1.
Tano vs Socrates
FACTS:
On Dec 15, 1992, the Sangguniang Panglungsod ng Puerto Princesa enacted an
ordinance banning the shipment of all live fish and lobster outside Puerto Princesa City
from January 1, 1993 to January 1, 1998.
Subsequently the Sangguniang Panlalawigan, Provincial Government of Palawan
enacted a resolution prohibiting the catching, gathering, possessing, buying, selling, and
shipment of a several species of live marine coral dwelling aquatic organisms for 5 years,
in and coming from Palawan waters.
Petitioners filed a special civil action for certiorari and prohibition, praying that the court
declare the said ordinances and resolutions as unconstitutional on the ground that the
said ordinances deprived them of the due process of law, their livelihood, and unduly
restricted them from the practice of their trade, in violation of Section 2, Article XII and
Sections 2 and 7 of Article XIII of the 1987 Constitution; Second, Office Order No. 23
contained no regulation nor condition under which the Mayors permit could be granted
or denied; in other words, the Mayor had the absolute authority to determine whether or
not to issue permit. Third, as Ordinance No. 2 of the Province of Palawan altogether
prohibited the catching, gathering, possession, buying, selling and shipping of live
marine coral dwelling organisms, without any distinction whether it was caught or
gathered through lawful fishing method, the Ordinance took away the right of
petitioners-fishermen to earn their livelihood in lawful ways; and insofar as petitioners-
members of Airline Shippers Association are concerned, they were unduly prevented
from pursuing their vocation and entering into contracts which are proper, necessary,
and essential to carry out their business endeavors to a successful conclusion.
Public respondents Governor Socrates and Members of the Sangguniang Panlalawigan
of Palawan defended the validity of Ordinance No.2, Series as a valid exercise of the
Provincial Governments power under the general welfare clause. Respondents likewise
maintained that there was no violation of due process and equal protection clauses of the
Constitution. As to the former, public hearings were conducted before the enactment of
the Ordinance which, undoubtedly, had a lawful purpose and employed reasonable
means.
There are actually two sets of petitioners in this case. Those who were criminally charged
with violating Sangguniang Panlalawigan Resolution No. 33 and Ordinance No. 2,
Series of 1993, of the Province of Palawan, in Criminal Case No. 93-05-C of the 1st
Municipal Circuit Trial Court of Palawan and Robert Lim and Virginia Lim who were
charged with violating City Ordinance No. 15-92 of Puerto Princesa City and Ordinance
No. 2, Series of 1993, of the Province of Palawan before the Office of the City Prosecutor
of Puerto Princesa.
The second set of petitioners is composed of the rest of the petitioners numbering
seventy-seven (77), all of whom, except the Airline Shippers Association of Palawan --
an alleged private association of several marine merchants -- are natural persons who
claim to be fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the prosecution,
trial and determination of the criminal cases until the constitutionality or legality of the
Ordinances they allegedly violated shall have been resolved. The second set of
petitioners merely claim that they being fishermen or marine merchants, they
would be adversely affected by the ordinances.
ISSUE(S): WON the ordinance is unconstitutional
HELD: Nope. Petition dismissed and TRO lifted.
RATIO:
As to the first set of petitioners, this special civil for certiorari must fail on the ground
of prematurity amounting to a lack of cause of action. There is no showing that the said
petitioners, as the accused in the criminal cases, have filed motions to quash the
informations therein and that the same were denied. The ground available for such
motions is that the facts charged therein do not constitute an offense because the
ordinances in question are unconstitutional. It cannot then be said that the lower courts
acted without or in excess of jurisdiction or with grave abuse of discretion to justify
recourse to the extraordinary remedy of certiorari or prohibition. It must further be
stressed that even if the petitioners did file motions to quash, the denial thereof would
not forthwith give rise to a cause of action under Rule 65 of the Rules of Court. The
general rule is that where a motion to quash is denied, the remedy therefrom is not
certiorari, but for the party aggrieved thereby to go to trial without prejudice to
reiterating special defenses involved in said motion, and if, after trial on the merits of
adverse decision is rendered, to appeal therefrom in the manner authorized by law. And
, even where in an exceptional circumstance such denial may be the subject of a special
civil action for certiorari, a motion for reconsideration must have to be filed to allow the
court concerned an opportunity to correct its errors, unless such motion may be dispensed
with because of existing exceptional circumstances. Finally, even if a motion for
reconsideration has been filed and denied, the remedy under Rule 65 is still unavailable
absent any showing of the grounds provided for in Section 1 thereof. For obvious
reasons, the petition at bar does not, and could not have , alleged any of such grounds.
As to the second set of petitioners, the instant petition is obviously one for
DECLARATORY RELIEF, i.e., for a declaration that the Ordinances in question
are a nullity ... for being unconstitutional. As such, their petition must likewise fail,
as this Court is not possessed of original jurisdiction over petitions for declaratory
relief even if only questions of law are involved, it being settled that the Court
merely exercises appellate jurisdiction over such petitions.
It is of course settled that laws (including ordinances enacted by local government units)
enjoy the presumption of constitutionality. To overthrow this presumption, there must
be a clear and unequivocal breach of the Constitution, not merely a doubtful or
argumentative contradiction. In short, the conflict with the Constitution must be shown
beyond reasonable doubt. Where doubt exists, even if well founded, there can be no
finding of unconstitutionality. To doubt is to sustain.
Take note:
Both Ordinances have two principal objectives or purposes:
to establish a closed season for the species of fish or aquatic animals covered therein
for a period of five years, and
to protect the corals of the marine waters of the City of Puerto Princesa and the Province
of Palawan from further destruction due to illegal fishing activities. It is incorrect to say
that the challenged Ordinance of the City of Puerto Princesa is invalid or unenforceable
because it was not approved by the Secretary of the DENR. If at all, the approval that
should be sought would be that of the Secretary of the Department of Agriculture (not
DENR) of municipal ordinances affecting fishing and fisheries in municipal waters. In
closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa and
Sangguniang Panlalawigan of the Province of Palawan for exercising the requisite
political will to enact urgently needed legislation to protect and enhance the marine
environment, thereby sharing In the herculean task of arresting the tide of ecological
destruction. We hope that other local government units shall now be roused from their
lethargy and adopt a more vigilant stand in the battle against the decimation of our legacy
to future generations. At this time, the repercussions of any further delay in their response
may prove disastrous, if not, irreversible.

2. Velarde v SJS NOTES: There are other issues not included
here.
CASE LAW/ DOCTRINE:
Section 1 of Rule 63 of the Rules of Court, which deals with petitions for declaratory
relief, provides in part:
Section 1. Who may file petition.- Any person interested under a deed, will, contract
or other written instrument, whose rights are affected by a statute, executive order
or regulation, ordinance, or any other governmental regulation may, before breach
or violation thereof, bring an action in the appropriate Regional Trial Court to
determine any question of construction or validity arising, and for a declaration of
his rights or duties thereunder.
