Interpleader [Rule 62]

Mesina vs. IAC, GR L-70145, 13 November 1986, 145 SCRA 497 [proper remedy against
conflicting claims]

Respondent Jose Go, purchased from Associated Bank Cashier's Check No. 011302 for
P800,000.00. Unfortunately, Jose Go left said check on the top of the desk of the bank manager when he
left the bank. The bank manager entrusted the check for safekeeping to a bank official, a certain Albert
Uy, who had then a visitor in the person of Alexander Lim. Uy had to answer a phone call on a nearby
telephone after which he proceeded to the men's room. When he returned to his desk, his visitor Lim was
already gone. When Jose Go inquired for his cashier's check from Albert Uy, the check was not in his
folder and nowhere to be found. The latter advised Jose Go to go to the bank to accomplish a "STOP
PAYMENT" order, which suggestion Jose Go immediately followed. He also executed an affidavit of loss.
Albert Uy went to the police to report the loss of the check, pointing to the person of Alexander Lim as the
one who could shed light on it.
The records of the police show that Associated Bank received the lost check for clearing, coming
from Prudential Bank, Escolta Branch. The check was immediately dishonored by Associated Bank by
sending it back to Prudential Bank, with the words "Payment Stopped" stamped on it. However, the same
was again returned to Associated Bank on and for the second time it was dishonored. Several days later,
respondent Associated Bank received a letter, dated January 9, 1984, from a certain Atty. Lorenzo
Navarro demanding payment on the cashier's check in question, which was being held by his client.
Unsure of what to do on the matter, respondent Associated Bank on February 2, 1984 filed an
action for Interpleader naming as respondent, Jose Go and one John Doe, Atty. Navarro's then unnamed
client. On even date, respondent bank received summons and copy of the complaint for damages of a
certain Marcelo A. Mesina from the Regional Trial Court (RTC) of Caloocan City. Respondent bank
moved to amend its complaint, having been notified for the first time of the name of Atty. Navarro's client
and substituted Marcelo A. Mesina for John Doe. Marcelo Mesina when asked how he came to possess
the check, he said it was paid to him by Alexander Lim in a "certain transaction".
Meanwhile, Jose Go filed his answer on February 24, 1984 in the Interpleader Case and moved
to participate as intervenor in the complain for damages. Albert Uy filed a motion of intervention and
answer in the complaint for Interpleader.. Petitioner instead of filing his answer to the complaint in the
interpleader filed on May 17, 1984 an Omnibus Motion to Dismiss Ex Abudante Cautela alleging lack of
jurisdiction in view of the absence of an order to litigate, failure to state a cause of action and lack of
personality to sue. Respondent bank in the other civil case for damages moved to dismiss suit in view of
the existence already of the Interpleader case.
The trial court in the interpleader case issued an order dated July 13, 1984, denying the motion to
dismiss of petitioner Mesina and ruling that respondent bank's complaint sufficiently pleaded a cause of
action for interpleader.
Petitioner Mesina filed a petition for certiorari with preliminary injunction with IAC to set aside 1)
order of respondent court denying his omnibus Motion to Dismiss 2) order of 3) the order of default
against him.
IAC rendered its decision dimissing the petition for certiorari.
ISSUE:
WON the orders of respondent Judge of RTC Manila may be annulled by giving due course to the
interpleader suit and declaring petitioner in default.
HELD:
No. Petitioner stubbornly insists that there is no showing of conflicting claims and interpleader is
out of the question. There is enough evidence to establish the contrary. Considering the aforementioned
facts and circumstances, respondent bank merely took the necessary precaution not to make a
mistake as to whom to pay and therefore interpleader was its proper remedy. It has been shown
that the interpleader suit was filed by respondent bank because petitioner and Jose Go were both laying
their claims on the check, petitioner asking payment thereon and Jose Go as the purchaser or owner. The
allegation of petitioner that respondent bank had effectively relieved itself of its primary liability under the
check by simply filing a complaint for interpleader is belied by the willingness of respondent bank to issue
a certificate of time deposit in the amount of P800,000 representing the cashier's check in question in the
name of the Clerk of Court of Manila to be awarded to whoever will be found by the court as validly
entitled to it. Said validity will depend on the strength of the parties' respective rights and titles
thereto. Bank filed the interpleader suit not because petitioner sued it but because petitioner is
laying claim to the same check that Go is claiming. On the very day that the bank instituted the case
in interpleader, it was not aware of any suit for damages filed by petitioner against it as supported by the
fact that the interpleader case was first entitled Associated Bank vs. Jose Go and John Doe, but later on
changed to Marcelo A. Mesina for John Doe when his name became known to respondent bank.
The records of the case show that respondent bank had to resort to details in support of its action
for Interpleader. Before it resorted to Interpleader, respondent bank took a precautionary and necessary
measures to bring out the truth.
Arreza vs. Diaz, Jr, GR 133113, 30 August 2001 [interpleading parties may file counter-
claim, cross-claims or third party complaint for complete adjudication of the case]
FACTS:
Bliss Development Corporation (BDC) is the owner of a housing unit. In the course of a
