RULE 62 INTERPLEADER G.R. No. L-23851 March 26, 1976 WAC WAC G!L" # C!UNTR$ CLU%, INC.

, plaintiff-appellant, vs. LEE E. W!N a&'a( RAM!N LEE a)* %IEN+ENID! A. TAN, defendants-appellees. CA,TR!, C.J.: This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the plaintiff-appellant s complaint of interpleader upon the grounds of failure to state a cause of action and res judicata. In its amended and supplemental complaint of !cto"er #$, %&6$, the 'ac( 'ac( )olf * Countr+ Clu", Inc., a non-stoc(, civic and athletic corporation dul+ organized under the la,s of the -hilippines, ,ith principal office in .andalu+ong, Rizal /hereinafter referred to as the Corporation0, alleged, for its first cause of action, that the defendant 1ee 2. 'on claims o,nership of its mem"ership fee certificate #3%, "+ virtue of the decision rendered in civil case #6344 of the CFI of .anila, entitled 5 Lee E. Won alias Ramon Lee vs. Wack Wack Golf & Country Club, Inc. 5 and also "+ virtue of mem"ership fee certificate #3%serial no. %476 issued on !cto"er %7, %&6$ "+ -onciano 7. 8acinto, deput+ cler( of court of the said CFI of .anila, for and in "ehalf of the president and the secretar+ of the Corporation and of the -eople s 7an( * Trust Compan+ as transfer agent of the said Corporation, pursuant to the order of 9eptem"er #$, %&6$ in the said case: that the defendant 7ienvenido ;. Tan, on the other hand, claims to "e la,ful o,ner of its aforesaid mem"ership fee certificate #3% "+ virtue of mem"ership fee certificate #3%serial no. %%&& issued to him on 8ul+ #4, %&53 pursuant to an assignment made in his favor "+ 59,an, Cul"ertson and Fritz,5 the original o,ner and holder of mem"ership fee certificate #3%: that under its articles of incorporation and "+-la,s the Corporation is authorized to issue a ma<imum of 433 mem"ership fee certificates to persons dul+ elected or admitted to proprietar+ mem"ership, all of ,hich have "een issued as earl+ as =ecem"er %&$&: that it claims no interest ,hatsoever in the said mem"ership fee certificate #3%: that it has no means of determining ,ho of the t,o defendants is the la,ful o,ner thereof: that it is ,ithout po,er to issue t,o separate certificates for the same mem"ership fee certificate #3%, or to issue another mem"ership fee certificate to the defendant 1ee, ,ithout violating its articles of incorporation and "+-la,s: and that the mem"ership fee certificate #3%-serial no. %%&& held "+ the defendant Tan and the mem"ership fee certificate #3%-serial >o. %476 issued to the defendant 1ee proceed from the same mem"ership fee certificate #3%, originall+ issued in the name of 59,an, Cul"ertson and Fritz5. For its second cause of action. it alleged that the mem"ership fee certificate #3%-serial no. %476 issued "+ the deput+ cler( of court of court of the CFI of .anila in "ehalf of the Corporation is null and void "ecause issued in violation of its "+-la,s, ,hich re?uire the surrender and cancellation of the outstanding mem"ership fee certificate #3% "efore issuance ma+ "e made to the transferee of a ne, certificate dul+ signed "+ its president and secretar+, aside from the fact that the decision of the CFI of .anila in civil case #6344 is not "inding upon the defendant Tan, holder of mem"ership fee certificate #3%serial no. %%&&: that Tan is made a part+ "ecause of his refusal to @oin it in this action or "ring a separate action to protect his rights despite the fact that he has a legal and "eneficial interest in the su"@ect matter of this litigation: and that he is made a part so that complete relief ma+ "e accorded herein. The Corporation pra+ed that /a0 an order "e issued re?uiring 1ee and Tan to interplead and litigate their conflicting claims: and /"0 @udgment. "e rendered, after hearing, declaring ,ho of the t,o is the la,ful o,ner of mem"ership fee certificate #3%, and ordering the surrender and cancellation of mem"ership fee certificate #3%-serial no. %476 issued in the name of 1ee. In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the complaint to state a cause of action, and "ar "+ prescription. 1 These motions ,ere dul+ opposed "+ the Corporation. Finding the grounds

of "ar "+ prior @udgment and failure to state a cause of action ,ell ta(en, the trial court dismissed the complaint, ,ith costs against the Corporation. In this appeal, the Corporation contends that the court a quo erred /%0 in finding that the allegations in its amended and supplemental complaint do not constitute a valid ground for an action of interpleader, and in holding that 5the principal motive for the present action is to reopen the .anila Case and collaterall+ attac( the decision of the said Court5: /#0 in finding that the decision in civil case #6344 of the CFI of .anila constitutes res judicata and "ars its present action: and /$0 in dismissing its action instead of compelling the appellees to interplead and litigate "et,een themselves their respective claims. The Corporations position ma+ "e stated else,ise as follo,sA The trial court erred in dismissing the complaint, instead of compelling the appellees to interplead "ecause there actuall+ are conflicting claims "et,een the latter ,ith respect to the o,nership of mem"ership fee certificate #3%, and, as there is not Identit+ of parties, of su"@ect-matter, and of cause of action, "et,een civil case #6344 of the CFI of .anila and the present action, the complaint should not have "een dismissed upon the ground of res judicata. !n the other hand, the appellees argue that the trial court properl+ dismissed the complaint, "ecause, having the effect of reopening civil case #6344, the present action is "arred "+ res judicata. ;lthough res judicata or "ar "+ a prior @udgment ,as the principal ground availed of "+ the appellees in moving for the dismissal of the complaint and upon ,hich the trial court actuall+ dismissed the complaint, the determinative issue, as can "e gleaned from the pleadings of the parties, relates to the propriet+ and timeliness of the remed+ of interpleader. The action of interpleader, under section %#3 of the Code of Civil -rocedure, 2 is a remed+ ,here"+ a person ,ho has personal propert+ in his possession, or an o"ligation to render ,holl+ or partiall+, ,ithout claiming an+ right to either, comes to court and as(s that the persons ,ho claim the said personal propert+ or ,ho consider themselves entitled to demand compliance ,ith the o"ligation, "e re?uired to litigate among themselves in order to determine finall+ ,ho is entitled to tone or the one thing. The remed+ is afforded to protect a person not against dou"le lia"ilit+ "ut against dou"le ve<ation in respect of one lia"ilit+. 3 The procedure under the Rules of Court - is the same as that under the Code of Civil -rocedure, 5 e<cept that under the former the remed+ of interpleader is availa"le regardless of the nature of the su"@ect-matter of the controvers+, ,hereas under the latter an interpleader suit is proper onl+ if the su"@ect-matter of the controvers+ is personal propert+ or relates to the performance of an o"ligation. There is no ?uestion that the su"@ect matter of the present controvers+, i.e., the mem"ership fee certificate #3%, is proper for an interpleader suit. 'hat is here disputed is the propriet+ and timeliness of the remed+ in the light of the facts and circumstances o"taining. ; sta(eholder 6 should use reasona"le diligence to hale the contending claimants to court. 7 Be need not a,ait actual institution of independent suits against him "efore filing a "ill of interpleader. 8 Be should file an action of interpleader ,ithin a reasona"le time after a dispute has arisen ,ithout ,aiting to "e sued "+ either of the contending claimants. 9 !ther,ise, he ma+ "e "arred "+ laches 1. or undue dela+. 11 7ut ,here he acts ,ith reasona"le diligence in vie, of the environmental circumstances, the remed+ is not "arred. 12 Bas the Corporation in this case acted ,ith diligence, in vie, of all the circumstances, such that it ma+ properl+ invo(e the remed+ of interpleaderC 'e do not thin( so. It ,as a,are of the conflicting claims of the appellees ,ith respect to the mem"ership fee certificate #3% long "efore it filed the present interpleader suit. It had "een recognizing Tan as the la,ful o,ner thereof. It ,as sued "+ 1ee ,ho also claimed the same mem"ership fee certificate. Det it did not interplead Tan. It preferred to proceed ,ith the litigation /civil case #63440 and to defend itself therein. ;s a matter of fact, final @udgment ,as rendered against it and said @udgment has alread+ "een e<ecuted. It is not therefore too late for it to invo(e the remed+ of interpleader.

It has "een held that a sta(eholder s action of interpleader is too late ,hen filed after @udgment has "een rendered against him in favor of one of the contending claimants, 13 especiall+ ,here he had notice of the conflicting claims prior to the rendition of the @udgment and neglected the opportunit+ to implead the adverse claimants in the suit ,here @udgment ,as entered. This must "e so, "ecause once @udgment is o"tained against him "+ one claimant he "ecomes lia"le to the latter. 1- In once case, 15 it ,as declaredA The record here discloses that long "efore the rendition of the @udgment in favor of relators against the Banover Fire Insurance Compan+ the latter had notice of the adverse claim of 9outh to the proceeds of the polic+. >o reason is sho,n ,h+ the Insurance Compan+ did not implead 9outh in the former suit and have the conflicting claims there determined. The Insurance Compan+ elected not to do so and that suit proceeded to a final @udgment in favor of relators. The Compan+ there"+ "ecame independentl+ lia"le to relators. It ,as then too late for such compan+ to invo(e the remed+ of interpleader The Corporation has not sho,n an+ @ustifia"le reason ,h+ it did not file an application for interpleader in civil case #6344 to compel the appellees herein to litigate "et,een themselves their conflicting claims of o,nership. It ,as onl+ after adverse final @udgment ,as rendered against it that the remed+ of interpleader ,as invo(ed "+ it. 7+ then it ,as too late, "ecause to he entitled to this remed+ the applicant must "e a"le to sho, that lie has not "een made independentl+ lia"le to an+ of the claimants. ;nd since the Corporation is alread+ lia"le to 1ee under a final @udgment, the present interpleader suit is clearl+ improper and unavailing. It is the general rule that "efore a person ,ill "e deemed to "e in a position to as( for an order of intrepleader, he must "e prepared to sho,, among other prere?uisites, that he has not "ecome independentl+ lia"le to an+ of the claimants. #5 Te<. 8ur. p. 5#, 9ec. $: $3 ;m. 8ur. p. #%6, 9ection 6. It is also the general rule that a "ill of interpleader comes too late ,hen it is filed after @udgment has "een rendered in favor of one of the claimants of the fund, this "eing especiall+ true ,hen the holder of the funds had notice of the conflicting claims prior to the rendition of the @udgment and had an opportunit+ to implead the adverse claimants in the suit in ,hich the @udgment ,as rendered. nited !rocedures !i"e Line Co. v. #ritton , Te<. Civ. ;pp. #64 9.'. %76: $as% v. &cCullum, Te<. Civ. 74 9.'. #d %346: $3 ;m. 8ur. p. ##$, 9ec. %%: #5 Te<. 8ur. p. 56, 9ec. 5: %36 ;.1.R., note 5, p. #75. 16 Indeed, if a sta(eholder defends a suit filed "+ one of the adverse claimants and allo,s said suit to proceed to final @udgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case at hand, the Corporation allo,ed civil case #6344 to proceed to final @udgment. ;nd it offered no satisfactor+ e<planation for its failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader suit cannot prosper "ecause it ,as filed much too late. If a sta(eholder defends a suit "+ one claimant and allo,s it to proceed so far as a @udgment against him ,ithout filing a "ill of interpleader, it then "ecomes too late for him to do so. nion #ank v. 'err , # .d. Ch. 463: (ome Life Ins. Co. v. Gaulk, 66 .d. $65, $&3, $6 ;. &3%: Gonia v. )*#rien, ##$ .ass. %77, %%% >.2. 767. It is one o the main offices of a "ill of interpleader to restrain a separate proceeding at la, "+ claimant so as to avoid the resulting partial @udgment: and if the sta(eholder ac?uiesces in one claimant s tr+ing out his claim and esta"lishing it at la,, he cannot then have that part of the litigation repeated in an

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interpleader suit. 4 -omero+ s 2?. 8uris. >o. %6#: .itfor s 2?. -leading /T+ler s 2d.0 %47 and #$6: 1angdell s 9ummar+ of 2?. -leading, >o. %6# +e ,ouc%e v. Garri-on, %43 -a. 4$3, #% ;E453. 17 It is the general rule that a "ill of interpleader comes too late ,hen application therefore is dela+ed until after @udgment has "een rendered in favor of one of the claimants of the fund, and that this is especiall+ true ,here the holder of the fund had notice of the conflicting claims prior to the rendition of such @udgment and an opportunit+ to implead the adverse claimants in the suit in ,hich such @udgment ,as rendered. /9ee notes and cases cited $6 ;m. =ec. 73$, ;m. 9t. Rep. 5&6, also 5 -omero+ s 2?. 8uris. 9ec. 4%.0 The evidence in the opinion of the ma@orit+ sho,s "e+ond dispute that the appellant permitted the -ar(er count+ suit to proceed to @udgment in favor of 7ritton ,ith full notice of the adverse claims of the defendants in the present suit other than the assignees of the @udgment /the "an( and .rs. -a""0 and no e<cuse is sho,n ,h+ he did not implead them in the suit. 18 To no, permit the Corporation to "ring 1ee to court after the latter s successful esta"lishment of his rights in civil case #6344 to the mem"ership fee certificate #3%, is to increase instead of to diminish the num"er of suits, ,hich is one of the purposes of an action of interpleader, ,ith the possi"ilit+ that the latter ,ould lose the "enefits of the favora"le @udgment. This cannot "e done "ecause having elected to ta(e its chances of success in said civil case #6344, ,ith full (no,ledge of all the fact, the Corporation must su"mit to the conse?uences of defeat. The act providing for the proceeding has nothing to sa+ touching the right of one, after contesting a claim of one of the claimants to final @udgment unsuccessfull+, to involve the successful litigant in litigation ane, "+ "ringing an interpleader action. The ?uestion seems to "e one of first impression here, "ut, in other @urisdictions, from ,hich the su"stance of the act ,as apparentl+ ta(en, the rule prevails that the action cannot "e resorted to after an unsuccessful trial against one of the claimants. It is ,ell settled, "oth "+ reasons and authorit+, that one ,ho as(s the interposition of a court of e?uit+ to compel others, claiming propert+ in his hands, to interplead, must do so "efore putting them to the test of trials at la,. .arborou/% v. 0%om"son, $ 9medes * .. #&% /4% ;m. =ec. 6#60: Gornis% v. 0anner, % Dou. * 8er. $$$: (aseltine v. #rickery , %6 )rat. /Fa.0 %%6. The remed+ "+ interpleader is afforded to protect the part+ from the anno+ance and hazard of t,o or more actions touching the same propert+ or demand: "ut one ,ho, ,ith (no,ledge of all the facts, neglects to avail himself of the relief, or elects to ta(e the chances for success in the actions at la,, ought to su"mit to the conse?uences of defeat. To permit an unsuccessful defendant to compel the successful plaintiffs to interplead, is to increase instead of to diminish the num"er of suits: to put upon the shoulders of others the "urden ,hich he as(s ma+ "e ta(en from his o,n. .... It is urged, ho,ever, that the ;merican 9uret+ Compan+ of >e, Dor( ,as not in position to file an interpleader until it had tested the claim of relatri< to final @udgment, and that, failing to meet ,ith success, it promptl+ filed the interpleader. The reason ,h+, it urges, it ,as not in such position until then is that had it succeeded "efore this court

in sustaining its construction of the "ond and the la, governing the "ond, it ,ould not have "een called upon to file an interpleader, since there ,ould have "een sufficient funds in its hands to have satisfied all la,ful claimants. It ma+ "e o"served, ho,ever, that the suret+ compan+ ,as ac?uainted ,ith all of the facts, and hence that it simpl+ too( its chances of meeting ,ith success "+ its o,n construction of the "ond and the la,. Baving failed to sustain it, it cannot no, force relatri< into litigation ane, ,ith others, involving most li(el+ a repetition of ,hat has "een decided, or force her to accept a pro rata part of a fund, ,hich is far from "enefits of the @udgment. 19 7esides, a successful litigant cannot later "e impleaded "+ his defeated adversar+ in an interpleader suit and compelled to prove his claim ane, against other adverse claimants, as that ,ould in effect "e a collateral attac( upon the @udgment. The @urisprudence of this state and the common la, states is ,ell-settled that a claimant ,ho has "een put to test of a trial "+ a suret+, and has esta"lish his claim, ma+ not "e impleaded later "+ the suret+ in an interpleader suit, and compelled to prove his claim again ,ith other adverse claimants.1merican 2urety Com"any of $e3 .ork v. #rim , %75 1a. &5&, %44 9o. 7#7: 1merican 2urety Com"any of $e3 .ork v. #rim /In Re 1+ong 1um"er Compan+0, %76 1a. 667, %47 9o. %6: +u/as v. $... Casualty Co., %6% 1a. $##, %5& 9o. 57#: %5 Ruling Case 1a,, ##6: $$ Corpus 8uris, 477: 4 -omero+ s 8urisprudence, %3#$: Royal $ei/%bors of 1merica v. Lo3ary /=.C.0 46 F#d 565: #rackett v. Graves, $3 ;pp. =iv. %6#, 5% >.D.9. 6&5: +e ,ouc%e v. Garrison, %43 -a. 4$3, #% ;. 453, 45%:&anufacturer*s 4inance Co. v. W.I. 5ones Co. %4% )a., 5%&, 6% 9.2. %3$$: (ancock &utual Life Ins. Co. v. La3der, ## R.I. 4%6, 64 ;. $6$. There can "e no dou"t that relator s claim has "een finall+ and definitel+ esta"lished, "ecause that matter ,as passed upon "+ three courts in definitive @udgments. The onl+ remaining item is the value of the use of the land during the time that relator occupied it. The case ,as remanded solel+ and onl+ for the purpose of determining the amount of that credit. In all other aspects the @udgment is final. 2. It is generall+ held "+ the cases it is the office of interpleader to protect a part+, not against dou"le lia"ilit+, "ut against dou"le ve<ation on account of one lia"ilit+. Gonia v. )*#rien, ##$ .ass. %77, %%% >.2. 767. ;nd so it is said that it is too late for the remed+ of interpleader if the part+ see(ing this relef has contested the claim of one of the parties and suffered @udgment to "e ta(en. In nited !.!.I. Co. v. #ritton /Te<. Civ. ;pp.0 #64 9.'. 576. 576, it ,as saidA It is the general rule that a "ill of interpleader comes too late ,hen application therefor is dela+ed until after @udgment has "een rendered in favor of one of the claimants of the fund, and this is especiall+ true ,here the holder of the fund had notice of the conflicting claims prior to the rendition of such @udgment and an opportunit+ to implead the adverse claimants in the suit in ,hich such @udgment ,as rendered. 9ee notes and cases cited $5 ;m. =ec. 73$: &% ;n. 9t. Rep. 5&6: also 5 -omero+ s 2?uit+ 8urisprudence >o. 4%.

The principle thus stated has "een recognized in man+ cases in other @urisdictions, among ,hich ma+ "e cited 1merican 2urety Co. v. )*#rien , ##$ .ass. %77, %%% >.2. 767: !%illi"s v. 0aylor , %46 .d. %57, %#& ;. %6: &oore v. (ill, 5& )a. 763, 76%: .earborou/% v. 0%om"son, $ 9medes * .. /%% .iss.0 #&%, 4% ;m. =ec. 6#6. 9ee, also, $$ C.8. p. 447, >o. $3: $as% v. &cCullum, /Te<. Civ. ;pp.0 74 9.'. #d %34#, %347. It ,ould seem that this rule should logicall+ follo, since, after the recover+ of @udgment, the interpleading of the @udgment creditor is in effect a collateral attac( upon the @udgment. 21 In fine, the instant interpleader suit cannot prosper "ecause the Corporation had alread+ "een made independentl+ lia"le in civil case #6344 and, therefore, its present application for interpleader ,ould in effect "e a collateral attac( upon the final @udgment in the said civil case: the appellee 1ee had alread+ esta"lished his rights to mem"ership fee certificate #3% in the aforesaid civil case and, therefore, this interpleader suit ,ould compel him to esta"lish his rights ane,, and there"+ increase instead of diminish litigations, ,hich is one of the purposes of an interpleader suit, ,ith the possi"lit+ that the "enefits of the final @udgment in the said civil case might eventuall+ "e ta(en a,a+ from him: and "ecause the Corporation allo,ed itself to "e sued to final @udgment in the said case, its action of interpleader ,as filed ine<cusa"l+ late, for ,hich reason it is "arred "+ laches or unreasona"le dela+. ;CC!R=I>)1D, the order of .a+ #6, %&64, dismissing the complaint, is affirmed, at appellant s cost.

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G.R. No. 127913

,/01/23/r 13, 2..1 C!RP!RATI!N, petitioner,

RI4AL C!MMERCIAL %AN ING vs. METR! C!NTAINER C!RP!RATI!N, respondent. APUNAN, J.:

In its =ecision, promulgated on %6 !cto"er %&&6, the Court of ;ppeals granted the petition and set aside the %# .arch %&&6 and #4 8une %&&6 orders of the RTC. The appellate court also ordered the dismissal of Civil Case >o. 4$&6-F-&4. RC7C s motion for reconsideration ,as denied for lac( of merit in the resolution of 36 8anuar+ %&&7. Bence, the present recourse. RC7C alleged, thatA

dismissal of the interpleader action not "ecause it is no longer interested "ut "ecause there is no more need for it to pursue such cause of action. It should "e remem"ered that an action of interpleader is afforded to protect a person not against dou"le lia"ilit+ "ut against dou"le ve<ation in respect of one lia"ilit+. 7 It re?uires, as an indespensa"le re?uisite, that 5conflicting claims upon the same su"@ect matter are or ma+ "e made against the plaintiff-in-interpleader ,ho claims no interest ,hatever in the su"@ect matter or an interest ,hich in ,hole or in part is not disputed "+ the claimants.56The decision in Civil Case >o. 6#3# resolved the conflicting claims insofar as pa+ment of rentals ,as concerned. -etitioner is correct in sa+ing that it is not "ound "+ the decision in Civil Case >o. 6#3#. It is not a part+ thereto. Bo,ever, it could not compel .2TR!C;> to pursue Civil Case >o. 4$&6-F-&4. RC7C has other avenues to prove its claim. Is not "ereft of other legal remedies. In fact, he issue of o,nership can ver+ ,ell "e threshed out in Civil Case >o. 43$7-F-&$, the case for >ullification of 2<tra@udicial foreclosure 9ale and =amages filed "+ 12DC!> against RC7C.783"%i7.n9t W5ERE"!RE, the petition for revie, is =2>I2= and the =ecision of the Court of ;ppeals, promulgated on %6 !cto"er %&&6, as ,ell as its Resolution promulgated on 36 8anuar+ %&&7, are A""IRMED. ,! !RDERED.

;ssailed in this petition for revie, on certiorari are the =ecision, promulgated on %6 !cto"er %&&6 and the Resolution, promulgated on 36 8anuar+ %&&7, of the Court of ;ppeals in C;-).R. 9- >o. 4%#&4. The facts of the case are as follo,sA !n #6 9eptem"er %&&3, 1e+ Construction Corporation /12DC!>0 contracted a loan from Rizal Commercial 7an(ing Corporation /RC7C0 in the amount of Thirt+ .illion -esos /-$3,333,333.330. The loan ,as secured "+ a real estate mortgage over a propert+, located in 7arrio Ggong, Falenzuela, .etro .anila /no, Falenzuela Cit+0 and covered "+ TCT >o. F-%7##$. 12DC!> failed to settle its o"ligations prompting RC7C to institute an e<tra@udicial foreclosure proceedings against it. ;fter 12DC!> s legal attempts to forestall the action of R7C7 failed, the foreclosure too( place on #6 =ecem"er %&&# ,ith RC7C as the highest "idder. 12DC!> promptl+ filed an action for >ullification of 2<tra@udicial Foreclosure 9ale and =amages against RC7C. The case, doc(eted as Civil Case >o. 43$7-F-&$, ,as raffled to the Regional Trial Court /RTC0 of Falenzuela, 7ranch %7#. .ean,hile, RC7C consolidated its o,nership over the propert+ due to 12DC!> s failure to redeem it ,ithin the %#-month redemption period and TCT >o. F-$$#4$# ,as issued if favor of the "an(. 7+ virtue thereof, RC7C demanded rental pa+ments from .etro Container Corporation /.2TR!C;>0 ,hich ,as leasing the propert+ from 12DC!>. !n #6 .a+ %&&4, 12DC!> filed an action for Gnla,ful =etainer, doc(eted as Civil Case >o. 6#3#, against .2TR!C;> "efore the .etropolitan Trial Court /.eTC0 of Falenzuela, 7ranch 6#. !n #7 .a+ %&&4, .2TR!C;> filed a complaint for Interpleader, doc(eted as Civil Case >o. 4$&6-F-&4 "efore the Regional Trial Court of Falenzuela, .etro .anila: 7ranch 75 against 12DC!> and RC7C to compel them to interplead and litigate their several claims among themselves and to determine ,hich among them shall rightfull+ receive the pa+ment of monthl+ rentals on the su"@ect propert+ .!n 34 8ul+ %&&5, during the pre-trial conference in Civil Case >o. 4$&6-F-&4, the trial court ordered the dismissal of the case insofar as .2TR!C;> and 12DC!> ,ere concerned in vie, of an amica"le settlement the+ entered "+ virtue of ,hich .2TR!C;> paid "ac( rentals to 12DC!>. !n $% !cto"er %&&5, @udgment ,as rendered in Civil Case >o.6#3#, ,hich among other things, ordered .2TR!C;> to pa+ 12DC!> ,hatever rentals due on the su"@ect premises. The .eTC decision "ecame final and e<ecutor+. !n 3% Fe"ruar+ %&&6, .2TR!C;> moved for the dismissal of Civil Case >o. 4$&6-F-&4 for having "ecome moot and academic due to the amica"le settlement it entered ,ith 12DC!> on 34 8ul+ %&&5 and the decision in Civil Case >o. 6#3# on $% !cto"er %&&5. 12DC!>, li(e,ise, moved for the dismissal of the case citing the same grounds cited "+ .2TR!C;>. !n %# .arch %&&6, the t,o motions ,ere dismissed for lac( of merit. The motions for reconsideration filed "+ .2TR!C;> and 12DC!> ,ere also denied prompting .2TR!C;> to see( relief from the Court of ;ppeals via a petition for certiorari and prohi"ition ,ith pra+er for the issuance of a temporar+ restraining order and a ,rit of preliminar+ in@unction. 12DC!>, as private respondent, also sought for the nullification of the RTC orders.

/%0 TB2 =2CI9I!> !F TB2 .2TR!-!1IT;> TRI;1 C!GRT I> TB2 282CT.2>T C;92 72T'22> .2TR!C;> ;>= 12DC!> =!29 >!T ;>= C;>>!T R2>=2R TB2 I>T2R-12;=2R ;CTI!> .!!T ;>= ;C;=2.IC. /#0 'BI12 ; -;RTD 'B! I>ITI;T29 ;> I>T2R-12;=2R ;CTI!> .;D >!T 72 C!.-2112= T! 1ITI);T2 IF B2 I9 >! 1!>)2R I>T2R29T2= T! -GR9G2 9GCB C;G92 !F ;CTI!>, 9;I= -;RTD .;D >!T G>I1;T2R;11D C;G92 TB2 =I9.I99;1 !F TB2 C;92 ;FT2R TB2 ;>9'2R B; F2 722> FI12=. FGRTB2R, TB2 =2F2>=;>T9 I> ;> I>T2R-12;=2R 9GIT 9B!G1= 72 )IF2> FG11 !--!RTG>ITD T! 1ITI);T2 TB2IR R29-2CTIF2 C1;I.9.% 'e sustain the Court of ;ppeals. 9ection %, Rule 6$ of the Revised Rules of Court# providesA 9ection %. 6 Inter"leader 3%en "ro"er. - 'henever conflicting claims upon the same su"@ect matter are or ma+ "e made against a person, ,ho claims no interest ,hatever in the su"@ect matter, or an interest ,hich in ,hole or in part is not disputed "+ the claimants, he ma+ "ring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves. In the case "efore us, it is undisputed that .2TR!C;> filed the interpleader action /Civil Case >o. 4$&6-F-&40 "ecause it ,as unsure ,hich "et,een 12DC!> and RC7C ,as entitled to receive the pa+ment of monthl+ rentals on the su"@ect propert+. 12DC!> ,as claiming pa+ment of the rentals as lessor of the propert+ ,hile RC7C ,as ma(ing a demand "+ virtue of the consolidation of the title of the propert+ in its name. It is also undisputed that 12DC!>, as lessor of the su"@ect propert+ filed an action for unla,ful detainer /Civil Case >o. 6#3#0 against its lessee .2TR!C;>. The issue in Civil Case >o. 6#3# is limited to the ?uestion of ph+sical or material possession of the premises.$ The issue of o,nership is immaterial therein 4 and the outcome of the case could not in an+ ,a+ affect conflicting claims of o,nership, in this case "et,een RC7C and 12DC!>. This ,as made clear ,hen the trial court, in den+ing RC7C s 5.otion for Inclusion < < < as an Indispensa"le -art+5 declared that 5the final determination of the issue of ph+sical possession over the su"@ect premises "et,een the plaintiff and the defendant shall not in an+ ,a+ affect RC7C s claims of o,nership over the said premises, since RC7C is neither a co-lessor or co- lessee of the same, hence he has no legal personalit+ to @oin the parties herein ,ith respect to the issue of ph+sical possession vis6a6vis the contract of lease "et,een the parties.5 5 ;s aptl+ pointed "+ the .eTC, the issue in Civil Case >o. 6#3# is limited to the defendant 12DC!> s "reach of the provisions of the Contract of 1ease Rentals.6 Bence, the reason for the interpleader action ceased ,hen the .eTC rendered @udgment in Civil Case >o. 6#3# ,here"+ the court directed .2TR!C;> to pa+ 12DC!> 5,hatever rentals due on the su"@ect premises < < <.5 'hile RC7C, not "eing a part+ to Civil Case >o. 6#3#, could not "e "ound "+ the @udgment therein, .2TR!C;> is "ound "+ the .eTC decision. 'hen the decision in Civil Case >o. 6#3# "ecame final and e<ecutor+, .2TR!C;> has no other alternative left "ut to pa+ the rentals to 12DC!>. -recisel+ "ecause there ,as alread+ a @udicial fiat to .2TR!C;>, there ,as no more reason to continue ,ith Civil Case >o. 4$&6-F-&4. Thus, .2TR!C;> moved for the

Page 3 of 29

G.R. No. L--1818 "/3r6ar7 18, 1976 4!ILA C! vs. C!NTINENTAL DE+EL!PTMENT C!RP!RATI!N, respondent. G.R. No. L--1831 "/3r6ar7 18, 1976 C!NTINENTAL DE+EL!PMENT C!RP!RATI!N, petitioner, vs. %ENIT! GER+A,I! TAN a)* 4!ILA C! LIM, respondents. MA A,IAR, J.8 These t,o petitions see( a revie, of the order dated .arch %#, %&74 of the 8udge presiding 7ranch HHFI of the .anila Court of First Instance, dismissing petitioner Continental =evelopment Corporation s complaint. The C!GRT resolved to treat these petitions as special civil actions, the petition to dismiss filed "+ the respondent 7enito )ervasio Tan as ans,er and the cases as su"mitted for decision. !n >ovem"er #6, %&7$, herein petitioner Continental =evelopment Corporation filed a complaint for interpleader against the defendants 7enito )ervasio Tan and Ioila Co 1im, alleging among othersA #. That in the "oo(s of the plaintiff, there appears the name of the defendant 7enito )ervasio Tan as one of its stoc(holders initiall+ sometime in %&75 ,ith fift+ /530 common shares covered "+ of stoc( >os. %# and %$, and su"se?uentl+ credited ,ith /750 shares "+ ,a+ of dividends covered "+ certificates of stoc( >os. #3 and #5, or an outstanding total stoc(holding of one hundred t,ent+ five /%#50 common shares of the par value of T,o Bundred Fift+ -esos /-#53.330 each. $. That said defendant 7enito )ervasio Tan, personall+ or through his la,+er, has since =ecem"er, %&7#, "een demanding from "+ letters and telegrams, the release to him of the certificates stoc( aforesaid "ut ,hich the plaintiff has not done so far and is prevented from doing so "ecause of the vehement and adverse claim thereto "+ the other defendant, Ioila Co 1im. 4. That the defendant Ioila Co 1im, "+ letters sent to the plaintiff through her counsel, has laid claim and persists in claiming the ver+ same shares of stoc( "eing demanded "+ the other defendant alleging that said stoc(s reall+ "elonged to her mother 9o no, alread+ deceased, and strongl+ den+ing her proclaim to the same. 5. That "oth defendants, through their respective la,+ers, threaten to ta(e punitive measures against the plaintiff compan+ should it ta(e an+ steps that ma+ pre@udice their respective interests in so far as the stoc(s in ?uestion are concerned. 6. That plaintiff is not sufficientl+ informed of the right of the respective claimants and therefore not in a position to determine @ustl+ and correctl+ their conflicting claims. 7. That the plaintiff compan+ has no interest of an+ (ind in said stoc(s and is read+ and ,illing to deliver the corresponding certificates of o,nership to ,homsoever as this Bonora"le Court ma+ direct. /pp. ##-#$, rec.0 and pra+ing that the defendants "e directed to interplead and litigate their respective claims over the aforementioned shares of stoc( and to determine their respective rights thereto. !n 8anuar+ 7, %&74, herein respondent 7enito )ervasio Tan, as defendant in the lo,er court, filed a motion to dismiss the complaint, on the ground, inter alia, that paragraph # of the complaint itself states that the shares of stoc( in ?uestion are recorded in the "oo(s of petitioner in the same of defendant 7enito )ervasio Tan, ,ho should therefore "e declared o,ner thereof pursuant to 9ection 5# of the Corporation 1a, /pp. #5-$3, rec.0. !n 8anuar+ %4, %&74, defendant Ioila Co 1im filed her ans,er e<pressl+ admitting paragraph # of the complaint, "ut alleging that the said shares of stoc( had previousl+ LIM, petitioner,

"een delivered in trust to the defendant 7enito )ervasio Tan for her /Ioila s0 mother, the late 9o 7i, alias Ta,a, the actual o,ner of the shares of stoc(: that no, 7enito )ervasioTan ,ould ,ant the re-issuance and release to him of ne, replacement certificates, ,hich petitioner has not so far done: and that as the daughter and heir of said 9o 7i, alias Ta,a, she is no, the o,ner of the said shares of stoc(, ,hich should "e delivered to her /pp. $%-$$, rec.0. !n 8anuar+ ##, %&74, petitioner Continental =evelopment Corporation filed its opposition to 7enito s motion to dismiss /pp. $4-43, ).R. >o. 1-4%6$%0. In the ?uestioned order dated .arch %#, %&74, the trial @udge dismissed the complaint for lac( of cause of action, invo(ing 9ection $5 of ;ct >o. %45&, as amended, other,ise (no,n as the Corporation 1a, /pp. 4%4#, ).R. >o. 1-4%6$%0. =efendant Ioila Co 1im and herein petitioner as plaintiff, filed their respective motions for reconsideration of the aforesaid order /pp. 4$-4&, ).R. >o. 1-4%6$%0, to ,hich the defendant 7enito )ervasio Tan filed his re@oinder /pp. 53-6%, ).R. >o. 1-4%6$%0. 9aid motions ,ere denied in an order dated 8ul+ $, %&74. Bence these petitions "+ Continental =evelopment Corporation and Ioila Co 1im. It is patent from the pleadings in the lo,er court that "oth defendants 7enito )ervasio Tan and Ioila Co 1im assert conflicting rights to the ?uestioned shares of stoc(. -recisel+ in his motion to dismiss the complaint for interpleader, defendant 7enito )ervasio Tan states that petitioner corporation, through its Fice--resident, notified him on 8ul+ #$, %&7$ 5that the shares of stoc( are in the possession of its treasurer, .r. T+ 1im, and urged defendant to directl+ o"tain them from the former, ,ho allegedl+ ,as on vacation at the time. .r. T+ 1im, on ;ugust $3, %&7$, through counsel, replied to the defendant 7enito )ervasio Tan that said certificates ,ere not in his possession "ut surmised, ,ithout reference to an+ record, that the same might have "een delivered to the deceased 9o 7i. ;nd, on !cto"er #&, %&7$, same counsel of .r. T+ 1im, ,rote the corporation, in "ehalf of defendant Ioila Co 1im, alleged heir of 9o 7i, claiming o,nership of the stoc(s5 /pp. #6, #7, ).R. >o. 1-4%6$%0. =efendant Ioila Co 1im, on the other hand. as heretofore stated, claims sole-o,nership of said shares of stoc( as inheritance from her late mother 9o 7i, alias Ta,a. ;nd petitioner Continental =evelopment Corporation e<pressl+ stated in the complaint that "oth defendants, through their respective la,+ers, threatened to ta(e punitive measures against it should it adopt an+ steps that ma+ pre@udice then respective interests in the shares of stoc( in ?uestion: and that it is not sufficientl+ informed of the rights of the respective claimants and therefore not in a position to determine @ustl+ and correctl+ their conflicting claims /pars. 5, 6 and 7 of the complaint, p. #$, rec.0 ;nd in its opposition to the motion to dismiss its complaint, petitioner Continental =evelopment Corporation s that it might "e lia"le to one defendant should it compl+ ,ith the demands of the other ,ith respect to the transfer or entr+ of the shares of stoc( in the "oo(s of the corporation. 9ince there is an active conflict of interests "et,een the t,o defendants, no, herein respondent 7enito )ervasio Tan and petitioner Ioila Co 1im, over the disputed shares of stoc(, the trial court gravel+ a"used its discretion in dismissing the complaint for interpleader, ,hich practicall+ decided o,nership of the shares of stoc( in favor of defendant 7enito )ervasio Tan. The t,o defendants, no, respondents in ).R. >o. 1-4%6$%, should "e given full opportunit+ to litigate their respective claims. Rule 6$, 9ection % of the >e, Rules of Court tells us ,hen a cause of action e<ists to support a complaint in interpleaderA 'henever conflicting claims upon the same su"@ect matter are or ma+ "e made against a person, ,ho claims no interest ,hatever in the su"@ect matter, or an interest ,hich in ,hole or in part is not disputed "+ the complainants to compel them to interplead and litigate their several claims among themselves /Italics supplied0.