Based on the foregoing, an action for declaratory relief should be filed by a person
interested under a deed, a will, a contract or other written instrument, and whose rights
are affected by a statute, an executive order, a regulation or an ordinance. The purpose
of the remedy is to interpret or to determine the validity of the written instrument and to
seek a judicial declaration of the parties rights or duties thereunder. The essential
requisites of the action are as follows: (1) there is a justiciable controversy; (2) the
controversy is between persons whose interests are adverse; (3) the party seeking the
relief has a legal interest in the controversy; and (4) the issue is ripe for judicial
determination.
FACTS:
On January 28, 2003, SJS filed a Petition for Declaratory Relief (SJS Petition) before
the RTC-Manila against Velarde and his aforesaid co-respondents. SJS, a registered
political party, sought the interpretation of several constitutional provisions,
specifically on the separation of church and state; and a declaratory judgment on the
constitutionality of the acts of religious leaders endorsing a candidate for an elective
office, or urging or requiring the members of their flock to vote for a specified
candidate.
Bro. Eddie Villanueva, Executive Minister Erao Manalo and Bro. Mike Velarde, filed
their Motions to Dismiss. While His Eminence Jaime Cardinal L. Sin, filed a Comment
and Bro. Eli Soriano filed an Answer and similarly prayed for the dismissal of the
Petition.
Trial court said that it had jurisdiction over the Petition, because in praying for a
determination as to whether the actions imputed to the respondents are violative of
Article II, Section 6 of the Fundamental Law, [the Petition] has raised only a question
of law. It then proceeded to a lengthy discussion of the issue raised in the Petition the
separation of church and state even tracing, to some extent, the historical background
of the principle. Through its discourse, the court a quo opined at some point that the
endorsement of specific candidates in an election to any public office is a clear
violation of the separation clause.
However, the trial court failed to include a dispositive portion in its assailed Decision.
ISSUE(S):
Did the Petition for Declaratory Relief raise a justiciable controversy? NO
Did it state a cause of action? NO
Did respondent have any legal standing to file the Petition for Declaratory Relief?
HELD:
The Petition for Declaratory Relief failed to raise a justiciable controversy.
A justiciable controversy refers to an existing case or controversy that is
appropriate or ripe for judicial determination, not one that is conjectural or merely
anticipatory. The SJS Petition for Declaratory Relief fell short of this test. It
miserably failed to allege an existing controversy or dispute between the petitioner
and the named respondents therein. Further, the Petition did not sufficiently state
what specific legal right of the petitioner was violated by the respondents therein;
and what particular act or acts of the latter were in breach of its rights, the law or
the Constitution.
SJS merely speculated or anticipated without factual moorings that, as religious
leaders, the petitioner and his co-respondents below had endorsed or threatened to
endorse a candidate or candidates for elective offices; and that such actual or
threatened endorsement will enable [them] to elect men to public office who
[would] in turn be forever beholden to their leaders, enabling them to control the
government; and pose a clear and present danger of serious erosion of the peoples
faith in the electoral process; and reinforc[ing] their belief that religious leaders
determine the ultimate result of elections, which would then be violative of the
separation clause.
All that the 5-page SJS Petition prayed for was that the question raised in paragraph
9 hereof be resolved. In other words, it merely sought an opinion of the trial court
on whether the speculated acts of religious leaders endorsing elective candidates
for political offices violated the constitutional principle on the separation of church
and state. SJS did not ask for a declaration of its rights and duties; neither did it
pray for the stoppage of any threatened violation of its declared rights. Courts,
however, are proscribed from rendering an advisory opinion.
There is no cause of action.
A cause of action is an act or an omission of one party in violation of the legal right
or rights of another, causing injury to the latter.[28] Its essential elements are the
following: (1) a right in favor of the plaintiff; (2) an obligation on the part of the
named defendant to respect or not to violate such right; and (3) such defendants act
or omission that is violative of the right of the plaintiff or constituting a breach of
the obligation of the former to the latter.
The failure of a complaint to state a cause of action is a ground for its outright
dismissal. However, in special civil actions for declaratory relief, the concept of a
cause of action under ordinary civil actions does not strictly apply. The reason for
this exception is that an action for declaratory relief presupposes that there has been
no actual breach of the instruments involved or of rights arising thereunder.
Nevertheless, a breach or violation should be impending, imminent or at least
threatened.
A perusal of the Petition filed by SJS before the RTC discloses no explicit allegation
that the former had any legal right in its favor that it sought to protect.
Indeed, the Court finds in the Petition for Declaratory Relief no single allegation of
fact upon which SJS could base a right of relief from the named respondents. In any
event, even granting that it sufficiently asserted a legal right it sought to protect,
there was nevertheless no certainty that such right would be invaded by the said
respondents. Not even the alleged proximity of the elections to the time the Petition
was filed would have provided the certainty that it had a legal right that would be
jeopardized or violated by any of those respondents.
There is no legal standing. obligations) of the parties to the Petition. Neither does it grant any -- much less, the
Legal standing or locus standi has been defined as a personal and substantial interest proper -- relief under the circumstances, as required of a dispositive portion.
in the case, such that the party has sustained or will sustain direct injury as a result
of the challenged act. Interest means a material interest in issue that is affected by Proceedings for declaratory relief must still follow the process -- the petition must state a
the questioned act or instrument, as distinguished from a mere incidental interest in cause of action; the proceedings must undergo the procedure outlined in the Rules of Court;
the question involved. and the decision must adhere to constitutional and legal requirements.
First, parties suing as taxpayers must specifically prove that they have sufficient
interest in preventing the illegal expenditure of money raised by taxation. A
taxpayers action may be properly brought only when there is an exercise by
Congress of its taxing or spending power. In the present case, there is no allegation,
whether express or implied, that taxpayers money is being illegally disbursed.
Second, there was no showing in the Petition for Declaratory Relief that SJS as a
political party or its members as registered voters would be adversely affected by
the alleged acts of the respondents below, if the question at issue was not resolved.
There was no allegation that SJS had suffered or would be deprived of votes due to
the acts imputed to the said respondents. Neither did it allege that any of its
members would be denied the right of suffrage or the privilege to be voted for a
public office they are seeking.
Finally, the allegedly keen interest of its thousands of members who are citizens-
taxpayers-registered voters is too general and beyond the contemplation of the
standards set by our jurisprudence. Not only is the presumed interest impersonal in
character; it is likewise too vague, highly speculative and uncertain to satisfy the
requirement of standing

The Court, thus, called for Oral Argument to determine with certainty whether it could resolve
the constitutional issue despite the barren allegations in the SJS Petition (to see if this would
fall under transcendental importance). Much to its chagrin, however, counsels for the parties
-- particularly for Respondent SJS -- made no satisfactory allegations or clarifications that
would supply the deficiencies hereinabove discussed. Hence, even if the Court would exempt
this case from the stringent locus standi requirement, such heroic effort would be futile
because the transcendental issue cannot be resolved anyway.

To prevent a repetition of this waste of precious judicial time and effort, and for the guidance
of the bench and the bar, the Court reiterates the elementary procedure that must be followed
by trial courts in the conduct of civil cases. (Please see full text for this)

The Constitution commands that no decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based.
