EDITED SPECIAL PROCEEDINGS 62, 63 and 65

CASES IN SPECIAL PROCEEDINGS

RULE 62, INTERPLEADER

Wack Wack Golf & Country Club, Inc. v. Won, et al., G.R. No. 23851, March 26, 1976, 70 SCRA 165
SYNOPSIS
Lee E. Won and Bienvenido Tan both claimed ownership over Wack Wack Golf and Country Club's membership fee
certificate 201, the former, by virtue of the decision rendered in the Court of First Instance of Manila and of membership
fee certificate 201-serial No. 1478 issued pursuant to a court order, and the latter by virtue of membership fee
certificate 201-serial No. 1199 issued to him in July 1950 pursuant to an assignment made in his favor by the original
owner and holder thereof. The corporation filed an action of interpleader in the court a quo to have defendants litigate
among themselves their conflicting claims of ownership. In separate motions, the defendants moved to dismiss the
complaint upon the grounds of res judicata, failure of the complainant to state a cause of action, and bar by prescription.
Finding the first two grounds well taken, the trial court dismissed the complain. Hence, this appeal, the determinative
issue of which is the timeless of the remedy of interpleader availed of by the Corporation.
The Supreme Court held that because the Corporation had allowed itself to be sued to final judgment and be made
independently liable in civil case 26044 and the appellee Lee had already established in said case his rights to
membership fee certificate 201, its action of interpleader is barred by laches.
SYLLABUS
1.SPECIAL CIVIL ACTION; INTERPLEADER; A REMEDY TO DETERMINE CONFLICTING CLAIMS ON PROPERTY.
The actions of interpleader under Section 120 of the Code of Civil Procedure is a remedy whereby a person who has
personal property in his posession, 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 one or other thing. The remedy is afforded to protect a person not against double liability but against double
vexation in respect of one liability.
2.ID.; ID.; PROCEDURE UNDER THE CODE OF CIVIL PROCEDURE AND NEW RULES OF COURT DISTINGUISHED.
The procedure under Section 1 of Rule 63 of the Revised Rules of Court is the same as that under Section 120 of the
Code of Civil Procedure, 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.
3.ID.; ID.; ACTION TO BE FILED WITHIN A REASONABLE TIME AFTER A DISPUTE ARISES. A stakeholder, meaning
a person entrusted with the custody of property or money that is subject of ligitation or of contention between rival
claimants in which the holder claims no right or property interest, should use reasonable diligence to hale the contending
claimants to court. He need not await actual institution of independent suits against him before filing a bill of
interpleader. 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. Otherwise, he may be barred by laches or undue delay. But where he
acts with reasonable diligence in view of the environmental circumstances, the remedy is not barred.
4.ID.; ID.; ACTION BARRED IF NOT TIMELY MADE. When a stakeholder's action is filed after judgment has been
rendered against him in favor of one of the contending claimants, 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, the interpleader suit is too late and will be barred by laches or undue delay.
5.ID.; ID.; ID.; ID.; INSTANT CASE. The Corporation was aware of the conflicting claims of the parties with respect to
the membership fee certificate 201 long before it filed its 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 26004) and to defend itself therein. Final judgment was rendered
against it and said judgment has already been executed. It is now therefore too late for it to invoke the remedy of
interpleader.
6.ID.; ID.; ID.; PARTY WHO HAS SUCCESSFULLY ESTABLISHED A RIGHT CANNOT BE LATTER IMPLEADED. 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.
This is an appeal from the order of the Court of First Instance of Rizal 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, 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 and also by virtue of membership fee certificate 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,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 pursuant to an assignment made in his favor by "Swan, Culbertson and Fritz," the original
owner and holder of membership fee certificate; 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 30, 1939; that it claims no interest whatsoever in the
said membership fee certificate 201; that it has no means of determining who of the two defendants is the lawful owner
thereof; that it is without power to issue two separate certificates for the same membership fee certificate 201, or to
issue another membership fee certificate to the defendant Lee, without violating its articles of incorporation and by-
laws; and that the membership fee certificate 201-serial no. 1199 held by the defendant Tan and the membership fee
certificate 201-serial no. 1478 issued to the defendant Lee proceed from the same membership fee certificate 201,
originally issued in the name of "Swan, Culbertson and Fritz"
For its second cause of action, it alleged that the membership fee certificate 201-serial no. 1478 issued by the deputy
clerk of court of 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 party so that complete relief may be accorded herein.
The Corporation prayed that
(a) an order be issued requiring Lee and Tan to interplead and litigate their conflicting claims; and
(b) judgment be rendered, after hearing, declaring who of the two is the lawful owner of membership fee certificate 201,
and ordering the surrender and cancellation of membership fee certificate 201-serial no. 1478 issued in the name of Lee.
In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the
complaint to state a cause of action, and bar by prescription. 1 These motions were duly opposed by the Corporation.
Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the trial court dismissed
the complaint, with costs against the Corporation.
In this appeal, the Corporation contends that the court a quo erred
ISSUE: 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 no identity of parties, of subject-matter, and of cause of action, between civil case 26044 of the CFI of
Manila and the present action, the complaint should not have been dismissed upon the ground of res judicata.
On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the effect of
reopening civil case 26044, the present action is barred by res judicata.
Although res judicata or bar by a prior judgment was the principal ground availed, the determinative issue, as can be
gleaned from the pleadings of the parties, relates to the propriety and timeliness of the remedy of the interpleader.
The action of interpleader, under section 120 of the Code of Civil Procedure,
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 one or the other thing. The remedy is afforded to protect a
person not against double liability but against double vexation in respect of one liability.
DISTINCTION
The procedure under the Rules of Court is the same as that under the Code of Civil Procedure, except that under the
former the remedy of interpleader is available regardless of the nature of the subject-matter of the controversy, whereas
under the latter an interpleader suit is proper only if the subject-matter of the controversy is personal property or relates
to the performance of an obligation.
There is no question that the subject-matter of the present controversy, i.e., the membership fee certificate 201, is
proper for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light of the
facts and circumstances obtaining.
A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. He need not await actual
institution of independent suits against him before filing a bill of interpleader. 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.
Otherwise, he may be barred by laches or undue delay. But where he acts with reasonable diligence in view of the
environmental circumstances, the remedy is not barred.
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 now therefore too late for it to invoke the remedy of interpleader.
It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered against
him in favor of one of the contending claimants, 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.
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 be entitled to this remedy the applicant must be able to show that he has not been made independently liable
to any of the claimants. And since the Corporation is already liable to Lee under a final judgment, the present
interpleader suit is clearly improper and unavailing.
"It is the general rule that before a person will be deemed to be in a position to ask for an order of
interpleader, he must be prepared to show, among other prerequisites, that he has not become
independently liable to any of the claimants.
"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.
Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final
judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case at
hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no satisfactory explanation
for its failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader suit cannot
prosper because it was filed much too late.
"If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment
against him without filing a bill of interpleader, it then becomes too late for him to do so.
It is one of 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.
"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 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..
"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 that judgment (the bank and Mrs.
Pabb) and no excuse is shown why he did not implead them in that suit."
To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil case,
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 facts, the Corporation must
submit to the consequences of defeat.
"The act providing for the proceeding has nothing to say touching the right of one, after contesting
a claim of one of the claimants to final judgment unsuccessfully, to involve the successful litigant in
litigation anew by bringing an interpleader action. The question seems to be one of first impression
here, but, in other jurisdictions, from which the substance of the act was apparently taken, the rule
prevails that the action cannot be resorted to after an unsuccessful trial against one of the
claimants.
"'It is well settled, both by reasons and authority, that one who asks the interposition of a court of
equity to compel others, claiming property in his hands, to interplead, must do so before putting
them to the test of trials at law. The remedy by interpleader is afforded to protect the party from the
annoyance and hazard of two or more actions touching the same property or demand; but one who,
with knowledge of all the facts, neglects to avail himself of the relief, or elects to take the chances
for success in the actions at law, ought to submit to the consequences of defeat. To permit an
unsuccessful defendant to compel the successful plaintiffs to interplead, is to increase instead of to
diminish the number of suits; to put upon the shoulders of others the burden which he asks may be
taken from his own
"It is urged, however, that the American Surety Company of New York was not in position to file an
interpleader until it had tested the claim of relatrix to final judgment, and that, failing to meet with
success, it promptly filed the interpleader. The reason why, it urges, it was not in such position until
then is that had it succeeded before this court in sustaining its construction of the bond and the law
governing the bond, it would not have been called upon to file an interpleader, since there would
have been sufficient funds in its hands to have satisfied all lawful claimants. It may be observed,
however, that the surety company was acquainted with all of the facts, and hence that it simply took
its chances of meeting with success by its own construction of the bond and the law. Having failed
to sustain it, it cannot now force relatrix into litigation anew with others, involving most likely a
repetition of what has been decided, or force her to accept a pro rata part of a fund, which is far
from benefits of the judgment."
Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and compelled
to prove his claim anew against other adverse claimants, as that would in effect be a collateral attack upon the judgment.
"The jurisprudence of this state and the common law states is well-settled that a claimant who has
been put to test of a trial by a surety, and has established 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.
"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 respects the judgment
is final."
"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. And so it is said that it is too late for
the remedy of interpleader if the party seeking this relief has contested the claim of one of the
parties and suffered judgment to be taken.
'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.
"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.
In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently liable
in civil case 26044 and, therefore, its present application for interpleader would in effect be a collateral attack upon the
final judgment in the said civil case; the appellee Lee had already established his rights to membership fee certificate
201 in the aforesaid civil case and, therefore, this interpleader suit would compel him to establish his rights anew, and
thereby increase instead of diminish litigations, which is one of the purposes of an interpleader suit, with the possibility
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. Complaint dismissed.

Rizal Commercial Banking Corporation v. Metro Container Corporation, G.R. No. 127913, September 13, 2001, 365 SCRA
150
SYNOPSIS
For failure of Ley Construction Corporation (LEYCON) to settle its loan obligations, Rizal Commercial
Banking Corporation (RCBC) instituted an extrajudicial foreclosure proceeding against it. In a bidding, RCBC was
adjudged the highest bidder. LEYCON promptly filed an action for Nullification of Extrajudicial Foreclosure Sale and
Damages against RCBC. Meanwhile, RCBC consolidated its ownership over the property due to LEYCON's failure to
redeem the mortgaged property within the 12-month redemption period. By virtue thereof, RCBC demanded rental
payments from Metro Container Corporation (METROCAN) which was leasing the mortgaged property from LEYCON.
On the other hand, LEYCON filed an action for Unlawful Detainer against METROCAN before the Metropolitan Trial
Court (MeTC), Branch 82 of Valenzuela, Metro Manila, docketed as Civil Case No. 6202. Consequently, METROCAN
filed a complaint for Interpleader against LEYCON and RCBC before the Regional Trial Court of Valenzuela 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. During the pre-trial conference of
the interpleader case, the trial court ordered the dismissal of the case insofar as METROCAN and LEYCON were
concerned in view of an amicable settlement, judgment was rendered in the Unlawful Detainer case, which, among
other things, ordered METROCAN to pay LEYCON whatever rentals due on the subject premises. The said decision
became final and executory. By reason thereof, METROCAN and LEYCON separately filed a motion to dismiss in the
interpleader case. However, the said two motions were dismissed for lack of merit. Thereafter, METROCAN sought
relief from the Court of Appeals via a petition for certiorari and prohibition. Thus, the Court of Appeals granted the
petition and ordered the dismissal of the interpleader case. Hence, RCBC filed the instant petition.
The Court sustained the Court of Appeals. An action of interpleader is afforded to protect a person not
against double liability but against double vexation in respect of one liability. It 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. The decision in Civil Case No. 6202 resolved the conflicting claims insofar as payment of rentals was
concerned. Petitioner then was correct in saying that it is not bound by the decision in Civil Case No. 5202. 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. It is not bereft of other legal remedies. In fact, the issue of ownership can very well be
threshed out in Civil Case No. 4037-V-93, the case for Nullification of Extrajudicial Foreclosure Sale and Damages
filed by LEYCON against RCBC.
SYLLABUS
1.REMEDIAL LAW; SPECIAL CIVIL ACTION; UNLAWFUL DETAINER; LIMITED TO THE QUESTION OF PHYSICAL OR
MATERIAL POSSESSION OF THE PREMISES. 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. The issue of ownership is immaterial therein
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 . . . 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--vis the contract of lease between the parties." 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.
2. INTERPLEADER; PURPOSE. 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. It 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."
3. INTERPLEADER FOR PAYMENT OF RENTALS; CEASED TO EXIST WHEN THE DECISION OF THE LOWER COURT
IN AN UNLAWFUL DETAINER CASE INVOLVING THE SAME PROPERTY BECOMES FINAL AND EXECUTORY. When
the decision in Civil Case No. 6202 became final and executory, METROCAN has no other alternative left but to pay the
rentals to LEYCON. Precisely because there was already a judicial fiat to METROCAN, there was no more reason to
continue with Civil Case No. 4398-V-94. Thus, METROCAN moved for the dismissal of the interpleader action not because
it is no longer interested but because there is no more need for it to pursue such cause of action.
4.ID.; ID.; ID.; ID.; CLAIM OF OWNERSHIP BY ONE OF THE DEFENDANTS IS NOT AFFECTED. 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. It is not bereft of other legal
remedies. In fact, the issue of ownership can very well be threshed out in Civil Case No. 4037-V-93, the case for
Nullification of Extrajudicial Foreclosure Sale and Damages filed by LEYCON against RCBC.
Assailed in this petition for review on certiorari
The following facts:
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.
LEYCON promptly filed an action for Nullification of Extrajudicial Foreclosure Sale and Damages against RCBC. 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. V-332432 was issued if favor of the bank. By virtue thereof, RCBC demanded rental
payments from Metro Container Corporation (METROCAN) which was leasing the property from LEYCON.
LEYCON filed an action for Unlawful Detainer against METROCAN before the Metropolitan Trial Court (MeTC) of
Valenzuela.
METROCAN filed a complaint for Interpleader before the Regional Trial Court of Valenzuela 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. During the pre-trial conference, 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.
METROCAN and LEYCON moved for the dismissal of Civil Case No. 4398-V-94 for having become moot and academic due
to the amicable settlement ??
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.
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.
Hence, the present recourse.
ISSUE
RCBC alleged, that:
(1) CANNOT RENDER THE INTERPLEADER ACTION MOOT AND ACADEMIC.
(2)WHILE A PARTY WHO INITIATES AN INTERPLEADER ACTION MAY NOT BE COMPELLED TO
LITIGATE IF HE IS NO LONGER INTERESTED TO PURSUE SUCH CAUSE OF ACTION,
SAID PARTY MAY NOT UNILATERALLY CAUSE THE DISMISSAL OF THE CASE AFTER
THE ANSWER HAVE BEEN FILED. FURTHER, THE DEFENDANTS IN AN
INTERPLEADER SUIT SHOULD BE GIVEN FULL OPPORTUNITY TO LITIGATE THEIR
RESPECTIVE CLAIMS.
We sustain the Court of Appeals.
Section 1, Rule 63 of the Revised Rules of Court 2 provides:
SECTION 1. Interpleader when proper. Whenever conflicting claims upon the same subject matter
are or may be made against a person, who claims no interest whatever in the subject matter, or an
interest which in whole or in part is not disputed by the claimants, he may bring an action against the
conflicting claimants to compel them to interplead and litigate their several claims among themselves.
In the case before us, it is undisputed that METROCAN filed the interpleader action because it was unsure which between
LEYCON and RCBC was entitled to receive the payment of monthly rentals on the subject property. LEYCON was claiming
payment of the rentals as lessor of the property while RCBC was making a demand by virtue of the consolidation of the
title of the property in its name.
It is also undisputed that LEYCON, as lessor of the subject property filed an action for unlawful detainer (against its lessee
METROCAN. The issue in Civil Case No. 6202 is limited to the question of physical or material possession of the
premises. The issue of ownership is immaterial therein 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 . . . 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." 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.
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 . . . ." While RCBC, not
being a party to Civil Case No. 6202, could not be bound by the judgment therein, METROCAN is bound by the MeTC
decision. When the decision in Civil Case No. 6202 became final and executory, METROCAN has no other alternative left
but to pay the rentals to LEYCON. Precisely because there was already a judicial fiat to METROCAN, there was no more
reason to continue with Civil Case No. 4398-V-94. Thus, METROCAN moved for the dismissal of the interpleader action
not because it is no longer interested but because there is no more need for it to pursue such cause of action.
It should be remembered that an action of interpleader is afforded to protect a person not against double liability but
against double vexation in respect of one liability. It 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." The decision in Civil Case No.
6202 resolved the conflicting claims insofar as payment of rentals was concerned.

Petitioner is correct in saying that it is not bound by the decision in Civil Case No. 6202. It is not a party thereto.
However, it could not compel METROCAN to pursue Civil Case No. 4398-V-94. RCBC has other avenues to prove its
claim. Is not bereft of other legal remedies. In fact, the issue of ownership can very well be threshed out in Civil Case No.
4037-V-93, the case for Nullification of Extrajudicial Foreclosure Sale and Damages filed by LEYCON against RCBC.
WHEREFORE, the petition for review is DENIED
Lim v. Continental Development Corporation, G.R. No. 41818, February 18, 1976, 69 SCRA 349
SYNOPSIS
A complaint for interpleader was filed by Continental Development Corporation (CDC) against Benito Gervacio Tan and
Zoila Co Lim, praying that said defendants be directed to interplead and litigate their respective claims over the shares of
stock in its possession. CDC alleged that, since both defendants claim ownership of the shares of stock, is it not in a
position to justly and correctly determine the conflicting claims; that it cannot dispose of the shares of stock as both
defendants threatened to take punitive measure against it should it adopt steps the may prejudice their respective interest;
and that it has no interest over the subject matter of the complaint.
The trial court dismissed the complaint for lack of cause of action invoking Section 35 of the Corporation Law (Act 1459,
as amended). CDC and defendant Zoila Co Lim filed their respective motions for reconsideration of the trial court's order
but the same were denied, hence, these petitions for review on certiorari.
The Supreme Court held that an active conflict of interests over the shares of stock exist between the defendants, and
the court a quo gravely abused its discretion in dismissing the complaint for interpleader without giving full opportunity
to defendants to litigate their respective claims, which dismissal has the effect of determining the question of ownership
in favor of defendant Benito Gervacio Tan.
Petition granted with costs.
SYLLABUS
1.INTERPLEADER; DISMISSAL; ERROR TO DISMISS ACTION WHERE CLEAR CONFLICT OF INTEREST EXISTS.
Since there is an active conflict of interests between the two defendants over the disputed shares of stock, which the
plaintiff-in-interpleader cannot justly and correctly decide thus rendering it impossible to dispose the shares of stock in
question, the dismissal of the complaint is a grave abuse of the discretion and practically decided the ownership of the
shares of stock in favor of defendant Benito Gervacio Tan without giving full opportunity to both defendants to litigate their
respective claims.
2. REQUISITES; CONFLICT OF INTEREST, THE ONLY INDISPENSABLE REQUISITE IN INTERPLEADER. Section 1,
Rule 63 of the Revised Rules of Court provides that, whenever conflicting claims upon the same subject matter are or
may be made against a person, who claims no interest whatever in the object 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. The only indispensable requisite required by this rule is
that conflicting claims upon the same subject matter are may be made against 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.
PHHC, L-25138, 39 SCRA 145).
3.SUBJECT MATTER MUST BE THE SAME AND DERIVED FROM THE SAME SOURCE. An interpleader merely
demands 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. The fund, thing, or duty over which the parties assert adverse claims must be one and the same
and derived from the same source.
4.ID.; NATURE OF REMEDY; A PROTECTION AGAINST DOUBLE VEXATION. An action for interpleader 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 only to protect a person
against a double liability but to protect him against a double vexation in respect of one liability.
MAKASIAR, J p:
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' 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: LLphil
"2.That in the books of the plaintiff, there appears the name of the defendant Benito Gervasio Tan
as one of its stockholders initially accredited sometime in 1957 with fifty (50) common shares
covered by certificates of stock Nos. 12 and 13, and subsequently credited with seventy five (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 plaintiff company, by letters and telegrams, the release to him of the
certificates of 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
as aforesaid, alleging that said stocks really belonged to her mother So Bi (alias Tawa), now already
deceased, and strongly denying her co-defendant's claim 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 rights 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 name of defendant Benito Gervasio Tan, who should therefore be declared
owner thereof pursuant to Section 52 of the Corporation Law (pp. 25-30, rec.). cdphil
On January 14, 1974, defendant in 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 Gervasio Tan would
want the re-issuance and release to him of new replacement certificates, which petitioner has not so far done; and that
as the daughter and heir of said So Bi, alias Tawa, she is now the owner of the said shares of stock, which should be
delivered to her (pp. 31-33, rec.).
On January 22, 1974, petitioner Continental Development Corporation filed its opposition to Benito's motion to dismiss
(pp. 34-40. G.R. No. L-41831).
In the questioned order dated March 12, 1974, the trial judge dismissed the complaint for lack of cause of action,
invoking Section 35 of Act No. 1459, as amended, otherwise known as the Corporation Law (pp. 41-42, G.R. No. L-
41831).
Defendant Zoila Co Lim and herein petitioner as plaintiff, filed their respective motions for reconsideration of the
aforesaid order (pp. 43-49, G.R. No. L-41831), to which the defendant Benito Gervasio Tan filed his rejoinder (pp. 50-
61, G.R. No. L-41831). Said motions were denied in an order dated July 3, 1974.
Hence these petitions by Continental Development Corporation and Zoila Co Lim.
It is patent from the pleadings in the lower court that both defendants Benito Gervasio Tan and Zoila Co Lim assert
conflicting rights to the questioned shares of stock. Precisely in his motion to dismiss the complaint for interpleader,
defendant Benito Gervasio Tan states that petitioner corporation, through its Vice-President, notified him on July 23,
1973 "that the shares of stock are in the possession of its treasurer Mr. Ty Lim, and urged defendant to directly obtain
them from the former, who allegedly was on vacation at the time. Mr. Ty Lim, on August 30, 1973, through counsel,
replied to the defendant Benito Gervasio Tan that said certificates were not in his possession but surmised, without
reference to any record, that the same might have been delivered to the deceased So Bi. And, on October 29, 1973, same
counsel of Mr. Ty Lim, wrote the corporation, in behalf of defendant Zoila Co Lim, alleged heir of So Bi, claiming
ownership of the stocks" (pp. 26, 27, G.R. No. L-41831). Defendant Zoila Co Lim, on the other hand, as heretofore
stated, claims sole ownership of said shares of stock as inheritance from her late mother So Bi, alias Tawa. LexLib

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 their
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 stressed 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 claimants, he may bring an action against the conflicting claimants to compel them
to interplead and litigate their several claims among themselves" (Emphasis supplied).
This provision only requires as an indispensable requisite:
"that conflicting claims upon the same subject matter are or may be made against the plaintiff-in-
interpleader who claims no interest whatever in the subject matter or an interest which in whole or
in part is not disputed by the claimants" (Beltran vs. People's Homesite and Housing Corporation,
No. L-25138, 29 SCRA 145).
This ruling, penned by Mr. Justice Teehankee, reiterated the principle in Alvarez vs. Commonwealth (65 Phil. 302),
that
"The action of interpleader, under Section 120, is a remedy whereby a person who has personal
property in his possession, or an obligation to render wholly or partially, without claiming any right
in both comes to court and asks that the persons who claim the said personal property or who
consider themselves entitled to demand compliance with the obligation, be required to litigate
among themselves, in order to determine finally who is entitled to one or the other thing. The
remedy is afforded not to protect a person against a double liability but to protect him against a
double vexation in respect of one liability."
An interpleader merely demands as a sine qua non element
". . . that there be two or more claimants to the fund or thing in dispute through separate and
different interests. The claims must be adverse before relief can be granted and the parties sought
to be interpleaded must be in a position to make effective claims" (33 C.J. 430).
Additionally, the fund, thing, or duty over which the parties assert adverse claims must be one and the same and
derived from the same source (33 C.J., 328; Martin, Rules of Court, 1969 ed., Vol. 3, 133-134; Moran, Rules of
Court, 1970 ed., Vol. 3, 134-136).
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 tine 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. prcd
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.
Teehankee (Chairman), Esguerra, Muoz-Palma and Martin, JJ., concur.

RULE 63, DECLARATORY RELIEF AND SIMILAR REMEDIES

Almeda , et al. v. Bathala Marketing Industries, Inc., G.R. No. 150806, January 28, 2008, 542 SCRA 470

D E C I S I O N
NACHURA, J p:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, of the Decision 1 of the Court of Appeals
(CA), dated September 3, 2001, in CA-G.R. CV No. 67784, and its Resolution 2 dated November 19, 2001. The assailed
Decision affirmed with modification the Decision 3 of the Regional Trial Court (RTC), Makati City, Branch 136, dated May
9, 2000 in Civil Case No. 98-411.
Sometime in May 1997, respondent Bathala Marketing Industries, Inc., as lessee, represented by its president Ramon H.
Garcia, renewed its Contract of Lease 4 with Ponciano L. Almeda (Ponciano), as lessor, husband of petitioner Eufemia
and father of petitioner Romel Almeda. Under the said contract, Ponciano agreed to lease a portion of the Almeda
Compound, located at 2208 Pasong Tamo Street, Makati City, consisting of 7,348.25 square meters, for a monthly rental
of P1,107,348.69, for a term of four (4) years from May 1, 1997 unless sooner terminated as provided in the contract. 5
The contract of lease contained the following pertinent provisions which gave rise to the instant case:
SIXTH It is expressly understood by the parties hereto that the rental rate stipulated is based on
the present rate of assessment on the property, and that in case the assessment should hereafter be
increased or any new tax, charge or burden be imposed by authorities on the lot and building where
the leased premises are located, LESSEE shall pay, when the rental herein provided becomes due,
the additional rental or charge corresponding to the portion hereby leased; provided, however, that
in the event that the present assessment or tax on said property should be reduced, LESSEE shall
be entitled to reduction in the stipulated rental, likewise in proportion to the portion leased by him;
SEVENTH In case an extraordinary inflation or devaluation of Philippine Currency should
supervene, the value of Philippine peso at the time of the establishment of the obligation shall be
the basis of payment; 6
During the effectivity of the contract, Ponciano died. Thereafter, respondent dealt with petitioners. In a letter 7 dated
December 29, 1997, petitioners advised respondent that the former shall assess and collect Value Added Tax (VAT) on
its monthly rentals. In response, respondent contended that VAT may not be imposed as the rentals fixed in the contract
of lease were supposed to include the VAT therein, considering that their contract was executed on May 1, 1997 when
the VAT law had long been in effect. 8
On January 26, 1998, respondent received another letter from petitioners informing the former that its monthly rental
should be increased by 73% pursuant to condition No. 7 of the contract and Article 1250 of the Civil Code. Respondent
opposed petitioners' demand and insisted that there was no extraordinary inflation to warrant the application of Article
1250 in light of the pronouncement of this Court in various cases. 9
Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but continued to pay the stipulated
amount set forth in their contract.
On February 18, 1998, respondent instituted an action for declaratory relief for purposes of determining the correct
interpretation of condition Nos. 6 and 7 of the lease contract to prevent damage and prejudice. 10 The case was
docketed as Civil Case No. 98-411 before the RTC of Makati.
On March 10, 1998, petitioners in turn filed an action for ejectment, rescission and damages against respondent for
failure of the latter to vacate the premises after the demand made by the former. 11 Before respondent could file an
answer, petitioners filed a Notice of Dismissal. 12 They subsequently refiled the complaint before the Metropolitan Trial
Court of Makati; the case was raffled to Branch 139 and was docketed as Civil Case No. 53596.
Petitioners later moved for the dismissal of the declaratory relief case for being an improper remedy considering that
respondent was already in breach of the obligation and that the case would not end the litigation and settle the rights of
the parties. The trial court, however, was not persuaded, and consequently, denied the motion.
After trial on the merits, on May 9, 2000, the RTC ruled in favor of respondent and against petitioners. The pertinent
portion of the decision reads:
WHEREFORE, premises considered, this Court renders judgment on the case as follows:
1)declaring that plaintiff is not liable for the payment of Value-Added Tax (VAT) of 10% of the rent
for [the] use of the leased premises;
2)declaring that plaintiff is not liable for the payment of any rental adjustment, there being no
[extraordinary] inflation or devaluation, as provided in the Seventh Condition of the lease contract,
to justify the same;
3)holding defendants liable to plaintiff for the total amount of P1,119,102.19, said amount
representing payments erroneously made by plaintiff as VAT charges and rental adjustment for the
months of January, February and March, 1999; and
4)holding defendants liable to plaintiff for the amount of P1,107,348.69, said amount representing
the balance of plaintiff's rental deposit still with defendants.
SO ORDERED. 13
The trial court denied petitioners their right to pass on to respondent the burden of paying the VAT since it was not a
new tax that would call for the application of the sixth clause of the contract. The court, likewise, denied their right to
collect the demanded increase in rental, there being no extraordinary inflation or devaluation as provided for in the
seventh clause of the contract. Because of the payment made by respondent of the rental adjustment demanded by
petitioners, the court ordered the restitution by the latter to the former of the amounts paid, notwithstanding the well-
established rule that in an action for declaratory relief, other than a declaration of rights and obligations, affirmative
reliefs are not sought by or awarded to the parties.
Petitioners elevated the aforesaid case to the Court of Appeals which affirmed with modification the RTC decision. The
fallo reads:
WHEREFORE, premises considered, the present appeal is DISMISSED and the appealed decision in
Civil Case No. 98-411 is hereby AFFIRMED with MODIFICATION in that the order for the return of
the balance of the rental deposits and of the amounts representing the 10% VAT and rental
adjustment, is hereby DELETED.
No pronouncement as to costs.
SO ORDERED. 14
The appellate court agreed with the conclusions of law and the application of the decisional rules on the matter made by
the RTC. However, it found that the trial court exceeded its jurisdiction in granting affirmative relief to the respondent,
particularly the restitution of its excess payment.
Petitioners now come before this Court raising the following issues:
I.
WHETHER OR NOT ARTICLE 1250 OF THE NEW CIVIL CODE IS APPLICABLE TO THE CASE AT
BAR.
II.
WHETHER OR NOT THE DOCTRINE ENUNCIATED IN FILIPINO PIPE AND FOUNDRY CORP. VS.
NAWASA CASE, 161 SCRA 32 AND COMPANION CASES ARE (sic) APPLICABLE IN THE CASE AT
BAR.
III.
WHETHER OR NOT IN NOT APPLYING THE DOCTRINE IN THE CASE OF DEL ROSARIO VS. THE
SHELL COMPANY OF THE PHILIPPINES, 164 SCRA 562, THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED ON A QUESTION OF LAW.
IV.
WHETHER OR NOT THE FINDING OF THE HONORABLE COURT OF APPEALS THAT
RESPONDENT IS NOT LIABLE TO PAY THE 10% VALUE ADDED TAX IS IN ACCORDANCE WITH
THE MANDATE OF RA 7716.
V.
WHETHER OR NOT DECLARATORY RELIEF IS PROPER SINCE PLAINTIFF-APPELLEE WAS IN
BREACH WHEN THE PETITION FOR DECLARATORY RELIEF WAS FILED BEFORE THE TRIAL
COURT.
In fine, the issues for our resolution are as follows: 1) whether the action for declaratory relief is proper; 2) whether
respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716; and 3) whether the amount of rentals due the
petitioners should be adjusted by reason of extraordinary inflation or devaluation.
Declaratory relief is defined as an action by any person interested in a deed, will, contract or other written instrument,
executive order or resolution, to determine any question of construction or validity arising from the instrument,
executive order or regulation, or statute, and for a declaration of his rights and duties thereunder. The only issue that
may be raised in such a petition is the question of construction or validity of provisions in an instrument or statute.
Corollary is the general rule that such an action must be justified, as no other adequate relief or remedy is available
under the circumstances. 15
Decisional law enumerates the requisites of an action for declaratory relief, as follows: 1) the subject matter of the
controversy must be a deed, will, contract or other written instrument, statute, executive order or regulation, or
ordinance; 2) the terms of said documents and the validity thereof are doubtful and require judicial construction; 3) there
must have been no breach of the documents in question; 4) there must be an actual justiciable controversy or the
"ripening seeds" of one between persons whose interests are adverse; 5) the issue must be ripe for judicial
determination; and 6) adequate relief is not available through other means or other forms of action or proceeding. 16
It is beyond cavil that the foregoing requisites are present in the instant case, except that petitioners insist that
respondent was already in breach of the contract when the petition was filed.
We do not agree.
After petitioners demanded payment of adjusted rentals and in the months that followed, respondent complied with the
terms and conditions set forth in their contract of lease by paying the rentals stipulated therein. Respondent religiously
fulfilled its obligations to petitioners even during the pendency of the present suit. There is no showing that respondent
committed an act constituting a breach of the subject contract of lease. Thus, respondent is not barred from instituting
before the trial court the petition for declaratory relief.