This provision onl+ re?uires as an indispensa"le re?uisiteA that conflicting claims upon the same su"@ect matter are or ma+ "e made against the plaintiff-in-interpleader ,ho claims no interest ,hatever in the su"@ect matter or an interest ,hich in ,hole or in part is not disputed "+ the claimants /7eltran vs. -eople s Bomesite and Bousing Corporation, >o. 1-#5%$6,#& 9CR; %450. This ruling, penned "+ &r. 5ustice 0ee t%e "rinci"le in 1lvare- vs. Common3ealt% /65 -hil. $3#0, that The action of interpleader under section %#3, is a remed+ ,here"+ a person ,ho has personal propert+ in his possession, or an o"ligation to render ,holl+ or partiall+, ,ithout claiming an+ right in "oth comes to court and as(s that the persons ,ho claim the said personal propert+ or ,ho consider themselves entitled to demand compliance ,ith the o"ligation, "e re?uired to litigate among themselves, in order to determine finall+ ,ho is entitled to one or the other thing. The remed+ is afforded not to protect a person against a dou"le lia"ilit+ "ut to protect him against a dou"le ve<ation in respect of one lia"ilit+ ;n interpleader merel+ demands as a sine ?ua non element ... that there "e t,o or more claimants to the fund or thing in dispute through separate and different interests. The claims must "e adverse "efore relief can "e granted and the parties sought to "e interpleaded must "e in a position to ma(e effective claims /$$ C.8. 4$30. ;dditionall+, the fund, thing, or dut+ over ,hich the parties assert adverse claims must "e one and the same and derived from the same source /$$ C.8., $#6: .artin, Rules of Court, %&6& ed., Fol. $, %$$-%$4: .oran, Rules of Court, %&73 ed., Fol. $, %$4%$60. Indeed, petitioner corporation is placed in the same situation as a lessee ,ho does not (no, the person to ,hom he ,ill pa+ the rentals due to the conflicting claims over the propert+ leased, or a sheriff ,ho finds himself puzzled "+ conflicting claims to a propert+ seized "+ him. In these e<amples, the lessee /-ang(alina,an vs. Rodas, 63 -hil. #60 and the sheriff 9+-Juia vs. 9heriff, 46 -hil. 4330 ,ere each allo,ed to file a complaint in interpleader to determine the respective rights of the claimants. 'B2R2F!R2, TB2 -2TITI!>9 ;R2 B2R27D )R;>T2=: TB2 !R=2R =;T2= .;RCB %#, %&74 =I9.I99I>) TB2 C!.-1;I>T ;>= TB2 !R=2R =;T2= 8G1D $, %&74 =2>DI>) TB2 .!TI!> F!R R2C!>9I=2R;TI!> !F TB2 -2TITI!>2R9 I> TB292 T'! C;929 ;R2 B2R27D 92T ;9I=2. 'ITB C!9T9 ;);I>9T R29-!>=2>T 72>IT! )2RF;9I! T;>.

Page 4 of 29

RULE 63 DECLARAT!R$ RELIE" AND ,IMILAR REMEDIE, G.R. No. 15.8.6 9a)6ar7 28, 2..8 ALMEDA, petitioners,

prevent damage and pre@udice.%3 The case ,as doc(eted as Civil Case >o. &6-4%% "efore the RTC of .a(ati. !n .arch %3, %&&6, petitioners in turn filed an action for e@ectment, rescission and damages against respondent for failure of the latter to vacate the premises after the demand made "+ the former. %% 7efore respondent could file an ans,er, petitioners filed a >otice of =ismissal.%# The+ su"se?uentl+ refiled the complaint "efore the .etropolitan Trial Court of .a(ati: the case ,as raffled to 7ranch %$& and ,as doc(eted as Civil Case >o. 5$5&6. -etitioners later moved for the dismissal of the declarator+ relief case for "eing an improper remed+ considering that respondent ,as alread+ in "reach of the o"ligation and that the case ,ould not end the litigation and settle the rights of the parties. The trial court, ho,ever, ,as not persuaded, and conse?uentl+, denied the motion. ;fter trial on the merits, on .a+ &, #333, the RTC ruled in favor of respondent and against petitioners. The pertinent portion of the decision readsA 'B2R2F!R2, premises considered, this Court renders @udgment on the case as follo,sA %0 declaring that plaintiff is not lia"le for the pa+ment of Falue-;dded Ta< /F;T0 of %3K of the rent for LtheM use of the leased premises: #0 declaring that plaintiff is not lia"le for the pa+ment of an+ rental ad@ustment, there "eing no Le<traordinar+M inflation or devaluation, as provided in the 9eventh Condition of the lease contract, to @ustif+ the same: $0 holding defendants lia"le to plaintiff for the total amount of -%,%%&,%3#.%&, said amount representing pa+ments erroneousl+ made "+ plaintiff as F;T charges and rental ad@ustment for the months of 8anuar+, Fe"ruar+ and .arch, %&&&: and 40 holding defendants lia"le to plaintiff for the amount of -%,%37,$46.6&, said amount representing the "alance of plaintiff s rental deposit still ,ith defendants. 9! !R=2R2=. %$ The trial court denied petitioners their right to pass on to respondent the "urden of pa+ing the F;T since it ,as not a ne, ta< that ,ould call for the application of the si<th clause of the contract. The court, li(e,ise, denied their right to collect the demanded increase in rental, there "eing no e<traordinar+ inflation or devaluation as provided for in the seventh clause of the contract. 7ecause of the pa+ment made "+ respondent of the rental ad@ustment demanded "+ petitioners, the court ordered the restitution "+ the latter to the former of the amounts paid, not,ithstanding the ,ell-esta"lished rule that in an action for declarator+ relief, other than a declaration of rights and o"ligations, affirmative reliefs are not sought "+ or a,arded to the parties. -etitioners elevated the aforesaid case to the Court of ;ppeals ,hich affirmed ,ith modification the RTC decision. The fallo readsA 'B2R2F!R2, premises considered, the present appeal is =I9.I992= and the appealed decision in Civil Case >o. &6-4%% is here"+ ;FFIR.2= ,ith .!=IFIC;TI!> in that the order for the return of the "alance of the rental deposits and of the amounts representing the %3K F;T and rental ad@ustment, is here"+ =212T2=. >o pronouncement as to costs.

9! !R=2R2=. %4 The appellate court agreed ,ith the conclusions of la, and the application of the decisional rules on the matter made "+ the RTC. Bo,ever, it found that the trial court e<ceeded its @urisdiction in granting affirmative relief to the respondent, particularl+ the restitution of its e<cess pa+ment. -etitioners no, come "efore this Court raising the follo,ing issuesA I. 'B2TB2R !R >!T ;RTIC12 %#53 !F TB2 >2' CIFI1 C!=2 I9 ;--1IC;712 T! TB2 C;92 ;T 7;R. II. 'B2TB2R !R >!T TB2 =!CTRI>2 2>G>CI;T2= I> FI1I-I>! -I-2 ;>= F!G>=RD C!R-. F9. >;';9; C;92, %6% 9CR; $# ;>= C!.-;>I!> C;929 ;R2 /sic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n fine, the issues for our resolution are as follo,sA %0 ,hether the action for declarator+ relief is proper: #0 ,hether respondent is lia"le to pa+ %3K F;T pursuant to Repu"lic ;ct /R;0 77%6: and $0 ,hether the amount of rentals due the petitioners should "e ad@usted "+ reason of e<traordinar+ inflation or devaluation. =eclarator+ relief is defined as an action "+ an+ person interested in a deed, ,ill, contract or other ,ritten instrument, e<ecutive order or resolution, to determine an+ ?uestion of construction or validit+ arising from the instrument, e<ecutive order or regulation, or statute, and for a declaration of his rights and duties thereunder. The onl+ issue that ma+ "e raised in such a petition is the ?uestion of construction or validit+ of provisions in an instrument or statute. Corollar+ is the general rule that such an action must "e @ustified, as no other ade?uate relief or remed+ is availa"le under the circumstances. %5 =ecisional la, enumerates the re?uisites of an action for declarator+ relief, as follo,sA %0 the su"@ect matter of the controvers+ must "e a deed, ,ill, contract or other ,ritten instrument, statute, e<ecutive order or regulation, or ordinance: #0 the terms of said documents and the validit+ thereof are dou"tful and re?uire @udicial construction: $0 there must have "een no "reach of the documents in ?uestion: 40 there must "e an actual

EU"EMIA ALMEDA a)* R!MEL vs. %AT5ALA MAR ETING INDU,TRIE,, INC., respondent. DECI,I!N NAC5URA, J.8

This is a -etition for Revie, on Certiorari under Rule 45 of the Rules of Court, of the =ecision% of the Court of ;ppeals /C;0, dated 9eptem"er $, #33%, in C;-).R. CF >o. 67764, and its Resolution# dated >ovem"er %&, #33%. The assailed =ecision affirmed ,ith modification the =ecision $ of the Regional Trial Court /RTC0, .a(ati Cit+, 7ranch %$6, dated .a+ &, #333 in Civil Case >o. &6-4%%. 9ometime in .a+ %&&7, respondent 7athala .ar(eting Industries, Inc., as lessee, represented "+ its president Ramon B. )arcia, rene,ed its Contract of 1ease 4 ,ith -onciano 1. ;lmeda /-onciano0, as lessor, hus"and of petitioner 2ufemia and father of petitioner Romel ;lmeda. Gnder the said contract, -onciano agreed to lease a portion of the ;lmeda Compound, located at ##36 -asong Tamo 9treet, .a(ati Cit+, consisting of 7,$46.#5 s?uare meters, for a monthl+ rental of -%,%37,$46.6&, for a term of four /40 +ears from .a+ %, %&&7 unless sooner terminated as provided in the contract. 5 The contract of lease contained the follo,ing pertinent provisions ,hich gave rise to the instant caseA 9IHTB - It is e<pressl+ understood "+ the parties hereto that the rental rate stipulated is "ased on the present rate of assessment on the propert+, and that in case the assessment should hereafter "e increased or an+ ne, ta<, charge or "urden "e imposed "+ authorities on the lot and "uilding ,here the leased premises are located, 129922 shall pa+, ,hen the rental herein provided "ecomes due, the additional rental or charge corresponding to the portion here"+ leased: provided, ho,ever, that in the event that the present assessment or ta< on said propert+ should "e reduced, 129922 shall "e entitled to reduction in the stipulated rental, li(e,ise in proportion to the portion leased "+ him: 92F2>TB - In case an e<traordinar+ inflation or devaluation of -hilippine Currenc+ should supervene, the value of -hilippine peso at the time of the esta"lishment of the o"ligation shall "e the "asis of pa+ment: 6 =uring the effectivit+ of the contract, -onciano died. Thereafter, respondent dealt ,ith petitioners. In a letter7dated =ecem"er #&, %&&7, petitioners advised respondent that the former shall assess and collect Falue ;dded Ta< /F;T0 on its monthl+ rentals. In response, respondent contended that F;T ma+ not "e imposed as the rentals fi<ed in the contract of lease ,ere supposed to include the F;T therein, considering that their contract ,as e<ecuted on .a+ %, %&&7 ,hen the F;T la, had long "een in effect. 6 !n 8anuar+ #6, %&&6, respondent received another letter from petitioners informing the former that its monthl+ rental should "e increased "+ 7$K pursuant to condition >o. 7 of the contract and ;rticle %#53 of the Civil Code. Respondent opposed petitioners demand and insisted that there ,as no e<traordinar+ inflation to ,arrant the application of ;rticle %#53 in light of the pronouncement of this Court in various cases. & Respondent refused to pa+ the F;T and ad@usted rentals as demanded "+ petitioners "ut continued to pa+ the stipulated amount set forth in their contract. !n Fe"ruar+ %6, %&&6, respondent instituted an action for declarator+ relief for purposes of determining the correct interpretation of condition >os. 6 and 7 of the lease contract to

Page 5 of 29

@usticia"le controvers+ or the 5ripening seeds5 of one "et,een persons ,hose interests are adverse: 50 the issue must "e ripe for @udicial determination: and 60 ade?uate relief is not availa"le through other means or other forms of action or proceeding. %6 It is "e+ond cavil that the foregoing re?uisites are present in the instant case, e<cept that petitioners insist that respondent ,as alread+ in "reach of the contract ,hen the petition ,as filed. 'e do not agree. ;fter petitioners demanded pa+ment of ad@usted rentals and in the months that follo,ed, respondent complied ,ith the terms and conditions set forth in their contract of lease "+ pa+ing the rentals stipulated therein. Respondent religiousl+ fulfilled its o"ligations to petitioners even during the pendenc+ of the present suit. There is no sho,ing that respondent committed an act constituting a "reach of the su"@ect contract of lease. Thus, respondent is not "arred from instituting "efore the trial court the petition for declarator+ relief. -etitioners claim that the instant petition is not proper "ecause a separate action for rescission, e@ectment and damages had "een commenced "efore another court: thus, the construction of the su"@ect contractual provisions should "e ventilated in the same forum. 'e are not convinced. It is true that in !an/aniban v. !ili"inas 2%ell !etroleum Cor"oration %7 ,e held that the petition for declarator+ relief should "e dismissed in vie, of the pendenc+ of a separate action for unla,ful detainer. Bo,ever, ,e cannot appl+ the same ruling to the instant case. In !an/aniban, the unla,ful detainer case had alread+ "een resolved "+ the trial court "efore the dismissal of the declarator+ relief case: and it ,as petitioner in that case ,ho insisted that the action for declarator+ relief "e preferred over the action for unla,ful detainer. Conversel+, in the case at "ench, the trial court had not +et resolved the rescissionEe@ectment case during the pendenc+ of the declarator+ relief petition. In fact, the trial court, ,here the rescission case ,as on appeal, itself initiated the suspension of the proceedings pending the resolution of the action for declarator+ relief. 'e are not unmindful of the doctrine enunciated in 0eodoro, 5r. v. &irasol ,here the declarator+ relief action ,as dismissed "ecause the issue therein could "e threshed out in the unla,ful detainer suit. Det, again, in that case, there ,as alread+ a "reach of contract at the time of the filing of the declarator+ relief petition. This dissimilar factual milieu proscri"es the Court from appl+ing 0eodoro to the instant case. )iven all these attendant circumstances, the Court is disposed to entertain the instant declarator+ relief action instead of dismissing it, not,ithstanding the pendenc+ of the e@ectmentErescission case "efore the trial court. The resolution of the present petition ,ould ,rite finis to the parties dispute, as it ,ould settle once and for all the ?uestion of the proper interpretation of the t,o contractual stipulations su"@ect of this controvers+. >o,, on the su"stantive la, issues. -etitioners repeatedl+ made a demand on respondent for the pa+ment of F;T and for rental ad@ustment allegedl+ "rought a"out "+ e<traordinar+ inflation or devaluation. 7oth the trial court and the appellate court found no merit in petitioners claim. 'e see no reason to depart from such findings. ;s to the lia"ilit+ of respondent for the pa+ment of F;T, ,e cite ,ith approval the ratiocination of the appellate court, viz.A Clearl+, the person primaril+ lia"le for the pa+ment of F;T is the lessor ,ho ma+ choose to pass it on to the lessee or a"sor" the same. 7eginning 8anuar+ %, %&&6, the lease of real propert+ in the ordinar+ course of "usiness, ,hether for commercial or residential use, ,hen the
%6

gross annual receipts e<ceed -533,333.33, is su"@ect to %3K F;T. >ot,ithstanding the mandator+ pa+ment of the %3K F;T "+ the lessor, the actual shifting of the said ta< "urden upon the lessee is clearl+ optional on the part of the lessor, under the terms of the statute. The ,ord 5ma+5 in the statute, generall+ spea(ing, denotes that it is director+ in nature. It is generall+ permissive onl+ and operates to confer discretion. In this case, despite the applica"ilit+ of the rule under 9ec. && of the >IRC, as amended "+ R.;. 77%6, granting the lessor the option to pass on to the lessee the %3K F;T, to e<isting contracts of lease as of 8anuar+ %, %&&6, the original lessor, -onciano 1. ;lmeda did not charge the lesseeappellee the %3K F;T nor provided for its additional imposition ,hen the+ rene,ed the contract of lease in .a+ %&&7. .ore significantl+, said lessor did not actuall+ collect a %3K F;T on the monthl+ rental due from the lessee-appellee after the e<ecution of the .a+ %&&7 contract of lease. The inevita"le implication is that the lessor intended not to avail of the option granted him "+ la, to shift the %3K F;T upon the lessee-appellee. < < <. %& In short, petitioners are estopped from shifting to respondent the "urden of pa+ing the F;T. -etitioners reliance on the si<th condition of the contract is, li(e,ise, unavailing. This provision clearl+ states that respondent can onl+ "e held lia"le for ne3 ta:es imposed after the effectivit+ of the contract of lease, that is, after .a+ %&&7, and onl+ if the+ pertain to the lot and the "uilding ,here the leased premises are located. Considering that R; 77%6 too( effect in %&&4, the F;T cannot "e considered as a 5ne, ta<5 in .a+ %&&7, as to fall ,ithin the coverage of the si<th stipulation. >either can petitioners legitimatel+ demand rental ad@ustment "ecause of e<traordinar+ inflation or devaluation. -etitioners contend that ;rticle %#53 of the Civil Code does not appl+ to this case "ecause the contract stipulation spea(s of e<traordinar+ inflation or devaluation ,hile the Code spea(s of e<traordinar+ inflation or deflation. The+ insist that the doctrine pronounced in +el Rosario v. 0%e 2%ell Com"any, !%ils. Limited #3 should appl+. 2ssential to contract construction is the ascertainment of the intention of the contracting parties, and such determination must ta(e into account the contemporaneous and su"se?uent acts of the parties. This intention, once ascertained, is deemed an integral part of the contract.#% 'hile, indeed, condition >o. 7 of the contract spea(s of 5e<traordinar+ inflation or devaluation5 as compared to ;rticle %#53 s 5e<traordinar+ inflation or deflation,5 ,e find that ,hen the parties used the term 5devaluation,5 the+ reall+ did not intend to depart from ;rticle %#53 of the Civil Code. Condition >o. 7 of the contract should, thus, "e read in harmon+ ,ith the Civil Code provision. That this is the intention of the parties is evident from petitioners letter ## dated 8anuar+ #6, %&&6, ,here, in demanding rental ad@ustment ostensi"l+ "ased on condition >o. 7, petitioners made e<plicit reference to ;rticle %#53 of the Civil Code, even ?uoting the la, ver"atim. Thus, the application of +el Rosario is not ,arranted. Rather, @urisprudential rules on the application of ;rticle %#53 should "e considered. ;rticle %#53 of the Civil Code statesA In case an e<traordinar+ inflation or deflation of the currenc+ stipulated should supervene, the value of the currenc+ at the time of the esta"lishment of the o"ligation shall "e the "asis of pa+ment, unless there is an agreement to the contrar+. Inflation has "een defined as the sharp increase of mone+ or credit, or "oth, ,ithout a corresponding increase in "usiness transaction. There is inflation ,hen there is an increase in the volume of mone+ and credit relative to availa"le goods, resulting in a

su"stantial and continuing rise in the general price level. #$ In a num"er of cases, this Court had provided a discourse on ,hat constitutes e<traordinar+ inflation, thusA L2M<traordinar+ inflation e<ists ,hen there is a decrease or increase in the purchasing po,er of the -hilippine currenc+ ,hich is unusual or "e+ond the common fluctuation in the value of said currenc+, and such increase or decrease could not have "een reasona"l+ foreseen or ,as manifestl+ "e+ond the contemplation of the parties at the time of the esta"lishment of the o"ligation.#4 The factual circumstances o"taining in the present case do not ma(e out a case of e<traordinar+ inflation or devaluation as ,ould @ustif+ the application of ;rticle %#53 of the Civil Code. 'e ,ould li(e to stress that the erosion of the value of the -hilippine peso in the past three or four decades, starting in the mid-si<ties, is characteristic of most currencies. ;nd ,hile the Court ma+ ta(e @udicial notice of the decline in the purchasing po,er of the -hilippine currenc+ in that span of time, such do,n,ard trend of the peso cannot "e considered as the e<traordinar+ phenomenon contemplated "+ ;rticle %#53 of the Civil Code. Furthermore, a"sent an official pronouncement or declaration "+ competent authorities of the e<istence of e<traordinar+ inflation during a given period, the effects of e<traordinar+ inflation are not to "e applied. #5 W5ERE"!RE, premises considered, the petition is DENIED. The =ecision of the Court of ;ppeals in C;-).R. CF >o. 67764, dated 9eptem"er $, #33%, and its Resolution dated >ovem"er %&, #33%, are A""IRMED. ,! !RDERED.

Page 6 of 29

G.R. No. 159357

A0r'& 28, 2..4. +ELARDE, petitioner,

%ro1h/r MARIAN! :MI E: vs. ,!CIAL 9U,TICE ,!CIET$, respondent. =2CI9I!> PANGANI%AN, J.8

; decision that does not conform to the form and su"stance re?uired "+ the Constitution and the la, is void and deemed legall+ ine<istent. To "e valid, decisions should compl+ ,ith the form, the procedure and the su"stantive re?uirements laid out in the Constitution, the Rules of Court and relevant circularsEorders of the 9upreme Court. For the guidance of the "ench and the "ar, the Court here"+ discusses these forms, procedures and re?uirements. Th/ Ca(/ 7efore us is a -etition for Revie,% under Rule 45 of the Rules of Court, assailing the 8une %#, #33$ =ecision# and 8ul+ #&, #33$ !rder $ of the Regional Trial Court /RTC0 of .anila /7ranch 4&0.4 The challenged =ecision ,as the offshoot of a -etition for =eclarator+ Relief 5 filed "efore the RTC-.anila "+ herein Respondent 9ocial 8ustice 9ociet+ /9890 against herein -etitioner .ariano 5.i(e5 I. Felarde, together ,ith Bis 2minence, 8aime Cardinal 9in, 2<ecutive .inister 2raNo .analo, 7rother 2ddie Fillanueva and 7rother 2liseo F. 9oriano as co-respondents. The -etition pra+ed for the resolution of the ?uestion 5,hether or not the act of a religious leader li(e an+ of herein respondents, in endorsing the candidac+ of a candidate for elective office or in urging or re?uiring the mem"ers of his floc( to vote for a specified candidate, is violative of the letter or spirit of the constitutional provisions < < <.56 ;lleging that the ?uestioned =ecision did not contain a statement of facts and a dispositive portion, herein petitioner filed a Clarificator+ .otion and .otion for Reconsideration "efore the trial court. 9oriano, his co-respondent, similarl+ filed a separate .otion for Reconsideration. In response, the trial court issued the assailed !rder, ,hich held as follo,sA 5< < < LTMhis Court cannot reconsider, "ecause ,hat it ,as as(ed to do, ,as onl+ to clarif+ a Constitutional provision and to declare ,hether acts are violative thereof. The =ecision did not ma(e a dispositive portion "ecause a dispositive portion is re?uired onl+ in coercive reliefs, ,here a redress from ,rong suffered and the "enefit that the prevailing part+ ,ronged should get. The step that these movants have to ta(e, is direct appeal under Rule 45 of the Rules of Court, for a conclusive interpretation of the Constitutional provision to the 9upreme Court.5 7 Th/ A)1/c/*/)1 Proc//*');( !n 8anuar+ #6, #33$, 989 filed a -etition for =eclarator+ Relief /5989 -etition50 "efore the RTC-.anila against Felarde and his aforesaid co-respondents. 989, a registered political part+, sought the interpretation of several constitutional provisions, 6 specificall+ on the separation of church and state: and a declarator+ @udgment on the constitutionalit+ of the acts of religious leaders endorsing a candidate for an elective office, or urging or re?uiring the mem"ers of their floc( to vote for a specified candidate. The su"se?uent proceedings ,ere recounted in the challenged =ecision in these ,ordsA

5< < <. 7ro. 2ddie Fillanueva su"mitted, ,ithin the original period Lto file an ;ns,erM, a .otion to =ismiss. 9u"se?uentl+, 2<ecutive .inister 2raNo .analo and 7ro. .i(e Felarde, filed their .otions to =ismiss. 'hile Bis 2minence 8aime Cardinal 1. 9in, filed a Comment and 7ro. 2li 9oriano, filed an ;ns,er ,ithin the e<tended period and similarl+ pra+ed for the dismissal of the -etition. ;ll sought the dismissal of the -etition on the common grounds that it does not state a cause of action and that there is no @usticia"le controvers+. The+ ,ere ordered to su"mit a pleading "+ ,a+ of advisement, ,hich ,as closel+ follo,ed "+ another !rder den+ing all the .otions to =ismiss. 7ro. .i(e Felarde, 7ro. 2ddie Fillanueva and 2<ecutive .inister 2raNo .analo moved to reconsider the denial. Bis 2minence 8aime Cardinal 1. 9in, as(ed for e<tension to file memorandum. !nl+ 7ro. 2li 9oriano complied ,ith the first !rder "+ su"mitting his .emorandum. < < <. 5< < < the Court denied the .otions to =ismiss, and the .otions for Reconsideration filed "+ 7ro. .i(e Felarde, 7ro. 2ddie Fillanueva and 2<ecutive .inister 2raNo .analo, ,hich raised no ne, arguments other than those alread+ considered in the motions to dismiss < < <.5 & ;fter narrating the a"ove incidents, the trial court said that it had @urisdiction over the -etition, "ecause 5in pra+ing for a determination as to ,hether the actions imputed to the respondents are violative of ;rticle II, 9ection 6 of the Fundamental 1a,, Lthe -etitionM has raised onl+ a ?uestion of la,.5%3 It then proceeded to a length+ discussion of the issue raised in the -etition O the separation of church and state O even tracing, to some e<tent, the historical "ac(ground of the principle. Through its discourse, the court a quo opined at some point that the 5LeMndorsement of specific candidates in an election to an+ pu"lic office is a clear violation of the separation clause.5 %% ;fter its essa+ on the legal issue, ho,ever, the trial court failed to include a dispositive portion in its assailed =ecision. Thus, Felarde and 9oriano filed separate .otions for Reconsideration ,hich, as mentioned earlier, ,ere denied "+ the lo,er court. Bence, this -etition for Revie,.%#

55. 'hether or not there is ade?uate remed+ other than the declarator+ relief: and, 56. 'hether or not the court a ?uo has @urisdiction over the -etition for declarator+ relief of herein respondent.5%5 =uring the !ral ;rgument, the issues ,ere narro,ed do,n and classified as follo,sA 5;. -rocedural Issues 5=id the -etition for =eclarator+ Relief raise a @usticia"le controvers+C =id it state a cause of actionC =id respondent have an+ legal standing to file the -etition for =eclarator+ ReliefC 57. 9u"stantive Issues 5%. =id the RTC =ecision conform to the form and su"stance re?uired "+ the Constitution, the la, and the Rules of CourtC 5#. .a+ religious leaders li(e herein petitioner, 7ro. .i(e Felarde, "e prohi"ited from endorsing candidates for pu"lic officeC Corollaril+, ma+ the+ "e "anned from campaigning against said candidatesC5 Th/ Co6r1<( R6&'); The -etition of 7rother .i(e Felarde is meritorious. Proc/*6ra& I((6/(8

This Court, in a Resolution%$ dated 9eptem"er #, #33$, re?uired 989 and the !ffice of the 9olicitor )eneral /!9)0 to su"mit their respective comments. In the same Resolution, the Court gave the other parties -- impleaded as respondents in the original case "elo, --the opportunit+ to comment, if the+ so desired. !n ;pril %$, #334, the Court en "anc conducted an !ral ;rgument. %4 Th/ I((6/( In his -etition, 7rother .i(e Felarde su"mits the follo,ing issues for this CourtPs resolutionA 5%. 'hether or not the =ecision dated %# 8une #33$ rendered "+ the court a quo ,as proper and valid: 5#. 'hether or not there e<ists @usticea"le controvers+ in herein respondentPs -etition for declarator+ relief: 5$. 'hether or not herein respondent has legal interest in filing the -etition for declarator+ relief: 54. 'hether or not the constitutional ?uestion sought to "e resolved "+ herein respondent is ripe for @udicial determination:

Requisites of Petitions for Declaratory Relief 9ection % of Rule 6$ of the Rules of Court, ,hich deals ,ith petitions for declarator+ relief, provides in partA 59ection %. W%o may file "etition. - ;n+ person interested under a deed, ,ill, contract or other ,ritten instrument, ,hose rights are affected "+ a statute, e<ecutive order or regulation, ordinance, or an+ other governmental regulation ma+, "efore "reach or violation thereof, "ring an action in the appropriate Regional Trial Court to determine an+ ?uestion of construction or validit+ arising, and for a declaration of his rights or duties thereunder.5 7ased on the foregoing, an action for declarator+ relief should "e filed "+ a person interested under a deed, a ,ill, a contract or other ,ritten instrument, and ,hose rights are affected "+ a statute, an e<ecutive order, a regulation or an ordinance. The purpose of the remed+ is to interpret or to determine the validit+ of the ,ritten instrument and to see( a @udicial declaration of the partiesP rights or duties thereunder. %6 The essential re?uisites of the action are as follo,sA /%0 there is a @usticia"le controvers+: /#0 the controvers+ is "et,een persons ,hose interests are adverse: /$0 the part+ see(ing the relief has a legal interest in the controvers+: and /40 the issue is ripe for @udicial determination.%7 5usticiable Controversy

Page 7 of 29

7rother .i(e Felarde contends that the 989 -etition failed to allege, much less esta"lish "efore the trial court, that there e<isted a @usticia"le controvers+ or an adverse legal interest "et,een them: and that 989 had a legal right that ,as "eing violated or threatened to "e violated "+ petitioner. !n the contrar+, Felarde alleges that 989 premised its action on mere speculations, contingent events, and h+pothetical issues that had not +et ripened into an actual controvers+. Thus, its -etition for =eclarator+ Relief must fail. ; @usticia"le controvers+ refers to an e<isting case or controvers+ that is appropriate or ripe for @udicial determination, not one that is con@ectural or merel+ anticipator+. %6 The 989 -etition for =eclarator+ Relief fell short of this test. It misera"l+ failed to allege an e<isting controvers+ or dispute "et,een the petitioner and the named respondents therein. Further, the -etition did not sufficientl+ state ,hat specific legal right of the petitioner ,as violated "+ the respondents therein: and ,hat particular act or acts of the latter ,ere in "reach of its rights, the la, or the Constitution. ;s pointed out "+ 7rother 2liseo F. 9oriano in his Comment, %& ,hat e<actl+ has he done that merited the attention of 989C Be confesses that he does not (no, the ans,er, "ecause the 989 -etition /as ,ell as the assailed =ecision of the RTC0 5+ields nothing in this respect.5 Bis 2minence, 8aime Cardinal 9in, adds that, at the time 989 filed its -etition on 8anuar+ #6, #33$, the election season had not even started +et: and that, in an+ event, he has not "een activel+ involved in partisan politics. ;n initiator+ complaint or petition filed ,ith the trial court should contain 5a plain, concise and direct statement of the ultimate facts on ,hich the part+ pleading relies for his claim < < <.5#3 Det, the 989 -etition stated no ultimate facts. Indeed, 989 merel+ speculated or anticipated ,ithout factual moorings that, as religious leaders, the petitioner and his co-respondents "elo, had endorsed or threatened to endorse a candidate or candidates for elective offices: and that such actual or threatened endorsement 5,ill ena"le LthemM to elect men to pu"lic office ,ho L,ouldM in turn "e forever "eholden to their leaders, ena"ling them to control the government5L:M #% and 5posLingM a clear and present danger of serious erosion of the peoplePs faith in the electoral processL:M and reinforcLingM their "elief that religious leaders determine the ultimate result of elections,5## ,hich ,ould then "e violative of the separation clause. 9uch premise is highl+ speculative and merel+ theoretical, to sa+ the least. Clearl+, it does not suffice to constitute a @usticia"le controvers+. The -etition does not even allege an+ indication or manifest intent on the part of an+ of the respondents "elo, to champion an electoral candidate, or to urge their so-called floc( to vote for, or not to vote for, a particular candidate. It is a time-honored rule that sheer speculation does not give rise to an actiona"le right. !"viousl+, there is no factual allegation that 989P rights are "eing su"@ected to an+ threatened, imminent and inevita"le violation that should "e prevented "+ the declarator+ relief sought. The @udicial po,er and dut+ of the courts to settle actual controversies involving rights that are legall+ demanda"le and enforcea"le #$ cannot "e e<ercised ,hen there is no actual or threatened violation of a legal right. ;ll that the 5-page 989 -etition pra+ed for ,as 5that the ?uestion raised in paragraph & hereof "e resolved.5#4 In other ,ords, it merel+ sought an opinion of the trial court on ,hether the speculated acts of religious leaders endorsing elective candidates for political offices violated the constitutional principle on the separation of church and state. 989 did not as( for a declaration of its rights and duties: neither did it pra+ for the stoppage of an+ threatened violation of its declared rights. Courts, ho,ever, are proscri"ed from rendering an advisor+ opinion.#5 Ca6(/ o= Ac1'o) Respondent 989 asserts that in order to maintain a petition for declarator+ relief, a cause of action need not "e alleged or proven. 9upposedl+, for such petition to prosper, there need not "e an+ violation of a right, "reach of dut+ or actual ,rong committed "+ one part+ against the other.

