G.R. No. 127913 September 13, 2001 Rizal Commercial Banking Corporation, Petitioner, Metro Container Corporation, Respondent. Kapunan, J.

G.R. No.
127913
September 13, 2001
In its Decision, promulgated on 18 October 1996, the Court of Appeals granted the petition and set
aside the 12 March 1996 and 24 June 1996 orders of the RTC. The appellate court also ordered the
dismissal of Civil Case No. 4398-V-94. RCBC's motion for reconsideration was denied for lack of merit
in the resolution of 08 January 1997.
RIZAL COMMERCIAL BANKING CORPORATION, petitioner,

vs.
METRO CONTAINER CORPORATION, respondent.
Hence, the present recourse.

KAPUNAN, J.:
RCBC alleged, that:
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.
(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.
The facts of the case are as follows:
(2) WHILE A PARTY WHO INITIATES AN INTERPLEADER ACTION MAY NOT BE

COMPELLED TO LITIGATE IF HE IS NO LONGER INTERESTED TO PURSUE SUCH
CAUSE OF ACTION, SAID PARTY MAY NOT UNILATERALLY CAUSE THE DISMISSAL OF
THE CASE AFTER THE ANSWER HA VE BEEN FILED. FURTHER, THE DEFENDANTS IN
AN INTERPLEADER SUIT SHOULD BE GIVEN FULL OPPORTUNITY TO LITIGATE THEIR
RESPECTIVE CLAIMS.1
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 an extrajudicial foreclosure proceedings against it.
After LEYCON's legal attempts to forestall the action of RBCB failed, the foreclosure took place on 28
December 1992 with RCBC as the highest bidder.
We sustain the Court of Appeals.

Section 1, Rule 63 of the Revised Rules of Court2 provides:
LEYCON promptly filed an action for Nullification of Extrajudicial Foreclosure Sale and Damages
against RCBC. The case, docketed as Civil Case No. 4037-V-93, was raffled to the Regional Trial
Court (RTC) of Valenzuela, Branch 172. Meanwhile, RCBC consolidated its ownership over the
property due to LEYCON's failure to redeem it within the 12-month redemption period and TCT No. V332432 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.
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.
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.
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.
On 27 May 1994, METROCAN filed a complaint for Interpleader, docketed as Civil Case No. 4398-V94 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.
It is also undisputed that LEYCON, as lessor of the subject property filed an action for unlawful
detainer (Civil Case No. 6202) against its lessee METROCAN. The issue in Civil Case No. 6202 is
limited to the question of physical or material possession of the premises. 3 The issue of ownership is
immaterial therein4 and the outcome of the case could not in any way affect conflicting claims of
ownership, in this case between RCBC and LEYCON. This was made clear when the trial court, in
denying RCBC's "Motion for Inclusion x x x as an Indispensable Party" declared that "the final
determination of the issue of physical possession over the subject premises between the plaintiff and
the defendant shall not in any way affect RCBC's claims of ownership over the said premises, since
RCBC is neither a co-lessor or co- lessee of the same, hence he has no legal personality to join the
parties herein with respect to the issue of physical possession vis-a-vis the contract of lease between
the parties."5 As aptly pointed by the MeTC, the issue in Civil Case No. 6202 is limited to the defendant
LEYCON's breach of the provisions of the Contract of Lease Rentals.6
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.
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
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.
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.
G.R. No. L-41818 February 18, 1976

ZOILA CO LIM, petitioner,
vs.
CONTINENTAL DEVELOPTMENT CORPORATION, respondent.
It should be remembered that an action of interpleader is afforded to protect a person not against
double liability but against double vexation in respect of one liability.7 It requires, as an indespensable
requisite, that "conflicting claims upon the same subject matter are or may be made against the
plaintiff-in-interpleader who claims no interest whatever in the subject matter or an interest which in
whole or in part is not disputed by the claimants."8 The decision in Civil Case No. 6202 resolved the
conflicting claims insofar as payment of rentals was concerned.
G.R. No. L-41831 February 18, 1976

CONTINENTAL DEVELOPMENT CORPORATION, petitioner,
vs.
BENITO GERVASIO TAN and ZOILA CO LIM, respondents.
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, he issue of ownership
can very well be threshed out in Civil Case No. 4037-V-93, the case for Nullification of Extrajudicial
foreclosure Sale and Damages filed by LEYCON against RCBC.1wphi1.nt
Jose F. Aguirre for Zoila Co Lim.

Ismael T. Almeda for Continental Development Corporation.
Joaquin G. Chung, Jr. for Benito Gervasio Tan.
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.
MAKASIAR, J.:
These two petitions seek a review of the order dated March 12, 1974 of the Judge presiding Branch
XXVI of the Manila Court of First Instance, dismissing petitioner Continental Development
Corporation's complaint. The COURT resolved to treat these petitions as special civil actions, the
petition to dismiss filed by the respondent Benito Gervasio Tan as answer and the cases as submitted
for decision. On November 26, 1973, herein petitioner Continental Development Corporation filed a
complaint for interpleader against the defendants Benito Gervasio Tan and Zoila Co Lim, alleging
among others:
SO ORDERED.
2. That in the books of the plaintiff, there appears the name of the defendant
Benito Gervasio Tan as one of its stockholders initially sometime in 1975 with fifty
(50) common shares covered by of stock Nos. 12 and 13, and subsequently
credited with (75) shares by way of dividends covered by certificates of stock Nos.
20 and 25, or an outstanding total stockholding of one hundred twenty five (125)
common shares of the par value of Two Hundred Fifty Pesos (P250.00) each.
3. That said defendant Benito Gervasio Tan, personally or through his lawyer, has
since December, 1972, been demanding from by letters and telegrams, the
release to him of the certificates stock aforesaid but which the plaintiff has not
done so far and is prevented from doing so because of the vehement and adverse
claim thereto by the other defendant, Zoila Co Lim.
4. That the defendant Zoila Co Lim, by letters sent to the plaintiff through her
counsel, has laid claim and persists in claiming the very same shares of stock
being demanded by the other defendant alleging that said stocks really belonged
to her mother So now already deceased, and strongly denying her proclaim to the
same.
5. That both defendants, through their respective lawyers, threaten to take punitive
measures against the plaintiff company should it take any steps that may
prejudice their respective interests in so far as the stocks in question are
concerned.
6. That plaintiff is not sufficiently informed of the right of the respective claimants
and therefore not in a position to determine justly and correctly their conflicting
claims.
7. That the plaintiff company has no interest of any kind in said stocks and is ready
and willing to deliver the corresponding certificates of ownership to whomsoever
as this Honorable Court may direct. (pp. 22-23, rec.)
and praying that the defendants be directed to interplead and litigate their respective claims over the
aforementioned shares of stock and to determine their respective rights thereto.
On January 7, 1974, herein respondent Benito Gervasio Tan, as defendant in the lower court, filed a
motion to dismiss the complaint, on the ground, inter alia, that paragraph 2 of the complaint itself
states that the shares of stock in question are recorded in the books of petitioner in the same of
defendant Benito Gervasio Tan, who should therefore be declared owner thereof pursuant to Section
52 of the Corporation Law (pp. 25-30, rec.).
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).
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.).
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'
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).
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).
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.
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, 133134; Moran, Rules of Court, 1970 ed., Vol. 3, 134136).
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.
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.
And petitioner Continental Development Corporation expressly stated in the complaint that both
defendants, through their respective lawyers, threatened to take punitive measures against it should it
adopt any steps that may prejudice then respective interests in the shares of stock in question; and
that it is not sufficiently informed of the rights of the respective claimants and therefore not in a position
to determine justly and correctly their conflicting claims (pars. 5, 6 and 7 of the complaint, p. 23, rec.)
And in its opposition to the motion to dismiss its complaint, petitioner Continental Development
Corporation s that it might be liable to one defendant should it comply with the demands of the other
with respect to the transfer or entry of the shares of stock in the books of the corporation.
Since there is an active conflict of interests between the two defendants, now herein respondent
Benito Gervasio Tan and petitioner Zoila Co Lim, over the disputed shares of stock, the trial court
gravely abused its discretion in dismissing the complaint for interpleader, which practically decided
ownership of the shares of stock in favor of defendant Benito Gervasio Tan. The two defendants, now
respondents in G.R. No.
L-41831, should be given full opportunity to litigate their respective claims.
Rule 63, Section 1 of the New Rules of Court tells us when a cause of action exists to support a
complaint in interpleader:
Whenever conflicting claims upon the same subject matter are or may be made
against a person, who claims no interest whatever in the subject matter, or an
interest which in whole or in part is not disputed by the complainants to compel
them to interplead and litigate their several claims among themselves (Italics
supplied).
G.R. No. L-22807
October 10, 1924

G.R. No. L-1806
GREGORIO R. SY-QUIA, petitioner,

vs.
THE SHERIFF OF ILOCOS SUR and FILADELFO DE LEON, respondents.
February 25, 1948
ALFONSO PAGKALINAWAN and MANUEL PAGKALINAWAN, petitioners,

vs.
SOTERO RODAS, Judge of First Instance of Manila, JOAQUIN GARCIA, Sheriff of Manila, and
MANUEL TAMBUNTING, respondents.
Antonio M. Jimenez for petitioner.

F. Villanueva, for respondents.
P. L. Meer for petitioners.

Sarte and Garcia for respondents.
PARAS, J.:
In an ejectment suit between Manuel Tambunting, plaintiff, and Alfonso Pagkalinawan and Manuel
Pagkalinawan, defendants, appealed from the municipal court to the Court of First Instance of Manila,
the latter court, after trial, rendered a decision dated July 3, 1947, sentencing the defendants to vacate
the house in question and to pay the plaintiff the rentals from November, 1946, at the rate of P45 a
month, plus the costs. Acting upon a motion for reconsideration, filed by the defendants, the Court of
First Instance of Manila issued an order dated July 26, 1947, granting said motion, setting aside the
decision of July 3, 1947, and absolving the defendants from the complaint. On motion for
reconsideration in turn filed by the plaintiff, an order dated August 16, 1947, was issued in which the
same court "dicta de nuevo sentencia en esta causa, ordenando al Escribano pague al aqui
domandante los alquileres depositados por los demandados paguen al demandante directamenta los
alquileres, en caso contrario, el Juzgado ordenara su lanzamiento de la finca en cuestion y les
condenara al pago de las costas." This decision appears to have become final, as a result of which,
upon petition of the plaintiff, the Court of First Instance of Manila ordered the issuance of a writ of
execution. The defendants sought to stay the execution on the ground that they had in the meantime
filed with the same court an interpleader suit against the plaintiff and one Angel de Leon Ong, praying
that the latter two be ordered to litigate their conflicting claims to the rentals due from the defendants
for the premises in question, it appearing that said defendants received a notice from the Attorney of
Angel de Leon Ong advising the defendants to stop paying rentals to the plaintiff. The Court of First
Instance of Manila acceded to the motion for stay of execution, but, at the instance of the plaintiff, it
issued an order on November 1, 1947, directing that execution be proceeded with. Failing to obtain a
reconsideration of the latter order, the defendants instituted the present petition for certiorari and
prohibition, seeking from us an order directing Hon. Sotero Rodas, Judge of the Court of First Instance
of Manila, and Joaquin Garcia, sheriff, to desist from carrying out the writ of execution.
OSTRAND, J.:
This is a petition for a writ of mandamus to compel the Sheriff of the Province of Ilocos Sur to proceed
with a chattel mortgage foreclosure sale.
It appears from the record that on February 3, 1915, Miguel Aglipay Cheng-Laco and Feliciano Reyes
Cheng-Kiangco executed a chattel mortgage in favor of the petitioner, Gregorio R. Sy-Quia on their
mercantile, establishment, with all the merchandise therein contained, as security for a debt of P6,000.
The chattel mortgage was duly recorded on the date of its execution and fell due on February 3, 1917.
From its terms it may be inferred that it was the intention of the parties that the mortgagors were to be
permitted to sell the merchandise replenishing their stock from time to time and that the new stock
brought in should also be subject to the mortgage.
On May 5, 1924, Miguel Aglipay Cheng-Laco executed another chattel mortgage on the same
establishment and all its contents in favor of the respondent Filadelfo de Leon as security for the sum
of P4,900, which mortgage was recorded on May 4, 1924.
On the latter date of the petitioner, in writing, requested the sheriff to take possession of the mortgaged
property and to sell it at public auction under the provisions of section 14 of the Chattel Mortgage Law
(Act No. 1508). The sheriff seized the establishment in question as well as its contents and fixed the
date of the sale at June 2, 1924. In the meantime Filadelfo de Leon presented an adverse claim to the
property by virtue of his chattel mortgage, alleging that all the goods on which the chattel mortgage of
Gregorio R. Sy-Quia was given had been sold long before the chattel mortgage in favor of De Leon
was executed and that, therefore, the earlier chattel mortgage was of no effect.
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.
The sheriff being in doubt as to the priority of the conflicting claims, suspended the foreclosure
proceedings and brought an action under section 120 of the Code of Civil Procedure requiring the two
claimants to interplead. Thereupon, the present proceeding that the duty of the sheriff to proceed with
the sale was a ministerial one and praying that the sheriff be commanded to proceed.1awph!l.net
Though it, perhaps, would have been better practice for the sheriff to sell the property and hold the
proceeds of the sale subject to the outcome of the action of interpleader, we, nevertheless, are of the
opinion that the facts shown do not justify our interference by mandamus. The sheriff might lay himself
open to an action for damages if he sold the goods without the consent of the holder of the last
mortgage, and it does not appear that the petitioner offered to give bond to hold him harmless in such
an event. In these circumstances, his action in suspending the sale pending the determination of the
action of interpleader seems justified.
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.
We may say further that in cases such as the present, the petition for mandamus should be addressed
to the Courts of First Instance rather than to this court.
The petition is denied with the costs against the petitioner. So ordered.
G.R. Nos. 72664-65 March 20, 1990
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-ininterpleader, with motion to dismiss the crossclaim of Makati Bel-Air.
UNITED COCONUT PLANTERS BANK, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT and MAKATI BEL-AIR CONDOMINIUM
DEVELOPERS, INC.,respondents.
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.
Encanto, Mabugat & Associates for petitioner.

On 29 August 1979, petitioner Bank filed a "motion to withdraw complaint and motion to dismiss
counter-claim", stating that there was no longer any conflict between Makati Bel-Air and Altiura as to
who was entitled to the funds covered by the manager's check, since Makati Bel-Air in its answer had
alleged that it had cancelled and rescinded the sale of the condominium unit and had relinquished any
claim it had over the funds covered by the manager's check.
Mena Q. Taganas for private respondent.

RESOLUTION
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.
FELICIANO, J.:
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).
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 complaintin-interpleader against private respondent Makati Bel-Air Condominium Developers, Inc. (Makati BelAir) 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 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.
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.
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.
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.
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 counterclaim. 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".
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.
In the instant Petition for Review on Certiorari, petitioner Bank argues that Makati Bel-Air's counterclaim 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.
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.
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.
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.
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.
G.R. No. 181723
August 11, 2014
ELIZABETH DEL CARMEN, Petitioner,

vs.
SPOUSES RESTITUTO SABORDO and MIMA MAHILUM-SABORDO, Respondents.
In the instant case, petitioner Bank having been informed by both Altiura and Makati Bel-Air of their
respective positions in their controversy, and Makati Bel-Air having refused the Bank's suggestion
voluntarily to refrain for fifteen (15) days from presenting the check for payment, petitioner Bank felt
compelled to resort to the remedy of interpleader. It will be seen that Makati Bel-Air's counter-claim
arose out of or was necessarily connected with the recourse of petitioner to this remedy of
interpleader. Makati-Bel Air was in effect claiming that petitioner Bank had in bad faith refused to honor
its undertaking to pay represented by the manager's check it had issued. When the trial court granted
petitioner's motion for withdrawal of its complaint-in-interpleader, as having become moot and
academic by reason of Makati Bel-Air's having cancelled the sale of the office unit to Altiura and having
returned the manager's check to the Bank and acquiesced in the release of the funds to Altiura, the
trial court in effect held that petitioner Bank's recourse to interpleader was proper and not a frivolous or
malicious maneuver to evade its obligation to pay to the party lawfully entitled the funds represented
by the manager's check. Having done so, the trial court could not have logically allowed Makati Bel-Air
to recover on its counterclaim for damages against petitioner Bank.
DECISION
PERALTA, J.:
This treats of the petition for review on certiorari assailing the Decision 1 and Resolution2 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 com 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.
There are other considerations supporting the conclusion reached by this Court that respondent
appellate court had committed reversible error. Makati Bel-Air was a party to the contract of sale of an
office condominium unit to Altiura, for the payment of which the manager's check was issued.
Accordingly, Makati Bel-Air was fully aware, at the time it had received the manager's check, that there
was, or had arisen, at least partial failure of consideration since it was unable to comply with its
obligation to deliver office space amounting to 165 square meters to Altiura. Makati Bel-Air was also
aware that petitioner Bank had been informed by Altiura of the claimed defect in Makati Bel-Air's title to
the manager's check or its right to the proceeds thereof. Vis-a-vis both Altiura and petitioner Bank,
Makati Bel-Air was not a holder in due course 3 of the manager's check.
ACCORDINGLY, the Court Resolved to GRANT the Petition for Review and to REVERSE and SET
ASIDE the Decision of respondent appellate court dated 27 June 1985 in AC-G.R. SP Nos. 01669-70.
On September 13, 1976, respondent Restituto Sabordo (Restituto) filed with the then Court of First
Instance of Negros Occidental an original action for declaratory relief with damages and prayer for a
writ of preliminary injunction raising the issue of whether or not the Suico spouses have the right to
recover from respondents Lots 506 and 514.
In its Decision dated December 17, 1986, the Regional Trial Court (RTC) of San Carlos City, Negros
Occidental, ruled in favor of the Suico spouses directing that the latter have until August 31, 1987
within which to redeem or buy back from respondents Lots 506 and 514.
On appeal, the CA, in its Decision3 in CA-G.R. CV No. 13785, dated April 24, 1990, modified the RTC
decision by giving the Suico spouses until October 31, 1990 within which to exercise their option to
purchase or redeem the subject lots from respondents by paying the sum of P127,500.00. The
dispositive portion of the CADecision reads as follows:
xxxx
For reasons given, judgment is hereby rendered modifying the dispositive portion of [the] decision of
the lower court to read:
Petitioner and her co-heirs filed a Motion for Reconsideration,9 but it was likewise denied by the CA.
1) The defendants-appellees are granted up to October 31, 1990 within which toexercise
their option to purchase from the plaintiff-appellant Restituto Sabordo and Mima Mahilum Lot
No. 506, covered by Transfer Certificate of Title No. T-102598 and Lot No. 514, covered by
Transfer Certificate of Title No. T-102599, both of Escalante Cadastre, Negros Occidental by
reimbursing or paying to the plaintiff the sum of ONE HUNDRED TWENTY-SEVEN
THOUSAND FIVE HUNDRED PESOS (P127,500.00);
Hence, the present petition for review on certiorariwith a lone Assignment of Error, to wit:
THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE LOWER COURT
WHICH HELD THAT THE JUDICIAL DEPOSIT OF P127,500.00 MADE BY THE SUICOS WITH THE
CLERK OF COURT OF THE RTC, SAN CARLOS CITY, IN COMPLIANCE WITH THE FINAL AND
EXECUTORY DECISION OF THE COURT OF APPEALS IN CA-G.R. CV-13785 WAS NOT VALID.10
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;
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 125712of the Civil Code.
3) The Writ of Preliminary Injunction dated August 12, 1977 shall be effective
untildefendants-appellees shall have exercised their option to purchase within said period by
paying or reimbursing to the plaintiff-appellant the aforesaid amount.
The petition lacks merit. At the outset, the Court quotes withapproval 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, thatis, an
act preparatory to the consignation, which is the principal, and from which are derived the immediate
consequences which the debtor desires or seeks to obtain. Tender of payment may be extrajudicial,
while consignation is necessarily judicial, and the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of consignation. Tender and consignation, where
validly made, produces the effect of payment and extinguishes the obligation.13
No pronouncement as to costs.
SO ORDERED.4
In a Resolution5 dated February 13, 1991, the CA granted the Suico spouses an additional period of 90
days from notice within which to exercise their option to purchase or redeem the disputed lots.
In the meantime, Toribio Suico (Toribio) died leaving his widow, Eufrocina, and several others,
includingherein 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.
In the case of Arzaga v. Rumbaoa,14 which was cited by petitioner in support of his contention, this
Court ruled that the deposit made with the court by the plaintiff-appellee in the saidcase is considered
a valid payment of the amount adjudged, even without a prior tender of payment thereof to the
defendants-appellants,because the plaintiff-appellee, upon making such deposit, expressly petitioned
the court that the defendants-appellees be notified to receive the tender of payment.This Court held
that while "[t]he deposit, by itself alone, may not have been sufficient, but with the express terms of the
petition, there was full and complete offer of payment made directly to defendants-appellants." 15 In the
instant case, however, petitioner and her co-heirs, upon making the deposit with the RTC, did not ask
the trial court that respondents be notified to receive the amount that they have deposited. In fact,
there was no tender of payment. Instead, what petitioner and her co-heirs prayed for is
thatrespondents 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 notmake any claim
whatsoever over the amount consigned by petitioner and her co-heirs with the court.
Thereafter, claiming that theyare ready with the payment of P127,500.00, but alleging that they cannot
determine as to whom such payment shall be made, petitioner and her co-heirs filed a Complaint6 with
the RTC of San Carlos City, Negros Occidental seeking to compel herein respondents and RPB to
interplead and litigate between themselves their respective interests on the abovementioned sum of
money.1wphi1 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 toaccept the substitute collateral and release the mortgage on Lots 506 and 514.
Upon filing of their complaint, the heirs of Toribio deposited the amount of P127,500.00 with the RTC of
San Carlos City, Branch 59.
Respondents filed their Answer7 with Counterclaim praying for the dismissal of the above Complaint on
the grounds that (1) the action for interpleader was improper since RPB isnot laying any claim on the
sum of P127,500.00; (2) that the period withinwhich 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 pendenciaor res judicata.
On December 5, 2001, the RTC rendered judgment, dismissing the Complaint of petitioner and her coheirs for lack of merit.8 Respondents' Counterclaim was likewise dismissed.
In the cases of Del Rosario v. Sandico16 and Salvante v. Cruz,17 likewise cited as authority by petitioner,
this Court held that, for a consignation or deposit with the court of an amount due on a judgment to be
considered as payment, there must beprior tender to the judgment creditor who refuses to accept it.
The same principle was reiterated in the later case of Pabugais v. Sahijwani.18 As stated above, tender
of payment involves a positive and unconditional act by the obligor of offering legal tender currency as
payment to the obligee for the formers obligation and demanding that the latter accept the same.19 In
the instant case, the Court finds no cogent reason to depart from the findings of the CA and the RTC
that petitioner and her co-heirs failed to make a prior valid tender of payment to respondents.
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.
It is settled that compliance with the requisites of a valid consignation is mandatory.20 Failure to comply
strictly with any of the requisites will render the consignation void. One of these requisites is a valid
prior tender of payment.21
In its assailed Decision, the CA denied the above appeal for lack of merit and affirmed the disputed
RTC Decision.
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
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.
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 coheirs from tendering payment to respondents, as directed by the court.
G.R. No. 136409
March 14, 2008
SUBHASH C. PASRICHA and JOSEPHINE A. PASRICHA, Petitioners,

vs.
DON LUIS DISON REALTY, INC., Respondent.
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.
DECISION
SO ORDERED.
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking the reversal of the
Decision1 of the Court of Appeals (CA) dated May 26, 1998 and its Resolution2 dated December 10,
1998 in CA-G.R. SP No. 37739 dismissing the petition filed by petitioners Josephine and Subhash
Pasricha.
The facts of the case, as culled from the records, are as follows:
Respondent Don Luis Dison Realty, Inc. and petitioners executed two Contracts of Lease 3 whereby the
former, as lessor, agreed to lease to the latter Units 22, 24, 32, 33, 34, 35, 36, 37 and 38 of the San
Luis Building, located at 1006 M.Y. Orosa cor. T.M. Kalaw Streets, Ermita, Manila. Petitioners, in turn,
agreed to pay monthly rentals, as follows:
For Rooms 32/35:
From March 1, 1991 to August 31, 1991 P5,000.00/P10,000.00
From September 1, 1991 to February 29, 1992 P5,500.00/P11,000.00
From March 1, 1992 to February 28, 1993 P6,050.00/P12,100.00
For Rooms 22 and 24:
Effective July 1, 1992 P10,000.00 with an increment of 10% every two years.5
For Rooms 33 and 34:
Effective April 1, 1992 P5,000.00 with an increment of 10% every two years.6
(3) to pay an additional sum equivalent to 25% of the rent accounts as and for attorneys
fees plus the costs of this suit.
For Rooms 36, 37 and 38:

SO ORDERED.20
Effective when tenants vacate said premises P10,000.00 with an increment of 10% every two years.7
The court adopted the MeTCs finding on petitioners unjustified refusal to pay the rent, which is a valid
ground for ejectment. It, however, faulted the MeTC in dismissing the case on the ground of lack of
capacity to sue. Instead, it upheld Ms. Bautistas authority to represent respondent notwithstanding the
absence of a board resolution to that effect, since her authority was implied from her power as a
general manager/treasurer of the company.21
Petitioners were, likewise, required to pay for the cost of electric consumption, water bills and the use
of telephone cables.8
The lease of Rooms 36, 37 and 38 did not materialize leaving only Rooms 22, 24, 32, 33, 34 and 35 as
subjects of the lease contracts.9 While the contracts were in effect, petitioners dealt with Francis
Pacheco (Pacheco), then General Manager of private respondent. Thereafter, Pacheco was replaced
by Roswinda Bautista (Ms. Bautista).10Petitioners religiously paid the monthly rentals until May
1992.11 After that, however, despite repeated demands, petitioners continuously refused to pay the
stipulated rent. Consequently, respondent was constrained to refer the matter to its lawyer who, in turn,
made a final demand on petitioners for the payment of the accrued rentals amounting
to P916,585.58.12 Because petitioners still refused to comply, a complaint for ejectment was filed by
private respondent through its representative, Ms. Bautista, before the Metropolitan Trial Court (MeTC)
of Manila.13The case was raffled to Branch XIX and was docketed as Civil Case No. 143058-CV.
Aggrieved, petitioners elevated the matter to the Court of Appeals in a petition for review on
certiorari.22 On March 18, 1998, petitioners filed an Omnibus Motion23 to cite Ms. Bautista for contempt;
to strike down the MeTC and RTC Decisions as legal nullities; and to conduct hearings and ocular
inspections or delegate the reception of evidence. Without resolving the aforesaid motion, on May 26,
1998, the CA affirmed24 the RTC Decision but deleted the award of attorneys fees.25
Petitioners moved for the reconsideration of the aforesaid decision.26 Thereafter, they filed several
motions asking the Honorable Justice Ruben T. Reyes to inhibit from further proceeding with the case
allegedly because of his close association with Ms. Bautistas uncle-in-law.27
Petitioners admitted their failure to pay the stipulated rent for the leased premises starting July until
November 1992, but claimed that such refusal was justified because of the internal squabble in
respondent company as to the person authorized to receive payment.14 To further justify their nonpayment of rent, petitioners alleged that they were prevented from using the units (rooms) subject
matter of the lease contract, except Room 35. Petitioners eventually paid their monthly rent for
December 1992 in the amount of P30,000.00, and claimed that respondent waived its right to collect
the rents for the months of July to November 1992 since petitioners were prevented from using Rooms
22, 24, 32, 33, and 34.15 However, they again withheld payment of rents starting January 1993
because of respondents refusal to turn over Rooms 36, 37 and 38.16 To show good faith and
willingness to pay the rents, petitioners alleged that they prepared the check vouchers for their monthly
rentals from January 1993 to January 1994.17 Petitioners further averred in their Amended
Answer18 that the complaint for ejectment was prematurely filed, as the controversy was not referred to
the barangay for conciliation.
In a Resolution28 dated December 10, 1998, the CA denied the motions for lack of merit. The appellate
court considered said motions as repetitive of their previous arguments, irrelevant and obviously
dilatory.29 As to the motion for inhibition of the Honorable Justice Reyes, the same was denied, as the
appellate court justice stressed that the decision and the resolution were not affected by extraneous
matters.30 Lastly, the appellate court granted respondents motion for execution and directed the RTC
to issue a new writ of execution of its decision, with the exception of the award of attorneys fees which
the CA deleted.31
Petitioners now come before this Court in this petition for review on certiorari raising the following
issues:
I.
For failure of the parties to reach an amicable settlement, the pre-trial conference was terminated.
Thereafter, they submitted their respective position papers.
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.
On November 24, 1994, the MeTC rendered a Decision dismissing the complaint for ejectment.19 It
considered petitioners non-payment of rentals as unjustified. The court held that mere willingness to
pay the rent did not amount to payment of the obligation; petitioners should have deposited their
payment in the name of respondent company. On the matter of possession of the subject premises,
the court did not give credence to petitioners claim that private respondent failed to turn over
possession of the premises. The court, however, dismissed the complaint because of Ms. Bautistas
alleged lack of authority to sue on behalf of the corporation.
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.
Deciding the case on appeal, the Regional Trial Court (RTC) of Manila, Branch 1, in Civil Case No. 9472515, 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:
III.
(1) to vacate the leased premised (sic) and restore possession thereof to plaintiff-appellant;
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
(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
petitioners and in favor of the respondent "corporation" constitute an unconstitutional

deprivation of petitioners property without due process of law.32
substantiate the suspicion. Bias and prejudice cannot be presumed, especially when weighed against
a judges sacred pledge under his oath of office to administer justice without regard for any person and
to do right equally to the poor and the rich. There must be a showing of bias and prejudice stemming
from an extrajudicial source, resulting in an opinion on the merits based on something other than what
the judge learned from his participation in the case.46 We would like to reiterate, at this point, the policy
of the Court not to tolerate acts of litigants who, for just about any conceivable reason, seek to
disqualify a judge (or justice) for their own purpose, under a plea of bias, hostility, prejudice or
prejudgment.47
In addition to Ms. Bautistas lack of capacity to sue, petitioners insist that respondent company has no
standing to sue as a juridical person in view of the suspension and eventual revocation of its certificate
of registration.33 They likewise question the factual findings of the court on the bases of their ejectment
from the subject premises. Specifically, they fault the appellate court for not finding that: 1) their nonpayment of rentals was justified; 2) they were deprived of possession of all the units subject of the
lease contract except Room 35; and 3) respondent violated the terms of the contract by its continued
refusal to turn over possession of Rooms 36, 37 and 38. Petitioners further prayed that a Temporary
Restraining Order (TRO) be issued enjoining the CA from enforcing its Resolution directing the
issuance of a Writ of Execution. Thus, in a Resolution34 dated January 18, 1999, this Court directed the
parties to maintain the status quo effective immediately until further orders.
We now come to the more substantive issue of whether or not the petitioners may be validly ejected
from the leased premises.
Unlawful detainer cases are summary in nature. In such cases, the elements to be proved and
resolved are the fact of lease and the expiration or violation of its terms.48 Specifically, the essential
requisites of unlawful detainer are: 1) the fact of lease by virtue of a contract, express or implied; 2) the
expiration or termination of the possessors right to hold possession; 3) withholding by the lessee of
possession of the land or building after the expiration or termination of the right to possess; 4) letter of
demand upon lessee to pay the rental or comply with the terms of the lease and vacate the premises;
and 5) the filing of the action within one year from the date of the last demand received by the
defendant.49
The petition lacks merit.

