RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES spouses Rene and Rosemarie Matienzo.
ouses Rene and Rosemarie Matienzo. The case was a complaint for
NOTE: Reyes v Dizon 628 SCRA 1,13 August 11, 2010- FULLTEXT CAN’T
BE FOUND; I think same ni siya sa case #9 (Reyes v Ortiz) kay ang ruling
sa book, sa Case #1 naa sa page 144 (2016 ed). Namention siya exact
words dri na case.
#1 G.R. No. 137794 August 11, 2010
ERLINDA REYES and ROSEMARIE MATIENZO, Petitioners,
vs.
HON. JUDGE BELEN B. ORTIZ, Presiding, Branch 49, Metropolitan Trial
Court, Caloocan City; SPOUSES BERNARD and FLORENCIA PERL,
represented by Attorney-in-Fact BENJAMIN MUCIO; HON. JUDGE
VICTORIA ISABEL A. PAREDES, Presiding, Branch 124, Regional Trial
Court, Caloocan City and SEGUNDO BAUTISTA, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 149664
SPS. ALBERTO EMBORES and LOURDES EMBORES, SPS. ROBERTO AND
EVELYN PALAD, DENNIS HENOSA and CORAZON LAURENTE, Petitioners,
vs.
HON. RAYMUNDO G. VALLEGA, Presiding Judge, Branch 52,
Metropolitan Trial Court, Caloocan City; HON. ELEANOR R. KWONG,
Presiding Judge, Branch 51, Metropolitan Trial Court, Caloocan City;
HON. JUDGE BELEN B. ORTIZ, Presiding Judge, Branch 49, Metropolitan
Trial Court, Caloocan City; VICTORIA C. SALIRE-ALBIS, represented by her
attorney-in-fact MR. MENELIO C. SALIRE; MA. FE R. ROCO, ALFREDO
TAN, MANUELITO ESTRELLA; and HON. JUDGE ANTONIO FINEZA,
Presiding Judge, Branch 131, Regional Trial Court, Caloocan
City, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
The instant cases are consolidated Petitions1 for Declaratory Relief, Certiorari,
and Prohibition. The petitioners in G.R. No. 137794 seek to declare null and
void the proceedings in Civil Case No. 23477, an ejectment case, before the
Metropolitan Trial Court (MeTC), Caloocan City, Branch 49, and Civil Case No.
C-17725, a complaint for Recovery of Possession and Ownership, filed with
the Regional Trial Court (RTC), Caloocan City, Branch 124;2while the
petitioners in G.R. No. 149664 pray for the nullity of the following ejectment
proceedings before the different branches of the Caloocan City MeTC: (1) Civil
Case No. 99-25011, Branch 52; (2) Civil Case No. 22559 and Civil Case No.
18575, Branch 49 and its appeal to the RTC, Branch 131; (3) Civil Case No. 00-
25892, Branch 51; and (4) Civil Case No. 00-25889, Branch 51.3 G.R. No.
149664 was considered closed and terminated by the Court’s Resolution
dated August 30, 2006.4
The parcels of land which are the subject matter of these cases are part of the
Tala Estate, situated between the boundaries of Caloocan City and Quezon
City and encompassing an area of 7,007.9515 hectares more or less.5
In G.R. No. 137794, respondents Segundo Bautista and spouses Bernard and
Florencia Perl sought the ouster from the contested lots of Erlinda Reyes,
spouses Rene and Rosemarie Matienzo and Sergio Abejero, who are
occupants of separate home lots in Camarin, Caloocan City.
The first case was commenced on December 11, 1996, by respondent
Segundo Bautista, a registered owner of the parcel of land occupied by
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Recovery of Possession and/or Ownership of Real Property (Recovery case)
against the latter spouses with the RTC Caloocan City, Branch 124.6 This was
docketed as Civil Case No. C-17725.7
Shortly thereafter, a separate but related action, was initiated by the Republic
of the Philippines, represented by the Director of Lands on December 27,
1996, before the Quezon City RTC, Branch 85 (re-raffled to Branch 93).8 This
was a complaint for Annulment of Title/Reversion
(Annulment/Reversion case) against Biyaya Corporation and the Register of
Deeds of the Cities of Pasig, Caloocan, and Quezon, the City of Manila, and
the Administrator of the Land Registration Authority involving the Tala Estate.
The case, docketed as Civil Case No. Q-96-29810, sought to declare null and
void the transfer certificates of title issued in the name of Biyaya Corporation,
and all derivative titles emanating therefrom, and to declare the land in suit to
be reverted to it as part of the patrimonial property of the State, and the same
be awarded to the actual occupants. One of the intervenors therein is
Samahan ng Maliliit na Magkakapitbahay (SAMAKABA) of which petitioners
Erlinda Reyes and Rosemarie Matienzo are members.9
On May 28, 1997, the Quezon City RTC in the Annulment/Reversion case
issued a Preliminary Injunction (Injunction) freezing all ejectment cases
involving the Tala Estate pending in the MeTCs of Quezon City and Caloocan
City.10
Believing that the Injunction issued by the Quezon City RTC can be beneficial
to them in the Recovery case pending before the Caloocan City RTC, on June
27, 1997, spouses Rene and Rosemarie Matienzo filed a motion to suspend
the proceedings of the Recovery case.11 On December 8, 1997, the Caloocan
City RTC, Branch 124 denied said motion.12 Spouses Matienzo moved for the
reconsideration of the motion, but the same was denied on May 14,
1998.13 The spouses received the order denying their motion for
reconsideration on June 9, 1998.14 Trial on the merits started on December 2,
1998.15
The second case, an ejectment complaint, was commenced by spouses
Bernard and Florencia Perl on June 25, 1997, against Erlinda Reyes before the
Caloocan City MeTC, Branch 49.16 It was docketed as Civil Case No. 23477.
Shortly thereafter, on July 8, 1997, spouses Perl filed the third case, an
ejectment action against Sergio Abejero. The case, which was raffled off to
Branch 49 of the Caloocan City MeTC, was docketed as Civil Case No.
23519.17 Subsequently, these two ejectment cases were consolidated
(Ejectment cases).18 In her Answer and during the preliminary conference,
Erlinda Reyes moved for the suspension of the proceedings and/or for the
dismissal of these cases citing the Injunction issued in Civil Case No. Q-96-
29810.19 In its Order20 dated January 22, 1999, the MeTC did not entertain
Reyes’s motion, instead, it required her to submit a position paper. Erlinda
Reyes received the order on March 11, 1999.21 On April 16, 1999, the trial
court issued a Decision ordering Erlinda to vacate the contested property.22
The Recovery case and the Ejectment cases converged when petitioners
Rosemarie Matienzo and Erlinda Reyes, joined on March 25, 1999 in filing
directly with this Court the instant petition denominated as "Declaratory
Relief, Certiorari, and Prohibition," mainly assailing the denial of their
respective motions for suspension.23 Petitioners Matienzo and Reyes asked
that the proceedings in the Ejectment cases and the Recovery case be
declared null and void for violating the Injunction order of the Quezon City
RTC. This case is docketed as G.R. No. 137794.
During the pendency of G.R. No. 137794, certain events supervened when the
Ejectment cases ran their course and petitioner Reyes appealed the MeTC
decision to the RTC. In the RTC, the Ejectment cases were docketed as Civil
Cases Nos. C-18904-05.24 Apparently, respondent-spouses Perl moved for the
execution of the MeTC decision pending appeal, which the RTC granted as the
Writ of Execution was thereafter issued on October 20, 2000.25 Petitioner
Erlinda Reyes and company, thus, filed with this Court a motion to suspend
the proceedings in the RTC. 26 On October 25, 2000, this Court issued a
Page 1 of 62
Temporary Restraining Order restraining the implementation of the said writ
of execution.27
G.R. No. 149664, on the other hand, emanated from four distinct ejectment
complaints filed against petitioners Corazon Laurente, spouses Alberto and
Lourdes Embores, spouses Roberto and Evelyn Palad, and Dennis
Henosa.28 The parcels of land from which petitioners were sought to be
evicted were located in Camarin, Caloocan City and within the Tala
Estate.29 Petitioners were members of Alyansa Ng Mga Naninirahan Sa Tala
Friar Lands (ALNATFRAL), an intervenor in the Reversion case.30 These
ejectment cases were all filed after the Injunction order was issued on May 28,
1997 by the Quezon City RTC in the Annulment/Reversion case. Thus,
petitioners separately invoked the said injunction in seeking the dismissal or
suspension of the four ejectment cases. Petitioners’ motions for suspension
were dismissed and the trial court proceeded to render judgments on these
cases. Petitioners resorted directly to this Court in seeking the declaration of
nullity of the proceedings of these ejectment cases for violating the prevailing
injunction issued by the Quezon City RTC.
Meanwhile, on March 4, 2003, the petitioners in G.R. No. 149664 filed a
motion for consolidation asking that the said case be consolidated with G.R.
No. 137794.
On April 28, 2003, this Court resolved to consolidate the two cases.
On July 28, 2006, petitioners in G.R. No. 149664 filed a Motion to Withdraw
and/or Dismiss Instant Petition31 stating that since a decision in the
Annulment/Reversion case (Civil Case No. Q-96-29810) was already issued
(although they did not attach a copy thereof), the petition is therefore
rendered moot and academic as the injunction order was effective only
pending determination of the merits.
On August 30, 2006, the Court granted the motion to withdraw petition in
G.R. No. 149664 and considered the same closed and terminated.32 On
October 11, 2006, G.R. No. 149664 became final and executory.
What remains to be resolved, therefore, are the issues raised in G.R. No.
137794.
In their bid to declare null and void the proceedings in the Recovery case and
the Ejectment cases, petitioners argued that the Caloocan City MeTC, where
the Ejectment cases were filed, and the Caloocan City RTC where the Recovery
case was pending, were divested of jurisdiction since the Quezon City RTC
acquired jurisdiction over the subject matter.33 Petitioners specifically alleged
that the MeTC’s refusal to suspend the Ejectment cases despite the Injunction
order is tantamount or amounting to lack of or excess of jurisdiction. As to
the Caloocan City RTC, its desistance to heed the Injunction is unjustified and
contrary to well-settled jurisprudence.34 Petitioners were of the view that the
interference by the Quezon City RTC was justified since no third-party claim is
involved.35
The Office of the Solicitor General (OSG) adopts the position of petitioners in
praying that the orders denying the motion to suspend proceedings and the
proceedings that transpired in the Ejectment cases be set aside for having
been issued with grave abuse of discretion.36 Citing Honda Giken Kogyo-
Kabushiki Kaisha v. San Diego,37 where it was held that a writ of injunction
may be issued to a court by another court superior in rank, the OSG maintains
that the Injunction issued by the Quezon City RTC in Civil Case No. Q-96-
29810 covers all metropolitan trial courts including the Ejectment cases in
Caloocan City MeTC, Branch 49.38 The OSG also maintains that the Injunction
was in accordance with the settled jurisprudence where the reversion case is
being filed by the State.
Respondent Segundo Bautista contends that petitioners resorted to a wrong
remedy. He argues that the action for declaratory relief can only prosper if the
statute, deed, or contract has not been violated.39 Hence, where the law or
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
contract has already been breached prior to the filing of the declaratory relief,
courts can no longer assume jurisdiction since this action is not geared
towards the settling of issues arising from breach or violation of the rights
and obligations of the parties under a statute, deed, and contract, but rather it
is intended to secure an authoritative statement for guidance in their
enforcement or compliance of the same.40 Since the Injunction order of the
Quezon City RTC had already been violated as early as December 8, 1997 by
the Caloocan City RTC in the Recovery case, or before the filing of this instant
petition, resort to Rule 63 of the Rules of Court would not lie. Respondent
Bautista insists that the instant recourse of petitioner Matienzo was resorted
to as a ploy to substitute the filing of certiorariunder Rule 65, which she
already lost since the 60-day period had already expired.41 Respondent points
out that direct resort to this Court violates the rule on the hierarchy of courts.
Since it was the Caloocan City RTC which denied petitioner Matienzo’s motion
to suspend proceedings, the petition for declaratory relief should have been
filed with the Court of Appeals. Direct filing with this Court is not justified as,
other than making motherhood statements, petitioner Matienzo failed to
state clearly the exceptional and compelling circumstances to justify the
exercise of this Court’s primary jurisdiction.42 He likewise contends that the
Caloocan City RTC did not err in not suspending the proceedings in the
Recovery case, notwithstanding the Injunction issued by the Quezon City RTC,
since the said injunction applied only to the MeTCs of Quezon City and
Caloocan City so the RTC was excluded from the injunction order. He avers
that it is the Caloocan City RTC which is vested with the jurisdiction to hear
and decide the case until its final conclusion since it had acquired the same
ahead of the Quezon City RTC. He states that being co-equal, the Quezon City
RTC had no authority to stop by injunction the Caloocan City RTC and even
though there are instances where another court may exercise coordinate
jurisdiction in cases where there are justifiable grounds, here, petitioner
Matienzo has not alleged any of those circumstances.
Petitioners insist that this is mainly a petition for declaratory relief. Section 1,
Rule 63 of the 1997 Rules of Court provides:
SECTION 1. Who may file petition. — Any person interested under a deed,
will, contract or other written instrument, or whose rights are affected by a
statute, executive order or regulation, ordinance, or any other governmental
regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or
validity arising, and for a declaration of his rights or duties, thereunder.
An action for the reformation of an instrument, to quiet title to real property
or remove clouds therefrom, or to consolidate ownership under Article 1607
of the Civil Code, may be brought under this Rule.
The foregoing section can be dissected into two parts. The first
paragraph concerns declaratory relief, which has been defined as a
special civil action by any person interested under a deed, will, contract
or other written instrument or whose rights are affected by a statute,
ordinance, executive order or regulation to determine any question of
construction or validity arising under the instrument, executive order or
regulation, or statute and for a declaration of his rights and duties
thereunder. The second paragraph pertains to (1) an action for the
reformation of an instrument; (2) an action to quiet title; and (3) an
action to consolidate ownership in a sale with a right to repurchase.43
(MENTIONED IN THE BOOK, page 144, 2016 ed. But under Reyes v Dizon)
The first paragraph of Section 1 of Rule 63 enumerates the subject matter to
be inquired upon in a declaratory relief namely, deed, will, contract or other
written instrument, a statute, executive order or regulation, or any
government regulation. This Court, in Lerum v. Cruz,44 declared that the
subject matters to be tested in a petition for declaratory relief are
exclusive, viz:
Under this rule, only a person who is interested "under a deed, will, contract
or other written instrument, and whose rights are affected by a statute or
ordinance, may bring an action to determine any question of construction or
Page 2 of 62
validity arising under the instrument or statute and for a declaration of his
rights or duties thereunder." This means that the subject matter must refer to
a deed, will, contract or other written instrument, or to a statute or ordinance,
to warrant declaratory relief. Any other matter not mentioned therein is
deemed excluded. This is under the principle of expressio unius est exclussio
alterius. (Emphasis supplied.)
The foregoing holding was reiterated in Natalia Realty, Inc. v. Court of
Appeals,45 wherein this Court stressed that court orders or decisions cannot
be made the subject matter of a declaratory relief, thus:
Judge Querubin's query is not an action for declaratory relief. Section 1 of
Rule 64 [now Rule 63] of the Rules of Court provides the requisites of an
action for declaratory relief. In interpreting these requisites, the Court has
ruled that:
xxxx
The letter of Judge Querubin pertained to final orders and decisions of the
courts that are clearly not the proper subjects of a petition for declaratory
relief. Thus, the requisites prescribed by the Rules of Court in an action for
declaratory relief are not applicable to the letter of Judge
Querubin.46 (Emphasis supplied.)
Then again in a recent ruling of this Court, it was emphasized:
A petition for declaratory relief cannot properly have a court decision as its
subject matter. In Tanda v. Aldaya [98 Phil. 244 (1956)], we ruled that:
[A] court decision cannot be interpreted as included within the purview of the
words "other written instrument," as contended by appellant, for the simple
reason that the Rules of Court already provide for the ways by which an
ambiguous or doubtful decision may be corrected or clarified without need of
resorting to the expedient prescribed by Rule 66 [now Rule 64].47 (Emphasis
supplied.)
In the instant case, petitioners Erlinda Reyes and Rosemarie Matienzo assailed
via Declaratory Relief under Rule 63 of the Rules of Court, the orders of the
trial courts denying their motions to suspend proceedings. This recourse by
petitioners, unfortunately, cannot be countenanced since a court order is not
one of those subjects to be examined under Rule 63.
The proper remedy that petitioner Erlinda Reyes could have utilized from the
denial of her motion to suspend proceedings in the Caloocan City MeTC was
to file a motion for reconsideration and, if it is denied, to file a petition for
certiorari before the RTC pursuant to Rule 65 of the Rules of Court. On the
other hand, petitioner Matienzo should have filed a special civil action on
certiorari also under Rule 65 with the Court of Appeals from the denial of her
motion by the Caloocan City RTC. The necessity of filing the petition to the
RTC in the case of Erlinda Reyes and to the Court of Appeals in the case of
Matienzo is dictated by the principle of the hierarchy of courts.48 Both
petitions must be filed within 60 days from the receipt or notice of the denial
of the motion to suspend proceedings or from the denial of the motion for
reconsideration. Section 4 of Rule 65 partly provides:
Sec. 4. When and where to file the petition. - The petition shall be filed not
later than sixty (60) days from notice of the judgment, order or resolution. In
case a motion for reconsideration or new trial is timely filed, whether such
motion is required or not, the petition shall be filed not later than sixty (60)
days counted from the notice of the denial of said motion.
If the petition relates to an act or an omission of a municipal trial court x x x, it
shall be filed with the Regional Trial Court exercising jurisdiction over the
territorial area as defined by the Supreme Court. It may also be filed with the
Court of Appeals or with the Sandiganbayan, whether or not the same is in
aid of the court’s appellate jurisdiction.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Despite this procedural remedy available to them, petitioners, under the
pretext that they were in a quandary as to their rights under the Injunction
order of the Quezon City RTC, directly filed the instant case here. Petitioners
did not bother to proffer a compelling reason for their direct resort to this
Court. This procedural faux pas proves fatal. The Court’s exhortation against
taking a procedural shortcut cannot be overemphasized. In Ortega v. The
Quezon City Government, 49 the Court accentuated:
At all events, even if this petition delves on questions of law, there is no
statutory or jurisprudential basis for according to this Court original and
exclusive jurisdiction over declaratory relief which advances only questions of
law.
Finally, while a petition for declaratory relief may be treated as one for
prohibition if it has far reaching implications and raises questions that need to
be resolved, there is no allegation of facts by petitioner tending to show that
she is entitled to such a writ. The judicial policy must thus remain that this
Court will not entertain direct resort to it, except when the redress sought
cannot be obtained in the proper courts or when exceptional and compelling
circumstances warrant availment of a remedy within and calling for the
exercise of this Court's primary jurisdiction. (Emphasis supplied.)
To make matters worse, petitioner Matienzo obviously availed of the instant
declaratory relief to substitute for a petition for certiorari, a remedy which she
sadly lost by inaction. It must be recalled that on December 8, 1997, the
Caloocan City RTC, Branch 124 denied Matienzo’s motion to suspend
proceedings.50 She moved for reconsideration, but the same was denied on
May 14, 1998.51 She received the Order denying her motion for
reconsideration on June 9, 1998.52 She had 60 days therefrom to question the
same before the Quezon City RTC. It was only on March 25, 1999 that
petitioner Matienzo assailed the order denying her motion for
reconsideration, albeit wrongly before this Court.53 From this, it can be
inferred that petitioner Matienzo’s recourse is a belated attempt designed to
salvage her lost opportunity to assail the order denying her motion to
suspend proceedings.
Also unavailing are the contentions of petitioners that the Caloocan City RTC
and MeTC committed grave abuse of discretion when they denied petitioners’
motions to suspend proceedings. The pertinent portion of the Injunction
order of the Quezon City RTC reads:
WHEREFORE, premises considered, this Court has to grant, as it hereby grants
the application for the issuance of the writ of preliminary injunction. Let a writ
of preliminary Injunction be issued ordering defendant representing Biyaya
Corporation, its agents, assigns, and transferees, as well as all other persons
representing themselves as owners of certain portions of the land in question,
otherwise known as the Tala Estate, to immediately cease and desist from
doing or causing to do, further acts of disposition of the lots subject of the
present complaint, such as the filing of ejectment cases in the Municipal Trial
Courts of Quezon City and Caloocan City and, the demolition and ejectment
therefrom of the members of the herein Intervenors. Accordingly, the
Metropolitan Trial Courts of Quezon City and Caloocan City are specifically
ordered to cease and desist from further conducting trials and proceedings in
the ejectment cases filed and to be filed involving the lots of the present
complaint, until further orders from this Court.54 (Emphasis supplied.)
The foregoing order is not addressed to the Caloocan City RTC. Neither can it
be inferred from the language thereof that the Quezon City RTC intended to
enjoin the Caloocan City RTC from further proceeding with the Recovery case.
The order merely mentions the Caloocan City MeTCs. Nothing more. But
more importantly, the Quezon City RTC could not have validly enjoined the
Caloocan City RTC without violating the doctrine that no court has the power
to interfere by injunction with the judgments or decrees of a court of
concurrent or coordinate jurisdiction.55Spouses Ching v. Court of
Appeals56 justifies this rule in this manner:
Page 3 of 62
Beginning with the case of Orais v. Escaño, down to the subsequent cases
of Nuñez v. Low, Cabigao v. del Rosario, Hubahib v. Insular Drug Co., Inc.,
National Power Corp. v. De Veyra, Luciano v. Provincial Governor, De Leon v.
Hon. Judge Salvador, Cojuangco v. Villegas, Darwin v. Tokonaga, we laid down
the long standing doctrine that no court has the power to interfere by
injunction with the judgments or decrees of a court of concurrent or
coordinate jurisdiction. The various trial courts of a province or city, having
the same or equal authority, should not, cannot, and are not permitted to
interfere with their respective cases, much less with their orders or judgments.
A contrary rule would obviously lead to confusion and seriously hamper the
administration of justice. (Emphasis supplied.)
In Compania General de Tabacos de Filipinas v. Court of Appeals, two civil
57
cases with identical causes of action were filed in different RTCs, one ahead of
the other. The second RTC which acquired jurisdiction over the case issued a
preliminary injunction enjoining the proceedings in the RTC which first
acquired jurisdiction of the case. Ruling against the injunction issued by the
RTC, this Court stressed:
Hence, nothing can be clearer than that Judge Rapatalo had indeed issued
the questioned writ of preliminary injunction with grave abuse of discretion
amounting to excess or lack of jurisdiction for the blatant disregard of the
basic precept that no court has the power to interfere by injunction with the
judgments or orders of a co-equal and coordinate court of concurrent
jurisdiction having the power to grant the relief sought by injunction.
This Court explained in Parco vs. Court of Appeals that:
x x x Jurisdiction is vested in the court not in any particular branch or judge,
and as a corollary rule, the various branches of the Court of First Instance of a
judicial district are a coordinate and co-equal courts one branch stands on the
same level as the other. Undue interference by one on the proceedings and
processes of another is prohibited by law. In the language of this Court, the
various branches of the Court of First Instance of a province or city, having as
they have the same or equal authority and exercising as they do concurrent
and coordinate jurisdiction should not, cannot, and are not permitted to
interfere with their respective cases, much less with their orders or judgments
x x x.
Needless to say, adherence to a different rule would sow confusion and wreak
havoc on the orderly administration of justice, and in the ensuing melee,
hapless litigants will be at a loss as to where to appear and plead their
cause.1avvphi158 (Emphasis supplied.)
While there are recognized exceptions to the foregoing rule, other than citing
said cases, 59 petitioners did not explain the applicability of said exceptional
cases to their petition.
Bereft of merit too is petitioners’ argument that the Caloocan City MeTC
cannot disregard the injunction order of the Quezon City RTC hearing the
Annulment/Reversion case. The established rule is that a pending civil action
for ownership such as annulment of title shall not ipso facto suspend an
ejectment proceeding.60 The Court explained that the rationale for this is that
in an ejectment case, the issue is possession, while in an annulment case the
issue is ownership.61 In fact, an ejectment case can be tried apart from an
annulment case.62 Although there is an exception to this rule, petitioners
failed to justify that this case falls within said exception. The words of the
Court on this matter are instructive:
In the absence of a concrete showing of compelling equitable reasons at least
comparable and under circumstances analogous to Amagan, we cannot
override the established rule that a pending civil action for ownership shall
not ipso facto suspend an ejectment proceeding. Additionally, to allow a
suspension on the basis of the reasons the petitioners presented in this case
would create the dangerous precedent of allowing an ejectment suit to be
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
suspended by an action filed in another court by parties who are not involved
or affected by the ejectment suit.63(Emphases supplied.)
Hence, petitioners’ posture that the Ejectment cases should be suspended
due to the pendency of the Annulment/Reversion case is not meritorious.
WHEREFORE, premises considered, the instant petition is hereby DISMISSED.
The Temporary Restraining Order dated October 25, 2000 issued by this Court
is LIFTED.
SO ORDERED.
#2. G.R. No. 172457 December 24, 2008
CJH DEVELOPMENT CORPORATION,
Petitioner, - versus - BUREAU OF INTERNAL REVENUE, VELASCO, JR., and
BUREAU OF CUSTOMS,
Respondents.
TINGA, J.:
Before us is a petition for review on certiorari[1] seeking the reversal of the
orders dated 14 October 2005[2] and 04 April 2006[3] of the Regional Trial
Court (RTC) of Baguio City, Branch 5. The RTC dismissed the petition for
declaratory relief filed by petitioner CJH Development Corporation (CJH). This
petition was brought directly to this Court since it involves a pure question of
law in accordance with Rule 50 of the 1997 Revised Rules of Court.
Proclamation No. 420 (the Proclamation) was issued by then President Fidel V.
Ramos to create a Special Economic Zone (SEZ) in a portion of Camp John
Hay in Baguio City. Section 3[4] of the Proclamation granted to the newly
created SEZ the same incentives then already enjoyed by the Subic SEZ.
Among these incentives are the exemption from the payment of taxes, both
local and national, for businesses located inside the SEZ, and the operation of
the SEZ as a special customs territory providing for tax and duty free
importations of raw materials, capital and equipment.[5]
In line with the Proclamation, the Bureau of Internal Revenue (BIR) issued
Revenue Regulations No. 12-97[6] while the Bureau of Customs (BOC) issued
Customs Administrative Order No. 2-98.[7] The two issuances provided the
rules and regulations to be implemented within the Camp John Hay
SEZ. Subsequently, however, Section 3 of
the Proclamation was declared unconstitutional in part by the Court en
banc in John Hay Peoples Alternative Coalition v. Lim, [8] when it ruled that:
WHEREORE, the second sentence of Section 3
of Proclamation No. 420 is hereby declared NULL and
VOID and is accordingly declared of no legal force and
effect. Public respondents are hereby enjoined from
implementing the aforesaid void provision.
Proclamation No. 420, without the invalidated
portion, remains valid and effective.[9]
The decision attained finality when the Court en banc denied the
motion for reconsideration through a resolution dated 29 March 2005.[10]
While the motion for reconsideration was pending with the Court, on 16
January 2004 the Office of the City Treasurer of Baguio sent a demand
letter[11] which stated that:
Page 4 of 62
 In view of the Supreme Court decision dated October 24,
2003 on G.R. No. 119775, declaring null and void Section
3 of Proclamation 420 on applicable incentives of Special
Economic Zones, we are sending you updated
statements of real property taxes due on real estate
properties declared under the names of the Bases
Conversion and Development Authority and Camp John
Hay Development Corporation totaling P101,935,634.17
inclusive of penalties, as of January 10, 2004.
May we request for the immediate settlement of the
above indebtedness, otherwise this office shall be
constrained to hold the processing of your business
permit pursuant to Section 2 C c.1 of Tax Ordinance
2000-001 of Baguio City.
Five months later, on 26 May 2005, the BOC followed suit and demanded[12] of
CJH the payment of P71,983,753.00 representing the duties and taxes due on
all the importations made by CJH from 1998 to 2004. For its part, the BIR sent
a letter dated 23 May 2005 to CJH wherein it treated CJH as an ordinary
corporation subject to the regular corporate income tax as well as to the
Value Added Tax of 1997.[13]
CJH questioned the retroactive application by the BOC of the decision of this
Court in G.R. No. 119775. It claimed that the assessment was null and void
because it violated the non-retroactive principle under the Tariff and Customs
Code.[14]
The Office of the Solicitor General (OSG) filed a motion to dismiss.[15] The OSG
claimed that the remedy of declaratory relief is inapplicable because an
assessment is not a proper subject of such petition. It further alleged that
there are administrative remedies which were available to CJH.
In an Order[16] dated 28 June 2005, the RTC dropped the City of Baguio as a
party to the case. The remaining parties were required to submit their
respective memoranda. On 14 October 2005, the RTC rendered its assailed
order.[17] It held that the decision in G.R. No. 119775 applies retroactively
because the tax exemption granted by Proclamation No. 420 is null and void
from the beginning. The RTC also ruled that the petition for declaratory relief
is not the appropriate remedy. A judgment of the court cannot be the proper
subject of a petition for declaratory relief; the enumeration in Rule 64 is
exclusive. Moreover, the RTC held that Commonwealth Act No. 55 (CA No. 55)
which proscribes the use of declaratory relief in cases where a taxpayer
questions his tax liability is still in force and effect.
CJH filed a motion for reconsideration but the RTC denied it.[18] Hence this
petition, which, as earlier stated, was filed directly to this Court, raising as it
does only pure questions of law.
There are two issues raised in this petition, one procedural and the other
substantive. First, is the remedy of declaratory relief proper in this
case? Second, can the decision in G.R. No. 119775 be applied retroactively?
The requisites for a petition for declaratory relief to prosper are: (1) there
must be a justiciable controversy; (2) the controversy must be between
persons whose interests are adverse; (3) the party seeking declaratory relief
must have a legal interest in the controversy; and (4) the issue involved must
be ripe for judicial determination.[19]
CJH alleges that CA No. 55[20] has already been repealed by the Rules of Court;
thus, the remedy of declaratory relief against the assessment made by the
BOC is proper. It cited the commentaries of Moran allegedly to the effect that
declaratory relief lies against assessments made by the BIR and BOC. Yet
in National Dental Supply Co. v. Meer,[21] this Court held that:
From the opinion of the former Chief Justice
Moran may be deduced that the failure to incorporate the
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
above proviso [CA No. 55] in section 1, rule 66, [now Rule
64] is not due to an intention to repeal it but rather to the
desire to leave its application to the sound discretion of
the court, which is the sole arbiter to determine whether a
case is meritorious or not. And even if it be desired to
incorporate it in rule 66, it is doubted if it could be done
under the rule-making power of the Supreme Court
considering that the nature of said proviso
is substantive and not adjective, its purpose being to lay
down a policy as to the right of a taxpayer to contest the
collection of taxes on the part of a revenue officer or of
the Government. With the adoption of said proviso, our
law-making body has asserted its policy on the matter,
which is to prohibit a taxpayer to question his liability for
the payment of any tax that may be collected by the
Bureau of Internal Revenue. As this Court well said,
quoting from several American cases, The Government
may fix the conditions upon which it will consent to
litigate the validity of its original taxes... The power of
taxation being legislative, all incidents are within the
control of the Legislature. In other words, it is our
considered opinion that the proviso contained in
Commonwealth Act No. 55 is still in full force and effect
and bars the plaintiff from filing the present
action.[22] (Emphasis supplied) (Citations omitted.)
As a substantive law that has not been repealed by another statute,
CA No. 55 is still in effect and holds sway. Precisely, it has removed from the
courts jurisdiction over petitions for declaratory relief involving tax
assessments. The Court cannot repeal, modify or alter an act of the
Legislature.
Moreover, the proper subject matter of a declaratory relief is a deed, will,
contract, or other written instrument, or the construction or validity of statute
or ordinance.[23] CJH hinges its petition on the demand letter or assessment
sent to it by the BOC. However, it is really not the demand letter which is the
subject matter of the petition. Ultimately, this Court is asked to determine
whether the decision of the Court en banc in G.R. No. 119775 has a retroactive
effect. This approach cannot be countenanced. A petition for declaratory relief
cannot properly have a court decision as its subject matter.
In Tanda v. Aldaya,[24] we ruled that:
x x x [A] court decision cannot be interpreted as included
within the purview of the words other written instrument,
as contended by appellant, for the simple reason that the
Rules of Court already provide[s] for the ways by which an
ambiguous or doubtful decision may be corrected or
clarified without need of resorting to the expedient
prescribed by Rule 66 [now Rule 64].[25]
There are other remedies available to a party who is not agreeable to a
decision whether it be a question of law or fact. If it involves a decision of an
appellate court, the party may file a motion for reconsideration or new trial in
order that the defect may be corrected.[26] In case of ambiguity of the
decision, a party may file a motion for a clarificatory judgment.[27]One of the
requisites of a declaratory relief is that the issue must be ripe for judicial
determination. This means that litigation is inevitable[28] or there is no
adequate relief available in any other form or proceeding.[29]
However, CJH is not left without recourse. The Tariff and Customs Code (TCC)
provides for the administrative and judicial remedies available to a taxpayer
who is minded to contest an assessment, subject of course to
certain reglementary periods. The TCC provides that a protest can be raised
provided that payment first be made of the amount due.[30]The decision of the
Page 5 of 62
Collector can be reviewed by the
Commissioner of Customs who can approve, modify or reverse the
decision or action of the Collector.[31] If the party is not satisfied with the
ruling of the Commissioner, he may file the necessary appeal to the Court of
Tax Appeals.[32] Afterwards, the decision of the Court of Tax Appeals can be
appealed to this Court.
With the foregoing disquisition on the first issue, there is no need
to delve into the second issue at this juncture. It should be noted though, as
admitted by CJH in its Certificate of Non-Forum Shopping,[33] that even before
the filing of this petition, it already had a pending petition for review with this
Court, docketed as G.R. No. 169234[34] and entitled, Camp John Hay
Development Corporation v. Central Board of Assessment Appeals, et al. That
case emanated from assessments made in 2002 for real estate taxes on CJH
by the City of Baguio. Said assessments were duly challenged before the Local
Board of Assessment Appeals, the Central Board of Assessment Appeals and
the Court of Tax Appeals. The petition in G.R. No. 169234 was filed with this
Court in September 2005, or after our 2003 Decision in John Hay Peoples
Alternative Coalition had attained finality. CJH therein raised the same
question of law, as in this case, whether the doctrine of operative fact applies
to G.R. No. 119775. Clearly, the Court in G.R. No. 169234 is better positioned
to resolve that question of law, there being no antecedent jurisdictional
defects that would preclude the Court from squarely deciding that particular
issue. CJH is free to reiterate this current point of clarification as it litigates the
petition in G.R. No. 169234.
WHEREFORE, the Petition is DENIED.
SO ORDERED.
#3 G.R. No. 200670, July 06, 2015
CLARK INVESTORS AND LOCATORS ASSOCIATION,
INC., Petitioner, v. SECRETARY OF FINANCE AND COMMISSIONER OF
INTERNAL REVENUE, Respondents.
VILLARAMA, JR., J.:
This is a petition for certiorari with a prayer for the issuance of a temporary
restraining order and/or writ of preliminary injunction to annul and set aside
Revenue Regulations No. 2-2012 (RR 2-2012) issued by the Department of
Finance (DOF) on February 17, 2012 upon recommendation of the Bureau of
Internal Revenue (BIR). Petitioner Clark Investors and Locators Association, Inc.
claims that RR 2-2012, which imposes Value Added Tax (VAT) and excise tax
on the importation of petroleum and petroleum products from abroad into
the Freeport or Economic Zones, is void and contrary to Republic Act (RA) No.
7227, otherwise known as the Bases Conversion and Development Act of
1992,as amended by RA No. 9400. The salient facts follow. On March 13, 1992,
Congress enacted RA No. 7227 which mandated the accelerated conversion of
the Clark and Subic military reservations into special economic zones. Section
12 thereof provides for the creation of the Subic Special Economic Zone:
SEC. 12. Subic Special Economic Zone. — Subject to the concurrence by
resolution of the sangguniang panlungsod of the City of Olongapo and the
sangguniang bayan of the Municipalities of Subic, Morong and Hermosa,
there is hereby created a Special Economic and Free-port Zone consisting of
the City of Olongapo and the Municipality of Subic, Province of Zambales, the
lands occupied by the Subic Naval Base and its contiguous extensions as
embraced, covered, and defined by the 1947 Military Bases Agreement
between the Philippines and the United States of America as amended, and
within the territorial jurisdiction of the Municipalities of Morong and
Hermosa, Province of Bataan, hereinafter referred to as the Subic Special
Economic Zone whose metes and bounds shall be delineated in a
proclamation to be issued by the President of the Philippines. Within thirty
(30) days after the approval of this Act, each local government unit shall
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
submit its resolution of concurrence to join the Subic Special Economic Zone
to the Office of the President. Thereafter, the President of the Philippines shall
issue a proclamation defining the metes and bounds of the zone as provided
herein. The abovementioned zone shall be subject to the following policies:
(a) Within the framework and subject to the mandate and limitations of the
Constitution and the pertinent provisions of the Local Government Code, the
Subic Special Economic Zone shall be developed into a self-sustaining,
industrial, commercial, financial and investment center to generate
employment opportunities in and around the zone and to attract and
promote productive foreign investments; (b) The Subic Special Economic
Zone shall be operated and managed as a separate customs territory
ensuring free flow or movement of goods and capital within, into and
exported out of the Subic Special Economic Zone, as well as provide
incentives such as tax and duty-free importations of raw materials,
capital and equipment. However, exportation or removal of goods from
the territory of the Subic Special Economic Zone to the other parts of the
Philippine territory shall be subject to customs duties and taxes under
the Customs and Tariff Code and other relevant tax laws of the
Philippines; (c) The provision of existing laws, rules and regulations to
the contrary notwithstanding, no taxes, local and national, shall be
imposed within the Subic Special Economic Zone. In lieu of paying taxes,
three percent (3%) of the gross income earned by all businesses and
enterprises within the Subic Special Economic Zone shall be remitted to
the National Government, one percent (1%) each to the local
government units affected by the declaration of the zone in proportion
to their population area, and other factors. In addition, there is hereby
established a development fund of one percent (1%) of the gross income
earned by all businesses and enterprises within the Subic Special
Economic Zone to be utilized for the development of municipalities
outside the City of Olongapo and the Municipality of Subic, and other
municipalities contiguous to the base areas. In case of conflict between
national and local laws with respect to tax exemption privileges in the
Subic Special Economic Zone, the same shall be resolved in favor of the
latter; (d) No exchange control policy shall be applied and free markets for
foreign exchange, gold, securities and futures shall be allowed and
maintained in the Subic Special Economic Zone; (e) The Central Bank, through
the Monetary Board, shall supervise and regulate the operation of banks and
other financial institutions within the Subic Special Economic Zone; (f) Banking
and finance shall be liberalized with the establishment of foreign currency
depository units of local commercial banks and offshore banking units of
foreign banks with minimum Central Bank regulation; (g) Any investor within
the Subic Special Economic Zone whose continuing investment shall not be
less than Two hundred fifty thousand dollars ($250,000), his/her spouse and
dependent children under twenty-one (21) years of age, shall be granted
permanent resident status within the Subic Special Economic Zone. They shall
have freedom of ingress and egress to and from the Subic Special Economic
Zone without any need of special authorization from the Bureau of
Immigration and Deportation. The Subic Bay Metropolitan Authority referred
to in Section 13 of this Act may also issue working visas renewable every two
(2) years to foreign executives and other aliens possessing highly-technical
skills which no Filipino within the Subic Special Economic Zone possesses, as
certified by the Department of Labor and Employment. The names of aliens
granted permanent residence status and working visas by the Subic Bay
Metropolitan Authority shall be reported to the Bureau of Immigration and
Deportation within thirty (30) days after issuance thereof; (h) The defense of
the zone and the security of its perimeters shall be the responsibility of the
National Government in coordination with the Subic Bay Metropolitan
Authority. The Subic Bay Metropolitan Authority shall provide and establish its
own internal security and firefighting forces; and (i) Except as herein provided,
the local government units comprising the Subic Special Economic Zone shall
retain their basic autonomy and identity. The cities shall be governed by their
respective charters and the municipalities shall operate and function in
accordance with Republic Act No. 7160, otherwise known as the Local
Government Code of 1991. (Emphasis supplied)
Based on Section 12 (c) above, in lieu of national and local taxes, all
businesses and enterprises operating within the Subic Special Economic Zone
shall pay a preferential gross income tax rate of five percent (5%). In addition,
Section 12 (b) also provides that such businesses and enterprises shall be
exempt from the payment of all taxes and duties on the importation of raw
Page 6 of 62
materials, capital, and equipment into the Subic Special Economic Zone.
Meanwhile, on March 20, 2007, Congress enacted RA No. 9400 which
extended the aforementioned tax and fiscal incentives under RA No. 7227 to
the Clark Freeport Zone. By way of amendment, Section 2 thereof provides:
SEC. 2. Section 15 of Republic Act No. 7227, as amended, is hereby amended
to read as follows:
"SEC. 15. Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ). -
Subject to the concurrence by resolution of the local government units
directly affected, the President is hereby authorized to create by executive
proclamation a Special Economic Zone covering the lands occupied by the
Clark military reservations and its contiguous extensions as embraced,
covered and defined by the 1947 Military Bases Agreement between the
Philippines and the United States of America, as amended, located within the
territorial jurisdiction of Angeles City, municipalities of Mabalacat and Porac,
Province of Pampanga, and the municipalities of Capas and Bamban, Province
of Tarlac, in accordance with the provision as herein provided insofar as
applied to the Clark military reservations. The Clark Air Base proper with an
area of not more than four thousand four hundred hectares (4,400 has.), with
the exception of the twenty-two-hectare commercial area situated near the
main gate and the Bayanihan Park consisting of seven and a half hectares (7.5
has.) located outside the main gate of the Clark Special Economic Zone, is
hereby declared a freeport zone. "The CFZ shall be operated and managed
as a separate customs territory ensuring free flow or movement of goods
and capital equipment within, into and exported out of the CFZ, as well
as provide incentives such as tax and duty-free importation of raw
materials and capital equipment. However, exportation or removal of
goods from the territory of the CFZ to the other parts of the Philippine
territory shall be subject to customs duties and taxes under the Tariff
and Customs Code of the Philippines, as amended, the National Internal
Revenue Code of 1997, as amended, and other relevant tax laws of the
Philippines. "The provisions of existing laws, rules and regulations to the
contrary notwithstanding, no national and local taxes shall be imposed on
registered business enterprises within the CFZ. In lieu of said taxes, a five
percent (5%) tax on gross income earned shall be paid by all registered
business enterprises within the CFZ and shall be directly remitted as follows:
three percent (3%) to the National Government, and two percent (2%) to the
treasurer's office of the municipality or city where they are located. "The
governing body of the Clark Special Economic Zone shall likewise be
established by executive proclamation with such powers and functions
exercised by the Export Processing Zone Authority pursuant to Presidential
Decree No. 66, as amended: Provided, That it shall have no regulatory
authority over public utilities, which authority pertains to the regulatory
agencies created by law for the purpose, such as the Energy Regulatory
Commission created under Republic Act No. 9136 and the National
Telecommunications Commission created under Republic Act No. 7925. "xxx
"Subject to the concurrence by resolution of the local government units
directly affected and upon recommendation of the Philippine Economic Zone
Authority (PEZA), the President is hereby authorized to create by executive
proclamation Special Economic Zones covering the City of Balanga and the
municipalities of Limay, Mariveles, Morong, Hermosa, and Dinalupihan,
Province of Bataan. "Subject to the concurrence by resolution of the local
government units directly affected and upon recommendation of the PEZA,
the President is hereby authorized to create by executive proclamation Special
Economic Zones covering the municipalities of Castillejos, San Marcelino, and
San Antonio, Province of Zambales. "Duly registered business enterprises that
will operate in the Special Economic Zones to be created shall be entitled to
the same tax and duty incentives as provided for under Republic Act No.
7916, as amended: Provided, That for the purpose of administering these
incentives, the PEZA shall register, regulate, and supervise all registered
enterprises within the Special Economic Zones."
Thus, the businesses and enterprises within the Clark Freeport Zone are
similarly exempt from the payment of all taxes and duties on the importation
of raw materials, capital and equipment. On February 17, 2012, the DOF, upon
recommendation of the BIR, issued RR 2-2012 which imposed VAT and excise
tax on the importation of petroleum and petroleum products from abroad
and into the Freeport or Economic Zones. Section 3 thereof partly provides:
SECTION 3. TAX TREATMENT OF ALL PETROLEUM AND PETROLEUM
PRODUCTS IMPORTED AND ITS SUBSEQUENT EXPORTATION OR SALES
TO FREEPORT AND ECONOMIC ZONE LOCATORS OR OTHER
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
PERSONS/ENTITIES; REFUND OF TAXES PAID; AUTHORITY TO RELEASE
IMPORTED GOODS (ATRIG) AND OTHER ADMINISTRATIVE
REQUIREMENTS. — The Value-Added and Excise taxes which are due on all
petroleum and petroleum products that are imported and/or brought directly
from abroad to the Philippines, including Freeport and Economic zones, shall
be paid by the importer thereof to the Bureau of Customs (BOC). The
subsequent exportation or sale/delivery of these petroleum or petroleum
products to registered enterprises enjoying tax privileges within the Freeport
and Economic zones, as well as the sale of said goods to persons engaged in
international shipping or international air transport operations, shall be
subject to 0% VAT. With respect to the VAT paid on petroleum or petroleum
products by the importer on account of aforesaid 0% VAT
transactions/entities and the Excise taxes paid on account of sales to
international carriers of Philippine or Foreign Registry for use or consumption
outside the Philippines or exempt entities or agencies covered by tax treaties,
conventions and international agreements for their use or consumption
(covered by Certification in such entity's favor), as well as entities which are by
law exempt from indirect taxes, the importer may file a claim for credit or
refund with the BOC, which shall process the claim for refund, subject to the
favorable endorsement of the BIR, in accordance with existing rules and
procedures: Provided, that no claim for refund shall be granted unless it is
properly shown to the satisfaction of the BIR that said petroleum or
petroleum products have been sold to a duly registered locator and have
been utilized in the registered activity/operation of the locator, or that such
have been sold and have been used for international shipping or air transport
operations, or that the entities to which the said goods were sold are
statutorily zero-rated for VAT, and/or exempt from Excise taxes. x x x x
On March 8, 2012, petitioner, which represents the businesses and enterprises
within the Clark Freeport Zone, filed the instant petition alleging that
respondents acted with grave abuse of discretion in issuing RR 2-2012. It
argues that by imposing the VAT and excise tax on the importation of
petroleum and petroleum products from abroad and into the Freeport or
Economic Zones, RR 2-2012 unilaterally revoked the tax exemption granted
by RA No. 7227 and RA No. 9400 to the businesses and enterprises operating
within the Subic Special Economic Zone and Clark Freeport Zone.
Respondents, through the Office of the Solicitor General (OSG), contend that
the petition must be denied outright because the special civil action for
certiorari cannot be used to assail RR 2-2012 which was issued by the
respondents in the exercise of their quasi-legislative or rule-making powers.
According to the OSG, certiorari can only be used against a public officer
exercising judicial or quasi-judicial powers. In addition, the OSG invokes the
doctrine of hierarchy of courts and claims that a petition for certiorari cannot
be filed directly to this Court absent highly exceptional reasons which the
petitioner failed to adduce. Finally, the OSG opposes the argument of
petitioner that RR 2-2012 unilaterally revoked the tax exemption granted by
RA No. 7227 and RA No. 9400 to the businesses and enterprises operating
within the Subic Special Economic Zone and Clark Freeport Zone by referring
to the tax refund under Section 3 of RR 2-2012. It points out that Section 3
allows the businesses and enterprises operating within the Subic Special
Economic Zone and Clark Freeport Zone to claim for a tax refund upon
submission of competent proof that they used the imported fuel exclusively
within the Subic Special Economic Zone and Clark Freeport Zone. Thus, the
OSG claimed that RR 2-2012 is consistent with RA No. 7227 and RA No. 9400.
We deny the petition for being an improper remedy. Firstly, respondents did
not act in any judicial or quasi-judicial capacity. A petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure, as amended, is a special civil
action that may be invoked only against a tribunal, board, or officer exercising
judicial or quasi-judicial functions. Section 1, Rule 65 of the 1997 Rules of Civil
Procedure, as amended, provides:
SECTION 1. Petition for certiorari. — When any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in excess of
its or his jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty
and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require. x x x x
Page 7 of 62
For a special civil action for certiorari to prosper, the following requisites must
concur: (1) it must be directed against a tribunal, board, or officer exercising
judicial or quasi-judicial functions; (2) the tribunal, board, or officer must have
acted without or in excess of jurisdiction or with grave abuse of discretion
amounting to lack or excess of jurisdiction; and (3) there is no appeal or any
plain, speedy, and adequate remedy in the ordinary course of law.1 A
respondent is said to be exercising judicial function where he has the power
to determine what the law is and what the legal rights of the parties are, and
then undertakes to determine these questions and adjudicate upon the rights
of the parties.2Quasi-judicial function, on the other hand, is "a term which
applies to the action, discretion, etc., of public administrative officers or
bodies x x x required to investigate facts, or ascertain the existence of facts,
hold hearings, and draw conclusions from them, as a basis for their official
action and to exercise discretion of a judicial nature."3 Before a tribunal,
board, or officer may exercise judicial or quasi-judicial acts, it is necessary that
there be a law that gives rise to some specific rights of persons or property
under which adverse claims to such rights are made, and the controversy
ensuing therefrom is brought before a tribunal, board, or officer clothed with
power and authority to determine the law and adjudicate the respective rights
of the contending parties.4 Respondents do not fall within the ambit of a
tribunal, board, or officer exercising judicial or quasi-judicial functions. They
issued RR 2-2012 in the exercise of their quasi-legislative or rule-making
powers, and not judicial or quasi-judicial functions. Verily, respondents did
not adjudicate or determine the rights of the parties. In order to determine
whether a Revenue Regulation is quasi-legislative in nature, we must examine
the legal basis of the Secretary of Finance in the issuance thereof. In BPI
Leasing Corporation v. Court of Appeals,5 we ruled that Revenue Regulation
19-86 was quasi-legislative in nature because it was issued by the Secretary of
Finance in the exercise of his rule-making powers under Section 244 of the
National Internal Revenue Code (NIRC):
The Court finds the questioned revenue regulation to be legislative in nature.
Section 1 of Revenue Regulation 19-86 plainly states that it was promulgated
pursuant to Section 277 of the NIRC. Section 277 (now Section 244) is an
express grant of authority to the Secretary of Finance to promulgate all
needful rules and regulations for the effective enforcement of the provisions
of the NIRC. In Paper Industries Corporation of the Philippines v. Court of
Appeals, the Court recognized that the application of Section 277 calls for
none other than the exercise of quasi-legislative or rule-making authority.
Verily, it cannot be disputed that Revenue Regulation 19-86 was issued
pursuant to the rule-making power of the Secretary of Finance, thus making it
legislative, and not interpretative as alleged by BLC.6
Similarly, in the case at bar, RR 2-2012 was also issued by the Secretary of
Finance based on Section 244 of the NIRC. Section 1 of RR 2-2012 provides:
SECTION 1. SCOPE — Pursuant to Section 244, in relation to Section 245, of
the National Internal Revenue Code (NIRC) of 1997, as amended, these
Regulations are hereby promulgated in order to prescribe: 1) the tax
administration treatment of all petroleum and petroleum products imported
into the Philippines, including those coming in through Freeport zones or
Economic Zones; and 2) the refund of Value-Added Tax (VAT) and Excise taxes
paid for transactions statutorily zero-rated or exempt therefrom; and to
provide administrative guidelines on the operation and maintenance of
storage tanks, facilities, depots or terminals where commodities for
commercial use can be stored.
Relevantly, Section 244 of the NIRC provides:
SEC. 244. Authority of Secretary of Finance to Promulgate Rules and
Regulations. — The Secretary of Finance, upon recommendation of the
Commissioner, shall promulgate all needful rules and regulations for the
effective enforcement of the provisions of this Code.
Conformably with our ruling in BPI Leasing Corporation that the application of
Section 244 of the NIRC is an exercise of quasi-legislative or rule-making
powers of the Secretary of Finance, and since RR 2-2012 was issued by the
Secretary of Finance based on Section 244 of the NIRC, such administrative
issuance is therefore quasi-legislative in nature which is outside the scope of a
petition for certiorari. Secondly, while this case is styled as a petition for
certiorari, there is, however, no denying the fact that, in essence, it seeks the
declaration by this Court of the unconstitutionality and illegality of the
questioned rule, thus partaking the nature, in reality, of one for declaratory
relief over which this Court has only appellate, not original,
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
jurisdiction.7 Section 5, Article VIII of the 1987 Philippine Constitution
provides: Sec. 5. The Supreme Court shall have the following powers:
(1) Exercise original jurisdiction over cases affecting ambassadors, other public
ministers and consuls, and over petitions for certiorari, prohibition, mandamus,
quo warranto, and habeas corpus. (2) Review, revise, reverse, modify, or affirm
on appeal or certiorari as the law or the Rules of Court may provide, final
judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty,
international or executive agreement, law, presidential decree, proclamation,
order, instruction, ordinance, or regulation is in question. x x x x
Accordingly, this petition must fail because this Court does not have original
jurisdiction over a petition for declaratory relief even if only questions of law
are involved.8 The special civil action of declaratory relief falls under the
exclusive jurisdiction of the Regional Trial Courts.9 The Rules of Court is
explicit that such action shall be brought before the appropriate Regional Trial
Court. Section 1, Rule 63 of the Rules of Court provides:
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.
Lastly, although this Court, the Court of Appeals and the Regional Trial Courts
have concurrent jurisdiction to issue writs of certiorari, prohibition,
mandamus, quo warranto, habeas corpus and injunction, such concurrence
does not give the petitioner unrestricted freedom of choice of court
forum.10 In Heirs ofBertuldo Hinog v. Hon. Melicor,11 citing People v.
Cuaresrna,12 we held:
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. That hierarchy is determinative of the venue of appeals,
and also serves as a general determinant of the appropriate forum for
petitions for the extraordinary writs. A becoming regard for that judicial
hierarchy most certainly indicates that petitions for the issuance of
extraordinary writs against first level ("inferior") courts should be filed with the
Regional Trial Court, and those against the latter, with the Court of Appeals. 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 [an] established
policy. It is a policy 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.
The rationale for this rule is two-fold: (1) it would be an imposition upon the
precious time of this Court; and (2) it would cause an inevitable and resultant
delay, intended or otherwise, in the adjudication of cases, which in some
instances had to be remanded or referred to the lower court as the proper
forum under the rules of procedure, or as better equipped to resolve the
issues because this Court is not a trier of facts. We thus affirm the judicial
policy that we shall not entertain a direct resort to this Court unless the
remedy cannot be obtained in the appropriate courts, and exceptional and
compelling circumstances, such as cases of national interest and of serious
implications, justify the availment of the extraordinary remedy of writ of
certiorari. In Chamber of Real Estate and Builders Association, Inc. (CREBA) v.
Secretary of Agrarian Reform,15 we provided examples of such exceptional and
compelling circumstances, to wit:
Exceptional and compelling circumstances were held present in the following
cases: (a) Chavez v. Romulo, on citizens' right to bear anus; (b) Government of
[the] United States of America v. Hon. Purganan, on bail in extradition
proceedings; (c) Commission on Elections v. Judge Quijano-Padilla, on
government contract involving modernization and computerization of voters'
registration list; (d) Buklod ng Kawaning EIIB v. Hon. Sec. Zamora, on status
and existence of a public office; and (e) Hon. Fortich v. Hon. Corona,on the so-
called "Win-Win Resolution" of the Office of the President which modified the
approval of the conversion to agro-industrial area.16
Page 8 of 62
In the case at bar, petitioner failed to allege such exceptional and compelling
circumstances which justify a direct resort to this Court. In view of the serious
procedural and technical defects of the petition, we see no need for this Court
to resolve the other issues raised by the petitioner.
WHEREFORE, premises considered, the petition is DISMISSED. With costs
against the petitioner.
SO ORDERED.
#4 [G.R. No. 104639. July 14, 1995.]
PROVINCE OF CAMARINES SUR through its GOVERNOR, SANGGUNIANG
PANLALAWIGAN and PROVINCIAL TREASURER, Petitioner, v. COURT OF
APPEALS and TITO B. DATO, Respondents.
SYLLABUS
1. ADMINISTRATIVE LAW; APPOINTMENT; TEMPORARY DISTINCT FROM
PERMANENT; CASE AT BAR. — Private respondent does not dispute the fact
that at the time he was appointed Assistant Provincial Warden on January 1,
1974, he had not yet qualified in an appropriate examination for the
aforementioned position. Such lack of a civil service eligibility made his
appointment temporary and without a fixed and definite term and is
dependent entirely upon the pleasure of the appointing power. The fact that
private respondent obtained civil service eligibility later on is of no moment as
his having passed the supervising security guard examination, did not ipso
facto convert his temporary appointment into a permanent one (Tolentino v.
De Jesus, 56 SCRA 167 [1974]; Jimenez v. Francisco, 100 Phil. 1025 [1957]). In
cases such as the one at bench, what is required is a new appointment since a
permanent appointment is not a continuation of the temporary appointment
— these are two distinct acts of the appointing authority. (Torio v. Civil Service
Commission, 209 SCRA 677 [1992]).
2. ID.; CIVIL SERVICE COMMISSION; FUNCTION THEREOF; RULE; APPLICATION
IN CASE AT BAR. — In Luego v. Civil Service Commission, 143 SCRA 327
[1986], the Court ruled that CSC has the power to approve or disapprove an
appointment set before it. It does not have the power to make the
appointment itself or to direct the appointing authority to change the
employment status of an employee. The CSC can only inquire into the
eligibility of the person chosen to fill a position and if it finds the person
qualified it must so attest. If not, the appointment must be disapproved. The
duty of the CSC is to attest appointments (Villanueva v. Balallo, 9 SCRA 407
[1963]) and after that function is discharged, its participation in the
appointment process ceases (Villegas v. Subido, 30 SCRA 498 [1969]). In the
case at bench, CSC should have ended its participation in the appointment of
private respondent on January 1, 1974 when it confirmed the temporary
status of the latter who lacked the proper civil service eligibility. When it
issued the foregoing communication on March 19, 1976, it stepped on the
toes of the appointing authority, thereby encroaching on the discretion
vested solely upon the latter.
DECISION
KAPUNAN, J.:
Petitioner Province of Camarines Sur assails the decision of the Court of
Appeals which affirmed with modification the Regional Trial Court of
Camarines Sur’s decision ordering it to pay private respondent Tito Dato
backwages and attorney’s fees.chanroblesvirtualawlibrary
The relevant antecedents are as follows:chanrob1es virtual 1aw library
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
On January 1, 1960, private respondent Tito Dato was appointed as Private
Agent by the then governor of Camarines Sur, Apolonio Maleniza.
On October 12, 1972, he was promoted and was appointed Assistant
Provincial Warden by then Governor Felix Alfelor, Sr. Because he had no civil
service eligibility for the position he was appointed to, private respondent Tito
Dato could not be legally extended a permanent appointment. Hence, what
was extended to him was only a temporary appointment. Thereafter, the
temporary appointment was renewed annually.
On January 1, 1974, Governor Alfelor approved the change in Dato’s
employment status from temporary to permanent upon the latter’s
representation that he passed the civil service examination for supervising
security guards. Said change of status however, was not favorably acted upon
by the Civil Service Commission (CSC) reasoning that Tito Dato did not
possess the necessary civil service eligibility for the office he was appointed
to. His appointment therefore remained temporary.
Thereafter, no other appointment was extended to him.
On March 16, 1976, private respondent Tito Dato was indefinitely suspended
by Governor Alfelor after criminal charges were filed against him and a prison
guard for allegedly conniving and/or consenting to evasion of sentence of
some detention prisoners who escaped from confinement.
On March 19, 1976, or two years after the request for change of status was
made, Mr. Lope B. Rama, head of the Camarines Sur Unit of the Civil Service
Commission, wrote the Governor of Camarines Sur a letter informing him that
the status of private respondent Tito Dato has been changed from temporary
to permanent, the latter having passed the examination for Supervising
Security Guard. The change of status was to be made retroactive to June 11,
1974, the date of release of said examination.
In the meantime, the Sangguniang Panlalawigan suppressed the
appropriation for the position of Assistant Provincial Warden and deleted
private respondent’s name from the petitioner’s plantilla.
Private respondent Tito Dato was subsequently acquitted of the charges
against him. Consequently, he requested the Governor for reinstatement and
backwages.
When his request for reinstatement and backwages was not heeded, private
respondent Tito Dato filed an action for mandamus before the Regional Trial
Court of Pili, Camarines Sur, Branch 31.
On May 31, 1991, the trial court 1 rendered judgment, the decretal portion of
which reads:chanrob1es virtual 1aw library
WHEREFORE, judgment is hereby rendered, ordering the
respondents:chanrob1es virtual 1aw library
1) to appropriate and pay the back salaries of the petitioner Tito B Dato
equivalent to five (5) years without qualification or deduction, at the rate of
P14,532.00 per annum, with all the rights and privileges that he is entitled to
as a regular government employee reaching the age of 65 in the government
service, as provided by law;
2) to pay the petitioner the sum of P5,000.00 as attorney’s fees; and
3) to pay the costs.
SO ORDERED. 2
In due course, petitioner Province of Camarines Sur appealed the said
decision to the Court of Appeals.
On February 20, 1992, respondent Court of Appeals rendered its decision
which dispositively reads as follows:chanrob1es virtual 1aw library
Page 9 of 62
WHEREFORE, in view of all the foregoing, judgment appealed from is hereby
AFFIRMED with the following modifications: (1) respondents are ordered to
pay the backwages of petitioner Tito B. Dato during the entire period of his
suspension, with all the rights and privileges that he is entitled to as a regular
government employee reaching the age of 65 in the government service, as
provided by law; and (2) the award of the sum of P5,000 to petitioner as
attorney’s fees and respondents to pay the costs of suit is deleted.
IT IS SO ORDERED. 3
Aggrieved by the foregoing ruling, petitioner Province of Camarines Sur
interposed the present petition submitting that the respondent court erred in
(a) affirming the trial court’s finding that private respondent Tito Dato was its
permanent employee at the time he was suspended on March 16, 1976; and
(b) modifying the said decision so as to allow private respondent to claim
backwages for the entire period of his suspension.chanrobles virtual lawlibrary
The primary question to be resolved in the instant case is whether or not
private respondent Tito Dato was a permanent employee of petitioner
Province of Camarines Sur at the time he was suspended on March 16,.1976.
Petitioner contends that when Governor Alfelor recommended to CSC the
change in the employment status of private respondent from temporary to
permanent, which the CSC approved as only temporary pending validation of
the results of private respondent’s examination for supervising security guard,
private respondent’s appointment in effect remained temporary. Hence, his
subsequent qualification for civil service eligibility did not ipso facto convert
his temporary status to that of permanent.
Private respondent, on his part, vigorously asseverates that the respondent
court committed no error in confirming his appointment as permanent.
We agree with the petitioner.
Private respondent does not dispute the fact that at the time he was
appointed Assistant Provincial Warden on January 1, 1974, he had not yet
qualified in an appropriate examination for the aforementioned position. Such
lack of a civil service eligibility made his appointment temporary 4 and
without a fixed and definite term and is dependent entirely upon the pleasure
of the appointing power. 5 The fact that private respondent obtained civil
service eligibility later on is of no moment as his having passed the
supervising security guard examination, did not ipso facto convert his
temporary appointment into a permanent one. 6 In cases such as the one at
bench, what is required is a new appointment since a permanent appointment
is not a continuation of the temporary appointment — these are two distinct
acts of the appointing authority. 7
It is worthy to note that private respondent rests his case entirely on the letter
dated March 19, 1976 communicated by Mr. Lope Rama to the Governor of
Camarines Sur. The letter, which is self-explanatory, is reproduced in full
below:chanrob1es virtual 1aw library
x x x
CAMARINES SUR UNIT
Naga City
Re: DATO, Tito
Appointment of
March 19, 1976
The Honorable
The Provincial Governor of Camarines Sur
Naga City
Sir:chanrob1es virtual 1aw library
This refers to the latest approved appointment of Mr. TITO DATO as Asst.
Provincial Warden, this province, at P3600, effective January 1, 1974 which
was approved by this Office as temporary pending validation of his
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Supervising Security Guard eligibility.
It appears, however, that the aforementioned eligibility of Mr. Dato was
released on June 11, 1974. In this connection, attention is being invited to Sec.
19, Rule III of the Rules on Personnel Action and Policies which provides that
‘Eligibility resulting from civil service examination . . . shall be effective on the
date on the release of the results of the examination . . .’ (Emphasis supplied.)
Mr. Dato’s Supervising Security Guard eligibility, therefore, takes effect June
11, 1974, the date the results thereof was released.
In view thereof, the aforementioned appointment of Mr. Dato is hereby
approved anew as follows: ‘APPROVED as temporary under Sec. 24(c), R.A.
2260, as amended, effective January 1, 1974 up to June 10, 1974 and as
permanent under Sec. 24(b), R.A. 2260, as amended, subject to the report on
his physical and medical examination as to insurability, effective June 11,
1974. The Supervising Security Guard eligibility of Mr. Dato has been
validated by the Civil Service Commission, Quezon City.
The records of Mr. Dato in this Office have been amended accordingly.
Very truly yours,
By authority of the Commission
(Initialled)
LOPE B. RAMA
Unit Head 8
The foregoing is a clear arrogation of power properly belonging to the
appointing authority. Time and again, the Court has defined the parameters
within which the power of approval of appointments shall be exercised by the
Civil Service Commission. In Luego v. Civil Service Commission, 9 the Court
ruled that CSC has the power to approve or disapprove an appointment set
before it. It does not have the power to make the appointment itself or to
direct the appointing authority to change the employment status of an
employee. The CSC can only inquire into the eligibility of the person chosen
to fill a position and if it finds the person qualified it must so attest. If not, the
appointment must be disapproved. The duty of the CSC is to attest
appointments 10 and after that function is discharged, its participation in the
appointment process ceases. 11 In the case at bench, CSC should have ended
its participation in the appointment of private respondent on January 1, 1974
when it confirmed the temporary status of the latter who lacked the proper
civil service eligibility. When it issued the foregoing communication on March
19, 1976, it stepped on the toes of the appointing authority, thereby
encroaching on the discretion vested solely upon the latter.chanrobles virtual
lawlibrary
Moreover, the Court is not prepared to accord said letter 12 any probative
value, the same being merely a purported photocopy of the alleged letter,
initialled and not even signed by the proper officer of the CSC.
Based on the foregoing, private respondent Tito Dato, being merely a
temporary employee, is not entitled to the relief he seeks, including his claim
for backwages for the entire period of his suspension.
WHEREFORE, premises considered, the appealed decision is hereby REVERSED
and the petition for mandamus instituted by herein private respondent Tito
Dato is hereby DISMISSED.
SO ORDERED.
Page 10 of 62
#5.
EUFEMIA ALMEDA and G.R. No. 150806
ROMEL ALMEDA,
Petitioners, Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
- versus - CORONA,*
NACHURA, and
REYES, JJ.
BATHALA MARKETING INDUSTRIES, INC., Promulgated:
Respondent.
January 28, 2008
x------------------------------------------------------------------------------------------ the premises after the demand made by the former.[11] Before respondent
----x
DECISION
NACHURA, J.:
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
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
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
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 plaintiffs 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.
Page 11 of 62
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]
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
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.:
Page 12 of 62
 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. x x x.[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 1250s 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
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
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.
#6 G.R. No. L-27247 April 20, 1983
IN THE MATTER OF THE PETITION FOR DECLARATORY JUDGMENT
REGARDING THE VALIDITY OF ORDINANCE NO. 386 OF THE CITY OF
BAGUIO, BAGUIO CITIZENS ACTION INC., and JUNIOR CHAMBER OF
BAGUIO CITY, INC., petitioners-appellants,
vs.
THE CITY COUNCIL AND CITY MAYOR OF THE CITY OF
BAGUIO, respondents-appellees.
DE CASTRO, J:
In this petition for declaratory relief originally filed in the Court of First
Instance of Baguio, Branch II, what is involved is the validity of Ordinance 386
passed by the City Council of Baguio City which took effect on February 23,
1967, quoted together with the explanatory note, as follows:
ORDINANCE 386
AN ORDINANCE CONSIDERING ALL SQUATTERS OF PUBLIC
LAND, OTHER THAN THOSE EARMARKED FOR PUBLIC USE IN THE
CITY OF BAGUIO WHO ARE DULY REGISTERED AS SUCH AT THE
TIME OF THE PROMULGATION OF THIS ORDINANCE AS
BONAFIDE OCCUPANTS OF THEIR RESPECTIVE LOTS AND WHICH
SHALL HEREAFTER BE EMBRACED AS A CITY GOVERNMENT
HOUSING PROJECT AND PROVIDING FOR OTHER PURPOSES.
Page 13 of 62
 Upon strong recommendation of the Vice-Mayor and
Presiding Officer, on Motion of all the Councilors, seconded by the
same, be it ordained by the City Council assembled:
Section l.—All public lands within Baguio townsite which are
occupied by squatters who are duly registered as such at the time
of the promulgation of this Ordinance such public lands not
designated by city and national authorities for public use, shall be
considered as embraced and comprising a City Government
Housing Project; PROVIDED, HOWEVER, That areas covered by
Executive Orders or Presidential Proclamations but the city had
made official representation for the lifting of such orders or
proclamation shall be deemed to be part of the Baguio Townsite
for the purposes of this ordinance;
Section 2.—Building permits shall have been deemed issued to
all squatters as contemplated by this Ordinance, giving such
squatters five years from the approval of this Ordinance to
satisfactorily comply with city building specifications and payment
of the corresponding city building permit fees;
Section 3.—All cases pending in court against squatters be
dropped without prejudice to the full prosecution of all
subsequent violations in relation to the provisions of existing city
ordinances and/or resolutions;
Section 4.—All squatters be given all the necessary and
needed protection of the City Government against the stringent
provisions of the Public Land Act, particularly on public bidding, in
that the lots occupied by said squatters be awarded to them by
direct sale through Presidential Proclamation;
Section 5.—The City Government shall not be interested in
making financial profit out of the project and that the appraisal
and evaluation of the said lots shall be made at minimum cost per
square meters, the total cost of the lots made payable within the
period of ten years;
Section 6.—The minimum lot area requirements shall be
disregarded in cases where it could not be implemented due to
existing congestion of houses, and that, if necessary, areas applied
for under this ordinance shall be reduced to that which is practical
under the circumstances; PROVIDED, HOWEVER, That squatters in
congested areas shall be given preference in the transfer to
resettlement areas or government housing projects earmarked as
such under the provisions of this ordinance, if and when it
becomes necessary to ease congestion or when their lots shall be
traversed by the laying of roads or are needed for public use;
Section 7.—The amount of P20,000.00 or so much as is
necessary, for the lot survey of each squatter's lot be appropriated,
such survey of which shall be conducted by licensed private
surveyors through public biddings; PROVIDED, That, said expenses
for survey shall be included in the overall cost of each lot;
Section 8.—The three-man control committed for the Quirino-
Magsaysay housing project which was previously created under
City Ordinance No. 344, shall exercise administration and
supervision of the city government housing projects created under
this Ordinance shall, furthermore, be entrusted with the duty of:
(1) Consolidating a list of all city squatters who shall be benefitted
in contemplation and under the provisions of this Ordinance; (2)
To assist and help the squatters in the preparation of all the
necessary and required paper work and relative items in
connection with their application over their respective lots; (3) To
seek and locate other areas within the Baguio Townsite
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
conveniently situated and which will be earmarked as
subsequently housing projects of the city for landless bonafide
city residents; and (4) To carry out and implement the provisions
of this Ordinance without the least possible delay.
EXPLANATORY NOTE
This ordinance is primarily designed to extend a helping hand
to the numerous landless city residents and the called 'Squatters'
within the Baguio Townsite in their desire to acquire residential
lots which they may rightly call their own.
The reported people who have violated the City's building
ordinances were not so guarded by any criminal perversity, but
where given to it more by circumstances of necessity and that they
are, therefore, entitled to a more human treatment, more of
understanding and more of pity rather than be herded before the
courts, likened to hardened criminals and deliberate violators of
our laws and ordinances.
PRESENT AND VOTING:
Hon. Norberto de Guzman — Vice Mayor Presiding Officer
Hon. Gaudencio Floresca — Councilor Hon. Jose S. Florendo —
Councilor Hon. Francisco G. Mayo — Councilor Hon. Braulio D.
Yaranon — Councilor Hon. Sinforoso Fañgonil — Councilor
The petition for declaratory relief filed with the Court of First Instance of
Baguio, Branch II, prays for a judgment declaring the Ordinance as invalid and
illegal ab initio. The respondents-appellees, the City Council and the City
Mayor, filed motions to dismiss the petition which were denied. Nonetheless,
in the decision thereafter rendered, the petition was dismissed on the
grounds that: 1) another court, the Court of First Instance of Baguio, Branch I,
had declared the Ordinance valid in a criminal case filed against the squatters
for illegal construction, and the Branch II of the same court cannot, in a
declaratory proceeding, review and determine the validity of said judgment
pursuant to the policy of judicial respect and stability; 2) those who come
within the protection of the ordinance have not been made parties to the suit
in accordance with Section 2 of Rule 64 and it has been held that the non-
joinder of such parties is a jurisdictional defect; and 3) the court is clothed
with discretion to refuse to make any declaration where the declaration is not
necessary and proper at the time under all circumstances, e.g. where the
declaration would be of no practical help in ending the controversy or would
not stabilize the disputed legal relation, citing Section 5 of Rule 64; ICJS 1033-
1034; 16 AM. JUR 287-289; Hoskyns vs. National City Bank of New York, 85
Phil. 201.
Hence, the instant appeal which was perfected in accordance with the
provisions of Rule 42, before the approval of Republic Act No. 5440 on
September 9, 1968.
1. The case before the Court of First Instance of Baguio, Branch 1, dealt with
the criminal liability of the accused for constructing their houses without
obtaining building permits, contrary to Section 47 in relation to Section 52 of
the Revised Ordinances of Baguio, which act the said court considered as
pardoned by Section 2 of Ordinance 386. The court in said case upheld the
power of the Municipal Council to legalize the acts punished by the aforesaid
provisions of the Revised Ordinances of Baguio, stating that the Municipal
Council is the policy determining body of Baguio City and therefore it can
amend, repeal, alter or modify its own laws as it did when it enacted
Ordinance 386. In deciding the case, the first branch of the court a quo did
not declare the whole Ordinance valid. This is clear when it stated that "had
the issue been the legalization of illegal occupation of public land, covered by
Republic Act No. 947, ... the Ordinance in question should have been ultra
vires and unconstitutional." 1 Said court merely confined itself to Sections 2
and 3 of Ordinance 386. It did not make any definite pronouncement whether
Page 14 of 62
or not the City Council has the power to legalize the illegal occupation of
public land which is the issue in the instant case. It is noteworthy that the
court, in passing upon the validity of the aforesaid sections, was apparently
guided by the rule that where part of a statute is void as repugnant to the
organic law, while another part is valid, the valid portion, if separable from the
invalid may stand and be enforced. Contrary to what was said in the decision
under review, the second branch of the court a quo was not called upon to
determine the validity of the judgment of the first branch.
2. The non-inclusion of the squatters mentioned in the Ordinance in question
as party defendants in this case cannot defeat the jurisdiction of the Court of
First Instance of Baguio. There is nothing in Section 2 of Rule 64 of the Rules
of Court which says that the non-joinder of persons who have or claim any
interest which would be affected by the declaration is a jurisdictional defect.
Said section merely states that "All persons shall be made parties who have or
claim any interest which would be affected by the declaration; and no
declaration shall, except or otherwise provided in these rules, prejudice the
rights of persons not parties to the action." This section contemplates a
situation where there are other persons who would be affected by the
declaration, but were not impleaded as necessary parties, in which case the
declaration shall not prejudice them. If at all, the case may be dismissed not
on the ground of lack of jurisdiction but for the reason stated in Section 5 of
the same Rule stating that "the Court may refuse to exercise the power to
declare rights and to construe instruments in any case where a decision would
not terminate the uncertainty or controversy which gave rise to the action, or
any case where the declaration or construction is not necessary and proper at
the time under all circumstances."
It must be noted that the reason for the law requiring the joinder of all
necessary parties is that failure to do so would deprive the declaration of the
final and pacifying function the action for declaratory relief is calculated to
subserve, as they would not be bound by the declaration and may raise the
Identical issue.2 In the case at bar, although it is true that any declaration by
the court would affect the squatters, the latter are not necessary parties
because the question involved is the power of the Municipal Council to enact
the Ordinances in question. Whether or not they are impleaded, any
determination of the controversy would be binding upon the squatters.
A different situation obtains in the case of Degala v. Reyes 3 cited in the
decision under review. The Degala case involves the validity of the trust
created in the will of the testator. In the said case, the Roman Catholic Church
which was a necessary party, being the one which would be most vitally
affected by the declaration of the nullity of the will was not brought in as
party. The Court therefore, refused to make any declaratory judgment on
ground of jurisdictional defect, for there can be no final judgment that could
be rendered and the Roman Catholic not being bound by such judgment
might raise the Identical issue, making therefore the declaration a mere
exercise in futility.
This is not true in the instant case. A declaration on the nullity of the
ordinance, would give the squatters no right which they are entitled to
protect. The party most interested to sustain and defend the legality of the
Ordinance is the body that passed it, the City Council, and together with the
City Mayor, is already a party in these proceedings.
3. The Ordinance in question is a patent nullity. It considered all squatters of
public land in the City of Baguio as bona-fide occupants of their respective
lots. As we have stated in City of Manila v. Garcia, 4 et al.:
Squatting is unlawful and no amount of acquiescence on
the part of the city officials will elevate it into a lawful act.
In principle, a compound of illegal entry and official
permit to stay is obnoxious to our concept of proper
official norm of conduct. Because, such permit does not
serve social justice; it fosters moral decadence. It does
not promote public welfare; it abets disrespect for the
law. It has its roots in vice; so it is an infected bargain.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Official approval of squatting should not, therefore, be
permitted to obtain in this country where there is an
orderly form of government.
In the same case, squatting was characterized as a widespread vice and a
blight Thus:
Since the last global war, squatting on another's property in this
country has become a widespread vice. It was and is a blight
Squatter's areas pose problems of health, sanitation. They are
breeding places for crime. They constitute proof that respect for the
law and the rights of others, even those of the government are
being flouted. Knowingly, squatters have embarked on the
pernicious act of occupying property whenever and wherever
convenient to their interests without as much as leave, and even
against the will, of the owner. They are emboldened seemingly
because of their belief that they could violate the law with impunity.
The pugnaciousness of some of them has tied up the hands of
legitimate owners. The latter are thus prevented from recovering
possession by peaceful means. Government lands have not been
spared by them. They know, of course, that instrusion into property,
government or private, is wrong. But, then the wheels of justice
grind slow, mainly because of lawyers who, by means, fair or foul,
are quite often successful in procuring delay of the day of
reckoning. Rampancy of forcible entry into government lands
particularly, is abetted by the apathy of some public officials to
enforce the government's rights. Obstinacy of these squatters is
difficult to explain unless it is spawned by official tolerance, if not
outright encouragement or protection. Said squatters have become
insensible to the difference between right and wrong. To them,
violation of law means nothing. With the result that squatters still
exists, much to the detriment of public interest. It is high time that,
in this aspect, sanity and the rule of law be restored. It is in this
environment that we look into the validity of the permits granted
defendants herein.
In the above cited case, the land occupied by the squatters belongs to the
City of Manila. In the instant case, the land occupied by the squatters are
portions of water sheds, reservations, scattered portions of the public domain
within the Baguio townsite. Certainly, there is more reason then to void the
actions taken by the City of Baguio through the questioned ordinance.
Being unquestionably a public land, no disposition thereof could be made by
the City of Baguio without prior legislative authority. It is the fundamental
principle that the state possesses plenary power in law to determine who shall
be favored recipients of public domain, as well as under what terms such
privilege may be granted not excluding the placing of obstacles in the way of
exercising what otherwise would be ordinary acts of ownership. And the law
has laid in the Director of Lands the power of exclusive control,
administrations, disposition and alienation of public land that includes the
survey, classification, lease, sale or any other form of concessions or
disposition and management of the lands of public domains. 5
Nor could the enactment of Ordinance 386 be justified by stating that "this
Ordinance is primarily designed to extend a helping hand to the numerous
landless city residents and the so called squatters within the Baguio townsite
in their desire to acquire residential lots which they may rightly call their own
and that the reported people who have violated the City's building ordinances
were not so guided by any criminal perversity, but were given to it more by
circumstances of necessity and that they are, therefore, entitled to a more
human treatment, more understanding and more of pity rather than be
herded before the courts, likened to hardened criminals and deliberate
violators of our laws and ordinances."6
Our pronouncement in Astudillo vs. Board of Directors of PHHC 7 is relevant to
this case. Thus—
Page 15 of 62
 In carrying out its social re-adjustment policies, the government
could not simply lay aside moral standards, and aim to favor
usurpers, squatters, and intruders, unmindful of the lawful and
unlawful origin and character of their occupancy. Such a policy
would perpetuate conflicts instead of attaining their just solution.
(Bernardo vs. Bernardo, 96 Phil. 202, 206.)
Indeed, the government has enunciated a militant policy against
squatters. Thus, Letter of Instruction No. 19 dated October 2, 1972
orders city and district engineers 'to remove all illegal constructions
including buildings ... and those built without permits on public or
private property' and providing for the relocation of squatters (68
O.G. 7962. See Letter of Instruction No. 19-A). As noted by Justice
Sanchez, since the last global war, squatting on another's property
in this country has become a widespread vice. (City of Manila vs..
Garcia, L-26053, Feb. 21, 1967, 19 SCRA 413, 418).
WHEREFORE, in view of the foregoing, Ordinance 386 is hereby rendered
nullified and without force and effect.
SO ORDERED.
#7 G.R. No. L-21036 June 30, 1977
COMMISSIONER OF CUSTOMS and COLLECTOR OF CUSTOMS FOR
MANILA and CONRADO SOLEDAD, EDMUNDO POSTRERO, MAXIMINO
ABRUGENA, GERONIMO DERILO, SANTOS GUINTO and EUSTAQUIO
MARANAN, as employees and duly authorized representatives of the
House of Representatives, Congress of the Philippines, Petitioners,
vs. HON. JUDGE GAUDENCIO CLORIBEL, as Presiding Judge of Branch VI,
Court of First Instance of Manila, and JOSE and SUSANA
COCHINGYAN, Respondents.
Solicitor General Arturo A. Alafriz Assistant Solicitor General Pacifico P.
de Castro, Solicitor Alejandro B. Afurong, Special Attorney Jose T. Viduya
and Attorney Ceferino de los Santos for petitioners.chanrobles virtual law
library
Lino M. Patajo and Ramon Encarnacion, Jr. for private respondents.
BARREDO, J.:
Petition for certiorari and prohibition to annul and set aside several orders of
respondent court all of which together in effect: (1) permitted ex-parte private
respondents Jose and Susana Conchingyan to file a third-party complaint for
mandamus against petitioners in a special civil. action for declaratory relief in
which said Cochingyans were defendants and which was already tried and
almost ready for decision; on the same day, (2) admitted said third-party
complaint and (8) further issued immediately a writ of preliminary mandatory
injunction likewise ex-parte; and which (4) were intended to enforce said writ
of injunction.chanroblesvirtualawlibrarychanrobles virtual law library
There was pending before respondent court as Civil Case No. 52318,
entitled Macario M. Ofilada vs. Reparations Commission, Jose Cochingyan and
Susana Cochingyan, a special civil action for declaratory relief, wherein
Ofilada, as the Second Receiver of the World War II Veterans Enterprises, Inc.
(Warvets) in Civil Case No. 34998, likewise pending in another Branch of the
Court of First Instance of Manila, sought a judicial declaration as to whether,
under the allocation granted to said Warvets to purchase reparations goods,
the conversion into pesos of the dollar prices of said goods should be at the
rate of two pesos to one dollar or at the prevailing market rate at the time for
payment, which would be much higher. Civil Case No. 34998 was a minority
suit filed by certain stockholders of Warvets alleging irregularities in the
management and disposition of the goods being purchased by the
corporation by virtue of the aforementioned allocation, hence the need for
receivers, of which there were two, the first being one Ramon E. Saura and the
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
second, Ofilada. In the same Civil Case No. 34998, an order had been issued
on October 9, 1962 ordering Ofilada to deliver to the Cochingyans the second
shipment of goods under Warvets' allocation. (The Cochingyans had a
contract with Warvets regarding said goods.) It appears, however, that a
motion for the reconsideration of the just mentioned order of October 9,
1962 had been filed and was still unresolved when on February 9, 1963, the
Honorable Judge Francisco Arca (now deceased) issued the following order:
Considering all the foregoing, the Court is of the opinion that the petition of
Atty. Magno to defer action on the motion for contempt against the
intervenors should be granted until after it can be definitely known whether
or not the parties can settle this case amicably. Resolutions on all pending
incidents, such as the motion for reconsideration of the order authorizing the
release of the second shipment, and the motions for the release of the third,
fourth and fifth shipments, are also held in abeyance until such time that the
Court knows the result of the pending settlement being negotiated among
the parties.chanroblesvirtualawlibrarychanrobles virtual law library
In view of all the above, the Court hereby orders that all incidents pending
resolution be held in abeyance until after the parties have definitely decided
whether they are going to settle this case or not. (Emphasis supplied.)
It was shortly after the issuance of this order which in effect freezed the order
of release of October 9, 1962, that the incidents subject of the instant petition
took place. On February 13, 1963, the Cochingyans filed in Civil Case No.
52318 then already tried although not yet decided by Judge Gaudencio
Cloribel (now also deceased) - who on February 9, 1963 had written the
Secretary of Justice asking for permission to go on leave for a week starting
February 12, 1973 but who later changed the starting date to February 13,
1973- an ex-parte motion asking permission to file a third party complaint
which was forthwith granted. On the same day, another motion was filed
asking for immediate admission of the third party complaint, which likewise,
was forthwith granted. The third-party complaint included in the prayer,
among other reliefs, the following:
1. Immediately upon the filing of the herein third-party complaint this
Honorable Court issue a writ of preliminary mandatory injunction ex-parte,
without notice to the other parties, ordering the third-party defendants
Commissioner of Customs and Collector of Customs and Reparations
Commission to release immediately to the third-party plaintiffs the balance of
the 202 packages of rayon clothing forming part of the shipment of consumer
goods originally consigned to the Reparations Commission which arrived in
Manila aboard the SS GUILLERMO on September 10, 1962, and which to the
present are still under the custody and possession of the Collector of Customs
and Commissioner of Customs, upon the filing of a bond by the third-party
plaintiffs in such amount as may be fixed by this Honorable Court to pay for
any damages that the third-party defendants may suffer should this
Honorable Court find that issuance of the preliminary mandatory injunction is
not proper. (Page 87, Record.)
Without loss of time and without hearing the third-party defendants, the
following order, was issued on the same day, February 12, 1963:
In a verified third-party complaint for mandamus against the Commissioner of
Customs, the Collector of Customs and others, third party plaintiffs Jose and
Susana Cochingyan, doing business under the name and style "The Catholic
Church Mart", alleged that a shipment of 402 packages of rayon cloth which
was procured by the Reparations Commission to cover an allocation granted
by the Commission to the World War II Veterans Enterprises (WARVETS for
reparation consumer goods from Japan arrived in Manila on September 10,
1962, consigned to the Reparations Commission; that this Court in Civil Case
No. 34998 entitled "Pilar Normandy et al., vs. Calixto Duque, et al." authorized
in its order of October 9, 1962, the Second Receiver of WARVETS, Mr. Macario
M. Ofilada, to release said goods to Jose and Susana Cochingyan; that
pursuant to said order of October 9, 1962, Mr. Ofilada, in his capacity as
second receiver of WARVETS, signed a contract of absolute sale with the
Reparations Commission covering the described reparation consumer goods
Page 16 of 62
and paid in full the purchase price of said goods; that after receiving full
payment of the purchase price of said goods the Commission instead of
releasing the goods from customs and delivering them requested the
Collector of Customs to verify and make an appraisal of the value of the
goods and complying with said request, the Collector of Customs opened and
inspected each and all of the bales and packages compromising said
shipment; that after completing said inspection and verification the Collector
of Customs advised the third-party plaintiffs herein that the shipment cannot
be released unless the advance sales' tax due on the goods be first paid; that
said Collector of Customs also advised the Reparations Commission that the
goods, being reparations goods and as such owned by the Philippine
Government, cannot be subject to seizure or forfeiture proceedings; that of
the 402 packages the Commissioner and Collector of Customs have released
to the said third-party plaintiffs only 200 packages but have retained 202
packages supposedly to secure the payment of advance sales tax assessed on
the shipment as recomputed on the basis of an opinion of the Collector of
Internal Revenue; that notwithstanding the fact that there are no unpaid liens
fines, surcharges taxes (except the advance sales tax the payment of which
was tendered by third-party plaintiffs and refused and the amount deposited
with the Clerk of this Court) customs duties, and consular fees (of which the
goods are exempt under Section 14 of the Reparations Law) and
notwithstanding the fact that there are no pending proceedings for the
seizure and forfeiture of the goods for the same have been imported by the
Reparations Commission which made the proper declaration of entry therefor,
third-party defendants Commissioner of Customs and Collector of Customs
have refused without any legal reason or justification whatsoever to release
and deliver the balance of the shipment to the third-party plaintiffs; that the
duty of the Collector of Customs and Commissioner of Customs to deliver or
release said goods to third- party plaintiffs is clear as under the circumstances
above recited said officials have no discretion to decide whether or not to
release said goods.chanroblesvirtualawlibrarychanrobles virtual law library
Third-party plaintiffs further alleged that the delay in the release of the goods
to them has caused and will cause them grave and irreparable damage and
injury; and unless a writ of preliminary injunction were to be issued ex-parte
they will suffer greater and grave
damages.chanroblesvirtualawlibrarychanrobles virtual law library
WHEREFORE, finding the petition for the issuance of a writ of preliminary
injunction to be meritorious, the same is hereby granted, and upon the filing
by the third-party plaintiffs of a bond in the sum of P5,000.00 to answer for all
damages that the third-party defendants may sustain by reason of this
injunction if it be finally decided that the third-party plaintiffs are not entitled
thereto, let a writ of preliminary mandatory injunction be issued ordering the
third-party defendants Commissioner of Customs, Collector of Customs, and
the Reparations Commission, their representatives, agents, subordinates and
other persons acting in their behalf to release and deliver immediately the
third-party plaintiffs Jose and Susana Cochingyan, doing business under the
name and style 'The Catholic, Church Mart the 202 packages of rayon cloth
presently in their possession, custody and/or control, which goods are part of
the shipment of reparation consumer goods which arrived in Manila aboard
the SS Guillermo from Japan consigned to the Reparations
Commission.chanroblesvirtualawlibrarychanrobles virtual law library
SO ORDERED.
The writ issued pursuant to this order was served on the Law Division of the
Bureau of Customs at 4:55 o'clock in the afternoon of the same day, February
12, 1963. But compliance therewith did not materialize. A motion to lift the
writ was filed, and in the meanwhile, the Chairman of the Committee on
Reparations of the House of Representatives, which was then investigating the
implementation of the Warvets allocation, asserted jurisdiction over the
goods by ordering the Collector of Customs to deliver the same to the
Sergeant-at-Arms of the House. Respondent court denied the motion to lift
and threatened the agents of the Committee on Reparations, herein co-
petitioners, with contempt. Still, there was no release. The goods were,
therefore, still unreleased to the Cochingyans when the petition now at bar
was filed.chanroblesvirtualawlibrarychanrobles virtual law library
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
We deem it unnecessary to dwell on the many interesting issues extensively
and brilliantly discussed by distinguished counsel of both petitioners and
respondents. In Our view of this case, the only question We have to resolve in
order to dispose of it is whether or not respondent court gravely abused its
discretion in allowing the filing of and in admitting the third-party complaint
of the Cochingyans. In the affirmative, it should follow that the writ of
preliminary mandatory injunction in question would have no legal basis, as
also all subsequent orders of respondent court tending to enforce the same.
And it is Our considered opinion and so We hold that it was highly irregular
and totally unwarranted for respondent court to have allowed said third-party
complaint. The circumstances surrounding the allowance and admission
thereof indicate that respondent court's action was hasty, baseless and
arbitrary.chanroblesvirtualawlibrarychanrobles virtual law library
As already stated, Civil Case No. 52318 was a special civil action for
declaratory relief under Rule 66 of the Rules of 1940 which were in force when
it was filed. The only purpose thereof was to secure from the court the proper
interpretation or construction of the reparations contract between the
Reparations Commission and Warvets in regard to the rate of conversion of
the dollar to the peso of the purchase price Warvets had to pay No positive or
affirmative, much less any material relief, was 'using sought therein. Indeed, it
is in the very nature of a 'declaratory relief special civil action that "the Relief
is confined to a case of actual controversy within the Court's jurisdiction,
without the need of injunction, execution or other relief beyond the
adjudication of the legal rights which are the subject of controversy between
the parties." ( 3 Moran, Comments on the Rules of Court, p. 146, 1970 ed.) In
other words, the plaintiff Ofilada in said case did not, as he could not pray for
anything to be award or granted to him. Now, as regards the nature and
purpose of a third-party complaint, Section 1 of Rule 12 of the Rules of 1940
provided:
SECTION 1. Claim against one not a party to an action. - When a defendant
claims to be entitled against a person not a party to the action, hereinafter
called the third-party defendant, to contribution, indemnity, subrogation or
any other relief, in respect of the plaintiff' claim, he may file, with leave of
court, against such person a pleading which shall state the nature of his claim
and shall be called the third-party complaint.
It is obvious from this definition that a third-party complaint is inconceivable
when the main case is one for nothing more' than a declaratory relief. In a
third-party complaint, the defendant or third-party plaintiff is supposed to
seek contribution, indemnity, subrogation or any other relief from the third-
party defendant is respect to the claim of the plaintiff against him. In the case
at bar, what possible relief could the Cochingyans, as defendants in Civil Case
No. 52318, for declaratory relief, have asked for by way of contribution,
indemnity, subrogation or any other relief from those they have named third-
party defendants, the Collector of Customs, Commissioner of Customs,
Reparations Commission, their co-defendant and Macario Ofilada, the very
plaintiff, in respect to the construction or interpretation that Ofilada was
asking the court to make? At the risk of quoting again part thereof, the
complete prayer in the third-party complaint in question reads thus:
1. Immediately upon the filing of the herein third-party complaint this
Honorable Court issue a writ of preliminary mandatory injunction ex-parte,
without notice to the other parties, ordering the third-party defendants
Commissioner of Customs and Collector of Customs and Reparations
Commission to release immediately the third-party plaintiffs the balance of
the 202 packages of rayon clothing forming part of the shipment of consumer
goods originally consigned to the Reparations Commission which arrived in
Manila aboard the SS GUILLERMO on September 10, 1962, and which to the
present are still under the custody and possession of the collector of Customs
and Commissioner of Customs upon the filing of a bond by the third-party
plaintiffs in such amount as may be fixed by this Honorable Court to pay for
any damages that the third-party defendants may suffer should this
Honorable Court find that issuance of the preliminary mandatory injunction is
not proper.chanroblesvirtualawlibrarychanrobles virtual law library
Page 17 of 62
2. That after hearing on the merits this Honorable Court confirm and make
final its order of mandatory preliminary
injunction.chanroblesvirtualawlibrarychanrobles virtual law library
The third-party plaintiffs further pray for such other relief as may be just and
equitable under the premises. (Pp. 87-88, Record.)chanrobles virtual law
library
According to Moran:
Tests of Propriety.-The test to determine whether the claim for indemnity in a
third-party complaint in respect to plaintiff's claim is proper, are (a) whether it
arises out of the same transaction on which plaintiff's claim is based; or
whether the third-party's claim, although arising out of another or different
contract or transaction, is connected with plaintiff's claim; (U.S. Commercial
Co. v. Guevara, et al., 48 O.G. 612.) (b) whether the third-party defendant
would be liable to the plaintiff or to the defendant for all or part of the
plaintiffs claim against the original defendant, although the third- party
defendant's liability arises out of another transaction; or (e) whether the third-
party defendant may assert any defense which the third-party plaintiff has, or
may have, against plaintiff's claim. (Capayas v. Court of First Instance, 77 Phil.
181.) Failing these tests, the complaint is improper. ... (1 Moran, Comments on
the Rules of Court, p. 281, 1970 ed.)
It is thus too evident to call for more elaborate discussion that respondent
court s action in allowing the filing of Cochingyans' third-party complaint
completely disregarded, due presumably to ignorance thereof, the basic
concepts of the remedies of declaratory relief and third-party
complaint.chanroblesvirtualawlibrarychanrobles virtual law library
Moreover, respondent court also paid no heed to the requirement of Section
2 of Rule 12 of the 1940 Rules to the effect that: "Before the service of his
answer a defendant may move ex parte or, after the service of his answer, on
notice to the plaintiff, for leave as third- party plaintiff to file a complaint
against a third-party defendant." In the present case, it is a fact that the
motions of the Cochingyans for leave to file their third-party complaint and
for the admission thereof were granted ex parte notwithstanding that the trial
of the case had already been terminated.chanroblesvirtualawlibrarychanrobles
virtual law library
IN CONSEQUENCE OF THE FOREGOING, We have no other alternative than to
declare as We do declare null and void all the orders herein complained
of. 1 They are all hereby set aside and respondent court is enjoined to desist
from carrying any of them into effect, Costs against respondents Jose and
Susana Cochingyan.
Antonio, Muñoz-Palma, Concepcion, Jr., and Martin, JJ., concur.
#8 G.R. No. L-29673 November 12, 1987
THE VISAYAN PACKING CORPORATION, petitioner,
vs.
THE REPARATIONS COMMISSION and THE COURT OF
APPEALS, respondents.
NARVASA, J.:
The proceedings at bar had their origin in an agreement denominated
"Contract of Constitutional Purchase and Sale of nterparation Goods" entered
into between petitioner Visayan baking Corporation (hereafter, simply
VISPAC) and the Reparations Commission (hereafter, simply REPACOM).
Subject of the contract were a cannery plant, a tin manufacturing plant, and
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
three (3) filing boats sold to VISPAC, for which it bound itself to pay the total
price of P1,135,712.47 in ten (10) equal yearly installments with interest. 2
Prior to the due date of the first installment, REPACOM sent VISPAC a written
reminder thereof. VISPAC's response was to file in the Court of First Instance
of Manila two (2) special civil actions for declaratory relief, 3alleging ambiguity
in the contract between it and REPACOM consisting in the agreement's failure
to clearly state the precise time when the obligation to pay the first
installment of the price would arise. 4
On the other hand, when VISPAC subsequently failed, despite several
demands, to pay the first installment of the price (P135,712.47) on what
REPACOM deemed to be the due date, the latter instituted an ordinary civil
action for collection thereof. 5 VISPAC moved to dismiss this collection suit on
the ground of the pendency of the declaratory relief actions, arguing that until
and unless the latter were resolved, no cause of action could be deemed to
exist in favor of REPACOM for collection of said first installment. The motion
to dismiss was denied; and after trial, the Court of First Instance rendered
judgment dated March 27, 1963 ordering VISPAC to pay REPACOM the sum
claimed, P135,712.47, with interest at the legal rate from date of filing of the
complaint until fully paid.
VISPAC appealed to the Court of Appeals claiming error on the part of the
Trial Court in not holding that the collection suit was barred by the pendency
of the declaratory relief cases earlier instituted.
But the declaratory relief actions had been earlier dismissed by Order of the
Court of First Instance dated October 9, 1962, the Court holding that the
issues raised would be necessarily threshed out in the collection suit. VISPAC
appealed to this Court 6 but was rebuffed. By decision rendered on May 31,
1965, this Court affirmed the dismissal of the declaratory relief suits, holding
that the clarity of the terms of the contract eliminated all occasion for
interpretation thereof.
VISPAC also received an unfavorable verdict in its appeal to the Court of
Appeals from the decision of the Trial Court in the collection action against it.
That Appellate Court, on October 2, 1968, promulgated judgment affirming
that of the Court of First Instance. It is this affirmance of the Court of Appeals
that is subject of the instant appeal taken to this Court by VISPAC. VISPAC's
contention is that it was error on the Appellate Court's part to have affirmed
the Trial Court's decision for the collection of the first installment of the price
due from it under its contract with REPACOM, because that money claim
should have been set up as a compulsory counterclaim in the declaratory relief
action, and since REPACOM had not done this, but had instead set it up in a
separate suit, the claim had thereby become barred.
It is indeed the rule, embodied in Section 4, Rule 9 of the Rules of Court, that
a counterclaim not set up shall be barred if it arises out of or is necessarily
connected with the transaction or occurrence that is the subject matter of the
opposing party's claim and does not require for its adjudication the presence
of third parties of whom the court cannot acquire jurisdiction. In other words,
a compulsory counterclaim cannot be made the subject of a separate action
but should be asserted in the same suit involving the same transaction or
occurrence giving rise to it. The omission is not however irremediable or
irreversibly fatal. The Rules provide that when a pleader fails to set up a
counterclaim through oversight, inadvertence, or excusable negligence, or
when justice requires, he may, by leave of court, set up the counterclaim or
crossclaim by amendment before judgment. 7 Where the counterclaim is
made the subject of a separate suit, it may be abated upon a plea of auter
action pendant or litis pendentia, 8 and/or dismissed on the ground of res
adjudicata. 9 Res adjudicata may be pleaded as a ground for dismissal if the
opposing party's claim, involving the same transaction or occurrence as the
counterclaim, has already been adjudicated on the merits by a court of
competent jurisdiction, and the judgment has become final; this, on the
theory that what is barred by prior judgment are not only the matters
squarely raised and litigated, but all such other matters as could have been
raised but were not. 10
Page 18 of 62
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 an not essentially different from all 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. 11 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. 12
Ideally, in the case at bar, the separate action for collection should have been
dismissed and set up as a compulsory counterclaim in the declaratory relief
suits, by way of an amended answer. This was not done. The actions
proceeded separately and were decided on the merits. The final verdict was
that the declaratory relief suits instituted by VISPAC were unmeritorious, quite
without foundation and, in the light of all the relevant facts, appear to have
been initiated by VISPAC merely to obstruct and delay the payment of the
installments clearly due from it, payment of which was decreed in
the collection suit. Under the circumstances, and taking account of the not
inconsiderable lenght of time that the case at bar has been pending, it would
be to do violence to substantial justice to pronounce the proceedings fatally
defective for breach of the rule on compulsory counterclaims. Rules of
procedure are after all laid down in order to attain justice. They cannot be
applied to prevent the achievement of that goal. Form cannot prevail over
substance. 13
WHEREFORE, the petition is dismissed for lack of merit, with costs against the
petitioner.
Teehankee C.J., Cruz, * Paras and Gancayco, JJ., concur.
# G.R. No. 211356, September 29, 2014
CRISOSTOMO B. AQUINO, Petitioner, v. MUNICIPALITY OF MALAY,
AKLAN, REPRESENTED BY HON. MAYOR JOHN P. YAP, SANGGUNIANG
BAYAN OF MALAY, AKLAN, REPRESENTED BY HON. EZEL FLORES,
DANTE PASUGUIRON, ROWEN AGUIRRE, WILBEC GELITO, JUPITER
GALLENERO, OFFICE OF THE MUNICIPAL ENGINEER, OFFICE OF THE
MUNICIPAL TREASURER, BORACAY PNP CHIEF, BORACAY FOUNDATION,
INC., REPRESENTED BY NENETTE GRAF, MUNICIPAL AUXILIARY POLICE,
AND JOHN AND JANE DOES, Respondents.
DECISION
VELASCO JR., J.:
Nature of the Case
Before the Court is a Petition for Review on Certiorari challenging the
Decision1 and the Resolution of the Court of Appeals (CA) in CA-G.R. SP No.
120042 dated August 13, 2013 and February 3, 2014, respectively. The
assailed rulings denied Crisostomo Aquino’s Petition for Certiorari for not
being the proper remedy to question the issuance and implementation of
Executive Order No. 10, Series of 2011 (EO 10), ordering the demolition of his
hotel establishment.
The Facts
Petitioner is the president and chief executive officer of Boracay Island West
Cove Management Philippines, Inc. (Boracay West Cove). On January 7, 2010,
the company applied for a zoning compliance with the municipal government
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
of Malay, Aklan.2 While the company was already operating a resort in the
area, the application sought the issuance of a building permit covering the
construction of a three-storey hotel over a parcel of land measuring 998 sqm.
located in Sitio Diniwid, Barangay Balagab, Boracay Island, Malay, Aklan, which
is covered by a Forest Land Use Agreement for Tourism Purposes (FLAgT)
issued by the Department of Environment and Natural Resources (DENR) in
favor of Boracay West Cove.
Through a Decision on Zoning dated January 20, 2010, the Municipal Zoning
Administrator denied petitioner’s application on the ground that the
proposed construction site was within the “no build zone” demarcated in
Municipal Ordinance 2000-131 (Ordinance).3 As provided in the
Ordinance:chanRoblesvirtualLawlibrary
SECTION 2. – Definition of Terms. As used in this Ordinance, the following
words, terms and phrases shall mean as follows:chanRoblesvirtualLawlibrary
xxxx
(b) No Build Zone – the space twenty-five (25) meters from the edge of the
mean high water mark measured inland;
xxxx
SECTION 3. – No building or structure of any kind whether temporary or
permanent shall be allowed to be set up, erected or constructed on the
beaches around the Island of Boracay and in its offshore waters. During the
conduct of special activities or special events, the Sangguniang Bayan may,
through a Resolution, authorize the Office of the Mayor to issue Special
Permits for construction of temporary structures on the beach for the
duration of the special activity as embodied in the Resolution.
In due time, petitioner appealed the denial action to the Office of the Mayor
on February 1, 2010.
On May 13, 2010, petitioner followed up his appeal through a letter but no
action was ever taken by the respondent mayor. On April 5, 2011, however, a
Notice of Assessment was sent to petitioner asking for the settlement of
Boracay West Cove’s unpaid taxes and other liabilities under pain of a
recommendation for closure in view of its continuous commercial operation
since 2009 sans the necessary zoning clearance, building permit, and business
and mayor’s permit. In reply, petitioner expressed willingness to settle the
company’s obligations, but the municipal treasurer refused to accept the
tendered payment. Meanwhile, petitioner continued with the construction,
expansion, and operation of the resort hotel.
Subsequently, on March 28, 2011, a Cease and Desist Order was issued by the
municipal government, enjoining the expansion of the resort, and on June 7,
2011, the Office of the Mayor of Malay, Aklan issued the assailed EO 10,
ordering the closure and demolition of Boracay West Cove’s hotel.
EO 10 was partially implemented on June 10, 2011. Thereafter, two more
instances followed wherein respondents demolished the improvements
introduced by Boracay West Cove, the most recent of which was made in
February 2014.
Alleging that the order was issued and executed with grave abuse of
discretion, petitioner filed a Petition for Certiorari with prayer for injunctive
relief with the CA. He argued that judicial proceedings should first be
conducted before the respondent mayor could order the demolition of the
company’s establishment; that Boracay West Cove was granted a FLAgT by
the DENR, which bestowed the company the right to construct permanent
improvements on the area in question; that since the area is a forestland, it is
the DENR—and not the municipality of Malay, or any other local government
unit for that matter—that has primary jurisdiction over the area, and that the
Regional Executive Director of DENR-Region 6 had officially issued an opinion
regarding the legal issues involved in the present case; that the Ordinance
admits of exceptions; and lastly, that it is the mayor who should be blamed
for not issuing the necessary clearances in the company’s favor.
Page 19 of 62
In rebuttal, respondents contended that the FLAgT does not excuse the
company from complying with the Ordinance and Presidential Decree No.
1096 (PD 1096), otherwise known as the National Building Code of the
Philippines. Respondents also argued that the demolition needed no court
order because the municipal mayor has the express power under the Local
Government Code (LGC) to order the removal of illegally constructed
buildings.
Ruling of the Court of Appeals
In its assailed Decision dated August 13, 2013, the CA dismissed the petition
solely on procedural ground, i.e., the special writ of certiorari can only be
directed against a tribunal, board, or officer exercising judicial or quasi-judicial
functions and since the issuance of EO 10 was done in the exercise of
executive functions, and not of judicial or quasi-judicial
functions, certiorari will not lie. Instead, the proper remedy for the petitioner,
according to the CA, is to file a petition for declaratory relief with the Regional
Trial Court.
Petitioner sought reconsideration but this was denied by the CA on February
3, 2014 through the challenged Resolution. Hence, the instant petition raising
arguments on both procedure and substance.
The Issues
Stripped to the essentials, the pivotal issues in the extant case are as
follows:chanRoblesvirtualLawlibrary
The propriety under the premises of the filing of a petition
for certiorari instead of a petition for declaratory relief;
a. Whether or not declaratory relief is still available to petitioner;
b. Whether or not the CA correctly ruled that the respondent mayor
was performing neither a judicial nor quasi-judicial function when
he ordered the closure and demolition of Boracay West Cove’s
hotel;
Whether or not respondent mayor committed grave abuse of discretion
when he issued EO 10;
a. Whether or not petitioner’s right to due process was violated when
the respondent mayor ordered the closure and demolition of
Boracay West Cove’s hotel without first conducting judicial
proceedings;
b. Whether or not the LGU’s refusal to issue petitioner the necessary
building permit and clearances was justified;
c. Whether or not petitioner’s rights under the FLAgT prevail over the
municipal ordinance providing for a no-build zone;
andChanRoblesVirtualawlibrary
d. Whether or not the DENR has primary jurisdiction over the
controversy, not the LGU.
The Court’s Ruling
We deny the petition.
Certiorari, not declaratory relief, is the proper remedy
a. Declaratory relief no longer viable
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Resolving first the procedural aspect of the case, We find merit in petitioner’s
contention that the special writ of certiorari , and not declaratory relief, is the
proper remedy for assailing EO 10. As provided under Sec. 1, Rule 63 of the
Rules of Court:chanRoblesvirtualLawlibrary
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. x x x
(emphasis added)
An action for declaratory relief presupposes that there has been no actual
breach of the instruments involved or of the rights arising thereunder. Since
the purpose of an action for declaratory relief is to secure an authoritative
statement of the rights and obligations of the parties under a statute, deed, or
contract for their guidance in the enforcement thereof, or compliance
therewith, and not to settle issues arising from an alleged breach thereof, it
may be entertained before the breach or violation of the statute, deed or
contract to which it refers. A petition for declaratory relief gives a practical
remedy for ending controversies that have not reached the state where
another relief is immediately available; and supplies the need for a form of
action that will set controversies at rest before they lead to a repudiation of
obligations, an invasion of rights, and a commission of
wrongs.4cralawlawlibrary
In the case at bar, the petition for declaratory relief became unavailable by EO
10’s enforcement and implementation. The closure and demolition of the
hotel rendered futile any possible guidelines that may be issued by the trial
court for carrying out the directives in the challenged EO 10. Indubitably, the
CA erred when it ruled that declaratory relief is the proper remedy given such
a situation.
b. Petitioner correctly resorted to certiorari
On the propriety of filing a petition for certiorari , Sec. 1, Rule 65 of the Rules
of Court provides:chanRoblesvirtualLawlibrary
Section 1. Petition for certiorari . — When any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in excess of
its or his jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction, and there is no appeal, or any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby
may file a verified petition in the proper court, alleging the facts with certainty
and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental
reliefs as law and justice may require. x x x
For certiorari to prosper, the petitioner must establish the concurrence of the
following requisites, namely:chanRoblesvirtualLawlibrary
1. The writ is directed against a tribunal, board, or officer exercising
judicial or quasi-judicial functions;
2. Such tribunal, board, or officer has acted without or in excess of
jurisdiction, or with grave abuse of discretion amounting to lack or
excess of jurisdiction; andChanRoblesVirtualawlibrary
3. There is no appeal or any plain speedy, and adequate remedy in the
ordinary course of law.5
Guilty of reiteration, the CA immediately dismissed the Petition for Certiorari
upon determining that the first element is wanting—that respondent mayor
was allegedly not exercising judicial or quasi-judicial functions when he issued
EO 10.
Page 20 of 62