Petitioners claim that the instant petition is not proper because a separate action for rescission, ejectment and damages
had been commenced before another court; thus, the construction of the subject contractual provisions should be
ventilated in the same forum.
We are not convinced.
It is true that in Panganiban v. Pilipinas Shell Petroleum Corporation 17 we held that the petition for declaratory relief
should be dismissed in view of the pendency of a separate action for unlawful detainer. However, we cannot apply the
same ruling to the instant case. In Panganiban, the unlawful detainer case had already been resolved by the trial court
before the dismissal of the declaratory relief case; and it was petitioner in that case who insisted that the action for
declaratory relief be preferred over the action for unlawful detainer. Conversely, in the case at bench, the trial court had
not yet resolved the rescission/ejectment case during the pendency of the declaratory relief petition. In fact, the trial
court, where the rescission case was on appeal, itself initiated the suspension of the proceedings pending the resolution
of the action for declaratory relief.
We are not unmindful of the doctrine enunciated in Teodoro, Jr. v. Mirasol 18 where the declaratory relief action was
dismissed because the issue therein could be threshed out in the unlawful detainer suit. Yet, again, in that case, there
was already a breach of contract at the time of the filing of the declaratory relief petition. This dissimilar factual milieu
proscribes the Court from applying Teodoro to the instant case.
Given all these attendant circumstances, the Court is disposed to entertain the instant declaratory relief action instead of
dismissing it, notwithstanding the pendency of the ejectment/rescission case before the trial court. The resolution of the
present petition would write finis to the parties' dispute, as it would settle once and for all the question of the proper
interpretation of the two contractual stipulations subject of this controversy.
Now, on the substantive law issues.
Petitioners repeatedly made a demand on respondent for the payment of VAT and for rental adjustment allegedly brought
about by extraordinary inflation or devaluation. Both the trial court and the appellate court found no merit in petitioners'
claim. We see no reason to depart from such findings.
As to the liability of respondent for the payment of VAT, we cite with approval the ratiocination of the appellate court,
viz.:
Clearly, the person primarily liable for the payment of VAT is the lessor who may choose to pass it
on to the lessee or absorb the same. Beginning January 1, 1996, the lease of real property in the
ordinary course of business, whether for commercial or residential use, when the gross annual
receipts exceed P500,000.00, is subject to 10% VAT. Notwithstanding the mandatory payment of
the 10% VAT by the lessor, the actual shifting of the said tax burden upon the lessee is clearly
optional on the part of the lessor, under the terms of the statute. The word "may" in the statute,
generally speaking, denotes that it is directory in nature. It is generally permissive only and
operates to confer discretion. In this case, despite the applicability of the rule under Sec. 99 of the
NIRC, as amended by R.A. 7716, granting the lessor the option to pass on to the lessee the 10%
VAT, to existing contracts of lease as of January 1, 1996, the original lessor, Ponciano L. Almeda
did not charge the lessee-appellee the 10% VAT nor provided for its additional imposition when
they renewed the contract of lease in May 1997. More significantly, said lessor did not actually
collect a 10% VAT on the monthly rental due from the lessee-appellee after the execution of the
May 1997 contract of lease. The inevitable implication is that the lessor intended not to avail of the
option granted him by law to shift the 10% VAT upon the lessee-appellee. . . . . 19
In short, petitioners are estopped from shifting to respondent the burden of paying the VAT.
Petitioners' reliance on the sixth condition of the contract is, likewise, unavailing. This provision clearly states that
respondent can only be held liable for new taxes imposed after the effectivity of the contract of lease, that is, after May
1997, and only if they pertain to the lot and the building where the leased premises are located. Considering that RA
7716 took effect in 1994, the VAT cannot be considered as a "new tax" in May 1997, as to fall within the coverage of the
sixth stipulation.
Neither can petitioners legitimately demand rental adjustment because of extraordinary inflation or devaluation.
Petitioners contend that Article 1250 of the Civil Code does not apply to this case because the contract stipulation
speaks of extraordinary inflation or devaluation while the Code speaks of extraordinary inflation or deflation. They insist
that the doctrine pronounced in Del Rosario v. The Shell Company, Phils. Limited 20 should apply.
Essential to contract construction is the ascertainment of the intention of the contracting parties, and such determination
must take into account the contemporaneous and subsequent acts of the parties. This intention, once ascertained, is
deemed an integral part of the contract. 21
While, indeed, condition No. 7 of the contract speaks of "extraordinary inflation or devaluation" as compared to Article
1250's "extraordinary inflation or deflation," we find that when the parties used the term "devaluation," they really did
not intend to depart from Article 1250 of the Civil Code. Condition No. 7 of the contract should, thus, be read in harmony
with the Civil Code provision.
That this is the intention of the parties is evident from petitioners' letter 22 dated January 26, 1998, where, in demanding
rental adjustment ostensibly based on condition No. 7, petitioners made explicit reference to Article 1250 of the Civil
Code, even quoting the law verbatim. Thus, the application of Del Rosario is not warranted. Rather, jurisprudential rules
on the application of Article 1250 should be considered.
Article 1250 of the Civil Code states:
In case an extraordinary inflation or deflation of the currency stipulated should supervene, the value
of the currency at the time of the establishment of the obligation shall be the basis of payment,
unless there is an agreement to the contrary.
Inflation has been defined as the sharp increase of money or credit, or both, without a corresponding increase in
business transaction. There is inflation when there is an increase in the volume of money and credit relative to available
goods, resulting in a substantial and continuing rise in the general price level. 23 In a number of cases, this Court had
provided a discourse on what constitutes extraordinary inflation, thus:
[E]xtraordinary inflation exists when there is a decrease or increase in the purchasing power of the
Philippine currency which is unusual or beyond the common fluctuation in the value of said
currency, and such increase or decrease could not have been reasonably foreseen or was
manifestly beyond the contemplation of the parties at the time of the establishment of the obligation.
24
The factual circumstances obtaining in the present case do not make out a case of extraordinary inflation or devaluation
as would justify the application of Article 1250 of the Civil Code. We would like to stress that the erosion of the value of
the Philippine peso in the past three or four decades, starting in the mid-sixties, is characteristic of most currencies.
And while the Court may take judicial notice of the decline in the purchasing power of the Philippine currency in that
span of time, such downward trend of the peso cannot be considered as the extraordinary phenomenon contemplated by
Article 1250 of the Civil Code. Furthermore, absent an official pronouncement or declaration by competent authorities of
the existence of extraordinary inflation during a given period, the effects of extraordinary inflation are not to be applied.
25
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. CV No.
67784, dated September 3, 2001, and its Resolution dated November 19, 2001, are AFFIRMED.
SO ORDERED.
Ynares-Santiago, Austria-Martinez, Corona * and Reyes, JJ., concur.

Velarde v. Social Justice Society, G.R. No. 159357, April 28, 2004, 428 SCRA 283

D E C I S I O N
PANGANIBAN, J p:
A decision that does not conform to the form and substance required by the Constitution and the law is void and deemed
legally inexistent. To be valid, decisions should comply with the form, the procedure and the substantive requirements
laid out in the Constitution, the Rules of Court and relevant circulars/orders of the Supreme Court. For the guidance of
the bench and the bar, the Court hereby discusses these forms, procedures and requirements.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, assailing the June 12, 2003 Decision 2 and July
29, 2003 Order 3 of the Regional Trial Court (RTC) of Manila (Branch 49). 4
The challenged Decision was the offshoot of a Petition for Declaratory Relief 5 filed before the RTC-Manila by herein
Respondent Social Justice Society (SJS) against herein Petitioner Mariano "Mike" Z. Velarde, together with His Eminence,
Jaime Cardinal Sin, Executive Minister Erao Manalo, Brother Eddie Villanueva and Brother Eliseo F. Soriano as co-
respondents. The Petition prayed for the resolution of the question "whether or not the act of a religious leader like any
of herein respondents, in endorsing the candidacy of a candidate for elective office or in urging or requiring the members
of his flock to vote for a specified candidate, is violative of the letter or spirit of the constitutional provisions . . ." 6
Alleging that the questioned Decision did not contain a statement of facts and a dispositive portion, herein petitioner filed
a Clarificatory Motion and Motion for Reconsideration before the trial court. Soriano, his co-respondent, similarly filed a
separate Motion for Reconsideration. In response, the trial court issued the assailed Order, which held as follows:
". . . [T]his Court cannot reconsider, because what it was asked to do, was only to clarify a
Constitutional provision and to declare whether acts are violative thereof. The Decision did not
make a dispositive portion because a dispositive portion is required only in coercive reliefs, where a
redress from wrong suffered and the benefit that the prevailing party wronged should get. The step
that these movants have to take, is direct appeal under Rule 45 of the Rules of Court, for a
conclusive interpretation of the Constitutional provision to the Supreme Court. 7
The Antecedent Proceedings
On January 28, 2003, SJS filed a Petition for Declaratory Relief ("SJS Petition") before the RTC-Manila against Velarde
and his aforesaid co-respondents. SJS, a registered political party, sought the interpretation of several constitutional
provisions, 8 specifically on the separation of church and state; and a declaratory judgment on the constitutionality of the
acts of religious leaders endorsing a candidate for an elective office, or urging or requiring the members of their flock to
vote for a specified candidate.
The subsequent proceedings were recounted in the challenged Decision in these words:
". . .. 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 . . .
". . . 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 . . ." 9
After narrating the above incidents, the trial court said that it had jurisdiction over the Petition, because "in praying for a
determination as to whether the actions imputed to the respondents are violative of Article II, Section 6 of the
Fundamental Law, [the Petition] has raised only a question of law." 10 It then proceeded to a lengthy discussion of the
issue raised in the Petition the separation of church and state even tracing, to some extent, the historical
background of the principle. Through its discourse, the court a quo opined at some point that the "[e]ndorsement of
specific candidates in an election to any public office is a clear violation of the separation clause." 11
After its essay on the legal issue, however, the trial court failed to include a dispositive portion in its assailed Decision.
Thus, Velarde and Soriano filed separate Motions for Reconsideration which, as mentioned earlier, were denied by the
lower court.
Hence, this Petition for Review. 12
This Court, in a Resolution 13 dated September 2, 2003, required SJS and the Office of the Solicitor General (OSG) to
submit their respective comments. In the same Resolution, the Court gave the other parties impleaded as respondents
in the original case below the opportunity to comment, if they so desired. cIHSTC
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 Court's resolution:
"1.Whether or not the Decision dated 12 June 2003 rendered by the court a quo was proper and
valid;
"2.Whether or not there exists justiceable controversy in herein respondent's Petition for
declaratory relief;
"3.Whether or not herein respondent has legal interest in filing the Petition for declaratory relief;
"4.Whether or not the constitutional question sought to be resolved by herein respondent is ripe for
judicial determination;
"5.Whether or not there is adequate remedy other than the declaratory relief; and,
"6.Whether or not the court a quo has jurisdiction over the Petition for declaratory relief of herein
respondent." 15
During the Oral Argument, the issues were narrowed down and classified as follows:
"A.Procedural Issues
"Did the Petition for Declaratory Relief raise a justiciable controversy? Did it state a cause
of action? Did respondent have any legal standing to file the Petition for Declaratory
Relief?
"B.Substantive Issues
"1.Did the RTC Decision conform to the form and substance required by the Constitution,
the law and the Rules of Court?
"2.May religious leaders like herein petitioner, Bro. Mike Velarde, be prohibited from
endorsing candidates for public office? Corollarily, may they be banned from
campaigning against said candidates?"
The Court's Ruling
The Petition of Brother Mike Velarde is meritorious.
Procedural Issues:
Requisites of Petitions
for Declaratory Relief
Section 1 of Rule 63 of the Rules of Court, which deals with petitions for declaratory relief, provides in part:
"Section 1.Who may file petition. Any person interested under a deed, will, contract or other
written instrument, whose rights are affected by a statute, executive order or regulation, ordinance,
or any other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and
for a declaration of his rights or duties thereunder."
Based on the foregoing, an action for declaratory relief should be filed by a person interested under a deed, a will, a
contract or other written instrument, and whose rights are affected by a statute, an executive order, a regulation or an
ordinance. The purpose of the remedy is to interpret or to determine the validity of the written instrument and to seek a
judicial declaration of the parties' rights or duties thereunder. 16 The essential requisites of the action are as follows: (1)
there is a justiciable controversy; (2) the controversy is between persons whose interests are adverse; (3) the party
seeking the relief has a legal interest in the controversy; and (4) the issue is ripe for judicial determination. 17
Justiciable Controversy
Brother Mike Velarde contends that the SJS Petition failed to allege, much less establish before the trial court, that there
existed a justiciable controversy or an adverse legal interest between them; and that SJS had a legal right that was being
violated or threatened to be violated by petitioner. On the contrary, Velarde alleges that SJS premised its action on mere
speculations, contingent events, and hypothetical issues that had not yet ripened into an actual controversy. Thus, its
Petition for Declaratory Relief must fail.
A justiciable controversy refers to an existing case or controversy that is appropriate or ripe for judicial determination,
not one that is conjectural or merely anticipatory. 18 The SJS Petition for Declaratory Relief fell short of this test. It
miserably failed to allege an existing controversy or dispute between the petitioner and the named respondents therein.
Further, the Petition did not sufficiently state what specific legal right of the petitioner was violated by the respondents
therein; and what particular act or acts of the latter were in breach of its rights, the law or the Constitution.
As pointed out by Brother Eliseo F. Soriano in his Comment, 19 what exactly has he done that merited the attention of
SJS? He confesses that he does not know the answer, because the SJS Petition (as well as the assailed Decision of the
RTC) "yields nothing in this respect." His Eminence, Jaime Cardinal Sin, adds that, at the time SJS filed its Petition on
January 28, 2003, the election season had not even started yet; and that, in any event, he has not been actively involved
in partisan politics.

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 . . .." 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 people's faith in the electoral process[;] and reinforc[ing] their belief that religious leaders
determine the ultimate result of elections," 22 which would then be violative of the separation clause.
Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does not suffice to constitute a
justiciable controversy. The Petition does not even allege any indication or manifest intent on the part of any of the
respondents below to champion an electoral candidate, or to urge their so-called flock to vote for, or not to vote for, a
particular candidate. It is a time-honored rule that sheer speculation does not give rise to an actionable right.
Obviously, there is no factual allegation that SJS' rights are being subjected to any threatened, imminent and inevitable
violation that should be prevented by the declaratory relief sought. The judicial power and duty of the courts to settle
actual controversies involving rights that are legally demandable and enforceable 23 cannot be exercised when there is
no actual or threatened violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof be resolved." 24 In other
words, it merely sought an opinion of the trial court on whether the speculated acts of religious leaders endorsing
elective candidates for political offices violated the constitutional principle on the separation of church and state. SJS did
not ask for a declaration of its rights and duties; neither did it pray for the stoppage of any threatened violation of its
declared rights. Courts, however, are proscribed from rendering an advisory opinion. 25
Cause of Action
Respondent SJS asserts that in order to maintain a petition for declaratory relief, a cause of action need not be alleged or
proven. Supposedly, for such petition to prosper, there need not be any violation of a right, breach of duty or actual
wrong committed by one party against the other.
Petitioner, on the other hand, argues that the subject matter of an action for declaratory relief should be a deed, a will, a
contract (or other written instrument), a statute, an executive order, a regulation or an ordinance. But the subject matter
of the SJS Petition is "the constitutionality of an act of a religious leader to endorse the candidacy of a candidate for
elective office or to urge or require the members of the flock to vote for a specified candidate." 26 According to
petitioner, this subject matter is "beyond the realm of an action for declaratory relief." 27 Petitioner avers that in the
absence of a valid subject matter, the Petition fails to state a cause of action and, hence, should have been dismissed
outright by the court a quo.
A cause of action is an act or an omission of one party in violation of the legal right or rights of another, causing injury to
the latter. 28 Its essential elements are the following: (1) a right in favor of the plaintiff; (2) an obligation on the part of
the named defendant to respect or not to violate such right; and (3) such defendant's act or omission that is violative of
the right of the plaintiff or constituting a breach of the obligation of the former to the latter. 29
The failure of a complaint to state a cause of action is a ground for its outright dismissal. 30 However, in special civil
actions for declaratory relief, the concept of a cause of action under ordinary civil actions does not strictly apply. The
reason for this exception is that an action for declaratory relief presupposes that there has been no actual breach of the
instruments involved or of rights arising thereunder. 31 Nevertheless, a breach or violation should be impending,
imminent or at least threatened.
A perusal of the Petition filed by SJS before the RTC discloses no explicit allegation that the former had any legal right
in its favor that it sought to protect. We can only infer the interest, supposedly in its favor, from its bare allegation that it
"has thousands of members who are citizens-taxpayers-registered voters and who are keenly interested in a judicial
clarification of the constitutionality of the partisan participation of religious leaders in Philippine politics and in the
process to insure adherence to the Constitution by everyone . . .." 32
Such general averment does not, however, suffice to constitute a legal right or interest. Not only is the presumed
interest not personal in character; it is likewise too vague, highly speculative and uncertain. 33 The Rules require that
the interest must be material to the issue and affected by the questioned act or instrument, as distinguished from simple
curiosity or incidental interest in the question raised. 34
To bolster its stance, SJS cites the Corpus Juris Secundum and submits that the "[p]laintiff in a declaratory judgment
action does not seek to enforce a claim against [the] defendant, but seeks a judicial declaration of [the] rights of the
parties for the purpose of guiding [their] future conduct, and the essential distinction between a 'declaratory judgment
action' and the usual 'action' is that no actual wrong need have been committed or loss have occurred in order to sustain
the declaratory judgment action, although there must be no uncertainty that the loss will occur or that the asserted rights
will be invaded." 35
SJS has, however, ignored the crucial point of its own reference that there must be no uncertainty that the loss will
occur or that the asserted rights will be invaded. Precisely, as discussed earlier, it merely conjectures that herein
petitioner (and his co-respondents below) might actively participate in partisan politics, use "the awesome voting
strength of its faithful flock [to] enable it to elect men to public office . . ., enabling [it] to control the government." 36
During the Oral Argument, though, Petitioner Velarde and his co-respondents below all strongly asserted that they had
not in any way engaged or intended to participate in partisan politics. They all firmly assured this Court that they had not
done anything to trigger the issue raised and to entitle SJS to the relief sought.
Indeed, the Court finds in the Petition for Declaratory Relief no single allegation of fact upon which SJS could base a
right of relief from the named respondents. In any event, even granting that it sufficiently asserted a legal right it sought
to protect, there was nevertheless no certainty that such right would be invaded by the said respondents. Not even the
alleged proximity of the elections to the time the Petition was filed below (January 28, 2003) would have provided the
certainty that it had a legal right that would be jeopardized or violated by any of those respondents. caADIC
Legal Standing
Legal standing or locus standi has been defined as a personal and substantial interest in the case, such that the party has
sustained or will sustain direct injury as a result of the challenged act. 37 Interest means a material interest in issue that
is affected by the questioned act or instrument, as distinguished from a mere incidental interest in the question involved.
38
Petitioner alleges that "[i]n seeking declaratory relief as to the constitutionality of an act of a religious leader to
endorse, or require the members of the religious flock to vote for a specific candidate, herein Respondent SJS has no
legal interest in the controversy"; 39 it has failed to establish how the resolution of the proffered question would benefit
or injure it.
Parties bringing suits challenging the constitutionality of a law, an act or a statute must show "not only that the law [or
act] is invalid, but also that [they have] sustained or [are] in immediate or imminent danger of sustaining some direct
injury as a result of its enforcement, and not merely that [they] suffer thereby in some indefinite way." 40 They must
demonstrate that they have been, or are about to be, denied some right or privilege to which they are lawfully entitled,
or that they are about to be subjected to some burdens or penalties by reason of the statute or act complained of. 41
First, parties suing as taxpayers must specifically prove that they have sufficient interest in preventing the illegal
expenditure of money raised by taxation. 42 A taxpayer's action may be properly brought only when there is an exercise
by Congress of its taxing or spending power. 43 In the present case, there is no allegation, whether express or implied,
that taxpayers' money is being illegally disbursed.
Second, there was no showing in the Petition for Declaratory Relief that SJS as a political party or its members as
registered voters would be adversely affected by the alleged acts of the respondents below, if the question at issue was
not resolved. There was no allegation that SJS had suffered or would be deprived of votes due to the acts imputed to the
said respondents. Neither did it allege that any of its members would be denied the right of suffrage or the privilege to
be voted for a public office they are seeking.
Finally, the allegedly keen interest of its "thousands of members who are citizens-taxpayers-registered voters" is too
general 44 and beyond the contemplation of the standards set by our jurisprudence. Not only is the presumed interest
impersonal in character; it is likewise too vague, highly speculative and uncertain to satisfy the requirement of standing.
45

Transcendental Importance
In any event, SJS urges the Court to take cognizance of the Petition, even sans legal standing, considering that "the
issues raised are of paramount public interest."
In not a few cases, the Court has liberalized the locus standi requirement when a petition raises an issue of
transcendental significance or paramount importance to the people. 46 Recently, after holding that the IBP had no locus
standi to bring the suit, the Court in IBP v. Zamora 47 nevertheless entertained the Petition therein. It noted that "the IBP
has advanced constitutional issues which deserve the attention of this Court in view of their seriousness, novelty and
weight as precedents." 48
Similarly in the instant case, the Court deemed the constitutional issue raised in the SJS Petition to be of paramount
interest to the Filipino people. The issue did not simply concern a delineation of the separation between church and
state, but ran smack into the governance of our country. The issue was both transcendental in importance and novel in
nature, since it had never been decided before.
The Court, thus, called for Oral Argument to determine with certainty whether it could resolve the constitutional issue
despite the barren allegations in the SJS Petition as well as the abbreviated proceedings in the court below. Much to its
chagrin, however, counsels for the parties particularly for Respondent SJS made no satisfactory allegations or
clarifications that would supply the deficiencies hereinabove discussed. Hence, even if the Court would exempt this case
from the stringent locus standi requirement, such heroic effort would be futile because the transcendental issue cannot
be resolved anyway.
Proper Proceedings Before
the Trial Court
To prevent a repetition of this waste of precious judicial time and effort, and for the guidance of the bench and the bar,
the Court reiterates the elementary procedure 49 that must be followed by trial courts in the conduct of civil cases. 50
Prefatorily, the trial court may motu proprio or upon motion of the defendant dismiss a complaint 51 (or petition, in
a special civil action) that does not allege the plaintiff's (or petitioner's) 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
Upon the filing of the complaint/petition and the payment of the requisite legal fees, the clerk of court shall forthwith
issue the corresponding summons to the defendants or the respondents, with a directive that the defendant answer 55
within 15 days, unless a different period is fixed by the court. 56 The summons shall also contain a notice that if such
answer is not filed, the plaintiffs/petitioners shall take a judgment by default and may be granted the relief applied for. 57
The court, however, may upon such terms as may be just allow an answer to be filed after the time fixed by the
Rules. 58
If the answer sets forth a counterclaim or cross-claim, it must be answered within ten (10) days from service. 59 A reply
may be filed within ten (10) days from service of the pleading responded to. 60
When an answer fails to tender an issue or admits the material allegations of the adverse party's pleading, the court may,
on motion of that party, direct judgment on such pleading (except in actions for declaration of nullity or annulment of
marriage or for legal separation). 61 Meanwhile, a party seeking to recover upon a claim, a counterclaim or crossclaim
or to obtain a declaratory relief may, at any time after the answer thereto has been served, move for a summary
judgment in its favor. 62 Similarly, a party against whom a claim, a counterclaim or crossclaim is asserted or a
declaratory relief sought may, at any time, move for a summary judgment in its favor. 63 After the motion is heard,
the judgment sought shall be rendered forthwith if there is a showing that, except as to the amount of damages, there is
no genuine issue as to any material fact; and that the moving party is entitled to a judgment as a matter of law. 64
Within the time for but before filing the answer to the complaint or petition, the defendant may file a motion to
dismiss based on any of the grounds stated in Section 1 of Rule 16 of the Rules of Court. During the hearing of the
motion, the parties shall submit their arguments on the questions of law, and their evidence on the questions of fact. 65
After the hearing, the court may dismiss the action or claim, deny the motion, or order the amendment of the pleadings.
It shall not defer the resolution of the motion for the reason that the ground relied upon is not indubitable. In every case,
the resolution shall state clearly and distinctly the reasons therefor. 66
If the motion is denied, the movant may file an answer within the balance of the period originally prescribed to file an
answer, but not less than five (5) days in any event, computed from the receipt of the notice of the denial. If the pleading
is ordered to be amended, the defendant shall file an answer within fifteen (15) days, counted from the service of the
amended pleading, unless the court provides a longer period. 67
After the last pleading has been served and filed, the case shall be set for pretrial, 68 which is a mandatory proceeding.
69 A plaintiff's/ petitioner's (or its duly authorized representative's) non-appearance at the pretrial, if without valid
cause, shall result in the dismissal of the action with prejudice, unless the court orders otherwise. A similar failure on the
part of the defendant shall be a cause for allowing the plaintiff/petitioner to present evidence ex parte, and the court to
render judgment on the basis thereof. 70
The parties are required to file their pretrial briefs; failure to do so shall have the same effect as failure to appear at the
pretrial. 71 Upon the termination thereof, the court shall issue an order reciting in detail the matters taken up at the
conference; the action taken on them, the amendments allowed to the pleadings; and the agreements or admissions, if
any, made by the parties regarding any of the matters considered. 72 The parties may further avail themselves of any of
the modes of discovery, 73 if they so wish. ECISAD
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
Upon the completion of such proceedings, the commissioner shall file with the court a written report on the matters
referred by the parties. 77 The report shall be set for hearing, after which the court shall issue an order adopting,
modifying or rejecting it in whole or in part; or recommitting it with instructions; or requiring the parties to present
further evidence before the commissioner or the court. 78
Finally, a judgment or final order determining the merits of the case shall be rendered. The decision shall be in writing,
personally and directly prepared by the judge, stating clearly and distinctly the facts and the law on which it is based,
signed by the issuing magistrate, and filed with the clerk of court. 79
Based on these elementary guidelines, let us examine the proceedings before the trial court in the instant case.
First, with respect to the initiatory pleading of the SJS. Even a cursory perusal of the Petition immediately reveals its
gross inadequacy. It contained no statement of ultimate facts upon which the petitioner relied for its claim. Furthermore,
it did not specify the relief it sought from the court, but merely asked it to answer a hypothetical question.
Relief, as contemplated in a legal action, refers to a specific coercive measure prayed for as a result of a violation of the
rights of a plaintiff or a petitioner. 80 As already discussed earlier, the Petition before the trial court had no allegations
of fact 81 or of any specific violation of the petitioner's rights, which the respondents had a duty to respect. Such
deficiency amounted to a failure to state a cause of action; hence, no coercive relief could be sought and adjudicated.
The Petition evidently lacked substantive requirements and, we repeat, should have been dismissed at the outset.
Second, with respect to the trial court proceedings. Within the period set to file their respective answers to the SJS
Petition, Velarde, Villanueva and Manalo filed Motions to Dismiss; Cardinal Sin, a Comment; and Soriano, within a priorly
granted extended period, an Answer in which he likewise prayed for the dismissal of the Petition. 82 SJS filed a
Rejoinder to the Motion of Velarde, who subsequently filed a Sur-Rejoinder. Supposedly, there were "several scheduled
settings, in which the "[c]ourt was apprised of the respective positions of the parties." 83 The nature of such settings
whether pretrial or trial hearings was not disclosed in the records. Before ruling on the Motions to Dismiss, the trial
court issued an Order 84 dated May 8, 2003, directing the parties to submit their memoranda. Issued shortly thereafter
was another Order 85 dated May 14, 2003, denying all the Motions to Dismiss.
In the latter Order, the trial court perfunctorily ruled:
"The Court now resolves to deny the Motions to Dismiss, and after all the memoranda are
submitted, then, the case shall be deemed as submitted for resolution." 86