No petition for review or motion for reconsideration of a decision of the court shall
be refused due course or denied without stating the basis therefor.
The assailed Decision in the present case leaves us in the dark as to its final
resolution of the Petition. To recall, the original Petition was for declaratory relief.
So, what relief did the trial court grant or deny? What rights of the parties did it
conclusively declare? Its final statement says, SO ORDERED. But what exactly did
the court order? It had the temerity to label its issuance a Decision, when nothing
was in fact decided.
the dispositive portion cannot be deemed to be the statement quoted by SJS and
embedded in the last paragraph of page 10 of the assailed 14-page Decision. If at
all, that statement is merely an answer to a hypothetical legal question and just a
part of the opinion of the trial court. It does not conclusively declare the rights (or
3. Almeda vs. Bathala
CASE LAW/ DOCTRINE:
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.
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.
FACTS:
Bathala Marketing Industries, Inc., as lessee, represented by its president Ramon H.
Garcia, renewed its Contract of Lease with Ponciano 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 in Makati.
Provisions in contract which gave rise to 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 .
Ponciano died during the effectivity of the lease, so Bathala had to deal with petitioners
herein. In a letter in 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. There was also a demand to
increase rent by 73% due to extraordinary inflation (irrelevant to topic)
This prompted respondent Bathala to institute 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.
Petitioners Almeda 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.
ISSUE(S):
1) Whether the action for declaratory relief is proper (TOPIC)
2) Whether respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716; and
HELD: Petition is Denied, Bathala won the case.
1.) YES
2.) NO
RATIO:
1.) 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.
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.
Petitioners insist that respondent was already in breach of the contract when the petition
was filed NO, 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.
2.) The contract 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.
4. KAWASAKI V. AMORES
CASE LAW/ DOCTRINE: where a declaratory judgment as to a disputed fact would be
determinative of issues rather than a construction of definite stated rights, status and other
relations, commonly expressed in written instrument, the case is not one for declaratory
judgment.
FACTS:
C.F Sharp Kabushiki (Kabushiki) incurred several obligations from several creditors,
including petitioners
C.F. Sharp & Co (CF Sharp) different company- anticipated that the creditors of
Kabushiki will run after it
Hence, C.F. Sharp prayed for injunctive relief against the petitioners' (creditors) demand
for the payment of C.F. Sharp Kabushiki Kaisha's liabilities
C.F. Sharp alleged that it is separate and distinct from Kabushiki. That the former is
organized and existing under the laws of the Philippines while the latter is under the laws
of Japan. That it had no participation whatsoever or liability in connection with the
transactions between the latter and the defendants.
CF Sharp also prayed for declaratory relief that it is separate and Independent
Corporation, it is not liable for the obligations and liabilities of Kabushiki.
As the creditor-defendants are non-residents, without business addresses in the
Philippines but in Japan, CF Sharp asked the court to effect extraterritorial service of
summons.
Judge Amores authorized the extraterritorial service of summons on creditors
The creditors opposed and filed "Special Appearance to Question Jurisdiction of This
Honorable Court Over Persons of Defendants"
o Alleged that lower court does not and cannot acquire jurisdiction over the
persons of defendants on the grounds that private respondent's action does not
refer to its personal status (Rule 14, Section 17)
o The action does not have for subject matter property contemplated in Section
17 of Rule 14 of the Rules of Court, that the action does not pray that
defendants be excluded from any interest or property in the Philippines;
o And that no property of the defendants has been attached
o Action is in personam; and that the action does not fall within any of the four
cases mentioned in Section 17, Rule 14 of the Rules of Court.
Defense: affects status of CF Sharp and liability for Kabushikis indebtedness therefore
extraterritorial service is proper.
ISSUE(S):
W/N Declaratory relief is proper
W/N private respondent's complaint for injunction and/or declaratory relief is within the
purview of the provisions of Section 17, Rule 14 of the Rules of Court.
HELD: No No
RATIO:
What is sought is a declaration not only that private respondent is a corporation for there
is no dispute on that matter but also that it is separate and distinct from C.F. Sharp
Kabushiki Kaisha and therefore, not liable for the latter's indebtedness. It is evident that
monetary obligations does not, in any way, refer to status, rights and obligations.
Obligations are more or less temporary, but status is relatively permanent. But more
importantly, the prevailing rule is that "where a declaratory judgment as to a disputed
fact would be determinative of issues rather than a construction of definite stated rights,
status and other relations, commonly expressed in written instrument, the case is not one
for declaratory judgment." Thus, considering the nature of a proceeding for declaratory
judgment, wherein relief may be sought only to declare rights and not to determine or
try issues, there is more valid reason to adhere to the principle that a declaratory relief
proceeding is unavailable where judgment would have to be made, only after a judicial
investigation of disputed issues.
The fact that C.F. Sharp Philippines is an entity separate and distinct from C.F. Sharp
K.K., is a matter of defense that can be raised by the former at the proper time. (when
cases are filed against it etc. wala pa naman kasi, demand pa lang)
Jurisdiction
Section 17. Extraterritorial service. When the defendant does not reside and is not
found in the Philippines and the action affects the personal status of the plaintiff or relates
to, or the subject of which is, property within the Philippines, in which the defendant has
or claims a lien or interest, actual or contingent, or in which the relief demanded consists,
wholly or in part, in excluding the defendant from any interest therein, or the property
of the defendant has been attached within the Philippines, service may, by leave of court,
be effected out of the Philippines by personal service as under section 7; or by publication
in a newspaper of general circulation in such places and for such times as the court may
order, in which case a copy of the summons and order of the court shall be sent by
registered mail to the last known address of the defendant, or in any other manner the
court may deem sufficient. Any order granting such leave shall specify a reasonable time,
which shall not be less than sixty (60) days after notice, within which the defendant must
answer.
"Status means a legal personal relationship, not temporary in nature nor terminable at
the mere will of the parties, with which third persons and the state are concerned"
In this case the issue includes monetary obligations which does not refer to status.
The action does not fall within any of the four cases mentioned in Section 17, Rule 14
of the Rules of Court.
05. Tambunting v. Sumabat
CASE LAW/ DOCTRINE: An action for declaratory relief should be filed by a person
interested under a deed, will, contract or other written instrument, and whose rights are
affected by a statute, executive order, regulation or ordinance before breach or violation
thereof.
RTC issued the assailed decision. It ruled that the 1981 CFI decision in Civil Case No.
C-7496 (fixing respondents liability at P15,743.83 and authorizing consignation) had
long attained finality. The mortgage was extinguished when respondents paid
their indebtedness by consigning the amount in court.
Petitioners moved for a reconsideration of the trial courts decision but it was denied.
Hence, this petition.

Emergency Recit: Petitioner and respondents entered into a REM. Respondents failed to ISSUE(S): WON DR was proper (NO)
pay monthly amortization hence the property was foreclosed by the assignee (CHFI).