case involving a conflict of ownership between petitioner Edgar H. Arreza and respondent
Montano M. Diaz, Jr., 4 docketed as Civil Case No. 94-2086 before the Regional Trial Court of
Makati, Bliss Development Corporation filed a complaint for interpleader. In its decision, the trial
court granted cognizance of the interpleader Bliss and resolved the conflict as between the
parties herein in favor of petitioner Arreza.
The decision became final and was duly executed with Bliss executing a Contract to Sell
the aforementioned property to petitioner Arreza. Respondent Diaz was constrained to deliver
the property with all its improvements to petitioner.
Thereafter, respondent Diaz filed a complaint against Bliss Development Corporation
and Edgar H. Arreza in the Regional Trial Court of Makati, docketed as Civil Case No. 96-1372.
He sought to hold Bliss Development Corporation and petitioner Arreza liable for
reimbursement to him of P1,706,915;58 representing the cost of his acquisition and
improvements on the subject property with interest at 8% per annum.
Petitioner Arreza filed a Motion to Dismiss the case, citing as grounds res adjudicata or
conclusiveness of the judgment in the interpleader case as well as lack of cause of action. This
was however denied for lack of merit. The case was then brought before the Court of Appeals
which was likewise denied for lack of merit. The Court of Appeals stated that the decision
invoked by the petitioner as res adjudicata resolved only the issue of who between Edgar
H. Arreza and Montano Diaz has the better right over the property under litigation. It did
not resolve the rights and obligations of the parties. The action filed by Montano M. Diaz
against Bliss Development Corporation, et al. seeks principally the collection of damages in the
form of the payments Diaz made to the defendant and the value of the improvements he
introduced on the property matters that were not adjudicated upon in the previous case for
interpleader.
Hence, this petition.
ISSUE:
W/N respondents claims for reimbursement against petitioner is barred by res
adjudicata
HOLDING:
The claim for reimbursement is now barred by res adjudicata.
The elements of res adjudicata are: (a) that the former judgment must be final; (b) the
court which rendered the judgment had jurisdiction over the parties and the subject matter; (c) it
must be a judgment on the merits; and (d) there must be, between the first and second causes
of action, identity of the parties, subject matter, and cause of action.
Let us now relate the elements with the facts in the case at bar.
(a) The prior case of interpleaded filed with the RTC of Makati was settled with finality;
therefore, the judgment therein is now final.
(b) When said court rendered its judgment, it had acquired jurisdiction over the parties
and the subject matter. This was evidenced by the filing of respondents answer in said case
before the Makati RTC. By filing his answer to secure affirmative relief against petitioner,
respondent is now estopped from challenging the jurisdiction of said court after it had decided
the case against him. Surely we cannot condone here the undesirable practice of a party
submitting his case for decision and then accepting the judgment only if favorable, but attacking
it on grounds of jurisdiction when adverse.
(c) the judgment in the interpleaded case was based on the merits.
(d) Further, respondent wants Us to believe that there is no identity of causes of action
between the case filed before the RTC of Makati and the present case because the former
involved a complaint for interpleader while the latter now involves an action for sum of money
and damages., According to respondent Diaz, it was incumbent upon petitioner as party in the
earlier case to put in issue respondents demands for reimbursement. As stated by the Court of
Appeals, the court in a complaint for interpleader shall determine the rights and obligations of
the parties and adjudicate their respective claims. Such rights, obligations, and claims could
only be adjudicated if put forward by the aggrieved party in assertion of his rights. That party in
this case referred to respondent Diaz. The second paragraph of Section 5 of Rule 62 of the
1997 Rules of Civil Procedure provides that the parties in an interpleader action may file
counterclaims, cross-claims, third party complaints and responsive pleadings thereto,
"as provided by these Rules." The second paragraph was added to Section 5 to expressly
authorize the additional pleadings and claims enumerated therein, in the interest of a complete
adjudication of the controversy and its incidents. Pursuant to said Rules, respondent should
have filed his claims against petitioner Arreza in the interpleader action.
Having failed to set up his claim for reimbursement, said claim of respondent Diaz
being in the nature of a compulsory counterclaim is now barred.
To sum up, in the present case, we find there is an identity of causes of action between
Civil Case No. 94-2086 and Civil Case No. 96-1372. Respondent Diaz's cause of action in the
prior case, now the crux of his present complaint against petitioner, was in the nature of an
unpleaded compulsory counterclaim, which is now barred. There being a former final judgment
on the merits in the prior case, the present complaint of respondent herein (Diaz) against
petitioner Arreza docketed as Civil Case No. 96-1372 before the Regional Trial of Makati,
Branch 59 should be dismissed on the ground of res adjudicata.
WHEREFORE, the instant petition is GRANTED. The decision dated December 24,
1997 and the resolution dated March 6, 1998 of the Court of Appeals in CA-G.R. SP No. 43895
are REVERSED and SET ASIDE. Civil Case No. 96-1372 before the Regional Trial Court of
Makati City, Branch 59, is hereby ordered DISMISSED as against herein petitioner Edgar H.
Arreza.


