G.R. No.
110249 August 21, 1997
ALFREDO TANO, BALDOMERO TANO, DANILO TANO, ROMUALDO TANO, TEOCENES
MIDELLO, ANGEL DE MESA, EULOGIO TREMOCHA, FELIPE ONGONION, JR., ANDRES
LINIJAN, ROBERT LIM, VIRGINIA LIM, FELIMON DE MESA, GENEROSO ARAGON,
TEODORICO ANDRE, ROMULO DEL ROSARIO, CHOLITO ANDRE, ERICK MONTANO,
ANDRES OLIVA, VITTORIO SALVADOR, LEOPOLDO ARAGON, RAFAEL RIBA,
ALEJANDRO LEONILA, JOSE DAMACINTO, RAMIRO MANAEG, RUBEN MARGATE,
ROBERTO REYES, DANILO PANGARUTAN, NOE GOLPAN, ESTANISLAO ROMERO,
NICANOR DOMINGO, ROLDAN TABANG, ADRIANO TABANG, FREDDIE SACAMAY,
MIGUEL TRIMOCHA, PACENCIO LABABIT, PABLO H. OMPAD, CELESTINO A. ABANO,
ALLAN ALMODAI, BILLY D. BARTOLAY, ALBINO D. LIQUE, MECHOR J. LAYSON,
MELANIE AMANTE, CLARO E. YATOC, MERGELDO B. BALDEO, EDGAR M. ALMASETA,
JOSELITO MANAEG, LIBERATO ANDRADA, JR., ROBERTO BERRY, RONALD
VILLANUEVA, EDUARDO VALMORIA, WILFREDO MENDOZA, NAPOLEON BABANGGA,
ROBERTO TADEPA, RUBEN ASINGUA, SILVERIO GABO, JERRY ROMERO, DAVID
PANGGARUTAN, DANIEL PANGGARUTAN, ROMEO AGAWIN, FERNANDO EQUIZ, DITO
LEQUIZ, RONILO MODERABLE, BENEDICTO TORRES, ROSITO A. VALDEZ, CRESENCIO
A. SAYANG, NICOMEDES S. ACOSTA, ERENEO A. SEGARINO, JR., WILFREDO A.
RAUTO, DIOSDADO A. ACOSTA, BONIFACIO G. SISMO, TACIO ALUBA, DANIEL B.
BATERZAL, ELISEO YBAEZ, DIOSDADO E. HANCHIC, EDDIE ESCALICAS, ELEAZAR B.
BATERZAL, DOMINADOR HALICHIC, ROOSEVELT RISMO-AN, ROBERT C. MERCADER,
TIRSO ARESGADO, DANIEL CHAVEZ, DANILO CHAVEZ, VICTOR VILLAROEL, ERNESTO
C. YBAEZ, ARMANDO T. SANTILLAN, RUDY S. SANTILLAN, JODJEN ILUSTRISIMO,
NESTOR SALANGRON, ALBERTO SALANGRON, ROGER L. ROXAS, FRANCISCO T.
ANTICANO, PASTOR SALANGRON, BIENVENIDO SANTILLAN, GILBUENA LADDY, FIDEL
BENJAMIN, JOVELITO BELGANO, HONEY PARIOL, ANTONIO SALANGRON, NICASIO
SALANGRON, & AIRLINE SHIPPERS ASSOCIATION OF PALAWAN, petitioners,
vs.
HON. GOV. SALVADOR P. SOCRATES, MEMBERS OF SANGGUNIANG PANLALAWIGAN
OF PALAWAN, namely, VICE-GOVERNOR JOEL T. REYES, JOSE D. ZABALA, ROSALINO
R. ACOSTA, JOSELITO A. CADLAON, ANDRES R. BAACO, NELSON P. PENEYRA,
CIPRIANO C. BARROMA, CLARO E. ORDINARIO, ERNESTO A. LLACUNA, RODOLFO C.
FLORDELIZA, GILBERT S. BAACO, WINSTON G. ARZAGA, NAPOLEON F. ORDONEZ and
GIL P. ACOSTA, CITY MAYOR EDWARD HAGEDORN, MEMBERS OF SANGGUNIANG
PANLUNGSOD NG PUERTO PRINCESA, ALL MEMBERS OF BANTAY DAGAT, MEMBERS
OF PHILIPPINE NATIONAL POLICE OF PALAWAN, PROVINCIAL AND CITY
PROSECUTORS OF PALAWAN and PUERTO PRINCESA CITY, and ALL JUDGES OF
PALAWAN, REGIONAL, MUNICIPAL AND METROPOLITAN, respondents.
DAVIDE, JR., J.:
Petitioners caption their petition as one for "Certiorari, Injunction With Preliminary and Mandatory
Injunction, with Prayer for Temporary Restraining Order" and pray that this Court: (1) declare as
unconstitutional: (a) Ordinance No. 15-92, dated 15 December 1992, of the Sangguniang
Panglungsod of Puerto Princesa; (b) Office Order No. 23, Series of 1993, dated 22 January
1993, issued by Acting City Mayor Amado L. Lucero of Puerto Princesa City; and (c) Resolution
No. 33, Ordinance No. 2, Series of 1993, dated 19 February 1993, of the Sangguniang
Panlalawigan of Palawan; (2) enjoin the enforcement thereof; and (3) restrain respondents
Provincial and City Prosecutors of Palawan and Puerto Princesa City and Judges of the
Regional Trial Courts, Metropolitan Trial Courts 1 and Municipal Circuit Trial Courts in Palawan
from assuming jurisdiction over and hearing cases concerning the violation of the Ordinances
and of the Office Order.
More appropriately, the petition is, and shall be treated as, a special civil action for certiorari and
prohibition.
The following is petitioners' summary of the factual antecedents giving rise to the petition: 1. On
December 15, 1992, the Sangguniang Panlungsod ng Puerto Princesa City enacted Ordinance
No. 15-92 which took effect on January 1, 1993 entitled: "AN ORDINANCE BANNING THE
SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM
JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND
FOR OTHER PURPOSES THEREOF", the full text of which reads as follows:
Sec. 1. Title of the Ordinance. This Ordinance is entitled: AN ORDINANCE BANNING THE
SHIPMENT OF ALL LIVE FISH AND LOBSTER OUTSIDE PUERTO PRINCESA CITY FROM
JANUARY 1, 1993 TO JANUARY 1, 1998 AND PROVIDING EXEMPTIONS, PENALTIES AND
FOR OTHER PURPOSES THEREOF.
Sec. 2. Purpose, Scope and Coverage. To effectively free our City Sea Waters from Cyanide
and other Obnoxious substance[s], and shall cover all persons and/or entities operating within
and outside the City of Puerto Princesa who is are (sic) directly or indirectly in the business or
shipment of live fish and lobster outside the City.
Sec. 3. Definition of terms. For purpose of this Ordinance the following are hereby defined:
A. SEA BASS A kind of fish under the family of Centropomidae, better known as APAHAP;
B. CATFISH A kind of fish under the family of Plotosidae, better known as HITO-HITO;
C. MUDFISH A kind of fish under the family of Orphicaphalisae better known as DALAG;
D. ALL LIVE FISH All alive, breathing not necessarily moving of all specie[s] use[d] for food
and for aquarium purposes.
E. LIVE LOBSTER Several relatively, large marine crusteceans [sic] of the genus Homarus
that are alive and breathing not necessarily moving.
Sec. 4. It shall be unlawful [for] any person or any business enterprise or company to ship out
from Puerto Princesa City to any point of destination either via aircraft or seacraft of any live fish
and lobster except SEA BASS, CATFISH, MUDFISH, AND MILKFISH FRIES.
Sec. 5. Penalty Clause. Any person/s and or business entity violating this Ordinance shall be
penalized with a fine of not more than P5,000.00 or imprisonment of not more than twelve (12)
months, cancellation of their permit to do business in the City of Puerto Princesa or all of the
herein stated penalties, upon the discretion of the court.
Sec. 6. If the owner and/or operator of the establishment found violating the provisions of this
ordinance is a corporation or a partnership, the penalty prescribed in Section 5 hereof shall be
imposed upon its president and/or General Manager or Managing Partner and/or Manager, as
the case maybe [sic].
Sec. 7. Any existing ordinance or any provision of any ordinance inconsistent to [sic] this
ordinance is deemed repealed.
Sec. 8. This Ordinance shall take effect on January 1, 1993. SO ORDAINED.
2. To implement said city ordinance, then Acting City Mayor Amado L. Lucero issued Office
Order No. 23, Series of 1993 dated January 22, 1993 which reads as follows:
In the interest of public service and for purposes of City Ordinance No. PD 426-14-74, otherwise
known as "AN ORDINANCE REQUIRING ANY PERSON ENGAGED OR INTENDING TO
ENGAGE IN ANY BUSINESS, TRADE, OCCUPATION, CALLING OR PROFESSION OR
HAVING IN HIS POSSESSION ANY OF THE ARTICLES FOR WHICH A PERMIT IS
REQUIRED TO BE HAD, TO OBTAIN FIRST A MAYOR'S PERMIT" and "City Ordinance No.
15-92, AN ORDINANCE BANNING THE SHIPMENT OF ALL LIVE FISH AND LOBSTER
OUTSIDE PUERTO PRINCESA CITY FROM JANUARY 1, 1993 TO JANUARY 1, 1998, you are
hereby authorized and directed to check or conduct necessary inspections on cargoes
containing live fish and lobster being shipped out from the Puerto Princesa Airport, Puerto
Princesa Wharf or at any port within the jurisdiction of the City to any point of destinations [sic]
either via aircraft or seacraft.
The purpose of the inspection is to ascertain whether the shipper possessed the required
Mayor's Permit issued by this Office and the shipment is covered by invoice or clearance issued
by the local office of the Bureau of Fisheries and Aquatic Resources and as to compliance with
all other existing rules and regulations on the matter.
Any cargo containing live fish and lobster without the required documents as stated herein must
be held for proper disposition.
In the pursuit of this Order, you are hereby authorized to coordinate with the PAL Manager, the
PPA Manager, the local PNP Station and other offices concerned for the needed support and
cooperation. Further, that the usual courtesy and diplomacy must be observed at all times in the
conduct of the inspection.
Please be guided accordingly.
3. On February 19, 1993, the Sangguniang Panlalawigan, Provincial Government of Palawan
enacted Resolution No. 33 entitled: "A RESOLUTION PROHIBITING THE CATCHING,
GATHERING, POSSESSING, BUYING, SELLING AND SHIPMENT OF LIVE MARINE CORAL
DWELLING AQUATIC ORGANISMS, TO WIT: FAMILY: SCARIDAE (MAMENG), EPINE
PHELUS FASCIATUS (SUNO). CROMILEPTES ALTIVELIS(PANTHER OR SENORITA),
LOBSTER BELOW 200 GRAMS AND SPAWNING, TRIDACNA GIGAS(TAKLOBO), PINCTADA
MARGARITEFERA (MOTHER PEARL, OYSTERS, GIANT CLAMS AND OTHER
SPECIES), PENAEUS MONODON (TIGER PRAWN-BREEDER SIZE OR
MOTHER), EPINEPHELUS SUILLUS (LOBA OR GREEN GROUPER) AND
FAMILY: BALISTIDAE (TROPICAL AQUARIUM FISHES) FOR A PERIOD FIVE (5) YEARS IN
AND COMING FROM PALAWAN WATERS", the full text of which reads as follows:
WHEREAS, scientific and factual researches [sic] and studies disclose that only five (5) percent
of the corals of our province remain to be in excellent condition as [a] habitat of marine coral
dwelling aquatic organisms;
WHEREAS, it cannot be gainsaid that the destruction and devastation of the corals of our
province were principally due to illegal fishing activities like dynamite fishing, sodium cyanide
fishing, use of other obnoxious substances and other related activities;
WHEREAS, there is an imperative and urgent need to protect and preserve the existence of the
remaining excellent corals and allow the devastated ones to reinvigorate and regenerate
themselves into vitality within the span of five (5) years;
WHEREAS, Sec. 468, Par. 1, Sub-Par. VI of the [sic] R.A. 7160 otherwise known as the Local
Government Code of 1991 empowers the Sangguniang Panlalawigan to protect the environment
and impose appropriate penalties [upon] acts which endanger the environment such as
dynamite fishing and other forms of destructive fishing, among others.
NOW, THEREFORE, on motion by Kagawad Nelson P. Peneyra and upon unanimous decision
of all the members present;
Be it resolved as it is hereby resolved, to approve Resolution No. 33, Series of 1993 of the
Sangguniang Panlalawigan and to enact Ordinance No. 2 for the purpose, to wit:
ORDINANCE NO. 2
Series of 1993
BE IT ORDAINED BY THE SANGGUNIANG PANLALAWIGAN IN SESSION ASSEMBLED:
Sec. 1. TITLE This Ordinance shall be known as an "Ordinance Prohibiting the catching,
gathering, possessing, buying, selling and shipment of live marine coral dwelling aquatic
organisms, to wit: 1. Family: Scaridae (Mameng), 2. Epinephelus Fasciatus (Suno) 3.
Cromileptes altivelis (Panther or Senorita), lobster below 200 grams and spawning), 4. Tridacna
Gigas (Taklobo), 5. Pinctada Margaretefera (Mother Pearl, Oysters, Giant Clams and other
species), 6. Penaeus Monodon (Tiger Prawn-breeder size or mother), 7. Epinephelus Suillus
(Loba or Green Grouper) and 8. Family: Balistidae (T[r]opical Aquarium Fishes) for a period of
five (5) years in and coming from Palawan Waters.