-etitioner, on the other hand, argues that the su"@ect matter of an action for declarator+ relief should "e a deed, a ,ill, a contract /or other ,ritten instrument0, a statute, an e<ecutive order, a regulation or an ordinance. 7ut the su"@ect matter of the 989 -etition is 5the constitutionalit+ of an act of a religious leader to endorse the candidac+ of a candidate for elective office or to urge or re?uire the mem"ers of the floc( to vote for a specified candidate.5#6;ccording to petitioner, this su"@ect matter is 5"e+ond the realm of an action for declarator+ relief.5 #7 -etitioner avers that in the a"sence of a valid su"@ect matter, the -etition fails to state a cause of action and, hence, should have "een dismissed outright "+ the court a quo. ; cause of action is an act or an omission of one part+ in violation of the legal right or rights of another, causing in@ur+ to the latter. #6 Its essential elements are the follo,ingA /%0 a right in favor of the plaintiff: /#0 an o"ligation on the part of the named defendant to respect or not to violate such right: and /$0 such defendantPs act or omission that is violative of the right of the plaintiff or constituting a "reach of the o"ligation of the former to the latter.#& The failure of a complaint to state a cause of action is a ground for its outright dismissal.$3 Bo,ever, in special civil actions for declarator+ relief, the concept of a cause of action under ordinar+ civil actions does not strictl+ appl+. The reason for this e<ception is that an action for declarator+ relief presupposes that there has "een no actual "reach of the instruments involved or of rights arising thereunder. $% >evertheless, a "reach or violation should "e impending, imminent or at least threatened. ; perusal of the -etition filed "+ 989 "efore the RTC discloses no e<plicit allegation that the former had an+ legal right in its favor that it sought to protect. 'e can onl+ infer the interest, supposedl+ in its favor, from its "are allegation that it 5has thousands of mem"ers ,ho are citizens-ta<pa+ers-registered voters and ,ho are (eenl+ interested in a @udicial clarification of the constitutionalit+ of the partisan participation of religious leaders in -hilippine politics and in the process to insure adherence to the Constitution "+ ever+one < < <.5$# 9uch general averment does not, ho,ever, suffice to constitute a legal right or interest. >ot onl+ is the presumed interest not personal in character: it is li(e,ise too vague, highl+ speculative and uncertain. $$ The Rules re?uire that the interest must "e material to the issue and affected "+ the ?uestioned act or instrument, as distinguished from simple curiosit+ or incidental interest in the ?uestion raised. $4 To "olster its stance, 989 cites the Cor"us 5uris 2ecundum and su"mits that the 5LpMlaintiff in a declarator+ @udgment action does not see( to enforce a claim against LtheM defendant, "ut see(s a @udicial declaration of LtheM rights of the parties for the purpose of guiding LtheirM future conduct, and the essential distinction "et,een a Qdeclarator+ @udgment actionP and the usual QactionP is that no actual ,rong need have "een committed or loss have occurred in order to sustain the declarator+ @udgment action, although there must "e no uncertaint+ that the loss ,ill occur or that the asserted rights ,ill "e invaded.5$5 989 has, ho,ever, ignored the crucial point of its o,n reference O t%at t%ere must be no uncertainty t%at t%e loss 3ill occur or t%at t%e asserted ri/%ts 3ill be invaded . -recisel+, as discussed earlier, it merel+ con@ectures that herein petitioner /and his co-respondents "elo,0 mi/%t activel+ participate in partisan politics, use 5the a,esome voting strength of its faithful floc( LtoM ena"le it to elect men to pu"lic office < < <, ena"ling LitM to control the government.5$6 =uring the !ral ;rgument, though, -etitioner Felarde and his co-respondents "elo, all strongl+ asserted that the+ had not in an+ ,a+ engaged or intended to participate in partisan politics. The+ all firml+ assured this Court that the+ had not done an+thing to trigger the issue raised and to entitle 989 to the relief sought. Indeed, the Court finds in the -etition for =eclarator+ Relief no single allegation of fact upon ,hich 989 could "ase a right of relief from the named respondents. In an+ event, even granting that it sufficientl+ asserted a legal right it sought to protect, there ,as nevertheless no certainty that such right ,ould "e invaded "+ the said respondents. >ot even the alleged pro<imit+ of the elections to the time the -etition ,as filed "elo,

/8anuar+ #6, #33$0 ,ould have provided the certaint+ that it had a legal right that ,ould "e @eopardized or violated "+ an+ of those respondents. L/;a& ,1a)*'); 1egal standing or locus standi has "een defined as a personal and su"stantial interest in the case, such that the part+ has sustained or ,ill sustain direct in@ur+ as a result of the challenged act.$7 Interest means a material interest in issue that is affected "+ the ?uestioned act or instrument, as distinguished from a mere incidental interest in the ?uestion involved.$6 -etitioner alleges that 5LiMn see(ing declarator+ relief as to the constitutionalit+ of an act of a religious leader to endorse, or re?uire the mem"ers of the religious floc( to vote for a specific candidate, herein Respondent 989 has no legal interest in the controvers+5: $& it has failed to esta"lish ho, the resolution of the proffered ?uestion ,ould "enefit or in@ure it. -arties "ringing suits challenging the constitutionalit+ of a la,, an act or a statute must sho, 5not onl+ that the la, Lor actM is invalid, "ut also that Lthe+ haveM sustained or LareM in immediate or imminent danger of sustaining some direct in@ur+ as a result of its enforcement, and not merel+ that Lthe+M suffer there"+ in some indefinite ,a+.5 43The+ must demonstrate that the+ have "een, or are a"out to "e, denied some right or privilege to ,hich the+ are la,full+ entitled, or that the+ are a"out to "e su"@ected to some "urdens or penalties "+ reason of the statute or act complained of. 4% 4irst, parties suing as ta<pa+ers must specificall+ prove that the+ have sufficient interest in preventing the illegal e<penditure of mone+ raised "+ ta<ation. 4# ; ta<pa+erPs action ma+ "e properl+ "rought onl+ ,hen there is an e<ercise "+ Congress of its ta<ing or spending po,er.4$ In the present case, there is no allegation, ,hether e<press or implied, that ta<pa+ersP mone+ is "eing illegall+ dis"ursed. 2econd, there ,as no sho,ing in the -etition for =eclarator+ Relief that 989 as a political part+ or its mem"ers as registered voters ,ould "e adversel+ affected "+ the alleged acts of the respondents "elo,, if the ?uestion at issue ,as not resolved. There ,as no allegation that 989 had suffered or ,ould "e deprived of votes due to the acts imputed to the said respondents. >either did it allege that an+ of its mem"ers ,ould "e denied the right of suffrage or the privilege to "e voted for a pu"lic office the+ are see(ing. 4inally, the allegedl+ (een interest of its 5thousands of mem"ers ,ho are citizensta<pa+ers-registered voters5 is too general 44 and "e+ond the contemplation of the standards set "+ our @urisprudence. >ot onl+ is the presumed interest impersonal in character: it is li(e,ise too vague, highl+ speculative and uncertain to satisf+ the re?uirement of standing.45 Transcendental Importance In an+ event, 989 urges the Court to ta(e cognizance of the -etition, even sans legal standing, considering that 5the issues raised are of paramount pu"lic interest.5 In not a fe, cases, the Court has li"eralized the locus standi re?uirement ,hen a petition raises an issue of transcendental significance or paramount importance to the people.46 Recentl+, after holding that the I7- had no locus standi to "ring the suit, the Court in I#! v. ,amora47 nevertheless entertained the -etition therein. It noted that 5the I7- has advanced constitutional issues ,hich deserve the attention of this Court in vie, of their seriousness, novelt+ and ,eight as precedents.5 46 9imilarl+ in the instant case, the Court deemed the constitutional issue raised in the 989 -etition to "e of paramount interest to the Filipino people. The issue did not simpl+ concern a delineation of the separation "et,een church and state, "ut ran smac( into the governance of our countr+. The issue ,as "oth transcendental in importance and novel in nature, since it had never "een decided "efore.

Page 8 of 29

The Court, thus, called for !ral ;rgument to determine ,ith certaint+ ,hether it could resolve the constitutional issue despite the "arren allegations in the 989 -etition as ,ell as the a""reviated proceedings in the court "elo,. .uch to its chagrin, ho,ever, counsels for the parties -- particularl+ for Respondent 989 -- made no satisfactor+ allegations or clarifications that ,ould suppl+ the deficiencies hereina"ove discussed. Bence, even if the Court ,ould e<empt this case from the stringent locus standi re?uirement, such heroic effort ,ould "e futile "ecause the transcendental issue cannot "e resolved an+,a+. Proper Proceedings Before the Trial Court To prevent a repetition of this ,aste of precious @udicial time and effort, and for the guidance of the "ench and the "ar, the Court reiterates the elementary procedure4& that must "e follo,ed "+ trial courts in the conduct of civil cases. 53 -refatoril+, the trial court ma+ -- motu "ro"rio or upon motion of the defendant -- dismiss a complaint5% /or petition, in a special civil action0 that does not allege the plaintiffPs /or petitionerPs0 cause or causes of action. 5# ; complaint or petition should contain 5a plain, concise and direct statement of the ultimate facts on ,hich the part+ pleading relies for his claim or defense.55$ It should li(e,ise clearl+ specif+ the relief sought. 54 Gpon the filing of the complaintEpetition and the pa+ment of the re?uisite legal fees, the cler( of court shall forth,ith issue the corresponding summons to the defendants or the respondents, ,ith a directive that the defendant ans,er 55 ,ithin %5 da+s, unless a different period is fi<ed "+ the court.56 The summons shall also contain a notice that if such ans,er is not filed, the plaintiffsEpetitioners shall ta(e a @udgment "+ default and ma+ "e granted the relief applied for. 57 The court, ho,ever, ma+ -- upon such terms as ma+ "e @ust -- allo, an ans,er to "e filed after the time fi<ed "+ the Rules. 56 If the ans,er sets forth a counterclaim or cross-claim, it must "e ans,ered ,ithin ten /%30 da+s from service.5& ; repl+ ma+ "e filed ,ithin ten /%30 da+s from service of the pleading responded to.63 'hen an ans,er fails to tender an issue or admits the material allegations of the adverse part+Ps pleading, the court ma+, on motion of that part+, direct @udgment on such pleading /e<cept in actions for declaration of nullit+ or annulment of marriage or for legal separation0.6% .ean,hile, a part+ see(ing to recover upon a claim, a counterclaim or crossclaim -- or to o"tain a declarator+ relief -- ma+, at an+ time after the ans,er thereto has "een served, move for a summar+ @udgment in its favor. 6# 9imilarl+, a part+ against ,hom a claim, a counterclaim or crossclaim is asserted -- or a declarator+ relief sought -ma+, at an+ time, move for a summar+ @udgment in its favor. 6$ ;fter the motion is heard, the @udgment sought shall "e rendered forth,ith if there is a sho,ing that, e<cept as to the amount of damages, there is no genuine issue as to an+ material fact: and that the moving part+ is entitled to a @udgment as a matter of la,. 64 'ithin the time for -- "ut "efore -- filing the ans,er to the complaint or petition, the defendant ma+ file a motion to dismiss "ased on an+ of the grounds stated in 9ection % of Rule %6 of the Rules of Court. =uring the hearing of the motion, the parties shall su"mit their arguments on the ?uestions of la,, and their evidence on the ?uestions of fact.65 ;fter the hearing, the court ma+ dismiss the action or claim, den+ the motion, or order the amendment of the pleadings. It shall not defer the resolution of the motion for the reason that the ground relied upon is not indu"ita"le. In ever+ case, the resolution shall state clearl+ and distinctl+ the reasons therefor. 66 If the motion is denied, the movant ma+ file an ans,er ,ithin the "alance of the period originall+ prescri"ed to file an ans,er, "ut not less than five /50 da+s in an+ event, computed from the receipt of the notice of the denial. If the pleading is ordered to "e amended, the defendant shall file an ans,er ,ithin fifteen /%50 da+s, counted from the service of the amended pleading, unless the court provides a longer period. 67 ;fter the last pleading has "een served and filed, the case shall "e set for pretrial, 66 ,hich is a mandator+ proceeding.6& ; plaintiffPsE petitionerPs /or its dul+ authorized representativePs0 non-appearance at the pretrial, if ,ithout valid cause, shall result in the

dismissal of the action ,ith pre@udice, unless the court orders other,ise. ; similar failure on the part of the defendant shall "e a cause for allo,ing the plaintiffEpetitioner to present evidencee: "arte, and the court to render @udgment on the "asis thereof. 73 The parties are re?uired to file their pretrial "riefs: failure to do so shall have the same effect as failure to appear at the pretrial. 7% Gpon the termination thereof, the court shall issue an order reciting in detail the matters ta(en up at the conference: the action ta(en on them, the amendments allo,ed to the pleadings: and the agreements or admissions, if an+, made "+ the parties regarding an+ of the matters considered. 7# The parties ma+ further avail themselves of an+ of the modes of discover+, 7$ if the+ so ,ish. Thereafter, the case shall "e set for trial, 74 in ,hich the parties shall adduce their respective evidence in support of their claims andEor defenses. 7+ their ,ritten consent or upon the application of either part+, or on its o,n motion, the court ma+ also order an+ or all of the issues to "e referred to a commissioner, ,ho is to "e appointed "+ it or to "e agreed upon "+ the parties.75 The trial or hearing "efore the commissioner shall proceed in all respects as it ,ould if held "efore the court. 76 Gpon the completion of such proceedings, the commissioner shall file ,ith the court a ,ritten report on the matters referred "+ the parties. 77 The report shall "e set for hearing, after ,hich the court shall issue an order adopting, modif+ing or re@ecting it in ,hole or in part: or recommitting it ,ith instructions: or re?uiring the parties to present further evidence "efore the commissioner or the court.76 Finall+, a @udgment or final order determining the merits of the case shall "e rendered. The decision shall "e in ,riting, personall+ and directl+ prepared "+ the @udge, stating clearl+ and distinctl+ the facts and the la, on ,hich it is "ased, signed "+ the issuing magistrate, and filed ,ith the cler( of court.7& 7ased on these elementar+ guidelines, let us e<amine the proceedings "efore the trial court in the instant case. 4irst, ,ith respect to the initiator+ pleading of the 989. 2ven a cursor+ perusal of the -etition immediatel+ reveals its gross inade?uac+. It contained no statement of ultimate facts upon ,hich the petitioner relied for its claim. Furthermore, it did not specif+ the relief it sought from the court, "ut merel+ as(ed it to ans,er a h+pothetical ?uestion. Relief, as contemplated in a legal action, refers to a specific coercive measure pra+ed for as a result of a violation of the rights of a plaintiff or a petitioner. 63 ;s alread+ discussed earlier, the -etition "efore the trial court had no allegations of fact 6% or of an+ specific violation of the petitionerPs rights, ,hich the respondents had a dut+ to respect. 9uch deficienc+ amounted to a failure to state a cause of action: hence, no coercive relief could "e sought and ad@udicated. The -etition evidentl+ lac(ed su"stantive re?uirements and, ,e repeat, should have "een dismissed at the outset. 2econd, ,ith respect to the trial court proceedings. 'ithin the period set to file their respective ans,ers to the 989 -etition, Felarde, Fillanueva and .analo filed .otions to =ismiss: Cardinal 9in, a Comment: and 9oriano, ,ithin a priorl+ granted e<tended period, an ;ns,er in ,hich he li(e,ise pra+ed for the dismissal of the -etition. 6# 989 filed a Re@oinder to the .otion of Felarde, ,ho su"se?uentl+ filed a 9ur-Re@oinder. 9upposedl+, there ,ere 5several scheduled settings, in ,hich the 5LcMourt ,as apprised of the respective positions of the parties.56$ The nature of such settings -- ,hether pretrial or trial hearings -- ,as not disclosed in the records. 7efore ruling on the .otions to =ismiss, the trial court issued an !rder 64 dated .a+ 6, #33$, directing the parties to su"mit their memoranda. Issued shortl+ thereafter ,as another !rder 65 dated .a+ %4, #33$, den+ing all the .otions to =ismiss. In the latter !rder, the trial court perfunctoril+ ruledA 5The Court no, resolves to den+ the .otions to =ismiss, and after all the memoranda are su"mitted, then, the case shall "e deemed as su"mitted for resolution.566

;pparentl+, contrar+ to the re?uirement of 9ection # of Rule %6 of the Rules of Court, the .otions ,ere not heard. 'orse, the !rder purportedl+ resolving the .otions to =ismiss did not state an+ reason at all for their denial, in contravention of 9ection $ of the said Rule %6. There ,as not even an+ statement of the grounds relied upon "+ the .otions: much less, of the legal findings and conclusions of the trial court. Thus, Felarde, Fillanueva and .analo moved for reconsideration. -ending the resolution of these .otions for Reconsideration, Fillanueva filed a .otion to suspend the filing of the partiesP memoranda. 7ut instead of separatel+ resolving the pending .otions fairl+ and s?uarel+, the trial court again transgressed the Rules of Court ,hen it immediatel+ proceeded to issue its =ecision, even "efore tac(ling the issues raised in those .otions. Furthermore, the RTC issued its 5=ecision5 ,ithout allo,ing the parties to file their ans,ers. For this reason, there ,as no @oinder of the issues. If onl+ it had allo,ed the filing of those ans,ers, the trial court ,ould have (no,n, as the !ral ;rgument revealed, that the petitioner and his co-respondents "elo, had not committed or threatened to commit the act attri"uted to them /endorsing candidates0 -- the act that ,as supposedl+ the factual "asis of the suit. -arentheticall+, the court a quo further failed to give a notice of the -etition to the !9), ,hich ,as entitled to "e heard upon ?uestions involving the constitutionalit+ or validit+ of statutes and other measures.67 .oreover, as ,ill "e discussed in more detail, the ?uestioned =ecision of the trial court ,as utterl+ ,anting in the re?uirements prescri"ed "+ the Constitution and the Rules of Court. ;ll in all, during the loosel+ a""reviated proceedings of the case, the trial court indeed acted ,ith ine<plica"le haste, ,ith total ignorance of the la, -- or, ,orse, in cavalier disregard of the rules of procedure -- and ,ith grave a"use of discretion. Contrar+ to the contentions of the trial @udge and of 989, proceedings for declarator+ relief must still follo, the process descri"ed a"ove -- the petition must state a cause of action: the proceedings must undergo the procedure outlined in the Rules of Court: and the decision must adhere to constitutional and legal re?uirements. "'r(1 ,63(1a)1'>/ I((6/8 Fundamental Requirements of a Decision The Constitution commands that 5LnMo decision shall "e rendered "+ an+ court ,ithout e<pressing therein clearl+ and distinctl+ the facts and the la, on ,hich it is "ased. >o petition for revie, or motion for reconsideration of a decision of the court shall "e refused due course or denied ,ithout stating the "asis therefor.5 66 Consistent ,ith this constitutional mandate, 9ection % of Rule $6 of the Rules on Civil -rocedure similarl+ providesA 59ec. %. Rendition of jud/ments and final orders . O ; @udgment or final order determining the merits of the case shall "e in ,riting personall+ and directl+ prepared "+ the @udge, stating clearl+ and distinctl+ the facts and the la, on ,hich it is "ased, signed "+ him and filed ,ith the cler( of court.5 In the same vein, 9ection # of Rule %#3 of the Rules of Court on Criminal -rocedure reads as follo,sA 59ec. #. 4orm and contents of jud/ments. -- The @udgment must "e ,ritten in the official language, personall+ and directl+ prepared "+ the @udge and signed "+ him and shall contain clearl+ and distinctl+ a statement of the

Page 9 of 29

facts proved or admitted "+ the accused and the la, upon ,hich the @udgment is "ased. 5< < < <<< < < <.5

'ithout e<pressl+ stating the final conclusion she has reached or specif+ing the relief granted or denied, the trial @udge ends her 5=ecision5 ,ith the clause 59! !R=2R2=.5 'hat ,ere the antecedents that necessitated the filing of the -etitionC 'hat e<actl+ ,ere the distinct facts that gave rise to the ?uestion sought to "e resolved "+ 989C .ore important, ,hat ,ere the factual findings and anal+sis on ,hich the trial court "ased its legal findings and conclusionsC >one ,ere stated or implied. Indeed, the RTCPs =ecision cannot "e upheld for its failure to e<press clearl+ and distinctl+ the facts on ,hich it ,as "ased. Thus, the trial court clearl+ transgressed the constitutional directive. The significance of factual findings lies in the value of the decision as a precedent. Bo, can it "e so if one cannot appl+ the ruling to similar circumstances, simpl+ "ecause such circumstances are un(no,nC !ther,ise stated, ho, ,ill the ruling "e applied in the future, if there is no point of factual comparisonC .oreover, the court a ?uo did not include a resolutor+ or dispositive portion in its socalled =ecision. The importance of such portion ,as e<plained in the earl+ case &analan/ v. 0uason de Rickards,&4 from ,hich ,e ?uoteA 5The resolution of the Court on a given issue as em"odied in the dispositive part of the decision or order is the investitive or controlling factor that determines and settles the rights of the parties and the ?uestions presented therein, not,ithstanding the e<istence of statements or declaration in the "od+ of said order that ma+ "e confusing.5 The assailed =ecision in the present case leaves us in the dar( as to its final resolution of the -etition. To recall, the original -etition ,as for declarator+ relief. 9o, ,hat relief did the trial court grant or den+C 'hat rights of the parties did it conclusivel+ declareC Its final statement sa+s, 59! !R=2R2=.5 7ut ,hat e<actl+ did the court orderC It had the temerit+ to la"el its issuance a 5=ecision,5 ,hen nothing ,as in fact decided. Respondent 989 insists that the dispositive portion can "e found in the "od+ of the assailed =ecision. It claims that the issue is disposed of and the -etition finall+ resolved "+ the statement of the trial court found on page %3 of its %4-page =ecision, ,hich readsA 52ndorsement of specific candidates in an election to an+ pu"lic office is a clear violation of the separation clause.5&5 'e cannot agree. In &a/dalena Estate, Inc. v. Calua/,&6 the o"ligation of the part+ imposed "+ the Court ,as allegedl+ contained in the te<t of the original =ecision. The Court, ho,ever, heldA 5< < < The ?uoted finding of the lo,er court cannot suppl+ deficiencies in the dispositive portion. It is a mere opinion of the court and the rule is settled that ,here there is a conflict "et,een the dispositive part and the opinion, the former must prevail over the latter on the theor+ that the dispositive portion is the final order ,hile the opinion is merel+ a statement ordering nothing.5 /Italics in the original0 Thus, the dispositive portion cannot "e deemed to "e the statement ?uoted "+ 989 and em"edded in the last paragraph of page %3 of the assailed %4-page =ecision. If at all, that statement is merel+ an ans,er to a h+pothetical legal ?uestion and @ust a part of the opinion of the trial court. It does not conclusivel+ declare the rights /or o"ligations0 of the parties to the -etition. >either does it grant an+ -- much less, the proper -- relief under the circumstances, as re?uired of a dispositive portion. Failure to compl+ ,ith the constitutional in@unction is a grave a"use of discretion amounting to lac( or e<cess of @urisdiction. =ecisions or orders issued in careless disregard of the constitutional mandate are a patent nullit+ and must "e struc( do,n as void.&7

Par1( o= a D/c'('o) In general, the essential parts of a good decision consist of the follo,ingA /%0 statement of the case: /#0 statement of facts: /$0 issues or assignment of errors: /40 court ruling, in ,hich each issue is, as a rule, separatel+ considered and resolved: and, finall+, /50 dispositive portion. The "onente ma+ also opt to include an introduction or a prologue as ,ell as an epilogue, especiall+ in cases in ,hich controversial or novel issues are involved.&6 ;n introduction ma+ consist of a concise "ut comprehensive statement of the principal factual or legal issueEs of the case. In some cases -- particularl+ those concerning pu"lic interest: or involving complicated commercial, scientific, technical or other,ise rare su"@ect matters -- a longer introduction or prologue ma+ serve to ac?uaint readers ,ith the specific nature of the controvers+ and the issues involved. ;n epilogue ma+ "e a summation of the important principles applied to the resolution of the issues of paramount pu"lic interest or significance. It ma+ also la+ do,n an enduring philosoph+ of la, or guiding principle. 1et us no,, again for the guidance of the "ench and the "ar, discuss the essential parts of a good decision. 1. ,1a1/2/)1 o= 1h/ Ca(/ The 2tatement of t%e Case consists of a legal definition of the nature of the action. ;t the first instance, this part states ,hether the action is a civil case for collection, e@ectment, ?uieting of title, foreclosure of mortgage, and so on: or, if it is a criminal case, this part descri"es the specific charge -- ?uoted usuall+ from the accusator+ portion of the information -- and the plea of the accused. ;lso mentioned here are ,hether the case is "eing decided on appeal or on a petition for certiorari, the court of origin, the case num"er in the trial court, and the dispositive portion of the assailed decision. In a criminal case, the ver"atim reproduction of the criminal information serves as a guide in determining the nature and the gravit+ of the offense for ,hich the accused ma+ "e found culpa"le. ;s a rule, the accused cannot "e convicted of a crime different from or graver than that charged. ;lso, ?uoting ver"atim the te<t of the information is especiall+ important ,hen there is a ?uestion on the sufficienc+ of the charge, or on ,hether ?ualif+ing and modif+ing circumstances have "een ade?uatel+ alleged therein. To ensure that due process is accorded, it is important to give a short description of the proceedings regarding the plea of the accused. ;"sence of an arraignment, or a serious irregularit+ therein, ma+ render the @udgment void, and further consideration "+ the appellate court ,ould "e futile. In some instances, especiall+ in appealed cases, it ,ould also "e useful to mention the fact of the appellantsP detention, in order to dispose of the preliminar+ ?uer+ -- ,hether or not the+ have a"andoned their appeal "+ a"sconding or @umping "ail. .entioning the court of origin and the case num"er originall+ assigned helps in facilitating the consolidation of the records of the case in "oth the trial and the appellate courts, after entr+ of final @udgment. Finall+, the reproduction of the decretal portion of the assailed decision informs the reader of ho, the appealed case ,as decided "+ the court a ?uo. 2. ,1a1/2/)1 o= "ac1( There are different ,a+s of relating the facts of the case. 4irst, under the o"@ective or reportorial method, the @udge summarizes -- ,ithout comment -- the testimon+ of each ,itness and the contents of each e<hi"it. 2econd,under the s+nthesis method, the factual theor+ of the plaintiff or prosecution and then that of the defendant or defense is

-ursuant to the Constitution, this Court also issued on 8anuar+ #6, %&66, ;dministrative Circular >o. %, prompting all @udges 5to ma(e complete findings of facts in their decisions, and scrutinize closel+ the legal aspects of the case in the light of the evidence presented. The+ should avoid the tendenc+ to generalize and form conclusions ,ithout detailing the facts from ,hich such conclusions are deduced.5 In man+ cases,6& this Court has time and time again reminded 5magistrates to heed the demand of 9ection %4, ;rticle FIII of the Constitution.5 The Court, through Chief 8ustice Bilario ). =avide 8r. in .ao v. Court of 1""eals, &3discussed at length the implications of this provision and strongl+ e<horted thusA 5Faithful adherence to the re?uirements of 9ection %4, ;rticle FIII of the Constitution is indisputa"l+ a paramount component of due process and fair pla+. It is li(e,ise demanded "+ the due process clause of the Constitution. The parties to a litigation should "e informed of ho, it ,as decided, ,ith an e<planation of the factual and legal reasons that led to the conclusions of the court. The court cannot simpl+ sa+ that @udgment is rendered in favor of H and against D and @ust leave it at that ,ithout an+ @ustification ,hatsoever for its action. The losing part+ is entitled to (no, ,h+ he lost, so he ma+ appeal to the higher court, if permitted, should he "elieve that the decision should "e reversed. ; decision that does not clearl+ and distinctl+ state the facts and the la, on ,hich it is "ased leaves the parties in the dar( as to ho, it ,as reached and is precisel+ pre@udicial to the losing part+, ,ho is una"le to pinpoint the possi"le errors of the court for revie, "+ a higher tri"unal. .ore than that, the re?uirement is an assurance to the parties that, in reaching @udgment, the @udge did so through the processes of legal reasoning. It is, thus, a safeguard against the impetuosit+ of the @udge, preventing him from deciding i"se di:it. Fouchsafed neither the s,ord nor the purse "+ the Constitution "ut nonetheless vested ,ith the sovereign prerogative of passing @udgment on the life, li"ert+ or propert+ of his fello,men, the @udge must ultimatel+ depend on the po,er of reason for sustained pu"lic confidence in the @ustness of his decision.5 In !eo"le v. #u/arin,&% the Court also e<plainedA 5The re?uirement that the decisions of courts must "e in ,riting and that the+ must set forth clearl+ and distinctl+ the facts and the la, on ,hich the+ are "ased serves man+ functions. It is intended, among other things, to inform the parties of the reason or reasons for the decision so that if an+ of them appeals, he can point out to the appellate court the finding of facts or the rulings on points of la, ,ith ,hich he disagrees. .ore than that, the re?uirement is an assurance to the parties that, in reaching @udgment, the @udge did so through the processes of legal reasoning. < < <.5 Indeed, elementar+ due process demands that the parties to a litigation "e given information on ho, the case ,as decided, as ,ell as an e<planation of the factual and legal reasons that led to the conclusions of the court. &# In &adrid v. Court of 1""eals, this Court had instructed magistrates to e<ert effort to ensure that their decisions ,ould present a comprehensive anal+sis or account of the factual and legal findings that ,ould su"stantiall+ address the issues raised "+ the parties. In the present case, it is star(l+ o"vious that the assailed =ecision contains no statement of facts -- much less an assessment or anal+sis thereof -- or of the courtPs findings as to the pro"a"le facts. The assailed =ecision "egins ,ith a statement of the nature of the action and the ?uestion or issue presented. Then follo,s a "rief e<planation of the constitutional provisions involved, and ,hat the -etition sought to achieve. Thereafter, the ensuing procedural incidents "efore the trial court are trac(ed. The =ecision proceeds to a full-length opinion on the nature and the e<tent of the separation of church and state.
&$

Page 10 of 29

summarized according to the @udgePs "est light. 0%ird, in the su"@ective method, the version of the facts accepted "+ the @udge is simpl+ narrated ,ithout e<plaining ,hat the partiesP versions are. 4inally, through a com"ination of o"@ective and su"@ective means, the testimon+ of each ,itness is reported and the @udge then formulates his or her o,n version of the facts. In criminal cases, it is "etter to present "oth the version of the prosecution and that of the defense, in the interest of fairness and due process. ; detailed evaluation of the contentions of the parties must follo,. The resolution of most criminal cases, unli(e civil and other cases, depends to a large e<tent on the factual issues and the appreciation of the evidence. The plausi"ilit+ or the implausi"ilit+ of each version can sometimes "e initiall+ dra,n from a reading of the facts. Thereafter, the "ases of the court in arriving at its findings and conclusions should "e e<plained. !n appeal, the fact that the assailed decision of the lo,er court full+, intelligentl+ and correctl+ resolved all factual and legal issues involved ma+ partl+ e<plain ,h+ the revie,ing court finds no reason to reverse the findings and conclusions of the former. Conversel+, the lo,er courtPs patent misappreciation of the facts or misapplication of the la, ,ould aid in a "etter understanding of ,h+ its ruling is reversed or modified. In appealed civil cases, the opposing sets of facts no longer need to "e presented. Issues for resolution usuall+ involve ?uestions of la,, grave a"use of discretion, or ,ant of @urisdiction: hence, the facts of the case are often undisputed "+ the parties. 'ith fe, e<ceptions, factual issues are not entertained in non-criminal cases. Conse?uentl+, the narration of facts "+ the lo,er court, if e<haustive and clear, ma+ "e reproduced: other,ise, the material factual antecedents should "e restated in the ,ords of the revie,ing magistrate. In addition, the reasoning of the lo,er court or "od+ ,hose decision is under revie, should "e laid out, in order that the parties ma+ clearl+ understand ,h+ the lo,er court ruled in a certain ,a+, and ,h+ the revie,ing court either finds no reason to reverse it or concludes other,ise. 3. I((6/( or A((';)2/)1 o= Error( 7oth factual and legal issues should "e stated. !n appeal, the assignment of errors, as mentioned in the appellantPs "rief, ma+ "e reproduced in toto and tac(led seriatim, so as to avoid motions for reconsideration of the final decision on the ground that the court failed to consider all assigned errors that could affect the outcome of the case. 7ut ,hen the appellant presents repetitive issues or ,hen the assigned errors do not stri(e at the main issue, these ma+ "e restated in clearer and more coherent terms. Though not specificall+ ?uestioned "+ the parties, additional issues ma+ also "e included, if deemed important for su"stantial @ustice to "e rendered. >ote that appealed criminal cases are given de novo revie,, in contrast to noncriminal cases in ,hich the revie,ing court is generall+ limited to issues specificall+ raised in the appeal. The fe, e<ceptions are errors of @urisdiction: ?uestions not raised "ut necessar+ in arriving at a @ust decision on the case: or unassigned errors that are closel+ related to those properl+ assigned, or upon ,hich depends the determination of the ?uestion properl+ raised. -. Th/ Co6r1<( R6&'); This part contains a full discussion of the specific errors or issues raised in the complaint, petition or appeal, as the case ma+ "e: as ,ell as of other issues the court deems essential to a @ust disposition of the case. 'here there are several issues, each one of them should "e separatel+ addressed, as much as practica"le. The respective contentions of the parties should also "e mentioned here. 'hen procedural ?uestions are raised in addition to su"stantive ones, it is "etter to resolve the former preliminaril+. 5. Th/ D'(0o('1'o) or D'(0o('1'>/ Por1'o)

In a criminal case, the disposition should include a finding of innocence or guilt, the specific crime committed, the penalt+ imposed, the participation of the accused, the modif+ing circumstances if an+, and the civil lia"ilit+ and costs. In case an ac?uittal is decreed, the court must order the immediate release of the accused, if detained, /unless the+ are "eing held for another cause0 and order the director of the 7ureau of Corrections /or ,herever the accused is detained0 to report, ,ithin a ma<imum of ten /%30 da+s from notice, the e<act date ,hen the accused ,ere set free. In a civil case as ,ell as in a special civil action, the disposition should state ,hether the complaint or petition is granted or denied, the specific relief granted, and the costs. The follo,ing test of completeness ma+ "e applied. 4irst, the parties should (no, their rights and o"ligations. 2econd, the+ should (no, ho, to e<ecute the decision under alternative contingencies. 0%ird, there should "e no need for further proceedings to dispose of the issues.4ourt%, the case should "e terminated "+ according the proper relief. The 5proper relief5 usuall+ depends upon ,hat the parties see( in their pleadings. It ma+ declare their rights and duties, command the performance of positive prestations, or order them to a"stain from specific acts. The disposition must also ad@udicate costs. The foregoing parts need not al,a+s "e discussed in se?uence. 7ut the+ should all "e present and plainl+ identifia"le in the decision. =epending on the ,riterPs character, genre and st+le, the language should "e fresh and free-flo,ing, not necessaril+ stereot+ped or in a fi<ed form: much less highfalutin, hac(ne+ed and pretentious. ;t all times, ho,ever, the decision must "e clear, concise, complete and correct. ,/co)* ,63(1a)1'>/ I((6/8 Religious eaders! "ndorsement of Candidates for Pu#lic $ffice The "asic ?uestion posed in the 989 -etition -- 'B2TB2R 2>=!R92.2>T9 !F C;>=I=;CI29 7D R21I)I!G9 12;=2R9 I9 G>C!>9TITGTI!>;1 -- undou"tedl+ deserves serious consideration. ;s stated earlier, the Court deems this constitutional issue to "e of paramount interest to the Filipino citizenr+, for it concerns the governance of our countr+ and its people. Thus, despite the o"vious procedural transgressions "+ "oth 989 and the trial court, this Court still called for !ral ;rgument, so as not to leave an+ dou"t that there might "e room to entertain and dispose of the 989 -etition on the merits. Counsel for 989 has utterl+ failed, ho,ever, to convince the Court that there are enough factual and legal "ases to resolve the paramount issue. !n the other hand, the !ffice of the 9olicitor )eneral has sided ,ith petitioner insofar as there are no facts supporting the 989 -etition and the assailed =ecision. 'e reiterate that the said -etition failed to state directl+ the ultimate facts that it relied upon for its claim. =uring the !ral ;rgument, counsel for 989 candidl+ admitted that there ,ere no factual allegations in its -etition for =eclarator+ Relief. >either ,ere there factual findings in the assailed =ecision. ;t "est, 989 merel+ as(ed the trial court to ans,er a h+pothetical ?uestion. In effect, it merel+ sought an advisor+ opinion, the rendition of ,hich ,as "e+ond the courtPs constitutional mandate and @urisdiction. && Indeed, the assailed =ecision ,as rendered in clear violation of the Constitution, "ecause it made no findings of facts and final disposition. Bence, it is void and deemed legall+ ine<istent. Conse?uentl+, there is nothing for this Court to revie,, affirm, reverse or even @ust modif+. Regretta"l+, it is not legall+ possi"le for the Court to ta(e up, on the merits, the paramount ?uestion involving a constitutional principle. It is a time-honored rule that 5the constitutionalit+ of a statute Lor actM ,ill "e passed upon onl+ if, and to the e<tent that, it is directl+ and necessaril+ involved in a @usticia"le controvers+ and is essential to the protection of the rights of the parties concerned.5%33

'B2R2F!R2, the -etition for Revie, of 7rother .i(e Felarde is %R&'T"D. The assailed 8une %#, #33$ =ecision and 8ul+ #&, #33$ !rder of the Regional Trial Court of .anila /7ranch 4&0 are here"+ D"C &R"D '( &'D )$ID and thus *"T &*ID". The 989 -etition for =eclarator+ Relief is DI*+I**"D for failure to state a cause of action. 1et a cop+ of this =ecision "e furnished the !ffice of the Court ;dministrator to evaluate and recommend ,hether the trial @udge ma+, after o"serving due process, "e held administrativel+ lia"le for rendering a decision violative of the Constitution, the Rules of Court and relevant circulars of this Court. >o costs. 9! !R=2R2=.