Declaratory Relief [Rule 63]

EufemiaAlmeda vs. Bathala marketing Industries, GR 150806, 28 January 2008
[Defintion; Requisites]


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

During the effectivity of the contract, Ponciano died.
Thereafter, respondent dealt with petitioners. In a letter
7
dated December 29,
1997, petitioners advised respondent that the former shall assess and collect Value
Added Tax (VAT) on its monthly rentals. In response, respondent contended that
VAT may not be imposed as the rentals fixed in the contract of lease were supposed
to include the VAT therein, considering that their contract was executed on May 1,
1997 when the VAT law had long been in effect.
8

On January 26, 1998, respondent received another letter from petitioners
informing the former that its monthly rental should be increased by 73% pursuant
to condition No. 7 of the contract and Article 1250 of the Civil Code. Respondent
opposed petitioners demand and insisted that there was no extraordinary inflation
to warrant the application of Article 1250 in light of the pronouncement of this
Court in various cases.
9

Respondent refused to pay the VAT and adjusted rentals as demanded by
petitioners but continued to pay the stipulated amount set forth in their contract.
On February 18, 1998, respondent instituted an action for declaratory relief for
purposes of determining the correct interpretation of condition Nos. 6 and 7 of the
lease contract to prevent damage and prejudice.
10
The case was docketed as Civil
Case No. 98-411 before the RTC of Makati.
On March 10, 1998, petitioners in turn filed an action for ejectment, rescission
and damages against respondent for failure of the latter to vacate the premises
after the demand made by the former.
11
Before respondent could file an answer,
petitioners filed a Notice of Dismissal.
12
They subsequently refiled the complaint
before the Metropolitan Trial Court of Makati; the case was raffled to Branch 139
and was docketed as Civil Case No. 53596.
Petitioners later moved for the dismissal of the declaratory relief case for being
an improper remedy considering that respondent was already in breach of the
obligation and that the case would not end the litigation and settle the rights of the
parties. The trial court, however, was not persuaded, and consequently, denied the
motion.

Issue: whether declaratory relief is an improper remedy considering that respondent was
already in breach of the obligation
Held: Actions; Declaratory Relief; Words and Phrases; Declaratory Relief,
Defined; The only issue that may be raised in a petition for declaratory relief 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.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.

Requisites.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.
Malana vs. Tappa, GR 181303, 17 September 2009 [Proper party, three remedies similar to
declaratory relief, reformation, quieting of title and consolidation; jurisdiction]
Facts: Petitioners Carmen Danao Malana alleged to be the owners of a land in Tugegarao which they
inherited from Anastacio Danao. During the lifetime of Danao, he allowed Consuelo Pauig (family
member of Tappa) to build on and occupy the southern portion of the subject property. Danao and
Consuelo agreed that the latter would vacate the said land at any time that Danao and his heirs might
need it. Danao heirs claimed that respondents Benigno Tappa, et al. continued to occupy the subject
property even after Consuelos death, building their residences thereon using permanent materials.
Danao heirs also learned that Tappa were claiming ownership over the subject property. Averring that
they already needed it, Danao heirs demanded that respondents vacate the same. The call was
unheeded. Meanwhile, Danao heirs referred their land dispute to the Lupong Tagapamayapa. During the
conciliation proceedings, respondents asserted that they owned the subject property and presented
documents ostensibly supporting their claim of ownership. The heirs opposed this, saying that the
documents were falsified and highly dubious. This notwithstanding, Tappa, et al. created a cloud upon the
heirs title to the property. Thus, the heirs filed a case for Reivindicacion, Quieting of Title, and Damages
in the RTC.