Apparently, contrary to the requirement of Section 2 of Rule 16 of the Rules of Court, the Motions were not heard.
Worse, the Order purportedly resolving the Motions to Dismiss did not state any reason at all for their denial, in
contravention of Section 3 of the said Rule 16. There was not even any statement of the grounds relied upon by the
Motions; much less, of the legal findings and conclusions of the trial court.
Thus, Velarde, Villanueva and Manalo moved for reconsideration. Pending the resolution of these Motions for
Reconsideration, Villanueva filed a Motion to suspend the filing of the parties' memoranda. But instead of separately
resolving the pending Motions fairly and squarely, the trial court again transgressed the Rules of Court when it
immediately proceeded to issue its Decision, even before tackling the issues raised in those Motions.
Furthermore, the RTC issued its "Decision" without allowing the parties to file their answers. For this reason, there was
no joinder of the issues. If only it had allowed the filing of those answers, the trial court would have known, as the Oral
Argument revealed, that the petitioner and his co-respondents below had not committed or threatened to commit the act
attributed to them (endorsing candidates) the act that was supposedly the factual basis of the suit.
Parenthetically, the court a quo further failed to give a notice of the Petition to the OSG, which was entitled to be heard
upon questions involving the constitutionality or validity of statutes and other measures. 87
Moreover, as will be discussed in more detail, the questioned Decision of the trial court was utterly wanting in the
requirements prescribed by the Constitution and the Rules of Court.
All in all, during the loosely abbreviated proceedings of the case, the trial court indeed acted with inexplicable haste,
with total ignorance of the law or, worse, in cavalier disregard of the rules of procedure and with grave abuse of
discretion.
Contrary to the contentions of the trial judge and of SJS, proceedings for declaratory relief must still follow the process
described above the petition must state a cause of action; the proceedings must undergo the procedure outlined in the
Rules of Court; and the decision must adhere to constitutional and legal requirements.
First Substantive Issue:
Fundamental Requirements
of a Decision
The Constitution commands that "[n]o decision shall be rendered by any court without expressing therein clearly and
distinctly the facts and the law on which it is based. No petition for review or motion for reconsideration of a decision of
the court shall be refused due course or denied without stating the basis therefor." 88
Consistent with this constitutional mandate, Section 1 of Rule 36 of the Rules on Civil Procedure similarly provides:
"Sec. 1.Rendition of judgments and final orders. A judgment or final order determining the merits
of the case shall be in writing personally and directly prepared by the judge, stating clearly and
distinctly the facts and the law on which it is based, signed by him and filed with the clerk of court."
In the same vein, Section 2 of Rule 120 of the Rules of Court on Criminal Procedure reads as follows:
"Sec. 2.Form and contents of judgments. The judgment must be written in the official language,
personally and directly prepared by the judge and signed by him and shall contain clearly and
distinctly a statement of the facts proved or admitted by the accused and the law upon which the
judgment is based.
"xxx xxx xxx."
Pursuant to the Constitution, this Court also issued on January 28, 1988, Administrative Circular No. 1, prompting all
judges "to make complete findings of facts in their decisions, and scrutinize closely the legal aspects of the case in the
light of the evidence presented. They should avoid the tendency to generalize and form conclusions without detailing the
facts from which such conclusions are deduced."
In many cases, 89 this Court has time and time again reminded "magistrates to heed the demand of Section 14, Article
VIII of the Constitution." The Court, through Chief Justice Hilario G. Davide Jr. in Yao v. Court of Appeals, 90 discussed
at length the implications of this provision and strongly exhorted thus:
"Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is indisputably
a paramount component of due process and fair play. It is likewise demanded by the due process
clause of the Constitution. The parties to a litigation should be informed of how it was decided, with
an explanation of the factual 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." THADEI
In People v. Bugarin, 91 the Court also explained:
"The requirement that the decisions of courts must be in writing and that they must set forth clearly
and distinctly the facts and the law on which they are based serves many functions. It is intended,
among other things, to inform the parties of the reason or reasons for the decision so that if any of
them appeals, he can point out to the appellate court the finding of facts or the rulings on points of
law with which he disagrees. More than that, the requirement is an assurance to the parties that, in
reaching judgment, the judge did so through the processes of legal reasoning. . . .."
Indeed, elementary due process demands that the parties to a litigation be given information on how the case was
decided, as well as an explanation of the factual and legal reasons that led to the conclusions of the court. 92
In Madrid v. Court of Appeals, 93 this Court had instructed magistrates to exert effort to ensure that their decisions
would present a comprehensive analysis or account of the factual and legal findings that would substantially address the
issues raised by the parties.
In the present case, it is starkly obvious that the assailed Decision contains no statement of facts much less an
assessment or analysis thereof or of the court's findings as to the probable facts. The assailed Decision begins with a
statement of the nature of the action and the question or issue presented. Then follows a brief explanation of the
constitutional provisions involved, and what the Petition sought to achieve. Thereafter, the ensuing procedural incidents
before the trial court are tracked. The Decision proceeds to a full-length opinion on the nature and the extent of the
separation of church and state. Without expressly stating the final conclusion she has reached or specifying the relief
granted or denied, the trial judge ends her "Decision" with the clause "SO ORDERED."
What were the antecedents that necessitated the filing of the Petition? What exactly were the distinct facts that gave rise
to the question sought to be resolved by SJS? More important, what were the factual findings and analysis on which the
trial court based its legal findings and conclusions? None were stated or implied. Indeed, the RTC's Decision cannot be
upheld for its failure to express clearly and distinctly the facts on which it was based. Thus, the trial court clearly
transgressed the constitutional directive.
The significance of factual findings lies in the value of the decision as a precedent. How can it be so if one cannot apply
the ruling to similar circumstances, simply because such circumstances are unknown? Otherwise stated, how will the
ruling be applied in the future, if there is no point of factual comparison?
Moreover, the court a quo did not include a resolutory or dispositive portion in its so-called Decision. The importance of
such portion was explained in the early case Manalang v. Tuason de Rickards, 94 from which we quote:
"The resolution of the Court on a given issue as embodied in the dispositive part of the decision or
order is the investitive or controlling factor that determines and settles the rights of the parties and
the questions presented therein, notwithstanding the existence of statements or declaration in the
body of said order that may be confusing."
The assailed Decision in the present case leaves us in the dark as to its final resolution of the Petition. To recall, the
original Petition was for declaratory relief. So, what relief did the trial court grant or deny? What rights of the parties did
it conclusively declare? Its final statement says, "SO ORDERED." But what exactly did the court order? It had the
temerity to label its issuance a "Decision," when nothing was in fact decided.
Respondent SJS insists that the dispositive portion can be found in the body of the assailed Decision. It claims that the
issue is disposed of and the Petition finally resolved by the statement of the trial court found on page 10 of its 14-page
Decision, which reads: "Endorsement of specific candidates in an election to any public office is a clear violation of the
separation clause." 95

We cannot agree.
In Magdalena Estate, Inc. v. Caluag, 96 the obligation of the party imposed by the Court was allegedly contained in the
text of the original Decision. The Court, however, held:
". . . 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)
Thus, the dispositive portion cannot be deemed to be the statement quoted by SJS and embedded in the last paragraph of
page 10 of the assailed 14-page Decision. If at all, that statement is merely an answer to a hypothetical legal question
and just a part of the opinion of the trial court. It does not conclusively declare the rights (or obligations) of the parties to
the Petition. Neither does it grant any much less, the proper relief under the circumstances, as required of a
dispositive portion.
Failure to comply with the constitutional injunction is a grave abuse of discretion amounting to lack or excess of
jurisdiction. Decisions or orders issued in careless disregard of the constitutional mandate are a patent nullity and must
be struck down as void. 97
Parts of a Decision
In general, the essential parts of a good decision consist of the following: (1) statement of the case; (2) statement of
facts; (3) issues or assignment of errors; (4) court ruling, in which each issue is, as a rule, separately considered and
resolved; and, finally, (5) dispositive portion. The ponente may also opt to include an introduction or a prologue as well
as an epilogue, especially in cases in which controversial or novel issues are involved. 98
An introduction may consist of a concise but comprehensive statement of the principal factual or legal issue/s of the
case. In some cases particularly those concerning public interest; or involving complicated commercial, scientific,
technical or otherwise rare subject matters a longer introduction or prologue may serve to acquaint readers with the
specific nature of the controversy and the issues involved. An epilogue may be a summation of the important principles
applied to the resolution of the issues of paramount public interest or significance. It may also lay down an enduring
philosophy of law or guiding principle.
Let us now, again for the guidance of the bench and the bar, discuss the essential parts of a good decision.
1.Statement of the Case
The Statement of the Case consists of a legal definition of the nature of the action. At the first instance, this part states
whether the action is a civil case for collection, ejectment, quieting of title, foreclosure of mortgage, and so on; or, if it is
a criminal case, this part describes the specific charge quoted usually from the accusatory portion of the information
and the plea of the accused. Also mentioned here are whether the case is being decided on appeal or on a petition for
certiorari, the court of origin, the case number in the trial court, and the dispositive portion of the assailed decision.
In a criminal case, the verbatim reproduction of the criminal information serves as a guide in determining the nature and
the gravity of the offense for which the accused may be found culpable. As a rule, the accused cannot be convicted of a
crime different from or graver than that charged.
Also, quoting verbatim the text of the information is especially important when there is a question on the sufficiency of
the charge, or on whether qualifying and modifying circumstances have been adequately alleged therein.
To ensure that due process is accorded, it is important to give a short description of the proceedings regarding the plea
of the accused. Absence of an arraignment, or a serious irregularity therein, may render the judgment void, and further
consideration by the appellate court would be futile. In some instances, especially in appealed cases, it would also be
useful to mention the fact of the appellants' detention, in order to dispose of the preliminary query whether or not they
have abandoned their appeal by absconding or jumping bail. ADEHTS
Mentioning the court of origin and the case number originally assigned helps in facilitating the consolidation of the
records of the case in both the trial and the appellate courts, after entry of final judgment.
Finally, the reproduction of the decretal portion of the assailed decision informs the reader of how the appealed case was
decided by the court a quo.
2.Statement of Facts
There are different ways of relating the facts of the case. First, under the objective or reportorial method, the judge
summarizes without comment the testimony of each witness and the contents of each exhibit. Second, under the
synthesis method, the factual theory of the plaintiff or prosecution and then that of the defendant or defense is
summarized according to the judge's best light. Third, in the subjective method, the version of the facts accepted by the
judge is simply narrated without explaining what the parties' versions are. Finally, through a combination of objective and
subjective means, the testimony of each witness is reported and the judge then formulates his or her own version of the
facts.
In criminal cases, it is better to present both the version of the prosecution and that of the defense, in the interest of
fairness and due process. A detailed evaluation of the contentions of the parties must follow. The resolution of most
criminal cases, unlike civil and other cases, depends to a large extent on the factual issues and the appreciation of the
evidence. The plausibility or the implausibility of each version can sometimes be initially drawn from a reading of the
facts. Thereafter, the bases of the court in arriving at its findings and conclusions should be explained.
On appeal, the fact that the assailed decision of the lower court fully, intelligently and correctly resolved all factual and
legal issues involved may partly explain why the reviewing court finds no reason to reverse the findings and conclusions
of the former. Conversely, the lower court's patent misappreciation of the facts or misapplication of the law would aid in
a better understanding of why its ruling is reversed or modified.
In appealed civil cases, the opposing sets of facts no longer need to be presented. Issues for resolution usually involve
questions of law, grave abuse of discretion, or want of jurisdiction; hence, the facts of the case are often undisputed by
the parties. With few exceptions, factual issues are not entertained in non-criminal cases. Consequently, the narration of
facts by the lower court, if exhaustive and clear, may be reproduced; otherwise, the material factual antecedents should
be restated in the words of the reviewing magistrate.
In addition, the reasoning of the lower court or body whose decision is under review should be laid out, in order that the
parties may clearly understand why the lower court ruled in a certain way, and why the reviewing court either finds no
reason to reverse it or concludes otherwise.
3.Issues or Assignment of Errors
Both factual and legal issues should be stated. On appeal, the assignment of errors, as mentioned in the appellant's brief,
may be reproduced in toto and tackled seriatim, so as to avoid motions for reconsideration of the final decision on the
ground that the court failed to consider all assigned errors that could affect the outcome of the case. But when the
appellant presents repetitive issues or when the assigned errors do not strike at the main issue, these may be restated in
clearer and more coherent terms.
Though not specifically questioned by the parties, additional issues may also be included, if deemed important for
substantial justice to be rendered. Note that appealed criminal cases are given de novo review, in contrast to noncriminal
cases in which the reviewing court is generally limited to issues specifically raised in the appeal. The few exceptions are
errors of jurisdiction; questions not raised but necessary in arriving at a just decision on the case; or unassigned errors
that are closely related to those properly assigned, or upon which depends the determination of the question properly
raised.
4.The Court's Ruling
This part contains a full discussion of the specific errors or issues raised in the complaint, petition or appeal, as the case
may be; as well as of other issues the court deems essential to a just disposition of the case. Where there are several
issues, each one of them should be separately addressed, as much as practicable. The respective contentions of the
parties should also be mentioned here. When procedural questions are raised in addition to substantive ones, it is better
to resolve the former preliminarily.
5.The Disposition or Dispositive Portion
In a criminal case, the disposition should include a finding of innocence or guilt, the specific crime committed, the penalty
imposed, the participation of the accused, the modifying circumstances if any, and the civil liability and costs. In case an
acquittal is decreed, the court must order the immediate release of the accused, if detained, (unless they are being held
for another cause) and order the director of the Bureau of Corrections (or wherever the accused is detained) to report,
within a maximum of ten (10) days from notice, the exact date when the accused were set free.
In a civil case as well as in a special civil action, the disposition should state whether the complaint or petition is granted
or denied, the specific relief granted, and the costs. The following test of completeness may be applied. First, the parties
should know their rights and obligations. Second, they should know how to execute the decision under alternative
contingencies. Third, there should be no need for further proceedings to dispose of the issues. Fourth, the case should
be terminated by according the proper relief. The "proper relief" usually depends upon what the parties seek in their
pleadings. It may declare their rights and duties, command the performance of positive prestations, or order them to
abstain from specific acts. The disposition must also adjudicate costs.

The foregoing parts need not always be discussed in sequence. But they should all be present and plainly identifiable in
the decision. Depending on the writer's 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.
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.
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.
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 court's
constitutional mandate and jurisdiction. 99
Indeed, the assailed Decision was rendered in clear violation of the Constitution, because it made no findings of facts and
final disposition. Hence, it is void and deemed legally 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
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.
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.
SO ORDERED.
Davide, Jr., C .J ., Puno, Quisumbing, Sandoval-Gutierrez, Carpio, Austria-Martinez, Carpio Morales, Callejo, Sr., Azcuna
and Tinga, JJ ., concur.
Vitug, J ., concurs in the result.
Ynares-Santiago, J ., took no part.
Corona, J ., is on leave.

Philippine Deposit Insurance Corporation v. Court of Appeals, et al., G.R. No. 126911, April 30, 2003, 402 SCRA 194
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.
The Chief Legal Counsel for petitioner.
Dolores P. Abad and Leonora P. Abad for private respondents.
SYNOPSIS
Respondents filed claims with the Philippine Deposit Insurance Corporation (PDIC) for the payment of the twenty insured
golden time deposits (GTDs) at the Manila Banking Corporation (MBC), Iloilo Branch. PDIC paid respondents the value of
three claims; however, it withheld the payment of the seventeen remaining claims. Subsequently, PDIC filed a petition for
declaratory relief against respondents for a judicial declaration of the insurability of respondents' GTDs. The trial court
declared the GTDs of respondents to be deposit liabilities of MBC, hence, are liabilities of PDIC as statutory insurer. The
Court of Appeals (CA) affirmed the decision of the trial court, except as to the award of legal interest which it deleted.
Hence, this petition.
In affirming the decision of the CA, the Supreme Court ruled that PDIC is liable only for deposits received by a bank in
the usual course of business. That no actual money in bills and/or coins was handed by respondents to MBC does not
mean that the transactions on the new GTDs did not involve money and that there was no consideration therefor, for the
outstanding balance of respondents' 71 GTDs in MBC prior to May 26, 1987 was re-deposited by respondents under 28
new GTDs, eight of which were pre-terminated and withdrawn by respondent Abad. MBC had cash on hand more than
double the outstanding balance of respondents' 71 GTDs at the start of the banking day on May 25, 1987. Since
respondent 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. Petitioner
having failed to overcome the presumption that the ordinary course of business was followed, the Court found that the 28
new GTDs were deposited in the usual course of business of MBC.
SYLLABUS
1.COMMERCIAL LAW; INSURANCE LAW; PHILIPPINE DEPOSIT INSURANCE CORPORATION; LIABLE ONLY FOR
DEPOSITS RECEIVED BY A BANK IN THE USUAL COURSE OF BUSINESS; CASE AT BAR. Under its charter, PDIC
(hereafter petitioner) is liable only for deposits received by a bank "in the usual course of business." . . . That no actual
money in bills and/or coins was handed by respondents to MBC does not mean that the transactions on the new GTDs did
not involve money and that there was no consideration therefor. For the outstanding balance of respondents' 71 GTDs in
MBC prior to May 26, 1987 in the amount of P1,115,889.15 as earlier mentioned was re-deposited by respondents under
28 new GTDs. Admittedly, MBC had P2,841,711.90 cash on hand more than double the outstanding balance of
respondents' 71 GTDs at the start of the banking day on May 25, 1987. Since respondent Jose Abad was at MBC soon
after it opened at 9:00 a.m. of that day, petitioner should not presume that MBC had no cash to cover the new GTDs of
respondents and conclude that there was no consideration for said GTDs. Petitioner having failed to overcome the
presumption that the ordinary course of business was followed, this Court finds that the 28 new GTDs were deposited "in
the usual course of business" of MBC. THCSEA
2.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; DECLARATORY RELIEF; DOES NOT PROSCRIBE THE FILING OF
COUNTERCLAIM BASED ON THE SAME TRANSACTION, DEED OR CONTRACT SUBJECT OF THE COMPLAINT.
[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. "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."
D E C I S I O N
CARPIO MORALES, J p:
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. cDCEIA
Prior to May 22, 1997, respondents had, individually or jointly with each other, 71 certificates of time deposits
denominated as "Golden Time Deposits" (GTD) with an aggregate face value of P1,115,889.96. 1
On May 22, 1987, a Friday, the Monetary Board (MB) of the Central Bank of the Philippines, now Bangko Sentral ng
Pilipinas, issued Resolution 505 2 prohibiting MBC to do business in the Philippines, and placing its assets and affairs
under receivership. The Resolution, however, was not served on MBC until Tuesday the following week, or on May 26,
1987, when the designated Receiver took over. 3
On May 25, 1987, the next banking day following the issuance of the MB Resolution, respondent Jose Abad was at the
MBC at 9:00 a.m. for the purpose of pre-terminating the 71 aforementioned GTDs and re-depositing the fund
represented thereby into 28 new GTDs in denominations of P40,000.00 or less under the names of herein respondents
individually or jointly with each other. 4 Of the 28 new GTDs, Jose Abad pre-terminated 8 and withdrew the value
thereof in the total amount of P320,000.00. 5
Respondents thereafter filed their claims with the PDIC for the payment of the remaining 20 insured GTDs. 6
On February 11, 1988, PDIC paid respondents the value of 3 claims in the total amount of P120,000.00. PDIC, however,
withheld payment of the 17 remaining claims after Washington Solidum, Deputy Receiver of MBC-Iloilo, submitted a
report to the PDIC 7 that there was massive conversion and substitution of trust and deposit accounts on May 25, 1987
at MBC-Iloilo. 8 The pertinent portions of the report stated:
xxx 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. . . .
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
xxx xxx xxx
Because of the report, PDIC entertained serious reservation in recognizing respondents' GTDs as deposit liabilities of
MBC-Iloilo. Thus, on August 30, 1991, it filed a petition for declaratory relief against respondents with the Regional Trial
Court (RTC) of Iloilo City, for a judicial declaration determination of the insurability of respondents' GTDs at MBC-Iloilo.
10
In their Answer filed on October 24, 1991 and Amended Answer 11 filed on January 9, 1992, respondents set up a
counterclaim against PDIC whereby they asked for payment of their insured deposits. 12
In its Decision of February 22, 1994, 13 Branch 30 of the Iloilo RTC declared the 20 GTDs of respondents to be deposit
liabilities of MBC, hence, are liabilities of PDIC as statutory insurer. It accordingly disposed as follows:
WHEREFORE, premises considered, judgment is hereby rendered:
1.Declaring the 28 GTDs of the Abads which were issued by the TMBC-Iloilo on May 25,
1987 as deposits or deposit liabilities of the bank as the term is defined under Section 3 (f)
of R.A. No. 3591, as amended;
2.Declaring PDIC, being the statutory insurer of bank deposits, liable to the Abads for the
value of the remaining 20 GTDs, the other 8 having been paid already by TMBC Iloilo on
May 25,1987;
3.Ordering PDIC to pay the Abads the value of said 20 GTDs less the value of 3 GTDs it
paid on February 11, 1988, and the amounts it may have paid the Abads pursuant to the
Order of this Court dated September 8, 1992;
4.Ordering PDIC to pay immediately the Abads the balance of its admitted liability as
contained in the aforesaid Order of September 8, 1992, should there be any, subject to
liquidation when this case shall have been finally decide; and
5.Ordering PDIC to pay legal interest on the remaining insured deposits of the Abads from
February 11, 1988 until they are fully paid.
SO ORDERED.
On appeal, the Court of Appeals, by the assailed Decision of October 21, 1996, 14 affirmed the trial court's decision
except as to the award of legal interest which it deleted.
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 PRE-
TERMINATED/TERMINATED AT THE TIME THE MANILA BANKING CORPORATION WAS
ALREADY IN SERIOUS FINANCIAL DISTRESS.

In its supplement to the petition, PDIC adds the following assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF THE TRIAL
COURT ORDERING PETITIONER TO PAY RESPONDENTS' CLAIMS FOR PAYMENT OF INSURED
DEPOSITS FOR THE REASON THAT AN ACTION FOR DECLARATORY RELIEF DOES NOT
ESSENTIALLY ENTAIL AN EXECUTORY PROCESS AS THE ONLY RELIEF THAT SHOULD HAVE
BEEN GRANTED BY THE TRIAL COURT IS A DECLARATION OF THE RIGHTS AND DUTIES OF
PETITIONER UNDER R.A. 3591, AS AMENDED, PARTICULARLY SECTION 3(F) THEREOF AS
CONSIDERED AGAINST THE SURROUNDING CIRCUMSTANCES OF THE MATTER IN ISSUE
SOUGHT TO BE CONSTRUED WITHOUT PREJUDICE TO OTHER MATTERS THAT NEED TO BE
CONSIDERED BY PETITIONER IN THE PROCESSING OF RESPONDENTS' CLAIMS. TcHDIA
Under its charter, 15 PDIC (hereafter petitioner) is liable only for deposits received by a bank "in the usual course of
business." 16 Being of the firm conviction that, as the reported May 25, 1987 bank transactions were so massive, hence,
irregular, petitioner essentially seeks a judicial declaration that such transactions were not made "in the usual course of
business" and, therefore, it cannot be made liable for deposits subject thereof. 17
Petitioner points that as MBC was prohibited from doing further business by MB Resolution 505 as of May 22, 1987, all
transactions subsequent to such date were not done "in the usual course of business."
Petitioner further posits that there was no consideration for the 20 GTDs subject of respondents' claim. In support of this
submission, it states that prior to March 25, 1987, when the 20 GTDs were made, MBC had been experiencing liquidity
problems, e.g., at the start of banking operations on March 25, 1987, it had only P2,841,711.90 cash on hand and at the
end of the day it was left with P27,805.81 consisting mostly of mutilated bills and coins. 18 Hence, even if respondents
had wanted to convert the face amounts of the GTDs to cash, MBC could not have complied with it.
Petitioner theorizes that after MBC had exhausted its cash and could no longer sustain further withdrawal transactions, it
instead issued new GTDs as "payment" for the pre-terminated GTDs of respondents to make sure that all the newly-
issued GTDs have face amounts which are within the statutory coverage of deposit insurance. DHATcE
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
Petitioner's position does not persuade.
While the MB issued Resolution 505 on May 22, 1987, a copy thereof was served on MBC only on May 26, 1987. MBC
and its clients could be given the benefit of the doubt that they were not aware that the MB resolution had been passed,
given the necessity of confidentiality of placing a banking institution under receivership. 20
The evident implication of the law, therefore, is that the appointment of a receiver may be made by
the Monetary Board without notice and hearing but its action is subject to judicial inquiry to insure
the protection of the banking institution. Stated otherwise, due process does not necessarily require
a prior hearing; a hearing or an opportunity to be heard may be subsequent to the closure. One can
just imagine the dire consequences of a prior hearing: bank runs would be the order of the day,
resulting in panic and hysteria. In the process, fortunes may be wiped out, and disillusionment will
run the gamut of the entire banking community. (Italics supplied). 21
Mere conjectures that MBC had actual knowledge of its impending closure do not suffice. The MB resolution could not
thus have nullified respondents' transactions which occurred prior to May 26, 1987.
That no actual money in bills and/or coins was handed by respondents to MBC does not mean that the transactions on
the new GTDs did not involve money and that there was no consideration therefor. For the outstanding balance of
respondents' 71 GTDs in MBC prior to May 26, 1987 22 in the amount of P1,115,889.15 as earlier mentioned was re-
deposited by respondents under 28 new GTDs. Admittedly, MBC had P2,841,711.90 cash on hand more than double
the outstanding balance of 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.
Petitioner having failed to overcome the presumption that the ordinary course of business was followed, 23 this Court
finds that the 28 new GTDs were deposited "in the usual course of business" of MBC.
In its second assignment of error, petitioner posits that the trial court erred in ordering it to pay the balance of the
deposit insurance to respondents, maintaining that the instant petition stemmed from a petition for declaratory relief
which does not essentially entail an executory process, and the only relief that should have been granted by the trial
court is a declaration of the parties' rights and duties. As such, petitioner continues, no order of payment may arise from
the case as this is beyond the office of declaratory relief proceedings. 24
Without doubt, a petition for declaratory relief does not essentially entail an executory process. There is nothing in its
nature, however, that prohibits a counterclaim from being set-up in the same action. 25
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
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
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. HSaEAD
SO ORDERED.
Puno, Panganiban, Sandoval-Gutierrez and Corona, JJ., concur.

Department of Budget and Management, et al. v. Manilas Finest Retirees Association Inc., G.R. No. 169466, May 9, 2007,
520 SCRA 90
D E C I S I O N
GARCIA, J p:
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.Decision 1 dated July 7, 2005 which affirmed in toto the decision of the Regional Trial Court of
Manila, Branch 32, in Civil Case No. 02-103702, a suit for declaratory relief, declaring the
herein respondents entitled to the same retirement benefits accorded upon retirees of the
Philippine National Police (PNP) under Republic Act (R.A.) No. 6975, as amended by R.A.
No. 8551, and ordering the herein petitioners to implement the proper adjustments on
respondents' retirement benefits; and
2.Resolution 2 dated August 24, 2005 which denied the petitioners' motion for reconsideration.
The antecedent facts:
In 1975, Presidential Decree (P.D.) No. 765 was issued constituting the Integrated National Police (INP) to be composed
of the Philippine Constabulary (PC) as the nucleus and the integrated police forces as components thereof.
Complementing P.D. No. 765 was P.D. No. 1184 3 dated August 26, 1977 (INP Law, hereinafter) issued to professionalize
the INP and promote career development therein.
On December 13, 1990, Republic Act (R.A.) No. 6975, entitled "AN ACT ESTABLISHING THE PHILIPPINE NATIONAL
POLICE UNDER A REORGANIZED DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR OTHER
PURPOSES," hereinafter referred to as PNP Law, was enacted. Under Section 23 of said law, the Philippine National
Police (PNP) would initially consist of the members of the INP, created under P.D. No. 765, as well as the officers and
enlisted personnel of the PC. In part, Section 23 reads:
SEC. 23.Composition. Subject to the limitation provided for in this Act, the Philippine National
Police, hereinafter referred to as the PNP, is hereby established, initially consisting of the members
of the police forces who were integrated into the Integrated National Police (INP) pursuant to
Presidential Decree No. 765, and the officers and enlisted personnel of the Philippine Constabulary
(PC). DaAISH
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 RankMonthly PensionDifference
INPPNPINPPNP
CorporalSPO3P3,225.00P11,310.00P8,095.00
CaptainP. Sr. Insp.P5,248.00P15,976.00P10,628.00
Brig. Gen.P. Chief Supt.P10,054.24P18,088.00P8,033.76
Hence, on June 3, 2002, in the Regional Trial Court (RTC) of Manila, all INP retirees, spearheaded by the Manila's Finest
Retirees Association, Inc., or the MFRAI (hereinafter collectively referred to as the INP Retirees), filed a petition for
declaratory relief, 5 thereunder impleading, as respondents, the Department of Budget and Management (DBM), the PNP,
the National Police Commission (NAPOLCOM), the Civil Service Commission (CSC) and the Government Service
Insurance System (GSIS). Docketed in the RTC as Civil Case No. 02-103702, which was raffled to Branch 22 thereof, the
petition alleged in gist that INP retirees were equally situated as the PNP retirees but whose retirement benefits prior to
the enactment of R.A. No. 6975, as amended by R.A. No. 8551, were unconscionably and arbitrarily excepted from the
higher rates and adjusted benefits accorded to the PNP retirees. Accordingly, in their petition, the petitioning INP
retirees pray that a
DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty that they, as
INP-retirees, are truly absorbed and equally considered as PNP-retirees and thus, entitled to enjoy
the SAME or IDENTICAL retirement benefits being bestowed to PNP-retirees by virtue of said PNP
Law or Republic Act No. 6975, as amended by Republic Act 8551, with the corollary mandate for the
respondents-government agencies to effect the immediate adjustment on their previously received
disparate retirement benefits, retroactive to its effectivity, and with due payment thereof.
The GSIS moved to dismiss the petition on grounds of lack of jurisdiction and cause of action. On the other hand, the
CSC, DBM, NAPOLCOM and PNP, in their respective answers, asserted that the petitioners could not claim the more
generous retirement benefits under R.A. No. 6975 because at no time did they become PNP members, having retired
prior to the enactment of said law. DBM, NAPOLCOM and PNP afterwards filed their respective pre-trial briefs.
The ensuing legal skirmish is not relevant to the disposition of the instant case. The bottom line is that, on March 21,
2003, the RTC came out with its decision 6 holding that R.A. No. 6975, as amended, did not abolish the INP but merely
provided for the absorption of its police functions by the PNP, and accordingly rendered judgment for the INP retirees, to
wit:
WHEREFORE, this Court hereby renders JUDGMENT DECLARING the INP Retirees entitled to the
same or identical retirement benefits and such other benefits being granted, accorded and bestowed
upon the PNP Retirees under the PNP Law (RA No. 6975, as amended).
The respondents Government Departments and Agencies shall IMMEDIATELY EFFECT and
IMPLEMENT the proper adjustments on the INP Retirees' retirement and such other benefits,
RETROACTIVE to its date of effectivity, and RELEASE and PAY to the INP Retirees the due
payments of the amounts. cSaADC
SO ORDERED.
On April 2, 2003, the trial court issued what it denominated as Supplement to the Decision whereunder it granted the
GSIS' motion to dismiss and thus considered the basic petition as withdrawn with respect to the latter.
From the adverse decision of the trial court, the remaining respondents, namely, DBM, PNP, NAPOLCOM and CSC,
interposed an appeal to the CA whereat their appellate recourse was docketed as CA-G.R. CV No. 78203.
As stated at the threshold hereof, the CA, in its decision of July 7, 2005, 7 affirmed that of the trial court upholding the
entitlement of the INP retirees to the same or identical retirement benefits accorded upon PNP retirees under R.A. No.
6975, as amended.
Their motion for reconsideration having been denied by the CA in its equally assailed resolution of August 24, 2005, 8
herein petitioners are now with this Court via the instant recourse on their singular submission that
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN LAW IN AFFIRMING THE DECISION
OF THE TRIAL COURT NOTWITHSTANDING THAT IT IS CONTRARY TO LAW AND ESTABLISHED
JURISPRUDENCE.
We DENY.
In the main, it is petitioners' posture that R.A. No. 6975 clearly abolished the INP and created in its stead a new police
force, the PNP. Prescinding therefrom, petitioners contend that since the PNP is an organization entirely different from
the INP, it follows that INP retirees never became PNP members. Ergo, they cannot avail themselves of the retirement
benefits accorded to PNP members under R.A. No. 6975 and its amendatory law, R.A. No. 8551. HDIATS
A flashback at history is proper.
As may be recalled, R.A. No. 6975 was enacted into law on December 13, 1990, or just about four (4) years after the
1986 Edsa Revolution toppled down the dictatorship regime. Egged on by the current sentiment of the times generated
by the long period of martial rule during which the police force, the PC-INP, had a military character, being then a major
service of the Armed Forces of the Philippines, and invariably moved by a fresh constitutional mandate for the
establishment of one police force which should be national in scope and, most importantly, purely civilian in character, 9
Congress enacted R.A. No. 6975 establishing the PNP and placing it under the Department of Interior and Local
Government. To underscore the civilian character of the PNP, R.A. No. 6975 made it emphatically clear in its declaration
of policy the following:
Section 2.Declaration of policy It is hereby declared to be the policy of the State to promote
peace and order, ensure public safety and further strengthen local government capability aimed
towards the effective delivery of the basic services to the citizenry through the establishment of a
highly efficient and competent police force that is national in scope and civilian in character. . . . .
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 statute's implementation, Section 85 of the Act
spelled out the following absorption phases: DACcIH

