Special Civil Actions: Rule 62 -

Interpleader
What is an interpleader?

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. (Beltran vs. PHHC, G.R. No. L-25138, August 28, 1969)

What is the purpose of interpleader?

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. (Beltran vs.
PHHC)

1. A classic example is that of a warehouseman who has custody of goods

claimed to be owned by two or more persons who do not have the same
interests. He may file an action for interpleader for the court to determine the
rightful owner. The basis of the need to file an interpleader in the case of a
warehouseman is actually the substantive law provisions of the Warehouse
Receipts Law. Under said law, where a warehouseman delivers the goods to
one who is not in fact entitled to possession, the warehouseman shall be liable
for conversion (Sec. 10, Warehouse Receipts Law). He may also be sued for
damages for non-delivery if he refuses to deliver the goods. Hence, Sec. 17 of
the same law authorizes the warehouseman to require all known claimants to
interplead to shield him from liability. (Dean Riano)

2. Another usual example is the case of a lessee who may commence a

complaint for interpleader when he is confronted with adverse claimants on the
rentals due and he is in doubt as to which of them should be the rightful
recipient.

Recall that under the Civil Code of the Philippines, a cardinal principle to be
observed for the validity of payment or performance is that payment must be
made "to the person in whose favor the obligation was constituted" (Art. 1240,
Civil Code of the Philippines). This means that as a rule, payment to the wrong
person is not a valid payment and does not extinguish the obligation. Where
two or more persons who do not represent the same interests claim the right to
collect, the debtor will have to file an action for interpleader to effect the
extinguishment of his obligation. (Dean Riano)

What are the requisites of interpleader?

1. There must be two or more claimants with adverse or conflicting interests to

a property in the custody or possession of the plaintiff.

2. The plaintiff has NO CLAIM upon the subject matter of the adverse claims,
or if he has an interest at all, such interest is NOT DISPUTED by the claimants.

3. The subject matter of the adverse claims must be one and the same.
What court has jurisdiction over an interpleader case?

1. MTC - If the subject matter of the action is personal property, valued at not
more than P300,000.00 outside Metro Manila, and in Metro Manila, at not
more than P400,000.00, the Municipal Trial Court has jurisdiction.

2. RTC - If the subject matter is real property with an assessed value at not
more than P20,000.00 outside Metro Manila, and in Metro Manila, at not more
than P50,000.00, the Regional Trial Court has jurisdiction.

When should the interpleader be filed?

An action for interpleader should be filed within a reasonable time after a

dispute has arisen without waiting to be sued by either of the contending
claimants. Otherwise, he may be barred by laches or undue delay. (Wack-Wack
Golf and Country Club vs. Won, G.R. No. L-23851, March 26, 1976)

If the the allegations of the complaint do not show conflicting claims

between or among the persons required to interplead, what would be the
ground for the dismissal of the complaint for interpleader?

It is believed that where the allegations of the complaint do not show

conflicting claims between or among the persons required to interplead, the
complaint for interpleader is subject to dismissal on the ground of impropriety
of the interpleader, not a failure to state a cause of action under Rule 16 because
the meaning of a cause of action in ordinary civil actions cannot apply to an
interpleader. Besides, for an interpleader to be proper such conflicting claims
must exist (Sec. 1, Rule 62, Rules of Court). Conversely, there is impropriety
where no such adverse claims can be found from the reading of the
complaint. (Dean Riano)

Procedure:

1. Filing: A complaint for interpleader is filed by the person against whom the
conflicting claims are made. The docket, other lawful fees, costs and other
litigation expenses shall be paid by the complainant; but these will constitute a
lien or charge upon the subject matter of the action, unless the
court hold otherwise.

2. Court Order: Upon filing of the complaint, the court shall issue an order
requiring the conflicting claimants to interplead with one another. If the
interests of justice so require, the court may direct that the subject matter be
paid or delivered to the court.

3. Summons: Summons shall be served upon the conflicting claimants,

together with a copy of the complaint and order.