Issue:WON the judge commit grave abuse of discretion in motu proprio dismissing the complaint for lack
of jurisdiction.

Held: An action for declaratory relief should be filed by a person interested under a deed, a will, a
contract or other written instrument, and whose rights are affected by a statute, an executive order, a
regulation or an ordinance. The relief sought under this remedy includes the interpretation and
determination of the validity of the written instrument and the judicial declaration of the parties rights or
duties thereunder. Petitions for declaratory relief are governed by Rule 63. Section 1 states that an
action for the reformation of an instrument, to quiet title, and to consolidate ownership in a sale
with a right to repurchase may be brought under the RTC. These remedies are considered
similar to declaratory relief because they result in the adjudication of the legal rights of the
litigants, often without the need of execution. Whereas the Rules of Court uses may, as the
amended Judicial Reorganization Act uses the word shall in determining jurisdiction. JRA explicitly
requires the MTC to exercise exclusive original jurisdiction over all civil actions which involve title
to or possession of real property where the assessed value does not exceed P20,000 (OMM) or
P50,000 (MM). In this case, the assessed value of the subject property is only P410.00; therefore,
the jurisdiction is with the MTC, not the RTC.

Further, an action for declaratory relief presupposes that there has been no actual breach of the
instruments involved or of rights arising thereunder. 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, and not to settle issues arising
from an alleged breach thereof. Where the law or contract has already been contravened prior to the
filing of an action for declaratory relief, the courts can no longer assume jurisdiction over the action. In
the present case, the case for quieting of title was filed after Danao heirs already demanded, and Tappa
refused to vacate the subject property. Since the heirs had already been deprived of the possession of
their property, the proper remedy for them is the filing of an accion publiciana or an accion reivindicatoria,
not a case for declaratory relief. An accion publiciana is a suit for the recovery of possession, filed
one year after the occurrence of the cause of action or from the unlawful withholding of
possession of the realty. Jurisdiction over such an action would depend on the value of the property
involved. Given that the property is only at P410.00, then the MTC, not the RTC, has jurisdiction over an
action to recover the same.


Ombudsman vs. Ibay, GR 137538, 3 September 2001 [relief incapable of pecuniary
estimation; jurisdiction

Facts:
Sometime in 1998, petitioner conducted an investigation on the alleged scam on the
Public Estates Authority-Amari Coastal Bay Development Corporation. The case, entitled Fact-
Finding and Intelligence Bureau vs. Amadeo Lagdameo, et al., was docketed as OMB-0-97-
0411. Initial result of the investigation revealed that the alleged anomaly was committed through
the issuance of checks which were subsequently deposited in several financial institutions. On
April 29, 1998, petitioner issued an Order directing private respondent Lourdes Marquez, branch
manager of Union Bank of the Philippines branch at Julia Vargas Avenue, Pasig City, to
produce several bank documents for inspection relative to Account Nos. 011-37270-5, 240-
020718, 245-30317-3 and 245-30318-1, reportedly maintained in the said branch. The
documents referred to include bank account application forms, signature cards, transactions
history, bank statements, bank ledgers, debit and credit memos, deposit and withdrawal slips,
application for purchase of managers checks, used managers checks and check microfilms.
The inspection would be done in camera wherein the bank records would be examined without
bringing the documents outside the bank premises. Its purpose was to identify the specific bank
records prior to the issuance of the required information not in any manner needed in or relevant
to the investigation.
[1]

Private respondent failed to comply with petitioners order. She explained that the subject
accounts pertain to International Corporate Bank (Interbank) which merged with Union Bank in
1994. She added that despite diligent efforts, the bank could not identify these accounts since
the checks were issued in cash or bearer forms. She informed petitioner that she had to first
verify from the Interbank records in its archives the whereabouts of said accounts.
[2]

Petitioner found private respondents explanation unacceptable. Petitioner reminded private
respondent that her acts constitute disobedience or resistance to a lawful order and is
punishable as indirect contempt under Section 3 (b), Rule 71 of the Revised Rules of Court, in
relation to Section 15 (9) of R.A. 6770 (Ombudsman Act of 1989). The same might also
constitute willful obstruction of the lawful exercise of the functions of the Ombudsman, which is
punishable under Section 36 of R.A. 6770. On June 16, 1998, petitioner issued an order to
private respondent to produce the requested bank documents for in camera inspection. In the
event of her failure to comply as directed, private respondent was ordered to show cause why
she should not be cited for contempt and why she should not be charged for obstruction.
[3]