Phase I Exercise of option by the uniformed members of the [PC], the PC elements assigned with
the Narcotics Command, CIS, and the personnel of the technical services of the AFP assigned with
the PC to include the regular CIS investigating agents and the operatives and agents of the
NAPOLCOM Inspection. Investigation and Intelligence Branch, and the personnel of the absorbed
National Action Committee on Anti-Hijacking (NACAH) of the Department of National Defense to be
completed within six (6) months from the date of the effectivity of this Act. At the end of this phase,
all personnel from the INP, PC, AFP Technical Services, NACAH, and NAPOLCOM Inspection,
Investigation and Intelligence Branch shall have been covered by official orders assigning them to the
PNP, Fire and Jail Forces by their respective units.
Phase II Approval of the table of organization and equipment of all bureaus and offices created
under this Act, preparation and filling up of their staffing 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.
DASEac
The PC officers and enlisted personnel who have not opted to join the PNP shall be reassigned to
the Army, Navy or Air Force, or shall be allowed to retire under existing AFP rules and regulations.
Any PC-INP officer or enlisted personnel may, within the twelve-month period from the effectivity of
this Act, retire and be paid retirement benefits corresponding to a position two (2) ranks higher than
his present grade, subject to the conditions that at the time he applies for retirement, he has rendered
at least twenty (20) years of service and still has, at most, twenty-four (24) months of service
remaining before the compulsory retirement age as provided by existing law for his office.
Phase III Adjustment of ranks and establishment of one (1) lineal roster of officers and another
for non-officers, and the rationalization of compensation and retirement systems; taking into
consideration the existing compensation schemes and retirement and separation benefit systems of
the different components of the PNP, to ensure that no member of the PNP shall suffer any
diminution in basic longevity and incentive pays, allowances and retirement benefits due them
before the creations of the PNP, to be completed within eighteen (18) months from the effectivity of
this Act. . . . .
Upon the effectivity of this Act, the [DILG] Secretary shall exercise administrative supervision as
well as operational control over the transferred, merged and/or absorbed AFP and INP units. The
incumbent Director General of the PC-INP shall continue to act as Director General of the PNP until .
. . replaced . . . . (Emphasis and words in brackets supplied.)
From the foregoing, it appears clear to us that the INP was never, as posited by the petitioners, abolished or terminated
out of existence by R.A. No. 6975. For sure, nowhere in R.A. No. 6975 does the words "abolish" or "terminate" appear in
reference to the INP. Instead, what the law provides is for the "absorption," "transfer," and/or "merger" of the INP, as
well as the other offices comprising the PC-INP, with the PNP. To "abolish" is to do away with, to annul, abrogate or
destroy completely; 12 to "absorb" is to assimilate, incorporate or to take in. 13 "Merge" means to cause to combine or
unite to become legally absorbed or extinguished by merger 14 while "transfer" denotes movement from one position to
another. Clearly, "abolition" cannot be equated with "absorption."
True it is that Section 90 15 of R.A. No. 6975 speaks of the INP "[ceasing] to exist" upon the effectivity of the law. It
ought to be stressed, however, that such cessation is but the logical consequence of the INP being absorbed by the PNP.
Far from being abolished then, the INP, at the most, was merely transformed to become the PNP, minus of course its
military character and complexion.
Even the petitioners' effort at disclosing the legislative intent behind the enactment of R.A. No. 6975 cannot support their
theory of abolition. Rather, the Senate and House deliberations on the bill that eventually became R.A. No. 6975 reveal
what has correctly been held by the CA in its assailed decision: that the PNP was precisely created to erase the stigma
spawned by the militarization of the police force under the PC-INP structure. The rationale behind the passage of R.A.
No. 6975 was adequately articulated by no less than the sponsor 16 of the corresponding House bill in his sponsorship
speech, thus:
By removing the police force from under the control and supervision of military officers, the bill
seeks to restore and underscore the civilian character of police work an otherwise universal
concept that was muddled up by the martial law years.
Indeed, were the legislative intent was for the INP's 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. cIHSTC
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 74 17 and 75 18 of R.A. No. 6975, as amended by R.A.
No. 8551. It may be that respondents were no longer in the government service at the time of the enactment of R.A. No.
6975. This fact, however, without more, would not pose as an impediment to the respondents' entitlement to the new
retirement scheme set forth under the aforecited sections. As correctly ratiocinated by the CA to which we are in full
accord:
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 RTC's
interpretation of R.A. No. 6975 any less valid. The [respondents'] retirement prior to the passage of
R.A. No. 6975 did not exclude them from the benefits provided by R.A. No. 6975, as amended by
R.A. No. 8551, since their membership in the INP was an antecedent fact that nonetheless allowed
them to avail themselves of the benefits of the subsequent laws. R.A. No. 6975 considered them as
PNP members, always referring to their membership and service in the INP in providing for their
retirement benefits. 19
Petitioners maintain, however, that NAPOLCOM Resolution No. 8, 20 particularly Section 11 21 thereof, bars the
payment of any differential in retirement pay to officers and non-officers who are already retired prior to the effectivity
of R.A. No. 6975. SAHIaD
The contention does not commend itself for concurrence.
Under the amendatory law (R.A. No. 8551), the application of rationalized retirement benefits to PNP members who have
meanwhile retired before its (R.A. No. 8551) enactment was not prohibited. In fact, its Section 38 22 explicitly states that
the rationalized retirement benefits schedule and program "shall have retroactive effect in favor of PNP members and
officers retired or separated from the time specified in the law." To us, the aforesaid provision should be made
applicable to INP members who had retired prior to the effectivity of R.A. No. 6975. For, as afore-held, the INP was, in
effect, merely absorbed by the PNP and not abolished.
Indeed, to bar payment of retirement pay differential to INP members who were already retired before R.A. No. 6975
became effective would even run counter to the purpose of NAPOLCOM Resolution No. 8 itself, as expressed in its
preambulatory clause, which is to rationalize the retirement system of the PNP taking into consideration existing
retirement and benefit systems (including R.A. No. 6975 and P.D. No. 1184) of the different components thereof "to
ensure that no member of the PNP shall suffer any diminution in the retirement benefits due them before the creation of
the PNP." 23
Most importantly, the perceived restriction could not plausibly preclude the respondents from asserting their entitlement
to retirement benefits adjusted to the level when R.A. No. 6975 took effect. Such adjustment hews with the constitutional
warrant that "the State shall, from time to time, review to upgrade the pensions and other benefits due to retirees of both
the government and private sectors," 24 and the implementing mandate under the Senior Citizen's Law 25 that "to the
extent practicable and feasible, retirement benefits . . . shall be upgraded to be at par with the current scale enjoyed by
those in actual service." EcAISC
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. . . . : 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.
Then, too, is the all familiar rule that:

Retirement laws should be liberally construed in favor of the retiree because their intention is to
provide for his sustenance and hopefully, even comfort, when he no longer has the stamina to
continue earning his livelihood. The liberal approach aims to achieve the humanitarian purposes of
the law in order that efficiency, security and well-being of government employees may be
enhanced. 26
The petitioners parlay the notion of prospective application of statutes, noting in this regard that R.A. No. 6975, as
amended, cannot be applied retroactively, there being no provision to that effect.
We are not persuaded.
As correctly found by the appellate court, R.A. No. 6975 itself contextually provides for its retroactive application to
cover those who had retired prior to its effectivity. In this regard, we invite attention to the three (3) phases of
implementation under Section 85 for the absorption and continuation in the service of, among others, the INP members
under the newly-established PNP. IHEDAT
In a further bid to scuttle respondents' entitlement to the desired retirement benefits, the petitioners fault the trial court
for ordering the immediate adjustments of the respondents' retirement benefits when the basic petition filed before it
was one for declaratory relief. To the petitioners, such petition does not essentially entail an executory process, the only
relief proper under that setting being a declaration of the parties' rights and duties.
Petitioners' above posture is valid to a point. However, the execution of judgments in a petition for declaratory relief is
not necessarily indefensible. In Philippine Deposit Insurance Corporation[PDIC] v. Court of Appeals, 27 wherein the
Court affirmed the order for the petitioners therein to pay the balance of the deposit insurance to the therein
respondents, we categorically ruled:
Now, there is nothing in the nature of a special civil action for declaratory relief that proscribes the
filing of a counterclaim based on the same transaction, deed or contract subject of the complaint. A
special civil action is after all not essentially different from an ordinary civil action, which is
generally governed by Rules 1 to 56 of the Rules of Court, except that the former deals with a
special subject matter which makes necessary some special regulation. But the identity between
their fundamental nature is such that the same rules governing ordinary civil suits may and do apply
to special civil actions if not inconsistent with or if they may serve to supplement the provisions of
the peculiar rules governing special civil actions. 28 IHEaAc
Similarly, in Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del Sur: 29 the Court upheld the lower
court's order for a party to refund the amounts paid by the adverse party under the municipal ordinance therein
questioned, stating:
. . . Under Sec. 6 of Rule 64, the action for declaratory relief may be converted into an ordinary
action and the parties allowed to file such pleadings as may be necessary or proper, if before the
final termination of the case "a breach or violation of an . . . ordinance, should take place." In the
present case, no breach or violation of the ordinance occurred. The petitioner decided to pay "under
protest" the fees imposed by the ordinance. Such payment did not affect the case; the declaratory
relief action was still proper because the applicability of the ordinance to future transactions still
remained to be resolved, although the matter could also be threshed out in an ordinary suit for the
recovery of taxes paid . . . In its petition for declaratory relief, petitioner-appellee alleged that by
reason of the enforcement of the municipal ordinance by respondents it was forced to pay under
protest the fees imposed pursuant to the said ordinance, and accordingly, one of the reliefs prayed
for by the petitioner was that the respondents be ordered to refund all the amounts it paid to
respondent Municipal Treasurer during the pendency of the case. The inclusion of said allegation
and prayer in the petition was not objected to by the respondents in their answer. During the trial,
evidence of the payments made by the petitioner was introduced. Respondents were thus fully
aware of the petitioner's claim for refund and of what would happen if the ordinance were to be
declared invalid by the court.
The Court sees no reason for treating this case differently from PDIC and Matalin. This disposition becomes all the more
appropriate considering that the respondents, as petitioners in the RTC, pleaded for the immediate adjustment of their
retirement benefits which, significantly, the herein petitioners, as respondents in the same court, did not object to. Being
aware of said prayer, the petitioners then already knew the logical consequence if, as it turned out, a declaratory
judgment is rendered in the respondents' favor.
At bottom then, the trial court's judgment forestalled multiplicity of suits which, needless to stress, would only entail a
long and arduous process. Considering their obvious advanced years, the respondents can hardly afford another
protracted proceedings. 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. EcIDaA
No costs.
SO ORDERED.
Puno, C.J., Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Carpio-Morales, Azcuna, Tinga, Chico-Nazario
and Velasco, Jr., JJ., concur.
Austria-Martinez and Corona, JJ., are on leave.
Nachura, J., took no part, signed pleading as Solicitor General.

Philippine Deposit Insurance Corporation (PDIC) v. Court of Appeals, G.R. No. 126911, April 30, 2003, 402 SCRA 194
Same-

Araneta, et al. v. Gatmaitan, et al., and Soriano v. Araneta, et al., G.R. Nos. 8895 and 9191, April 30, 1957

SYLLABUS
1.PLEADING AND PRACTICE; ACTIONS; DECLARATORY RELIEF; CONSTITUTIONALITY OF
EXECUTIVE ORDER PROPER SUBJECT OF ACTION. The constitutionality of an executive order can be
ventilated in a declaratory relief proceeding. (Hilado vs. De la Costa, 83 Phil., 471).
2.ID.; APPEALS; EFFECT ON EXECUTION OF JUDGMENT; EXCEPTION. It is an elementary rule of
procedure that an appeal stays the execution of a judgment. However in injunction, receivership and patent
accounting cases, a judgment shall not be stayed after its rendition and before an appeal is taken or during the
pendency of an appeal unless otherwise ordered by the court. (Sec. 4, Rule 39, Rules of Court).
3.ID.; ID.; ID.; INJUNCTION; ISSUANCE RESTS IN SOUND DISCRETION OF COURT; CASE AT BAR.
The State's counsel contends that while judgment could be stayed in injunction, receivership and patent accounting
cases, the present complaint, although styled "Injunction and/or Declaratory Relief with Preliminary Injunction," is
one for declaratory relief, there being no allegation sufficient to convince the Court that the plaintiffs intended it to
be one for injunction. But aside from the title of the complaint, plaintiffs pray for the declaration of the nullity of
Executive Orders Nos. 22, 66 and 80; the issuance of a writ of preliminary injunction, and for such other relief as
may be deemed just and equitable. This Court has already held that there are only two requisites to be satisfied if an
injunction is to issue, namely, the existence of the right sought to be protected, and that the acts against which the
injunction is to be directed are violative of said right (North Negros Sugar Co., Inc. vs. Serafin Hidalgo, 63 Phil.,
664). There is no question that in the case at bar, at least 11 of the complaining trawl operators were duly licensed
to operate in any of the national waters of the Philippines, and it is undeniable that the executive enactments sought
to be annulled are detrimental to their interests. And considering further that the granting or refusal of an injunction,
whether temporary or permanent, rests in the sound discretion of the Court, taking into account the circumstances
and the facts of the particular case (Rodulfa vs. Alfonso, 42 Off. Gaz., 2439), the trial Court committed no abuse of
discretion when it treated the complaint as one for injunction and declaratory relief and executed the judgment
pursuant to the provisions of section 4 of Rule 39 of the Rules of Court.
4.ID.; ID.; ACTION AGAINST GOVERNMENT OFFICIALS IS ONE AGAINST GOVERNMENT; BOND
REQUIREMENT. An Action against Government officials sued in their official capacity, is essentially one against
the Government, and to require these officials to file a bond would be indirectly a requirement against the
Government, for as regards bonds or damages that may be proved, if any, the real party in interest would be the
Republic of the Philippines (L. S. Moom and Co. vs. Harrison, 43 Phil., 39; Salgado vs. Ramos, 64 Phil., 724-727, and
others). The reason for this pronouncement is understandable; the State undoubtedly is always solvent (Tolentino
vs. Carlos, 66 Phil., 140; Government of the P. I. vs. Judge of First Instance of Iloilo, 34 Phil., 157, cited in Joaquin
Gutierrez et al. vs. Camus et al., 96 Phil., 114).
5.FISHERIES LAW; TRAWL FISHING; WHO MAY BAN OR RESTRICT TRAWL FISHING; POWER OF
PRESIDENT THROUGH EXECUTIVE ORDERS, TO BAN TRAWL FISHING. Under sections 75 and 83 of the
Fisheries Law, the restriction and banning of trawl fishing from all Philippine waters come within the powers of the
Secretary of Agriculture and Natural Resources, who, in compliance with his duties may even cause the criminal
prosecution of those who in violation of his instructions, regulations or orders are caught fishing with trawls in
Philippine waters. However, as the Secretary of Agriculture and Natural Resources exercises its functions subject to
the general supervision and control of the President of the Philippines (Section 75, Revised Administrative Code),
the President can exercise the same power and authority through executive orders, regulations, decrees and
proclamations upon recommendation of the Secretary concerned (Section 79-A, Revised Administrative Code).
Hence, Executive Orders Nos. 22, 66 and 80, series of 1954, restricting and banning of trawl fishing from San
Miguel Bay (Camarines) are valid and issued by authority of law.
6.ID.; ID.; ID.; ID.; EXERCISE OF AUTHORITY BY THE PRESIDENT DOES NOT CONSTITUTE UNDUE
DELEGATION OF LEGISLATIVE POWERS. For the protection of fry or fish eggs and small and immature fishes,
Congress intended with the promulgation of Act No. 4003, to prohibit the use of any fish net or fishing device like
trawl nets that could endanger and deplete the supply of sea food, and to that end authorized the Secretary of
Agriculture and Natural Resources to provide by regulations such restrictions as he deemed necessary in order to
preserve the aquatic resources of the land. In so far as the protection of fish fry or fish eggs is concerned the
Fisheries Act is complete in itself leaving only to the Secretary of Agriculture & Natural Resources the promulgation
of rules and regulations to carry into effect the legislative intent. Consequently, when the President, in response to
the clamor of the people and authorities of Camarines Sur issued Executive Order No. 80 absolutely prohibiting
fishing by means of trawls in all waters comprised within the San Miguel Bay, he did nothing but show an anxious
regard for the welfare of the inhabitants of said coastal province and dispose of issues of general concern (Section
63, Revised Administrative Code) which were in consonance and strict conformity with the law. The exercise of
such authority did not, therefore, constitute an undue delegation of the powers of Congress.
D E C I S I O N
FELIX, J p:
San Miguel Bay, located between the provinces of Camarines Norte and Camarines Sur, a part of the
National waters of the Philippines with an extension of about 250 square miles and an average depth of
approximately 6 fathoms (Otter trawl explorations in Philippine waters p. 21, Exh. B), is considered as the most
important fishing area in the Pacific side of the Bicol region. Sometime in 1950, trawl 1 operators from Malabon,
Navotas and other places migrated to this region most of them settling at Sabang, Calabanga, Camarines Sur, for the
purpose of using this particular method of fishing in said bay. On account of the belief of sustenance fishermen that
the operation of this kind of gear caused the depletion of the marine resources of that area, there arose a general
clamor among the majority of the inhabitants of coastal towns to prohibit the operation of trawls in San Miguel Bay.
This move was manifested in the resolution of December 18, 1953 (Exh. F), passed by the Municipal Mayors'
League condemning the operation of trawls as the cause of the wanton destruction of the shrimp specie and
resolving to petition the President of the Philippines to regulate fishing in San Miguel Bay by declaring it closed for
trawl fishing at a certain period of the year. In another resolution dated March 27, 1954, the same League of
Municipal Mayors prayed the President to protect them and the fish resources of San Miguel Bay by banning the
operation of trawls therein (Exh. 4). The Provincial Governor also made proper representations to this effect and
petitions in behalf of the non-trawl fishermen were likewise presented to the President by social and civic
organizations as the NAMFREL (National Movement for Free Elections) and the COMPADRE (Committee for
Philippine Action in Development, Reconstruction and Education), recommending the cancellation of the licenses of
trawl operators after investigation, if such inquiry would substantiate the charges that the operation of said fishing
method was detrimental to the welfare of the majority of the inhabitants (Exh. 2).
In response to these pleas, the President issued on April 5, 1954, Executive Order No. 22 (50 Off. Gaz.,
1421) prohibiting the use of trawls in San Miguel Bay, but said executive order was amended by Executive Order
No. 66, issued on September 23, 1954 (50 Off. Gaz., 4037), apparently in answer to a resolution of the Provincial
Board of Camarines Sur recommending the allowance of trawl fishing during the typhoon season only. On November
2, 1954, however, Executive Order No. 80 (50 Off. Gaz., 5198) was issued reviving Executive Order No. 22, to take
effect after December 31, 1954.
A group of Otter trawl operators took the matter to the court by filing a complaint for injunction and/or
declaratory relief with preliminary injunction with the Court of First Instance of Manila, docketed as Civil Case No.
24867, praying that a writ of preliminary injunction be issued to restrain the Secretary of Agriculture and Natural
Resources and the Director of Fisheries from enforcing said executive order; to declare the same null and void, and
for such other relief as may be just and equitable in the premises.
The Secretary of Agriculture and Natural Resources and the Director of Fisheries, represented by the
Legal Adviser of said Department and a Special Attorney of the Office of the Solicitor General, answered the
complaint alleging, among other things, that of the 18 plaintiffs (Exequiel Soriano, Teodora Donato, Felipe
Concepcion, Venancio Correa, Santo Gaviana, Alfredo General, Constancio Gutierrez, Arsenio de Guzman, Pedro
Lazaro, Porfirio Lazaro, Deljie de Leon, Jose Nepomuceno, Bayani Pingol, Claudio Salgado, Porfirio San Juan, Luis
Sioco, Casimiro Villar and Enrique Voluntad), only 11 were issued licenses to operate fishing boats for the year
1954 (Annex B, petition L-8895); that the executive orders in question were issued in accordance with law; that
the encouragement by the Bureau of Fisheries of the use of Otter trawls should not be construed to mean that the
general welfare of the public could be disregarded, and set up the affirmative defenses that since plaintiffs question
the validity of the executive orders issued by the President, then the Secretary of Agriculture and Natural
Resources and the Director of Fisheries were not the real parties in interest; that said executive orders do not
constitute a deprivation of property without due process of law, and therefore prayed that the complaint be
dismissed (Exh. B, petition, L-8895).

During the trial of the case, the Governor of Camarines Sur appearing for the municipalities of Siruma,
Tinambac, Calabanga, Cabusao and Sipocot, in said province, called the attention of the Court that the Solicitor
General had not been notified of the proceeding. To this manifestation, the Court ruled that in view of the
circumstances of the case, and as the Solicitor General would only be interested in maintaining the legality of the
executive orders sought to be impugned, Section 4 of Rule 66 could be interpreted to mean that the trial could go on
and the Solicitor General could be notified before judgment is entered.
After the evidence for both parties was submitted and the Solicitor General was allowed to file his
memorandum, the Court rendered decision on February 2, 1955, the last part of which reads as follows:
"The power to close any definite area of the Philippine waters, from the fact that Congress
has seen fit to define under what conditions it may be done by the enactment of the sections cited,
in the mind of Congress must be of transcendental significance. It is primarily within the fields of
legislation not of execution; for it goes far and says who can and who can not fish in definite
territorial waters. The court can not accept that Congress had intended to abdicate its inherent right
to legislate on this matter of national importance. To accept respondents' view would be to sanction
the exercise of legislative power by executive decrees. If it is San Miguel Bay now, it may be Davao
Gulf tomorrow, and so on. That may be done only by Congress. This being the conclusion, there is
hardly need to go any further. Until the trawler is outlawed by legislative enactment, it cannot be
banned from San Miguel Bay by executive proclamation. The remedy for respondents and
population of the coastal towns of Camarines Sur is to go to the Legislature. The result will be to
issue the writ prayed for, even though this be to strike at public clamor and to annul the orders of
the President issued in response therefor. This is a task unwelcome and unpleasant; unfortunately,
courts of justice use only one measure for both the rich and poor, and are not bound by the more
popular cause when they give judgments.
"IN VIEW WHEREOF, granted; Executive Order Nos. 22, 66 and 80 are declared invalid;
the injunction prayed for is ordered to issue; no pronouncement as to costs".
Petitioners immediately filed an ex-parte motion for the issuance of a writ of injunction which was opposed
by the Solicitor General and after the parties had filed their respective memoranda, the Court issued an order dated
February 19, 1955, denying respondents' motion to set aside judgment and ordering them to file a bond in the sum of
P30,000 on or before March 1, 1955, as a condition for the non- issuance of the injunction prayed for by petitioners
pending appeal. The Solicitor General filed a motion for reconsideration which was denied for lack of merit, and the
Court, acting upon the motion for new trial filed by respondents, issued another order on March 3, 1955, denying
said motion and granting the injunction prayed for by petitioners upon the latter's filing a bond for P30,000 unless
respondents could secure a writ of preliminary injunction from the Supreme Court on or before March 15, 1955.
Respondents, therefore, brought the matter to this Court in a petition for prohibition and certiorari with preliminary
injunction, docketed as G. R. No. L-8895, and on the same day filed a notice to appeal from the order of the lower
court dated February 2, 1955, which appeal was docketed in this Court as G. R. No. L-9191.
In the petition for prohibition and certiorari, petitioners (respondents therein) contended among other
things, that the order of the respondent Judge requiring petitioners Secretary of Agriculture and Natural Resources
and the Director of Fisheries to post a bond in the sum of P30,000 on or before March 1, 1955, had been issued
without jurisdiction or in excess thereof, or at the very least with grave abuse of discretion, because by requiring
the bond, the Republic of the Philippines was in effect made a party defendant and therefore transformed the suit
into one against the Government which is beyond the jurisdiction of the respondent Judge to entertain; that the
failure to give the Solicitor General the opportunity to defend the validity of the challenged executive orders
resulted in the receipt of objectionable matters at the hearing; that Rule 66 of the Rules of Court does not empower
a court of law to pass upon the validity of an executive order in a declaratory relief proceeding; that the respondent
Judge did not have the power to grant the injunction as Section 4 of Rule 39 does not apply to declaratory relief
proceedings but only to injunction, receivership and patent accounting proceedings; and prayed that a writ of
preliminary injunction be issued to enjoin the respondent Judge from enforcing its order of March 3, 1955, and for
such other relief as may be deem just and equitable in the premises. This petition was given due course and the
hearing on the merits was set by this Court for April 12, 1955, but no writ of preliminary injunction was issued.
Meanwhile, the appeal (G. R. No. L-9191) was heard on October 3, 1956, wherein respondents-appellants
ascribed to the lower court the commission of the following errors:
1.In ruling that the President has no authority to issue Executive Orders Nos. 22, 66 and
80 banning the operation of trawls in San Miguel Bay;
2.In holding that the power to declare a closed area for fishing purposes has not been
delegated to the President of the Philippines under the Fisheries Act;
3.In not considering Executive Orders Nos. 22, 66 and 80 as declaring a closed season
pursuant to Section 7, Act 4003, as amended, otherwise known as the Fisheries Act;
4.In holding that to uphold the validity of Executive Orders Nos. 22 and 80 would be to
sanction the exercise of legislative power by executive decrees;
5.In its suggestion that the only remedy for respondents and the people of the coastal
towns of Camarines Sur and Camarines Norte is to go to the Legislature; and
6.In declaring Executive Orders Nos. 22, 66 and 80 invalid and in ordering the injunction
prayed for to issue.
As Our decision in the prohibition and certiorari case (G. R. No. L-8895) would depend, in the last analysis,
on Our ruling in the appeal of the respondents in case G. R. No. L-9191, We shall first proceed to dispose of the
latter case.
It is indisputable that the President issued Executive Orders Nos. 22, 66 and 80 in response to the clamor
of the inhabitants of the municipalities along the coastline of San Miguel Bay. They read as follows:
EXECUTIVE ORDER NO. 22
"PROHIBITING THE USE OF TRAWLS IN
SAN MIGUEL BAY"
"In order to effectively protect the municipal fisheries of San Miguel Bay, Camarines Norte
and Camarines Sur, and to conserve fish and other aquatic resources of the area, I, RAMON
MAGSAYSAY, President of the Philippines, by virtue of the powers vested in me by law, do hereby
order that:
"1.Fishing by means of trawls (utase, otter and/or perenzella) of any kind, in the waters
comprised within San Miguel Bay, is hereby prohibited.
"2.Trawl shall mean, for the purpose of this Order, a fishing net made in the form of a bag
with the mouth kept open by a device, the whole affair being towed, dragged, trailed or trawled on
the bottom of the sea to capture demersal, ground or bottom species.
"3.Violation of the provisions of this Order shall subject the offender to the penalty
provided under Section 83 of Act 4993, or a fine of not more than two hundred pesos, or
imprisonment for not more than six months, or both, in the discretion of the Court.
"Done in the City of Manila, this 5th day of April, nineteen hundred and fifty-four and of
the Independence of the Philippines, the eighth." (50 Off. Gaz. 1421).
"EXECUTIVE ORDER NO. 66
"AMENDING EXECUTIVE ORDER NO. 22, DATED APRIL 5, 1954, ENTITLED
'PROHIBITING THE USE OF TRAWLS IN SAN MIGUEL BAY'
"By virtue of the powers vested in me by law, I, RAMON MAGSAYSAY, President of the
Philippines, do hereby amend Executive Order No. 22, dated April 5, 1954, so as to allow fishing by
means of trawls, as defined in said Executive Order, within that portion of San Miguel Bay north of a
straight line drawn from Tacubtacuban Hill in the Municipality of Tinambac, Province of Camarines
Sur. Fishing by means of trawls south of said line shall still be absolutely prohibited.
"Done in the City of Manila, this 23rd day of September, in the year of our Lord, nineteen
hundred and fifty-four, and of the Independence of the Philippines, the ninth." (50 Off. Gaz. 4037).
"EXECUTIVE ORDER NO. 80
"FURTHER AMENDING EXECUTIVE ORDER NO. 22, DATED APRIL 5, 1954, AS
AMENDED BY EXECUTIVE ORDER NO. 66, DATED SEPTEMBER 23, 1954
"By virtue of the powers vested in me by law, I, RAMON MAGSAYSAY, President of the
Philippines, do hereby amend Executive Order No. 66, dated September 23, 1954, so as to allow
fishing by means of trawls, as defined in Executive Order No. 22, dated April 5, 1954, within that
portion of San Miguel Bay north of a straight line drawn from Tacubtacuban Hill in the Municipality
of Mercedes, Province of Camarines Norte to Balocbaloc Point in the Municipality of Tinambac,
Province of Camarines Sur, until December 31, 1954, only.
Thereafter, the provisions of said Executive Order No. 22 absolutely prohibiting fishing by
means of trawls in all the waters comprised within the San Miguel Bay shall be revived and given
full force and effect as originally provided therein.
"Done in the City of Manila, this 2nd day of November, in the year of Our Lord, nineteen
hundred and fifty-four and of the Independence of the Philippines, the ninth." (50 Off. Gaz. 5198)
It is likewise admitted that petitioners assailed the validity of said executive orders in their petition for a
writ of injunction and/or declaratory relief filed with the Court of First Instance of Manila, and that the lower court,
upon declaring Executive Orders Nos. 22, 66 and 80 invalid, issued an order requiring the Secretary of Agriculture
and Natural Resources and the Director of Fisheries to post a bond for P30,000 if the writ of injunction restraining
them from enforcing the executive orders in question must be stayed.