4. Motion to Dismiss: Within the time for filing an answer (15 days), each
claimant may file a motion to dismiss on the grounds specified in Rule 16 and
on the ground of impropriety of the action for interpleader.

The period to file an answer is interrupted or tolled by the filing of the motion
to dismiss. If the motion is denied, the movant may file his answer within the
remaining period to answer, but which shall NOT BE LESS THAN 5 days in
any event from the notice of denial of the motion.
5. Answer: Each claimant shall file his answer within 15 days from service of
the summons, serving a copy thereof upon each of the other conflicting
claimants, who may file their reply thereto.

If claimant fails to plead within the time herein fixed, the court may, on motion,
declare him in default and render judgment barring him from any claim in
respect to the subject matter.

6. Other pleadings: The parties may file counterclaims, crossclaims, third-

party complaints and responsive pleadings thereto.

7. Pre-trial: A pre‐trial will be conducted in accordance with the Rules of

Court.

8. Determination: Court shall determine conflicting claimants’ respective

rights and adjudicate their several claims.

Bar Questions:

LTA, Inc. is the lessee of a building owned by Mr. Tenorio paying rental
of P10,000.00 a month. The owner died on May 10, 1988 and since then,
LTA has not paid the monthly rentals, now amounting to P40,000.00
because two women are both claiming to be widows of Tenorio and are
demanding rental payments. What legal action may LTA's counsel take,
before what court and against whom to protect LTA's interest? (Bar 1996)

Suggested answer.
LTAs counsel should file an action for interpleader against the two women and
pray that the court resolve their conflicting claims. The action should be filed
in the Municipal Trial Court because the subject of the action is an amount
within the jurisdiction of said court. Note: When the question was asked,
jurisdiction was with the Regional Trial Court. At that time the jurisdictional
amount for the RTC was an amount exceeding P10,000.00.

A lost the cashier's check she purchased from XYZ Bank. Upon being
notified of the loss, XYZ Bank immediately issued a "STOP PAYMENT"
order. Here comes B trying to encash the same cashier's check but XYZ
Bank refused payment. As precautionary measure what remedy may
XYZ Bank avail of with respect to the conflicting claims of A and B over
the cashier's check? Explain. (Bar 1996)

Suggested answer:

XYX Bank should file a complaint for interpleader and leave unto the court
the resolution of the conflicting claims of A and B. Note: The examiner made
reference to "conflicting claims." This is a clue as to what the examiner desires
as an answer. The examinee should therefore, refrain from making assumptions
or unnecessary analysis.

H insured his life with X Insurance Co. and designated W as beneficiary.

The policy provided that the beneficiary could be changed by a written
notice designating the new beneficiary sent by the insured and received by
X Insurance Co. before the death of the insured. After the death of H, Q
demanded from X Insurance Co. the proceeds of the policy, claiming that
she had been designated as the beneficiary by H as may be seen from a
copy of a written notice signed by H and allegedly received by X Insurance
Co. before X's death. W who is also demanding from X Insurance Co. the
proceeds of the policy, claims that the signature of H appearing on the
written notice is forged. As counsel for X Insurance Co., what advice
would you give to your client and why? (Bar 1978)

Suggested answer:

I would advice my client not to pay either of the claimants in the meantime and
instead file a complaint for interpleader against them and let the court resolve
their conflicting claims (Sec. 1, Rule 63, Rules of Court).

What courts have jurisdiction over the following cases filed in Metro
Manila?
xxx
(d) An action for interpleader to determine who between the defendants is
entitled to receive the amount of P190, 000.00 from the plaintiff.

Suggested answer.

(d) The action shall be filed in the Metropolitan Court in Metro Manila. The
amount of P190, 000.00 not being in excess of P400, 000.00, is within the
jurisdiction of said court. (Bar 1997)
Special Civil Actions: Rule 63 -
Declaratory Relief and Similar Remedies
Types of Actions:

Rule 63 covers two types of actions:

(a) petition for declaratory relief, and

(b) similar remedies.

The similar remedies are:

(a) action for reformation of an instrument;

(b) action to quiet title; and
(c) action to consolidate ownership, under Article 1607 of the Civil Code.