Sec. II. PRELIMINARY CONSIDERATIONS
1. Sec. 2-A (Rep. Act 7160). It is hereby declared, the policy of the state that the territorial and
political subdivisions of the State shall enjoy genuine and meaningful local autonomy to enable
them to attain their fullest development as self-reliant communities and make them more
effective partners in the attainment of national goals. Toward this end, the State shall provide for
[a] more responsive and accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more powers, authority,
responsibilities and resources.
2. Sec. 5-A (R.A. 7160). Any provision on a power of [a] local Government Unit shall be liberally
interpreted in its favor, and in case of doubt, any question thereon shall be resolved in favor of
devolution of powers and of the lower government units. "Any fair and reasonable doubts as to
the existence of the power shall be interpreted in favor of the Local Government Unit
concerned."
3. Sec. 5-C (R.A. 7160). The general welfare provisions in this Code shall be liberally interpreted
to give more powers to local government units in accelerating economic development and
upgrading the quality of life for the people in the community.
4. Sec. 16 (R.A. 7160). General Welfare. Every local government unit shall exercise the
powers expressly granted, those necessarily implied therefrom, as well as powers necessary,
appropriate, or incidental for its efficient and effective governance; and those which are essential
to the promotion of the general welfare.
Sec. III. DECLARATION OF POLICY. It is hereby declared to be the policy of the Province of
Palawan to protect and conserve the marine resources of Palawan not only for the greatest good
of the majority of the present generation but with [the] proper perspective and consideration of
[sic] their prosperity, and to attain this end, the Sangguniang Panlalawigan henceforth declares
that is (sic) shall be unlawful for any person or any business entity to engage in catching,
gathering, possessing, buying, selling and shipment of live marine coral dwelling aquatic
organisms as enumerated in Section 1 hereof in and coming out of Palawan Waters for a period
of five (5) years;
Sec. IV. PENALTY CLAUSE. Any person and/or business entity violating this Ordinance shall
be penalized with a fine of not more than Five Thousand Pesos (P5,000.00), Philippine
Currency, and/or imprisonment of six (6) months to twelve (12) months and confiscation and
forfeiture of paraphernalias [sic] and equipment in favor of the government at the discretion of
the Court;
Sec. V. SEPARABILITY CLAUSE. If for any reason, a Section or provision of this Ordinance
shall be held as unconditional [sic] or invalid, it shall not affect the other provisions hereof.
Sec. VI. REPEALING CLAUSE. Any existing Ordinance or a provision of any ordinance
inconsistent herewith is deemed modified, amended or repealed.
Sec. VII. EFFECTIVITY This Ordinance shall take effect ten (10) days after its publication. SO
ORDAINED.
4. The respondents implemented the said ordinances, Annexes "A" and "C" hereof thereby
depriving all the fishermen of the whole province of Palawan and the City of Puerto Princesa of
their only means of livelihood and the petitioners Airline Shippers Association of Palawan and
other marine merchants from performing their lawful occupation and trade;
5. Petitioners Alfredo Tano, Baldomero Tano, Teocenes Midello, Angel de Mesa, Eulogio
Tremocha, and Felipe Ongonion, Jr. were even charged criminally under criminal case no. 93-
05-C in the 1st Municipal Circuit Trial Court of Cuyo-Agutaya-Magsaysay, an original carbon
copy of the criminal complaint dated April 12, 1993 is hereto attached as Annex "D"; while xerox
copies are attached as Annex "D" to the copies of the petition;
6. Petitioners Robert Lim and Virginia Lim, on the other hand, were charged by the respondent
PNP with the respondent City Prosecutor of Puerto Princess City, a xerox copy of the complaint
is hereto attached as Annex "E";
Without seeking redress from the concerned local government units, prosecutor's office and
courts, petitioners directly invoked our original jurisdiction by filing this petition on 4 June 1993.
In sum, petitioners contend that:
First, the Ordinances deprived them of due process of law, their livelihood, and unduly restricted
them from the practice of their trade, in violation of Section 2, Article XII and Sections 2 and 7 of
Article XIII of the 1987 Constitution.
Second, Office Order No. 23 contained no regulation nor condition under which the Mayor's
permit could be granted or denied; in other words, the Mayor had the absolute authority to
determine whether or not to issue the permit.
Third, as Ordinance No. 2 of the Province of Palawan "altogether prohibited the catching,
gathering, possession, buying, selling and shipping of live marine coral dwelling organisms,
without any distinction whether it was caught or gathered through lawful fishing method," the
Ordinance took away the right of petitioners-fishermen to earn their livelihood in lawful ways; and
insofar as petitioners-members of Airline Shippers Association are concerned, they were unduly
prevented from pursuing their vocation and entering "into contracts which are proper, necessary,
and essential to carry out their business endeavors to a successful conclusion."
Finally, as Ordinance No. 2 of the Sangguniang Panlalawigan is null and void, the criminal cases
based thereon against petitioners Tano and the others have to be dismissed.
In the Resolution of 15 June 1993 we required respondents to comment on the petition, and
furnished the Office of the Solicitor General with a copy thereof.
In their comment filed on 13 August 1993, public respondents Governor Socrates and Members
of the Sangguniang Panlalawigan of Palawan defended the validity of Ordinance No. 2, Series of
1993, as a valid exercise of the Provincial Government's power under the general welfare clause
(Section 16 of the Local Government Code of 1991 [hereafter, LGC]), and its specific power to
protect the environment and impose appropriate penalties for acts which endanger the
environment, such as dynamite fishing and other forms of destructive fishing under Section 447
(a) (1) (vi), Section 458 (a) (1) (vi), and Section 468 (a) (1) (vi), of the LGC. They claimed that in
the exercise of such powers, the Province of Palawan had "the right and responsibility . . . to
insure that the remaining coral reefs, where fish dwells [sic], within its territory remain healthy for
the future generation." The Ordinance, they further asserted, covered only live marine coral
dwelling aquatic organisms which were enumerated in the ordinance and excluded other kinds
of live marine aquatic organisms not dwelling in coral reefs; besides the prohibition was for only
five (5) years to protect and preserve the pristine coral and allow those damaged to regenerate.
Aforementioned respondents likewise maintained that there was no violation of the due process
and equal protection clauses of the Constitution. As to the former, public hearings were
conducted before the enactment of the Ordinance which, undoubtedly, had a lawful purpose and
employed reasonable means; while as to the latter, a substantial distinction existed "between a
fisherman who catches live fish with the intention of selling it live, and a fisherman who catches
live fish with no intention at all of selling it live," i.e., "the former uses sodium cyanide while the
latter does not." Further, the Ordinance applied equally to all those belonging to one class.
On 25 October 1993 petitioners filed an Urgent Plea for the Immediate Issuance of a Temporary
Restraining Order, claiming that despite the pendency of this case, Branch 50 of the Regional
Trial Court of Palawan was bent on proceeding with Criminal Case No. 11223 against petitioners
Danilo Tano, Alfredo Tano, Eulogio Tremocha, Romualdo Tano, Baldomero Tano, Andres
Linijan and Angel de Mesa for violation of Ordinance No. 2 of the Sangguniang Panlalawigan of
Palawan. Acting on said plea, we issued on 11 November 1993 a temporary restraining order
directing Judge Angel Miclat of said court to cease and desist from proceeding with the
arraignment and pre-trial of Criminal Case No. 11223.
On 12 July 1994, we excused the Office of the Solicitor General from filing a comment,
considering that as claimed by said office in its Manifestation of 28 June 1994, respondents were
already represented by counsel.
The rest of the respondents did not file any comment on the petition.
In the resolution of 15 September 1994, we resolved to consider the comment on the petition as
the Answer, gave due course to the petition and required the parties to submit their respective
memoranda. 2
On 22 April 1997 we ordered impleaded as party respondents the Department of Agriculture and
the Bureau of Fisheries and Aquatic Resources and required the Office of the Solicitor General
to comment on their behalf. But in light of the latter's motion of 9 July 1997 for an extension of
time to file the comment which would only result in further delay, we dispensed with said
comment.
After due deliberation on the pleadings filed, we resolved to dismiss this petition for want of
merit, and on 22 July 1997, assigned it to the ponente to write the opinion of the Court.
 I. There are actually two sets of petitioners in this case. The first is composed of
Alfredo Tano, Baldomero Tano, Danilo Tano, Romualdo Tano, Teocenes Midello,
Angel de Mesa, Eulogio Tremocha, Felipe Ongonion, Jr., Andres Linijan, and
Felimon de Mesa, who were criminally charged with violating Sangguniang
Panlalawigan Resolution No. 33 and Ordinance No. 2, Series of 1993, of the
Province of Palawan, in Criminal Case No. 93-05-C of the 1st Municipal Circuit
Trial Court (MCTC) of Palawan; 3 and Robert Lim and Virginia Lim who were
charged with violating City Ordinance No. 15-92 of Puerto Princesa City and
Ordinance No. 2, Series of 1993, of the Province of Palawan before the Office of
the City Prosecutor of Puerto Princesa. 4 All of them, with the exception of
Teocenes Midello, Felipe Ongonion, Jr., Felimon de Mesa, Robert Lim and
Virginia Lim, are likewise the accused in Criminal Case No. 11223 for the
violation of Ordinance No. 2 of the Sangguniang Panlalawigan of Palawan,
pending before Branch 50 of the Regional Trial Court of Palawan. 5
The second set of petitioners is composed of the rest of the petitioners numbering seventy-
seven (77), all of whom, except the Airline Shippers Association of Palawan an alleged
private association of several marine merchants are natural persons who claim to be
fishermen.
The primary interest of the first set of petitioners is, of course, to prevent the prosecution, trial
and determination of the criminal cases until the constitutionality or legality of the Ordinances
they allegedly violated shall have been resolved. The second set of petitioners merely claim that
being fishermen or marine merchants, they would be adversely affected by the ordinance's.
As to the first set of petitioners, this special civil for certiorari must fail on the ground of
prematurity amounting to a lack of cause of action. There is no showing that said petitioners, as
the accused in the criminal cases, have filed motions to quash the informations therein and that
the same were denied. The ground available for such motions is that the facts charged therein
do not constitute an offense because the ordinances in question are unconstitutional. 6It cannot
then be said that the lower courts acted without or in excess of jurisdiction or with grave abuse of
discretion to justify recourse to the extraordinary remedy of certiorari or prohibition. It must
further be stressed that even if petitioners did file motions to quash, the denial thereof would not
forthwith give rise to a cause of action under Rule 65 of the Rules of Court. The general rule is
that where a motion to quash is denied, the remedy therefrom is not certiorari, but for the party
aggrieved thereby to go to trial without prejudice to reiterating special defenses involved in said
motion, and if, after trial on the merits an adverse decision is rendered, to appeal therefrom in
the manner authorized by law. 7 And, even where in an exceptional circumstance such denial
may be the subject of a special civil action for certiorari, a motion for reconsideration must have
to be filed to allow the court concerned an opportunity to correct its errors, unless such motion
may be dispensed with because of existing exceptional circumstances. 8 Finally, even if a
motion for reconsideration has been filed and denied, the remedy under Rule 65 is still
unavailable absent any showing of the grounds provided for in Section 1 thereof. 9 For obvious
reasons, the petition at bar does not, and could not have, alleged any of such grounds.
As to the second set of petitioners, the instant petition is obviously one for DECLARATORY
RELIEF, i.e., for a declaration that the Ordinances in question are a "nullity . . . for being
unconstitutional."10 As such, their petition must likewise fail, as this Court is not possessed of
original jurisdiction over petitions for declaratory relief even if only questions of law are
involved,11 it being settled that the Court merely exercises appellate jurisdiction over such
petitions.12
II. Even granting arguendo that the first set of petitioners have a cause of action ripe
for the extraordinary writ of certiorari, there is here a clear disregard of the
hierarchy of courts, and no special and important reason or exceptional and
compelling circumstance has been adduced why direct recourse to us should be
allowed. While we have concurrent jurisdiction with Regional Trial courts and with
the Court of Appeals to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction, such concurrence gives petitioners no
unrestricted freedom of choice of court forum, so we held in People
v. Cuaresma.13
This concurrence of jurisdiction is not . . . to be taken as according to parties seeking any of the
writs an absolute unrestrained freedom of choice of the court to which application therefor will be
directed. There is after all hierarchy of courts. That hierarchy is determinative of the venue of
appeals, and should also serve as a general determinant of the appropriate forum for petitions
for the extraordinary writs. A becoming regard for that judicial hierarchy most certainly indicates
that petitions for the issuance of extraordinary writs against first level ("inferior") courts should be
filed with the Regional Trial Court, and those against the latter, with the Court of Appeals. A
direct invocation of the Supreme Court's original jurisdiction to issue these writs should be
allowed only when there are special and important reasons therefor, clearly and specifically set
out in the petition. This is established policy. It is a policy necessary to prevent inordinate
demands upon the Court's time and attention which are better devoted to those matters within its
exclusive jurisdiction, and to prevent further over-crowding of the Court's docket. . . .
The Court feels the need to reaffirm that policy at this time, and to enjoin strict
adherence thereto in the light of what it perceives to be a growing tendency on the
part of litigants and lawyers to have their applications for the so-called extraordinary
writs, and sometimes even their appeals, passed upon and adjudicated directly and
immediately by the highest tribunal of the land. . . .