The Solicitor General avers that the constitutionality of an executive order cannot be ventilated in a
declaratory relief proceeding. We find this untenable, for this Court taking cognizance of an appeal from the decision
of the lower court in the case of Hilado vs. De la Costa et al., 83 Phil., 471, which involves the constitutionality of
another executive order presented in an action for declaratory relief, in effect accepted the propriety of such action.
This question being eliminated, the main issues left for Our determination with respect to defendants'
appeal (G. R. No. L-9191), are:
(1)Whether the Secretary of an Executive Department and the Director of a Bureau, acting in their
capacities as such Government officials, could lawfully be required to post a bond in an action against them;
(2)Whether the President of the Philippines has authority to issue Executive Orders Nos. 22, 66 and 80,
banning the operation of trawls in San Miguel Bay, or, said in other words, whether said Executive Orders Nos. 22,
66 and 80 were issued in accordance with law; and
(3)Whether Executive Orders Nos. 22, 66 and 80 were valid, for the issuance thereof was not in the
exercise of legislative powers unduly delegated to the President.
Counsel for both parties presented commendable exhaustive defenses in support of their respective stands.
Certainly, these cases deserve such efforts, not only because the constitutionality of an act of a coordinate branch
in our tripartite system of Government is in issue, but also because of the number of inhabitants, admittedly
classified as "subsistence fishermen", that may be affected by any ruling that We may promulgate herein.
I.As to the first proposition, it is an elementary rule of procedure that an appeal stays the execution of a
judgment. An exception is offered by section 4 of Rule 39 of the Rules of Court, which provides that:
"SEC. 4.INJUNCTION, RECEIVERSHIP AND PATENT ACCOUNTING, NOT STAYED.
Unless otherwise ordered by the court, a judgment in an action for injunction or in a receivership
action, or a judgment or order directing an accounting in an action for infringement of letter patent,
shall not be stayed after its rendition and before an appeal is taken or during the pendency of an
appeal. The trial court, however, in its discretion, when an appeal is taken from a judgment granting,
dissolving or denying an injunction, may make an order suspending, modifying, restoring, or
granting such injunction during the pendency of an appeal, upon such terms as to bond or otherwise
as it may consider proper for the security of the rights of the adverse party."
This provision was the basis of the order of the lower court dated February 19, 1955, requiring the filing
by the respondents of a bond for P30,000 as a condition for the non-issuance of the injunction prayed for by
plaintiffs therein, and which the Solicitor General charged to have been issued in excess of jurisdiction. The State's
counsel, however, alleges that while judgment could be stayed in injunction, receivership and patent accounting
cases and although the complaint was styled "Injunction and/or Declaratory Relief with Preliminary Injunction", the
case is necessarily one for declaratory relief, there being no allegation sufficient to convince the Court that the
plaintiffs intended it to be one for injunction. But aside from the title of the complaint, We find that plaintiffs pray for
the declaration of the nullity of Executive Order Nos. 22, 66 and 80; the issuance of a writ of preliminary injunction,
and for such other relief as may be deemed just and equitable. This Court has already held that there are only two
requisites to be satisfied if an injunction is to issue, namely, the existence of the right sought to be protected, and
that the acts against which the injunction is to be directed are violative of said right (North Negros Sugar Co., Inc.
vs. Serafin Hidalgo, 63 Phil., 664). There is no question that at least 11 of the complaining trawl operators were duly
licensed to operate in any of the national waters of the Philippines, and it is undeniable that the executive
enactments sought to be annulled are detrimental to their interests. And considering further that the granting or
refusal of an injunction, whether temporary or permanent, rests in the sound discretion of the Court, taking into
account the circumstances and the facts of the particular case (Rodulfa vs. Alfonso, 76 Phil., 225, 42 Off. Gaz.,
2439), We find no abuse of discretion when the trial Court treated the complaint as one for injunction and
declaratory relief and executed the judgment pursuant to the provisions of section 4 of Rule 39 of the Rules of
Court.
On the other hand, it shall be remembered that the party defendants in Civil Case No. 24867 of the Court of
First Instance of Manila are Salvador Araneta, as Secretary of Agriculture and Natural Resources, and Deogracias
Villadolid, as Director of Fisheries, and were sued in such capacities because they were the officers charged with
duty of carrying out the statutes, orders and regulations on fishing and fisheries. In its order of February 19, 1955,
the trial court denied defendants' motion to set aside judgment and they were required to file a bond for P30,000 to
answer for damages that plaintiffs were allegedly suffering at the time, as otherwise the injunction prayed for by the
latter would be issued.
Because of these facts, We agree with the Solicitor General when he says that the action, being one
against herein petitioners as such Government officials, is essentially one against the Government, and to require
these officials to file a bond would be indirectly a requirement against the Government, for as regards bonds or
damages that may be proved, if any, the real party in interest would be the Republic of the Philippines (L. S. Moon
and Co. vs. Harrison, 43 Phil., 39; Salgado vs. Ramos, 64 Phil., 724-727, and others). The reason for this
pronouncement is understandable; the State undoubtedly is always solvent (Tolentino vs. Carlos, 66 Phil., 140;
Government of the P. I. vs. Judge of the Court of First Instance of Iloilo, 34 Phil., 157, cited in Joaquin Gutierrez et
al. vs. Camus et al. * G. R. No. L-6725, promulgated October 30, 1954). However, as the records show that herein
petitioners failed to put up the bond required by the lower court, allegedly due to difficulties encountered with the
Auditor General's Office (giving the impression that they were willing to put up said bond but failed to do so for
reasons beyond their control), and that the orders subjects of the prohibition and certiorari proceedings in G. R. No.
L-8895, were enforced, if at all, 1 in accordance with section 4 of Rule 39, which We hold to be applicable to the
case at bar, the issue as to the regularity or adequacy of requiring herein petitioners to post a bond, becomes moot
and academic.
II.Passing upon the question involved in the second proposition, the trial judge extending the controversy
to the determination of which between the Legislative and Executive Departments of the Government had "the
power to close any definite area of the Philippine waters" instead of limiting the same to the real issue raised by the
enactment of Executive Orders Nos. 22, 66 and 80, specially the first and the last "absolutely prohibiting fishing by
means of trawls in all the waters comprised within the San Miguel Bay", ruled in favor of Congress, and as the
closing of any definite area of the Philippine waters is, according to His Honor, primarily within the fields of
legislation and Congress had not intended to abdicate its power to legislate on the matter, he maintained, as stated
before, that "until the trawler is outlawed by legislative enactment, it cannot be banned from San Miguel Bay by
executive proclamation", and that "the remedy for respondents and population of the coastal towns of Camarines Sur
is to go to the Legislature," and thus declared said Executive Orders Nos. 22, 66 and 80 invalid".
The Solicitor General, on the contrary, asserts that the President is empowered by law to issue the
executive enactments in question.
Sections 6, 13 and 75 of Act No. 4003, known as the Fisheries Law, the latter two sections as amended by
section 1 of Commonwealth Act No. 471, read as follows:
"SEC. 6.WORDS AND PHRASES DEFINED. Words and terms used in this Act shall be
construed as follows:
xxx xxx xxx
TAKE or TAKING, includes pursuing, shooting, killing, capturing, trapping, snaring, and
netting fish and other aquatic animals, and all lesser acts, such as disturbing, wounding, stupefying,
or placing, setting, drawing, or using any net or other device commonly used to take or collect fish
and other aquatic animals, whether they result in taking or not, and includes every attempt to take
and every act of assistance to every other person in taking or attempting to take or collect fish and
other aquatic animals: PROVIDED, That whenever taking is allowed by law, reference is had to
taking by lawful means and in lawful manner.
xxx xxx xxx
"SEC. 13.PROTECTION OF FRY OR FISH EGGS. Except for scientific or educational
purpose or for propagation, it shall be unlawful to take or catch fry or fish eggs and the small fish,
not more than three (3) centimeters long, known as siliniasi, in the territorial waters of the
Philippines. Towards this end, the Secretary of Agriculture and Commerce shall be authorized to
provide by regulations such restrictions as may be deemed necessary to be imposed on THE USE
OF ANY FISHING NET OR FISHING DEVICE FOR THE PROTECTION OF FRY OR FISH EGGS;
Provided, however, That the Secretary of Agriculture and Commerce shall permit the taking of
young of certain species of fish known as hipon under such restrictions as may be deemed
necessary.
"SEC. 75.FISH REFUGES AND SANCTUARIES. Upon the recommendation of the officer
or chief of the bureau, office or service concerned, the Secretary of Agriculture and Commerce may
set aside and establish fishery reservation or fish refuges and sanctuaries to be administered in the
manner to be prescribed by him. All streams, ponds, and waters within the game refuge, birds
sanctuaries, national parks, botanical gardens, communal forests and communal pastures are hereby
declared fishing refuges and sanctuaries. It shall be unlawful for any person, to take, destroy or kill
in any of the places aforementioned, or in any manner disturb or drive away or take therefrom, any
fish fry or fish eggs."

Act No. 4003 further provides as follows:
"SEC. 83.OTHER VIOLATIONS. Any other violation of the provisions of this Act or any
rules and regulations promulgated thereunder shall subject the offender to a fine of not more than
two hundred pesos, or imprisonment for not more than six months, or both, in the discretion of the
Court."
As may be seen from the just quoted provisions, the law declares unlawful and fixes the penalty for the
taking (except for scientific or educational purposes or for propagation), destroying or killing of any fish fry or fish
eggs, and the Secretary of Agriculture and Commerce (now the Secretary of Agriculture and Natural Resources) is
authorized to promulgate regulations restricting the use of any fish net or fishing device (which includes the net
used by trawl fishermen) for the protection of fry or fish eggs, as well as to set aside and establish fishery
reservations or fish refuges and sanctuaries to be administered in the manner prescribed by him, from which no
person could lawfully take, destroy or kill in any of the places aforementioned, or in any manner disturb or drive
away or take therefrom any small or immature fish, fry or fish eggs. It is true that said section 75 mentions certain
streams, ponds and waters within the game refuges, . . . communal forests, etc., which the law itself declares fish
refuges and sanctuaries, but this enumeration of places does not curtail the general and unlimited power of the
Secretary of Agriculture and Natural Resources in the first part of section 75, to set aside and establish fishery
reservations or fish refuges and sanctuaries, which naturally include seas or bays, like the San Miguel Bay in
Camarines.
From the resolution passed at the Conference of Municipal Mayors held at Tinambac, Camarines Sur, on
December 18, 1953 (Exh. F), the following manifestation is made:
"WHEREAS, the continuous operation of said trawls even during the close season as
specified in said Executive Order No. 20 caused the wanton destruction of the mother shrimps
laying their eggs and the millions of eggs laid and the inevitable extermination of the shrimps
specie; in order to save the shrimps specie from eventual extermination and in order to conserve
the shrimps specie for posterity;"
In the brief submitted by the NAMFREL and addressed to the President of the Philippines (Exh. 2), in
support of the petition of San Miguel Bay fishermen (allegedly 6,175 in number), praying that trawlers be banned
from operating in San Miguel Bay, it is also stated that:
"The trawls ram and destroy the fish corrals. The heavy trawl nets dig deep into the ocean
bed. They destroy the fish food which lies below the ocean floor. Their daytime catches net millions
of shrimps scooped up from the mud. In their nets they bring up the life of the sea: algea, shell fish
and star fish . . .
"The absence of some species or the apparent decline in the catch of some fishermen
operating in the bay may be due to several factors, namely: the indiscriminate catching of fry and
immature sizes of fishes, the wide spread use of explosives inside as well as at the mouth and
approaches of the bay, and the extensive operation of the trawls." (p. 9, Report of Santos B.
Rasalan, Exh. A).
Extensive Operation of Trawls: The strenuous effect of the operations of the 17
TRAWLS of the demersal fisheries of San Miguel Bay is better appreciated when we consider the
fact that out of its about 850 square kilometers area, only about 350 square kilometers of 5 fathoms
up could be trawled. With their continuous operation, coupled with those of the numerous fishing
methods, the fisheries is greatly strained. This is shown by the fact that in view of the non-
observance of the close season from May to October, each year, majority of their catch are
immature. If their operation would continue unrestricted, the supply would be greatly depleted." (p.
11, Report of Santos B. Rasalan, Exh. A).
San Miguel Bay can sustain 3 to 4 small trawlers (Otter Trawl Explorations in Philippine
Waters, Research Report 25 of the Fish and Wildlife Service, United States Department of the
Interior, p. 9, Exhibit B).
According to Annex A of the complaint filed in the lower court in Civil Case No. 24867 G. R. No. L
9191 (Exh. D, p. 53 of the folder of Exhibits), the 18 plaintiffs-appellees operate 29 trawling boats, and their
operation must be in a big scale considering the investments plaintiffs have made therefor, amounting to P387,000
(Record on Appeal, p. 16-17).
In virtue of the aforementioned provisions of law and the manifestations just copied, We are of the opinion
that with or without said Executive Orders, the restriction and banning of trawl fishing from all Philippine waters
come, under the law, within the powers of the Secretary of Agriculture and Natural Resources, who in compliance
with his duties may even cause the criminal prosecution of those who in violation of his instructions, regulations or
orders are caught fishing with trawls in Philippine waters.
Now, if under the law the Secretary of Agriculture and Natural Resources has authority to regulate or ban
the fishing by trawl which, it is claimed, is obnoxious for it carries away fish eggs and frys which should be
preserved, can the President of the Philippines exercise that same power and authority? Section 10(1), Article VII of
the Constitution of the Philippines prescribes:
"SEC. 10(1).The President shall have control of all the executive departments, bureaus or
offices, exercises general supervision over all local governments as may be provided by law, and
take care that the laws be faithfully executed."
Section 63 of the Revised Administrative Code reads as follows:
"SEC. 63.EXECUTIVE ORDERS AND EXECUTIVE PROCLAMATION. Administrative acts
and commands of the President of the Philippines touching the organization or mode of operation of
the Government or rearranging or readjusting any of the districts, divisions, parts or ports of the
Philippines, and all acts and commands governing the general performance of duties by public
employees or disposing of issues of general concern shall be made in executive orders."
xxx xxx xxx
Regarding department organization Section 74 of the Revised Administrative Code also provides that:
"All executive functions of the Government of the Republic of the Philippines shall be
directly under the Executive Department subject to the supervision and control of the President of
the Philippines in matters of general policy. The Departments are established for the proper
distribution of the work of the Executive, for the performance of the functions expressly assigned to
them by law, and in order that each branch of the administration may have a chief responsible for its
direction and policy. Each Department Secretary shall assume the burden of, and responsibility for,
all activities of the Government under his control and supervision.
For administrative purposes the President of the Philippines shall be considered the
Department Head of the Executive Office.". . . .
One of the executive departments is that of Agriculture and Natural Resources which by law is placed
under the direction and control of the Secretary, who exercises its functions subject to the general supervision and
control of the President of the Philippines (Sec. 75, R. A. C.). Moreover, "executive orders, regulations, decrees and
proclamations relative to matters under the supervision or jurisdiction of a Department, the promulgation whereof is
expressly assigned by law to the President of the Philippines, shall as a general rule, be issued upon proposition and
recommendation of the respective Department" (Sec. 79-A, R.A.C.), and there can be no doubt that the promulgation
of the questioned Executive Orders was upon the proposition and recommendation of the Secretary of Agriculture
and Natural Resources and that is why said Secretary, who was and is called upon to enforce said executive Orders,
was made a party defendant in one of the cases at bar (G. R. No. L-9191).
For the foregoing reasons We do not hesitate to declare that Executive Orders Nos. 22, 66 and 80, series
of 1954, of the President, are valid and issued by authority of law.
III.But does the exercise of such authority by the President constitute an undue delegation of the powers of
Congress?
As already held by this Court, the true distinction between delegation of the power to legislate and the
conferring of authority or discretion as to the execution of the law consists in that the former necessarily involves a
discretion as to what the law shall be, while in the latter the authority or discretion as to its execution has to be
exercised under and in pursuance of the law. The first cannot be done; to the latter no valid objection can be made
(Cruz vs. Youngberg, 56 Phil., 234, 239. See also Rubi, et al. vs. The Provincial Board of Mindoro, 39 Phil., 660).
In the case of U. S. vs. Ang Tang Ho., 43 Phil. 1, We also held:
"THE POWER TO DELEGATE. The Legislature cannot delegate legislative power to
enact any law. If Act No. 2868 is a law unto itself, and within itself, and it does nothing more than to
authorize the Governor-General to make rules and regulations to carry it into effect, then the
Legislature created the law. There is no delegation of power and it is valid. On the other hand, if the
act within itself does not define a crime and is not complete, and some legislative act remains to be
done to make it a law or a crime, the doing of which is vested in the Governor-General, the act is a
delegation of legislative power, is unconstitutional and void."
From the provisions of Act No. 4003 of the Legislature, as amended by Commonwealth Act No. 471, which
have been aforequoted, We find that Congress (a) declared it unlawful "to take or catch fry or fish eggs in the
territorial waters of the Philippines; (b) towards this end, it authorized the Secretary of Agriculture and Natural
Resources to provide by the regulations such restrictions as may be deemed necessary to be imposed on the use of
any fishing net or fishing device for the protection of fish fry or fish eggs (Sec. 13); (c) it authorized the Secretary
of, Agriculture and Natural Resources to set aside and establish fishery reservations or fish refuges and sanctuaries
to be administered in the manner to be prescribed by him and declared it unlawful for any person to take, destroy or
kill in any of said places, or in any manner disturb or drive away or take therefrom, any fish fry or fish eggs (Sec.
75); and (d) it penalizes the execution of such acts declared unlawful and in violation of this Act (No. 4003) or of any
rules and regulations promulgated thereunder, making the offender subject to a fine of not more than P200, or
imprisonment for not more than 6 months, or both, in the discretion of the court (Sec. 83).

From the foregoing it may be seen that in so far as the protection of fish fry or fish egg is concerned, the
Fisheries Act is complete in itself, leaving to the Secretary of Agriculture and Natural Resources the promulgation of
rules and regulations to carry into effect the legislative intent. It also appears from the exhibits on record in these
cases that fishing with trawls causes "a wanton destruction of the mother shrimps laying their eggs and the millions
of eggs laid and the inevitable extermination of the shrimps specie" (Exh. F), and that "the trawls ram and destroy
the fish corrals. The heavy trawl nets dig deep into the ocean bed. They destroy the fish food which lies below the
ocean floor. Their daytime catches net millions of shrimps scooped up from the mud. In their nets they bring up the
life of the sea" (Exh. 2).
In the light of these facts it is clear to Our mind that for the protection of fry or fish eggs and small and
immature fishes, Congress intended with the promulgation of Act No. 4003, to prohibit the use of any fish net or
fishing device like trawl nets that could endanger and deplete our supply of sea food, and to that end authorized the
Secretary of Agriculture and Natural Resources to provide by regulations such restrictions as he deemed necessary
in order to preserve the aquatic resources of the land. Consequently, when the President, in response to the clamor
of the people and authorities of Camarines Sur issued Executive Order No. 80 absolutely prohibiting fishing by
means of trawls in all waters comprised within the San Miguel Bay, he did nothing but show an anxious regard for
the welfare of the inhabitants of said coastal province and dispose of issues of general concern (Sec. 63, R.A.C.)
which were in consonance and strict conformity with the law.
Wherefore, and on the strength of the foregoing considerations We render judgment, as follows:
(a)Declaring that the issues involved in case G. R. No. L-8895 have become moot, as no writ of preliminary
injunction has been issued by this Court enjoining the respondent Judge of the Court of First Instance of Manila,
Branch XIV, from enforcing his order of March 3, 1955; and
(b)Reversing the decision appealed from in case G. R. No. L- 9191; dissolving the writ of injunction prayed
for in the lower court by plaintiffs, if any has been actually issued by the court a quo; and declaring Executive
Orders Nos. 22, 66 and 80, series of 1954, valid for having been issued by authority of the Constitution, the Revised
Administrative Code and the Fisheries Act.
Without pronouncement as to costs. It is so ordered.
Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L. and Endencia, JJ.,
concur.

Jumamil v. Cafe, et al., G.R. No. 144570, September 21, 2005, 470 SCRA 475

SYLLABUS
1.POLITICAL LAW; CONSTITUTIONAL LAW; JUDICIAL REVIEW; REQUISITES. The unbending rule is that courts will
not assume jurisdiction over a constitutional question unless the following requisites are satisfied: (1) there must be an
actual case calling for the exercise of judicial review; (2) the question before the Court must be ripe for adjudication; (3)
the person challenging the validity of the act must have standing to do so; (4) the question of constitutionality must have
been raised at the earliest opportunity, and (5) the issue of constitutionality must be the very lis mota of the case.
2.ID.; ID.; ID.; LEGAL STANDING; DEFINED. Legal standing or locus standi is a party's personal and substantial
interest in a case such that he has sustained or will sustain direct injury as a result of the governmental act being
challenged. It calls for more than just a generalized grievance. The term "interest" means a material interest, an interest
in issue affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental
interest. Unless a person's constitutional rights are adversely affected by the statute or ordinance, he has no legal
standing.
3.ID.; ID.; ID.; ID.; PARTIES SUING AS TAXPAYERS MUST SPECIFICALLY PROVE SUFFICIENT INTEREST IN
PREVENTING THE ILLEGAL EXPENDITURE OF MONEY RAISED BY TAXATION. Petitioner brought the petition in
his capacity as taxpayer of the Municipality of Panabo, Davao del Norte and not in his personal capacity. He was
questioning the official acts of the public respondents in passing the ordinances and entering into the lease contracts
with private respondents. A taxpayer need not be a party to the contract to challenge its validity. . . . Parties suing as
taxpayers must specifically prove sufficient interest in preventing the illegal expenditure of money raised by taxation.
The expenditure of public funds by an officer of the State for the purpose of executing an unconstitutional act constitutes
a misapplication of such funds.
4.ID.; ID.; STATE; SEPARATION OF POWERS; THE POLICY OF THE COURTS IS TO AVOID RULING ON
CONSTITUTIONAL QUESTIONS AND TO PRESUME THAT THE ACTS OF THE POLITICAL DEPARTMENTS ARE
VALID, ABSENT A CLEAR SHOWING TO THE CONTRARY. "The policy of the courts is to avoid ruling on
constitutional questions and to presume that the acts of the political departments are valid, absent a clear and
unmistakable showing to the contrary. To doubt is to sustain. This presumption is based on the doctrine of separation of
powers. This means that the measure had first been carefully studied by the legislative and executive departments and
found to be in accord with the Constitution before it was finally enacted and approved."
5.REMEDIAL LAW; EVIDENCE; JUDICIAL NOTICE; COURTS MAY TAKE JUDICIAL NOTICE OF A JUDGMENT IN
ANOTHER CASE AS LONG AS THE PARTIES GIVE THEIR CONSENT. [C]ourts may take judicial notice of a judgment
in another case as long as the parties give their consent or do not object. As opined by Justice Edgardo L. Paras: "A
court will take judicial notice of its own acts and records in the same case, of facts established in prior proceedings in
the same case, of the authenticity of its own records of another case between the same parties, of the files of related
cases in the same court, and of public records on file in the same court. In addition, judicial notice will be taken of the
record, pleadings or judgment of a case in another court between the same parties or involving one of the same parties,
as well as of the record of another case between different parties in the same court."
D E C I S I O N
CORONA, J p:
In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Vivencio V. Jumamil seeks to
reverse the decision of the Court of Appeals dated July 24, 2000 1 in CA-G.R. CV No. 35082, the dispositive portion of
which read:
With the foregoing, the assailed Decision of Branch 4, Regional Trial Court of Panabo Davao dated
26 November 1990 in Sp. Civil Action No. 89-1 is hereby AFFIRMED. 2
The Regional Trial Court dismissed petitioner's petition for declaratory relief with prayer for preliminary injunction
and writ of restraining order, and ordered the petitioner to pay attorney's fees in the amount of P1,000 to each of
the 57 private respondents. 3
The factual antecedents follow.
In 1989, petitioner Jumamil 4 filed before the Regional Trial Court (RTC) of Panabo, Davao del Norte a petition for
declaratory relief with prayer for preliminary injunction and writ of restraining order against public respondents Mayor
Jose J. Cafe and the members of the Sangguniang Bayan of Panabo, Davao del Norte. He questioned the constitutionality
of Municipal Resolution No. 7, Series of 1989 (Resolution No. 7).
Resolution No. 7, enacting Appropriation Ordinance No. 111, provided for an initial appropriation of P765,000 for the
construction of stalls around a proposed terminal fronting the Panabo Public Market 5 which was destroyed by fire.
Subsequently, the petition was amended due to the passage of Resolution No. 49, series of 1989 (Resolution No. 49),
denominated as Ordinance No. 10, appropriating a further amount of P1,515,000 for the construction of additional stalls
in the same public market. 6
Prior to the passage of these resolutions, respondent Mayor Cafe had already entered into contracts with those who
advanced and deposited (with the municipal treasurer) from their personal funds the sum of P40,000 each. Some of the
parties were close friends and/or relatives of the public respondents. 7 The construction of the stalls which petitioner
sought to stop through the preliminary injunction in the RTC was nevertheless finished, rendering the prayer therefor
moot and academic. The leases of the stalls were then awarded by public raffle which, however, was limited to those
who had deposited P40,000 each. 8 Thus, the petition was amended anew to include the 57 awardees of the stalls as
private respondents. 9
Petitioner alleges that Resolution Nos. 7 and 49 were unconstitutional because they were:
. . . passed for the business, occupation, enjoyment and benefit of private respondents who
deposited the amount of P40,000.00 for each stall, and with whom also the mayor had a prior
contract to award the would be constructed stalls to all private respondents. . . . As admitted by
public respondents some of the private respondents are close friends and/or relatives of some of
the public respondents which makes the questioned acts discriminatory. The questioned resolutions
and ordinances did not provide for any notice of publication that the special privilege and
unwarranted benefits conferred on the private respondents maybe (sic) availed of by anybody who
can deposit the amount of P40,000.00. 10
Neither was there any prior notice or publication pertaining to contracts entered into by public and
private respondents for the construction of stalls to be awarded to private respondents that the
same can be availed of by anybody willing to deposit P40,000.00. 11
In this petition, petitioner prays for the reversal of the decision of the Court of Appeals (CA) and a declaration of the
unconstitutionality, illegality and nullity of the questioned resolutions/ordinances and lease contracts entered into by the
public and private respondents; for the declaration of the illegality of the award of the stalls during the pendency of this
action and for the re-raffling and award of the stalls in a manner that is fair and just to all interested applicants; 12 for
the issuance of an order to the local government to admit any and all interested persons who can deposit the amount of
P40,000 for a stall and to order a re-raffling for the award of the stalls to the winners of the re-raffle; for the
nullification of the award of attorney's fees to private respondents on the ground that it was erroneous and
unmeritorious; and for the award of damages in favor of petitioner in the form of attorney's fees. 103
At the outset, we must point out that the issue of the constitutionality of the questioned resolutions was never ruled upon
by both the RTC and the CA. TDcEaH
It appears that on May 21, 1990, both parties agreed 14 to await the decision in CA G.R. SP No. 20424, 15 which
involved similar facts, issues and parties. The RTC, consequently, deferred the resolution of the pending petition. The
appellate court eventually rendered its decision in that case finding that the petitioners were not entitled to the
declaratory relief prayed for as they had no legal interest in the controversy. Upon elevation to the Supreme Court as
UDK Case No. 9948, the petition for review on certiorari was denied for being insufficient in form and substance. 16
The RTC, after receipt of the entry of the SC judgment, 17 dismissed the pending petition on November 26, 1990. It
adopted the ruling in CA G.R. SP No. 20424:
xxx xxx xxx
We find petitioners' aforesaid submission utterly devoid of merit. It is, to say the least, questionable
whether or not a special civil action for declaratory relief can be filed in relation to a contract by
persons who are not parties thereto. Under Sec. 1 of Rule 64 of the Rules of Court, any person
interested under a deed, will, contract, or other written instruments may bring an action to
determine any question of the contract, or validly arising under the instrument for a declaratory
(sic) of his rights or duties thereunder. Since contracts take effect only between the parties (Art.
1311) it is quite plain that one who is not a party to a contract can not have the interest in it that the
rule requires as a basis for declaratory reliefs (PLUM vs. Santos, 45 SCRA 147).
Following this ruling, the petitioners were not parties in the agreement for the award of the market
stalls by the public respondents, in the public market of Panabo, Davao, and since the petitioners
were not parties to the award of the market stalls and whose rights are never affected by merely
stating that they are taxpayers, they have no legal interest in the controversy and they are not,
therefore, entitled to bring an action for declaratory relief. 18
WHEREFORE, the petition of the petitioners as taxpayers being without merit and not in consonance
with law, is hereby ordered DISMISSED.
As to the counterclaim for damages, the same not having been actually and fully proven, the Court
gives no award as to the same. It is not amiss to state here that the petitioners agreed to be bound
by the outcome of Special Civil Case No. 89-10.
However, for unnecessarily dragging into Court the fifty-seven (57) private respondents who are
bonafide businessmen and stall holders in the public market of Panabo, it is fitting and proper for
the petitioners to be ordered payment of attorney's fees.
Accordingly, the herein petitioners are ordered to pay ONE THOUSAND (P1,000.00) PESOS EACH
to the 57 private respondents, as attorney's fees, jointly and severally, and for them to pay the
costs of this suit.
SO ORDERED. 19
From this adverse decision, petitioner again appealed to the Court of Appeals in CA-G.R. CV No. 35082 which is now
before us for review.
The appellate court, yet again, affirmed the RTC decision and held that:
Res judicata does not set in a case dismissed for lack of capacity to sue, because there has been no
determination on the merits. Neither does the law of the case apply. However, the court a quo took
judicial notice of the fact that petitioners agreed to be bound by the outcome of Special Civil Case
No. 89-10. Allegans contraria non est audiendus. (He is not to be heard who alleges things
contradictory to each other.) It must be here observed that petitioners-appellants were the ones
who manifested that it would be practical to await the decision of the Supreme Court in their
petition for certiorari, for after all the facts, circumstances and issues in that case, are exactly the
same as in the case that is here appealed. Granting that they may evade such assumption, a careful
evaluation of the case would lead Us to the same conclusion: that the case for declaratory relief is
dismissible. As enumerated by Justice Regalado in his "Remedial Law Compendium", the requisites
of an action for declaratory relief are:

(a)The subject matter of the controversy must be a deed, will, contract or other written instrument,
statute, executive order or regulation, or ordinance; IAcDET
(b)The terms of said documents and the validity thereof are doubtful and require judicial
construction;
(c)There must have been no breach of the documents in question;
(d)There must be an actual justiciable controversy or the "ripening seeds" of one between persons
whose interests are adverse;
(e)The issue must be ripe for judicial determination; and
(f)Adequate relief is not available through other means or other forms of action or proceeding.
In Tolentino vs. Board of Accountancy, et al, 90 Phil. 83, 88, the Supreme Court ratiocinated the
requisites of justiciability of an action for declaratory relief by saying that the court must be
"satisfied that an actual controversy, or the ripening seeds of one, exists between parties, all of
whom are sui juris and before the court, and that the declaration sought will be a practical help in
ending the controversy."
The petition must show "an active antagonistic assertion of a legal right on one side and a denial
thereof on the other concerning a real, and not a mere theoretical question or issue. The question is
whether the facts alleged a substantial controversy between parties having adverse legal interests,
of sufficient immediacy and reality to warrant the issuance of a declaratory relief. In GSISEA and
GSISSU vs. Hon. Alvendia etc. and GSIS, 108 Phil. 505, the Supreme Court ruled a declaratory relief
improper or unnecessary when it appears to be a moot case, since it seeks to get a judgment on a
pretended controversy, when in reality there is none. In Kawasaki Port Service Corporation vs.
Amores, 199 SCRA 230, citing Dy Poco vs. Commissioner of Immigration, et al., 16 SCRA 618, the
rule was stated: "where a declaratory judgment as to a disputed fact would be determinative of
issues rather than a construction of definite stated rights, statuses and other relations, commonly
expressed in a written instrument, the case is not one for declaratory judgment."
Indeed, in its true light, the present petition for declaratory relief seems to be no more than a
request for an advisory opinion to which courts in this and other jurisdiction have cast a definite
aversion. The ordinances being assailed are appropriation ordinances. The passage of the
ordinances were pursuant to the public purpose of constructing market stalls. For the exercise of
judicial review, the governmental act being challenged must have had an adverse effect on the
person challenging it, and the person challenging the act, must have "standing" to challenge, i.e., in
the categorical and succinct language of Justice Laurel, he must have a "personal and substantial
interest in the case such that he has sustained, or will sustain, direct injury as a result of its
enforcement." Standing is a special concern in constitutional law because in some cases suits are
brought not by parties who have been personally injured by the operation of a law or by official
action taken, but by concerned citizens, taxpayers or voters who actually sue in the public interest.
Hence the question in standing is whether such parties have "alleged such a personal stake in the
outcome of the controversy as to assure that concrete adverseness which sharpens the presentation
of issues upon which the court largely depends for illumination of difficult constitutional questions.
A careful analysis of the records of the case at bar would disclose that petitioners-appellants have
suffered no wrong under the terms of the ordinances being assailed and, naturally need no relief
in the form they now seek to obtain. Judicial exercise cannot be exercised in vacuo. The policy of
the courts is to avoid ruling on a constitutional question and to presume that the acts of the political
departments are valid in the absence of a clear and unmistakable showing to the contrary. To doubt
is to sustain. The issue is not the ordinances themselves, but the award of the market stalls to the
private respondents on the strength of the contracts individually executed by them with Mayor Cafe.
To reiterate, a person who is not a party to a contract cannot file a petition for declaratory relief
and seek judicial interpretation of such contract (Atlas Consolidated Mining Corp. vs. Court of
Appeals, 182 SCRA 166). Not having established their locus standi, we see no error committed by
the court a quo warranting reversal of the appealed decision. aHESCT
With the foregoing, the assailed Decision of Branch 4, Regional Trial Court of Panabo Davao dated
26 November 1990 in Sp. Civil Action No. 89-1 is hereby AFFIRMED.
SO ORDERED. 20
Thus, both the RTC and the CA dismissed the case on the ground of petitioner's lack of legal standing and the parties'
agreement to be bound by the decision in CA G.R. SP. No. 20424.
The issues to be resolved are the following:
(1)whether the parties were bound by the outcome in CA G.R. SP. No. 20424;
(2)whether petitioner had the legal standing to bring the petition for declaratory relief;
(3)whether Resolution Nos. 7 and 49 were unconstitutional; and
(4)whether petitioner should be held liable for damages.
LOCUS STANDI AND THE
CONSTITUTIONALITY ISSUE
We will first consider the second issue. The petition for declaratory relief challenged the constitutionality of the subject
resolutions. There is an unbending rule that courts will not assume jurisdiction over a constitutional question unless the
following requisites are satisfied: (1) there must be an actual case calling for the exercise of judicial review; (2) the
question before the Court must be ripe for adjudication; (3) the person challenging the validity of the act must have
standing to do so; (4) the question of constitutionality must have been raised at the earliest opportunity, and (5) the issue
of constitutionality must be the very lis mota of the case. 21
Legal standing or locus standi is a party's personal and substantial interest in a case such that he has sustained or will
sustain direct injury as a result of the governmental act being challenged. It calls for more than just a generalized
grievance. The term "interest" means a material interest, an interest in issue affected by the decree, as distinguished
from mere interest in the question involved, or a mere incidental interest. 22 Unless a person's constitutional rights are
adversely affected by the statute or ordinance, he has no legal standing.
The CA held that petitioner had no standing to challenge the two resolutions/ordinances because he suffered no wrong
under their terms. It also concluded that "the issue (was) not the ordinances themselves but the award of the market
stalls to the private respondents on the strength of the contracts individually executed by them with Mayor Cafe."
Consequently, it ruled that petitioner, who was not a party to the lease contracts, had no standing to file the petition for
declaratory relief and seek judicial interpretation of the agreements.
We do not agree. Petitioner brought the petition in his capacity as taxpayer of the Municipality of Panabo, Davao del
Norte 23 and not in his personal capacity. He was questioning the official acts of the public respondents in passing the
ordinances and entering into the lease contracts with private respondents. A taxpayer need not be a party to the contract
to challenge its validity. 24 Atlas Consolidated Mining & Development Corporation v. Court of Appeals 25 cited by the CA
does not apply because it involved contracts between two private parties.
Parties suing as taxpayers must specifically prove sufficient interest in preventing the illegal expenditure of money
raised by taxation. 26 The expenditure of public funds by an officer of the State for the purpose of executing an
unconstitutional act constitutes a misapplication of such funds. 27 The resolutions being assailed were appropriations
ordinances. Petitioner alleged that these ordinances were "passed for the business, occupation, enjoyment and benefit of
private respondents" 28 (that is, allegedly for the private benefit of respondents) because even before they were passed,
respondent Mayor Cafe and private respondents had already entered into lease contracts for the construction and award
of the market stalls. 29 Private respondents admitted they deposited P40,000 each with the municipal treasurer, which
amounts were made available to the municipality during the construction of the stalls. The deposits, however, were
needed to ensure the speedy completion of the stalls after the public market was gutted by a series of fires. 30 Thus, the
award of the stalls was necessarily limited only to those who advanced their personal funds for their construction. 31
Petitioner did not seasonably allege his interest in preventing the illegal expenditure of public funds or the specific injury
to him as a result of the enforcement of the questioned resolutions and contracts. It was only in the "Remark to
Comment" he filed in this Court did he first assert that "he (was) willing to engage in business and (was) interested to
occupy a market stall." 32 Such claim was obviously an afterthought. THaAEC
Be that as it may, we have on several occasions relaxed the application of these rules on legal standing:
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. Recently, after holding
that the IBP had no locus standi to bring the suit, the Court in IBP v. Zamora 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."
33
xxx xxx xxx

Objections to a taxpayer's suit for lack of sufficient personality, standing or interest are procedural
matters. Considering the importance to the public of a suit assailing the constitutionality of a tax
law, and in keeping with the Court's duty, specially explicated in the 1987 Constitution, to determine
whether or not the other branches of the Government have kept themselves within the limits of the
Constitution and the laws and that they have not abused the discretion given to them, the Supreme
Court may brush aside technicalities of procedure and take cognizance of the suit. 34
xxx xxx xxx
There being no doctrinal definition of transcendental importance, the following determinants
formulated by former Supreme Court Justice Florentino P. Feliciano are instructive: (1) the
character of the funds or other assets involved in the case; (2) the presence of a clear case of
disregard of a constitutional or statutory prohibition by the public respondent agency or
instrumentality of the government; and (3) the lack of any other party with a more direct and
specific interest in raising the questions being raised. 35
But, even if we disregard petitioner's lack of legal standing, this petition must still fail. The subject
resolutions/ordinances appropriated a total of P2,280,000 for the construction of the public market stalls. Petitioner
alleges that these ordinances were discriminatory because, even prior to their enactment, a decision had already been
made to award the market stalls to the private respondents who deposited P40,000 each and who were either friends or
relatives of the public respondents. Petitioner asserts that "there (was) no publication or invitation to the public that this
contract (was) available to all who (were) interested to own a stall and (were) willing to deposit P40,000." 36
Respondents, however, counter that the "public respondents' act of entering into this agreement was authorized by the
Sangguniang Bayan of Panabo per Resolution No. 180 dated October 10, 1988" 37 and that "all the people interested
were invited to participate in investing their savings." 38
We note that the foregoing was a disputed fact which the courts below did not resolve because the case was dismissed
on the basis of petitioner's lack of legal standing. Nevertheless, petitioner failed to prove the subject ordinances and
agreements to be discriminatory. Considering that he was asking this Court to nullify the acts of the local political
department of Panabo, Davao del Norte, he should have clearly established that such ordinances operated unfairly
against those who were not notified and who were thus not given the opportunity to make their deposits. His
unsubstantiated allegation that the public was not notified did not suffice. Furthermore, there was the time-honored
presumption of regularity of official duty, absent any showing to the contrary. 39 And this is not to mention that:
The policy of the courts is to avoid ruling on constitutional questions and to presume that the acts
of the political departments are valid, absent a clear and unmistakable showing to the contrary. To
doubt is to sustain. This presumption is based on the doctrine of separation of powers. This means
that the measure had first been carefully studied by the legislative and executive departments and
found to be in accord with the Constitution before it was finally enacted and approved. 40
Therefore, since petitioner had no locus standi to question the ordinances, there is no need for us to discuss the
constitutionality of said enactments.
WERE THE PARTIES BOUND BY THE
OUTCOME IN CA G.R. SP. NO. 20424?
Adverting to the first issue, we observe that petitioner was the one who wanted the parties to await the decision of the
Supreme Court in UDK Case No. 9948 since the facts and issues in that case were similar to this. Petitioner, having
expressly agreed to be bound by our decision in the aforementioned case, should be reined in by the dismissal order we
issued, now final and executory. In addition to the fact that nothing prohibits parties from committing to be bound by the
results of another case, courts may take judicial notice of a judgment in another case as long as the parties give their
consent or do not object. 41 As opined by Justice Edgardo L. Paras:
A court will take judicial notice of its own acts and records in the same case, of facts established in
prior proceedings in the same case, of the authenticity of its own records of another case between
the same parties, of the files of related cases in the same court, and of public records on file in the
same court. In addition, judicial notice will be taken of the record, pleadings or judgment of a case in
another court between the same parties or involving one of the same parties, as well as of the
record of another case between different parties in the same court. 42
DAMAGES
Finally, on the issue of damages, petitioner asserts that he impleaded the 57 respondents in good faith since the award of
the stalls to them was made during the pendency of the action. 43 Private respondents refute this assertion and argue
that petitioner filed this action in bad faith and with the intention of harassing them inasmuch as he had already filed CA
G.R. SP. No. 20424 even before then. 44 The RTC, affirmed by the CA, held that petitioner should pay attorney's fees
"for unnecessarily dragging into Court the 57 private respondents who (were) bonafide businessmen and stall holders in
the public market of Panabo." 45
We do not agree that petitioner should be held liable for damages. It is not sound public policy to put a premium on the
right to litigate where such right is exercised in good faith, albeit erroneously. 46 The alleged bad faith of petitioner was
never established. The special circumstances in Article 2208 of the Civil Code justifying the award of attorney's fees are
not present in this case. SHDAEC
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 35082 is hereby AFFIRMED with the
MODIFICATION that the award of attorney's fees to private respondents is deleted.
Costs against petitioner.
SO ORDERED.
Panganiban, Sandoval-Gutierrez, Carpio Morales and Garcia, JJ., concur.



RULE 65, CERTIORARI

Francisco v. Winai Permskul, G.R. No. 81006, May 12, 1989, 173 SCRA 324

SYLLABUS
1.CONSTITUTIONAL LAW; JUDICIAL DEPARTMENT; DECISIONS MUST STATE FACTS AND LAW ON WHICH THEY
ARE BASED. Except for the second paragraph, which was introduced only in the present charter, Section 14 has been
in force since the Constitution of 1935. The provision was recast in affirmative terms in the 1973 Constitution but has
been virtually restored to its original form in the Constitution of 1987, to apply to all courts, including the municipal
courts. The purpose has always been the same, viz., to inform the person reading the decision, and especially the
parties, of how it was reached by the court after consideration of the pertinent facts and examination of the applicable
laws.
2.ID.; ID.; ID.; REASONS FOR CREATION THEREOF, CITED. The parties are entitled to no less than this explanation
if only to assure them that the court rendering the decision actually studied the case before pronouncing its judgment.
But there are more substantial reasons. For one thing, the losing party must be given an opportunity to analyze the
decision so that, if permitted, he may elevate what he may consider its errors for review by a higher tribunal. For
another, the decision, if well-presented and reasoned, may convince the losing party of its merits and persuade it to
accept the verdict in good grace instead of prolonging the litigation with a useless appeal. A third reason is that decisions
with a full exposition of the facts and the law on which they are based, especially those coming from the Supreme Court,
will constitute a valuable body of case law that can serve as useful references and even as precedents in the resolution
of future controversies.
3.REMEDIAL LAW; MEMORANDUM DECISION; PURPOSE. There is no question that the purpose of the law in
authorizing the memorandum decision is to expedite the termination of litigations for the benefit of the parties as well as
the courts themselves.
4.ID.; ID.; INTRODUCED BY SECTION 24 OF THE INTERIM RULES AND GUIDELINES OF THE RULES OF COURT.
The law does not define the memorandum decision and simply suggests that the court may adopt by reference the
findings of fact and the conclusions of law stated in the decision, order or resolution on appeal before it. No particular
form is prescribed; the conditions for its use are not indicated. In fact, B.P. Blg. 129 does not even employ the term
"memorandum decision" in Section 40 or elsewhere in the rest of the statute. This phrase appears to have been
introduced in this jurisdiction not by that law but by Section 24 of the Interim Rules and Guidelines.
5.ID.; ID.; DISTINCTIVE FEATURES. It is clear that where the decision of the appellate court actually reproduces the
findings of fact or the conclusions of law of the court below, it is not a memorandum decision as envisioned in the above
provision. The distinctive features of the memorandum decision are, first, it is rendered by an appellate court, and
second, it incorporates by reference the findings of fact or the conclusions of law contained in the decision, order or
ruling under review.
6.ID.; ID.; ID.; REASON FOR ALLOWING INCORPORATION BY REFERENCE, EXPLAINED. At any rate, the reason for
allowing the incorporation by reference is evidently to avoid the cumbersome reproduction of the decision of the lower
court, or portions thereof, in the decision of the higher court. The idea is to avoid having to repeat in the body of the
latter decision the findings or conclusions of the lower court since they are being approved or adopted anyway.
7.ID.; ID.; CONSTITUTIONALITY OF A LAW, PRESUMED. When a law is questioned before the Court, we employ the
presumption in favor of its constitutionality. As we said in Peralta v. Commission of Elections, "to justify the nullification
of a law, there must be a `clear and unequivocal breach of the Constitution, not a doubtful and argumentative
implication.'" Courts will bend over backward to sustain that presumption. In case of doubt, it is the duty of the judiciary
to exert every effort to prevent the invalidation of the law and the nullification of the will of the legislature that enacted
it and the executive that approved it. This norm is based on a becoming respect that the judiciary is expected to accord
the political departments of the government which, it must be assumed in fairness, thoroughly studied the measure under
challenge and assured themselves of its constitutionality before agreeing to enact it.
8.ID.; ID.; SEC. 40 OF BLG. 129 IS NOT UNCONSTITUTIONAL. The Court has deliberated extensively on the
challenge posed against the memorandum decision as now authorized by law. Taking into account the salutary purpose
for which it is allowed, and bearing in mind the above-discussed restraint we must observe when a law is challenged
before us, we have come to the conclusion that Section 40 of B.P. Blg. 129, as we shall interpret it here, is not
unconstitutional.
9.ID.; ID.; SHOULD ACTUALLY EMBODY THE FINDINGS OF FACT AND CONCLUSIONS OF LAW OF LOWER COURT IN
AN ANNEX ATTACHED TO AND MADE AN INDISPENSABLE PART OF DECISION. The memorandum decision, to be
valid, cannot incorporate the findings of fact and the conclusions of law of the lower court only by remote reference,
which is to say that the challenged decision is not easily and immediately available to the person reading the
memorandum decision. For the incorporation by reference to be allowed, it must provide for direct access to the facts
and the law being adopted, which must be contained in a statement attached to the said decision. In other words, the
memorandum decision authorized under Section 40 of B.P. Blg. 129 should actually embody the findings of fact and
conclusions of law of the lower court in an annex attached to and made an indispensable part of the decision.
10.ID.; ID.; SHOULD BE USED SPARINGLY AND ONLY IN SIMPLE LITIGATIONS. The Court finds it necessary to
emphasize that the memorandum decision should be sparingly used lest it become an addictive excuse for judicial sloth.
It is an additional condition for its validity that this kind of decision may be resorted to only in cases where the facts are
in the main accepted by both parties or easily determinable by the judge and there are no doctrinal complications
involved that will require an extended discussion of the laws involved. The memorandum decision may be employed in
simple litigations only, such as ordinary collection cases, where the appeal is obviously groundless and deserves no more
than the time needed to dismiss it.
11.ID.; ID.; APPELLATE JUDGE SHOULD RESTATE IN HIS OWN WORDS FINDINGS OF FACT OF LOWER COURT AND
PRESENT HIS OWN INTERPRETATION OF LAW. Despite the convenience afforded by the memorandum decision, it is
still desirable that the appellate judge exert some effort in restating in his own words the findings of fact of the lower
court and presenting his own interpretation of the law instead of merely parroting the language of the court a quo as if he
cannot do any better. There must be less intellectual indolence and more pride of authorship in the writing of a decision,
especially if it comes from an appellate court.
D E C I S I O N
CRUZ, J p:
An important constitutional question has been injected in this case which started out as an ordinary complaint for a sum
of money. The question squarely presented to the Court is the validity of the memorandum decision authorized under
Section 40 of B.P. Blg. 129 in the light of Article VIII, Section 14 of the Constitution.
On May 21, 1984, the petitioner leased his apartment in Makati to the private respondent for a period of one year for the
stipulated rental of P3,000.00 a month. Pursuant to the lease contract, the private respondent deposited with the
petitioner the amount of P9,000.00 to answer for unpaid rentals or any damage to the leased premises except when
caused by reasonable wear and tear. On May 31, 1985, the private respondent vacated the property. He thereafter
requested the refund of his deposit minus the sum of P1,000.00, representing the rental for the additional ten days of his
occupancy after the expiration of the lease. The petitioner rejected this request. He said the lessee still owed him for
other charges, including the electricity and water bills and the sum of P2,500.00 for repainting of the leased premises to
restore them to their original condition. 1
The private respondent sued in the Metropolitan Trial Court of Makati. After the submission of position papers by the
parties, a summary judgment was rendered on October 11, 1985, sustaining the complainant and holding that the
repainting was not chargeable to him. The defendant was ordered to pay the plaintiff the amount of P7,750.00,
representing the balance of the deposit after deducting the water and electricity charges. The plaintiff was also awarded
the sum of P1,250.00 as attorney's fees, plus the costs. 2
This decision was appealed to the Regional Trial Court of Makati and was affirmed by Judge Jose C. de la Rama on
January 14, 1987. This was done in a memorandum decision reading in full as follows:
MEMORANDUM DECISION
After a careful and thorough perusal, evaluation and study of the records of this case, this Court
hereby adopts by reference the findings of fact and conclusions of law contained in the decision of
the Metropolitan Trial Court of Makati, Metro Manila, Branch 63 and finds that there is no cogent
reason to disturb the same.
WHEREFORE, judgment appealed from is hereby affirmed in toto. 3
When the defendant went to the Court of Appeals, his petition for review was denied on September 29, 1987, as so too
was his motion for reconsideration, on December 1, 1987. 4 He is now before us to fault the respondent court, principally
for sustaining the memorandum decision of the regional trial court. His contention is that it violates Article VIII, Section
14 of the Constitution.

This provision reads as follows:
Sec. 14.No decision shall be rendered by any court without expressing therein clearly and distinctly
the facts and the law or 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 legal basis therefor.
Except for the second paragraph, which was introduced only in the present charter, Section 14 has been in force since
the Constitution of 1935. The provision was recast in affirmative terms in the 1973 Constitution but has been virtually
restored to its original form in the Constitution of 1987, to apply to all courts, including the municipal courts. The
purpose has always been the same, viz., to inform the person reading the decision, and especially the parties, of how it
was reached by the court after consideration of the pertinent facts and examination of the applicable laws.
The parties are entitled to no less than this explanation if only to assure them that the court rendering the decision
actually studied the case before pronouncing its judgment. But there are more substantial reasons. For one thing, the
losing party must be given an opportunity to analyze the decision so that, if permitted, he may elevate what he may
consider its errors for review by a higher tribunal. For another, the decision, if well-presented and reasoned, may
convince the losing party of its merits and persuade it to accept the verdict in good grace instead of prolonging the
litigation with a useless appeal. A third reason is that decisions with a full exposition of the facts and the law on which
they are based, especially those coming from the Supreme Court, will constitute a valuable body of case law that can
serve as useful references and even as precedents in the resolution of future controversies. As the Court said in Rosales
v. Court of First Instance: 5
Precedents are helpful in deciding cases when they are on all fours or at least substantially identical
with previous litigations. Argumentum a simili valet in lege. Earlier decisions are guideposts that can
lead us in the right direction as we tread the 'highways and byways of the law in the search for
truth and justice. These pronouncements represent the wisdom of the past. They are the voice of
vanished judges talking to the future. Except where there is a need to reverse them because of an
emergent viewpoint or an altered situation, they urge us strongly that, indeed, the trodden path is
best.
According to the petitioner, the memorandum decision rendered by the regional trial court should be revoked for non-
compliance with the above-quoted constitutional mandate. He asks that the case be remanded to the regional trial court
for a full-blown hearing on the merits, to be followed by a decision stating therein clearly and distinctly the facts and the
law on which it is based. For his part, the private respondent demurs. He justifies the memorandum decision as
authorized by B.P. Blg. 129 and invokes the ruling of this Court in Romero v. Court of Appeals, 6 which sustained the
said law.
Section 40 of B.P. Blg. 129 reads as follows:
Sec. 40.Form of decision in appealed cases. Every decision or final resolution of a court in
appealed cases shall clearly and distinctly state the findings of fact and the conclusions of law on
which it is based which may be contained in the decision or final resolution itself, or adopted by
reference from those set forth, in the decision, order or resolution appealed from.
The above section was applied in the Romero case, together with a similar rule embodied in Section 18 of P.D. No. 946,
providing that:
All cases of the Court of Agrarian Relations now pending before the Court of Appeals shall remain
in the Division to which they have been assigned, and shall be decided within sixty (60) days from
the effectivity of this Decree; Provided, however, That if the decision or order be an affirmance in
toto of the dispositive conclusion of the judgment appealed from, then the Court of Appeals may,
instead of rendering an extended opinion, indicate clearly the trial court's findings of fact and
pronouncements of law which have been adopted as basis for the affirmance.
In the said case, Justice Jose Y. Feria, speaking for a unanimous Court, declared: prLL
As previously stated, the decision of the Court of Agrarian Relations consisted of thirteen pages,
single space. The above-quoted decision of the respondent Court of Appeals consists of four pages,
three of which contains verbatim the dispositive portion of the decision appealed from. The
remaining page is devoted to an explanation of why "for judicial convenience and expediency,
therefore, We hereby adopt, by way of reference, the findings of facts and conclusions of the court
a quo spread in its decision, as integral part of this Our decision." The said decision may be
considered as substantial compliance with the above-quoted provisions in Section 18 of P.D. No.
946 and Section 40 of B.P. Blg. 129.
Nevertheless, he was quick to add a tenable misgiving and to express the following reservation:
The authority given the appellate court to adopt by reference the findings of fact and conclusions of
law from those set forth in the appealed decisions should be exercised with caution and prudence,
because the tendency would be to follow the line of least resistance by just adopting the findings
and conclusions of the lower court without thoroughly studying the appealed case.
Thus caveat was necessary because, as he correctly observed:
It cannot be too strongly emphasized that just as important as the intrinsic validity of a decision is
the perception by the parties-litigants that they have been accorded a fair opportunity to be heard
by a fair and responsible magistrate before judgment is rendered. It is this perception, coupled with
a clear conscience, which enables the members of the judiciary to discharge the awesome
responsibility of sitting in judgment on their fellowmen.
There is no question that the purpose of the law in authorizing the memorandum decision is to expedite the termination
of litigations for the benefit of the parties as well as the courts themselves.
Concerned with the mounting problem of delay in the administration of justice, the Constitution now contains a number of
provisions aimed at correcting this serious difficulty that has caused much disaffection among the people. Thus, Section
16 of the Bill of Rights reiterates the original provision in the 1973 Constitution guaranteeing to all persons "the right to
a speedy disposition of their cases before all judicial, quasi-judicial or administrative bodies." Section 14(2) of the same
Article III retains the rule that the accused shall be entitled to a trial that shall not only be public and impartial but also
speedy. In Article VIII, Section 5(3), the Supreme Court is expressly permitted to temporarily assign a judge from one
station to another when the public interest so requires, as when there is a necessity for less occupied judge to help a
busier colleague dispose of his cases. In paragraph 5 of the same section, it is stressed that the rules of court to be
promulgated by the Supreme Court "shall provide a simplified and inexpensive procedure for the speedy disposition of
cases." In Section 15, of the same article, maximum periods are prescribed for the decision or resolution of cases, to wit,
twenty-four months in the case of Supreme Court and, unless reduced by the Supreme Court, twelve months for all
lower collegiate courts and three months for all other lower courts.
The courts of justice are really hard put at coping with the tremendous number of cases in their dockets which, to make
matters worse, continues to grow by the day despite the efforts being taken to reduce it. In the Supreme Court alone, an
average of 400 cases is received every month as against the average of 300 cases disposed of during the same month,
leaving a difference of 100 cases monthly that is added to some 5,000 still unresolved cases that have accumulated
during the last two decades or so. At this rate, the backlog will increase by 1,200 cases every year on top of the earlier
balance, much of which, despite its age, is still viable and have still to be resolved. Considering that the Court spends
four days of the week for studying and deliberating on these cases in its en banc and division sessions, one can
appreciate the limited time allowed its members for the actual writing of its decisions. (This particular decision, while
extended, happens fortunately to be less complicated than many of the other cases submitted to it, which require more
time to write, not to mention the antecedent research that may have to be made.)
Viewed in the light of these practical considerations, the memorandum decision can be welcomed indeed as an
acceptable method of dealing expeditiously with the case load of the courts of justice. But expediency alone, no matter
how compelling, cannot excuse non-compliance with the Constitution; or to put it more familiarly, the end does not
justify the means. It is plain that if Section 40 of B.P. Blg. 129 is unconstitutional, it must be struck down.
In the case at bar, we find that a judgment was made by the metropolitan trial court in compliance with the rule on
summary procedure. The decision consisted of three typewritten pages, single space, and stated clearly and distinctly
the facts and the law on which it was based. It was a concise and well-written decision, and a correct one to boot, for
which Judge Paciano B. Balita is to be commended. prcd
The problem, though, as the petitioner sees it, is that in affirming this judgment, the regional trial court of Makati
rendered a mere memorandum decision that simply adopted by reference the findings of fact and law made by Judge
Balita and then concluded, without saying more, that "there (was no cogent reason to disturb the same." It is claimed that
as Judge de la Rama did not make his own statement of the facts and the law as required by the Constitution, his
memorandum decision was a total nullity. Worse, when the appeal was taken to the respondent court, what it reviewed
was not the memorandum decision of the regional trial court but the decision rendered by the metropolitan trial court
which, legally speaking, was not before the appellate court.