Page 11 of 29

G.R. No. 126911

A0r'& 3., 2..3

<<<

<<<

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P5ILIPPINE DEP!,IT IN,URANCE C!RP!RATI!N, petitioner, vs. T5E 5!N!RA%LE C!URT !" APPEAL, a)* 9!,E A%AD, LE!N!R A%AD, ,A%INA A%AD, 9!,EP5INE :9!,IE: %EATA A%AD-!RLINA, CECILIA A%AD, PI! A%AD, D!MINIC A%AD, TE!D!RA A%AD, respondents. CARPI! M!RALE,, J.8 The present petition for revie, assails the decision of the Court of ;ppeals affirming that of the Regional Trial Court of Iloilo Cit+, 7ranch $3, finding petitioner -hilippine =eposit Insurance Corporation /-=IC0 lia"le, as statutor+ insurer, for the value of #3 )olden Time =eposits "elonging to respondents 8ose ;"ad, 1eonor ;"ad, 9a"ina ;"ad, 8osephine 58osie5 7eata ;"ad-!rlina, Cecilia ;"ad, -io ;"ad, =ominic ;"ad, and Teodora ;"ad at the .anila 7an(ing Corporation /.7C0, Iloilo 7ranch. -rior to .a+ ##, %&&7, respondents had, individuall+ or @ointl+ ,ith each other, 7% certificates of time deposits denominated as 5)olden Time =eposits5 /)T=0 ,ith an aggregate face value of -%,%%5,66&.&6.% !n .a+ ##, %&67, a Frida+, the .onetar+ 7oard /.70 of the Central 7an( of the -hilippines, no, 7ang(o 9entral ng -ilipinas, issued Resolution 535 # prohi"iting .7C to do "usiness in the -hilippines, and placing its assets and affairs under receivership. The Resolution, ho,ever, ,as not served on .7C until Tuesda+ the follo,ing ,ee(, or on .a+ #6, %&67, ,hen the designated Receiver too( over. $ !n .a+ #5, %&67, the ne<t "an(ing da+ follo,ing the issuance of the .7 Resolution, respondent 8ose ;"ad ,as at the .7C at &A33 a.m. for the purpose of pre-terminating the 7% aforementioned )T=s and re-depositing the fund represented there"+ into #6 ne, )T=s in denominations of -43,333.33 or less under the names of herein respondents individuall+ or @ointl+ ,ith each other. 4 !f the #6 ne, )T=s, 8ose ;"ad pre-terminated 6 and ,ithdre, the value thereof in the total amount of -$#3,333.33. 5 Respondents thereafter filed their claims ,ith the -=IC for the pa+ment of the remaining #3 insured )T=s.6 !n Fe"ruar+ %%, %&66, -=IC paid respondents the value of $ claims in the total amount of -%#3,333.33. -=IC, ho,ever, ,ithheld pa+ment of the %7 remaining claims after 'ashington 9olidum, =eput+ Receiver of .7C-Iloilo, su"mitted a report to the -=IC 7 that there ,as massive conversion and su"stitution of trust and deposit accounts on .a+ #5, %&67 at .7C-Iloilo.6 The pertinent portions of the report statedA <<< <<< <<<

7ecause of the report, -=IC entertained serious reservation in recognizing respondents )T=s as deposit lia"ilities of .7C-Iloilo. Thus, on ;ugust $3, %&&%, it filed a petition for declarator+ relief against respondents ,ith the Regional Trial Court /RTC0 of Iloilo Cit+, for a @udicial declaration determination of the insura"ilit+ of respondents )T=s at .7CIloilo.%3 In their ;ns,er filed on !cto"er #4, %&&% and ;mended ;ns,er %% filed on 8anuar+ &, %&&#, respondents set up acounterclaim a/ainst !+IC ,here"+ the+ as(ed for pa+ment of their insured deposits.%# In its =ecision of Fe"ruar+ ##, %&&4, %$ 7ranch $3 of the Iloilo RTC declared the #3 )T=s of respondents to "e deposit lia"ilities of .7C, hence, are lia"ilities of -=IC as statutor+ insurer. It accordingl+ disposed as follo,sA 'B2R2F!R2, premises considered, @udgment is here"+ renderedA %. =eclaring the #6 )T=s of the ;"ads ,hich ,ere issued "+ the T.7CIloilo on .a+ #5, %&67 as deposits or deposit lia"ilities of the "an( as the term is defined under 9ection $ /f0 of R.;. >o. $5&%, as amended: #. =eclaring -=IC, "eing the statutor+ insurer of "an( deposits, lia"le to the ;"ads for the value of the remaining #3 )T=s, the other 6 having "een paid alread+ "+ T.7C Iloilo on .a+ #5,%&67: $. !rdering -=IC to pa+ the ;"ads the value of said #3 )T=s less the value of $ )T=s it paid on Fe"ruar+ %%, %&66, and the amounts it ma+ have paid the ;"ads pursuant to the !rder of this Court dated 9eptem"er 6, %&&#: 4. !rdering -=IC to pa+ immediatel+ the ;"ads the "alance of its admitted lia"ilit+ as contained in the aforesaid !rder of 9eptem"er 6, %&&#, should there "e an+, su"@ect to li?uidation ,hen this case shall have "een finall+ decide: and 5. !rdering -=IC to pa+ legal interest on the remaining insured deposits of the ;"ads from Fe"ruar+ %%, %&66 until the+ are full+ paid. 9! !R=2R2=. !n appeal, the Court of ;ppeals, "+ the assailed =ecision of !cto"er #%, %&&6, %4 affirmed the trial court s decision e<cept as to the a,ard of legal interest ,hich it deleted. Bence, -=IC s present -etition for Revie, ,hich sets forth this lone assignment of errorA TB2 B!>!R;712 C!GRT !F ;--2;19 2RR2= I> ;FFIR.I>) TB2 B!1=I>) !F TB2 TRI;1 C!GRT TB;T TB2 ;.!G>T R2-R292>T2= I> TB2 F;C29 !F TB2 9! C;112= 5)!1=2> TI.2 =2-!9IT95 '2R2 I>9GR2= =2-!9IT9 2F2> ;9 TB2D '2R2 .2R2 =2RIF;TIF29 !F R29-!>=2>T9 -R2FI!G9 ;CC!G>T 7;1;>C29 'BICB '2R2 -R2-T2R.I>;T2=ET2R.I>;T2= ;T TB2 TI.2 TB2 .;>I1; 7;>RI>) C!R-!R;TI!> ';9 ;1R2;=D I> 92RI!G9 FI>;>CI;1 =I9TR299. In its supplement to the petition, -=IC adds the follo,ing assignment of errorA

=2C1;R;T!RD R21I2F =!29 >!T 2992>TI;11D 2>T;I1 ;> 2H2CGT!RD -R!C299 ;9 TB2 !>1D R21I2F TB;T 9B!G1= B;F2 722> )R;>T2= 7D TB2 TRI;1 C!GRT I9 ; =2C1;R;TI!> !F TB2 RI)BT9 ;>= =GTI29 !F -2TITI!>2R G>=2R R.;. $5&%, ;9 ;.2>=2=, -;RTICG1;R1D 92CTI!> $/F0 TB2R2!F ;9 C!>9I=2R2= ;);I>9T TB2 9GRR!G>=I>) CIRCG.9T;>C29 !F TB2 .;TT2R I> I99G2 9!G)BT T! 72 C!>9TRG2= 'ITB!GT -R28G=IC2 T! !TB2R .;TT2R9 TB;T >22= T! 72 C!>9I=2R2= 7D -2TITI!>2R I> TB2 -R!C299I>) !F R29-!>=2>T9 C1;I.9. Gnder its charter,%5 -=IC /hereafter petitioner0 is lia"le onl+ for deposits received "+ a "an( 5in the usual course of "usiness.5 %6 7eing of the firm conviction that, as the reported .a+ #5, %&67 "an( transactions ,ere so massive, hence, irregular, petitioner essentiall+ see(s a @udicial declaration that such transactions ,ere not made 5in the usual course of "usiness5 and, therefore, it cannot "e made lia"le for deposits su"@ect thereof. %7 -etitioner points that as .7C ,as prohi"ited from doing further "usiness "+ .7 Resolution 535 as of .a+ ##, %&67, all transactions su"se?uent to such date ,ere not done 5in the usual course of "usiness.5 -etitioner further posits that there ,as no consideration for the #3 )T=s su"@ect of respondents claim. In support of this su"mission, it states that prior to .arch #5, %&67, ,hen the #3 )T=s ,ere made, .7C had "een e<periencing li?uidit+ pro"lems, e.g., at the start of "an(ing operations on .arch #5, %&67, it had onl+ -#,64%,7%%.&3 cash on hand and at the end of the da+ it ,as left ,ith -#7,635.6% consisting mostl+ of mutilated "ills and coins.%6 Bence, even if respondents had ,anted to convert the face amounts of the )T=s to cash, .7C could not have complied ,ith it. -etitioner theorizes that after .7C had e<hausted its cash and could no longer sustain further ,ithdra,al transactions, it instead issued ne, )T=s as 5pa+ment5 for the preterminated )T=s of respondents to ma(e sure that all the ne,l+-issued )T=s have face amounts ,hich are ,ithin the statutor+ coverage of deposit insurance. -etitioner concludes that since no cash ,as given "+ respondents and none ,as received "+ .7C ,hen the ne, )T=s ,ere transacted, there ,as no consideration therefor and, thus, the+ ,ere not validl+ transacted 5in the usual course of "usiness5 and no lia"ilit+ for deposit insurance ,as created.%& -etitioner s position does not persuade. 'hile the .7 issued Resolution 535 on .a+ ##, %&67, a cop+ thereof ,as served on .7C onl+ on .a+ #6, %&67. .7C and its clients could "e given the "enefit of the dou"t that the+ ,ere not a,are that the .7 resolution had "een passed, given the necessit+ of confidentialit+ of placing a "an(ing institution under receivership. #3 The evident implication of the la,, therefore, is that the appointment of a receiver ma+ "e made "+ the .onetar+ 7oard ,ithout notice and hearing "ut its action is su"@ect to @udicial in?uir+ to insure the protection of the "an(ing institution. 9tated other,ise, due process does not necessaril+ re?uire a prior hearing: a hearing or an opportunit+ to "e heard ma+ "e subsequent to the closure. )ne can just ima/ine t%e dire consequences of a "rior %earin/; bank runs 3ould be t%e order of t%e day, resultin/ in "anic and %ysteria. In t%e "rocess, fortunes may be 3i"ed out, and disillusionment 3ill run t%e /amut of t%e entire bankin/ community . /2mphasis supplied0.#% .ere con@ectures that .7C had actual (no,ledge of its impending closure do not suffice. The .7 resolution could not thus have nullified respondents transactions ,hich occurred prior to .a+ #6, %&67. That no actual mone+ in "ills andEor coins ,as handed "+ respondents to .7C does not mean that the transactions on the ne, )T=s did not involve mone+ and that there ,as no consideration therefor. For the outstanding "alance of respondents 7% )T=s in .7C prior to .a+ #6, %&67 ## in the amount of -%,%%5,66&.%5 as earlier mentioned ,as re6

!n .a+ #5, %&67 /.onda+0 or a da+ prior to the official announcement and ta(e-over "+ C7 of the assets and lia"ilities of The .anila 7an(ing Corporation, the Iloilo 7ranch ,as found to have recorded an unusuall+ heav+ movements in terms of volume and amount for all t+pes of deposits and trust accounts. It appears that the impending receivership of T.7C ,as someho, alread+ (no,n to man+ depositors on account of the massive ,ithdra,als paid on this da+ ,hich practicall+ ,iped out the "ranch s entire cash position. . . . <<< <<< <<<

. . . The intention ,as to ma<imize the availment of -=IC coverage limited to -43,333 "+ spreading out "ig accounts to as man+ certificates under various nominees. . . .&

TB2 B!>!R;712 C!GRT !F ;--2;19 2RR2= I> ;FFIR.I>) TB2 B!1=I>) !F TB2 TRI;1 C!GRT !R=2RI>) -2TITI!>2R T! -;D R29-!>=2>T9 C1;I.9 F!R -;D.2>T !F I>9GR2= =2-!9IT9 F!R TB2 R2;9!> TB;T ;> ;CTI!> F!R

Page 12 of 29

de"osited "+ respondents under #6 ne, )T=s. ;dmittedl+, .7C had -#,64%,7%%.&3 cash on hand S more than dou"le the outstanding "alance of respondent s 7% )T=s S at the start of the "an(ing da+ on .a+ #5, %&67. 9ince respondent 8ose ;"ad ,as at .7C soon after it opened at &A33 a.m. of that da+, petitioner should not presume that .7C had no cash to cover the ne, )T=s of respondents and conclude that there ,as no consideration for said )T=s. -etitioner having failed to overcome the presumption that the ordinar+ course of "usiness ,as follo,ed,#$ this Court finds that the #6 ne, )T=s ,ere deposited 5in the usual course of "usiness5 of .7C. In its second assignment of error, petitioner posits that the trial court erred in ordering it to pa+ the "alance of the deposit insurance to respondents, maintaining that the instant petition stemmed from a petition for declarator+ relief ,hich does not essentiall+ entail an e<ecutor+ process, and the onl+ relief that should have "een granted "+ the trial court is a declaration of the parties rights and duties. ;s such, petitioner continues, no order of pa+ment ma+ arise from the case as this is "e+ond the office of declarator+ relief proceedings.#4 'ithout dou"t, a petition for declarator+ relief does not essentiall+ entail an e<ecutor+ process. There is nothing in its nature, ho,ever, that prohi"its a counterclaim from "eing set-up in the same action.#5 >o,, there is nothing in the nature of a special civil action for declarator+ relief that proscri"es the filing of a counterclaim "ased on the same transaction, deed or contract su"@ect of the complaint. ; special civil action is after all not essentiall+ different from an ordinar+ civil action, ,hich is generall+ governed "+ Rules % to 56 of the Rules of Court, e<cept that the former deals ,ith a special su"@ect matter ,hich ma(es necessar+ some special regulation. 7ut the identit+ "et,een their fundamental nature is such that the same rules governing ordinar+ civil suits ma+ and do appl+ to special civil actions if not inconsistent ,ith or if the+ ma+ serve to supplement the provisions of the peculiar rules governing special civil actions.#6 -etitioner additionall+ su"mits that the issue of determining the amount of deposit insurance due respondents ,as never tried on the merits since the trial d,elt onl+ on the 5determination of the via"ilit+ or validit+ of the deposits5 and no evidence on record sustains the holding that the amount of deposit due respondents had "een finall+ determined.#7 This issue ,as not raised in the court a quo, ho,ever, hence, it cannot "e raised for the first time in the petition at "ar. #6 Finall+, petitioner faults respondents for availing of the statutor+ limits of the -=IC la,, presupposing that, "ased on the conduct of respondent 8ose ;"ad on .arch #5, %&67, he and his co respondents 5someho, (ne,5 of the impending closure of .7C. -etitioner ascri"es "ad faith to respondent 8ose ;"ad in transacting the ?uestioned deposits, and see(s to dis?ualif+ him from availing the "enefits under the la,. #& )ood faith is presumed. This, petitioner failed to overcome since it offered mere presumptions as evidence of "ad faith. 'B2R2F!R2, the assailed decision of the Court of ;ppeals is here"+ ;FFIR.2=. 9! !R=2R2=.

Page 13 of 29

G.R. No. 169-66

Ma7 9, 2..7

DEPARTMENT !" %UDGET AND MANAGEMENT, r/0r/(/)1/* 37 ,ECRETAR$ R!MUL! L. NERI, P5ILIPPINE NATI!NAL P!LICE, r/0r/(/)1/* 37 P!LICE DIRECT!R GENERAL ARTUR! L. L!MI%A!, NATI!NAL P!LICE C!MMI,,I!N, r/0r/(/)1/* 37 C5AIRMAN ANGEL! T. RE$E,, AND CI+IL ,ER+ICE C!MMI,,I!N, r/0r/(/)1/* 37 C5AIRPER,!N ARINA C. DA+ID, -etitioners, vs. MANILA<, "INE,T RETIREE, A,,!CIATI!N, INC., r/0r/(/)1/* 37 P?C!L. "ELICI,IM! G. LA4AR! @RET.A, AND ALL T5E !T5ER INP RETIREE,, Respondents. =2CI9I!> GARCIA, J.: ;ssailed and sought to "e set aside in this petition for revie, on certiorari under Rule 45 of the Rules of Court are the follo,ing issuances of the Court of ;ppeals /C;0 in C;-).R. CF >o. 76#3$, to ,itA %. =ecision% dated 8ul+ 7, #335 ,hich affirmed in toto the decision of the Regional Trial Court of .anila, 7ranch $#, in Civil Case >o. 3#-%3$73#, a suit for declarator+ relief, declaring the herein respondents entitled to the same retirement "enefits accorded upon retirees of the -hilippine >ational -olice /->-0 under Repu"lic ;ct /R.;.0 >o. 6&75, as amended "+ R.;. >o. 655%, and ordering the herein petitioners to implement the proper ad@ustments on respondentsP retirement "enefits: and #. Resolution# dated ;ugust #4, #335 ,hich denied the petitionersP motion for reconsideration. The antecedent factsA In %&75, -residential =ecree /-.=.0 >o. 765 ,as issued constituting the Integrated >ational -olice /I>-0 to "e composed of the -hilippine Consta"ular+ /-C0 as the nucleus and the integrated police forces as components thereof. Complementing -.=. >o. 765 ,as -.=. >o. %%64 $ dated ;ugust #6, %&77 /I>- 1a,, hereinafter0 issued to professionalize the I>- and promote career development therein. !n =ecem"er %$, %&&3, Repu"lic ;ct /R.;.0 >o. 6&75, entitled 5;> ;CT 29T;71I9BI>) TB2 -BI1I--I>2 >;TI!>;1 -!1IC2 G>=2R ; R2!R);>II2= =2-;RT.2>T !F TB2 I>T2RI!R ;>= 1!C;1 )!F2R>.2>T, ;>= F!R !TB2R -GR-!929,5 hereinafter referred to as ->- 1a,, ,as enacted. Gnder 9ection #$ of said la,, the -hilippine >ational -olice /->-0 ,ould initiall+ consist of the mem"ers of the I>-, created under -.=. >o. 765, as ,ell as the officers and enlisted personnel of the -C. In part, 9ection #$ readsA 92C. #$. Composition. O 9u"@ect to the limitation provided for in this ;ct, the -hilippine >ational -olice, hereinafter referred to as the ->-, is here"+ esta"lished, initiall+ consisting of the mem"ers of the police forces ,ho ,ere integrated into the Integrated >ational -olice /I>-0 pursuant to -residential =ecree >o. 765, and the officers and enlisted personnel of the -hilippine Consta"ular+ /-C0. ; little less than eight /60 +ears later, or on Fe"ruar+ #5, %&&6, R.;. >o. 6&75 ,as amended "+ R.;. >o. 655%, other,ise (no,n as the 5-BI1I--I>2 >;TI!>;1 -!1IC2 R2F!R. ;>= R2!R);>II;TI!> ;CT !F %&&6.5 ;mong other things, the amendator+ la, reengineered the retirement scheme in the police organization. Relevantl+, ->- personnel, under the ne, la,, stood to collect more retirement "enefits than ,hat I>- mem"ers of e?uivalent ran(, ,ho had retired under the I>- 1a,, received. The I>- retirees illustrated the resulting disparit+ in the retirement "enefits "et,een them and the ->- retirees as follo,sA 4

Retirement Ran( I>Corporal Captain 7rig. )en. ->9-!$ -. 9r. Insp. -. Chief 9upt.

.onthl+ -ension I>- $,##5.33 - 5,#46.33 - %3,354.#4 ->- %%,$%3.33 - %5,&76.33 - %6,366.33

=ifference

- 6,3&5.33 -%3,6#6.33 - 6,3$$.76

Bence, on 8une $, #33#, in the Regional Trial Court /RTC0 of .anila, all I>- retirees, spearheaded "+ the .anilaPs Finest Retirees ;ssociation, Inc., or the .FR;I /hereinafter collectivel+ referred to as the I>- Retirees0, filed a petition for declarator+ relief, 5 thereunder impleading, as respondents, the =epartment of 7udget and .anagement /=7.0, the ->-, the >ational -olice Commission />;-!1C!.0, the Civil 9ervice Commission /C9C0 and the )overnment 9ervice Insurance 9+stem /)9I90. =oc(eted in the RTC as Civil Case >o. 3#-%3$73#, ,hich ,as raffled to 7ranch ## thereof, the petition alleged in gist that I>- retirees ,ere e?uall+ situated as the ->- retirees "ut ,hose retirement "enefits prior to the enactment of R.;. >o. 6&75, as amended "+ R.;. >o. 655%, ,ere unconsciona"l+ and ar"itraril+ e<cepted from the higher rates and ad@usted "enefits accorded to the ->- retirees. ;ccordingl+, in their petition, the petitioning I>- retirees pra+ that a O

Page 14 of 29

=2C1;R;T!RD 8G=).2>T "e rendered in their favor, =2C1;RI>) ,ith certaint+ that the+, as I>--retirees, are trul+ a"sor"ed and e?uall+ considered as ->--retirees and thus, entitled to en@o+ the 9;.2 or I=2>TIC;1 retirement "enefits "eing "esto,ed to ->--retirees "+ virtue of said ->- 1a, or Repu"lic ;ct >o. 6&75, as amended "+ Repu"lic ;ct 655%, ,ith the corollar+ mandate for the respondents-government agencies to effect the immediate ad@ustment on their previousl+ received disparate retirement "enefits, retroactive to its effectivit+, and ,ith due pa+ment thereof. The )9I9 moved to dismiss the petition on grounds of lac( of @urisdiction and cause of action. !n the other hand, the C9C, =7., >;-!1C!. and ->-, in their respective ans,ers, asserted that the petitioners could not claim the more generous retirement "enefits under R.;. >o. 6&75 "ecause at no time did the+ "ecome ->- mem"ers, having retired prior to the enactment of said la,. =7., >;-!1C!. and ->- after,ards filed their respective pre-trial "riefs. The ensuing legal s(irmish is not relevant to the disposition of the instant case. The "ottom line is that, on .arch #%, #33$, the RTC came out ,ith its decision 6 holding that R.;. >o. 6&75, as amended, did not a"olish the I>- "ut merel+ provided for the a"sorption of its police functions "+ the ->-, and accordingl+ rendered @udgment for the I>- retirees, to ,itA 'B2R2F!R2, this Court here"+ renders 8G=).2>T =2C1;RI>) the I>- Retirees entitled to the same or identical retirement "enefits and such other "enefits "eing granted, accorded and "esto,ed upon the ->- Retirees under the ->- 1a, /R; >o. 6&75, as amended0. The respondents )overnment =epartments and ;gencies shall I..2=I;T21D 2FF2CT and I.-12.2>T the proper ad@ustments on the I>- RetireesP retirement and such other "enefits, R2TR!;CTIF2 to its date of effectivit+, and R212;92 and -;D to the I>- Retirees the due pa+ments of the amounts. 9! !R=2R2=. !n ;pril #, #33$, the trial court issued ,hat it denominated as 9upplement to the =ecision ,hereunder it granted the )9I9P motion to dismiss and thus considered the "asic petition as ,ithdra,n ,ith respect to the latter. From the adverse decision of the trial court, the remaining respondents, namel+, =7., ->-, >;-!1C!. and C9C, interposed an appeal to the C; ,hereat their appellate recourse ,as doc(eted as C;-).R. CF >o. 76#3$. ;s stated at the threshold hereof, the C;, in its decision of 8ul+ 7, #335, affirmed that of the trial court upholding the entitlement of the I>- retirees to the same or identical retirement "enefits accorded upon ->- retirees under R.;. >o. 6&75, as amended. Their motion for reconsideration having "een denied "+ the C; inT its e?uall+ assailed resolution of ;ugust #4, #335,6 herein petitioners are no, ,ith this Court via the instant recourse on their singular su"mission that TB2 C!GRT !F ;--2;19 C!..ITT2= ; 92RI!G9 2RR!R I> 1;' I> ;FFIR.I>) TB2 =2CI9I!> !F TB2 TRI;1 C!GRT >!T'ITB9T;>=I>) TB;T IT I9 C!>TR;RD T! 1;' ;>= 29T;71I9B2= 8GRI9-RG=2>C2. 'e =2>D. In the main, it is petitionersP posture that R.;. >o. 6&75 clearl+ a"olished the I>- and created in its stead a ne, police force, the ->-. -rescinding therefrom, petitioners contend that since the ->- is an organization entirel+ different from the I>-, it follo,s that I>- retirees never "ecame ->- mem"ers. 2rgo, the+ cannot avail themselves of the retirement "enefits accorded to ->mem"ers under R.;. >o. 6&75 and its amendator+ la,, R.;. >o. 655%. ; flash"ac( at histor+ is proper. ;s ma+ "e recalled, R.;. >o. 6&75 ,as enacted into la, on =ecem"er %$, %&&3, or @ust a"out four /40 +ears after the %&66 2dsa Revolution toppled do,n the dictatorship regime. 2gged on "+
7

the current sentiment of the times generated "+ the long period of martial rule during ,hich the police force, the -C-I>-, had a militar+ character, "eing then a ma@or service of the ;rmed Forces of the -hilippines, and invaria"l+ moved "+ a fresh constitutional mandate for the esta"lishment of one police force ,hich should "e national in scope and, most importantl+, purel+ civilian in character, & Congress enacted R.;. >o. 6&75 esta"lishing the ->- and placing it under the =epartment of Interior and 1ocal )overnment. To underscore the civilian character of the ->-, R.;. >o. 6&75 made it emphaticall+ clear in its declaration of polic+ the follo,ingA 9ection #. =eclaration of polic+ - It is here"+ declared to "e the polic+ of the 9tate to promote peace and order, ensure pu"lic safet+ and further strengthen local government capa"ilit+ aimed to,ards the effective deliver+ of the "asic services to the citizenr+ through the esta"lishment of a highl+ efficient and competent police force that is national in scope and civilian in character. <<<. The police force shall "e organized, trained and e?uipped primaril+ for the performance of police functions. Its national scope and civilian character shall "e paramount. >o element of the police force shall "e militar+ nor shall an+ position thereof "e occupied "+ active mem"ers of the L;F-M. /2mphasis and ,ord in "rac(et supplied.0 -ursuant to 9ection #$, supra, of R.;. >o. 6&75, the ->- initiall+ consisted of the mem"ers of the police forces ,ho ,ere integrated into the I>- "+ virtue of -.=. >o. 765, ,hile 9ection 66%3 of the same la, provides for the assumption "+ the ->- of the police functions of the I>and its a"sorption "+ the former, including its appropriations, funds, records, e?uipment, etc., as ,ell as its personnel.%% ;nd to govern the statutePs implementation, 9ection 65 of the ;ct spelled out the follo,ing a"sorption phasesA -hase I O 2<ercise of option "+ the uniformed mem"ers of the L-CM, the -C elements assigned ,ith the >arcotics Command, CI9, and the personnel of the technical services of the ;Fassigned ,ith the -C to include the regular CI9 investigating agents and the operatives and agents of the >;-!1C!. Inspection. Investigation and Intelligence 7ranch, and the personnel of the a"sor"ed >ational ;ction Committee on ;nti-Bi@ac(ing />;C;B0 of the =epartment of >ational =efense to "e completed ,ithin si< /60 months from the date of the effectivit+ of this ;ct. ;t the end of this phase, all personnel from the I>-, -C, ;F- Technical 9ervices, >;C;B, and >;-!1C!. Inspection, Investigation and Intelligence 7ranch shall have "een covered "+ official orders assigning them to the ->-, Fire and 8ail Forces "+ their respective units. -hase II O ;pproval of the ta"le of organization and e?uipment of all "ureaus and offices created under this ;ct, preparation and filling up of their staffing pattern, transfer of assets to the L=I1)M and organization of the Commission, to "e completed ,ithin t,elve /%#0 months from the effectivit+ date hereof. ;t the end of this phase, all personnel to "e a"sor"ed "+ the L=I1)M shall have "een issued appointment papers, and the organized Commission and the ->- shall "e full+ operational. The -C officers and enlisted personnel ,ho have not opted to @oin the ->- shall "e reassigned to the ;rm+, >av+ or ;ir Force, or shall "e allo,ed to retire under e<isting ;F- rules and regulations. ;n+ -C-I>- officer or enlisted personnel ma+, ,ithin the t,elve-month period from the effectivit+ of this ;ct, retire and "e paid retirement "enefits corresponding to a position t,o /#0 ran(s higher than his present grade, su"@ect to the conditions that at the time he applies for retirement, he has rendered at least t,ent+ /#30 +ears of service and still has, at most, t,ent+four /#40 months of service remaining "efore the compulsor+ retirement age as provided "+ e<isting la, for his office. -hase III O ;d@ustment of ran(s and esta"lishment of one /%0 lineal roster of officers and another for non-officers, and the rationalization of compensation and retirement s+stems: ta(ing into consideration the e<isting compensation schemes and retirement and separation "enefit s+stems of the different components of the ->-, to ensure that no mem"er of the ->- shall suffer an+ diminution in "asic longevit+ and incentive pa+s, allo,ances and retirement "enefits due them "efore the creations of the ->-, to "e completed ,ithin eighteen /%60 months from the effectivit+ of this ;ct. <<<.

Gpon the effectivit+ of this ;ct, the L=I1)M 9ecretar+ shall e<ercise administrative supervision as ,ell as operational control over the transferred, merged andEor a"sor"ed ;F- and I>- units. The incum"ent =irector )eneral of the -C-I>- shall continue to act as =irector )eneral of the ->- until U replaced U. /2mphasis and ,ords in "rac(ets supplied.0 From the foregoing, it appears clear to us that the I>- ,as never, as posited "+ the petitioners, a"olished or terminated out of e<istence "+ R.;. >o. 6&75. For sure, no,here in R.;. >o. 6&75 does the ,ords 5a"olish5 or 5terminate5 appear in reference to the I>-. Instead, ,hat the la, provides is for the 5a"sorption,5 5transfer,5 andEor 5merger5 of the I>-, as ,ell as the other offices comprising the -C-I>-, ,ith the ->-. To 5a"olish5 is to do a,a+ ,ith, to annul, a"rogate or destro+ completel+:%# to 5a"sor"5 is to assimilate, incorporate or to ta(e in. %$ 5.erge5 means to cause to com"ine or unite to "ecome legall+ a"sor"ed or e<tinguished "+ merger %4 ,hile 5transfer5 denotes movement from one position to another. Clearl+, 5a"olition5 cannot "e e?uated ,ith 5a"sorption.5 True it is that 9ection &3%5 of R.;. >o. 6&75 spea(s of the I>- 5LceasingM to e<ist5 upon the effectivit+ of the la,. It ought to "e stressed, ho,ever, that such cessation is "ut the logical conse?uence of the I>- "eing a"sor"ed "+ the ->-.7a<=>"%i7.net Far from "eing a"olished then, the I>-, at the most, ,as merel+ transformed to "ecome the ->-, minus of course its militar+ character and comple<ion. 2ven the petitionersP effort at disclosing the legislative intent "ehind the enactment of R.;. >o. 6&75 cannot support their theor+ of a"olition. Rather, the 9enate and Bouse deli"erations on the "ill that eventuall+ "ecame R.;. >o. 6&75 reveal ,hat has correctl+ "een held "+ the C; in its assailed decisionA that the ->- ,as precisel+ created to erase the stigma spa,ned "+ the militarization of the police force under the -C-I>- structure. The rationale "ehind the passage of R.;. >o. 6&75 ,as ade?uatel+ articulated "+ no less than the sponsor %6 of the corresponding Bouse "ill in his sponsorship speech, thusA 7+ removing the police force from under the control and supervision of militar+ officers, the "ill see(s to restore and underscore the civilian character of police ,or( - an other,ise universal concept that ,as muddled up "+ the martial la, +ears. Indeed, ,ere the legislative intent ,as for the I>-Ps a"olition such that nothing ,ould "e left of it, the ,ord 5a"olish5 or ,hat passes for it could have easil+ found its ,a+ into the ver+ te<t of the la, itself, ,hat ,ith the a"undant use of the ,ord during the legislative deli"erations. 7ut as can "e gleaned from said deli"erations, the la,ma(ersP concern centered on the fact that if the entire -C-I>- corps @oin the ->-, then the -C-I>- ,ill necessaril+ "e a"olished, for ,ho then ,ould "e its mem"ersC !f more conse?uence, the la,ma(ers ,ere one in sa+ing that there should never "e t,o national police agencies at the same time. 'ith the conclusion herein reached that the I>- ,as not in fact a"olished "ut ,as merel+ transformed to "ecome the ->-, mem"ers of the I>- ,hich include the herein respondents are, therefore, not e<cluded from availing themselves of the retirement "enefits accorded to ->retirees under 9ections 74%7 and 75%6 of R.;. >o. 6&75, as amended "+ R.;. >o. 655%. It ma+ "e that respondents ,ere no longer in the government service at the time of the enactment of R.;. >o. 6&75. This fact, ho,ever, ,ithout more, ,ould not pose as an impediment to the respondentsP entitlement to the ne, retirement scheme set forth under the aforecited sections. ;s correctl+ ratiocinated "+ the C; to ,hich ,e are in full accordA For sure, R.;. >o. 6&75 ,as not a retroactive statute since it did not impose a ne, o"ligation to pa+ the I>- retirees the difference "et,een ,hat the+ received ,hen the+ retired and ,hat ,ould no, "e due to them after R.;. >o. 6&75 ,as enacted. 2ven so, that did not render the RTCPs interpretation of R.;. >o. 6&75 an+ less valid. The LrespondentsPM retirement prior to the passage of R.;. >o. 6&75 did not e<clude them from the "enefits provided "+ R.;. >o. 6&75, as amended "+ R.;. >o. 655%, since their mem"ership in the I>- ,as an antecedent fact that nonetheless allo,ed them to avail themselves of the "enefits of the su"se?uent la,s. R.;. >o.