DECLARATORY RELIEF

What is the subject matter in a petition for declaratory relief?

The subject matter in a petition for declaratory relief is any of the following:
1. a deed;
2. a will;
3. a contract or other written instrument;
4. a statute;
5. an executive order or regulation;
6. an ordinance; or
7. any other governmental regulation (Sec. 1, Rule 63, Rules of Court).

●The enumeration of the subject matter is exclusive. Hence, an action not

based on any of the enumerated subject matters cannot be the proper subject of
declaratory relief.

● An action for declaratory relief to ask the court to declare his filiation and
consequently his hereditary rights is improper. The action is not based on a
deed, a will, statute or any of those enumerated as the subject matter of the
petition

●An action for declaratory relief to seek judicial declaration of citizenship to

correct a previous unilateral registration by petitioner as an alien is improper,
the action not being founded on a deed, contract or any ordinance (Obiles vs.
Republic, 92 Phil. 864). An action for declaratory relief is not proper to resolve
doubts concerning one's citizenship.

● A petition for declaratory relief is not proper for the purpose of seeking
enlightenment as to the true import of a judgment. The remedy is to move for
a clarificatory judgment.

● A petition for declaratory relief is not proper to assail a judgment. A party

could appeal and employ other remedies under the Rules of Court before or
after the judgment has become final and executor.

● Even if the subject is one enumerated under the Rules, where the contract or
statute is clear in its terms and there is no doubt as to its meaning and validity,
a petition for declaratory relief is improper. There would be no need for
construction or a declaration of rights thereunder.

Who may file a petition for declaratory relief?

1. Any person interested under a deed, will, contract or other written

instrument or

Contracts take effect only between the parties, their assigns and heirs, except in case
where the rights and obligations arising from the contract are not transmissible by
their nature, or by stipulation or by provision of law. The heir is not liable beyond the
value of the property he received from the decedent.

If a contract should contain some stipulation in favor of a third person, he may

demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not sufficient.
The contracting parties must have clearly and deliberately conferred a favor upon a
third person.

2. Any person whose rights are affected by a statute, executive order or

regulation, ordinance or other governmental regulation

may before breach or violation thereof, bring an action in the RTC to determine
any question of construction or validity arising and for a declaration of his
rights or duties, thereunder (Sec 1, Rule 63).

Who shall be made parties to the action?

1. All persons who have or claim any interest which would be affected by the
declaration shall be made parties; and no declaration shall, except as otherwise
provided in the Rules, prejudice the rights of persons not parties to the
action. (Sec 2, Rule 63).

2. In any action which involves the validity of a statute, executive order or

regulation, or any other governmental regulation, the Solicitor General shall be
notified by the party assailing the same and shall be entitled to be heard upon
such question. (Sec 3, Rule 63).

3. In any action involving the validity of a local government ordinance, the

corresponding prosecutor or attorney of the local governmental unit involved
shall be similarly notified and entitled to be heard. If such ordinance is alleged
to be unconstitutional, the Solicitor General shall also be notified and entitled
to be heard. (Sec 4, Rule 63).

What court has jurisdiction over declaratory relief?

The subject matter of a petition for declaratory relief raises issues which are
not capable of pecuniary estimation and must be filed with the
appopriate Regional Trial Court (Sec. 19[11, BP 129; Sec. 1, Rule 63). It
would be error to file the petition with the Supreme Court which has no original
jurisdiction to entertain a petition for declaratory relief.

When should a petition for declaratory relief be filed?

The petition for declaratory relief should be filed before there occurs any
breach or violation of the deed, contract, statute, ordinance or executive order
or regulation. (Sec 1, Rule 63) It will not prosper when brought after a contract
or a statute has already been breached or violated.

What is the appropriate remedy if there has already been a breach?

● If there has already been a breach, the appropriate ordinary civil action, not
declaratory relief, should be filed.

● 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 (Malana vs. Tappa, G.R. No. 181303,
September 17, 2009). 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.

Will the action for declaratory relief be dismissed if the breach occurs
after the action has been constituted and during the its pendency?