We are not persuaded.
The CA fell into a trap when it ruled that a mayor, an officer from the
executive department, exercises an executive function whenever he issues an
Executive Order. This is tad too presumptive for it is the nature of the act to
be performed, rather than of the office, board, or body which performs it, that
determines whether or not a particular act is a discharge of judicial or quasi-
judicial functions. The first requirement for certiorari is satisfied if the officers
act judicially in making their decision, whatever may be their public
character.6cralawlawlibrary
It is not essential that the challenged proceedings should be strictly and
technically judicial, in the sense in which that word is used when applied to
courts of justice, but it is sufficient if they are quasi-judicial.7 To contrast, a
party is said to be exercising a judicial function where he has the power to
determine what the law is and what legal rights of the parties are, and then
undertakes to determine these questions and adjudicate upon the rights of
the parties, whereas quasi-judicial function is “a term which applies to the
actions, discretion, etc., of public administrative officers or bodies x x x
required to investigate facts or ascertain the existence of facts, hold hearings,
and draw conclusions from them as a basis for their official action and to
exercise discretion of a judicial nature.”8cralawlawlibrary
In the case at bench, the assailed EO 10 was issued upon the respondent
mayor’s finding that Boracay West Cove’s construction, expansion, and
operation of its hotel in Malay, Aklan is illegal. Such a finding of illegality
required the respondent mayor’s exercise of quasi-judicial functions, against
which the special writ of certiorari may lie. Apropos hereto is Our ruling in City
Engineer of Baguio v. Baniqued:9cralawlawlibrary
There is no gainsaying that a city mayor is an executive official nor is the
matter of issuing demolition notices or orders not a ministerial one. In
determining whether or not a structure is illegal or it should be demolished,
property rights are involved thereby needing notices and opportunity to be
heard as provided for in the constitutionally guaranteed right of due
process. In pursuit of these functions, the city mayor has to exercise quasi-
judicial powers.
With the foregoing discussion, the CA erred in ruling that the respondent
mayor was merely exercising his executive functions, for clearly, the first
requisite for the special writ has been satisfied.
Aside from the first requisite, We likewise hold that the third element, i.e., the
unavailability of a plain, speedy, or adequate remedy, is also present herein.
While it may be argued that, under the LGC, Executive Orders issued by
mayors are subject to review by provincial governors,10 this cannot be
considered as an adequate remedy given the exigencies of petitioner’s
predicament.
In a litany of cases, We have held that it is inadequacy, not the mere absence
of all other legal remedies and the danger of failure of justice without the writ,
that must usually determine the propriety of certiorari . A remedy is plain,
speedy and adequate if it will promptly relieve the petitioner from the
injurious effects of the judgment, order, or resolution of the lower court or
agency. It is understood, then, that a litigant need not mark time by resorting
to the less speedy remedy of appeal in order to have an order annulled and
set aside for being patently void for failure of the trial court to comply with
the Rules of Court.11cralawlawlibrary
Before applying this doctrine, it must first be borne in mind that respondents
in this case have already taken measures towards implementing EO 10. In fact,
substantial segments of the hotel have already been demolished pursuant to
the mayor’s directive. It is then understandable why petitioner prayed for the
issuance of an injunctive writ––a provisional remedy that would otherwise
have been unavailable had he sought a reversal from the office of the
provincial governor of Aklan. Evidently, petitioner correctly saw the urgent
need for judicial intervention via certiorari .
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
In light of the foregoing, the CA should have proceeded to grab the bull by its
horns and determine the existence of the second element of certiorari ––
whether or not there was grave abuse of discretion on the part of
respondents.
Upon Our finding that a petition for certiorari under Rule 65 is the appropriate
remedy, We will proceed to resolve the core issues in view of the urgency of
the reliefs prayed for in the petition.
Respondents did not commit grave abuse of discretion
a. The hotel’s classification as a nuisance
Article 694 of the Civil Code defines “nuisance” as any act, omission,
establishment, business, condition or property, or anything else that (1)
injures or endangers the health or safety of others; (2) annoys or offends the
senses; (3) shocks, defies or disregards decency or morality; (4) obstructs or
interferes with the free passage of any public highway or street, or any body
of water; or (5) hinders or impairs the use of property.12cralawlawlibrary
In establishing a no build zone through local legislation, the LGU effectively
made a determination that constructions therein, without first securing
exemptions from the local council, qualify as nuisances for they pose a threat
to public safety. No build zones are intended for the protection of the public
because the stability of the ground’s foundation is adversely affected by the
nearby body of water. The ever present threat of high rising storm surges also
justifies the ban on permanent constructions near the shoreline. Indeed, the
area’s exposure to potential geo-hazards cannot be ignored and ample
protection to the residents of Malay, Aklan should be afforded.
Challenging the validity of the public respondents’ actuations, petitioner
posits that the hotel cannot summarily be abated because it is not a
nuisance per se, given the hundred million peso-worth of capital infused in
the venture. Citing Asilo, Jr. v. People,13 petitioner also argues that
respondents should have first secured a court order before proceeding with
the demolition.
Preliminarily, We agree with petitioner’s posture that the property involved
cannot be classified as a nuisance per se, but not for the reason he so offers.
Property valuation, after all, is not the litmus test for such a determination.
More controlling is the property’s nature and conditions, which should be
evaluated to see if it qualifies as a nuisance as defined under the law.
As jurisprudence elucidates, nuisances are of two kinds: nuisance per se and
nuisance per accidens. The first is recognized as a nuisance under any and all
circumstances, because it constitutes a direct menace to public health or
safety, and, for that reason, may be abated summarily under the undefined
law of necessity. The second is that which depends upon certain conditions
and circumstances, and its existence being a question of fact, it cannot be
abated without due hearing thereon in a tribunal authorized to decide
whether such a thing does in law constitute a nuisance.14cralawlawlibrary
In the case at bar, the hotel, in itself, cannot be considered as a nuisance per
se since this type of nuisance is generally defined as an act, occupation,
or structure, which is a nuisance at all timesand under any
circumstances, regardless of location or surrounding.15 Here, it is merely the
hotel’s particular incident––its location––and not its inherent qualities that
rendered it a nuisance. Otherwise stated, had it not been constructed in the
no build zone, Boracay West Cove could have secured the necessary permits
without issue. As such, petitioner is correct that the hotel is not a nuisance per
se, but to Our mind, it is still a nuisance per accidens.
b. Respondent mayor has the power to order the demolition of illegal
constructions
Generally, LGUs have no power to declare a particular thing as a nuisance
unless such a thing is a nuisance per se.16 So it was held in AC Enterprises v.
Frabelle Properties Corp:17cralawlawlibrary
Page 21 of 62
We agree with petitioner’s contention that, under Section 447(a)(3)(i) of R.A. violated Municipal Ordinance 2000-131, which
No. 7160, otherwise known as the Local Government Code, the Sangguniang provides:chanRoblesvirtualLawlibrary
Panglungsod is empowered to enact ordinances declaring, preventing or
abating noise and other forms of nuisance. It bears stressing, however, that SECTION 9. – Permits and Clearances.
the Sangguniang Bayan cannot declare a particular thing as a nuisance per se
and order its condemnation. It does not have the power to find, as a fact, (a) No building or structure shall be allowed to start construction unless
that a particular thing is a nuisance when such thing is not a nuisance per a Building Permit therefore has been duly issued by the Office of the
se; nor can it authorize the extrajudicial condemnation and destruction Municipal Engineer. Once issued, the building owner or any person in
of that as a nuisance which in its nature, situation or use is not such. charge of the construction shall display on the lot or on the building
Those things must be determined and resolved in the ordinary courts of undergoing construction a placard containing the Building Permit
law. If a thing, be in fact, a nuisance due to the manner of its operation, that Number and the date of its issue. The office of the Municipal Engineer
question cannot be determined by a mere resolution of the Sangguniang shall not issue any building permit unless:
Bayan. (emphasis supplied) 1. The proposed construction has been duly issued a Zoning
Clearance by the Office of the Municipal Zoning Officer;
Despite the hotel’s classification as a nuisance per accidens, however, We still 2. The proposed construction has been duly endorsed by the
find in this case that the LGU may nevertheless properly order the hotel’s Sangguniang Bayan through a Letter of Endorsement.
demolition. This is because, in the exercise of police power and the general
welfare clause,18 property rights of individuals may be subjected to restraints
(b) Only buildings/structures which has complied with all the requirements
and burdens in order to fulfill the objectives of the government. Otherwise
for its construction as verified to by the Building Inspector and the
stated, the government may enact legislation that may interfere with personal
Sangguniang Bayan shall be issued a Certificate of Occupancy by the
liberty, property, lawful businesses and occupations to promote the general
Office of the Municipal Engineer.
welfare.19cralawlawlibrary
(c) No Business or Mayor’s Permit shall be issued to businesses being
undertaken on buildings or structures which were not issued a
One such piece of legislation is the LGC, which authorizes city and municipal
certificate of Occupancy beginning January 2001 and thereafter.
governments, acting through their local chief executives, to issue demolition
orders. Under existing laws, the office of the mayor is given powers not only
xxxx
relative to its function as the executive official of the town; it has also been
endowed with authority to hear issues involving property rights of individuals
SECTION 10. – Penalties.
and to come out with an effective order or resolution thereon.20 Pertinent
herein is Sec. 444 (b)(3)(vi) of the LGC, which empowered the mayor to order
xxxx
the closure and removal of illegally constructed establishments for failing to
secure the necessary permits, to wit:chanRoblesvirtualLawlibrary
(e) Any building, structure, or contraption erected in any public place within
the Municipality of Malay such as but not limited to streets, thoroughfares,
Section 444. The Chief Executive: Powers, Duties, Functions and
sidewalks, plazas, beaches or in any other public place are hereby declared as
Compensation. –
nuisance and illegal structure. Such building structure or contraption shall
be demolished by the owner thereof or any of his authorized
xxxx
representative within ten (10) days from receipt of the notice to
demolish. Failure or refusal on the part of the owner or any of his
(b) For efficient, effective and economical governance the purpose of which is
authorized representative to demolish the illegal structure within the
the general welfare of the municipality and its inhabitants pursuant to Section
period herein above specified shall automatically authorize the
16 of this Code, the municipal mayor shall:chanroblesvirtuallawlibrary
government of the Municipality of Malay to demolish the same, gather
xxxx
and keep the construction materials of the demolished
structure.(emphasis supplied)
(3) Initiate and maximize the generation of resources and revenues, and apply
the same to the implementation of development plans, program objectives
Petitioner cannot justify his position by passing the blame onto the
and priorities as provided for under Section 18 of this Code, particularly those
respondent mayor and the latter’s failure to act on his appeal for this does
resources and revenues programmed for agro-industrial development and
not, in any way, imply that petitioner can proceed with his infrastructure
country-wide growth and progress, and relative thereto,
projects. On the contrary, this only means that the decision of the zoning
shall:chanroblesvirtuallawlibrary
administrator denying the application still stands and that petitioner
xxxx
acquired no right to construct on the no build zone. The illegality of the
construction cannot be cured by merely tendering payment for the necessary
(vi) Require owners of illegally constructed houses, buildings or other
fees and permits since the LGU’s refusal rests on valid grounds.
structures to obtain the necessary permit, subject to such fines and
penalties as may be imposed by law or ordinance, or to make necessary
Instead of taking the law into his own hands, petitioner could have filed, as an
changes in the construction of the same when said construction violates
alternative, a petition for mandamus to compel the respondent mayor to
any law or ordinance, or to order the demolition or removal of said
exercise discretion and resolve the controversy pending before his office.
house, building or structure within the period prescribed by law or
There is indeed an exception to the rule that matters involving judgment and
ordinance. (emphasis supplied)
discretion are beyond the reach of a writ of mandamus, for such writ may be
issued to compel action in those matters, when refused. Whether or not the
c. Requirements for the exercise of the power are present
decision would be for or against petitioner would be for the respondent
i. Illegality of structures
mayor to decide, for while mandamus may be invoked to compel the exercise
of discretion, it cannot compel such discretion to be exercised in a particular
In the case at bar, petitioner admittedly failed to secure the necessary permits,
way.21 What would have been important was for the respondent mayor to
clearances, and exemptions before the construction, expansion, and operation
immediately resolve the case for petitioner to be able to go through the
of Boracay Wet Cove’s hotel in Malay, Aklan. To recall, petitioner declared that
motions that the zoning clearance application process entailed.
the application for zoning compliance was still pending with the office of the
mayor even though construction and operation were already ongoing at the
Alas, petitioner opted to defy the zoning administrator’s ruling. He
same time. As such, it could no longer be denied that petitioner openly
consciously chose to violate not only the Ordinance but also Sec. 301 of PD

ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT Page 22 of 62
1096, laying down the requirement of building permits, which
provides:chanRoblesvirtualLawlibrary
Section 301. Building Permits. No person, firm or corporation, including any
agency or instrumentality of the government shall erect, construct, alter,
repair, move, convert or demolish any building or structure or cause the same
to be done without first obtaining a building permit therefor from the
Building Official assigned in the place where the subject building is located or
the building work is to be done.
This twin violation of law and ordinance warranted the LGU’s invocation of
Sec. 444 (b)(3)(vi) of the LGC, which power is separate and distinct from the
power to summarily abate nuisances per se. Under the law, insofar as illegal
constructions are concerned, the mayor can, after satisfying the requirement
of due notice and hearing, order their closure and demolition.
ii. Observance of procedural due process rights
In the case at bench, the due process requirement is deemed to have been
sufficiently complied with. First, basic is the rule that public officers enjoy the
presumption of regularity in the performance of their duties.22 The burden is
on the petitioner herein to prove that Boracay West Cove was deprived of the
opportunity to be heard before EO 10 was issued. Regrettably, copies of the
Cease and Desist Order issued by the LGU and of the assailed EO 10 itself
were never attached to the petition before this Court, which documents could
have readily shed light on whether or not petitioner has been accorded the
10-day grace period provided in Section 10 of the Ordinance. In view of this
fact, the presumption of regularity must be sustained. Second, as quoted by
petitioner in his petition before the CA, the assailed EO 10 states that
petitioner received notices from the municipality government on March 7 and
28, 2011, requiring Boracay West Cove to comply with the zoning ordinance
and yet it failed to do so.23 If such was the case, the grace period can be
deemed observed and the establishment was already ripe for closure and
demolition by the time EO 10 was issued in June.Third, the observance of the
10-day allowance for the owner to demolish the hotel was never questioned
by petitioner so there is no need to discuss the same. Verily, the only grounds
invoked by petitioner in crying due process violation are (1) the absence of a
court order prior to demolition and (2) the municipal government’s exercise of
jurisdiction over the controversy instead of the DENR. Therefore, it can no
longer be belatedly argued that the 10-day grace period was not observed
because to entertain the same would result in the violation of the
respondents’ own due process rights.
Given the presence of the requirements under Sec. 444 (b)(3)(vi) of the LGC,
whether the building constituted a nuisance per se or a nuisance per
accidens becomes immaterial. The hotel was demolished not exactly because
it is a nuisance but because it failed to comply with the legal requirements
prior to construction. It just so happened that, in the case at bar, the hotel’s
incident that qualified it as a nuisance per accidens––its being constructed
within the no build zone––further resulted in the non-issuance of the
necessary permits and clearances, which is a ground for demolition under the
LGC. Under the premises, a court order that is required under normal
circumstances is hereby dispensed with.
d. The FLAgT cannot prevail over the municipal ordinance and PD 1096
Petitioner next directs our attention to the following FLAgT
provision:chanRoblesvirtualLawlibrary
VII. The SECOND PARTY may construct permanent and/or temporary
improvements or infrastructure in the FLAgT Area necessary and appropriate
for its development for tourism purposes pursuant to the approved SMP.
“Permanent Improvements” refer to access roads, and buildings or structures
which adhere to the ground in a fixed and permanent manner. On the other
hand, “Temporary Improvements” include those which are detachable from
the foundation or the ground introduced by the SECOND PARTY in the FLAgT
Area and which the SECOND PARTY may remove or dismantle upon
expiration or cancellation of this AGREEMENT x x x.24chanrobleslaw
Taken in conjunction with the exceptions laid down in Sections 6 and 8 of the
Ordinance, petitioner argues that Boracay West Cove is exempted from
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
securing permits from the LGU. Said exceptions
read:chanRoblesvirtualLawlibrary
SECTION 6. – No building or structure shall be allowed to be constructed on a
slope Twenty Five Percent (25%) or higher unless provided with soil erosion
protective structures and authorized by the Department of Environment and
Natural Resources.
xxxx
SECTION 8. – No building or structure shall be allowed to be constructed on a
swamp or other water-clogged areas unless authorized by the Department of
Environment and Natural Resources.
According to petitioner, the fact that it was issued a FLAgT constitutes
sufficient authorization from the DENR to proceed with the construction of
the three-storey hotel.
The argument does not persuade.
The rights granted to petitioner under the FLAgT are not unbridled.
Forestlands, although under the management of the DENR, are not exempt
from the territorial application of municipal laws, for local government units
legitimately exercise their powers of government over their defined territorial
jurisdiction.
Furthermore, the conditions set forth in the FLAgT and the limitations
circumscribed in the ordinance are not mutually exclusive and are, in fact,
cumulative. As sourced from Sec. 447 (a)(5)(i) of the
LGC:chanRoblesvirtualLawlibrary
Section 447. Powers, Duties, Functions and Compensation. –
(a) The sangguniang bayan, as the legislative body of the municipality, shall
enact ordinances, approve resolutions and appropriate funds for the general
welfare of the municipality and its inhabitants pursuant to Section 16 of this
Code and in the proper exercise of the corporate powers of the municipality
as provided for under Section 22 of this Code, and
shall:chanroblesvirtuallawlibrary
xxxx
(5) Approve ordinances which shall ensure the efficient and effective delivery
of the basic services and facilities as provided for under Section 17 of this
Code, and in addition to said services and facilities,
shall:chanroblesvirtuallawlibrary
(i) Provide for the establishment, maintenance, protection, and
conservation of communal forestsand watersheds, tree parks, greenbelts,
mangroves, and other similar forest development projects x x x. (emphasis
added)
Thus, aside from complying with the provisions in the FLAgT granted by the
DENR, it was incumbent on petitioner to likewise comply with the no build
zone restriction under Municipal Ordinance 2000-131, which was already in
force even before the FLAgT was entered into. On this point, it is well to stress
that Sections 6 and 8 of the Ordinance do not exempt petitioner from
complying with the restrictions since these provisions adverted to grant
exemptions from the ban on constructions on slopes and swamps, not on the
no build zone.
Additionally, the FLAgT does not excuse petitioner from complying with PD
1096. As correctly pointed out by respondents, the agreement cannot and will
not amend or change the law because a legislative act cannot be altered by
mere contractual agreement. Hence, petitioner has no valid reason for its
failure to secure a building permit pursuant to Sec. 301 of the National
Building Code.
e. The DENR does not have primary jurisdiction over the controversy
Lastly, in ascribing grave abuse of discretion on the part of the respondent
Page 23 of 62
mayor, petitioner argued that the hotel site is a forestland under the primary #9 Erlinda Reyes v Ortiz SAME AS CASE #1.
jurisdiction of the DENR. As such, the merits of the case should have been
passed upon by the agency and not by the LGU. In the alternative, petitioner
#10
explains that even if jurisdiction over the matter has been devolved in favor of JELBERT B. GALICTO, G.R. No. 193978
the LGU, the DENR still has the power of review and supervision over the Petitioner,
former’s rulings. As cited by the petitioner, the LGC
Present:
reads:chanRoblesvirtualLawlibrary CORONA, C.J.,
CARPIO,
Section 17. Basic Services and Facilities. – - versus - VELASCO, JR.,
LEONARDO-DE CASTRO,
xxxx BRION,
PERALTA,
(b) Such basic services and facilities include, but are not limited to, the BERSAMIN,
following:chanroblesvirtuallawlibrary H.E. PRESIDENT BENIGNO SIMEON C. DEL CASTILLO,*
xxxx AQUINO III, in his capacity as President of ABAD,
the Republic of the Philippines; ATTY. VILLARAMA, JR.,
(2) For a Municipality:chanroblesvirtuallawlibrary PAQUITO N. OCHOA, JR., in his capacity PEREZ,
xxxx as Executive Secretary; and FLORENCIO B. MENDOZA,
ABAD, in his capacity as Secretary of the SERENO,**
(ii) Pursuant to national policies and subject to supervision, control and review Department of Budget and Management, REYES, and
of the DENR, implementation of community-based forestry projects which Respondents. PERLAS-BERNABE, JJ.
include integrated social forestry programs and similar projects; management
and control of communal forests with an area not exceeding fifty (50) square
kilometers; establishment of tree parks, greenbelts, and similar forest Promulgated:
development projects. (emphasis added)
February 28, 2012
Petitioner has made much of the fact that in line with this provision, the DENR
Region 6 had issued an opinion favourable to petitioner.25 To petitioner, the x------------------------------------------------------x
adverted opinion effectively reversed the findings of the respondent mayor
that the structure introduced was illegally constructed.
RESOLUTION
We disagree.
BRION, J.:
In alleging that the case concerns the development and the proper use of the
country’s environment and natural resources, petitioner is skirting the
principal issue, which is Boracay West Cove’s non-compliance with the permit,
clearance, and zoning requirements for building constructions under national Before us is a Petition for Certiorari and Prohibition with Application
and municipal laws. He downplays Boracay West Cove’s omission in a bid to for Writ of Preliminary Injunction and/or Temporary Restraining
justify ousting the LGU of jurisdiction over the case and transferring the same Order,[1] seeking to nullify and enjoin the implementation of Executive Order
to the DENR. He attempts to blow the issue out of proportion when it all boils No. (EO) 7 issued by the Office of the President on September 8,
down to whether or not the construction of the three-storey hotel was 2010. Petitioner Jelbert B. Galicto asserts that EO 7 is unconstitutional for
supported by the necessary documentary requirements. having been issued beyond the powers of the President and for being in
breach of existing laws.
Based on law and jurisprudence, the office of the mayor has quasi-judicial
powers to order the closing and demolition of establishments. This power The petitioner is a Filipino citizen and an employee of the Philippine
granted by the LGC, as earlier explained, We believe, is not the same power Health Insurance Corporation (PhilHealth).[2] He is currently holding the
devolved in favor of the LGU under Sec. 17 (b)(2)(ii), as above-quoted, which position of Court Attorney IV and is assigned at the PhilHealth Regional Office
is subject to review by the DENR. The fact that the building to be demolished CARAGA.[3]
is located within a forestland under the administration of the DENR is of no Respondent Benigno Simeon C. Aquino III is the President of the
moment, for what is involved herein, strictly speaking, is not an issue on Republic of the Philippines (Pres. Aquino); he issued EO 7 and has the duty of
environmental protection, conservation of natural resources, and the implementing it. Respondent Paquito N. Ochoa, Jr. is the incumbent Executive
maintenance of ecological balance, but the legality or illegality of the Secretary and, as the alter ego of Pres. Aquino, is tasked with the
structure. Rather than treating this as an environmental issue then, focus implementation of EO 7. Respondent Florencio B. Abad is the incumbent
should not be diverted from the root cause of this debacle––compliance. Secretary of the Department of Budget and Management (DBM) charged with
the implementation of EO 7.[4]
Ultimately, the purported power of review by a regional office of the DENR
over respondents’ actions exercised through an instrumentality of an ex-parte The Antecedent Facts
opinion, in this case, finds no sufficient basis. At best, the legal opinion
rendered, though perhaps informative, is not conclusive on the courts and On July 26, 2010, Pres. Aquino made public in his first State of the
should be taken with a grain of salt. Nation Address the alleged excessive allowances, bonuses and other benefits
of Officers and Members of the Board of Directors of the Manila Waterworks
WHEREFORE, in view of the foregoing, the petition is hereby DENIED for lack and Sewerage System a government owned and controlled corporation
of merit. The Decision and the Resolution of the Court of Appeals in CA-G.R. (GOCC) which has been unable to meet its standing
SP No. 120042 dated August 13, 2013 and February 3, 2014, respectively, are obligations.[5] Subsequently, the Senate of the Philippines (Senate), through
hereby AFFIRMED. the Senate Committee on Government Corporations and Public Enterprises,
conducted an inquiry in aid of legislation on the reported excessive salaries,
SO ORDERED.cralawred allowances, and other benefits of GOCCs and government financial
institutions (GFIs).[6]

ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT Page 24 of 62
 Based on its findings that officials and governing boards of various
[GOCCs] and [GFIs] x x x have been granting themselves unwarranted
allowances, bonuses, incentives, stock options, and other benefits [as well as
other] irregular and abusive practices,[7] the Senate issued Senate Resolution
No. 17 urging the President to order the immediate suspension of the
unusually large and apparently excessive allowances, bonuses, incentives and
other perks of members of the governing boards of [GOCCs] and [GFIs].[8]
Heeding the call of Congress, Pres. Aquino, on September 8, 2010,
issued EO 7, entitled Directing the Rationalization of the Compensation and
Position Classification System in the [GOCCs] and [GFIs], and for Other
Purposes. EO 7 provided for the guiding principles and framework to establish
a fixed compensation and position classification system for GOCCs and
GFIs. A Task Force was also created to review all remunerations of GOCC and
GFI employees and officers, while GOCCs and GFIs were ordered to submit to
the Task Force information regarding their compensation. Finally, EO 7
ordered (1) a moratorium on the increases in the salaries and other
forms of compensation, except salary adjustments under EO 8011 and EO
900, of all GOCC and GFI employees for an indefinite period to be set by
the President,[9] and (2) a suspension of all allowances, bonuses and
incentives of members of the Board of Directors/Trustees until
December 31, 2010.[10]
EO 7 was published on September 10, 2010.[11] It took effect on
September 25, 2010 and precluded the Board of Directors, Trustees and/or
Officers of GOCCs from granting and releasing bonuses and allowances to
members of the board of directors, and from increasing salary rates of and
granting new or additional benefits and allowances to their employees.
The Petition
The petitioner claims that as a PhilHealth employee, he is affected
by the implementation of EO 7, which was issued with grave abuse of
discretion amounting to lack or excess of jurisdiction, based on the following
arguments:
I.
EXECUTIVE ORDER NO. 7 IS NULL AND VOID FOR LACK
OF LEGAL BASIS DUE TO THE FOLLOWING GROUNDS:
A. P.D. 985 IS NOT APPLICABLE AS BASIS FOR
EXECUTIVE ORDER NO. 7 BECAUSE THE
GOVERNMENT-OWNED AND CONTROLLED
CORPORATIONS WERE SUBSEQUENTLY
GRANTED THE POWER TO FIX COMPENSATION
LONG AFTER SUCH POWER HAS BEEN REVOKED
BY P.D. 1597 AND R.A. 6758.
B. THE GOVERNMENT-OWNED AND CONTROLLED
CORPORATIONS DO NOT NEED TO HAVE ITS
COMPENSATION PLANS, RATES AND POLICIES
REVIEWED BY THE DBM AND APPROVED BY THE
PRESIDENT BECAUSE P.D. 1597 REQUIRES ONLY
THE GOCCs TO REPORT TO THE OFFICE TO THE
PRESIDENT THEIR COMPENSATION PLANS AND
RATES BUT THE SAME DOES NOT GIVE THE
PRESIDENT THE POWER OF CONTROL OVER THE
FISCAL POWER OF THE GOCCs.
C. J.R. NO. 4, [SERIES] 2009 IS NOT APPLICABLE AS
LEGAL BASIS BECAUSE IT HAD NOT RIPENED
INTO X X X LAW, THE SAME NOT HAVING BEEN
PUBLISHED.
D. ASSUMING ARGUENDO THAT J.R. NO. 1, S. 2004
(sic) AND J.R. 4, S. 2009 ARE VALID, STILL THEY
ARE NOT APPLICABLE AS LEGAL BASIS BECAUSE
THEY ARE NOT LAWS WHICH MAY VALIDLY
DELEGATE POWER TO THE PRESIDENT TO
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
SUSPEND THE POWER OF THE BOARD TO FIX
COMPENSATION.
II.
EXECUTIVE ORDER NO. 7 IS INVALID FOR DIVESTING THE
BOARD OF DIRECTORS OF [THE] GOCCS OF THEIR
POWER TO FIX THE COMPENSATION, A POWER WHICH
IS A LEGISLATIVE GRANT AND WHICH COULD NOT BE
REVOKED OR MODIFIED BY AN EXECUTIVE FIAT.
III.
EXECUTIVE ORDER NO. 7 IS BY SUBSTANCE A LAW,
WHICH IS A DEROGATION OF CONGRESSIONAL
PREROGATIVE AND IS THEREFORE UNCONSTITUTIONAL.
IV.
THE ACTS OF SUSPENDING AND IMPOSING
MORATORIUM ARE ULTRA VIRES ACTS BECAUSE J.R. NO.
4 DOES NOT EXPRESSLY AUTHORIZE THE PRESIDENT TO
EXERCISE SUCH POWERS.
V.
EXECUTIVE ORDER NO. 7 IS AN INVALID ISSUANCE
BECAUSE IT HAS NO SUFFICIENT STANDARDS AND IS
THEREFORE ARBITRARY, UNREASONABLE AND A
VIOLATION OF SUBSTANTIVE DUE PROCESS.
VI.
EXECUTIVE ORDER NO. 7 INVOLVES THE
DETERMINATION AND DISCRETION AS TO WHAT THE
LAW SHALL BE AND IS THEREFORE INVALID FOR ITS
USURPATION OF LEGISLATIVE POWER.
VII.
CONSISTENT WITH THE DECISION OF THE SUPREME
COURT IN PIMENTEL V. AGUIRRE CASE, EXECUTIVE
ORDER NO. 7 IS ONLY DIRECTORY AND NOT
MANDATORY.[12]
The Case for the Respondents
On December 13, 2010, the respondents filed their Comment. They
pointed out the following procedural defects as grounds for the petitions
dismissal: (1) the petitioner lacks locus standi; (2) the petitioner failed to attach
a board resolution or secretarys certificate authorizing him to question EO
7 in behalf of PhilHealth; (3) the petitioners signature does not indicate his
PTR Number, Mandatory Continuing Legal Education (MCLE) Compliance
Number and Integrated Bar of the Philippines (IBP) Number; (4) the jurat of
the Verification and Certification of Non-Forum Shopping failed to indicate a
valid identification card as provided under A.M. No. 02-8-13-SC; (5) the
President should be dropped as a party respondent as he is immune from
suit; and (6) certiorari is not applicable to this case.[13]
The respondents also raised substantive defenses to support the validity of EO
7. They claim that the President exercises control over the governing boards
of the GOCCs and GFIs; thus, he can fix their compensation packages. In
addition, EO 7 was issued in accordance with law for the purpose of
controlling the grant of excessive salaries, allowances, incentives and other
benefits to GOCC and GFI employees. They also advocate the validity of Joint
Resolution (J.R.) No. 4, which they point to as the authority for issuing EO 7.[14]
Page 25 of 62
Meanwhile, on June 6, 2011, Congress enacted Republic Act (R.A.) No.
10149,[15] otherwise known as the GOCC Governance Act of 2011. Section 11
of RA 10149 expressly authorizes the President to fix the compensation
framework of GOCCs and GFIs.
The Courts Ruling
We resolve to DISMISS the petition for its patent formal and procedural
infirmities, and for having been mooted by subsequent events.
A. Certiorari is not the proper remedy.
Under the Rules of Court, petitions for Certiorari and Prohibition are
availed of to question judicial, quasi-judicial and mandatory acts. Since the
issuance of an EO is not judicial, quasi-judicial or a mandatory act, a petition
for certiorari and prohibition is an incorrect remedy; instead a petition for
declaratory relief under Rule 63 of the Rules of Court, filed with the Regional
Trial Court (RTC), is the proper recourse to assail the validity of EO 7:
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. (Emphases ours.)
Liga ng mga Barangay National v. City Mayor of Manila[16] is a case
in point. In Liga, we dismissed the petition for certiorari to set aside an EO
[17]
issued by a City Mayor and insisted that a petition for declaratory relief should
have been filed with the RTC. We painstakingly ruled:
After due deliberation on the pleadings
filed, we resolve to dismiss this petition for certiorari.
First, the respondents neither acted in any
judicial or quasi-judicial capacity nor arrogated unto
themselves any judicial or quasi-judicial
prerogatives. A petition for certiorari under Rule 65
of the 1997 Rules of Civil Procedure is a special civil
action that may be invoked only against a tribunal,
board, or officer exercising judicial or quasi-judicial
functions.
Section 1, Rule 65 of the 1997 Rules of Civil
Procedure provides:
SECTION 1. Petition for certiorari. When
any tribunal, board or officer exercising judicial
or quasi-judicial functions has acted without or
in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess
of jurisdiction, and there is no appeal, or any
plain, speedy, and adequate remedy in the
ordinary course of law, a person aggrieved
thereby may file a verified petition in the
proper court, alleging the facts with certainty
and praying that judgment be rendered
annulling or modifying the proceedings of such
tribunal, board or officer, and granting such
incidental reliefs as law and justice may require.
Elsewise stated, for a writ of certiorari to issue, the
following requisites must concur: (1) it must be directed
against a tribunal, board, or officer exercising judicial or
quasi-judicial functions; (2) the tribunal, board, or officer
must have acted without or in excess of jurisdiction or with
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
grave abuse of discretion amounting [to] lack or excess of
jurisdiction; and (3) there is no appeal or any plain, speedy,
and adequate remedy in the ordinary course of law.
A respondent is said to be
exercising judicial function where he has the power to
determine what the law is and what the legal rights of the
parties are, and then undertakes to determine these questions
and adjudicate upon the rights of the parties.
Quasi-judicial function, on the other hand, is a term
which applies to the actions, discretion, etc., of public
administrative officers or bodies required to investigate facts
or ascertain the existence of facts, hold hearings, and draw
conclusions from them as a basis for their official action and
to exercise discretion of a judicial nature.
Before a tribunal, board, or officer may exercise
judicial or quasi-judicial acts, it is necessary that there be a
law that gives rise to some specific rights of persons or
property under which adverse claims to such rights are made,
and the controversy ensuing therefrom is brought before a
tribunal, board, or officer clothed with power and authority to
determine the law and adjudicate the respective rights of the
contending parties.
The respondents do not fall within the ambit
of tribunal, board, or officer exercising judicial or quasi-
judicial functions. As correctly pointed out by the
respondents, the enactment by the City Council of Manila of
the assailed ordinance and the issuance by respondent Mayor
of the questioned executive order were done in the exercise
of legislative and executive functions, respectively, and not
of judicial or quasi-judicial functions. On this score
alone, certiorari will not lie.
Second, although the instant petition is styled as a
petition for certiorari, in essence, it seeks the declaration by
this Court of the unconstitutionality or illegality of the
questioned ordinance and executive order. It, thus, partakes
of the nature of a petition for declaratory relief over which
this Court has only appellate, not original, jurisdiction. Section
5, Article VIII of the Constitution provides:
Sec. 5. The Supreme Court shall have the
following powers:
(1) Exercise original jurisdiction over cases
affecting ambassadors, other public
ministers and consuls, and over
petitions for certiorari,
prohibition, mandamus, quo
warranto, andhabeas corpus.
(2) Review, revise, reverse, modify, or affirm on
appeal or certiorari as the law or the
Rules of Court may provide, final
judgments and orders of lower courts in:
(a) All cases in which
the constitutionality or
validity of any treaty,
international or executive
agreement, law,
presidential decree,
proclamation, order,
instruction, ordinance, or
regulation is in question.
(Italics supplied).
As such, this petition must necessar[ily] fail,
as this Court does not have original jurisdiction over a
petition for declaratory relief even if only questions
of law are involved.[18]
Page 26 of 62

Likewise, in Southern Hemisphere Engagement Network, Inc. v. Anti
Terrorism Council,[19] we similarly dismissed the petitions for certiorari and
prohibition challenging the constitutionality of R.A. No. 9372, otherwise
known as the Human Security Act of 2007, since the respondents therein
(members of the Anti-Terrorism Council) did not exercise judicial or quasi-
judicial functions.
While we have recognized in the past that we can exercise the
discretion and rulemaking authority we are granted under the
Constitution,[20] and set aside procedural considerations to permit parties to
bring a suit before us at the first instance through certiorari and/or
prohibition,[21] this liberal policy remains to be an exception to the general
rule, and thus, has its limits. In Concepcion v. Commission on
Elections (COMELEC),[22] we emphasized the importance of availing of the
proper remedies and cautioned against the wrongful use of certiorari in order
to assail the quasi-legislative acts of the COMELEC, especially by the wrong
party. In ruling that liberality and the transcendental doctrine cannot trump
blatant disregard of procedural rules, and considering that the petitioner had
other available remedies (such as a petition for declaratory relief with the
appropriate RTC under the terms of Rule 63 of the Rules of Court), as in this
case, we categorically ruled:
The petitioners unusual approaches and use
of Rule 65 of the Rules of Court do not appear to us
to be the result of any error in reading Rule 65, given
the way the petition was crafted. Rather, it was a
backdoor approach to achieve what the petitioner
could not directly do in his individual capacity under
Rule 65. It was, at the very least, an attempted
bypass of other available, albeit lengthier, modes of
review that the Rules of Court provide. While we stop
short of concluding that the petitioners approaches
constitute an abuse of process through a
manipulative reading and application of the Rules of
Court, we nevertheless resolve that the petition should
be dismissed for its blatant violation of the Rules. The
transgressions alleged in a petition, however weighty
they may sound, cannot be justifications for blatantly
disregarding the rules of procedure, particularly when
remedial measures were available under these same rules
to achieve the petitioners objectives. For our part, we
cannot and should not in the name of liberality and the
transcendental importance doctrine entertain these types
of petitions. As we held in the very recent case
of Lozano, et al. vs. Nograles, albeit from a different
perspective, our liberal approach has its limits and
should not be abused.[23] [emphasis supplied]
B. Petitioner lacks locus standi.
Locus standi or legal standing has been defined as a personal
and substantial interest in a case such that the party has
sustained or will sustain direct injury as a result of the
governmental act that is being challenged. The gist of the
question on standing is whether a party alleges such personal
stake in the outcome of the controversy as to assure that
concrete adverseness which sharpens the presentation of issues
upon which the court depends for illumination of difficult
constitutional questions.[24] This requirement of standing
relates to the constitutional mandate that this Court settle only
actual cases or controversies.[25]
Thus, as a general rule, a party is allowed to raise a constitutional
question when (1) he can show that he will personally suffer some actual or
threatened injury because of the allegedly illegal conduct of the government;
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
(2) the injury is fairly traceable to the challenged action; and (3) the injury is
likely to be redressed by a favorable action.[26]
Jurisprudence defines interest as "material interest, an interest in
issue and to be affected by the decree, as distinguished from mere interest in
the question involved, or a mere incidental interest. By real interest is meant
a present substantial interest, as distinguished from a mere expectancy or
a future, contingent, subordinate, or consequential interest."[27]
To support his claim that he has locus standi to file the present
petition, the petitioner contends that as an employee of PhilHealth, he stands
to be prejudiced by [EO] 7, which suspends or imposes a moratorium on the
grants of salary increases or new or increased benefits to officers and
employees of GOCC[s] and x x x curtail[s] the prerogative of those officers
who are to fix and determine his compensation.[28] The petitioner also claims
that he has standing as a member of the bar in good standing who has an
interest in ensuring that laws and orders of the Philippine government are
legally and validly issued and implemented.
The respondents meanwhile argue that the petitioner is not a real
party-in-interest since future increases in salaries and other benefits are
merely contingent events or expectancies.[29] The petitioner, too, is not
asserting a public right for which he is entitled to seek judicial
protection. Section 9 of EO 7 reads:
Section 9. Moratorium on Increases in Salaries,
Allowances, Incentives and Other Benefits. Moratorium
on increases in the rates of salaries, and the grant of new
increases in the rates of allowances, incentives and other
benefits, except salary adjustments pursuant to Executive
Order No. 8011 dated June 17, 2009 and Executive Order
No. 900 dated June 23, 2010, are hereby imposed until
specifically authorized by the President. [emphasis ours]
In the present case, we are not convinced that the petitioner has
demonstrated that he has a personal stake or material interest in the outcome
of the case because his interest, if any, is speculative and based on a mere
expectancy. In this case, the curtailment of future increases in his salaries and
other benefits cannot but be characterized as contingent events or
expectancies. To be sure, he has no vested rights to salary increases and,
therefore, the absence of such right deprives the petitioner of legal standing
to assail EO 7.
It has been held that as to the element of injury, such aspect is not something
that just anybody with some grievance or pain may assert. It has to be direct
and substantial to make it worth the courts time, as well as the effort of
inquiry into the constitutionality of the acts of another department of
government. If the asserted injury is more imagined than real, or is merely
superficial and insubstantial, then the courts may end up being importuned
to decide a matter that does not really justify such an excursion into
constitutional adjudication.[30] The rationale for this constitutional requirement
of locus standi is by no means trifle. Not only does it assure the vigorous
adversary presentation of the case; more importantly, it must suffice to
warrant the Judiciarys overruling the determination of a coordinate,
democratically elected organ of government, such as the President, and the
clear approval by Congress, in this case. Indeed, the rationale goes to the very
essence of representative democracies.[31]
Neither can the lack of locus standi be cured by the petitioners claim that he is
instituting the present petition as a member of the bar in good standing who
has an interest in ensuring that laws and orders of the Philippine government
are legally and validly issued. This supposed interest has been branded by the
Court in Integrated Bar of the Phils. (IBP) v. Hon. Zamora,[32] as too general an
interest which is shared by other groups and [by] the whole citizenry.[33] Thus,
the Court ruled in IBP that the mere invocation by the IBP of its duty to
preserve the rule of law and nothing more, while undoubtedly true, is not
sufficient to clothe it with standing in that case. The Court made a similar
ruling in Prof. David v. Pres. Macapagal-Arroyo[34] and held that the petitioners
Page 27 of 62
therein, who are national officers of the IBP, have no legal standing, having
failed to allege any direct or potential injury which the IBP, as an institution, or
its members may suffer as a consequence of the issuance of Presidential
Proclamation No. 1017 and General Order No. 5.[35]
We note that while the petition raises vital constitutional and
statutory questions concerning the power of the President to fix the
compensation packages of GOCCs and GFIs with possible implications on
their officials and employees, the same cannot infuse or give the
petitioner locus standi under the transcendental importance or paramount
public interest doctrine. In Velarde v. Social Justice Society,[36] we held that
even if the Court could have exempted the case from the stringent locus
standi requirement, such heroic effort would be futile because the
transcendental issue could not be resolved any way, due to procedural
infirmities and shortcomings, as in the present case.[37] In other words,
giving due course to the present petition which is saddled with formal and
procedural infirmities explained above in this Resolution, cannot but be an
exercise in futility that does not merit the Courts liberality. As we emphasized
in Lozano v. Nograles,[38] while the Court has taken an increasingly liberal
approach to the rule of locus standi, evolving from the stringent
requirements of personal injury to the broader transcendental
importance doctrine, such liberality is not to be abused.[39]
Finally, since the petitioner has failed to demonstrate a material
and personal interest in the issue in dispute, he cannot also be considered to
have filed the present case as a representative of PhilHealth. In this regard, we
cannot ignore or excuse the blatant failure of the petitioner to provide a
Board Resolution or a Secretarys Certificate from PhilHealth to act as its
representative.
C. The petition has a defective
jurat.
The respondents claim that the petition should be dismissed for
failing to comply with Section 3, Rule 7 of the Rules of Civil Procedure, which
requires the party or the counsel representing him to sign the pleading and
indicate an address that should not be a post office box. The petition also
allegedly violated the Supreme Court En BancResolution dated November 12,
2001, requiring counsels to indicate in their pleadings their Roll of Attorneys
Number, their PTR Number and their IBP Official Receipt or Lifetime Member
Number; otherwise, the pleadings would be considered unsigned and
dismissible. Bar Matter No. 1922 likewise states that a counsel should note
down his MCLE Certificate of Compliance or Certificate of Exemption in the
pleading, but the petitioner had failed to do so.[40]
We do not see any violation of Section 3, Rule 7 of the Rules of Civil
Procedure as the petition bears the petitioners signature and office
address. The present suit was brought before this Court by the petitioner
himself as a party litigant and not through counsel. Therefore, the
requirements under the Supreme Court En Banc Resolution dated November
12, 2001 and Bar Matter No. 1922 do not apply. In Bar Matter No. 1132, April
1, 2003, we clarified that a party who is not a lawyer is not precluded from
signing his own pleadings as this is allowed by the Rules of Court; the
purpose of requiring a counsel to indicate his IBP Number and PTR Number is
merely to protect the public from bogus lawyers. A similar construction
should be given to Bar Matter No. 1922, which requires lawyers to indicate
their MCLE Certificate of Compliance or Certificate of Exemption; otherwise,
the provision that allows parties to sign their own pleadings will be negated.
However, the point raised by the respondents regarding the
petitioners defective jurat is correct. Indeed, A.M. No. 02-8-13-SC, dated
February 19, 2008, calls for a current identification document issued by an
official agency bearing the photograph and signature of the individual as
competent evidence of identity. Nevertheless, we hasten to clarify that the
defective jurat in the Verification/Certification of Non-Forum Shopping is not
a fatal defect, as we held in In-N-Out Burger, Inc. v. Sehwani,
Incorporated.[41] The verification is only a formal, not a jurisdictional,
requirement that the Court may waive.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
D. The petition has been mooted
by supervening events.
Because of the transitory nature of EO 7, it has been pointed out that the
present case has already been rendered moot by these supervening events:
(1) the lapse on December 31, 2010 of Section 10 of EO 7 that suspended the
allowances and bonuses of the directors and trustees of GOCCs and GFIs; and
(2) the enactment of R.A. No. 10149 amending the provisions in the charters
of GOCCs and GFIs empowering their board of directors/trustees to
determine their own compensation system, in favor of the grant of authority
to the President to perform this act.
With the enactment of the GOCC Governance Act of 2011, the
President is now authorized to fix the compensation framework of GOCCs and
GFIs. The pertinent provisions read:
Section 5. Creation of the Governance
Commission for Government-Owned or -Controlled
Corporations. There is hereby created an advisory,
monitoring, and oversight body with authority to
formulate, implement and coordinate policies to be
known as the Governance Commission for Government-
Owned or-Controlled Corporations, hereinafter referred
to as the GCG, which shall be attached to the Office of
the President. The GCG shall have the following powers
and functions:
xxxx
h) Conduct compensation studies, develop and
recommend to the President a competitive compensation
and remuneration system which shall attract and retain
talent, at the same time allowing the GOCC to be
financially sound and sustainable;
xxxx
Section 8. Coverage of the Compensation and Position
Classification System. The GCG, after conducting a
compensation study, shall develop a Compensation and
Position Classification System which shall apply to all
officers and employees of the GOCCs whether under the
Salary Standardization Law or exempt therefrom and shall
consist of classes of positions grouped into such
categories as the GCG may determine, subject to
approval of the President.
Section 9. Position Titles and Salary Grades. All positions
in the Positions Classification System, as determined by
the GCG and as approved by the President, shall be
allocated to their proper position titles and salary grades
in accordance with an Index of Occupational Services,
Position Titles and Salary Grades of the Compensation
and Position Classification System, which shall be
prepared by the GCG and approved by the President.
xxxx
[N]o GOCC shall be exempt from the coverage of the
Compensation and Position Classification System
developed by the GCG under this Act.
As may be gleaned from these provisions, the new law amended
R.A. No. 7875 and other laws that enabled certain GOCCs and GFIs to fix their
own compensation frameworks; the law now authorizes the President to fix
the compensation and position classification system for all GOCCs and GFIs,
as well as other entities covered by the law.This means that, the President can
Page 28 of 62
now reissue an EO containing these same provisions without any legal
constraints.
A moot case is one that ceases to present a justiciable controversy
by virtue of supervening events, so that a declaration thereon would be of no
practical use or value.[42][A]n action is considered moot when it no longer
presents a justiciable controversy because the issues involved have become
academic or dead[,] or when the matter in dispute has already been resolved
and hence, one is not entitled to judicial intervention unless the issue is likely
to be raised again between the parties x x x. Simply stated, there is nothing
for the x x x court to resolve as [its] determination x x x has been overtaken by
subsequent events.[43]
This is the present situation here. Congress, thru R.A. No. 10149, has
expressly empowered the President to establish the compensation systems of
GOCCs and GFIs. For the Court to still rule upon the supposed
unconstitutionality of EO 7 will merely be an academic exercise. Any further
discussion of the constitutionality of EO 7 serves no useful purpose since such
issue is moot in its face in light of the enactment of R.A. No. 10149. In the
words of the eminent constitutional law expert, Fr. Joaquin Bernas, S.J., the
Court normally [will not] entertain a petition touching on
an issue that has become moot because x x x there would [be] no longer x x x
a flesh and blood case for the Court to resolve.[44]
All told, in view of the supervening events rendering the petition
moot, as well as its patent formal and procedural infirmities, we no longer see
any reason for the Court to resolve the other issues raised in
the certiorari petition.
WHEREFORE, premises considered, the petition is DISMISSED. No
costs.
SO ORDERED.
# 11
THE OFFICE OF THE SOLICITOR G.R. No. 177056
GENERAL,
Petitioner, Present:
YNARES-SANTIAGO, J.,
- versus - Chairperson,
CHICO-NAZARIO,
VELASCO, JR.,
AYALA LAND INCORPORATED, NACHURA, and
ROBINSONS LAND PERALTA, JJ.
CORPORATION, SHANGRI-LA
PLAZA CORPORATION and SM
PRIME HOLDINGS, INC., Promulgated:
Respondents.
September 18, 2009
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari,[1] under
Rule 45 of the Revised Rules of Court, filed by petitioner Office of the
Solicitor General (OSG), seeking the reversal and setting aside of the
Decision[2] dated 25 January 2007 of the Court of Appeals in CA-G.R. CV
No. 76298, which affirmed in toto the Joint Decision[3] dated 29 May
2002 of the Regional Trial Court (RTC) of Makati City, Branch 138, in Civil
Cases No. 00-1208 and No. 00-1210; and (2) the Resolution[4] dated 14
March 2007 of the appellate court in the same case which denied the
Motion for Reconsideration of the OSG. The RTC adjudged that
respondents Ayala Land Incorporated (Ayala Land), Robinsons Land
Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
SM Prime Holdings, Inc. (SM Prime) could not be obliged to provide free
parking spaces in their malls to their patrons and the general public.
Respondents Ayala Land, Robinsons, and Shangri-la maintain
and operate shopping malls in various locations in Metro
Manila. Respondent SM Prime constructs, operates, and leases out
commercial buildings and other structures, among which, are SM
City, Manila; SM Centerpoint, Sta. Mesa, Manila; SM City, North
Avenue, Quezon City; and SM Southmall, Las Pias.
The shopping malls operated or leased out by respondents
have parking facilities for all kinds of motor vehicles, either by way of
parking spaces inside the mall buildings or in separate buildings and/or
adjacent lots that are solely devoted for use as parking
spaces. Respondents Ayala Land, Robinsons, and SM Prime spent for the
construction of their own parking facilities. Respondent Shangri-la is
renting its parking facilities, consisting of land and building specifically
used as parking spaces, which were constructed for the lessors account.
Respondents expend for the maintenance and administration
of their respective parking facilities. They provide security personnel to
protect the vehicles parked in their parking facilities and maintain order
within the area. In turn, they collect the following parking fees from the
persons making use of their parking facilities, regardless of whether said
persons are mall patrons or not:
Respondent Parking Fees
Ayala Land On weekdays, P25.00 for the first four hours
and P10.00 for every succeeding hour; on
weekends, flat rate of P25.00 per day
Robinsons P20.00 for the first three hours and P10.00 for
every succeeding hour
Shangri-la Flat rate of P30.00 per day
SM Prime P10.00 to P20.00 (depending on whether the
parking space is outdoors or indoors) for the
first three hours and 59 minutes, and P10.00 for
every succeeding hour or fraction thereof
The parking tickets or cards issued by respondents to vehicle owners
contain the stipulation that respondents shall not be responsible for any
loss or damage to the vehicles parked in respondents parking facilities.
In 1999, the Senate Committees on Trade and Commerce and
on Justice and Human Rights conducted a joint investigation for the
following purposes: (1) to inquire into the legality of the prevalent
practice of shopping malls of charging parking fees; (2)
assuming arguendo that the collection of parking fees was legally
authorized, to find out the basis and reasonableness of the parking rates
charged by shopping malls; and (3) to determine the legality of the
policy of shopping malls of denying liability in cases of theft, robbery, or
carnapping, by invoking the waiver clause at the back of the parking
tickets. Said Senate Committees invited the top executives of
respondents, who operate the major malls in the country; the officials
from the Department of Trade and Industry (DTI), Department of Public
Works and Highways (DPWH), Metro Manila Development Authority
(MMDA), and other local government officials; and the Philippine
Motorists Association (PMA) as representative of the consumers group.
After three public hearings held on 30 September, 3 November,
and 1 December 1999, the afore-mentioned Senate Committees jointly
issued Senate Committee Report No. 225[5] on 2 May 2000, in which they
concluded:
In view of the foregoing, the Committees
find that the collection of parking fees by shopping
malls is contrary to the National Building Code and is
Page 29 of 62
 therefor [sic] illegal. While it is true that the Code
merely requires malls to provide parking spaces,
without specifying whether it is free or not, both
Committees believe that the reasonable and logical
interpretation of the Code is that the parking spaces
are for free. This interpretation is not only reasonable
and logical but finds support in the actual practice in
other countries like the United States of
America where parking spaces owned and operated
by mall owners are free of charge.
Figuratively speaking, the Code has
expropriated the land for parking something similar
to the subdivision law which require developers to
devote so much of the land area for parks.
Moreover, Article II of R.A. No. 9734
(Consumer Act of the Philippines) provides that it is
the policy of the State to protect the interest of the
consumers, promote the general welfare and establish
standards of conduct for business and
industry. Obviously, a contrary interpretation (i.e.,
justifying the collection of parking fees) would be
going against the declared policy of R.A. 7394.
Section 201 of the National Building Code
gives the responsibility for the administration and
enforcement of the provisions of the Code, including
the imposition of penalties for administrative
violations thereof to the Secretary of Public
Works. This set up, however, is not being carried out
in reality.
In the position paper submitted by the
Metropolitan Manila Development Authority
(MMDA), its chairman, Jejomar C. Binay, accurately
pointed out that the Secretary of the DPWH is
responsible for the implementation/enforcement of
the National Building Code. After the enactment of
the Local Government Code of 1991, the local
government units (LGUs) were tasked to discharge
the regulatory powers of the DPWH. Hence, in the
local level, the Building Officials enforce all rules/
regulations formulated by the DPWH relative to all
building plans, specifications and designs including
parking space requirements.There is, however, no
single national department or agency directly tasked
to supervise the enforcement of the provisions of the
Code on parking, notwithstanding the national
character of the law.[6]
Senate Committee Report No. 225, thus, contained the
following recommendations:
In light of the foregoing, the Committees on
Trade and Commerce and Justice and Human Rights
hereby recommend the following:
1. The Office of the Solicitor General should institute
the necessary action to enjoin the collection
of parking fees as well as to enforce the
penal sanction provisions of the National
Building Code. The Office of the Solicitor
General should likewise study how refund
can be exacted from mall owners who
continue to collect parking fees.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
2. The Department of Trade and Industry pursuant to
the provisions of R.A. No. 7394, otherwise
known as the Consumer Act of
the Philippines should enforce the
provisions of the Code relative to
parking.Towards this end, the DTI should
formulate the necessary implementing rules
and regulations on parking in shopping
malls, with prior consultations with the local
government units where these are
located. Furthermore, the DTI, in
coordination with the DPWH, should be
empowered to regulate and supervise the
construction and maintenance of parking
establishments.
3. Finally, Congress should amend and update the
National Building Code to expressly prohibit
shopping malls from collecting parking fees
by at the same time, prohibit them from
invoking the waiver of liability.[7]
Respondent SM Prime thereafter received information that,
pursuant to Senate Committee Report No. 225, the DPWH Secretary and
the local building officials of Manila, Quezon City, and Las Pias intended
to institute, through the OSG, an action to enjoin respondent SM Prime
and similar establishments from collecting parking fees, and to impose
upon said establishments penal sanctions under Presidential Decree No.
1096, otherwise known as the National Building Code of the Philippines
(National Building Code), and its Implementing Rules and Regulations
(IRR). With the threatened action against it, respondent SM Prime filed,
on 3 October 2000, a Petition for Declaratory Relief[8] under Rule 63 of
the Revised Rules of Court, against the DPWH Secretary and local
building officials of Manila, Quezon City, and Las Pias. Said Petition was
docketed as Civil Case No. 00-1208 and assigned to the RTC of Makati
City, Branch 138, presided over by Judge Sixto Marella, Jr. (Judge
Marella). In its Petition, respondent SM Prime prayed for judgment:
a) Declaring Rule XIX of the Implementing
Rules and Regulations of the National Building Code
as ultra vires, hence, unconstitutional and void;
b) Declaring [herein respondent SM Prime]s
clear legal right to lease parking spaces appurtenant
to its department stores, malls, shopping centers and
other commercial establishments; and
c) Declaring the National Building Code of
the Philippines Implementing Rules and Regulations
as ineffective, not having been published once a week
for three (3) consecutive weeks in a newspaper of
general circulation, as prescribed by Section 211 of
Presidential Decree No. 1096.
[Respondent SM Prime] further prays for
such other reliefs as may be deemed just and
equitable under the premises.[9]
The very next day, 4 October 2000, the OSG filed a Petition for
Declaratory Relief and Injunction (with Prayer for Temporary Restraining
Order and Writ of Preliminary Injunction)[10] against respondents. This
Petition was docketed as Civil Case No. 00-1210 and raffled to the RTC of
Makati, Branch 135, presided over by Judge Francisco B. Ibay (Judge
Ibay). Petitioner prayed that the RTC:
1. After summary hearing, a temporary
restraining order and a writ of preliminary injunction
Page 30 of 62
 be issued restraining respondents from collecting
parking fees from their customers; and
2. After hearing, judgment be rendered
declaring that the practice of respondents in charging
parking fees is violative of the National Building Code
and its Implementing Rules and Regulations and is
therefore invalid, and making permanent any
injunctive writ issued in this case.
Other reliefs just and equitable under the
premises are likewise prayed for.[11]
On 23 October 2000, Judge Ibay of the RTC of Makati City,
Branch 135, issued an Order consolidating Civil Case No. 00-1210 with
Civil Case No. 00-1208 pending before Judge Marella of RTC of Makati,
Branch 138.
As a result of the pre-trial conference held on the morning of 8
August 2001, the RTC issued a Pre-Trial Order[12] of even date which
limited the issues to be resolved in Civil Cases No. 00-1208 and No. 00-
1210 to the following:
1. Capacity of the plaintiff [OSG] in Civil
Case No. 00-1210 to institute the present proceedings
and relative thereto whether the controversy in the
collection of parking fees by mall owners is a matter
of public welfare.
2. Whether declaratory relief is
proper.
3. Whether
respondent Ayala Land, Robinsons, Shangri-La and
SM Prime are obligated to provide parking spaces in
their malls for the use of their patrons or the public in
general, free of charge.
4. Entitlement of the parties of
[sic] award of damages.[13]
On 29 May 2002, the RTC rendered its Joint Decision in Civil
Cases No. 00-1208 and No. 00-1210.
The RTC resolved the first two issues affirmatively. It ruled that
the OSG can initiate Civil Case No. 00-1210 under Presidential Decree No.
478 and the Administrative Code of 1987.[14] It also found that all the
requisites for an action for declaratory relief were present, to wit:
The requisites for an action for declaratory relief
are: (a) there is a justiciable controversy; (b) the
controversy is between persons whose interests are
adverse; (c) the party seeking the relief has a legal
interest in the controversy; and (d) the issue involved is
ripe for judicial determination.
SM, the petitioner in Civil Case No. 001-
1208 [sic] is a mall operator who stands to be
affected directly by the position taken by the
government officials sued namely the Secretary of
Public Highways and the Building Officials of the
local government units where it operates shopping
malls. The OSG on the other hand acts on a matter of
public interest and has taken a position adverse to
that of the mall owners whom it sued. The
construction of new and bigger malls has been
announced, a matter which the Court can take judicial
notice and the unsettled issue of whether mall
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
operators should provide parking facilities, free of
charge needs to be resolved.[15]
As to the third and most contentious issue, the RTC
pronounced that:
The Building Code, which is the enabling
law and the Implementing Rules and Regulations do
not impose that parking spaces shall be provided by
the mall owners free of charge. Absent such
directive[,] Ayala Land, Robinsons, Shangri-la and SM
[Prime] are under no obligation to provide them for
free. Article 1158 of the Civil Code is clear:
Obligations derived from
law are not presumed. Only those
expressly determined in this Code
or in special laws are demandable
and shall be regulated by the
precepts of the law which
establishes them; and as to what
has not been foreseen, by the
provisions of this Book (1090).[]
xxxx
The provision on ratios of parking slots to
several variables, like shopping floor area or customer
area found in Rule XIX of the Implementing Rules and
Regulations cannot be construed as a directive to
provide free parking spaces, because the enabling
law, the Building Code does not so provide. x x x.
To compel Ayala Land, Robinsons, Shangri-
La and SM [Prime] to provide parking spaces for free
can be considered as an unlawful taking of property
right without just compensation.
Parking spaces in shopping malls are
privately owned and for their use, the mall operators
collect fees. The legal relationship could be either
lease or deposit. In either case[,] the mall owners have
the right to collect money which translates into
income. Should parking spaces be made free, this
right of mall owners shall be gone. This, without just
compensation. Further, loss of effective control over
their property will ensue which is frowned upon by
law.
The presence of parking spaces can be
viewed in another light. They can be looked at as
necessary facilities to entice the public to increase
patronage of their malls because without parking
spaces, going to their malls will be
inconvenient. These are[,] however[,] business
considerations which mall operators will have to
decide for themselves. They are not sufficient to
justify a legal conclusion, as the OSG would like the
Court to adopt that it is the obligation of the mall
owners to provide parking spaces for free.[16]
The RTC then held that there was no sufficient evidence to
justify any award for damages.
The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases
No. 00-1208 and No. 00-1210 that:
Page 31 of 62
 FOR THE REASONS GIVEN, the Court
declares that Ayala Land[,] Inc., Robinsons Land
Corporation, Shangri-la Plaza Corporation and SM
Prime Holdings[,] Inc. are not obligated to provide
parking spaces in their malls for the use of their
patrons or public in general, free of charge.
All counterclaims in Civil Case No. 00-1210
are dismissed.
No pronouncement as to costs.[17]
CA-G.R. CV No. 76298 involved the separate appeals of the OSG[18] and
respondent SM Prime[19] filed with the Court of Appeals. The sole
assignment of error of the OSG in its Appellants Brief was:
THE TRIAL COURT ERRED IN HOLDING THAT THE
NATIONAL BUILDING CODE DID NOT INTEND MALL
PARKING SPACES TO BE FREE OF CHARGE[;][20]
while the four errors assigned by respondent SM Prime in its Appellants
Brief were:
I National Building Code and Rule XIX of the IRR were clear and needed
THE TRIAL COURT ERRED IN FAILING TO DECLARE
RULE XIX OF THE IMPLEMENTING RULES AS HAVING
BEEN ENACTED ULTRA VIRES, HENCE,
UNCONSTITUTIONAL AND VOID.
II
THE TRIAL COURT ERRED IN FAILING TO DECLARE
THE IMPLEMENTING RULES INEFFECTIVE FOR NOT
HAVING BEEN PUBLISHED AS REQUIRED BY LAW.
III
THE TRIAL COURT ERRED IN FAILING TO DISMISS
THE OSGS PETITION FOR DECLARATORY RELIEF AND
INJUNCTION FOR FAILURE TO EXHAUST
ADMINISTRATIVE REMEDIES.
IV
THE TRIAL COURT ERRED IN FAILING TO DECLARE
THAT THE OSG HAS NO LEGAL CAPACITY TO SUE
AND/OR THAT IT IS NOT A REAL PARTY-IN-INTEREST
IN THE INSTANT CASE.[21]
Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on
the ground that the lone issue raised therein involved a pure question of
law, not reviewable by the Court of Appeals.
The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298
on 25 January 2007. The appellate court agreed with respondent
Robinsons that the appeal of the OSG should suffer the fate of dismissal,
since the issue on whether or not the National Building Code and its
implementing rules require shopping mall operators to provide parking
facilities to the public for free was evidently a question of law. Even so,
since CA-G.R. CV No. 76298 also included the appeal of respondent SM
Prime, which raised issues worthy of consideration, and in order to
satisfy the demands of substantial justice, the Court of Appeals
proceeded to rule on the merits of the case.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
In its Decision, the Court of Appeals affirmed the capacity of the OSG to
initiate Civil Case No. 00-1210 before the RTC as the legal representative
of the government,[22] and as the one deputized by the Senate of the
Republic of the Philippines through Senate Committee Report No. 225.
The Court of Appeals rejected the contention of respondent SM
Prime that the OSG failed to exhaust administrative remedies. The
appellate court explained that an administrative review is not a
condition precedent to judicial relief where the question in dispute is
purely a legal one, and nothing of an administrative nature is to be or
can be done.
The Court of Appeals likewise refused to rule on the validity of
the IRR of the National Building Code, as such issue was not among
those the parties had agreed to be resolved by the RTC during the pre-
trial conference for Civil Cases No. 00-1208 and No. 00-1210. Issues
cannot be raised for the first time on appeal. Furthermore, the appellate
court found that the controversy could be settled on other grounds,
without touching on the issue of the validity of the IRR. It referred to the
settled rule that courts should refrain from passing upon the
constitutionality of a law or implementing rules, because of the principle
that bars judicial inquiry into a constitutional question, unless the
resolution thereof is indispensable to the determination of the case.
Lastly, the Court of Appeals declared that Section 803 of the
no further construction. Said provisions were only intended to control
the occupancy or congestion of areas and structures. In the absence of
any express and clear provision of law, respondents could not be obliged
and expected to provide parking slots free of charge.
The fallo of the 25 January 2007 Decision of the Court of
Appeals reads:
WHEREFORE, premises considered, the instant
appeals are DENIED. Accordingly, appealed Decision is
hereby AFFIRMED in toto.[23]
In its Resolution issued on 14 March 2007, the Court of Appeals denied
the Motion for Reconsideration of the OSG, finding that the grounds
relied upon by the latter had already been carefully considered,
evaluated, and passed upon by the appellate court, and there was no
strong and cogent reason to modify much less reverse the assailed
judgment.
The OSG now comes before this Court, via the instant Petition
for Review, with a single assignment of error:
THE COURT OF APPEALS SERIOUSLY ERRED IN
AFFIRMING THE RULING OF THE LOWER
COURT THAT RESPONDENTS ARE NOT OBLIGED TO
PROVIDE FREE PARKING SPACES TO THEIR
CUSTOMERS OR THE PUBLIC.[24]
The OSG argues that respondents are mandated to provide
free parking by Section 803 of the National Building Code and Rule XIX
of the IRR.
According to Section 803 of the National Building Code:
SECTION 803. Percentage of Site Occupancy
(a) Maximum site occupancy shall be
governed by the use, type of construction, and height
of the building and the use, area, nature, and location
of the site; and subject to the provisions of the local
zoning requirements and in accordance with the rules
and regulations promulgated by the Secretary.
Page 32 of 62

