession and has actually exercised her
profession before she had to quit her teaching job to assume her
family duties and take on her role as joint provider, together with her
husband, in order to support her family. Together, husband and wife
were able to raise all their five children, provided them with
education, and have all become professionals and responsible
citizens of this country. Certainly, this is proof enough of both
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Republic vs. Batugas
husband and wife’s lucrative trade. Azucena herself is a professional
and can resume teaching at anytime. Her profession never leaves her,
and this is more than sufficient guarantee that she will not be a
charge to the only country she has known since birth.
Moreover, the Court acknowledged that the main objective of
extending the citizenship privilege to an alien wife is to maintain a
unity of allegiance among family members, thus:
It is, therefore, not congruent with our cherished traditions of family
unity and identity that a husband should be a citizen and the wife an
alien, and that the national treatment of one should be different from
that of the other. Thus, it cannot be that the husband’s interests in
property and business activities reserved by law to citizens should
not form part of the conjugal partnership and be denied to the wife,
nor that she herself cannot, through her own efforts but for the
benefit of the partnership, acquire such interests. Only in rare
instances should the identity of husband and wife be refused
recognition, and we submit that in respect of our citizenship laws, it
should only be in the instances where the wife suffers from the
disqualifications stated in Section 4 of the Revised Naturalization
Law.43
CA 473.Azucena has clearly proven, under strict judicial scrutiny,
that she is qualified for the grant of that privilege, and this Court will
not stand in the way of making her a part of a truly Filipino family.
WHEREFORE, the Petition is DENIED. The May 23, 2008 Decision
of the Court of Appeals in CA-G.R. CV No. 00523 which affirmed
the January 31,2005 Decision of the Regional Trial Court, Branch
29, Zamboanga del Sur that granted the Petition for Naturalization, is
hereby AFFIRMED. Subject to compliance with the period and the
requirements under Republic Act No. 530which supplements the
Revised Naturalization Law, let a Certificate of Naturalization be
issued to AZUCENA SAAVEDRA BATUIGAS after taking an oath
of allegiance to the Republic of the Philippines. Thereafter, her Alien
Certificate of Registration should be cancelled.
SO ORDERED.

We are not unmindful of precedents to the effect that there is no

proceeding authorized by the law or by the Rules of Court, for the
judicial declaration of the citizenship of an individual. 44 "Such
judicial declaration of citizenship cannot even be decreed pursuant to
an alternative prayer therefor in a naturalization proceeding." 45

This case however is not a Petition for judicial declaration of

Philippine citizenship but rather a Petition for judicial naturalization
under CA 473. In the first, the petitioner believes he is a Filipino
citizen and asks a court to declare or confirm his status as a
Philippine citizen. In the second, the petitioner acknowledges he is
an alien, and seeks judicial approval to acquire the privilege of be
coming a Philippine citizen based on requirements required under

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Tan vs. Republic
G.R. No. L-16108            October 31, 1961
IN THE MATTER OF THE PETITION FOR DECLARATORY
RELIEF REGARDING CIVIL STATUS, ELEUTERIA
FELISETA TAN vs. REPUBLIC OF THE PHILIPPINES
Appeal from a decision of the Court of First Instance of Misamis
Occidental, Hon. Patricio C. Ceniza, presiding, the dispositive part of
which reads as follows:
WHEREFORE, premises considered, the court hereby
renders judgment declaring said Eleuteria Feliseta Tan a
Filipino citizen; that her registration as an alien has been a
clear mistake on her part and on the part of the City
Treasurer of Ozamis City and therefore, the Commissioner
of Immigration is hereby ordered to cancel the Alien
Certificate of Registration of the herein petitioner as well as
those of her children born out her relationship as husband
and wife without benefit of marriage with Tan King Pock,
namely: Loreta Tan, Nenita Tan, Lourdes Tan, Leonila Tan,
Tan King Pock, Jr., and William Tan. (ROA, pp. 29-30).
The case originated with the presentation of a petition to the Court of
First Instance of Misamis Occidental, alleging that petitioner
Eleuteria Feliseta Tan is the common-law wife of Tan King Pock, a
Chinaman, and that nine minor children were born to them out of
wedlock; that she and her children are registered as aliens; that she
had asked the Commissioner of Immigration to cancel her
registration and that of her children as aliens, but that the
Commissioner refused to grant her petition. Therefore, she prayed
that the cancellation of the alien certificate of registration of herself
and her children be ordered.
The petition is dated September 8, 1958, and on September 17, 1958,
the court issued an order suggesting that the petitioner amend her
petition into one for declaratory relief. The order reads thus:
After considering carefully the merits of the petition, the
Court finds and so holds that the same cannot be granted in
view of the decision rendered by the Supreme Court on
February 5, 1954, in G.R. No. L-5609, entitled Ty Kong Tin
vs. Republic of the Philippines.
It is suggested, therefore, that the herein petitioner amends
her petition into that of declaratory relief within a period of
fifteen (15) days from receipt a copy of this order, otherwise
this case will be dismissed. (ROA, p. 5).
Pursuant to the suggestion, petitioner through counsel, amended her
original petition converting it into one for declaratory judgment,
alleging that petitioner is a Filipino citizen being the illegitimate
child of a Chinaman by the name of Sy Siwa and Benita Feliseta, a
Filipina, without benefit of marriage; that the children mentioned in
the petition are children of herself and Tan King Pock and their
registration as aliens has been a mistake; that she had asked the
Commissioner of Immigration for the cancellation of their alien
certificate of registration but the Commissioner had denied her
petition, so she prayed that her alien certificate of registration be
cancelled.
The Solicitor General presented an answer asking for the denial of
the petition because the petition is not based upon any of the grounds
required by the rules as a ground for declaratory judgment; that there
is no need for the present action for the cancellation of their alien
certificate of registration; and that the petition is evidently one which
seeks a judicial pronouncement as to petitioner's claim for
citizenship, which matter should be threshed out in a proper action.
The provincial fiscal also prayed that the petition be denied, alleging
that the petition is not in order; that the children are not represented
RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES
 Tan vs. Republic
by a guardian, and that the end sought in the petition should be vs. Republic, G.R. No. L-14159, April 18, 1960, reiterated in
threshed out in a proper action. After hearing the petition and the G.R. No. L-15775, April 29, 1961).
arguments, the court below entered the order already quoted above.
If the petition be considered as one for declaratory judgment, the
The judgment or order appealed from must be set aside. facts do not warrant the filing of the said special civil action. If the
petition seeks to compel the Commissioner of Immigration to cancel
Declaratory relief in this jurisdiction is a special civil action which her and her children's alien certificate of registration, this petition
may lie only when "any person interested under a deed, will, contract would not lie because such a remedy of cancellation of alien
or other written instrument, or whose rights are affected by statute or certificate of registration can only be had by virtue of a judgment of
ordinance," demands construction thereof for a declaration of his a competent court, in an action where the citizenship of parties is a
rights thereunder. None of the above circumstances exists in the case material matter in issue, declaring the Filipino citizenship of the
under consideration. And this Court has already held that there is no petitioner and her children, and such declaration cannot be obtained
proceeding established by law or the rules by which any person directly because there is no proceeding at present provided by law or
claiming to be a citizen may get a declaration in a court of justice to the rules for such purpose.
that effect or in regard to his citizenship.
WHEREFORE, the judgment appealed from should be, as it is
Under our laws, there can be no action or proceeding for the hereby, set aside, and the petition dismissed. With costs against
judicial declaration of the citizenship of an individual. petitioner-appellee.
Courts of justice exist for the settlement of justiciable
controversies, which imply a given right, legally demandable
and enforceable, an act or omission violative of said right,
and a remedy, granted or sanctioned by law, for said breach
of right. As an incident only of the adjudication of the rights
of the parties to a controversy, the court may pass upon, and
make a pronouncement relative to, their status. Otherwise,
such a pronouncement is beyond judicial power. Thus, for
instance, no action or proceeding may be instituted for a
declaration to the effect that plaintiff or petitioner is married,
or single or a legitimate child, although a finding thereon
may be made as a necessary premise to justify a given relief
available only to one enjoying said status. At times, the law
permits the acquisition of a given status, such as
naturalization, by judicial decree. But, there is no similar
legislation authorizing the institution of a judicial proceeding
to declare that a given person is part of our citizenry. (Tan

RULE 63 – DECLARATORY RELIEF AND SIMILAR REMEDIES

 Pates vs. Commission on Elections
PATES vs. COMELEC
G.R. No. 184915 June 30, 2009
Our Resolution of November 11, 2008 dismissed the
petition in caption pursuant to Section 3, Rule 64 of the Rules of
Court which provides:
 
SEC. 3. Time to file petition. The petition
shall be filed within thirty (30) days from notice of
the judgment or final order or resolution sought to be
reviewed. The filing of a motion for new trial or
reconsideration of said judgment or final order or
resolution, if allowed under the procedural rules of
the Commission concerned, shall interrupt the period
herein fixed. If the motion is denied, the aggrieved
party may file the petition within the remaining
period, but which shall not be less than five (5) days
in any event, reckoned from notice of denial.
  The Motion for Reconsideration
taking into account the following material antecedents:
 
a.     February 1, 2008 The COMELEC First Division
issued its Resolution (assailed in the petition);
b.     February 4, 2008 The counsel for petitioner Nilo T.
Pates (petitioner) received a copy of the February 1,
2008 Resolution;
 
c.      February 8, 2008 The petitioner filed his motion
for reconsideration (MR) of the February 1,
2008 Resolution (4 days from receipt of
the February 1, 2008 Resolution)
 
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
d.     September 18, 2008 The COMELEC en
banc issued a Resolution denying the petitioners MR
(also assailed in the petition).
e.      September 22, 2008 The petitioner received the
COMELEC en banc Resolution of September 18,
2008
 
Under this chronology, the last day for the filing of a
petition for certiorari, i.e., 30 days from notice of the final
COMELEC Resolution, fell on a Saturday (October 18, 2008), as
the petitioner only had the remaining period of 26 days to file his
petition, after using up 4 days in preparing and filing his Motion
for Reconsideration. Effectively, the last day for filing
was October 20, 2008 the following Monday or the first working
day after October 18, 2008. The petitioner filed his petition with
us on October 22, 2008 or two days late; hence, our Resolution of
dismissal of November 11, 2008.
 
 
The petitioner asks us in his Urgent Motion for
Reconsideration with Reiteration for the Issuance of a Temporary
Restraining Order to reverse the dismissal of his petition, arguing
that the petition was seasonably filed under the fresh period rule
enunciated by the Supreme Court in a number of cases decided
beginning the year 2005. The fresh period refers to the original
period provided under the Rules of Court counted from notice of
the ruling on the motion for reconsideration by the tribunal below,
without deducting the period for the preparation and filing of the
motion for reconsideration.
 
He claims that, historically, the fresh period rule was the
prevailing rule in filing petitions for certiorari. This Court, he
continues, changed this rule when it promulgated the 1997 Rules
 Pates vs. Commission on Elections
of Civil Procedure and Circular No. 39-98, which both provided
for the filing of petitions within the remainder of the original
period, the remainder being the original period less the days used
up in preparing and filing a motion for reconsideration. He then
points out that on September 1, 2000 or only three years after, this
Court promulgated A.M. No. 00-02-03-SC bringing back the
fresh period rule. According to the petitioner, the reason for the
change, which we supposedly articulated in Narzoles v. National
Labor Relations Commission,[1] was the tremendous confusion
generated by Circular No. 39-98.
 
The fresh period rule, the petitioner further asserts, was
subsequently applied by this Court in the following cases:
 
(1) Neypes v. Court of Appeals[2] which thenceforth
applied the fresh period rule to ordinary appeals of decisions of
the Regional Trial Court to the Court of Appeals;
 
(2) Spouses de los Santos v. Vda. de
Mangubat[3] reiterating Neypes;
(3) Active Realty and Development Corporation v.
Fernandez[4] which, following Neypes, applied the fresh period
rule to ordinary appeals from the decisions of the Municipal Trial
Court to the Regional Trial Court; and
(4) Romero v. Court of Appeals[5] which emphasized that
A.M. No. 00-02-03-SC is a curative statute that may be applied
retroactively.
 
A reading of the ruling in these cases, the petitioner
argues, shows that this Court has consistently held that the order
or resolution denying the motion for reconsideration or new trial
is considered as the final order finally disposing of the case, and
the date of its receipt by a party is the correct reckoning point for
counting the period for appellate review.
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 
The Respondents Comment
 
We asked the respondents to comment on the petitioners’
motion for reconsideration. The Office of the Solicitor General
(OSG), citing Section 5, Rule 65 of the Rules of Court and its
related cases, asked via a Manifestation and Motion that it be
excused from filing a separate comment. We granted the OSGs
manifestation and motion.
 