It is not really correct to say that the Court of Appeals did not review the memorandum decision of the regional trial
court which was the subject of the petition for review. A reading of its own decision will show that it dealt extensively
with the memorandum decision and discussed it at some length in the light of the observations and reservations of
this Court in the Romero case. Moreover, in reviewing the decision of the metropolitan trial court, the Court of Appeals
was actually reviewing the decision of the regional trial court, which had incorporated by reference the earlier decision
rendered by Judge Balita.
The question, of course, is whether such incorporation by reference was a valid act that effectively elevated the decision
of the metropolitan trial court for examination by the Court of Appeals.
To be fair, let it be said that when Judge dela Rama availed himself of the convenience offered by Section 400 of B.P.
Blg. 129, he was only acting in accordance with the ruling announced in Romero permitting the use of the memorandum
decision. It must also be observed that even if the respondent court appeared to be partial to the reservation rather than
the rule in the said case, it nevertheless had the duty which it discharged to abide by the doctrine announced
therein by the highest tribunal of the land. The respondent court could not have acted otherwise.
This Court is not hampered by such inhibitions. As we may re-examine our own rulings and modify or reverse them
whenever warranted, we take a second look at the memorandum decision and the Romero case and test them on the
touchstone of the Constitution.
The law does not define the memorandum decision and simply suggests that the court may adopt by reference the
findings of fact and the conclusions of law stated in the decision, order or resolution on appeal before it. No particular
form is prescribed; the conditions for its use are not indicated. In fact, B.P. Blg. 129 does not even employ the term
"memorandum decision" in Section 40 or elsewhere in the rest of the statute. This phrase appears to have been
introduced in this jurisdiction not by that law but by Section 24 of the Interim Rules and Guidelines, reading as follows:
Sec. 24.Memorandum decisions. The judgment or final resolution of a court in appealed cases
may adopt by reference the findings of fact and conclusions of law contained in the decision or final
order appealed from.
It is clear that where the decision of the appellate court actually reproduces the findings of fact or the conclusions of law
of the court below, it is not a memorandum decision as envisioned in the above provision. The distinctive features of the
memorandum decision are, first, it is rendered by an appellate court, and second, it incorporates by reference the
findings of fact or the conclusions of law contained in the decision, order or ruling under review. Most likely, the purpose
is to affirm the decision, although it is not impossible that the approval of the findings of fact by the lower court may lead
to a different conclusion of law by the higher court. At any rate, the reason for allowing the incorporation by reference is
evidently to avoid the cumbersome reproduction of the decision of the lower court, or portions thereof, in the decision of
the higher court. The idea is to avoid having to repeat in the body of the latter decision the findings or conclusions of the
lower court since they are being approved or adopted anyway.
Parenthetically, the memorandum decision is also allowed in the United States, but its form (at least) differs from the one
under consideration in this case. Such a decision is rendered in that country upon a previous determination by the judge
that there is no need for a published opinion and that it will have no precedential effect. The judgment is usually limited
to the dispositive portion but a memorandum is attached containing a brief statement of the facts and the law involved,
mainly for the information of the parties to the case.
When a law is questioned before the Court, we employ the presumption in favor of its constitutionality. As we said in
Peralta v. Commission of Elections, "to justify the nullification of a law, there must be a `clear and unequivocal breach of
the Constitution, not a doubtful and argumentative implication.'" 7 Courts will bend over backward to sustain that
presumption. In case of doubt, it is the duty of the judiciary to exert every effort to prevent the invalidation of the law
and the nullification of the will of the legislature that enacted it and the executive that approved it. This norm is based on
a becoming respect that the judiciary is expected to accord the political departments of the government which, it must be
assumed in fairness, thoroughly studied the measure under challenge and assured themselves of its constitutionality
before agreeing to enact it.
The Court has deliberated extensively on the challenge posed against the memorandum decision as now authorized by
law. Taking into account the salutary purpose for which it is allowed, and bearing in mind the above-discussed restraint
we must observe when a law is challenged before us, we have come to the conclusion that Section 40 of B.P. Blg. 129,
as we shall interpret it here, is not unconstitutional.
What is questioned about the law is the permission it gives for the appellate court to merely adopt by reference in its
own decision the judgment of the lower court on appeal. It is easy to understand that this device may feed the suspicion
feared by Justice Feria that the court has not given the appeal the attention it deserved and thus deprived the parties of
due process. True or not, this impression is likely to undermine popular faith in the judiciary as an impartial forum which
hears before it decides and bases its decision on the established facts and the applicable law.
No less objectionable is the inconvenience involved in having to search for the decision referred to, which, having been
incorporated by reference only, does not have to be attached to the memorandum decision. The Court had occasion
earlier to complain about this difficulty in the case of Gindoy v. Tapucar, 8 where we said:
. . . True it is that the Court of First Instance may adopt in toto either expressly or impliedly the
findings and conclusions of the inferior court, and as a rule, such adoption would amount to a
substantial compliance with the constitutional mandate discussed herein, but where, as in this case,
the specific arguments presented against the decision of the inferior court are of such nature that a
blanket affirmance of said decision does not in fact adequately dispose of the strictures against it, it
is but proper, if only to facilitate the action to be taken by the appellate court on the petition for
review, that the concrete bases of the impugned decision should appear on its face, instead of the
appellate court having to dig into the records to find out how the inferior court resolved the issues
of the case.
As to this problem, the Solicitor General correctly points out that it does not exist in the case at bar because the decision
of the Court of Appeals extensively quoted from the decision of the metropolitan trial court. Although only incorporated
by reference in the memorandum decision of the regional trial court, Judge Balita's decision was nevertheless available
to the Court of Appeals. It is this circumstance, or even happenstance, if you will, that has validated the memorandum
decision challenged in this case and spared it from constitutional infirmity.
That same circumstance is what will move us now to lay down the following requirement, as a condition for the proper
application of Section 40 of B.P. Blg. 129. The memorandum decision, to be valid, cannot incorporate the findings of fact
and the conclusions of law of the lower court only by remote reference, which is to say that the challenged decision is
not easily and immediately available to the person reading the memorandum decision. For the incorporation by reference
to be allowed, it must provide for direct access to the facts and the law being adopted, which must be contained in a
statement attached to the said decision. In other words, the memorandum decision authorized under Section 40 of B.P.
Blg. 129 should actually embody the findings of fact and conclusions of law of the lower court in an annex attached to
and made an indispensable part of the decision.
It is expected that this requirement will allay the suspicion that no study was made of the decision of the lower court and
that its decision was merely affirmed without a proper examination of the facts and the law on which it was based. The
proximity at least of the annexed statement should suggest that such an examination has been undertaken. It is, of
course, also understood that the decision being adopted should, to begin with, comply with Article VIII, Section 14 as no
amount of incorporation or adoption will rectify its violation.
The Court finds it necessary to emphasize that the memorandum decision should be sparingly used lest it become an
addictive excuse for judicial sloth. It is an additional condition for its validity that this kind of decision may be resorted to
only in cases where the facts are in the main accepted by both parties or easily determinable by the judge and there are
no doctrinal complications involved that will require an extended discussion of the laws involved. The memorandum
decision may be employed in simple litigations only, such as ordinary collection cases, where the appeal is obviously
groundless and deserves no more than the time needed to dismiss it.
Despite the convenience afforded by the memorandum decision, it is still desirable that the appellate judge exert some
effort in restating in his own words the findings of fact of the lower court and presenting his own interpretation of the
law instead of merely parroting the language of the court a quo as if he cannot do any better. There must be less
intellectual indolence and more pride of authorship in the writing of a decision, especially if it comes from an appellate
court. cdphil

It ill becomes an appellate judge to write his rulings with a pair of scissors and a pot of paste as if he were a mere
researcher. He is an innovator, not an echo. The case usually becomes progressively simpler as it passes through the
various levels of appeal and many issues become unimportant or moot and drop along the way. The appellate judge
should prune the cluttered record to make the issues clearer. He cannot usually do this by simply mimicking the lower
court. He must use his own perceptiveness in unraveling the rollo and his own discernment in discovering the law. No
less importantly, he must use his own language in laying down his judgment. And in doing so, he should also guard
against torpidity lest his pronouncements excite no more fascination than a technical tract on the values of horse manure
as a fertilizer. A little style will help lien the opinion trapped in the tortuous lexicon of the law with all its whereases and
wherefores. A judicial decision does not have to be a bore.
The interpretation we make today will not apply retroactively to the memorandum decision rendered by the regional trial
court in the case at bar, or to the decision of the respondent court affirming such decision on the strength of Romero v.
Court of Appeals. As earlier observed, there was substantial compliance with Section 40 because of the direct availability
and actual review of the decision of Judge Balita incorporated by reference in the memorandum decision of Judge de la
Rama. The memorandum decision as then understood under the Romero decision was a valid act at the time it was
rendered by Judge de la Rama and produced binding legal effect. We also affirm the finding of the respondent court that
the summary judgment without a formal trial was in accord with the Rule on Summary Procedure and that the award of
attorney's fees is not improper. LibLex
Henceforth, all memorandum decisions shall comply with the requirements herein set forth both as to the form
prescribed and the occasions when they may be rendered. Any deviation will summon the strict enforcement of Article
VIII, Section 14 of the Constitution and strike down the flawed judgment as a lawless disobedience.
WHEREFORE, the petition is DENIED, with costs against the petitioner. This decision is immediately executory. It is so
ordered.
Fernan (C.J.), Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Gancayco, Padilla, Bidin, Sarmiento, Cortes, Grio-
Aquino, Medialdea and Regalado, JJ., concur.
Feliciano, J., took no part.

New Frontier Sugar Corporation v. Regional Trial Court, G.R. No. 165001, January 31, 2007, 513 SCRA 601

D E C I S I O N
AUSTRIA-MARTINEZ, J p:
In the present petition for review under Rule 45 of the Rules of Court, petitioner assails the decision of the Court of
Appeals (CA) 1 in CA-G.R. SP No. 78673, dismissing its special civil action for certiorari and affirming the dismissal
orders dated January 13, 2003 and April 14, 2003 issued by the Regional Trial Court (RTC) of Iloilo City, Branch 39,
acting as a special commercial court, in Civil Case No. 02-27278.
As borne by the records, New Frontier Sugar Corporation (petitioner) is a domestic corporation engaged in the business
of raw sugar milling. Foreseeing that it cannot meet its obligations with its creditors as they fell due, petitioner filed a
Petition for the Declaration of State of Suspension of Payments with Approval of Proposed Rehabilitation Plan under the
Interim Rules of Procedure on Corporate Rehabilitation (2000) some time in August 2002. 2 Finding the petition to be
sufficient in form and substance, the RTC issued a Stay Order dated August 20, 2002, appointing Manuel B. Clemente as
rehabilitation receiver, ordering the latter to put up a bond, and setting the initial hearing on the petition. 3
One of petitioner's creditors, the Equitable PCI Bank (respondent bank), filed a Comment/Opposition with Motion to
Exclude Property, alleging that petitioner is not qualified for corporate rehabilitation, as it can no longer operate because
it has no assets left. Respondent bank also alleged that the financial statements, schedule of debts and liabilities,
inventory of assets, affidavit of general financial condition, and rehabilitation plan submitted by petitioner are misleading
and inaccurate since its properties have already been foreclosed and transferred to respondent bank before the petition
for rehabilitation was filed, and petitioner, in fact, still owes respondent bank deficiency liability. 4
On January 13, 2003, the RTC issued an Omnibus Order terminating the proceedings and dismissing the case. 5
Petitioner filed an Omnibus Motion but this was denied by the RTC in its Order dated April 14, 2003. 6
Petitioner then filed with the CA a special civil action for certiorari, which was denied by the CA per assailed Decision
dated July 19, 2004, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING
the petition filed in this case and AFFIRMING the orders assailed by the petitioner.
SO ORDERED. 7
In dismissing the petition, the CA sustained the findings of the RTC that since petitioner no longer has sufficient assets
and properties to continue with its operations and answer its corresponding liabilities, it is no longer eligible for
rehabilitation. The CA also ruled that even if the RTC erred in dismissing the petition, the same could not be corrected
anymore because what petitioner filed before the CA was a special civil action for certiorari under Rule 65 of the Rules
of Court instead of an ordinary appeal. 8
Hence, herein petition based on the following reasons:
(a)
THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN UPHOLDING THE
FINDINGS OF THE SPECIAL COMMERCIAL COURT (RTC BR. 39, ILOILO CITY), PREMATURELY
EXCLUDING THE FORECLOSED PROPERTY OF PETITIONER AND DECLARING THAT
PETITIONER HAS NO SUBSTANTIAL PROPERTY LEFT TO MAKE CORPORATE
REHABILITATION FEASIBLE AS THERE IS AN ONGOING LITIGATION FOR THE ANNULMENT OF
SUCH FORECLOSURE IN ANOTHER PROCEEDING.
(b)
THE COURT OF APPEALS ERRED IN DISMISSING THE PETITION FOR CERTIORARI FILED
BEFORE IT AS "IMPROPER," APPEAL BEING AN AVAILABLE REMEDY. 9
The Court denies the petition.
Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the
corporation to its former position of successful operation and solvency. 10 Presently, the applicable law on rehabilitation
petitions filed by corporations, partnerships or associations, 11 including rehabilitation cases transferred from the
Securities and Exchange Commission to the RTCs pursuant to Republic Act No. 8799 or the Securities Regulation Code,
12 is the Interim Rules of Procedure on Corporate Rehabilitation (2000). SAEHaC
Under the Interim Rules, the RTC, within five (5) days from the filing of the petition for rehabilitation and after finding
that the petition is sufficient in form and substance, shall issue a Stay Order appointing a Rehabilitation Receiver,
suspending enforcement of all claims, prohibiting transfers or encumbrances of the debtor's properties, prohibiting
payment of outstanding liabilities, and prohibiting the withholding of supply of goods and services from the debtor. 13
Any transfer of property or any other conveyance, sale, payment, or agreement made in violation of the Stay Order or in
violation of the Rules may be declared void by the court upon motion or motu proprio. 14
Further, the Stay Order is effective both against secure and unsecured creditors. This is in harmony with the principle of
"equality is equity" first enunciated in Alemar's Sibal & Sons, Inc. v. Elbinias, 15 thus:
During rehabilitation receivership, the assets are held in trust for the equal benefit of all creditors
to preclude one from obtaining an advantage or preference over another by the expediency of an
attachment, execution or otherwise. For what would prevent an alert creditor, upon learning of the
receivership, from rushing posthaste to the courts to secure judgments for the satisfaction of its
claims to the prejudice of the less alert creditors.
As between creditors, the key phrase is "equality is equity." When a corporation threatened by
bankruptcy is taken over by a receiver, all the creditors should stand on an equal footing. Not
anyone of them should be given any preference by paying one or some of them ahead of the others.
This is precisely the reason for the suspension of all pending claims against the corporation under
receivership. Instead of creditors vexing the courts with suits against the distressed firm, they are
directed to file their claims with the receiver who is a duly appointed officer of the SEC. (Emphasis
supplied)
Nevertheless, the suspension of the enforcement of all claims against the corporation is subject to the rule that it shall
commence only from the time the Rehabilitation Receiver is appointed. Thus, in Rizal Commercial Banking Corporation v.
Intermediate Appellate Court, 16 the Court upheld the right of RCBC to extrajudicially foreclose the mortgage on some of
BF Homes' properties, and reinstated the trial court's judgment ordering the sheriff to execute and deliver to RCBC the
certificate of auction sale involving the properties. The Court vacated its previous Decision rendered on September 14,
1992 in the same case, finding that RCBC can rightfully move for the extrajudicial foreclosure of the mortgage since it
was done on October 16, 1984, while the management committee was appointed only on March 18, 1985. The Court also
took note of the SEC's denial of the petitioner's consolidated motion to cite the sheriff and RCBC for contempt and to
annul the auction proceedings and sale.
In this case, respondent bank instituted the foreclosure proceedings against petitioner's properties on March 13, 2002
and a Certificate of Sale at Public Auction was issued on May 6, 2002, with respondent bank as the highest bidder. The
mortgage on petitioner's chattels was likewise foreclosed and the Certificate of Sale was issued on May 14, 2002. It also
appears that titles over the properties have already been transferred to respondent bank. 17
On the other hand, the petition for corporate rehabilitation was filed only on August 14, 2002 and the Rehabilitation
Receiver appointed on August 20, 2002. Respondent bank, therefore, acted within its prerogatives when it foreclosed and
bought the property, and had title transferred to it since it was made prior to the appointment of a rehabilitation receiver.
AacSTE
The fact that there is a pending case for the annulment of the foreclosure proceedings and auction sales 18 is of no
moment. Until a court of competent jurisdiction, which in this case is the RTC of Dumangas, Iloilo, Branch 68, annuls the
foreclosure sale of the properties involved, petitioner is bereft of a valid title over the properties. 19 In fact, it is the trial
court's ministerial duty to grant a possessory writ over the properties. 20
Consequently, the CA was correct in upholding the RTC's dismissal of the petition for rehabilitation in view of the fact
that the titles to petitioner's properties have already passed on to respondent bank and petitioner has no more assets to
speak of, specially since petitioner does not dispute the fact that the properties which were foreclosed by respondent
bank comprise the bulk, if not the entirety, of its assets.
It should be stressed that the Interim Rules was enacted to provide for a summary and non-adversarial rehabilitation
proceedings. 21 This is in consonance with the commercial nature of a rehabilitation case, which is aimed to be resolved
expeditiously for the benefit of all the parties concerned and the economy in general.
As provided in the Interim Rules, the basic procedure is as follows:
(1)The petition is filed with the appropriate Regional Trial Court; 22
(2)If the petition is found to be sufficient in form and substance, the trial court shall issue a Stay
Order, which shall provide, among others, for the appointment of a Rehabilitation Receiver; the
fixing of the initial hearing on the petition; a directive to the petitioner to publish the Order in a
newspaper of general circulation in the Philippines once a week for two (2) consecutive weeks; and
a directive to all creditors and all interested parties (including the Securities and Exchange
Commission) to file and serve on the debtor a verified comment on or opposition to the petition,
with supporting affidavits and documents. 23

3)Publication of the Stay Order;
4)Initial hearing on any matter relating to the petition or on any comment and/or opposition filed in
connection therewith. If the trial court is satisfied that there is merit in the petition, it shall give due
course to the petition; 24
5)Referral for evaluation of the rehabilitation plan to the rehabilitation receiver who shall submit his
recommendations to the court; 25
6)Modifications or revisions of the rehabilitation plan as necessary; 26
7)Submission of final rehabilitation plan to the trial court for approval; 27
8)Approval/disapproval of rehabilitation plan by the trial court; 28
In the present case, the petition for rehabilitation did not run its full course but was dismissed by the RTC after due
consideration of the pleadings filed before it. On this score, the RTC cannot be faulted for its summary dismissal, as it is
tantamount to a finding that there is no merit to the petition. This is in accord with the trial court's authority to give due
course to the petition or not under Rule 4, Section 9 of the Interim Rules. Letting the petition go through the process only
to be dismissed later on because there are no assets to be conserved will not only defeat the reason for the rules but will
also be a waste of the trial court's time and resources.
The CA also correctly ruled that petitioner availed of the wrong remedy when it filed a special civil action for certiorari
with the CA under Rule 65 of the Rules of Court.
Certiorari is a remedy for the correction of errors of jurisdiction, not errors of judgment. It is an original and independent
action that was not part of the trial that had resulted in the rendition of the judgment or order complained of. More
importantly, since the issue is jurisdiction, an original action for certiorari may be directed against an interlocutory order
of the lower court prior to an appeal from the judgment; or where there is no appeal or any plain, speedy or adequate
remedy. A petition for certiorari should be filed not later than sixty days from the notice of judgment, order, or
resolution, and a motion for reconsideration is generally required prior to the filing of a petition for certiorari, in order to
afford the tribunal an opportunity to correct the alleged errors. 29
The Omnibus Order dated January 13, 2003 issued by the RTC is a final order since it terminated the proceedings and
dismissed the case before the trial court; it leaves nothing more to be done. As such, petitioner's recourse is to file an
appeal from the Omnibus Order.
In this regard, A.M. No. 00-8-10-SC promulgated by the Court on September 4, 2001 provides that a petition for
rehabilitation is considered a special proceeding given that it seeks to establish the status of a party or a particular fact.
Accordingly, the period of appeal provided in paragraph 19 (b) of the Interim Rules Relative to the Implementation of
Batas Pambansa Blg. 129 for special proceedings shall apply. Under said paragraph 19 (b), the period of appeal shall be
thirty (30) days, a record of appeal being required.
However, it should be noted that the Court issued A.M. No. 04-9-07-SC on September 14, 2004, clarifying the proper
mode of appeal in cases involving corporate rehabilitation and intra-corporate controversies. It is provided therein that
all decisions and final orders in cases falling under the Interim Rules of Corporate Rehabilitation and the Interim Rules of
Procedure Governing Intra-Corporate Controversies under Republic Act No. 8799 shall be appealed to the CA through a
petition for review under Rule 43 of the Rules of Court to be filed within fifteen (15) days from notice of the decision or
final order of the RTC. CIaDTE
In any event, as previously stated, since what petitioner filed was a petition for certiorari under Rule 65 of the Rules, the
CA rightly dismissed the petition and affirmed the assailed Orders.
WHEREFORE, the petition is DENIED for lack of merit.
Costs against petitioner.
SO ORDERED.
Ynares-Santiago, Callejo, Sr. and Chico-Nazario, JJ., concur.

Lee, et al. v. Court of Appeals, G.R. No. 137914, December 4, 2002, 393 SCRA 397

SYNOPSIS
Two separate informations for estafa were filed before the trial court against petitioners Johnson Lee and Sonny Moreno,
President and Secretary of Neugene Marketing, Inc., (NMI) for allegedly misappropriating the corporate funds.
Petitioners moved to suspend the proceedings on the ground that the prejudicial question in a Securities and Exchange
Commission (SEC) case pending before the Supreme Court docketed as G.R. No. 112941 would determine the petitioners'
guilt in the criminal cases, thereby necessitating the suspension of the same. The trial court denied the motion and
scheduled the arraignment of the petitioners. When petitioner Lee failed to appear on the day of the arraignment, the trial
court issued an order directing the issuance of a warrant of arrest against him and fixing an additional bond. Hence,
petitioners filed a petition for certiorari before the Court of Appeals. The appellate court, however, denied the petition.
Hence, this Petition for Review on Certiorari. CSaHDT
In affirming the decision of the Court of Appeals, the Supreme Court held that there was no prejudicial question that
would call for the suspension or dismissal of the criminal case. The case before the SEC was totally different from the
issues raised in the criminal action. The case before the SEC dealt with the validity of the voluntary dissolution of NMI
and the designation of Atty. Reyes as trustee, while the criminal cases relate to the misappropriation of money by the
petitioners. In the SEC case, the disputing parties were the stockholders without NMI's involvement; on the other hand,
NMI is the complainant in the criminal cases. Moreover, any decision by the SEC as to the validity of the dissolution will
not affect NMI's ownership over the subject money.
SYLLABUS
1.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; MAY NOT BE AVAILED OF WHERE IT IS NOT SHOWN
THAT THE RESPONDENT COURT LACKED OR EXCEEDED ITS JURISDICTION OVER THE CASE. We have
consistently ruled that certiorari lies only where it is clearly shown that there is a patent and gross abuse of discretion
amounting to an evasion of positive duty or 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. Certiorari may not be availed of where it is not shown that the respondent court lacked or exceeded
its jurisdiction over the case, even if its findings are not correct. Its questioned acts would at most constitute errors of
law and not abuse of discretion correctible by certiorari.
2.ID.; ID.; ID.; WILL NOT BE ISSUED TO CORRECT ERRORS OF PROCEDURE OR MISTAKES IN THE COURT'S
FINDINGS AND CONCLUSIONS. Certiorari will issue only to correct errors of jurisdiction and not to correct errors of
procedure or mistakes in the court's findings and conclusions. An interlocutory order may be assailed by certiorari or
prohibition only when it is shown that the court acted without or in excess of jurisdiction or with grave abuse of
discretion. However, this Court generally frowns upon this remedial measure as regards interlocutory orders. To tolerate
the practice of allowing interlocutory orders to be the subject of review by certiorari will not only delay the
administration of justice but will also unduly burden the courts.
3.ID.; ID.; ID.; MUST BE BASED ON JURISDICTIONAL GROUNDS; FACTUAL CONTENTIONS PRESENTED BY THE
PARTIES THAT MIGHT ABSOLVE THEM FROM CRIMINAL LIABILITY ARE INAPPROPRIATE FOR CONSIDERATION IN
PETITION FOR CERTIORARI; CASE AT BAR. We find that the allegations of the petitioners are not sufficient grounds
to qualify as abuse of discretion warranting the issuance of a writ of certiorari. The petitioners present factual
contentions to absolve them from the criminal charge of estafa. The criminal cases concern corporate funds petitioners
allegedly received as payment for plastic bought by Victorias Milling Corporation from NMI. They refused to turn over
the money to the trustee after NMI's dissolution on the ground that they were keeping the money for the protection of
the corporation itself. Thus, the elements of misappropriation and damage are absent. They argue that there is no proof
that, as officers of the corporation, they converted the said amount for their own personal benefit. They likewise claim
that they already turned the money over to the majority stockholder of the defunct corporation. Clearly, the said
allegations are defenses that must be presented as evidence in the hearing of the criminal cases. They are inappropriate
for consideration in a petition for certiorari before the appellate court inasmuch as they do not affect the jurisdiction of
the trial court hearing the said criminal cases but instead are defenses that might absolve them from criminal liability. A
petition for certiorari must be based on jurisdictional grounds because, as long as the respondent court acted with
jurisdiction, any error committed by it in the exercise thereof will amount to nothing more than an error of judgment
which can be reviewed or corrected on appeal.
4.ID.; ID.; ID.; CONSIDERED PREMATURE WHERE THERE ARE OTHER PLAIN AND ADEQUATE REMEDIES AT LAW
AVAILABLE TO THE PARTIES. Moreover, the petition for certiorari before the Court of Appeals was premature for
the reason that there were other plain and adequate remedies at law available to the petitioners. Under Section 3 (a) of
Rule 117 of the Revised Rules of Criminal Procedure, the accused can move to quash the information on the ground that
the facts do not constitute an offense. There is no showing that the petitioners, as the accused in the criminal cases,
ever filed motions to quash the subject informations or that the same were denied. It cannot then be said that the lower
court acted without or in excess of jurisdiction or with grave abuse of discretion to justify recourse to the extraordinary
remedy of certiorari or prohibition.
5.ID.; ID.; ID.; DENIAL OF MOTION TO QUASH NOT PROPER SUBJECT THEREOF. But it must be stressed that, even
if petitioners did file motions to quash, the denial thereof would not have automatically given rise to a cause of action
under Rule 65 of the Rules of Court. The general rule is that, where a motion to quash is denied, the remedy is not
certiorari but to go to trial without prejudice to reiterating the special defenses involved in said motion, and if, after trial
on the merits an adverse decision is rendered, to appeal therefrom in the manner authorized by law. And, even in the
exceptional case where such denial may be the subject of a special civil action for certiorari, a motion for
reconsideration must first be filed to give the trial court an opportunity to correct its error. Finally, even if a motion for
reconsideration were filed and denied, the remedy under Rule 65 would still be unavailable absent any showing of the
grounds provided for in Section l thereof. The petition before the Court of Appeals, subject of this appeal, did not allege
any of such grounds.
6.ID.; APPEALS; PETITION FOR REVIEW; ALLOWS ONLY QUESTIONS OF LAW. Furthermore, a petition for review
under Rule 45 of the 1997 Revised Rules of Civil Procedure before this Court only allows questions of law. Inasmuch as
petitioners' defenses alleging circumstances that negate misappropriation definitely require appreciation of facts, i.e.,
testimonial and documentary evidence, this Court cannot assess the merit of the said claims.
7.ID.; CRIMINAL PROCEDURE; PREJUDICIAL QUESTION; NOT PRESENT IN CASE AT BAR. We also agree with the
appellate court in ruling that there is no prejudicial question that would call for the suspension (or even dismissal) of the
case. We also agree with then Undersecretary Bello's resolution that the case before the SEC questioning the validity of
the dissolution and the appointment of a trustee is totally different from the issues raised in the criminal action. The case
before the SEC deals with the validity of the voluntary dissolution of NMI while the criminal cases relate to the
misappropriation of money by the petitioners. In the SEC case, the disputing parties are the stockholders without NMI's
involvement; on the other hand, NMI is the complainant, in the criminal cases. Moreover, any decision by the SEC as to
the validity of the dissolution will not affect NMI's ownership over the subject money.
8.ID.; COURTS; REGIONAL TRIAL COURTS; HAVE JURISDICTION TO RULE ON INTRA-CORPORATE ISSUES. We
likewise find no merit in the petitioners' contention that the criminal cases should be dismissed on the ground that the
issue in the said cases involves an intra-corporate issue that is within the exclusive jurisdiction of the Securities and
Exchange Commission. Aside from the fact that estafa and intra-corporate disputes are two entirely different matters
with entirely different elements, the SEC is not a trier of a criminal case like estafa. But even assuming that the case
involves only intra-corporate issues, Regional Trial Courts are now competent to rule on said matters. The quasi-judicial
jurisdiction of the SEC has been transferred to the RTCs pursuant to Section 5.2 of Republic Act No. 8799, otherwise
known as The Securities Regulation Code of 2001. Congress recognized that intra-corporate disputes are not that much
of a technical matter that requires the competence of a specialized agency like the SEC. Thus, even an ordinary trial
court can resolve the alleged corporate disputes in the case at bar. AHECcT
D E C I S I O N
CORONA, J p:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure of the decision 1 dated
August 24, 1998 of the Court of Appeals 2 dismissing the petition for certiorari of the orders dated June 27, 1996 3 and
June 28, 1996, respectively, of the Regional Trial Court, Branch 50, Bacolod City in Criminal Cases Nos. 10010 and
10011. ScAHTI