We uphold the capacity of respondent company to institute the ejectment case. Although the Securities
and Exchange Commission (SEC) suspended and eventually revoked respondents certificate of
registration on February 16, 1995, records show that it instituted the action for ejectment on December
15, 1993. Accordingly, when the case was commenced, its registration was not yet revoked.35 Besides,
as correctly held by the appellate court, the SEC later set aside its earlier orders of suspension and
revocation of respondents certificate, rendering the issue moot and academic.36
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.
We likewise affirm Ms. Bautistas capacity to sue on behalf of the company despite lack of proof of
authority to so represent it. A corporation has no powers except those expressly conferred on it by the
Corporation Code and those that are implied from or are incidental to its existence. In turn, a
corporation exercises said powers through its board of directors and/or its duly authorized officers and
agents. Physical acts, like the signing of documents, can be performed only by natural persons duly
authorized for the purpose by corporate by-laws or by a specific act of the board of directors. 37 Thus,
any person suing on behalf of the corporation should present proof of such authority. Although Ms.
Bautista initially failed to show that she had the capacity to sign the verification and institute the
ejectment case on behalf of the company, when confronted with such question, she immediately
presented the Secretarys Certificate38 confirming her authority to represent the company.
This issue involves questions of fact, the resolution of which requires the evaluation of the evidence
presented. The MeTC, the RTC and the CA all found that petitioners failed to perform their obligation to
pay the stipulated rent. It is settled doctrine that in a civil case, the conclusions of fact of the trial court,
especially when affirmed by the Court of Appeals, are final and conclusive, and cannot be reviewed on
appeal by the Supreme Court.50 Albeit the rule admits of exceptions, not one of them obtains in this
case.51
There is ample jurisprudence holding that subsequent and substantial compliance may call for the
relaxation of the rules of procedure in the interest of justice.39 In Novelty Phils., Inc. v. Court of
Appeals,40 the Court faulted the appellate court for dismissing a petition solely on petitioners failure to
timely submit proof of authority to sue on behalf of the corporation. In Pfizer, Inc. v. Galan,41 we upheld
the sufficiency of a petition verified by an employment specialist despite the total absence of a board
resolution authorizing her to act for and on behalf of the corporation. Lastly, in China Banking
Corporation v. Mondragon International Philippines, Inc,42 we relaxed the rules of procedure because
the corporation ratified the managers status as an authorized signatory. In all of the above cases, we
brushed aside technicalities in the interest of justice. This is not to say that we disregard the
requirement of prior authority to act in the name of a corporation. The relaxation of the rules applies
only to highly meritorious cases, and when there is substantial compliance. While it is true that rules of
procedure are intended to promote rather than frustrate the ends of justice, and while the swift
unclogging of court dockets is a laudable objective, we should not insist on strict adherence to the
rules at the expense of substantial justice.43 Technical and procedural rules are intended to help
secure, not suppress, the cause of justice; and a deviation from the rigid enforcement of the rules may
be allowed to attain that prime objective, for, after all, the dispensation of justice is the core reason for
the existence of courts.44
To settle this issue once and for all, we deem it proper to assess the array of factual findings
supporting the courts conclusion.
The evidence of petitioners non-payment of the stipulated rent is overwhelming. Petitioners, however,
claim that such non-payment is justified by the following: 1) the refusal of respondent to allow
petitioners to use the leased properties, except room 35; 2) respondents refusal to turn over Rooms
36, 37 and 38; and 3) respondents refusal to accept payment tendered by petitioners.
Petitioners justifications are belied by the evidence on record. As correctly held by the CA, petitioners
communications to respondent prior to the filing of the complaint never mentioned their alleged inability
to use the rooms.52 What they pointed out in their letters is that they did not know to whom payment
should be made, whether to Ms. Bautista or to Pacheco.53 In their July 26 and October 30, 1993
letters, petitioners only questioned the method of computing their electric billings without, however,
raising a complaint about their failure to use the rooms.54 Although petitioners stated in their December
30, 1993 letter that respondent failed to fulfill its part of the contract,55 nowhere did they specifically
refer to their inability to use the leased rooms. Besides, at that time, they were already in default on
their rentals for more than a year.
As to the denial of the motion to inhibit Justice Reyes, we find the same to be in order. First, the motion
to inhibit came after the appellate court rendered the assailed decision, that is, after Justice Reyes had
already rendered his opinion on the merits of the case. It is settled that a motion to inhibit shall be
denied if filed after a member of the court had already given an opinion on the merits of the case, the
rationale being that "a litigant cannot be permitted to speculate on the action of the court x x x (only to)
raise an objection of this sort after the decision has been rendered."45 Second, it is settled that mere
suspicion that a judge is partial to one of the parties is not enough; there should be evidence to
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
10
should have demanded specific performance from the lessor and commenced an action in court. With
the execution of the contract, petitioners were already in a position to exercise their right to the use
and enjoyment of the property according to the terms of the lease contract. 56 As borne out by the
records, the fact is that respondent turned over to petitioners the keys to the leased premises and
petitioners, in fact, renovated the rooms. Thus, they were placed in possession of the premises and
they had the right to the use and enjoyment of the same. They, likewise, had the right to resist any act
of intrusion into their peaceful possession of the property, even as against the lessor itself. Yet, they
did not lift a finger to protect their right if, indeed, there was a violation of the contract by the lessor.
Neither can petitioners validly invoke the non-delivery of Rooms 36, 37 and 38 as a justification for
non-payment of rentals. Although the two contracts embraced the lease of nine (9) rooms, the terms of
the contracts - with their particular reference to specific rooms and the monthly rental for each - easily
raise the inference that the parties intended the lease of each room separate from that of the
others.lavvphil There is nothing in the contract which would lead to the conclusion that the lease of one
or more rooms was to be made dependent upon the lease of all the nine (9) rooms. Accordingly, the
use of each room by the lessee gave rise to the corresponding obligation to pay the monthly rental for
the same. Notably, respondent demanded payment of rentals only for the rooms actually delivered to,
and used by, petitioners.
What was, instead, clearly established by the evidence was petitioners non-payment of rentals
because ostensibly they did not know to whom payment should be made. However, this did not justify
their failure to pay, because if such were the case, they were not without any remedy. They should
have availed of the provisions of the Civil Code of the Philippines on the consignation of payment and
of the Rules of Court on interpleader.
It may also be mentioned that the contract specifically provides that the lease of Rooms 36, 37 and 38
was to take effect only when the tenants thereof would vacate the premises. Absent a clear showing
that the previous tenants had vacated the premises, respondent had no obligation to deliver
possession of the subject rooms to petitioners. Thus, petitioners cannot use the non-delivery of Rooms
36, 37 and 38 as an excuse for their failure to pay the rentals due on the other rooms they
occupied.1avvphil
Article 1256 of the Civil Code provides:
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:
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.
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
Consignation alone shall produce the same effect in the following cases:
xxxx
Moreover, Article 167363 of the Civil Code gives the lessor the right to judicially eject the lessees in
case of non-payment of the monthly rentals. A contract of lease is a consensual, bilateral, onerous and
commutative contract by which the owner temporarily grants the use of his property to another, who
undertakes to pay the rent therefor.64 For failure to pay the rent, petitioners have no right to remain in
the leased premises.
(4) When two or more persons claim the same right to collect;
x x x x.
Consignation shall be made by depositing the things due at the disposal of a judicial authority, before
whom the tender of payment shall be proved in a proper case, and the announcement of the
consignation in other cases.57
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.
In the instant case, consignation alone would have produced the effect of payment of the rentals. The
rationale for consignation is to avoid the performance of an obligation becoming more onerous to the
debtor by reason of causes not imputable to him.58 Petitioners claim that they made a written tender of
payment and actually prepared vouchers for their monthly rentals. But that was insufficient to
constitute a valid tender of payment. Even assuming that it was valid tender, still, it would not
constitute payment for want of consignation of the amount. Well-settled is the rule that tender of
payment must be accompanied by consignation in order that the effects of payment may be
produced.59
SO ORDERED.
Moreover, Section 1, Rule 62 of the Rules of Court provides:

Section 1. When interpleader proper. Whenever conflicting claims upon the same subject matter are
or may be made against a person who claims no interest whatever in the subject matter, or an interest
which in whole or in part is not disputed by the claimants, he may bring an action against the
conflicting claimants to compel them to interplead and litigate their several claims among themselves.
Otherwise stated, an action for interpleader is proper when the lessee does not know to whom
payment of rentals should be made due to conflicting claims on the property (or on the right to
collect).60 The remedy is afforded not to protect a person against double liability but to protect him
against double vexation in respect of one liability.61
Notably, instead of availing of the above remedies, petitioners opted to refrain from making payments.
11
G.R. No. 133113
August 30, 2001
The petition was dismissed for lack of merit. The Court of Appeals said:
EDGAR H. ARREZA, petitioner,

vs.
MONTANO M. DIAZ, JR., respondent.
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.
QUISUMBING, J.:
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.
This petition assails the decision 1 promulgated on December 24, 1997, and the resolution 2 dated
March 6, 1998, by the Court of Appeals in CA-G.R SP No. 43895. That decision dismissed the petition
for certiorari questioning the order 3 dated February 4, 1997 of the Regional Trial Court of Makati City,
Branch 59, in Civil Case No. 96-1372, which had denied petitioner's motion to dismiss the complaint
filed against him on grounds of res adjudicata.
xxx
xxx
xxx
WHEREFORE, this petition is hereby DISMISSED with costs against the petitioner.
The factual antecedents of the present petition are culled from the findings of the Court of Appeals.
SO ORDERED.5
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.
Petitioner's motion to reconsider the decision of the Court of Appeals was denied.6 Hence, the present
petition, where petitioner raises the following grounds for review:
I
In a decision dated March 27, 1996, the trial court resolved the conflict by decreeing as follows:
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC CASE PERTAINING TO MR.
DIAZ'S CLAIMS FOR REIMBURSEMENT OF AMOUNTS WHICH HE ALLEGEDLY PAID TO
BLISS BY WAY OF PREMIUM OR INSTALLMENT PAYMENTS FOR THE ACQUISITION
OF THE PROPERTY WAS ERRONEOUSLY BROUGHT AGAINST MR. ARREZA. ALSO,
SAID CLAIMS ARE BARRED BY RES ADJUDICATA OR CONCLUSIVENESS OF A PRIOR
JUDGMENT IN THE PRIOR RTC CASE WHICH WAS ULTIMATELY AFFIRMED BY THIS
HONORABLE COURT IN G.R. NO. 128726.
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.
II
SO ORDERED.
THE CAUSE OF ACTION EMBODIED IN THE PRESENT RTC CASE PERTAINING TO MR.
DIAZ'S CLAIMS FOR REIMBURSEMENT OF THE COST OF IMPROVEMENTS HE
ALLEGEDLY INTRODUCED TO THE PROPERTY IS LIKEWISE BARRED BY RES
ADJUDICATA OR CONCLUSIVENESS OF A PRIOR JUDGMENT IN THE PRIOR RTC
CASE WHICH WAS ULTIMATELY AFFIRMED BY THIS HONORABLE COURT IN G.R NO.
128726.
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. 961372. 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.
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.
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.
IV.
A Motion for Reconsideration filed by Arreza was likewise denied on March 20, 1997.
IN ITS ENTIRETY, THE AMENDED COMPLAINT IN THE PRESENT RTC CASE IS

DISMISSIBLE ON THE GROUND OF LACK OF CAUSE OF ACTION. 7
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.
12
The issue for our resolution now is whether respondent Diaz's claims for reimbursement against
petitioner Arreza are barred by res adjudicata.
resolution, no similar cause of action exists between the prior case and the present case, according to
respondent Diaz.
The elements of res adjudicata are: (a) that the former judgment must be final; (b) the court which
rendered judgment had jurisdiction over the parties and the subject matter; (c) it must be a judgment
on the merits; and (d) there must be between the first and second causes of action identity of the
parties, subject matter, and cause of action.8
Respondent in effect argues that it was incumbent upon petitioner as a party in Civil Case No. 94-2086
to put in issue respondent's demands for reimbursement. However, it was not petitioner's duty to do
the lawyering for respondent. As stated by the Court of Appeals, the court in a complaint for
interpleader shall determine the rights and obligations of the parties and adjudicate their respective
claims. Such rights, obligations, and claims could only be adjudicated if put forward by the aggrieved
party in assertion of his rights. That party in this case referred to respondent Diaz. The second
paragraph of Section 5 of Rule 62 of the 1997 Rules of Civil Procedure provides that the parties in an
interpleader action may file counterclaims, cross-claims, third party complaints and responsive
pleadings thereto, "as provided by these Rules." The second paragraph was added to Section 5 to
expressly authorize the additional pleadings and claims enumerated therein, in the interest of a
complete adjudication of the controversy and its incidents.15
Worthy of note, the prior case for interpleader filed with Branch 146 of the Regional Trial Court of
Makati, Civil Case No. 94-2086, was settled with finality with this Court's resolution in G.R. No.
128726. 9 The judgment therein is now final.
When the Regional Trial Court of Makati (Branch 146) rendered judgment, it had priorly acquired
jurisdiction over the parties and the subject matter. Respondent, however, contends that the trial court
did not acquire jurisdiction over the property subject of the action, as the action was instituted in Makati
City while the subject unit is situated in Quezon City.
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:
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)
A corollary question that We might as well resolve now (although not raised as an issue in
the present petition, but conformably with Gayos, et al. v. Gayos, et al., G.R. No. L-27812,
September 26, 197S, 67 SCRA 146, that it is a cherished rule of procedure that a court
should always strive to settle the entire controversy in a single proceeding leaving no root or
branch to bear the seeds in future litigation) is whether or not the private respondents can
still file a separate complaint against the petitioners on the ground that they are builders in
good faith and consequently, recover the value of the improvements introduced by them on
the subject lot. The case of Heirs of Laureano Marquez v. Valencia, 99 Phil. 740, provides
the answer:
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
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)
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.
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)
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
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
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
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
13
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
G.R. No. 89132 February 26, 1990

LEONCIA, MANUEL, DIOSDADA, ANTONIA, ISIDRO, GERONIMO, CRESENCIO, ALEJANDRO,
BONIFACIA, AURELIO, EPIFANIO, POLICARPO, IRENEO, ALL SURNAMED BACLAYON; HRS. of
AGRIPINA BACLAYON, rep. by LUCIA BACLAYON; HRS. of MODESTA BACLAYON, rep. by
FILING BACLAYON; HRS. OF HIPOLITO BACLAYON, rep. BY MARIO BACLAYON; HRS. OF
TOMAS BACLAYON, rep. by CRISTITO BACLAYON; SILVESTRE ABANES; HRS. of LEONICA
ABELLARE, rep. by FELIX BACLAYON; CECILIA, HERMINIA, FELIX, CONCORDIA, all surnamed
DELA VICTORIA; and THE HON. JUDGE GERMAN LEE, JR., Presiding Judge of Branch XV,
RTC, Cebu, petitioners,
vs.
THE HON. COURT OF APPEALS, HEIRS OF SPOUSES MARCIANO BACALSO AND GREGORIA
SABANDEJA, namely, ARCADIA, FRANCISCA, JOSEFA, DIONESIA, VALENTINA, ANGELA,
VENANCIO, DOMINGA and FELIMON, all surnamed BACALSO, respondents.
In the present case, we find there is an identity of causes of action between Civil Case No. 94-2086
and Civil Case No. 96-1372. Respondent Diaz's cause of action in the prior case, now the crux of his
present complaint against petitioner, was in the nature of an unpleaded compulsory counterclaim,
which is now barred. There being a former final judgment on the merits in the prior case, rendered in
Civil Case No. 94-2086 by Branch 146 of the Regional Trial Court of Makati, which acquired jurisdiction
over the same parties, the same subject property, and the same cause of action, the present complaint
of respondent herein (Diaz) against petitioner Arreza docketed as Civil Case No. 96-1372 before the
Regional Trial of Makati, Branch 59 should be dismissed on the ground of res adjudicata.
Leonardo Garcillano for petitioners.

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.
Jesus N. Borromeo for private respondents.
SO ORDERED.
MEDIALDEA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals dated April 28, 1989
ordering the trial court, in a hearing supplementary to execution, to receive private respondents'
evidence to prove that they are builders in good faith of the improvements and the value of said
improvements, and its resolution dated June 20, 1989 denying the motion for reconsideration.
The antecedent facts are as follows:
On May 7, 1969, petitioners Leoncia, Martin, Policarpio, Hilarion, Ireneo, Juliana and Tomas, all
surnamed Baclayon; Rosendo, Felicidad and Silvestra, all surnamed Abanes; and Tomasa, Leoncia,
Anacleto, Monica, Guillerma and Gertrudes all surnamed Abellare filed with the then CFI-Cebu Branch
2, in Civil Case No. R-11185, a complaint for recovery of ownership and possession, and damages,
against spouses Marciano Bacalso and Gregoria Sabandeja of Lot No. 5528 of the Cebu Cadastre.
The latter filed their answer thereto on July 15, 1969.
On December 20, 1982, the trial court rendered a decision in favor of the Bacalso spouses, declaring
them owners of the subject lot, which decision was appealed by the petitioners to the respondent Court
of Appeals. The case was docketed as AC-G.R. CV No. 04948.
On July 29, 1986, the respondent court rendered a decision reversing the trial court, the dispositive
portion of which reads as follows (p. 15, Rollo):
WHEREFORE, the decision a quo is hereby reversed and set aside and another
one is rendered declaring plaintiffs-appellants as heirs of the late Matias Baclayon
the owners of Lot No. 5528 of the Cebu Cadastre covered by Original Certificate
of Title No. 2726 (O-NA) of the Registry of Deeds of Cebu (Exh. I) and ordering
defendants to vacate the lot and surrender the same to plaintiffs. No costs.
SO ORDERED.
The private respondents then elevated the case to this Court by filing a petition for review which was,
however, denied in the Resolution dated May 27, 1987.
14
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):
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.
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.
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.
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.
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.
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):
IT IS SO ORDERED.
ORDER
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.
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.
On April 28, 1989, the respondent court granted the petition, the dispositive portion of which reads as
follows (p. 21, Rollo):
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.
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.
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.
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.
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.
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.
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.
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.
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.
We shall narrate the facts in these two cases in a nutshell:
Judge Lee, thereafter, issued the order dated August 19, 1988, to wit (p. 17, Rollo):
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
ORDER
15
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):
already become final and almost executed and the law allows no intervention after
the trial has been terminated.
On the other hand, it cannot also be denied that the sums of money in question
have been awarded to the herein petitioner as expenses for her hospitalization in
the respondent hospitals and are based upon petitioner's own evidence. To order
the filing of a separate and independent action to recover a claim where the
respondent hospitals concerned will have to prove exactly a claim which had
already been tried, litigated and adjudged would unduly result in multiplicity of
suits. Considering that the herein respondents claim that the herein petitioner has
not yet paid the amounts she incurred for hospitalization, the interests of justice
will be best served if a hearing be conducted to determine whether or not the
hospital bills have been paid, instead of requiring the respondent hospitals to file
separate actions to recover their respective claims.
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.
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.
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):
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.)"
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 exparte motion before the court, but to file separate and independent actions before
courts of competent jurisdiction, since the judgment rendered in the case had
The rule is well established that once a decision has become final and executory the only jurisdiction
left with the trial court is to order its execution. To require now the trial court in a hearing
supplementary to execution, to receive private respondents' evidence to prove that they are builders in
good faith of the improvements and the value of said Improvements, is to disturb a final executory
decision; which may even cause its substantial amendment. It appears that the private respondent's
16
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.
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.
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:
SO ORDERED.
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 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.
17
G.R. No. L-25138
August 28, 1969
On August 29, 1962, the two defendant corporations represented by the Government Corporate
Counsel filed a Motion to Dismiss the complaint for failure to state a cause of action as well as to lift
the Court's order designating the People's First Savings Bank as trustee to receive the tenants'
payments on the PHHC lots.
JOSE A. BELTRAN, ET AL., plaintiffs-appellants,

vs.
PEOPLE'S HOMESITE & HOUSING CORPORATION, defendants-appellees.
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
Beltran, Cendaa, Camu, Pelias and Manuel for plaintiffs-appellants.

Government Corporate Counsel Tomas P. Matic Jr. and Assistant Government Corporate Counsel
Romualdo Valera for defendants-appellees.
TEEHANKEE, J.:
Appeal on purely questions of law from an order of dismissal of the complaint for interpleader, on the
ground that it does not state a cause of action, as certified to this Court by the Court of Appeals. We
affirm the dismissal on the ground that where the defendants sought to be interpleaded as conflicting
claimants have no conflicting claims against plaintiff, as correctly found by the trial court, the special
civil action of interpleader will not lie.
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
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
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 leasepurchase agreement, ever made on them any claim or demand for payment of the rentals or
amortization payments. The questions of fact raised in their complaint concerning the enforceability,
and recognition or non-enforceability and non-recognition of the turnover agreement of December 27,
1961 between the two defendant corporations are irrelevant to their action of interpleader, for these
conflicting claims, loosely so-called, are between the two corporations and not against plaintiffs. Both
defendant corporations were in conformity and had no dispute, as pointed out by the trial court that the
monthly payments and amortizations should be made directly to the PHHC alone.
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
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
18
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
G.R. No. L-23851 March 26, 1976

WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant,
vs.
LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.
Leonardo Abola for appellant.
Alfonso V. Agcaoli & Ramon A. Barcelona for appellee Lee E. Won.
Bienvenido A. Tan in his own behalf.
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
CASTRO, C.J.:
This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing
the plaintiff-appellant's complaint of interpleader upon the grounds of failure to state a cause of action
and res judicata.
In its amended and supplemental complaint of October 23, 1963, the Wack Wack Golf & Country Club,
Inc., a non-stock, civic and athletic corporation duly organized under the laws of the Philippines, with
principal office in Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for its first
cause of action, that the defendant Lee E. Won claims ownership of its membership fee certificate 201,
by virtue of the decision rendered in civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias
Ramon Lee vs. Wack Wack Golf & Country Club, Inc." and also by virtue of membership fee certificate
201-serial no. 1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy clerk of court of the
said CFI of Manila, for and in behalf of the president and the secretary of the Corporation and of the
People's Bank & Trust Company as transfer agent of the said Corporation, pursuant to the order of
September 23, 1963 in the said case; that the defendant Bienvenido A. Tan, on the other hand, claims
to be lawful owner of its aforesaid membership fee certificate 201 by virtue of membership fee
certificate 201-serial no. 1199 issued to him on July 24, 1950 pursuant to an assignment made in his
favor by "Swan, Culbertson and Fritz," the original owner and holder of membership fee certificate 201;
that under its articles of incorporation and by-laws the Corporation is authorized to issue a maximum of
400 membership fee certificates to persons duly elected or admitted to proprietary membership, all of
which have been issued as early as December 1939; that it claims no interest whatsoever in the said
membership fee certificate 201; that it has no means of determining who of the two defendants is the
lawful owner thereof; that it is without power to issue two separate certificates for the same
membership fee certificate 201, or to issue another membership fee certificate to the defendant Lee,
without violating its articles of incorporation and by-laws; and that the membership fee certificate 201serial 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".
Plaintiffs' other contention in their appeal is that notwithstanding that the issue as to which of the
defendants is authorized to receive the tenants' payments was resolved in favor of the PHHC, they had
raised other issues that were not resolved and would require rendition of judgment after trial on the
merits, such as "the issue of the right of ownership over the houses and lots in Project 4 (and) the
issue of the status of the commitment agreements and undertakings made by the previous PHHC
Administration, particularly those of the then PHHC General Manager Bernardo Torres." 10 This
contention is without merit, for no conflicting claims have been made with regard to such issues upon
plaintiffs by defendant corporations, who both bound themselves to recognize and respect the rights of
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.
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.
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.1wph1.t
19
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.
Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may
properly invoke the remedy of interpleader? We do not think so. It was aware of the conflicting claims
of the appellees with respect to the membership fee certificate 201 long before it filed the present
interpleader suit. It had been recognizing Tan as the lawful owner thereof. It was sued by Lee who also
claimed the same membership fee certificate. Yet it did not interplead Tan. It preferred to proceed with
the litigation (civil case 26044) and to defend itself therein. As a matter of fact, final judgment was
rendered against it and said judgment has already been executed. It is not therefore too late for it to
invoke the remedy of interpleader.
In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata,
failure of the complaint to state a cause of action, and bar by prescription. 1 These motions were duly
opposed by the Corporation. Finding the grounds of bar by prior judgment and failure to state a cause
of action well taken, the trial court dismissed the complaint, with costs against the Corporation.
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:
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 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 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.
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.
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.
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.
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.
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
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.
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.
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
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
20
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
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.
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
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.
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.
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
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 generally held by the cases it is the office of interpleader to protect a party, not
against double liability, but against double vexation on account of one
liability. Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. And so it is said that it is
too late for the remedy of interpleader if the party seeking this relef has contested
the claim of one of the parties and suffered judgment to be taken.
In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is
the general rule that a bill of interpleader comes too late when application therefor
is delayed until after judgment has been rendered in favor of one of the claimants
of the fund, and this is especially true where the holder of the fund had notice of
the conflicting claims prior to the rendition of such judgment and an opportunity to
implead the adverse claimants in the suit in which such judgment was rendered.
See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5
Pomeroy's Equity Jurisprudence No. 41.'
It is well settled, both by reasons and authority, that one who asks the interposition
of a court of equity to compel others, claiming property in his hands, to interplead,
must do so before putting them to the test of trials at law. Yarborough v.
Thompson, 3 Smedes & M. 291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You. &
Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy by interpleader is
afforded to protect the party from the annoyance and hazard of two or more
actions touching the same property or demand; but one who, with knowledge of all
the facts, neglects to avail himself of the relief, or elects to take the chances for
success in the actions at law, ought to submit to the consequences of defeat. To
permit an unsuccessful defendant to compel the successful plaintiffs to interplead,
is to increase instead of to diminish the number of suits; to put upon the shoulders
of others the burden which he asks may be taken from his own. ....'
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 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
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
21
established his rights to membership fee certificate 201 in the aforesaid civil case and, therefore, this
interpleader suit would compel him to establish his rights anew, and thereby increase instead of
diminish litigations, which is one of the purposes of an interpleader suit, with the possiblity that the
benefits of the final judgment in the said civil case might eventually be taken away from him; and
because the Corporation allowed itself to be sued to final judgment in the said case, its action of
interpleader was filed inexcusably late, for which reason it is barred by laches or unreasonable delay.
G.R. No. 181303
September 17, 2009
CARMEN DANAO MALANA, MARIA DANAO ACORDA, EVELYN DANAO, FERMINA DANAO,
LETICIA DANAO and LEONORA DANAO, the last two are represented herein by their Attorneyin-Fact, MARIA DANAO ACORDA, Petitioners,
vs.
BENIGNO TAPPA, JERRY REYNA, SATURNINO CAMBRI and SPOUSES FRANCISCO AND
MARIA LIGUTAN,Respondents.
ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Certiorari under Rule 65 of the Rules of Court, assailing the Orders1 dated 4 May
2007, 30 May 2007, and 31 October 2007, rendered by Branch 3 of the Regional Trial Court (RTC) of
Tuguegarao City, which dismissed, for lack of jurisdiction, the Complaint of petitioners Carmen Danao
Malana, Leticia Danao, Maria Danao Accorda, Evelyn Danao, Fermina Danao, and Leonora Danao,
against respondents Benigno Tappa, Jerry Reyna, Saturnino Cambri, Francisco Ligutan and Maria
Ligutan, in Civil Case No. 6868.
Petitioners filed before the RTC their Complaint for Reivindicacion, Quieting of Title, and
Damages2 against respondents on 27 March 2007, docketed as Civil Case No. 6868. Petitioners
alleged in their Complaint that they are the owners of a parcel of land covered by Transfer Certificate
of Title (TCT) No. T-1279373 situated in Tuguegarao City, Cagayan (subject property). Petitioners
inherited the subject property from Anastacio Danao (Anastacio), who died intestate.4 During the
lifetime of Anastacio, he had allowed Consuelo Pauig (Consuelo), who was married to Joaquin
Boncad, to build on and occupy the southern portion of the subject property. Anastacio and Consuelo
agreed that the latter would vacate the said land at any time that Anastacio and his heirs might need
it.5
Petitioners claimed that respondents, Consuelos family members,6 continued to occupy the subject
property even after her death, already building their residences thereon using permanent materials.
Petitioners also learned that respondents were claiming ownership over the subject property. Averring
that they already needed it, petitioners demanded that respondents vacate the same. Respondents,
however, refused to heed petitioners demand.7
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.8Petitioners 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
22
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:
Hence, the present Petition, where petitioners raise the sole issue of:
I
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
WHETHER OR NOT THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN

DISMISSING THE COMPLAINT OF THE PETITIONERS MOTU PROPRIO. 20
Petitioners filed a Motion for Reconsideration of the aforementioned RTC Order dismissing their
Complaint. They argued that their principal cause of action was for quieting of title; the accion
reivindicacion was included merely to enable them to seek complete relief from respondents.
Petitioners Complaint should not have been dismissed, since Section 1, Rule 63 of the Rules of
Court13 states that an action to quiet title falls under the jurisdiction of the RTC.14
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.
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
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
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
Petitions for declaratory relief are governed by Rule 63 of the Rules of Court. The RTC correctly made
a distinction between the first and the second paragraphs of Section 1, Rule 63 of the Rules of Court.
The first paragraph of Section 1, Rule 63 of the Rules of Court, describes the general circumstances in
which a person may file a petition for declaratory relief, to wit:
Any person interested under a deed, will, contract or other written instrument, or whose rights are
affected by a statute, executive order or regulation, ordinance, or any other governmental regulation
may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a declaration of his rights or duties,
thereunder. (Emphasis ours.)
The RTC issued an Order dated 31 October 2007 denying petitioners Motion. It clarified that their
Complaint was dismissed, not on the ground of misjoinder of causes of action, but for lack of
jurisdiction. The RTC dissected Section 1, Rule 63 of the Rules of Court, which provides:
Section 1. Who may file petition. Any person interested under a deed, will, contract or other written
instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any
other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and for a
declaration of his rights or duties, thereunder.
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.
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 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:
The second paragraph of Section 1, Rule 63 of the Rules of Court specifically refers to (1) an action for
the reformation of an instrument, recognized under Articles 1359 to 1369 of the Civil Code; (2) an
action to quiet title, authorized by Articles 476 to 481 of the Civil Code; and (3) an action to consolidate
ownership required by Article 1607 of the Civil Code in a sale with a right to repurchase. These three
remedies are considered similar to declaratory relief because they also result in the adjudication of the
legal rights of the litigants, often without the need of execution to carry the judgment into effect. 22
To determine which court has jurisdiction over the actions identified in the second paragraph of Section
1, Rule 63 of the Rules of Court, said provision must be read together with those of the Judiciary
Reorganization Act of 1980, as amended.
This Court maintains that an action to quiet title is a real action. [Herein petitioners] do not dispute the
assessed value of the property at P410.00 under Tax Declaration No. 02-48386. Hence, it has no
jurisdiction over the action.
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
In view of the foregoing considerations, the Motion is hereby denied.19
23
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
As for the RTC dismissing petitioners Complaint motu proprio, the following pronouncements of the
Court in Laresma v. Abellana28 proves instructive:
It is axiomatic that the nature of an action and the jurisdiction of a tribunal are determined by the
material allegations of the complaint and the law at the time the action was commenced. Jurisdiction of
the tribunal over the subject matter or nature of an action is conferred only by law and not by the
consent or waiver upon a court which, otherwise, would have no jurisdiction over the subject matter or
nature of an action. Lack of jurisdiction of the court over an action or the subject matter of an action
cannot be cured by the silence, acquiescence, or even by express consent of the parties. If the court
has no jurisdiction over the nature of an action, it may dismiss the same ex mero motu or motu proprio.
x x x. (Emphasis supplied.)
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:
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.
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.)
IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED. The Orders dated 4 May 2007, 30
May 2007 and 31 October 2007 of the Regional Trial Court of Tuguegarao City, Branch 3, dismissing
the Complaint in Civil Case No. 6868, without prejudice, are AFFIRMED. The Regional Trial Court is
ordered to REMAND the records of this case to the Municipal Trial Court or the court of proper
jurisdiction for proper disposition. Costs against the petitioners.
As found by the RTC, the assessed value of the subject property as stated in Tax Declaration No. 0248386 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
SO ORDERED.
Where the law or contract has already been contravened prior to the filing of an action for declaratory
relief, the courts can no longer assume jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject has already been infringed or transgressed
before the institution of the action.26
In the present case, petitioners Complaint for quieting of title was filed after petitioners already
demanded and respondents refused to vacate the subject property. In fact, said Complaint was filed
only subsequent to the latters express claim of ownership over the subject property before the Lupong
Tagapamayapa, in direct challenge to petitioners title.
Since petitioners averred in the Complaint that they had already been deprived of the possession of
their property, the proper remedy for them is the filing of an accion publiciana or an accion
reivindicatoria, not a case for declaratory relief. An accion publiciana is a suit for the recovery of
possession, filed one year after the occurrence of the cause of action or from the unlawful withholding
of possession of the realty. An accion reivindicatoria is a suit that has for its object ones recovery of
possession over the real property as owner.271avvphi1
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.
24
G.R. No. 159357
April 28, 2004
"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
Brother MARIANO "MIKE" Z. VELARDE, petitioner,

vs.
SOCIAL JUSTICE SOCIETY, respondent.
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
DECISION
PANGANIBAN, J.:
A decision that does not conform to the form and substance required by the Constitution and the law is
void and deemed legally inexistent. To be valid, decisions should comply with the form, the procedure
and the substantive requirements laid out in the Constitution, the Rules of Court and relevant
circulars/orders of the Supreme Court. For the guidance of the bench and the bar, the Court hereby
discusses these forms, procedures and requirements.
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
The Case
This Court, in a Resolution13 dated September 2, 2003, required SJS and the Office of the Solicitor
General (OSG) to submit their respective comments. In the same Resolution, the Court gave the other
parties -- impleaded as respondents in the original case below --the opportunity to comment, if they so
desired.
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the June 12, 2003
Decision2 and July 29, 2003 Order3 of the Regional Trial Court (RTC) of Manila (Branch 49).4
The challenged Decision was the offshoot of a Petition for Declaratory Relief 5 filed before the RTCManila 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
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;
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:
"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;
"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
"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
The Antecedent Proceedings
During the Oral Argument, the issues were narrowed down and classified as follows:
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.
"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
The subsequent proceedings were recounted in the challenged Decision in these words:
"1. Did the RTC Decision conform to the form and substance required by the
Constitution, the law and the Rules of Court?
"x x x. Bro. Eddie Villanueva submitted, within the original period [to file an Answer], a
Motion to Dismiss. Subsequently, Executive Minister Erao Manalo and Bro. Mike Velarde,
filed their Motions to Dismiss. While His Eminence Jaime Cardinal L. Sin, filed a Comment
and Bro. Eli Soriano, filed an Answer within the extended period and similarly prayed for the
dismissal of the Petition. All sought the dismissal of the Petition on the common grounds that
it does not state a cause of action and that there is no justiciable controversy. They were
ordered to submit a pleading by way of advisement, which was closely followed by another
Order denying all the Motions to Dismiss. Bro. Mike Velarde, Bro. Eddie Villanueva and
Executive Minister Erao Manalo moved to reconsider the denial. His Eminence Jaime
Cardinal L. Sin, asked for extension to file memorandum. Only Bro. Eli Soriano complied
with the first Order by submitting his Memorandum. x x x.
"2. May religious leaders like herein petitioner, Bro. Mike Velarde, be prohibited
from endorsing candidates for public office? Corollarily, may they be banned from
campaigning against said candidates?"
The Courts Ruling
The Petition of Brother Mike Velarde is meritorious.
Procedural Issues:
Requisites of Petitions for Declaratory Relief
25
Section 1 of Rule 63 of the Rules of Court, which deals with petitions for declaratory relief, provides in
part:
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
"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."
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."26According 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.
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
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
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.
The failure of a complaint to state a cause of action is a ground for its outright dismissal. 30 However, in
special civil actions for declaratory relief, the concept of a cause of action under ordinary civil actions
does not strictly apply. The reason for this exception is that an action for declaratory relief presupposes
that there has been no actual breach of the instruments involved or of rights arising
thereunder.31 Nevertheless, a breach or violation should be impending, imminent or at least
threatened.
A 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.
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
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.
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
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.
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
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.
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
Obviously, there is no factual allegation that SJS rights are being subjected to any threatened,
imminent and inevitable violation that should be prevented by the declaratory relief sought. The judicial
power and duty of the courts to settle actual controversies involving rights that are legally demandable
and enforceable23 cannot be exercised when there is no actual or threatened violation of a legal right.
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.
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
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
26
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.
To prevent a repetition of this waste of precious judicial time and effort, and for the guidance of the
bench and the bar, the Court reiterates the elementary procedure49 that must be followed by trial courts
in the conduct of civil cases.50
Legal Standing
Prefatorily, the trial court may -- motu proprio or upon motion of the defendant -- dismiss a
complaint51 (or petition, in a special civil action) that does not allege the plaintiffs (or petitioners) cause
or causes of action.52 A complaint or petition should contain "a plain, concise and direct statement of
the ultimate facts on which the party pleading relies for his claim or defense."53 It should likewise
clearly specify the relief sought.54
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
Upon the filing of the complaint/petition and the payment of the requisite legal fees, the clerk of court
shall forthwith issue the corresponding summons to the defendants or the respondents, with a directive
that the defendant answer55 within 15 days, unless a different period is fixed by the court.56 The
summons shall also contain a notice that if such answer is not filed, the plaintiffs/petitioners shall take
a judgment by default and may be granted the relief applied for.57 The court, however, may -- upon
such terms as may be just -- allow an answer to be filed after the time fixed by the Rules.58
Petitioner alleges that "[i]n seeking declaratory relief as to the constitutionality of an act of a religious
leader to endorse, or require the members of the religious flock to vote for a specific candidate, herein
Respondent SJS has no legal interest in the controversy";39 it has failed to establish how the resolution
of the proffered question would benefit or injure it.
Parties bringing suits challenging the constitutionality of a law, an act or a statute must show "not only
that the law [or act] is invalid, but also that [they have] sustained or [are] in immediate or imminent
danger of sustaining some direct injury as a result of its enforcement, and not merely that [they] suffer
thereby in some indefinite way."40 They must demonstrate that they have been, or are about to be,
denied some right or privilege to which they are lawfully entitled, or that they are about to be subjected
to some burdens or penalties by reason of the statute or act complained of.41
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
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.
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
Finally, the allegedly keen interest of its "thousands of members who are citizens-taxpayers-registered
voters" is too general44 and beyond the contemplation of the standards set by our jurisprudence. Not
only is the presumed interest impersonal in character; it is likewise too vague, highly speculative and
uncertain to satisfy the requirement of standing.45
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
Transcendental Importance
In any event, SJS urges the Court to take cognizance of the Petition, even sans legal standing,
considering that "the issues raised are of paramount public interest."
In not a few cases, the Court has liberalized the locus standi requirement when a petition raises an
issue of transcendental significance or paramount importance to the people.46 Recently, after holding
that the IBP had no locus standi to bring the suit, the Court in IBP v. Zamora47 nevertheless entertained
the Petition therein. It noted that "the IBP has advanced constitutional issues which deserve the
attention of this Court in view of their seriousness, novelty and weight as precedents."48
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) nonappearance 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
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 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.
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.
Thereafter, the case shall be set for trial,74 in which the parties shall adduce their respective evidence
in support of their claims and/or defenses. By their written consent or upon the application of either
party, or on its own motion, the court may also order any or all of the issues to be referred to a
commissioner, who is to be appointed by it or to be agreed upon by the parties.75 The trial or hearing
before the commissioner shall proceed in all respects as it would if held before the court.76
Proper Proceedings Before the Trial Court
27
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
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.
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 Substantive Issue:

Fundamental Requirements of a Decision
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.
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
Relief, as contemplated in a legal action, refers to a specific coercive measure prayed for as a result of
a violation of the rights of a plaintiff or a petitioner.80 As already discussed earlier, the Petition before
the trial court had no allegations of fact81 or of any specific violation of the petitioners rights, which the
respondents had a duty to respect. Such deficiency amounted to a failure to state a cause of action;
hence, no coercive relief could be sought and adjudicated. The Petition evidently lacked substantive
requirements and, we repeat, should have been dismissed at the outset.
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."
Second, with respect to the trial court proceedings. Within the period set to file their respective
answers to the SJS Petition, Velarde, Villanueva and Manalo filed Motions to Dismiss; Cardinal Sin, a
Comment; and Soriano, within a priorly granted extended period, an Answer in which he likewise
prayed for the dismissal of the Petition.82 SJS filed a Rejoinder to the Motion of Velarde, who
subsequently filed a Sur-Rejoinder. Supposedly, there were "several scheduled settings, in which the
"[c]ourt was apprised of the respective positions of the parties."83 The nature of such settings -whether pretrial or trial hearings -- was not disclosed in the records. Before ruling on the Motions to
Dismiss, the trial court issued an Order84 dated May 8, 2003, directing the parties to submit their
memoranda. Issued shortly thereafter was another Order85 dated May 14, 2003, denying all the
Motions to Dismiss.
In the same vein, Section 2 of Rule 120 of the Rules of Court on Criminal Procedure reads as follows:
"Sec. 2. Form and contents of judgments. -- The judgment must be written in the official
language, personally and directly prepared by the judge and signed by him and shall contain
clearly and distinctly a statement of the facts proved or admitted by the accused and the law
upon which the judgment is based.
"x x x
xxx
x x x."
Pursuant to the Constitution, this Court also issued on January 28, 1988, Administrative Circular No. 1,
prompting all judges "to make complete findings of facts in their decisions, and scrutinize closely the
legal aspects of the case in the light of the evidence presented. They should avoid the tendency to
generalize and form conclusions without detailing the facts from which such conclusions are deduced."
In 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
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,90discussed at length the implications of this provision and strongly exhorted
thus:
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.
"Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably a
paramount component of due process and fair play. It is likewise demanded by the due process clause
of the Constitution. The parties to a litigation should be informed of how it was decided, with an
explanation of the factual and legal reasons that led to the conclusions of the court. The court cannot
simply say that judgment is rendered in favor of X and against Y and just leave it at that without any
justification whatsoever for its action. The losing party is entitled to know why he lost, so he may
appeal to the higher court, if permitted, should he believe that the decision should be reversed. A
decision that does not clearly and distinctly state the facts and the law on which it is based leaves the
parties in the dark as to how it was reached and is precisely prejudicial to the losing party, who is
unable to pinpoint the possible errors of the court for review by a higher tribunal. More than that, the
requirement is an assurance to the parties that, in reaching judgment, the judge did so through the
processes of legal reasoning. It is, thus, a safeguard against the impetuosity of the judge, preventing
him from deciding ipse dixit. Vouchsafed neither the sword nor the purse by the Constitution but
nonetheless vested with the sovereign prerogative of passing judgment on the life, liberty or property
of his fellowmen, the judge must ultimately depend on the power of reason for sustained public
confidence in the justness of his decision."
Thus, Velarde, Villanueva and Manalo moved for reconsideration. Pending the resolution of these
Motions for Reconsideration, Villanueva filed a Motion to suspend the filing of the parties memoranda.
But instead of separately resolving the pending Motions fairly and squarely, the trial court again
transgressed the Rules of Court when it immediately proceeded to issue its Decision, even before
tackling the issues raised in those Motions.
Furthermore, the RTC issued its "Decision" without allowing the parties to file their answers. For this
reason, there was no joinder of the issues. If only it had allowed the filing of those answers, the trial
court would have known, as the Oral Argument revealed, that the petitioner and his co-respondents
below had not committed or threatened to commit the act attributed to them (endorsing candidates) -the act that was supposedly the factual basis of the suit.
Parenthetically, the court a quo further failed to give a notice of the Petition to the OSG, which was
entitled to be heard upon questions involving the constitutionality or validity of statutes and other
measures.87
In People v. Bugarin,91 the Court also explained:
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.
"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
28
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."
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.
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
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
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.
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
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."
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.
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.
Let us now, again for the guidance of the bench and the bar, discuss the essential parts of a good
decision.
1. Statement of the Case
The 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?
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.
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:
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.
"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."
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.
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.
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.
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
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.
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:
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.
"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 part and the opinion, the former must prevail over the latter on the
theory that the dispositive portion is the final order while the opinion is merely a statement
ordering nothing." (Italics in the original)
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
29
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.
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.
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.
The foregoing parts need not always be discussed in sequence. But they should all be present and
plainly identifiable in the decision. Depending on the writers character, genre and style, the language
should be fresh and free-flowing, not necessarily stereotyped or in a fixed form; much less highfalutin,
hackneyed and pretentious. At all times, however, the decision must be clear, concise, complete and
correct.
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.
Second Substantive Issue:

Religious Leaders Endorsement
of Candidates for Public Office
The basic question posed in the SJS Petition -- WHETHER ENDORSEMENTS OF CANDIDACIES BY
RELIGIOUS LEADERS IS UNCONSTITUTIONAL -- undoubtedly deserves serious consideration. As
stated earlier, the Court deems this constitutional issue to be of paramount interest to the Filipino
citizenry, for it concerns the governance of our country and its people. Thus, despite the obvious
procedural transgressions by both SJS and the trial court, this Court still called for Oral Argument, so
as not to leave any doubt that there might be room to entertain and dispose of the SJS Petition on the
merits.
In appealed civil cases, the opposing sets of facts no longer need to be presented. Issues for
resolution usually involve questions of law, grave abuse of discretion, or want of jurisdiction; hence, the
facts of the case are often undisputed by the parties. With few exceptions, factual issues are not
entertained in non-criminal cases. Consequently, the narration of facts by the lower court, if exhaustive
and clear, may be reproduced; otherwise, the material factual antecedents should be restated in the
words of the reviewing magistrate.
In addition, the reasoning of the lower court or body whose decision is under review should be laid out,
in order that the parties may clearly understand why the lower court ruled in a certain way, and why the
reviewing court either finds no reason to reverse it or concludes otherwise.
3. Issues or Assignment of Errors
Counsel for SJS has utterly failed, however, to convince the Court that there are enough factual and
legal bases to resolve the paramount issue. On the other hand, the Office of the Solicitor General has
sided with petitioner insofar as there are no facts supporting the SJS Petition and the assailed
Decision.
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.
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
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.
Indeed, the assailed Decision was rendered in clear violation of the Constitution, because it made no
findings of facts and final disposition. Hence, it is void and deemed legally inexistent. Consequently,
there is nothing for this Court to review, affirm, reverse or even just modify.
Regrettably, it is not legally possible for the Court to take up, on the merits, the paramount question
involving a constitutional principle. It is a time-honored rule that "the constitutionality of a statute [or
act] will be passed upon only if, and to the extent that, it is directly and necessarily involved in a
justiciable controversy and is essential to the protection of the rights of the parties concerned."100
4. The Courts Ruling
WHEREFORE, the Petition for Review of Brother Mike Velarde is GRANTED. The assailed June 12,
2003 Decision and July 29, 2003 Order of the Regional Trial Court of Manila (Branch 49) are
hereby DECLARED NULL AND VOID and thus SET ASIDE. The SJS Petition for Declaratory Relief
is DISMISSED for failure to state a cause of action.
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.
Let a copy of this Decision be furnished the Office of the Court Administrator to evaluate and
recommend whether the trial judge may, after observing due process, be held administratively liable for
rendering a decision violative of the Constitution, the Rules of Court and relevant circulars of this
Court. No costs.
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.
SO ORDERED.
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
30
G.R. No. 144101 September 16, 2005
to respondents. It also held petitioners liable for moral damages, exemplary damages and attorneys
fees.
ANTONIO P. TAMBUNTING, JR. and COMMERCIAL HOUSE OF FINANCE, INC., Petitioners,

vs.
SPOUSES EMILIO SUMABAT and ESPERANZA BAELLO, Respondent.
Petitioners moved for a reconsideration of the trial courts decision but it was denied. Hence, this
petition.
DECISION
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.
CORONA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court assails the February 11, 2000
decision of the Regional Trial Court (RTC) of Caloocan City, Branch 120, in Civil Case No. C-16822.
True, the trial court erred when it ruled that the 1981 CFI decision in Civil Case No. C-7496 was
already final and executory.
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.
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.
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.
Here, an infraction of the mortgage terms had already taken place before the filing of Civil Case No. C7496. 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
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.
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.
In March 1995, respondents received a notice of sheriffs sale indicating that the mortgage had been
foreclosed by CHFI on February 8, 1995 and that an extrajudicial sale of the property would be held on
March 27, 1995.
On March 27, 1995, respondents instituted Civil Case No. C-16822, a petition for preliminary
injunction, damages and cancellation of annotation of encumbrance with prayer for the issuance of a
temporary restraining order, with the RTC of Caloocan City, Branch 120. However, the public auction
scheduled on that same day proceeded and the property was sold to CHFI as the highest bidder.
Respondents failed to redeem the property during the redemption period. Hence, title to the property
was consolidated in favor of CHFI and a new certificate of title (TCT No. 310191) was issued in its
name. In view of these developments, respondents amended their complaint to an action for
nullification of foreclosure, sheriffs sale and consolidation of title, reconveyance and damages.
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.
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 property
Here, petitioners right of action accrued in May 1977 when respondents defaulted in their obligation to
pay their loan amortizations. It was from that time that the ten-year period to enforce the right under
the mortgage started to run. The period was interrupted when respondents filed Civil Case No. C-6329
sometime after May 1977 and the CFI restrained the intended foreclosure of the property. However,
the period commenced to run again on November 9, 1977 when the case was dismissed.
31
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.
G.R. No. 157866
February 14, 2007
AUGUSTO MANGAHAS and MARILOU VERDEJO, petitioners,

vs.
Hon. JUDGE VICTORIA ISABEL PAREDES, Presiding Judge, Br. 124, Regional Trial Court,
Caloocan City; SHERIFF ERLITO BACHO, Br. 124, Regional Trial Court, Caloocan City; and
AVELINO BANAAG,Respondents.
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.
DECISION
WHEREFORE, the petition is hereby DENIED.
CHICO-NAZARIO, J.:
Costs against petitioners.
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.
SO ORDERED.
The instant controversy arose from a verified complaint for Ejectment filed by private respondent
Avelino Banaag on 31 January 1997 before the Metropolitan Trial Court (MeTC), Branch 49, Caloocan
City, against petitioners. Private respondent alleged that he is the registered owner of the disputed
property identified as Lot 4, Block 21, located in Maligaya Park Subdivision, Caloocan City, as
evidenced by Transfer Certificate of Title (TCT) No. 196025 of the Registry of Deeds of Caloocan City.
Private respondent averred that petitioners constructed houses on the property without his knowledge
and consent and that several demands were made, but the same fell on deaf ears as petitioners
refused to vacate the premises. This prompted private respondent to refer the matter to the Lupon
Tagapayapa for conciliation. The recourse proved futile since the parties were not able to settle
amicably. Private respondent then filed an ejectment suit before the MeTC.
On 23 April 1997, petitioners filed their answer denying having unlawfully deprived private respondent
possession of the contested property. Petitioners claimed that they have resided in the subject lot with
the knowledge and conformity of the true owner thereof, Pinagkamaligan Indo-Agro Development
Corporation (PIADECO), as evidenced by a Certificate of Occupancy signed by PIADECOs president
in their favor.
On 10 July 1997, petitioners filed a Manifestation And Motion To Suspend Proceedings on the ground
that the subject property is part of the Tala Estate and that the RTC of Quezon City, Branch 85, in Civil
Case No. Q-96-29810 issued a Writ of Preliminary Injunction dated 10 November 1997, enjoining the
MeTCs of Quezon City and Caloocan City from ordering the eviction and demolition of all occupants of
the Tala Estate. They posited that the injunction issued by the Quezon City RTC is enforceable in
Caloocan City because both cities are situated within the National Capital Region.
In an order dated 7 August 1997, the MeTC denied said manifestation and motion.1awphi1.net It
ratiocinated that the injunction issued by the Quezon City RTC has binding effect only within the
territorial boundaries of the said court and since Caloocan City is not within the territorial area of same,
the injunction it issued is null and void for lack of jurisdiction.
For failure of the parties to arrive at a compromise agreement during the preliminary conference, they
were required to submit their respective position papers containing their positions on the following
issues: (a) whether or not the torrens title of private respondent is a valid basis of his right to eject
petitioners, (b) whether the MeTC has jurisdiction to hear and decide the case, and (c) whether either
the private respondent or petitioners are entitled to their respective claims for damages.
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
32
decide the case as ejectment suit applies only to instances where possession of the land lasted for a
period of not more than one year. In addition, they claimed that private respondent has not proffered
any evidence that he has prior physical possession over the property. Petitioners reiterated their
posture in the motion to suspend proceedings wherein they urged the MeTC to respect the Writ of
Preliminary Injunction issued by the Quezon City RTC. They also alleged that private respondents
certificate of title originated from a fictitious title.
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 February 2003. On 05 March 2003, Sheriff Erlito Bacho implemented and
enforced the writ of execution.
In a decision dated 5 October 1999, the MeTC ruled for private respondent. It opined that TCT No.
196025 in private respondents name was an indefeasible proof of his ownership of the lot and his
inherent right to possess the same. This title entitled private respondent better right to possess the
subject property over petitioners Certificate of Occupancy executed in their favor by PIADECO. It held
that it has jurisdiction over the controversy since private respondent filed the case within one year from
the time the demand to vacate was given to petitioners. The decretal portion of the decision reads:
Hence, the instant recourse.

At the outset it must be pointed out that petitioners direct recourse to this Court via petition for
Declaratory Relief, Certiorari, Prohibition With Prayer For Provisional Remedy is an utter disregard of
the hierarchy of courts and should have been dismissed outright. This Courts original jurisdiction to
issue writs of certiorari, prohibition, mandamus, quo warranto, habeas corpus and injunction is not
exclusive.4 It is shared by this Court with the Regional Trial Courts and the Court of Appeals. 5 Such
concurrence of jurisdiction does not give the petitioners unbridled freedom of choice of court forum.6 A
direct recourse of the Supreme Courts original jurisdiction to issue these writs should be allowed only
when there are special and important reasons therefor, clearly and specifically set out in the petition.7
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;
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.
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;
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
3) To reimburse to plaintiff the sum of ten thousand (P10,000.00) pesos as and for attorneys
fees; [and]
4) To pay the costs of this suit.2
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.
On 2 December 1999, petitioners appealed to the RTC, which case was docketed as Civil Case No. C19097. In a Decision dated 16 November 2000, the trial court affirmed in toto the MeTC decision. It
ruled that the MeTC was correct in denying petitioners motion to suspend proceedings anchored on
the Writ of Preliminary Injunction issued by the Quezon City RTC reasoning that the writ of the latter
court is limited only to its territorial area, thus, the same has no binding effect on the MeTC of
Caloocan City. It sustained the MeTCs ruling that the latter court has jurisdiction over the case as the
same has been filed within the reglementary period from the date of demand to vacate. Furthermore,
the RTC stated that the validity of private respondents title cannot be assailed collaterally in the instant
case.
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:
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.
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.
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.
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).
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.
Sec. 18 of B.P. 129 states:
33
"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"
G.R. No. 184203
November 26, 2014
CITY OF LAPU-LAPU, Petitioner,

vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
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
x-----------------------x
G.R. No. 187583
PROVINCE OF BATAAN, represented by GOVERNOR ENRIQUE T. GARCIA, JR., and
EMERLINDA S. TALENTO, in her capacity as Provincial Treasurer of Bataan, Petitioners,
vs.
PHILIPPINE ECONOMIC ZONE AUTHORITY, Respondent.
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
DECISION
LEONEN, J.:
The Philippine Economic Zone Authority is exempt from payment of real property taxes.
These are consolidated1 petitions for review on certiorari the City of Lapu-Lapu and the Province of
Bataan separately filed against the Philippine Economic Zone Authority (PEZA).
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 :
In G.R. No. 184203, the City of Lapu-Lapu (the City) assails the Court of Appeals decision 2 dated
January 11, 2008 and resolution3 dated August 6, 2008, dismissing the Citys appeal for being the
wrong mode of appeal. The City appealed the Regional Trial Court,Branch 111, Pasay Citys decision
finding the PEZA exempt from payment of real property taxes.
In G.R. No. 187583, the Province of Bataan (the Province) assails the Court of Appeals
decision4 dated August 27, 2008 and resolution5 dated April 16, 2009, granting the PEZAs petition for
certiorari. The Court of Appeals ruled that the Regional Trial Court, Branch 115, Pasay City gravely
abused its discretion in finding the PEZA liable for real property taxes to the Province of Bataan.
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.
Facts common to the consolidated petitions

In the exercise of his legislative powers,6 President Ferdinand E. Marcos issued Presidential Decree
No. 66 in 1972, declaring as government policy the establishment of export processing zones in
strategic locations in the Philippines. Presidential Decree No. 66 aimed "to encourage and promote
foreign commerce as a means of making the Philippines a center of international trade, of
strengthening our export trade and foreign exchange position, of hastening industrialization,of reducing
domestic unemployment, and of accelerating the development of the country."7
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.
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 character10 with all its revenues devoted to its
development, improvement, and maintenance.11 To maintain this non-profit character, the EPZA was
declared exempt from all taxes that may be due to the Republic of the Philippines, its provinces, cities,
municipalities, and other government agencies and instrumentalities.12 Specifically, Section 21 of
Presidential Decree No. 66 declared the EPZA exempt from payment of real property taxes:
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. C19097 is AFFIRMED. Costs against petitioners.
Section 21. Non-profit Character of the Authority; Exemption from Taxes. The Authority shall be nonprofit 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:
SO ORDERED.
....
(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
agenciesand instrumentalities[.]
34
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-Lapuin Mactan, Cebu
were reserved to serve as site of the Mactan Export Processing Zone.
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.
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
Based on Section 51, the trial court held that all privileges, benefits, advantages, or exemptions
granted tospecial economic zones created under the Bases Conversion and Development Act of 1992
apply to special economic zones created under the Special Economic ZoneAct 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.
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
According to the trial court, the PEZA remained tax-exempt regardless of Section 24 of the Special
Economic Zone Act of 1995. It ruled that Section 24, which taxes real property owned by developers of
economic zones, only applies to private developers of economic zones, not to public developers like
the PEZA. The PEZA, therefore, is not liable for real property taxes on the land it owns.
On October 30, 1995, President Fidel V. Ramos issued Executive Order No. 282, directing the PEZA to
assume and exercise all of the EPZAs powers, functions, and responsibilities "as provided in
Presidential Decree No. 66, as amended, insofar as they are not inconsistent with the powers,
functions, and responsibilities of the PEZA, as mandated under [the Special Economic Zone Act of
1995]."19 All of EPZAs properties, equipment, and assets, among others, were ordered transferred to
the PEZA.20
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.
Facts of G.R. No. 184203
In the resolution32 dated June 14, 2006, the trial court granted the PEZAs petition for declaratory relief
and declared it exempt from payment of real property taxes.
21
In the letter dated March 25, 1998, the City of Lapu-Lapu, through the Office of the Treasurer,
demanded from the PEZA 32,912,350.08 in real property taxes for the period from 1992 to 1998 on the
PEZAs properties located in the Mactan Economic Zone.
The City filed a motion for reconsideration,33 which the trial court denied in its resolution34 dated
September 26, 2006.
The City reiterated its demand in the letter22 dated May 21, 1998. It cited Sections 193 and 234 of the
Local Government Code of 1991 that withdrew the real property tax exemptions previously granted to
or presently enjoyed by all persons. The City pointed out that no provision in the Special Economic
Zone Act of 1995 specifically exempted the PEZA from payment of real property taxes, unlike Section
21 of Presidential Decree No. 66 that explicitly provided for EPZAs exemption. Since no legal
provision explicitly exempted the PEZA from payment of real property taxes, the City argued that it can
tax the PEZA.
The City then appealed35 to the Court of Appeals.

The Court of Appeals noted the following issues the City raised in its appellants brief: (1) whether the
trial court had jurisdiction over the PEZAs petition for declaratory relief; (2) whether the PEZA is a
government agency performing governmental functions; and (3) whether the PEZA is exempt from
payment of real property taxes.
The issues presented by the City, according to the Court of Appeals, are pure questions of law which
should have been raised in a petition for review on certiorari directly filed before this court. Since the
City availed itself of the wrong mode of appeal, the Court of Appeals dismissed the Citys appeal in the
decision36 dated January 11, 2008.
The City 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 PEZAfiled a petition for declaratory Relief 25 with the Regional Trial Court
of Pasay City, praying that the trial court declare it exempt from payment ofreal property taxes. The
case was raffled to Branch 111.
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.
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.
Despite the denial of its motion for extension, the City filed a motion for reconsideration.39 In the
resolution40 dated August 6, 2008, the Court of Appeals denied that motion.
In its petition for review on certiorari with this court,41 the City argues that the Court of Appeals "hid
under the skirts of technical rules"42 in resolving its appeal. The City maintains that its appeal involved
mixed questions of fact and law. According to the City, whether the PEZA performed governmental
functions "cannot completely be addressed by law but [by] the factual and actual activities [the PEZA
is] carrying out."43
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
comment31 on the PEZAs petition for declaratory relief. It agreed that the PEZA is exempt from
payment of real property taxes, citing Sections 24 and 51 of the Special Economic Zone Act of 1995.
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 ofour nations future."44 The Court of Appeals, the City
argues, should have resolved the case on the merits.
The trial court agreed with the Solicitor General. Section 24 of the Special Economic Zone Act of 1995
provides:
The City insists that the trial court had no jurisdiction to hear the PEZAs petition for declaratory relief.
According to the City, the case involves real property located in the City of Lapu-Lapu. The petition for
declaratory relief should have been filed before the Regional Trial Court of the City of Lapu-Lapu.45
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:
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
a. Three percent (3%) to the National Government;

b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.
This court ordered the PEZA to comment on the Citys petition for review on certiorari. 47
Section 51 of the law, on the other hand, provides:
35
In its order71 dated June 18, 2004, the trial court issued a temporary restraining order against the
Province. After the PEZA had filed a P100,000.00 bond,72 the trial court issued a writ of preliminary
injunction,73 enjoining the Province from selling the PEZAs real properties at public auction.
At the outset of its comment, the PEZA argues that the Court of Appeals decision dated January 11,
2008 had become final and executory. After the Court of Appeals had denied the Citys appeal, the City
filed a motion for extension of time to file a motion for reconsideration. Arguing that the time to file a
motion for reconsideration is not extendible, the PEZA filed its motion for reconsideration out of time.
The Cityhas no more right to appeal to this court.48
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
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 Citys appeal under Rule 50,
Section 2 of the Rules of Court.49
In the order75 dated January 31, 2007, the trial court denied the PEZAs petition for injunction. The trial
court ruled that the PEZA is not exempt from payment of real property taxes. According to the trial
court, Sections 193 and 234 of the Local Government Code had withdrawn the real property tax
exemptions previously granted to all persons, whether natural or juridical. 76 As to the tax exemptions
under Section 51 of the Special Economic Zone Act of 1995, the trial court ruled that the provision only
applies to businesses operating within the economic zones, not to the PEZA. 77
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
The PEZA filed before the Court of Appeals a petition for certiorari78 with prayer for issuance of a
temporary restraining order.
Considering that the site of the Mactan Economic Zoneis 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
The Court of Appeals issued a temporary restraining order, enjoining the Province and its Provincial
Treasurer from selling PEZA's properties at public auction scheduled on October 17, 2007.79 It also
ordered the Province to comment on the PEZAs petition.
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
In its comment,80 the Province alleged that it received a copy of the temporary restraining order only on
October 18, 2007 when it had already sold the PEZAs properties at public auction. Arguing that the act
sought to be enjoined was already fait accompli, the Province prayed for the dismissal of the petition
for certiorari.
The PEZA then filed a supplemental petition for certiorari, prohibition, and mandamus81 against the
Province, arguing that the Provincial Treasurer of Bataan acted with grave abuse of discretion in
issuing the notice of delinquency and notice of sale. It maintained that it is exempt from payment of
real property taxes because it is a government instrumentality. It added that its lands are property of
public dominion which cannot be sold at public auction.
Facts of G.R. No. 187583

After the City of Lapu-Lapu had demanded payment of real property taxes from the PEZA, the
Province of Bataan followed suit. In its letter55 dated May 29, 2003, the Province, through the Office of
the Provincial Treasurer, informed the PEZA that it would be sending a real property tax billing to the
PEZA. Arguing that the PEZA is a developer of economic zones, the Province claimed that the PEZA is
liable for real property taxes under Section 24 of the Special Economic Zone Act of 1995.
The PEZA also filed a motion82 for issuance of an order affirming the temporary restraining order and a
writ of preliminary injunction to enjoin the Province from consolidating title over the PEZAs properties.
In its reply letter56 dated June 18, 2003, the PEZA requested the Province to suspend the service of the
real property tax billing. It cited its petition for declaratory relief against the City of Lapu-Lapu pending
before the Regional Trial Court, Branch 111, Pasay City as basis.
In its resolution83 dated January 16, 2008,the Court of Appeals admitted the supplemental petition for
certiorari, prohibition, and mandamus. It required the Province to comment on the supplemental
petition and to file a memorandum on the PEZAs prayer for issuance of temporary restraining order.
The Province argued that serving a real property tax billing on the PEZA "would not in any way affect
[its] petition for declaratory relief before [the Regional Trial Court] of Pasay City."57 Thus, in its
letter58 dated June 27, 2003, the Province notified the PEZAof its real property tax liabilities for June 1,
1995 to December 31, 2002 totalling P110,549,032.55.
The Province commented84 on the PEZAs supplemental petition, to which the PEZA replied.85
The Province then filed a motion86 for leave to admit attached rejoinder with motion to dismiss. In the
rejoinder with motion to dismiss,87 the Province argued for the first time that the Court of Appeals had
no jurisdiction over the subject matter of the action.
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 Cityresolves its petition for
declaratory relief.59
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 Province ignored the PEZAs request. On January 20, 2004, the Province served on the PEZA a
statement of unpaid real property tax for the period from June 1995 to December 2004.60
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 servedon the PEZA a warrant
of levy63 covering the PEZAs real properties located in Mariveles, Bataan.
The Court of Appeals held that the issue before it was whether the trial court judge gravely abused his
discretion in dismissing the PEZAs petition for prohibition. This issue, according to the Court of
Appeals, is properly addressed in a petition for certiorari over which it has jurisdiction to resolve. It,
therefore, maintained jurisdiction to resolve the PEZAs petition for certiorari.88
The PEZAs subsequent requests64 for suspension of collection were all denied by the Province.65 The
Province then served on the PEZA a notice of delinquency in the payment of real property taxes66 and
a notice of sale of real property for unpaid real property tax.67 The Province finally sent the PEZA a
notice of public auction of the latters properties in Mariveles, Bataan. 68
Although it admitted that appeal, not certiorari, was the PEZAs proper remedy to reverse the trial
courts decision,89the Court of Appeals proceeded to decide the petition for certiorari in "the broader
interest of justice."90
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 ofreal property taxes. It added that the notice of sale issued by
the Province was void because it was not published in a newspaper ofgeneral circulation asrequired by
Section 260 of the Local Government Code.70
The Court of Appeals ruled that the trial court judge gravely abused his discretion in dismissing the
PEZAs petition for prohibition. It held that Section 21 of Presidential Decree No. 66 and Section 51 of
the Special Economic Zone Act of 1995 granted the PEZA exemption from payment of real property
taxes.91 Based on the criteria set in Manila International Airport Authority v. Court of Appeals, 92 the
Court of Appeals found that the PEZA is an instrumentality of the national government. No taxes,
therefore, could be levied on it by local government units.93
The case was raffled to Branch 115.
36
In the decision94 dated August 27, 2008, the Court of Appeals granted the PEZAs petition for certiorari.
It set aside the trial courts decision and nullified all the Provinces proceedings with respect to the
collection of real property taxes from the PEZA.
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
The Province filed a motion for reconsideration,95 which the Court of Appeals denied in the
resolution96 dated April 16, 2009 for lack of merit.
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:
In its petition for review on certiorari with this court,97 the Province of Bataan insists that the Court of
Appeals had no jurisdiction to take cognizance of the PEZAs petition for certiorari. The Province
maintains that the Court of Tax Appeals had jurisdiction to hear the PEZAs petition since it involved a
local tax case decided by a Regional Trial Court.98
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.
The Province reiterates that the PEZA is not exempt from payment of real property taxes. The Province
points out that the EPZA, the PEZAs predecessor, had to be categorically exempted from payment of
real property taxes. The EPZA, therefore, was not inherently exempt from payment of real property
taxes and so is the PEZA. Since Congress omitted from the Special Economic Zone Act of 1995 a
provision specifically exempting the PEZA from payment of real property taxes, the Province argues
that the PEZA is a taxable entity. It cited the rule in statutory construction that provisions omitted in
revised statutes are deemed repealed.99
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:
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.
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.
This court ordered the PEZA tocomment on the Provinces 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 thatit 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.
With respect to appeals by certiorari directly filed before this court but which raise questions of fact,
paragraph 4(b) of Circular No. 2-90 dated March 9, 1990 states that this court "retains the option, in
the exercise of its sound discretion and considering the attendant circumstances, either itself to take
cognizance of and decide such issues or to refer them to the Court of Appeals for determination." In
Indoyon, Jr. v. Court of Appeals,111 we said that this court "cannot tolerate ignorance of the law on
appeals."112 It is not this courts task to determine for litigants their proper remedies under the Rules.113
The Province filed its reply,103 reiterating its arguments in its petition for review on certiorari. On the
PEZAs motion,104 this court consolidated the petitions filed by the City of Lapu-Lapu and the Province
of Bataan.105
We agree that the City availed itself of the wrong mode of appeal before the Court of Appeals. The City
raised pure questions of law in its appeal. The issue of whether the Regional Trial Court of Pasay had
jurisdiction over the PEZAs petition for declaratory relief is a question of law, jurisdiction being a matter
of law.114 The issue of whether the PEZA is a government instrumentality exempt from payment of real
property taxes is likewise a question of law since this question is resolved by examining the provisions
of the PEZAs charter as well as other laws relating to the PEZA.115
The issues for our resolution are the following:

I. Whether the Court of Appeals erred in dismissing the City of Lapu-Lapus appeal for
raising pure questions of law;
The Court of Appeals, therefore, did not err in dismissing the Citys appeal pursuant to Rule 50,
Section 2 of the Rules of Court.
II. Whether the Regional Trial Court, Branch 111, Pasay City had jurisdiction to hear, try, and
decide the City of Lapu-Lapus petition for declaratory relief;
Nevertheless, considering the important questions involved in this case, we take cognizance of the
Citys petition for review on certiorari in the interest of justice.
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
In Municipality of Pateros v. The Honorable Court of Appeals,116 the Municipality of Pateros filed an
appeal under Rule 42 before the Court of Appeals, which the Court of Appeals denied outright for
raising pure questions of law. This court agreed that the Municipality of Pateros "committed a
procedural 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 finisto [the] controversy,"118 this court
"opt[ed] to relax the rules"119 and proceeded to decide the case. This court said:
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-Lapus
appeal for raising pure questions of law
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.
Under the Rules of Court, there are three modes of appeal from Regional Trial Court decisions. The
first mode is through an ordinary appeal before the Court of Appeals where the decision assailed was
rendered in the exercise of the Regional Trial Courts original jurisdiction. Ordinary appeals are
governed by Rule 41, Sections 3 to 13 of the Rules of Court. In ordinary appeals, questions of fact or
mixed questions of fact and law may be raised.106
The Court has allowed some meritorious cases to proceed despite inherent procedural defects and
lapses. Thisis 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 ofrules 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
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
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
The third mode is through an appealby certiorari before this court under Rule 45 where only questions
of law shall be raised.108
37
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.
statutes or right, and that it is sufficient tobar 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
II.
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 theoreticalor hypothetical questions
cannot be filed for our courts are not advisory courts.136
The Regional Trial Court of Pasay had no

jurisdiction to hear, try, and decide the
PEZAs petition for declaratory relief
against the City of Lapu-Lapu
Rule 63 of the Rules of Court governs actions for declaratory relief. Section 1 of Rule 63 provides:
In Republic v. Roque,137 this court dismissed respondents petition for declaratory relief for lack of
justiciable controversy. According to this court, "[the respondents] fear of prospective prosecution
[under the Human Security Act] was solely based on remarks of certain government officials which
were addressed to the general public."138
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.
In Velarde v. Social Justice Society,139 this court refused to resolve the issue of "whether or not [a
religious leaders endorsement] of a candidate for elective office or in urging or requiring the members
of his flock to vote for a specific candidate is violative [of the separation clause]." 140 According to the
court, there was no justiciable controversy and ordered the dismissal of the Social Justice Societys
petition for declaratory relief. This court explained: Indeed, SJS merely speculated or anticipated
without factual moorings that, as religious leaders, the petitioner and his co-respondents below had
endorsed or threatened to endorse a candidate or candidates for elective offices; and that such actual
or threatened endorsement "will enable [them] to elect men to public office who [would] in turn be
forever beholden to their leaders, enabling them to control the government"[;] and "pos[ing] a clear and
present danger ofserious erosion of the peoples faith in the electoral process[;] and reinforc[ing] their
belief that religious leaders determine the ultimate result of elections," which would then be violative of
the separation clause.
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[.]
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.
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, orany 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 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
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:
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 ones trade,"129
Ollada filed a petition for declaratory relief against the Central Bank.
[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)
This court ordered the dismissal of Olladas petition "without prejudice to [his] seeking relief in another
appropriate action."130 According to this court, Olladas right had already been violated when the
Central Bank refused to accept the financial statements he prepared. Since there was already a
breach, a petition for declaratory relief was not proper. Ollada must pursue the "appropriate ordinary
civil action or proceeding."131 This court explained:
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 lightof 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,
We rule that the PEZA erred in availing itself of a petition for declaratory relief against the City. The City
had already issued demand letters and real property tax assessment against the PEZA, in violation of
the PEZAs alleged tax-exempt status under its charter. The Special Economic Zone Act of 1995, the
subject matter of PEZAs petition for declaratory relief, had already been breached. The trial court,
therefore, had no jurisdiction over the petition for declaratory relief. There are several aspects of
jurisdiction.143 Jurisdiction over the subject matter is "the power to hear and determine cases of the
general class to which the proceedings in question belong."144 It is conferred by law, which may either
be the Constitution or a statute.145 Jurisdiction over the subject matter means "the nature of the cause
of action and the relief sought."146 Thus, the cause of action and character of the relief sought as
38
alleged in the complaint are examinedto determine whether a court had jurisdiction over the subject
matter.147 Any decision rendered by a court without jurisdiction over the subjectmatter of the action is
void.148
(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.
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."149A court automatically acquires jurisdiction over the person of the plaintiff upon
the filing of the initiatory pleading.150With respect to the defendant, voluntary appearance in court or a
valid service of summons vests the court with jurisdiction over the defendants person.151 Jurisdiction
over the person of the defendant is indispensable in actions in personamor those actions based on a
partys personal liability.152 The proceedings in an action in personamare void if the court had no
jurisdiction over the person of the defendant.153
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.
Jurisdiction over the resor 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 asa 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 remor 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
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 Boards decision:
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
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 ofits
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.
. . . 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.
(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 factusing 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)
Where the law or contract has already been contravened prior to the filing of an action for declaratory
relief, the courts can no longer assume jurisdiction over the action. In other words, a court has no more
jurisdiction over an action for declaratory relief if its subject has already been infringed or transgressed
before the institution of the action.158 (Emphasis supplied)
The trial court should have dismissed the PEZAs petition for declaratory relief for lack of jurisdiction.
Once an assessment has already been issued by the assessor, the proper remedy of a taxpayer
depends on whether the assessment was erroneous or illegal.
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.
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.
In Ty v. Trampe,163 the Municipal Assessor of Pasig sent Alejandro B. Ty a notice of assessment with
respect to Tys real properties in Pasig. Without resorting to the administrative remedies under the
Local Government Code, Ty filed before the Regional Trial Court a petition, praying that the trial court
nullify the notice of assessment. In assessing the real property taxes due, the Municipal Assessor used
a schedule of market values solely prepared by him. This, Ty argued, was void for being contrary to the
Local Government Code requiring that the schedule of market values be jointly prepared by the
provincial, city, and municipal assessors of the municipalities within the Metropolitan Manila Area.
The taxpayer must first pay the realproperty 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
paysthe 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.
This court ruled that the assessmentwas 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 valuesmust be jointly prepared by the provincial, city,
and municipal assessors of the municipalities within the Metropolitan Manila Area.
As to the issue of exhaustion of administrative remedies, this court held that Ty did not err in directly
resorting to judicial action. According to this court, payment under protest is required only "where there
is a question as to the reasonableness of the amount assessed."164 As to appeals before the Local and
Central Board of Assessment Appeals, they are "fruitful only where questions of fact are involved."165
(b) The tax or a portion thereof paidunder protest, shall be held in trust by the treasurer
concerned.
(c) In the event that the protest is finally decided in favor of the taxpayer, the amount or
portion of the tax protested shall be refunded to the protestant, or applied as tax credit
against his existing or future tax liability.
Ty raised the issue of the legality of the notice of assessment, an issue that did not go into the
reasonableness of the amount assessed. Neither did the issue involve a question of fact. Ty raised a
39
question of law and, therefore, need not resort to the administrative remedies provided under the Local
Government Code.
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.
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.
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,"188was 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
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 taxes from the PEZA. After all, a
declaratory judgment as to the PEZAs tax-exempt status is useless unless the City isenjoined from
enforcing its demand.
In the common law, from which the remedy of certiorari evolved, the writ of certiorari was issued out of
Chancery, or the Kings Bench, commanding agents or officers of the inferior courts to return the
record of a cause pending before them, so as to give the party more sure and speedy justice, for the
writ would enable the superior court to determine froman inspection of the record whether the inferior
courts judgment was rendered without authority. The errors were of such a nature that, if allowed to
stand, they would result in a substantial injury to the petitioner to whom no other remedy was available.
If the inferior court acted without authority, the record was then revised and corrected in matters of law.
The writ of certiorari was limited to cases in which the inferior court was said to be exceeding its
jurisdiction or was not proceeding according to essential requirements of law and would lie only to
review judicial or quasi-judicial acts.190
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
esseor 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.
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 reviewon certiorari under Rule 45 of the Rules of
Court. An appeal by certiorari, which continues the proceedings commenced before the lower
courts,191 is filed to reverse or modify judgments or final orders.192 Under the Rules, an appeal by
certiorarimust be filed within 15 days from notice of the judgment or final order, or of the denial of the
appellants motion for new trial or reconsideration.193
On the one hand, jurisdiction is "the power to hear and determine cases of the general class to which
the proceedings in question belong."170 Jurisdiction is a matter of substantive law.171 Thus, an action
may be filed only with the court or tribunal where the Constitution or a statute says it can be
brought.172 Objections to jurisdiction cannot be waived and may be brought at any stage of the
proceedings, even on appeal.173 When a case is filed with a court which has no jurisdiction over the
action, the court shall motu propriodismiss the case.174
A petition for certiorari under Rule 65, on the other hand, is an independent and original action filed to
set aside proceedings conducted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction.194 Under the Rules, a petition for certiorari may only be filed
if there is no appeal or any plain, speedy, or adequate remedy in the ordinary course of law.195 The
petition must be filed within 60 days from notice of the judgment, order, or resolution. 196
On the other hand, venue is "the place of trial or geographical location in which an action or
proceeding should be brought." 175 In civil cases, venue is a matter of procedural law.176 A partys
objections to venue must be brought at the earliest opportunity either in a motion to dismiss or in the
answer; otherwise the objection shall be deemed waived.177 When the venue of a civil action is
improperly laid, the court cannot motu propriodismiss the case.178
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. Appealis 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.
The venue of an action depends on whether the action is a real or personal action. Should the action
affect title to or possession of real property, or interest therein, it is a real action. The action should be
filed in the proper court which has jurisdiction over the area wherein the real property involved, or a
portion thereof, is situated.179 If the action is a personal action, the action shall be filed with the proper
court where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a non-resident defendant where he may be found, at the
election of the plaintiff.180
In this case, the trial courts decision dated January 31, 2007 is a judgment on the merits. Based on
the facts disclosed by the parties, the trial court declared the PEZA liable to the Province of Bataan for
real property taxes. The PEZAs proper remedy against the trial courts decision, therefore, is appeal.
Since the PEZA filed a petition for certiorari against the trial courts decision, it availed itself of the
wrong remedy. As the Province of Bataan contended, the trial courts decision dated January 31, 2007
"is only an error of judgment appealable to the higher level court and may not be corrected by filing a
petition for certiorari."198 That the trial court judge allegedly committed grave abuse of discretion does
not make the petition for certiorari the correct remedy. The PEZA should haveraised this ground in an
appeal filed within 15 days from notice of the assailed resolution.
The City was objecting to the venue of the action, not to the jurisdiction of the Regional Trial Court of
Pasay. In essence, the City was contending that the PEZAs petition is a real action as it affects title to
or possession of real property, and, therefore, the PEZA should have filed the petition with the
Regional Trial Court of Lapu-Lapu City where the real properties are located. However, whatever
objections the City has against the venue of the PEZAs action for declaratory relief are already
deemed waived. Objections to venue must be raised at the earliest possible opportunity.181 The City did
not file a motion to dismiss the petition on the ground that the venue was improperly laid. Neither did
the City raise this objection in its answer.
This court, "in the liberal spirit pervading the Rules of Court and in the interest of substantial
justice,"199 has treated petitions for certiorari as an appeal: "(1) if the petition for certiorari was filed
within the reglementary period within which to file a petition for review on certiorari; (2) when errors of
judgment are averred; and (3) when there is sufficient reason to justify the relaxation of the
rules."200 Considering that "the nature of an action is determined by the allegationsof 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.
In any event, the law sought to be judicially interpreted in this case had already been breached. The
Regional Trial Court of Pasay, therefore, had no jurisdiction over the PEZAs petition for declaratory
relief against the City.
III.
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 Court of Appeals had no jurisdiction

over the PEZAs petition for certiorari
against the Province of Bataan
Appeal is the remedy "to obtain a reversal or modification of a judgment on the merits." 182 A judgment
on the merits is one which "determines the rights and liabilities of the parties based on the disclosed
facts, irrespective of the formal, technical or dilatory objections."183 It is not even necessary that the
The PEZAs petition for certiorari may be treated as an appeal. First, the petition for certiorari was filed
withinthe 15-day reglementary period for filing an appeal. The PEZA filed its petition for certiorari
40
before the Court of Appeals on October 15, 2007,205 which was 12 days from October 3, 2007206 when
the PEZA had notice of the trial courts order denying the motion for reconsideration.
....
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.
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 PEZAs 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, paragraph (a)(3) of Republic Act No. 1125, as amended by Republic
Act No. 9282, provides:
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
withit 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 decisionsof the RTC, in order to have complete supervision over the acts of the
latter.217 (Citations omitted)
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
....
3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally
decided or resolved by them in the exercise of their original or appellate jurisdiction[.]
The local tax cases referred to in Section 7, paragraph (a)(3) of Republic Act No. 1125, as amended,
include cases involving real property taxes. Real property taxation is governed by Book II of the Local
Government Code on "Local Taxation and Fiscal Matters." Real property taxes are collected by the
Local Treasurer,208 not by the Bureau of Internal Revenue in charge of collecting national internal
revenue taxes, fees, and charges.209
In this case, the petition for injunction filed before the Regional Trial Court of Pasay was a local tax
case originally decided by the trial court in its original jurisdiction. Since the PEZA assailed a judgment,
not an interlocutory order, of the Regional Trial Court, the PEZAs proper remedy was an appeal to the
Court of Tax Appeals.
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:
Considering that the appellate jurisdiction of the Court of Tax Appeals is to the exclusion of all other
courts, the Court of Appeals had no jurisdiction to take cognizance of the PEZAs petition. The Court of
Appeals acted without jurisdiction in rendering the decision in CA-G.R. SP No. 100984. Its decision in
CA-G.R. SP No. 100984 is void.218
Sec. 7. Jurisdiction. The [Court of Tax Appeals] shall exercise:

a. Exclusive appellate jurisdiction to review by appeal, as herein provided:
The filing of appeal in the wrong court does not toll the period to appeal. Consequently, the decision of
the Regional Trial Court, Branch 115, Pasay City, became final and executory after the lapse of the
15th day from the PEZAs receipt of the trial courts decision.219 The denial of the petition for injunction
became final and executory.
....
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[.]
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
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 localgovernment 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
The proper remedy of a taxpayer depends on the stage in which the local government unit is enforcing
its authority to collect real property taxes. For the guidance of the members of the bench and the bar,
we reiterate the taxpayers remedies against the erroneous or illegal assessment of real property
taxes.
We have also ruled that the Court of Tax Appeals, not the Court of Appeals, has the exclusive original
jurisdiction over petitions for certiorari assailing interlocutory orders issued by Regional Trial Courts in
a local tax case. We explained in The City of Manila v. Hon. Grecia-Cuerdo 213 that while the Court of
Tax Appeals has no express grant of power to issue writs of certiorari under Republic Act No.
1125,214 as amended, the tax courts judicial power as defined in the Constitution215 includes the power
to determine "whether or not there has been grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the [Regional Trial Court] in issuing an interlocutory order of jurisdiction in
cases falling within the exclusive appellate jurisdiction of the tax court."216 We further elaborated:
Exhaustion of administrative remedies under the Local Government Code is necessary in cases of
erroneous assessments where the correctness of the amount assessed is assailed. The taxpayer must
first pay the tax then file a protest with the Local Treasurer within 30 days from date of payment of
tax.220 If protest is denied or upon the lapse of the 60-day period to decide the protest, the taxpayer
may appeal to the Local Board of Assessment Appeals within 60 days from the denial of the protest or
the lapse of the 60-day period to decide the protest.221 The Local Board of Assessment Appeals has
120 days to decide the appeal.222
Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the
authority to issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed
tax cases to the CTA, it can reasonably be assumed that the law intended to transfer also such power
as is deemed necessary, if not indispensable, in aid of such appellate jurisdiction. There is no
perceivable reason why the transfer should only be considered as partial, not total.
If the taxpayer is unsatisfied withthe Local Boards decision, the taxpayer may appeal before the
Central Board of Assessment Appeals within 30 days from receipt of the Local Boards decision.223
41
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
(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;
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
(d) All real property owned by duly registered cooperatives as provided under R.A. No. 6938;
and
In case of an illegal assessment where the assessment was issued without authority, exhaustion of
administrative remedies is not necessary and the taxpayer may directly resort to judicial action. 227 The
taxpayer shall file a complaint for injunction before the Regional Trial Court 228 to enjoin the local
government unit from collecting real property taxes.
(e) Machinery and equipment usedfor 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 party unsatisfied with the decision of the Regional Trial Court shall file an appeal, not a petition for
certiorari, before the Court of Tax Appeals, the complaint being a local tax case decided by the
Regional Trial Court.229 The appeal shall be filed within fifteen (15) days from notice of the trial courts
decision.
The 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 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
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:
In case the local government unit has issued a notice of delinquency, the taxpayer may file a complaint
for injunction to enjoin the impending sale of the real property at public auction. In case the local
government unit has already sold the property at public auction, the taxpayer must first deposit with the
court the amount for which the real property was sold, together with interest of 2% per month from the
date ofsale to the time of the institution of action. The taxpayer may then file a complaint to assail the
validity of the public auction.231 The decisions of the Regional Trial Court in these cases shall be
appealable before the Court of Tax Appeals,232 and the latters decisions appealable before this court
through a petition for review on certiorari under Rule 45 of the Rules of Court. 233
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:
V.
The PEZA is exempt from payment of
real property taxes
SEC. 234. Exemptions from Real Property Tax. The following are exempted from payment of real
property tax:
The jurisdictional errors in this case render these consolidated petitions moot. We do not review void
decisions rendered without jurisdiction.
(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;
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 respective actions against each other.
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques,

nonprofitor religious cemeteries and all lands, buildings, and improvements actually, directly,
and exclusively used for religious, charitable or educational purposes;
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.
(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;
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
(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.
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:
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)
property tax:
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:
(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;
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.
(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;
42
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 asthey may deem
necessary:
attachment is merely for "policy and program coordination." With respect to administrative matters, the
independence of an attached agency from Departmental control and supervision is further reinforced
by the fact that even an agency under a Departments administrative supervision is free from
Departmental interference with respect to appointments and other personnel actions "in accordance
with the decentralization of personnel functions" under the Administrative Code of 1987. Moreover, the
Administrative Code explicitly provides that Chapter 8 of Book IV on supervision and control shall not
apply to chartered institutions attached to a Department.253
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 profitor
religious cemeteries.242
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 PEZAs annual budget.257 Appointments and other personnel actions in
the PEZA are also free from departmental interference, with the PEZA Board having the exclusive and
final authority to promote, transfer, assign and reassign officers of the PEZA.258
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
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:
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 State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments." (Sec. 20, Art. II)
(A) The PEZA is an instrumentality of the national government

An instrumentality is "any agency of the National Government, not integrated within the department
framework, vested with special functions or jurisdiction by law, endowed with some if not all corporate
powers, administering special funds, and enjoying operational autonomy, usually through a charter."245
(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
Examples of instrumentalities of the national government are the Manila International Airport
Authority,246 the Philippine Fisheries Development Authority,247 the Government Service Insurance
System,248 and the Philippine Reclamation Authority.249 These entities are not integrated within the
department framework but are nevertheless vested with special functions to carry out a declared policy
of the national government.
Similarly, the PEZA is an instrumentality of the national government. It is not integrated within the
department framework but is an agency attached to the Department of Trade and Industry.250 Book IV,
Chapter 7, Section 38(3)(a) of the Administrative Code of 1987 defines "attachment": 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:
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 governmentowned 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":
....
(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[.]
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 nonstock 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.
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
43
Government entities are created by law, specifically, by the Constitution or by statute. In the case of
government-owned or controlled corporations, they are incorporated by virtue of special charters263 to
participate in the market for special reasons which may be related to dysfunctions or inefficiencies of
the market structure. This is to adjust reality as against the concept of full competition where all market
players are price takers. Thus, under the Constitution, government-owned or controlled corporations
are created in the interest of the common good and should satisfy the test of economic
viability.264 Article XII, Section 16 of the Constitution provides:
rendering such essential public service does not excuse the State from withholding such essential
services from the public.269 (Emphases and citations omitted)
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.
Under its charter, the PEZA was created a body corporate endowed with some corporate powers.
However, it was not organized as a stock270 or non-stock271 corporation. Nothing in the PEZAs charter
provides that the PEZAs capital is divided into shares.272 The PEZA also has no members who shall
share in the PEZAs profits.
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
The PEZA does not compete with other economic zone authorities in the country. The government may
even subsidize the PEZAs operations. Under Section 47 of the Special Economic Zone Act of 1995,
"any sum necessary to augment [the PEZAs] capital outlay shall be included in the General
Appropriations Act to be treated as an equity of the national government."273
The law created the PEZAs charter. Under the Special Economic Zone Act of 1995, the PEZA was
established primarily to perform the governmental function of operating,administering, managing, and
developing special economic zones to attract investments and provide opportunities for preferential
use of Filipino labor.
To be considered a government-owned or controlled corporation, the entity must have been organized
as a stock or non-stock corporation.267
The PEZA, therefore, need not be economically viable. It is not a government-owned or controlled
corporation liable for real property taxes.
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:
V. (B)
The PEZA assumed the non-profit character, including the tax exempt status, of the EPZA
In contrast, government instrumentalities vested with corporate powers and performing governmental
orpublic 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.
The PEZAs predecessor, the EPZA, was declared non-profit in character with all its revenues devoted
for its development, improvement, and maintenance. Consistent with this 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 nonprofit 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:
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 meetthe
test of economic viability because they compete in the market place.
....
(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[.]
....
Commissioner Blas F. Ople, proponent of the test of economic viability, explained to the Constitutional
Commission the purpose of this test, as follows:
The Special Economic Zone Act of 1995, on the other hand, does not specifically exempt the PEZA
from payment of real property taxes.
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.
Nevertheless, we rule that the PEZA is exempt from real property taxes by virtue of its charter. A
provision in the Special Economic Zone Act of 1995 explicitly exempting the PEZA is unnecessary. The
PEZA assumed the real property exemption of the EPZA under Presidential Decree No. 66.
Section 11 of the Special Economic Zone Act of 1995 mandated the EPZA "to evolve into the PEZA in
accordance with the guidelines and regulations set forth in an executive order issued for this purpose."
President Ramos then issued Executive Order No. 282 in 1995, ordering the PEZA to assume the
EPZAs powers, functions, and responsibilities under Presidential Decree No. 66 not inconsistent with
the Special Economic Zone Act of 1995:
Therefore, when we insert the phrase "ECONOMIC VIABILITY" together with the "common good," this
becomes a restraint on future enthusiasts for state capitalism to excuse themselves from the
responsibility of meeting the market test so that they become viable. And so, Madam President, I
reiterate, for the committee's consideration and I am glad that I am joined in this proposal by
Commissioner Foz, the insertion of the standard of "ECONOMIC VIABILITY OR THE ECONOMIC
TEST," together with the common good.
SECTION 1. Assumption of EPZAs Powers and Functions by PEZA. All the powers, functions and
responsibilities of EPZA as provided under its Charter, Presidential Decree No. 66, as amended,
insofar as they are not inconsistent with the powers,functions and responsibilities of the PEZA, as
mandated under Republic Act No. 7916, shall hereafter be assumed and exercised by the PEZA.
Henceforth, the EPZA shall be referred to as the PEZA.
....
The following sections of the Special Economic Zone Act of 1995 provide for the PEZAs
powers,functions, and responsibilities:
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 noneconomic viability of
44
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:
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 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.
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. 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:
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.
(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;
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.
(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;
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.
(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;
SEC. 13. General Powers and Functions of the Authority. The PEZA shall have the following powers
and functions:
(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
(a) To operate, administer, manage and develop the ECOZONE according to the principles
and provisions set forth in this Act;
(h) The area must be situated where controls can easily be established to curtail smuggling
activities.
(b) To register, regulate and supervise the enterprises in the ECOZONE in an efficient and
decentralized manner;
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.
(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;
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, agroindustrial, 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 opportunitiesfor its own inhabitants and those of
nearby towns and cities.
(e) To create, operate and/or contractto 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;
The ECOZONE shall administer itself on economic, financial, industrial, tourism development and such
other matters within the exclusive competence of the national government.
(g) To coordinate the formulation and preparation of the development plans of the different
entities mentioned above;
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.
(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
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,
45
(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.
Ships of all sizes, descriptions and nationalities shall enjoy access to the ports of the ECOZONE,
subject only to such reasonable requirement as may be prescribed by the PEZA In coordination with
the appropriate agencies of the national government.
SEC. 33. Protection of Environment. - The PEZA, in coordination with the appropriate agencies, shall
take concrete and appropriate steps and enact the proper measure for the protection of the local
environment.
SEC. 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. 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. 21. Development Strategy of the ECOZONE. - The strategy and priority of development of each
ECOZONE established pursuant to this Act shall be formulated by the PEZA, in coordination with the
Department of Trade and Industry and the National Economic and Development Authority; Provided,
That such development strategy is consistent with the priorities of the national government as outlined
in the medium-term Philippine development plan. It shall be the policy of the government and the
PEZA to encourage and provide Incentives and facilitate private sector participation in the construction
and operation of public utilities and infrastructure in the ECOZONE, using any of the schemes allowed
in Republic Act No. 6957 (the build-operate-transfer law).
SEC. 36. One Stop Shop Center. - The PEZA shall establish a one stop shop center for the purpose of
facilitating the registration of new enterprises in the ECOZONE. Thus, all appropriate government
agencies that are Involved In registering, licensing or issuing permits to investors shall assign their
representatives to the ECOZONE to attend to Investors requirements.
SEC. 39. Master Employment Contracts. - The PEZA, in coordination with the Department of Tabor
and Employment, shall prescribe a master employment contract for all ECOZONE enterprise staff
members and workers, the terms of which provide salaries and benefits not less than those provided
under this Act, the Philippine Labor Code, as amended, and other relevant issuances of the national
government.
SEC. 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. 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. 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 willbe 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.
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, 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.
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. 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:
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.
a. Consolidation of lands for zone development purposes;

b. Acquisition of right of way to the ECOZONE; and
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.
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. 45. Relationship of PEZA to Privately-Owned Industrial Estates. Privately-owned industrial

estates shall retain their autonomy and independence and shall be monitored by the PEZA for the
implementation of incentives.
SEC. 46. Transfer of Resources. - The relevant functions of the Board of Investments over industrial
estates and agri-export processing estates shall be transferred to the PEZA. The resources of
government owned Industrial estates and similar bodies except the Bases Conversion Development
Authority and those areas identified under Republic Act No. 7227, are hereby transferred to the PEZA
as the holding agency. They are hereby detached from their mother agencies and attached to the
PEZA for policy, program and operational supervision.
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.
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.
46
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 theyare
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.
(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.
The non-profit character of the EPZA under Presidential Decree No. 66 is not inconsistent with any of
the powers, functions, and responsibilities of the PEZA. The EPZAs non-profit character, including the
EPZAs exemption from real property taxes, must be deemed assumed by the PEZA.
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:
In addition, the Local Government Code exempting instrumentalities of the national government from
real property taxes was already in force274 when the PEZAs charter was enacted in 1995. It would
have been redundant to provide for the PEZAs exemption in its charter considering that the PEZA is
already exempt by virtue of Section 133(o) of the Local Government Code.
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
As for the EPZA, Commonwealth Act No. 470 or the Assessment Law was in force when the EPZAs
charter was enacted. Unlike the Local Government Code, Commonwealth Act No. 470 does not
contain a provision specifically exempting instrumentalities of the national government from payment of
real property taxes.275 It was necessary to put an exempting provision in the EPZAs charter.
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:
Contrary to the PEZAs claim, however, Section 24 of the Special Economic Zone Act of 1995 is not a
basis for the PEZAs exemption. Section 24 of the Special Economic Zone Act of 1995 provides:
Art. 421. All other property of the State, which is not of the character stated in the preceding article, is
patrimonial property.
Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by
enterprises within the ECOZONEshall be paid and remitted as follows:
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 owned economic zones. These
economic zones are property of public dominion. The City seeks to tax properties located within the
Mactan Economic Zone,281 the site of which was reserved by President Marcos under Proclamation
No. 1811, Series of 1979. Reserved lands are lands of the public domain set aside for settlement or
public use, and for specific public purposes by virtue of a presidential proclamation.282 Reserved lands
are inalienable and outside the commerce of man,283 and remain property of the Republic until
withdrawn from publicuse 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.
(a) Three percent (3%) to the National Government;

(b) Two percent (2%) which shall be directly remitted by the business establishments to the
treasurer's office of the municipality or city where the enterprise is located. (Emphasis
supplied)
Tax exemptions provided under Section 24 apply only to business establishments operating within
economic zones. Considering that the PEZA is not a business establishment but an instrumentality
performing governmental functions, Section 24 is inapplicable to the PEZA. Also, contrary to the
PEZAs claim, developers ofeconomic zones, whether public or private developers, are liable for real
property taxes on lands they own. Section 24 does not distinguish between a public and private
developer. Thus, courts cannot distinguish.276 Unless the public developer is exempt under the Local
Government Code or under its charter enacted after the Local Government Codes effectivity, the
public developer must pay real property taxes on their land.
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":
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
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)
V. (C)
Real properties under the PEZAs title are owned by the Republic of the Philippines
Under Section 234(a) of the LocalGovernment Code, real properties owned by the Republic of the
Philippines are exempt from real property taxes:
The port in Mariveles, Bataan then became the Bataan Economic Zone under the Special Economic
Zone Act of 1995.287 Republic Act No. 9728 then converted the Bataan Economic Zone into the
Freeport Area of Bataan.288
property tax:
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.
(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:
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
Art. 420. The following things are property of public dominion:
47
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:
said business establishments shall pay a five percent (5%) final tax on their gross income earned in
the following percentages:
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:
(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)
(2) For property belonging to the Republic of the Philippines, but titled in the name of any political
subdivision orof any corporate agency or instrumentality, by the executive head of the agency or
instrumentality. (Emphasis supplied)
Petitioners, therefore, are not deprived of revenues from the operations of economic zones within their
respective territorial jurisdictions.
In Manila International Airport Authority, this court explained:
The national government ensured that loeal government units comprising economic zones shall retain
their basic autonomy and identity.295
[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 instrumentalitiesx 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.
All told, the PEZA is an instrumentality of the national government.1wphi1 Furthermore, the lands
owned by the PEZA are real properties owned by the Republic of the Philippines. The City of LapuLapu and the Province of Bataan cannot collect real property taxes from the PEZA.
WHEREFORE, the consolidated petitions are DENIED.
SO ORDERED.
The Republic may grant the beneficialuse 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 PEZAs lands and buildings whose beneficial use have been granted to other persons may
not be taxed with real property taxes. The PEZA may only lease its lands and buildings to PEZAregistered 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:
b. Two percent (2%) which shall be directly remitted by the business establishments to the treasurers
office of the municipality or city where the enterprise is located. 292 (Emphasis supplied)
In lieu of revenues from real property taxes, the City of Lapu-Lapu collects two-fifths of 5% final tax on
gross income paid by all business establishments operating withinthe Mactan Economic Zone:
SEC. 24. Exemption from National and Local Taxes. Except for real property on land owned by
enterprises within the ECOZONE shall be paid and remitted as follows:
b. Two percent (2%) which shall be directly remitted by the business establishments to the
treasurers office of the municipality or city where the enterprise is located.293 (Emphasis
supplied)
For its part, the Province of Bataan collects a fifth of the 5% final tax on gross income paid by all
business establishments operating within the Freeport Area of Bataan:
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 withinthe FAB. In lieu thereof,
48
G.R. No. 172457
Five months later, on 26 May 2005, the BOC followed suit and demanded12 of CJH the payment
of P71,983,753.00 representing the duties and taxes due on all the importations made by CJH from
1998 to 2004. For its part, the BIR sent a letter dated 23 May 2005 to CJH wherein it treated CJH as
an ordinary corporation subject to the regular corporate income tax as well as to the Value Added Tax
of 1997.13
December 24, 2008
CJH DEVELOPMENT CORPORATION, petitioner,

vs.
BUREAU OF INTERNAL REVENUE, BUREAU OF CUSTOMS, and DISTRICT COLLECTOR OF
CUSTOMS EDWARD O. BALTAZAR, respondents.
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
DECISION
TINGA, J.:
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.
Before us is a petition for review on certiorari1 seeking the reversal of the orders dated 14 October
20052 and 04 April 20063 of the Regional Trial Court (RTC) of Baguio City, Branch 5. The RTC
dismissed the petition for declaratory relief filed by petitioner CJH Development Corporation (CJH).
This petition was brought directly to this Court since it involves a pure question of law in accordance
with Rule 50 of the 1997 Revised Rules of Court.
In an Order16 dated 28 June 2005, the RTC dropped the City of Baguio as a party to the case. The
remaining parties were required to submit their respective memoranda. On 14 October 2005, the RTC
rendered its assailed order.17 It held that the decision in G.R. No. 119775 applies retroactively because
the tax exemption granted by Proclamation No. 420 is null and void from the beginning. The RTC also
ruled that the petition for declaratory relief is not the appropriate remedy. A judgment of the court
cannot be the proper subject of a petition for declaratory relief; the enumeration in Rule 64 is exclusive.
Moreover, the RTC held that Commonwealth Act No. 55 (CA No. 55) which proscribes the use of
declaratory relief in cases where a taxpayer questions his tax liability is still in force and effect.
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
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.
In line with the Proclamation, the Bureau of Internal Revenue (BIR) issued Revenue Regulations No.
12-976 while the Bureau of Customs (BOC) issued Customs Administrative Order No. 2-98.7 The two
issuances provided the rules and regulations to be implemented within the Camp John Hay SEZ.
Subsequently, however, Section 3 of
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 Proclamation was declared unconstitutional in part by the Court en banc in John Hay Peoples
Alternative Coalition v. Lim, 8 when it ruled that:
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
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.
CJH alleges that CA No. 5520 has already been repealed by the Rules of Court; thus, the remedy of
declaratory relief against the assessment made by the BOC is proper. It cited the commentaries of
Moran allegedly to the effect that declaratory relief lies against assessments made by the BIR and
BOC. Yet in National Dental Supply Co. v. Meer,21 this Court held that:
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
From the opinion of the former Chief Justice Moran may be deduced that the failure to
incorporate the above proviso [CA No. 55] in section 1, rule 66, [now Rule 64] is not due to
an intention to repeal it but rather to the desire to leave its application to the sound discretion
of the court, which is the sole arbiter to determine whether a case is meritorious or not. And
even if it be desired to incorporate it in rule 66, it is doubted if it could be done under the
rule-making power of the Supreme Court considering that the nature of said proviso
is substantive and not adjective, its purpose being to lay down a policy as to the right of a
taxpayer to contest the collection of taxes on the part of a revenue officer or of the
Government. With the adoption of said proviso, our law-making body has asserted its policy
on the matter, which is to prohibit a taxpayer to question his liability for the payment of any
tax that may be collected by the Bureau of Internal Revenue. As this Court well said, quoting
from several American cases, "The Government may fix the conditions upon which it will
consent to litigate the validity of its original taxes..." "The power of taxation being legislative,
all incidents are within the control of the Legislature." In other words, it is our considered
opinion that the proviso contained in Commonwealth Act No. 55 is still in full force and effect
and bars the plaintiff from filing the present action.22(Emphasis supplied) (Citations omitted.)
While the motion for reconsideration was pending with the Court, on 16 January 2004 the Office of the
City Treasurer of Baguio sent a demand letter11 which stated that:
In view of the Supreme Court decision dated October 24, 2003 on G.R. No. 119775,
declaring null and void Section 3 of Proclamation 420 on applicable incentives of Special
Economic Zones, we are sending you updated statements of real property taxes due on real
estate properties declared under the names of the Bases Conversion and Development
Authority and Camp John Hay Development Corporation totaling P101,935,634.17 inclusive
of penalties, as of January 10, 2004.
May we request for the immediate settlement of the above indebtedness, otherwise this
office shall be constrained to hold the processing of your business permit pursuant to
Section 2 C c.1 of Tax Ordinance 2000-001 of Baguio City.
49
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.
G.R. No. L-11357
May 31, 1962
FELIPE B. OLLADA, etc., petitioner-appellant,

vs.
CENTRAL BANK OF THE PHILIPPINES, respondent-appellee.
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:
Antonio V. Sanchez as amicus curiae.