For her part, respondent Emelita B. Almirante
(respondent Almirante) filed a comment stating that: (1) we are
absolutely correct in concluding that the petition was filed out of
time; and (2) the petitioners reliance on Section 4, Rule 65 of the
Rules of Court (as amended by A.M. No. 00-02-03-SC) is totally
misplaced, as Rule 64, not Rule 65, is the vehicle for review of
judgments and final orders or resolutions of the
COMELEC. Respondent Almirante points out that Rule 64 and
Rule 65 are different; Rule 65 provides for a 60-day period for
filing petitions for certiorari, while Rule 64 provides for 30 days.
OUR RULING
 
We do not find the motion for reconsideration
meritorious.
A. As a Matter of Law
 
Section 7, Article IX-A of the Constitution provides that
unless otherwise provided by the Constitution or by law, any
decision, order, or ruling of each Commission may be brought to
the Court on certiorari by the aggrieved party within 30 days
from receipt of a copy thereof. For this reason, the Rules of Court
provide for a separate rule (Rule 64) specifically applicable only
to decisions of the COMELEC and the Commission on
Audit. This Rule expressly refers to the application of Rule 65 in
 Pates vs. Commission on Elections
the filing of a petition for certiorari, subject to the exception
clause except as hereinafter provided.[6]
 
Even a superficial reading of the motion for
reconsideration shows that the petitioner has not challenged our
conclusion that his petition was filed outside the period required
by Section 3, Rule 64; he merely insists that the fresh period
rule applicable to a petition for certiorari under Rule 65 should
likewise apply to petitions for certiorari of COMELEC rulings
filed under Rule 64.
 
Rule 64, however, cannot simply be equated to Rule 65
even if it expressly refers to the latter rule. They exist as separate
rules for substantive reasons as discussed below. Procedurally, the
most patent difference between the two i.e., the exception that
Section 2, Rule 64 refers to is Section 3 which provides for a
special period for the filing of petitions for certiorari from
decisions or rulings of the COMELEC en banc. The period is 30
days from notice of the decision or ruling (instead of the 60 days
that Rule 65 provides), with the intervening period used for the
filing of any motion for reconsideration deductible from the
originally-granted 30 days (instead of the fresh period of 60 days
that Rule 65 provides).  
 
Thus, as a matter of law, our ruling of November 11,
2008 to dismiss the petition for late filing cannot but be
correct. This ruling is not without its precedent; we have
previously ordered a similar dismissal in the earlier case
of Domingo v. Commission on Elections.[7] The Court, too, has
countless times in the past stressed that the Rules of Court must
be followed. Thus, we had this to say in Fortich v. Corona:[8]
 
Procedural rules, we must stress, should be
treated with utmost respect and due regard since they
are designed to facilitate the adjudication of cases to  
remedy the worsening problem of delay in the
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
resolution of rival claims and in the administration
of justice. The requirement is in pursuance to the bill
of rights inscribed in the Constitution which
guarantees that "all persons shall have a right to the
speedy disposition of their before all judicial, quasi-
judicial and administrative bodies," the adjudicatory
bodies and the parties to a case are thus enjoined to
abide strictly by the rules. While it is true that a
litigation is not a game of technicalities, it is equally
true that every case must be prosecuted in
accordance with the prescribed procedure to ensure
an orderly and speedy administration of
justice. There have been some instances wherein
this Court allowed a relaxation in the application
of the rules, but this flexibility was "never
intended to forge a bastion for erring litigants to
violate the rules with impunity." A liberal
interpretation and application of the rules of
procedure can be resorted to only in proper cases
and under justifiable causes and circumstances.
(Emphasis supplied)
 
As emphasized above, exceptional circumstances or
compelling reasons may have existed in the past when we either
suspended the operation of the Rules or exempted a particular
case from their application. [9] But, these instances were the
exceptions rather than the rule, and we invariably took this
course of action only upon a meritorious plea for the liberal
construction of the Rules of Court based on attendant exceptional
circumstances. These uncommon exceptions allowed us to
maintain the stability of our rulings, while allowing for the
unusual cases when the dictates of justice demand a
correspondingly different treatment.
 Pates vs. Commission on Elections
Under this unique nature of the exceptions, a party asking for the
suspension of the Rules of Court comes to us with the heavy burden
of proving that he deserves to be accorded exceptional
treatment. Every plea for a liberal construction of the Rules must at
least be accompanied by an explanation of why the party-litigant
failed to comply with the rules and by a justification for the
requested liberal construction.[10]
 
Significantly, the petitioner presented no exceptional
circumstance or any compelling reason to warrant the non-
application of Section 3, Rule 64 to his petition. He failed to
explain why his filing was late. Other than his appeal to history,
uniformity, and convenience, he did not explain why we should
adopt and apply the fresh period rule to an election case.
To us, the petitioners omissions are fatal, as his motion
does not provide us any reason specific to his case why we should
act as he advocates.
 
B. As a Matter of Policy
 
In harking back to the history of the fresh period rule,
what the petitioner apparently wants for reasons of uniformity and
convenience is the simultaneous amendment of Section 3, Rule 64
and the application of his proposed new rule to his case. To state
the obvious, any amendment of this provision is an exercise in the
power of this Court to promulgate rules on practice and procedure
as provided by Section 5(5), Article VIII of the Constitution. Our
rulemaking, as every lawyer should know, is different from our
adjudicatory function. Rulemaking is an act of legislation, directly
assigned to us by the Constitution, that requires the formulation of
policies rather than the determination of the legal rights and
obligations of litigants before us. As a rule, rulemaking requires
that we consult with our own constituencies, not necessarily with
the parties directly affected in their individual cases, in order to
ensure that the rule and the policy that it enunciates are the most
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
reasonable that we can promulgate under the circumstances,
taking into account the interests of everyone not the least of
which are the constitutional parameters and guidelines for our
actions. We point these out as our adjudicatory powers should not
be confused with our rulemaking prerogative. 
We acknowledge that the avoidance of confusion through
the use of uniform standards is not without its merits. We are not
unmindful, too, that no less than the Constitution requires that
motions for reconsideration of [division] decisions shall be
decided by the Commission en banc.[11] Thus, the ruling of the
Commission en banc on reconsideration is effectively a new
ruling rendered separately and independently from that made by a
division.
Counterbalanced against these reasons, however, are
other considerations no less weighty, the most significant of
which is the importance the Constitution and this Court, in
obedience to the Constitution, accord to elections and the prompt
determination of their results. Section 3, Article IX-C of the
Constitution expressly requires that the COMELECs rules of
procedure should expedite the disposition of election cases. This
Court labors under the same command, as our proceedings are in
fact the constitutional extension of cases that start with the
COMELEC.
 
Based on these considerations, we do not find
convenience and uniformity to be reasons sufficiently compelling
to modify the required period for the filing of petitions
for certiorari under Rule 64. While the petitioner is correct in his
historical data about the Courts treatment of the periods for the
filing of the different modes of review, he misses out on the
reason why the period under Section 3, Rule 64 has been
retained. The reason, as made clear above, is constitutionally-
based and is no less than the importance our Constitution accords
to the prompt determination of election results. This reason far
 Pates vs. Commission on Elections
outweighs convenience and uniformity. We significantly note that of November 11, 2008 is hereby declared FINAL. Let entry of
the present petition itself, through its plea for the grant of a judgment be made in due course.
restraining order, recognizes the need for haste in deciding  
election cases. SO ORDERED.

C. Our Liberal Approach

 
Largely for the same reason and as discussed below, we
are not inclined to suspend the rules to come to the rescue of a
litigant whose counsel has blundered by reading the wrong
applicable provision. The Rules of Court are with us for the
prompt and orderly administration of justice; litigants cannot,
after resorting to a wrong remedy, simply cry for the liberal
construction of these rules.[12] Our ruling in Lapid v.
Laurea[13] succinctly emphasized this point when we said:
 
Members of the bar are reminded that their
first duty is to comply with the rules of procedure,
rather than seek exceptions as loopholes. Technical
rules of procedure are not designed to frustrate the
ends of justice. These are provided to effect the
prompt, proper and orderly disposition of cases and,
thus, effectively prevent the clogging of court
dockets. Utter disregard of these rules cannot
justly be rationalized by harking on the policy of
liberal construction. [Emphasis supplied.]
 
 
We add that even for this Court, liberality does not signify an
unbridled exercise of discretion. It has its limits; to serve its purpose
and to preserve its true worth, it must be exercised only in the most
appropriate cases.[14]
 
WHEREFORE, premises considered, we DENY the
motion for reconsideration for lack of merit. Our Resolution

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Paa vs. Court of Appeals
G.R. No. 126560 December 4, 1997
ATTY. ALFONSO PAA vs. THE HONORABLE COURT OF
APPEALS, CIVIL SERVICE COMMISSION and DIRECTOR
BARTOLOME C. AMOGUIS
Petitioner urges us to set aside, on ground of grave abuse of
discretion, the resolution of respondent Court of Appeals of 30 April
1996 in CA-G.R. SP No. 40341 denying petitioner's "Motion for
Extension of Time to File Petition for Certiorari under Rule 45 of
the Rules of Court," and its resolution of 19 September 1996 denying
the motion for reconsideration.
Petitioner was the Administrative Officer of Regional Office No. XI
of the Department of Labor and Employment (DOLE). In an Order
dated 4 September 1992, then DOLE Secretary Ma. Nieves R.
Confesor ordered petitioner "DISMISSED from the service with
forfeiture of leave credits and retirement benefits and disqualification
for (sic) re-employment in the government service," for conduct
grossly prejudicial to the best interest of the service, frequent
absences from duty during office hours, and violation of reasonable
office rules and regulations. Unsuccessful in his bid for
reconsideration, petitioner appealed to the Civil Service
Commission.
In its Resolution No. 95-0230 of 12 January 1995,  1 the Civil Service
Commission "found [petitioner] guilty of being Notoriously
Undesirable" and imposed upon him "the penalty of dismissal from
the service with all its accessories." Petitioner moved for
reconsideration, which, however, was denied by the Civil Service
Commission in its Resolution No. 960987 of 13 February 1996. 2
On 12 April 1996, petitioner filed with the Court of Appeals
a Motion for Extension of Time to File Petition for Certiorari Under
Rule 45 of the Rules of Court, 3 docketed by the Court of Appeals as
CA-G.R. SP No. 40341. He alleged that he received a copy of the 13
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
February 1996 Civil Service Commission resolution on 29 March
1996 and he had then "until 13 April 1996 within which to file a
petition for review under Rule 45 of the Rules of Court as amended;"
and that he needed three (3) weeks to secure "certified true copies of
the resolutions and other pertinent documents [from] the Civil
Service Commission, Quezon City," which were to be attached to the
petition. He thus asked for an extension of 30 days from 13 April
1996 within which to file the petition.
On 30 April 1996, the Court of Appeals promulgated a
Resolution 4 denying petitioner's aforementioned Motion for
Extension of Time to File Petition, decreeing:
The instant "Motion for Extension of Time to File Petition
for Certiorari under Rule 45 of the Rules of Court" filed on
12 April 1996 is hereby DENIED it being the wrong mode
of appeal.
It is to be noted that the questioned resolution was rendered
by the Civil Service Commission; that the Supreme Court
Revised Administrative Circular No. 1-95 (Revised Circular
No. 1-91) specifically provides that appeals from judgments
or final orders or resolutions of the quasi-judicial agencies
(which includes the Civil Service Commission) is Petition
for Review. (Pars. 1 and 5, supra.)
Since the Court of Appeals denied his motion for reconsideration on
19 September 1996, 5 petitioner filed the instant petition, designating
it in both the caption and the body as one for "certiorari" under Rule
65 or Rule 45 of the Rules of Court as amended." Petitioner alleges:
I THE HONORABLE COURT OF
APPEALS COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO
MYOPIC OR SHORT SIGHTEDNESS IN
JUDGMENT IN ADHERING AND
 Paa vs. Court of Appeals
LIMITING ITSELF ONLY TO APPEAL REVIEWED BY THE HONORABLE
BY A PETITION FOR REVIEW UNDER COURT OF APPEALS BY A PETITION
SUPREME COURT REVISED FOR REVIEW UNDER RULE 45 OF 65
ADMINISTRATIVE CIRCULAR NO. 1-95 OF THE NEW RULES OF COURT AS
(REVISED CIRCULAR NO. 1-91) AMENDED DESPITE THE PATENT
GROSSLY IGNORING THAT GRAVE ABUSE OF DISCRETION ON
AUTHORITY/POWER TO ISSUE WRITS THE PART OF THE CIVIL SERVICE
OF MANDAMUS, COMMISSION IN DECIDING A CASE
PROHIBITION, CERTIORARI, HABEAS BASED ON DOCUMENTS/EVIDENCE
CORPUS AND QUO WARRANTO AND INTRODUCED FOR THE FIRST TIME
AUXILIARY WRITS OR PROCESSES, ON APPEAL, ORDINARY APPEAL BOT
WHETHER OR NOT IN AID OF ITS [sic] BEING THE PLAIN, SPEEDY AND
APPELLATE JURISDICTION AS ADEQUATE REMEDY IN THE
GRANTED UNDER PAR. (1), SEC. 9 OF ORDINARY COURSE OF LAW.
REPUBLIC ACT NO. 7902 IN CASES
WHERE THE QUASI-JUDICIAL BODY III A QUESTION OF LAW AS TO
COMMITS ULTRAVIREZ [sic] ACTS WHETHER A PETITION
TANTAMOUNT TO GRAVE ABUSE OF FOR CERTIORARI UNDER RULE 45 OR
DISCRETION OR LACK/IN EXCESS OF 65 OF THE RULES OF COURT AS
JURISDICTION AS IN THE INSTANT AMENDED CAN BE CONSIDERED A
CASE WHERE THE CIVIL SERVICE MODE OF APPEAL AND IF SO
COMMISSION FOR THE FIRST TIME CONSIDERED AS A MODE OF APPEAL
ON APPEAL CONSIDERED WHETHER IT IS THE PROPER REMEDY
DOCUMENTS/ EVIDENCE WHICH TO CORRECT SUPER [sic] GRAVE
WERE NEVER INTRODUCED/ ABUSE OF DISCRETION OF THE CIVIL
PRESENTED NOR ADMITTED DURING SERVICE COMMISSION IN DECIDING
THE FORMAL HEARING OF THE A CASE BASED ON AN [sic] EVIDENCE
ADMINISTRATIVE CASE. NOT INTRODUCED DURING THE
FORMAL HEARING OF THE CASE IT
II A QUESTION OF LAW AS TO APPEARING UNDER SUCH
WHETHER DECISIONS OR CIRCUMSTANCE THERE IS NO
RESOLUTIONS OF THE CIVIL SERVICE APPEAL, NOR ANY PLAIN, SPEEDY,
COMMISSION ISSUED WITH GRAVE AND ADEQUATE REMEDY IN THE
ABUSE OF DISCRETION AMOUNTING ORDINARY COURSE OF LAW THAT
TO LACK OR IN EXCESS OF CAN BE MADE AVAILABLE TO THE
JURISDICTION CAN NO LONGER BE PETITIONER EXCEPT THE SAID