Respondents filed DR with the CFI. CFI rendered a decision and fixed respondents liability RATIO:
and ordered that the amount be consigned to the court. Respondents obliged. Respondents, The purpose of the action is to secure an authoritative statement of the rights and
however, received a notice that the property was foreclosed and an extrajudicial sale was obligations of the parties under a statute, deed, contract, etc. for their guidance in its
scheduled. The sale pushed through and ownership was consolidated to the buyer thus enforcement or compliance and not to settle issues arising from its alleged breach. It may
respondents filed a petition for preliminary injunction, damages and cancellation of be entertained only before the breach or violation of the statute, deed, contract, etc. to
annotation of encumbrance with prayer for the issuance of a temporary restraining order. which it refers. Where the law or contract has already been contravened prior to the filing
RTC ruled that the DR judgment is final and executory thus the consignment made by of an action for declaratory relief, the court can no longer assume jurisdiction over the
respondents was payment of the obligation. SC ruled otherwise because there was already action. In other words, a court has no more jurisdiction over an action for declaratory
breach. relief if its subject, i.e., the statute, deed, contract, etc., has already been infringed or
transgressed before the institution of the action. Under such circumstances, inasmuch as
FACTS: a cause of action has already accrued in favor of one or the other party, there is nothing
This case involves a dispute over a parcel of land situated in Caloocan City. It was more for the court to explain or clarify short of a judgment or final order.
previously registered in the names of respondents, sps Sumabat and Esperanza Baello. Here, an infraction of the mortgage terms had already taken place before the filing of
Respondents mortgaged it to petitioner Antonio Tambunting, Jr. to secure the Civil Case No. C-7496. Thus, the CFI lacked jurisdiction when it took cognizance of the
payment of a loan. case in 1979. And in the absence of jurisdiction, its decision was void and without legal
Subsequently, the respondents were informed that their indebtedness had ballooned effect.
to P15,000 for their failure to pay the monthly amortizations.
Because respondents defaulted in their obligation, petitioner Commercial House of
Finance, Inc. (CHFI), as assignee of the mortgage, initiated foreclosure proceedings
on the mortgaged property but the same did not push through. (restrained by CFI)
Respondents filed an action for declaratory relief seeking a declaration of the extent of
their actual indebtedness.
Petitioners were declared in default for failure to file an answer within the
reglementary period. They moved for the dismissal of the action on the ground
that its subject, the mortgage deed, had already been breached prior to the filing
of the action.
The motion was denied for having been filed out of time and petitioners had already
been declared in default.
CFI rendered its decision. It fixed respondents liability at P15,743.83 and authorized
them to consign the amount to the court for proper disposition. In compliance with the
decision, respondents consigned the required amount.
In March 1995, respondents received a notice of sheriffs sale indicating that the
mortgage had been foreclosed by CHFI and that an extrajudicial sale of the property
would be held on March 27, 1995.
Respondents filed a petition for preliminary injunction, damages and cancellation of
annotation of encumbrance with prayer for the issuance of a temporary restraining
order.
However, the public auction scheduled on that same day proceeded and the property
was sold to CHFI as the highest bidder.
Respondents failed to redeem the property during the redemption period. Hence, title
to the property was consolidated in favor of CHFI.
6. AUTHOR: The Talio the various respondent entities and declared the assailed provision as unconstitutional. The
[G.R. No. 164171; February 20, 2006] NOTES: CA, in the 3rd case (1st and 2nd cases were directly appealed to the SC), also affirmed the
Hon. Executive Secretary, Hon. Secretary SHII Southwing Heavy Industries, Inc. decision of the RTC. The SC partially granted the petition of the petitioners and ruled that
of the Department of Transportation and UAI United Auctioneers, Inc. said provision is declared VALID insofar as it applies to the Philippine territory outside the
Communications, Commissioner of MI Microvan, Inc. presently fenced-in former Subic Naval Base area and VOID with respect to its application to
Customs, Assistant Secretary, Land SIMVC Subic Integrated Macro Ventures the secured fenced-in former Subic Naval Base area. With respect to the propriety of the
Transportation Office, Collector of Corp. action for declaratory relief, the SC ruled (SEE ABOVE).
Customs, Subic Bay Free Port Zone, and MVIASBFC Motor Vehicle Importers
Chief of LTO, Subic Bay Free Port Association of Subic Bay Freeport, Inc. FACTS:
Zone vs. Southwing Heavy Industries, President GMA, through Exec. Sec. Alberto G. Romulo, issued EO 156, entitled
Inc., Represented by its President Jose T. "Providing for a comprehensive industrial policy and directions for the motor vehicle
Dizon, United Auctioneers, Inc., development program and its implementing guidelines." The challenged provision
Represented by its President Dominic states:
Sytin, and Microvan, Inc., Represented by 3.1 The importation into the country, inclusive of the Freeport, of all types of
its President Mariano C. Sonon used motor vehicles is prohibited, except for the following... (Check full text.
Too long to include)
[G.R. No. 164172; February 20, 2006] The issuance of EO 156 spawned 3 separate actions for declaratory relief before the RTC
Hon. Executive Secretary, Secretary of the of Olongapo City, all seeking the declaration of the unconstitutionality of Art. 2, Sec.
Department of Transportation and 3.1 of said executive order. The cases were filed by the respondent entities, who or
Communication, Commissioner of whose members, are classified as Subic Bay Freeport Enterprises and engaged in the
Customs, Assistant Secretary, Land business of, among others, importing and/or trading used motor vehicles.
Transportation Office, Collector of
Customs, Subic Bay Free Port Zone and G.R. No. 164171:
Chief of LTO, Subic Bay Free Port Respondents instituted a declaratory relief case docketed as Civil Case No. 20-0-
Zone vs. Subic Integrated Macro 04, against the petitioners.
Ventures Corp., Represented by its SHII, UAI, and MI prayed that judgment be rendered:
President Yolanda Ambar o declaring Art. 2, Sec. 3.1 of EO 156 unconstitutional and illegal;
o directing the Sec. of Finance, Commissioner of Customs, Collector of
[G.R. No. 168741; February 20, 2006] Customs, and the Chairman of the SBMA to allow the importation of used
Hon. Executive Secretary, Hon. Secretary motor vehicles;
of Finance, the Chief of the Land o ordering the LTO and its subordinates inside the Subic Special Economic
Transportation Office, the Commissioner Zone to process the registration of the imported used motor vehicles; and
of Customs, and the Collector of Customs, o in general, to allow the unimpeded entry and importation of used motor
Subic Special Economic Zone vs. Motor vehicles subject only to the payment of the required customs duties.
Vehicle Importers Association of Subic Upon filing of petitioners answer/comment, SHII and MI filed a motion for summary
Bay Freeport, Inc., Represented by its judgment which was granted by the RTC.
President Alfredo S. Galang A summary judgment was rendered declaring that Art. 2, Sec. 3.1 of EO 156 constitutes
an unlawful usurpation of legislative power vested by the Constitution with Congress.
TOPIC: Declaratory Relief The RTC further held that the proviso is contrary to the mandate of RA7227 or the Bases
PONENTE: Ynares-Santiago, J. Conversion and Development Act of 1992 which allows the free flow of goods and
capital within the Freeport.