Felipe B. Ollada for and in his own behalf as petitioner-appellant.
Nat. M. Balboa for respondent-appellee.
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
DIZON, J.:
Felipe B. Ollada is a certified public accountant, having passed the examination given by the Board of
Accountancy, and is duly qualified to practice his profession. On July 22, 1952, his name was placed in
the rolls of certified public accountants authorized and accredited to practice accountancy in the office
of the Central Bank of the Philippines. In December, 1955, by reason of a requirement of the ImportExport Department of said bank that CPAs submit to an accreditation under oath before they could
certify financial statements of their clients applying for import dollar allocations with its office, Ollada's
previous accreditation was nullified.
There are other remedies available to a party who is not agreeable to a decision whether it be a
question of law or fact. If it involves a decision of an appellate court, the party may file a motion for
reconsideration or new trial in order that the defect may be corrected.26 In case of ambiguity of the
decision, a party may file a motion for a clarificatory judgment.27 One of the requisites of a declaratory
relief is that the issue must be ripe for judicial determination. This means that litigation is inevitable 28 or
there is no adequate relief available in any other form or proceeding.29
Pursuant to the new requirement, the Import-Export Department of the Central Bank issued
APPLICATION FOR ACCREDITATION OF CERTIFIED PUBLIC ACCOUNTANTS (CB-IED Form No.
5) and ACCREDITATION CARD FOR CERTIFIED PUBLIC ACCOUNTANTS (CB-IED, Form No. 6) for
CPAs to accomplish under oath. Assailing said accreditation requirement on the ground that it was (a)
an unlawful invasion of the jurisdiction of the Board of Accountancy, (b) in excess of the powers of the
Central Bank and (c) unconstitutional in that it unlawfully restrained the legitimate pursuit of one's
trade, Ollada, for himself and allegedly on behalf of numerous other CPAs, filed a petition for
Declaratory Relief in the Court of First Instance of Manila to nullify said accreditation requirement.
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.
On April 16, 1956 the Central Bank filed a motion to dismiss the petition for Declaratory Relief for lack
of cause of action. Its main contention was that the Central Bank has the responsibility of administering
the Monetary Banking System of the Republic and is authorized to prepare and issue, through its
Monetary Board, rules and regulations to make effective the discharge of such responsibility; that the
accreditation requirement alleged in the petition was issued in the exercise of such power and
authority; that the purpose of such requirement is not to regulate the practice of accountancy in the
Philippines but only the manner in which certified public accountants should transact business with the
Central Bank.
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. 16923434 and entitled, Camp John Hay Development Corporation v.
Central Board of Assessment Appeals, et al. That case emanated from assessments made in 2002 for
real estate taxes on CJH by the City of Baguio. Said assessments were duly challenged before the
Local Board of Assessment Appeals, the Central Board of Assessment Appeals and the Court of Tax
Appeals. The petition in G.R. No. 169234 was filed with this Court in September 2005, or after our
2003 Decision in John Hay Peoples Alternative Coalition had attained finality. CJH therein raised the
same question of law, as in this case, whether the doctrine of operative fact applies to G.R. No.
119775. Clearly, the Court in G.R. No. 169234 is better positioned to resolve that question of law, there
being no antecedent jurisdictional defects that would preclude the Court from squarely deciding that
particular issue. CJH is free to reiterate this current point of clarification as it litigates the petition in
G.R. No. 169234.
On May 3, 1956, petitioner Ollada applied for a writ of preliminary injunction to restrain the respondent
Central Bank of the Philippines from enforcing the accreditation requirement aforesaid until final
adjudication of the case. In a memorandum submitted by said respondent opposing the issuance of
the writ, it manifested that it was willing to delete paragraph 13 from its CB-IED Form No. 5
(Application for accreditation of certified public accountants), which required CPAs to answer the query
whether they agreed, if accredited with the Import-Export Department, Central Bank of the Philippines,
to follow strictly the rules and regulations promulgated by the Philippine Institute of Accountants and, if
not, to state their reasons therefor, and that it was also willing to modify paragraph 14 of the same form
to read as follows:
WHEREFORE, the Petition is DENIED.
14. Do you agree, if accredited with the Import-Export Department, to follow strictly the rules
and regulations of the Central Bank of the Philippines concerning the practice of your
profession as CPA, with reference to its importing licensing functions which may hereinafter
be promulgated and which are not inconsistent with the rules and regulations promulgated
by the Board of Accountancy of the Philippines, and to give written notice(s) of any
change(s) in your professional status as practitioner, or the name and style under which you
practice your profession as Certified Public Accountant(s)? . . . If not, state your reasons: . . .
SO ORDERED.
50
On May 22, 1956 the trial court required respondent to submit within ten days from notice, proof that it
had deleted paragraph 13 and modified paragraph 14 of its CB-IED Form No. 5, as manifested in its
memorandum, otherwise the writ of preliminary injunction prayed for by petitioner would be granted.
Having complied with said order by submitting CB-ID Form No. 5 (formerly CB-IED Form No. 5)
showing that paragraph 13 of CB-IED Form No. 5 had been deleted, and paragraph 14 thereof had
been modified, the court, on June 27, 1956, denied the petition for preliminary injunction. On June 29,
1956, petitioner filed a motion for reconsideration alleging that, despite the deletion of paragraph 13
from respondent's CB-IED Form No. 5, it was still enforcing the rules and regulations of the Philippine
Institute of Accountants in its CB-IED Form No. 6 (ACCREDITATION CARD FOR CERTIFIED PUBLIC
ACCOUNTANTS) which was still a part of the questioned accreditation requirement. All this
notwithstanding, however, on July 5, 1956 petitioner, in the interests of its clients, filed his application
for accreditation with the CB under protest.1wph1.t
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).
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:
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.
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).
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.
Consequently, on July 12, 1956, the court set aside its order of July 7, 1956 granting the writ of
preliminary injunction.
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.
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:
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
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.
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. . . .
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).
In order to dismiss an action under the aforecited ground, Sutherland, Code of Pleadings,
Practice and Form, 167, has laid down the essential test which should serve as the
controlling guide in determining whether a petition states a cause of action, to wit:
1. Does the complaint show the plaintiff suffered an injury?
It appears, therefore, that after respondent had eliminated said objectionable features, the
petition for declaratory relief has become groundless and should be dismissed.
2. Is it an injury the law recognizes as a wrong?
51
3. Is the defendant liable for the alleged wrong?

G.R. No. 204603
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.)
September 24, 2013
REPUBLIC OF THE G.R. No. 204603 PHILIPPINES, represented by THE EXECUTIVE

SECRETARY, THE SECRETARY OF JUSTICE, THE SECRETARY OF FOREIGN AFFAIRS, THE
SECRETARY OF NATIONALDEFENSE, THE SECRETARY OF THE INTERIOR AND LOCAL
GOVERNMENT THE SECRETARY OF FINANCE, THE NATIONAL SECURITY ADVISER, THE
SECRETARY OF BUDGET AND MANAGEMENT THE TREASURER OF THE PHILIPPINES, THE
CHIEF OF STAFF OF THE ARMED FORCES OF THE PHILIPPINES, and THE CHIEFOF THE
PHILIPPINE NATIONAL POLICE, Petitioners,
vs.
HERMINIO HARRY ROQUE, MORO CHRISTIAN PEOPLE'S ALLIANCE, FR. JOE DIZON, RODINIE
SORIANO, STEPHANIE ABIERA, MARIA LOURDES ALCAIN, VOLTAIRE ALFEREZ, CZARINA
MAYALTEZ, SHERYL BALOT, RENIZZA BATACAN, EDAN MARRI CAETE, LEANA CARAMOAN,
ALDWIN CAMANCE, RENE DELORINO, PAULYN MAY DUMAN, RODRIGO FAJARDO III,
ANNAMARIE GO, ANNA ARMINDA JIMENEZ, MARY ANN LEE,LUISA MANALAYSAY, MIGUEL
MUSNGI, MICHAEL OCAMPO, NORMAN ROLAND OCANA III, WILLIAM RAGAMAT, MARICAR
RAMOS, CHERRY LOU REYES, MELISSA ANN SICAT, CRISTINE MAE TABING, VANESSA
TORNO, and HON. JUDGE ELEUTERIO L. BATHAN, as Presiding Judge of Regional Trial Court,
Quezon City, Branch 92, Respondents.
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.)
RESOLUTION
Again, in his brief petitioner reiterates the same view in the following language:
PERLAS-BERNABE, J.:
Assailed in this petition for certiorari1 are the April 23, 20122 and July 31, 20123 Orders of the Regional
Trial Court of Quezon City, Branch 92(RTC) in Special Civil Action (SCA) No. Q-07-60778, denying
petitioners motion to dismiss (subject motion to dismiss) based on the following grounds: (a) that the
Court had yet to pass upon the constitutionality of Republic Act No. (RA) 9372,4 otherwise known as
the "Human Security Act of 2007," in the consolidated cases of Southern Hemisphere Engagement
Network, Inc. v. Anti-Terrorism Council5 (Southern Hemisphere); and (b) that private respondents
petition for declaratory relief was proper.
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 ofpetitioner'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).
The Facts
On July 17, 2007, private respondents filed a Petition6 for declaratory relief before the RTC, assailing
the constitutionality of the following sections of RA 9372: (a) Section 3,7 for being void for
vagueness;8 (b) Section 7,9for 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 125 12 of
the Revised Penal Code, as amended;13 (d) Section 26,14 for violating the right to travel;15 and (e)
Section 27,16 for violating the prohibition against unreasonable searches and seizures.17
Petitioners moved to suspend the proceedings,18 averring that certain petitions (SC petitions) raising
the issue of RA 9372s constitutionality have been lodged before the Court.19 The said motion was
granted in an Order dated October 19, 2007.20
WHEREFORE, the order of dismissal appealed from is hereby affirmed, without prejudice to the
aggrieved party seeking relief in another appropriate action. The writ of preliminary injunction issued by
Us on November 5, 1956 is hereby set aside, and the motion for contempt filed by petitioner on
September 30, 1957 is denied. With costs against appellant.
On October 5, 2010, the Court promulgated its Decision21 in the Southern Hemisphere cases and
thereby dismissed the SC petitions.
On February 27, 2012, petitioners filed the subject motion to dismiss,22 contending that private
respondents failed to satisfy the requisites for declaratory relief. Likewise, they averred that the
constitutionality of RA 9372 had already been upheld by the Court in the Southern Hemisphere cases.
52
In their Comment/Opposition,23 private respondents countered that: (a) the Court did not resolve the
issue of RA 9372s constitutionality in Southern Hemisphere as the SC petitions were dismissed based
purely on technical grounds; and (b) the requisites for declaratory relief were met.
The same conclusion cannot, however, be reached with regard to the RTCs ruling on the sufficiency of
private respondents petition for declaratory relief.
Case law states that the following are the requisites for an action for declaratory relief:
The RTC Ruling

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
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 laws
implementation considering that the case is of paramount impact to the Filipino people.27
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.
Hence, the instant petition.
As to the fourth requisite, there is serious doubt that an actual justiciable controversy or the "ripening
seeds" of one exists in this case.
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.
Pertinently, a justiciable controversy refers to an existing case or controversy that is appropriate or ripe
for judicial determination, not one that is conjectural or merely anticipatory.38 Corollary thereto, by
"ripening seeds" it is meant, not that sufficient accrued facts may be dispensed with, but that a dispute
may be tried at its inception before it has accumulated the asperity, distemper, animosity, passion, and
violence of a full blown battle that looms ahead. The concept describes a state of facts indicating
imminent and inevitable litigation provided that the issue is not settled and stabilized by tranquilizing
declaration.39
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 RTCs part.
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:
The Courts Ruling

The petition is meritorious.
An act of a court or tribunal can only be considered as with grave abuse of discretion when such act is
done in a capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. 28 It is
well-settled that the abuse of discretion to be qualified as "grave" must be so patent or gross as to
constitute an evasion of a positive duty or a virtual refusal to perform the duty or to act at all in
contemplation of law.29 In this relation, case law states that not every error in the proceedings, or every
erroneous conclusion of law or fact, constitutes grave abuse of discretion.30The degree of gravity, as
above-described, must be met.
Without any justiciable controversy, the petitions have become pleas for declaratory relief, over which
the Court has no original jurisdiction. Then again, declaratory actions characterized by "double
contingency," where both the activity the petitioners intend to undertake and the anticipated reaction to
it of a public official are merely theorized, lie beyond judicial review for lack of ripeness.1wphi1
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.
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)
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.
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
53
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
[G.R. Nos. L-9322-23. January 30, 1956.]

TEODORO TANDA, Plaintiff-Appellant, vs. NARCISO N. ALDAYA, Defendant-Appellee.
DECISION
BAUTISTA ANGELO, J.:
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.
As to the fifth requisite for an action for declaratory relief, neither can it be inferred that the controversy
at hand is ripe for adjudication since the possibility of abuse, based on the above-discussed
allegations in private respondents petition, remain highly-speculative and merely theorized.1wphi1 It
is well-settled that a question is ripe for adjudication when the act being challenged has had a direct
adverse effect on the individual challenging it.47 This private respondents failed to demonstrate in the
case at bar.
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.
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.
On April 10, 1948, Appellant instituted in the Court of First Instance of Cavite an action for the
annulment of a certain contract of sale with pacto de retro (Civil Case No. 4606). On May 11, 1949, the
trial court rendered a decision declaring the contract valid and absolving Appellee of the complaint.
After a motion to set aside judgment and a motion for new trial filed by Appellant were denied by the
trial court, Appellant brought the case on appeal to the Supreme Court. On July 23, 1951, the Supreme
Court affirmed the decision appealed from particularly with regard to the validity of the contract which
is disputed by Appellant. After the two motions for reconsideration filed by Appellant were denied, the
decision became final and executory and the record was returned to the court of origin; chan
roblesvirtualawlibrarybut, on November 8, 1951, Appellant initiated the present case for declaratory
relief. Considering that this action is purposeless because, while outwardly its aim is to seek a
declaratory relief on certain matters but in effect its purpose is to nullify the judgment rendered in the
previous case (Civil Case No. 4606) which was affirmed by the Supreme Court (G. R. No. L-3278),
* Appellee filed a motion to dismiss on the ground that the case states no cause of action. In the
meantime, Appellee moved to withdraw the original of Title No. 114 which was presented in the case
as evidence in order that his ownership may be consolidated and a new title issued in his name it
appearing that case has been finally terminated (Civil Case No. 4606). The trial court, acting on the
two motions, entered an order on June 12, 1953 granting the motion to dismiss and allowing the
withdrawal of the original title as already adverted to in the early part of this decision.
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.
The case was originally taken to the Court of Appeals wherein Appellant assigned nine errors as
allegedly committed by the trial court but, after a cursory reading of the errors assigned, that court
certified the case to us on the ground that the questions to be resolved are purely of law.
The purpose of the case which gave rise to the present appeal is avowedly for declaratory relief
instituted under Section 1, Rule 66 of the Rules of Court which provides that Any person interested
under a deed, will, contract or other written instrument, or whose rights are affected by a statute or
ordinance, may bring an action to determine any question of construction or validity arising under the
instrument or statute and for a declaration of his rights or duties thereunder. And, it is claimed, this
case comes under its purview because its purpose is to obtain a clarification of the decision of this
Court in G. R. No. L-3278 which in the opinion of Appellant, is vague and susceptible of double
interpretation. Appellant contends that the words other written instrument should be interpreted as
including a court decision regardless of whether it is final in character or otherwise.
We do not subscribe to the foregoing view. Evidently, a court decision cannot be interpreted as
included within the purview of the words other written instrument, as contended by Appellant, for the
simple reason that the Rules of Court already provide for the ways by which an ambiguous or doubtful
decision may be corrected or clarified without need of resorting to the expedient prescribed by Rule 66.
Thus, if a party is not agreeable to a decision either on questions of law or of fact, he may file with the
trial court a motion for reconsideration or a new trial in order that the defect may be corrected (Section
1, Rule 37). The same remedy may be pursued by a party with regard to a decision of the Court of
Appeals or of the Supreme Court (section 1, Rule 54, section 1, Rule 55, in connection with section 1,
Rule 58). A party may even seek relief from a judgment or order of an inferior court on the ground of
fraud, accident, mistake or excusable negligence if he avails of that remedy within the terms
54
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.
G.R. No. 126911
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; chan
roblesvirtualawlibrarythat, when a right or fact has been judicially tried and determined by a court of
competent jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so
long as it remains unreversed, should be conclusive upon the parties, and those in privity with them in
law or estate. It is considered that a judgment presents evidence of the facts of so high a nature that
nothing which could be proved by evidence aliunde would be sufficient to overcome it; chan
roblesvirtualawlibraryand therefore it would be useless for a party against whom it can be properly
applied to adduce any such evidence, and accordingly he is estopped or precluded by law from doing
so. Such is the character of an estoppel by matter of record, as in case of an issue on a question of
fact, judicially tried and decided. (Oberiano vs. Sobremesana, G. R. No. L-4622, May 30, 1952.)
April 30, 2003
PHILIPPINE DEPOSIT INSURANCE CORPORATION, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and JOSE ABAD, LEONOR ABAD, SABINA ABAD,
JOSEPHINE "JOSIE" BEATA ABAD-ORLINA, CECILIA ABAD, PIO ABAD, DOMINIC ABAD,
TEODORA ABAD, respondents.
CARPIO MORALES, J.:
The present petition for review assails the decision of the Court of Appeals affirming that of the
Regional Trial Court of Iloilo City, Branch 30, finding petitioner Philippine Deposit Insurance
Corporation (PDIC) liable, as statutory insurer, for the value of 20 Golden Time Deposits belonging to
respondents Jose Abad, Leonor Abad, Sabina Abad, Josephine "Josie" Beata Abad-Orlina, Cecilia
Abad, Pio Abad, Dominic Abad, and Teodora Abad at the Manila Banking Corporation (MBC), Iloilo
Branch.
We may mention in passing that the claim of Appellant that the decision of this Court above referred to
suffers from contradiction or inconsistency is rather equivocal for he mistook a restatement made
therein of a portion of the argument of Appellant as a finding of fact made by the Court which is not the
case. A more discerning appreciation of the decision would bear this out. The truth of the matter is that
the Court concluded that the contract in dispute was valid as may be inferred from the portion of the
decision which we quote:chanroblesvirtuallawlibrary
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
The second or supplemental motion for a new trial, the denial of which is the subject of the fourth
assignment of error, added a new ground to the first motion for new trial and assailed the validity of the
contract of sale for supposed lack of valuable consideration or because the consideration was false
and illicit. Here is what we make out of the Plaintiffs line of reasoning, which is none too easy to
understand:chanroblesvirtuallawlibrary
On May 22, 1987, a Friday, the Monetary Board (MB) of the Central Bank of the Philippines, now
Bangko Sentral ng Pilipinas, issued Resolution 5052 prohibiting MBC to do business in the Philippines,
and placing its assets and affairs under receivership. The Resolution, however, was not served on
MBC until Tuesday the following week, or on May 26, 1987, when the designated Receiver took over.3
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.
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
What the Plaintiff would want the court to do as a result of the contracts alleged nullity is not stated or
made clear. However, that may be, the contract was not void. It was licit for the parties to agree that
the vendor should pay the purchaser only P2,000 instead of P20,000 as price of repurchase
regardless of the currency received by the vendor. In this case the Plaintiff, who is a full-pledged
lawyer and appeared below in his own behalf and filed the brief in this instance, drew the deed of sale
himself, according to the lower courts finding, and the fixing of the ratio of ten to one between the
Japanese war notes and the Commonwealth money must have been his own idea and certainly was
for his own benefit. If the devaluation of the Japanese money bothered the Plaintiffs conscience, there
was no law to prevent him from redeeming the land for P20,000, or P15,000 which he admitted having
received. (Italics supplied)
On February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount of
P120,000.00. PDIC, however, withheld payment of the 17 remaining claims after Washington Solidum,
Deputy Receiver of MBC-Iloilo, submitted a report to the PDIC7 that there was massive conversion and
substitution of trust and deposit accounts on May 25, 1987 at MBC-Iloilo.8 The pertinent portions of the
report stated:
xxx
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.
xxx
xxx
On May 25, 1987 (Monday) or a day prior to the official announcement and take-over by CB
of the assets and liabilities of The Manila Banking Corporation, the Iloilo Branch was found
to have recorded an unusually heavy movements in terms of volume and amount for all
types of deposits and trust accounts. It appears that the impending receivership of TMBC
was somehow already known to many depositors on account of the massive withdrawals
paid on this day which practically wiped out the branch's entire cash position. . . .
Finding no merit in this appeal, we hereby affirm the order appealed from, with costs against Appellant.
xxx
xxx
xxx
. . . The intention was to maximize the availment of PDIC coverage limited to P40,000 by
spreading out big accounts to as many certificates under various nominees. . . .9
55
xxx
xxx
xxx
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.
Because of the report, PDIC entertained serious reservation in recognizing respondents' GTDs as
deposit liabilities of MBC-Iloilo. Thus, on August 30, 1991, it filed a petition for declaratory relief against
respondents with the Regional Trial Court (RTC) of Iloilo City, for a judicial declaration determination of
the insurability of respondents' GTDs at MBC-Iloilo.10
In their Answer filed on October 24, 1991 and Amended Answer11 filed on January 9, 1992,
respondents set up a counterclaim against PDIC whereby they asked for payment of their insured
deposits.12
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
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:
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."
WHEREFORE, premises considered, judgment is hereby rendered:
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.
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;
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.
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;
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
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
Petitioner's position does not persuade.
5. Ordering PDIC to pay legal interest on the remaining insured deposits of the Abads from
February 11, 1988 until they are fully paid.
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
SO ORDERED.
On appeal, the Court of Appeals, by the assailed Decision of October 21, 1996,14 affirmed the trial
court's decision except as to the award of legal interest which it deleted.
The evident implication of the law, therefore, is that the appointment of a receiver may be
made by the Monetary Board without notice and hearing but its action is subject to judicial
inquiry to insure the protection of the banking institution. Stated otherwise, due process does
not necessarily require a prior hearing; a hearing or an opportunity to be heard may
be subsequent to the closure. One can just imagine the dire consequences of a prior
hearing: bank runs would be the order of the day, resulting in panic and hysteria. In the
process, fortunes may be wiped out, and disillusionment will run the gamut of the entire
banking community. (Emphasis supplied).21
Hence, PDIC's present Petition for Review which sets forth this lone assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF THE TRIAL
COURT THAT THE AMOUNT REPRESENTED IN THE FACES OF THE SO CALLED "GOLDEN TIME
DEPOSITS" WERE INSURED DEPOSITS EVEN AS THEY WERE MERE DERIVATIVES OF
RESPONDENTS' PREVIOUS ACCOUNT BALANCES WHICH WERE PRETERMINATED/TERMINATED AT THE TIME THE MANILA BANKING CORPORATION WAS ALREADY
IN SERIOUS FINANCIAL DISTRESS.
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.
In its supplement to the petition, PDIC adds the following assignment of error:
That no actual money in bills and/or coins was handed by respondents to MBC does not mean that the
transactions on the new GTDs did not involve money and that there was no consideration therefor. For
the outstanding balance of respondents' 71 GTDs in MBC prior to May 26, 198722 in the amount of
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF THE TRIAL
COURT ORDERING PETITIONER TO PAY RESPONDENTS' CLAIMS FOR PAYMENT OF INSURED
56
P1,115,889.15 as earlier mentioned was re-deposited by respondents under 28 new GTDs. Admittedly,
MBC had P2,841,711.90 cash on hand more than double the outstanding balance of respondent's
71 GTDs at the start of the banking day on May 25, 1987. Since respondent Jose Abad was at MBC
soon after it opened at 9:00 a.m. of that day, petitioner should not presume that MBC had no cash to
cover the new GTDs of respondents and conclude that there was no consideration for said GTDs.
G.R. No. L-28138 August 13, 1986

MATALIN COCONUT CO., INC., petitioner-appellee,
vs.
THE MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR, AMIR M. BALINDONG and HADJI
PANGILAMUN MANALOCON, MUNICIPAL MAYOR and MUNICIPAL TREASURER OF
MALABANG, LANAO DEL SUR, respondents-appellants. PURAKAN PLANTATION
COMPANY, intervenor-appellee.
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
YAP, J.:
On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur, invoking the authority of
Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, enacted Municipal
Ordinance No. 45-46, entitled "AN ORDINANCE IMPOSING A POLICE INSPECTION FEE OF P.30
PER SACK OF CASSAVA STARCH PRODUCED AND SHIPPED OUT OF THE MUNICIPALITY OF
MALABANG AND IMPOSING PENALTIES FOR VIOLATIONS THEREOF." The ordinance made it
unlawful for any person, company or group of persons "to ship out of the Municipality of Malabang,
cassava starch or flour without paying to the Municipal Treasurer or his authorized representatives the
corresponding fee fixed by (the) ordinance." It imposed a "police inspection fee" of P.30 per sack of
cassava starch or flour, which shall be paid by the shipper before the same is transported or shipped
outside the municipality. Any person or company or group of individuals violating the ordinance "is
liable to a fine of not less than P100.00, but not more than P1,000.00, and to pay Pl.00 for every sack
of flour being illegally shipped outside the municipality, or to suffer imprisonment of 20 days, or both, in
the discretion of the court.
Without doubt, a petition for declaratory relief does not essentially entail an executory process. There
is nothing in its nature, however, that prohibits a counterclaim from being set-up in the same action. 25
Now, there is nothing in the nature of a special civil action for declaratory relief that
proscribes the filing of a counterclaim based on the same transaction, deed or contract
subject of the complaint. A special civil action is after all not essentially different from an
ordinary civil action, which is generally governed by Rules 1 to 56 of the Rules of Court,
except that the former deals with a special subject matter which makes necessary some
special regulation. But the identity between their fundamental nature is such that the same
rules governing ordinary civil suits may and do apply to special civil actions if not
inconsistent with or if they may serve to supplement the provisions of the peculiar rules
governing special civil actions.26
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.
Petitioner additionally submits that the issue of determining the amount of deposit insurance due
respondents was never tried on the merits since the trial dwelt only on the "determination of the
viability or validity of the deposits" and no evidence on record sustains the holding that the amount of
deposit due respondents had been finally determined.27 This issue was not raised in the court a quo,
however, hence, it cannot be raised for the first time in the petition at bar.28
Finally, petitioner faults respondents for availing of the statutory limits of the PDIC law, presupposing
that, based on the conduct of respondent Jose Abad on March 25, 1987, he and his co respondents
"somehow knew" of the impending closure of MBC. Petitioner ascribes bad faith to respondent Jose
Abad in transacting the questioned deposits, and seeks to disqualify him from availing the benefits
under the law. 29
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.
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.
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.
SO ORDERED.
After the promulgation of the decision, the Trial Court issued a writ of preliminary mandatory injunction,
upon motion of petitioner, requiring the respondent Municipal Treasurer to deposit with the Philippine
57
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.
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.
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.
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:
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.
... It has been proven that the only service rendered by the Municipality of
Malabang, by way of inspection, is for the policeman to verify from the driver of the
trucks of the petitioner passing by at the police checkpoint the number of bags
loaded per trip which are to be shipped out of the municipality based on the trip
tickets for the purpose of computing the total amount of tax to be collect (sic) and
for no other purpose. The pretention of respondents that the police, aside from
counting the number of bags shipped out, is also inspecting the cassava flour
starch contained in the bags to find out if the said cassava flour starch is fit for
human consumption could not be given credence by the Court because, aside
from the fact that said purpose is not so stated in the ordinance in question, the
policemen of said municipality are not competent to determine if the cassava flour
starch are fit for human consumption. The further pretention of respondents that
the trucks of the petitioner hauling the bags of cassava flour starch from the mill to
the bodega at the beach of Malabang are escorted by a policeman from the police
checkpoint to the beach for the purpose of protecting the truck and its cargoes
from molestation by undesirable elements could not also be given credence by the
Court because it has been shown, beyond doubt, that the petitioner has not asked
for the said police protection because there has been no occasion where its trucks
have been molested, even for once, by bad elements from the police checkpoint
to the bodega at the beach, it is solely for the purpose of verifying the correct
number of bags of cassava flour starch loaded on the trucks of the petitioner as
stated in the trip tickets, when unloaded at its bodega at the beach. The
imposition, therefore, of a police inspection fee of P.30 per bag, imposed by said
ordinance is unjust and unreasonable.
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.
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.
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.
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
58
Having found the ordinance in question to be invalid, we find it unnecessary to rule on the other errors
assigned by the appellants.
G.R. No. 169466
WHEREFORE, petition is dismissed. The decision of the court a quo is hereby affirmed. No costs.
May 9, 2007
DEPARTMENT OF BUDGET AND MANAGEMENT, represented by SECRETARY ROMULO L.