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Paa vs. Court of Appeals
PETITION FOR CERTIORARI RULE 45 REGARD TO THE CARDINAL RULES
OR 65 OF THE RULED OF COURT AS OF PROCEDURE AND EVIDENCE
AMENDED. RULED AND DECREED IN ANNEX "A"
TO ANNEX "A-10" LIKE AN EMPRESS
In its Comment, 6 the Office of the Solicitor General submits that the THAT PETITIONER SHOULD BE
Court of Appeals did not commit grave abuse of discretion as the DISMISSED FROM THE SERVICE
petition which petitioner actually filed with the Court of Appeals in WHERE THE SAID PETITIONER SPENT
CA-G.R. SP No. 40341 on 10 May 1996 was one THE BEST 23 YEARS OF HIS LIFE
for certiorari under Rule 65 of the Rules of Court, as clearly shown HONESTLY, FAITHFULLY AND
by the grounds petitioner relied upon, to wit: SINCERELY WITHOUT BEING
CHARGED OF [sic] ANY SINGLE CASE,
I. THE HONORABLE PUBLIC ADMINISTRATIVE OR OTHERWISE,
RESPONDENT NIEVES CONFESSOR IN EXCEPT THE PRESENT HARASSMENT
HER CAPACITY AS SECRETARY OF CASE UNLIKE THE
LABOR AND EMPLOYMENT AND AFOREMENTIONED NIEVES
REVIEWING OFFICER OF THE CONFESSOR WHO IN HER SHORT
ADMINISTRATIVE COMPLAINT STINT AS SECRETARY [OF] LABOR
AGAINST THE PETITIONER AND EMPLOYMENT WAS CHARGED
COMMITTED SUPER [sic] GRAVE IN THE OFFICE OF THE OMBUDSMAN
ABUSE OF DISCRETION AMOUNTING OF [sic] SEVERAL CRIMINAL AND
TO LACK OR EXCESS OF ADMINISTRATIVE CASES RANGING
JURISDICTION [sic] WHEN THE FROM CORRUPTION TO ALL SORTS
COMPLAINANTS IN SAID OF CASES INCLUDING HER
ADMINISTRATIVE CASE MERELY INEXCUSABLE NEGLIGENCE OF [sic]
PETITIONED FOR THE DEMOTION OF THE FLOR CONTEMPLACION AND
PETITIONER IN POSITION FROM OTHER SIMILAR CASES INVOLVING
CHIEF OF THE ADMINISTRATIVE OVERSEAS CONTRACT WORKERS
SERVICES TO SUPERVISING OFFICER ABROAD.
OF THE INDUSTRIAL RELATIONS
DIVISION OF THE SAME REGIONAL II. THE HONORABLE PUBLIC
OFFICE, NO. XI, DAVAO CITY, RESPONDENT NIEVES CONFESSOR
DEPARTMENT OF LABOR AND ACTED WITH SUPER [sic] GRAVE
EMPLOYMENT BUT THE HONORABLE ABUSE OF DISCRETION AMOUNTING
NIEVES CONFESSOR CAPRICIOUSLY, TO FALSE NARRATION OF FACTS OR
WHIMSICALLY, ARROGANTLY, UNTRUTHFUL STATEMENT IN THE
ULTRAVIREZLY [sic] WITHOUT NARRATION OF FACTS IN VIOLATION

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Paa vs. Court of Appeals
OF ART. 171 OF THE REVISED PENAL REGULAR OFFICE HOUSES [sic] AND
CODE TANTAMOUNT TO CONDUCT PREJUDICIAL TO THE BEST
FALSIFICATION OF QUASI INTEREST OF THE SERVICE AND
JUDICIAL PUBLIC DOCUMENTS WHEN PETITIONER FOR THE FIRST TIME IN
IN THE QUESTIONED ORDER (ANNEX HIS 23 YEARS OF SERVICE WITH THE
"A" TO "A-10") SHE ALTERED, DEPARTMENT OF LABOR AND
SUBSTITUTED AND CHANGED THE EMPLOYMENT WAS CONFRONTED
FINDINGS OF THE DEPARTMENT OF WITH AN ADMINISTRATIVE
LABOR INVESTIGATOR ATTY. JOEL HARASSMENT CASE IN A PLACE
MARTINEZ BY MAKING IT APPEAR SEVERAL HUNDRED KILOMETERS
THAT PETITIONER WAS FOUND TO BE FROM HIS FAMILY WHEN UNDER THE
FREQUENTLY ABSENT, WAS DRUNK CIVIL SERVICE LAW (PRESIDENTIAL
OF SLEEPING DURING REGULAR DECREE NO. 807) AND CODE OF
OFFICE HOURS WHEN THE CONDUCT OF GOVERNMENT
AFOREMENTIONED INVESTIGATING OFFICIALS AND EMPLOYEES (R.A.
OFFICER HAS [sic] NOT MADE ANY OF 6713) THE MAXIMUM PENALTY FOR
THOSE FINDINGS. FREQUENT UNAUTHORIZED
ABSENCES WHICH IS CONSIDERED A
III. THE HONORABLE NIEVES GRAVE OFFENSE IS ONLY
CONFESSOR COMMITTED GRAVE SUSPENSION FROM THE SERVICE FOR
ABUSE OF DISCRETION AMOUNTING SIX MONTHS AND ONE DAY AND THE
TO LACK OR IN EXCESS OF PENALTY FOR CONDUCT
JURISDICTION OF GROSS IGNORANCE PREJUDICIAL TO THE BEST INTEREST
OF THE LAW WHEN SHE ISSUED THE OF THE SERVICE IS SIX MONTHS AND
SEPTEMBER 4, 1992 ORDER (ANNEX A ONE DAY TO ONE YEAR WHILE THE
TO ANNEX A-10) WHEREIN SHE PENALTY FOR VIOLATION OF
IMPOSED THE SUPREME PENALTY OF REASONABLE OFFICE RULES AND
DISMISSAL WITH FORFEITURE OF REGULATIONS WHICH IS A LIGHT
RETIREMENT BENEFITS AND LEAVE OFFENSE, IS ONLY A REPRIMAND.
CREDITS ON THE PETITIONER WHICH
IS GROSSLY DISPROPORTIONATE TO IV. THE HONORABLE NIEVES
PETITIONER'S ALLEGED FINDINGS OF CONFESSOR COMMITTED GRAVE
GUILT FOR VIOLATION OF ABUSE OF DISCRETION IN ISSUING
REASONABLE OFFICE RULES AND THE SEPTEMBER 4, 1992 ORDER
REGULATIONS, FREQUENT (ANNEX A TO ANNEX A-10)
ABSENCES FROM DUTY DURING DISMISSING FROM THE SERVICE THE

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Paa vs. Court of Appeals
HEREIN PETITIONER WITH ACTUALLY STOPPED WORKING IN
FORFEITURE OF RETIREMENT [THE] OFFICE ON APRIL 15, 1993, THE
BENEFITS AND LEAVE CREDITS SAID HONORABLE NIEVES
AMOUNTING TO CAPRICIOUS, CONFESSOR DENIED PETITIONER'S
WHIMSICAL, ARROGANT AND MOTION FOR RECONSIDERATION
ULTRAVIREZ [sic] EXERCISE OF (ANNEXES F, F-1, F-2, F-3, F-4, AND F-5)
FUNCTIONS WHEN THE CHIEF OF THE AND RETIREMENT APPLICATION.
LEGAL SERVICES, THE ASSISTANT
SECRETARY OF LABOR AND THE VI. PUBLIC RESPONDENT CIVIL
UNDERSECRETARY OF LABOR HAVE SERVICE COMMISSION COMMITTED
ALREADY INDORSED TO HER FOR GRAVE ABUSE OF DISCRETION
HER APPROVAL THE ORDER AMOUNTING LIKEWISE TO
DISMISSING THE INSTANT FALSIFICATION OF QUASI
ADMINISTRATIVE CASE AND AT THE JUDICIAL PUBLIC DOCUMENTS WHEN
SAME TIME RECOMMENDED THE IT ISSUED RESOLUTION NO. 95-0230
APPROVAL OF PETITIONER'S (ANNEX "B" TO "B-8" DATED
APPLICATION FOR RETIREMENT. JANUARY 12, 1995) AFFIRMING THE
ORDER OF HONORABLE PUBLIC
V. THE HONORABLE NIEVES RESPONDENT NIEVES CONFESSOR
CONFESSOR COMMITTED GRAVE WHEN THE SAID CIVIL SERVICE
ABUSE OF DISCRETION AMOUNTING COMMISSION MADE IT APPEAR IN
TO VIOLATION OF PARAGRAPH (c), SAID RESOLUTION THAT CERTAIN
SEC. 4 OF R.A. 6713 WHICH IS THE LETTERS AND MEMORANDA WERE
CODE OF CONDUCT AND ETHICAL PRESENTED DURING THE FORMAL
STANDARDS FOR PUBLIC OFFICIALS HEARING OF THE CASE SUCH AS
AND EMPLOYEES CONSISTING OF THOSE LETTERS AND MEMORANDA
HER DELIBERATE MALICIOUS ENUMERATED FROM NO. 1 TO 19 OF
REFUSAL TO ACT WITH JUSTNESS PAGES 7 AND 8 OF THE QUESTIONED
AND SINCERITY [sic] TOWARDS RESOLUTION NO. 95-0230 WHEN NO
PETITIONER WHEN UNDER FALSE SUCH LETTERS AND MEMORANDA
PRETEPSES [sic] SHE MISLEAD WERE EVER PRESENTED IN THE
PETITIONER INTO FILING OF [sic] HIS FORMAL HEARING OF THE
APPLICATION FOR RETIREMENT TO ADMINISTRATIVE CASE AND HOW
TAKE EFFECT ON APRIL 15, 1993 AND THE SAID DOCUMENTS FOUND THEIR
AFTER PETITIONER FILED SUCH WAY INTO THE RECORDS OF THE
APPLICATION FOR RETIREMENT AND CASE AND FOR THE FIRST TIME