Instead of complying with the order of petitioner, private respondent filed a petition for
declaratory relief with an application for temporary restraining order and/or preliminary injunction
before the Regional Trial Court of Makati City, Branch 135, presided by respondent Judge
Francisco Ibay. The petition was docketed as Civil Case No. 98-1585. In her petition, private
respondent averred that under Sections 2 and 3 of R.A. 1405 (Law on Secrecy of Bank
Deposits), she had the legal obligation not to divulge any information relative to all
deposits of whatever nature with banks in the Philippines. But petitioners Order cited
Section 15 (8) of R.A. 6770 stating that the Ombudsman had the power to examine and have
access to bank accounts and records. Private respondent, therefore, sought a definite ruling
and/or guidelines as regards her rights as well as petitioners power to inspect bank deposits
under the cited provisions of law. Meanwhile, private respondent filed with this Court a petition
for certiorari and prohibition, assailing petitioners order to institute indirect contempt
proceedings against her.
[4]

Petitioner moved to dismiss the aforesaid petition for declaratory relief on the ground that
the RTC has no jurisdiction over the subject matter thereof. In an order dated August 19, 1998,
now being assailed, public respondent denied petitioners motion to dismiss. Petitioner then filed
an ex-parte motion for extended ruling. On December 22, 1998, public respondent issued an
order declaring that it has jurisdiction over the case since it is an action for declaratory relief
under Rule 63 of the Rules of Court.
Seasonably, petitioner filed before this Court the instant petition assailing the Orders dated
August 19, 1998 and December 22, 1998 of public respondent on the ground that public
respondent assumed jurisdiction over the case and issued orders with grave abuse of discretion
and clear lack of jurisdiction. Petitioner sought the nullification of the impugned orders, the
immediate dismissal of Civil Case No. 98-1585, and the prohibition of public respondent from
exercising jurisdiction on the investigation being conducted by petitioner in the alleged PEA-
AMARI land scam.
The only question raised by petitioner for resolution is whether or not public respondent
acted without jurisdiction and/or with grave abuse of discretion in entertaining the cited petition
for declaratory relief.
Petitioner contends that the RTC of Makati City lacks jurisdiction over the petition for
declaratory relief. It asserts that respondent judge should have dismissed the petition outright in
view of Section 14 of R.A. 6770.
Section 14 of R.A. 6770 provides: Restrictions.- No writ of injunction shall be issued by any
court to delay an investigation being conducted by the Ombudsman under this Act,
unless there is a prima facie evidence that the subject matter of the investigation is
outside the jurisdiction of the Office of the Ombudsman.
No court shall hear any appeal or application for remedy against the decision or findings of the
Ombudsman, except the Supreme Court, on pure question of law.

ISSUE: WON Petitioners invocation of the provision is correct

RULING: Petitioners invocation of the aforequoted statutory provision is misplaced. The
special civil action of declaratory relief falls under the exclusive jurisdiction of the
Regional Trial Courts.
[5]
It is not among the actions within the original jurisdiction of the
Supreme Court even if only questions of law are involved.
[6]
Similarly, 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.
The requisites of an action for declaratory relief are: (1) there must be a justiciable
controversy; (2) the controversy must be between persons whose interests are adverse; (3) that
the party seeking the relief has a legal interest in the controversy; and (4) that the issue is ripe
for judicial determination.
[7]
In this case, the controversy concerns the extent of the power
of petitioner to examine bank accounts under Section 15 (8) of R.A. 6770vis--vis the
duty of banks under Republic Act 1405 not to divulge any information relative to deposits
of whatever nature. The interests of the parties are adverse considering the antagonistic
assertion of a legal right on one hand, that is the power of Ombudsman to examine bank
deposits, and on the other, the denial thereof apparently by private respondent who refused to
allow petitioner to inspect in camera certain bank accounts. The party seeking relief, private
respondent herein, asserts a legal interest in the controversy. The issue invoked is ripe for
judicial determination as litigation is inevitable. Note that petitioner has threatened private
respondent with indirect contempt and obstruction charges should the latter not comply with
its order.
Circumstances considered, we hold that public respondent has jurisdiction to take
cognizance of the petition for declaratory relief. Nor can it be said that public respondent
gravely abused its discretion in doing so. We are thus constrained to dismiss the instant petition
for lack of merit.
In any event, the relief being sought by private respondent in her action for declaratory relief
before the RTC of Makati City has been squarely addressed by our decision in Marquez vs.
Desierto.
[8]
In that case, we ruled that before an in camera inspection of bank accounts may be
allowed, there must be a pending case before a court of competent jurisdiction. Further, the
account must be clearly identified, and the inspection limited to the subject matter of the
pending case before the court of competent jurisdiction. The bank personnel and the account
holder must be notified to be present during the inspection, and such inspection may cover only
the account identified in the pending case. In the present case, since there is no pending
litigation yet before a court of competent authority, but only an investigation by the
Ombudsman on the so-called scam, any order for the opening of the bank account for
inspection is clearly premature and legally unjustified.