NERI, PHILIPPINE NATIONAL POLICE, represented by POLICE DIRECTOR GENERAL ARTURO
L. LOMIBAO, NATIONAL POLICE COMMISSION, represented by CHAIRMAN ANGELO T. REYES,
AND CIVIL SERVICE COMMISSION, represented by CHAIRPERSON KARINA C.
DAVID, Petitioners,
vs.
MANILAS FINEST RETIREES ASSOCIATION, INC., represented by P/COL. FELICISIMO G.
LAZARO (RET.), AND ALL THE OTHER INP RETIREES, Respondents.
SO ORDERED.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review on certiorari under Rule 45 of the Rules
of Court are the following issuances of the Court of Appeals (CA) in CA-G.R. CV No. 78203, to wit:
1. Decision1 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. Resolution2 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. 11843 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
INP
59
Monthly Pension
PNP
INP
Difference
PNP
Corporal
SPO3
P 3,225.00
P 11,310.00
P 8,095.00
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.
Captain
P. Sr. Insp.
P 5,248.00
P 15,976.00
P10,628.00
We DENY.
P 8,033.76
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.
Brig. Gen.
P. Chief Supt.
P 10,054.24
P 18,088.00
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
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:
DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty that they, as INPretirees, 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.
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 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 police force shall be organized, trained and equipped primarily for the performance of police
functions. Its national scope and civilian character shall be paramount. No element of the police force
shall be military nor shall any position thereof be occupied by active members of the [AFP]. (Emphasis
and word in bracket supplied.)
Pursuant to Section 23, supra, of R.A. No. 6975, the PNP initially consisted of the members of the
police forces who were integrated into the INP by virtue of P.D. No. 765, while Section 86 10 of the same
law provides for the assumption by the PNP of the police functions of the INP and its absorption by the
former, including its appropriations, funds, records, equipment, etc., as well as its personnel.11 And to
govern the statutes implementation, Section 85 of the Act spelled out the following absorption phases:
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 decision6 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).
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.
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.
Phase II Approval of the table of organization and equipment of all bureaus and offices created under
this Act, preparation and filling up of their staffing pattern, transfer of assets to the [DILG] and
organization of the Commission, to be completed within twelve (12) months from the effectivity date
hereof. At the end of this phase, all personnel to be absorbed by the [DILG] shall have been issued
appointment papers, and the organized Commission and the PNP shall be fully operational.
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.
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 PCINP 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.
As stated at the threshold hereof, the CA, in its decision of July 7, 2005, 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 -
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
60
Petitioners maintain, however, that NAPOLCOM Resolution No. 8,20 particularly Section 1121 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 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.
The contention does not commend itself for concurrence.
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.)
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 3822 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.
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 PCINP, 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 merger14 while "transfer" denotes movement from one
position to another. Clearly, "abolition" cannot be equated with "absorption."
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
True it is that Section 9015 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.1a\^/phi1.net
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 Law25 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."1awphi1.nt
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 sponsor16 of the corresponding House bill in his sponsorship
speech, thus:
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.
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.
Then, too, is the all familiar rule that:
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.
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.
With the conclusion herein reached that the INP was not in fact abolished but was merely transformed
to become the PNP, members of the INP which include the herein respondents are, therefore, not
excluded from availing themselves of the retirement benefits accorded to PNP retirees under Sections
7417 and 7518 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:
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.
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 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
61
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
G.R. No. L-20014
November 27, 1968
FRANCISCO CRISOLOGO and CONSOLACION FLORENTINO CRISOLOGO, petitionersappellants,

vs.
ISAAC CENTENO and ASUNCION AQUINO CENTENO, oppositors-appellees.
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:
B. Martinez for petitioners-appellants.

Luis Bello, Jr. for oppositors-appellees.
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
CAPISTRANO, J.:
On January 18, 1955, the spouses Francisco Crisologo and Consolacion Florentino filed in the Court
of First Instance of Ilocos Sur an ex parte petition for consolidation of ownership in them as vendees a
retro of two parcels of land situated at Barrio Lapting, Lapog, Ilocos Sur, on the ground that the
vendors, the spouses Isaac Centeno and Asuncion Aquino, have failed to exercise their right of
repurchase within the periods stipulated in the two contracts of sale with pacto de retro. On January
28, 1955, after hearing at which the petitioners presented evidence in support of the petition, the
court a quo, through Judge Francisco Geronimo, granted the petition. On July 19, 1956, the vendors
filed a motion to set aside the Order of January 28, 1955, and on July 27, 1956, the court a quo,
through Judge Felix Q. Antonio, granted the motion on the ground that the movants had not been duly
notified of the hearing. On motion by the petitioners to set aside the Order of July 27, 1956, on the
ground that the vendors had been notified by registered mail of the hearing, the lower court, by its
Order of February 27, 1957, granted the motion and set aside the Order of July 27, 1956. The vendors
appealed the Order of February 27, 1957, to the Court of Appeals. On June 27, 1958, the Court of
Appeals rendered judgment in the appeal setting aside the lower court's Order of February 27, 1957,
after holding that the vendors had not been legally notified of the petition and the hearing, and that the
Order of January 28, 1955, was a patent nullity. The Court of Appeals remanded the record to the
lower court for reopening and for further proceedings. Accordingly, after the vendors had been duly
summoned as respondents, they filed their answer alleging that the two contracts of sale with pacto de
retro were really intended as equitable mortgages as securities for usurious loans. After trial, the lower
court rendered its decision on October 26, 1960, holding that respondents' allegation was
substantiated by their evidence. Judgment was rendered in favor of the respondents as follows:
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.1awphi1.nt 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.
WHEREFORE, in view of the foregoing, the Court hereby renders judgment declaring that
Exhibits 2 and 3 are actually intended by the parties to be Deeds of Equitable Mortgage, and
as such respondents are entitled to redeem the lands described therein, by paying to the
petitioners whatever balance remains of the principal and interest thereon at 12%, after
deducting therefrom the excess interest paid on November 11, 1952 and September 10,
1953, and the value of the produce taken from those properties by petitioners in accordance
with the above findings from 1955 until the possession of these properties are returned to
respondents and upon such settlement, the petitioners are ordered to execute the
corresponding release of mortgage.
No costs.
SO ORDERED.
Petition for consolidation of title is therefore denied, with costs against petitioners.
The petitioners appealed to the Supreme Court on questions of law.
Appellants contend that the lower court erred in not finding that the Order of January 28, 1955, was
valid, final and executory and that all proceedings thereafter taken, including the vendors' appeal to the
Court of Appeals and its decision rendered in said appeal setting aside the Order of February 27,
1957, and remanding the case reopening and further proceedings, as well as the proceedings
thereafter taken including the decision of October 26, 1960, are null and void. The contention is
untenable in view of the following considerations:
(1) Article 1607 of the Civil Code which provides that:
62
In case of real property, the consolidation of ownership in the vendee by virtue of the failure
of the vendor to comply with the provisions of article 1616 shall not be recorded in the
Registry of Property without a judicial order, after the vendor has been duly heard.
G.R. No. 42108 December 29, 1989

OSCAR D. RAMOS and LUZ AGUDO, petitioners,
vs.
HON. COURT OF APPEALS, ADELAIDA RAMOS and LAZARO E. MENESES, respodents.
contemplates a contentious proceeding wherein the vendor a retro must be named respondent in the
caption and title of the petition for consolidation of ownership and has been duly heard.
In the instant case, the caption and title of the petition for consolidation of ownership named the
vendees as petitioners, but did not name the vendors as respondents, and said vendors were not duly
summoned and heard. In view thereof, the Order of January 28, 1955, was a patent nullity having been
issued contrary to the contentious proceeding contemplated in Article 1607 of the Civil Code, and the
lower court not having acquired jurisdiction over the persons of the vendors;
Godofredo V. Magbiray for petitioners.

Joselito Lim for private respondents.
(2) The judgment of the Court of Appeals setting aside the Order of February 27, 1957, and in
consequence thereof the Order of January 28, 1955, as a patent nullity on the ground that the lower
court did not acquire jurisdiction over the persons of the vendors because they had not been duly
summoned is res judicata on the question of nullity of said orders; and.
REGALADO, J.:
The instant petition for review on certiorari impugns the decision of the Court of Appeals dated October
7, 1975, 1which affirmed in toto the decision of the Court of First Instance of Tarlac in Civil Case No.
4168, entitled "Adelaida Ramos, et al. vs. Oscar D. Ramos, et al.," holding that the contracts between
the parties are not ventas con pacto de retro but are equitable mortgages.
(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.
Sometime in January 1959, private respondent Adelaida Ramos borrowed from her brother, petitioner
Oscar D. Ramos, the amounts of P 5,000.00 and P 9,000.00 in connection with her business
transaction with one Flor Ramiro, Fred Naboa and Atty. Ruperto Sarandi involving the recovery of a
parcel of land in Tenejeros, Malabon. The said amount was used to finance the trip to Hawaii of
Ramiro, Naboa and Atty. Sarandi. As security for said loan, private respondent Adelaida Ramos
executed in favor of petitioners two (2) deeds of conditional sale dated May 27, 1959 and August 30,
1959, of her rights, shares, interests and participation respectively over Lot No. 4033 covered by
Original Certificate of Title No. 5125 registered in the name of their parents, Valente Ramos and
Margarita Denoga, now deceased; 2 and Lot No. 4221 covered by Transfer Certificate of Title No.
10788 then registered in the names of Socorro Ramos, Josefina Ramos and Adelaida Ramos, 3 said
properties being of the Cadastral Survey of Paniqui, Tarlac.
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..
Upon the failure of said private respondent as vendor a retro to exercise her right of repurchase within
the redemption period, aforenamed petitioner filed a petition for consolidation and approval of the
conditional sale of Lot No. 4033 in Special Proceedings No. 5174, entitled "Intestate Estate of the late
Margarita Denoga," 4 and a petition for approval of the pacto de retro sale of Lot No. 4221 in the former
Court of First Instance of Tarlac acting as a cadastral court. 5 On January 22, 1960, the said probate
court issued an order with the following disposition:
WHEREFORE, the deed of CONDITIONAL SALE executed on May 27, 1959, by
Adelaida Ramos in favor of spouses Oscar D. Ramos and Luz Agudo, conveying
to the latter by way of pacto de retro sale whatever rights and interests the former
may have in Lot No. 4033 of the Cadastral Survey of Paniqui, which deed of
conditional sale is known as Document No. 14, Page 26, Book VI, Series of 1959,
of the notarial register of Notary Public Jose P. Sibal, is hereby approved. 6
The cadastral Court also issued a similar order dated April 18, 1960, the dispositive portion of which
reads:
WHEREFORE, by way of granting the petition, the Court orders the consolidation
of ownership and dominion in petitioners-spouses Oscar D. Ramos and Luz
Agudo over the rights, shares and interests of Adelaida Ramos in Lot No. 4221 of
the Cadastral Survey of Paniqui, Tarlac, which the latter sold to the former under a
pacto de retro sale executed in a public instrument known as Document No. 22,
Page 28, Book No. VI. Series of 1959, of the Notarial Registry of Notary Public
63
Jose P. Sibal but which she failed to repurchase within the period specified in said
Document. 7
On June 14, 1971, petitioners appealed said decision to the Court of Appeals which, on October 7,
1975; affirmed in all respects the judgment of the trial court. Petitioners' motion for reconsideration of
said decision was denied on November 27, 1975. 11
Private respondents had been and remained in possession of these properties until sometime in 1964
when petitioner took possession thereof.
On January 8, 1976, petitioners filed the petition at bar anchored on the following assignments of
errors:
On February 28, 1968, private respondent filed Civil Case No. 4168 with the then Court of First
Instance of Tarlac for declaration of nullity of orders, reformation of instrument, recovery of possession
with preliminary injunction and damages. The complaint therein alleged that the deeds of conditional
sale, dated May 27, 1959 and August 30, 1959, are mere mortgages and were vitiated by
misrepresentation, fraud and undue influence and that the orders dated January 22, 1960 and April 18,
1960, respectively issued by the probate and cadastral courts, were null and void for lack of
jurisdiction. Petitioners, in their answer to the complaint, specifically deny the allegations of fraud and
misrepresentation and interposed as defense the fact that the questioned conditional sales of May 27,
1959 and August 30, 1959 were voluntarily executed by private respondent Adelaida Ramos and truly
expressed the intention of the parties; that the action, if any, has long prescribed; that the questioned
orders of January 22, 1960 and April 18, 1960, approving the consolidation of ownership of the lands in
question in favor of petitioner were within the jurisdiction of the lower court, in its capacity as a probate
court insofar as Lot No. 4033 is concerned, and acting as a cadastral court with respect to Lot No.
4221; and that said lands subject of the conditional sales were in custodia legis in connection with the
settlement of the properties of the late Margarita Denoga, the predecessor in interest of both
petitioners and private respondents.
1. The Hon. Court of Appeals erred in not applying the correct

provisions of law interpreting the conditional sales dated May
27, 1959 and August 30, 1959, Exhibits 'B' and 'G' as
equitable mortgages.
2. That as a consequence of its ruling that the conditional
sales, Exhibits 'B' and 'G', are equitable mortgages, the Hon.
Court of Appeals erred in ordering the reformation of the
same.
3. The Honorable Court of Appeals erred in holding that the
order dated January 22, 1960, Exhibit C or 2, and the order
dated April 18, 1960, Exhibit H or 6, issued by the probate
court in Sp. Proc. No. 5174 and by the cadastral court in
G.L.R.O. Rec. No. 395, respectively, are null and void for lack
of jurisdiction.
On January 7, 1970, the court below issued a pre-trial order to the effect that petitioners admit the
genuineness and due execution of the promissory notes marked as Exhibits "F" and "F-1 " and that the
principal triable issue is whether or not the documents purporting to be deeds of conditional sale,
marked as Exhibits "B", "B-1" and "G" were in fact intended to be equitable mortgages. 8 In its order
dated February 17, 1971, the trial court also declared: "Both parties agreed and manifested in open
court the principal obligation in the transaction reflected in Exhibits 'B' and 'B-l' and 'G' is one of loan.
The parties differ, however, on the nature of the security described therein. 9
4. The Hon. Court of Appeals erred in not applying the

applicable provisions of law on the prescription of action and
in not dismissing the complaint filed in the lower court. 12
We find the petition devoid of merit.
On May 17, 1971, the court a quo rendered a decision the decretal part of which reads:
Article 1602 of the Civil Code provides:
WHEREFORE, judgment is hereby rendered:
The contract shall be presumed to be an equitable mortgage, in any of the

following cases:
1) Denying defendants' motion to dismiss of February 23,

1970;
(1) When the price of a sale with right to repurchase is

unusually inadequate;
2) Declaring Exhibits 'B', 'B-I' and 'G' as loan transaction

secured by real estate mortgages;
(2) When the vendor remains in possession as lessee or

otherwise;
3) Annulling and setting aside Exhibits 'D', 'D-l', 'I', 'I-l' and 'I-2';
(3) When upon or after the expiration of the right to

repurchase another instrument extending the period of
redemption or granting a new period is executed;
4) Ordering plaintiffs, jointly and severally to pay (within ninety

[90] days from receipt of a copy of this judgment) defendants
the sum of P 5,000.00 specified in Exhibit 'B', with interest
thereon at the legal rate from November 28, 1959 until full
payment together with the sum of P 9,308.00 specified in
Exhibit 'G' with interest thereon at the legal rate from
December 1, 1959 until full payment, and in default of such
payment, let the properties mortgaged under Exhibits 'B', 'B-1'
and 'G' be sold to realize the mortgage debt and costs; and
(4) When the purchaser retains for himself a part of the

purchase price;
(5) When the vendor binds himself to pay the taxes on the
thing sold;
5) Dismissing defendants' counter-claim.
(6) In any other case where it may be fairly inferred that the
real intention of the parties is that the transaction shall secure
the payment of a debt or the performance of any other
obligation.
With costs against defendants. 10
64
In any of the foregoing cases, any money, fruits or other benefit to be received by
the vendee as rent or otherwise shall be considered as interest which shall be
subject to the usury laws.
xxx xxx xxx

Moreover, it is a well entrenched principle in the interpretation of contracts that if the terms thereof are
clear and leave no doubt as to the intention of the contracting parties the literal meaning of the
stipulation shall control but when the words appear to be contrary to the evident intention of the
parties, the latter shall prevail over the former.18
The Court of Appeals, in holding that the two (2) deeds purporting to be pacto de retro sale contracts
are equitable mortgages, relied on the following factual findings of the trial court, to wit:
Several undisputed circumstances persuade this Court (that) the questioned
deeds should be construed as equitable mortgages as contemplated in Article
1602 of the Civil Code, namely: (1) plaintiff vendor remained in possession until
1964 of the properties she allegedly sold in 1959 to defendants; (2) the sums
representing the alleged purchase price were actually advanced to plaintiff by way
of loans, as expressly admitted by the parties at the hearing of February 17, 1971,
reflected in an Order of the same date: and (3) the properties allegedly purchased
by defendant Oscar Ramos and his wife have never been declared for taxation
purposes in their names. Exhibits K, K-1, L and L-1. 13
The admission of parol testimony to prove that a deed, absolute in form, was in fact given and
accepted as a mortgage does not violate the rule against the admission of oral evidence to vary or
contradict the terms of a written instrument. 19 Sales with a right to repurchase, as defined by the Civil
Code, are not favored. We will not construe instruments to be sales with a right to repurchase, with the
stringent and onerous effects which follow, unless the terms of the document and the surrounding
circumstances require it. Whenever, under the terms of the writing, any other construction can fairly
and reasonably be made, such construction will be adopted and the contract will be construed as a
mere loan unless the court can see that, if enforced according to its terms, it is not an unconscionable
one. 20
Even if we indulge the petitioners in their contention that they are justified in not taking possession of
the lots considering that what were allegedly sold to them were only the rights, shares, interests and
participation of private respondent Adelaida Ramos in the said lots which were under
administration, 14 however, such fact will not justify a reversal of the conclusion reached by respondent
court that the purported deeds of sale con pacto de retro are equitable mortgages. Such a conclusion
is buttressed by the other circumstances catalogued by respondent court especially the undisputed
fact that the two deeds were executed by reason of the loan extended by petitioner Oscar Ramos to
private respondent Adelaida Ramos and that the purchase price stated therein was the amount of the
loan itself.
On the faces thereof, the contracts purport to be sales with pacto de retro; however, since the same
were actually executed in consideration of the aforesaid loans said contracts are indubitably equitable
mortgages. The rule is firmly settled that whenever it is clearly shown that a deed of sale with pacto de
retro, regular on its face, is given as security for a loan, it must be regarded as an equitable
mortgage. 21
With respect to the orders dated January 22, 1960 and April 18, 1960, issued by the Court below
acting as a probate court and cadastral court, respectively, the same could not preclude the institution
of the case now under review.
The above-stated circumstances are more than sufficient to show that the true intention of the parties
is that the transaction shall secure the payment of said debt and, therefore, shall be presumed to be an
equitable mortgage under Paragraph 6 of Article 1602 hereinbefore quoted. Settled is the rule that to
create the presumption enunciated by Article 1602, the existence of one circumstance is
enough. 15 The said article expressly provides therefor "in any of the following cases," hence the
existence of any of the circumstances enumerated therein, not a concurrence nor an overwhelming
number of such circumstances, suffices to give rise to the presumption that the contract with the right
of repurchase is an equitable mortgage. As aptly stated by the Court of Appeals:
A reading of the order of the probate court will show that it is merely an approval of the deed of
conditional sale dated May 27, 1959 executed by petitioner Adelaida Ramos in favor of petitioners.
There is nothing in said order providing for the consolidation of ownership over the lots allegedly sold
to petitioners nor was the issue of the validity of said contract discussed or resolved therein. "To give
approval" means in its essential and most obvious meaning, to confirm, ratify, sanction or consent to
some act or thing done by another. 22 The approval of the probate court of the conditional sale is not a
conclusive determination of the intrinsic or extrinsic validity of the contract but a mere recognition of
the right of private respondent Adelaida Ramos as an heir, to dispose of her rights and interests over
her inheritance even before partition. 23 As held in Duran, et al., vs. Duran 24 the approval by the
settlement court of the assignment pendente lite, made by one heir in favor of the other during the
course of the settlement proceedings, is not deemed final until the estate is closed and said order can
still be vacated, hence the assigning heir remains an interested person in the proceeding even after
said approval.
Thus, it may be fairly inferred that the real intention of the parties is that the
transactions in question were entered into to secure the payment of the loan and
not to sell the property (Article 1602, Civil Code). Under Article 1603 of the Civil
Code it is provided that 'in case of doubt, a contract purporting to be a sale with
right to repurchase shall be construed as an equitable mortgage' in this case, we
have no doubt that the transaction between the parties is that of a loan secured by
said properties by way of mortgage. Hence, we find that Exhibits B and G do not
reflect the true and real intention of the parties and should accordingly be
reformed and construed as equitable mortgages. 16
Moreover, the probate jurisdiction of the former court of first instance or the present regional trial court
relates only to matters having to do with the settlement of the estate and probate of wills of deceased
persons, and the appointment and removal of administrators, executors, guardians and trustees.
Subject to settled exceptions not present in this case, the law does not extend the jurisdiction of a
probate court to the determination of questions of ownership that arise during the proceeding. The
parties concerned may choose to bring a separate action as a matter of convenience in the
preparation or presentation of evidence. 25 Obviously, the approval by the probate court of the
conditional sale was without prejudice to the filing of the proper action for consolidation of ownership
and/or reformation of instrument in the proper court within the statutory period of prescription.
Equally puerile is the other contention of petitioners that respondent court erred in not applying the
exclusionary parol evidence rule in ascertaining the true intendment of the contracting parties. The
present case falls squarely under one of the exceptions to said rule as provided in then Section 7 of
Rule 130, thus:
xxx xxx xxx
The same jurisdictional flaw obtains in the order of consolidation issued by the cadastral court. The
court of first instance or the regional trial court, acting as cadastral court, acts with limited competence.
It has no jurisdiction to take cognizance of an action for consolidation of ownership, much less to issue
an order to that effect, such action must have been filed in the former court of first instance, now in the
regional trial court, in the exercise of its general jurisdiction. That remedy, and the procedure therefor,
is now governed by Rule 64 of the Rules of Court as a special civil action cognizable by the regional
trial court in the exercise of original general jurisdiction.
(a) Where a mistake or imperfection of the writing or its failure

to express the true intent and agreement of the parties, or the
validity of the agreement is put in issue by the pleadings; 17
65
Antecedent thereto, Article 1607 of the Civil Code provided for consolidation as follows:
interest on the money loaned. In many instances, the interest is usurious. Thus,
the usury law is also circumvented.
In case of real property, the consolidation of ownership in the vendee by virtue of

the failure of the vendor to comply with the provisions of article 1616 shall not be
recorded in the Registry of Property without a judicial order, after the vendor has
been duly heard.
It is high time these transgressions of the law were stopped. It is believed by the
Commission that the plan submitted for the solution of the problem will meet with
the approval of an enlightened public opinion, and in general, of everyone moved
by a sense of justice.
Hence in Crisologo, et al. vs. Centeno, et al., 26 we ruled that said Article 1607 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. An order granting the
vendee's petition for consolidation of ownership, without the vendor a retro being named as
respondent, summoned and heard, is a patent nullity for want of jurisdiction of the court over the
person of the latter.
During the deliberations of the Commission the question arose as to whether the
contract of purchase with pacto de retro should be abolished and forbidden. On
first impression, this should be done, but there is every reason to fear that in such
a case the usurious money-lenders would demand of the borrowers that, although
the real agreement is one of loan secured with a mortgage, the instrument to be
signed should purport to be an absolute sale of the property involved. Should this
happen, the problem would become aggravated. Moreover, it must be admitted
that there are some cases where the parties really intend a sale with right to
repurchase. Although such cases are rare, still the freedom of contract must be
maintained and respected. Therefore, the contract under consideration is
preserved in the Project of Civil Code, but with adequate safeguards and
restrictions. 31
The questioned order of consolidation issued by the cadastral court, being void for lack of jurisdiction,
is in contemplation of law non-existent and may be wholly disregarded. Such judgment may be
assailed any time, either directly or collaterally, by means of a separate action or by resisting such
judgment in any action or proceeding whenever it is invoked. 27 It is not necessary to take any step to
vacate or avoid a void judgment; it may simply be ignored. 28
On the issue of prescription, in addition to what has been said, the present case, having been filed on
February 28, 1960, approximately seven (7) years from the execution of the questioned deeds, was
seasonably instituted. The prescriptive period for actions based upon a written contract and for
reformation is ten (10) years under Article 1144 of the Civil Code. Such right to reformation is expressly
recognized in Article 1365 of the same code. 29
WHEREFORE, the instant petition is hereby DENIED and the assailed decision of the Court of
Appeals is hereby AFFIRMED.
SO ORDERED.
Article 1602 of the Civil Code is designed primarily to curtail the evils brought about by contracts of
sale with right of repurchase, such as the circumvention of the laws against usury and pactum
commissorium. 30 In the present case before us, to rule otherwise would contravene the legislative
intent to accord the vendor a retro maximum safeguards for the protection of his legal rights under the
true agreement of the parties. The judicial experience in cases of this nature and the rationale for the
remedial legislation are worth reiterating, considering that such nefarious practices still persist:
It must be admitted that there are some cases where the parties really intend a
sale with right to repurchase. Although such cases are rare, still the freedom of
contract must be maintained and respected. Therefore, the contract under
consideration is preserved, but with adequate safeguards and restrictions.
One of the gravest problems that must be solved is that raised by the contract of
sale with right of repurchase or pacto de retro. The evils arising from this contract
have festered like a sore on the body politic. ...
xxx xxx xxx
It is a matter of common knowledge that in practically all of the so-called contracts
of sale with right of repurchase, the real intention of the parties is that the
pretended purchase-price is money loaned, and in order to secure the payment of
the loan a contract purporting to be a sale with pacto de retro is drawn up. It is
thus that the provisions contained in articles 1859 and 1858 of the present Civil
Code which respectively prohibit the creditor from appropriating the things given in
pledge or mortgage and ordering that said things be sold or alienated when the
principal obligation becomes due, are circumvented.
Furthermore, it is well-known that the practice in these so-called contracts of sale
with pacto de retro is to draw up another contract purporting to be a lease of the
property to the supposed vendor, who pays in money or in crops a so-called rent.
It is, however, no secret to anyone that this simulated rent is in truth and in fact
66
G.R. No. 183110
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
October 7, 2013
REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
AZUCENA SAAVEDRA BATUGAS, Respondent.
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 20042005.23 The business name and the business permits issued to the spouses store, Azucenas General
Merchandising, are registered in Santiagos name,24 and he is also the National Food Authority
licensee for their rice and corn business.25 During their marital union, the Batuigas spouses bought
parcels of land in Barrio Lombog, Margosatubig.26
DECISION
DEL CASTILLO, J.:
"It is universally accepted that a State, in extending the privilege of citizenship to an alien wife of one of
its citizens could have had no other objective than to maintain a unity of allegiance among the
members of the family."1
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.
This Petition for Review on Certiorari2 assails the May 23, 2008 Decision3 of the Court of Appeals (CA)
G.R. CV No. 00523, which affirmed the January 31, 2005 Decision4 of the Regional Trial Court (RTC),
Branch 29, Zamboanga del Sur that granted the Petition for Naturalization 5 of respondent Azucena
Saavedra Batuigas (Azucena).
To further support Azucenas Petition, Santiago and witnesses Eufemio Miniao and Irineo Alfaro
testified.
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.
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:
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 mens ideas; that she is
neither a polygamist nor believes in polygamy; that the nation of which she is a subject is not at war
with the Philippines; that she intends in good faith to become a citizen of the Philippines and to
renounce absolutely and forever all allegiance and fidelity to any foreign prince, potentate, state or
sovereignty, and particularly to China; and that she will reside continuously in the Philippines from the
time of the filing of her Petition up to the time of her naturalization.
x x x In sum, the petitioner has all the qualifications and none of the disqualifications to be admitted as
citizen of the Philippines in accordance with the provisions of the Naturalization Law.
WHEREFORE, premises considered, the petition is hereby granted.
SO ORDERED.29
In its Omnibus Motion,30 the OSG argued that the ex-parte presentation of evidence before the Branch
Clerk of Court violates Section 10 of CA 473,31 as the law mandates public hearing in naturalization
cases.
Rejecting this argument in its March 21, 2005 Order,32 the RTC held that the public has been fully
apprised of the naturalization proceedings and was free to intervene. The OSG and its delegate, the
Provincial Prosecutor, are the only officers authorized by law to appear on behalf of the State, which
represents the public. Thus, when the OSG was furnished with a copy of the notice of hearing for the
reception of evidence ex-parte, there was already a sufficient compliance with the requirement of a
public hearing.
After all the jurisdictional requirements mandated by Section 97 of CA 473had been complied with, the
Office of the Solicitor General (OSG) filed its Motion to Dismiss8 on the ground that Azucena failed to
allege that she is engaged in a lawful occupation or in some known lucrative trade. Finding the
grounds relied upon by the OSG to be evidentiary in nature, the RTC denied said Motion.9 Thereafter,
the hearing for the reception of Azucenas evidence was then set on May 18, 2004.10
Neither the OSG nor the Office of the Provincial Prosecutor appeared on the day of the hearing.
Hence, Azucenas counsel moved that the evidence be presented ex-parte, which the RTC granted.
Accordingly, the RTC designated its Clerk of Court as Commissioner to receive Azucenas
evidence.11 During the November 5, 2004 ex-parte hearing, no representative from the OSG appeared
despite due notice.12
The OSG then appealed the RTC judgment to the CA,33 contending that Azucena failed to comply with
the income requirement under CA 473. The OSG maintained that Azucena is not allowed under the
Retail Trade Law (Republic Act No. 1180) to engage directly or indirectly in the retail trade. Hence, she
cannot possibly meet the income requirement. And even if she is allowed, her business is not a
"lucrative trade" within the contemplation of the law or that which has an appreciable margin of income
over expenses in order to provide for adequate support in the event of unemployment, sickness, or
disability to work. The OSG likewise disputed Azucenas claim that she owns real property because
aliens are precluded from owning lands in the country.
Born in Malangas, Zamboanga del Sur on September 28, 1941 to Chinese parents,13 Azucena has
never departed the Philippines since birth. She has resided in Malangas, Zamboanga del Sur from
1941-1942; in Margosatubig, Zamboanga del Sur from 1942-1968; in Bogo City for nine months; in Ipil,
Zamboanga del Sur from 1969-1972; in Talisayan, Misamis Oriental from 1972-1976; and, in
Margosatubig, Zamboanga del Sur, thereafter, up to the filing of her Petition.
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 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
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
67
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."
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
Azucena denied that the hearing for her Petition was not made public, as the hearing before the Clerk
of Court was conducted in the courts session hall. Besides, the OSG cannot claim that it was denied
its day in court as notices have always been sent to it. Hence, its failure to attend is not the fault of the
RTC.
Records however show that in February 1980, Azucena applied before the then Commission on
Immigration and Deportation (CID) for the cancellation of her Alien Certificate of Registration (ACR)
No. 03070541 by reason of her marriage to a Filipino citizen. The CID granted her application. However,
the Ministry of Justice set aside the ruling of the CID as it found no sufficient evidence that Azucenas
husband is a Filipino citizen42 as only their marriage certificate was presented to establish his
citizenship.
Ruling of the Court of Appeals

35
In dismissing the OSGs appeal, the CA found that Azucenas financial condition permits her and her
family to live with reasonable comfort in accordance with the prevailing standard of living and
consistent with the demands of human dignity. It said:
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 that her
application for derivative naturalization under Section 15 of CA 473 was denied should not prevent her
from seeking judicial naturalization under the same law. It is to be remembered that her application at
the CID was denied not because she was found to be disqualified, but because her husbands
citizenship was not proven. Even if the denial was based on other grounds, it is proper, in a judicial
naturalization proceeding, for the courts to determine whether there are in fact grounds to deny her of
Philippine citizenship based on regular judicial naturalization proceedings.
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.
As the records before this Court show, Santiagos Filipino citizenship has been adequately proven.
Under judicial proceeding, Santiago submitted his birth certificate indicating therein that he and his
parents are Filipinos. He also submitted voters registration, land titles, and business
registrations/licenses, all of which are public records. He has always comported himself as a Filipino
citizen, an operative fact that should have enabled Azucena to avail of Section 15 of CA473. On the
submitted evidence, nothing would show that Azucena suffers from any of the disqualifications under
Section 4 of the same Act.
Our Ruling
The Petition lacks merit.
Under existing laws, an alien may acquire Philippine citizenship through either judicial naturalization
under CA 473 or administrative naturalization under Republic Act No. 9139 (the "Administrative
Naturalization Law of 2000"). A third option, called derivative naturalization, which is available to alien
women married to Filipino husbands is found under Section 15 of CA 473, which provides that:
However, the case before us is a Petition for judicial naturalization and is not based on Section 15 of
CA 473 which was denied by the then Ministry of Justice. The lower court which heard the petition and
received evidence of her qualifications and absence of disqualifications to acquire Philippine
citizenship, has granted the Petition, which was affirmed by the CA. We will not disturb the findings of
the lower court which had the opportunity to hear and scrutinize the evidence presented during the
hearings on the Petition, as well as determine, based on Azucenas testimony and deportment during
the hearings, that she indeed possesses all the qualifications and none of the disqualifications for
acquisition of Philippine citizenship.
"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
The OSG has filed this instant Petition on the ground that Azucena does not have the qualification
required in no. 4 of Section 2 of CA 473 as she does not have any lucrative income, and that the
proceeding in the lower court was not in the nature of a public hearing. The OSG had the opportunity
to contest the qualifications of Azucena during the initial hearing scheduled on May 18, 2004.However,
the OSG or the Office of the Provincial Prosecutor failed to appear in said hearing, prompting the lower
court to order ex parte presentation of evidence before the Clerk of Court on November 5, 2004. The
OSG was also notified of the ex parte proceeding, but despite notice, again failed to appear. The OSG
had raised this same issue at the CA and was denied for the reasons stated in its Decision. We find no
reason to disturb the findings of the CA on this issue. Neither should this issue further delay the grant
of Philippine citizenship to a woman who was born and lived all her life, in the Philippines, and devoted
all her life to the care of her Filipino family. She has more than demonstrated, under judicial scrutiny,
her being a qualified Philippine citizen. On the second issue, we also affirm the findings of the CA that
since the government who has an interest in, and the only one who can contest, the citizenship of a
person, was duly notified through the OSG and the Provincial Prosecutors office, the proceedings
have complied with the public hearing requirement under CA 473.
Thus, the Court categorically declared in Moy Ya Lim Yao v. Commissioner of Immigration:38
Accordingly, We now hold, all previous decisions of this Court indicating otherwise notwithstanding,
that under Section 15 of Commonwealth Act 473, an alien woman marrying a Filipino, native born or
naturalized, becomes ipso facto a Filipina provided she is not disqualified to be a citizen of the
Philippines under Section 4 of the same law. Likewise, an alien woman married to an alien who is
subsequently naturalized here follows the Philippine citizenship of her husband the moment he takes
his oath as Filipino citizen, provided that she does not suffer from any of the disqualifications under
said Section 4.39
As stated in Moy Ya Lim Yao, the procedure for an alien wife to formalize the conferment of Filipino
citizenship is as follows:
Regarding the steps that should be taken by an alien woman married to a Filipino citizen in order to
acquire Philippine citizenship, the procedure followed in the Bureau of Immigration is as follows: The
alien woman must file a petition for the cancellation of her alien certificate of registration alleging,
among other things, that she is married to a Filipino citizen and that she is not disqualified from
acquiring her husbands citizenship pursuant to Section 4 of Commonwealth Act No. 473, as amended.
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.
68
Azucena is a teacher by profession and has actually exercised her profession before she had to quit
her teaching job to assume her family duties and take on her role as joint provider, together with her
husband, in order to support her family. Together, husband and wife were able to raise all their five
children, provided them with education, and have all become professionals and responsible citizens of
this country. Certainly, this is proof enough of both husband and wifes lucrative trade. Azucena herself
is a professional and can resume teaching at anytime. Her profession never leaves her, and this is
more than sufficient guarantee that she will not be a charge to the only country she has known since
birth.
G.R. No. L-16108
October 31, 1961
IN THE MATTER OF THE PETITION FOR DECLARATORY RELIEF REGARDING CIVIL STATUS,
ELEUTERIA FELISETA TAN, petitioner-appellee,
vs.
REPUBLIC OF THE PHILIPPINES, oppositor-appellant.
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:
Valeriano S. Kaamino for petitioner-appellee.