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Paa vs. Court of Appeals
CONSIDERED ON APPEAL BY PUBLIC RESOLUTION NO. 96-0987 DECLARING
RESPONDENT CIVIL SERVICE PETITIONER AS NOTORIOUSLY
COMMISSION WHICH WAS THE BASIS UNDESIRABLE ON THE BASIS OF
OF AFFIRMING THE QUESTIONED DOCUMENTS NOT ADMITTED IN
ORDER OF HON. NIEVES CONFESSOR EVIDENCE NOR PASSED UPON IN THE
(ANNEX "A" TO ANNEX "A-10") AS FORMAL HEARING OF THE
WELL AS IN DECLARING PETITIONER ADMINISTRATIVE CASE BUT WHICH
NOTORIOUSLY UNDESIRABLE IS A FOR THE FIRST TIME ON APPEAL WAS
"MIRACLE" WHICH HAS NEVER BEEN [sic] MIRACULOUSLY INSERTED INTO
DISCUSSED NOR EXPLAINED BY THE RECORDS OF THE CASE IN THE
PUBLIC RESPONDENT IN THE CIVIL SERVICE COMMISSION AND
QUESTIONED RESOLUTION NO. 95- THESE CONSIST OF THE LETTERS
0230. AND MEMORANDA MENTIONED IN
PAGES 7 AND 8 OF THE QUESTIONED
VII. THE HONORABLE PUBLIC RESOLUTION NO. 95-0230
RESPONDENT CIVIL SERVICE ENUMERATED AS NO. 1 TO 19.
COMMISSION COMMITTED GRAVE
ABUSE OF DISCRETION AMOUNTING IX. THE HONORABLE CIVIL SERVICE
TO FALSIFICATION PUNISHABLE COMMISSION COMMITTED GRAVE
UNDER ART. 171 OF THE REVISED ABUSE OF DISCRETION
PENAL CODE WHEN IT DENIED TANTAMOUNT TO KNOWINGLY
PETITIONER'S MOTION FOR RENDERING [AN] UNJUST JUDGMENT
RECONSIDERATION BY ISSUING WHEN INSTEAD OF REVIEWING THE
RESOLUTION NO. 96-0987 DATED FINDINGS AND ORDER OF
FEBRUARY 13, 1996 WHEN IT HONORABLE NIEVES CONFESSOR
CONSIDERED FOR THE FIRST TIME (ANNEXES A TO A-10) DATED
ON APPEAL THE QUESTIONED SEPTEMBER 4, 1992 IT PROCEEDED TO
LETTERS AND MEMORANDA WHICH CONDUCT ITS OWN EX-
WERE NEVER INTRODUCED DURING PARTE INFORMAL INQUIRY BY
THE FORMAL HEARING OF THE CONSIDERING DOCUMENTS OR
INSTANT ADMINISTRATIVE CASE. SCRAP[S] OF PAPERS [sic]
MIRACULOUSLY INSERTED INTO THE
VIII. THE HONORABLE CIVIL SERVICE RECORDS OF THE CASE IN THE CIVIL
COMMISSION ACTED WITH GRAVE SERVICE COMMISSION WHICH WERE
ABUSE OF DISCRETION IN ISSUING FOR THE FIRST TIME TREATED ON
RESOLUTION NO. 95-0230 AND APPEAL THEREBY ISSUING A NEW

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Paa vs. Court of Appeals
FINDING THAT THE PETITIONER WAS xxx xxx xxx
NOTORIOUSLY UNDESIRABLE WHICH
FINDING WAS NEVER DREAMED NOR (3) Exclusive appellate jurisdiction
CONCEIVED OF BY ANY PARTY IN over all final judgments, decisions,
THE FORMAL HEARING OF THE resolutions, orders or awards of
ADMINISTRATIVE CASE AND NOT Regional Trial Courts and quasi-
EVEN BY THE OVER ZEALOUS, OVER judicial agencies, instrumentalities,
VIGILANT, OVER ACTING, boards or commissions, including
OVERSPEEDING, OVER HONEST AND the Securities and Exchange
OVER INCORRUPTIBLE PUBLIC Commission, the Social Security
RESPONDENT NIEVES CONFESSOR. 7 Commission, the Employees
Compensation Commission and the
The Solicitor General then concluded that since under Revised Civil Service Commission, except
Administrative Circular No. 1-95 of this Court appeals from those falling within the appellate
judgments of quasi-judicial agencies such as the Civil Service jurisdiction of the Supreme Court in
Commission should be by verified petition for review, and accordance with the Constitution,
considering further that Circular No. 2-90 of this Court provides that the Labor Code of the Philippines
appeals taken to either this Court or the Court of Appeals by the under the Presidential Decree No.
wrong or inappropriate mode of appeal shall be dismissed, then 442, as amended, the provisions of
petitioner's motion for extension of time to file petition this Act, and of subparagraph (1) of
for certiorari was correctly denied by the Court of Appeals. the third paragraph and
subparagraph (4) of the fourth
In its Comment 8 filed by its Office for Legal Affairs, respondent paragraph of Section 17 of the
Civil Service Commission claims as misplaced petitioner's reliance Judiciary Act of 1948.
on Section 9(1) of B.P. Blg. 129 which vests upon the Court of
Appeals exclusive original jurisdiction to issue writs of mandamus, xxx xxx xxx
prohibition, certiorari, habeas corpus, and quo warranto, whether or
not in aid of its appellate jurisdiction. Respondent Commission In his Consolidated Reply, 9 petitioner justified his filing a petition
contends that the only mode of appeal from its decisions is a petition for certiorari under Rule 65 of the Rules of Court in light of the
for review, in accordance with Revised Circular No. 1-95 of this "super-grave abuse of discretion on the part of the . . . Civil Service
Court and Section 9(3) of B.P. Bldg. 129, as amended by R.A. No. Commission" in issuing the challenged resolution, and that an
7902. The latter provides: ordinary appeal was "not appropriate and sufficient to seek reddress
[sic] . . . for the reason that it would in effect impliedly give credence
Sec. 9. Jurisdiction. — The Court of Appeals shall to the unlawful acts of the Civil Service Commission thus admitting
exercise: its despotic, arrogant exercise of authority . . ."

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Paa vs. Court of Appeals
We rule against petitioner.
The Court of Appeals committed no error in denying petitioner's
"Motion for Extension of Time to File Petition for Certiorari under
Rule 45 of the Rules of Court."
Prior to the effectivity of R.A. 7902, a party aggrieved by any
decision, final order or resolution of the Civil Service Commission
had only one remedy, namely, a special civil action
for certiorari under Rule 65 of the Rules of
Court 10 to be filed with this Court pursuant to Section 7 of Article
IX-A of the Constitution, which reads, in part:
Sec. 7. . . . Unless otherwise provided by law this
Constitution or by law, any decision, order, or ruling
of each Commission may be brought to the Supreme
Court on certiorari by the aggrieved party within
thirty days from receipt of a copy thereof.
Conformably with its implied authority in this Section,
Congress passed R.A. No. 7902 vesting upon the Court of
Appeals appellate jurisdiction over cases decided or resolved
by the Civil Service Commission, but not the other two
Constitutional Commissions treated under Article IX.
Pursuant to Revised Administrative Circular No. 1-95, the
mode of appeal from a decision of the Civil Service
Commission, to bring it within the appellate jurisdiction of
the Court of Appeals, is a petition for review to be filed
within the period therein fixed. This petition for review is the
same as that contemplated in Section 29 of the Judiciary Act
of 1948 (R.A. No. 269), as amended, and in Circular No. 2-
90, but not that treated in Rule 45 of the Rules of Court
which refers to petitions filed in the Supreme Court for the
review of decisions or final orders of the Court of Appeals.
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Under the 1997 Rules of Civil Procedure, which took effect
on 1 July 1997, a petition for review as a mode of appeal to
the Court of Appeals from decisions, final orders or
resolutions of the Court of Tax Appeals and quasi-
judicial bodies, including the Civil Service Commission, is
governed by Rule 43 thereof.
Considering that petitioner announced in his motion for
extension of time that he would be filing a petition for
review under Rule 45 of the Rules of Court, the Court of
Appeals cannot be faulted for peremptorily denying the
motion.
Petitioner claims, however, that a petition for review was not
his exclusive remedy, as he could also avail of a special civil
action for certiorari under Rule 65. There are, of course,
settled distinctions between a petition for review as a mode
of appeal and a special civil action for certiorari, thus:
a. In appeal by certiorari, the petition is based on
questions of law which the appellant desires the
appellate court to resolve. In certiorari as an original
action, the petition raises the issue as to whether the
lower court acted without or in excess of jurisdiction
or with grave abuse of discretion.
b. Certiorari, as a mode of appeal, involves the
review of the judgment, award or final order on the
merits. The original action for certiorari may be
directed against an interlocutory order of the court
prior to appeal from the judgment or where there is
no appeal or any other plain, speedy or adequate
remedy.
c. Appeal by certiorari must be made within the
reglementary period for appeal. An original action
 Paa vs. Court of Appeals
for certiorari may be filed not later than sixty (60)
days from notice of the judgment, order or resolution
sought to be assailed.
d. Appeal by certiorari stays the judgment, award or
order appealed from. An original action
for certiorari, unless a writ of preliminary injunction
or a temporary restraining order shall have been
issued, does not stay the challenged proceeding.
e. In appeal by certiorari, the petitioner and
respondent are the original parties to the action, and
the lower court or quasi-judicial agency is not to be
impleaded. In certiorari as an original action, the
parties are the aggrieved, party against the lower
court quasi-judicial agency and the prevailing
parties, who thereby respectively become the
petitioner and respondents.
f. In certiorari for purposes of appeal, the prior
filing of a motion for reconsideration is not required
(Sec. 1, Rule 45); while in certiorari as an original
action, a motion for reconsideration is a condition
precedent (Villa-Rey Transit vs. Bello, L-18957,
April 23, 1963), subject to certain exceptions.
g. In appeal by certiorari, the appellate court is in
the exercise of its appellate jurisdiction and power of
review for, while in certiorari as an original action,
the higher court exercises original jurisdiction under
its power of control and supervision over the
proceedings of lower courts. 11
The original jurisdiction of the Court of Appeals over special
civil actions for, inter alia, certiorari, is vested upon it in
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Section 9(1) of B.P. Blg. 129. This jurisdiction is concurrent
with the Supreme Court 12 and the Regional Trial Court. 13
If, indeed, petitioner initially believed that he had the
alternative remedy of a special civil action
for certiorari which would have been more effective and
adequate, then it was not necessary for him to ask for an
extension of time to file the petition. Under Rule 65 then, he
had a reasonable period from receipt of a copy of the Civil
Service Commission resolution denying his motion for
reconsideration within which to file the petition.
That reasonable period has been interpreted to be ninety
(90) days. 14 We are not, however, persuaded that petitioner
initially thought of filing a special civil action. All along,
what he had in mind was a petition for review, as evidenced
by his express reference in his motion to a petition for
review under Rule 45 and his indication of the date he
received a copy of the resolution, viz., 29 March 1996, and
the last day to file the petition, viz., 13 April 1996, which
coincided with the last day prescribed under Rule 45.
If petitioner then filed a special civil action for certiorari on
10 May 1996, it was only because he had lost his right to
appeal by way of the intended petition fore review. The
proffered justification then for his belated filing of a special
action for certiorari was nothing but a crude attempt to
circumvent standing rules of procedure, which we cannot
tolerate.
It is settled that a special civil action for certiorari will not
lie as a substitute for the lost remedy of appeal,  15and we find
no special nor compelling reasons why we should make out
an exception here.
In any case, even if we were to sympathize with petitioner
and permit his recourse under Rule 65, the end result would
 Paa vs. Court of Appeals
remain unchanged since a perusal of the challenged
resolutions of the Civil Service Commission fails to disclose
any grave abuse of discretion on its part.

WHEREFORE, the instant petition is DISMISSED.

Costs against petitioner.

SO ORDERED.