Commisioner of Customs vs. Hyper Mix Feeds Corp., GR 179579, 1 February 2012
[necessary facts for an action for declaratory relief]
Petitioner Commissioner of Customs issued CMO 27-2003. Under said Memorandum, for tariff
purposes, wheat was classified according to the following: (1) importer or consignee; (2) country of origin;
and (3) port of discharge.
5
The regulation provided an exclusive list of corporations, ports of discharge,
commodity descriptions and countries of origin. Depending on these factors, wheat would be classified
either as food grade or feed grade. The corresponding tariff for food grade wheat was 3%, for feed grade,
7%.
Respondent filed a Petition for Declaratory Relief
7
with the Regional Trial Court. It anticipated the
implementation of the regulation on its imported and perishable Chinese milling wheat in transit from
China.

Respondent contended that CMO 27-2003 was issued without following the mandate of the
Revised Administrative Code on public participation, prior notice, and publication or registration with the
University of the Philippines Law Center.
RTC issued a Temporary Restraining Order (TRO) effective for twenty (20) days from notice.
9

Petitioners thereafter filed a Motion to Dismiss.
10
They alleged that: (1) the RTC did not have jurisdiction
over the subject matter of the case, because respondent was asking for a judicial determination of the
classification of wheat; (2) an action for declaratory relief was improper;
On 28 February 2005, the parties agreed that the matters raised in the application for preliminary
injunction and the Motion to Dismiss would just be resolved together in the main case. Thus, on 10 March
2005, the RTC rendered its Decision without having to resolve the application for preliminary injunction
and the Motion to Dismiss.
Trial court ruled in favor of respondent petition was GRANTED and the subject Customs
Memorandum Order 27-2003 was declared INVALID and OF NO FORCE AND EFFECT. Petitioners
appealed to the CA, raising the same allegations in defense of CMO 27-2003.
14
The appellate court,
however, dismissed the appeal.Hence, this Petition.
ISSUE:
Whether or not an action for declaratory relief was proper
HELD:
Rule 63, Section 1 provides:
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.
The requirements of an action for declaratory relief are as follows: (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.
15
We find that the Petition filed by respondent before the lower court meets
these requirements.
First, the subject of the controversy is the constitutionality of CMO 27-2003 issued by petitioner
Commissioner of Customs.
Second, the controversy is between two parties that have adverse interests. Petitioners are summarily
imposing a tariff rate that respondent is refusing to pay.
Third, it is clear that respondent has a legal and substantive interest in the implementation of CMO 27-
2003.
Finally, the issue raised by respondent is ripe for judicial determination, because litigation is
inevitable
19
for the simple and uncontroverted reason that respondent is not included in the enumeration
of flour millers classified as food grade wheat importers
It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of the
case.