In Santiago v. Vasquez,14 this Court forcefully expressed that the propensity of litigants and
lawyers to disregard the hierarchy of courts must be put to a halt, not only because of the
imposition upon the precious time of this Court, but also because of the inevitable and resultant
delay, intended or otherwise, in the adjudication of the case which often has to be remanded or
referred to the lower court, the proper forum under the rules of procedure, or as better equipped
to resolve the issues since this Court is not a trier of facts. We reiterated "the judicial policy that
this Court will not entertain direct resort to it unless the redress desired cannot be obtained in the
appropriate courts or where exceptional and compelling circumstances justify availment of a
remedy within and calling for the exercise of [its] primary jurisdiction."
III. Notwithstanding the foregoing procedural obstacles against the first set of
petitioners, we opt to resolve this case on its merits considering that the lifetime
of the challenged Ordinances is about to end. Ordinance No. 15-92 of the City of
Puerto Princesa is effective only up to 1 January 1998, while Ordinance No. 2 of
the Province of Palawan, enacted on 19 February 1993, is effective for only five
(5) years. Besides, these Ordinances were undoubtedly enacted in the exercise
of powers under the new LGC relative to the protection and preservation of the
environment and are thus novel and of paramount importance. No further delay
then may be allowed in the resolution of the issues raised.
It is of course settled that laws (including ordinances enacted by local government units) enjoy
the presumption of constitutionality. 15 To overthrow this presumption, there must be a clear and
unequivocal breach of the Constitution, not merely a doubtful or argumentative contradiction. In
short, the conflict with the Constitution must be shown beyond reasonable doubt. 16 Where doubt
exists, even if well-founded, there can be no finding of unconstitutionality. To doubt is to
sustain.17
After a scrutiny of the challenged Ordinances and the provisions of the Constitution petitioners
claim to have been violated, we find petitioners' contentions baseless and so hold that the former
do not suffer from any infirmity, both under the Constitution and applicable laws.
Petitioners specifically point to Section 2, Article XII and Sections 2 and 7, Article XIII of the
Constitution as having been transgressed by the Ordinances.
The pertinent portion of Section 2 of Article XII reads:
Sec. 2. . . .The State shall protect the nation's marine wealth in its archipelagic waters, territorial
sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino
citizens. The Congress may, by law, allow small-scale utilization of natural resources by Filipino
citizens, as well as cooperative fish farming, with priority to subsistence fishermen and
fishworkers in rivers, lakes, bays, and lagoons.
Sections 2 and 7 of Article XIII provide:
Sec. 2. The promotion of social justice shall include the commitment to create economic
opportunities based on freedom of initiative and self-reliance.
Sec. 7. The State shall protect the rights of subsistence fishermen, especially of local
communities, to the preferential use of the communal marine and fishing resources, both inland
and offshore. It shall provide support to such fishermen through appropriate technology and
research, adequate financial, production, and marketing assistance, and other services. The
State shall also protect, develop, and conserve such resources. The protection shall extend to
offshore fishing grounds of subsistence fishermen against foreign intrusion. Fishworkers shall
receive a just share from their labor in the utilization of marine and fishing resources.
There is absolutely no showing that any of the petitioners qualifies as a subsistence or marginal
fisherman. In their petition, petitioner Airline Shippers Association of Palawan is self-described
as "a private association composed of Marine Merchants;" petitioners Robert Lim and Virginia
Lim, as "merchants;" while the rest of the petitioners claim to be "fishermen," without any
qualification, however, as to their status.
Since the Constitution does not specifically provide a definition of the terms "subsistence" or
"marginal" fishermen,18 they should be construed in their general and ordinary sense. A marginal
fisherman is an individual engaged in fishing whose margin of return or reward in his harvest of
fish as measured by existing price levels is barely sufficient to yield a profit or cover the cost of
gathering the fish,19 while a subsistence fisherman is one whose catch yields but the irreducible
minimum for his livelihood.20 Section 131(p) of the LGC (R.A. No. 7160) defines a marginal
farmer or fisherman as "an individual engaged in subsistence farming or fishing which shall be
limited to the sale, barter or exchange of agricultural or marine products produced by himself
and his immediate family." It bears repeating that nothing in the record supports a finding that
any petitioner falls within these definitions.
Besides, Section 2 of Article XII aims primarily not to bestow any right to subsistence fishermen,
but to lay stress on the duty of the State to protect the nation's marine wealth. What the provision
merely recognizes is that the State may allow, by law, cooperative fish farming, with priority to
subsistence fishermen and fishworkers in rivers, lakes, bays and lagoons. Our survey of the
statute books reveals that the only provision of law which speaks of a preferential right of
marginal fishermen is Section 149 of the LGC, which pertinently provides:
Sec. 149. Fishery Rentals, Fees and Charges. . . .
(b) The sangguniang bayan may:
(1) Grant fishery privileges to erect fish corrals, oyster, mussels or other aquatic beds or bangus
fry areas, within a definite zone of the municipal waters, as determined by it: Provided, however,
That duly registered organizations and cooperatives of marginal fishermen shall have the
preferential right to such fishery privileges . . . .
In a Joint Administrative Order No. 3 dated 25 April 1996, the Secretary of the Department of
Agriculture and the Secretary of the Department of Interior and Local Government prescribed
guidelines concerning the preferential treatment of small fisherfolk relative to the fishery right
mentioned in Section 149. This case, however, does not involve such fishery right.
Anent Section 7 of Article XIII, it speaks not only of the use of communal marine and fishing
resources, but of their protection, development and conservation. As hereafter shown, the
ordinances in question are meant precisely to protect and conserve our marine resources to the
end that their enjoyment may be guaranteed not only for the present generation, but also for the
generations to come.
The so-called "preferential right" of subsistence or marginal fishermen to the use of marine
resources is not at all absolute. In accordance with the Regalian Doctrine, marine resources
belong to the State, and, pursuant to the first paragraph of Section 2, Article XII of the
Constitution, their "exploration, development and utilization . . . shall be under the full control and
supervision of the State." Moreover, their mandated protection, development and conservation
as necessarily recognized by the framers of the Constitution, imply certain restrictions on
whatever right of enjoyment there may be in favor of anyone. Thus, as to the curtailment of the
preferential treatment of marginal fishermen, the following exchange between Commissioner
Francisco Rodrigo and Commissioner Jose F.S. Bengzon, Jr., took place at the plenary session
of the Constitutional Commission:
MR. RODRIGO: Let us discuss the implementation of this because I would not raise the hopes
of our people, and afterwards fail in the implementation. How will this be implemented? Will
there be a licensing or giving of permits so that government officials will know that one is really a
marginal fisherman? Or if policeman say that a person is not a marginal fisherman, he can show
his permit, to prove that indeed he is one.
MR. BENGZON: Certainly, there will be some mode of licensing insofar as this is concerned and
this particular question could be tackled when we discuss the Article on Local Governments
whether we will leave to the local governments or to Congress on how these things will be
implemented. But certainly, I think our congressmen and our local officials will not be bereft of
ideas on how to implement this mandate.
MR. RODRIGO: So, once one is licensed as a marginal fisherman, he can go anywhere in the
Philippines and fish in any fishing grounds.
MR. BENGZON: Subject to whatever rules and regulations and local laws that may be passed,
may be existing or will be passed.21 (emphasis supplied)
What must likewise be borne in mind is the state policy enshrined in the Constitution regarding
the duty of the State to protect and advance the right of the people to a balanced and healthful
ecology in accord with the rhythm and harmony of nature. 22 On this score, in Oposa
v. Factoran, 23 this Court declared:
While the right to a balanced and healthful ecology is to be found under the Declaration of
Principles the State Policies and not under the Bill of Rights, it does not follow that it is less
important than any of the civil and political rights enumerated in the latter. Such a right belongs
to a different category of rights altogether for it concerns nothing less than self-preservation and
self-perpetuation aptly and fittingly stressed by the petitioners the advancement of which
may even be said to predate all governments and constitutions. As a matter of fact, these basic
rights need not even be written in the Constitution for they are assumed to exist from the
inception of humankind. If they are now explicitly mentioned in the fundamental charter, it is
because of the well-founded fear of its framers that unless the rights to a balanced and healthful
ecology and to health are mandated as state policies by the Constitution itself, thereby
highlighting their continuing importance and imposing upon the state a solemn obligation to
preserve the first and protect and advance the second, the day would not be too far when all
else would be lost not only for the present generation, but also for those to come generations
which stand to inherit nothing but parched earth incapable of sustaining life.
The right to a balanced and healthful ecology carries with it a correlative duty to refrain from
impairing the environment. . . .
The LGC provisions invoked by private respondents merely seek to give flesh and blood to the
right of the people to a balanced and healthful ecology. In fact, the General Welfare Clause,
expressly mentions this right:
Sec. 16. General Welfare. Every local government unit shall exercise the powers expressly
granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or
incidental for its efficient and effective governance, and those which are essential to the
promotion of the general welfare. Within their respective territorial jurisdictions, local government
units shall ensure and support, among other things, the preservation and enrichment of culture,
promote health and safety, enhance the right of the people to a balanced ecology, encourage
and support the development of appropriate and self-reliant scientific and technological
capabilities, improve public morals, enhance economic prosperity and social justice, promote full
employment among their residents, maintain peace and order, and preserve the comfort and
convenience of their inhabitants. (emphasis supplied).
Moreover, Section 5(c) of the LGC explicitly mandates that the general welfare provisions of the
LGC "shall be liberally interpreted to give more powers to the local government units in
accelerating economic development and upgrading the quality of life for the people of the
community."
The LGC vests municipalities with the power to grant fishery privileges in municipal waters and
impose rentals, fees or charges therefor; to penalize, by appropriate ordinances, the use of
explosives, noxious or poisonous substances, electricity, muro-ami, and other deleterious
methods of fishing; and to prosecute any violation of the provisions of applicable fishery
laws.24 Further, the sangguniang bayan, the sangguniang panlungsod and the sangguniang
panlalawigan are directed to enact ordinances for the general welfare of the municipality and its
inhabitants, which shall include, inter alia, ordinances that "[p]rotect the environment and impose
appropriate penalties for acts which endanger the environment such as dynamite fishing and
other forms of destructive fishing . . . and such other activities which result in pollution,
acceleration of eutrophication of rivers and lakes, or of ecological
imbalance."25
One of the devolved powers enumerated in the section of the LGC on devolution is the
enforcement of fishery laws in municipal waters including the conservation of mangroves. 30 This
necessarily includes the enactment of ordinances to effectively carry out such fishery laws within
the municipal waters.
The term "municipal waters," in turn, includes not only streams, lakes, and tidal waters within the
municipality, not being the subject of private ownership and not comprised within the national
parks, public forest, timber lands, forest reserves, or fishery reserves, but also marine waters
included between two lines drawn perpendicularly to the general coastline from points where the
boundary lines of the municipality or city touch the sea at low tide and a third line parallel with
the general coastline and fifteen kilometers from
it.31 Under P.D. No. 704, the marine waters included in municipal waters is limited to three
nautical miles from the general coastline using the above perpendicular lines and a third parallel
line.
These "fishery laws" which local government units may enforce under Section 17(b)(2)(i) in
municipal waters include: (1) P.D. No. 704; (2) P.D. No. 1015 which, inter alia, authorizes the
establishment of a "closed season" in any Philippine water if necessary for conservation or
ecological purposes; (3) P.D. No. 1219 which provides for the exploration, exploitation, utilization
and conservation of coral resources; (4) R.A. No. 5474, as amended by B.P. Blg. 58, which
makes it unlawful for any person, association or corporation to catch or cause to be caught, sell,
offer to sell, purchase, or have in possession any of the fish specie called gobiidae or "ipon"
during closed season; and (5) R.A. No. 6451 which prohibits and punishes electrofishing, as well
as various issuances of the BFAR.
To those specifically devolved insofar as the control and regulation of fishing in municipal waters
and the protection of its marine environment are concerned, must be added the following:
1. Issuance of permits to construct fish cages within municipal waters;
2. Issuance of permits to gather aquarium fishes within municipal waters;
3. Issuance of permits to gather kapis shells within municipal waters;
4. Issuance of permits to gather/culture shelled mollusks within municipal waters;
5. Issuance of licenses to establish seaweed farms within municipal waters;
6. Issuance of licenses to establish culture pearls within municipal waters;
7. Issuance of auxiliary invoice to transport fish and fishery products; and
8. Establishment of "closed season" in municipal waters.
These functions are covered in the Memorandum of Agreement of 5 April 1994 between the
Department of Agriculture and the Department of Interior and Local Government.
In light then of the principles of decentralization and devolution enshrined in the LGC and the
powers granted therein to local government units under Section 16 (the General Welfare
Clause), and under Sections 149, 447(a) (1) (vi), 458 (a) (1) (vi) and 468 (a) (1) (vi), which
unquestionably involve the exercise of police power, the validity of the questioned Ordinances
cannot be doubted.