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Lokin vs. Commission on Elections
G.R. No. 193808               June 26, 2012
LUIS K. LOKIN, JR. and TERESITA F. PLANAS vs.
COMMISSION ON ELECTIONS (COMELEC), CITIZENS’
BATTLE AGAINST CORRUPTION PARTY LIST
The present petition having been flied beyond the reglementary
period, Rule 64 of the Rules of Court compels a dismissal on this
basis alone. Despite petitioner's inexplicable disregard of basic
concepts, this Court deems it appropriate to reiterate the specific
procedure for the review of judgments made by the Commission on
Elections (COMELEC) as laid down in Rule 64, and how it is
differentiated from the more general remedy afforded by Rule 65.
On 5 July 2010, the COMELEC First Division issued a
Resolution1 expunging the Certificate of Nomination which included
herein petitioners as representatives of the party-list group known as
Citizens’ Battle Against Corruption (CIBAC). The COMELEC en
banc affirmed the said Resolution, prompting Luis Lokin, Jr. and
Teresita F. Planas to file the present Petition for Certiorari.
Petitioners allege grave abuse of discretion on the part of the
COMELEC in issuing both Resolutions, praying that they be
recognized as the legitimate nominees of CIBAC party-list, and that
petitioner Lokin, Jr. be proclaimed as the CIBAC party-list
representative to the House of Representatives.
Respondent CIBAC party-list is a multi-sectoral party
registered2 under Republic Act No. (R.A.) 7941, otherwise known as
the Party- List System Act. As stated in its constitution and bylaws,
the platform of CIBAC is to fight graft and corruption and to
promote ethical conduct in the country’s public service. 3 Under the
leadership of the National Council, its highest policymaking and
governing body, the party participated in the 2001, 2004, and 2007
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
elections.4On 20 November 2009, two different entities, both
purporting to represent CIBAC, submitted to the COMELEC a
"Manifestation of Intent to Participate in the Party-List System of
Representation in the May 10, 2010 Elections." The first
Manifestation5 was signed by a certain Pia B. Derla, who claimed to
be the party’s acting secretary-general. At 1:30 p.m. of the same day,
another Manifestation6 was submitted by herein respondents
Cinchona Cruz-Gonzales and Virginia Jose as the party’s vice-
president and secretary-general, respectively.
On 15 January 2010, the COMELEC issued Resolution No.
87447giving due course to CIBAC’s Manifestation, "WITHOUT
PREJUDICE …TO the determination which of the two factions of
the registered party-list/coalitions/sectoral organizations which filed
two (2) manifestations of intent to participate is the official
representative of said party-list/coalitions/sectoral organizations
xxx."8
On 19 January 2010, respondents, led by President and Chairperson
Emmanuel Joel J. Villanueva, submitted the Certificate of
Nomination9 of CIBAC to the COMELEC Law Department. The
nomination was certified by Villanueva and Virginia S. Jose. On 26
March 2010, Pia Derla submitted a second Certificate of
Nomination,10 which included petitioners Luis Lokin, Jr. and Teresita
Planas as party-list nominees. Derla affixed to the certification her
signature as "acting secretary-general" of CIBAC.
Claiming that the nomination of petitioners Lokin, Jr. and Planas was
unauthorized, respondents filed with the COMELEC a "Petition to
Expunge From The Records And/Or For Disqualification," seeking
to nullify the Certificate filed by Derla. Respondents contended that
Derla had misrepresented herself as "acting secretary-general," when
she was not even a member of CIBAC; that the Certificate of
Nomination and other documents she submitted were unauthorized
by the party and therefore invalid; and that it was Villanueva who
 Lokin vs. Commission on Elections
was duly authorized to file the Certificate of Nomination on its
behalf.11
In the Resolution dated 5 July 2010, the COMELEC First Division
granted the Petition, ordered the Certificate filed by Derla to be
expunged from the records, and declared respondents’ faction as the
true nominees of CIBAC.12Upon Motion for Reconsideration
separately filed by the adverse parties, the COMELEC en
banc affirmed the Division’s findings. In a per curiam Resolution
dated 31 August 2010,13 the Commission reiterated that Pia Derla
was unable to prove her authority to file the said Certificate, whereas
respondents presented overwhelming evidence that Villanueva
deputized CIBAC Secretary General Virginia Jose to submit the
Certificate of Nomination pursuant to CIBAC’s Constitution and
bylaws.
Petitioners now seek recourse with this Court in accordance with
Rules 64 and 65 of the Rules of Court, raising these issues: I)
Whether the authority of Secretary General Virginia Jose to file the
party’s Certificate of Nomination is an intra-corporate matter,
exclusively cognizable by special commercial courts, and over which
the COMELEC has no jurisdiction; and II) Whether the COMELEC
erred in granting the Petition for Disqualification and recognizing
respondents as the properly authorized nominees of CIBAC party-
list.
As earlier stated, this Court denies the petition for being filed outside
the requisite period. The review by this Court of judgments and final
orders of the COMELEC is governed specifically by Rule 64 of the
Rules of Court, which states:
Sec. 1. Scope. This rule shall govern the review of judgments and
final orders or resolutions of the Commission on Elections and the
Commission on Audit.
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Sec. 2. Mode of review. A judgment or final order or resolution of
the Commission on Elections and the Commission on Audit may be
brought by the aggrieved party to the Supreme Court on certiorari
under Rule 65, except as hereinafter provided.
The exception referred to in Section 2 of this Rule refers precisely to
the immediately succeeding provision, Section 3 thereof, 14 which
provides for the allowable period within which to file petitions for
certiorari from judgments of both the COMELEC and the
Commission on Audit. Thus, while Rule 64 refers to the same
remedy of certiorari as the general rule in Rule 65, they cannot be
equated, as they provide for different reglementary periods. 15 Rule 65
provides for a period of 60 days from notice of judgment sought to
be assailed in the Supreme Court, while Section 3 expressly provides
for only 30 days, viz:
SEC. 3. Time to file petition.—The petition shall be filed within
thirty (30) days from notice of the judgment or final order or
resolution sought to be reviewed. The filing of a motion for new trial
or reconsideration of said judgment or final order or resolution, if
allowed under the procedural rules of the Commission concerned,
shall interrupt the period herein fixed. If the motion is denied, the
aggrieved party may file the petition within the remaining period, but
which shall not be less than five (5) days in any event, reckoned from
notice of denial.
Petitioner received a copy of the first assailed Resolution on 12 July
2010. Upon the Motion for Reconsideration filed by petitioners on
15 July 2010, the COMELEC en banc issued the second assailed
Resolution on 31 August 2010. This per curiam Resolution was
received by petitioners on 1 September 2010. 16 Thus, pursuant to
Section 3 above, deducting the three days it took petitioners to file
the Motion for Reconsideration, they had a remaining period of 27
days or until 28 September 2010 within which to file the Petition for
Certiorari with this Court.
 Lokin vs. Commission on Elections
However, petitioners filed the present Petition only on 1 October
2010, clearly outside the required period. In Pates v. Commission on
Elections and Domingo v. Commission on Elections, 17 we have
established that the fresh-period rule used in Rule 65 does not
similarly apply to the timeliness of petitions under Rule 64. In Pates,
this Court dismissed the
Petition for Certiorari on the sole ground that it was belatedly filed,
reasoning thus:
x x x. While it is true that a litigation is not a game of technicalities,
it is equally true that every case must be prosecuted in accordance
with the prescribed procedure to ensure an orderly and speedy
administration of justice. There have been some instances wherein
this Court allowed a relaxation in the application of the rules, but this
flexibility was "never intended to forge a bastion for erring litigants
to violate the rules with impunity."
x x x           x x x          x x x
Under this unique nature of the exceptions, a party asking for the
suspension of the Rules of Court comes to us with the heavy burden
of proving that he deserves to be accorded exceptional treatment.
Every plea for a liberal construction of the Rules must at least be
accompanied by an explanation of why the party-litigant failed to
comply with the rules and by a justification for the requested liberal
construction.
x x x           x x x          x x x
x x x. Section 3, Article IX-C of the Constitution expressly requires
that the COMELEC’s rules of procedure should expedite the
disposition of election cases. This Court labors under the same
command, as our proceedings are in fact the constitutional extension
of cases that start with the COMELEC.
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Based on these considerations, we do not find convenience and
uniformity to be reasons sufficiently compelling to modify the
required period for the filing of petitions for certiorari under Rule 64.
While the petitioner is correct in his historical data about the Court’s
treatment of the periods for the filing of the different modes of
review, he misses out on the reason why the period under Section 3,
Rule 64 has been retained. The reason, as made clear above, is
constitutionally-based and is no less than the importance our
Constitution accords to the prompt determination of election
results.18 x x x. (Emphasis supplied, footnotes omitted.)
In this case, petitioners do not even attempt to explain why the
Petition was filed out of time. Clearly, they are aware of the
applicable period for filing, as they themselves invoke the remedy
under Rule 64 in conjunction with Rule 65. Hence, there is no
acceptable reason for their failure to comply with the proper
procedure. But even if this Court were to apply liberality and take
cognizance of the late Petition, the arguments therein are
flawed. The COMELEC has jurisdiction over cases pertaining to
party leadership and the nomination of party-list representatives.
Petitioners contend that the COMELEC never should have taken
cognizance of respondents’ Petition to Expunge and/or for
Disqualification. They have reached this conclusion by
characterizing the present matter as an intra-corporate dispute and,
thus, cognizable only by special commercial courts, particularly the
designated commercial court in this case, the Regional Trial Court in
Pasig City.19 Pia Derla purportedly filed the Certificate of
Nomination pursuant to the authority granted by the Board of
Trustees of the "CIBAC Foundation, Inc.," the non-stock entity that
is registered with the Securities and Exchange Commission (SEC). 20
Thus, petitioners insist that the group that participated in the party-
list system in the 2004 and 2007 elections was the SEC-registered
entity, and not the National Council, which had allegedly become
defunct since 2003. That was the year when CIBAC Foundation, Inc.
 Lokin vs. Commission on Elections
was established and registered with the SEC. 21 On the other hand,
respondents counter that the foundation was established solely for
the purpose of acting as CIBAC’s legal and financial arm, as
provided by the party’s Constitution and bylaws. It was never
intended to substitute for, or oust CIBAC, the party-list itself. 22
Even as petitioners insisted on the purely intra-corporate nature of
the conflict between "CIBAC Foundation" and the CIBAC Sectoral
Party, they submitted their Certificate of Nomination and
Manifestation of Intent to participate in the party-list elections.
Precisely, petitioners were seeking the COMELEC’s approval of
their eligibility to participate in the upcoming party-list elections. In
effect, they invoke its authority under the Party-List System
Act.23 Contrary to their stance that the present dispute stemmed from
an intra-corporate matter, their submissions even recognize the
COMELEC’s constitutional power to enforce and administer all laws
relative to the conduct of an election, plebiscite, initiative,
referendum, and recall.24 More specifically, as one of its
constitutional functions, the COMELEC is also tasked to "register,
after sufficient publication, political parties, organizations, or
coalitions which, in addition to other requirements, must present
their platform or program of government."25
In any case, the COMELEC’s jurisdiction to settle the struggle for
leadership within the party is well established. This singular power to
rule upon questions of party identity and leadership is exercised by
the COMELEC as an incident to its enforcement powers. In Laban
ng Demokratikong Pilipino v. Commission on Elections, 26 the Court
held:
x x x. Corollary to the right of a political party "to identify the people
who constitute the association and to select a standard bearer who
best represents the party’s ideologies and preference" is the right to
exclude persons in its association and to not lend its name and
prestige to those which it deems undeserving to represent its ideals.
A certificate of candidacy makes known to the COMELEC that the
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
person therein mentioned has been nominated by a duly authorized
political group empowered to act and that it reflects accurately the
sentiment of the nominating body. A candidate’s political party
affiliation is also printed followed by his or her name in the certified
list of candidates. A candidate misrepresenting himself or herself to
be a party’s candidate, therefore, not only misappropriates the party’s
name and prestige but foists a deception upon the electorate, who
may unwittingly cast its ballot for him or her on the mistaken belief
that he or she stands for the party’s principles. To prevent this
occurrence, the COMELEC has the power and the duty to step in and
enforce the law not only to protect the party but, more importantly,
the electorate, in line with the Commission’s broad constitutional
mandate to ensure orderly elections.27 (Emphasis supplied.)
Similar to the present case, Laban delved into the issue of leadership
for the purpose of determining which officer or member was the duly
authorized representative tasked with filing the Certificate of
Nomination, pursuant to its Constitution and bylaws, to wit:
The only issue in this case, as defined by the COMELEC itself, is
who as between the Party Chairman and the Secretary General has
the authority to sign certificates of candidacy of the official
candidates of the party. Indeed, the petitioners’ Manifestation and
Petition before the
COMELEC merely asked the Commission to recognize only those
certificates of candidacy signed by petitioner Sen. Angara or his
authorized representative, and no other. 28
In the 2010 case Atienza v. Commission on Elections, 29 it was
expressly settled that the COMELEC possessed the authority to
resolve intra-party disputes as a necessary tributary of its
constitutionally mandated power to enforce election laws and register
political parties. The Court therein cited Kalaw v. Commission on
Elections and Palmares v. Commission on Elections, which
 Lokin vs. Commission on Elections
uniformly upheld the COMELEC’s jurisdiction over intra-party
disputes:
The COMELEC’s jurisdiction over intra-party leadership disputes
has already been settled by the Court. The Court ruled in Kalaw v.
Commission on Elections that the COMELEC’s powers and
functions under Section 2, Article IX-C of the Constitution, "include
the ascertainment of the identity of the political party and its
legitimate officers responsible for its acts." The Court also declared
in another case that the COMELEC’s power to register political
parties necessarily involved the determination of the persons who
must act on its behalf. Thus, the COMELEC may resolve an intra-
party leadership dispute, in a proper case brought before it, as an
incident of its power to register political parties. 30
Furthermore, matters regarding the nomination of party-list
representatives, as well as their individual qualifications, are outlined
in the Party-List System Law. Sections 8 and 9 thereof state: Sec. 8.
Nomination of Party-List Representatives. Each registered party,
organization or coalition shall submit to the COMELEC not later
than forty-five (45) days before the election a list of names, not less
than five (5), from which party-list representatives shall be chosen in
case it obtains the required number of votes.
A person may be nominated in one (1) list only. Only persons who
have given their consent in writing may be named in the list. The list
shall not include any candidate for any elective office or a person
who has lost his bid for an elective office in the immediately
preceding election. No change of names or alteration of the order of
nominees shall be allowed after the same shall have been submitted
to the COMELEC except in cases where the nominee dies, or
withdraws in writing his nomination, becomes incapacitated in which
case the name of the substitute nominee shall be placed last in the
list. Incumbent sectoral representatives in the House of
Representatives who are nominated in the party-list system shall not
be considered resigned.
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Sec. 9. Qualifications of Party-List Nominees. No person shall be
nominated as party-list representative unless he is a natural-born
citizen of the Philippines, a registered voter, a resident of the
Philippines for a period of not less than one (1)year immediately
preceding the day of the election, able to read and write, a bona fide
member of the party or organization which he seeks to represent for
at least ninety (90) days preceding the day of the election, and is at
least twenty-five (25) years of age on the day of the election.
By virtue of the aforesaid mandate of the Party-List Law vesting the
COMELEC with jurisdiction over the nomination of party-list
representatives and prescribing the qualifications of each nominee,
the COMELEC promulgated its "Rules on Disqualification Cases
Against Nominees of Party-List Groups/ Organizations Participating
in the 10 May 2010 Automated National and Local
Elections."31 Adopting the same qualifications of party-list nominees
listed above, Section 6 of these Rules also required that:
The party-list group and the nominees must submit documentary
evidence in consonance with the Constitution, R.A. 7941 and other
laws to duly prove that the nominees truly belong to the marginalized
and underrepresented sector/s, the sectoral party, organization,
political party or coalition they seek to represent, which may include
but not limited to the following:
a. Track record of the party-list group/organization showing
active participation of the nominee/s in the undertakings of
the party-list group/organization for the advancement of the
marginalized and underrepresented sector/s, the sectoral
party, organization, political party or coalition they seek to
represent;
b. Proofs that the nominee/s truly adheres to the advocacies
of the party-list group/organizations (prior declarations,
speeches, written articles, and such other positive actions on
 Lokin vs. Commission on Elections
the part of the nominee/s showing his/her adherence to the
advocacies of the party-list group/organizations);
c. Certification that the nominee/s is/are a bona fide member
of the party-list group/ organization for at least ninety (90)
days prior to the election; and
d. In case of a party-list group/organization seeking
representation of the marginalized and underrepresented
sector/s, proof that the nominee/s is not only an advocate of
the party-list/organization but is/are also a bona fide
member/s of said marginalized and underrepresented sector.
The Law Department shall require party-list group and nominees to
submit the foregoing documentary evidence if not complied with
prior to the effectivity of this resolution not later than three (3) days
from the last day of filing of the list of nominees.
Contrary to petitioners’ stance, no grave abuse of discretion is
attributable to the COMELEC First Division and the COMELEC en
banc.1âwphi1 The tribunal correctly found that Pia Derla’s alleged
authority as "acting secretary-general" was an unsubstantiated
allegation devoid of any supporting evidence. Petitioners did not
submit any documentary evidence that Derla was a member of
CIBAC, let alone the representative authorized by the party to submit
its Certificate of Nomination.32 The COMELEC ruled:
A careful perusal of the records readily shows that Pia B. Derla, who
has signed and submitted, as the purported Acting Secretary General
of CIBAC, the Certificates of Nomination of Respondents, has no
authority to do so. Despite Respondents’ repeated claim that Ms.
Derla is a member and officer of CIBAC, they have not presented
any proof in support of the same. We are at a loss as to the manner
by which Ms. Derla has assumed the post, and We see nothing but
Respondents’ claims and writings/certifications by Ms. Derla herself
that point to that alleged fact. Surely, We cannot rely on these
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
submissions, as they are the very definition of self-serving
declarations.
On the other hand…We cannot help but be convinced that it was
Emmanuel Joel J. Villanueva, as the Party President and Chairman,
who had been given the sole authority, at least for the 10 May 2010
Elections, to submit the list of nominees for the Party. The records
would show that, in accordance with the Party’s Constitution and by-
laws, its National Council, the highest policymaking and governing
body of the Party, met on 12 November 2009 and there being a
quorum, then proceeded to elect its new set of officers, which
included Mr. Villanueva as both Party President and Party Chairman,
and Virginia S. Jose as Party Secretary General. During the same
meeting, the Party’s New Electoral Congress, which as per the
CIBAC’s Constitution and By-Laws, was also composed of the
National Council Members and had the task of choosing the
nominees for the Party in the Party-List Elections, unanimously ruled
to delegate to the Party President such latter function. This set of
facts, which had not been belied by concrete contrary evidence,
weighed heavily against Respondents and favorably for Petitioner. 33
Pia Derla, who is not even a member of CIBAC, is thus a virtual
stranger to the party-list, and clearly not qualified to attest to
petitioners as CIBAC nominees, or certify their nomination to the
COMELEC. Petitioners cannot use their registration with the SEC as
a substitute for the evidentiary requirement to show that the
nominees, including Derla, are bona fide members of the party.
Petitioners Planas and Lokin, Jr. have not even presented evidence
proving the affiliation of the so-called Board of Trustees to the
CIBAC Sectoral Party that is registered with COMELEC.
Petitioners cannot draw authority from the Board of Trustees of the
SEC-registered entity, because the Constitution of CIBAC expressly
mandates that it is the National Council, as the governing body of
CIBAC, that has the power to formulate the policies, plans, and
programs of the Party, and to issue decisions and resolutions binding
 Lokin vs. Commission on Elections
on party members and officers. 34 Contrary to petitioners’ allegations,
the National Council of CIBAC has not become defunct, and has
certainly not been replaced by the Board of Trustees of the SEC-
registered entity. The COMELEC carefully perused the documents
of the organization and outlined the process followed by the National
Council before it complied with its task of choosing the party’s
nominees.This was based on the "Minutes of Meeting of CIBAC
Party-List National Council" held on 12 November 2009, which
respondents attached to their Memorandum.35
COMELEC expunging from its records the Certificate of
Nomination filed on 26 March 2010 by Pia B. Derla. The nominees,
as listed in the Certificate of Nomination filed on 19 January 2010 by
Emmanuel Joel J. Villanueva, President and Chairman of Citizens’
Battle Against Corruption (CIBAC) Party List, are recognized as the
legitimate nominees of the said party.
SO ORDERED.