Macasiano vs. NHA, GR 107921, 1 July 1993 [treating declaratory relief as one for
prohibition]
Facts:
Petitioner seeks to declare unconstitutional Sections 28 and 44 of Republic Act No. 7279,
otherwise known as the Urban Development and Housing Act of 1992. He predicates his locust standi on
his being a consultant of the Department of Public Works and Highways (DPWH) and his being a
taxpayer. Petitioner alleges that said Sections 28 and 44 "contain the seeds of a ripening controversy that
serve as drawback" to his "tasks and duties regarding demolition of illegal structures"; because of the
said sections, he "is unable to continue the demolition of illegal structures which he assiduously and
faithfully carried out in the past."As a taxpayer, he alleges that "he has a direct interest in seeing to it that
public funds are properly and lawfully disbursed."
SEC. 28. Eviction and Demolition. Eviction or demolition as a practice shall be discouraged. Eviction or
demolition, however, may be allowed under the following
Sec. 44. Moratorium on Eviction and Demolition. There shall be a moratorium on the eviction of all
program beneficiaries and on the demolition of their houses or dwelling units for a period of three (3)
years from the effectivity of this Act: Provided, That the moratorium shall not apply to those persons who
have constructed their structures after the effectivity of this Act and for cases enumerated in Section 28
hereof.
Petitioner maintains that the said provisions are unconstitutional because:
(a) They deprive the government, and more so, private property owners of their property without due
process of law and without compensation;
(b) They reward, instead of punish, what this Honorable Court has categorically declared as unlawful
acts;
(c) They violate the prohibition against legislation that" takes away one's property to be given to plain
interlopers;
(d) They sweep over broadly over legitimate concerns of the police power of the State; and
(e) They encroach upon the judicial power to its valid judgments and orders.
Respondent in its comment said that Sec. 28 only provides for the "humanitarian approach" towards less
privileged, citizens and does not in fact prohibit but merely discourages eviction or demolition, while
Section 44 only covers program beneficiaries.
OSG then filed its comment stating that instant petition is devoid of merit for non-compliance with the
essential requisites for the exercise of judicial review in cases involving the constitutionality of a law. He
contends that there is no actual case or controversy with litigants asserting adverse legal rights or
interests, that the petitioner merely asks for an advisory opinion, that the petitioner is not the proper party
to question the Act as he does not state that he has property "being squatted upon" and that there is no
showing that the question of constitutionality is the very lis mota presented.
Issue: 1. WON the SC may act upon the constitutionality of the Act of the legislature.
2. WON a declaratory relief may be availed of by the petitioner
Held:
1. The essential requisites for a successful judicial inquiry into the constitutionality of a law are: (a) the
existence of an actual case or controversy involving a conflict of legal rights susceptible of judicial
determination, (b) the constitutional question must be raised by a proper party, (c) the constitutional
question must be raised at the opportunity, and (d) the resolution of the constitutional question must be
necessary to the decision of the case. A proper party is one who has sustained or is in danger of
sustaining an immediate injury as a result of the acts or measures complained of.
It is easily discernible in the instant case that the first two (2) fundamental requisites are absent. There is
no actual controversy. Moreover, petitioner does not claim that, in either or both of the capacities in which
he is filing the petition, he has been actually prevented from performing his duties as a consultant and
exercising his rights as a property owner because of the assertion by other parties of any benefit under
the challenged sections of the said Act.
2. No. The essential requisites of a petition for declaratory relief are controversy, (a) there must be a
justiciable controversy,(b)the controversy must be between persons whose interests are adverse and (c)
the party seeking declaratory relief must have a legal interest in the controversy.
Furthermore, an action for declaratory relief does not fall within the original jurisdiction of the Supreme
Court even if only questions of law are involved. True, we have said that such a petition may be treated
as one for prohibition or mandamus if it has far reaching implications and raises questions that need to be
resolved; but the exercise of such discretion presupposes, at the outset, that the petition is otherwise
viable or meritorious.
Lastly, the petitioner is not a proper party since his authority as a consultant does not divest him of
authority to demolish obstructions and encroachments on properties of the public domain, much less on
private lands.
Wilson Gamboa vs. Finance Secretary, GR 176579, 28 June 2011 [treating declaratory
relief as one for mandamus if it has far reaching implications]
This resolves the motions for reconsideration of the 28 June 2011 Decision filed by (1) the
Philippine Stock Exchange's (PSE) President,
1
(2) Manuel V. Pangilinan (Pangilinan),
2
(3) Napoleon L.
Nazareno (Nazareno ),
3
and ( 4) the Securities and Exchange Commission (SEC)
4
(collectively, movants ).
The Office of the Solicitor General (OSG) initially filed a motion for reconsideration on behalf of
the SEC,
5
assailing the 28 June 2011 Decision. However, it subsequently filed a Consolidated Comment
on behalf of the State, declaring expressly that it agrees with the Court's definition of the term "capital" in
Section 11, Article XII of the Constitution. During the Oral Arguments on 26 June 2012, the OSG
reiterated its position consistent with the Court's 28 June 2011 Decision.
We deny the motions for reconsideration.
ISSUE: WON the interpretation of the term capital in Section 11, Article XII of the Constitution has far-
reaching implications to the national economy thus justify the treatment of petition for declaratory relief as
one for mandamus.
HELD:
Far-reaching implications of the legal issue justify
treatment of petition for declaratory relief as one for mandamus.
As we emphatically stated in the 28 June 2011 Decision, 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 Philippine
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 threshold legal issue presented in this case.
Contrary to Pangilinans narrow view, the serious economic consequences resulting in the interpretation
of the term "capital" in Section 11, Article XII of the Constitution undoubtedly demand an immediate
adjudication of this issue. Simply put, the far-reaching implications of this issue justify the treatment of the
petition as one for mandamus.
7