CASE LAW/ DOCTRINE: As to the propriety of declaratory relief as a vehicle for assailing From the foregoing decision, petitioners sought relief before this Court via a petition
the executive issuance, suffice it to state that any breach of the rights of respondents will not for review on certiorari, docketed as G.R. No. 164171.
affect the case. In Commission on Audit of the Province of Cebu vs. Province of Cebu, the
Court entertained a suit for declaratory relief to finally settle the doubt as to the proper G.R. No. 164172:
interpretation of the conflicting laws involved, notwithstanding a violation of the right of the SIMVC filed with the same RTC, a similar action for declaratory relief docketed as
party affected. We find no reason to deviate from said ruling mindful of the significance of Civil Case No. 22-0-04, with the same prayer and against the same parties as those in
the present case to the national economy. Civil Case No. 20-0-04 (first case).
In this case, the RTC likewise rendered a summary judgment holding that Art. 2, Sec.
Emergency Recit: PGMA issued EO 156. As a result, 3 separate actions for Declaratory 3.1 of EO 156, is repugnant to the constitution.
Relief were filed before the RTC of Olongapo City, all seeking the declaration of the Petitioners elevated to this Court via a petition for review on certiorari, Civil Case No.
unconstitutionality of Art. 2, Sec. 3.1 of EO 156. The RTC, in all 3 cases, ruled in favour of 22-0-04 which was docketed as G.R. No. 164172.
 of the party affected. We find no reason to deviate from said ruling mindful of the
G.R. No. 168741: significance of the present case to the national economy.
MVIASBFC filed another action for declaratory relief with essentially the same prayer So also, summary judgments were properly rendered by the RTC because the issues
as those in Civil Case No. 22-0-04 and Civil Case No. 20-0-04, against the petitioners. involved in the instant case were pure questions of law. A motion for summary judgment
This was docketed as Civil Case No. 30-0-2003, before the same trial court. is premised on the assumption that the issues presented need not be tried either because
The RTC granted MVIASBFCs prayer and declared the assailed proviso as contrary to these are patently devoid of substance or that there is no genuine issue as to any pertinent
the Constitution. fact. It is a method sanctioned by the ROC for the prompt disposition of a civil action in
Aggrieved, the petitioners in Civil Case No. 30-0-2003, filed a petition for which the pleadings raise only a legal issue, not a genuine issue as to any material fact.
certiorari with the CA (CA-G.R. SP. No. 83284) At any rate, even assuming the procedural flaws raised by petitioners truly exist, the
The CA denied the petition and sustained the finding of the RTC that Art. 2, Sec. 3.1 of Court is not precluded from brushing aside these technicalities and taking cognizance of
EO 156, is void for being repugnant to the constitution. the action filed by respondents considering its importance to the public and in keeping
The decision of the CA was elevated to this Court and docketed as G.R. No. 168741. with the duty to determine whether the other branches of the government have kept
themselves within the limits of the Constitution.
Petitioners are now before this Court contending that Art. 2, Sec. 3.1 of EO 156 is valid
and applicable to the entire country, including the Freeeport. In support of their
arguments, they raise procedural and substantive issues bearing on the constitutionality
of the assailed proviso. The procedural issues are:
o the lack of respondents locus standi to question the validity of EO 156,
o the propriety of challenging EO 156 in a declaratory relief proceeding; and
o the applicability of a judgment on the pleadings in this case.
Petitioners argue that respondents will not be affected by the importation ban
considering that their certificate of registration and tax exemption do not authorize them
to engage in the importation and/or trading of used cars. They also aver that the actions
filed by respondents do not qualify as declaratory relief cases. Sec. 1, Rule 63 of the
ROC provides that a petition for declaratory relief may be filed before there is a breach
or violation of rights. Petitioners claim that there was already a breach of respondents
supposed right because the cases were filed more than a year after the issuance of EO
156. In fact, in Civil Case No. 30-0-2003 (3rd case), numerous warrants of seizure and
detention were issued against imported used motor vehicles belonging to MVIASBFCs
members.

ISSUE(S): WON declaratory relief is proper.

HELD: I AM NOT SURE HUHUHU PARANG YES NA NO LOL. What is your

understanding of the 2nd bullet sa ratio? Yun yung sagot eh.

RATIO:
The established rule that the constitutionality of a law or administrative issuance can be
challenged by one who will sustain a direct injury as a result of its enforcement has been
satisfied in the instant case. The broad subject of the prohibited importation is "all types
of used motor vehicles." Respondents would definitely suffer a direct injury from the
implementation of EO 156 because their certificate of registration and tax exemption
authorize them to trade and/or import new and used motor vehicles and spare parts,
except "used cars." Other types of motor vehicles imported and/or traded by
respondents and not falling within the category of used cars would thus be subjected to
the ban to the prejudice of their business. Undoubtedly, respondents have the legal
standing to assail the validity of EO 156.
As to the propriety of declaratory relief as a vehicle for assailing the executive issuance,
suffice it to state that any breach of the rights of respondents will not affect the case.
In Commission on Audit of the Province of Cebu vs. Province of Cebu, the Court
entertained a suit for declaratory relief to finally settle the doubt as to the proper
interpretation of the conflicting laws involved, notwithstanding a violation of the right
7. Rafael R. Martelino, Barchelechu S. AUTHOR: The Talio o Respondents, on the other hand, failed to ensure SPIs completion of the
Morales, Roselyn S. Cachapero, Reynaldo NOTES: subdivision. Instead, respondents ignored their right to suspend amortization
R. Evangelista, Cesar B. Yape, Leonora R. NHMFC National Home Mortgage Finance payments for SPIs failure to complete the subdivision, charged interests and
Paras, Segundina I. Ibarra, Raquel G. Corporation penalties on their outstanding loans, threatened to foreclose their mortgages
Halnin, Zamora I. Diaz, and Arthur L. HDMF Home Development Mutual Fund and initiated foreclosure proceedings against petitioner Rafael Martelino.
Vega vs. National Home Mortgage SPI Shelter Philippines, Inc. Petitioners prayed that:
Finance Corporation and Home HLURB Housing and Land Use Regulatory o Respondents be restrained from foreclosing their mortgages.
Development Mutual Fund. Board o The RTC declare (1) that their right as house and lot buyers to suspend
payment to SPI for its failure to fully develop the subdivision also applied to
[G.R. No. 160208; June 30, 2008] respondents who released their loans directly to SPI; and (2) that during the
TOPIC: Declaratory Relief suspension of payment, respondents should not assess them accrued interests
PONENTE: Quisumbing, J. and penalties.
o They be allowed to pay their housing loans without interest and penalties.