For its part, the COMELEC en banc also enumerated the

documentary evidence that further bolstered respondents’ claim that
it is Chairman Villanueva and Secretary General Virginia Jose who
were duly authorized to submit the Certificate of Nomination to the
COMELEC.36 These include:

a. The Joint Affidavit of Resolutions of the CIBAC National

Council and the National Electoral Congress of CIBAC
dated 12 November 2009;

b. Certificate of Deputization and Delegation of Authority

issued to CIBAC Secretary-General Virginia S. Jose by the
CIBAC President;

c. Constitution and By-Laws of CIBAC as annexed to its

Petition for Registration as Sectoral Organization Under the
Party-List System filed by CIBAC on 13 November 2000;
and

d. Manifestation dated 8 January 2010 by CIBAC’s

Secretary General Virginia S. Jose providing the official list
of officers of CIBAC.37

WHEREFORE , finding no grave abuse of discretion on the part of

the COMELEC in issuing the assailed Resolutions, the instant
Petition is DISMISSED. This Court AFFIRMS the judgment of the

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Fortune Life Insurance Company vs. Commission on Audit
G.R. No. 213525, January 27, 2015
FORTUNE LIFE INSURANCE COMPANY,
INC. v. COMMISSION ON AUDIT (COA) PROPER; COA
REGIONAL OFFICE NO. VI-WESTERN VISAYAS; AUDIT
GROUP LGS-B, PROVINCE OF ANTIQUE; AND
PROVINCIAL GOVERNMENT OF ANTIQUE
Petitioner Fortune Life Insurance Company, Inc. seeks the
reconsideration1 of the resolution promulgated on August 19,
2014,2 whereby the Court dismissed its petition for certiorari under
Rule 64 in relation to Rule 65 of the Rules of Court due to its non-
compliance with the provisions of Rule 64, particularly for: (a) the
late filing of the petition; (b) the non-submission of the proof of
service and verified declaration; and (c) the failure to show grave
abuse of discretion on the part of the respondents. 3
Antecedents
Respondent Provincial Government of Antique (LGU) and the
petitioner executed a memorandum of agreement concerning the life
insurance coverage of qualified barangay secretaries, treasurers
and tanod, the former obligating P4,393,593.60 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
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
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,
2012,7 and filed its motion for reconsideration on January 14,
2013.8 However, the COA denied the motion,9 the denial being
received by the petitioner on July 14, 2014.10
Hence, the petitioner filed the petition for certiorari on August 12,
2014, but the petition for certiorari was dismissed as earlier stated
through the resolution promulgated on August 19, 2014 for (a) the
late filing of the petition; (b) the non-submission of the proof of
service and verified declaration; and (c) the failure to show grave
abuse of discretion on the part of the respondents.
Issues
In its motion for reconsideration, the petitioner submits that it filed
the petition for certiorari within the reglementary period following
the fresh period rule enunciated in Neypes v. Court of Appeals;11 and
that the petition for certiorari included an affidavit of service in
compliance with Section 3, Rule 13 of the Rules of Court. It admits
having overlooked the submission of a verified declaration; and
prays that the declaration attached to the motion for reconsideration
be admitted by virtue of its substantial compliance with the Efficient
Use of Paper Rule12 by previously submitting a compact disc (CD)
containing the petition for certiorari and its annexes. It disagrees
with the Court, insisting that it showed and proved grave abuse of
discretion on the part of the COA in issuing the assailed decision.
Ruling
We deny the motion for reconsideration for being without merit.
 Fortune Life Insurance Company vs. Commission on Audit
I the Court held in the resolution of August 19, 2014 that the petitioner
Petitioner did not comply with
the rule on proof of service
The petitioner claims that the affidavit of service attached to the
petition for certiorari complied with the requirement on proof of
service.
The claim is unwarranted. The petitioner obviously ignores that
Section 13, Rule 13 of the Rules of Court concerns two types of
proof of service, namely: the affidavit and the registry receipt, viz:
Section 13. Proof of Service. – x x x. If service is made by registered
mail, proof shall be made by such affidavit and the registry
receipt issued by the mailing office. The registry return card shall be
filed immediately upon its receipt by the sender, or in lieu thereof the
unclaimed letter together with the certified or sworn copy of the
notice given by the postmaster to the addressee.
Section 13 thus requires that if the service is done by registered mail,
proof of service shall consist of the affidavit of the person effecting
the mailing and the registry receipt, both of which must be appended
to the paper being served.  A compliance with the rule is mandatory,
such that there is no proof of service if either or both are not
submitted.13
Here, the petition for certiorari only carried the affidavit of service
executed by one Marcelino T. Pascua, Jr., who declared that he had
served copies of the petition by registered mail “under Registry
Receipt Nos. 70449, 70453, 70458, 70498 and 70524 attached to the
appropriate spaces found on pages 64-65 of the petition.” 14 The
petition only bore, however, the cut print-outs of what appeared to
be the registry receipt numbers of the registered matters, not the
registry receipts themselves. The rule requires to be appended the
registry receipts, not their reproductions. Hence, the cut print-outs
did not substantially comply with the rule. This was the reason why
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
did not comply with the requirement of proof of service. 15
II
Fresh Period Rule under Neypes did not apply to the petition
for certiorari under Rule 64 of the Rules of Court
The petitioner posits that the fresh period rule applies because its
Rule 64 petition is akin to a petition for review brought under Rule
42 of the Rules of Court; hence, conformably with the fresh period
rule, the period to file a Rule 64 petition should also be reckoned
from the receipt of the order denying the motion for reconsideration
or the motion for new trial.16
The petitioner’s position cannot be sustained.
There is no parity between the petition for review under Rule 42 and
the petition for certiorari under Rule 64.
As to the nature of the procedures, Rule 42 governs an appeal from
the judgment or final order rendered by the Regional Trial Court in
the exercise of its appellate jurisdiction. Such appeal is on a question
of fact, or of law, or of mixed question of fact and law, and is given
due course only upon a prima facie showing that the Regional Trial
Court committed an error of fact or law warranting the reversal or
modification of the challenged judgment or final order. 17 In contrast,
the petition for certiorari under Rule 64 is similar to the petition
for certiorari under Rule 65, and assails a judgment or final order of
the Commission on Elections (COMELEC), or the Commission on
Audit (COA). The petition is not designed to correct only errors of
jurisdiction, not errors of judgment.18 Questions of fact cannot be
raised except to determine whether the COMELEC or the COA were
guilty of grave abuse of discretion amounting to lack or excess of
jurisdiction.
The reglementary periods under Rule 42 and Rule 64 are different. In
the former, the aggrieved party is allowed 15 days to file the petition
 Fortune Life Insurance Company vs. Commission on Audit
for review from receipt of the assailed decision or final order, or
from receipt of the denial of a motion for new trial or
reconsideration.19 In the latter, the petition is filed within 30 days
from notice of the judgment or final order or resolution sought to be
reviewed. The filing of a motion for new trial or reconsideration, if
allowed under the procedural rules of the Commission concerned,
interrupts the period; hence, should the motion be denied, the
aggrieved party may file the petition within the remaining period,
which shall not be less than five days in any event, reckoned from
the notice of denial.20
The petitioner filed its motion for reconsideration on January 14,
2013, which was 31 days after receiving the assailed decision of the
COA on December 14, 2012.21  Pursuant to Section 3 of  Rule 64, it
had only five days from receipt of the denial of its motion for
reconsideration to file the petition. Considering that it received the
notice of the denial on July 14, 2014, it had only until July 19, 2014
to file the petition. However, it filed the petition on August 13, 2014,
which was 25 days too late.
We ruled in Pates v. Commission on Elections22 that the belated
filing of the petition for certiorari under Rule 64 on the belief that
the fresh period rule should apply was fatal to the recourse. As such,
the petitioner herein should suffer the same fate for having wrongly
assumed that the fresh period rule under Neypes23 applied. Rules of
procedure may be relaxed only to relieve a litigant of an injustice that
is not commensurate with the degree of his thoughtlessness in not
complying with the prescribed procedure.24Absent this reason for
liberality, the petition cannot be allowed to prosper.
III
Petition for certiorari further lacked merit
The petition for certiorari is also dismissible for its lack of merit.
The petitioner insists on having fully shown that the COA committed
grave abuse of discretion, to wit: (1) the challenged decision was
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
rendered by a divided COA proper; (2) the COA took almost a year
before promulgating its decision, and more than a year in resolving
the  motion for reconsideration, in contravention of the express
mandate of the Constitution; (3) the resolution denying the motion
for reconsideration was made up of only two sentences; (4)  the
matter involved a novel issue that called for an interpretation of the
pertinent provisions of the Local Government Code; and (5) in
issuing the resolution, COA Commissioners Grace Pulido-Tan and
Heidi L. Mendoza made it appear that they knew the Local
Government Code better than former Senator Aquilino Pimentel who
offered an opinion on the matter.25
Grave abuse of discretion implies such capricious and whimsical
exercise of judgment as to be equivalent to lack or excess of
jurisdiction; in other words, power is exercised in an arbitrary or
despotic manner by reason of passion, prejudice, or personal
hostility; and such exercise is so patent or so gross as to amount to an
evasion of a positive duty or to a virtual refusal either to perform the
duty enjoined or to act at all in contemplation of law. 26
A close look indicates that the petition for certiorari did not
sufficiently disclose how the COA committed grave abuse of its
discretion. For sure, the bases cited by the petitioner did not
approximate grave abuse of discretion. To start with, the supposed
delays taken by the COA in deciding the appeal were neither
arbitrary nor whimsical on its part. Secondly, the mere terseness of
the denial of the motion for reconsideration was not a factor in
demonstrating an abuse of discretion. And, lastly, the fact that
Senator Pimentel, even if he had been the main proponent of
the Local Government Code in the Legislature, expressed an opinion
on the issues different from the COA Commissioners’ own did not
matter, for it was the latter’s adjudication that had any value and
decisiveness on the issues by virtue of their being the
Constitutionally officials entrusted with the authority for that
purpose.
 Fortune Life Insurance Company vs. Commission on Audit
It is equally relevant to note that the COA denied the money claim of
the petitioner for the further reason of lack of sufficient publication
as required by the Government Procurement Act. In that light, the
COA acted well within its authority in denying the petitioner’s claim.
IV
Petitioner and its counsel exhibited harshness and disrespect
towards the Court and its Members
The petitioner contends that the Court erred in appreciating the
petitioner’s non-compliance with the requirement of the proof of
service, alleging that even “a perfunctory scrutiny” of the petition
for certiorari and its annexes could have easily shown that it had
attached an affidavit of service to the petition. It goes on to make the
following statements, viz:
25. Apparently, the staff of the Justice-in-charge failed to verify the
PETITION and its annexes up to its last page, thus, the erroneous
finding that there was non-submission of the proof of service;
26. In turn, the same omission was hoisted upon the other members
of this Honorable Court who took the observation from the office of
the Justice-in-charge, to be the obtaining fact, when in truth and in
fact, it is not;27
The petitioner and its counsel thereby exhibited their plain inability
to accept the ill consequences of their own shortcomings, and instead
showed an unabashed propensity to readily lay blame on others like
the Court and its Members. In doing so, they employed harsh and
disrespectful language that accused the Court and its Members of
ignorance and recklessness in the performance of their function of
adjudication.
We do not tolerate such harsh and disrespectful language being
uttered against the Court and its Members. We consider the
accusatory language particularly offensive because it was unfounded
and undeserved. As this resolution earlier clarifies, the petition
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
for certiorari did not contain a proper affidavit of service. We do not
need to rehash the clarification. Had the petitioner and its counsel
been humbler to accept their self-inflicted situation and more
contrite, they would have desisted from their harshness and
disrespect towards the Court and its Members. Although we are not
beyond error, we assure the petitioner and its counsel that our
resolutions and determinations are arrived at or reached with much
care and caution, aware that the lives, properties and rights of the
litigants are always at stake. If there be errors, they would be
unintended, and would be the result of human oversight. But in this
instance the Court and its Members committed no error. The petition
bore only cut reproductions of the supposed registry receipts, which
even a mere “perfunctory scrutiny” would not pass as the original
registry receipts required by the Rules of Court.
Accordingly, the petitioner and its counsel, Atty. Eduardo S.
Fortaleza, should fully explain in writing why they should not be
punished for indirect contempt of court for their harsh and
disrespectful language towards the Court and its Members; and, in
his case, Atty. Fortaleza should further show cause why he should
not be disbarred.chanrobleslaw
WHEREFORE, the Court DENIES the Motion for Reconsideration
for its lack of merit; ORDERS the petitioner and its counsel, Atty.
Eduardo S. Fortaleza, to show cause in writing within ten (10) days
from notice why they should not be punished for indirect contempt
of court; and FURTHER DIRECTS Atty. Fortaleza to show cause
in the same period why he should not be disbarred. SO ORDERED.
 Osmea vs. Commission on Audit
OSMEA vs. COA
G.R. No. 188818 May 31, 2011
Before the Court is the Petition for Certiorari[1] filed by Tomas R.
Osmea, former mayor of the City of Cebu, under Rule 64 of the
Rules of Court. The petition seeks the reversal of the May 6, 2008
Decision[2] and the June 8, 2009 Resolution[3] of the respondent
Commission on Audit (COA), which disallowed the damages,
attorneys fees and litigation expenses awarded in favor of two
construction companies in the collection cases filed against the City
of Cebu, and made these charges the personal liability of Osmea for
his failure to comply with the legal requirements for the
disbursement of public funds.
BACKGROUND FACTS
The City of Cebu was to play host to the 1994 Palarong Pambansa
(Palaro). In preparation for the games, the City engaged the services
of WT Construction, Inc. (WTCI) and Dakay Construction and
Development Company (DCDC) to construct and renovate the Cebu
City Sports Complex. Osmea, then city mayor, was authorized by the
Sangguniang Panlungsod (Sanggunian) of Cebu to represent the City
and to execute the construction contracts.
While the construction was being undertaken, Osmea issued a total
of 20 Change/Extra Work Orders to WTCI, amounting to
P35,418,142.42 (about 83% of the original contract price), and to
DCDC, amounting to P15,744,525.24 (about 31% of the original
contract price). These Change/Extra Work Orders were not covered
by any Supplemental Agreement, nor was there a prior authorization
from the Sanggunian. Nevertheless, the work proceeded on account
of the extreme urgency and need to have a suitable venue for the
Palaro.[4] The Palaro was successfully held at the Cebu City Sports