Finally, the centerpiece of LGC is the system of decentralization26 as expressly mandated by the
Parenthetically, we wish to add that these Ordinances find full support under R.A. No. 7611,
Constitution.27 Indispensable to decentralization is devolution and the LGC expressly provides
otherwise known as the Strategic Environmental Plan (SEP) for Palawan Act, approved on 19
that "[a]ny provision on a power of a local government unit shall be liberally interpreted in its
June 1992. This statute adopts a "comprehensive framework for the sustainable development of
favor, and in case of doubt, any question thereon shall be resolved in favor of devolution of
Palawan compatible with protecting and enhancing the natural resources and endangered
powers and of the lower local government unit. Any fair and reasonable doubt as to the
environment of the province," which "shall serve to guide the local government of Palawan and
existence of the power shall be interpreted in favor of the local government unit
the government agencies concerned in the formulation and implementation of plans, programs
concerned."28 Devolution refers to the act by which the National Government confers power and
and projects affecting said province."32
authority upon the various local government units to perform specific functions and
responsibilities.29
At this time then, it would be appropriate to determine the relation between the assailed
Ordinances and the aforesaid powers of the Sangguniang Panlungsod of the City of Puerto
Princesa and the Sangguniang Panlalawigan of the Province of Palawan to protect the
environment. To begin, we ascertain the purpose of the Ordinances as set forth in the statement
of purposes or declaration of policies quoted earlier.
It is clear to the Court that both Ordinances have two principal objectives or purposes: (1) to
establish a "closed season" for the species of fish or aquatic animals covered therein for a
period of five years; and (2) to protect the coral in the marine waters of the City of Puerto
Princesa and the Province of Palawan from further destruction due to illegal fishing activities.
The accomplishment of the first objective is well within the devolved power to enforce fishery
laws in municipal waters, such as P.D. No. 1015, which allows the establishment of "closed
seasons." The devolution of such power has been expressly confirmed in the Memorandum of
Agreement of 5 April 1994 between the Department of Agriculture and the Department of Interior
and Local Government.
The realization of the second objective clearly falls within both the general welfare clause of the
LGC and the express mandate thereunder to cities and provinces to protect the environment and
impose appropriate penalties for acts which endanger the environment.33
The destruction of coral reefs results in serious, if not irreparable, ecological imbalance, for coral
reefs are among nature's life-support systems.34 They collect, retain and recycle nutrients for
adjacent nearshore areas such as mangroves, seagrass beds, and reef flats; provide food for
marine plants and animals; and serve as a protective shelter for aquatic organisms. 35 It is said
that "[e]cologically, the reefs are to the oceans what forests are to continents: they are shelter
and breeding grounds for fish and plant species that will disappear without them." 36
The prohibition against catching live fish stems, in part, from the modern phenomenon of live-
fish trade which entails the catching of so-called exotic species of tropical fish, not only for
aquarium use in the West, but also for "the market for live banquet fish [which] is virtually
insatiable in ever more affluent Asia.37 These exotic species are coral-dwellers, and fishermen
catch them by "diving in shallow water with corraline habitats and squirting sodium cyanide
poison at passing fish directly or onto coral crevices; once affected the fish are immobilized
[merely stunned] and then scooped by hand."38 The diver then surfaces and dumps his catch
into a submerged net attached to the skiff. Twenty minutes later, the fish can swim normally.
Back on shore, they are placed in holding pens, and within a few weeks, they expel the cyanide
from their system and are ready to be hauled. They are then placed in saltwater tanks or
packaged in plastic bags filled with seawater for shipment by air freight to major markets for live
food fish.39 While the fish are meant to survive, the opposite holds true for their former home as
"[a]fter the fisherman squirts the cyanide, the first thing to perish is the reef algae, on which fish
feed. Days later, the living coral starts to expire. Soon the reef loses its function as habitat for the
fish, which eat both the algae and invertebrates that cling to the coral. The reef becomes an
underwater graveyard, its skeletal remains brittle, bleached of all color and vulnerable to erosion
from the pounding of the waves."40 It has been found that cyanide fishing kills most hard and soft
corals within three months of repeated application.41
The nexus then between the activities barred by Ordinance No. 15-92 of the City of Puerto
Princesa and the prohibited acts provided in Ordinance No. 2, Series of 1993 of the Province of
Palawan, on one hand, and the use of sodium cyanide, on the other, is painfully obvious. In sum,
the public purpose and reasonableness of the Ordinances may not then be controverted.
As to Office Order No. 23, Series of 1993, issued by Acting City Mayor Amado L. Lucero of the
City of Puerto Princesa, we find nothing therein violative of any constitutional or statutory
provision. The Order refers to the implementation of the challenged ordinance and is not the
Mayor's Permit.
The dissenting opinion of Mr. Justice Josue N. Bellosillo relies upon the lack of authority on the
part of the Sangguniang Panglungsod of Puerto Princesa to enact Ordinance No. 15, Series of
1992, on the theory that the subject thereof is within the jurisdiction and responsibility of the
Bureau of Fisheries and Aquatic Resources (BFAR) under P.D. No. 704, otherwise known as the
Fisheries Decree of 1975; and that, in any event, the Ordinance is unenforceable for lack of
approval by the Secretary of the Department of Natural Resources (DNR), likewise in
accordance with P.D. No. 704.
The majority is unable to accommodate this view. The jurisdiction and responsibility of the BFAR
under P.D. No. 704, over the management, conservation, development, protection, utilization
and disposition of all fishery and aquatic resources of the country is not all-encompassing. First,
Section 4 thereof excludes from such jurisdiction and responsibility municipal waters, which shall
be under the municipal or city government concerned, except insofar as fishpens and seaweed
culture in municipal centers are concerned. This section provides, however, that all municipal or
city ordinances and resolutions affecting fishing and fisheries and any disposition thereunder
shall be submitted to the Secretary of the Department of Natural Resources for appropriate
action and shall have full force and effect only upon his approval. 42
Second, it must at once be pointed out that the BFAR is no longer under the Department of
Natural Resources (now Department of Environment and Natural Resources). Executive Order
No. 967 of 30 June 1984 transferred the BFAR from the control and supervision of the Minister
(formerly Secretary) Of Natural Resources to the Ministry of Agriculture and Food (MAF) and
converted it into a mere staff agency thereof, integrating its functions with the regional offices of
the MAF.
In Executive Order No. 116 of 30 January 1987, which reorganized the MAF, the BFAR was
retained as an attached agency of the MAF. And under the Administrative Code of 1987, 43 the
BFAR is placed under the Title concerning the Department of Agriculture.44
Therefore, it is incorrect to say that the challenged Ordinance of the City of Puerto Princesa is
invalid or unenforceable because it was not approved by the Secretary of the DENR. If at all, the
approval that should be sought would be that of the Secretary of the Department of Agriculture.
However, the requirement of approval by the Secretary of the Department of Agriculture (not
DENR) of municipal ordinances affecting fishing and fisheries in municipal waters has been
dispensed with in view of the following reasons:
(1) Section 534 (Repealing Clause) of the LGC expressly repeals or amends Sections 16 and 29
of P.D. No. 70445 insofar as they are inconsistent with the provisions of the LGC.
(2) As discussed earlier, under the general welfare clause of the LGC, local government units
have the power, inter alia, to enact ordinances to enhance the right of the people to a balanced
ecology. It likewise specifically vests municipalities with the power to grant fishery privileges in
municipal waters, and impose rentals, fees or charges therefor; to penalize, by appropriate
ordinances, the use of explosives, noxious or poisonous substances, electricity, muro-ami, and
other deleterious methods of fishing; and to prosecute any violation of the provisions of
applicable fishery laws.46 Finally, it imposes upon the sangguniang bayan, the sangguniang
panlungsod, and the sangguniang panlalawigan the duty to enact ordinances to "[p]rotect the
environment and impose appropriate penalties for acts which endanger the environment such as
dynamite fishing and other forms of destructive fishing . . . and such other activities which result
in pollution, acceleration of eutrophication of rivers and lakes or of ecological imbalance." 47
In closing, we commend the Sangguniang Panlungsod of the City of Puerto Princesa and
Sangguniang Panlalawigan of the Province of Palawan for exercising the requisite political will to
enact urgently needed legislation to protect and enhance the marine environment, thereby
sharing in the herculean task of arresting the tide of ecological destruction. We hope that other
local government units shall now be roused from their lethargy and adopt a more vigilant stand
in the battle against the decimation of our legacy to future generations. At this time, the
repercussions of any further delay in their response may prove disastrous, if not, irreversible.
WHEREFORE, the instant petition is DISMISSED for lack of merit and the temporary restraining
order issued on 11 November 1993 is LIFTED. No pronouncement as to costs. SO ORDERED.
G.R. No. 159357 April 28, 2004
Brother MARIANO "MIKE" Z. VELARDE, petitioner,
vs.
SOCIAL JUSTICE SOCIETY, respondent.
PANGANIBAN, J.:
A decision that does not conform to the form and substance required by the Constitution and the
law is void and deemed legally inexistent. To be valid, decisions should comply with the form,
the procedure and the substantive requirements laid out in the Constitution, the Rules of Court
and relevant circulars/orders of the Supreme Court. For the guidance of the bench and the bar,
the Court hereby discusses these forms, procedures and requirements.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, assailing the June 12,
2003 Decision2 and July 29, 2003 Order3 of the Regional Trial Court (RTC) of Manila (Branch
49).4
The challenged Decision was the offshoot of a Petition for Declaratory Relief5 filed before the
RTC-Manila by herein Respondent Social Justice Society (SJS) against herein Petitioner
Mariano "Mike" Z. Velarde, together with His Eminence, Jaime Cardinal Sin, Executive Minister
Erao Manalo, Brother Eddie Villanueva and Brother Eliseo F. Soriano as co-respondents. The
Petition prayed for the resolution of the question "whether or not the act of a religious leader like
any of herein respondents, in endorsing the candidacy of a candidate for elective office or in
urging or requiring the members of his flock to vote for a specified candidate, is violative of the
letter or spirit of the constitutional provisions x x x."6
Alleging that the questioned Decision did not contain a statement of facts and a dispositive
portion, herein petitioner filed a Clarificatory Motion and Motion for Reconsideration before the
trial court. Soriano, his co-respondent, similarly filed a separate Motion for Reconsideration. In
response, the trial court issued the assailed Order, which held as follows:
"x x x [T]his Court cannot reconsider, because what it was asked to do, was only to clarify a
Constitutional provision and to declare whether acts are violative thereof. The Decision did not
make a dispositive portion because a dispositive portion is required only in coercive reliefs,
where a redress from wrong suffered and the benefit that the prevailing party wronged should
get. The step that these movants have to take, is direct appeal under Rule 45 of the Rules of
Court, for a conclusive interpretation of the Constitutional provision to the Supreme Court."7
The Antecedent Proceedings
On January 28, 2003, SJS filed a Petition for Declaratory Relief ("SJS Petition") before the RTC-
Manila against Velarde and his aforesaid co-respondents. SJS, a registered political party,
sought the interpretation of several constitutional provisions, 8 specifically on the separation of
church and state; and a declaratory judgment on the constitutionality of the acts of religious
leaders endorsing a candidate for an elective office, or urging or requiring the members of their
flock to vote for a specified candidate.
The subsequent proceedings were recounted in the challenged Decision in these words:
"x x x. Bro. Eddie Villanueva submitted, within the original period [to file an Answer], a Motion to
Dismiss. Subsequently, Executive Minister Erao Manalo and Bro. Mike Velarde, filed their
Motions to Dismiss. While His Eminence Jaime Cardinal L. Sin, filed a Comment and Bro. Eli
Soriano, filed an Answer within the extended period and similarly prayed for the dismissal of the
Petition. All sought the dismissal of the Petition on the common grounds that it does not state a
cause of action and that there is no justiciable controversy. They were ordered to submit a
pleading by way of advisement, which was closely followed by another Order denying all the
Motions to Dismiss. Bro. Mike Velarde, Bro. Eddie Villanueva and Executive Minister Erao
Manalo moved to reconsider the denial. His Eminence Jaime Cardinal L. Sin, asked for
extension to file memorandum. Only Bro. Eli Soriano complied with the first Order by submitting
his Memorandum. x x x.
"x x x the Court denied the Motions to Dismiss, and the Motions for Reconsideration filed by Bro.
Mike Velarde, Bro. Eddie Villanueva and Executive Minister Erao Manalo, which raised no new
arguments other than those already considered in the motions to dismiss x x x." 9
After narrating the above incidents, the trial court said that it had jurisdiction over the Petition,
because "in praying for a determination as to whether the actions imputed to the respondents
are violative of Article II, Section 6 of the Fundamental Law, [the Petition] has raised only a
question of law."10 It then proceeded to a lengthy discussion of the issue raised in the Petition
the separation of church and state even tracing, to some extent, the historical background of
the principle. Through its discourse, the court a quo opined at some point that the
"[e]ndorsement of specific candidates in an election to any public office is a clear violation of the
separation clause."11
After its essay on the legal issue, however, the trial court failed to include a dispositive portion in
its assailed Decision. Thus, Velarde and Soriano filed separate Motions for Reconsideration
which, as mentioned earlier, were denied by the lower court.
Hence, this Petition for Review.12
This Court, in a Resolution13 dated September 2, 2003, required SJS and the Office of the
Solicitor General (OSG) to submit their respective comments. In the same Resolution, the Court
gave the other parties -- impleaded as respondents in the original case below --the opportunity
to comment, if they so desired.