CASE LAW/ DOCTRINE: The RTC set the preliminary injunction hearing, but said order, including the summons
Indeed, under Sec. 1, Rule 63, a person must file a petition for declaratory relief before and petition, were served only on the NHMFC and Sheriff Castillo. Despite notice, the
breach or violation of a deed, will, contract, other written instrument, statute, executive NHMFC failed to attend the preliminary injunction hearing. The RTC ordered that a
order, regulation, ordinance or any other governmental regulation. In this case, the writ of preliminary injunction be issued restraining the respondents from foreclosing
petitioners had stated in their petition that respondents assessed them interest and the mortgages on petitioners houses. The writ was issued on July 14, 1998.
penalties on their outstanding loans, initiated foreclosure proceedings against petitioner NHMFC filed its Answer with Special and Affirmative Defenses. Thereafter, the RTC
Rafael Martelino as evidenced by the notice of extra-judicial sale and threatened to ordered the parties to submit their pre-trial briefs and scheduled the pre-trial conference.
foreclose the mortgages of the other petitioners, all in disregard of their right to suspend NHMFC filed a Manifestation and an MTD on the ground that the RTC had no
payment to SPI for its failure to complete the subdivision. Said statements clearly mean jurisdiction over its person or over the subject matter of the case.
one thing: petitioners had already suspended paying their amortization payments. The next day, the HDMF moved to set aside the preliminary injunction order on the
Unfortunately, their actual suspension of payments defeated the purpose of the action to ground that it was not notified of the hearing. The HDMF also stated that the petition
secure an authoritative declaration of their supposed right to suspend payment, for their should have been filed with the HLURB as the case involved the developers failure to
guidance. Thus, the RTC could no longer assume jurisdiction over the action for complete the subdivision. The HDMF alleged that the RTC had no jurisdiction over the
declaratory relief because its subject initially unspecified, now identified as PD 957 and case or even to implead the HDMF which only financed petitioners housing loans.
relied upon -- correctly or otherwise -- by petitioners, and assumed by the RTC to be Petitioners opposed the NHMFCs MTD and the HDMFs motion. They said that:
RA 8501, was breached before filing the action. o The NHMFC stated no basis why the RTC lacked jurisdiction.
Under the circumstances, may the Court nonetheless allow the conversion of the petition o Since they sought a judicial declaration of their right to suspend
for declaratory relief and prohibition into an ordinary action? We are constrained to say: amortization payments to respondents, not to the subdivision developer
no. Although Sec. 6, Rule 63 might allow such course of action, the respondents did not (SPI), the HLURB had no jurisdiction over the case.
argue the point, and we note petitioners failure to specify the ordinary action they o The HDMF cannot claim ignorance of the preliminary injunction hearing
desired. We also cannot reasonably assume that they now seek annulment of the because the NHMFC was duly notified. They claimed that the HDMFs
mortgages. Further, the records support the CAs finding that this issue was not raised motion constituted voluntary submission to the RTCs jurisdiction which
before the RTC. The CA therefore properly refused to entertain the issue as it cannot be cured the lack of service of summons.
raised for the first time on appeal. Petitioners moved to cite Atty. Florentino C. Delos Santos, Manager of HDMFs Legal
Department, in contempt for foreclosing the mortgage of Rosella T. Rosete and
Emergency Recit: threatening to pursue similar actions against petitioners, in defiance of the preliminary
FACTS: injunction order.
The case stemmed from the petition for declaratory relief and prohibition with urgent RTC: granted the MTD filed by the NHMFC and the motion of the HDMF.
prayer for the issuance of a temporary restraining order and/or preliminary o In dismissing the case, the RTC ruled that the issue of non-completion of the
injunction filed before the RTC of Caloocan City, by petitioners against the NHMFC subdivision should have been brought before the HLURB. It also ruled that no
and the HDMF, and Sheriff Alberto A. Castillo. judicial declaration can be made because the petition was vague.
Petitioners alleged that: o The RTC assumed that the subject of the petition was RA 8501 or the Housing
o They obtained housing loans from the respondents who directly released the Loan Condonation Act of 1998 which was cited by petitioners. But the RTC
proceeds thereof to the subdivision developer, SPI. pointed out that petitioners failed to state which section of the law affected
o However, SPI failed to complete the subdivision according to its their rights and needed judicial declaration.
representations and the subdivision plan. They were thus compelled to spend o The RTC also noted that, as stated by petitioners, respondents still
their own resources to improve the subdivision roads and alleys, and to install foreclosed their mortgages, a breach of said law which rendered the petition
individual water facilities. for declaratory relief improper. The proper remedy was an ordinary civil
action, the RTC concluded.
 CA: affirmed the RTC Order. and/or for Prohibition as an action for prohibition. That case involved the
o Ruled that the writ of preliminary injunction was not valid against the HDMF constitutionality of BP Blg. 129 or the Judiciary Reorganization Act of 1980. Citing De
since under Sec. 5, Rule 58 of the ROC, no preliminary injunction shall be La Llana, Justice Florenz D. Regalado opined in his book that if the petition has far-
granted without hearing and prior notice to the party or person sought to be reaching implications and it raises questions that should be resolved, it may be treated
enjoined. The HDMF was not notified of the hearing and only appeared before as one for prohibition.
the RTC to object to its jurisdiction for non-service of summons. Assuming the Court can also treat the Petition for Declaratory Relief and Prohibition as
o Held that petitioners were not denied due process because the MTD and the an action for prohibition, we must still hold that prohibition is improper. Prohibition is a
motion to set aside the injunction order both raised the issue of jurisdiction and remedy against proceedings that are without or in excess of jurisdiction, or with grave
were duly heard. Petitioners even filed a memorandum. abuse of discretion, there being no appeal or other plain, speedy adequate remedy in the
o Did not entertain the issue of whether the petition for declaratory relief can be ordinary course of law. But here, the petition did not even impute lack of jurisdiction or
converted to an ordinary action for it was not raised before the RTC. grave abuse of discretion committed by respondents and Sheriff Castillo regarding the
ISSUE(S): foreclosure proceedings. Foreclosure of mortgage is also the mortgagees right in case
- WON declaratory relief is proper. of non-payment of a debt secured by mortgage. The mortgagee can sell the encumbered
- WON the action can be converted to an ordinary civil action. property to satisfy the outstanding debt. Hence, the HDMF cannot be faulted for
exercising its right to foreclose the mortgages, under the provisions of Act No. 3135 as
HELD: Nope. amended by Act No. 4118. We are not saying, however, that the HDMF must exercise
RATIO: its right at all cost, considering that RA 8501 allows condonation of loan penalties when
After a careful study of the case, we are in agreement to uphold the dismissal of the appropriate.
petition for declaratory relief and prohibition.
Worthy of recall, the RTC held that respondents act of initiating foreclosure
proceedings was in breach of RA 8501 and rendered the action of declaratory relief
improper. The RTC suggested that the proper remedy is an ordinary civil action.
Incidentally, this point is also related to petitioners contention that the CA should have
ordered the conversion of their petition filed before the RTC to an ordinary civil action,
under the provisions of Sec. 6, Rule 63 of the ROC.
We agree with the RTC but hasten to point out that the RTC had not ruled on whether
the petition was also improper as a petition for prohibition. Indeed, under Sec. 1, Rule
63, a person must file a petition for declaratory relief before breach or violation of a
deed, will, contract, other written instrument, statute, executive order, regulation,
ordinance or any other governmental regulation. In this case, the petitioners had stated
in their petition that respondents assessed them interest and penalties on
their outstanding loans, initiated foreclosure proceedings against petitioner Rafael
Martelino as evidenced by the notice of extra-judicial sale and threatened to foreclose
the mortgages of the other petitioners, all in disregard of their right to suspend payment
to SPI for its failure to complete the subdivision. Said statements clearly mean one thing:
petitioners had already suspended paying their amortization payments. Unfortunately,
their actual suspension of payments defeated the purpose of the action to secure an
authoritative declaration of their supposed right to suspend payment, for their guidance.