Complex during the first six months of 1994.
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Thereafter, WTCI and DCDC demanded payment for the extra work
they performed in the construction and renovation of the sports
complex. A Sanggunian member, Councilor Augustus Young,
sponsored a resolution authorizing Osmea to execute the
supplemental agreements with WTCI and DCDC to cover the extra
work performed, but the other Sanggunian members refused to pass
the resolution. Thus, the extra work completed by WTCI and DCDC
was not covered by the necessary appropriation to effect payment,
prompting them to file two separate collection cases before the
Regional Trial Court (RTC) of Cebu City (Civil Case Nos. CEB-
17004[5] and CEB-17155[6]). The RTC found the claims
meritorious, and ordered the City to pay for the extra work
performed. The RTC likewise awarded damages, litigation expenses
and attorneys fees in the amount of P2,514,255.40 to WTCI[7] and
P102,015.00 to DCDC.[8] The decisions in favor of WTCI and
DCDC were affirmed on appeal, subject to certain modifications as
to the amounts due, and have become final. To satisfy the judgment
debts, the Sanggunian finally passed the required appropriation
ordinances.
During post-audit, the City Auditor issued two notices disallowing
the payment of litigation expenses, damages, and attorneys fees to
WTCI and DCDC.[9] The City Auditor held Osmea, the members of
the Sanggunian, and the City Administrator liable for the
P2,514,255.40 and P102,015.00 awarded to WTCI and DCDC,
respectively, as damages, attorneys fees, and interest charges. These
amounts, the City Auditor concluded, were unnecessary expenses for
which the public officers should be held liable in their personal
capacities pursuant to the law.
Osmea and the members of the Sanggunian sought reconsideration of
the disallowance with the COA Regional Office, which, through a
2nd Indorsement dated April 30, 2003,[10] modified the City
Auditors Decision by absolving the members of the sanggunian from
any liability. It declared that the payment of the amounts awarded as
damages and attorneys fees should solely be Osmeas liability, as it
 Osmea vs. Commission on Audit
was him who ordered the change or extra work orders without the
supplemental agreement required by law, or the prior authorization
from the Sanggunian. The Sanggunian members cannot be held
liable for refusing to enact the necessary ordinance appropriating
funds for the judgment award because they are supposed to exercise
their own judgment and discretion in the performance of their
functions; they cannot be mere rubber stamps of the city mayor.
The COA Regional Offices Decision was sustained by the COAs
National Director for Legal and Adjudication (Local Sector) in a
Decision dated January 16, 2004.[11] Osmea filed an appeal against
this Decision.
On May 6, 2008, the COA issued the assailed Decision which
affirmed the notices of disallowance.[12] Osmea received a copy of
the Decision on May 23, 2008. Eighteen days after or on June 10,
2008, Osmea filed a motion for reconsideration of the May 6, 2008
COA Decision.
The COA denied Osmeas motion via a Resolution dated June 8,
2009.[13] The Office of the Mayor of Cebu City received the June 8,
2009 Resolution of the COA on June 29, 2009. A day before,
however, Osmea left for the United States of America for his check-
up after his cancer surgery in April 2009 and returned to his office
only on July 15, 2009. Thus, it was only on July 27, 2009 that Osmea
filed the present petition for certiorari under Rule 64 to assail the
COAs Decision of May 6, 2008 and Resolution of June 8, 2009.
THE PETITION
Rule 64 of the Rules of Court governs the procedure for the review
of judgments and final orders or resolutions of the Commission on
Elections and the COA. Section 3 of the same Rule provides for a
30-day period, counted from the notice of the judgment or final order
or resolution sought to be reviewed, to file the petition for certiorari.
The Rule further states that the filing of a motion for reconsideration
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
of the said judgment or final order or resolution interrupts the 30-day
period.
Osmea filed his motion for reconsideration, of the COAs May 6,
2008 Decision, 18 days from his receipt thereof, leaving him with 12
days to file a Rule 64 petition against the COA ruling. He argues that
the remaining period should be counted not from the receipt of the
COAs June 8, 2009 Resolution by the Office of the Mayor of Cebu
City on June 29, 2009, but from the time he officially reported back
to his office on July 15, 2009, after his trip abroad. Since he is being
made liable in his personal capacity, he reasons that the remaining
period should be counted from his actual knowledge of the denial of
his motion for reconsideration. Corollary, he needed time to hire a
private counsel who would review his case and prepare the petition.
Osmea pleads that his petition be given due course for the resolution
of the important issues he raised. The damages and interest charges
were awarded on account of the delay in the payment of the extra
work done by WTCI and DCDC, which delay Osmea attributes to
the refusal of the Sanggunian to appropriate the necessary amounts.
Although Osmea acknowledges the legal necessity for a
supplemental agreement for any extra work exceeding 25% of the
original contract price, he justifies the immediate execution of the
extra work he ordered (notwithstanding the lack of the supplemental
agreement) on the basis of the extreme urgency to have the
construction and repairs on the sports complex completed in time for
the holding of the Palaro. He claims that the contractors themselves
did not want to embarrass the City and, thus, proceeded to perform
the extra work even without the supplemental agreement.
Osmea also points out that the City was already adjudged liable for
the principal sum due for the extra work orders and had already
benefitted from the extra work orders by accepting and using the
sports complex for the Palaro. For these reasons, he claims that all
consequences of the liability imposed, including the payment of
 Osmea vs. Commission on Audit
damages and interest charges, should also be shouldered by the City
and not by him.
THE COURTS RULING
Relaxation of procedural rules to give effect to a partys right to
appeal
Section 3, Rule 64 of the Rules of Court states:
SEC. 3. Time to file petition.The petition shall be filed within thirty
(30) days from notice of the judgment or final order or resolution
sought to be reviewed. The filing of a motion for new trial or
reconsideration of said judgment or final order or resolution, if
allowed under the procedural rules of the Commission concerned,
shall interrupt the period herein fixed. If the motion is denied, the
aggrieved party may file the petition within the remaining period, but
which shall not be less than five (5) days in any event, reckoned from
notice of denial. [Emphasis ours.]
Several times in the past, we emphasized that procedural rules should
be treated with utmost respect and due regard, since they are
designed to facilitate the adjudication of cases to remedy the
worsening problem of delay in the resolution of rival claims and in
the administration of justice. From time to time, however, we have
recognized exceptions to the Rules but only for the most compelling
reasons where stubborn obedience to the Rules would defeat rather
than serve the ends of justice. Every plea for a liberal construction of
the Rules must at least be accompanied by an explanation of why the
party-litigant failed to comply with the Rules and by a justification
for the requested liberal construction.[14] Where strong
considerations of substantive justice are manifest in the petition, this
Court may relax the strict application of the rules of procedure in the
exercise of its legal jurisdiction.[15]
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Osmea cites the mandatory medical check-ups he had to undergo in
Houston, Texas after his cancer surgery in April 2009 as reason for
the delay in filing his petition for certiorari. Due to his weakened
state of health, he claims that he could not very well be expected to
be bothered by the affairs of his office and had to focus only on his
medical treatment. He could not require his office to attend to the
case as he was being charged in his personal capacity.
We find Osmeas reasons sufficient to justify a relaxation of the
Rules. Although the service of the June 8, 2009 Resolution of the
COA was validly made on June 29, 2009 through the notice sent to
the Office of the Mayor of Cebu City,[16] we consider July 15, 2009
the date he reported back to office as the effective date when he was
actually notified of the resolution, and the reckoning date of the
period to appeal. If we were to rule otherwise, we would be denying
Osmea of his right to appeal the Decision of the COA, despite the
merits of his case.
Moreover, a certiorari petition filed under Rule 64 of the Rules of
Court must be verified, and a verification requires the petitioner to
state under oath before an authorized officer that he has read the
petition and that the allegations therein are true and correct of his
personal knowledge. Given that Osmea was out of the country to
attend to his medical needs, he could not comply with the
requirements to perfect his appeal of the Decision of the COA.
While the Court has accepted verifications executed by a petitioners
counsel who personally knows the truth of the facts alleged in the
pleading, this was an alternative not available to Osmea, as he had
yet to secure his own counsel. Osmea could not avail of the services
of the City Attorney, as the latter is authorized to represent city
officials only in their official capacity.[17] The COA pins liability
for the amount of damages paid to WTCI and DCDC on Osmea in
his personal capacity, pursuant to Section 103 of Presidential Decree
No. 1445 (PD 1445).[18]
 Osmea vs. Commission on Audit
Thus, the reckoning date to count the remaining 12 days to file his
Rule 64 petition should be counted from July 15, 2009, the date
Osmea had actual knowledge of the denial of his motion for
reconsideration of the Decision of the COA and given the
opportunity to competently file an appeal thereto before the Court.
The present petition, filed on July 27, 2009, was filed within the
reglementary period.
Personal liability for expenditures of government fund when made in
violation of law
The Courts decision to adopt a liberal application of the rules stems
not only from humanitarian considerations discussed earlier, but also
on our finding of merit in the petition.
Section 103 of PD 1445 declares that [e]xpenditures of government
funds or uses of government property in violation of law or
regulations shall be a personal liability of the official or employee
found to be directly responsible therefor. Notably, the public officials
personal liability arises only if the expenditure of government funds
was made in violation of law. In this case, the damages were paid to
WTCI and DCDC pursuant to final judgments rendered against the
City for its unreasonable delay in paying its obligations. The COA,
however, declared that the judgments, in the first place, would not be
rendered against the City had it not been for the change and extra
work orders that Osmea made which (a) it considered as
unnecessary, (b) were without the Sanggunians approval, and (c)
were not covered by a supplemental agreement.
The term unnecessary, when used in reference to expenditure of
funds or uses of property, is relative. In Dr. Teresita L. Salva, etc. v.
Guillermo N. Carague, etc., et al.,[19] we ruled that [c]ircumstances
of time and place, behavioural and ecological factors, as well as
political, social and economic conditions, would influence any such
determination. x x x [T]ransactions under audit are to be judged on
the basis of not only the standards of legality but also those of
regularity, necessity, reasonableness and moderation. The 10-page
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
letter of City Administrator Juan Saul F. Montecillo to the
Sanggunian explained in detail the reasons for each change and extra
work order; most of which were made to address security and safety
concerns that may arise not only during the holding of the Palaro, but
also in other events and activities that may later be held in the sports
complex. Comparing this with the COAs general and unsubstantiated
declarations that the expenses were not essential[20] and not dictated
by the demands of good government,[21] we find that the expenses
incurred for change and extra work orders were necessary and
justified.
The COA considers the change and extra work orders illegal, as
these failed to comply with Section III, C1 of the Implementing
Rules and Regulations of Presidential Decree No. 1594,[22] which
states that:
5. Change Orders or Extra Work Orders may be issued on a contract
upon the approval of competent authorities provided that the
cumulative amount of such Change Orders or Extra Work Orders
does not exceed the limits of the former's authority to approve
original contracts.
6. A separate Supplemental Agreement may be entered into for all
Change Orders and Extra Work Orders if the aggregate amount
exceeds 25% of the escalated original contract price. All change
orders/extra work orders beyond 100% of the escalated original
contract cost shall be subject to public bidding except where the
works involved are inseparable from the original scope of the project
in which case negotiation with the incumbent contractor may be
allowed, subject to approval by the appropriate authorities.
[Emphases ours.]
Reviewing the facts of the case, we find that the prevailing
circumstances at the time the change and extra work orders were
executed and completed indicate that the City of Cebu tacitly
 Osmea vs. Commission on Audit
approved these orders, rendering a supplemental agreement or especially considering that the City incurred no substantial loss in
authorization from the Sanggunian unnecessary. paying for the additional work and the damages awarded.
Apparently, the City placed in a time deposit the entire funds allotted
The Pre-Qualification, Bids and Awards Committee (PBAC), upon for the construction and renovation of the sports complex. The
the recommendation of the Technical Committee and after a careful interest that the deposits earned amounted to P12,835,683.15, more
deliberation, approved the change and extra work orders. It bears than enough to cover the damages awarded to WTCI (P2,514,255.40)
pointing out that two members of the PBAC were members of the and the DCDC (P102,015.00). There was no showing that [the]
Sanggunian as well Rodolfo Cabrera (Chairman, Committee on petitioner was ill-motivated, or that [the petitioner] had personally
Finance) and Ronald Cuenco (Minority Floor Leader). A COA profited or sought to profit from the transactions, or that the
representative was also present during the deliberations of the PBAC. disbursements have been made for personal or selfish ends.[28] All
None of these officials voiced any objection to the lack of a prior in all, the circumstances showed that Osmea issued the change and
authorization from the Sanggunian or a supplemental agreement. The extra work orders for the Citys successful hosting of the Palaro, and
RTC Decision in fact mentioned that the Project Post Completion not for any other nefarious endeavour.[29]
Report and Acceptance was approved by an authorized WHEREFORE, in light of the foregoing, we hereby GRANT the
representative of the City of Cebu on September 21, 1994.[23] [a]s petitioners Petition for Certiorari filed under Rule 64 of the Rules of
the projects had been completed, accepted and used by the [City of Court. The respondents Decision of May 6, 2008 and Resolution of
Cebu], the RTC ruled that there is no necessity of [executing] a June 8, 2009 are SET ASIDE.
supplemental agreement.[24] Indeed, as we declared in Mario R.
Melchor v. COA,[25] a supplemental agreement to cover change or
extra work orders is not always mandatory, since the law adopts the SO ORDERED.
permissive word may. Despite its initial refusal, the Sanggunian was
eventually compelled to enact the appropriation ordinance in order to
satisfy the RTC judgments. Belated as it may be, the enactment of
the appropriation ordinance, nonetheless, constitutes as sufficient
compliance with the requirements of the law. It serves as a
confirmatory act signifying the Sanggunians ratification of all the
change and extra work orders issued by Osmea. In National Power
Corporation (NPC) v. Hon. Rose Marie Alonzo-Legasto, etc., et al.,
[26] the Court considered the compromise agreement between the
NPC and the construction company as a ratification of the extra work
performed, without prior approval from the NPCs Board of
Directors.