In connection therewith, Rule XIX of the old IRR,[25] provides:
RULE XIX PARKING AND LOADING SPACE
REQUIREMENTS
Pursuant to Section 803 of the National Building Code
(PD 1096) providing for maximum site occupancy, the
following provisions on parking and loading space
requirements shall be observed:
1. The parking space ratings listed below are minimum
off-street requirements for specific
uses/occupancies for buildings/structures:
1.1 The size of an average automobile parking
slot shall be computed as 2.4 meters by
5.00 meters for perpendicular or diagonal
parking, 2.00 meters by 6.00 meters for
parallel parking. A truck or bus
parking/loading slot shall be computed at
a minimum of 3.60 meters by 12.00
meters. The parking slot shall be drawn to
scale and the total number of which shall
be indicated on the plans and specified
whether or not parking accommodations,
are attendant-managed. (See Section 2 for
computation of parking requirements).
xxxx
1.7 Neighborhood shopping center 1 slot/100 sq.
m. of shopping floor area
The OSG avers that the aforequoted provisions should be read
together with Section 102 of the National Building Code, which declares:
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the
State to safeguard life, health, property, and public
welfare, consistent with the principles of sound
environmental management and control; and to this
end, make it the purpose of this Code to provide for
all buildings and structures, a framework of minimum
standards and requirements to regulate and control
their location, site, design, quality of materials,
construction, use, occupancy, and maintenance.
The requirement of free-of-charge parking, the OSG argues, greatly
contributes to the aim of safeguarding life, health, property, and public
welfare, consistent with the principles of sound environmental
management and control. Adequate parking spaces would contribute
greatly to alleviating traffic congestion when complemented by quick
and easy access thereto because of free-charge parking. Moreover, the
power to regulate and control the use, occupancy, and maintenance of
buildings and structures carries with it the power to impose fees and,
conversely, to control -- partially or, as in this case, absolutely -- the
imposition of such fees.
The Court finds no merit in the present Petition.
The explicit directive of the afore-quoted statutory and
regulatory provisions, garnered from a plain reading thereof, is that
respondents, as operators/lessors of neighborhood shopping centers,
should provide parking and loading spaces, in accordance with the
minimum ratio of one slot per 100 square meters of shopping floor
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
area. There is nothing therein pertaining to the collection (or non-
collection) of parking fees by respondents. In fact, the term parking fees
cannot even be found at all in the entire National Building Code and its
IRR.
Statutory construction has it that if a statute is clear and
unequivocal, it must be given its literal meaning and applied without any
attempt at interpretation.[26] Since Section 803 of the National Building
Code and Rule XIX of its IRR do not mention parking fees, then simply,
said provisions do not regulate the collection of the same. The RTC and
the Court of Appeals correctly applied Article 1158 of the New Civil
Code, which states:
Art. 1158. Obligations derived from law are
not presumed. Only those expressly determined in this
Code or in special laws are demandable, and shall be
regulated by the precepts of the law which
establishes them; and as to what has not been
foreseen, by the provisions of this Book. (Emphasis
ours.)
Hence, in order to bring the matter of parking fees within the
ambit of the National Building Code and its IRR, the OSG had to resort to
specious and feeble argumentation, in which the Court cannot concur.
The OSG cannot rely on Section 102 of the National Building
Code to expand the coverage of Section 803 of the same Code and Rule
XIX of the IRR, so as to include the regulation of parking fees. The OSG
limits its citation to the first part of Section 102 of the National Building
Code declaring the policy of the State to safeguard life, health, property,
and public welfare, consistent with the principles of sound
environmental management and control; but totally ignores the second
part of said provision, which reads, and to this end, make it the purpose
of this Code to provide for all buildings and structures, a framework of
minimum standards and requirements to regulate and control their
location, site, design, quality of materials, construction, use, occupancy,
and maintenance. While the first part of Section 102 of the National
Building Code lays down the State policy, it is the second part thereof
that explains how said policy shall be carried out in the Code. Section
102 of the National Building Code is not an all-encompassing grant of
regulatory power to the DPWH Secretary and local building officials in
the name of life, health, property, and public welfare. On the contrary, it
limits the regulatory power of said officials to ensuring that the
minimum standards and requirements for all buildings and structures, as
set forth in the National Building Code, are complied with.
Consequently, the OSG cannot claim that in addition to fixing
the minimum requirements for parking spaces for buildings, Rule XIX of
the IRR also mandates that such parking spaces be provided by building
owners free of charge. If Rule XIX is not covered by the enabling law,
then it cannot be added to or included in the implementing rules. The
rule-making power of administrative agencies must be confined to
details for regulating the mode or proceedings to carry into effect the
law as it has been enacted, and it cannot be extended to amend or
expand the statutory requirements or to embrace matters not covered
by the statute. Administrative regulations must always be in harmony
with the provisions of the law because any resulting discrepancy
between the two will always be resolved in favor of the basic law.[27]
From the RTC all the way to this Court, the OSG repeatedly
referred to Republic v. Gonzales[28] and City of Ozamis v. Lumapas[29] to
support its position that the State has the power to regulate parking
spaces to promote the health, safety, and welfare of the public; and it is
by virtue of said power that respondents may be required to provide free
parking facilities. The OSG, though, failed to consider the substantial
differences in the factual and legal backgrounds of these two cases from
those of the Petition at bar.
Page 33 of 62
 In Republic, the Municipality of Malabon sought to eject the
occupants of two parcels of land of the public domain to give way to a
road-widening project. It was in this context that the Court pronounced:
Indiscriminate parking along F. Sevilla Boulevard and
other main thoroughfares was prevalent; this, of
course, caused the build up of traffic in the
surrounding area to the great discomfort and
inconvenience of the public who use the streets.
Traffic congestion constitutes a threat to the health,
welfare, safety and convenience of the people and it
can only be substantially relieved by widening streets
and providing adequate parking areas.
The Court, in City of Ozamis, declared that the City had been
clothed with full power to control and regulate its streets for the
purpose of promoting public health, safety and welfare. The City can
regulate the time, place, and manner of parking in the streets and public
places; and charge minimal fees for the street parking to cover the
expenses for supervision, inspection and control, to ensure the smooth
flow of traffic in the environs of the public market, and for the safety
and convenience of the public.
Republic and City of Ozamis involved parking in the local
streets; in contrast, the present case deals with privately owned parking
facilities available for use by the general public. In Republic and City of
Ozamis, the concerned local governments regulated parking pursuant to
their power to control and regulate their streets; in the instant case, the
DPWH Secretary and local building officials regulate parking pursuant to
their authority to ensure compliance with the minimum standards and
requirements under the National Building Code and its IRR. With the
difference in subject matters and the bases for the regulatory powers
being invoked, Republic and City of Ozamis do not constitute precedents
for this case.
Indeed, Republic and City of Ozamis both contain
pronouncements that weaken the position of the OSG in the case at
bar. In Republic, the Court, instead of placing the burden on private
persons to provide parking facilities to the general public, mentioned the
trend in other jurisdictions wherein the municipal governments
themselves took the initiative to make more parking spaces available so
as to alleviate the traffic problems, thus:
Under the Land Transportation and Traffic
Code, parking in designated areas along public streets
or highways is allowed which clearly indicates that
provision for parking spaces serves a useful purpose.
In other jurisdictions where traffic is at least as
voluminous as here, the provision by municipal
governments of parking space is not limited to
parking along public streets or highways. There has
been a marked trend to build off-street parking
facilities with the view to removing parked cars from
the streets. While the provision of off-street parking
facilities or carparks has been commonly undertaken
by private enterprise, municipal governments have
been constrained to put up carparks in response to
public necessity where private enterprise had failed to
keep up with the growing public demand. American
courts have upheld the right of municipal
governments to construct off-street parking facilities
as clearly redounding to the public benefit.[30]
In City of Ozamis, the Court authorized the collection by the
City of minimal fees for the parking of vehicles along the streets: so why
then should the Court now preclude respondents from collecting from
the public a fee for the use of the mall parking facilities? Undoubtedly,
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
respondents also incur expenses in the maintenance and operation of the
mall parking facilities, such as electric consumption, compensation for
parking attendants and security, and upkeep of the physical structures.
It is not sufficient for the OSG to claim that the power to regulate
and control the use, occupancy, and maintenance of buildings and structures
carries with it the power to impose fees and, conversely, to control, partially
or, as in this case, absolutely, the imposition of such fees. Firstly, the fees
within the power of regulatory agencies to impose are regulatory fees. It has
been settled law in this jurisdiction that this broad and all-compassing
governmental competence to restrict rights of liberty and property carries
with it the undeniable power to collect a regulatory fee. It looks to the
enactment of specific measures that govern the relations not only as between
individuals but also as between private parties and the political
society.[31] True, if the regulatory agencies have the power to impose
regulatory fees, then conversely, they also have the power to remove the
same. Even so, it is worthy to note that the present case does not involve the
imposition by the DPWH Secretary and local building officials of regulatory
fees upon respondents; but the collection by respondents of parking
fees from persons who use the mall parking facilities. Secondly,
assuming arguendo that the DPWH Secretary and local building officials do
have regulatory powers over the collection of parking fees for the use of
privately owned parking facilities, they cannot allow or prohibit such
collection arbitrarily or whimsically.Whether allowing or prohibiting the
collection of such parking fees, the action of the DPWH Secretary and local
building officials must pass the test of classic reasonableness and propriety of
the measures or means in the promotion of the ends sought to be
accomplished.[32]
Keeping in mind the aforementioned test of reasonableness
and propriety of measures or means, the Court notes that Section 803 of
the National Building Code falls under Chapter 8 on Light and
Ventilation. Evidently, the Code deems it necessary to regulate site
occupancy to ensure that there is proper lighting and ventilation in every
building.Pursuant thereto, Rule XIX of the IRR requires that a building,
depending on its specific use and/or floor area, should provide a
minimum number of parking spaces. The Court, however, fails to see the
connection between regulating site occupancy to ensure proper light
and ventilation in every building vis--vis regulating the collection by
building owners of fees for the use of their parking spaces. Contrary to
the averment of the OSG, the former does not necessarily include or
imply the latter. It totally escapes this Court how lighting and ventilation
conditions at the malls could be affected by the fact that parking
facilities thereat are free or paid for.
The OSG attempts to provide the missing link by arguing that:
Under Section 803 of the National Building
Code, complimentary parking spaces are required to
enhance light and ventilation, that is, to avoid traffic
congestion in areas surrounding the building, which
certainly affects the ventilation within the building
itself, which otherwise, the annexed parking spaces
would have served. Free-of-charge parking avoids
traffic congestion by ensuring quick and easy access
of legitimate shoppers to off-street parking spaces
annexed to the malls, and thereby removing the
vehicles of these legitimate shoppers off the busy
streets near the commercial establishments.[33]
The Court is unconvinced. The National Building Code
regulates buildings, by setting the minimum specifications and
requirements for the same. It does not concern itself with traffic
congestion in areas surrounding the building. It is already a stretch to say
that the National Building Code and its IRR also intend to solve the
problem of traffic congestion around the buildings so as to ensure that
the said buildings shall have adequate lighting and
ventilation. Moreover, the Court cannot simply assume, as the OSG has
Page 34 of 62
apparently done, that the traffic congestion in areas around the malls is
due to the fact that respondents charge for their parking facilities, thus,
forcing vehicle owners to just park in the streets. The Court notes that
despite the fees charged by respondents, vehicle owners still use the mall
parking facilities, which are even fully occupied on some days. Vehicle
owners may be parking in the streets only because there are not enough
parking spaces in the malls, and not because they are deterred by the
parking fees charged by respondents.Free parking spaces at the malls
may even have the opposite effect from what the OSG envisioned: more
people may be encouraged by the free parking to bring their own
vehicles, instead of taking public transport, to the malls; as a result, the
parking facilities would become full sooner, leaving more vehicles
without parking spaces in the malls and parked in the streets instead,
causing even more traffic congestion.
Without using the term outright, the OSG is actually invoking
police power to justify the regulation by the State, through the DPWH
Secretary and local building officials, of privately owned parking facilities,
including the collection by the owners/operators of such facilities of parking
fees from the public for the use thereof. The Court finds, however, that in
totally prohibiting respondents from collecting parking fees from the public
for the use of the mall parking facilities, the State would be acting beyond the
bounds of police power.
Police power is the power of promoting the public welfare by
restraining and regulating the use of liberty and property. It is usually exerted
in order to merely regulate the use and enjoyment of the property of the
owner. The power to regulate, however, does not include the power to
prohibit. A fortiori, the power to regulate does not include the power to
confiscate. Police power does not involve the taking or confiscation of
property, with the exception of a few cases where there is a necessity to
confiscate private property in order to destroy it for the purpose of protecting
peace and order and of promoting the general welfare; for instance, the
confiscation of an illegally possessed article, such as opium and firearms. [34]
When there is a taking or confiscation of private property for
public use, the State is no longer exercising police power, but another of
its inherent powers, namely, eminent domain. Eminent domain enables
the State to forcibly acquire private lands intended for public use upon
payment of just compensation to the owner.[35]
Normally, of course, the power of eminent domain results in the
taking or appropriation of title to, and possession of, the expropriated
property; but no cogent reason appears why the said power may not be
availed of only to impose a burden upon the owner of condemned
property, without loss of title and possession.[36] It is a settled rule that
neither acquisition of title nor total destruction of value is essential to
taking. It is usually in cases where title remains with the private owner
that inquiry should be made to determine whether the impairment of a
property is merely regulated or amounts to a compensable taking. A
regulation that deprives any person of the profitable use of his property
constitutes a taking and entitles him to compensation, unless the
invasion of rights is so slight as to permit the regulation to be justified
under the police power. Similarly, a police regulation that unreasonably
restricts the right to use business property for business purposes
amounts to a taking of private property, and the owner may recover
therefor.[37]
Although in the present case, title to and/or possession of the
parking facilities remain/s with respondents, the prohibition against their
collection of parking fees from the public, for the use of said facilities, is
already tantamount to a taking or confiscation of their properties. The State is
not only requiring that respondents devote a portion of the latters properties
for use as parking spaces, but is also mandating that they give the public
access to said parking spaces for free. Such is already an excessive intrusion
into the property rights of respondents. Not only are they being deprived of
the right to use a portion of their properties as they wish, they are further
prohibited from profiting from its use or even just recovering therefrom the
expenses for the maintenance and operation of the required parking facilities.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
The ruling of this Court in City Government of Quezon City v. Judge
Ericta[38] is edifying. Therein, the City Government of Quezon City passed an
ordinance obliging private cemeteries within its jurisdiction to set aside at
least six percent of their total area for charity, that is, for burial grounds of
deceased paupers. According to the Court, the ordinance in question was null
and void, for it authorized the taking of private property without just
compensation:
There is no reasonable relation between the setting
aside of at least six (6) percent of the total area of all private
cemeteries for charity burial grounds of deceased paupers
and the promotion of' health, morals, good order, safety, or
the general welfare of the people. The ordinance is actually a
taking without compensation of a certain area from a private
cemetery to benefit paupers who are charges of the
municipal corporation. Instead of' building or maintaining a
public cemetery for this purpose, the city passes the burden
to private cemeteries.
'The expropriation without compensation of a
portion of private cemeteries is not covered by Section 12(t)
of Republic Act 537, the Revised Charter of Quezon City
which empowers the city council to prohibit the burial of the
dead within the center of population of the city and to
provide for their burial in a proper place subject to the
provisions of general law regulating burial grounds and
cemeteries. When the Local Government Code, Batas
Pambansa Blg. 337 provides in Section 177(q) that a
sangguniang panlungsod may "provide for the burial of the
dead in such place and in such manner as prescribed by law
or ordinance" it simply authorizes the city to provide its own
city owned land or to buy or expropriate private properties
to construct public cemeteries. This has been the law, and
practise in the past. It continues to the present.
Expropriation, however, requires payment of just
compensation. The questioned ordinance is different from
laws and regulations requiring owners of subdivisions to set
aside certain areas for streets, parks, playgrounds, and other
public facilities from the land they sell to buyers of
subdivision lots. The necessities of public safety, health, and
convenience are very clear from said requirements which are
intended to insure the development of communities with
salubrious and wholesome environments. The beneficiaries
of the regulation, in turn, are made to pay by the subdivision
developer when individual lots are sold to homeowners.
In conclusion, the total prohibition against the collection by respondents
of parking fees from persons who use the mall parking facilities has no
basis in the National Building Code or its IRR. The State also cannot
impose the same prohibition by generally invoking police power, since
said prohibition amounts to a taking of respondents property without
payment of just compensation.
Given the foregoing, the Court finds no more need to address the issue
persistently raised by respondent SM Prime concerning the
unconstitutionality of Rule XIX of the IRR. In addition, the said issue was
not among those that the parties, during the pre-trial conference for
Civil Cases No. 12-08 and No. 00-1210, agreed to submit for resolution
of the RTC.It is likewise axiomatic that the constitutionality of a law, a
regulation, an ordinance or an act will not be resolved by courts if the
controversy can be, as in this case it has been, settled on other
grounds.[39]
WHEREFORE, the instant Petition for Review on Certiorari is
hereby DENIED. The Decision dated 25 January 2007 and Resolution
dated 14 March 2007 of the Court of Appeals in CA-G.R. CV No. 76298,
affirming in toto the Joint Decision dated 29 May 2002 of the Regional
Trial Court of Makati City, Branch 138, in Civil Cases No. 00-1208 and No.
00-1210 are hereby AFFIRMED. No costs.
Page 35 of 62
 On 28 November 1928, the Philippine Legislature enacted Act No. 3436 which
SO ORDERED. granted PLDT a franchise and the right to engage in telecommunications
business. In 1969, General Telephone and Electronics Corporation (GTE), an
#12 American company and a major PLDT stockholder, sold 26 percent of the
outstanding common shares of PLDT to PTIC. In 1977, Prime Holdings, Inc.
WILSON P. GAMBOA, G.R. No. 176579 (PHI) was incorporated by several persons, including Roland Gapud and Jose
Campos, Jr. Subsequently, PHI became the owner of 111,415 shares of stock
of PTIC by virtue of three Deeds of Assignment executed by PTIC stockholders
Petitioner,
Ramon Cojuangco and Luis Tirso Rivilla. In 1986, the 111,415 shares of stock
Present: of PTIC held by PHI were sequestered by the Presidential Commission on
Good Government (PCGG). The 111,415 PTIC shares, which represent about
- versus - 46.125 percent of the outstanding capital stock of PTIC, were later declared by
this Court to be owned by the Republic of the Philippines.2
FINANCE SECRETARY MARGARITO B. CORONA, C.J.,
TEVES, FINANCE UNDERSECRETARY CARPIO, In 1999, First Pacific, a Bermuda-registered, Hong Kong-based investment
JOHN P. SEVILLA, AND VELASCO, JR., firm, acquired the remaining 54 percent of the outstanding capital stock of
COMMISSIONER RICARDO ABCEDE LEONARDO-DE PTIC. On 20 November 2006, the Inter-Agency Privatization Council (IPC) of
OF THE PRESIDENTIAL COMMISSION CASTRO, the Philippine Government announced that it would sell the 111,415 PTIC
ON GOOD GOVERNMENT (PCGG) IN BRION, shares, or 46.125 percent of the outstanding capital stock of PTIC, through a
THEIR CAPACITIES AS CHAIR AND PERALTA, public bidding to be conducted on 4 December 2006. Subsequently, the
MEMBERS, RESPECTIVELY, OF THE BERSAMIN, public bidding was reset to 8 December 2006, and only two bidders, Parallax
PRIVATIZATION COUNCIL, DEL CASTILLO, Venture Fund XXVII (Parallax) and Pan-Asia Presidio Capital, submitted their
ABAD, bids. Parallax won with a bid of P25.6 billion or US$510 million.
CHAIRMAN ANTHONI SALIM OF VILLARAMA, JR.,
FIRST PACIFIC CO., LTD. IN HIS PEREZ,
Thereafter, First Pacific announced that it would exercise its right of first
CAPACITY AS DIRECTOR OF METRO MENDOZA, and
refusal as a PTIC stockholder and buy the 111,415 PTIC shares by matching
PACIFIC ASSET HOLDINGS INC., SERENO, JJ.
the bid price of Parallax. However, First Pacific failed to do so by the 1
CHAIRMAN MANUEL V. PANGILINAN February 2007 deadline set by IPC and instead, yielded its right to PTIC itself
OF PHILIPPINE LONG DISTANCE which was then given by IPC until 2 March 2007 to buy the PTIC shares. On 14
TELEPHONE COMPANY (PLDT) IN HIS February 2007, First Pacific, through its subsidiary, MPAH, entered into a
CAPACITY AS MANAGING DIRECTOR Conditional Sale and Purchase Agreement of the 111,415 PTIC shares, or
OF FIRST PACIFIC CO., LTD., 46.125 percent of the outstanding capital stock of PTIC, with the Philippine
PRESIDENT NAPOLEON L. NAZARENO Government for the price of P25,217,556,000 or US$510,580,189. The sale was
OF PHILIPPINE LONG DISTANCE completed on 28 February 2007.
TELEPHONE COMPANY, CHAIR FE
BARIN OF THE SECURITIES
Since PTIC is a stockholder of PLDT, the sale by the Philippine Government of
EXCHANGE COMMISSION, and
46.125 percent of PTIC shares is actually an indirect sale of 12 million shares
PRESIDENT FRANCIS LIM OF THE
or about 6.3 percent of the outstanding common shares of PLDT. With the
PHILIPPINE STOCK EXCHANGE,
sale, First Pacifics common shareholdings in PLDT increased from 30.7
percent to 37 percent, thereby increasing the common shareholdings of
Respondents. foreigners in PLDT to about 81.47 percent. This violates Section 11, Article
PABLITO V. SANIDAD and Promulgated: June 28, 2011 XII of the 1987 Philippine Constitution which limits foreign ownership of the
ARNO V. SANIDAD, capital of a public utility to not more than 40 percent.3
Petitioners-in-Intervention.
On the other hand, public respondents Finance Secretary Margarito B. Teves,
Undersecretary John P. Sevilla, and PCGG Commissioner
Ricardo Abcede allege the following relevant facts:
x- - - - - - - - - - - - --------- - - - - - - - - - - - - -x
On 9 November 1967, PTIC was incorporated and had since engaged in the
DECISION business of investment holdings. PTIC held 26,034,263 PLDT common shares,
or 13.847 percent of the total PLDT outstanding common shares. PHI, on the
other hand, was incorporated in 1977, and became the owner of 111,415 PTIC
CARPIO, J.:
shares or 46.125 percent of the outstanding capital stock of PTIC by virtue of
three Deeds of Assignment executed by Ramon Cojuangco and
The Case Luis Tirso Rivilla. In 1986, the 111,415 PTIC shares held by PHI were
sequestered by the PCGG, and subsequently declared by this Court as part of
This is an original petition for prohibition, injunction, declaratory relief and the ill-gotten wealth of former President Ferdinand Marcos. The sequestered
declaration of nullity of the sale of shares of stock of Philippine PTIC shares were reconveyed to the Republic of the Philippines in accordance
Telecommunications Investment Corporation (PTIC) by the government of the with this Courts decision4 which became final and executory on 8 August
Republic of the Philippines to Metro Pacific Assets Holdings, Inc. (MPAH), an 2006.
affiliate of First Pacific Company Limited (First Pacific).
The Philippine Government decided to sell the 111,415 PTIC shares, which
The Antecedents represent 6.4 percent of the outstanding common shares of stock of PLDT,
and designated the Inter-Agency Privatization Council (IPC), composed of the
Department of Finance and the PCGG, as the disposing entity. An invitation to
The facts, according to petitioner Wilson P. Gamboa, a stockholder of
bid was published in seven different newspapers from 13 to 24 November
Philippine Long Distance Telephone Company (PLDT), are as follows:1
2006. On 20 November 2006, a pre-bid conference was held, and the original

ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT Page 36 of 62
deadline for bidding scheduled on 4 December 2006 was reset to 8 December
2006. The extension was published in nine different newspapers.
During the 8 December 2006 bidding, Parallax Capital Management LP
emerged as the highest bidder with a bid of P25,217,556,000. The
government notified First Pacific, the majority owner of PTIC shares, of the
bidding results and gave First Pacific until 1 February 2007 to exercise its right
of first refusal in accordance with PTICs Articles of Incorporation. First Pacific
announced its intention to match Parallaxs bid.
On 31 January 2007, the House of Representatives (HR) Committee on Good
Government conducted a public hearing on the particulars of the then
impending sale of the 111,415 PTIC shares.
Respondents Teves and Sevilla were among those who attended the public
hearing. The HR Committee Report No. 2270 concluded that: (a) the auction
of the governments 111,415 PTIC shares bore due diligence, transparency and
conformity with existing legal procedures; and (b) First Pacifics intended
acquisition of the governments 111,415 PTIC shares resulting in First
Pacifics 100% ownership of PTIC will not violate the 40 percent
constitutional limit on foreign ownership of a public utility since PTIC
holds only 13.847 percent of the total outstanding common shares of
PLDT.5 On 28 February 2007, First Pacific completed the acquisition of the
111,415 shares of stock of PTIC.
Respondent Manuel V. Pangilinan admits the following facts: (a) the IPC
conducted a public bidding for the sale of 111,415 PTIC shares or 46 percent
of the outstanding capital stock of PTIC (the remaining 54 percent of PTIC
shares was already owned by First Pacific and its affiliates); (b) Parallax offered
the highest bid amounting to P25,217,556,000; (c) pursuant to the right of first
refusal in favor of PTIC and its shareholders granted in PTICs Articles of
Incorporation, MPAH, a First Pacific affiliate, exercised its right of first refusal
by matching the highest bid offered for PTIC shares on 13 February 2007; and
(d) on 28 February 2007, the sale was consummated when MPAH paid
IPC P25,217,556,000 and the government delivered the certificates for the
111,415 PTIC shares. Respondent Pangilinan denies the other allegations of
facts of petitioner.
On 28 February 2007, petitioner filed the instant petition for prohibition,
injunction, declaratory relief, and declaration of nullity of sale of the 111,415
PTIC shares. Petitioner claims, among others, that the sale of the 111,415 PTIC
shares would result in an increase in First Pacifics common shareholdings in
PLDT from 30.7 percent to 37 percent, and this, combined with Japanese
NTT DoCoMos common shareholdings in PLDT, would result to a total foreign
common shareholdings in PLDT of 51.56 percent which is over the 40 percent
constitutional limit.6 Petitioner asserts:
If and when the sale is completed, First Pacifics equity in PLDT will
go up from 30.7 percent to 37.0 percent of its common or voting-
stockholdings, x x x. Hence, the consummation of the sale will put
the two largest foreign investors in PLDT First Pacific and Japans
NTT DoCoMo, which is the worlds largest wireless
telecommunications firm, owning 51.56 percent of PLDT common
equity. x x x With the completion of the sale, data culled from the
official website of the New York Stock Exchange (www.nyse.com)
showed that those foreign entities, which own at least five percent
of common equity, will collectively own 81.47 percent of PLDTs
common equity. x x x
x x x as the annual disclosure reports, also referred to as
Form 20-K reports x x x which PLDT submitted to the New
York Stock Exchange for the period 2003-2005, revealed
that First Pacific and several other foreign entities breached
the constitutional limit of 40 percent ownership as early as
2003. x x x7
Petitioner raises the following issues: (1) whether the consummation of the
then impending sale of 111,415 PTIC shares to First Pacific violates the
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
constitutional limit on foreign ownership of a public utility; (2) whether public
respondents committed grave abuse of discretion in allowing the sale of the
111,415 PTIC shares to First Pacific; and (3) whether the sale of common
shares to foreigners in excess of 40 percent of the entire subscribed common
capital stock violates the constitutional limit on foreign ownership of a public
utility.8
On 13 August 2007, Pablito V. Sanidad and Arno V. Sanidad filed a Motion for
Leave to Intervene and Admit Attached Petition-in-Intervention. In the
Resolution of 28 August 2007, the Court granted the motion and noted the
Petition-in-Intervention.
Petitioners-in-intervention join petitioner Wilson Gamboa x x x in seeking,
among others, to enjoin and/or nullify the sale by respondents of the 111,415
PTIC shares to First Pacific or assignee. Petitioners-in-intervention claim that,
as PLDT subscribers, they have a stake in the outcome of the controversy
x x x where the Philippine Government is completing the sale of government
owned assets in [PLDT], unquestionably a public utility, in violation of the
nationality restrictions of the Philippine Constitution
The Issue
This Court is not a trier of facts. Factual questions such as those raised by
petitioner,9 which indisputably demand a thorough examination of the
evidence of the parties, are generally beyond this Courts jurisdiction.
Adhering to this well-settled principle, the Court shall confine the resolution
of the instant controversy solely on the threshold and purely legal issue of
whether the term capital in Section 11, Article XII of the Constitution refers to
the total common shares only or to the total outstanding capital stock
(combined total of common and non-voting preferred shares) of PLDT, a
public utility.
The Ruling of the Court
The petition is partly meritorious.
Petition for declaratory relief treated as petition for mandamus
At the outset, petitioner is faced with a procedural barrier. Among the
remedies petitioner seeks, only the petition for prohibition is within the
original jurisdiction of this court, which however is not exclusive but is
concurrent with the Regional Trial Court and the Court of Appeals. The actions
for declaratory relief,10 injunction, and annulment of sale are not embraced
within the original jurisdiction of the Supreme Court. On this ground alone,
the petition could have been dismissed outright.
While direct resort to this Court may be justified in a petition for
prohibition,11 the Court shall nevertheless refrain from discussing the grounds
in support of the petition for prohibition since on 28 February 2007, the
questioned sale was consummated when MPAH paid IPC P25,217,556,000 and
the government delivered the certificates for the 111,415 PTIC shares.
However, since the threshold and purely legal issue on the definition of the
term capital in Section 11, Article XII of the Constitution has far-reaching
implications to the national economy,the Court treats the petition for
declaratory relief as one for mandamus.12
In Salvacion v. Central Bank of the Philippines,13 the Court treated the petition
for declaratory relief as one for mandamus considering the grave injustice
that would result in the interpretation of a banking law. In that case, which
involved the crime of rape committed by a foreign tourist against a Filipino
minor and the execution of the final judgment in the civil case for damages
on the tourists dollar deposit with a local bank, the Court declared Section
113 of Central Bank Circular No. 960, exempting foreign currency deposits
from attachment, garnishment or any other order or process of any court,
inapplicable due to the peculiar circumstances of the case. The Court held
Page 37 of 62
that injustice would result especially to a citizen aggrieved by a foreign guest
like accused x x x that would negate Article 10 of the Civil Code which
provides that in case of doubt in the interpretation or application of laws, it is
presumed that the lawmaking body intended right and justice to prevail. The
Court therefore required respondents Central Bank of the Philippines, the
local bank, and the accused to comply with the writ of execution issued in the
civil case for damages and to release the dollar deposit of the accused to
satisfy the judgment.
In Alliance of Government Workers v. Minister of Labor,14 the Court similarly
brushed aside the procedural infirmity of the petition for declaratory relief
and treated the same as one for mandamus. In Alliance, the issue was whether
the government unlawfully excluded petitioners, who were government
employees, from the enjoyment of rights to which they were entitled under
the law. Specifically, the question was: Are the branches, agencies,
subdivisions, and instrumentalities of the Government, including government
owned or controlled corporations included among the four employers under
Presidential Decree No. 851 which are required to pay their employees x x x a
thirteenth (13th) month pay x x x ? The Constitutional principle involved
therein affected all government employees, clearly justifying a relaxation of
the technical rules of procedure, and certainly requiring the interpretation of
the assailed presidential decree.
In short, it is well-settled that this Court may treat a petition for declaratory
relief as one for mandamus if the issue involved has far-reaching implications.
As this Court held in Salvacion:
The Court has no original and exclusive jurisdiction over a petition
for declaratory relief. However, exceptions to this rule have been
recognized. Thus, where the petition has far-reaching
implications and raises questions that should be resolved, it
may be treated as one for mandamus.15 (Emphasis supplied)
In the present case, petitioner seeks primarily the interpretation of the term
capital in Section 11, Article XII of the Constitution. He prays that this Court
declare that the term capital refers to common shares only, and that such
shares constitute the sole basis in determining foreign equity in a public
utility. Petitioner further asks this Court to declare any ruling inconsistent with
such interpretation unconstitutional.
The interpretation of the term capital in Section 11, Article XII of the
Constitution has far-reaching implications to the national economy. In fact, a
resolution of this issue will determine whether Filipinos are masters, or second
class citizens, in their own country. What is at stake here is whether Filipinos
or foreigners will have effective control of the national economy. Indeed, if
ever there is a legal issue that has far-reaching implications to the entire
nation, and to future generations of Filipinos, it is the threshhold legal issue
presented in this case.
The Court first encountered the issue on the definition of the term capital in
Section 11, Article XII of the Constitution in the case of Fernandez
v. Cojuangco, docketed as G.R. No. 157360.16 That case involved the same
public utility (PLDT) and substantially the same private respondents. Despite
the importance and novelty of the constitutional issue raised therein and
despite the fact that the petition involved a purely legal question, the Court
declined to resolve the case on the merits, and instead denied the same for
disregarding the hierarchy of courts.17 There, petitioner Fernandez assailed on
a pure question of law the Regional Trial Courts Decision of 21 February
2003 via a petition for review under Rule 45. The Courts Resolution, denying
the petition, became final on 21 December 2004.
The instant petition therefore presents the Court with another opportunity to
finally settle this purely legal issue which is of transcendental importance to
the national economy and a fundamental requirement to a faithful adherence
to our Constitution. The Court must forthwith seize such opportunity, not only
for the benefit of the litigants, but more significantly for the benefit of the
entire Filipino people, to ensure, in the words of the Constitution, a self-reliant
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
and independent national economy effectively controlled by
Filipinos.18 Besides, in the light of vague and confusing positions taken by
government agencies on this purely legal issue, present and future foreign
investors in this country deserve, as a matter of basic fairness, a categorical
ruling from this Court on the extent of their participation in the capital of
public utilities and other nationalized businesses.
Despite its far-reaching implications to the national economy, this purely legal
issue has remained unresolved for over 75 years since the 1935 Constitution.
There is no reason for this Court to evade this ever recurring fundamental
issue and delay again defining the term capital, which appears not only in
Section 11, Article XII of the Constitution, but also in Section 2, Article XII on
co-production and joint venture agreements for the development of our
natural resources,19 in Section 7, Article XII on ownership of private lands,20 in
Section 10, Article XII on the reservation of certain investments to Filipino
citizens,21 in Section 4(2), Article XIV on the ownership of educational
institutions,22 and in Section 11(2), Article XVI on the ownership of advertising
companies.23
Petitioner has locus standi
There is no dispute that petitioner is a stockholder of PLDT. As such, he has
the right to question the subject sale, which he claims to violate the
nationality requirement prescribed in Section 11, Article XII of the
Constitution. If the sale indeed violates the Constitution, then there is a
possibility that PLDTs franchise could be revoked, a dire consequence directly
affecting petitioners interest as a stockholder.
More importantly, there is no question that the instant petition raises matters
of transcendental importance to the public. The fundamental and threshold
legal issue in this case, involving the national economy and the economic
welfare of the Filipino people, far outweighs any perceived impediment in the
legal personality of the petitioner to bring this action.
In Chavez v. PCGG,24 the Court upheld the right of a citizen to bring a suit on
matters of transcendental importance to the public, thus:
In Taada v. Tuvera, the Court asserted that when the issue concerns a public
right and the object of mandamus is to obtain the enforcement of a
public duty, the people are regarded as the real parties in interest; and
because it is sufficient that petitioner is a citizen and as such is interested
in the execution of the laws, he need not show that he has any legal or
special interest in the result of the action. In the aforesaid case, the
petitioners sought to enforce their right to be informed on matters of public
concern, a right then recognized in Section 6, Article IV of the 1973
Constitution, in connection with the rule that laws in order to be valid and
enforceable must be published in the Official Gazette or otherwise effectively
promulgated. In ruling for the petitioners legal standing, the Court declared
that the right they sought to be enforced is a public right recognized by no
less than the fundamental law of the land.
Legaspi v. Civil Service Commission, while reiterating Taada, further declared
that when a mandamus proceeding involves the assertion of a public
right, the requirement of personal interest is satisfied by the mere fact
that petitioner is a citizen and, therefore, part of the general public
which possesses the right.
Further, in Albano v. Reyes, we said that while expenditure of public funds may
not have been involved under the questioned contract for the development,
management and operation of the Manila International Container
Terminal, public interest [was] definitely involved considering the
important role [of the subject contract] . . . in the economic development
of the country and the magnitude of the financial consideration
involved. We concluded that, as a consequence, the disclosure provision in
the Constitution would constitute sufficient authority for upholding the
petitioners standing. (Emphasis supplied)
Page 38 of 62