Thus, the RTC could no longer assume jurisdiction over the action for declaratory relief
because its subject initially unspecified, now identified as PD 957 and relied upon --
correctly or otherwise -- by petitioners, and assumed by the RTC to be RA 8501, was
breached before filing the action.
Under the circumstances, may the Court nonetheless allow the conversion of the petition
for declaratory relief and prohibition into an ordinary action? We are constrained to say:
no. Although Sec. 6, Rule 63 might allow such course of action, the respondents did not
argue the point, and we note petitioners failure to specify the ordinary action they
desired. We also cannot reasonably assume that they now seek annulment of the
mortgages. Further, the records support the CAs finding that this issue was not raised
before the RTC. The CA therefore properly refused to entertain the issue as it cannot be
raised for the first time on appeal.
Relatedly, the Court had considered De La Llana, etc., et al. vs. Alba, etc., et al., where
this Court considered a petition erroneously entitled Petition for Declaratory Relief
8. Tomas Velasco, Lourdes Ramirez, Sy AUTHOR: The Talio Malcolm made clear the significance and scope of such a clause, which "delegates in
Pin, Edmundo Unson, Apolonia Ramirez, NOTES: 2 Paragraphs Lang Siya Sa Full statutory form the police power to a municipality. As above stated, this clause has been
and Lourdes Lomibao, as Component Text Lelz. given wide application by municipal authorities and has in its relation to the particular
Members of the Sta. Cruz Barbershop circumstances of the case been liberally construed by the courts. Such, it is well to really
Association, in their Own Behalf and in is the progressive view of Philippine jurisprudence." As it was then, so it has continued
Representation of the Other Owners of to be. There is no showing, therefore, of the unconstitutionality of such ordinance.
Barbershops in the City of Manila vs. Hon.
Antonio J. Villegas, City Mayor of Manila,
Hon. Herminio A. Astorga, Vice-Mayor
and Presiding Officer of the Municipal
Board in Relation to Republic Act 4065,
The Municipal Board of the City of
Manila, and Eduardo Quintos Sr., Chief
of Police of the City of Manila

[G.R. No. L-24153; February 14, 1983]

TOPIC: Declaratory Relief
PONENTE: Fernando, J.
CASE LAW/ DOCTRINE: There is no showing, therefore, of the unconstitutionality of such
ordinance.

Emergency Recit:
FACTS:
This is an appeal from an order of the lower court dismissing a suit for declaratory relief
challenging the constitutionality based on Ordinance No. 4964 of the City of Manila,
the contention being that it amounts to a deprivation of property of petitioners of their
means of livelihood without due process of law.
The assailed ordinance is worded thus: "It shall be prohibited for any operator of any
barber shop to conduct the business of massaging customers or other persons in any
adjacent room or rooms of said barber shop, or in any room or rooms within the same
building where the barber shop is located as long as the operator of the barber shop and
the room where massaging is conducted is the same person."
As noted in the appealed order, petitioners admitted that criminal cases for the violation
of this ordinance had been previously filed and decided. The lower court, therefore, held
that a petition for declaratory relief did not lie, its availability being dependent on there
being as yet no case involving such issue having been filed.
Even if such were not the case, the attack against the validity cannot succeed. As pointed
out in the brief of respondents, it is a police power measure. The objectives behind its
enactment are:
o To be able to impose payment of the license fee for engaging in the business
of massage clinic under Ordinance No. 3659 as amended by Ordinance
4767, an entirely different measure than the ordinance regulating the business
of barbershops; and
o In order to forestall possible immorality which might grow out of the
construction of separate rooms for massage of customers.
o
ISSUE(S): WON declaratory relief is proper.

HELD: Nope.
RATIO:
This Court has been most liberal in sustaining ordinances based on the general welfare
clause. As far back as U.S. vs Salaveria, a 1918 decision, this Court through Justice
9. The Honourable Monetary Board, Gail AUTHOR: The Talio
U. Fule, Director of Supervision and NOTES:
Examination Department II, and the PVB Philippine Veterans Bank
Bangko Sentral ng Pilipinas vs Philippine CRF Credit Redemption Fund
Veterans Bank STFs Special Trust Funds
SED Supervision and Examination
[G.R. No. 189571; January 21, 2015] Department
TOPIC: Declaratory Relief MB Monetary Board
PONENTE: Peralta, J. RA 8791 General Banking Law [GBL Lelz]
CASE LAW/ DOCTRINE:
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. Ergo, the Court, in CJH Development Corporation vs BIR, held that
in the same manner that court decisions cannot be the proper subjects of a petition for
declaratory relief, decisions of quasi-judicial agencies cannot be subjects of a petition for
declaratory relief for the simple reason that if a party is not agreeable to a decision either
on questions of law or of fact, it may avail of the various remedies provided by the Rules
of Court.
In view of the foregoing, the decision of the BSP Monetary Board cannot be a proper
subject matter for a petition for declaratory relief since it was issued by the BSP Monetary
Board in the exercise of its quasi-judicial powers or functions.
Emergency Recit: PVB established a pension loan product for bona fide veterans or their
surviving spouses, as well as salary loan product for teachers and low-salaried employees. As
its clientele usually do not have real estate or security to cover their pension or salary loan, other
than their continuing good health and/or employment, PVB devised a program by charging a
premium in the form of a higher fee known as CRF from said borrowers. An examination was
conducted by BSP. It found, among other things, that PVBs collection of premiums from the
proceeds of various salary and pension loans of borrowers to guarantee payment of outstanding
loans violated Sec. 54 of RA No. 8791 which states that banks shall not directly engage in
insurance business as insurer. The BSP notified PVB about the Insurance Commissions
opinion that the CRF is a form of insurance. Thus, PVB was requested to discontinue the
collection of said fees. PVB complied with the BSPs directive and discontinued the collection
of fees for CRF. Petitioners issued MB Resolution No. 1139 directing PVB to return to the
borrowers all the balances of the CRF. Thus, PVB requested reconsideration of said MB
Resolution. However, the same was denied. Accordingly, PVB filed a Petition for Declaratory
Relief with the RTC of Makati City. The RTC dismissed the petition, but upon the filing of
an MR a year later, granted it. Hence, the case.
FACTS:
PVB established a pension loan product for bona fide veterans or their surviving spouses,
as well as salary loan product for teachers and low-salaried employees pursuant to its
mandate under RAs 3518 and 7169 to provide financial assistance to veterans and teachers.
As its clientele usually do not have real estate or security to cover their pension or salary
loan, other than their continuing good health and/or employment, PVB devised a program
by charging a premium in the form of a higher fee known as CRF from said borrowers.