Page 15 of 29

6&75 considered them as ->- mem"ers, al,a+s referring to their mem"ership and service in the I>- in providing for their retirement "enefits. %& -etitioners maintain, ho,ever, that >;-!1C!. Resolution >o. 6, #3 particularl+ 9ection %%#% thereof, "ars the pa+ment of an+ differential in retirement pa+ to officers and non-officers ,ho are alread+ retired prior to the effectivit+ of R.;. >o. 6&75. The contention does not commend itself for concurrence. Gnder the amendator+ la, /R.;. >o. 655%0, the application of rationalized retirement "enefits to ->- mem"ers ,ho have mean,hile retired "efore its /R.;. >o. 655%0 enactment ,as not prohi"ited. In fact, its 9ection $6## e<plicitl+ states that the rationalized retirement "enefits schedule and program 5 s%all %ave retroactive effect in favor of !$! members and officers retired or se"arated from t%e time s"ecified in t%e la3 .5 To us, the aforesaid provision should "e made applica"le to I>- mem"ers ,ho had retired prior to the effectivit+ of R.;. >o. 6&75. For, as afore-held, the I>- ,as, in effect, merel+ a"sor"ed "+ the ->- and not a"olished. Indeed, to "ar pa+ment of retirement pa+ differential to I>- mem"ers ,ho ,ere alread+ retired "efore R.;. >o. 6&75 "ecame effective ,ould even run counter to the purpose of >;-!1C!. Resolution >o. 6 itself, as e<pressed in its pream"ulator+ clause, ,hich is to rationalize the retirement s+stem of the ->- ta(ing into consideration e<isting retirement and "enefit s+stems /including R.;. >o. 6&75 and -.=. >o. %%640 of the different components thereof 5to ensure that no mem"er of the ->- shall suffer an+ diminution in the retirement "enefits due them "efore the creation of the ->-.5#$ .ost importantl+, the perceived restriction could not plausi"l+ preclude the respondents from asserting their entitlement to retirement "enefits ad@usted to the level ,hen R.;. >o. 6&75 too( effect. 9uch ad@ustment he,s ,ith the constitutional ,arrant that 5the 9tate shall, from time to time, revie, to upgrade the pensions and other "enefits due to retirees of "oth the government and private sectors,5#4 and the implementing mandate under the 9enior CitizenPs 1a,#5 that 5to the e<tent practica"le and feasi"le, retirement "enefits <<< shall "e upgraded to "e at par ,ith the current scale en@o+ed "+ those in actual service.5 7a3"%i7.n?t Certainl+ going for the respondents in their "id to en@o+ the same retirement "enefits granted to ->- retirees, either under R.;. >o. 6&75 or R.;. >o. 655%, is 9ection $4 of the latter la, ,hich amended 9ection 75 of R.;. >o. 6&75 "+ adding thereto the follo,ing provisoA 9ection 75. Retirement "enefits. < < <A !rovided, finally, 0%at retirement "ay of t%e officers>non6 officers of t%e !$! s%all be subject to adjustments based on t%e "revailin/ scale of base "ay of "olice "ersonnel in t%e active service.

Then, too, is the all familiar rule thatA Retirement la,s should "e li"erall+ construed in favor of the retiree "ecause their intention is to provide for his sustenance and hopefull+, even comfort, ,hen he no longer has the stamina to continue earning his livelihood. The li"eral approach aims to achieve the humanitarian purposes of the la, in order that efficienc+, securit+ and ,ell-"eing of government emplo+ees ma+ "e enhanced.#6 The petitioners parla+ the notion of prospective application of statutes, noting in this regard that R.;. >o. 6&75, as amended, cannot "e applied retroactivel+, there "eing no provision to that effect. 'e are not persuaded. ;s correctl+ found "+ the appellate court, R.;. >o. 6&75 itself conte<tuall+ provides for its retroactive application to cover those ,ho had retired prior to its effectivit+. In this regard, ,e invite attention to the three /$0 phases of implementation under 9ection 65 for the a"sorption and continuation in the service of, among others, the I>- mem"ers under the ne,l+-esta"lished ->-. In a further "id to scuttle respondentsP entitlement to the desired retirement "enefits, the petitioners fault the trial court for ordering the immediate ad@ustments of the respondentsP retirement "enefits ,hen the "asic petition filed "efore it ,as one for declarator+ relief. To the petitioners, such petition does not essentiall+ entail an e<ecutor+ process, the onl+ relief proper under that setting "eing a declaration of the partiesP rights and duties. -etitionersP a"ove posture is valid to a point. Bo,ever, the e<ecution of @udgments in a petition for declarator+ relief is not necessaril+ indefensi"le. In -hilippine =eposit Insurance CorporationL-=ICM v. Court of ;ppeals, #7,herein the Court affirmed the order for the petitioners therein to pa+ the "alance of the deposit insurance to the therein respondents, ,e categoricall+ ruledA >o,, there is nothing in the nature of a special civil action for declarator+ relief that proscri"es the filing of a counterclaim "ased on the same transaction, deed or contract su"@ect of the complaint. ; special civil action is after all not essentiall+ different from an ordinar+ civil action, ,hich is generall+ governed "+ Rules % to 56 of the Rules of Court, e<cept that the former deals ,ith a special su"@ect matter ,hich ma(es necessar+ some special regulation. 7ut the identit+ "et,een their fundamental nature is such that the same rules governing ordinar+ civil suits ma+ and do appl+ to special civil actions if not inconsistent ,ith or if the+ ma+ serve to supplement the provisions of the peculiar rules governing special civil actions. #6

9imilarl+, in .atalin Coconut Co., Inc. v. .unicipal Council of .ala"ang, 1anao del 9urA #& the Court upheld the lo,er courtPs order for a part+ to refund the amounts paid "+ the adverse part+ under the municipal ordinance therein ?uestioned, statingA < < < Gnder 9ec. 6 of Rule 64, the action for declarator+ relief ma+ "e converted into an ordinar+ action and the parties allo,ed to file such pleadings as ma+ "e necessar+ or proper, if "efore the final termination of the case 5a "reach or violation of an U ordinance, should ta(e place.5 In the present case, no "reach or violation of the ordinance occurred. The petitioner decided to pa+ 5under protest5 the fees imposed "+ the ordinance. 9uch pa+ment did not affect the case: the declarator+ relief action ,as still proper "ecause the applica"ilit+ of the ordinance to future transactions still remained to "e resolved, although the matter could also "e threshed out in an ordinar+ suit for the recover+ of ta<es paid U. In its petition for declarator+ relief, petitionerappellee alleged that "+ reason of the enforcement of the municipal ordinance "+ respondents it ,as forced to pa+ under protest the fees imposed pursuant to the said ordinance, and accordingl+, one of the reliefs pra+ed for "+ the petitioner ,as that the respondents "e ordered to refund all the amounts it paid to respondent .unicipal Treasurer during the pendenc+ of the case. The inclusion of said allegation and pra+er in the petition ,as not o"@ected to "+ the respondents in their ans,er. =uring the trial, evidence of the pa+ments made "+ the petitioner ,as introduced. Respondents ,ere thus full+ a,are of the petitioner s claim for refund and of ,hat ,ould happen if the ordinance ,ere to "e declared invalid "+ the court. The Court sees no reason for treating this case differentl+ from -=IC and .atalin.7a3"%i7.n?t This disposition "ecomes all the more appropriate considering that the respondents, as petitioners in the RTC, pleaded for the immediate ad@ustment of their retirement "enefits ,hich, significantl+, the herein petitioners, as respondents in the same court, did not o"@ect to. 7eing a,are of said pra+er, the petitioners then alread+ (ne, the logical conse?uence if, as it turned out, a declarator+ @udgment is rendered in the respondentsP favor. ;t "ottom then, the trial courtPs @udgment forestalled multiplicit+ of suits ,hich, needless to stress, ,ould onl+ entail a long and arduous process. Considering their o"vious advanced +ears, the respondents can hardl+ afford another protracted proceedings. It is thus for this Court to alread+ ,rite finis to this case. 'B2R2F!R2, the instant petition is =2>I2= and the assailed decision and resolution of the C;, respectivel+ dated 8ul+ 7, #335 and ;ugust #4, #335, are ;FFIR.2=. >o costs. 9! !R=2R2=.

Page 16 of 29

G.R. No(. L-8895 a)* L-9191

A0r'& 3., 1957 AL., petitioners,

,AL+AD!R A. ARANETA, ETC., ET vs. T5E 5!N. MAGN! ,. GATMAITAN, ETC., ET AL., respondents. EBECUIEL ,!RIAN!, ET vs. ,AL+AD!R ARANETA, ETC., ET AL., respondents-appellants. "ELIB, J.8

9oriano, Teodora =onato, Felipe Concepcion, Fenancio Correa, 9anto )aviana, ;lfredo )eneral, Constancio )utierrez, ;rsenio de )uzman, -edro 1azaro, -orfirio 1azaro, =el@ie de 1eon, 8ose >epomuceno, 7a+ani -ingol, Claudio 9algado, -orfirio, 9an 8uan, 1uis 9ioco, Casimiro Fillar and 2nri?ue Foluntad0, onl+ %% ,ere issued license to operate fishing "oats for the +ear %&54 /;nne< 7, petition S 1-66&50: that the e<ecutive orders in ?uestion ,ere issued accordance ,ith la,: that the encouragement "+ the 7ureau of Fisheries of the use of !tter tra,ls should not "e construed to mean that the general ,elfare of the pu"lic could "e disregarded, and set up the defenses that since plaintiffs ?uestion the validit+ of the e<ecutive orders issued "+ the -resident, then the 9ecretar+ of ;griculture and >atural Resources and the =irector of Fisheries ,ere not the real parties in interest: that said e<ecutive orders do not constitute a deprivation of propert+ ,ithout due process of la,, and therefore pra+ed that the complaint "e dismissed /2<h. 7, petition, 1-66&50. =uring the trial of the case, the )overnor of Camarines 9ur appearing for the municipalities of 9iruma, Tinam"ac, Cala"anga, Ca"usao and 9ipocot, in said province, called the attention of the Court that the 9olicitor )eneral had not "een notified of the proceeding. To this manifestation, the Court ruled that in vie, of the circumstances of the case, and as the 9olicitor )eneral ,ould onl+ "e interested in maintaining the legalit+ of the e<ecutive orders sought to "e impugned, section 4 of Rule 66 could "e interpreted to mean that the trial could go on and the 9olicitor )eneral could "e notified "efore @udgement is entered. ;fter the evidence for "oth parties ,as su"mitted and the 9olicitor )eneral ,as allo,ed to file his memorandum, the Court rendered decision on Fe"ruar+ #, %&55, the last part of ,hich reads as follo,sA The po,er to close an+ definite area of the -hilippine ,aters, from the fact that Congress has seen fit to define under ,hat conditions it ma+ "e done "+ the enactment of the sections cited, in the mind of Congress must "e of transcendental significance. It is primaril+ ,ithin the fields of legislation not of e<ecutionA for it goes far and sa+s ,ho can and ,ho can not fish in definite territorial ,aters. The court can not accept that Congress had intended to a"dicate its inherent right to legislate on this matter of national importance. To accept respondents vie, ,ould "e to sanction the e<ercise of legislative po,er "+ e<ecutive decrees. If it is 9an .iguel 7a+ no,, it ma+ "e =avao )ulf tomorro,, and so on. That ma+ "e done onl+ "+ Congress. This "eing the conclusion, there is hardl+ need to go an+ further. Gntil the tra,ler is outla,ed "+ legislative enactment, it cannot "e "anned from 9an .iguel 7a+ "+ e<ecutive proclamation. The remed+ for respondents and population of the coastal to,ns of Camarines 9ur is to go to the 1egislature. The result ,ill "e to issue the ,rit pra+ed for, even though this "e to stri(e at pu"lic clamor and to annul the orders of the -resident issued in response therefor. This is a tas( un,elcome and unpleasant: unfortunatel+, courts of @ustice use onl+ one measure for "oth the rich and poor, and are not "ound "+ the more popular cause ,hen the+ give @udgments. I> FI2' 'B2R2!F, granted: 2<ecutive !rder >os. ##, 66 and 63 are declared invalid: the in@unction pra+ed for is ordered to issue: no pronouncement as to costs. -etitioners immediatel+ filed an e<-parte motion for the issuance of a ,rit of in@unction ,hich ,as opposed "+ the 9olicitor )eneral and after the parties had filed their respective memoranda, the Court issued an order dated Fe"ruar+ %&, %&55, den+ing respondents motion to set aside @udgement and ordering them to file a "ond in the sum of -$3,333 on or "efore .arch %, %&55, as a condition for the non-issuance of the in@unction pra+ed for "+ petitioners pending appeal. The 9olicitor )eneral filed a motion for reconsideration ,hich ,as denied for lac( of merit, and the Court, acting upon the motion for ne, trial filed "+ respondents, issued another order on .arch $, %&65, den+ing said motion and granting the in@unction pra+ed for "+ petitioners upon the latter s filing a "ond for -$3,333 unless respondents could secure a ,rit of preliminar+ in@unction from the 9upreme Court on or "efore .arch %5, %&55. Respondents, therefore, "rought the matter to this Court in a petition for prohi"ition and certiorari,ith preliminar+ in@unction, doc(eted as ).R. >o. 1-66&5, and on the same da+ filed a notice to appeal from the order of the lo,er court dated Fe"ruar+ #, %&55, ,hich appeal ,as doc(eted in this Court as ).R. >o. 1-&%&%.

AL., petitioners-appellees,

In the petition for prohi"ition and certiorari, petitioners /respondents therein0 contended among other things, that the order of, the respondent 8udge re?uiring petitioners 9ecretar+ of ;griculture and >atural Resources and the =irector of Fisheries to post a "ond in the sum of -$3,333 on or "efore .arch %, %&55, had "een issued ,ithout @urisdiction or in e<cess thereof, or at the ver+ least ,ith grave a"use of discretion, "ecause "+ re?uiring the "ond, the Repu"lic of the -hilippines ,as in effect made a part+ defendant and therefore transformed the suit into one against the )overnment ,hich is "e+ond the @urisdiction of the respondent 8udge to entertain: that the failure to give the 9olicitor )eneral the opportunit+ to defend the validit+ of the challenged e<ecutive orders resulted in the receipt of o"@ectiona"le matters at the hearing: that Rule 66 of the Rules of Court does not empo,er a court of la, to pass upon the validit+ of an e<ecutive order in a declarator+ relief proceeding: that the respondent 8udge did not have the po,er to grant the in@unction as 9ection 4 of Rule $& does not appl+ to declarator+ relief proceedings "ut onl+ to in@unction, receivership and patent accounting proceedings: and pra+ed that a ,rit of preliminar+ in@unction "e issued to en@oin the respondent 8udge from enforcing its order of .arch $, %&55, and for such other relief as ma+ "e deem @ust and e?uita"le in the premises. This petition ,as given due course and the hearing on the merits ,as set "+ this Court for ;pril %#, %&55, "ut no ,rit of preliminar+ in@unction ,as issued. .ean,hile, the appeal /).R. >o. 1-&%&%0 ,as heard on !cto"er $, %&56, ,herein respondentsappellants ascri"ed to the lo,er court the commission of the follo,ing errorsA %. In ruling that the -resident has no authorit+ to issue 2<ecutive !rders >os. ##, 66 and 63 "anning the operation of tra,ls in 9an .iguel 7a+: #. In holding that the po,er to declare a closed area for fishing purposes has not "een delegated to the -resident of the -hilippines under the Fisheries ;ct: $. In not considering 2<ecutive !rders >os. ##, 66 and 63 as declaring a closed season pursuant to 9ection 7, ;ct 433$, as amended, other,ise (no,n as the Fisheries ;ct: 4. In holding that to uphold the validit+ of 2<ecutive !rders >os. ## and 63 ,ould "e to sanction the e<ercise of legislative po,er "+ e<ecutive decrees: 5. In its suggestion that the onl+ remed+ for respondents and the people of the coastal to,ns of Camarines 9ur and Camarines >orte is to go to the 1egislature: and 6. In declaring 2<ecutive !rders >os. ##, 66 and 63 invalid and in ordering the in@unction pra+ed for to issue. ;s !ur decision in the prohi"ition and certiorari case /).R. >o. 1-66&50 ,ould depend, in the last anal+sis, on !ur ruling in the appeal of the respondents in case ).R. >o. 1-&%&%, 'e shall first proceed to dispose of the latter case. It is indisputa"le that the -resident issued 2<ecutive !rders >os. ##, 66 and 63 in response to the clamor of the inha"itants of the municipalities along the coastline of 9an .iguel 7a+. The+ read as follo,sA 2H2CGTIF2 !R=2R >o. ## -R!BI7ITI>) TB2 G92 !F TR;'19 I> 9;> .I)G21 7;D In order to effectivel+ protect the municipal fisheries of 9an .iguel 7a+, Camarines >orte and Camarines 9ur, and to conserve fish and other a?uatic resources of the area, I, R;.!> .;)9;D9;D, -resident of the -hilippines, "+ virtue of the po,ers vested in me "+ la,, do here"+ order thatA

9an .iguel 7a+, located "et,een the provinces of Camarines >orte and Camarines 9ur, a part of the >ational ,aters of the -hilippines ,ith an e<tension of a"out #53 s?uare miles and an average depth of appro<imatel+ 6 fathoms /!tter tra,l e<plorations in -hilippine ,aters p. #%, 2<h. 70, is considered as the most important fishing area in the -acific side of the 7icol region. 9ometime in %&53, tra,l% operators from .ala"on, >avotas and other places migrated to this region most of them settling at 9a"ang, Cala"anga, Camarines 9ur, for the purpose of using this particular method of fishing in said "a+. !n account of the "elief of sustenance fishermen that the operation of this (ind of gear caused the depletion of the marine resources of that area, there arose a general clamor among the ma@orit+ of the inha"itants of coastal to,ns to prohi"it the operation of tra,ls in 9an .iguel 7a+. This move ,as manifested in the resolution of =ecem"er %6, %&5$ /2<h. F0, passed "+ the .unicipal .a+ors 1eague condemning the operation of tra,ls as the cause of the ,anton destruction of the shrimp specie and resolving to petition the -resident of the -hilippines to regulate fishing in 9an .iguel 7a+ "+ declaring it closed for tra,l fishing at a certain period of the +ear. In another resolution dated .arch #7, %&54, the same 1eague of .unicipal .a+or, pra+ed the -resident to protect them and the fish resources of 9an .iguel 7a+ "+ "anning the operation of tra,ls therein /2<h. 40. The -rovincial )overnor also made proper presentations to this effect and petitions in "ehalf of the non-tra,l fishermen ,ere li(e,ise presented to the -resident "+ social and civic organizations as the >;.FR21 />ational .ovement for Free 2lections0 and the C!.-;=R2 /Committee for -hilippine ;ction in =evelopment, Reconstruction and 2ducation0, recommending the cancellation of the licenses of tra,l operators after investigation, if such in?uir+ ,ould su"stantiate the charges that the operation of said fishing method ,as detrimental to the ,elfare of the ma@orit+ of the inha"itants /2<h. #0. In response to these pleas, the -resident issued on ;pril 5, %&54, 2<ecutive !rder >o. ## /53 !ff. )az., %4#%0 prohi"iting the use of tra,ls in 9an .iguel 7a+, "ut said e<ecutive order ,as amended "+ 2<ecutive !rder >o. 66, issued on 9eptem"er #$, %&54 /53 !ff. )az., 43$70, apparentl+ in ans,er to a resolution of the -rovincial 7oard of Camarines 9ur recommending the allo,ance of tra,l fishing during the t+phoon season onl+. !n >ovem"er #, %&54, ho,ever, 2<ecutive !rder >o. 63 /53 !ff. )az., 5%&60 ,as issued reviving 2<ecutive !rder >o. ##, to ta(e effect after =ecem"er $%, %&54. ; group of !tter tra,l operators too( the matter to the court "+ filing a complaint for in@unction andEor declarator+ relief ,ith preliminar+ in@unction ,ith the Court of First Instance of .anila, doc(eted as Civil Case >o. #4667, pra+ing that a ,rit of preliminar+ in@unction "e issued to restrain the 9ecretar+ of ;griculture and >atural Resources and the =irector of Fisheries from enforcing said e<ecutive order: to declare the same null and void, and for such other relief as ma+ "e @ust and e?uita"le in the premises. The 9ecretar+ of ;griculture and >atural Resources and the =irector of Fisheries, represented "+ the 1egal ;dviser of said =epartment and a 9pecial ;ttorne+ of the !ffice of the 9olicitor )eneral, ans,ered the complaint alleging, among other things, that of the %6 plaintiff /2<e?uiel

Page 17 of 29

%. Fishing "+ means of tra,ls /utase, otter andEor perenzella0 of an+ (ind, in the ,aters comprised ,ithin 9an .iguel 7a+, is here"+ prohi"ited. #. Tra,l shall mean, for the purpose of this !rder, a fishing net made in the form of a "ag ,ith the mouth (ept open "+ a device, the ,hole affair "eing to,ed, dragged, trailed or tra,led on the "ottom of the sea to capture demersal, ground or "ottom species. $. Fiolation of the provisions of this !rder shall su"@ect the offender to the penalt+ provided under 9ection 6$ of ;ct 4&&$, or more than si< months, or "oth, in the discretion of the Court. =one in the Cit+ of .anila, this 5th da+ of ;pril, nineteen hundred and fift+-four and of the Independence of the -hilippines, the eighth. /53 !ff. )az. %4#%0 2H2CGTIF2 !R=2R >o. 66 ;.2>=I>) 2H2CGTIF2 !R=2R >o. ##, =;T2= ;-RI1 5, %&54, 2>TIT12= 5-R!BI7ITI>) TB2 G92 !F TR;'19 I> 9;> .I)G21 7;D5 7+ virtue of the po,ers voted in me "+ la,, I, R;.!> .;)9;D9;D, -resident of the -hilippines, do here"+ amend 2<ecutive !rder >o. ##, dated ;pril 5, %&54, so as to allo, fishing "+ means of tra,ls, as defined in said 2<ecutive !rder, ,ithin that portion of 9an .iguel 7a+ north of a straight line dra,n from Tacu"tacu"an Bill in the .unicipalit+ of Tinam"ac, -rovince of Camarines 9ur. Fishing "+ means of tra,ls south of said line shall still "e a"solutel+ prohi"ited. =one in the Cit+ of .anila, this #$rd da+ of 9eptem"er, in the +ear of our 1ord, nineteen hundred and fift+-four, and of the Independence of the -hilippines, the ninth.5 /53 !ff. )az. 43$70. 2H2CGTIF2 !R=2R >o. 63. FGRTB2R ;.2>=I>) 2H2CGTIF2 !R=2R >o. ##, =;T2= ;-RI1 5, %&54, ;9 ;.2>=2= 7D 2H2CGTIF2 !R=2R >o. 66, =;T2= 92-T2.72R #$, %&54. 7+ virtue of the po,ers vested in me "+ la,, I, R;.!> .;)9;D9;D, -resident of the -hilippines, do here"+ amend 2<ecutive !rder >o. 66 dated 9eptem"er #$, %&54, so as to allo, fishing "+ means of tra,ls, as defined in 2<ecutive !rder >o. ##, dated ;pril 5, %&54, ,ithin the portion of 9an .iguel 7a+ >orth of a straight line dra,n from Tacu"tacu"an Bill in the .unicipalit+ of .ercedes, -rovince of Camarines >orte to 7aloc"aloc -oint in the .unicipalit+ of Tinam"ac, -rovince of Camarines 9ur, until =ecem"er $%, %&54, onl+. Thereafter, the provisions of said 2<ecutive !rder >o. ## a"solutel+ prohi"iting fishing "+ means of tra,ls in all the ,aters comprised ,ithin the 9an .iguel 7a+ shall "e revived and given full force and effect as originall+ provided therein. =one in the Cit+ of .anila, this #nd da+ of >ovem"er, in the +ear of !ur 1ord, nineteen hundred and fift+-four and of the Independence of the -hilippines, the ninth. /53 !ff. )az. 5%&60 It is li(e,ise admitted that petitioners assailed the validit+ of said e<ecutive orders in their petition for a ,rit of in@unction andEor declarator+ relief filed ,ith the Court of First Instance of .anila, and that the lo,er court, upon declaring 2<ecutive !rders >os. ##, 66 and 63 invalid, issued an order re?uiring the 9ecretar+ of ;griculture and >atural Resources and the =irector of

Fisheries to post a "ond for -$3,333 if the ,rit of in@unction restraining them from enforcing the e<ecutive orders in ?uestion must "e sta+ed. The 9olicitor )eneral avers that the constitutionalit+ of an e<ecutive order cannot "e ventilated in a declarator+ relief proceeding. 'e find this untena"le, for this Court ta(ing cognizance of an appeal from the decision of the lo,er court in the case of (ilado vs. +e la Costa, et al ., 6$ -hil., 47%, ,hich involves the constitutionalit+ of another e<ecutive order presented in an action for declarator+ relief, in effect accepted the propriet+ of such action. This ?uestion "eing eliminated, the main issues left for !ur determination ,ith respect to defendants appeal /).R. >o. 1-&%&%0, areA /%0 'hether the 9ecretar+ of an 2<ecutive =epartment and the =irector of a 7ureau, acting in their capacities as such )overnment officials, could la,full+ "e re?uired to post a "ond in an action against them: /#0 'hether the -resident of the -hilippines has authorit+ to issue 2<ecutive !rders >os. ##, 66 and 63, "anning the operation of tra,ls in 9an .iguel 7a+, or, said in other ,ords, ,hether said 2<ecutive !rders >os. ##, 66 and 63 ,ere issued in accordance ,ith la,: and. /$0 'hether 2<ecutive !rders >os. ##, 66 and 63 ,ere valid, for the issuance thereof ,as not in the e<ercise of legislative po,ers undul+ delegated to the -resident. Counsel for "oth parties presented commenda"le e<haustive defenses in support of their respective stands. Certainl+, these cases deserve such efforts, not onl+ "ecause the constitutionalit+ of an act of a coordinate "ranch in our tripartite s+stem of )overnment is in issue, "ut also "ecause of the num"er of inha"itants, admittedl+ classified as 5su"sistence fishermen5, that ma+ "e affected "+ an+ ruling that 'e ma+ promulgate herein. I. ;s to the first proposition, it is an elementar+ rule of procedure that an appeal sta+s the e<ecution of a @udgment. ;n e<ception is offered "+ section 4 of Rule $& of the Rules of Court ,hich provides thatA 92C. 4. I>8G>CTI!>, R2C2IF2R9BI- ;>= -;T2>T ;CC!G>TI>), >!T 9T;D2=. S Gnless other,ise ordered "+ the court, a @udgment in an action for in@unction or in a receivership action, or a @udgment or order directing an accounting in an action for infringement of letter patent, shall not "e sta+ed after its rendition and "efore an appeal is ta(en or during the pendenc+ of an appeal. The trial court, ho,ever, in its discretion, ,hen an appeal is ta(en from a @udgement granting, dissolving or den+ing an in@unction, ma+ ma(e an order suspending, modif+ing, restoring, or granting such in@unction during the pendenc+ of an appeal, upon such terms as to "ond or other,ise as it ma+ consider proper for the securit+ of the rights of the adverse part+. This provision ,as the "asis of the order of the lo,er court dated Fe"ruar+ %&, %&55, re?uiring the filing "+ the respondents of a "ond for -$3,333 as a condition for the non-issuance of the in@unction pra+ed for "+ plaintiffs therein, and ,hich the 9olicitor )eneral charged to have "een issued in e<cess of @urisdiction. The 9tate s counsel, ho,ever, alleges that ,hile @udgment could "e sta+ed in in@unction, receivership and patent accounting cases and although the complaint ,as st+led 5In@unction, andEor =eclarator+ Relief ,ith -reliminar+ In@unction5, the case is necessaril+ one for declarator+ relief, there "eing no allegation sufficient to convince the Court that the plaintiffs intended it to "e one for in@unction. 7ut aside from the title of the complaint, 'e find that plaintiffs pra+ for the declaration of the nullit+ of 2<ecutive !rder >os. ##, 66 and 63: the issuance of a ,rit of preliminar+ in@unction, and for such other relief as ma+ "e deemed @ust and e?uita"le. This Court has alread+ held that there are onl+ t,o re?uisites to "e satisfied if an in@unction is to issue, namel+, the e<istence of the right sought to "e protected, and that the acts against ,hich the in@unction is to "e directed are violative of said right />orth >egros 9ugar Co., Inc.vs. 9erafin Bidalgo, 6$ -hil., 6640. There is no ?uestion that at least %% of the complaining tra,l operators ,ere dul+ licensed to operate in an+ of the national ,aters of the -hilippines, and it is undenia"le that the e<ecutive enactment s sought to "e annulled are detrimental to their interests. ;nd considering further that the granting or refusal of an in@unction, ,hether temporar+

or permanent, rests in the sound discretion of the Court, ta(ing into account the circumstances and the facts of the particular case /Rodulfa vs. ;lfonso, 76 -hil,, ##5, 4# !ff. )az., #4$&0, 'e find no a"use of discretion ,hen the trial Court treated the complaint as one for in@unction and declarator+ relief and e<ecuted the @udgment pursuant to the provisions of section 4 of Rule $& of the Rules of Court. !n the other hand, it shall "e remem"ered that the part+ defendants in Civil Case >o. #4667 of the Court of First Instance of .anila are 9alvador ;raneta, as 9ecretar+ of ;griculture and >atural Resources, and, =eogracias Filladolid, as =irector of Fisheries, and ,ere sued in such capacities "ecause the+ ,ere the officers charged ,ith dut+ of carr+ing out the statutes, orders and regulations on fishing and fisheries. In its order of Fe"ruar+ %&, %&55, the trial court denied defendants motion to set aside @udgment and the+ ,ere re?uired to file a "ond for -$3,333 to ans,er for damages that plaintiffs ,ere allegedl+ suffering at that time, as other,ise the in@unction pra+ed for "+ the latter ,ould "e issued. 7ecause of these facts, 'e agree ,ith the 9olicitor )eneral ,hen he sa+s that the action, "eing one against herein petitioners as such )overnment officials, is essentiall+ one against the )overnment, and to re?uire these officials to file a "ond ,ould "e indirectl+ a re?uirement against the )overnment for as regards "onds or damages that ma+ "e proved, if an+, the real part+ in interest ,ould "e the Repu"lic of the -hilippines /1. 9. .oon and Co. vs. Barrison, 4$ -hi., $&: 9algado vs. Ramos, 64 -hil., 7#4-7#7, and others0. The reason for this pronouncement is understanda"le: the 9tate undou"tedl+ is al,a+s solvent /Tolentino vs. Carlos 66 -hil., %43: )overnment of the -. I. vs. 8udge of the Court of First Instance of Iloilo, $4 -hil., %67, cited in 8oa?uin )utierrez et al. vs. Camus et al. V ).R. >o. 1-67#5, promulgated !cto"er $3, %&540. Bo,ever, as the records sho, that herein petitioners failed to put up the "ond re?uired "+ the lo,er court, allegedl+ due to difficulties encountered ,ith the ;uditor )eneral s !ffice /giving the impression that the+ ,ere ,illing to put up said "ond "ut failed to do so for reasons "e+ond their control0, and that the orders su"@ects of the prohi"ition and certiorari proceedings in ).R. >o. 166&5, ,ere enforced, if at all,# in accordance ,ith section 4 of Rule $&, ,hich 'e hold to "e applica"le to the case at "ar, the issue as to the regularit+ or ade?uac+ of re?uiring herein petitioners to post a "ond, "ecomes moot and academic. II. -assing upon the ?uestion involved in the second proposition, the trial @udge e<tending the controvers+ to the determination of ,hich "et,een the 1egislative, and 2<ecutive =epartments of the )overnment had 5the po,er to close an+ definite area of the -hilippine ,aters5 instead of limiting the same to the real issue raised "+ the enactment of 2<ecutive !rders >o. ##, #6 and 63, especiall+ the first and the last 5 absolutely "ro%ibitin/ fis%in/ by means tra3ls in all the ,aters comprised ,ithin the 9an .iguel 7a+5, ruled in favor of Congress had not intended to a"dicate its po,er to legislate on the matter, he maintained as stated "efore, that 5until the tra,ler is outla,ed "+ legislative enactment, it cannot "e "anned from 9an .iguel 7a+ "+ e<ecutive proclamation5, and that 5the remed+ for respondents and population of the coastal to,ns of Camarines 9ur is to go to 1egislature,5 and thus declared said 2<ecutive !rders >os. ##, 66 and 63 invalid5. The 9olicitor )eneral, on the contrar+, asserts that the -resident is empo,ered "+ la, to issue the e<ecutive enactment s in ?uestion. 9ections 6, %$ and 75 of ;ct >o. 433$, (no,n as the Fisheries 1a,, the latter t,o sections as amended "+ section % of Common,ealth ;ct >o. 47%, read as follo,sA 92C. 6. '!R=9 ;>= -BR;929 =2FI>2=. S'ords and terms used in this ;ct shall "e construed as follo,sA <<< <<< <<<

T;R2 or T;RI>) includes pursuing, shooting, (illing, capturing, trapping, snaring, and netting fish and other a?uatic animals, and all lesser acts, such as disturbin/, ,ounding, stupef+ing: or placing, setting, dra,ing, or using an+ net or other device commonl+ used to ta(e or collect fish and other a?uatic animals, 3%et%er t%ey result in takin/ or not , and includes ever+ attempt to ta(e and ever+ act of assistance to ever+ other person in ta(ing or attempting to ta(e

Page 18 of 29

or collect fish and other a?uatic animalsA -R!FI=2=, That ,henever ta(ing is allo,ed "+ la,, reference is had to ta(ing "+ la,ful means and in la,ful manner. <<< <<< <<<

The tra,ls ram and destro+ the fish corrals. The heav+ tra,l nets dig deep into the ocean "ed. The+ destro+ the fish foods ,hich lies "elo, the ocean floor. Their da+time catches net millions of shrimps scooped up from the mud. In their nets the+ "ring up the life of the seaA algea, shell fish and star fish . . . The a"sence of some species or the apparent decline in the catch of some fishermen operating in the "a+ ma+ "e due to several factors, namel+A the indiscriminate catc%in/ of fry and immature si-es of fis%es , the ,ide-spread use of e<plosives inside as ,ell as at the mouth and approaches of the "a+, and t%e e:tensive o"eration of the tra,ls. /p.&, Report of 9antos 7. Rasalan, 2<h. ;0 E:tensive )"eration of 0ra3ls A S The strenuous effect of the operations of the %7 0R1WL2 of t%e demersal fis%eries of 2an &i/uel #ay is "etter appreciated ,hen ,e consider the fact that out of its a"out 653 s?uare (ilometers area, onl+ a"out $53 s?uare (ilometers of 5 fathoms up could "e tra,led. 'ith their continuous operation, is greatl+ strained. This is sho,n "+ the fact that in vie, of the non-o"servance of the close season from .a+ to !cto"er, each +ear, majority of t%eir catc% are immature . If their operation ,ould continue unrestricted, the suppl+ ,ould "e greatl+ depleted. /p. %%0, Report of 9antos 7. Rasalan, 2<h. ;0 9an .iguel 7a+ S can sustain B to C small tra3lers /!tter Tra,l 2<plorations in -hilippine 'aters, Research Report #5 of the Fish and 'ildlife 9ervice, Gnited 9tates =epartment of the Interior, p. & 2<hi"it 70. ;ccording to ;nne< ; of the complaint filed in the lo,er court in Civil Case >o. #4667 S ).R. >o. 1-&%&% /2<h. =, p. 5$ of the folder of 2<hi"its0, the %6 plaintiffs-appellees operate #& tra,ling "oats, and their operation must "e in a "ig scale considering the investments plaintiffs have made therefore, amounting to -$67,333 /Record on ;ppeal, p. %6-%70. In virtue of the aforementioned provisions of la, and the manifestation @ust copied, 'e are of the opinion that ,ith or ,ithout said 2<ecutive !rders, the restriction and "anning of tra,l fishing from all -hilippine ,aters come, under the la,, ,ithin the po,ers of the 9ecretar+ of ;griculture and >atural Resources, ,ho in compliance ,ith his duties ma+ even cause the criminal prosecution of those ,ho in violation of his instructions, regulations or orders are caught fishing ,ith tra,ls in the -hilippine ,aters. >o,, if under the la, the 9ecretar+ of ;griculture and >atural Resources has authorit+ to regulate or "an the fishing "+ tra,l ,hich, it is claimed, o"no<ious for it carries a,a+ fish eggs and fr+ s ,hich should "e preserved, can the -resident of the -hilippines e<ercise that same po,er and authorit+C 9ection %3/%0, ;rticle FII of the Constitution of the -hilippines prescri"esA 92C. %3 /%0. The -resident shall have control of all the e<ecutive departments, "ureaus or offices, e<ercises general supervision over all local governments as ma+ "e provided "+ la,, and ta(e care that the la,s "e faithfull+ e<ecuted. 9ection 6$ of the Revised ;dministrative Code reads as follo,sA 92C. 6$. 2H2CGTIF2 !R=2R9 ;>= 2H2CGTIF2 -R!C1;.;TI!>. S ;dministrative acts and commands of the -resident of the -hilippines touching the organization or mode of operation of the )overnment or rearranging or read@usting an+ of the district, divisions, parts or ports of the -hilippines, and all acts and commands /overnin/ t%e /eneral "erformance of duties by "ublic em"loyees or dis"osin/ of issues of /eneral concern s%all be made in e:ecutive orders. <<< <<< <<<