Clearly, since the instant petition, brought by a citizen, involves matters of
transcendental public importance, the petitioner has the requisite locus standi.
Definition of the Term Capital in
Section 11, Article XII of the 1987 Constitution
Section 11, Article XII (National Economy and Patrimony) of the 1987
Constitution mandates the Filipinization of public utilities, to wit:
Section 11. No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines, at
least sixty per centum of whose capital is owned by such
citizens; nor shall such franchise, certificate, or authorization be
exclusive in character or for a longer period than fifty years. Neither
shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or
repeal by the Congress when the common good so requires. The
State shall encourage equity participation in public utilities by the
general public. The participation of foreign investors in the
governing body of any public utility enterprise shall be limited to
their proportionate share in its capital, and all the executive and
managing officers of such corporation or association must be
citizens of the Philippines. (Emphasis supplied)
The above provision substantially reiterates Section 5, Article XIV of the 1973
Constitution, thus:
Section 5. No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations
or associations organized under the laws of the Philippines at
least sixty per centum of the capital of which is owned by such
citizens, nor shall such franchise, certificate, or authorization be
exclusive in character or for a longer period than fifty years. Neither
shall any such franchise or right be granted except under the
condition that it shall be subject to amendment, alteration, or
repeal by the National Assembly when the public interest so
requires. The State shall encourage equity participation in public
utilities by the general public. The participation of foreign investors
in the governing body of any public utility enterprise shall be
limited to their proportionate share in the capital thereof. (Emphasis
supplied)
The foregoing provision in the 1973 Constitution reproduced Section 8,
Article XIV of the 1935 Constitution, viz:
Section 8. No franchise, certificate, or any other form of
authorization for the operation of a public utility shall be
granted except to citizens of the Philippines or to corporations
or other entities organized under the laws of the Philippines
sixty per centum of the capital of which is owned by citizens of
the Philippines, nor shall such franchise, certificate, or
authorization be exclusive in character or for a longer period than
fifty years. No franchise or right shall be granted to any individual,
firm, or corporation, except under the condition that it shall be
subject to amendment, alteration, or repeal by the Congress when
the public interest so requires. (Emphasis supplied)
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Father Joaquin G. Bernas, S.J., a leading member of the 1986 Constitutional
Commission, reminds us that the Filipinization provision in the 1987
Constitution is one of the products of the spirit of nationalism which gripped
the 1935 Constitutional Convention.25 The 1987 Constitution provides for
the Filipinization of public utilities by requiring that any form of authorization
for the operation of public utilities should be granted only to citizens of the
Philippines or to corporations or associations organized under the laws of the
Philippines at least sixty per centum of whose capital is owned by such
citizens. The provision is [an express] recognition of the sensitive and
vital position of public utilities both in the national economy and for
national security.26 The evident purpose of the citizenship requirement is to
prevent aliens from assuming control of public utilities, which may be inimical
to the national interest.27 This specific provision explicitly reserves to Filipino
citizens control of public utilities, pursuant to an overriding economic goal of
the 1987 Constitution: to conserve and develop our patrimony28 and ensure a
self-reliant and independent national economy effectively controlled by
Filipinos.29
Any citizen or juridical entity desiring to operate a public utility must therefore
meet the minimum nationality requirement prescribed in Section 11, Article
XII of the Constitution. Hence, for a corporation to be granted authority to
operate a public utility, at least 60 percent of its capital must be owned by
Filipino citizens.
The crux of the controversy is the definition of the term capital. Does the
term capital in Section 11, Article XII of the Constitution refer to common
shares or to the total outstanding capital stock (combined total of common
and non-voting preferred shares)?
Petitioner submits that the 40 percent foreign equity limitation in domestic
public utilities refers only to common shares because such shares are entitled
to vote and it is through voting that control over a corporation is exercised.
Petitioner posits that the term capital in Section 11, Article XII of the
Constitution refers to the ownership of common capital stock subscribed and
outstanding, which class of shares alone, under the corporate set-up of PLDT,
can vote and elect members of the board of directors. It is undisputed that
PLDTs non-voting preferred shares are held mostly by Filipino citizens.30 This
arose from Presidential Decree No. 217,31 issued on 16 June 1973 by then
President Ferdinand Marcos, requiring every applicant of a PLDT telephone
line to subscribe to non-voting preferred shares to pay for the investment
cost of installing the telephone line.32
Petitioners-in-intervention basically reiterate petitioners arguments and adopt
petitioners definition of the term capital.33 Petitioners-in-intervention allege
that the approximate foreign ownership of common capital stock of PLDT
x x x already amounts to at least 63.54% of the total outstanding common
stock, which means that foreigners exercise significant control over PLDT,
patently violating the 40 percent foreign equity limitation in public utilities
prescribed by the Constitution.
Respondents, on the other hand, do not offer any definition of the term
capital in Section 11, Article XII of the Constitution. More importantly, private
respondents Nazareno and Pangilinan of PLDT do not dispute that more than
40 percent of the common shares of PLDT are held by foreigners.
In particular, respondent Nazarenos Memorandum, consisting of 73 pages,
harps mainly on the procedural infirmities of the petition and the supposed
violation of the due process rights of the affected foreign common
shareholders. Respondent Nazareno does not deny petitioners allegation of
foreigners dominating the common shareholdings of
PLDT. Nazareno stressed mainly that the petition seeks to divest foreign
common shareholders purportedly exceeding 40% of the total common
shareholdings in PLDT of their ownership over their shares. Thus, the
foreign natural and juridical PLDT shareholders must be impleaded in this suit
Page 39 of 62
so that they can be heard.34 Essentially, Nazareno invokes denial of due
process on behalf of the foreign common shareholders.
While Nazareno does not introduce any definition of the term capital, he
states that among the factual assertions that need to be established to
counter petitioners allegations is the uniform interpretation by
government agencies (such as the SEC), institutions and corporations
(such as the Philippine National Oil Company-Energy Development
Corporation or PNOC-EDC) of including both preferred shares and
common shares in controlling interest in view of testing compliance with
the 40% constitutional limitation on foreign ownership in public
utilities.35
Similarly, respondent Manuel V. Pangilinan does not define the term capital in
Section 11, Article XII of the Constitution. Neither does he refute petitioners
claim of foreigners holding more than 40 percent of PLDTs common shares.
Instead, respondent Pangilinan focuses on the procedural flaws of the petition
and the alleged violation of the due process rights of foreigners.
Respondent Pangilinan emphasizes in his Memorandum (1) the absence of
this Courts jurisdiction over the petition; (2) petitioners lack of standing;
(3) mootness of the petition; (4) non-availability of declaratory relief; and (5)
the denial of due process rights. Moreover, respondent Pangilinan alleges that
the issue should be whether owners of shares in PLDT as well as owners of
shares in companies holding shares in PLDT may be required to relinquish
their shares in PLDT and in those companies without any law requiring them
to surrender their shares and also without notice and trial.
Respondent Pangilinan further asserts that Section 11, [Article XII of the
Constitution] imposes no nationality requirement on the shareholders of
the utility company as a condition for keeping their shares in the utility
company. According to him, Section 11 does not authorize taking one
persons property (the shareholders stock in the utility company) on the basis
of another partys alleged failure to satisfy a requirement that is a condition
only for that other partys retention of another piece of property (the utility
company being at least 60% Filipino-owned to keep its franchise).36
The OSG, representing public respondents Secretary Margarito Teves,
Undersecretary John P. Sevilla, Commissioner Ricardo Abcede, and Chairman
Fe Barin, is likewise silent on the definition of the term capital. In its
Memorandum37 dated 24 September 2007, the OSG also limits its discussion
on the supposed procedural defects of the petition, i.e. lack of standing, lack
of jurisdiction, non-inclusion of interested parties, and lack of basis for
injunction. The OSG does not present any definition or interpretation of the
term capital in Section 11, Article XII of the Constitution. The OSG contends
that the petition actually partakes of a collateral attack on PLDTs franchise as
a public utility, which in effect requires a full-blown trial where all the parties
in interest are given their day in court.38
Respondent Francisco Ed Lim, impleaded as President and Chief Executive
Officer of the Philippine Stock Exchange (PSE), does not also define the term
capital and seeks the dismissal of the petition on the following grounds: (1)
failure to state a cause of action against Lim; (2) the PSE allegedly
implemented its rules and required all listed companies, including PLDT, to
make proper and timely disclosures; and (3) the reliefs prayed for in the
petition would adversely impact the stock market.
In the earlier case of Fernandez v. Cojuangco, petitioner Fernandez who
claimed to be a stockholder of record of PLDT, contended that the term
capital in the 1987 Constitution refers to shares entitled to vote or the
common shares. Fernandez explained thus:
The forty percent (40%) foreign equity limitation in public utilities
prescribed by the Constitution refers to ownership of shares of
stock entitled to vote, i.e., common shares, considering that it is
through voting that control is being exercised. x x x
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Obviously, the intent of the framers of the Constitution in imposing
limitations and restrictions on fully nationalized and partially
nationalized activities is for Filipino nationals to be always in control
of the corporation undertaking said activities. Otherwise, if the Trial
Courts ruling upholding respondents arguments were to be given
credence, it would be possible for the ownership structure of a
public utility corporation to be divided into one percent (1%)
common stocks and ninety-nine percent (99%) preferred stocks.
Following the Trial Courts ruling adopting respondents arguments,
the common shares can be owned entirely by foreigners thus
creating an absurd situation wherein foreigners, who are supposed
to be minority shareholders, control the public utility corporation.
xxxx
Thus, the 40% foreign ownership limitation should be interpreted to
apply to both the beneficial ownership and the controlling interest.
xxxx
Clearly, therefore, the forty percent (40%) foreign equity limitation
in public utilities prescribed by the Constitution refers to ownership
of shares of stock entitled to vote, i.e., common shares.
Furthermore, ownership of record of shares will not suffice but it
must be shown that the legal and beneficial ownership rests in the
hands of Filipino citizens. Consequently, in the case of petitioner
PLDT, since it is already admitted that the voting interests of
foreigners which would gain entry to petitioner PLDT by the
acquisition of SMART shares through the Questioned Transactions
is equivalent to 82.99%, and the nominee arrangements between
the foreign principals and the Filipino owners is likewise admitted,
there is, therefore, a violation of Section 11, Article XII of the
Constitution.
Parenthetically, the Opinions dated February 15, 1988 and April 14,
1987 cited by the Trial Court to support the proposition that the
meaning of the word capital as used in Section 11, Article XII of the
Constitution allegedly refers to the sum total of the shares
subscribed and paid-in by the shareholder and it allegedly is
immaterial how the stock is classified, whether as common or
preferred, cannot stand in the face of a clear legislative policy as
stated in the FIA which took effect in 1991 or way after said
opinions were rendered, and as clarified by the above-quoted
Amendments. In this regard, suffice it to state that as between the
law and an opinion rendered by an administrative agency, the law
indubitably prevails. Moreover, said Opinions are merely advisory
and cannot prevail over the clear intent of the framers of the
Constitution.
In the same vein, the SECs construction of Section 11, Article XII of
the Constitution is at best merely advisory for it is the courts that
finally determine what a law means.39
On the other hand, respondents therein, Antonio O. Cojuangco, Manuel
V. Pangilinan, Carlos A. Arellano, Helen Y. Dee, Magdangal B.
Elma, Mariles Cacho-Romulo, Fr. Bienvenido F. Nebres, Ray C. Espinosa,
Napoleon L. Nazareno, Albert F. Del Rosario, and Orlando B. Vea, argued that
the term capital in Section 11, Article XII of the Constitution includes preferred
shares since the Constitution does not distinguish among classes of stock,
thus:
16. The Constitution applies its foreign ownership limitation on the
corporations capital, without distinction as to classes of shares. x x x
Page 40 of 62
 In this connection, the Corporation Code which was already in force
at the time the present (1987) Constitution was drafted defined
outstanding capital stock as follows:
Section 137. Outstanding capital stock defined. The term
outstanding capital stock, as used in this Code, means the total
shares of stock issued under binding subscription agreements to
subscribers or stockholders, whether or not fully or partially paid,
except treasury shares.
Section 137 of the Corporation Code also does not distinguish
between common and preferred shares, nor exclude either class of
shares, in determining the outstanding capital stock (the capital) of
a corporation. Consequently, petitioners suggestion to reckon
PLDTs foreign equity only on the basis of PLDTs outstanding
common shares is without legal basis. The language of the
Constitution should be understood in the sense it has in common
use.
xxxx
17. But even assuming that resort to the proceedings of the
Constitutional Commission is necessary, there is nothing in the
Record of the Constitutional Commission (Vol. III) which petitioner
misleadingly cited in the Petition x x x which supports petitioners
view that only common shares should form the basis for computing
a public utilitys foreign equity.
xx x x
18. In addition, the SEC the government agency primarily responsible for
implementing the Corporation Code, and which also has the
responsibility of ensuring compliance with the Constitutions foreign
equity restrictions as regards nationalized activities x x x has
categorically ruled that both common and preferred shares are
properly considered in determining outstanding capital stock and
the nationality composition thereof.40
We agree with petitioner and petitioners-in-intervention. The term capital in
Section 11, Article XII of the Constitution refers only to shares of stock entitled
to vote in the election of directors, and thus in the present case only to
common shares,41 and not to the total outstanding capital stock comprising
both common and non-voting preferred shares.
The Corporation Code of the Philippines42 classifies shares as common or
preferred, thus:
Sec. 6. Classification of shares. - The shares of stock of stock
corporations may be divided into classes or series of shares, or
both, any of which classes or series of shares may have such rights,
privileges or restrictions as may be stated in the articles of
incorporation: Provided, That no share may be deprived of
voting rights except those classified and issued as preferred or
redeemable shares, unless otherwise provided in this Code:
Provided, further, That there shall always be a class or series of
shares which have complete voting rights. Any or all of the shares
or series of shares may have a par value or have no par value as
may be provided for in the articles of incorporation: Provided,
however, That banks, trust companies, insurance companies, public
utilities, and building and loan associations shall not be permitted
to issue no-par value shares of stock.
Preferred shares of stock issued by any corporation may be given
preference in the distribution of the assets of the corporation in
case of liquidation and in the distribution of dividends, or such
other preferences as may be stated in the articles of incorporation
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
which are not violative of the provisions of this Code: Provided, That
preferred shares of stock may be issued only with a stated par
value. The Board of Directors, where authorized in the articles of
incorporation, may fix the terms and conditions of preferred shares
of stock or any series thereof: Provided, That such terms and
conditions shall be effective upon the filing of a certificate thereof
with the Securities and Exchange Commission.
Shares of capital stock issued without par value shall be deemed
fully paid and non-assessable and the holder of such shares shall
not be liable to the corporation or to its creditors in respect thereto:
Provided; That shares without par value may not be issued for a
consideration less than the value of five (P5.00) pesos per share:
Provided, further, That the entire consideration received by the
corporation for its no-par value shares shall be treated as capital
and shall not be available for distribution as dividends.
A corporation may, furthermore, classify its shares for the purpose
of insuring compliance with constitutional or legal requirements.
Except as otherwise provided in the articles of incorporation and
stated in the certificate of stock, each share shall be equal in all
respects to every other share.
Where the articles of incorporation provide for non-voting shares in
the cases allowed by this Code, the holders of such shares shall
nevertheless be entitled to vote on the following matters:
1. Amendment of the articles of incorporation;
2. Adoption and amendment of by-laws;
3. Sale, lease, exchange, mortgage, pledge or other
disposition of all or substantially all of the corporate
property;
4. Incurring, creating or increasing bonded indebtedness;
5. Increase or decrease of capital stock;
6. Merger or consolidation of the corporation with
another corporation or other corporations;
7. Investment of corporate funds in another corporation
or business in accordance with this Code; and
8. Dissolution of the corporation.
Except as provided in the immediately preceding paragraph, the
vote necessary to approve a particular corporate act as provided in
this Code shall be deemed to refer only to stocks with voting rights
Indisputably, one of the rights of a stockholder is the right to participate in
the control or management of the corporation.43 This is exercised through his
vote in the election of directors because it is the board of directors that
controls or manages the corporation.44 In the absence of provisions in the
articles of incorporation denying voting rights to preferred shares, preferred
shares have the same voting rights as common shares. However, preferred
shareholders are often excluded from any control, that is, deprived of the
right to vote in the election of directors and on other matters, on the theory
that the preferred shareholders are merely investors in the corporation for
income in the same manner as bondholders.45 In fact, under the Corporation
Code only preferred or redeemable shares can be deprived of the right to
vote.46 Common shares cannot be deprived of the right to vote in any
Page 41 of 62
corporate meeting, and any provision in the articles of incorporation
restricting the right of common shareholders to vote is invalid.47
Considering that common shares have voting rights which translate to
control, as opposed to preferred shares which usually have no voting rights,
the term capital in Section 11, Article XII of the Constitution refers only to
common shares. However, if the preferred shares also have the right to vote
in the election of directors, then the term capital shall include such preferred
shares because the right to participate in the control or management of the
corporation is exercised through the right to vote in the election of
directors. In short, the term capital in Section 11, Article XII of the
Constitution refers only to shares of stock that can vote in the election of
directors.
This interpretation is consistent with the intent of the framers of the
Constitution to place in the hands of Filipino citizens the control and
management of public utilities. As revealed in the deliberations of the
Constitutional Commission, capital refers to the voting stock or controlling
interest of a corporation, to wit:
MR. NOLLEDO. In Sections 3, 9 and 15, the Committee stated local
or Filipino equity and foreign equity; namely, 60-40 in Section 3, 60-
40 in Section 9 and 2/3-1/3 in Section 15.
MR. VILLEGAS. That is right
MR. NOLLEDO. In teaching law, we are always faced with this
question: Where do we base the equity requirement, is it on the
authorized capital stock, on the subscribed capital stock, or on the
paid-up capital stock of a corporation? Will the Committee please
enlighten me on this?
MR. VILLEGAS. We have just had a long discussion with the
members of the team from the UP Law Center who provided us a
draft. The phrase that is contained here which we adopted from
the UP draft is 60 percent of voting stock.
MR. NOLLEDO. That must be based on the subscribed capital stock,
because unless declared delinquent, unpaid capital stock shall be
entitled to vote.
MR. VILLEGAS. That is right.
MR. NOLLEDO. Thank you.
With respect to an investment by one corporation in another
corporation, say, a corporation with 60-40 percent equity invests in
another corporation which is permitted by the
Corporation Code, does the Committee adopt the grandfather rule?
MR. VILLEGAS. Yes, that is the understanding of the Committee.
MR. NOLLEDO. Therefore, we need additional Filipino capital?
MR. VILLEGAS. Yes.48
xxxx
MR. AZCUNA. May I be clarified as to that portion that was
accepted by the Committee.
MR. VILLEGAS. The portion accepted by the Committee is the
deletion of the phrase voting stock or controlling interest.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
MR. AZCUNA. Hence, without the Davide amendment, the
committee report would read: corporations or associations at least
sixty percent of whose CAPITAL is owned by such citizens.
MR. VILLEGAS. Yes.
MR. AZCUNA. So if the Davide amendment is lost, we are stuck with
60 percent of the capital to be owned by citizens.
MR. VILLEGAS. That is right.
MR. AZCUNA. But the control can be with the foreigners even
if they are the minority. Let us say 40 percent of the capital is
owned by them, but it is the voting capital, whereas, the
Filipinos own the nonvoting shares. So we can have a situation
where the corporation is controlled by foreigners despite being
the minority because they have the voting capital. That is the
anomaly that would result here.
MR. BENGZON. No, the reason we eliminated the word stock as
stated in the 1973 and 1935 Constitutions is that according to
Commissioner Rodrigo, there are associations that do not have
stocks. That is why we say CAPITAL.
MR. AZCUNA. We should not eliminate the phrase controlling
interest.
MR. BENGZON. In the case of stock corporations, it is
assumed.49 (Emphasis supplied)
Thus, 60 percent of the capital assumes, or should result in, controlling
interest in the corporation. Reinforcing this interpretation of the term capital,
as referring to controlling interest or shares entitled to vote, is the definition
of a Philippine national in the Foreign Investments Act of 1991,50 to wit:
SEC. 3. Definitions. - As used in this Act:
a. The term Philippine national shall mean a citizen of the
Philippines; or a domestic partnership or association wholly owned
by citizens of the Philippines; or a corporation organized under
the laws of the Philippines of which at least sixty percent (60%)
of the capital stock outstanding and entitled to vote is owned
and held by citizens of the Philippines; or a corporation
organized abroad and registered as doing business in the
Philippines under the Corporation Code of which one hundred
percent (100%) of the capital stock outstanding and entitled to vote
is wholly owned by Filipinos or a trustee of funds for pension or
other employee retirement or separation benefits, where the trustee
is a Philippine national and at least sixty percent (60%) of the fund
will accrue to the benefit of Philippine nationals: Provided, That
where a corporation and its non-Filipino stockholders own stocks in
a Securities and Exchange Commission (SEC) registered enterprise,
at least sixty percent (60%) of the capital stock outstanding and
entitled to vote of each of both corporations must be owned and
held by citizens of the Philippines and at least sixty percent (60%) of
the members of the Board of Directors of each of both corporations
must be citizens of the Philippines, in order that the corporation,
shall be considered a Philippine national. (Emphasis supplied)
In explaining the definition of a Philippine national, the Implementing Rules
and Regulations of the Foreign Investments Act of 1991 provide:
Page 42 of 62
 b. Philippine national shall mean a citizen of the Philippines or a
domestic partnership or association wholly owned by the citizens of
the Philippines; or a corporation organized under the laws of the
Philippines of which at least sixty percent [60%] of the capital
stock outstanding and entitled to vote is owned and held by
citizens of the Philippines; or a trustee of funds for pension or
other employee retirement or separation benefits, where the trustee
is a Philippine national and at least sixty percent [60%] of the fund
will accrue to the benefit of the Philippine nationals; Provided, that
where a corporation its non-Filipino stockholders own stocks in a
Securities and Exchange Commission [SEC] registered enterprise, at
least sixty percent [60%] of the capital stock outstanding and
entitled to vote of both corporations must be owned and held by
citizens of the Philippines and at least sixty percent [60%] of the
members of the Board of Directors of each of both corporation
must be citizens of the Philippines, in order that the corporation
shall be considered a Philippine national. The control test shall be
applied for this purpose.
Compliance with the required Filipino ownership of a
corporation shall be determined on the basis of outstanding
capital stock whether fully paid or not, but only such stocks
which are generally entitled to vote are considered.
For stocks to be deemed owned and held by Philippine citizens
or Philippine nationals, mere legal title is not enough to meet
the required Filipino equity. Full beneficial ownership of the
stocks, coupled with appropriate voting rights is essential.
Thus, stocks, the voting rights of which have been assigned or
transferred to aliens cannot be considered held by Philippine
citizens or Philippine nationals.
Individuals or juridical entities not meeting the aforementioned
qualifications are considered as non-Philippine
nationals. (Emphasis supplied)
Mere legal title is insufficient to meet the 60 percent Filipino-owned capital
required in the Constitution. Full beneficial ownership of 60 percent of the
outstanding capital stock, coupled with 60 percent of the voting rights, is
required. The legal and beneficial ownership of 60 percent of the outstanding
capital stock must rest in the hands of Filipino nationals in accordance with
the constitutional mandate. Otherwise, the corporation is considered as non-
Philippine national[s].
Under Section 10, Article XII of the Constitution, Congress may reserve to
citizens of the Philippines or to corporations or associations at least sixty per
centum of whose capital is owned by such citizens, or such higher percentage
as Congress may prescribe, certain areas of investments. Thus, in numerous
laws Congress has reserved certain areas of investments to Filipino citizens or
to corporations at least sixty percent of the capital of which is owned by
Filipino citizens. Some of these laws are: (1) Regulation of Award of
Government Contracts or R.A. No. 5183; (2) Philippine Inventors Incentives Act
or R.A. No. 3850; (3) Magna Carta for Micro, Small and Medium Enterprises or
R.A. No. 6977; (4) Philippine Overseas Shipping Development Act or R.A. No.
7471; (5) Domestic Shipping Development Act of 2004 or R.A. No. 9295; (6)
Philippine Technology Transfer Act of 2009 or R.A. No. 10055; and (7) Ship
Mortgage Decree or P.D. No. 1521. Hence, the term capital in Section 11,
Article XII of the Constitution is also used in the same context in numerous
laws reserving certain areas of investments to Filipino citizens.
To construe broadly the term capital as the total outstanding capital stock,
including both common and non-voting preferred shares, grossly contravenes
the intent and letter of the Constitution that the State shall develop a self-
reliant and independent national economy effectively controlled by Filipinos.
A broad definition unjustifiably disregards who owns the all-important voting
stock, which necessarily equates to control of the public utility.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
We shall illustrate the glaring anomaly in giving a broad definition to the term
capital. Let us assume that a corporation has 100 common shares owned by
foreigners and 1,000,000 non-voting preferred shares owned by Filipinos, with
both classes of share having a par value of one peso (P1.00) per share. Under
the broad definition of the term capital, such corporation would be
considered compliant with the 40 percent constitutional limit on foreign
equity of public utilities since the overwhelming majority, or more than 99.999
percent, of the total outstanding capital stock is Filipino owned. This is
obviously absurd.
In the example given, only the foreigners holding the common shares have
voting rights in the election of directors, even if they hold only 100 shares.
The foreigners, with a minuscule equity of less than 0.001 percent, exercise
control over the public utility. On the other hand, the Filipinos, holding more
than 99.999 percent of the equity, cannot vote in the election of directors and
hence, have no control over the public utility. This starkly circumvents the
intent of the framers of the Constitution, as well as the clear language of the
Constitution, to place the control of public utilities in the hands of Filipinos. It
also renders illusory the State policy of an independent national
economy effectively controlled by Filipinos.
The example given is not theoretical but can be found in the real world, and
in fact exists in the present case.
Holders of PLDT preferred shares are explicitly denied of the right to vote in
the election of directors. PLDTs Articles of Incorporation expressly state
that the holders of Serial Preferred Stock shall not be entitled to vote at
any meeting of the stockholders for the election of directors or for any
other purpose or otherwise participate in any action taken by the corporation
or its stockholders, or to receive notice of any meeting of stockholders.51
On the other hand, holders of common shares are granted the exclusive right
to vote in the election of directors. PLDTs Articles of Incorporation52 state that
each holder of Common Capital Stock shall have one vote in respect of each
share of such stock held by him on all matters voted upon by the
stockholders, and the holders of Common Capital Stock shall have the
exclusive right to vote for the election of directors and for all other
purposes.53
In short, only holders of common shares can vote in the election of directors,
meaning only common shareholders exercise control over PLDT. Conversely,
holders of preferred shares, who have no voting rights in the election of
directors, do not have any control over PLDT. In fact, under PLDTs Articles of
Incorporation, holders of common shares have voting rights for all purposes,
while holders of preferred shares have no voting right for any purpose
whatsoever.
It must be stressed, and respondents do not dispute, that foreigners hold a
majority of the common shares of PLDT. In fact, based on PLDTs 2010 General
Information Sheet (GIS),54which is a document required to be submitted
annually to the Securities and Exchange Commission,55 foreigners hold
120,046,690 common shares of PLDT whereas Filipinos hold only 66,750,622
common shares.56 In other words, foreigners hold 64.27% of the total number
of PLDTs common shares, while Filipinos hold only 35.73%. Since holding a
majority of the common shares equates to control, it is clear that foreigners
exercise control over PLDT. Such amount of control unmistakably exceeds the
allowable 40 percent limit on foreign ownership of public utilities expressly
mandated in Section 11, Article XII of the Constitution.
Moreover, the Dividend Declarations of PLDT for 2009,57 as submitted to the
SEC, shows that per share the SIP58 preferred shares earn a pittance in
dividends compared to the common shares. PLDT declared dividends for the
common shares at P70.00 per share, while the declared dividends for the
preferred shares amounted to a measly P1.00 per share.59 So the preferred
shares not only cannot vote in the election of directors, they also have very
little and obviously negligible dividend earning capacity compared to
common shares.
Page 43 of 62
As shown in PLDTs 2010 GIS,60 as submitted to the SEC, the par value of PLDT
common shares is P5.00 per share, whereas the par value of preferred shares
is P10.00 per share. In other words, preferred shares have twice the par value
of common shares but cannot elect directors and have only 1/70 of the
dividends of common shares. Moreover, 99.44% of the preferred shares are
owned by Filipinos while foreigners own only a minuscule 0.56% of the
preferred shares.61 Worse, preferred shares constitute 77.85% of the
authorized capital stock of PLDT while common shares constitute only
22.15%.62 This undeniably shows that beneficial interest in PLDT is not with
the non-voting preferred shares but with the common shares, blatantly
violating the constitutional requirement of 60 percent Filipino control and
Filipino beneficial ownership in a public utility.
The legal and beneficial ownership of 60 percent of the outstanding capital
stock must rest in the hands of Filipinos in accordance with the constitutional
mandate. Full beneficial ownership of 60 percent of the outstanding capital
stock, coupled with 60 percent of the voting rights, is constitutionally required
for the States grant of authority to operate a public utility. The undisputed
fact that the PLDT preferred shares, 99.44% owned by Filipinos, are non-
voting and earn only 1/70 of the dividends that PLDT common shares earn,
grossly violates the constitutional requirement of 60 percent Filipino control
and Filipino beneficial ownership of a public utility.
In short, Filipinos hold less than 60 percent of the voting stock, and earn
less than 60 percent of the dividends, of PLDT. This directly contravenes
the express command in Section 11, Article XII of the Constitution that [n]o
franchise, certificate, or any other form of authorization for the operation of a
public utility shall be granted except to x x x corporations x x x organized
under the laws of the Philippines, at least sixty per centum of whose capital
is owned by such citizens x x x.
To repeat, (1) foreigners own 64.27% of the common shares of PLDT, which
class of shares exercises the sole right to vote in the election of directors, and
thus exercise control over PLDT; (2) Filipinos own only 35.73% of PLDTs
common shares, constituting a minority of the voting stock, and thus do not
exercise control over PLDT; (3) preferred shares, 99.44% owned by Filipinos,
have no voting rights; (4) preferred shares earn only 1/70 of the dividends
that common shares earn;63 (5) preferred shares have twice the par value of
common shares; and (6) preferred shares constitute 77.85% of the authorized
capital stock of PLDT and common shares only 22.15%. This kind of ownership
and control of a public utility is a mockery of the Constitution.
Incidentally, the fact that PLDT common shares with a par value of P5.00 have
a current stock market value of P2,328.00 per share,64 while PLDT preferred
shares with a par value of P10.00 per share have a current stock market value
ranging from only P10.92 to P11.06 per share,65 is a glaring confirmation by
the market that control and beneficial ownership of PLDT rest with the
common shares, not with the preferred shares.
Indisputably, construing the term capital in Section 11, Article XII of the
Constitution to include both voting and non-voting shares will result in the
abject surrender of our telecommunications industry to foreigners, amounting
to a clear abdication of the States constitutional duty to limit control of public
utilities to Filipino citizens. Such an interpretation certainly runs counter to the
constitutional provision reserving certain areas of investment to Filipino
citizens, such as the exploitation of natural resources as well as the ownership
of land, educational institutions and advertising businesses. The Court should
never open to foreign control what the Constitution has expressly reserved to
Filipinos for that would be a betrayal of the Constitution and of the national
interest. The Court must perform its solemn duty to defend and uphold the
intent and letter of the Constitution to ensure, in the words of the
Constitution, a self-reliant and independent national economy effectively
controlled by Filipinos.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
Section 11, Article XII of the Constitution, like other provisions of the
Constitution expressly reserving to Filipinos specific areas of investment, such
as the development of natural resources and ownership of land, educational
institutions and advertising business, is self-executing. There is no need for
legislation to implement these self-executing provisions of the Constitution.
The rationale why these constitutional provisions are self-executing was
explained in Manila Prince Hotel v. GSIS,66 thus:
x x x Hence, unless it is expressly provided that a legislative act is
necessary to enforce a constitutional mandate, the presumption
now is that all provisions of the constitution are self-executing. If
the constitutional provisions are treated as requiring legislation
instead of self-executing, the legislature would have the power to
ignore and practically nullify the mandate of the fundamental law.
This can be cataclysmic. That is why the prevailing view is, as it has
always been, that
. . . in case of doubt, the Constitution should be considered self-
executing rather than non-self-executing. . . . Unless the contrary
is clearly intended, the provisions of the Constitution should be
considered self-executing, as a contrary rule would give the
legislature discretion to determine when, or whether, they shall
be effective. These provisions would be subordinated to the will of
the lawmaking body, which could make them entirely meaningless
by simply refusing to pass the needed implementing statute.
(Emphasis supplied
In Manila Prince Hotel, even the Dissenting Opinion of then Associate
Justice Reynato S. Puno, later Chief Justice, agreed that constitutional
provisions are presumed to be self-executing. Justice Puno stated:
Courts as a rule consider the provisions of the Constitution as self-
executing, rather than as requiring future legislation for their
enforcement. The reason is not difficult to discern. For if they are
not treated as self-executing, the mandate of the fundamental
law ratified by the sovereign people can be easily ignored and
nullified by Congress. Suffused with wisdom of the ages is the
unyielding rule that legislative actions may give breath to
constitutional rights but congressional inaction should not
suffocate them.
Thus, we have treated as self-executing the provisions in the Bill of
Rights on arrests, searches and seizures, the rights of a person
under custodial investigation, the rights of an accused, and the
privilege against self-incrimination. It is recognized that legislation
is unnecessary to enable courts to effectuate constitutional
provisions guaranteeing the fundamental rights of life, liberty and
the protection of property. The same treatment is accorded to
constitutional provisions forbidding the taking or damaging of
property for public use without just compensation. (Emphasis
supplied)
Thus, in numerous cases,67 this Court, even in the absence of implementing
legislation, applied directly the provisions of the 1935, 1973 and 1987
Constitutions limiting land ownership to Filipinos. In Soriano v. Ong Hoo,68 this
Court ruled:
x x x As the Constitution is silent as to the effects or consequences
of a sale by a citizen of his land to an alien, and as both the citizen
and the alien have violated the law, none of them should have a
recourse against the other, and it should only be the State that
should be allowed to intervene and determine what is to be done
with the property subject of the violation. We have said that what
the State should do or could do in such matters is a matter of
public policy, entirely beyond the scope of judicial
authority. (Dinglasan, et al. vs. Lee Bun Ting, et al., 6 G. R. No. L-
5996, June 27, 1956.) While the legislature has not definitely
Page 44 of 62
 decided what policy should be followed in cases of violations
against the constitutional prohibition, courts of justice cannot
go beyond by declaring the disposition to be null and void
as violative of the Constitution. x x x (Emphasis supplied)
To treat Section 11, Article XII of the Constitution as not self-executing would
mean that since the 1935 Constitution, or over the last 75 years, not one of
the constitutional provisions expressly reserving specific areas of investments
to corporations, at least 60 percent of the capital of which is owned by
Filipinos, was enforceable. In short, the framers of the 1935, 1973 and 1987
Constitutions miserably failed to effectively reserve to Filipinos specific areas
of investment, like the operation by corporations of public utilities, the
exploitation by corporations of mineral resources, the ownership by
corporations of real estate, and the ownership of educational institutions. All
the legislatures that convened since 1935 also miserably failed to enact
legislations to implement these vital constitutional provisions that determine
who will effectively control the national economy, Filipinos or foreigners. This
Court cannot allow such an absurd interpretation of the Constitution.
This Court has held that the SEC has both regulatory and adjudicative
functions.69 Under its regulatory functions, the SEC can be compelled by
mandamus to perform its statutory duty when it unlawfully neglects to
perform the same. Under its adjudicative or quasi-judicial functions, the SEC
can be also be compelled by mandamus to hear and decide a possible
violation of any law it administers or enforces when it is mandated by law to
investigate such violation.
Under Section 17(4)70 of the Corporation Code, the SEC has the regulatory
function to reject or disapprove the Articles of Incorporation of any
corporation where the required percentage of ownership of the capital
stock to be owned by citizens of the Philippines has not been complied
with as required by existing laws or the Constitution. Thus, the SEC is the
government agency tasked with the statutory duty to enforce the nationality
requirement prescribed in Section 11, Article XII of the Constitution on the
ownership of public utilities. This Court, in a petition for declaratory relief that
is treated as a petition for mandamus as in the present case, can direct the
SEC to perform its statutory duty under the law, a duty that the SEC has
apparently unlawfully neglected to do based on the 2010 GIS that respondent
PLDT submitted to the SEC.
Under Section 5(m) of the Securities Regulation Code,71 the SEC is vested with
the power and function to suspend or revoke, after proper notice and
hearing, the franchise or certificate of registration of corporations,
partnerships or associations, upon any of the grounds provided by
law. The SEC is mandated under Section 5(d) of the same Code with the
power and function to investigate x x x the activities of persons to ensure
compliance with the laws and regulations that SEC administers or enforces.
The GIS that all corporations are required to submit to SEC annually should
put the SEC on guard against violations of the nationality requirement
prescribed in the Constitution and existing laws. This Court can compel the
SEC, in a petition for declaratory relief that is treated as a petition for
mandamus as in the present case, to hear and decide a possible violation of
Section 11, Article XII of the Constitution in view of the ownership structure of
PLDTs voting shares, as admitted by respondents and as stated in PLDTs 2010
GIS that PLDT submitted to SEC.
WHEREFORE, we PARTLY GRANT the petition and rule that the term capital
in Section 11, Article XII of the 1987 Constitution refers only to shares of stock
entitled to vote in the election of directors, and thus in the present case only
to common shares, and not to the total outstanding capital stock (common
and non-voting preferred shares). Respondent Chairperson of the Securities
and Exchange Commission is DIRECTED to apply this definition of the term
capital in determining the extent of allowable foreign ownership in
respondent Philippine Long Distance Telephone Company, and if there is a
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
violation of Section 11, Article XII of the Constitution, to impose the
appropriate sanctions under the law.
SO ORDERED.
#13
PHIL-VILLE DEVELOPMENT AND G.R. No. 167391
HOUSING CORPORATION,
Petitioner, Present:
CARPIO MORALES, J.,
Chairperson,
- versus - BRION,
BERSAMIN,
VILLARAMA, JR., and
SERENO, JJ.
MAXIMO BONIFACIO, CEFERINO R. Promulgated:
BONIFACIO, APOLONIO B. TAN, BENITA June 8, 2011
B. CAINA, CRISPINA B. PASCUAL,
ROSALIA B. DE GRACIA, TERESITA S.
DORONIA, CHRISTINA GOCO AND
ARSENIO C. BONIFACIO, in their capacity
as the surviving heirs of the late
ELEUTERIA RIVERA VDA. DE BONIFACIO,
Respondents.
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
VILLARAMA, JR., J.:
This petition for review on certiorari[1] seeks to set aside the Decision[2] dated
January 31, 2005 and Resolution[3] dated March 15, 2005 of the Court of
Appeals in CA-G.R. SP No. 62211. The Court of Appeals dismissed the
Complaint[4] for Quieting of Title and Damages filed by Phil-Ville
Development and Housing Corporation (Phil-Ville) and denied its Motion for
Reconsideration.[5]
The factual antecedents, as culled from the records, are as follows.
Phil-Ville Development and Housing Corporation is the registered owner of
three parcels of land designated as Lots 1-G-1, 1-G-2 and 1-G-3 of the
subdivision plan Psd-1-13-006209, located in Caloocan City, having a total
area of 8,694 square meters and covered by Transfer Certificates of Title (TCT)
Nos. 270921,[6] 270922[7] and 270923.[8] Prior to their subdivision, the lots
were collectively designated as Lot 1-G of the subdivision plan Psd-2731
registered in the name of Phil-Ville under TCT No. T-148220.[9] Said parcels of
land form part of Lot 23-A of the Maysilo Estate originally covered by Original
Certificate of Title (OCT) No. 994[10] registered on May 3, 1917 in the name of
Isabel Gil de Sola as the judicial administratrix of the estate of Gonzalo Tuason
and thirty-one (31) others. Phil-Ville acquired the lots by purchase from N.
Dela Merced and Sons, Inc. on July 24, 1984.
Earlier, on September 27, 1961, a group composed of Eleuteria Rivera,
Bartolome P. Rivera, Josefa R. Aquino, Gregorio R. Aquino, Pelagia R. Angeles,
Modesta R. Angeles, Venancio R. Angeles, Felipe R. Angeles Fidela R. Angeles
and Rosauro R. Aquino, claiming to be the heirs of Maria de la Concepcion
Vidal, a co-owner to the extent of 1-189/1000% of the properties covered by
OCT Nos. 982, 983, 984, 985 and 994 of the Hacienda Maysilo, filed a petition
with the Court of First Instance (CFI) of Rizal in Land Registration Case No.
4557. They prayed for the substitution of their names on OCT No. 994 in place
of Maria de la Concepcion Vidal. Said petition was granted by the CFI in an
Order[11] dated May 25, 1962.
Afterwards, the alleged heirs of Maria de la Concepcion Vidal filed a petition
for the partition of the properties covered by OCT Nos. 982, 983, 984, 985 and
994. The case was docketed as Civil Case No. C-424 in the CFI of Rizal, Branch
12, Caloocan City. On December 29, 1965, the CFI granted the petition and
appointed three commissioners to determine the most equitable division of
Page 45 of 62
the properties.[12] Said commissioners, however, failed to submit a
recommendation.
Thirty-one (31) years later, on May 22, 1996, Eleuteria Rivera filed a
Supplemental Motion[13] in Civil Case No. C-424, for the partition and
segregation of portions of the properties covered by OCT No. 994. The
Regional Trial Court (RTC), Branch 120, of Caloocan City, through Judge Jaime
D. Discaya, to whom the case was transferred, granted said motion. In an
Order[14] dated September 9, 1996, Judge Discaya directed the segregation of
portions of Lots 23, 28-A-1 and 28-A-2 and ordered the Register of Deeds of
Caloocan City to issue to Eleuteria Rivera new certificates of title over
them. Three days later, the Register of Deeds of Caloocan, Yolanda O. Alfonso,
issued to Eleuteria Rivera TCT No. C-314537[15] covering a portion of Lot 23
with an area of 14,391.54 square meters. On December 12, 1996, the trial
court issued another Order directing the acting Branch Clerk to issue a
Certificate of Finality of the Order dated September 9, 1996.
Thereafter, one Rosauro R. Aquino filed a petition for certiorari contesting
said Order of December 12, 1996 and impugning the partial partition and
adjudication to Eleuteria Rivera of Lots 23, 28-A-1 and 28-A-2 of the Maysilo
Estate. The case was docketed as CA-G.R. SP No. 43034 at the Court of
Appeals.
Meanwhile, a writ of possession[16] was issued in Eleuteria Riveras favor on
December 26, 1996 upon the Order[17] of Judge Discaya issued on the same
date. Accordingly, Sheriff Cesar L. Cruz served a Notice to Vacate[18] dated
January 2, 1997 upon Phil-Ville, requiring it to vacate Lots 23-A and
28. Bonifacio Shopping Center, Inc., which occupied Lot 28-A-2, was also
served a copy of the notice. Aggrieved, Bonifacio Shopping Center, Inc. filed a
petition for certiorari and prohibition, docketed as CA-G.R. SP No. 43009,
before the Court of Appeals. In a Decision[19] dated February 19, 1997, the
appellate court set aside and declared as void the Order and Writ of
Possession dated December 26, 1996 and the Notice to Vacate dated January
2, 1997. The appellate court explained that a party who has not been
impleaded in a case cannot be bound by a writ of possession issued in
connection therewith.
Subsequently, on February 22, 1997, Eleuteria Rivera Vda. de
Bonifacio died at the age of 96.[20]
On April 23, 1997, the Secretary of Justice issued Department Order No. 137
creating a special committee to investigate the circumstances surrounding the
issuance of OCT No. 994 and its derivative titles.
On April 29, 1997, the Court of Appeals rendered a Decision[21] in CA-G.R. SP
No. 43034 granting Rosauro R. Aquinos petition and setting aside the RTCs
Order of September 9, 1996, which granted Eleuteria Riveras prayer for
partition and adjudicated in her favor portions of Lots 23, 28-A-1 and 28-A-2
of the Maysilo Estate. The appellate court likewise set aside the Order and the
Writ of Possession dated December 26, 1996.
Nonetheless, on June 5, 1997, petitioner filed a complaint for quieting of title
and damages against the surviving heirs of Eleuteria Rivera Vda. de Bonifacio
(namely Maximo R. Bonifacio, Ceferino R. Bonifacio, Apolonia B. Tan, Benita B.
Caina, Crispina B. Pascual, Rosalia B. de Gracia, Teresita S. Doronia, Christina B.
Goco, Arsenio C. Bonifacio, Carmen B. Bernardino and Danilo C. Bonifacio)
and the Register of Deeds of Caloocan City. The case was docketed as Civil
Case No. C-507 in the RTC of Caloocan City, Branch 122.
On October 7, 1997, then Senator Marcelo B. Fernan filed P.S. Resolution No.
1032 directing the Senate Committees on Justice and Human Rights and on
Urban Planning, Housing and Resettlement to conduct a thorough
investigation, in aid of legislation, of the irregularities surrounding the titling
of the properties in the Maysilo Estate.
In a Decision[22] dated March 24, 2000, the Caloocan RTC ordered
the quieting of Phil-Villes titles over Lots 1-G-1, 1-G-2 and 1-G-3, declaring as
valid TCT Nos. 270921, 270922 and 270923 in Phil-Villes name. The fallo of
said Decision reads:
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
WHEREFORE, and in view of the foregoing,
judgment is hereby rendered as follows:
1. Ordering the quieting of title of the
plaintiff over Lots 1-G-1, 1-G-2 and 1-G-3, all the subd.
plan Psd-1-13-006209, being a portion of Lot 1-G, Psd-
2731, LRC Rec. No. 4429, situated in Kalookan City, as
owner thereof in fee simple and with full faith and credit;
2. Declaring Transfer Ce[r]tificates of Title
Nos. 270921, 270922 and 270923 in the name of Phil-
Ville Development and Housing Corporation over the
foregoing parcels of land issued by the Registry of Deeds
for Kalookan City, as valid and effective;
3. Declaring Transfer Certificate of Title No.
C-314537 over Lot 23, being a portion of Maysilo Estate
situated in Maysilo, Kalookan City, in the name of
Eleuteria Rivera, issued by the Registry of Deeds for
Kalookan City, as null and void and with no force and
effect;
4. Ordering the private defendants to
surrender to the Registry of Deeds for Kalookan City, thru
this Court, the Owners Duplicate Certificate of said
Transfer Certificate of Title No. C-314537 in the name of
Eleuteria Rivera;
5. Directing the public defendant, Register
of Deeds of Kalookan City to cancel both Transfer
Certificate of Title Nos. C-314537 in the name of Eleuteria
Rivera on file with the Register of Deeds for Kalookan
City, and the Owners Duplicate copy of Transfer
Certificate of Title No. C-314537 being required to be
surrendered by the private defendants; and
6. Ordering the private defendants to pay
plaintiff, jointly and severally, the sum of P10,000.00, as
and by way of attorneys fees, plus the costs of suit.
SO ORDERED.[23]
In upholding Phil-Villes titles, the trial court adopted the conclusion
in Senate Committee Report No. 1031[24] dated May 25, 1998 that there is
only one OCT No. 994, registered on May 3, 1917, and that OCT No. 994,
purportedly registered on April 19, 1917 (from which Eleuteria Riveras title
originated) does not exist. The trial court also found that it was physically
impossible for respondents to be the heirs of Eleuteria Riveras grandmother,
Maria de la Concepcion Vidal, one of the registered owners of OCT No. 994,
because Maria de la Concepcion was born sometime in 1903, later than
Eleuteria Rivera who was born in 1901.[25] Lastly, the RTC pointed out that
contrary to the contentions of Riveras heirs, there is no overlapping of titles
inasmuch as Lot 23 lies far from Lot 23-A, where Phil-Villes lands are located.
On April 13, 2000, Atty. K.V. Faylona, on behalf of respondents,
addressed a letter[26] to the Branch Clerk of Court of the Caloocan City RTC
requesting the complete address of Phil-Ville and its counsel. Supposedly,
respondents counsels of record, Attys. Nicomedes Tolentino and Jerry D.
Baares, had abandoned the defense but still kept the records of the
case. Thus, the Notice of Appeal[27] on behalf of respondents was filed by Atty.
Faylona while two of the heirs, Danilo Bonifacio and Carmen Bernardino, filed
a separate Notice of Appeal[28] through their own counsel. The appeals were
consolidated and docketed as CA-G.R. CV No. 66547.
On April 17, 2000, respondents withdrew their appeal and instead
filed before this Court a Petition for Review on Certiorari,[29] which was
docketed as G.R. No. 142640. In a Resolution[30] dated September 25, 2000,
the Court referred the petition to the Court of Appeals for adjudication on the
merits since the case does not involve pure questions of law. Respondents
moved for reconsideration of the Resolution, but the Court denied their
motion. Thus, respondents petition was transferred to the Court of Appeals
and docketed as CA-G.R. SP No. 62211.
Meanwhile, on October 17, 2002, the Court of Appeals rendered a
Decision[31] in CA-G.R. CV No. 66547, dismissing the appeal as regards Danilo
Page 46 of 62
Bonifacio and Carmen Bernardino. Yet, along with Danilo and Carmen,
respondents moved for reconsideration on the contention that they are not
bound by the judgment since they had withdrawn their appeal therein. The
Court of Appeals denied said motion in a Resolution dated June 7,
2004. Danilo, Carmen and respondents elevated the case to the Supreme
Court through a Petition for Review on Certiorari, which was docketed as G.R.
No. 163397. Said petition, however, was denied by this Court in a Resolution
dated September 8, 2004 for being filed out of time.
Subsequently, on January 31, 2005, the Court of Appeals
promulgated its assailed Decision in CA-G.R. SP No. 62211, setting aside the
RTC judgment and dismissing Phil-Villes complaint. The appellate court held
that the RTC had no jurisdiction to hear Phil-Villes complaint as it effectively
seeks to annul the Order dated May 25, 1962 of the CFI in LRC No. 4557,
which directed the substitution of the late Eleuteria Rivera and her co-heirs in
place of Maria de la Concepcion Vidal as registered owners on OCT No. 994.
The appellate court likewise affirmed the validity of OCT No. 994 registered
on April 19, 1917 citing the Supreme Court Decisions in Metropolitan
Waterworks and Sewerage Systems v. Court of Appeals[32] and Heirs of Luis J.
Gonzaga v. Court of Appeals[33] as precedents.
Phil-Ville sought reconsideration[34] of the decision, but the Court of
Appeals denied its motion in the assailed Resolution dated March 15,
2005. Hence, this petition.
Petitioner alleges that:
I.
THE HONORABLE COURT OF APPEALS (FORMER NINTH
DIVISION) ACTED WITHOUT JURISDICTION ON THE
PETITION FOR REVIEW OF RESPONDENTS MAXIMO
BONIFACIO, ET AL. IN CA-G.R SP NO. 62211 BECAUSE OF
THE EARLIER DISMISSAL OF THEIR APPEAL IN CA-G.R
NO. 66547.
II.
THE HONORABLE COURT OF APPEALS (FORMER NINTH
DIVISION) ACTED WITHOUT JURISDICTION ON THE
PETITION FOR REVIEW FILED BY RESPONDENTS MAXIMO
BONIFACIO, ET AL. IN CA-G.R. NO. SP 62211 WHICH
DOES NOT RAISE PURE QUESTION[S] OF LAW OR
ISSUE[S] OF JURISDICTION AND THEREFORE THE PROPER
REMEDY AVAILABLE TO THEM IS ORDINARY APPEAL
WHICH, AS STATED, HAD ALREADY BEEN DISMISSED IN
CA-G.R. CV NO. 66547.
III.
THE HONORABLE COURT OF APPEALS (FORMER NINTH
DIVISION) COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION
IN HOLDING THAT THE TRIAL COURT HAS NO
JURISDICTION ON THE COMPLAINT FOR QUIETING OF
TITLE FILED BY PETITIONER PHIL-VILLE IN CIVIL CASE NO.
C-507, OR IN THE ALTERNATIVE, IN FAILING TO DECLARE
RESPONDENTS MAXIMO [BONIFACIO], ET AL. ALREADY
IN ESTOPPEL TO RAISE THE SAID ISSUE OF
JURISDICTION.[35]
Condensed, petitioner puts in issue the following: (1) whether the Court of
Appeals committed grave abuse of discretion in taking cognizance of
respondents petition; and (2) whether the Court of Appeals committed grave
abuse of discretion in declaring that the trial court had no jurisdiction over
Civil Case No. C-507.
Pertinently, however, the genuine issue in this case is whether TCT No. C-
314537 in the name of Eleuteria Rivera constitutes a cloud over petitioners
titles over portions of Lot 23-A of the Maysilo Estate.
Petitioner argues mainly that the Court of Appeals acted without jurisdiction
in resolving respondents petition for review since it had dismissed their
appeal in CA-G.R. CV No. 66547 for failure to file brief. Petitioner also points
out that respondents petition is defective because Maximo Bonifacio alone
signed its verification and certification of non-forum shopping without proof
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
that he was authorized to sign for the other respondents. It contends that the
ruling in MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of
Appeals will not invalidate its titles because it is not a party to any of said
cases. As well, petitioner invokes the finding in the joint investigation by the
Senate and the Department of Justice (DOJ) that there is only one OCT No.
994, that is, the one registered on May 3, 1917. It maintains that the trial court
had jurisdiction to hear its action since it is one for quieting of title and not
for annulment of the CFI Order dated May 25, 1962.
Conversely, respondents rely on MWSS v. Court of Appeals and Heirs of
Gonzaga v. Court of Appeals that upheld the titles emanating from OCT No.
994 registered on April 19, 1917. Therefore, they insist that petitioner has no
cause of action to seek the nullification of their title which is a derivative of
said OCT. Respondents reiterate that since they had withdrawn their appeal in
CA-G.R. CV No. 66547, the Court of Appeals decision therein applies only to
Danilo Bonifacio and Carmen Bernardino. Lastly, they believe that petitioners
action is one for annulment of judgment, which is foreign to the jurisdiction
of the trial court.
Petitioner argues in its first two assignments of errors that the Court of
Appeals acted with grave abuse of discretion in entertaining respondents
petition. However, said contention deserves scant consideration since the
Court of Appeals, in CA-G.R. SP No. 62211, properly assumed jurisdiction over
respondents case after the same was referred to it by this Court through our
Resolution dated September 25, 2000. The issue raised by respondents, as
petitioners in G.R. No. 142640, was purely a question of fact that is beyond
the power of this Court to resolve. Essentially, respondents asked the Court to
determine the ownership of the lots purportedly covered by petitioners titles.
Neither do we find merit in petitioners contention that the dismissal of the
appeal in CA-G.R. CV No. 66547 is binding on respondents. The appellate
court itself recognized the withdrawal of appeal filed by respondents, thus:
However, defendants Maximo R. Bonifacio, et
al. withdrew their appeal so that the only appellants
herein are defendants-appellants Danilo R. Bonifacio, et
al.[36]
So did the trial court err in taking cognizance of petitioners action for quieting
of title contrary to respondents assertion that it is actually one for annulment
of the CFI Order dated May 25, 1962? To this query, we rule in the negative.
The nature of an action is determined by the material allegations of
the complaint and the character of the relief sought by plaintiff, and the law in
effect when the action was filed irrespective of whether he is entitled to all or
only some of such relief.[37]
In its complaint, petitioner alleges:
27. That said TCT No. C-314537 of the late
Eleuteria Rivera, although apparently valid and effective,
are in truth and in fact invalid and ineffective[;]
27.1. An examination of Decree No. 36455
issued on April 19, 1917 in LRC Case No. 4429 and also of
OCT No. 994 which was issued pursuant thereto will show
that Lot 23 covered by the said TCT No. C-3145[3]7 of the
late Eleuteria Rivera is not one of the 34 parcels of land
covered by said Decree No. 36455 and OCT 994;
27.2. That, as hereinbefore stated, the same TCT
No. C-314537 of the late Eleuteria Rivera is a direct
transfer from OCT No. 994 which was registered on April
19, 1917. The fact, however, is that there is only one OCT
No. 994 which was issued pursuant to Decree No. 36455
in LRC Case No. 4429 and said OCT 994 was registered
with the Register of Deeds of Rizal on May 3, 1917. The
Office of the Register of Deeds of Caloocan City or of
Malabon or of Pasig City has no record of any OCT No.
994 that was allegedly registered on April 19, 1917;
Page 47 of 62
 27.3. That said TCT No. C-314537 of the late Jugo, Soledad N. de Jesus
Eleuteria Rivera could not cover Lot 23-A or any portion/s (81680) 17745 December 15, 1960 Pacifico Nepomuceno & Co.
thereof because, as hereinbefore recited, the whole of Lot C-13794 April 21, 1978 Pacifico Nepomuceno & Co. Inc.
23-A had been totally disposed of as early as July 24, C-14603 May 16, 1978 N. de La Merced & Sons, Inc.
1923 and she and/or any of her alleged predecessors-in- T-148220 April 22, 1987 Phil-Ville Development and
interest is not among those named in the memorandum Housing Corp.[42]
of encumbrances of OCT No. 994 as vendees or vendors
of said Lot 23-A;[38] Petitioner likewise presented the Proyecto de particion de la
Hacienda de Maysilo[43] to prove that Lot 23-A, of which petitioners Lots 1-G-
Ultimately, petitioner submits that a cloud exists over its titles because TCT 1, 1-G-2 and 1-G-3 form part, is among the 34 lots covered by OCT No. 994
No. C-314537 in the name of Eleuteria Rivera purports to cover the same registered on May 3, 1917. It produced tax receipts accompanied by a
parcels of land covered by petitioners TCT Nos. 270921, 270922 and Certification[44] dated September 15, 1997 issued by the City Treasurer of
270923. It points out that what appears to be a valid and effective TCT No. C- Caloocan stating that Phil-Ville has been religiously paying realty taxes on the
314537 is, in truth, invalid because it covers Lot 23 which is not among those lots. Its documentary evidence also includes a Plan[45] prepared by the Chief
described in the OCT No. 994 on file with the Register of Deeds of Rizal and of the Geodetic Surveys Division showing that Lot 23-A of the Maysilo Estate
registered on May 3, 1917. Petitioner notes that the OCT No. 994 allegedly is remotely situated from Lot 23 portion of the Maysilo Estate. Petitioner ties
registered on April 19, 1917 and from which TCT No. C-314537 was derived, is these pieces of evidence to the finding in the DOJ Committee Report[46] dated
not found in the records of the Register of Deeds. In other words, the action August 28, 1997 and Senate Committee Report No. 1031 dated May 25, 1998
seeks the removal of a cloud from Phil-Villes title and/or the confirmation of that, indeed, there is only one OCT No. 994, that is, the one registered on May
its ownership over the disputed properties as the successor-in-interest of N. 3, 1917.
Dela Merced and Sons, Inc.
On the other hand, respondents have not adduced competent evidence to
Quieting of title is a common law remedy for the removal of any cloud upon, establish their title to the contested property or to dispute petitioners claim
doubt, or uncertainty affecting title to real property. Whenever there is a over the same. It must be noted that the RTC Order dated September 9, 1996
cloud on title to real property or any interest in real property by reason of any in Civil Case No. C-424, which resulted in the issuance of TCT No. C-314537 in
instrument, record, claim, encumbrance, or proceeding that is apparently valid the name of Eleuteria Rivera had long been set aside by the Court of Appeals
or effective, but is, in truth and in fact, invalid, ineffective, voidable, or in CA-G.R. SP No. 43034. Clearly, respondents claim anchored primarily on
unenforceable, and may be prejudicial to said title, an action may be brought TCT No. C-314537 lacks legal basis. Rather, they rely simply on the Courts
to remove such cloud or to quiet the title. In such action, the competent court pronouncement in MWSS v. Court of Appeals and Heirs of Gonzaga v. Court of
is tasked to determine the respective rights of the complainant and the other Appeals that OCT No. 994 registered on May 3, 1917 and all titles emanating
claimants, not only to place things in their proper places, and make the from it are void.
claimant, who has no rights to said immovable, respect and not disturb the
one so entitled, but also for the benefit of both, so that whoever has the right The Supreme Court sustained said decisions in the case of Manotok Realty,
will see every cloud of doubt over the property dissipated, and he can Inc. v. CLT Realty Development Corporation[47] promulgated on November 29,
thereafter fearlessly introduce any desired improvements, as well as use, and 2005. In said case, the Court declared void the titles of the Manotoks and
even abuse the property.[39] Aranetas which were derived from OCT No. 994 registered on May 3, 1917
consistent with its ruling in MWSS and Gonzaga. The Court disregarded the
In order that an action for quieting of title may prosper, two requisites must DOJ and Senate reports on the alleged anomalies surrounding the titling of
concur: (1) the plaintiff or complainant has a legal or equitable title or interest the Maysilo Estate.
in the real property subject of the action; and (2) the deed, claim,
encumbrance, or proceeding claimed to be casting cloud on his title must be However, on motion for reconsideration, the Court issued a
shown to be in fact invalid or inoperative despite its prima facieappearance of Resolution[48] dated December 14, 2007 which created a Special Division of
validity or legal efficacy.[40] the Court of Appeals to hear the consolidated cases on remand. The Special
Division was tasked to hear and receive evidence, conclude the proceedings
As regards the first requisite, we find that petitioner was able to establish its and submit to the Court a report on its findings as well as recommend
title over the real properties subject of this action. Petitioner submitted in conclusions within three months from the finality of said Resolution. However,
evidence the Deed of Absolute Sale[41] by which it acquired the subject to guide the proceedings before the Special Division, the Court laid the
property from N. Dela Merced and Sons, Inc., as well as copies of OCT No. 994 following definitive conclusions:
dated May 3, 1917 and all the derivative titles leading to the issuance of TCT
Nos. 270921, 270922 and 270923 in petitioners name as follows: First, there is only one OCT 994. As it appears
on the record, that mother title was received for
Title No. Registration Date Holder transcription by the Register of Deeds on 3 May 1917,
8004 July 24, 1923 Vedasto Galino and that should be the date which should be reckoned as
8059 September 3, 1923 -ditto- the date of registration of the title. It may also be
8160 October 24, 1923 -ditto- acknowledged, as appears on the title, that OCT No. 994
8164 November 6, 1923 Juan Cruz Sanchez resulted from the issuance of the decree of registration
8321 February 26, 1924 -ditto- on [19] April 1917, although such date cannot be
8734 September 11, 1924 Emilio Sanchez considered as the date of the title or the date when the
12946 November 21, 1927 -ditto- title took effect.
28315 July 16, 1935 Eastern Syndicate Mining Co.,
Inc. Second. Any title that traces its source to
39163 November 18, 1939 Royal Lawrence Rutter OCT No. 994 dated [19] April 1917 is void, for such
43559 July 26, 1941 Mapua Institute of Technology mother title is inexistent. The fact that the Dimson and
18767 June 16, 1950 Sofia Nepomuceno CLT titles made specific reference to an OCT No. 994
57541 March 13, 1958 Leona N. de Jesus, Pacifico dated [19] April 1917 casts doubt on the validity of such
Nepomuceno, Sofia titles since they refer to an inexistent OCT. This error
Nepomuceno, Soledad alone is, in fact, sufficient to invalidate the Dimson and
Nepomuceno de Jesus CLT claims over the subject property if singular reliance is
81679 December 15, 1960 Pacifico Nepomuceno, Sofia N.

ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT Page 48 of 62
 placed by them on the dates appearing on their
respective titles.
Third. The decisions of this Court in MWSS v.
Court of Appeals and Gonzaga v. Court of Appeals cannot
apply to the cases at bar, especially in regard to their
recognition of an OCT No. 994 dated 19 April 1917, a title
which we now acknowledge as inexistent. Neither could
the conclusions in MWSS [and] Gonzaga with respect to
an OCT No. 994 dated 19 April 1917 bind any other case
operating under the factual setting the same as or similar
to that at bar.[49] (Emphasis supplied.)
Eventually, on March 31, 2009, the Supreme Court issued a
Resolution[50] reversing its Decision of November 29, 2005 and declaring
certain titles in the names of Araneta and Manotok valid. In the course of
discussing the flaws of Jose Dimsons title based on his alleged 25% share in
the hereditary rights of Bartolome Rivera, Eleuteria Riveras co-petitioner in
LRC No. 4557, the Court noted:
However, the records of these cases would
somehow negate the rights of Rivera to claim from Vidal.
The Verification Report of the Land Registration
Commission dated 3 August 1981 showed that Rivera
was 65 years old on 17 May 1963 (as gathered from the
records of Civil Case Nos. 4429 and 4496). It can thus be
deduced that, if Rivera was already 65 years old in 1963,
then he must have been born around 1898. On the other
hand, Vidal was only nine (9) years in 1912; hence, she
could have been born only on [1903]. This alone creates
an unexplained anomalous, if not ridiculous, situation
wherein Vidal, Riveras alleged grandmother, was seven
(7) years younger than her alleged grandson. Serious
doubts existed as to whether Rivera was in fact an heir of
Vidal, for him to claim a share in the disputed portions of
the Maysilo Estate.[51]
The same is true in this case. The Death Certificate[52] of Eleuteria Rivera
reveals that she was 96 years old when she died on February 22, 1997. That
means that she must have been born in 1901. That makes Rivera two years
older than her alleged grandmother Maria de la Concepcion Vidal who was
born in 1903. Hence, it was physically impossible for Eleuteria Rivera to be an
heir of Maria de la Concepcion Vidal.
Moreover, the Partition Plan of the Maysilo Estate shows that Lot 23-A was
awarded, not to Maria de la Concepcion Vidal, but to Isabel Tuason,
Esperanza Tuason, Trinidad Jurado, Juan O Farrell and Angel O
Farrell.[53] What Vidal received as her share were Lot 6 and portions of Lots 10
and 17, all subject to the usufructuary right of her mother Mercedes
Delgado. This was not at all disputed by respondents.
On the other hand, Vedasto Galino, who was the holder of TCT No. 8004
registered on July 24, 1923 and to whom petitioner traces its titles, was
among the successful petitioners in Civil Case No. 391 entitled Rosario
Negrao, et al. v. Concepcion Vidal, et al., who sought the issuance of bills of
sale in favor of the actual occupants of certain portions of the Maysilo Estate.
Be that as it may, the second requisite in an action for quieting of title
requires that the deed, claim, encumbrance, or proceeding claimed to be
casting cloud on his title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy. Article 476 of
the Civil Code provides:
Art. 476. Whenever there is a cloud on title to
real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding
which is apparently valid or effective but is in truth and in
fact invalid, ineffective, voidable, or unenforceable, and
may be prejudicial to said title, an action may be brought
to remove such cloud or to quiet the title.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
An action may also be brought to prevent a
cloud from being cast upon title to real property or any
interest therein.
Thus, the cloud on title consists of: (1) any instrument, record, claim,
encumbrance or proceeding; (2) which is apparently valid or effective; (3) but
is in truth and in fact invalid, ineffective, voidable, or unenforceable; and (4)
may be prejudicial to the title sought to be quieted. The fourth element is not
present in the case at bar.
While it is true that TCT No. C-314537 in the name of Eleuteria
Rivera is an instrument that appeared to be valid but was subsequently shown
to be invalid, it does not cover the same parcels of land that are described in
petitioners titles. Foremost, Riveras title embraces a land measuring 14,391.54
square meters while petitioners lands has an aggregate area of only 8,694
square meters. On the one hand, it may be argued that petitioners land could
be subsumed within Riveras 14,391.54-square meter property. Yet, a
comparison of the technical descriptions of the parties titles negates an
overlapping of their boundaries.
The technical description of respondents TCT No. C-314537 reads:
A parcel of land (Lot 23, being a portion of
Maysilo Estate) situated in Maysilo, Caloocan, Metro
Manila, Island of Luzon. Bounded on the NW., along line
1-2 by Blk. 2; on the SW., along line 2-3 by Jacinto
Street, along lines 3-4-5 by Blk. 4; along line 5-6
by Bustan St., and San Diego St., on the S., along lines
6-7-8 by Blk. 13, all of Caloocan Cadastre; on the NE.,
along line 8-9 by Caloocan Cadastre; and on the N., along
line 9-1 by Epifanio de los Santos Avenue. Beginning at
a point marked 1 on plan, being S. 28 deg. 30E., 530.50
m. from MBM No. 1, Caloocan Cadastre; thence S. 07
deg. 20W., 34.00 m. to point 2; S. 17 deg. 10E., 12.00 m.
to point 3; (0/illegible)
S. 15 deg. 31E., 31.00 m. to point 4; S. 27 deg. 23E., 22.50
m. to point 5;
S. 38 deg. 41E., 43.20 m. to point 6; S. 71 deg. 35E., 10.60
m. to point 7;
N. 84 deg. 30E., 38.80 m. to point 8; N. 11 deg. 40W.,
131.20 m. to point 9;
N. 89 deg. 10W., 55.00 m. to the point of beginning;
containing an area of FOURTEEN THOUSAND THREE
HUNDRED NINETY ONE SQUARE METERS AND FIFTY
FOUR SQUARE DECIMETERS (14,391.54). more or less.
All points referred to are indicated on the plan and are
marked on the ground by Old Ps. cyl. conc. mons. 15 x 60
cm.; bearings true;[54] (Emphasis supplied).
On the other hand, the technical description of petitioners lands before they
were subdivided under TCT No. T-148220 is as follows:
A parcel of land (Lot No. 1-G of the subdivision
plan Psd-2731, being a portion of Lot 23-A, Maysilo
Estate, GLRO Rec. No. 4429), situated in the Municipality
of Caloocan, Province of Rizal. Bounded on the North.,
by Calle A. Samson; on the East., by properties of
Gregoria de Jesus, Arcadio de Jesus and Felix de
Jesus; on the South., by properties of Lucas
Bustamante and Patricio Galauran; and on the West.,
by property of Patricio Galauran; and Lot No. 1-E of the
subdivision plan. Beginning at a point marked 1 on plan,
being N.69 deg. 27E., 1600.19 m. from BLLM No. 1, Mp. of
Caloocan, more or less, thence S. 21 deg. 25E., 44.78 m.
to point 2; thence S. 14 deg. 57E., 37.24 m. to point 3;
thence S. 81 deg. 11W., 20.28 m. to point 4; thence S. 86
deg. 06W., 15.45 m. to point 5; thence N. 67 deg. 20W.,
15.91 m. to point 6; thence N. 35 deg. 19W., 37.56 m. to
point 7; thence N. 27 deg. 11W., 12.17 m. to point 8;
thence N. 19 deg. 26W., 23.32 m. to point 9; thence N. 13
Page 49 of 62
 deg. 08W., 28.25 m. to point 10; thence S. 78 deg. 45W.,
13.00 m. to point 11; thence N. 0 deg. 56E., 48.92 m. to
point 12; thence N. 89 deg. 13E., 53.13 m. to point 13;
thence S. 21 deg. 24E., 67.00 m. to the point of beginning;
containing an area of EIGHT THOUSAND SIX HUNDRED
NINETY FOUR (8,694) SQUARE METERS, more or less.
All points referred to are indicated on the plan and are
marked on the ground points 1,2,3 and 13 by Old PLS
conc. mons. point 4,6,7,8 and 9 by Old PLS stone mons.;
points 5 to 10 and old stakes points 11 and 12 by PLS
conc. mons. bearings true, declination 1 deg. 08E., date of
the original survey, Sept. 8-27, Oct. 4-21 and Nov. 17-18,
1911 and that of the subdivision survey, Oct. 14 and 15,
1927.[55] (Emphasis supplied).
Such disparity in location is more vividly illustrated in the Plan prepared by
Engr. Privadi J.G. Dalire, Chief of the Geodetic Surveys Division, showing the
relative positions of Lots 23 and 23-A. As it appears on the Plan, the land
covered by respondents TCT No. C-314537 lies far west of petitioners lands
under TCT Nos. 270921, 270922 and 270923. Strictly speaking, therefore, the
existence of TCT No. C-314537 is not prejudicial to petitioners titles insofar as
it pertains to a different land.
Significantly, an action to quiet title is characterized as a proceeding quasi in
rem.[56] In an action quasi in rem, an individual is named a defendant and the
purpose of the proceeding is to subject his interests to the obligation or loan
burdening the property. Actions quasi in rem deal with the status, ownership
or liability of a particular property but which are intended to operate on these
questions only as between the particular parties to the proceedings and not
to ascertain or cut off the rights or interests of all possible claimants. The
judgment therein is binding only upon the parties who joined in the action.[57]
Yet, petitioner was well aware that the lots encompassed by its titles are not
the same as that covered by respondents title. In its complaint, Phil-Ville
alleges:
27.4. That Lot 23, being a portion of
Maysilo Estate, as described in said TCT No. C-
314537 of the late Eleuteria Rivera when plotted
using its tie line to MBM No. 1, Caloocan Cadastre is
outside Lot 23-A of the Maysilo Estate. This must be
so because Lot 23 is not [a] portion of Lot 23-A,
Maysilo Estate.[58]
This brings petitioners action within the purview of Rule 63 of the Rules of
Court on Declaratory Relief. Section 1 of Rule 63 provides:
SECTION 1. Who may file petition.-Any person
interested under a deed, will, contract or other written
instrument, whose rights are affected by a statute,
executive order or regulation, ordinance or any other
governmental regulation may, before breach or
violation thereof, bring an action in the appropriate
Regional Trial Court to determine any question
of construction or validity arising, and for a declaration
of his rights or duties, thereunder.
An action for the reformation of an
instrument, to quiet title to real property or remove
clouds therefrom, or to consolidate ownership under
Article 1607 of the Civil Code, may be brought under
this Rule. (Emphasis supplied).
An action for declaratory relief presupposes that there has been no actual
breach of the instruments involved or of the rights arising thereunder. Since the
purpose of an action for declaratory relief is to secure an authoritative statement
of the rights and obligations of the parties under a statute, deed, or contract for
their guidance in the enforcement thereof, or compliance therewith, and not to
settle issues arising from an alleged breach thereof, it may be entertained
before the breach or violation of the statute, deed or contract to which it
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
refers. A petition for declaratory relief gives a practical remedy for ending
controversies that have not reached the state where another relief is
immediately available; and supplies the need for a form of action that will set
controversies at rest before they lead to a repudiation of obligations, an
invasion of rights, and a commission of wrongs.
In the present case, petitioner filed a complaint for quieting of title after it was
served a notice to vacate but before it could be dispossessed of the subject
properties. Notably, the Court of Appeals, in CA-G.R. SP No. 43034, had earlier
set aside the Order which granted partial partition in favor of Eleuteria Rivera
and the Writ of Possession issued pursuant thereto. And although petitioners
complaint is captioned as Quieting of Title and Damages, all that petitioner
prayed for, is for the court to uphold the validity of its titles as against that of
respondents. This is consistent with the nature of the relief in an action for
declaratory relief where the judgment in the case can be carried into effect
without requiring the parties to pay damages or to perform any act.[59]
Thus, while petitioner was not able to demonstrate that respondents TCT No. C-
314537 in the name of Eleuteria Rivera constitutes a cloud over its title, it has
nevertheless successfully established its ownership over the subject properties and
the validity of its titles which entitles it to declaratory relief.
WHEREFORE, the petition for review on certiorari is GRANTED. The Decision
dated January 31, 2005 and Resolution dated March 15, 2005 of the Court of
Appeals in CA-G.R. SP No. 62211 are SET ASIDE. The Decision dated March
24, 2000 of the Caloocan RTC in Civil Case No. C-507 is hereby REINSTATED
and UPHELD.
No pronouncement as to costs.
SO ORDERED.
#14 G.R. No. 169466 May 9, 2007
DEPARTMENT OF BUDGET AND MANAGEMENT, represented by
SECRETARY ROMULO L. NERI, PHILIPPINE NATIONAL POLICE,
represented by POLICE DIRECTOR GENERAL ARTURO L. LOMIBAO,
NATIONAL POLICE COMMISSION, represented by CHAIRMAN ANGELO
T. REYES, AND CIVIL SERVICE COMMISSION, represented by
CHAIRPERSON KARINA C. DAVID, Petitioners,
vs.
MANILA’S FINEST RETIREES ASSOCIATION, INC., represented by P/COL.
FELICISIMO G. LAZARO (RET.), AND ALL THE OTHER INP
RETIREES, Respondents.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review on certiorari
under Rule 45 of the Rules of Court are the following issuances of the Court of
Appeals (CA) in CA-G.R. CV No. 78203, to wit:
1. Decision1 dated July 7, 2005 which affirmed in toto the decision
of the Regional Trial Court of Manila, Branch 32, in Civil Case No.
02-103702, a suit for declaratory relief, declaring the herein
respondents entitled to the same retirement benefits accorded
upon retirees of the Philippine National Police (PNP) under Republic
Act (R.A.) No. 6975, as amended by R.A. No. 8551, and ordering the
herein petitioners to implement the proper adjustments on
respondents’ retirement benefits; and
2. Resolution2 dated August 24, 2005 which denied the petitioners’
motion for reconsideration.
The antecedent facts:
Page 50 of 62
In 1975, Presidential Decree (P.D.) No. 765 was issued constituting the
Integrated National Police (INP) to be composed of the Philippine
Constabulary (PC) as the nucleus and the integrated police forces as
components thereof. Complementing P.D. No. 765 was P.D. No. 11843 dated
August 26, 1977 (INP Law, hereinafter) issued to professionalize the INP and
promote career development therein.
On December 13, 1990, Republic Act (R.A.) No. 6975, entitled "AN ACT
ESTABLISHING THE PHILIPPINE NATIONAL POLICE UNDER A REORGANIZED
DEPARTMENT OF THE INTERIOR AND LOCAL GOVERNMENT, AND FOR
OTHER PURPOSES," hereinafter referred to as PNP Law, was enacted. Under
Section 23 of said law, the Philippine National Police (PNP) would initially
consist of the members of the INP, created under P.D. No. 765, as well as the
officers and enlisted personnel of the PC. In part, Section 23 reads:
SEC. 23. Composition. – Subject to the limitation provided for in this Act, the
Philippine National Police, hereinafter referred to as the PNP, is hereby
established, initially consisting of the members of the police forces who were
integrated into the Integrated National Police (INP) pursuant to Presidential
Decree No. 765, and the officers and enlisted personnel of the Philippine
Constabulary (PC).
A little less than eight (8) years later, or on February 25, 1998, R.A. No. 6975
was amended by R.A. No. 8551, otherwise known as the "PHILIPPINE
NATIONAL POLICE REFORM AND REORGANIZATION ACT OF 1998." Among
other things, the amendatory law reengineered the retirement scheme in the
police organization. Relevantly, PNP personnel, under the new law, stood to
collect more retirement benefits than what INP members of equivalent rank,
who had retired under the INP Law, received.
The INP retirees illustrated the resulting disparity in the retirement benefits
between them and the PNP retirees as follows:4
Retirement Rank Monthly Pension Difference
INP PNP INP PNP
Corporal SPO3 P 3,225.00 P 11,310.00 P 8,095.00
Captain P. Sr. Insp. P 5,248.00 P 15,976.00 P10,628.00
Brig. Gen. P. Chief Supt. P 10,054.24 P 18,088.00 P 8,033.76
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.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
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
decision6 holding that R.A. No. 6975, as amended, did not abolish the INP but
merely provided for the absorption of its police functions by the PNP, and
accordingly rendered judgment for the INP retirees, to wit:
WHEREFORE, this Court hereby renders JUDGMENT DECLARING the INP
Retirees entitled to the same or identical retirement benefits and such other
benefits being granted, accorded and bestowed upon the PNP Retirees under
the PNP Law (RA No. 6975, as amended).
The respondents Government Departments and Agencies shall IMMEDIATELY
EFFECT and IMPLEMENT the proper adjustments on the INP Retirees’
retirement and such other benefits, RETROACTIVE to its date of effectivity,
and RELEASE and PAY to the INP Retirees the due payments of the amounts.
SO ORDERED.
On April 2, 2003, the trial court issued what it denominated as Supplement to
the Decision whereunder it granted the GSIS’ motion to dismiss and thus
considered the basic petition as withdrawn with respect to the latter.
From the adverse decision of the trial court, the remaining respondents,
namely, DBM, PNP, NAPOLCOM and CSC, interposed an appeal to the CA
whereat their appellate recourse was docketed as CA-G.R. CV No. 78203.
As stated at the threshold hereof, the CA, in its decision of July 7,
2005,7 affirmed that of the trial court upholding the entitlement of the INP
retirees to the same or identical retirement benefits accorded upon PNP
retirees under R.A. No. 6975, as amended.
Their motion for reconsideration having been denied by the CA in` its equally
assailed resolution of August 24, 2005,8 herein petitioners are now with this
Court via the instant recourse on their singular submission that -
THE COURT OF APPEALS COMMITTED A SERIOUS ERROR IN LAW IN
AFFIRMING THE DECISION OF THE TRIAL COURT NOTWITHSTANDING THAT
IT IS CONTRARY TO LAW AND ESTABLISHED JURISPRUDENCE.
We DENY.
In the main, it is petitioners’ posture that R.A. No. 6975 clearly abolished the
INP and created in its stead a new police force, the PNP. Prescinding
therefrom, petitioners contend that since the PNP is an organization entirely
different from the INP, it follows that INP retirees never became PNP
members. Ergo, they cannot avail themselves of the retirement benefits
accorded to PNP members under R.A. No. 6975 and its amendatory law, R.A.
No. 8551.
A flashback at history is proper.
As may be recalled, R.A. No. 6975 was enacted into law on December 13,
1990, or just about four (4) years after the 1986 Edsa Revolution toppled
down the dictatorship regime. Egged on by the current sentiment of the times
generated by the long period of martial rule during which the police force, the
PC-INP, had a military character, being then a major service of the Armed
Forces of the Philippines, and invariably moved by a fresh constitutional
Page 51 of 62
mandate for the establishment of one police force which should be national in
scope and, most importantly, purely civilian in character,9 Congress enacted
R.A. No. 6975 establishing the PNP and placing it under the Department of
Interior and Local Government. To underscore the civilian character of the
PNP, R.A. No. 6975 made it emphatically clear in its declaration of policy the
following:
Section 2. Declaration of policy - It is hereby declared to be the policy of the
State to promote peace and order, ensure public safety and further
strengthen local government capability aimed towards the effective delivery
of the basic services to the citizenry through the establishment of a highly
efficient and competent police force that is national in scope and civilian in
character. xxx.
The police force shall be organized, trained and equipped primarily for the
performance of police functions. Its national scope and civilian character shall
be paramount. No element of the police force shall be military nor shall any
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 8610 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:
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.
The PC officers and enlisted personnel who have not opted to join the PNP
shall be reassigned to the Army, Navy or Air Force, or shall be allowed to
retire under existing AFP rules and regulations. Any PC-INP officer or enlisted
personnel may, within the twelve-month period from the effectivity of this
Act, retire and be paid retirement benefits corresponding to a position two (2)
ranks higher than his present grade, subject to the conditions that at the time
he applies for retirement, he has rendered at least twenty (20) years of service
and still has, at most, twenty-four (24) months of service remaining before the
compulsory retirement age as provided by existing law for his office.
Phase III – Adjustment of ranks and establishment of one (1) lineal roster of
officers and another for non-officers, and the rationalization of compensation
and retirement systems; taking into consideration the existing compensation
schemes and retirement and separation benefit systems of the different
components of the PNP, to ensure that no member of the PNP shall suffer any
diminution in basic longevity and incentive pays, allowances and retirement
benefits due them before the creations of the PNP, to be completed within
eighteen (18) months from the effectivity of this Act. xxx.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
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 merger14 while "transfer"
denotes movement from one position to another. Clearly, "abolition" cannot
be equated with "absorption."
True it is that Section 9015 of R.A. No. 6975 speaks of the INP "[ceasing] to
exist" upon the effectivity of the law. It ought to be stressed, however, that
such cessation is but the logical consequence of the INP being absorbed by
the PNP.1a\^/phi1.net
Far from being abolished then, the INP, at the most, was merely transformed
to become the PNP, minus of course its military character and complexion.
Even the petitioners’ effort at disclosing the legislative intent behind the
enactment of R.A. No. 6975 cannot support their theory of abolition. Rather,
the Senate and House deliberations on the bill that eventually became R.A.
No. 6975 reveal what has correctly been held by the CA in its assailed
decision: that the PNP was precisely created to erase the stigma spawned by
the militarization of the police force under the PC-INP structure. The rationale
behind the passage of R.A. No. 6975 was adequately articulated by no less
than the sponsor16 of the corresponding House bill in his sponsorship speech,
thus:
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.
With the conclusion herein reached that the INP was not in fact abolished but
was merely transformed to become the PNP, members of the INP which
include the herein respondents are, therefore, not excluded from availing
themselves of the retirement benefits accorded to PNP retirees under
Sections 7417 and 7518 of R.A. No. 6975, as amended by R.A. No. 8551. It may
be that respondents were no longer in the government service at the time of
the enactment of R.A. No. 6975. This fact, however, without more, would not
pose as an impediment to the respondents’ entitlement to the new retirement
scheme set forth under the aforecited sections. As correctly ratiocinated by
the CA to which we are in full accord:
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.
Page 52 of 62
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 1121 thereof, bars the payment of any differential in
retirement pay to officers and non-officers who are already retired prior to the
effectivity of R.A. No. 6975.
The 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 3822 explicitly
states that the rationalized retirement benefits schedule and program "shall
have retroactive effect in favor of PNP members and officers retired or
separated from the time specified in the law." To us, the aforesaid provision
should be made applicable to INP members who had retired prior to the
effectivity of R.A. No. 6975. For, as afore-held, the INP was, in effect, merely
absorbed by the PNP and not abolished.
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 Law25 that "to the extent practicable and feasible, retirement
benefits xxx shall be upgraded to be at par with the current scale enjoyed by
those in actual service."1awphi1.nét
Certainly going for the respondents in their bid to enjoy the same retirement
benefits granted to PNP retirees, either under R.A. No. 6975 or R.A. No. 8551,
is Section 34 of the latter law which amended Section 75 of R.A. No. 6975 by
adding thereto the following proviso:
Section 75. Retirement benefits. x x x: Provided, finally, That retirement pay of
the officers/non-officers of the PNP shall be subject to adjustments based on the
prevailing scale of base pay of police personnel in the active service.
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.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
We are not persuaded.
As correctly found by the appellate court, R.A. No. 6975 itself contextually
provides for its retroactive application to cover those who had retired prior to
its effectivity. In this regard, we invite attention to the three (3) phases of
implementation under Section 85 for the absorption and continuation in the
service of, among others, the INP members under the newly-established PNP.
In a further bid to scuttle respondents’ entitlement to the desired retirement
benefits, the petitioners fault the trial court for ordering the immediate
adjustments of the respondents’ retirement benefits when the basic petition
filed before it was one for declaratory relief. To the petitioners, such petition
does not essentially entail an executory process, the only relief proper under
that setting being a declaration of the parties’ rights and duties.
Petitioners’ above posture is valid to a point. However, the execution of
judgments in a petition for declaratory relief is not necessarily indefensible. In
Philippine Deposit Insurance Corporation[PDIC] v. Court of Appeals,27wherein
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
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:
x x x Under Sec. 6 of Rule 64, the action for declaratory relief may be
converted into an ordinary action and the parties allowed to file such
pleadings as may be necessary or proper, if before the final termination of the
case "a breach or violation of an … ordinance, should take place." In the
present case, no breach or violation of the ordinance occurred. The petitioner
decided to pay "under protest" the fees imposed by the ordinance. Such
payment did not affect the case; the declaratory relief action was still proper
because the applicability of the ordinance to future transactions still remained
to be resolved, although the matter could also be threshed out in an ordinary
suit for the recovery of taxes paid …. In its petition for declaratory relief,
petitioner-appellee alleged that by reason of the enforcement of the
municipal ordinance by respondents it was forced to pay under protest the
fees imposed pursuant to the said ordinance, and accordingly, one of the
reliefs prayed for by the petitioner was that the respondents be ordered to
refund all the amounts it paid to respondent Municipal Treasurer during the
pendency of the case. The inclusion of said allegation and prayer in the
petition was not objected to by the respondents in their answer. During the
trial, evidence of the
payments made by the petitioner was introduced. Respondents were thus
fully aware of the petitioner's claim for refund and of what would happen if
the ordinance were to be declared invalid by the court.
The Court sees no reason for treating this case differently from PDIC and
Matalin.1awphi1.nét 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
Page 53 of 62
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.
No costs.
SO ORDERED
#15
G.R. No. 161140 January 31, 2007
BAYAN TELECOMMUNICATIONS INC. (Formerly International
Communications Corporation), Petitioner,
vs.
REPUBLIC OF THE PHILIPPINES and NATIONAL TELECOMMUNICATIONS
COMMISSION, Respondents.
RESOLUTION
QUISUMBING, J.:
This petition for review assails (a) the Decision1 dated September 25, 2003 of
the Court of Appeals in CA-G.R. CV No. 74283, which affirmed the
Order2 dated October 12, 2000 of the Regional Trial Court (RTC) of Pasig City,
Branch 71, dismissing SCA No. 1962 for declaratory relief; and (b) the Court of
Appeals’ Resolution3 dated December 5, 2003, which denied the motion for
reconsideration.
The case stemmed from the petition for declaratory relief filed before the RTC
of Pasig City, by petitioner Bayan Telecommunications Inc., against
respondents Republic of the Philippines and National Telecommunications
Commission (NTC). Petitioner specifically sought the suspension of the
requirement, under Section 21 of Republic Act No. 7925,4 of a public offering
of 30% of the aggregate common stocks of telecommunication entities with
regulated types of services within five years from the effectivity of the Act or
the entity’s first start of commercial operations, whichever comes later.
Petitioner claimed that it was impossible for it to make a bona fide public
offering at that time because its financial condition, the Philippine economy,
and the stock market were not conducive for a successful public offering. It
also claimed that impossibility of performance was an implied exception to
the abovecited provision of Rep. Act No. 7925.
The Solicitor General moved for the dismissal of the petition for failure to
state a cause of action. The Solicitor General maintained that the provisions of
Section 215 of Rep. Act No. 7925 are clear and free of any ambiguity, and that
petitioner failed to exhaust administrative remedies as it did not first ask for
an exemption from the application of said provision.
On October 12, 2000, the trial court dismissed the petition for failure to state
a cause of action. It ruled as follows:
WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby
GRANTED. The case is DISMISSED as the petition states no cause of action,
without costs.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
SO ORDERED.6
Petitioner sought reconsideration, but it was denied. Petitioner then elevated
the case to the Court of Appeals.
On September 25, 2003, the appellate court affirmed the trial court’s ruling. It
held that the elements of justiciable controversy and ripeness for judicial
determination were absent as there was no showing that petitioner asked for
an exemption from or deferment of compliance with the requirement of
Section 21, from the NTC, and was refused. The dispositive portion of the
Court of Appeals’ decision reads:
WHEREFORE, premises considered, the present appeal is hereby DISMISSED
and the appealed Order dated October 12, 2000 of the court a quo in SCA No.
1962 is hereby affirmed and upheld.
With costs against the petitioner-appellant.
SO ORDERED.7
Petitioner now comes before us raising the following issues:
1. Whether or not there is ambiguity in the provisions of Section 21
of R.A. 7925 that would require the remedy of a declaratory relief?
2. Whether or not there is a justiciable controversy ripe for judicial
determination?
3. Whether or not the matters relating to a [bona fide] public
offering by Telecommunication Entities are within the regulatory
power or authority of the National Telecommunications
Commission (NTC)?
4. Whether or not the petitioner, which is not in a position to make
a [bona fide] public offering due to the negative condition of the
economy, the negative interest of the investing public in the stock
market and the condition of the company, is still bound by the
provisions under section 21 of the Telecommunications Law…8
Simply stated, we are asked to resolve: (1) Whether there is an ambiguity in
the cited provision of Section 21, Rep. Act No. 7925 which justifies an action
for declaratory relief. And, also whether there is a justiciable controversy ripe
for judicial determination. (2) If so, is petitioner excused from complying with
Section 21 of Rep. Act No. 7925?
Petitioner contends that there is a justiciable controversy ripe for judicial
determination as it faces a possible sanction from the NTC for its inability to
comply with the mandate of Rep. Act No. 7925. It claims that the present case
falls within the exceptions to the general rule of exhaustion of administrative
remedies, since there is no administrative review provided by law as the NTC
does not have the power to decide the validity of the law and the questions
involved are essentially judicial.
Petitioner contends that applying blindly the literal import of Section 21
would lead to absurd and destructive results because the huge amount
needed to undertake a public offering could only bring more losses to the
corporation in case it fails to attract the investing public due to its unattractive
financial condition. It maintains that impossibility or impracticability of
compliance excuses it from complying with said provision.
Respondents counter that Section 21 is clear and unambiguous, hence, there
is no need for judicial interpretation. They maintain that petitioner’s claim of
impossibility or impracticability of compliance is purely speculative, adding
that there are a good number of publicly listed telecommunication
Page 54 of 62
companies. Besides, respondents argue, Section 21 does not provide for any the administrative agency, if afforded a complete chance to pass upon the
exception. matter, will decide correctly.16

Respondents state, however, that there were yet no implementing rules and
guidelines by the NTC or any administrative agency to carry into effect the
requirement imposed by Section 21 of Rep. Act No. 7925. Hence, according to
respondents, petitioner’s apprehension of an administrative sanction was
merely conjectural and anticipatory. Citing Garcia v. Executive Secretary,9 they
argue that under the circumstances, there is no justiciable controversy ripe for
judicial determination. Respondents also contend that courts do not have the
power to order the suspension of the application of a law or its provision
especially where there is no constitutional challenge to such legal provision.
They assert that the NTC has the power and authority to implement Rep. Act
No. 7925, hence they aver that the issue of suspension or deferment of the
initial public offering for telecommunication companies is best left to its
sound judgment.
Considering that the requirements of an action for declaratory relief have not
been met, the trial court properly dismissed the case for lack of cause of
action. The appellate court did not err in affirming said dismissal. At this point,
we shall no longer discuss the second issue, involving excuse from compliance
with Section 21 of Rep. Act No. 7925, for it will not serve any practical purpose
in the resolution of this petition.
WHEREFORE, the instant petition is DENIED for lack of merit. The Decision
dated September 25, 2003 and Resolution dated December 5, 2003 of the
Court of Appeals in CA-G.R. CV No. 74283 are hereby AFFIRMED. Costs
against petitioner.
SO ORDERED.