As in Melchor,[27] we find it unjust to order the petitioner to

shoulder the expenditure when the government had already received
and accepted benefits from the utilization of the [sports complex],

RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
 Pormento vs. Estrada
PORMENTO vs. ESTRADA
G.R. No. 191988 August 31, 2010
What is the proper interpretation of the following provision of Section 4,
Article VII of the Constitution: [t]he President shall not be eligible for any
reelection?
The novelty and complexity of the constitutional issue involved in
this case present a temptation that magistrates, lawyers, legal scholars and
law students alike would find hard to resist. However, prudence dictates that
this Court exercise judicial restraint where the issue before it has already
been mooted by subsequent events. More importantly, the constitutional
requirement of the existence of a case or an actual controversy for the proper
exercise of the power of judicial review constrains us to refuse the allure of
making a grand pronouncement that, in the end, will amount to nothing but a
non-binding opinion.
 
The petition asks whether private respondent Joseph Ejercito Estrada
is covered by the ban on the President from any reelection. Private
respondent was elected President of the Republic of the Philippines in the
general elections held on May 11, 1998. He sought the presidency again in
the general elections held on May 10, 2010. Petitioner Atty. Evillo C.
Pormento opposed private respondents candidacy and filed a petition for
disqualification. However, his petition was denied by the Second Division of
public respondent Commission on Elections (COMELEC). [1] His motion for
reconsideration was subsequently denied by the COMELEC en banc.[2]
 
Petitioner filed the instant petition for certiorari [3] on May 7, 2010.
However, under the Rules of Court, the filing of such petition would not stay
the execution of the judgment, final order or resolution of the COMELEC
that is sought to be reviewed. [4] Besides, petitioner did not even pray for the
issuance of a temporary restraining order or writ of preliminary injunction.
Hence, private respondent was able to participate as a candidate for the
position of President in the May 10, 2010 elections where he garnered the
second highest number of votes.[5]
RULE 64 – REVIEW OF JUDGMENTS AND FINAL ORDERS OF THE COMELEC AND COA
Private respondent was not elected President the second time he
ran. Since the issue on the proper interpretation of the phrase any reelection
will be premised on a persons second (whether immediate or not) election as
President, there is no case or controversy to be resolved in this case. No live
conflict of legal rights exists.[6] There is in this case no definite, concrete, real
or substantial controversy that touches on the legal relations of parties having
adverse legal interests.[7] No specific relief may conclusively be decreed upon
by this Court in this case that will benefit any of the parties herein. [8] As such,
one of the essential requisites for the exercise of the power of judicial review,
the existence of an actual case or controversy, is sorely lacking in this case.
As a rule, this Court may only adjudicate actual, ongoing
controversies.[9] The Court is not empowered to decide moot questions or
abstract propositions, or to declare principles or rules of law which cannot
affect the result as to the thing in issue in the case before it. [10] In other words,
when a case is moot, it becomes non-justiciable. [11]
 
An action is considered moot when it no longer presents a justiciable
controversy because the issues involved have become academic or dead or
when the matter in dispute has already been resolved and hence, one is not
entitled to judicial intervention unless the issue is likely to be raised again
between the parties. There is nothing for the court to resolve as the
determination thereof has been overtaken by subsequent events. [12]
 
Assuming an actual case or controversy existed prior to the
proclamation of a President who has been duly elected in the May 10, 2010
elections, the same is no longer true today. Following the results of that
elections, private respondent was not elected President for the second time.
Thus, any discussion of his reelection will simply be hypothetical and
speculative. It will serve no useful or practical purpose.
 
Accordingly, the petition is denied due course and is
hereby DISMISSED.
SO ORDERED.