The undisputed facts as found by the appellate court are as follows:
Petitioners Johnson Lee and Sonny Moreno were charged by Neugene Marketing, Inc. (NMI, for brevity), through its
designated trustee, Atty. Roger Z. Reyes, with the crime of estafa with abuse of confidence before the Office of the City
Prosecutor, Bacolod City. On December 14, 1988, the City Prosecutor issued a resolution absolving the petitioners from
criminal liability due to lack of malice on the part of the petitioners in retaining the money of NMI. The appeal by NMI to
the Department of Justice (DOJ, for brevity) was denied on the ground that the petitioners did not misappropriate
corporate funds.
NMI then filed a motion for reconsideration of the DOJ resolution. On January 4, 1991, the DOJ, through then
Undersecretary Silvestre Bello III, ordered the reinvestigation of the case. Upon recommendation of City Prosecutor
Augusto C. Rallos on March 9, 1991 to charge the petitioners with estafa, Criminal Case Nos. 10010 and 10011 were
filed.
The petitioners, on May 4 and 21 of 1992, filed at the DOJ petitions for reinvestigation of the cases but the same were
denied on the ground that the trial court's permission should first be secured before reinvestigation can be conducted in
accordance with this Court's ruling in Crespo vs. Mogul. 4 Petitioners then filed a motion to suspend the proceedings
before the trial court on the ground that there was a need for reinvestigation and there was a prejudicial question in a
Securities Exchange Commission (SEC, for brevity) case pending before this Court docketed as G. R. No. 112941. The
SEC case questions the validity of the dissolution of NMI and the designation of Atty. Reyes as trustee.
Initially, the trial court ruled in favor of the petitioners and ordered the DOJ to conduct a reinvestigation. But, on motion
for reconsideration by the prosecutor, the trial court reversed itself, set aside the previous order and scheduled the
arraignment of the petitioners. On January 19, 1996, the petitioners filed another motion to suspend the proceedings,
based on the same ground that the prejudicial question in the SEC case would determine the petitioners' guilt in the
criminal cases, thereby necessitating the suspension of the same.
On June 27, 1996, the trial court rendered the first assailed order denying petitioners' motion to suspend the
proceedings. Arraignment was scheduled on June 28, 1996. But on the day of the arraignment, petitioner Lee failed to
appear. The trial court then issued the second assailed order, directing the issuance of a warrant of arrest and fixing an
additional bond in the amount of P30,000 by petitioner Lee.
The petitioners filed before the Court of Appeals a petition for certiorari under Rule 65 of the Rules of Court, questioning
the said orders of the trial court. On August 24, 1998, the appellate court rendered a decision, the dispositive portion of
which reads:
"WHEREFORE, foregoing considered, the present petition is hereby DENIED. Public respondent is
hereby Ordered to proceed with deliberate speed in the hearing and trial of Criminal Cases Nos.
10010 and 10011.
"SO ORDERED." 5
In dismissing the said petition, the appellate court ruled that:
"In the criminal cases, the question is whether petitioners misappropriated the P1,500,150.00
corporate funds which was paid to the private respondent through petitioners. It is alleged in the
criminal complaint that upon demand, petitioners failed to deliver the same.
"In G.R. No. 112941 before the Supreme Court, the validity of the dissolution of the Nuegene (sic)
Corporation is in issue.
"With these in mind, We do not see how the resolution of the issue in the civil case would
necessarily be determinative of petitioners' criminal liability for Estafa.
"It is to be emphasized that even if the dissolution of the Neugene Corporation is to be declared
void and petitioners are still to be considered President and Secretary of Nuegene (sic) Corporation,
still petitioners may be found liable for the misappropriation of the corporate funds. The fact that
petitioners are the President and Secretary of the Nuegene (sic) Corporation does not mean that
they could not be held liable for Estafa with Abuse of Confidence, if they did in fact misappropriate
the corporate fund for personal use. The crime of Estafa is committed when a person shall defraud
another by any means mentioned in Article 315 of the Revised Penal Code. This is true whether or
not such person is an officer of the corporation defrauded.
"Thus, the issue in G.R. No 11241 does not in anyway pose a prejudicial question to the criminal
cases for Estafa against petitioners. Thus, there is no justifiable reason why the proceedings in
Criminal Cases No. 10010 and 10011 should be suspended. TcaAID
"xxx xxx xxx" 6
Hence, this appeal based on the following assignment of errors:
"5.1. PUBLIC RESPONDENT COURT COMMITTED A GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN NOT ORDERING THE DISMISSAL OF
CRIMINAL CASES NOS. 10010 AND 10011 PENDING BEFORE BRANCH 50 OF THE REGIONAL
TRIAL COURT OF BACOLOD CITY IN VIEW OF THE FOLLOWING:
"5.1.1. THE ALLEGATIONS IN THE COMPLAINT SHOW THAT THE ALLEGED ACT OF
PETITIONERS HEREIN WAS ONLY AN ATTEMPT TO COMMIT THE CRIME OF ESTAFA
IN THAT THE ACCUSED REFUSED TO TURN OVER CERTAIN SUMS OF MONEY, WHICH
COMPLAINANT CONSIDERED AS EVIDENCE OF 'CRIMINAL INTENT TO APPROPRIATE'
AND THERE IS NO CRIME OF ATTEMPTED ESTAFA UNDER ARTICLE 315,
PARAGRAPH 1 (B) OF THE REVISED PENAL CODE.
"5.1.2. EVEN ASSUMING THAT A 'CRIMINAL INTENT TO APPROPRIATE' IS ESTAFA,
PUBLIC RESPONDENT SHOULD HAVE ORDERED CRIMINAL CASES NOS. 10010 AND
10011 PENDING BEFORE BRANCH 50 OF THE BACOLOD CITY REGIONAL TRIAL
COURT DISMISSED AT LEAST PROVISIONALLY UPON SHOWING THAT THE
APPOINTMENT OF COMPLAINANT LAW FIRM AS TRUSTEE IS IN ISSUE BEFORE THE
SECURITIES AND EXCHANGE COMMISSION IN SEC CASE NO. 3318;
"5.1.3 ASSUMING FURTHER THAT A 'CRIMINAL INTENT TO APPROPRIATE' IS
ESTAFA, PUBLIC RESPONDENT COURT SHOULD HAVE DISMISSED NONETHELESS
THE SAID CRIMINAL CASES, AT LEAST PROVISIONALLY ALSO, UPON SHOWING THAT
IT INVOLVED AN INTRA-CORPORATE ISSUE, WHICH IS WITHIN THE EXCLUSIVE,
SOLE AND ORIGINAL JURISDICTION OF THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE CASE LAW IN DIONISIO V. CFI, (124 SCRA 222);
"5.1.4. ASSUMING FURTHERMORE THAT A 'CRIMINAL INTENT TO APPROPRIATE' IS
ESTAFA, PUBLIC RESPONDENT COURT SHOULD HAVE LIKEWISE ORDERED THE
DISMISSAL OF SAID CRIMINAL CASES BECAUSE THE NUMEROUS TWISTS AND
TURNS THAT THEY HAD GONE THROUGH DURING THE PRELIMINARY STAGE OF THE
PROCEEDING, INCLUDING THE RE-OPENING OF THE CASES AFTER THEY HAD BEEN
DISMISSED A YEAR OR SO AGO, VIOLATED PETITIONERS' RIGHT TO DUE PROCESS
AND EQUAL PROTECTION OF LAW." 7
We deny the petition.
In the case at bar, we are being asked to review the decision of the appellate court which dismissed the petition for
certiorari under Rule 65.
We have consistently ruled that certiorari lies only where it is clearly shown that there is a patent and gross abuse of
discretion amounting to an evasion of positive duty or 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. 8 Certiorari may not be availed of where it is not shown that the respondent court lacked or exceeded
its jurisdiction over the case, even if its findings are not correct. Its questioned acts would at most constitute errors of
law and not abuse of discretion correctible by certiorari.
In other words, certiorari will issue only to correct errors of jurisdiction and not to correct errors of procedure or
mistakes in the court's findings and conclusions. An interlocutory order may be assailed by certiorari or prohibition only
when it is shown that the court acted without or in excess of jurisdiction or with grave abuse of discretion. However, this
Court generally frowns upon this remedial measure as regards interlocutory orders. To tolerate the practice of allowing
interlocutory orders to be the subject of review by certiorari will not only delay the administration of justice but will also
unduly burden the courts. 9
We find that the allegations of the petitioners are not sufficient grounds to qualify as abuse of discretion warranting the
issuance of a writ of certiorari. The petitioners present factual contentions to absolve them from the criminal charge of
estafa. The criminal cases concern corporate funds petitioners allegedly received as payment for plastic bought by
Victorias Milling Corporation from NMI. They refused to turn over the money to the trustee after NMI's dissolution on
the ground that they were keeping the money for the protection of the corporation itself. Thus, the elements of
misappropriation and damage are absent. They argue that there is no proof that, as officers of the corporation, they
converted the said amount for their own personal benefit. They likewise claim that they already turned the money over
to the majority stockholder of the defunct corporation.
Clearly, the said allegations are defenses that must be presented as evidence in the hearing of the criminal cases. They
are inappropriate for consideration in a petition for certiorari before the appellate court inasmuch as they do not affect
the jurisdiction of the trial court hearing the said criminal cases but instead are defenses that might absolve them from
criminal liability. A petition for certiorari must be based on jurisdictional grounds because, as long as the respondent
court acted with jurisdiction, any error committed by it in the exercise thereof will amount to nothing more than an error
of judgment which can be reviewed or corrected on appeal. 10
Moreover, the petition for certiorari before the Court of Appeals was premature for the reason that there were other
plain and adequate remedies at law available to the petitioners. Under Section 3 (a) of Rule 117 of the Revised Rules of
Criminal Procedure, the accused can move to quash the information on the ground that the facts do not constitute an
offense. There is no showing that the petitioners, as the accused in the criminal cases, ever filed motions to quash the
subject informations or that the same were denied. It cannot then be said that the lower court acted without or in excess
of jurisdiction or with grave abuse of discretion to justify recourse to the extraordinary remedy of certiorari or
prohibition.

But it must be stressed that, even if petitioners did file motions to quash, the denial thereof would not have automatically
given rise to a cause of action under Rule 65 of the Rules of Court. The general rule is that, where a motion to quash is
denied, the remedy is not certiorari but to go to trial without prejudice to reiterating the special defenses involved in said
motion, and if, after trial on the merits an adverse decision is rendered, to appeal therefrom in the manner authorized by
law. And, even in the exceptional case where such denial may be the subject of a special civil action for certiorari, a
motion for reconsideration must first be filed to give the trial court an opportunity to correct its error. Finally, even if a
motion for reconsideration were filed and denied, the remedy under Rule 65 would still be unavailable absent any
showing of the grounds provided for in Section 1 thereof. 11 The petition before the Court of Appeals, subject of this
appeal, did not allege any of such grounds.
Furthermore, a petition for review under Rule 45 of the 1997 Revised Rules of Civil Procedure before this Court only
allows questions of law. 12 Inasmuch as petitioners' defenses alleging circumstances that negate misappropriation
definitely require appreciation of facts, i.e., testimonial and documentary evidence, this Court cannot assess the merit of
the said claims.
Regarding the alleged infringement of their constitutional rights, the petitioners argue that their right to procedural due
process and equal protection of laws was violated when then Undersecretary Bello ordered the reinvestigation of the
criminal charges against them despite (1) the previous dismissal of the same and (2) the lack of motions for
reconsideration by the private complainant to the resolution initially dismissing the said charges. They also contend that
the long delay in the resolution of the proceedings at the DOJ and the trial court violated their constitutional right to a
speedy disposition of their cases. HEScID
We cannot fault the DOJ for entertaining and eventually finding a prima facie case for estafa against the petitioners
despite the previous dismissals of the complaint. The issue in the criminal complaint before the DOJ involved intricate
questions of law and fact. Sadly for the petitioners, the DOJ resolved the cases against them. Substantially, the DOJ
followed procedure in reaching its final conclusion on the case. Then Undersecretary Bello adequately justified his
conclusion that a prima facie case for estafa existed notwithstanding the unproven allegations that the concerned officers
of DOJ were motivated by malice against petitioners.
With respect to the claim that the petitioners' right to a speedy disposition of their cases was violated, we herein quote
the Solicitor General's comment (uncontroverted by the petitioners) to refute their allegation that delay attended the
investigation and the criminal proceedings:
"Undaunted, petitioners filed a series of motions, both repetitious and dilatory, as shown by the
following table depicted by private complainant in his Preliminary Comment dated August 5, 1996,
to wit:
I.MOTIONS TO DISQUALIFY DATE
(1)Motion to Disqualify Private ProsecutorApril 22, 1991
(2)Motion to Disqualify Private ProsecutorJan. 30, 1992
(3)Motion to Disqualify Law FirmFeb. 3, 1992
(4)Motion to Disqualify Private ProsecutorMay 25, 1995
(5)Urgent Motion to Disqualify Private ProsecutorNov. 24, 1995
(6)Urgent Motion to Disqualify Private ProsecutorNov. 27, 1995
II.MOTIONS FOR REINVESTIGATION
(7)Motion for ReinvestigationJuly 26, 1991
(8)Motion for ReinvestigationJan. 30, 1992
(9)Motion for Leave to Conduct ComprehensiveOct. 5, 1992
Review/Reinvestigation
"This motion was already resolved by the previous presiding Judge, Emma Labayen, but was
surreptitiously raised again before the Hon. Judge Roberto S. Chiongson.
III.MOTION TO QUASH/DISMISS/
SUSPEND PROCEEDINGS
(11)Consolidated Motion to QuashSept. 25, 1991
(12)Motion to Suspend ProceedingsJan. 30, 1992
(13)Motion to Dismiss/Suspend ProceedingsMay 29, 1992
(14)Urgent Motion to Qualify ProvisionalMay 3, 1993
Dismissal
(15)Motion to suspend Further ProceedingsJune 19, 1996
VI.MOTIONS TO RECALL WARRANT TO ARREST
(16)Urgent Motion to Expunge and RecallApril 19, 1991
(17)Urgent Motion to Expunge and RecallNov. 12, 1991
Arrest
(18)Motion to ExpungeJune 27, 1993
(19)Urgent Motion to Recall Order of ArrestSept. 27, 1991
"5.The accused also filed several Motions to Inhibit the Judges who saw through the ploy of the
accused, including City Prosecutors;
"6.Behind the backdrop of the nine (9) motions to quash, as well as reinvestigations involving the
same issues concerning probable cause are:
"a.a series of five (5) motions and or letters to reinvestigation, filed before the Department
of Justice (see attached as ANNEX 'A' is a copy of the ruling of Acting Justice Secretary
Eduardo G. Montenegro, dated April 23, 1993), when the case was still under preliminary
investigation.
"b.Amended Petition docketed as SEC CASE 3318, with prayers to suspend the criminal
proceedings a quo, copies of pages 1, 16 and 18 are hereto attached as ANNEX 'B'. This is
the forerunner of G.R. No. 112941 now pending before the Supreme Court.
"c.A Special Civil Action for Certiorari (Petition for Certiorari and Prohibition), involving
the same issues with a prayer to suspend/restrain the proceedings filed before the
Regional Trial Court in Bacolod City, docketed as Special Civil Case No. 6469 way back in
1991 (Order dated April 29, 1991, hereto attached as ANNEX 'C').
"d.This was followed by the filing of CA-GR. SP No. 27370, a case for certiorari and
injunction with another prayer to restrain the proceedings (Resolution dated July 29, 1992,
hereto attached as ANNEX 'D').
(pp. 2-4, Preliminary Comment)
"It is important to stress that all the above enumerated petitions, motions and cases have been
DENIED OR DISMISSED." 13
Clearly, it was the petitioners themselves who principally dragged and hindered the resolution of the criminal
investigation and trial for estafa. They thus have no reason to complain against the delay in the disposition of their cases.
TDcEaH
We also agree with the appellate court in ruling that there is no prejudicial question that would call for the suspension (or
even dismissal) of the case. The appellate court correctly held that:
". . . . The fact that petitioners are the President and Secretary of the Nuegene (sic) Corporation
does not mean that they could not be held liable for Estafa with Abuse of Confidence, if they did in
fact misappropriate the corporate fund for personal use. The crime of Estafa is committed when a
person shall defraud another by any means mentioned in Article 315 of the Revised Penal Code.
This is true whether or not such person is an officer of the corporation defrauded." 14
We also agree with then Undersecretary Bello's resolution that the case before the SEC questioning the validity of the
dissolution and the appointment of a trustee is totally different from the issues raised in the criminal action. The case
before the SEC deals with the validity of the voluntary dissolution of NMI while the criminal cases relate to the
misappropriation of money by the petitioners. In the SEC case, the disputing parties are the stockholders without NMI's
involvement; on the other hand, NMI is the complainant, in the criminal cases. Moreover, any decision by the SEC as to
the validity of the dissolution will not affect NMI's ownership over the subject money. 15
For the above-mentioned reasons, we likewise find no merit in the petitioners' contention that the criminal cases should
be dismissed on the ground that the issue in the said cases involves an intra-corporate issue that is within the exclusive
jurisdiction of the Securities and Exchange Commission. Aside from the fact that estafa and intra-corporate disputes are
two entirely different matters with entirely different elements, the SEC is not a trier of a criminal case like estafa. But
even assuming that the case involves only intra-corporate issues, Regional Trial Courts are now competent to rule on
said matters. The quasi-judicial jurisdiction of the SEC has been transferred to the RTCs pursuant to Section 5.2 of
Republic Act No. 8799, otherwise known as The Securities Regulation Code of 2001. Congress recognized that intra-
corporate disputes are not that much of a technical matter that requires the competence of a specialized agency like the
SEC. Thus, even an ordinary trial court can resolve the alleged corporate disputes in the case at bar.
WHEREFORE, premises considered, the appealed decision of the Court of Appeals is hereby AFFIRMED. The Regional
Trial Court is hereby ordered to conduct the arraignment with no further delay. Costs against the petitioners. ASICDH
SO ORDERED.
Panganiban, Sandoval-Gutierrez and Carpio-Morales, JJ., concur.
Puno, J., is on official leave.

Microsoft Corporation v. Best Deal Computer Center, G.R. No. 148029, September 24, 2002, 389 SCRA 615
SYNOPSIS
Microsoft Corporation, a US-based corporation, filed with the Regional Trial Court, Branch 255 of Las Pias City, a
complaint for Injunction and Damages with Ex Parte Application for Temporary Restraining Order and the Provisional
Measure of Preservation of Evidence against Best Deal Computer Center Corporation, Perfect Deal Corporation and
Marcos C. Yuen doing business as Perfect Byte Computer Center. It also applied for the issuance of an ex parte order,
for the seizure and impounding of relevant evidence that can be or may be found at defendants' business premises.
However, the trial court denied said application for an ex parse order, ratiocinating that the Intellectual Property Code
does not expressly allow its issuance and that it partook of a search and seizure order available only in criminal cases.
Thus, Microsoft Corporation filed directly to this Court a petition for certiorari under Rule 65 of the Revised Rules of
Court.
The Court ruled that petitioner failed to point out specific instances where grave abuse of discretion was allegedly
committed. It was never shown how respondent tribunal supposedly exercised its power in a despotic, capricious or
whimsical manner. There being no hint of grave abuse of discretion that can be attributed to the lower court, it could be
safely held that the assailed orders were rendered in the proper exercise of its jurisdiction.
Moreover, the quest for speedy justice should not be used as a device to trample upon other equally laudable policies of
this Court. Petitioner's direct resort to this court in the guise of speedy justice was in utter disregard of the hierarchy of
courts. This Court found no exceptional or compelling reason not to observe the hierarchy of courts. Consequently, the
instant petition was dismissed. IHEaAc
SYLLABUS
1.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; MUST BE BASED ON JURISDICTIONAL GROUNDS. For
certiorari to lie, it must be shown that the tribunal, board or officer exercising judicial functions acted without or in
excess of jurisdiction or with grave abuse of discretion amounting to lack or excess of jurisdiction, and that there is no
appeal nor any plain, speedy and adequate remedy in the ordinary course of law for the purpose of amending or nullifying
the proceeding. The sole office of the writ of certiorari is the correction of errors of jurisdiction including the
commission of grave abuse of discretion amounting to lack of jurisdiction, and does not include correction of public
respondent's evaluation of the evidence and factual findings thereon. The petition for certiorari must be based on
jurisdictional grounds because as long as the respondent acted with jurisdiction, any error committed by him or it in the
exercise thereof will amount to nothing more than an error of judgment which may be reviewed or corrected only by
appeal. Even an abuse of discretion is not sufficient by itself to justify the issuance of a writ of certiorari.
2.ID.; ID.; ID.; GRAVE ABUSE OF DISCRETION; ELUCIDATED. A special civil action for certiorari will prosper only if
grave abuse of discretion is manifested. For an abuse to be grave the power must be exercised in an arbitrary or
despotic manner by reason of passion or personal hostility. The abuse of discretion must be so patent and gross as to
amount to an evasion of a positive duty, or a virtual refusal to perform the duty enjoined or act in contemplation of law.
There is grave abuse of discretion when respondent acts in a capricious or whimsical manner in the exercise of its
judgment as to be equivalent to lack of jurisdiction.
3.ID.; ID.; ID.; ID.; NOT ESTABLISHED IN CASE AT BAR. Petitioner asserts that respondent trial court gravely
abused its discretion in denying its application for the issuance of an ex parte order. However, other than this bare
allegation, petitioner failed to point out specific instances where grave abuse of discretion was allegedly committed. It
was never shown how respondent tribunal supposedly exercised its power in a despotic, capricious or whimsical manner.
There being no hint of grave abuse of discretion that can be attributed to the lower court, hence, it could be safely held
that the assailed orders were rendered in the proper exercise of its jurisdiction.
4.ID.; ID.; ID.; NOT PROPER REMEDY FOR CORRECTION OF ERROR OF JUDGMENT. Even assuming that the orders
were erroneous, such error would merely be deemed as an error of judgment that cannot be remedied by certiorari. As
long as the respondent acted with jurisdiction, any error committed by him or it in the exercise thereof will amount to
nothing more than an error of judgment which may be reviewed or corrected only by appeal.
5.ID.; ID.; ID.; DISTINGUISHED FROM PETITION FOR REVIEW ON CERTIORARI. A petition for certiorari seeks to
correct errors of jurisdiction while a petition for review seeks to correct errors of judgment committed by the court.
Errors of judgment include errors of procedure or mistakes in the court's findings. Where a court has jurisdiction over
the person and subject matter, the decision on all other questions arising in the case is an exercise of that jurisdiction.
Consequently, all errors committed in the exercise of such jurisdiction are merely errors of judgment. Certiorari under
Rule 65 is a remedy designed for the correction of errors of jurisdiction and not errors of judgment. EDSHcT
6.ID.; CIVIL PROCEDURE; JURISDICTION; REGIONAL TRIAL COURT HAS JURISDICTION ON COMPLAINT FOR
INJUNCTION AND DAMAGES; CASE AT BAR. The court below acted within its jurisdiction when it took cognizance of
the complaint for injunction and damages filed by petitioner. Section 19, par. (8), BP Blg. 129, as amended, provides that
Regional Trial Courts in Metro Manila shall have exclusive original jurisdiction in all cases in which the demand,
exclusive of interest, damages of whatever kind, attorneys fees, costs or the value of the property in controversy
exceeds P200,000.00. In the complaint filed before the court a quo, petitioner averred that it incurred no less than
P750,000.00 in attorney's fees, investigation and litigation expenses and another P2,000,000.00 by way of moral
damages. Clearly, the above amounts fall within the jurisdiction of the Regional Trial Court. Also, the complaint was
properly lodged in the Regional Trial Court of Las Pias considering that one of the principal defendants was residing
thereat.
7.ID.; ID.; ID.; HIERARCHY OF COURTS; QUEST FOR SPEEDY JUSTICE SHOULD NOT BE USED AS DEVISE TO
DISREGARD HIERARCHY. The quest for speedy justice should not be used as a devise to trample upon other equally
laudable policies of this Court. Petitioner's direct resort to this Court in the guise of speedy justice was in utter disregard
of the hierarchy of courts. We find no exceptional or compelling reason not to observe the hierarchy of courts.
D E C I S I O N
BELLOSILLO, J p:
MICROSOFT CORPORATION assails the Order of Judge Florentino M. Alumbres, RTC-Br. 255, Las Pias City, dated 26
December 2001 in its Civil Case No. 00-0237 denying its application for an ex parte order for the seizure and
impounding of relevant and infringing evidence and the Order dated 1 March 2001 denying reconsideration thereof.
Petitioner is a US-based corporation. It is not doing business in the Philippines but has sued in the court below solely to
protect its intellectual property rights.
On 4 December 2000 petitioner filed a complaint for Injunction and Damages with Ex Parte Application for Temporary
Restraining Order and the Provisional Measure of Preservation of Evidence against Best Deal Computer Center
Corporation, Perfect Deal Corporation and Marcos C. Yuen doing business as Perfect Byte Computer Center. It alleged
that defendants without authority or license copied, reproduced, distributed, installed and/or loaded software programs
owned by Microsoft into computer units sold by them to their customers in violation of its intellectual property rights. It
prayed for the issuance of a writ of preliminary injunction to restrain and enjoin defendants from illegally reproducing,
selling and distributing unlicensed software programs. It also applied for the issuance of an ex parte order for the seizure
and impounding of relevant evidence that can be or may be found at defendants' business premises.
On 26 December 2000 the Las Pias trial court set petitioner's prayer for a temporary restraining order for hearing but
at the same time denied its application for an ex parte order ratiocinating that the Intellectual Property Code does not
expressly allow its issuance and that, in any case, the TRIPS (Trade-Related Aspects of Intellectual Property Rights)
AGREEMENT 1 cannot prevail over it. The court a quo also opined that petitioner's application partook of a search and
seizure order available only in criminal cases. Petitioner moved for reconsideration but the same was denied on 9
January 2001.
In the instant petition for certiorari under Rule 65 of the Revised Rules of Court petitioner submits that the court a quo
gravely abused its discretion amounting to lack or excess of jurisdiction when it ruled that the law does not allow an ex
parte provisional remedy of seizure and impounding of infringing evidence. It maintains that Sec. 216.2, Part IV, of RA
8293 2 authorizes such order. It concedes though that while RA 8293 does not expressly mention the provisional and ex
parte nature of the remedy, nonetheless, Art. 50 of the TRIPS Agreement amply supplies the deficiency.
Petitioner allegedly resorted to the instant recourse because it had no appeal or any plain, speedy and adequate remedy
in the ordinary course of law. It automatically invoked the jurisdiction of this Court supposedly because of the importance
of the issue involved. It bypassed the Court of Appeals on the premise that it would be useless to first seek recourse
thereat as the party aggrieved by the appellate court's ruling would nonetheless elevate the matter to this Court. By
then, petitioner surmised, the level of intellectual piracy would have worsened. Likewise, petitioner presumes that direct
resort to this Court is justified as the petition involves a pure question of law.

Will the extraordinary writ of certiorari lie? For certiorari to lie, it must be shown that the tribunal, board or officer
exercising judicial functions acted without or in excess of jurisdiction or with grave abuse of discretion amounting to lack
or excess of jurisdiction, and that there is no appeal nor any plain, speedy and adequate remedy in the ordinary course of
law for the purpose of amending or nullifying the proceeding. 3 The sole office of the writ of certiorari is the correction
of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack of jurisdiction, and does
not include correction of public respondent's evaluation of the evidence and factual findings thereon. 4
The petition for certiorari must be based on jurisdictional grounds because as long as the respondent acted with
jurisdiction, any error committed by him or it in the exercise thereof will amount to nothing more than an error of
judgment which may be reviewed or corrected only by appeal. Even an abuse of discretion is not sufficient by itself to
justify the issuance of a writ of certiorari. 5
We find that the court below acted within its jurisdiction when it took cognizance of the complaint for injunction and
damages filed by petitioner. Section 19, par. (8), BP Blg. 129, as amended, 6 provides that Regional Trial Courts in Metro
Manila shall have exclusive original jurisdiction in all cases in which the demand, exclusive of interest, damages of
whatever kind, attorneys fees, costs or the value of the property in controversy exceeds P200,000.00. In the complaint
filed before the court a quo, petitioner averred that it incurred no less than P750,000.00 in attorney's fees, investigation
and litigation expenses and another P2,000,000.00 by way of moral damages. Clearly, the above amounts fall within the
jurisdiction of the Regional Trial Court. Also, the complaint was properly lodged in the Regional Trial Court of Las Pias
considering that one of the principal defendants was residing thereat.
Having determined that the court below had jurisdiction to entertain the complaint filed by petitioner, we now resolve
whether respondent tribunal gravely abused its discretion amounting to lack or excess of jurisdiction in denying
petitioner's application for an ex parte order.
A special civil action for certiorari will prosper only if grave abuse of discretion is manifested. 7 For an abuse to be
grave the power must be exercised in an arbitrary or despotic manner by reason of passion or personal hostility. 8 The
abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty, or a virtual refusal to
perform the duty enjoined or act in contemplation of law. 9 There is grave abuse of discretion when respondent acts in a
capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction. 10
Petitioner asserts that respondent trial court gravely abused its discretion in denying its application for the issuance of
an ex parte order. However, other than this bare allegation, petitioner failed to point out specific instances where grave
abuse of discretion was allegedly committed. It was never shown how respondent tribunal supposedly exercised its
power in a despotic, capricious or whimsical manner. There being no hint of grave abuse of discretion that can be
attributed to the lower court, hence, it could be safely held that the assailed orders were rendered in the proper exercise
of its jurisdiction.
Significantly, even assuming that the orders were erroneous, such error would merely be deemed as an error of
judgment that cannot be remedied by certiorari. As long as the respondent acted with jurisdiction, any error committed
by him or it in the exercise thereof will amount to nothing more than an error of judgment which may be reviewed or
corrected only by appeal. 11 The distinction is clear: A petition for certiorari seeks to correct errors of jurisdiction while
a petition for review seeks to correct errors of judgment committed by the court. Errors of judgment include errors of
procedure or mistakes in the court's findings. Where a court has jurisdiction over the person and subject matter, the
decision on all other questions arising in the case is an exercise of that jurisdiction. Consequently, all errors committed
in the exercise of such jurisdiction are merely errors of judgment. 12 Certiorari under Rule 65 is a remedy designed for
the correction of errors of jurisdiction and not errors of judgment. 13 Petitioner's rights can be more appropriately
addressed in the appeal.
True, petitioner invokes the jurisdiction of this Court in the interest of speedy justice. It conjectures that any further
delay in the resolution of the instant petition will be prejudicial not only to petitioner but to all those similarly situated.
Thus petitioner brought the instant petition directly to this Court on the premise that if it were to first seek a ruling from
the Court of Appeals, a party aggrieved by such ruling would take the matter to this Court for final resolution. By then,
the level of intellectual piracy would have worsened.
This Court is not persuaded. The quest for speedy justice should not be used as a devise to trample upon other equally
laudable policies of this Court. Petitioner's direct resort to this Court in the guise of speedy justice was in utter disregard
of the hierarchy of courts. We find no exceptional or compelling reason not to observe the hierarchy of courts. Our
pronouncement in People v. Cuaresma 14 is most instructive
This Court's original jurisdiction to issue writs of certiorari is not exclusive. It is shared by this
Court with Regional Trial Courts and with the Court of Appeals. This concurrence of jurisdiction is
not, however, to be taken as according to parties seeking any of the writs an absolute, unrestrained
freedom of choice of the court to which application therefor will be directed. There is after all a
hierarchy of courts. A direct invocation of the Supreme Court's original jurisdiction to issue these
writs should be allowed only when there are special and important reasons therefor, clearly and
specifically set out in the petition. This is established policy. It is a policy that is necessary to
prevent inordinate demands upon the Court's time and attention which are better devoted to those
matters within its exclusive jurisdiction, and to prevent further over-crowding of the Court's docket.
Indeed, the removal of the restriction on the jurisdiction of the Court of Appeals in this regard,
supra resulting from the deletion of the qualifying phrase, "in aid of its appellate jurisdiction"
was evidently intended precisely to relieve this Court pro tanto of the burden of dealing with
applications for the extraordinary writs which, but for the expansion of the Appellate Court's
corresponding jurisdiction, would have had to be filed with it.
The Court feels the need to reaffirm that policy at this time, and to enjoin strict adherence thereto
in the light of what it perceives to be a growing tendency on the part of litigants and lawyers to
have their applications for the so-called extraordinary writs, and sometimes even their appeals,
passed upon and adjudicated directly and immediately by the highest tribunal of the land.
The Court therefore closes this decision with the declaration for the information and guidance of all
concerned, that it will not only continue to enforce the policy, but will require a more strict
observance thereof.
WHEREFORE, the instant petition is DISMISSED. The assailed order dated 26 December 2001 of the RTC-Br. 255, Las
Pias City, which denied petitioner's application for an ex parte order for the seizure and impounding of relevant and
infringing evidence as well as its order dated 1 March 2001 denying reconsideration thereof is SUSTAINED. Costs
against petitioner.
SO ORDERED.
Mendoza, Quisumbing, Austria-Martinez and Callejo, Sr., JJ., concur.