On April 13, 2004, the Court en banc conducted an Oral Argument. 14
The Issues
In his Petition, Brother Mike Velarde submits the following issues for this Courts resolution:
"1. Whether or not the Decision dated 12 June 2003 rendered by the court a quo was proper and
valid;
"2. Whether or not there exists justiceable controversy in herein respondents Petition for
declaratory relief;
"3. Whether or not herein respondent has legal interest in filing the Petition for declaratory relief;
"4. Whether or not the constitutional question sought to be resolved by herein respondent is ripe
for judicial determination;
"5. Whether or not there is adequate remedy other than the declaratory relief; and,
"6. Whether or not the court a quo has jurisdiction over the Petition for declaratory relief of herein
respondent."15
During the Oral Argument, the issues were narrowed down and classified as follows:
"A. Procedural Issues
"Did the Petition for Declaratory Relief raise a justiciable controversy? Did it state a cause of
action? Did respondent have any legal standing to file the Petition for Declaratory Relief?
"B. Substantive Issues
"1. Did the RTC Decision conform to the form and substance required by the Constitution, the
law and the Rules of Court?
"2. May religious leaders like herein petitioner, Bro. Mike Velarde, be prohibited from endorsing
candidates for public office? Corollarily, may they be banned from campaigning against said
candidates?"
The Courts Ruling The Petition of Brother Mike Velarde is meritorious.
Procedural Issues: Requisites of Petitions for Declaratory Relief
Section 1 of Rule 63 of the Rules of Court, which deals with petitions for declaratory relief,
provides in part:
"Section 1. Who may file petition.- Any person interested under a deed, will, contract or other
written instrument, whose rights are affected by a statute, executive order or regulation,
ordinance, or any other governmental regulation may, before breach or violation thereof, bring
an action in the appropriate Regional Trial Court to determine any question of construction or
validity arising, and for a declaration of his rights or duties thereunder."
Based on the foregoing, an action for declaratory relief should be filed by a person interested
under a deed, a will, a contract or other written instrument, and whose rights are affected by a
statute, an executive order, a regulation or an ordinance. The purpose of the remedy is to
interpret or to determine the validity of the written instrument and to seek a judicial declaration of
the parties rights or duties thereunder.16 The essential requisites of the action are as follows: (1)
there is a justiciable controversy; (2) the controversy is between persons whose interests are
adverse; (3) the party seeking the relief has a legal interest in the controversy; and (4) the issue
is ripe for judicial determination.17
Justiciable Controversy
Brother Mike Velarde contends that the SJS Petition failed to allege, much less establish before
the trial court, that there existed a justiciable controversy or an adverse legal interest between
them; and that SJS had a legal right that was being violated or threatened to be violated by
petitioner. On the contrary, Velarde alleges that SJS premised its action on mere speculations,
contingent events, and hypothetical issues that had not yet ripened into an actual controversy.
Thus, its Petition for Declaratory Relief must fail.
A justiciable controversy refers to an existing case or controversy that is appropriate or ripe for
judicial determination, not one that is conjectural or merely anticipatory. 18 The SJS Petition for
Declaratory Relief fell short of this test. It miserably failed to allege an existing controversy or
dispute between the petitioner and the named respondents therein. Further, the Petition did not
sufficiently state what specific legal right of the petitioner was violated by the respondents
therein; and what particular act or acts of the latter were in breach of its rights, the law or the
Constitution.
As pointed out by Brother Eliseo F. Soriano in his Comment, 19 what exactly has he done that
merited the attention of SJS? He confesses that he does not know the answer, because the SJS
Petition (as well as the assailed Decision of the RTC) "yields nothing in this respect." His
Eminence, Jaime Cardinal Sin, adds that, at the time SJS filed its Petition on January 28, 2003,
the election season had not even started yet; and that, in any event, he has not been actively
involved in partisan politics.
An initiatory complaint or petition filed with the trial court should contain "a plain, concise and
direct statement of the ultimate facts on which the party pleading relies for his claim x x x."20 Yet,
the SJS Petition stated no ultimate facts.
Indeed, SJS merely speculated or anticipated without factual moorings that, as religious leaders,
the petitioner and his co-respondents below had endorsed or threatened to endorse a candidate
or candidates for elective offices; and that such actual or threatened endorsement "will enable
[them] to elect men to public office who [would] in turn be forever beholden to their leaders,
enabling them to control the government"[;]21 and "pos[ing] a clear and present danger of serious
erosion of the peoples faith in the electoral process[;] and reinforc[ing] their belief that religious
leaders determine the ultimate result of elections,"22 which would then be violative of the
separation clause.
Such premise is highly speculative and merely theoretical, to say the least. Clearly, it does not
suffice to constitute a justiciable controversy. The Petition does not even allege any indication or
manifest intent on the part of any of the respondents below to champion an electoral candidate,
or to urge their so-called flock to vote for, or not to vote for, a particular candidate. It is a time-
honored rule that sheer speculation does not give rise to an actionable right.
Obviously, there is no factual allegation that SJS rights are being subjected to any threatened,
imminent and inevitable violation that should be prevented by the declaratory relief sought. The
judicial power and duty of the courts to settle actual controversies involving rights that are legally
demandable and enforceable23 cannot be exercised when there is no actual or threatened
violation of a legal right.
All that the 5-page SJS Petition prayed for was "that the question raised in paragraph 9 hereof
be resolved."24 In other words, it merely sought an opinion of the trial court on whether the
speculated acts of religious leaders endorsing elective candidates for political offices violated the
constitutional principle on the separation of church and state. SJS did not ask for a declaration of
its rights and duties; neither did it pray for the stoppage of any threatened violation of its
declared rights. Courts, however, are proscribed from rendering an advisory opinion. 25
Cause of Action
Respondent SJS asserts that in order to maintain a petition for declaratory relief, a cause of
action need not be alleged or proven. Supposedly, for such petition to prosper, there need not
be any violation of a right, breach of duty or actual wrong committed by one party against the
other.
Petitioner, on the other hand, argues that the subject matter of an action for declaratory relief
should be a deed, a will, a contract (or other written instrument), a statute, an executive order, a
regulation or an ordinance. But the subject matter of the SJS Petition is "the constitutionality of
an act of a religious leader to endorse the candidacy of a candidate for elective office or to urge
or require the members of the flock to vote for a specified candidate." 26According to petitioner,
this subject matter is "beyond the realm of an action for declaratory relief." 27 Petitioner avers that
in the absence of a valid subject matter, the Petition fails to state a cause of action and, hence,
should have been dismissed outright by the court a quo.
faithful flock [to] enable it to elect men to public office x x x, enabling [it] to control the
government."36
During the Oral Argument, though, Petitioner Velarde and his co-respondents below all strongly
asserted that they had not in any way engaged or intended to participate in partisan politics.
They all firmly assured this Court that they had not done anything to trigger the issue raised and
to entitle SJS to the relief sought.
Indeed, the Court finds in the Petition for Declaratory Relief no single allegation of fact upon
which SJS could base a right of relief from the named respondents. In any event, even granting
that it sufficiently asserted a legal right it sought to protect, there was nevertheless no
certainty that such right would be invaded by the said respondents. Not even the alleged
proximity of the elections to the time the Petition was filed below (January 28, 2003) would have
provided the certainty that it had a legal right that would be jeopardized or violated by any of
those respondents.

A cause of action is an act or an omission of one party in violation of the legal right or rights of Legal Standing
another, causing injury to the latter.28 Its essential elements are the following: (1) a right in favor
of the plaintiff; (2) an obligation on the part of the named defendant to respect or not to violate
Legal standing or locus standi has been defined as a personal and substantial interest in the
such right; and (3) such defendants act or omission that is violative of the right of the plaintiff or
case, such that the party has sustained or will sustain direct injury as a result of the challenged
constituting a breach of the obligation of the former to the latter. 29
act.37 Interest means a material interest in issue that is affected by the questioned act or
instrument, as distinguished from a mere incidental interest in the question involved.38
The failure of a complaint to state a cause of action is a ground for its outright
dismissal.30 However, in special civil actions for declaratory relief, the concept of a cause of
Petitioner alleges that "[i]n seeking declaratory relief as to the constitutionality of an act of a
action under ordinary civil actions does not strictly apply. The reason for this exception is that an
religious leader to endorse, or require the members of the religious flock to vote for a specific
action for declaratory relief presupposes that there has been no actual breach of the instruments
candidate, herein Respondent SJS has no legal interest in the controversy";39 it has failed to
involved or of rights arising thereunder.31 Nevertheless, a breach or violation should be
establish how the resolution of the proffered question would benefit or injure it.
impending, imminent or at least threatened.

Parties bringing suits challenging the constitutionality of a law, an act or a statute must show "not
A perusal of the Petition filed by SJS before the RTC discloses no explicit allegation that the
only that the law [or act] is invalid, but also that [they have] sustained or [are] in immediate or
former had any legal right in its favor that it sought to protect. We can only infer the interest,
imminent danger of sustaining some direct injury as a result of its enforcement, and not merely
supposedly in its favor, from its bare allegation that it "has thousands of members who are
that [they] suffer thereby in some indefinite way."40 They must demonstrate that they have been,
citizens-taxpayers-registered voters and who are keenly interested in a judicial clarification of the
or are about to be, denied some right or privilege to which they are lawfully entitled, or that they
constitutionality of the partisan participation of religious leaders in Philippine politics and in the
are about to be subjected to some burdens or penalties by reason of the statute or act
process to insure adherence to the Constitution by everyone x x x."32
complained of.41

Such general averment does not, however, suffice to constitute a legal right or interest. Not only
First, parties suing as taxpayers must specifically prove that they have sufficient interest in
is the presumed interest not personal in character; it is likewise too vague, highly speculative
preventing the illegal expenditure of money raised by taxation.42 A taxpayers action may be
and uncertain.33 The Rules require that the interest must be material to the issue and affected by
properly brought only when there is an exercise by Congress of its taxing or spending
the questioned act or instrument, as distinguished from simple curiosity or incidental interest in
power.43 In the present case, there is no allegation, whether express or implied, that taxpayers
the question raised.34
money is being illegally disbursed.

To bolster its stance, SJS cites the Corpus Juris Secundum and submits that the "[p]laintiff in a
Second, there was no showing in the Petition for Declaratory Relief that SJS as a political party
declaratory judgment action does not seek to enforce a claim against [the] defendant, but seeks
or its members as registered voters would be adversely affected by the alleged acts of the
a judicial declaration of [the] rights of the parties for the purpose of guiding [their] future conduct,
respondents below, if the question at issue was not resolved. There was no allegation that SJS
and the essential distinction between a declaratory judgment action and the usual action is
had suffered or would be deprived of votes due to the acts imputed to the said respondents.
that no actual wrong need have been committed or loss have occurred in order to sustain the
Neither did it allege that any of its members would be denied the right of suffrage or the privilege
declaratory judgment action, although there must be no uncertainty that the loss will occur or
to be voted for a public office they are seeking.
that the asserted rights will be invaded."35

Finally, the allegedly keen interest of its "thousands of members who are citizens-taxpayers-
SJS has, however, ignored the crucial point of its own reference that there must be no
registered voters" is too general44 and beyond the contemplation of the standards set by our
uncertainty that the loss will occur or that the asserted rights will be invaded. Precisely, as
jurisprudence. Not only is the presumed interest impersonal in character; it is likewise too vague,
discussed earlier, it merely conjectures that herein petitioner (and his co-respondents
highly speculative and uncertain to satisfy the requirement of standing.45
below) might actively participate in partisan politics, use "the awesome voting strength of its
Transcendental Importance
In any event, SJS urges the Court to take cognizance of the Petition, even sans legal standing,
considering that "the issues raised are of paramount public interest."
In not a few cases, the Court has liberalized the locus standi requirement when a petition raises
an issue of transcendental significance or paramount importance to the people. 46 Recently, after
holding that the IBP had no locus standi to bring the suit, the Court in IBP v.
Zamora47 nevertheless entertained the Petition therein. It noted that "the IBP has advanced
constitutional issues which deserve the attention of this Court in view of their seriousness,
novelty and weight as precedents."48
Similarly in the instant case, the Court deemed the constitutional issue raised in the SJS Petition
to be of paramount interest to the Filipino people. The issue did not simply concern a delineation
of the separation between church and state, but ran smack into the governance of our country.
The issue was both transcendental in importance and novel in nature, since it had never been
decided before.
The Court, thus, called for Oral Argument to determine with certainty whether it could resolve the
constitutional issue despite the barren allegations in the SJS Petition as well as the abbreviated
proceedings in the court below. Much to its chagrin, however, counsels for the parties --
particularly for Respondent SJS -- made no satisfactory allegations or clarifications that would
supply the deficiencies hereinabove discussed. Hence, even if the Court would exempt this case
from the stringent locus standi requirement, such heroic effort would be futile because the
transcendental issue cannot be resolved anyway.