When the breach occurs not before the filing of the petition for declaratory
relief but after the action has been constituted and during its pendency, the
action is not to be dismissed but may be converted into an ordinary action and
the parties shall be allowed to file such pleadings as may be necessary or
proper (Sec 1, Rule 63).

What are the requisites of an action for declaratory relief ?

The requisites of an action for declaratory relief are:

1. The subject matter must be a deed, will, contract or other written
instrument, statute, executive order or regulation or ordinance;
2. The terms of said document or the validity thereof are doubtful and
require judicial construction;
3. There must have been no breach of said document;
4. There must be actual justiciable controversy or the "ripening seeds" of
one between persons whose interests are adverse;
5. The issue must be ripe for judicial determination [e.g. administrative
remedies already exhausted]; and
6. Adequate relief is not available thru other means or other forms of action
or proceedings. (Regalado, Remedial Law Compendium, Vol. 1)

What is the purpose of the petition?

● An action for declaratory relief is brought to secure an authoritative

statement of the rights and obligations of the parties under a contract or a
statute for their guidance in the enforcement or compliance with the same.

● The purpose of the petition is to ask the court to determine any question of
construction or validity arising from the subject matter, and for the declaration
of rights and duties therein (Sec. 1, Rule 63, Rules of Court). Thus, the purpose
is to seek for a judicial interpretation of an instrument or for a judicial
declaration of a person's rights under a statute and not to ask for affirmative
reliefs like injunction, damages or any other relief beyond the purpose of the
petition as declared under the Rules. It is not brought to settle issues arising
from a breach because after the breach of the contract or statute, the petition
can no longer be brought.

● It has been held that in an action for declaratory relief, the question raised is
a question of "construction" or "validity" arising under an instrument or statute.
The object is to terminate uncertainties in an instrument or statute and the
judgment of the court cannot extend beyond a declaration of the rights and
duties of the parties to the action and cannot provide corrective reliefs.

● It is the absence of allegations seeking material or affirmative reliefs in a

petition for declaratory relief that it has been held that when the main case is
for declaratory relief, a third-party complaint is inconceivable. The relief
sought in this kind of pleading is contribution, indemnity, subrogation or other
relief from the third-party defendant in respect of the claim of the plaintiff
against him. Accordingly, this relief cannot be granted because in a declaratory
relief, the court is merely interpreting the terms of the contract. It has also been
held however, that a petition for declaratory relief may entertain a compulsory
counterclaim as long as it is based on or arising from the same transaction,
subject mater of the petition.

Does the court have discretion to refuse to act on the petition for
declaratory relief?
Yes. In declaratory relief, the court is given the discretion to act or not to act
on the petition. It may therefore, choose not to construe the instrument sought
to be construed or could refrain from declaring the rights of the petitioner under
the deed or the law. A refusal of the court to declare rights or construe an
instrument is actually the functional equivalent of the dismissal of the petition.

What are the grounds for the court to refuse to exercise declaratory relief?

The court, motu proprio or upon motion, may refuse to exercise the power to
declare rights and to construe instruments in any case where:
1. A decision would not terminate the uncertainty or controversy which
gave rise to the action; or
2. The declaration or construction is not necessary and proper under the
circumstances as when the instrument or the statute has already been
breached (Sec 5, Rule 63).

Does the court have discretion to refuse to act with respect to actions
described as `similar remedies'?

No. The court does not have the discretion to refuse to act with respect to
actions described as `similar remedies'. Thus, in an action for reformation of
an instrument, to quiet title or to consolidate ownership, the court cannot refuse
to render a judgment. (Sec 5, Rule 63)

Does judgment in action for declaratory relief entail any executory

process?

There is nothing to execute in the judgment of the court the way judgments in
ordinary civil actions are executed. This is because the judgment in a
declaratory relief is confined either to an interpretation of a deed or a
declaration whether or nor the petitioner has or does not have rights under the
law. As a general principle therefore, the judgment in a declaratory relief is
said to stand by itself and no executory process follows as of course. It is unlike
the judgment in an ordinary civil action which is coercive in character and
enforced by execution.