Regarding department organization 9ection 74 of the Revised ;dministrative Code also provides thatA 1ll e:ecutive functions of t%e /overnment of t%e Re"ublic of t%e !%ili""ines s%all be directly under t%e E:ecutive +e"artments su"@ect to the supervision and control of the -resident of the -hilippines in matters of general polic+. The =epartments are esta"lished for the proper distri"ution of the ,or( of the 2<ecutive, for the performance of the functions e<pressl+ assigned to them "+ la,, and in order that each "ranch of the administration ma+ have a chief responsi"le for its direction and polic+. 2ach =epartment 9ecretar+ shall assume the "urden of, and responsi"ilit+ for, all activities of the )overnment under %is control and su"ervision. For administrative purposes the -resident of the -hilippines shall "e considered the =epartment Bead of the 2<ecutive !ffice. !ne of the e<ecutive departments is that of ;griculture and >atural Resources ,hich "+ la, is placed under the direction and control of the 9ecretar+, ,ho e<ercises its functions su"@ect to the general supervision and control of the -resident of the -hilippines /9ec. 75, R. ;. C.0. .oreover, 5e<ecutive orders, regulations, decrees and proclamations relative to matters under the supervision or @urisdiction of a =epartment, the promulgation ,hereof is e<pressl+ assigned "+ la, to the -resident of the -hilippines, shall as a general rule, "e issued upon proposition and recommendation of the respective =epartment5 /9ec. 7&-;, R.;.C.0, and there can "e no dou"t that the promulgation of the ?uestioned 2<ecutive !rders ,as upon the proposition and recommendation of the 9ecretar+ of ;griculture and >atural Resources and that is ,h+ said 9ecretar+, ,ho ,as and is called upon to enforce said e<ecutive !rders, ,as made a part+ defendant in one of the cases at "ar /).R. >o. 1-&%&%0. For the foregoing reasons 'e do hesitate to declare that 2<ecutive !rders >os. ##, 66 and 63, series of %&54, of the -resident, are valid and issued "+ authorit+ of la,. III. 7ut does the e<ercise of such authorit+ "+ the -resident constitute and undue delegation of the po,ers of CongressC ;s alread+ held "+ this Court, the true distinction "et,een delegation of the po,er to legislate and the conferring of authorit+ or discretion as to the e<ecution of la, consists in that the former necessar+ involves a discretion as to ,hat the la, shall "e, ,ile in the latter the authorit+ or discretion as to its e<ecution has to "e e<ercised under and in pursuance of the la,. The first cannot "e done: to the latter no valid o"@ection can "e made /Cruz vs.Doung"erg, 56 -hil., #$4, #$&. 9ee also Ru"i, et al. vs. The -rovincial 7oard of .indoro, $& -hil., 6630. In the case of . 2. vs. 1n/ 0an/ (o , 4$ -hil. %, 'e also heldA TB2 -!'2R T! =212);T2. S The 1egislature cannot delegate legislative po,er to enact an+ la,. If ;ct >o. #666 is a la, unto itself, and it does nothing more than to authorize the )overnor-)eneral to ma(e rules and regulations to carr+ it into effect, then the 1egislature created the la,. There is no delegation of po,er and it is valid. !n the other hand, if the act ,ithin itself does not define a crime and is not complete, and some legislative act remains to "e done to ma(e it a la, or a crime, the doing of ,hich is vested in the )overnor-)eneral, the act is delegation of legislative po,er, is unconstitutional and void. From the provisions of ;ct >o. 433$ of the 1egislature, as amended "+ Common,ealth ;ct >o. 47%, ,hich have "een afore?uoted, 'e find that Congress /a0 declared it unla,ful 5to ta(e or catch fr+ or fish eggs in the territorial ,aters of the -hilippines: /"0 to,ards this end, it authorized the 9ecretar+ of ;griculture and >atural Resources to provide "+ the regulations such restrictions as ma+ "e deemed necessar+ to "e imposed on t%e use of any fis%in/ net or fis%in/ device for t%e "rotection of fis% fry or fis% e//s /9ec. %$0: /c0 it authorized the 9ecretar+ of ;griculture and >atural Resources to set aside and esta"lish fisher+ reservations or fish refuges and sanctuaries to "e administered in the manner to "e prescri"ed "+ him and declared it unla3ful for any "erson to take, destroy or kill in any of said "laces, or, in any manner disturb or

92C. %$. -R!T2CTI!> !F FRD !R FI9B 2))9. S 2<cept for scientific or educational purpose or for propagation, it s%all be unla3ful to ta(e or catch fr+ or fish eggs and the small fish, not more than three /$0 centimeters long, (no,n as siliniasi, in the territorial ,aters of the -hilippines. 0o3ards t%is end, t%e 2ecretary of 1/riculture and Commerce s%all be aut%ori-ed to "rovide by re/ulations suc% restrictions as may be deemed necessary to be im"osed on 0(E 2E )4 1$. 4I2(I$G $E0 )R 4I2(I$G +E@ICE 4)R 0(E !R)0EC0I)$ )4 4R. )R 4I2( EGG2A !rovided, %o3ever , That the 9ecretar+ of ;griculture and Commerce shall permit the ta(ing of +oung of certain species of fish (no,n as hipon under such restrictions as ma+ "e deemed necessar+. 92C. 75. FI9B R2FG)229 ;>= 9;>CTG;RI29. S Gpon the recommendation of the officer or chief of the "ureau, office or service concerned, the 9ecretar+ of ;griculture and Commerce ma+ set aside and esta"lish fisher+ reservation or fish refuges and sanctuaries to "e administered in the manner to "e prescri"ed "+ him. ;ll streams, ponds and ,aters ,ithin the game refuge, "irds, sanctuaries, national par(s, "otanical gardens, communal forest and communal pastures are here"+ declared fishing refuges and sanctuaries. It s%all be unla3ful for any "erson, to take, destroy or kill in any of t%e "laces aforementioned, or in any manner disturb or drive a3ay or take t%erefrom, any fis% fry or fis% e//s . ;ct >o. 433$ further provides as follo,sA 92C. 6$. !TB2R FI!1;TI!>9. S ;n+ other violation of the provisions of this ;ct or an+ rules and regulations promulgated thereunder shall su"@ect the offender to a fine of not more than t,o hundred pesos, or imprisonment for not more than si< months, or "oth, in the discretion of the Court. ;s ma+ "e seen from the @ust ?uoted provisions, the la, declares unla,ful and fi<es the penalt+ for the ta(ing /e<cept for scientific or educational purposes or for propagation0, destro+ing or (illing of an+ fish fr+ or fish eggs, and the 9ecretar+ of ;griculture and Commerce /no, the 9ecretar+ of ;griculture and >atural Resources0 is authorized to promulgate regulations restricting the use of an+ fish net or fishing device /,hich includes the net used "+ tra,l fishermen0 for the protection of fr+ or fish eggs, as ,ell as to set aside and esta"lish fisher+ reservations or fish refuges and sanctuaries to "e administered in the manner prescri"ed "+ him, from ,hich no person could la,full+ ta(e, destro+ or (ill in an+ of the places aforementioned, or in an+ manner distur" or drive a,a+ or ta(e therefrom an+ small or immature fish, fr+ or fish eggs. It is true that said section 75 mentions certain streams, ponds and ,aters 3it%in the game refuges, . . . communal forest, etc., ,hich the la, itself declares fish refuges and sanctuaries, "ut this enumeration of places does not curtail the general and unlimited po,er of the 9ecretar+ of ;griculture and >atural Resources in the first part of section 75, to set aside and esta"lish fisher+ reservations or fish refuges and sanctuaries, ,hich naturall+ include seas or "a+s, li(e the 9an .iguel 7a+ in Camarines. From the resolution passed at the Conference of .unicipal .a+ors held at Tinam"ac, Camarines 9ur, on =ecem"er %6, %&5$ /2<h. F0, the follo,ing manifestation is madeA 'B2R2;9, the continuous operation of said tra,ls even during the close season as specified in said 2<ecutive !rder >o. #3 caused the ,anton destruction of the mother shrimps la+ing their eggs and the millions of eggs laid and the inevita"le e<termination of the shrimps specie: in order to save the shrimps specie from eventual e<termination and in order to conserve the shrimps specie for posterit+: In the "rief su"mitted "+ the >;.FR21 and addressed to the -resident of the -hilippines /2<h. #0, in support of the petition of 9an .iguel 7a+ fishermen /allegedl+ 6, %75 in num"er0, pra+ing that tra,lers "e "anned from operating in 9an .iguel 7a+, it is stated thatA

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drive a3ay or take t%erefrom, any fis% fry or fis% e//s /9ee. 750: and /d0 it penalizes the e<ecution of such acts declared unla,ful and in violation of this ;ct />o. 433$0 or of an+ rules and regulations promulgated thereunder, ma(ing the offender su"@ect to a fine of not more than -#33, or imprisonment for not more than 6 months, or "oth, in the discretion of the court /9ec. 6$0. From the foregoing it ma+ "e seen that in so far as the protection of fish fr+ or fish egg is concerned, the Fisheries ;ct is complete in itself, leaving to the 9ecretar+ of ;griculture and >atural Resources the promulgation of rules and regulations to carr+ into effect the legislative intent. It also appears from the e<hi"its on record in these cases that fishing ,ith tra,ls causes 5a ,anton destruction of the mother shrimps la+ing their eggs and the millions of eggs laid and the inevita"le e<termination of the shrimps specie5 /2<h. F0, and that, 5the tra,ls ram and destro+ the fish corrals. The heav+ tra,l nets dig deep into the ocean "ed. The+ destro+ the fish food ,hich lies "elo, the ocean floor. Their da+time catches net millions of shrimps scooped up from the mud. In their nets the+ "ring up the life of the sea5 /2<h- #0. In the light of these facts it is clear to !ur mind that for the protection of fr+ or fish eggs and small and immature fishes, Congress intended ,ith the promulgation of ;ct >o. 433$, to prohi"it the use of an+ fish net or fishing device li(e tra,l nets that could endanger and deplete our suppl+ of sea food, and to that end authorized the 9ecretar+ of ;griculture and >atural Resources to provide "+ regulations such restrictions as he deemed necessar+ in order to preserve the a?uatic resources of the land. Conse?uentl+, ,hen the -resident, in response to the clamor of the people and authorities of Camarines 9ur issued 2<ecutive !rder >o. 63 a"solutel+ prohi"iting fishing "+ means of tra,ls in all ,aters comprised ,ithin the 9an .iguel 7a+, he did nothing "ut sho, an an<ious regard for the ,elfare of the inha"itants of said coastal province and dispose of issues of general concern /9ec. 6$, R.;.C.0 ,hich ,ere in consonance and strict conformit+ ,ith the la,. 'herefore, and on the strength of the foregoing considerations 'e render @udgement, as follo,sA /a0 =eclaring that the issues involved in case ).R. >o. 1-66&5 have "ecome moot, as no ,rit of preliminar+ in@unction has "een issued "+ this Court the respondent 8udge of the Court of First Instance of .anila 7ranch HIF, from enforcing his order of .arch $, %&55: and /"0 Reversing the decision appealed from in case ). R. >o. 1-&%&%: dissolving the ,rit of in@unction pra+ed for in the lo,er court "+ plaintiffs, if an+ has "een actuall+ issued "+ the court a quo: and declaring 2<ecutive !rders >os. ##, 66 and 63, series of %&54, valid for having "een issued "+ authorit+ of the Constitution, the Revised ;dministrative Code and the Fisheries ;ct. 'ithout pronouncement as to costs. It is so ordered.

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the pu"lic respondents ,hich ma(es the ?uestioned acts discriminator+. The ?uestioned resolutions and ordinances did not provide for an+ notice of pu"lication that the special privilege and un,arranted "enefits conferred on the private respondents ma+"e / sic0 availed of "+ an+"od+ ,ho can deposit the amount of -43,333.33.%3 >either ,as there an+ prior notice or pu"lication pertaining to contracts entered into "+ pu"lic and private respondents for the construction of stalls to "e a,arded to private respondents that the same can "e availed of "+ an+"od+ ,illing to deposit -43,333.33.%% In this petition, petitioner pra+s for the reversal of the decision of the Court of ;ppeals /C;0 and a declaration of the unconstitutionalit+, illegalit+ and nullit+ of the ?uestioned resolutionsEordinances and lease contracts entered into "+ the pu"lic and private respondents: for the declaration of the illegalit+ of the a,ard of the stalls during the pendenc+ of this action and for the re-raffling and a,ard of the stalls in a manner that is fair and @ust to all interested applicants:%# for the issuance of an order to the local government to admit an+ and all interested persons ,ho can deposit the amount of -43,333 for a stall and to order a re-raffling for the a,ard of the stalls to the ,inners of the re-raffle: for the nullification of the a,ard of attorne+Ps fees to private respondents on the ground that it ,as erroneous and unmeritorious: and for the a,ard of damages in favor of petitioner in the form of attorne+Ps fees. %$ ;t the outset, ,e must point out that the issue of the constitutionalit+ of the ?uestioned resolutions ,as never ruled upon "+ "oth the RTC and the C;. It appears that on .a+ #%, %&&3, "oth parties agreed %4 to a,ait the decision in C; ).R. 9- >o. #34#4,%5 ,hich involved similar facts, issues and parties. The RTC, conse?uentl+, deferred the resolution of the pending petition. The appellate court eventuall+ rendered its decision in that case finding that the petitioners ,ere not entitled to the declarator+ relief pra+ed for as the+ had no legal interest in the controvers+. Gpon elevation to the 9upreme Court as G=R Case >o. &&46, the petition for revie, on certiorari ,as denied for "eing insufficient in form and su"stance. %6 The RTC, after receipt of the entr+ of the 9C @udgment, %7 dismissed the pending petition on >ovem"er #6, %&&3. It adopted the ruling in C; ).R. 9- >o. #34#4A <<<<<<<<< 'e find petitionersP aforesaid su"mission utterl+ devoid of merit. It is, to sa+ the least, ?uestiona"le ,hether or not a special civil action for declarator+ relief can "e filed in relation to a contract "+ persons ,ho are not parties thereto. Gnder 9ec. % of Rule 64 of the Rules of Court, an+ person interested under a deed, ,ill, contract, or other ,ritten instruments ma+ "ring an action to determine an+ ?uestion of the contract, or validl+ arising under the instrument for a declarator+ /sic0 of his rights or duties thereunder. 9ince contracts ta(e effect onl+ "et,een the parties /;rt. %$%%0 it is ?uite plain that one ,ho is not a part+ to a contract can not have the interest in it that the rule re?uires as a "asis for declarator+ reliefs /-1G. vs. 9antos, 45 9CR; %470. Follo,ing this ruling, the petitioners ,ere not parties in the agreement for the a,ard of the mar(et stalls "+ the pu"lic respondents, in the pu"lic mar(et of -ana"o, =avao, and since the petitioners ,ere not parties to the a,ard of the mar(et stalls and ,hose rights are never affected "+ merel+ stating that the+ are ta<pa+ers, the+ have no legal interest in the controvers+ and the+ are not, therefore, entitled to "ring an action for declarator+ relief. %6 'B2R2F!R2, the petition of the petitioners as ta<pa+ers "eing ,ithout merit and not in consonance ,ith la,, is here"+ ordered =I9.I992=. ;s to the counterclaim for damages, the same not having "een actuall+ and full+ proven, the Court gives no a,ard as to the same. It is not amiss to state here that the petitioners agreed to "e "ound "+ the outcome of 9pecial Civil Case >o. 6&-%3.

Bo,ever, for unnecessaril+ dragging into Court the fift+-seven /570 private respondents ,ho are "onafide "usinessmen and stall holders in the pu"lic mar(et of -ana"o, it is fitting and proper for the petitioners to "e ordered pa+ment of attorne+Ps fees. ;ccordingl+, the herein petitioners are ordered to pa+ !>2 TB!G9;>= /-%,333.330 -29!9 2;CB to the 57 private respondents, as attorne+Ps fees, @ointl+ and severall+, and for them to pa+ the costs of this suit. 9! !R=2R2=. %& From this adverse decision, petitioner again appealed to the Court of ;ppeals in C;-).R. CF >o. $536# ,hich is no, "efore us for revie,. The appellate court, +et again, affirmed the RTC decision and held thatA Res judicata does not set in a case dismissed for lac( of capacit+ to sue, "ecause there has "een no determination on the merits. >either does the la, of the case appl+. Bo,ever, the court a quo too( @udicial notice of the fact that petitioners agreed to "e "ound "+ the outcome of 9pecial Civil Case >o. 6&-%3. 1lle/ans contraria non est audiendus . /Be is not to "e heard ,ho alleges things contradictor+ to each other.0 It must "e here o"served that petitioners-appellants ,ere the ones ,ho manifested that it ,ould "e practical to a,ait the decision of the 9upreme Court in their petition for certiorari, for after all the facts, circumstances and issues in that case, are e<actl+ the same as in the case that is here appealed. )ranting that the+ ma+ evade such assumption, a careful evaluation of the case ,ould lead Gs to the same conclusionA that the case for declarator+ relief is dismissi"le. ;s enumerated "+ 8ustice Regalado in his 5Remedial 1a, Compendium5, the re?uisites of an action for declarator+ relief areA /a0 The su"@ect matter of the controvers+ must "e a deed, ,ill, contract or other ,ritten instrument, statute, e<ecutive order or regulation, or ordinance: /"0 The terms of said documents and the validit+ thereof are dou"tful and re?uire @udicial construction: /c0 There must have "een no "reach of the documents in ?uestion: /d0 There must "e an actual @usticia"le controvers+ or the 5ripening seeds5 of one "et,een persons ,hose interests are adverse: /e0 The issue must "e ripe for @udicial determination: and /f0 ;de?uate relief is not availa"le through other means or other forms of action or proceeding. In 0olentino vs. #oard of 1ccountancy, et al, &3 -hil. 6$, 66, the 9upreme Court ratiocinated the re?uisites of @usticia"ilit+ of an action for declarator+ relief "+ sa+ing that the court must "e 5satisfied that an actual controvers+, or the ripening seeds of one, e<ists "et,een parties, all of ,hom are sui juris and "efore the court, and that the declaration sought ,ill "e a practical help in ending the controvers+.5 The petition must sho, 5an active antagonistic assertion of a legal right on one side and a denial thereof on the other concerning a real, and not a mere theoretical ?uestion or issue. The ?uestion is ,hether the facts alleged a su"stantial controvers+ "et,een parties having adverse legal interests, of sufficient immediac+ and realit+ to ,arrant the issuance of a declarator+ relief. In G2I2E1 and G2I22 vs. (on. 1lvendia etc. and G2I2 , %36 -hil. 535, the 9upreme Court ruled a declarator+ relief improper or unnecessar+ ,hen it appears to "e a moot case, since it see(s to get a @udgment on a pretended controvers+, ,hen in realit+ there is none. In 'a3asaki !ort 2ervice Cor"oration vs. 1mores, %&& 9CR; #$3, citing +y !oco vs. Commissioner of Immi/ration, et al., %6 9CR; 6%6, the rule ,as statedA 5,here a declarator+ @udgment as to a disputed fact ,ould "e determinative of issues rather than a construction of definite stated rights, statuses and other relations, commonl+ e<pressed in a ,ritten instrument, the case is not one for declarator+ @udgment.5 Indeed, in its true light, the present petition for declarator+ relief seems to "e no more than a re?uest for an advisor+ opinion to ,hich courts in this and other @urisdiction have cast a definite aversion. The ordinances "eing assailed are appropriation ordinances. The passage of the ordinances ,ere pursuant to the pu"lic purpose of constructing mar(et stalls. For the e<ercise of @udicial revie,, the governmental act "eing challenged must have had an adverse effect on the person challenging it, and the person challenging the act, must have 5standing5 to challenge, i.e., in the categorical and succinct language of 8ustice 1aurel, he must have a 5personal and su"stantial interest in the case such that he has sustained, or ,ill sustain, direct in@ur+ as a result of its enforcement.5 9tanding is a special concern in constitutional la, "ecause in some cases suits are "rought not "+ parties ,ho have "een personall+ in@ured "+ the operation of a la, or "+ official action ta(en, "ut "+ concerned citizens, ta<pa+ers or voters ,ho actuall+ sue in the pu"lic

LU4+IMINDA A+ILA, GL!RIA !LAIR, L!RITA MENCIA,, RENAT! ARIETA, EDIT5A ACU4AR, LE!NARDA +ILLACAMPA, ELIA, 9ARDINIC!, %!%IN! NAMUAG, "ELIM!N NAMUAG, EDGAR CA%UN!C, 5ELEN ARGUELLE,, 5ELEN ANG, "ELECIDAD PRIET!, LUI,IT! GRECIA, LILI%ET5 PARING, RU%EN CAMAC5!, R!,ALINDA LALUNA, LU4 $AP, R!GELI! LAPUT, R!,EMARIE WEE, TAC!TC5E RANAIN, A+ELIN! DEL!, RE$E, a)* R!GA,IAN! !R!PE4A, Respondent. In this petition for revie, on certiorari under Rule 45 of the Rules of Court, petitioner Fivencio F. 8umamil see(s to reverse the decision of the Court of ;ppeals dated 8ul+ #4, #333 % in C;-).R. CF >o. $536#, the dispositive portion of ,hich readA 'ith the foregoing, the assailed =ecision of 7ranch 4, Regional Trial Court of -ana"o =avao dated #6 >ovem"er %&&3 in 9p. Civil ;ction >o. 6&-% is here"+ ;FFIR.2=. # The Regional Trial Court dismissed petitionerPs petition for declarator+ relief ,ith pra+er for preliminar+ in@unction and ,rit of restraining order, and ordered the petitioner to pa+ attorne+Ps fees in the amount of -%,333 to each of the 57 private respondents.$ The factual antecedents follo,. In %&6&, petitioner 8umamil4 filed "efore the Regional Trial Court /RTC0 of -ana"o, =avao del >orte a petition for declarator+ relief ,ith pra+er for preliminar+ in@unction and ,rit of restraining order against pu"lic respondents .a+or 8ose 8. Cafe and the mem"ers of the 2an//unian/ #ayan of -ana"o, =avao del >orte. Be ?uestioned the constitutionalit+ of .unicipal Resolution >o. 7, 9eries of %&6& /Resolution >o. 70. Resolution >o. 7, enacting ;ppropriation !rdinance >o. %%%, provided for an initial appropriation of -765,333 for the construction of stalls around a proposed terminal fronting the -ana"o -u"lic .ar(et5 ,hich ,as destro+ed "+ fire. 9u"se?uentl+, the petition ,as amended due to the passage of Resolution >o. 4&, series of %&6& /Resolution >o. 4&0, denominated as !rdinance >o. %3, appropriating a further amount of -%,5%5,333 for the construction of additional stalls in the same pu"lic mar(et. 6 -rior to the passage of these resolutions, respondent .a+or Cafe had alread+ entered into contracts ,ith those ,ho advanced and deposited /,ith the municipal treasurer0 from their personal funds the sum of -43,333 each. 9ome of the parties ,ere close friends andEor relatives of the pu"lic respondents. 7 The construction of the stalls ,hich petitioner sought to stop through the preliminar+ in@unction in the RTC ,as nevertheless finished, rendering the pra+er therefor moot and academic. The leases of the stalls ,ere then a,arded "+ pu"lic raffle ,hich, ho,ever, ,as limited to those ,ho had deposited -43,333 each.6 Thus, the petition ,as amended ane, to include the 57 a,ardees of the stalls as private respondents. & -etitioner alleges that Resolution >os. 7 and 4& ,ere unconstitutional "ecause the+ ,ereA Upassed for the "usiness, occupation, en@o+ment and "enefit of private respondents ,ho deposited the amount of -43,333.33 for each stall, and ,ith ,hom also the ma+or had a prior contract to a,ard the ,ould "e constructed stalls to all private respondents.U ;s admitted "+ pu"lic respondents some of the private respondents are close friends andEor relatives of some of

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interest. Bence the ?uestion in standing is ,hether such parties have 5alleged such a personal sta(e in the outcome of the controvers+ as to assure that concrete adverseness ,hich sharpens the presentation of issues upon ,hich the court largel+ depends for illumination of difficult constitutional ?uestions. ; careful anal+sis of the records of the case at "ar ,ould disclose that petitioners-appellants have suffered no ,rong under the terms of the ordinances "eing assailed O and, naturall+ need no relief in the form the+ no, see( to o"tain. 8udicial e<ercise cannot "e e<ercised in vacuo. The polic+ of the courts is to avoid ruling on a constitutional ?uestion and to presume that the acts of the political departments are valid in the a"sence of a clear and unmista(a"le sho,ing to the contrar+. To dou"t is to sustain. The issue is not the ordinances themselves, "ut the a,ard of the mar(et stalls to the private respondents on the strength of the contracts individuall+ e<ecuted "+ them ,ith .a+or Cafe. To reiterate, a person ,ho is not a part+ to a contract cannot file a petition for declarator+ relief and see( @udicial interpretation of such contract /;tlas Consolidated .ining Corp. vs. Court of ;ppeals, %6# 9CR; %660. >ot having esta"lished their locus standi, ,e see no error committed "+ the court a ?uo ,arranting reversal of the appealed decision. 'ith the foregoing, the assailed =ecision of 7ranch 4, Regional Trial Court of -ana"o =avao dated #6 >ovem"er %&&3 in 9p. Civil ;ction >o. 6&-% is here"+ ;FFIR.2=. 9! !R=2R2=. #3 Thus, "oth the RTC and the C; dismissed the case on the ground of petitionerPs lac( of legal standing and the partiesP agreement to "e "ound "+ the decision in C; ).R. 9-. >o. #34#4. The issues to "e resolved are the follo,ingA /%0 ,hether the parties ,ere "ound "+ the outcome in C; ).R. 9-. >o. #34#4: /#0 ,hether petitioner had the legal standing to "ring the petition for declarator+ relief: /$0 ,hether Resolution >os. 7 and 4& ,ere unconstitutional: and /40 ,hether petitioner should "e held lia"le for damages. ocus *tandi a)* 1h/ Co)(1'161'o)a&'17 I((6/ 'e ,ill first consider the second issue. The petition for declarator+ relief challenged the constitutionalit+ of the su"@ect resolutions. There is an un"ending rule that courts ,ill not assume @urisdiction over a constitutional ?uestion unless the follo,ing re?uisites are satisfiedA /%0 there must "e an actual case calling for the e<ercise of @udicial revie,: /#0 the ?uestion "efore the Court must "e ripe for ad@udication: /$0 the person challenging the validit+ of the act must have standing to do so: /40 the ?uestion of constitutionalit+ must have "een raised at the earliest opportunit+, and /50 the issue of constitutionalit+ must "e the ver+ lis mota of the case.#% 1egal standing or locus standi is a part+Ps personal and su"stantial interest in a case such that he has sustained or ,ill sustain direct in@ur+ as a result of the governmental act "eing challenged. It calls for more than @ust a generalized grievance. The term 5interest5 means a material interest, an interest in issue affected "+ the decree, as distinguished from mere interest in the ?uestion involved, or a mere incidental interest. ## Gnless a personPs constitutional rights are adversel+ affected "+ the statute or ordinance, he has no legal standing. The C; held that petitioner had no standing to challenge the t,o resolutionsEordinances "ecause he suffered no ,rong under their terms. It also concluded that 5the issue /,as0 not the ordinances themselves "ut the a,ard of the mar(et stalls to the private respondents on the strength of the contracts individuall+ e<ecuted "+ them ,ith .a+or Cafe.5 Conse?uentl+, it ruled that petitioner, ,ho ,as not a part+ to the lease contracts, had no standing to file the petition for declarator+ relief and see( @udicial interpretation of the agreements. 'e do not agree. -etitioner "rought the petition in his capacit+ as ta<pa+er of the .unicipalit+ of -ana"o, =avao del >orte#$ and not in his personal capacit+. Be ,as ?uestioning the official acts of the pu"lic respondents in passing the ordinances and entering into the lease contracts ,ith private respondents. ; ta<pa+er need not "e a part+ to the contract to challenge its validit+.#4 1tlas Consolidated &inin/ & +evelo"ment Cor"oration v. Court of 1""eals #5 cited "+ the C; does not appl+ "ecause it involved contracts "et,een t3o "rivate "arties.

-arties suing as ta<pa+ers must specificall+ prove sufficient interest in preventing the illegal e<penditure of mone+ raised "+ ta<ation.#6 The e<penditure of pu"lic funds "+ an officer of the 9tate for the purpose of e<ecuting an unconstitutional act constitutes a misapplication of such funds.#7 The resolutions "eing assailed ,ere appropriations ordinances. -etitioner alleged that these ordinances ,ere 5passed for the "usiness, occupation, en@o+ment and "enefit of private respondents5#6 /that is, allegedl+ for the private "enefit of respondents0 "ecause even "efore the+ ,ere passed, respondent .a+or Cafe and private respondents had alread+ entered into lease contracts for the construction and a,ard of the mar(et stalls. #&-rivate respondents admitted the+ deposited -43,333 each ,ith the municipal treasurer, ,hich amounts ,ere made availa"le to the municipalit+ during the construction of the stalls. The deposits, ho,ever, ,ere needed to ensure the speed+ completion of the stalls after the pu"lic mar(et ,as gutted "+ a series of fires. $3 Thus, the a,ard of the stalls ,as necessaril+ limited onl+ to those ,ho advanced their personal funds for their construction. $% -etitioner did not seasona"l+ allege his interest in preventing the illegal e<penditure of pu"lic funds or the specific in@ur+ to him as a result of the enforcement of the ?uestioned resolutions and contracts. It ,as onl+ in the 5Remar( to Comment5 he filed in this Court did he first assert that 5he /,as0 ,illing to engage in "usiness and /,as0 interested to occup+ a mar(et stall.5$# 9uch claim ,as o"viousl+ an afterthought. 7e that as it ma+, ,e have on several occasions rela<ed the application of these rules on legal standingA In not a fe, cases, the Court has li"eralized the locus standi re?uirement ,hen a petition raises an issue of transcendental significance or paramount importance to the people. Recentl+, after holding that the I7- had no locus standi to "ring the suit, the Court in I7- v. Iamora nevertheless entertained the -etition therein. It noted that 5the I7- has advanced constitutional issues ,hich deserve the attention of this Court in vie, of their seriousness, novelt+ and ,eight as precedents.5$$ Wo!oW !"@ections to a ta<pa+er s suit for lac( of sufficient personalit+, standing or interest are procedural matters. Considering the importance to the pu"lic of a suit assailing the constitutionalit+ of a ta< la,, and in (eeping ,ith the Court s dut+, speciall+ e<plicated in the %&67 Constitution, to determine ,hether or not the other "ranches of the )overnment have (ept themselves ,ithin the limits of the Constitution and the la,s and that the+ have not a"used the discretion given to them, the 9upreme Court ma+ "rush aside technicalities of procedure and ta(e cognizance of the suit.$4 Wo!oW There "eing no doctrinal definition of transcendental importance, the follo,ing determinants formulated "+ former 9upreme Court 8ustice Florentino -. Feliciano are instructiveA /%0 the character of the funds or other assets involved in the case: /#0 the presence of a clear case of disregard of a constitutional or statutor+ prohi"ition "+ the pu"lic respondent agenc+ or instrumentalit+ of the government: and /$0 the lac( of an+ other part+ ,ith a more direct and specific interest in raising the ?uestions "eing raised. $5 7ut, even if ,e disregard petitionerPs lac( of legal standing, this petition must still fail. The su"@ect resolutionsEordinances appropriated a total of -#,#63,333 for the construction of the pu"lic mar(et stalls. -etitioner alleges that these ordinances ,ere discriminator+ "ecause, even prior to their enactment, a decision had alread+ "een made to a,ard the mar(et stalls to the private respondents ,ho deposited -43,333 each and ,ho ,ere either friends or relatives of the pu"lic respondents. -etitioner asserts that 5there /,as0 no pu"lication or invitation to the pu"lic that this contract /,as0 availa"le to all ,ho /,ere0 interested to o,n a stall and /,ere0 ,illing to deposit -43,333.5$6 Respondents, ho,ever, counter that the 5pu"lic respondentsP act of entering into this agreement ,as authorized "+ the 2an//unian/ #ayan of -ana"o per Resolution >o. %63 dated !cto"er %3, %&665$7 and that 5all the people interested ,ere invited to participate in investing their savings.5$6

'e note that the foregoing ,as a disputed fact ,hich the courts "elo, did not resolve "ecause the case ,as dismissed on the "asis of petitionerPs lac( of legal standing. >evertheless, petitioner failed to prove the su"@ect ordinances and agreements to "e discriminator+. Considering that he ,as as(ing this Court to nullif+ the acts of the local political department of -ana"o, =avao del >orte, he should have clearl+ esta"lished that such ordinances operated unfairl+ against those ,ho ,ere not notified and ,ho ,ere thus not given the opportunit+ to ma(e their deposits. Bis unsu"stantiated allegation that the pu"lic ,as not notified did not suffice. Furthermore, there ,as the time-honored presumption of regularit+ of official dut+, a"sent an+ sho,ing to the contrar+.$& ;nd this is not to mention thatA The polic+ of the courts is to avoid ruling on constitutional ?uestions and to presume that the acts of the political departments are valid, a"sent a clear and unmista(a"le sho,ing to the contrar+. To dou"t is to sustain. This presumption is "ased on the doctrine of separation of po,ers. This means that the measure had first "een carefull+ studied "+ the legislative and e<ecutive departments and found to "e in accord ,ith the Constitution "efore it ,as finall+ enacted and approved.43 Therefore, since petitioner had no locus standi to ?uestion the ordinances, there is no need for us to discuss the constitutionalit+ of said enactments. W/r/ 1h/ Par1'/( %o6)* 37 1h/ !61co2/ ') CA G.R. ,P. No. 2.-2-D ;dverting to the first issue, ,e o"serve that petitioner ,as the one ,ho ,anted the parties to a,ait the decision of the 9upreme Court in G=R Case >o. &&46 since the facts and issues in that case ,ere similar to this. -etitioner, having e<pressl+ agreed to "e "ound "+ our decision in the aforementioned case, should "e reined in "+ the dismissal order ,e issued, no, final and e<ecutor+. In addition to the fact that nothing prohi"its parties from committing to "e "ound "+ the results of another case, courts ma+ ta(e @udicial notice of a @udgment in another case as long as the parties give their consent or do not o"@ect.4% ;s opined "+ 8ustice 2dgardo 1. -arasA ; court ,ill ta(e @udicial notice of its o,n acts and records in the same case, of facts esta"lished in prior proceedings in the same case, of the authenticit+ of its o,n records of another case "et,een the same parties, of the files of related cases in the same court, and of pu"lic records on file in the same court. In addition, @udicial notice ,ill "e ta(en of the record, pleadings or @udgment of a case in another court "et,een the same parties or involving one of the same parties, as ,ell as of the record of another case "et,een different parties in the same court. 4# Da2a;/( Finall+, on the issue of damages, petitioner asserts that he impleaded the 57 respondents in good faith since the a,ard of the stalls to them ,as made during the pendenc+ of the action.4$ -rivate respondents refute this assertion and argue that petitioner filed this action in "ad faith and ,ith the intention of harassing them inasmuch as he had alread+ filed C; ).R. 9-. >o. #34#4 even "efore then.44 The RTC, affirmed "+ the C;, held that petitioner should pa+ attorne+Ps fees 5for unnecessaril+ dragging into Court the 57 private respondents ,ho /,ere0 "onafide "usinessmen and stall holders in the pu"lic mar(et of -ana"o.5 45 'e do not agree that petitioner should "e held lia"le for damages. It is not sound pu"lic polic+ to put a premium on the right to litigate ,here such right is e<ercised in good faith, al"eit erroneousl+.46 The alleged "ad faith of petitioner ,as never esta"lished. The special circumstances in ;rticle ##36 of the Civil Code @ustif+ing the a,ard of attorne+Ps fees are not present in this case. W5ERE"!RE, the decision of the Court of ;ppeals in C;-).R. CF >o. $536# is here"+ A""IRMED ,ith theM!DI"ICATI!N that the a,ard of attorne+ s fees to private respondents is deleted. Costs against petitioner. ,! !RDERED.