Proper Proceedings Before the Trial Court
To prevent a repetition of this waste of precious judicial time and effort, and for the guidance of
the bench and the bar, the Court reiterates the elementary procedure49 that must be followed by
trial courts in the conduct of civil cases.50
Prefatorily, the trial court may -- motu proprio or upon motion of the defendant -- dismiss a
complaint51 (or petition, in a special civil action) that does not allege the plaintiffs (or petitioners)
cause or causes of action.52 A complaint or petition should contain "a plain, concise and direct
statement of the ultimate facts on which the party pleading relies for his claim or defense." 53 It
should likewise clearly specify the relief sought.54
Upon the filing of the complaint/petition and the payment of the requisite legal fees, the clerk of
court shall forthwith issue the corresponding summons to the defendants or the respondents,
with a directive that the defendant answer55 within 15 days, unless a different period is fixed by
the court.56 The summons shall also contain a notice that if such answer is not filed, the
plaintiffs/petitioners shall take a judgment by default and may be granted the relief applied
for.57 The court, however, may -- upon such terms as may be just -- allow an answer to be filed
after the time fixed by the Rules.58
If the answer sets forth a counterclaim or cross-claim, it must be answered within ten (10) days
from service.59 A reply may be filed within ten (10) days from service of the pleading responded
to.60
When an answer fails to tender an issue or admits the material allegations of the adverse partys
pleading, the court may, on motion of that party, direct judgment on such pleading (except in
actions for declaration of nullity or annulment of marriage or for legal separation). 61 Meanwhile, a
party seeking to recover upon a claim, a counterclaim or crossclaim -- or to obtain a declaratory
relief -- may, at any time after the answer thereto has been served, move for a summary
judgment in its favor.62 Similarly, a party against whom a claim, a counterclaim or crossclaim is
asserted -- or a declaratory relief sought -- may, at any time, move for a summary judgment in its
favor.63 After the motion is heard, the judgment sought shall be rendered forthwith if there is a
showing that, except as to the amount of damages, there is no genuine issue as to any material
fact; and that the moving party is entitled to a judgment as a matter of law. 64
Within the time for -- but before -- filing the answer to the complaint or petition, the defendant
may file a motion to dismiss based on any of the grounds stated in Section 1 of Rule 16 of the
Rules of Court. During the hearing of the motion, the parties shall submit their arguments on the
questions of law, and their evidence on the questions of fact. 65 After the hearing, the court may
dismiss the action or claim, deny the motion, or order the amendment of the pleadings. It shall
not defer the resolution of the motion for the reason that the ground relied upon is not
indubitable. In every case, the resolution shall state clearly and distinctly the reasons therefor.66
If the motion is denied, the movant may file an answer within the balance of the period originally
prescribed to file an answer, but not less than five (5) days in any event, computed from the
receipt of the notice of the denial. If the pleading is ordered to be amended, the defendant shall
file an answer within fifteen (15) days, counted from the service of the amended pleading, unless
the court provides a longer period.67
After the last pleading has been served and filed, the case shall be set for pretrial,68 which is a
mandatory proceeding.69 A plaintiffs/ petitioners (or its duly authorized representatives) non-
appearance at the pretrial, if without valid cause, shall result in the dismissal of the action with
prejudice, unless the court orders otherwise. A similar failure on the part of the defendant shall
be a cause for allowing the plaintiff/petitioner to present evidence ex parte, and the court to
render judgment on the basis thereof.70
The parties are required to file their pretrial briefs; failure to do so shall have the same effect as
failure to appear at the pretrial.71 Upon the termination thereof, the court shall issue an order
reciting in detail the matters taken up at the conference; the action taken on them, the
amendments allowed to the pleadings; and the agreements or admissions, if any, made by the
parties regarding any of the matters considered.72 The parties may further avail themselves of
any of the modes of discovery,73 if they so wish.
Thereafter, the case shall be set for trial,74 in which the parties shall adduce their respective
evidence in support of their claims and/or defenses. By their written consent or upon the
application of either party, or on its own motion, the court may also order any or all of the issues
to be referred to a commissioner, who is to be appointed by it or to be agreed upon by the
parties.75 The trial or hearing before the commissioner shall proceed in all respects as it would if
held before the court.76
Upon the completion of such proceedings, the commissioner shall file with the court a written
report on the matters referred by the parties.77 The report shall be set for hearing, after which the
court shall issue an order adopting, modifying or rejecting it in whole or in part; or recommitting it
with instructions; or requiring the parties to present further evidence before the commissioner or
the court.78
Finally, a judgment or final order determining the merits of the case shall be rendered. The
decision shall be in writing, personally and directly prepared by the judge, stating clearly and
distinctly the facts and the law on which it is based, signed by the issuing magistrate, and filed
with the clerk of court.79
Based on these elementary guidelines, let us examine the proceedings before the trial court in
the instant case.
First, with respect to the initiatory pleading of the SJS. Even a cursory perusal of the Petition
immediately reveals its gross inadequacy. It contained no statement of ultimate facts upon which
the petitioner relied for its claim. Furthermore, it did not specify the relief it sought from the court,
but merely asked it to answer a hypothetical question.
Relief, as contemplated in a legal action, refers to a specific coercive measure prayed for as a
result of a violation of the rights of a plaintiff or a petitioner. 80 As already discussed earlier, the
Petition before the trial court had no allegations of fact 81 or of any specific violation of the
petitioners rights, which the respondents had a duty to respect. Such deficiency amounted to a
failure to state a cause of action; hence, no coercive relief could be sought and adjudicated. The
Petition evidently lacked substantive requirements and, we repeat, should have been dismissed
at the outset.
Second, with respect to the trial court proceedings. Within the period set to file their respective
answers to the SJS Petition, Velarde, Villanueva and Manalo filed Motions to Dismiss; Cardinal
Sin, a Comment; and Soriano, within a priorly granted extended period, an Answer in which he
likewise prayed for the dismissal of the Petition.82 SJS filed a Rejoinder to the Motion of Velarde,
who subsequently filed a Sur-Rejoinder. Supposedly, there were "several scheduled settings, in
which the "[c]ourt was apprised of the respective positions of the parties." 83 The nature of such
settings -- whether pretrial or trial hearings -- was not disclosed in the records. Before ruling on
the Motions to Dismiss, the trial court issued an Order84 dated May 8, 2003, directing the parties
to submit their memoranda. Issued shortly thereafter was another Order 85 dated May 14, 2003,
denying all the Motions to Dismiss.
In the latter Order, the trial court perfunctorily ruled: "The Court now resolves to deny the
Motions to Dismiss, and after all the memoranda are submitted, then, the case shall be deemed
as submitted for resolution."86
Apparently, contrary to the requirement of Section 2 of Rule 16 of the Rules of Court, the
Motions were not heard. Worse, the Order purportedly resolving the Motions to Dismiss did not
state any reason at all for their denial, in contravention of Section 3 of the said Rule 16. There
was not even any statement of the grounds relied upon by the Motions; much less, of the legal
findings and conclusions of the trial court.
Thus, Velarde, Villanueva and Manalo moved for reconsideration. Pending the resolution of
these Motions for Reconsideration, Villanueva filed a Motion to suspend the filing of the parties
memoranda. But instead of separately resolving the pending Motions fairly and squarely, the trial
court again transgressed the Rules of Court when it immediately proceeded to issue its
Decision, even before tackling the issues raised in those Motions.
Furthermore, the RTC issued its "Decision" without allowing the parties to file their answers. For
this reason, there was no joinder of the issues. If only it had allowed the filing of those answers,
the trial court would have known, as the Oral Argument revealed, that the petitioner and his co-
respondents below had not committed or threatened to commit the act attributed to them
(endorsing candidates) -- the act that was supposedly the factual basis of the suit.
Parenthetically, the court a quo further failed to give a notice of the Petition to the OSG, which
was entitled to be heard upon questions involving the constitutionality or validity of statutes and
other measures.87
Moreover, as will be discussed in more detail, the questioned Decision of the trial court was
utterly wanting in the requirements prescribed by the Constitution and the Rules of Court.
All in all, during the loosely abbreviated proceedings of the case, the trial court indeed acted with
inexplicable haste, with total ignorance of the law -- or, worse, in cavalier disregard of the rules
of procedure -- and with grave abuse of discretion.
Contrary to the contentions of the trial judge and of SJS, proceedings for declaratory relief must
still follow the process described above -- the petition must state a cause of action; the
proceedings must undergo the procedure outlined in the Rules of Court; and the decision must
adhere to constitutional and legal requirements.
First Substantive Issue: Fundamental Requirements of a Decision
The Constitution commands that "[n]o decision shall be rendered by any court without
expressing therein clearly and distinctly the facts and the law on which it is based. No petition for
review or motion for reconsideration of a decision of the court shall be refused due course or
denied without stating the basis therefor."88
Consistent with this constitutional mandate, Section 1 of Rule 36 of the Rules on Civil Procedure
similarly provides: "Sec. 1. Rendition of judgments and final orders. A judgment or final order
determining the merits of the case shall be in writing personally and directly prepared by the
judge, stating clearly and distinctly the facts and the law on which it is based, signed by him and
filed with the clerk of court."
In the same vein, Section 2 of Rule 120 of the Rules of Court on Criminal Procedure reads as
follows: "Sec. 2. Form and contents of judgments. -- The judgment must be written in the official
language, personally and directly prepared by the judge and signed by him and shall contain
clearly and distinctly a statement of the facts proved or admitted by the accused and the law
upon which the judgment is based.
Pursuant to the Constitution, this Court also issued on January 28, 1988, Administrative Circular
No. 1, prompting all judges "to make complete findings of facts in their decisions, and scrutinize
closely the legal aspects of the case in the light of the evidence presented. They should avoid
the tendency to generalize and form conclusions without detailing the facts from which such
conclusions are deduced."
In many cases,89 this Court has time and time again reminded "magistrates to heed the demand
of Section 14, Article VIII of the Constitution." The Court, through Chief Justice Hilario G. Davide
Jr. in Yao v. Court of Appeals,90discussed at length the implications of this provision and strongly
exhorted thus:
"Faithful adherence to the requirements of Section 14, Article VIII of the Constitution is
indisputably a paramount component of due process and fair play. It is likewise demanded by
the due process clause of the Constitution. The parties to a litigation should be informed of how
it was decided, with an explanation of the factual and legal reasons that led to the conclusions of
the court. The court cannot simply say that judgment is rendered in favor of X and against Y and
just leave it at that without any justification whatsoever for its action. The losing party is entitled
to know why he lost, so he may appeal to the higher court, if permitted, should he believe that
the decision should be reversed. A decision that does not clearly and distinctly state the facts
and the law on which it is based leaves the parties in the dark as to how it was reached and is
precisely prejudicial to the losing party, who is unable to pinpoint the possible errors of the court
for review by a higher tribunal. More than that, the requirement is an assurance to the parties
that, in reaching judgment, the judge did so through the processes of legal reasoning. It is, thus,
a safeguard against the impetuosity of the judge, preventing him from deciding ipse dixit.
Vouchsafed neither the sword nor the purse by the Constitution but nonetheless vested with the
sovereign prerogative of passing judgment on the life, liberty or property of his fellowmen, the
judge must ultimately depend on the power of reason for sustained public confidence in the
justness of his decision."
In People v. Bugarin,91 the Court also explained: "The requirement that the decisions of courts
must be in writing and that they must set forth clearly and distinctly the facts and the law on
which they are based serves many functions. It is intended, among other things, to inform the
parties of the reason or reasons for the decision so that if any of them appeals, he can point out
to the appellate court the finding of facts or the rulings on points of law with which he disagrees.
More than that, the requirement is an assurance to the parties that, in reaching judgment, the
judge did so through the processes of legal reasoning. x x x."
Indeed, elementary due process demands that the parties to a litigation be given information on
how the case was decided, as well as an explanation of the factual and legal reasons that led to
the conclusions of the court.92
In Madrid v. Court of Appeals,93 this Court had instructed magistrates to exert effort to ensure
that their decisions would present a comprehensive analysis or account of the factual and legal
findings that would substantially address the issues raised by the parties.
In the present case, it is starkly obvious that the assailed Decision contains no statement of facts
-- much less an assessment or analysis thereof -- or of the courts findings as to the probable
facts. The assailed Decision begins with a statement of the nature of the action and the question
or issue presented. Then follows a brief explanation of the constitutional provisions involved, and
what the Petition sought to achieve. Thereafter, the ensuing procedural incidents before the trial
court are tracked. The Decision proceeds to a full-length opinion on the nature and the extent of
the separation of church and state. Without expressly stating the final conclusion she has
reached or specifying the relief granted or denied, the trial judge ends her "Decision" with the
clause "SO ORDERED."
What were the antecedents that necessitated the filing of the Petition? What exactly were the
distinct facts that gave rise to the question sought to be resolved by SJS? More important, what
were the factual findings and analysis on which the trial court based its legal findings and
conclusions? None were stated or implied. Indeed, the RTCs Decision cannot be upheld for its
failure to express clearly and distinctly the facts on which it was based. Thus, the trial court
clearly transgressed the constitutional directive.
The significance of factual findings lies in the value of the decision as a precedent. How can it be
so if one cannot apply the ruling to similar circumstances, simply because such circumstances
are unknown? Otherwise stated, how will the ruling be applied in the future, if there is no point of
factual comparison?
Moreover, the court a quo did not include a resolutory or dispositive portion in its so-called
Decision. The importance of such portion was explained in the early case Manalang v. Tuason
de Rickards,94 from which we quote:
"The resolution of the Court on a given issue as embodied in the dispositive part of the decision
or order is the investitive or controlling factor that determines and settles the rights of the parties
and the questions presented therein, notwithstanding the existence of statements or declaration
in the body of said order that may be confusing."
The assailed Decision in the present case leaves us in the dark as to its final resolution of the
Petition. To recall, the original Petition was for declaratory relief. So, what relief did the trial court
grant or deny? What rights of the parties did it conclusively declare? Its final statement says,
"SO ORDERED." But what exactly did the court order? It had the temerity to label its issuance a
"Decision," when nothing was in fact decided.
Respondent SJS insists that the dispositive portion can be found in the body of the assailed
Decision. It claims that the issue is disposed of and the Petition finally resolved by the statement
of the trial court found on page 10 of its 14-page Decision, which reads: "Endorsement of
specific candidates in an election to any public office is a clear violation of the separation
clause."95
We cannot agree.