After seriously considering the submission of the parties, we agree that

respondents’ contentions are valid while petitioner’s plea lacks merit. #16

Section 1, Rule 63 of the Rules of Court reads: THE G.R. No. 170656
METROPOLITAN MANILADEVELOPMENT
AUTHORITY and BAYANI FERNANDO as Present:
Any person interested under a deed, will, contract or other written instrument, Chairman of the
or whose rights are affected by a statute, executive order or regulation, Metropolitan ManilaDevelopment PUNO, C.J.,
ordinance, or any other governmental regulation may, before breach or Authority, QUISUMBING,
violation thereof, bring an action in the appropriate Regional Trial Court to Petitioners, YNARES-SANTIAGO,
determine any question of construction or validity arising, and for a SANDOVAL-GUTIERREZ,
declaration of his rights or duties, thereunder. CARPIO,
- versus - AUSTRIA-MARTINEZ,
xxxx CORONA,
CARPIO MORALES,
For such an action for declaratory relief before a trial court to prosper, it must AZCUNA,
be shown that (a) there is a justiciable controversy, (b) the controversy is VIRON TRANSPORTATION CO., INC., TINGA,
between persons whose interests are adverse, (c) the party seeking the relief Respondent. CHICO-NAZARIO,
has a legal interest in the controversy, and (d) the issue invoked is ripe for GARCIA,
judicial determination.10Respondents contest the presence of the first and last VELASCO, JR.,
requisites insofar as petitioner’s case is concerned. NACHURA, and
REYES, JJ.
x --------------------------------------------- x
A justiciable controversy is a definite and concrete dispute touching on the HON. ALBERTO G. ROMULO, Executive G.R. No. 170657
legal relations of parties having adverse legal interests, which may be resolved Secretary, the
by a court of law through the application of a law.11 In the case at bar, METROPOLITAN MANILADEVELOPMENT
petitioner fears the risk of possible sanctions. However, a mere apprehension AUTHORITY and BAYANI FERNANDO as
of an administrative sanction does not give rise to a justiciable Chairman of the
controversy.12 Rep. Act No. 7925 does not provide for a penalty for Metropolitan ManilaDevelopment
noncompliance with Section 21, and as correctly pointed out by the Solicitor Authority,
General, there are yet no implementing rules or guidelines to carry into effect Petitioners,
the requirement imposed by the said provision. Whatever sanctions petitioner
fears are merely hypothetical. - versus - Promulgated:

An issue is ripe for judicial determination when litigation is inevitable,13 or MENCORP TRANSPORTATION SYSTEM, August 15, 2007
when administrative remedies have been exhausted.14 There is no showing of INC.,
either in the present case. Instead, petitioner asserts that this case falls within Respondent.
the exceptions to the rule on exhaustion of administrative remedies,
specifically when there is no administrative review provided by law or when x-----------------------------------------------------------------x
the questions involved are essentially judicial. To our mind, petitioner should
have first raised its concerns with the NTC, the agency authorized to
implement Rep. Act No. 7925. Only after a categorical denial of its claim of
DECISION
exemption from or deferment of compliance with Section 21 can petitioner
CARPIO MORALES, J.:
proceed to court. As it is now, we agree with the trial and appellate courts
that petitioner has no cause of action.
The following conditions in 1969, as observed by this Court:
Observance of the mandate regarding exhaustion of administrative remedies
is a sound practice and policy. The doctrine insures an orderly procedure
which favors a preliminary sifting process and withholds judicial interference Vehicles have increased in number. Traffic congestion has
until administrative process would have been allowed to duly run its moved from bad to worse, from tolerable to critical. The
course.15 The underlying principle of the rule rests on the presumption that

ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT Page 55 of 62
 number of people who use the thoroughfares has
multiplied x x x,[1]
have remained unchecked and have reverberated to this day. Traffic jams
continue to clog the streets of Metro Manila, bringing vehicles to a standstill
at main road arteries during rush hour traffic and sapping peoples energies
and patience in the process.
The present petition for review on certiorari, rooted in the traffic
congestion problem, questions the authority of the Metropolitan Manila
Development Authority (MMDA) to order the closure of provincial bus
terminals along Epifanio de los Santos Avenue (EDSA) and major
thoroughfares of Metro Manila.
Specifically challenged are two Orders issued by Judge Silvino T.
Pampilo, Jr. of the Regional Trial Court (RTC) of Manila, Branch 26 in Civil Case
Nos. 03-105850 and 03-106224.
The first assailed Order of September 8, 2005,[2] which resolved a
motion for reconsideration filed by herein respondents, declared Executive
Order (E.O.) No. 179, hereafter referred to as the E.O., unconstitutional as it
constitutes an unreasonable exercise of police power. The second assailed
Order of November 23, 2005[3] denied petitioners motion for reconsideration.
The following facts are not disputed:
President Gloria Macapagal Arroyo issued the E.O. on February 10,
2003, PROVIDING FOR THE ESTABLISHMENT OF GREATER MANILA MASS
TRANSPORT SYSTEM, the pertinent portions of which read:
WHEREAS, Metro Manila continues to be the center of
employment opportunities, trade and commerce of the
Greater Metro Manila area;
WHEREAS, the traffic situation in Metro Manila has affected the
adjacent provinces of Bulacan, Cavite, Laguna, and Rizal,
owing to the continued movement of residents and
industries to more affordable and economically viable
locations in these provinces;
WHEREAS, the Metropolitan Manila Development Authority
(MMDA) is tasked to undertake measures to ease traffic
congestion in Metro Manila and ensure the convenient
and efficient travel of commuters within its jurisdiction;
WHEREAS, a primary cause of traffic congestion in Metro Manila
has been the numerous buses plying the streets that
impedes [sic] the flow of vehicles and commuters due to
the inefficient connectivity of the different transport
modes;
WHEREAS, the MMDA has recommended a plan to decongest
traffic by eliminating the bus terminals now located along
major Metro Manila thoroughfares and providing more
convenient access to the mass transport system to the
commuting public through the provision of mass
transport terminal facilities that would integrate the
existing transport modes, namely the buses, the rail-
based systems of the LRT, MRT and PNR and to facilitate
and ensure efficient travel through the improved
connectivity of the different transport modes;
WHEREAS, the national government must provide the necessary
funding requirements to immediately implement and
render operational these projects; and extent to MMDA
such other assistance as may be warranted to ensure
their expeditious prosecution.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
NOW, THEREFORE, I, GLORIA MACAPAGAL-ARROYO, President
of the Philippines, by virtue of the powers vested in me
by law, do hereby order:
Section 1. THE PROJECT. The project shall be identified as
GREATER MANILA TRANSPORT SYSTEM Project.
Section 2. PROJECT OBJECTIVES. In accordance with the plan
proposed by MMDA, the project aims to develop four (4)
interim intermodal mass transport terminals to integrate
the different transport modes, as well as those that shall
hereafter be developed, to serve the commuting public in
the northwest, north, east, south, and southwest of Metro
Manila. Initially, the project shall concentrate on
immediately establishing the mass transport terminals for
the north and south Metro Manila commuters as
hereinafter described.
Section 3. PROJECT IMPLEMENTING AGENCY. The Metropolitan
Manila Development Authority (MMDA), is hereby
designated as the implementing Agency for the
project. For this purpose, MMDA is directed to undertake
such infrastructure development work as may be
necessary and, thereafter, manage the project until it may
be turned-over to more appropriate agencies, if found
suitable and convenient. Specifically, MMDA shall have
the following functions and responsibilities:
a) Cause the preparation of the Master Plan
for the projects, including the designs and
costing;
b) Coordinate the use of the land and/or
properties needed for the project with the
respective agencies and/or entities
owning them;
c) Supervise and manage the construction
of the necessary structures and facilities;
d) Execute such contracts or agreements as
may be necessary, with the appropriate
government agencies, entities, and/or
private persons, in accordance with
existing laws and pertinent regulations, to
facilitate the implementation of the
project;
e) Accept, manage and disburse such funds
as may be necessary for the construction
and/or implementation of the projects, in
accordance with prevailing accounting
and audit polices and practice in
government.
f) Enlist the assistance of any national
government agency, office or department,
including local government units,
government-owned or controlled
corporations, as may be necessary;
g) Assign or hire the necessary personnel
for the above purposes; and
h) Perform such other related functions as
may be necessary to enable it to
accomplish the objectives and purposes
of this Executive Order.[4] (Emphasis in the
original; underscoring supplied)
As the above-quoted portions of the E.O. noted, the primary cause
of traffic congestion in Metro Manila has been the numerous buses plying the
streets and the inefficient connectivity of the different transport modes;[5] and
the MMDA had recommended a plan to decongest traffic by eliminating the
Page 56 of 62
bus terminals now located along major Metro Manila thoroughfares and
providing more and convenient access to the mass transport system to the
commuting public through the provision of mass transport terminal
facilities[6]which plan is referred to under the E.O. as the Greater Manila Mass
Transport System Project (the Project).
The E.O. thus designated the MMDA as the implementing agency
for the Project.
Pursuant to the E.O., the Metro Manila Council (MMC), the
governing board and policymaking body of the MMDA, issued Resolution No.
03-07 series of 2003[7] expressing full support of the Project. Recognizing the
imperative to integrate the different transport modes via the establishment of
common bus parking terminal areas, the MMC cited the need to remove the
bus terminals located along major thoroughfares of Metro Manila.[8]
On February 24, 2003, Viron Transport Co., Inc. (Viron), a domestic
corporation engaged in the business of public transportation with a provincial
bus operation,[9] filed a petition for declaratory relief[10] before the RTC[11] of
Manila.
In its petition which was docketed as Civil Case No. 03-105850,
Viron alleged that the MMDA, through Chairman Fernando, was poised to
issue a Circular, Memorandum or Order closing, or tantamount to closing, all
provincial bus terminals along EDSA and in the whole of the Metropolis under
the pretext of traffic regulation.[12] This impending move, it stressed, would
mean the closure of its bus terminal in Sampaloc, Manila and two others
in Quezon City.
Alleging that the MMDAs authority does not include the power to
direct provincial bus operators to abandon their existing bus terminals to thus
deprive them of the use of their property, Viron asked the court to construe
the scope, extent and limitation of the power of the MMDA to regulate traffic
under R.A. No. 7924, AN ACT CREATING THE METROPOLITAN MANILA
DEVELOPMENT AUTHORITY, DEFINING ITS POWERS AND FUNCTIONS,
PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES.
Viron also asked for a ruling on whether the planned closure of
provincial bus terminals would contravene the Public Service Act and related
laws which mandate public utilities to provide and maintain their own
terminals as a requisite for the privilege of operating as common carriers.[13]
Mencorp Transportation System, Inc. (Mencorp), another provincial
bus operator, later filed a similar petition for declaratory relief[14] against
Executive Secretary Alberto G. Romulo and MMDA Chairman Fernando.
Mencorp asked the court to declare the E.O. unconstitutional and
illegal for transgressing the possessory rights of owners and operators of
public land transportation units over their respective terminals.
Averring that MMDA Chairman Fernando had begun to implement
a plan to close and eliminate all provincial bus terminals along EDSA and in
the whole of the metropolis and to transfer their operations to common bus
terminals,[15] Mencorp prayed for the issuance of a temporary restraining
order (TRO) and/or writ of preliminary injunction to restrain the impending
closure of its bus terminals which it was leasing at the corner of EDSA and
New York Street in Cubao and at the intersection of Blumentritt, Laon Laan
and Halcon Streets in Quezon City. The petition was docketed as Civil Case
No. 03-106224 and was raffled to Branch 47 of the RTC of Manila.
Mencorps petition was consolidated on June 19, 2003 with Virons
petition which was raffled to Branch 26 of the RTC, Manila.
Mencorps prayer for a TRO and/or writ of injunction was denied as
was its application for the issuance of a preliminary injunction.[16]
In the Pre-Trial Order[17] issued by the trial court, the issues were
narrowed down to whether 1) the MMDAs power to regulate traffic in Metro
Manila included the power to direct provincial bus operators to abandon and
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
close their duly established and existing bus terminals in order to conduct
business in a common terminal; (2) the E.O. is consistent with the Public
Service Act and the Constitution; and (3) provincial bus operators would be
deprived of their real properties without due process of law should they be
required to use the common bus terminals.
Upon the agreement of the parties, they filed their respective
position papers in lieu of hearings.
By Decision[18] of January 24, 2005, the trial court sustained the
constitutionality and legality of the E.O. pursuant to R.A. No. 7924, which
empowered the MMDA to administer Metro Manilas basic services including
those of transport and traffic management.
The trial court held that the E.O. was a valid exercise of the police
power of the State as it satisfied the two tests of lawful subject matter and
lawful means, hence, Virons and Mencorps property rights must yield to
police power.
On the separate motions for reconsideration of Viron and
Mencorp, the trial court, by Order of September 8, 2005, reversed its Decision,
this time holding that the E.O. was an unreasonable exercise of police
power; that the authority of the MMDA under Section (5)(e) of R.A. No. 7924
does not include the power to order the closure of Virons and Mencorps
existing bus terminals; and that the E.O. is inconsistent with the provisions of
the Public Service Act.
Petitioners motion for reconsideration was denied by Resolution
of November 23, 2005.
Hence, this petition, which faults the trial court for failing to rule
that: (1) the requisites of declaratory relief are not present, there being no
justiciable controversy in Civil Case Nos. 03-105850 and 03-106224; and (2)
the President has the authority to undertake or cause the implementation of
the Project.[19]
Petitioners contend that there is no justiciable controversy in the
cases for declaratory relief as nothing in the body of the E.O. mentions or
orders the closure and elimination of bus terminals along the major
thoroughfares of Metro Manila. Viron and Mencorp, they argue, failed to
produce any letter or communication from the Executive Department
apprising them of an immediate plan to close down their bus terminals.
And petitioners maintain that the E.O. is only an administrative
directive to government agencies to coordinate with the MMDA and to make
available for use government property along EDSA and South Expressway
corridors. They add that the only relation created by the E.O. is that between
the Chief Executive and the implementing officials, but not between third
persons.
The petition fails.
It is true, as respondents have pointed out, that the alleged
deficiency of the consolidated petitions to meet the requirement of
justiciability was not among the issues defined for resolution in the Pre-Trial
Order of January 12, 2004. It is equally true, however, that the question was
repeatedly raised by petitioners in their Answer to Virons petition,[20] their
Comment of April 29, 2003 opposing Mencorps prayer for the issuance of a
TRO,[21] and their Position Paper of August 23, 2004.[22]
In bringing their petitions before the trial court, both respondents
pleaded the existence of the essential requisites for their respective petitions
for declaratory relief,[23] and refuted petitioners contention that a justiciable
controversy was lacking.[24] There can be no denying, therefore, that the issue
was raised and discussed by the parties before the trial court.
The following are the essential requisites for a declaratory relief
petition: (a) there must be a justiciable controversy; (b) the controversy must
be between persons whose interests are adverse; (c) the party seeking
Page 57 of 62
declaratory relief must have a legal interest in the controversy; and (d) the
issue invoked must be ripe for judicial determination.[25]
The requirement of the presence of a justiciable controversy is
satisfied when an actual controversy or the ripening seeds thereof exist
between the parties, all of whom are sui juris and before the court, and the
declaration sought will help in ending the controversy.[26] A question becomes
justiciable when it is translated into a claim of right which is actually
contested.[27]
In the present cases, respondents resort to court was prompted by
the issuance of the E.O. The 4th Whereas clause of the E.O. sets out in clear
strokes the MMDAs plan to decongest traffic by eliminating the bus
terminals now located along major Metro Manila thoroughfares and
providing more convenient access to the mass transport system to the
commuting public through the provision of mass transport terminal facilities x
x x. (Emphasis supplied)
Section 2 of the E.O. thereafter lays down the immediate
establishment of common bus terminals for north- and south-bound
commuters. For this purpose, Section 8 directs the Department of Budget and
Management to allocate funds of not more than one hundred million pesos
(P100,000,000) to cover the cost of the construction of the north and south
terminals. And the E.O. was made effective immediately.
The MMDAs resolve to immediately implement the Project, its
denials to the contrary notwithstanding, is also evident from telltale
circumstances, foremost of which was the passage by the MMC of Resolution
No. 03-07, Series of 2003 expressing its full support of the immediate
implementation of the Project.
Notable from the 5th Whereas clause of the MMC Resolution is the
plan to remove the bus terminals located along major thoroughfares of Metro
Manila and an urgent need to integrate the different transport modes. The
7th Whereas clause proceeds to mention the establishment of the North and
South terminals.
As alleged in Virons petition, a diagram of the GMA-MTS North
Bus/Rail Terminal had been drawn up, and construction of the terminal is
already in progress. The MMDA, in its Answer[28] and Position Paper,[29] in fact
affirmed that the government had begun to implement the Project.
It thus appears that the issue has already transcended the
boundaries of what is merely conjectural or anticipatory.
Under the circumstances, for respondents to wait for the actual
issuance by the MMDA of an order for the closure of respondents bus
terminals would be foolhardy for, by then, the proper action to bring would
no longer be for declaratory relief which, under Section 1, Rule 63[30] of the
Rules of Court, must be brought before there is a breach or violation of rights.
As for petitioners contention that the E.O. is a mere administrative
issuance which creates no relation with third persons, it does not
persuade. Suffice it to stress that to ensure the success of the Project for
which the concerned government agencies are directed to coordinate their
activities and resources, the existing bus terminals owned, operated or leased
by third persons like respondents would have to be eliminated; and
respondents would be forced to operate from the common bus terminals.
It cannot be gainsaid that the E.O. would have an adverse effect on
respondents. The closure of their bus terminals would mean, among other
things, the loss of income from the operation and/or rentals of stalls
thereat. Precisely, respondents claim a deprivation of their constitutional right
to property without due process of law.
Respondents have thus amply demonstrated a personal and
substantial interest in the case such that [they have] sustained, or will sustain,
direct injury as a result of [the E.O.s] enforcement.[31] Consequently, the
established rule that the constitutionality of a law or administrative issuance
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
can be challenged by one who will sustain a direct injury as a result of its
enforcement has been satisfied by respondents.
On to the merits of the case.
Respondents posit that the MMDA is devoid of authority to order
the elimination of their bus terminals under the E.O. which, they argue, is
unconstitutional because it violates both the Constitution and the Public
Service Act; and that neither is the MMDA clothed with such authority under
R.A. No. 7924.
Petitioners submit, however, that the real issue concerns the
Presidents authority to undertake or to cause the implementation of the
Project. They assert that the authority of the President is derived from E.O. No.
125, REORGANIZING THE MINISTRY OF TRANSPORTATION AND
COMMUNICATIONS DEFINING ITS POWERS AND FUNCTIONS AND FOR
OTHER PURPOSES, her residual power and/or E.O. No. 292, otherwise known
as the Administrative Code of 1987. They add that the E.O. is also a valid
exercise of the police power.
E.O. No. 125,[32] which former President Corazon Aquino issued in
the exercise of legislative powers, reorganized the then Ministry (now
Department) of Transportation and Communications. Sections 4, 5, 6 and 22
of E.O. 125, as amended by E.O. 125-A,[33] read:
SECTION 4. Mandate. The Ministry shall be
the primary policy, planning, programming,
coordinating, implementing, regulating
and administrative entity of the Executive Branch of
the government in the promotion, development and
regulation of dependable and coordinated networks
of transportation and communication systems as well as
in the fast, safe, efficient and reliable postal,
transportation and communications services.
To accomplish such mandate, the Ministry shall
have the following objectives:
(a) Promote the development of dependable
and coordinated networks of transportation and
communications systems;
(b) Guide government and private
investment in the development of the countrys
intermodal transportation and communications
systems in a most practical, expeditious, and orderly
fashion for maximum safety, service, and cost
effectiveness; (Emphasis and underscoring supplied)
xxxx
SECTION 5. Powers and Functions. To
accomplish its mandate, the Ministry shall have the
following powers and functions:
(a) Formulate and recommend national policies
and guidelines for the preparation and implementation of
integrated and comprehensive transportation and
communications systems at the national, regional and
local levels;
(b) Establish and administer comprehensive
and integrated programs for transportation and
communications, and for this purpose, may call on any
agency, corporation, or organization, whether public or
private, whose development programs include
transportation and communications as an integral part
thereof, to participate and assist in the preparation and
implementation of such program;
(c) Assess, review and provide direction to
transportation and communications research and
Page 58 of 62
 development programs of the government in
coordination with other institutions concerned;
(d) Administer all laws, rules and regulations
in the field of transportation and
communications; (Emphasis and underscoring supplied)
xxxx
SECTION 6. Authority and Responsibility. The
authority and responsibility for the exercise of the
mandate of the Ministry and for the discharge of its
powers and functions shall be vested in the Minister
of Transportation and Communications, hereinafter
referred to as the Minister, who shall have supervision
and control over the Ministry and shall be appointed by
the President. (Emphasis and underscoring supplied)
SECTION 22. Implementing Authority of
Minister. The Minister shall issue such orders, rules,
regulations and other issuances as may be
necessary to ensure the effective implementation of
the provisions of this Executive Order. (Emphasis and
underscoring supplied)
It is readily apparent from the abovequoted provisions of E.O. No.
125, as amended, that the President, then possessed of and exercising
legislative powers, mandated the DOTC to be the primary policy, planning,
programming, coordinating, implementing, regulating and administrative
entity to promote, develop and regulate networks of transportation and
communications. The grant of authority to the DOTC includes the power
to establish and administer comprehensive and integrated programs for
transportation and communications.
As may be seen further, the Minister (now Secretary) of the DOTC is
vested with the authority and responsibility to exercise the mandate given to
the department. Accordingly, the DOTC Secretary is authorized to issue such
orders, rules, regulations and other issuances as may be necessary to ensure
the effective implementation of the law.
Since, under the law, the DOTC is authorized to establish and
administer programs and projects for transportation, it follows that the
President may exercise the same power and authority to order the
implementation of the Project, which admittedly is one for transportation.
Such authority springs from the Presidents power of control over all
executive departments as well as the obligation for the faithful execution of
the laws under Article VII, Section 17 of the Constitution which provides:
SECTION 17. The President shall have control
of all the executive departments, bureaus and offices. He
shall ensure that the laws be faithfully executed.
This constitutional provision is echoed in Section 1, Book III of the
Administrative Code of 1987. Notably, Section 38, Chapter 37, Book IV of the
same Code defines the Presidents power of supervision and control over the
executive departments, viz:
SECTION 38. Definition of Administrative
Relationships. Unless otherwise expressly stated in the
Code or in other laws defining the special relationships of
particular agencies, administrative relationships shall be
categorized and defined as follows:
(1) Supervision and Control. Supervision and
control shall include authority to
act directly whenever a specific function is entrusted
by law or regulation to a subordinate; direct the
performance of duty; restrain the commission of acts;
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
review, approve, reverse or modify acts and decisions of
subordinate officials or units; determine priorities in the
execution of plans and programs. Unless a different
meaning is explicitly provided in the specific law
governing the relationship of particular agencies the
word "control" shall encompass supervision and control
as defined in this paragraph. x x x (Emphasis and
underscoring supplied)
Thus, whenever a specific function is entrusted by law or regulation
to a subordinate, the President may act directly or merely direct the
performance of a duty.[34]
Respecting the Presidents authority to order the implementation of
the Project in the exercise of the police power of the State, suffice it to stress
that the powers vested in the DOTC Secretary to establish and administer
comprehensive and integrated programs for transportation and
communications and to issue orders, rules and regulations to implement such
mandate (which, as previously discussed, may also be exercised by the
President) have been so delegated for the good and welfare of the
people. Hence, these powers partake of the nature of police power.
Police power is the plenary power vested in the legislature to make,
ordain, and establish wholesome and reasonable laws, statutes and
ordinances, not repugnant to the Constitution, for the good and welfare of
the people.[35] This power to prescribe regulations to promote the health,
morals, education, good order or safety, and general welfare of the people
flows from the recognition that salus populi est suprema lex ─ the welfare of
the people is the supreme law.
While police power rests primarily with the legislature, such power
may be delegated, as it is in fact increasingly being delegated.[36] By virtue of a
valid delegation, the power may be exercised by the President and
administrative boards[37] as well as by the lawmaking bodies of municipal
corporations or local governments under an express delegation by the Local
Government Code of 1991.[38]
The authority of the President to order the implementation of the
Project notwithstanding, the designation of the MMDA as the implementing
agency for the Project may not be sustained. It is ultra vires, there being no
legal basis therefor.
It bears stressing that under the provisions of E.O. No. 125, as amended, it is
the DOTC, and not the MMDA, which is authorized to establish and
implement a project such as the one subject of the cases at bar. Thus, the
President, although authorized to establish or cause the implementation of
the Project, must exercise the authority through the instrumentality of
the DOTC which, by law, is the primary implementing and administrative
entity in the promotion, development and regulation of networks of
transportation, and the one so authorized to establish and implement a
project such as the Project in question.
By designating the MMDA as the implementing agency of the
Project, the President clearly overstepped the limits of the authority conferred
by law, rendering E.O. No. 179 ultra vires.
In another vein, the validity of the designation of MMDA flies in the
absence of a specific grant of authority to it under R.A. No. 7924.
To recall, R.A. No. 7924 declared the Metropolitan Manila area[39] as a special
development and administrative region and placed the administration of
metro-wide basic services affecting the region under the MMDA.
Section 2 of R.A. No. 7924 specifically authorizes the MMDA to
perform planning, monitoring and coordinative functions, and in the process
exercise regulatory and supervisory authority over the delivery of metro-wide
services, including transport and traffic management.[40] Section 5 of the same
law enumerates the powers and functions of the MMDA as follows:
Page 59 of 62
 management which includes the formulation and
monitoring of policies, standards and projects to
(a) Formulate, coordinate and regulate the
rationalize the existing transport operations,
implementation of medium and long-term plans and
infrastructure requirements, the use of thoroughfares and
programs for the delivery of metro-wide services, land
promotion of the safe movement of persons and
use and physical development within Metropolitan
goods. It also covers the mass transport system and the
Manila, consistent with national development objectives
institution of a system of road regulation, the
and priorities;
administration of all traffic enforcement operations,
traffic engineering services and traffic education
(b) Prepare, coordinate and regulate the
programs, including the institution of a single ticketing
implementation of medium-term investment programs
system in Metro Manila for traffic violations. Under this
for metro-wide services which shall indicate sources and
service, the MMDA is expressly authorized to to set the
uses of funds for priority programs and projects, and
policies concerning traffic and coordinate and regulate
which shall include the packaging of projects and
the implementation of all traffic management
presentation to funding institutions;
programs. In addition, the MMDA may install and
administer a single ticketing system, fix, impose and
(c) Undertake and manage on its own metro-
collect fines and penalties for all traffic violations.
wide programs and projects for the delivery of specific
services under its jurisdiction, subject to the approval of
It will be noted that the powers of the MMDA
the Council. For this purpose, MMDA can create
are limited to the following acts: formulation,
appropriate project management offices;
coordination, regulation, implementation, preparation,
management, monitoring, setting of policies, installation
(d) Coordinate and monitor the
of a system and administration. There is no syllable in
implementation of such plans, programs and projects in
R.A. No. 7924 that grants the MMDA police power, let
Metro Manila; identify bottlenecks and adopt solutions to
alone legislative power. Even the Metro Manila Council
problems of implementation;
has not been delegated any legislative power. Unlike the
legislative bodies of the local government units, there
(e) The MMDA shall set the policies
is no provision in R.A. No. 7924 that empowers the
concerning traffic in Metro Manila, and shall
MMDA or its Council to enact ordinances, approve
coordinate and regulate the implementation of all
resolutions and appropriate funds for the general
programs and projects concerning traffic
welfare of the inhabitants of Metro Manila. The
management, specifically pertaining to enforcement,
MMDA is, as termed in the charter itself,
engineering and education. Upon request, it shall be
a development authority. It is an agency created for
extended assistance and cooperation, including but not
the purpose of laying down
limited to, assignment of personnel, by all other
policies and coordinating with the various national
government agencies and offices concerned;
government agencies, peoples organizations, non-
governmental organizations and the private sector
(f) Install and administer a single ticketing
for the efficient and expeditious delivery of basic
system, fix, impose and collect fines and penalties for
services in the vast metropolitan area. All its functions
all kinds of violations of traffic rules and
are administrative in nature and these are actually
regulations, whether moving or non-moving in nature,
summed up in the charter itself, viz:
and confiscate and suspend or revoke drivers licenses in
the enforcement of such traffic laws and regulations, the
SECTION 2. Creation of the
provisions of RA 4136 and PD 1605 to the contrary
Metropolitan Manila Development Authority. . .
notwithstanding. For this purpose, the Authority shall
.
impose all traffic laws and regulations in Metro Manila,
through its traffic operation center, and may deputize
The MMDA shall perform
members of the PNP, traffic enforcers of local
planning, monitoring and coordinative
government units, duly licensed security guards, or
functions, and in the process exercise
members of non-governmental organizations to whom
regulatory and supervisory authority over
may be delegated certain authority, subject to such
the delivery of metro-wide services within
conditions and requirements as the Authority may
Metro Manila, without diminution of the
impose; and
autonomy of the local government units
concerning purely local matters.[42] (Emphasis
(g) Perform other related functions required to
and underscoring supplied)
achieve the objectives of the MMDA, including the
undertaking of delivery of basic services to the local
government units, when deemed necessary subject to
In light of the administrative nature of its powers and functions, the
prior coordination with and consent of the local
MMDA is devoid of authority to implement the Project as envisioned by the
government unit concerned. (Emphasis and underscoring
E.O; hence, it could not have been validly designated by the President to
supplied)
undertake the Project. It follows that the MMDA cannot validly order the
elimination of respondents terminals.
The scope of the function of MMDA as an administrative,
Even the MMDAs claimed authority under the police power must
coordinating and policy-setting body has been settled in Metropolitan Manila
necessarily fail in consonance with the above-quoted ruling in MMDA v. Bel-
Development Authority (MMDA) v. Bel-Air Village Association, Inc.[41] In that
Air Village Association, Inc. and this Courts subsequent ruling in Metropolitan
case, the Court stressed:
Manila Development Authority v. Garin[43] that the MMDA is not vested with
Clearly, the scope of the MMDAs function
police power.
is limited to the delivery of the seven (7) basic
services. One of these is transport and traffic
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT Page 60 of 62
 Even assuming arguendo that police power was delegated to the
MMDA, its exercise of such power does not satisfy the two tests of a valid
police power measure, viz: (1) the interest of the public generally, as
distinguished from that of a particular class, requires its exercise; and (2) the
means employed are reasonably necessary for the accomplishment of the
purpose and not unduly oppressive upon individuals.[44] Stated differently, the
police power legislation must be firmly grounded on public interest and
welfare and a reasonable relation must exist between the purposes and the
means.
As early as Calalang v. Williams,[45] this Court recognized that traffic
congestion is a public, not merely a private, concern. The Court therein held
that public welfare underlies the contested statute authorizing the Director of
Public Works to promulgate rules and regulations to regulate and control
traffic on national roads.
Likewise, in Luque v. Villegas,[46] this Court emphasized that public
welfare lies at the bottom of any regulatory measure designed to relieve
congestion of traffic, which is, to say the least, a menace to public safety.[47] As
such, measures calculated to promote the safety and convenience of the
people using the thoroughfares by the regulation of vehicular traffic present a
proper subject for the exercise of police power.
Notably, the parties herein concede that traffic congestion is a
public concern that needs to be addressed immediately. Indeed, the E.O. was
issued due to the felt need to address the worsening traffic congestion in
Metro Manila which, the MMDA so determined, is caused by the increasing
volume of buses plying the major thoroughfares and the inefficient
connectivity of existing transport systems. It is thus beyond cavil that the
motivating force behind the issuance of the E.O. is the interest of the public in
general.
Are the means employed appropriate and reasonably necessary for
the accomplishment of the purpose. Are they not duly oppressive?
With the avowed objective of decongesting traffic in Metro Manila,
the E.O. seeks to eliminate[e] the bus terminals now located along
major Metro Manila thoroughfares and provid[e] more convenient access to
the mass transport system to the commuting public through the provision of
mass transport terminal facilities x x x.[48] Common carriers with terminals
along the major thoroughfares of Metro Manila would thus be compelled to
close down their existing bus terminals and use the MMDA-designated
common parking areas.
In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,[49] two city
ordinances were passed by the Sangguniang Panlungsod of Lucena, directing
public utility vehicles to unload and load passengers at the Lucena Grand
Central Terminal, which was given the exclusive franchise to operate a single
common terminal. Declaring that no other terminals shall be
situated, constructed, maintained or established inside or within the city
of Lucena, the sanggunian declared as inoperable all temporary terminals
therein.
The ordinances were challenged before this Court for being
unconstitutional on the ground that, inter alia, the measures constituted an
invalid exercise of police power, an undue taking of private property, and a
violation of the constitutional prohibition against monopolies.
Citing De la Cruz v. Paras[50] and Lupangco v. Court of
Appeals,[51] this Court held that the assailed ordinances were characterized by
overbreadth, as they went beyond what was reasonably necessary to solve the
traffic problem in the city. And it found that the compulsory use of the Lucena
Grand Terminal was unduly oppressive because it would subject its users to
fees, rentals and charges.
The true role of Constitutional Law is to effect
an equilibrium between authority and liberty so that
rights are exercised within the framework of the law and
the laws are enacted with due deference to rights.
ProvRem RULE 63 DECLARATORY RELIEF AND SIMILAR REMEDIES FULL TEXT
A due deference to the rights of the individual
thus requires a more careful formulation of solutions to
societal problems.
From the memorandum filed before this Court
by petitioner, it is gathered that the Sangguniang
Panlungsod had identified the cause of traffic congestion
to be the indiscriminate loading and unloading of
passengers by buses on the streets of the city proper,
hence, the conclusion that the terminals contributed to
the proliferation of buses obstructing traffic on the city
streets.
Bus terminals per se do not, however, impede
or help impede the flow of traffic. How the outright
proscription against the existence of all terminals,
apart from that franchised to petitioner, can be
considered as reasonably necessary to solve the
traffic problem, this Court has not been enlightened.
If terminals lack adequate space such that bus drivers are
compelled to load and unload passengers on the streets
instead of inside the terminals, then reasonable
specifications for the size of terminals could be instituted,
with permits to operate the same denied those which are
unable to meet the specifications.
In the subject ordinances, however,
the scope of the proscription against the maintenance
of terminals is so broad that even entities which
might be able to provide facilities better than the
franchised terminal are barred from operating at
all. (Emphasis and underscoring supplied)
As in Lucena, this Court fails to see how the prohibition against the
existence of respondents terminals can be considered a reasonable necessity
to ease traffic congestion in the metropolis. On the contrary, the elimination
of respondents bus terminals brings forth the distinct possibility and the
equally harrowing reality of traffic congestion in the common parking areas, a
case of transference from one site to another.
Less intrusive measures such as curbing the proliferation of colorum
buses, vans and taxis entering Metro Manila and using the streets for parking
and passenger pick-up points, as respondents suggest, might even be more
effective in easing the traffic situation. So would the strict enforcement of
traffic rules and the removal of obstructions from major thoroughfares.
As to the alleged confiscatory character of the E.O., it need only to
be stated that respondents certificates of public convenience confer no
property right, and are mere licenses or privileges.[52] As such, these must yield
to legislation safeguarding the interest of the people.
Even then, for reasons which bear reiteration, the MMDA cannot
order the closure of respondents terminals not only because no authority to
implement the Project has been granted nor legislative or police power been
delegated to it, but also because the elimination of the terminals does not
satisfy the standards of a valid police power measure.
Finally, an order for the closure of respondents terminals is not in
line with the provisions of the Public Service Act.
Paragraph (a), Section 13 of Chapter II of the Public Service Act
(now Section 5 of Executive Order No. 202, creating the Land Transportation
Franchising and Regulatory Board or LFTRB) vested the Public Service
Commission (PSC, now the LTFRB) with x x x jurisdiction, supervision and
control over all public services and their franchises, equipment and other
properties x x x.
Consonant with such grant of authority, the PSC was empowered
to impose such conditions as to construction, equipment, maintenance,
Page 61 of 62
service, or operation as the public interests and convenience may reasonably
require[53] in approving any franchise or privilege.

Further, Section 16 (g) and (h) of the Public Service Act[54] provided
that the Commission shall have the power, upon proper notice and hearing in
accordance with the rules and provisions of this Act, subject to the limitations
and exceptions mentioned and saving provisions to the contrary:

(g) To compel any public service to furnish

safe, adequate, and proper service as regards the
manner of furnishing the same as well as the
maintenance of the necessary material and equipment.
(h) To require any public service to establish,
construct, maintain, and operate any reasonable
extension of its existing facilities, where in the
judgment of said Commission, such extension is
reasonable and practicable and will furnish sufficient
business to justify the construction and maintenance of
the same and when the financial condition of the said
public service reasonably warrants the original
expenditure required in making and operating such
extension.(Emphasis and underscoring supplied)

The establishment, as well as the maintenance of vehicle parking

areas or passenger terminals, is generally considered a necessary service to be
provided by provincial bus operators like respondents, hence, the investments
they have poured into the acquisition or lease of suitable terminal
sites. Eliminating the terminals would thus run counter to the provisions of
the Public Service Act.

This Court commiserates with the MMDA for the roadblocks thrown
in the way of its efforts at solving the pestering problem of traffic congestion
in Metro Manila. These efforts are commendable, to say the least, in the face
of the abominable traffic situation of our roads day in and day out. This Court
can only interpret, not change, the law, however. It needs only to be reiterated
that it is the DOTC ─ as the primary policy, planning, programming,
coordinating, implementing, regulating and administrative entity to promote,
develop and regulate networks of transportation and
communications ─ which has the power to establish and administer a
transportation project like the Project subject of the case at bar.

No matter how noble the intentions of the MMDA may be then, any
plan, strategy or project which it is not authorized to implement cannot pass
muster.

WHEREFORE, the Petition is, in light of the foregoing

disquisition, DENIED. E.O. No. 179 is declared NULL and VOID for
being ultra vires.

SO ORDERED.

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