Office of the Solicitor General for oppositor-appellant.
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 husbands interests in property and business activities
reserved by law to citizens should not form part of the conjugal partnership and be denied to the wife,
nor that she herself cannot, through her own efforts but for the benefit of the partnership, acquire such
interests. Only in rare instances should the identity of husband and wife be refused recognition, and
we submit that in respect of our citizenship laws, it should only be in the instances where the wife
suffers from the disqualifications stated in Section 4 of the Revised Naturalization Law.43
LABRADOR, J.:
Appeal from a decision of the Court of First Instance of Misamis Occidental, Hon. Patricio C. Ceniza,
presiding, the dispositive part of which reads as follows:
WHEREFORE, premises considered, the court hereby renders judgment declaring said
Eleuteria Feliseta Tan a Filipino citizen; that her registration as an alien has been a clear
mistake on her part and on the part of the City Treasurer of Ozamis City and therefore, the
Commissioner of Immigration is hereby ordered to cancel the Alien Certificate of Registration
of the herein petitioner as well as those of her children born out her relationship as husband
and wife without benefit of marriage with Tan King Pock, namely: Loreta Tan, Nenita Tan,
Lourdes Tan, Leonila Tan, Tan King Pock, Jr., and William Tan. (ROA, pp. 29-30).
We are not unmindful of precedents to the effect that there is no proceeding authorized by the law or
by the Rules of Court, for the judicial declaration of the citizenship of an individual.44 "Such judicial
declaration of citizenship cannot even be decreed pursuant to an alternative prayer therefor in a
naturalization proceeding."45
This case however is not a Petition for judicial declaration of Philippine citizenship but rather a Petition
for judicial naturalization under CA 473. In the first, the petitioner believes he is a Filipino citizen and
asks a court to declare or confirm his status as a Philippine citizen. In the second, the petitioner
acknowledges he is an alien, and seeks judicial approval to acquire the privilege of be coming a
Philippine citizen based on requirements required under CA 473.Azucena has clearly proven, under
strict judicial scrutiny, that she is qualified for the grant of that privilege, and this Court will not stand in
the way of making her a part of a truly Filipino family.
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.
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.
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.
SO ORDERED.
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
69
that the petition be denied, alleging that the petition is not in order; that the children are not
represented by a guardian, and that the end sought in the petition should be threshed out in a proper
action. After hearing the petition and the arguments, the court below entered the order already quoted
above.
G.R. No. 184915
June 30, 2009
NILO T. PATES, Petitioner,

vs.
COMMISSION ON ELECTIONS and EMELITA B. ALMIRANTE, Respondents.
The judgment or order appealed from must be set aside.
RESOLUTION
Declaratory relief in this jurisdiction is a special civil action which may lie only when "any person
interested under a deed, will, contract or other written instrument, or whose rights are affected by
statute or ordinance," demands construction thereof for a declaration of his rights thereunder. None of
the above circumstances exists in the case under consideration. And this Court has already held that
there is no proceeding established by law or the rules by which any person claiming to be a citizen
may get a declaration in a court of justice to that effect or in regard to his citizenship.
BRION, J.:
Our Resolution of November 11, 2008 dismissed the petition in caption pursuant to Section 3, Rule 64
of the Rules of Court which provides:
SEC. 3. Time to file petition.The petition shall be filed within thirty (30) days from notice of the
judgment or final order or resolution sought to be reviewed. The filing of a motion for new trial or
reconsideration of said judgment or final order or resolution, if allowed under the procedural rules of
the Commission concerned, shall interrupt the period herein fixed. If the motion is denied, the
aggrieved party may file the petition within the remaining period, but which shall not be less than five
(5) days in any event, reckoned from notice of denial.
Under our laws, there can be no action or proceeding for the judicial declaration of the
citizenship of an individual. Courts of justice exist for the settlement of justiciable
controversies, which imply a given right, legally demandable and enforceable, an act or
omission violative of said right, and a remedy, granted or sanctioned by law, for said breach
of right. As an incident only of the adjudication of the rights of the parties to a controversy,
the court may pass upon, and make a pronouncement relative to, their status. Otherwise,
such a pronouncement is beyond judicial power. Thus, for instance, no action or proceeding
may be instituted for a declaration to the effect that plaintiff or petitioner is married, or single
or a legitimate child, although a finding thereon may be made as a necessary premise to
justify a given relief available only to one enjoying said status. At times, the law permits the
acquisition of a given status, such as naturalization, by judicial decree. But, there is no
similar legislation authorizing the institution of a judicial proceeding to declare that a given
person is part of our citizenry. (Tan vs. Republic, G.R. No. L-14159, April 18, 1960, reiterated
in G.R. No. L-15775, April 29, 1961).
taking into account the following material antecedents:

a. February 1, 2008 The COMELEC First Division issued its Resolution (assailed in the
petition);
b. February 4, 2008 The counsel for petitioner Nilo T. Pates (petitioner) received a copy of
the February 1, 2008 Resolution;
c. February 8, 2008 The petitioner filed his motion for reconsideration (MR) of the February
1, 2008 Resolution (4 days from receipt of the February 1, 2008 Resolution)
d. September 18, 2008 The COMELEC en banc issued a Resolution denying the
petitioners MR (also assailed in the petition).
If the petition be considered as one for declaratory judgment, the facts do not warrant the filing of the
said special civil action. If the petition seeks to compel the Commissioner of Immigration to cancel her
and her children's alien certificate of registration, this petition would not lie because such a remedy of
cancellation of alien certificate of registration can only be had by virtue of a judgment of a competent
court, in an action where the citizenship of parties is a material matter in issue, declaring the Filipino
citizenship of the petitioner and her children, and such declaration cannot be obtained directly because
there is no proceeding at present provided by law or the rules for such purpose.
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.
WHEREFORE, the judgment appealed from should be, as it is hereby, set aside, and the petition
dismissed. With costs against petitioner-appellee.
The Motion for Reconsideration

The petitioner asks us in his "Urgent Motion for Reconsideration with Reiteration for the Issuance of a
Temporary Restraining Order" to reverse the dismissal of his petition, arguing that the petition was
seasonably filed under the fresh period rule enunciated by the Supreme Court in a number of cases
decided beginning the year 2005. The "fresh period" refers to the original period provided under the
Rules of Court counted from notice of the ruling on the motion for reconsideration by the tribunal
below, without deducting the period for the preparation and filing of the motion for reconsideration.
He claims that, historically, the fresh period rule was the prevailing rule in filing petitions for certiorari.
This Court, he continues, changed this rule when it promulgated the 1997 Rules of Civil Procedure and
Circular No. 39-98, which both provided for the filing of petitions within the remainder of the original
period, the "remainder" being the original period less the days used up in preparing and filing a motion
for reconsideration. He then points out that on 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:
70
(1) Neypes v. Court of Appeals2 which thenceforth applied the fresh
Procedural rules, we must stress, should be treated with utmost respect and due regard since they are
designed to facilitate the adjudication of cases to remedy the worsening problem of delay in the
resolution of rival claims and in the administration of justice. The requirement is in pursuance to the bill
of rights inscribed in the Constitution which guarantees that "all persons shall have a right to the
speedy disposition of their before all judicial, quasi-judicial and administrative bodies," the adjudicatory
bodies and the parties to a case are thus enjoined to abide strictly by the rules. While it is true that a
litigation is not a game of technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to ensure an orderly and speedy administration of justice.
There have been some instances wherein this Court allowed a relaxation in the application of the
rules, but this flexibility was "never intended to forge a bastion for erring litigants to violate the rules
with impunity." A liberal interpretation and application of the rules of procedure can be resorted to only
in proper cases and under justifiable causes and circumstances. (Emphasis supplied)
eriod rule to ordinary appeals of decisions of the Regional Trial Court to the Court of
Appeals;
(2) Spouses de los Santos v. Vda. de Mangubat3 reiterating Neypes;
(3) Active Realty and Development Corporation v. Fernandez4 which, following Neypes,
applied the fresh period rule to ordinary appeals from the decisions of the Municipal Trial
Court to the Regional Trial Court; and
(4) Romero v. Court of Appeals5 which emphasized that A.M. No. 00-02-03-SC is a curative
statute that may be applied retroactively.
A reading of the ruling in these cases, the petitioner argues, shows that this Court has consistently
held that the order or resolution denying the motion for reconsideration or new trial is considered as
the final order finally disposing of the case, and the date of its receipt by a party is the correct
reckoning point for counting the period for appellate review.
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.
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.
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
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.
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.
OUR RULING
We do not find the motion for reconsideration meritorious.
B. As a Matter of Policy
A. As a Matter of Law
In harking back to the history of the fresh period rule, what the petitioner apparently wants for
reasons of uniformity and convenience is the simultaneous amendment of Section 3, Rule 64 and
the application of his proposed new rule to his case. To state the obvious, any amendment of this
provision is an exercise in the power of this Court to promulgate rules on practice and procedure as
provided by Section 5(5), Article VIII of the Constitution. Our rulemaking, as every lawyer should know,
is different from our adjudicatory function. Rulemaking is an act of legislation, directly assigned to us
by the Constitution, that requires the formulation of policies rather than the determination of the legal
rights and obligations of litigants before us. As a rule, rulemaking requires that we consult with our own
constituencies, not necessarily with the parties directly affected in their individual cases, in order to
ensure that the rule and the policy that it enunciates are the most reasonable that we can promulgate
under the circumstances, taking into account the interests of everyone not the least of which are the
constitutional parameters and guidelines for our actions. We point these out as our adjudicatory
powers should not be confused with our rulemaking prerogative.lavvphil
Section 7, Article IX-A of the Constitution provides that unless otherwise provided by the Constitution
or by law, any decision, order, or ruling of each Commission may be brought to the Court
on certiorari by the aggrieved party within 30 days from receipt of a copy thereof. For this reason, the
Rules of Court provide for a separate rule (Rule 64) specifically applicable only to decisions of the
COMELEC and the Commission on Audit. This Rule expressly refers to the application of Rule 65 in
the filing of a petition for certiorari, subject to the exception clause "except as hereinafter provided."6
Even a superficial reading of the motion for reconsideration shows that the petitioner has not
challenged our conclusion that his petition was filed outside the period required by Section 3, Rule 64;
he merely insists that the fresh period rule applicable to a petition for certiorari under Rule 65 should
likewise apply to petitions for certiorari of COMELEC rulings filed under Rule 64.
Rule 64, however, cannot simply be equated to Rule 65 even if it expressly refers to the latter rule.
They exist as separate rules for substantive reasons as discussed below. Procedurally, the most patent
difference between the two i.e., the exception that Section 2, Rule 64 refers to is Section 3 which
provides for a special period for the filing of petitions for certiorari from decisions or rulings of the
COMELEC en banc. The period is 30 days from notice of the decision or ruling (instead of the 60 days
that Rule 65 provides), with the 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).
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.lawphil Section 3, Article IX-C of the
Constitution expressly requires that the COMELECs rules of procedure should expedite the disposition
of election cases. This Court labors under the same command, as our proceedings are in fact the
constitutional extension of cases that start with the COMELEC.
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
71
Based on these considerations, we do not find convenience and uniformity to be reasons sufficiently
compelling to modify the required period for the filing of petitions for certiorari under Rule 64. While the
petitioner is correct in his historical data about the Courts treatment of the periods for the filing of the
different modes of review, he misses out on the reason why the period under Section 3, Rule 64 has
been retained. The reason, as made clear above, is constitutionally-based and is no less than the
importance our Constitution accords to the prompt determination of election results. This reason far
outweighs convenience and uniformity. We significantly note that the present petition itself, through its
plea for the grant of a restraining order, recognizes the need for haste in deciding election cases.
C. Our Liberal Approach
Largely for the same reason and as discussed below, we are not inclined to suspend the rules to come
to the rescue of a litigant whose counsel has blundered by reading the wrong applicable provision. The
Rules of Court are with us for the prompt and orderly administration of justice; litigants cannot, after
resorting to a wrong remedy, simply cry for the liberal construction of these rules.12 Our ruling in Lapid
v. Laurea13 succinctly emphasized this point when we said:
Members of the bar are reminded that their first duty is to comply with the rules of procedure, rather
than seek exceptions as loopholes. Technical rules of procedure are not designed to frustrate the ends
of justice. These are provided to effect the prompt, proper and orderly disposition of cases and, thus,
effectively prevent the clogging of court dockets. Utter disregard of these rules cannot justly be
rationalized by harking on the policy of liberal construction. [Emphasis supplied.]
We add that even for this Court, liberality does not signify an unbridled exercise of discretion. It has its
limits; to serve its purpose and to preserve its true worth, it must be exercised only in the most
appropriate cases.14
WHEREFORE, premises considered, we DENY the motion for reconsideration for lack of merit. Our
Resolution of November 11, 2008 is hereby declared FINAL. Let entry of judgment be made in due
course.
SO ORDERED.
72
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:
G.R. No. 126560 December 4, 1997

ATTY. ALFONSO PAA, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, CIVIL SERVICE COMMISSION and DIRECTOR
BARTOLOME C. AMOGUIS, respondents.
I THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO MYOPIC OR SHORT SIGHTEDNESS IN JUDGMENT IN ADHERING AND
LIMITING ITSELF ONLY TO APPEAL BY A PETITION FOR REVIEW UNDER SUPREME COURT
REVISED ADMINISTRATIVE CIRCULAR NO. 1-95 (REVISED CIRCULAR NO. 1-91) GROSSLY
IGNORING THAT AUTHORITY/POWER TO ISSUE WRITS OF MANDAMUS,
PROHIBITION, CERTIORARI, HABEAS CORPUS AND QUO WARRANTO AND AUXILIARY
WRITS OR PROCESSES, WHETHER OR NOT IN AID OF ITS APPELLATE JURISDICTION AS
GRANTED UNDER PAR. (1), SEC. 9 OF REPUBLIC ACT NO. 7902 IN CASES WHERE
THE QUASI-JUDICIAL BODY COMMITS ULTRAVIREZ [sic] ACTS TANTAMOUNT TO GRAVE
ABUSE OF DISCRETION OR LACK/IN EXCESS OF JURISDICTION AS IN THE INSTANT CASE
WHERE THE CIVIL SERVICE COMMISSION FOR THE FIRST TIME ON APPEAL CONSIDERED
DOCUMENTS/ EVIDENCE WHICH WERE NEVER INTRODUCED/ PRESENTED NOR
ADMITTED DURING THE FORMAL HEARING OF THE ADMINISTRATIVE CASE.
RESOLUTION
DAVIDE, JR., J.:

Petitioner urges us to set aside, on ground of grave abuse of discretion, the resolution of respondent
Court of Appeals of 30 April 1996 in CA-G.R. SP No. 40341 denying petitioner's "Motion for Extension
of Time to File Petition for Certiorari under Rule 45 of the Rules of Court," and its resolution of 19
September 1996 denying the motion for reconsideration.
II A QUESTION OF LAW AS TO WHETHER DECISIONS OR RESOLUTIONS OF THE CIVIL

SERVICE COMMISSION ISSUED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR IN EXCESS OF JURISDICTION CAN NO LONGER BE REVIEWED BY THE
HONORABLE COURT OF APPEALS BY A PETITION FOR REVIEW UNDER RULE 45 OF 65 OF
THE NEW RULES OF COURT AS AMENDED DESPITE THE PATENT GRAVE ABUSE OF
DISCRETION ON THE PART OF THE CIVIL SERVICE COMMISSION IN DECIDING A CASE
BASED ON DOCUMENTS/EVIDENCE INTRODUCED FOR THE FIRST TIME ON APPEAL,
ORDINARY APPEAL BOT [sic] BEING THE PLAIN, SPEEDY AND ADEQUATE REMEDY IN THE
ORDINARY COURSE OF LAW.
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.
III A QUESTION OF LAW AS TO WHETHER A PETITION FOR CERTIORARI UNDER RULE 45

OR 65 OF THE RULES OF COURT AS AMENDED CAN BE CONSIDERED A MODE OF APPEAL
AND IF SO CONSIDERED AS A MODE OF APPEAL WHETHER IT IS THE PROPER REMEDY
TO CORRECT SUPER [sic] GRAVE ABUSE OF DISCRETION OF THE CIVIL SERVICE
COMMISSION IN DECIDING A CASE BASED ON AN [sic] EVIDENCE NOT INTRODUCED
DURING THE FORMAL HEARING OF THE CASE IT APPEARING UNDER SUCH
CIRCUMSTANCE THERE IS NO APPEAL, NOR ANY PLAIN, SPEEDY, AND ADEQUATE
REMEDY IN THE ORDINARY COURSE OF LAW THAT CAN BE MADE AVAILABLE TO THE
PETITIONER EXCEPT THE SAID PETITION FOR CERTIORARI RULE 45 OR 65 OF THE
RULED OF COURT AS AMENDED.
In its 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 CAG.R. SP No. 40341. He alleged that he received a copy of the 13 February 1996 Civil Service
Commission resolution on 29 March 1996 and he had then "until 13 April 1996 within which to file a
petition for review under Rule 45 of the Rules of Court as amended;" and that he needed three (3)
weeks to secure "certified true copies of the resolutions and other pertinent documents [from] the Civil
Service Commission, Quezon City," which were to be attached to the petition. He thus asked for an
extension of 30 days from 13 April 1996 within which to file the petition.
In its Comment, 6 the Office of the Solicitor General submits that the Court of Appeals did not
commit grave abuse of discretion as the petition which petitioner actually filed with the Court of
Appeals in CA-G.R. SP No. 40341 on 10 May 1996 was one for certiorari under Rule 65 of the
Rules of Court, as clearly shown by the grounds petitioner relied upon, to wit:
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:
I. THE HONORABLE PUBLIC RESPONDENT NIEVES CONFESSOR IN HER CAPACITY AS

SECRETARY OF LABOR AND EMPLOYMENT AND REVIEWING OFFICER OF THE
ADMINISTRATIVE COMPLAINT AGAINST THE PETITIONER COMMITTED SUPER [sic] GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION [sic] WHEN
THE COMPLAINANTS IN SAID ADMINISTRATIVE CASE MERELY PETITIONED FOR THE
DEMOTION OF PETITIONER IN POSITION FROM CHIEF OF THE ADMINISTRATIVE
SERVICES TO SUPERVISING OFFICER OF THE INDUSTRIAL RELATIONS DIVISION OF THE
SAME REGIONAL OFFICE, NO. XI, DAVAO CITY, DEPARTMENT OF LABOR AND
EMPLOYMENT BUT THE HONORABLE NIEVES CONFESSOR CAPRICIOUSLY, WHIMSICALLY,
ARROGANTLY, ULTRAVIREZLY [sic] WITHOUT REGARD TO THE CARDINAL RULES OF
PROCEDURE AND EVIDENCE RULED AND DECREED IN ANNEX "A" TO ANNEX "A-10" LIKE
AN EMPRESS THAT PETITIONER SHOULD BE DISMISSED FROM THE SERVICE WHERE
THE SAID PETITIONER SPENT THE BEST 23 YEARS OF HIS LIFE HONESTLY, FAITHFULLY
AND SINCERELY WITHOUT BEING CHARGED OF [sic] ANY SINGLE CASE, ADMINISTRATIVE
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.)
73
OR OTHERWISE, EXCEPT THE PRESENT HARASSMENT CASE UNLIKE THE

AFOREMENTIONED NIEVES CONFESSOR WHO IN HER SHORT STINT AS SECRETARY [OF]
LABOR AND EMPLOYMENT WAS CHARGED IN THE OFFICE OF THE OMBUDSMAN OF [sic]
SEVERAL CRIMINAL AND ADMINISTRATIVE CASES RANGING FROM CORRUPTION TO ALL
SORTS OF CASES INCLUDING HER INEXCUSABLE NEGLIGENCE OF [sic] THE FLOR
CONTEMPLACION AND OTHER SIMILAR CASES INVOLVING OVERSEAS CONTRACT
WORKERS ABROAD.
VI. PUBLIC RESPONDENT CIVIL SERVICE COMMISSION COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING LIKEWISE TO FALSIFICATION OF QUASI JUDICIAL PUBLIC
DOCUMENTS WHEN IT ISSUED RESOLUTION NO. 95-0230 (ANNEX "B" TO "B-8" DATED
JANUARY 12, 1995) AFFIRMING THE ORDER OF HONORABLE PUBLIC RESPONDENT
NIEVES CONFESSOR WHEN THE SAID CIVIL SERVICE COMMISSION MADE IT APPEAR IN
SAID RESOLUTION THAT CERTAIN LETTERS AND MEMORANDA WERE PRESENTED
DURING THE FORMAL HEARING OF THE CASE SUCH AS THOSE LETTERS AND
MEMORANDA ENUMERATED FROM NO. 1 TO 19 OF PAGES 7 AND 8 OF THE QUESTIONED
RESOLUTION NO. 95-0230 WHEN NO SUCH LETTERS AND MEMORANDA WERE EVER
PRESENTED IN THE FORMAL HEARING OF THE ADMINISTRATIVE CASE AND HOW THE
SAID DOCUMENTS FOUND THEIR WAY INTO THE RECORDS OF THE CASE AND FOR THE
FIRST TIME CONSIDERED ON APPEAL BY PUBLIC RESPONDENT CIVIL SERVICE
COMMISSION WHICH WAS THE BASIS OF AFFIRMING THE QUESTIONED ORDER OF HON.
NIEVES CONFESSOR (ANNEX "A" TO ANNEX "A-10") AS WELL AS IN DECLARING
PETITIONER NOTORIOUSLY UNDESIRABLE IS A "MIRACLE" WHICH HAS NEVER BEEN
DISCUSSED NOR EXPLAINED BY PUBLIC RESPONDENT IN THE QUESTIONED
RESOLUTION NO. 95-0230.
II. THE HONORABLE PUBLIC RESPONDENT NIEVES CONFESSOR ACTED WITH SUPER [sic]
GRAVE ABUSE OF DISCRETION AMOUNTING TO FALSE NARRATION OF FACTS OR
UNTRUTHFUL STATEMENT IN THE NARRATION OF FACTS IN VIOLATION OF ART. 171 OF
THE REVISED PENAL CODE TANTAMOUNT TO FALSIFICATION OF QUASI JUDICIALPUBLIC
DOCUMENTS WHEN IN THE QUESTIONED ORDER (ANNEX "A" TO "A-10") SHE ALTERED,
SUBSTITUTED AND CHANGED THE FINDINGS OF THE DEPARTMENT OF LABOR
INVESTIGATOR ATTY. JOEL MARTINEZ BY MAKING IT APPEAR THAT PETITIONER WAS
FOUND TO BE FREQUENTLY ABSENT, WAS DRUNK OF SLEEPING DURING REGULAR
OFFICE HOURS WHEN THE AFOREMENTIONED INVESTIGATING OFFICER HAS [sic] NOT
MADE ANY OF THOSE FINDINGS.
VII. THE HONORABLE PUBLIC RESPONDENT CIVIL SERVICE COMMISSION COMMITTED

GRAVE ABUSE OF DISCRETION AMOUNTING TO FALSIFICATION PUNISHABLE UNDER ART.
171 OF THE REVISED PENAL CODE WHEN IT DENIED PETITIONER'S MOTION FOR
RECONSIDERATION BY ISSUING RESOLUTION NO. 96-0987 DATED FEBRUARY 13, 1996
WHEN IT CONSIDERED FOR THE FIRST TIME ON APPEAL THE QUESTIONED LETTERS AND
MEMORANDA WHICH WERE NEVER INTRODUCED DURING THE FORMAL HEARING OF
THE INSTANT ADMINISTRATIVE CASE.
III. THE HONORABLE NIEVES CONFESSOR COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION OF GROSS IGNORANCE OF THE
LAW WHEN SHE ISSUED THE SEPTEMBER 4, 1992 ORDER (ANNEX A TO ANNEX A-10)
WHEREIN SHE IMPOSED THE SUPREME PENALTY OF DISMISSAL WITH FORFEITURE OF
RETIREMENT BENEFITS AND LEAVE CREDITS ON THE PETITIONER WHICH IS GROSSLY
DISPROPORTIONATE TO PETITIONER'S ALLEGED FINDINGS OF GUILT FOR VIOLATION OF
REASONABLE OFFICE RULES AND REGULATIONS, FREQUENT ABSENCES FROM DUTY
DURING REGULAR OFFICE HOUSES [sic] AND CONDUCT PREJUDICIAL TO THE BEST
INTEREST OF THE SERVICE AND PETITIONER FOR THE FIRST TIME IN HIS 23 YEARS OF
SERVICE WITH THE DEPARTMENT OF LABOR AND EMPLOYMENT WAS CONFRONTED
WITH AN ADMINISTRATIVE HARASSMENT CASE IN A PLACE SEVERAL HUNDRED
KILOMETERS FROM HIS FAMILY WHEN UNDER THE CIVIL SERVICE LAW (PRESIDENTIAL
DECREE NO. 807) AND CODE OF CONDUCT OF GOVERNMENT OFFICIALS AND
EMPLOYEES (R.A. 6713) THE MAXIMUM PENALTY FOR FREQUENT UNAUTHORIZED
ABSENCES WHICH IS CONSIDERED A GRAVE OFFENSE IS ONLY SUSPENSION FROM THE
SERVICE FOR SIX MONTHS AND ONE DAY AND THE PENALTY FOR CONDUCT
PREJUDICIAL TO THE BEST INTEREST OF THE SERVICE IS SIX MONTHS AND ONE DAY TO
ONE YEAR WHILE THE PENALTY FOR VIOLATION OF REASONABLE OFFICE RULES AND
REGULATIONS WHICH IS A LIGHT OFFENSE, IS ONLY A REPRIMAND.
VIII. THE HONORABLE CIVIL SERVICE COMMISSION ACTED WITH GRAVE ABUSE OF
DISCRETION IN ISSUING RESOLUTION NO. 95-0230 AND RESOLUTION NO. 96-0987
DECLARING PETITIONER AS NOTORIOUSLY UNDESIRABLE ON THE BASIS OF
DOCUMENTS NOT ADMITTED IN EVIDENCE NOR PASSED UPON IN THE FORMAL HEARING
OF THE ADMINISTRATIVE CASE BUT WHICH FOR THE FIRST TIME ON APPEAL WAS [sic]
MIRACULOUSLY INSERTED INTO THE RECORDS OF THE CASE IN THE CIVIL SERVICE
COMMISSION AND THESE CONSIST OF THE LETTERS AND MEMORANDA MENTIONED IN
PAGES 7 AND 8 OF THE QUESTIONED RESOLUTION NO. 95-0230 ENUMERATED AS NO. 1
TO 19.
IX. THE HONORABLE CIVIL SERVICE COMMISSION COMMITTED GRAVE ABUSE OF
DISCRETION TANTAMOUNT TO KNOWINGLY RENDERING [AN] UNJUST JUDGMENT WHEN
INSTEAD OF REVIEWING THE FINDINGS AND ORDER OF HONORABLE NIEVES
CONFESSOR (ANNEXES A TO A-10) DATED SEPTEMBER 4, 1992 IT PROCEEDED TO
CONDUCT ITS OWN EX-PARTE INFORMAL INQUIRY BY CONSIDERING DOCUMENTS OR
SCRAP[S] OF PAPERS [sic] MIRACULOUSLY INSERTED INTO THE RECORDS OF THE CASE
IN THE CIVIL SERVICE COMMISSION WHICH WERE FOR THE FIRST TIME TREATED ON
APPEAL THEREBY ISSUING A NEW FINDING THAT THE PETITIONER WAS NOTORIOUSLY
UNDESIRABLE WHICH FINDING WAS NEVER DREAMED NOR CONCEIVED OF BY ANY
PARTY IN THE FORMAL HEARING OF THE ADMINISTRATIVE CASE AND NOT EVEN BY THE
OVER ZEALOUS, OVER VIGILANT, OVER ACTING, OVERSPEEDING, OVER HONEST AND
OVER INCORRUPTIBLE PUBLIC RESPONDENT NIEVES CONFESSOR. 7
IV. THE HONORABLE NIEVES CONFESSOR COMMITTED GRAVE ABUSE OF DISCRETION IN

ISSUING THE SEPTEMBER 4, 1992 ORDER (ANNEX A TO ANNEX A-10) DISMISSING FROM
THE SERVICE THE HEREIN PETITIONER WITH FORFEITURE OF RETIREMENT BENEFITS
AND LEAVE CREDITS AMOUNTING TO CAPRICIOUS, WHIMSICAL, ARROGANT AND
ULTRAVIREZ [sic] EXERCISE OF FUNCTIONS WHEN THE CHIEF OF THE LEGAL SERVICES,
THE ASSISTANT SECRETARY OF LABOR AND THE UNDERSECRETARY OF LABOR HAVE
ALREADY INDORSED TO HER FOR HER APPROVAL THE ORDER DISMISSING THE INSTANT
ADMINISTRATIVE CASE AND AT THE SAME TIME RECOMMENDED THE APPROVAL OF
PETITIONER'S APPLICATION FOR RETIREMENT.
V. THE HONORABLE NIEVES CONFESSOR COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO VIOLATION OF PARAGRAPH (c), SEC. 4 OF R.A. 6713 WHICH IS THE CODE
OF CONDUCT AND ETHICAL STANDARDS FOR PUBLIC OFFICIALS AND EMPLOYEES
CONSISTING OF HER DELIBERATE MALICIOUS REFUSAL TO ACT WITH JUSTNESS AND
SINCERITY [sic] TOWARDS PETITIONER WHEN UNDER FALSE PRETEPSES [sic] SHE
MISLEAD PETITIONER INTO FILING OF [sic] HIS APPLICATION FOR RETIREMENT TO TAKE
EFFECT ON APRIL 15, 1993 AND AFTER PETITIONER FILED SUCH APPLICATION FOR
RETIREMENT AND ACTUALLY STOPPED WORKING IN [THE] OFFICE ON APRIL 15, 1993,
THE SAID HONORABLE NIEVES CONFESSOR DENIED PETITIONER'S MOTION FOR
RECONSIDERATION (ANNEXES F, F-1, F-2, F-3, F-4, AND F-5) AND RETIREMENT
APPLICATION.
The Solicitor General then concluded that since under Revised Administrative Circular No. 1-95 of this
Court appeals from judgments of quasi-judicial agencies such as the Civil Service Commission should
be by verifiedpetition for review, and considering further that Circular No. 2-90 of this Court provides
that appeals taken to either this Court or the Court of Appeals by the wrong or inappropriate mode of
appeal shall be dismissed, then petitioner's motion for extension of time to file petition for certiorari was
correctly denied by the Court of Appeals.
In its Comment 8 filed by its Office for Legal Affairs, respondent Civil Service Commission claims as
misplaced petitioner's reliance on Section 9(1) of B.P. Blg. 129 which vests upon the Court of Appeals
exclusive original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas corpus,
74
and quo warranto, whether or not in aid of its appellate jurisdiction. Respondent Commission contends
that the only mode of appeal from its decisions is a petition for review, in accordance with Revised
Circular No. 1-95 of this Court and Section 9(3) of B.P. Bldg. 129, as amended by R.A. No. 7902. The
latter provides:
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.
Sec. 9. Jurisdiction. The Court of Appeals shall exercise:

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

In his Consolidated Reply, 9 petitioner justified his filing a petition for certiorari under Rule 65 of the
Rules of Court in light of the "super-grave abuse of discretion on the part of the . . . Civil Service
Commission" in issuing the challenged resolution, and that an ordinary appeal was "not appropriate
and sufficient to seek reddress [sic] . . . for the reason that it would in effect impliedly give credence to
the unlawful acts of the Civil Service Commission thus admitting its despotic, arrogant exercise of
authority . . ."
c. Appeal by certiorari must be made within the reglementary period for appeal. An
original action for certiorari may be filed not later than sixty (60) days from notice
of the judgment, order or resolution sought to be assailed.
d. Appeal by certiorari stays the judgment, award or order appealed from. An
original action for certiorari, unless a writ of preliminary injunction or a temporary
restraining order shall have been issued, does not stay the challenged
proceeding.
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."
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.
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:
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.
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.
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
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.
The original jurisdiction of the Court of Appeals over special civil actions for, inter
alia, certiorari, is vested upon it in Section 9(1) of B.P. Blg. 129. This jurisdiction is
concurrent with the Supreme Court 12 and the Regional Trial Court. 13
If, indeed, petitioner initially believed that he had the alternative remedy of a special civil
action for certiorariwhich 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
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
75
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.
G.R. No. 193808
June 26, 2012
LUISK. LOKIN, JR. and TERESITA F. PLANAS, Petitioners,

vs.
COMMISSION ON ELECTIONS (COMELEC), CITIZENS BATTLE AGAINST CORRUPTION PARTY
LIST represented by VIRGINIA S. JOSE SHERWIN N. TUGNA, and CINCHONA CRUZGONZALES, Respondents,
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.
DECISION
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.
SERENO, J.:
The present petition having been flied beyond the reglementary period, Rule 64 of the Rules of Court
compels a dismissal on this basis alone. Despite petitioner's inexplicable disregard of basic concepts,
this Court deems it appropriate to reiterate the specific procedure for the review of judgments made by
the Commission on Elections (COMELEC) as laid down in Rule 64, and how it is differentiated from
the more general remedy afforded by Rule 65.
In any case, even if we were to sympathize with petitioner and permit his recourse under
Rule 65, the end result would remain unchanged since a perusal of the challenged
resolutions of the Civil Service Commission fails to disclose any grave abuse of discretion on
its part.
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.
WHEREFORE, the instant petition is DISMISSED.