In Magdalena Estate, Inc. v. Caluag,96 the obligation of the party imposed by the Court was
allegedly contained in the text of the original Decision. The Court, however, held:
"x x x The quoted finding of the lower court cannot supply deficiencies in the dispositive portion.
It is a mere opinion of the court and the rule is settled that where there is a conflict between the
dispositive part and the opinion, the former must prevail over the latter on the theory that the
dispositive portion is the final order while the opinion is merely a statement ordering nothing."
(Italics in the original)
Thus, the dispositive portion cannot be deemed to be the statement quoted by SJS and
embedded in the last paragraph of page 10 of the assailed 14-page Decision. If at all, that
statement is merely an answer to a hypothetical legal question and just a part of the opinion of
the trial court. It does not conclusively declare the rights (or obligations) of the parties to the
Petition. Neither does it grant any -- much less, the proper -- relief under the circumstances, as
required of a dispositive portion.
Failure to comply with the constitutional injunction is a grave abuse of discretion amounting to
lack or excess of jurisdiction. Decisions or orders issued in careless disregard of the
constitutional mandate are a patent nullity and must be struck down as void.97
Parts of a Decision
In general, the essential parts of a good decision consist of the following: (1) statement of the
case; (2) statement of facts; (3) issues or assignment of errors; (4) court ruling, in which each
issue is, as a rule, separately considered and resolved; and, finally, (5) dispositive portion.
The ponente may also opt to include an introduction or a prologue as well as an epilogue,
especially in cases in which controversial or novel issues are involved. 98
An introduction may consist of a concise but comprehensive statement of the principal factual or
legal issue/s of the case. In some cases -- particularly those concerning public interest; or
involving complicated commercial, scientific, technical or otherwise rare subject matters -- a
longer introduction or prologue may serve to acquaint readers with the specific nature of the
controversy and the issues involved. An epilogue may be a summation of the important
principles applied to the resolution of the issues of paramount public interest or significance. It
may also lay down an enduring philosophy of law or guiding principle.
Let us now, again for the guidance of the bench and the bar, discuss the essential parts of a
good decision.
1. Statement of the Case
The Statement of the Case consists of a legal definition of the nature of the action. At the first
instance, this part states whether the action is a civil case for collection, ejectment, quieting of
title, foreclosure of mortgage, and so on; or, if it is a criminal case, this part describes the
specific charge -- quoted usually from the accusatory portion of the information -- and the plea of
the accused. Also mentioned here are whether the case is being decided on appeal or on a
petition for certiorari, the court of origin, the case number in the trial court, and the dispositive
portion of the assailed decision.
In a criminal case, the verbatim reproduction of the criminal information serves as a guide in
determining the nature and the gravity of the offense for which the accused may be found
culpable. As a rule, the accused cannot be convicted of a crime different from or graver than that
charged.
Also, quoting verbatim the text of the information is especially important when there is a question
on the sufficiency of the charge, or on whether qualifying and modifying circumstances have
been adequately alleged therein.
To ensure that due process is accorded, it is important to give a short description of the
proceedings regarding the plea of the accused. Absence of an arraignment, or a serious
irregularity therein, may render the judgment void, and further consideration by the appellate
court would be futile. In some instances, especially in appealed cases, it would also be useful to
mention the fact of the appellants detention, in order to dispose of the preliminary query --
whether or not they have abandoned their appeal by absconding or jumping bail.
Mentioning the court of origin and the case number originally assigned helps in facilitating the
consolidation of the records of the case in both the trial and the appellate courts, after entry of
final judgment.
Finally, the reproduction of the decretal portion of the assailed decision informs the reader of
how the appealed case was decided by the court a quo.
2. Statement of Facts
There are different ways of relating the facts of the case. First, under the objective or reportorial
method, the judge summarizes -- without comment -- the testimony of each witness and the
contents of each exhibit. Second, under the synthesis method, the factual theory of the plaintiff
or prosecution and then that of the defendant or defense is summarized according to the judges
best light. Third, in the subjective method, the version of the facts accepted by the judge is
simply narrated without explaining what the parties versions are. Finally, through a combination
of objective and subjective means, the testimony of each witness is reported and the judge then
formulates his or her own version of the facts.
In criminal cases, it is better to present both the version of the prosecution and that of the
defense, in the interest of fairness and due process. A detailed evaluation of the contentions of
the parties must follow. The resolution of most criminal cases, unlike civil and other cases,
depends to a large extent on the factual issues and the appreciation of the evidence. The
plausibility or the implausibility of each version can sometimes be initially drawn from a reading
of the facts. Thereafter, the bases of the court in arriving at its findings and conclusions should
be explained.
On appeal, the fact that the assailed decision of the lower court fully, intelligently and correctly
resolved all factual and legal issues involved may partly explain why the reviewing court finds no
reason to reverse the findings and conclusions of the former. Conversely, the lower courts
patent misappreciation of the facts or misapplication of the law would aid in a better
understanding of why its ruling is reversed or modified.
In appealed civil cases, the opposing sets of facts no longer need to be presented. Issues for
resolution usually involve questions of law, grave abuse of discretion, or want of jurisdiction;
hence, the facts of the case are often undisputed by the parties. With few exceptions, factual
issues are not entertained in non-criminal cases. Consequently, the narration of facts by the
lower court, if exhaustive and clear, may be reproduced; otherwise, the material factual
antecedents should be restated in the words of the reviewing magistrate.
In addition, the reasoning of the lower court or body whose decision is under review should be
laid out, in order that the parties may clearly understand why the lower court ruled in a certain
way, and why the reviewing court either finds no reason to reverse it or concludes otherwise.
3. Issues or Assignment of Errors
Both factual and legal issues should be stated. On appeal, the assignment of errors, as
mentioned in the appellants brief, may be reproduced in toto and tackled seriatim, so as to avoid
motions for reconsideration of the final decision on the ground that the court failed to consider all
assigned errors that could affect the outcome of the case. But when the appellant presents
repetitive issues or when the assigned errors do not strike at the main issue, these may be
restated in clearer and more coherent terms.
Though not specifically questioned by the parties, additional issues may also be included, if
deemed important for substantial justice to be rendered. Note that appealed criminal cases are
given de novo review, in contrast to noncriminal cases in which the reviewing court is generally
limited to issues specifically raised in the appeal. The few exceptions are errors of jurisdiction;
questions not raised but necessary in arriving at a just decision on the case; or unassigned
errors that are closely related to those properly assigned, or upon which depends the
determination of the question properly raised.
4. The Courts Ruling
This part contains a full discussion of the specific errors or issues raised in the complaint,
petition or appeal, as the case may be; as well as of other issues the court deems essential to a
just disposition of the case. Where there are several issues, each one of them should be
separately addressed, as much as practicable. The respective contentions of the parties should
also be mentioned here. When procedural questions are raised in addition to substantive ones, it
is better to resolve the former preliminarily.
5. The Disposition or Dispositive Portion
In a criminal case, the disposition should include a finding of innocence or guilt, the specific
crime committed, the penalty imposed, the participation of the accused, the modifying
circumstances if any, and the civil liability and costs. In case an acquittal is decreed, the court
must order the immediate release of the accused, if detained, (unless they are being held for
another cause) and order the director of the Bureau of Corrections (or wherever the accused is
detained) to report, within a maximum of ten (10) days from notice, the exact date when the
accused were set free.
In a civil case as well as in a special civil action, the disposition should state whether the
complaint or petition is granted or denied, the specific relief granted, and the costs. The following
test of completeness may be applied. First, the parties should know their rights and
obligations. Second, they should know how to execute the decision under alternative
contingencies. Third, there should be no need for further proceedings to dispose of the
issues. Fourth, the case should be terminated by according the proper relief. The "proper relief"
usually depends upon what the parties seek in their pleadings. It may declare their rights and
duties, command the performance of positive prestations, or order them to abstain from specific
acts. The disposition must also adjudicate costs.
The foregoing parts need not always be discussed in sequence. But they should all be present
and plainly identifiable in the decision. Depending on the writers character, genre and style, the
language should be fresh and free-flowing, not necessarily stereotyped or in a fixed form; much
less highfalutin, hackneyed and pretentious. At all times, however, the decision must be clear,
concise, complete and correct.
Second Substantive Issue: Religious Leaders Endorsement of Candidates for Public
Office
The basic question posed in the SJS Petition -- WHETHER ENDORSEMENTS OF
CANDIDACIES BY RELIGIOUS LEADERS IS UNCONSTITUTIONAL -- undoubtedly deserves
serious consideration. As stated earlier, the Court deems this constitutional issue to be of
paramount interest to the Filipino citizenry, for it concerns the governance of our country and its
people. Thus, despite the obvious procedural transgressions by both SJS and the trial court, this
Court still called for Oral Argument, so as not to leave any doubt that there might be room to
entertain and dispose of the SJS Petition on the merits.
Counsel for SJS has utterly failed, however, to convince the Court that there are enough factual
and legal bases to resolve the paramount issue. On the other hand, the Office of the Solicitor
General has sided with petitioner insofar as there are no facts supporting the SJS Petition and
the assailed Decision.
We reiterate that the said Petition failed to state directly the ultimate facts that it relied upon for
its claim. During the Oral Argument, counsel for SJS candidly admitted that there were no factual
allegations in its Petition for Declaratory Relief. Neither were there factual findings in the
assailed Decision. At best, SJS merely asked the trial court to answer a hypothetical question. In
effect, it merely sought an advisory opinion, the rendition of which was beyond the courts
constitutional mandate and jurisdiction.99
Indeed, the assailed Decision was rendered in clear violation of the Constitution, because it
made no findings of facts and final disposition. Hence, it is void and deemed legally inexistent.
Consequently, there is nothing for this Court to review, affirm, reverse or even just modify.
Regrettably, it is not legally possible for the Court to take up, on the merits, the paramount
question involving a constitutional principle. It is a time-honored rule that "the constitutionality of
a statute [or act] will be passed upon only if, and to the extent that, it is directly and necessarily
involved in a justiciable controversy and is essential to the protection of the rights of the parties
concerned."100
WHEREFORE, the Petition for Review of Brother Mike Velarde is GRANTED. The assailed June
12, 2003 Decision and July 29, 2003 Order of the Regional Trial Court of Manila (Branch 49) are
hereby DECLARED NULL AND VOID and thus SET ASIDE. The SJS Petition for Declaratory
Relief is DISMISSED for failure to state a cause of action.
Let a copy of this Decision be furnished the Office of the Court Administrator to evaluate and
recommend whether the trial judge may, after observing due process, be held administratively
liable for rendering a decision violative of the Constitution, the Rules of Court and relevant
circulars of this Court. No costs. SO ORDERED.
G.R. No. 150806 January 28, 2008
EUFEMIA ALMEDA and ROMEL ALMEDA, petitioners,
vs.
BATHALA MARKETING INDUSTRIES, INC., respondent.
NACHURA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, of the Decision1 of
the Court of Appeals (CA), dated September 3, 2001, in CA-G.R. CV No. 67784, and its
Resolution2 dated November 19, 2001. The assailed Decision affirmed with modification the
Decision3 of the Regional Trial Court (RTC), Makati City, Branch 136, dated May 9, 2000 in Civil
Case No. 98-411.
Sometime in May 1997, respondent Bathala Marketing Industries, Inc., as lessee, represented
by its president Ramon H. Garcia, renewed its Contract of Lease4 with Ponciano L. Almeda
(Ponciano), as lessor, husband of petitioner Eufemia and father of petitioner Romel Almeda.
Under the said contract, Ponciano agreed to lease a portion of the Almeda Compound, located
at 2208 Pasong Tamo Street, Makati City, consisting of 7,348.25 square meters, for a monthly
rental of P1,107,348.69, for a term of four (4) years from May 1, 1997 unless sooner terminated
as provided in the contract.5 The contract of lease contained the following pertinent provisions
which gave rise to the instant case:
SIXTH - It is expressly understood by the parties hereto that the rental rate stipulated is based
on the present rate of assessment on the property, and that in case the assessment should
hereafter be increased or any new tax, charge or burden be imposed by authorities on the lot
and building where the leased premises are located, LESSEE shall pay, when the rental herein
provided becomes due, the additional rental or charge corresponding to the portion hereby
leased; provided, however, that in the event that the present assessment or tax on said property
should be reduced, LESSEE shall be entitled to reduction in the stipulated rental, likewise in
proportion to the portion leased by him;
SEVENTH - In case an extraordinary inflation or devaluation of Philippine Currency should
supervene, the value of Philippine peso at the time of the establishment of the obligation shall be
the basis of payment;6
During the effectivity of the contract, Ponciano died. Thereafter, respondent dealt with
petitioners. In a letter7 dated December 29, 1997, petitioners advised respondent that the former
shall assess and collect Value Added Tax (VAT) on its monthly rentals. In response, respondent
contended that VAT may not be imposed as the rentals fixed in the contract of lease were
supposed to include the VAT therein, considering that their contract was executed on May 1,
1997 when the VAT law had long been in effect.8
On January 26, 1998, respondent received another letter from petitioners informing the former
that its monthly rental should be increased by 73% pursuant to condition No. 7 of the contract
and Article 1250 of the Civil Code. Respondent opposed petitioners' demand and insisted that
there was no extraordinary inflation to warrant the application of Article 1250 in light of the
pronouncement of this Court in various cases.9
Respondent refused to pay the VAT and adjusted rentals as demanded by petitioners but
continued to pay the stipulated amount set forth in their contract.