Resultantly, STFs were established by PVB for the pension loans of the veteran-borrowers,
salary loans of teachers and low-salaried employees. These trust funds were, in turn,
managed by PVBs Trust and Investment Department, with PVB as beneficiary. The
fees charged against the borrowers were credited to the respective trust funds, which would
be used to fully pay the outstanding obligation of the borrowers in case of death.
An examination was conducted by the SED II of the BSP. It found, among other things,
that PVBs collection of premiums from the proceeds of various salary and pension loans
of borrowers to guarantee payment of outstanding loans violated Sec. 54 of RA No. 8791
which states that banks shall not directly engage in insurance business as insurer.
(BANCASSURANCE HAHAHA)
Subsequently, PVB wrote a letter to petitioners justifying the existence of the CRF.
The BSP notified PVB about the Insurance Commissions opinion that the CRF is a form
of insurance. Thus, PVB was requested to discontinue the collection of said fees.
PVB complied with the BSPs directive and discontinued the collection of fees for CRF.
Petitioners issued MB Resolution No. 1139 directing PVBs Trust and Investment
Department to return to the borrowers all the balances of the CRF in the amount of Php
144,713,224.54 as of Aug. 31, 2004, and to preserve the records of borrowers who were
deducted CRFs from their loan proceeds pending resolution or ruling of the Office of the
General Counsel of the BSP.
Thus, PVB requested reconsideration of said MB Resolution. However, the same was
denied. Accordingly, PVB filed a Petition for Declaratory Relief with the RTC of Makati
City.
Petitioners filed an MTD alleging that the petition for declaratory relief cannot prosper
due to PVBs prior breach of Sec. 54 of RA 8791.
RTC: dismissed PVBs petition for declaratory relief and held as follows:
o An ordinary civil action or other else is the proper remedy.
o Clearly, as gleaned from the very documents attached to the petition, and as
correctly pointed out by the petitioners, PVB, as found by the BSP examiners
and confirmed by the MB, violated Sec. 54 of RA 8791, subject matter of the
instant case, by engaging in an insurance activity which is prohibited by such
law.
o The issue of whether or not PVB violated the foregoing law can only be fittingly
resolved thru an ordinary action.
Almost a year later, PVB filed a Motion to Admit its MR against said order alleging that
it did not receive a copy thereof until Sept. 3, 2008.
Petitioners opposed said motion on the ground that per Certification of the Philippine
Postal Office, an official copy of the RTCs Order was duly served and received by PVB
on Oct. 17, 2007.
Despite the foregoing, the RTC allowed PVBs MR and required petitioners to file their
answer.
RTC: granted PVBs petition for declaratory relief disposing as follows:
o When PVB collected additional fees known as CRF from its loan borrowers, it
was not directly engaged in insurance business as insurer; hence, it did not
violate Sec. 54, R.A. 8791.
o The MB Resolution No. 1139 is hereby declared null and void.
ISSUE(S): WON Declaratory Relief is proper.
HELD: Nope.
RATIO:
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. Ergo, the Court, in CJH Development Corporation vs BIR, held that banking, and credit. It has the power to issue subpoena, to sue for contempt those refusing
in the same manner that court decisions cannot be the proper subjects of a petition for to obey the subpoena without justifiable reason, to administer oaths and compel
declaratory relief, decisions of quasi-judicial agencies cannot be subjects of a petition for presentation of books, records and others, needed in its examination, to impose fines and
declaratory relief for the simple reason that if a party is not agreeable to a decision either other sanctions and to issue cease and desist order. Sec. 37 of RA 7653, in particular,
on questions of law or of fact, it may avail of the various remedies provided by the Rules explicitly provides that the BSP Monetary Board shall exercise its discretion in
of Court. determining whether administrative sanctions should be imposed on banks and quasi-
In view of the foregoing, the decision of the BSP Monetary Board cannot be a proper banks, which necessarily implies that the BSP Monetary Board must conduct some form
subject matter for a petition for declaratory relief since it was issued by the BSP Monetary of investigation or hearing regarding the same.
Board in the exercise of its quasi-judicial powers or functions. A priori, having established that the BSP Monetary Board is indeed a quasi-judicial body
The authority of the petitioners to issue the questioned MB Resolution emanated from its exercising quasi-judicial functions, then its decision in MB Resolution No. 1139 cannot be
powers under Sec. 37 of RA 7653 and Sec. 66 of RA 8791 to impose, at its discretion, the proper subject of declaratory relief.
administrative sanctions, upon any bank for violation of any banking law. Lastly, also worth noting is the fact that the court a quo's Order dated September 24, 2007,
The nature of the BSP Monetary Board as a quasi-judicial agency, and the character of which dismissed PVBs petition for declaratory relief, had long become final and
its determination of whether or not appropriate sanctions may be imposed upon erring executory.
banks, as an exercise of quasi-judicial function, have been recognized by this Court in the
case of United Coconut Planters Bank vs E. Ganzon, Inc., to wit:
o A perusal of Sec. 9(3) of BP Blg. 129, as amended, and Sec. 1, Rule 43 of the
1997 Rules of Civil Procedure reveals that the BSP Monetary Board is not
included among the quasi-judicial agencies explicitly named therein, whose final
judgments, orders, resolutions or awards are appealable to the CA. Such
omission, however, does not necessarily mean that the CA has no appellate
jurisdiction over the judgments, orders, resolutions, or awards of the BSP
Monetary Board.
It bears stressing that Sec. 9(3) of BP Blg. 129, as amended, on the appellate jurisdiction
of the CA, generally refers to quasi-judicial agencies, instrumentalities, boards or
commissions. The use of the word "including" in the said provision, prior to the naming of
several quasi-judicial agencies, necessarily conveys the very idea of non-exclusivity of the
enumeration. The principle of expressio unius est exclusio alterius does not apply where
other circumstances indicate that the enumeration was not intended to be exclusive, or
where the enumeration is by way of example only.
Similarly, Sec. 1, Rule 43 of the 1997 Revised Rules of Civil Procedure merely mentions
several quasi-judicial agencies without exclusivity in the phraseology. The enumeration of
the agencies therein mentioned is not exclusive. The introductory phrase "among these
agencies are" preceding the enumeration of specific quasi-judicial agencies only highlights
the fact that the list is not meant to be exclusive or conclusive. Further, the overture stresses
and acknowledges the existence of other quasi-judicial agencies not included in the
enumeration but should be deemed included.
A quasi-judicial agency or body is an organ of government other than a court and other
than a legislature, which affects the rights of private parties through either adjudication or
rule-making. The very definition of an administrative agency includes its being vested with
quasi-judicial powers. The ever increasing variety of powers and functions given to
administrative agencies recognizes the need for the active intervention of administrative
agencies in matters calling for technical knowledge and speed in countless controversies
which cannot possibly be handled by regular courts. A "quasi-judicial function" is a term
which applies to the action, discretion, etc. of public administrative officers or bodies, who
are 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.
Undoubtedly, the BSP Monetary Board is a quasi-judicial agency exercising quasi-
judicial powers or functions. As aptly observed by the CA, the BSP Monetary Board is
an independent central monetary authority and a body corporate with fiscal and
administrative autonomy, mandated to provide policy directions in the areas of money,