In Luzon Stevedoring Corp. v. Anti-Dummy Board,
8
the Court deemed it wise and expedient to resolve the
case although the petition for declaratory relief could be outrightly dismissed for being procedurally
defective. There, appellant admittedly had already committed a breach of the Public Service Act in
relation to the Anti-Dummy Law since it had been employing non-American aliens long before the
decision in a prior similar case. However, the main issue in Luzon Stevedoring was of transcendental
importance, involving the exercise or enjoyment of rights, franchises, privileges, properties and
businesses which only Filipinos and qualified corporations could exercise or enjoy under the Constitution
and the statutes. Moreover, the same issue could be raised by appellant in an appropriate action. Thus,
in Luzon Stevedoring the Court deemed it necessary to finally dispose of the case for the guidance of all
concerned, despite the apparent procedural flaw in the petition.
The circumstances surrounding the present case, such as the supposed procedural defect of the petition
and the pivotal legal issue involved, resemble those in Luzon Stevedoring. Consequently, in the interest
of substantial justice and faithful adherence to the Constitution, we opted to resolve this case for the
guidance of the public and all concerned parties.
Customs vs. Cloribel, GR L-21036, 30 June 1977 [third party complaint is not proper when
the main case is declaratory relief]
FACTS:
A special civil action for declaratory relief was pending before respondent court as Civil
Case No. 52318 against private respondents wherein the petitioner in said case, one Ofilada,
sought a judicial declaration as to matters pertaining to the terms of payment owing private
respondents and other matters relating to the allocation granted to purchase reparation goods.
In the meantime, an order had been issued ordering Ofilada to deliver to private respondents
the second shipment of goods pursuant to their contract. Ofilada filed a motion for
reconsideration on the said order but was unresolved and instead the court issued another
order holding in abeyance all incidents pending resolution until after the parties have decided
whether to settle their dispute or not. This order, in effect, freezed the order of release of the
goods to private respondent.
Thereafter, private respondents, in the special civil action for declaratory relief already
being tried but not yet decided upon, filed an ex-parte motion asking permission to file a third-
party complaint which was forthwith granted by respondent judge. Private respondents alleged
in the third-party complaint 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.
Respondent judge rendered his decision finding merit in the writ of preliminary injunction
and ordered herein petitioner to release and deliver to herein private respondents the goods
consisting of rayon cloths.
The writ was the served to petitioners but compliance therewith did not materialized.
Instead, a motion to lift the writ was filed by them but respondent court denied the same. Hence,
this appeal.
ISSUE:
W/N respondent court gravely abused its discretion in allowing the filing of and in
admitting the third-party complaint of the Cochingyans
HOLDING:
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.
As already stated, Civil Case No. 52318 was a special civil action for declaratory
relief. The only purpose thereof was to secure from the court the proper interpretation or
construction of the contract. No positive or affirmative, much less, any material relief was
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.
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 in
respect to the claim of the plaintiff against him. In the case at bar, this relief cannot be granted
because in a declaratory relief proceeding, to reiterate, the court is merely confined to the
interpretation of the terms of the contract.
WHEREFORE, the decision of the respondent court is SET ASIDE for being null and
void. Respondent judge is likewise enjoined to desist from carrying out any of them into effect.
Baguio Citizens Action Inc., et.al. vs. City Council of Baguio, GR L-27247, 20 April 1983
[non-joinder of parties of interest who may be affected by declaratory judgment is not a
jurisdictional defect]
FACTS:
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
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. [Baguio Citizens Action, Inc. vs. The City
Council, 121 SCRA 368(1983)]
ISSUE: WHETHER OR NOT THE NON-INCLUSION OF THE PARTIES IN INTEREST TO THE SUIT IS A
JURISDICTIONAL DEFECT
Same; Jurisdiction; Action; Squatters; Declaratory Relief; The non-inclusion of the squatters mentioned
in the questioned anti-squatting ordinance as party-defendants cannot defeat the jurisdiction of the
court to resolve the petition for declaratory relief on the validity of said ordinance. If at all, the case may
be dismissed under Sec. 5 of Rule 64 which gives courts the power to refuse to declare rights or construe
instruments.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 defeat. 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.
Same; Same; Same; Same; Same; Squatters are not necessary parties to a petition for declaratory relief
filed to determine the validity of an Anti-Squatting Ordinance.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. 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. [Baguio Citizens Action, Inc. vs. The City Council, 121 SCRA 368(1983)]