Costs against petitioner.
SO ORDERED.
Respondent CIBAC party-list is a multi-sectoral party registered 2 under Republic Act No. (R.A.) 7941,
otherwise known as the Party- List System Act. As stated in its constitution and bylaws, the platform of
CIBAC is to fight graft and corruption and to promote ethical conduct in the countrys public
service.3 Under the leadership of the National Council, its highest policymaking and governing body,
the party participated in the 2001, 2004, and 2007 elections.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 partys acting secretarygeneral. At 1:30 p.m. of the same day, another Manifestation6 was submitted by herein respondents
Cinchona Cruz-Gonzales and Virginia Jose as the partys vice-president and secretary-general,
respectively.
On 15 January 2010, the COMELEC issued Resolution No. 87447giving due course to CIBACs
Manifestation, "WITHOUT PREJUDICE TO the determination which of the two factions of the
registered party-list/coalitions/sectoral organizations which filed two (2) manifestations of intent to
participate is the official representative of said party-list/coalitions/sectoral organizations xxx." 8
On 19 January 2010, respondents, led by President and Chairperson Emmanuel Joel J. Villanueva,
submitted the Certificate of Nomination9 of CIBAC to the COMELEC Law Department. The nomination
was certified by Villanueva and Virginia S. Jose. On 26 March 2010, Pia Derla submitted a second
Certificate of Nomination,10 which included petitioners Luis Lokin, Jr. and Teresita Planas as party-list
nominees. Derla affixed to the certification her signature as "acting secretary-general" of CIBAC.
Claiming that the nomination of petitioners Lokin, Jr. and Planas was unauthorized, respondents filed
with the COMELEC a "Petition to Expunge From The Records And/Or For Disqualification," seeking to
nullify the Certificate filed by Derla. Respondents contended that Derla had misrepresented herself as
"acting secretary-general," when she was not even a member of CIBAC; that the Certificate of
Nomination and other documents she submitted were unauthorized by the party and therefore invalid;
and that it was Villanueva who was duly authorized to file the Certificate of Nomination on its behalf. 11
76
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 Divisions findings. In a per curiam Resolution dated 31 August
2010,13 the Commission reiterated that Pia Derla was unable to prove her authority to file the said
Certificate, whereas respondents presented overwhelming evidence that Villanueva deputized CIBAC
Secretary General Virginia Jose to submit the Certificate of Nomination pursuant to CIBACs
Constitution and bylaws.
x x x. While it is true that a litigation is not a game of technicalities, it is equally true that every case
must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy
administration of justice. There have been some instances wherein this Court allowed a relaxation in
the application of the rules, but this flexibility was "never intended to forge a bastion for erring litigants
to violate the rules with impunity."
xxx
xxx
xxx
Under this unique nature of the exceptions, a party asking for the suspension of the Rules of Court
comes to us with the heavy burden of proving that he deserves to be accorded exceptional treatment.
Every plea for a liberal construction of the Rules must at least be accompanied by an explanation of
why the party-litigant failed to comply with the rules and by a justification for the requested liberal
construction.
Petitioners now seek recourse with this Court in accordance with Rules 64 and 65 of the Rules of
Court, raising these issues: I) Whether the authority of Secretary General Virginia Jose to file the
partys Certificate of Nomination is an intra-corporate matter, exclusively cognizable by special
commercial courts, and over which the COMELEC has no jurisdiction; and II) Whether the COMELEC
erred in granting the Petition for Disqualification and recognizing respondents as the properly
authorized nominees of CIBAC party-list.
xxx
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:
xxx
xxx
x x x. Section 3, Article IX-C of the Constitution expressly requires that the COMELECs rules of
procedure should expedite the disposition of election cases. This Court labors under the same
command, as our proceedings are in fact the constitutional extension of cases that start with the
COMELEC.
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.
Based on these considerations, we do not find convenience and uniformity to be reasons sufficiently
compelling to modify the required period for the filing of petitions for certiorari under Rule 64. While the
petitioner is correct in his historical data about the Courts treatment of the periods for the filing of the
different modes of review, he misses out on the reason why the period under Section 3, Rule 64 has
been retained. The reason, as made clear above, is constitutionally-based and is no less than the
importance our Constitution accords to the prompt determination of election results. 18 x x x. (Emphasis
supplied, footnotes omitted.)
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:
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.
(5) days in any event, reckoned from notice of denial.
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
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.
Thus, petitioners insist that the group that participated in the party-list system in the 2004 and 2007
elections was the SEC-registered entity, and not the National Council, which had allegedly become
defunct since 2003. That was the year when CIBAC Foundation, Inc. was established and registered
with the SEC.21 On the other hand, respondents counter that the foundation was established solely for
the purpose of acting as CIBACs legal and financial arm, as provided by the partys Constitution and
bylaws. It was never intended to substitute for, or oust CIBAC, the party-list itself.22
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
Even as petitioners insisted on the purely intra-corporate nature of the conflict between "CIBAC
Foundation" and the CIBAC Sectoral Party, they submitted their Certificate of Nomination and
Manifestation of Intent to participate in the party-list elections. Precisely, petitioners were seeking the
COMELECs approval of their eligibility to participate in the upcoming party-list elections. In effect, they
invoke its authority under the Party-List System Act.23 Contrary to their stance that the present dispute
stemmed from an intra-corporate matter, their submissions even recognize the COMELECs
Petition for Certiorari on the sole ground that it was belatedly filed, reasoning thus:
77
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
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 partylist system shall not be considered resigned.
In any case, the COMELECs jurisdiction to settle the struggle for leadership within the party is well
established. This singular power to rule upon questions of party identity and leadership is exercised by
the COMELEC as an incident to its enforcement powers. In Laban ng Demokratikong Pilipino v.
Commission on Elections,26 the Court held:
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.
x x x. Corollary to the right of a political party "to identify the people who constitute the association and
to select a standard bearer who best represents the partys ideologies and preference" is the right to
exclude persons in its association and to not lend its name and prestige to those which it deems
undeserving to represent its ideals. A certificate of candidacy makes known to the COMELEC that the
person therein mentioned has been nominated by a duly authorized political group empowered to act
and that it reflects accurately the sentiment of the nominating body. A candidates political party
affiliation is also printed followed by his or her name in the certified list of candidates. A candidate
misrepresenting himself or herself to be a partys candidate, therefore, not only misappropriates the
partys name and prestige but foists a deception upon the electorate, who may unwittingly cast its
ballot for him or her on the mistaken belief that he or she stands for the partys principles. To prevent
this occurrence, the COMELEC has the power and the duty to step in and enforce the law not only to
protect the party but, more importantly, the electorate, in line with the Commissions broad
constitutional mandate to ensure orderly elections.27 (Emphasis supplied.)
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:
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:
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;
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
b. Proofs that the nominee/s truly adheres to the advocacies of the party-list
group/organizations (prior declarations, speeches, written articles, and such other positive
actions on the part of the nominee/s showing his/her adherence to the advocacies of the
party-list group/organizations);
COMELEC merely asked the Commission to recognize only those certificates of candidacy signed by
petitioner Sen. Angara or his authorized representative, and no other.28
In the 2010 case Atienza v. Commission on Elections,29 it was expressly settled that the COMELEC
possessed the authority to resolve intra-party disputes as a necessary tributary of its constitutionally
mandated power to enforce election laws and register political parties. The Court therein cited Kalaw v.
Commission on Elections and Palmares v. Commission on Elections, which uniformly upheld the
COMELECs jurisdiction over intra-party disputes:
c. Certification that the nominee/s is/are a bona fide member of the party-list group/
organization for at least ninety (90) days prior to the election; and
d. In case of a party-list group/organization seeking representation of the marginalized and
underrepresented sector/s, proof that the nominee/s is not only an advocate of the partylist/organization but is/are also a bona fide member/s of said marginalized and
underrepresented sector.
The COMELECs jurisdiction over intra-party leadership disputes has already been settled by the
Court. The Court ruled in Kalaw v. Commission on Elections that the COMELECs powers and
functions under Section 2, Article IX-C of the Constitution, "include the ascertainment of the identity of
the political party and its legitimate officers responsible for its acts." The Court also declared in another
case that the COMELECs power to register political parties necessarily involved the determination of
the persons who must act on its behalf. Thus, the COMELEC may resolve an intra-party leadership
dispute, in a proper case brought before it, as an incident of its power to register political parties. 30
The Law Department shall require party-list group and nominees to submit the foregoing documentary
evidence if not complied with prior to the effectivity of this resolution not later than three (3) days from
the last day of filing of the list of nominees.
Contrary to petitioners stance, no grave abuse of discretion is attributable to the COMELEC First
Division and the COMELEC en banc.1wphi1 The tribunal correctly found that Pia Derlas alleged
authority as "acting secretary-general" was an unsubstantiated allegation devoid of any supporting
evidence. Petitioners did not submit any documentary evidence that Derla was a member of CIBAC,
let alone the representative authorized by the party to submit its Certificate of Nomination.32 The
COMELEC ruled:
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.
78
A careful perusal of the records readily shows that Pia B. Derla, who has signed and submitted, as the
purported Acting Secretary General of CIBAC, the Certificates of Nomination of Respondents, has no
authority to do so. Despite Respondents repeated claim that Ms. Derla is a member and officer of
CIBAC, they have not presented any proof in support of the same. We are at a loss as to the manner
by which Ms. Derla has assumed the post, and We see nothing but Respondents claims and
writings/certifications by Ms. Derla herself that point to that alleged fact. Surely, We cannot rely on
these submissions, as they are the very definition of self-serving declarations.
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.
On the other handWe cannot help but be convinced that it was Emmanuel Joel J. Villanueva, as the
Party President and Chairman, who had been given the sole authority, at least for the 10 May 2010
Elections, to submit the list of nominees for the Party. The records would show that, in accordance with
the Partys Constitution and by-laws, its National Council, the highest policymaking and governing
body of the Party, met on 12 November 2009 and there being a quorum, then proceeded to elect its
new set of officers, which included Mr. Villanueva as both Party President and Party Chairman, and
Virginia S. Jose as Party Secretary General. During the same meeting, the Partys New Electoral
Congress, which as per the CIBACs Constitution and By-Laws, was also composed of the National
Council Members and had the task of choosing the nominees for the Party in the Party-List Elections,
unanimously ruled to delegate to the Party President such latter function. This set of facts, which had
not been belied by concrete contrary evidence, weighed heavily against Respondents and favorably
for Petitioner.33
Pia Derla, who is not even a member of CIBAC, is thus a virtual stranger to the party-list, and clearly
not qualified to attest to petitioners as CIBAC nominees, or certify their nomination to the COMELEC.
Petitioners cannot use their registration with the SEC as a substitute for the evidentiary requirement to
show that the nominees, including Derla, are bona fide members of the party. Petitioners Planas and
Lokin, Jr. have not even presented evidence proving the affiliation of the so-called Board of Trustees to
the CIBAC Sectoral Party that is registered with COMELEC.
Petitioners cannot draw authority from the Board of Trustees of the SEC-registered entity, because the
Constitution of CIBAC expressly mandates that it is the National Council, as the governing body of
CIBAC, that has the power to formulate the policies, plans, and programs of the Party, and to issue
decisions and resolutions binding on party members and officers.34 Contrary to petitioners allegations,
the National Council of CIBAC has not become defunct, and has certainly not been replaced by the
Board of Trustees of the 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 partys 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
For its part, the COMELEC en banc also enumerated the documentary evidence that further bolstered
respondents claim that it is Chairman Villanueva and Secretary General Virginia Jose who were duly
authorized to submit the Certificate of Nomination to the COMELEC.36 These include:
a. The Joint Affidavit of Resolutions of the CIBAC National Council and the National Electoral
Congress of CIBAC dated 12 November 2009;
b. Certificate of Deputization and Delegation of Authority issued to CIBAC Secretary-General
Virginia S. Jose by the CIBAC President;
c. Constitution and By-Laws of CIBAC as annexed to its Petition for Registration as Sectoral
Organization Under the Party-List System filed by CIBAC on 13 November 2000; and
d. Manifestation dated 8 January 2010 by CIBACs Secretary General Virginia S. Jose
providing the official list of officers of CIBAC.37
WHEREFORE , finding no grave abuse of discretion on the part of the COMELEC in issuing the
assailed Resolutions, the instant Petition is DISMISSED. This Court AFFIRMS the judgment of the
COMELEC expunging from its records the Certificate of Nomination filed on 26 March 2010 by Pia B.
79
G.R. No. 213525
January 27, 2015
The claim is unwarranted. The petitioner obviously ignores that Section 13, Rule 13 of the Rules of
Court concerns two types of proof of service, namely: the affidavit and the registry receipt, viz: Section
13. Proof of Service. x x x. If service is made by registered mail, proof shall be made by such affidavit
and the registry receipt issued by the mailing office. The registry return card shall be filed immediately
upon its receipt by the sender, or in lieu thereof the unclaimed letter together with the certified or sworn
copy of the notice given by the postmaster to the addressee. Section 13 thus requires that if the
service is done by registered mail, proof of service shall consist of the affidavit of the person effecting
the mailing and the registry receipt, both of which must be appended to the paper being served. A
compliance withthe rule is mandatory, such that
FORTUNE LIFE INSURANCE COMPANY, INC., Petitioner,

vs.
COMMISSION ON AUDIT (COA) PROPER; COA REGIONAL OFFICE NO. VI-WESTERN VISAYAS;
AUDIT GROUP LGS-B, PROVINCE OF ANTIQUE; AND PROVINCIAL GOVERNMENT OF
ANTIQUE, Respondents.
RESOLUTION
BERSAMIN, J.:
there is no proof of service if either or both are not submitted.13
Petitioner Fortune Life Insurance Company, Inc. seeks the Reconsideration 1 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 Courtdue to its non-compliance with the provisions of Rule 64,
particularly for:(a) the late filing of the petition; (b) the non-submission of the proof of service and
verified declaration; and (c) the failure to show grave abuse of discretion on the part of the
respondents.3
Here, the petition for certiorari only carried the affidavit of service executed by one Marcelino T.
Pascua, Jr., who declared that he had served copies of the petition by registered mail "under Registry
Receipt Nos. 70449, 70453, 70458,70498 and 70524 attached tothe appropriate spaces found on
pages 64-65 of the petition."14 The petition only bore, however, the cut print-outs of what appeared to
be the registry receipt numbers of the registered matters, not the registry receipts themselves. The rule
requires to be appended the registry receipts, nottheir reproductions. Hence, the cut print-outs did not
substantially comply with the rule. This was the reason why the Court held in the resolution of August
19, 2014 that the petitioner did not comply with the requirement of proof of service. 15
Antecedents
Respondent Provincial Government of Antique (LGU) and the petitioner executed a memorandum of
agreement concerning the life insurance coverage of qualified barangaysecretaries, treasurers and
tanod, the former obligating P4,393,593.60for the premium payment, and subsequently submitting the
corresponding disbursement voucher to COA Antique for pre-audit.4 The latter office disallowed the
payment for lack of legal basis under Republic Act No. 7160 (Local Government Code). Respondent
LGU appealed but its appeal was denied.
II
Fresh Period Ruleunder Neypes
did not apply to the petition for certiorari
under Rule 64 of the Rules of Court
The petitioner posits that the fresh period rule applies because its Rule 64 petition is akin to a petition
for review brought under Rule 42 of the Rules of Court; hence, conformably with the fresh period rule,
the period to file a Rule 64 petition should also be reckoned from the receipt of the order denying the
motion for reconsideration or the motion for new trial.16
Consequently, the petitioner filed its petition for money claim in the COA.5 On November 15, 2012, the
COA issued its decision denying the petition,6 holding that under Section 447 and Section 458 of the
Local Government Code only municipal or city governments are expressly vested with the power to
secure group insurance coverage for barangayworkers; and noting the LGUs failure to comply with the
requirement of publication under Section 21 of Republic Act No. 9184 (Government Procurement
Reform Act).
The petitioners position cannot be sustained.

There is no parity between the petition for review under Rule 42 and the petition for certiorari under
Rule 64.
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
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.
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.
The reglementary periods under Rule42 and Rule 64 are different. In the former, the aggrieved party is
allowed 15 days to file the petition for review from receipt of the assailed decision or final order, or from
receipt of the denial of a motion for new trial or reconsideration.19 In the latter, the petition is filed within
30 days from notice of the judgment or final order or resolution sought to be reviewed. The filing of a
motion for new trial or reconsideration, if allowed under the procedural rules of the Commission
concerned, interrupts the period; hence, should the motion be denied, the aggrieved party may file the
petition within the remaining period, which shall not be less than five days in any event, reckoned from
the notice of denial.20
Ruling
We deny the motion for reconsideration for being without merit.
The petitioner filed its motion for reconsideration on January 14, 2013, which was 31 days after
receiving the assailed decision of the COA on December 14, 2012.21 Pursuant to Section 3 of Rule 64,
it had only five days from receipt of the denial of its motion for reconsideration to file the petition.
Considering that it received the notice of the denial on July 14, 2014, it had only until July19, 2014 to
file the petition. However, it filed the petition on August 13, 2014, which was 25 days too late.
I
Petitioner did not comply with
the rule on proof of service
We ruled in Pates v. Commission on Elections22 that the belated filing of the petition for certiorari under
Rule 64 on the belief that the fresh period ruleshould apply was fatal to the recourse. As such, the
petitioner herein should suffer the same fate for having wrongly assumed that the fresh period rule
The petitioner claims that the affidavit of service attached to the petition for certiorari complied with the
requirement on proof of service.
80
under Neypes23 applied. Rules of procedure may be relaxed only to relieve a litigant of an injustice that
is not commensurate with the degree of his thoughtlessness in not complying with the prescribed
procedure.24 Absent this reason for liberality, the petition cannot be allowed to prosper.
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.
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 rendered by a divided COA proper; (2) the COA took almost a year
before promulgating its decision, and more thana year in resolving the motion for reconsideration, in
contravention of the express mandate of the Constitution; (3) the resolution denying the motion for
reconsideration was made up of only two sentences; (4) the matter involved a novel issue that called
for an interpretation of the pertinent provisions of the Local Government Code; and (5) in issuing the
resolution, COA Commissioners Grace Pulido-Tan and Heidi L. Mendoza made it appear that they
knew the Local Government Code better than former Senator Aquilino Pimentel who offered an opinion
on the matter.25
Accordingly, the petitioner and its counsel, Atty. Eduardo S. Fortaleza, should fully explain in writing
why they should not be punished for indirect contempt of court for their harsh and disrespectful
language towards the Court and its Members; and, in his case, Atty. Fortaleza should further show
cause why he should" not be disbarred.
WHEREFORE, the Court DENIES the Motion for Reconsideration for its lack of merit; ORDERS the
petitioner and its counsel, Atty. Eduardo S. Fortaleza, to show cause in writing within ten (10) days
from notice why they should not be punished for indirect contempt of court; and FURTHER DIRECTS
Atty. Fortaleza to show cause in the same period why he should not be disbarred.
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
SO ORDERED.
A close look indicates that the petition for certioraridid not sufficiently disclose how the COA committed
grave abuse of its discretion. For sure, the bases cited by the petitioner did not approximate grave
abuse of discretion. To start with, the supposed delays taken by the COA in deciding the appeal were
neither arbitrary nor whimsical on its part. Secondly, the mere terseness of the denial of the motion for
reconsideration was not a factor in demonstrating an abuse of discretion. And, lastly, the fact that
Senator Pimentel, even if he had been the main proponent of the Local Government Codein the
Legislature, expressed an opinion on the issues different from the COA Commissioners own did not
matter, for it was the latters adjudication that had any value and decisiveness on the issues by virtue
of their being the Constitutionally officials entrusted with the authority for that purpose.
It is equally relevant to note that the COA denied the money claim of the petitioner for the further
reason of lack of sufficient publication as required by the Government Procurement Act. In that light,
the COA acted well within its authority in denying the petitioners claim.
IV
Petitioner and its counsel
exhibited harshness and disrespect
towards the Court and its Members
The petitioner contends that the Court erred in appreciating the petitioners non-compliance with the
requirement of the proof of service, alleging that even "a perfunctory scrutiny" of the petition for
certiorari and its annexes could have easily shown that it had attached an affidavit of service to the
petition. It goes on to make the following statements, viz:
25. Apparently, the staff of the Justice-in-charge failed to verify the PETITION and its annexes up to its
last page, thus, the erroneous finding that there was non-submission of the proof of service; 26. In
turn, the same omission was hoisted upon the other members of this Honorable Court who took the
observation from the office of the Justice-in-charge, to be the obtaining fact, when in truth and in fact, it
is not;27
The petitioner and its counsel thereby exhibited their plain inability to accept the ill consequences of
their own shortcomings, and instead showed an unabashed propensity to readily lay blame on others
like the Court and its Members. In doing so, they employed harsh and disrespectful language that
accused the Court and its Members of ignorance and recklessness in the performance of their function
of adjudication.
We do not tolerate such harsh and disrespectful language being uttered against the Court and its
Members. We consider the accusatory language particularly offensive because it was unfounded and
undeserved. As this resolution earlier clarifies, the petition for certiorari did not contain a proper
81
G.R. No. 188818
May 31, 2011
Auditors Decision by absolving the members of the sanggunian from any liability. It declared that the
payment of the amounts awarded as damages and attorneys fees should solely be Osmeas
liability, as it was him who ordered the change or extra work orders without the supplemental
agreement required by law, or the prior authorization from the Sanggunian. The Sanggunian
members cannot be held liable for refusing to enact the necessary ordinance appropriating funds for
the judgment award because they are supposed to exercise their own judgment and discretion in the
performance of their functions; they cannot be mere "rubber stamps" of the city mayor.
TOMAS R. OSMEA, in his personal capacity and in his capacity as City Mayor of Cebu
City, Petitioner,
vs.
THE COMMISSION ON AUDIT, Respondent.
DECISION
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.
BRION, J.:
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.
Before the Court is the Petition for Certiorari1 filed by Tomas R. Osmea, former mayor of the City of
Cebu, under Rule 64 of the Rules of Court. The petition seeks the reversal of the May 6, 2008
Decision2 and the June 8, 2009 Resolution3 of the respondent Commission on Audit (COA), which
disallowed the damages, attorneys fees and litigation expenses awarded in favor of two construction
companies in the collection cases filed against the City of Cebu, and made these charges the personal
liability of Osmea for his failure to comply with the legal requirements for the disbursement of public
funds.
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.
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.
THE PETITION
Rule 64 of the Rules of Court governs the procedure for the review of judgments and final orders or
resolutions of the Commission on Elections and the COA. Section 3 of the same Rule provides for a
30-day period, counted from the notice of the judgment or final order or resolution sought to be
reviewed, to file the petition for certiorari. The Rule further states that the filing of a motion for
reconsideration of the said judgment or final order or resolution interrupts the 30-day period.
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.
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.
Thereafter, WTCI and DCDC demanded payment for the extra work they performed in the construction
and renovation of the sports complex. A Sanggunian member, Councilor Augustus Young, sponsored a
resolution authorizing Osmea to execute the supplemental agreements with WTCI and DCDC to
cover the extra work performed, but the other Sanggunian members refused to pass the resolution.
Thus, the extra work completed by WTCI and DCDC was not covered by the necessary appropriation
to effect payment, prompting them to file two separate collection cases before the Regional Trial Court
(RTC) of Cebu City (Civil Case Nos. CEB-170045 and CEB-171556 ). The RTC found the claims
meritorious, and ordered the City to pay for the extra work performed. The RTC likewise awarded
damages, litigation expenses and attorneys fees in the amount of P2,514,255.40 to
WTCI7 and P102,015.00 to DCDC.8 The decisions in favor of WTCI and DCDC were affirmed on
appeal, subject to certain modifications as to the amounts due, and have become final. To satisfy the
judgment debts, the Sanggunian finally passed the required appropriation ordinances.
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.
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 also points out that the City was already adjudged liable for the principal sum due for the
extra work orders and had already benefitted from the extra work orders by accepting and using the
sports complex for the Palaro. For these reasons, he claims that all consequences of the liability
imposed, including the payment of damages and interest charges, should also be shouldered by the
City and not by him.
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
82
THE COURTS RULING
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.
Relaxation of procedural rules to give effect to a partys right to appeal

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.
Section 3, Rule 64 of the Rules of Court states:

(5) days in any event, reckoned from notice of denial. [Emphasis ours.]
The term "unnecessary," when used in reference to expenditure of funds or uses of property, is
relative. In Dr. Teresita L. Salva, etc. v. Guillermo N. Carague, etc., et al.,19 we ruled that
"[c]ircumstances of time and place, behavioural and ecological factors, as well as political, social and
economic conditions, would influence any such determination. x x x [T]ransactions under audit are to
be judged on the basis of not only the standards of legality but also those of regularity, necessity,
reasonableness and moderation." The 10-page letter of City Administrator Juan Saul F. Montecillo to
the Sanggunian explained in detail the reasons for each change and extra work order; most of which
were made to address security and safety concerns that may arise not only during the holding of the
Palaro, but also in other events and activities that may later be held in the sports complex. Comparing
this with the COAs general and unsubstantiated declarations that the expenses were "not
essential"20 and not "dictated by the demands of good government,"21 we find that the expenses
incurred for change and extra work orders were necessary and justified.
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 partylitigant failed to comply with the Rules and by a justification for the requested liberal
construction.14 Where strong considerations of substantive justice are manifest in the petition, this
Court may relax the strict application of the rules of procedure in the exercise of its legal jurisdiction. 15
Osmea cites the mandatory medical check-ups he had to undergo in Houston, Texas after his cancer
surgery in April 2009 as reason for the delay in filing his petition for certiorari. Due to his weakened
state of health, he claims that he could not very well be expected to be bothered by the affairs of his
office and had to focus only on his medical treatment. He could not require his office to attend to the
case as he was being charged in his personal capacity.
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.
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.
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.]
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.
Reviewing the facts of the case, we find that the prevailing circumstances at the time the change and
extra work orders were executed and completed indicate that the City of Cebu tacitly approved these
orders, rendering a supplemental agreement or authorization from the Sanggunian
unnecessary.1wphi1
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
The Pre-Qualification, Bids and Awards Committee (PBAC), upon the recommendation of the
Technical Committee and after a careful deliberation, approved the change and extra work orders. It
bears pointing out that two members of the PBAC were members of the Sanggunian as well Rodolfo
Cabrera (Chairman, Committee on Finance) and Ronald Cuenco (Minority Floor Leader). A COA
representative was also present during the deliberations of the PBAC. None of these officials voiced
any objection to the lack of a prior authorization from the Sanggunian or a supplemental agreement.
The RTC Decision in fact mentioned that the Project Post Completion Report and Acceptance was
approved by an authorized representative of the City of Cebu on September 21, 1994.23 "[a]s the
projects had been completed, accepted and used by the [City of Cebu]," the RTC ruled that there is
"no necessity of [executing] a supplemental agreement."24 Indeed, as we declared in Mario R. Melchor
v. COA,25 a supplemental agreement to cover change or extra work orders is not always mandatory,
since the law adopts the permissive word "may." Despite its initial refusal, the Sanggunian was
eventually compelled to enact the appropriation ordinance in order to satisfy the RTC judgments.
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
83
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.
G.R. No. 191988
August 31, 2010
ATTY. EVILLO C. PORMENTO, Petitioner,

vs.
JOSEPH "ERAP" EJERCITO ESTRADA and COMMISSION ON ELECTIONS, Respondents.
As in Melchor,27 we find it "unjust to order the petitioner to shoulder the expenditure when the
government had already received and accepted benefits from the utilization of the [sports complex],"
especially considering that the City incurred no substantial loss in paying for the additional work and
the damages awarded. Apparently, the City placed in a time deposit the entire funds allotted for the
construction and renovation of the sports complex. The interest that the deposits earned amounted
to P12,835,683.15, more than enough to cover the damages awarded to WTCI (P2,514,255.40) and
the DCDC (P102,015.00). There was "no showing that [the] petitioner was ill-motivated, or that [the
petitioner] had personally profited or sought to profit from the transactions, or that the disbursements
have been made for personal or selfish ends."28 All in all, the circumstances showed that Osmea
issued the change and extra work orders for the Citys successful hosting of the Palaro, and not for
any other "nefarious endeavour."29
RESOLUTION
CORONA, C.J.:
What is the proper interpretation of the following provision of Section 4, Article VII of the Constitution:
"[t]he President shall not be eligible for any reelection?"
The novelty and complexity of the constitutional issue involved in this case present a temptation that
magistrates, lawyers, legal scholars and law students alike would find hard to resist. However,
prudence dictates that this Court exercise judicial restraint where the issue before it has already been
mooted by subsequent events. More importantly, the constitutional requirement of the existence of a
"case" or an "actual controversy" for the proper exercise of the power of judicial review constrains us to
refuse the allure of making a grand pronouncement that, in the end, will amount to nothing but a nonbinding opinion.
WHEREFORE, in light of the foregoing, we hereby GRANT the petitioners Petition for Certiorari filed
under Rule 64 of the Rules of Court. The respondents Decision of May 6, 2008 and Resolution of June
8, 2009 are SET ASIDE.
SO ORDERED.
The petition asks whether private respondent Joseph Ejercito Estrada is covered by the ban on the
President from "any reelection." Private respondent was elected President of the Republic of the
Philippines in the general elections held on May 11, 1998. He sought the presidency again in the
general elections held on May 10, 2010. Petitioner Atty. Evillo C. Pormento opposed private
respondents candidacy and filed a petition for disqualification. However, his petition was denied by the
Second Division of public respondent Commission on Elections (COMELEC). 1 His motion for
reconsideration was subsequently denied by the COMELEC en banc.2
Petitioner filed the instant petition for certiorari3 on May 7, 2010. However, under the Rules of Court,
the filing of such petition would not stay the execution of the judgment, final order or resolution of the
COMELEC that is sought to be reviewed.4 Besides, petitioner did not even pray for the issuance of a
temporary restraining order or writ of preliminary injunction. Hence, private respondent was able to
participate as a candidate for the position of President in the May 10, 2010 elections where he
garnered the second highest number of votes.51avvphi1
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
84
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.
85

G.R. No. 127913 September 13, 2001 Rizal Commercial Banking Corporation, Petitioner, Metro Container Corporation, Respondent. Kapunan, J.

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G.R. No. 127913 September 13, 2001 Rizal Commercial Banking Corporation, Petitioner, Metro Container Corporation, Respondent. Kapunan, J.

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G.R. No.

September 13, 2001

RIZAL COMMERCIAL BANKING CORPORATION, petitioner,

Hence, the present recourse.

The facts of the case are as follows:

(2) WHILE A PARTY WHO INITIATES AN INTERPLEADER ACTION MAY NOT BE

We sustain the Court of Appeals.

G.R. No. L-41818 February 18, 1976

G.R. No. L-41831 February 18, 1976

Jose F. Aguirre for Zoila Co Lim.

This provision only requires as an indispensable requisite:

An interpleader merely demands as a sine qua non element

Hence these petitions by Continental Development Corporation and Zoila Co Lim.

G.R. No. L-22807

October 10, 1924

GREGORIO R. SY-QUIA, petitioner,

February 25, 1948

ALFONSO PAGKALINAWAN and MANUEL PAGKALINAWAN, petitioners,

Antonio M. Jimenez for petitioner.

P. L. Meer for petitioners.

G.R. Nos. 72664-65 March 20, 1990

UNITED COCONUT PLANTERS BANK, petitioner,

Encanto, Mabugat & Associates for petitioner.

Mena Q. Taganas for private respondent.

G.R. No. 181723

August 11, 2014

ELIZABETH DEL CARMEN, Petitioner,

G.R. No. 136409

March 14, 2008

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

For Rooms 36, 37 and 38:

petitioners and in favor of the respondent "corporation" constitute an unconstitutional

The petition lacks merit.

Article 1256 of the Civil Code provides:

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

G.R. No. 133113

August 30, 2001

EDGAR H. ARREZA, petitioner,

WHEREFORE, premises considered, the herein interpleader is resolved in favor of

IN ITS ENTIRETY, THE AMENDED COMPLAINT IN THE PRESENT RTC CASE IS

Respondent in his answer also prayed that:

G.R. No. 89132 February 26, 1990

Leonardo Garcillano for petitioners.

Jesus N. Borromeo for private respondents.

Wherefore, the Opposition to the issuance of the Writ of execution is hereby

We shall narrate the facts in these two cases in a nutshell:

1) In the former case, Pacific Merchandising Corporation (Pacific) filed a complaint

The contention that a counterclaim for expenses incurred in clearing and

G.R. No. L-25138

August 28, 1969

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

Beltran, Cendaa, Camu, Pelias and Manuel for plaintiffs-appellants.

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

If a stakeholder defends a suit by one claimant and allows it to proceed so far as a

one o the main offices of a bill of interpleader to restrain a separate proceeding at

G.R. No. 181303

September 17, 2009

WHETHER OR NOT THE RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN

The Court rules in the negative.

In view of the foregoing considerations, the Motion is hereby denied.19

G.R. No. 159357

April 28, 2004

Brother MARIANO "MIKE" Z. VELARDE, petitioner,