Justiciable controversy

The traditional concept of cause of action in ordinary civil actions, as earlier

mentioned does not apply to a declaratory relief where no specific right of the
plaintiff has as yet been violated because the action is brought before a breach
of the deed or law occurs.

The absence of a breach should not however, be taken to mean that the petition
need not involve a controversy. A justiciable controversy is in fact
indispensable for the propriety of the petition. It need not be a controversy
consisting of an actual violation of a right by another but one with the "ripening
seeds" of a controversy. The controversy must be one that is not merely
imagined or one that is academic or theoretical.

A justiciable controversy is required because the court, in a petition for

declaratory relief is not called upon to render a mere `advisory opinion' which
unlike a judicial proceeding, has no res judicata effect and requires no
controversy of whatever degree.

Courts are not called upon to resolve questions as a "pure academic exercise."

For example, a person who impugns a statute must be one who could show that
he will sustain a direct injury as a result of the enforcement of a statute (Cabarle
vs. Tagle, G.R. No. 113475, February 15, 1994). An actual injury is not
necessary. In declaratory relief, all that is required is an impending violation
of the plaintiff's rights.

What is the proper recourse to assail the validity of an executive order?

Under the Rules of Court, petitions for Certiorari and Prohibition are availed
of to question judicial, quasi-judicial and mandatory acts. Since the issuance
of an EO is not judicial, quasi-judicial or a mandatory act, a petition for
certiorari and prohibition is an incorrect remedy; instead a petition for
declaratory relief under Rule 63 of the Rules of Court, filed with the Regional
Trial Court (RTC), is the proper recourse to assail the validity of EO 7. (Galicto
vs. Aquino, G.R. No. 193978, February 28, 2012)

A student files an action for declaratory relief against his school to

determine whether he deserves to graduate with Latin honors. Is this
action tenable? (Bar 1998)

Suggested answer:
The action is not tenable. To be the proper subject of a petition for declaratory
relief, the subject of the petition must be a deed, will, contract, written
instrument, statute, executive order, regulation, ordinance, or any other
governmental regulation. Whether or not the student is to be conferred Latin
honors is not a proper subject of the petition.

SIMILAR REMEDIES

What court has jurisdiction over actions described as "similar remedies"?

● The MTC 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 outside Metro Manila or does not exceed P50,000.00
in Metro Manila.

● 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.

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.

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.

To determine which court has jurisdiction over the actions identified in the
second paragraph of Section 1, Rule 63 of the Rules of Court, said provision
must be read together with those of the Judiciary Reorganization Act of 1980,
as amended.

It is important to note that Section 1, Rule 63 of the Rules of Court does not
categorically require that an action to quiet title be filed before the RTC. It
repeatedly uses the word may that an action for quieting of title may be brought
under [the] Rule on petitions for declaratory relief, and a person desiring to file
a petition for declaratory relief may x x x bring an action in the appropriate
Regional Trial Court. The use of the word may in a statute denotes that the
provision is merely permissive and indicates a mere possibility, an opportunity
or an option.

In contrast, the mandatory provision of the Judiciary Reorganization Act of

1980, as amended, uses the word shall and explicitly requires the MTC to
exercise exclusive original jurisdiction over all civil actions which involve title
to or possession of real property where the assessed value does not exceed
P20,000.00, thus:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases.Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts shall exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title to, possession
of, real property, or any interest therein where the assessed value of the property or
interest therein does not exceed Twenty thousand pesos (P20,000.00) or, in civil
actions in Metro Manila, where such assessed value does not exceeds Fifty thousand
pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorneys fees,
litigation expenses and costs: x x x (Emphasis ours.)

As found by the RTC, the assessed value of the subject property as stated in
Tax Declaration No. 02-48386 is only P410.00; therefore, petitioners
Complaint involving title to and possession of the said property is within the
exclusive original jurisdiction of the MTC, not the RTC. (Malana vs. Tappa,
G.R. No. 181303, September 17, 2009)