Page 22 of 29

>o petition for revie, or motion for reconsideration of a decision of the court shall "e refused due course or denied ,ithout stating the legal "asis therefor. 2<cept for the second paragraph, ,hich ,as introduced onl+ in the present charter, 9ection %4 has "een in force since the Constitution of %&$5. The provision ,as recast in affirmative terms in the %&7$ Constitution "ut has "een virtuall+ restored to its original form in the Constitution of %&67, to appl+ to all courts, including the municipal courts. The purpose has al,a+s "een the same, viz., to inform the person reading the decision, and especiall+ the parties, of ho, it ,as reached "+ the court after consideration of the pertinent facts and e<amination of the applica"le la,s. The parties are entitled to no less than this e<planation if onl+ to assure them that the court rendering the decision actuall+ studied the case "efore pronouncing its @udgment. 7ut there are more su"stantial reasons. For one thing, the losing part+ must "e given an opportunit+ to anal+ze the decision so that, if permitted, he ma+ elevate ,hat he ma+ consider its errors for revie, "+ a higher tri"unal. For another, the decision, if ,ell-presented and reasoned, ma+ convince the losing part+ of its merits and persuade it to accept the verdict in good grace instead of prolonging the litigation ,ith a useless appeal. ; third reason is that decisions ,ith a full e<position of the facts and the la, on ,hich the+ are "ased, especiall+ those coming from the 9upreme Court, ,ill constitute a valua"le "od+ of case la, that can serve as useful references and even as precedents in the resolution of future controversies. ;s the Court said in Rosales v. Court of First Instance. 5 -recedents are helpful in deciding cases ,hen the+ are on all fours or at least su"stantiall+ Identical ,ith previous litigations. 1r/umentum a simili valet in le/e. 2arlier decisions are guideposts that can lead us in the right direction as ,e tread the high,a+s and "+,a+s of the la, in the search for truth and @ustice. These pronouncements represent the ,isdom of the past. The+ are the voice of vanished @udges tal(ing to the future. 2<cept ,here there is a need to reverse them "ecause of an emergent vie,point or an altered situation, the+ urge us strongl+ that, indeed, the trodden path is "est. ;ccording to the petitioner, the memorandum decision rendered "+ the regional trial court should "e revo(ed for non-compliance ,ith the a"ove-?uoted constitutional mandate. Be as(s that the case "e remanded to the regional trial court for a full "lo,n hearing on the merits, to "e follo,ed "+ a decision stating therein clearl+ and distinctl+ the facts and the la, on ,hich it is "ased. For his part, the private respondent demurs. Be @ustifies the memorandum decision as authorized "+ 7.-. 7lg. %#& and invo(es the ruling of this Court in Romero v. Court of ;ppeals, 6 'hich sustained the said la,. 9ection 43 of 7.-. 7lg. %#& reads as follo,sA 9ec. 43. 4orm of decision in a""ealed cases . S 2ver+ decision or final resolution of a court in appealed cases shall clearl+ and distinctl+ state the findings of fact and the conclusions of la, on ,hich it is "ased ,hich ma+ "e contained in the decision or final resolution itself, or adopted "+ reference from those set forth in the decision, order or resolution appealed from. The a"ove section ,as applied in the Romero case, together ,ith a similar rule em"odied in 9ection %6 of -.=. >o. &46, providing thatA ;ll cases of the Court of ;grarian Relations no, pending "efore the Court of ;ppeals shall remain in the =ivision to ,hich the+ have "een assigned, and shall "e decided ,ithin si<t+ /630 da+s from the effectivit+ of this =ecree: -rovided, ho,ever, That if the decision or order "e an affirmance in toto of the dispositive conclusion of the @udgment appealed from, then the Court of ;ppeals ma+, instead of rendering an e<tended opinion, indicate clearl+ the trial court s findings of fact and pronouncements of la, ,hich have "een adopted as "asis for the affirmance. In the said case, 8ustice 8ose D. Feria, spea(ing for a unanimous Court, declaredA ;s previousl+ stated, the decision of the Court of ;grarian Relations consisted of thirteen pages, single space. The a"ove-?uoted decision of the respondent Court of ;ppeals consists of four pages, three of ,hich contains ver"atim the dispositive portion of the decision appealed from. The remaining page is devoted to an e<planation of ,h+ 5for @udicial convenience and e<pedienc+, therefore, 'e here"+ adopt, "+ ,a+ of reference, the findings of facts and conclusions of the court a quo spread in its decision, as integral part of this !ur decision.5 The said decision ma+ "e considered as su"stantial compliance ,ith the a"ove?uoted provisions in 9ection %6 of -.=. >o. &46 and 9ection 43 of 7.-. 7lg. %#&. >evertheless, he ,as ?uic( to add a tena"le misgiving and to e<press the follo,ing reservationA

The authorit+ given the appellate court to adopt "+ reference the findings of fact and conclusions of la, from those set forth in the appealed decisions should "e e<ercised ,ith caution and prudence, "ecause the tendenc+ ,ould "e to follo, the line of least resistance "+ @ust adopting the findings and conclusions of the lo,er court ,ithout thoroughl+ stud+ing the appealed case. This caveat ,as necessar+ "ecause, as he correctl+ o"servedA It cannot "e too strongl+ emphasized that @ust as important as the intrinsic validit+ of a decision is the perception "+ the parties-litigants that the+ have "een accorded a fair opportunit+ to "e heard "+ a fair and responsi"le magistrate "efore @udgment is rendered. It is this perception, coupled ,ith a clear conscience, ,hich ena"les the mem"ers of the @udiciar+ to discharge the a,esome responsi"ilit+ of sitting in @udgment on their fello,men. There is no ?uestion that the purpose of the la, in authorizing the memorandum decision is to e<pedite the termination of litigations for the "enefit of the parties as ,ell as the courts themselves. Concerned ,ith the mounting pro"lem of dela+ in the administration of @ustice, the Constitution no, contains a num"er of provisions aimed at correcting this serious difficult+ that has caused much disaffection among the people. Thus, 9ection %6 of the 7ill of Rights reiterates the original provision in the %&7$ Constitution guaranteeing to all persons 5the right to a speed+ disposition of their cases "efore all @udicial, ?uasi-@udicial or administrative "odies.5 9ection %4/#0 of the same ;rticle III retains the rule that the accused shall "e entitled to a trial that shall not onl+ "e pu"lic and impartial "ut also speed+. In ;rticle FIII, 9ection 5/$0, the 9upreme Court is e<pressl+ permitted to temporaril+ assign a @udge from one station to another ,hen the pu"lic interest so re?uires, as ,hen there is a necessit+ for less occupied @udge to help a "usier colleague dispose of his cases. In paragraph 5 of the same section, it is stressed that the rules of court to "e promulgated "+ the 9upreme Court 5shall provide a simplified and ine<pensive procedure for the speed+ disposition of cases.5 In 9ection %5, of the same article, ma<imum periods are prescri"ed for the decision or resolution of cases, to ,it, t,ent+-four months in the case of 9upreme Court and, unless reduced "+ the 9upreme Court, t,elve months for all lo,er collegiate courts and three months for all other lo,er courts. The courts of @ustice are reall+ hard put at coping ,ith the tremendous num"er of cases in their doc(ets ,hich, to ma(e matters ,orse, continues to gro, "+ the da+ despite the efforts "eing ta(en to reduce it. In the 9upreme Court alone, an average of 433 cases is received ever+ month as against the average of $33 cases disposed of during the same month, leaving a difference of %33 cases monthl+ that is added to some 5,333 still unresolved cases that have accumulated during the last t,o decades or so. ;t this rate, the "ac(log ,ill increase "+ %,#33 cases ever+ +ear on top of the earlier "alance, much of ,hich, despite its age, is still via"le and have still to "e resolved. Considering that the Court spends four da+s of the ,ee( for stud+ing and deli"erating on these cases in its en banc and division sessions, one can appreciate the limited time allo,ed its mem"ers for the actual ,riting of its decisions. /This particular decision, ,hile e<tended, happens fortunatel+ to "e less complicated than man+ of the other cases su"mitted to it, ,hich re?uire more time to ,rite, not to mention the antecedent research that ma+ have to "e made.0 Fie,ed in the light of these practical considerations, the memorandum decision can "e ,elcomed indeed as an accepta"le method of dealing e<peditiousl+ ,ith the case load of the courts of @ustice, 7ut e<pedienc+ alone, no matter ho, compelling, cannot e<cuse noncompliance ,ith the Constitution: or to put it more familiarl+, the end does not @ustif+ the means. It is plain that if 9ection 43 of 7.-. 7lg. %#& is unconstitutional, it must "e struc( do,n. In the case at "ar, ,e find that a @udgment ,as made "+ the metropolitan trial court in compliance ,ith the rule on summar+ procedure. The decision consisted of three t+pe,ritten pages, single space, and stated clearl+ and distinctl+ the facts and the la, on ,hich it ,as "ased. It ,as a concise and ,ell-,ritten decision, and a correct one to "oot, for ,hich 8udge -aciano 7. 7alita is to "e commended. The pro"lem, though, as the petitioner sees it, is that in affirming this @udgment, the regional trial court of .a(ati rendered a mere memorandum decision that simpl+ adopted "+ reference the findings of fact and la, made "+ 8udge 7alita and then concluded, ,ithout sa+ing more, that 5there ,as no cogent reason to distur" the same.5 It is claimed that as 8udge de la Rama did not ma(e his o,n statement of the facts and the la, as re?uired "+ the Constitution, his

RULE 65 CERTI!RARI G.R. No. 81..6 Ma7 12, 1989 +ICT!RIN! C. "RANCI,C!, petitioner, vs. WINAI PERM, UL a)* T5E 5!N. C!URT !" APPEAL,, respondents. ;n important constitutional ?uestion has "een in@ected in this case ,hich started out as an ordinar+ complaint for a sum of mone+. The ?uestion s?uarel+ presented to the Court is the validit+ of the memorandum decision authorized under 9ection 43 of 7.-. 7lg. %#& in the light of ;rticle FIII, 9ection %4 of the Constitution. !n .a+ #%, %&64, the petitioner leased his apartment in .a(ati to the private respondent for a period of one +ear for the stipulated rental of -$,333.33 a month. -ursuant to the lease contract, the private respondent deposited ,ith the petitioner the amount of -&,333.33 to ans,er for unpaid rentals or an+ damage to the leased premises e<cept ,hen caused "+ reasona"le ,ear and tear. !n .a+ $%, %&65, the private respondent vacated the propert+. Be thereafter re?uested the refund of his deposit minus the sum of -%,333.33, representing the rental for the additional ten da+s of his occupanc+ after the e<piration of the lease. The petitioner re@ected this re?uest. Be said the lessee still o,ed him for other charges, including the electricit+ and ,ater "ills and the sum of -#,533.33 for repainting of the leased premises to restore them to their original condition. 1 The private respondent sued in the .etropolitan Trial Court of .a(ati. ;fter the su"mission of position papers "+ the parties, a summar+ @udgment ,as rendered on !cto"er %%, %&65, sustaining the complainant and holding that the repainting ,as not chargea"le to him. The defendant ,as ordered to pa+ the plaintiff the amount of -7,753.33, representing the "alance of the deposit after deducting the ,ater and electricit+ charges. The plaintiff ,as also a,arded the sum of -%,#53.33 as attorne+ s fees, plus the Costs. 2 This decision ,as appealed to the Regional Trial Court of .a(ati and ,as affirmed "+ 8udge 8ose C. de la Rama on 8anuar+ %4, %&67. This ,as done in a memorandum decision reading in full as follo,sA .2.!R;>=G. =2CI9I!> ;fter a careful and thorough perusal, evaluation and stud+ of the records of this case, this Court here"+ adopts "+ reference the findings of fact and conclusions of la, contained in the decision of the .etropolitan Trial Court of .a(ati, .etro .anila, 7ranch 6$ and finds that there is no cogent reason to distur" the same. 'B2R2F!R2, @udgment appealed from is here"+ affirmed in toto. 3 'hen the defendant ,ent to the Court of ;ppeals, his petition for revie, ,as denied on 9eptem"er #&, %&67, as so too ,as his motion for reconsideration, on =ecem"er %, %&67. - Be is no, "efore us to fault the respondent court, principall+ for sustaining the memorandum decision of the regional trial court. Bis contention is that it violates ;rticle FIII, 9ection %4 of the Constitution. This provision reads as follo,sA 9ec. %4. >o decision shall "e rendered "+ an+ court ,ithout e<pressing therein clearl+ and distinctl+ the facts and the la, on ,hich it is "ased.

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memorandum decision ,as a total nullit+. 'orse, ,hen the appeal ,as ta(en to the respondent court, ,hat it revie,ed ,as not the memorandum decision of the regional trial court "ut the decision rendered "+ the metropolitan trial court ,hich, legall+ spea(ing, ,as not "efore the appellate court. It is not reall+ correct to sa+ that the Court of ;ppeals did not revie, the memorandum decision of the regional trial court ,hich ,as the su"@ect of the petition for revie,. ; reading of its o,n decision ,ill sho, that it dealt e<tensivel+ ,ith the memorandum decision and discussed it at some length in the light of the o"servations S and reservations S of this Court in the Romero case. .oreover, in revie,ing the decision of the metropolitan trial court, the Court of ;ppeals ,as actuall+ revie,ing the decision of the regional trial court, ,hich had incorporated "+ reference the earlier decision rendered "+ 8udge 7alita. The ?uestion, of course, is ,hether such incorporation "+ reference ,as a valid act that effectivel+ elevated the decision of the metropolitan trial court for e<amination "+ the Court of ;ppeals. To "e fair, let it "e said that ,hen 8udge dela Rama availed himself of the convenience offered "+ 9ection 43 of 7.-. 7lg. %#&, he ,as onl+ acting in accordance ,ith the ruling announced in Romero permitting the use of the memorandum decision. It must also "e o"served that even if the respondent court appeared to "e partial to the reservation rather than the rule in the said case, it nevertheless had the dut+ S ,hich it discharged S to a"ide "+ the doctrine announced therein "+ the highest tri"unal of the land. The respondent court could not have acted other,ise. This Court is not hampered "+ such inhi"itions. ;s ,e ma+ re-e<amine our o,n rulings and modif+ or reverse them ,henever ,arranted, ,e ta(e a second loo( at the memorandum decision and the Romero case and test them on the touchstone of the Constitution. The la, does not define the memorandum decision and simpl+ suggests that the court ma+ adopt "+ reference the findings of fact and the conclusions of la, stated in the decision, order or resolution on appeal "efore it. >o particular form is prescri"ed: the conditions for its use are not indicated. In fact, 7.-. 7lg. %#& does not even emplo+ the term 5memorandum decision5 in 9ection 43 or else,here in the rest of the statute. This phrase appears to have "een introduced in this @urisdiction not "+ that la, "ut "+ 9ection #4 of the Interim Rules and )uidelines, reading as follo,sA 9ec. #4. &emorandum decisions. D 6The @udgment or final resolution of a court in appealed cases ma+ adopt "+ reference the findings of fact and conclusions of la, contained in the decision or final order appealed from. It is clear that ,here the decision of the appellate court actuall+ reproduces the findings of fact or the conclusions of la, of the court "elo,, it is not a memorandum decision as envisioned in the a"ove provision. The distinctive features of the memorandum decision are, first, it is rendered "+ an appellate court, and second, it incorporates "+ reference the findings of fact or the conclusions of la, contained in the decision, order or ruling under revie,. .ost li(el+, the purpose is to affirm the decision, although it is not impossi"le that the approval of the findings of fact "+ the lo,er court ma+ lead to a different conclusion of la, "+ the higher court. ;t an+ rate, the reason for allo,ing the incorporation "+ reference is evidentl+ to avoid the cum"ersome reproduction of the decision of the lo,er court, or portions thereof, in the decision of the higher court. The Idea is to avoid having to repeat in the "od+ of the latter decision the findings or conclusions of the lo,er court since the+ are "eing approved or adopted an+,a+. -arentheticall+, the memorandum decision is also allo,ed in the Gnited 9tates, "ut its form /at least0 differs from the one under consideration in this case. 9uch a decision is rendered in that countr+ upon a previous determination "+ the @udge that there is no need for a pu"lished opinion and that it ,ill have no precedential effect. The @udgment is usuall+ limited to the dispositive portion "ut a memorandum is attached containing a "rief statement of the facts and the la, involved, mainl+ for the information of the parties to the case. 'hen a la, is ?uestioned "efore the Court, ,e emplo+ the presumption in favor of its constitutionalit+. ;s ,e said in !eralta v. Commission of Elections , 5to @ustif+ the nullification of a la,, there must "e a clear and une?uivocal "reach of the Constitution, not a dou"tful and argumentative implication.5 7 Courts ,ill "end over "ac(,ard to sustain that presumption. In case

of dou"t, it is the dut+ of the @udiciar+ to e<ert ever+ effort to prevent the invalidation of the la, and the nullification of the ,ill of the legislature that enacted it and the e<ecutive that approved it. This norm is "ased on a "ecoming respect that the @udiciar+ is e<pected to accord the political departments of the government ,hich, it must "e assumed in fairness, thoroughl+ studied the measure under challenge and assured themselves of its constitutionalit+ "efore agreeing to enact it. The Court has deli"erated e<tensivel+ on the challenge posed against the memorandum decision as no, authorized "+ la,. Ta(ing into account the salutar+ purpose for ,hich it is allo,ed, and "earing in mind the a"ove-discussed restraint ,e must o"serve ,hen a la, is challenged "efore us, ,e have come to the conclusion that 9ection 43 of 7.-. 7lg. %#&, as ,e shall interpret it here, is not unconstitutional. 'hat is ?uestioned a"out the la, is the permission it gives for the appellate court to merel+ adopt "+ reference in its o,n decision the @udgment of the lo,er court on appeal. It is eas+ to understand that this device ma+ feed the suspicion feared "+ 8ustice Feria that the court has not given the appeal the attention it deserved and thus deprived the parties of due process. True or not, this impression is li(el+ to undermine popular faith in the @udiciar+ as an impartial forum ,hich hears "efore it decides and "ases its decision on the esta"lished facts and the applica"le la,. >o less o"@ectiona"le is the inconvenience involved in having to search for the decision referred to, ,hich, having "een incorporated "+ reference onl+, does not have to "e attached to the memorandum decision. The Court had occasion earlier to complain a"out this difficult+ in the case of Gindoy v. 0a"ucar, 8 ,here ,e saidA . . . True it is that the Court of First Instance ma+ adopt in toto either e<pressl+ or impliedl+ the findings and conclusions of the inferior court, and as a rule, such adoption ,ould amount to a su"stantial compliance ,ith the constitutional mandate discussed herein, "ut ,here, as in this case, the specific arguments presented against the decision of the inferior court are of such nature that a "lan(et affirmance of said decision does not in fact ade?uatel+ dispose of the strictures against it, it is "ut proper, if onl+ to facilitate the action to "e ta(en "+ the appellate court on the petition for revie,, that the concrete "ases of the impugned decision should appear on its face, instead of the appellate court having to dig into the records to find out ho, the inferior court resolved the issues of the case. ;s to this pro"lem, the 9olicitor )eneral correctl+ points out that it does not e<ist in the case at "ar "ecause the decision of the Court of ;ppeals e<tensivel+ ?uoted from the decision of the metropolitan trial court. ;lthough onl+ incorporated "+ reference in the memorandum decision of the regional trial court, 8udge 7alita s decision ,as nevertheless availa"le to the Court of ;ppeals. It is this circumstance, or even happenstance, if +ou ,ill, that has validated the memorandum decision challenged in this case and spared it from constitutional infirmit+. That same circumstance is ,hat ,ill move us no, to la+ do,n the follo,ing re?uirement, as a condition for the proper application of 9ection 43 of 7.-. 7lg. %#&. The memorandum decision, to "e valid, cannot incorporate the findings of fact and the conclusions of la, of the lo,er court onl+ "+ remote reference, ,hich is to sa+ that the challenged decision is not easil+ and immediatel+ availa"le to the person reading the memorandum decision. For the incorporation "+ reference to "e allo,ed, it must provide for direct access to the facts and the la, "eing adopted, ,hich must "e contained in a statement attac%ed to the said decision. In other ,ords, the memorandum decision authorized under 9ection 43 of 7.-. 7lg. %#& should actuall+ em"od+ the findings of fact and conclusions of la, of the lo,er court in an anne< attached to and made an indispensa"le part of the decision. It is e<pected that this re?uirement ,ill alla+ the suspicion that no stud+ ,as made of the decision of the lo,er court and that its decision ,as merel+ affirmed ,ithout a proper e<amination of the facts and the la, on ,hich it ,as "ased. The "ro:imity at least of the anne<ed statement should suggest that such an e<amination has "een underta(en. It is, of course, also understood that the decision "eing adopted should, to "egin ,ith, compl+ ,ith ;rticle FIII, 9ection %4 as no amount of incorporation or adoption ,ill rectif+ its violation. The Court finds it necessar+ to emphasize that the memorandum decision should "e sparingl+ used lest it "ecome an addictive e<cuse for @udicial sloth. It is an additional condition for its validit+ that this (ind of decision ma+ "e resorted to onl+ in cases ,here the facts are in the main accepted "+ "oth parties or easil+ determina"le "+ the @udge and there are no doctrinal

complications involved that ,ill re?uire an e<tended discussion of the la,s involved. The memorandum decision ma+ "e emplo+ed in simple litigations onl+, such as ordinar+ collection cases, ,here the appeal is o"viousl+ groundless and deserves no more than the time needed to dismiss it. =espite the convenience afforded "+ the memorandum decision, it is still desira"le that the appellate @udge e<ert some effort in restating in his o,n ,ords the findings of fact of the lo,er court and presenting his o,n interpretation of the la, instead of merel+ parroting the language of the court a quo as if he cannot do an+ "etter. There must "e less intellectual indolence and more pride of authorship in the ,riting of a decision, especiall+ if it comes from an appellate court. It ill "ecomes an appellate @udge to ,rite his rulings ,ith a pair of scissors and a pot of paste as if he ,ere a mere researcher. Be is an innovator, not an echo. The case usuall+ "ecomes progressivel+ simpler as it passes through the various levels of appeal and man+ issues "ecome unimportant or moot and drop along the ,a+. The appellate @udge should prune the cluttered record to ma(e the issues clearer. Be cannot usuall+ do this "+ simpl+ mimic(ing the lo,er court. Be must use his o,n perceptiveness in unraveling the rollo and his o,n discernment in discovering the la,. >o less importantl+, he must use his o,n language in la+ing do,n his @udgment. ;nd in doing so, he should also guard against torpidit+ lest his pronouncements e<cite no more fascination than a technical tract on the values of horse manure as a fertilizer. ; little st+le ,ill help liven the opinion trapped in the tortuous le<icon of the la, ,ith all its ,hereases and ,herefores. ; @udicial decision does not have to "e a "ore. The interpretation ,e ma(e toda+ ,ill not appl+ retroactivel+ to the memorandum decision rendered "+ the regional trial court in the case at "ar, or to the decision of the respondent court such decision on the strength of Romero v. Court of 1""eals. ;s earlier o"served, there ,as su"stancial compliance ,ith 9ection 43 "ecause of the direct availa"ilit+ and actual revie, of the decision of 8udge 7alita incorporated "+ reference in the memorandum decision of 8udge de la Rama. The memorandum decision as then understood under the Romero decision ,as a valid act at the time it ,as rendered "+ 8udge de la Rama and produced "inding legal effect. 'e also affirm the finding of the respondent court that the summar+ @udgment ,ithout a formal trial ,as in accord ,ith the Rule on 9ummar+ -rocedure and that the a,ard of attorne+ s fees is not improper. Benceforth, all memorandum decisions shall compl+ ,ith the re?uirements herein set forth "oth as to the form prescri"ed and the occasions ,hen the+ ma+ "e rendered. ;n+ deviation ,ill summon the strict enforcement of ;rticle FIII, 9ection %4 of the Constitution and stri(e do,n the fla,ed @udgment as a la,less diso"edience. 'B2R2F!R2, the petition is =2>I2=, ,ith costs against the petitioner. This decision is immediatel+ e<ecutor+. It is so ordered.

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In dismissing the petition, the C; sustained the findings of the RTC that since petitioner no longer has sufficient assets and properties to continue ,ith its operations and ans,er its corresponding lia"ilities, it is no longer eligi"le for reha"ilitation. The C; also ruled that even if the RTC erred in dismissing the petition, the same could not "e corrected an+more "ecause ,hat petitioner filed "efore the C; ,as a special civil action for certiorari under Rule 65 of the Rules of Court instead of an ordinar+ appeal.6 Bence, herein petition "ased on the follo,ing reasonsA /a0 TB2 C!GRT !F ;--2;19 2RR2= ;>= )R;F21D ;7G92= IT9 =I9CR2TI!> I> G-B!1=I>) TB2 FI>=I>)9 !F TB2 9-2CI;1 C!..2RCI;1 C!GRT /RTC 7R. $&, I1!I1! CITD0, -R2.;TGR21D 2HC1G=I>) TB2 F!R2C1!92= -R!-2RTD !F -2TITI!>2R ;>= =2C1;RI>) TB;T -2TITI!>2R B;9 >! 9G79T;>TI;1 -R!-2RTD 12FT T! .;R2 C!R-!R;T2 R2B;7I1IT;TI!> F2;9I712 ;9 TB2R2 I9 ;> !>)!I>) 1ITI);TI!> F!R TB2 ;>>G1.2>T !F 9GCB F!R2C1!9GR2 I> ;>!TB2R -R!C22=I>). /"0 TB2 C!GRT !F ;--2;19 2RR2= I> =I9.I99I>) TB2 -2TITI!> F!R C2RTI!R;RI FI12= 72F!R2 IT ;9 5I.-R!-2R,5 ;--2;1 72I>) ;> ;F;I1;712 R2.2=D.& The Court denies the petition. Reha"ilitation contemplates a continuance of corporate life and activities in an effort to restore and reinstate the corporation to its former position of successful operation and solvenc+.%3 -resentl+, the applica"le la, on reha"ilitation petitions filed "+ corporations, partnerships or associations, %% including reha"ilitation cases transferred from the 9ecurities and 2<change Commission to the RTCs pursuant to Repu"lic ;ct >o. 67&& or the 9ecurities Regulation Code,%# is the Interim Rules of -rocedure on Corporate Reha"ilitation /#3330. Gnder the Interim Rules, the RTC, ,ithin five /50 da+s from the filing of the petition for reha"ilitation and after finding that the petition is sufficient in form and su"stance, shall issue a 9ta+ !rder appointing a Reha"ilitation Receiver, (6(0/)*'); /)=orc/2/)1 o= a&& c&a'2( , prohi"iting transfers or encum"rances of the de"torPs properties, prohi"iting pa+ment of outstanding lia"ilities, and prohi"iting the ,ithholding of suppl+ of goods and services from the de"tor.%$ ;n+ transfer of propert+ or an+ other conve+ance, sale, pa+ment, or agreement made in violation of the 9ta+ !rder or in violation of the Rules ma+ "e declared void "+ the court upon motion or motu proprio.%4 Further, the 9ta+ !rder is effective "oth against secure and unsecured creditors. This is in harmon+ ,ith the principle of 5e?ualit+ is e?uit+5 first enunciated in ;lemarPs 9i"al * 9ons, Inc. v. 2l"inias,%5 thusA =uring reha"ilitation receivership, the assets are held in trust for the e?ual "enefit of all creditors to preclude one from o"taining an advantage or preference over another "+ the e<pedienc+ of an attachment, e<ecution or other,ise. For ,hat ,ould prevent an alert creditor, upon learning of the receivership, from rushing posthaste to the courts to secure @udgments for the satisfaction of its claims to the pre@udice of the less alert creditors. A( 3/1E//) cr/*'1or(, 1h/ F/7 0hra(/ '( :/G6a&'17 '( /G6'17.: 'hen a corporation threatened "+ "an(ruptc+ is ta(en over "+ a receiver, all the creditors should stand on an e?ual footing. >ot an+one of them should "e given an+ preference "+ pa+ing one or some of them ahead of the others. This is precisel+ the reason for the suspension of all pending claims against the corporation under receivership. Instead of creditors ve<ing the courts ,ith suits against the

distressed firm, the+ are directed to file their claims ,ith the receiver ,ho is a dul+ appointed officer of the 92C. /2mphasis supplied0 >evertheless, the suspension of the enforcement of all claims against the corporation is su"@ect to the rule that '1 (ha&& co22/)c/ o)&7 =ro2 1h/ 1'2/ 1h/ R/ha3'&'1a1'o) R/c/'>/r '( a00o')1/*. Thus, in Rizal Commercial 7an(ing Corporation v. Intermediate ;ppellate Court,%6 the Court upheld the right of RC7C to e<tra@udiciall+ foreclose the mortgage on some of 7F BomesP properties, and reinstated the trial courtPs @udgment ordering the sheriff to e<ecute and deliver to RC7C the certificate of auction sale involving the properties. The Court vacated its previous =ecision rendered on 9eptem"er %4, %&&# in the same case, finding that RC7C can rightfull+ move for the e<tra@udicial foreclosure of the mortgage since it ,as done on !cto"er %6, %&64, ,hile the management committee ,as appointed onl+ on .arch %6, %&65. The Court also too( note of the 92CPs denial of the petitionerPs consolidated motion to cite the sheriff and RC7C for contempt and to annul the auction proceedings and sale. In this case, respondent "an( instituted the foreclosure proceedings against petitionerPs properties on .arch %$, #33# and a Certificate of 9ale at -u"lic ;uction ,as issued on .a+ 6, #33#, ,ith respondent "an( as the highest "idder. The mortgage on petitionerPs chattels ,as li(e,ise foreclosed and the Certificate of 9ale ,as issued on .a+ %4, #33#. It also appears that titles over the properties have alread+ "een transferred to respondent "an(. %7 !n the other hand, the petition for corporate reha"ilitation ,as filed onl+ on ;ugust %4, #33# and the Reha"ilitation Receiver appointed on ;ugust #3, #33#. Respondent "an(, therefore, acted ,ithin its prerogatives ,hen it foreclosed and "ought the propert+, and had title transferred to it since it ,as made prior to the appointment of a reha"ilitation receiver. The fact that there is a pending case for the annulment of the foreclosure proceedings and auction sales%6 is of no moment. Gntil a court of competent @urisdiction, ,hich in this case is the RTC of =umangas, Iloilo, 7ranch 66, annuls the foreclosure sale of the properties involved, petitioner is "ereft of a valid title over the properties. %& In fact, it is the trial courtPs ministerial dut+ to grant a possessor+ ,rit over the properties.#3 Conse?uentl+, the C; ,as correct in upholding the RTCPs dismissal of the petition for reha"ilitation in vie, of the fact that the titles to petitionerPs properties have alread+ passed on to respondent "an( and petitioner has no more assets to spea( of, speciall+ since petitioner does not dispute the fact that the properties ,hich ,ere foreclosed "+ respondent "an( comprise the "ul(, if not the entiret+, of its assets. It should "e stressed that the Interim Rules ,as enacted to provide for a summar+ and nonadversarial reha"ilitation proceedings.#% This is in consonance ,ith the commercial nature of a reha"ilitation case, ,hich is aimed to "e resolved e<peditiousl+ for the "enefit of all the parties concerned and the econom+ in general. ;s provided in the Interim Rules, the "asic procedure is as follo,sA %0 The petition is filed ,ith the appropriate Regional Trial Court: ## #0 If the petition is found to "e sufficient in form and su"stance, the trial court shall issue a 9ta+ !rder, ,hich shall provide, among others, for the appointment of a Reha"ilitation Receiver: the fi<ing of the initial hearing on the petition: a directive to the petitioner to pu"lish the !rder in a ne,spaper of general circulation in the -hilippines once a ,ee( for t,o /#0 consecutive ,ee(s: and a directive to all creditors and all interested parties /including the 9ecurities and 2<change Commission0 to file and serve on the de"tor a verified comment on or opposition to the petition, ,ith supporting affidavits and documents. #$ $0 -u"lication of the 9ta+ !rder:

G.R. N!. 165..1

9a)6ar7 31, 2..7

NEW "R!NTIER ,UGAR C!RP!RATI!N, -etitioner, vs. REGI!NAL TRIAL C!URT, %RANC5 39, IL!IL! CIT$ a)* ECUITA%LE PCI %AN , Respondents. DECI,I!N AU,TRIA-MARTINE4, J.: In the present petition for revie, under Rule 45 of the Rules of Court, petitioner assails the decision of the Court of ;ppeals /C;0% in C;-).R. 9- >o. 7667$, dismissing its special civil action for certiorari and affirming the dismissal orders dated 8anuar+ %$, #33$ and ;pril %4, #33$ issued "+ the Regional Trial Court /RTC0 of Iloilo Cit+, 7ranch $&, acting as a special commercial court, in Civil Case >o. 3#-#7#76. ;s "orne "+ the records, >e, Frontier 9ugar Corporation /petitioner0 is a domestic corporation engaged in the "usiness of ra, sugar milling. Foreseeing that it cannot meet its o"ligations ,ith its creditors as the+ fell due, petitioner filed a -etition for the =eclaration of 9tate of 9uspension of -a+ments ,ith ;pproval of -roposed Reha"ilitation -lan under the Interim Rules of -rocedure on Corporate Reha"ilitation /#3330 some time in ;ugust #33#. # Finding the petition to "e sufficient in form and su"stance, the RTC issued a 9ta+ !rder dated ;ugust #3, #33#, appointing .anuel 7. Clemente as reha"ilitation receiver, ordering the latter to put up a "ond, and setting the initial hearing on the petition.$ !ne of petitionerPs creditors, the 2?uita"le -CI 7an( /respondent "an(0, filed a CommentE!pposition ,ith .otion to 2<clude -ropert+, alleging that petitioner is not ?ualified for corporate reha"ilitation, as it can no longer operate "ecause it has no assets left. Respondent "an( also alleged that the financial statements, schedule of de"ts and lia"ilities, inventor+ of assets, affidavit of general financial condition, and reha"ilitation plan su"mitted "+ petitioner are misleading and inaccurate since its properties have alread+ "een foreclosed and transferred to respondent "an( "efore the petition for reha"ilitation ,as filed, and petitioner, in fact, still o,es respondent "an( deficienc+ lia"ilit+.4 !n 8anuar+ %$, #33$, the RTC issued an !mni"us !rder terminating the proceedings and dismissing the case.5-etitioner filed an !mni"us .otion "ut this ,as denied "+ the RTC in its !rder dated ;pril %4, #33$.6 -etitioner then filed ,ith the C; a special civil action for certiorari, ,hich ,as denied "+ the C; per assailed =ecision dated 8ul+ %&, #334, the dispositive portion of ,hich readsA 'B2R2F!R2, in vie, of the foregoing premises, @udgment is here"+ rendered "+ us =I9.I99I>) the petition filed in this case and ;FFIR.I>) the orders assailed "+ the petitioner. 9! !R=2R2=. 7

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40 Initial hearing on an+ matter relating to the petition or on an+ comment andEor opposition filed in connection there,ith. I= 1h/ 1r'a& co6r1 '( (a1'(='/* 1ha1 1h/r/ '( 2/r'1 ') 1h/ 0/1'1'o), '1 (ha&& ;'>/ *6/ co6r(/ 1o 1h/ 0/1'1'o) :#4 50 Referral for evaluation of the reha"ilitation plan to the reha"ilitation receiver ,ho shall su"mit his recommendations to the court: #5 60 .odifications or revisions of the reha"ilitation plan as necessar+: #6 70 9u"mission of final reha"ilitation plan to the trial court for approval: #7 60 ;pprovalEdisapproval of reha"ilitation plan "+ the trial court: #6 In the present case, the petition for reha"ilitation did not run its full course "ut ,as dismissed "+ the RTC after due consideration of the pleadings filed "efore it. !n this score, the RTC cannot "e faulted for its summar+ dismissal, as it is tantamount to a finding that there is no merit to the petition. This is in accord ,ith the trial courtPs authorit+ to give due course to the petition or not under Rule 4, 9ection & of the Interim Rules. 1etting the petition go through the process onl+ to "e dismissed later on "ecause there are no assets to "e conserved ,ill not onl+ defeat the reason for the rules "ut ,ill also "e a ,aste of the trial courtPs time and resources. The C; also correctl+ ruled that petitioner availed of the ,rong remed+ ,hen it filed a special civil action for certiorari ,ith the C; under Rule 65 of the Rules of Court. Certiorari is a remed+ for the correction of errors of @urisdiction, not errors of @udgment. It is an original and independent action that ,as not part of the trial that had resulted in the rendition of the @udgment or order complained of. .ore importantl+, since the issue is @urisdiction, an original action for certiorari ma+ "e directed against an ')1/r&oc61or7 or*/r of the lo,er court prior to an appeal from the @udgment: or ,here there is no appeal or an+ plain, speed+ or ade?uate remed+. ; petition for certiorari should "e filed not later than si<t+ da+s from the notice of @udgment, order, or resolution, and a motion for reconsideration is generall+ re?uired prior to the filing of a petition for certiorari, in order to afford the tri"unal an opportunit+ to correct the alleged errors. #& The !mni"us !rder dated 8anuar+ %$, #33$ issued "+ the RTC is a final order since it terminated the proceedings and dismissed the case "efore the trial court: it leaves nothing more to "e done. ;s such, petitionerPs recourse is to file an appeal from the !mni"us !rder. In this regard, ;... >o. 33-6-%3-9C promulgated "+ the Court on 9eptem"er 4, #33% provides that a petition for reha"ilitation is considered a special proceeding given that it see(s to esta"lish the status of a part+ or a particular fact. ;ccordingl+, the period of appeal provided in paragraph %& /"0 of the Interim Rules Relative to the Implementation of 7atas -am"ansa 7lg. %#& for special proceedings shall appl+. Gnder said paragraph %& /"0, the period of appeal shall "e thirt+ /$30 da+s, a record of appeal "eing re?uired. Bo,ever, it should "e noted that the Court issued ;... >o. 34-&-37-9C on 9eptem"er %4, #334, clarif+ing the proper mode of appeal in cases involving corporate reha"ilitation and intracorporate controversies. It is provided therein that all decisions and final orders in cases falling under the Interim Rules of Corporate Reha"ilitation and the Interim Rules of -rocedure )overning Intra-Corporate Controversies under Repu"lic ;ct >o. 67&& shall "e appealed to the C; through a petition for revie, under Rule 4$ of the Rules of Court to "e filed ,ithin fifteen /%50 da+s from notice of the decision or final order of the RTC. In an+ event, as previousl+ stated, since ,hat petitioner filed ,as a petition for certiorari under Rule 65 of the Rules, the C; rightl+ dismissed the petition and affirmed the assailed !rders. W5ERE"!RE, the petition is DENIED for lac( of merit. Costs against petitioner. 9! !R=2R2=.

