020 Quisimbing v.

Garcia
December 8, 2008; G. R. No. 175527
Emergency Recit: The Commission on Audit (COA) conducted a
financial audit and issued a report on the Province of Cebu. It
discovered that Gov. Garcia entered into several contracts without a
Sangguniang Panlalawigan (sanggunian) resolution as required under
Sec. 22 of RA 7160. Gov. Garcia, claiming that no prior
authorization was required because the expenditures incurred were
already authorized by the sanggunians appropriation ordinances,
filed an action for declaratory relief with the RTC. The court ruled
that, pursuant to Sec. 1, Rule 63 of the Rules of Court, the action
was improper as there already was a breach prior to its filing. 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. Thus, the case was remanded
to the RTC for a full-blown trial to be conducted.
FACTS:
1. The COA conducted a financial audit on the Province of
Cebu. It discovered that Gov. Garcia entered into several
contracts worth P100k plus without a sanggunian resolution
as required under Sec. 22 of RA 7160.
2. Gov. Garcia sought the reconsideration of the findings of the
COA, but without waiting for the resolution of the
reconsideration, he instituted an action for Declaratory Relief
before the RTC of Cebu. He argued that the audited
contracts:
a. complied with the bidding procedures provided
under RA 9184 (Govt Procurement Reform Act)
b. were entered into the appropriation ordinances
passed by the sanggunian
c. thus, a separate resolution was no longer needed
3. The RTC granted the petition for declaratory relief. It ruled
that it is only when the contract involves obligations which

are not backed by prior ordinances that the prior authority of

the sanggunian is required.
4. On petition for review, the petitioners argue that the granting
of declaratory relief was erroneous because there has already
been a breach of the law subject of the petition for
declaratory relief as it was already subject of a pending
investigation by the Deputy Ombudsman. Moreover, prior
authorization from the Sanggunian should be secured before
Gov. Garcia could validly enter into contracts involving
monetary obligations on the part of the province. They also
claim that the petition for declaratory relief should have been
dismissed for failure of Gov. Garcia to exhaust
administrative remedies.
5. Gov. Garcia argues that:
a. At the time of the filing of the petition for
declaratory relief, there was not yet any breach of
RA 7160.
b. The questioned contracts were executed after public
bidding in accordance with the appropriation
ordinances passed by the sanggunian which served
as the authorization required under RA 7160
c. OSG, in its comment, took support of the
Governors arguments. This should bind the COA.
ISSUE: WON the petition for declaratory relief should have been
dismissed YES, 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
RATIO:
1. Two basic premises: (1) the province was operating under a
reenacted budget in 2004; (2) Gov. Garcia entered into
contracts on behalf of the province while the reenacted
budget was in force
a. Sec. 323 of R.A. No. 7160 provides that contractual
obligations which were not included in the previous

years annual and supplemental budgets cannot be

disbursed by the local government unit. New
contracts entered into by the local chief executive
require the prior approval of the sanggunian.
2. Gov. Garcias petition for declaratory relief should have been
dismissed because it was instituted after the COA
had already found her in violation of Sec. 22(c) of RA 7160.
a. One of the important requirements for a petition for
declaratory relief under Sec. 1, Rule 63 of the Rules
of Court is that it be filed before breach or
violation of a deed, will, contract, other written
instrument, statute, executive order, regulation,
ordinance or any other governmental regulation.
3. Martelino v. Natl Home Mortgage Finance Corporation: 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. 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. The TC erred in not treating the COA report as a breach of
the law, and proceeding to resolve the issues as it would have
in an action for declaratory relief. The TC should have
conducted a full-blown trial to make an informed and
complete decision
Ruling: Petition for review granted. Conversion of the petition into
an ordinary civil action is warranted under Sec. 6, Rule 63 of the
ROC. Case remanded to the RTC.