Page 26 of 29

!n 8une #7, %&&6, the trial court rendered the first assailed order den+ing petitioners motion to suspend the proceedings. ;rraignment ,as scheduled on 8une #6, %&&6. 7ut on the da+ of the arraignment, petitioner 1ee failed to appear. The trial court then issued the second assailed order, directing the issuance of a ,arrant of arrest and fi<ing an additional "ond in the amount of -$3,333 "+ petitioner 1ee. The petitioners filed "efore the Court of ;ppeals a petition for certiorari under Rule 65 of the Rules of Court, ?uestioning the said orders of the trial court. !n ;ugust #4, %&&6, the appellate court rendered a decision, the dispositive portion of ,hich readsA 5'B2R2F!R2, foregoing considered, the present petition is here"+ =2>I2=. -u"lic respondent is here"+ !rdered to proceed ,ith deli"erate speed in the hearing and trial of Criminal Cases >os. %33%3 and %33%%. 59! !R=2R2=.5 5 In dismissing the said petition, the appellate court ruled thatA 5In the criminal cases, the ?uestion is ,hether petitioners misappropriated the -%,533,%53.33 corporate funds ,hich ,as paid to the private respondent through petitioners. It is alleged in the criminal complaint that upon demand, petitioners failed to deliver the same. 5In ).R. >o. %%#&4% "efore the 9upreme Court, the validit+ of the dissolution of the >uegene /sic0 Corporation is in issue. 5'ith these in mind, 'e do not see ho, the resolution of the issue in the civil case ,ould necessaril+ "e determinative of petitioners criminal lia"ilit+ for 2stafa. 5It is to "e emphasized that even if the dissolution of the >eugene Corporation is to "e declared void and petitioners are still to "e considered -resident and 9ecretar+ of >uegene /sic0 Corporation, still petitioners ma+ "e found lia"le for the misappropriation of the corporate funds. The fact that petitioners are the -resident and 9ecretar+ of the >uegene /sic0 Corporation does not mean that the+ could not "e held lia"le for 2stafa ,ith ;"use of Confidence, if the+ did in fact misappropriate the corporate fund for personal use. The crime of 2stafa is committed ,hen a person shall defraud another "+ an+ means mentioned in ;rticle $%5 of the Revised -enal Code. This is true ,hether or not such person is an officer of the corporation defrauded. 5Thus, the issue in ).R. >o %%#4% does not in an+,a+ pose a pre@udicial ?uestion to the criminal cases for 2stafa against petitioners. Thus, there is no @ustifia"le reason ,h+ the proceedings in Criminal Cases >o. %33%3 and %33%% should "e suspended. 5< < < <<< < < <56

;CCG92= R2FG92= T! TGR> !F2R C2RT;I> 9G.9 !F .!>2D, 'BICB C!.-1;I>;>T C!>9I=2R2= ;9 2FI=2>C2 !F CRI.I>;1 I>T2>T T! ;--R!-RI;T2 ;>= TB2R2 I9 >! CRI.2 !F ;TT2.-T2= 29T;F; G>=2R ;RTIC12 $%5, -;R;)R;-B % /70 !F TB2 R2FI92= -2>;1 C!=2. 55.%.#. 2F2> ;99G.I>) TB;T ; CRI.I>;1 I>T2>T T! ;--R!-RI;T2 I9 29T;F;, -G71IC R29-!>=2>T 9B!G1= B;F2 !R=2R2= CRI.I>;1 C;929 >!9. %33%3 ;>= %33%% -2>=I>) 72F!R2 7R;>CB 53 !F TB2 7;C!1!= CITD R2)I!>;1 TRI;1 C!GRT =I9.I992= ;T 12;9T -R!FI9I!>;11D G-!> 9B!'I>) TB;T TB2 ;--!I>T.2>T !F C!.-1;I>;>T 1;' FIR. ;9 TRG9T22 I9 I> I99G2 72F!R2 TB2 92CGRITI29 ;>= 2HCB;>)2 C!..I99I!> I> 92C C;92 >!. $$%6: 55.%.$ ;99G.I>) FGRTB2R TB;T ; CRI.I>;1 I>T2>T T! ;--R!-RI;T2 I9 29T;F;, -G71IC R29-!>=2>T C!GRT 9B!G1= B;F2 =I9.I992= >!>2TB21299 TB2 9;I= CRI.I>;1 C;929, ;T 12;9T -R!FI9I!>;11D ;19!, G-!> 9B!'I>) TB;T IT I>F!1F2= ;> I>TR;- C!R-!R;T2 I99G2, 'BICB I9 'ITBI> TB2 2HC1G9IF2, 9!12 ;>= !RI)I>;1 8GRI9=ICTI!> !F TB2 92CGRITI29 ;>= 2HCB;>)2 C!..I99I!> G>=2R TB2 C;92 1;' I> =I!>I9I! F. CFI, /%#4 9CR; ###0: 55.%.4. ;99G.I>) FGRTB2R.!R2 TB;T ; CRI.I>;1 I>T2>T T! ;--R!-RI;T2 I9 29T;F;, -G71IC R29-!>=2>T C!GRT 9B!G1= B;F2 1IR2'I92 !R=2R2= TB2 =I9.I99;1 !F 9;I= CRI.I>;1 C;929 72C;G92 TB2 >G.2R!G9 T'I9T9 ;>= TGR>9 TB;T TB2D B;= )!>2 TBR!G)B =GRI>) TB2 -R21I.I>;RD 9T;)2 !F TB2 -R!C22=I>), I>C1G=I>) TB2 R2-!-2>I>) !F TB2 C;929 ;FT2R TB2D B;= 722> =I9.I992= ; D2;R !R 9! ;)!, FI!1;T2= -2TITI!>2R9 RI)BT T! =G2 -R!C299 ;>= 2JG;1 -R!T2CTI!> !F 1;'.57 'e den+ the petition. In the case at "ar, ,e are "eing as(ed to revie, the decision of the appellate court ,hich dismissed the petition for certiorari under Rule 65. 'e have consistentl+ ruled that certiorari lies onl+ ,here it is clearl+ sho,n that there is a patent and gross a"use of discretion amounting to an evasion of positive dut+ or virtual refusal to perform a dut+ en@oined "+ la,, or to act at all in contemplation of la,, as ,here the po,er is e<ercised in an ar"itrar+ and despotic manner "+ reason of passion or personal hostilit+.6 Certiorari ma+ not "e availed of ,here it is not sho,n that the respondent court lac(ed or e<ceeded its @urisdiction over the case, even if its findings are not correct. Its ?uestioned acts ,ould at most constitute errors of la, and not a"use of discretion correcti"le "+ certiorari. In other ,ords, certiorari ,ill issue onl+ to correct errors of @urisdiction and not to correct errors of procedure or mista(es in the court s findings and conclusions. ;n interlocutor+ order ma+ "e assailed "+ certiorari or prohi"ition onl+ ,hen it is sho,n that the court acted ,ithout or in e<cess of @urisdiction or ,ith grave a"use of discretion. Bo,ever, this Court generall+ fro,ns upon this remedial measure as regards interlocutor+ orders. To tolerate the practice of allo,ing interlocutor+ orders to "e the su"@ect of revie, "+ certiorari ,ill not onl+ dela+ the administration of @ustice "ut ,ill also undul+ "urden the courts. & 'e find that the allegations of the petitioners are not sufficient grounds to ?ualif+ as a"use of discretion ,arranting the issuance of a ,rit of certiorari. The petitioners present factual contentions to a"solve them from the criminal charge of estafa. The criminal cases concern corporate funds petitioners allegedl+ received as pa+ment for plastic "ought "+ Fictorias .illing

G.R. No. 13791-

D/c/23/r -, 2..2

9!5N,!N LEE a)* ,!NN$ M!REN!, petitioners, vs. PE!PLE !" T5E P5ILIPPINE, a)* 1h/ C!URT !" APPEAL,, respondents. =2CI9I!> C!R!NA, J.: 7efore us is a petition for revie, on certiorari under Rule 45 of the %&&7 Rules of Civil -rocedure of the decision%dated ;ugust #4, %&&6 of the Court of ;ppeals # dismissing the petition for certiorari of the orders dated 8une #7, %&&6 $ and 8une #6, %&&6, respectivel+, of the Regional Trial Court, 7ranch 53, 7acolod Cit+ in Criminal Cases >os. %33%3 and %33%%. The undisputed facts as found "+ the appellate court are as follo,sA -etitioners 8ohnson 1ee and 9onn+ .oreno ,ere charged "+ >eugene .ar(eting, Inc. />.I, for "revit+0, through its designated trustee, ;tt+. Roger I. Re+es, ,ith the crime of estafa ,ith a"use of confidence "efore the !ffice of the Cit+ -rosecutor, 7acolod Cit+. !n =ecem"er %4, %&66, the Cit+ -rosecutor issued a resolution a"solving the petitioners from criminal lia"ilit+ due to lac( of malice on the part of the petitioners in retaining the mone+ of >.I. The appeal "+ >.I to the =epartment of 8ustice /=!8, for "revit+0 ,as denied on the ground that the petitioners did not misappropriate corporate funds. >.I then filed a motion for reconsideration of the =!8 resolution. !n 8anuar+ 4, %&&%, the =!8, through then Gndersecretar+ 9ilvestre 7ello III, ordered the reinvestigation of the case. Gpon recommendation of Cit+ -rosecutor ;ugusto C. Rallos on .arch &, %&&% to charge the petitioners ,ith estafa, Criminal Case >os. %33%3 and %33%% ,ere filed. The petitioners, on .a+ 4 and #% of %&&#, filed at the =!8 petitions for reinvestigation of the cases "ut the same ,ere denied on the ground that the trial court s permission should first "e secured "efore reinvestigation can "e conducted in accordance ,ith this Court s ruling in Crespo vs. .ogul.4 -etitioners then filed a motion to suspend the proceedings "efore the trial court on the ground that there ,as a need for reinvestigation and there ,as a pre@udicial ?uestion in a 9ecurities 2<change Commission /92C, for "revit+0 case pending "efore this Court doc(eted as ). R. >o. %%#&4%. The 92C case ?uestions the validit+ of the dissolution of >.I and the designation of ;tt+. Re+es as trustee. Initiall+, the trial court ruled in favor of the petitioners and ordered the =!8 to conduct a reinvestigation. 7ut, on motion for reconsideration "+ the prosecutor, the trial court reversed itself, set aside the previous order and scheduled the arraignment of the petitioners. !n 8anuar+ %&, %&&6, the petitioners filed another motion to suspend the proceedings, "ased on the same ground that the pre@udicial ?uestion in the 92C case ,ould determine the petitioners guilt in the criminal cases, there"+ necessitating the suspension of the same.

Bence, this appeal "ased on the follo,ing assignment of errorsA 55.%. -G71IC R29-!>=2>T C!GRT C!..ITT2= ; )R;F2 ;7G92 !F =I9CR2TI!> ;.!G>TI>) T! 1;CR !R I> 2HC299 !F 8GRI9=ICTI!> I> >!T !R=2RI>) TB2 =I9.I99;1 !F CRI.I>;1 C;929 >!9. %33%3 ;>= %33%% -2>=I>) 72F!R2 7R;>CB 53 !F TB2 R2)I!>;1 TRI;1 C!GRT !F 7;C!1!= CITD I> FI2' !F TB2 F!11!'I>)A 55.%.%. TB2 ;112);TI!>9 I> TB2 C!.-1;I>T 9B!' TB;T TB2 ;112)2= ;CT !F -2TITI!>2R9 B2R2I> ';9 !>1D ;> ;TT2.-T T! C!..IT TB2 CRI.2 !F 29T;F; I> TB;T TB2

Page 27 of 29

Corporation from >.I. The+ refused to turn over the mone+ to the trustee after >.I s dissolution on the ground that the+ ,ere (eeping the mone+ for the protection of the corporation itself. Thus, the elements of misappropriation and damage are a"sent. The+ argue that there is no proof that, as officers of the corporation, the+ converted the said amount for their o,n personal "enefit. The+ li(e,ise claim that the+ alread+ turned the mone+ over to the ma@orit+ stoc(holder of the defunct corporation. Clearl+, the said allegations are defenses that must "e presented as evidence in the hearing of the criminal cases. The+ are inappropriate for consideration in a petition for certiorari "efore the appellate court inasmuch as the+ do not affect the @urisdiction of the trial court hearing the said criminal cases "ut instead are defenses that might a"solve them from criminal lia"ilit+. ; petition for certiorari must "e "ased on @urisdictional grounds "ecause, as long as the respondent court acted ,ith @urisdiction, an+ error committed "+ it in the e<ercise thereof ,ill amount to nothing more than an error of @udgment ,hich can "e revie,ed or corrected on appeal. %3 .oreover, the petition for certiorari "efore the Court of ;ppeals ,as premature for the reason that there ,ere other plain and ade?uate remedies at la, availa"le to the petitioners. Gnder 9ection $ /a0 of Rule %%7 of the Revised Rules of Criminal -rocedure, the accused can move to ?uash the information on the ground that the facts do not constitute an offense. There is no sho,ing that the petitioners, as the accused in the criminal cases, ever filed motions to ?uash the su"@ect informations or that the same ,ere denied. It cannot then "e said that the lo,er court acted ,ithout or in e<cess of @urisdiction or ,ith grave a"use of discretion to @ustif+ recourse to the e<traordinar+ remed+ of certiorari or prohi"ition. 7ut it must "e stressed that, even if petitioners did file motions to ?uash, the denial thereof ,ould not have automaticall+ given rise to a cause of action under Rule 65 of the Rules of Court. The general rule is that, ,here a motion to ?uash is denied, the remed+ is not certiorari "ut to go to trial ,ithout pre@udice to reiterating the special defenses involved in said motion, and if, after trial on the merits an adverse decision is rendered, to appeal therefrom in the manner authorized "+ la,. ;nd, even in the e<ceptional case ,here such denial ma+ "e the su"@ect of a special civil action for certiorari, a motion for reconsideration must first "e filed to give the trial court an opportunit+ to correct its error. Finall+, even if a motion for reconsideration ,ere filed and denied, the remed+ under Rule 65 ,ould still "e unavaila"le a"sent an+ sho,ing of the grounds provided for in 9ection % thereof. %%The petition "efore the Court of ;ppeals, su"@ect of this appeal, did not allege an+ of such grounds. Furthermore, a petition for revie, under Rule 45 of the %&&7 Revised Rules of Civil -rocedure "efore this Court onl+ allo,s ?uestions of la,. %# Inasmuch as petitioners defenses alleging circumstances that negate misappropriation definitel+ re?uire appreciation of facts, i.e., testimonial and documentar+ evidence, this Court cannot assess the merit of the said claims. Regarding the alleged infringement of their constitutional rights, the petitioners argue that their right to procedural due process and e?ual protection of la,s ,as violated ,hen then Gndersecretar+ 7ello ordered the reinvestigation of the criminal charges against them despite /%0 the previous dismissal of the same and /#0 the lac( of motions for reconsideration "+ the private complainant to the resolution initiall+ dismissing the said charges. The+ also contend that the long dela+ in the resolution of the proceedings at the =!8 and the trial court violated their constitutional right to a speed+ disposition of their cases. 'e cannot fault the =!8 for entertaining and eventuall+ finding a prima facie case for estafa against the petitioners despite the previous dismissals of the complaint. The issue in the criminal complaint "efore the =!8 involved intricate ?uestions of la, and fact. 9adl+ for the petitioners, the =!8 resolved the cases against them. 9u"stantiall+, the =!8 follo,ed procedure in reaching its final conclusion on the case. Then Gndersecretar+ 7ello ade?uatel+ @ustified his conclusion that a prima facie case for estafa e<isted not,ithstanding the unproven allegations that the concerned officers of =!8 ,ere motivated "+ malice against petitioners. 'ith respect to the claim that the petitioners right to a speed+ disposition of their cases ,as violated, ,e herein ?uote the 9olicitor )eneral s comment /uncontroverted "+ the petitioners0 to refute their allegation that dela+ attended the investigation and the criminal proceedingsA

5Gndaunted, petitioners filed a series of motions, "oth repetitious and dilator+, as sho,n "+ the follo,ing ta"le depicted "+ private complainant in his -reliminar+ Comment dated ;ugust 5, %&&6, to ,itA I. .!TI!>9 T! =I9JG;1IFD =;T2 /%0 .otion to =is?ualif+ -rivate -rosecutor ;pril ##, %&&% /#0 .otion to =is?ualif+ -rivate -rosecutor 8an. $3, %&&# /$0 .otion to =is?ualif+ 1a, Firm Fe". $, %&&# /40 .otion to =is?ualif+ -rivate -rosecutor .a+ #5, %&&5 /50 Grgent .otion to =is?ualif+ -rivate -rosecutor >ov. #4, %&&5 /60 Grgent .otion to =is?ualif+ -rivate -rosecutor >ov. #7, %&&5 II. .!TI!>9 F!R R2I>F29TI);TI!> /70 .otion for Reinvestigation 8ul+ #6, %&&% /60 .otion for Reinvestigation 8an. $3, %&&# .otion for 1eave to Conduct Comprehensive !ct. 5, %&&# Revie,EReinvestigation 5This motion ,as alread+ resolved "+ the previous presiding 8udge, 2mma 1a"a+en, "ut ,as surreptitiousl+ raised again "efore the Bon. 8udge Ro"erto 9. Chiongson. III. .!TI!> T! JG;9BE=I9.I99E9G9-2>= -R!C22=I>)9 /%%0 Consolidated .otion to Juash 9ept, #5, %&&% /%#0 .otion to 9uspend -roceedings 8an. $3, %&&# /%$0 .otion to =ismissE9uspend -roceedings .a+ #&, %&&# /%40 Grgent .otion to Jualif+ -rovisional =ismissal .a+ $, %&&$ /%50 .otion to suspend Further -roceedings 8une %&, %&&6 .!TI!>9 T! R2C;11 ';RR;>T T! ;RR29T /%60 Grgent .otion to 2<punge and Recall ;pril %&, %&&% /%70 Grgent .otion to 2<punge and Recall ;rrest >ov. %#, %&&% /%60 .otion to 2<punge 8une #7, %&&$ /%&0 Grgent .otion to Recall !rder of ;rrest 9ept. #7, %&&% 55. The accused also filed several .otions to Inhi"it the 8udges ,ho sa, through the plo+ of the accused, including Cit+ -rosecutors: 56. 7ehind the "ac(drop of the nine /&0 motions to ?uash, as ,ell as reinvestigations involving the same issues concerning pro"a"le cause areA 5a. a series of five /50 motions and or letters to reinvestigation, filed "efore the =epartment of 8ustice /see attached as ;>>2H ; is a cop+ of the ruling of ;cting 8ustice 9ecretar+ 2duardo ). .ontenegro, dated ;pril #$, %&&$0, ,hen the case ,as still under preliminar+ investigation. 5". ;mended -etition doc(eted as 92C C;92 $$%6, ,ith pra+ers to suspend the criminal proceedings a ?uo, copies of pages %, %6 and %6 are hereto attached as ;>>2H 7 . This is the forerunner of ).R. >o. %%#&4% no, pending "efore the 9upreme Court. 5c. ; 9pecial Civil ;ction for Certiorari /-etition for Certiorari and -rohi"ition0, involving the same issued ,ith a pra+er to suspendErestrain the proceedings filed "efore the Regional Trial Court in 7acolod Cit+, doc(eted as 9pecial Civil Case >o. 646& ,a+ "ac( in %&&% /!rder dated ;pril #&, %&&%, hereto attached as ;>>2H C 0. 5d. This ,as follo,ed "+ the filing of C;-)R. 9- >o. #7$73, a case for certiorari and in@unction ,ith another pra+er to restrain the proceedings /Resolution dated 8ul+ #&, %&&#, hereto attached as ;>>2H = 0. /pp. #-4, -reliminar+ Comment0 5It is important to stress that all the a"ove enumerated petitions, motions and cases have "een =2>I2= !R =I9.I992=.5%$ Clearl+, it ,as the petitioners themselves ,ho principall+ dragged and hindered the resolution of the criminal investigation and trial for estafa. The+ thus have no reason to complain against the dela+ in the disposition of their cases. 'e also agree ,ith the appellate court in ruling that there is no pre@udicial ?uestion that ,ould call for the suspension /or even dismissal0 of the case. The appellate court correctl+ held thatA

5<<<. The fact that petitioners are the -resident and 9ecretar+ of the >uegene /sic0 Corporation does not mean that the+ could not "e held lia"le for 2stafa ,ith ;"use of Confidence, if the+ did in fact misappropriate the corporate fund for personal use. The crime of 2stafa is committed ,hen a person shall defraud another "+ an+ means mentioned in ;rticle $%5 of the Revised -enal Code. This is true ,hether or not such person is an officer of the corporation defrauded.5 %4 'e also agree ,ith then Gndersecretar+ 7ello s resolution that the case "efore the 92C ?uestioning the validit+ of the dissolution and the appointment of a trustee is totall+ different from the issues raised in the criminal action. The case "efore the 92C deals ,ith the validit+ of the voluntar+ dissolution of >.I ,hile the criminal cases relate to the misappropriation of mone+ "+ the petitioners. In the 92C case, the disputing parties are the stoc(holders ,ithout >.I s involvement: on the other hand, >.I is the complainant in the criminal cases. .oreover, an+ decision "+ the 92C as to the validit+ of the dissolution ,ill not affect >.I s o,nership over the su"@ect mone+.%5 For the a"ove-mentioned reasons, ,e li(e,ise find no merit in the petitioners contention that the criminal cases should "e dismissed on the ground that the issue in the said cases involves an intra-corporate issue that is ,ithin the e<clusive @urisdiction of the 9ecurities and 2<change Commission. ;side from the fact that estafa and intra-corporate disputes are t,o entirel+ different matters ,ith entirel+ different elements, the 92C is not a trier of a criminal case li(e estafa. 7ut even assuming that the case involves onl+ intra-corporate issues, Regional Trial Courts are no, competent to rule on said matters. The ?uasi-@udicial @urisdiction of the 92C has "een transferred to the RTCs pursuant to 9ection 5.# of Repu"lic ;ct >o. 67&&, other,ise (no,n as The 9ecurities Regulation Code of #33%. Congress recognized that intra-corporate disputes are not that much of a technical matter that re?uires the competence of a specialized agenc+ li(e the 92C. Thus, even an ordinar+ trial court can resolve the alleged corporate disputes in the case at "ar. 'B2R2F!R2, premises considered, the appealed decision of the Court of ;ppeals is here"+ ;FFIR.2=. The Regional Trial Court is here"+ ordered to conduct the arraignment ,ith no further dela+. Costs against the petitioners. 9! !R=2R2=.

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-etitioner allegedl+ resorted to the instant recourse "ecause it had no appeal or an+ plain, speed+ and ade?uate remed+ in the ordinar+ course of la,. It automaticall+ invo(ed the @urisdiction of this Court supposedl+ "ecause of the importance of the issue involved. It "+passed the Court of ;ppeals on the premise that it ,ould "e useless to first see( recourse thereat as the part+ aggrieved "+ the appellate court s ruling ,ould nonetheless elevate the matter to this Court. 7+ then, petitioner surmised, the level of intellectual pirac+ ,ould have ,orsened. 1i(e,ise, petitioner presumes that direct resort to this Court is @ustified as the petition involves a pure ?uestion of la,. 'ill the e<traordinar+ ,rit of certiorari lieC For certiorari to lie, it must "e sho,n that the tri"unal, "oard or officer e<ercising @udicial functions acted ,ithout or in e<cess of @urisdiction or ,ith grave a"use of discretion amounting to lac( or e<cess of @urisdiction, and that there is no appeal nor an+ plain, speed+ and ade?uate remed+ in the ordinar+ course of la, for the purpose of amending or nullif+ing the proceeding. L$M The sole office of the ,rit of certiorari is the correction of errors of @urisdiction including the commission of grave a"use of discretion amounting to lac( of @urisdiction, and does not include correction of pu"lic respondent s evaluation of the evidence and factual findings thereon.L4M The petition for certiorari must "e "ased on @urisdictional grounds "ecause as long as the respondent acted ,ith @urisdiction, an+ error committed "+ him or it in the e<ercise thereof ,ill amount to nothing more than an error of @udgment ,hich ma+ "e revie,ed or corrected onl+ "+ appeal. 2ven an a"use of discretion is not sufficient "+ itself to @ustif+ the issuance of a ,rit of certiorari.L5M 'e find that the court "elo, acted ,ithin its @urisdiction ,hen it too( cognizance of the complaint for in@unction and damages filed "+ petitioner. 9ection %&, par. /60, 7- 7lg. %#&, as amended,L6M provides that Regional Trial Courts in .etro .anila shall have e<clusive original @urisdiction in all cases in ,hich the demand, e<clusive of interest, damages of ,hatever (ind, attorne+s fees, costs or the value of the propert+ in controvers+ e<ceeds -#33,333.33. In the complaint filed "efore the court a quo, petitioner averred that it incurred no less than -753,333.33 in attorne+ s fees, investigation and litigation e<penses and another -#,333,333.33 "+ ,a+ of moral damages. Clearl+, the a"ove amounts fall ,ithin the @urisdiction of the Regional Trial Court. ;lso, the complaint ,as properl+ lodged in the Regional Trial Court of 1as -iNas considering that one of the principal defendants ,as residing thereat. Baving determined that the court "elo, had @urisdiction to entertain the complaint filed "+ petitioner, ,e no, resolve ,hether respondent tri"unal gravel+ a"used its discretion amounting to lac( or e<cess of @urisdiction in den+ing petitioner s application for an e: "arte order. ; special civil action for certiorari ,ill prosper onl+ if grave a"use of discretion is manifested.L7M For an a"use to "e grave the po,er must "e e<ercised in an ar"itrar+ or despotic manner "+ reason of passion or personal hostilit+. L6M The a"use of discretion must "e so patent and gross as to amount to an evasion of a positive dut+, or a virtual refusal to perform the dut+ en@oined or act in contemplation of la,. L&M There is grave a"use of discretion ,hen respondent acts in a capricious or ,himsical manner in the e<ercise of its @udgment as to "e e?uivalent to lac( of @urisdiction.L%3M -etitioner asserts that respondent trial court gravel+ a"used its discretion in den+ing its application for the issuance of an e: "arte order. Bo,ever, other than this "are allegation, petitioner failed to point out specific instances ,here grave a"use of discretion ,as allegedl+ committed. It ,as never sho,n ho, respondent tri"unal supposedl+ e<ercised its po,er in a despotic, capricious or ,himsical manner. There "eing no hint of grave a"use of discretion that can "e attri"uted to the lo,er court, hence, it could "e safel+ held that the assailed orders ,ere rendered in the proper e<ercise of its @urisdiction. 9ignificantl+, even assuming that the orders ,ere erroneous, such error ,ould merel+ "e deemed as an error of @udgment that cannot "e remedied "+ certiorari. ;s long as the

respondent acted ,ith @urisdiction, an+ error committed "+ him or it in the e<ercise thereof ,ill amount to nothing more than an error of @udgment ,hich ma+ "e revie,ed or corrected onl+ "+ appeal.L%%M The distinction is clearA ; petition for certiorari see(s to correct errors of @urisdiction ,hile a petition for revie, see(s to correct errors of @udgment committed "+ the court. 2rrors of @udgment include errors of procedure or mista(es in the court s findings. 'here a court has @urisdiction over the person and su"@ect matter, the decision on all other ?uestions arising in the case is an e<ercise of that @urisdiction. Conse?uentl+, all errors committed in the e<ercise of such @urisdiction are merel+ errors of @udgment. L%#M Certiorari under Rule 65 is a remed+ designed for the correction of errors of @urisdiction and not errors of @udgment. L%$M -etitioner s rights can "e more appropriatel+ addressed in the appeal. True, petitioner invo(es the @urisdiction of this Court in the interest of speed+ @ustice. It con@ectures that an+ further dela+ in the resolution of the instant petition ,ill "e pre@udicial not onl+ to petitioner "ut to all those similarl+ situated. Thus petitioner "rought the instant petition directl+ to this Court on the premise that if it ,ere to first see( a ruling from the Court of ;ppeals, a part+ aggrieved "+ such ruling ,ould ta(e the matter to this Court for final resolution. 7+ then, the level of intellectual pirac+ ,ould have ,orsened. This Court is not persuaded. The ?uest for speed+ @ustice should not "e used as a devise to trample upon other e?uall+ lauda"le policies of this Court. -etitioner s direct resort to this Court in the guise of speed+ @ustice ,as in utter disregard of the hierarch+ of courts. 'e find no e<ceptional or compelling reason not to o"serve the hierarch+ of courts. !ur pronouncement in !eo"le v. Cuaresma L%4M is most instructive This Court s original @urisdiction to issue ,rits of certiorari is not e<clusive. It is shared "+ this Court ,ith Regional Trial Courts and ,ith the Court of ;ppeals. This concurrence of @urisdiction is not, ho,ever, to "e ta(en as according to parties see(ing an+ of the ,rits an a"solute, unrestrained freedom of choice of the court to ,hich application therefor ,ill "e directed. There is after all a hierarch+ of courts. ; direct invocation of the 9upreme CourtPs original @urisdiction to issue these ,rits should "e allo,ed onl+ ,hen there are special and important reasons therefor, clearl+ and specificall+ set out in the petition. This is esta"lished polic+. It is a polic+ that is necessar+ to prevent inordinate demands upon the Court s time and attention ,hich are "etter devoted to those matters ,ithin its e<clusive @urisdiction, and to prevent further overcro,ding of the Court s doc(et. Indeed, the removal of the restriction on the @urisdiction of the Court of ;ppeals in this regard, su"ra 6 resulting from the deletion of the ?ualif+ing phrase, 5in aid of its appellate @urisdiction5 - ,as evidentl+ intended precisel+ to relieve this Court "ro tanto of the "urden of dealing ,ith applications for the e<traordinar+ ,rits ,hich, "ut for the e<pansion of the ;ppellate Court s corresponding @urisdiction, ,ould have had to "e filed ,ith it. The Court feels the need to reaffirm that polic+ at this time, and to en@oin strict adherence thereto in the light of ,hat it perceives to "e a gro,ing tendenc+ on the part of litigants and la,+ers to have their applications for the so-called e<traordinar+ ,rits, and sometimes even their appeals, passed upon and ad@udicated directl+ and immediatel+ "+ the highest tri"unal of the land. The Court therefore closes this decision ,ith the declaration for the information and guidance of all concerned, that it ,ill not onl+ continue to enforce the polic+, "ut ,ill re?uire a more strict o"servance thereof. W5ERE"!RE, the instant petition is =I9.I992=. The assailed order dated #6 =ecem"er #33% of the RTC-7r. #55, 1as -iNas Cit+, ,hich denied petitioner s application for an e: "arteorder for the seizure and impounding of relevant and infringing evidence as ,ell as its order dated % .arch #33% den+ing reconsideration thereof is 9G9T;I>2=. Costs against petitioner. ,! !RDERED.

HG.R. No. 1-8.29. ,/01/23/r 2-, 2..2I MICR!,!"T C!RP!RATI!N, petitioner, -s. %E,T DEAL C!MPUTER CENTER C!RP!RATI!N, PER"ECT DEAL C!RP!RATI!N, MARC!, C. $UEN *o'); 36(')/(( a( PER"ECT %$TE C!MPUTER CENTER a)* 5!N. "L!RENTIN! M. ALUM%RE,, ') h'( ca0ac'17 a( Pr/('*'); 96*;/, RTC-%r. 255, La( P'Ja( C'17, respondents. DECI,I!N %ELL!,ILL! , J.8 .ICR!9!FT C!R-!R;TI!> assails the !rder of 8udge Florentino .. ;lum"res, RTC-7r. #55, 1as -iNas Cit+, dated #6 =ecem"er #33% in its Civil Case >o. 33-3#$7 den+ing its application for an e: "arte order for the seizure and impounding of relevant and infringing evidence and the !rder dated % .arch #33% den+ing reconsideration thereof. -etitioner is a G9-"ased corporation. It is not doing "usiness in the -hilippines "ut has sued in the court "elo, solel+ to protect its intellectual propert+ rights. !n 4 =ecem"er #333 petitioner filed a complaint for Injunction and +ama/es 3it% E: !arte 1""lication for 0em"orary Restrainin/ )rder and t%e !rovisional &easure of !reservation of Evidence against 7est =eal Computer Center Corporation, -erfect =eal Corporation and .arcos C. Duen doing "usiness as -erfect 7+te Computer Center. It alleged that defendants ,ithout authorit+ or license copied, reproduced, distri"uted, installed andEor loaded soft,are programs o,ned "+ .icrosoft into computer units sold "+ them to their customers in violation of its intellectual propert+ rights. It pra+ed for the issuance of a ,rit of preliminar+ in@unction to restrain and en@oin defendants from illegall+ reproducing, selling and distri"uting unlicensed soft,are programs. It also applied for the issuance of an e: "arte order for the seizure and impounding of relevant evidence that can "e or ma+ "e found at defendants "usiness premises. !n #6 =ecem"er #333 the 1as -iNas trial court set petitioner s pra+er for a temporar+ restraining order for hearing "ut at the same time denied its application for an e: "arte order ratiocinating that the Intellectual -ropert+ Code does not e<pressl+ allo, its issuance and that, in an+ case, the TRI-9 /Trade-Related ;spects of Intellectual -ropert+ Rights0 ;)R22.2>TL%Mcannot prevail over it. The court a quo also opined that petitioner s application partoo( of a search and seizure order availa"le onl+ in criminal cases. -etitioner moved for reconsideration "ut the same ,as denied on & 8anuar+ #33%. In the instant petition for certiorari under Rule 65 of the Revised Rules of Court petitioner su"mits that the court a quo gravel+ a"used its discretion amounting to lac( or e<cess of @urisdiction ,hen it ruled that the la, does not allo, an e: "arte provisional remed+ of seizure and impounding of infringing evidence. It maintains that 9ec. #%6.#, -art IF, of R; 6#&$L#M authorizes such order. It concedes though that ,hile R; 6#&$ does not e<pressl+ mention the provisional and e: "arte nature of the remed+, nonetheless, ;rt. 53 of the TRI-9 ;greement ampl+ supplies the deficienc+.

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