On February 18, 1998, respondent instituted an action for declaratory relief for purposes of
determining the correct interpretation of condition Nos. 6 and 7 of the lease contract to prevent
damage and prejudice.10 The case was docketed as Civil Case No. 98-411 before the RTC of
Makati.
On March 10, 1998, petitioners in turn filed an action for ejectment, rescission and damages
against respondent for failure of the latter to vacate the premises after the demand made by the
former.11 Before respondent could file an answer, petitioners filed a Notice of Dismissal. 12 They
subsequently refiled the complaint before the Metropolitan Trial Court of Makati; the case was
raffled to Branch 139 and was docketed as Civil Case No. 53596.
Petitioners later moved for the dismissal of the declaratory relief case for being an improper
remedy considering that respondent was already in breach of the obligation and that the case
would not end the litigation and settle the rights of the parties. The trial court, however, was not
persuaded, and consequently, denied the motion.
After trial on the merits, on May 9, 2000, the RTC ruled in favor of respondent and against
petitioners. The pertinent portion of the decision reads:
WHEREFORE, premises considered, this Court renders judgment on the case as follows: 1)
declaring that plaintiff is not liable for the payment of Value-Added Tax (VAT) of 10% of the rent
for [the] use of the leased premises; 2) declaring that plaintiff is not liable for the payment of any
rental adjustment, there being no [extraordinary] inflation or devaluation, as provided in the
Seventh Condition of the lease contract, to justify the same; 3) holding defendants liable to
plaintiff for the total amount of P1,119,102.19, said amount representing payments erroneously
made by plaintiff as VAT charges and rental adjustment for the months of January, February and
March, 1999; and 4) holding defendants liable to plaintiff for the amount of P1,107,348.69, said
amount representing the balance of plaintiff's rental deposit still with defendants. SO
ORDERED.13
The trial court denied petitioners their right to pass on to respondent the burden of paying the
VAT since it was not a new tax that would call for the application of the sixth clause of the
contract. The court, likewise, denied their right to collect the demanded increase in rental, there
being no extraordinary inflation or devaluation as provided for in the seventh clause of the
contract. Because of the payment made by respondent of the rental adjustment demanded by
petitioners, the court ordered the restitution by the latter to the former of the amounts paid,
notwithstanding the well-established rule that in an action for declaratory relief, other than a
declaration of rights and obligations, affirmative reliefs are not sought by or awarded to the
parties.
Petitioners elevated the aforesaid case to the Court of Appeals which affirmed with modification
the RTC decision. The fallo reads:
WHEREFORE, premises considered, the present appeal is DISMISSED and the appealed
decision in Civil Case No. 98-411 is hereby AFFIRMED with MODIFICATION in that the order
for the return of the balance of the rental deposits and of the amounts representing the 10% VAT
and rental adjustment, is hereby DELETED.No pronouncement as to costs. SO ORDERED.14
The appellate court agreed with the conclusions of law and the application of the decisional rules
on the matter made by the RTC. However, it found that the trial court exceeded its jurisdiction in
granting affirmative relief to the respondent, particularly the restitution of its excess payment.
Petitioners now come before this Court raising the following issues:
I. WHETHER OR NOT ARTICLE 1250 OF THE NEW CIVIL CODE IS APPLICABLE TO
THE CASE AT BAR.
II. WHETHER OR NOT THE DOCTRINE ENUNCIATED IN FILIPINO PIPE AND
FOUNDRY CORP. VS. NAWASA CASE, 161 SCRA 32 AND COMPANION CASES
ARE (sic) APPLICABLE IN THE CASE AT BAR.
III. WHETHER OR NOT IN NOT APPLYING THE DOCTRINE IN THE CASE OF DEL
ROSARIO VS. THE SHELL COMPANY OF THE PHILIPPINES, 164 SCRA 562, THE
HONORABLE COURT OF APPEALS SERIOUSLY ERRED ON A QUESTION OF
LAW.
IV. WHETHER OR NOT THE FINDING OF THE HONORABLE COURT OF APPEALS
THAT RESPONDENT IS NOT LIABLE TO PAY THE 10% VALUE ADDED TAX IS IN
ACCORDANCE WITH THE MANDATE OF RA 7716.
V. WHETHER OR NOT DECLARATORY RELIEF IS PROPER SINCE PLAINTIFF-
APPELLEE WAS IN BREACH WHEN THE PETITION FOR DECLARATORY RELIEF
WAS FILED BEFORE THE TRIAL COURT.
In fine, the issues for our resolution are as follows: 1) whether the action for declaratory relief is
proper; 2) whether respondent is liable to pay 10% VAT pursuant to Republic Act (RA) 7716;
and 3) whether the amount of rentals due the petitioners should be adjusted by reason of
extraordinary inflation or devaluation.
Declaratory relief is defined as an action by any person interested in a deed, will, contract or
other written instrument, executive order or resolution, to determine any question of construction
or validity arising from the instrument, executive order or regulation, or statute, and for a
declaration of his rights and duties thereunder. The only issue that may be raised in such a
petition is the question of construction or validity of provisions in an instrument or statute.
Corollary is the general rule that such an action must be justified, as no other adequate relief or
remedy is available under the circumstances. 15
Decisional law enumerates the requisites of an action for declaratory relief, as follows: 1) the
subject matter of the controversy must be a deed, will, contract or other written instrument,
statute, executive order or regulation, or ordinance; 2) the terms of said documents and the
validity thereof are doubtful and require judicial construction; 3) there must have been no breach
of the documents in question; 4) there must be an actual justiciable controversy or the "ripening
seeds" of one between persons whose interests are adverse; 5) the issue must be ripe for
judicial determination; and 6) adequate relief is not available through other means or other forms
of action or proceeding.16
It is beyond cavil that the foregoing requisites are present in the instant case, except that
petitioners insist that respondent was already in breach of the contract when the petition was
filed.
We do not agree.
After petitioners demanded payment of adjusted rentals and in the months that followed,
respondent complied with the terms and conditions set forth in their contract of lease by paying
the rentals stipulated therein. Respondent religiously fulfilled its obligations to petitioners even
during the pendency of the present suit. There is no showing that respondent committed an act
constituting a breach of the subject contract of lease. Thus, respondent is not barred from
instituting before the trial court the petition for declaratory relief.
Petitioners claim that the instant petition is not proper because a separate action for rescission,
ejectment and damages had been commenced before another court; thus, the construction of
the subject contractual provisions should be ventilated in the same forum.
We are not convinced.
It is true that in Panganiban v. Pilipinas Shell Petroleum Corporation17 we held that the petition
for declaratory relief should be dismissed in view of the pendency of a separate action for
unlawful detainer. However, we cannot apply the same ruling to the instant case. In Panganiban,
the unlawful detainer case had already been resolved by the trial court before the dismissal of
the declaratory relief case; and it was petitioner in that case who insisted that the action for
declaratory relief be preferred over the action for unlawful detainer. Conversely, in the case at
bench, the trial court had not yet resolved the rescission/ejectment case during the pendency of
the declaratory relief petition. In fact, the trial court, where the rescission case was on appeal,
itself initiated the suspension of the proceedings pending the resolution of the action for
declaratory relief.
We are not unmindful of the doctrine enunciated in Teodoro, Jr. v. Mirasol18 where the
declaratory relief action was dismissed because the issue therein could be threshed out in the
unlawful detainer suit. Yet, again, in that case, there was already a breach of contract at the time
of the filing of the declaratory relief petition. This dissimilar factual milieu proscribes the Court
from applying Teodoro to the instant case.
Given all these attendant circumstances, the Court is disposed to entertain the instant
declaratory relief action instead of dismissing it, notwithstanding the pendency of the
ejectment/rescission case before the trial court. The resolution of the present petition would
write finis to the parties' dispute, as it would settle once and for all the question of the proper
interpretation of the two contractual stipulations subject of this controversy.
Now, on the substantive law issues.
intended not to avail of the option granted him by law to shift the 10% VAT upon the lessee-
appellee. x x x.19
In short, petitioners are estopped from shifting to respondent the burden of paying the VAT.
Petitioners' reliance on the sixth condition of the contract is, likewise, unavailing. This provision
clearly states that respondent can only be held liable for new taxes imposed after the effectivity
of the contract of lease, that is, after May 1997, and only if they pertain to the lot and the building
where the leased premises are located. Considering that RA 7716 took effect in 1994, the VAT
cannot be considered as a "new tax" in May 1997, as to fall within the coverage of the sixth
stipulation.
Neither can petitioners legitimately demand rental adjustment because of extraordinary inflation
or devaluation.
Petitioners contend that Article 1250 of the Civil Code does not apply to this case because the
contract stipulation speaks of extraordinary inflation or devaluation while the Code speaks of
extraordinary inflation or deflation. They insist that the doctrine pronounced in Del Rosario v. The
Shell Company, Phils. Limited20 should apply.
Essential to contract construction is the ascertainment of the intention of the contracting parties,
and such determination must take into account the contemporaneous and subsequent acts of
the parties. This intention, once ascertained, is deemed an integral part of the contract. 21
While, indeed, condition No. 7 of the contract speaks of "extraordinary inflation or devaluation"
as compared to Article 1250's "extraordinary inflation or deflation," we find that when the parties
used the term "devaluation," they really did not intend to depart from Article 1250 of the Civil
Code. Condition No. 7 of the contract should, thus, be read in harmony with the Civil Code
provision.

That this is the intention of the parties is evident from petitioners' letter22 dated January 26, 1998,
Petitioners repeatedly made a demand on respondent for the payment of VAT and for rental
where, in demanding rental adjustment ostensibly based on condition No. 7, petitioners made
adjustment allegedly brought about by extraordinary inflation or devaluation. Both the trial court
explicit reference to Article 1250 of the Civil Code, even quoting the law verbatim. Thus, the
and the appellate court found no merit in petitioners' claim. We see no reason to depart from
application of Del Rosario is not warranted. Rather, jurisprudential rules on the application of
such findings.
Article 1250 should be considered.

As to the liability of respondent for the payment of VAT, we cite with approval the ratiocination of
Article 1250 of the Civil Code states: In case an extraordinary inflation or deflation of the
the appellate court, viz.:
currency stipulated should supervene, the value of the currency at the time of the establishment
of the obligation shall be the basis of payment, unless there is an agreement to the contrary.
Clearly, the person primarily liable for the payment of VAT is the lessor who may choose to pass
it on to the lessee or absorb the same. Beginning January 1, 1996, the lease of real property in
Inflation has been defined as the sharp increase of money or credit, or both, without a
the ordinary course of business, whether for commercial or residential use, when the gross
corresponding increase in business transaction. There is inflation when there is an increase in
annual receipts exceed P500,000.00, is subject to 10% VAT. Notwithstanding the mandatory
the volume of money and credit relative to available goods, resulting in a substantial and
payment of the 10% VAT by the lessor, the actual shifting of the said tax burden upon the lessee
continuing rise in the general price level.23 In a number of cases, this Court had provided a
is clearly optional on the part of the lessor, under the terms of the statute. The word "may" in the
discourse on what constitutes extraordinary inflation, thus:
statute, generally speaking, denotes that it is directory in nature. It is generally permissive only
and operates to confer discretion. In this case, despite the applicability of the rule under Sec. 99
of the NIRC, as amended by R.A. 7716, granting the lessor the option to pass on to the lessee [E]xtraordinary inflation exists when there is a decrease or increase in the purchasing
the 10% VAT, to existing contracts of lease as of January 1, 1996, the original lessor, Ponciano power of the Philippine currency which is unusual or beyond the common fluctuation in
L. Almeda did not charge the lessee-appellee the 10% VAT nor provided for its additional the value of said currency, and such increase or decrease could not have been
imposition when they renewed the contract of lease in May 1997. More significantly, said lessor reasonably foreseen or was manifestly beyond the contemplation of the parties at the
did not actually collect a 10% VAT on the monthly rental due from the lessee-appellee after the time of the establishment of the obligation.24
execution of the May 1997 contract of lease. The inevitable implication is that the lessor
The factual circumstances obtaining in the present case do not make out a case of extraordinary As alleged in the complaint, the private respondent prayed for injunctive relief against the
inflation or devaluation as would justify the application of Article 1250 of the Civil Code. We petitioners' demand from the private respondent for the payment of C.F. Sharp Kabushiki
would like to stress that the erosion of the value of the Philippine peso in the past three or four Kaisha's liabilities to the petitioners.
decades, starting in the mid-sixties, is characteristic of most currencies. And while the Court may
take judicial notice of the decline in the purchasing power of the Philippine currency in that span
As an alternative to injunction, the private respondent prayed that a judicial declaration be made
of time, such downward trend of the peso cannot be considered as the extraordinary
that, as a separate and independent corporation, it is not liable for the obligations and liabilities
phenomenon contemplated by Article 1250 of the Civil Code. Furthermore, absent an official
of C.F. Sharp Kabushiki Kaisha.
pronouncement or declaration by competent authorities of the existence of extraordinary inflation
during a given period, the effects of extraordinary inflation are not to be applied. 25
Since the defendants are non-residents, without business addresses in the Philippines but in
Japan, the private respondent prayed for leave of court to effect extraterritorial service of
WHEREFORE, premises considered, the petition is DENIED. The Decision of the Court of
summons.
Appeals in CA-G.R. CV No. 67784, dated September 3, 2001, and its Resolution dated
November 19, 2001, are AFFIRMED. SO ORDERED.
On June 11, 1980, the respondent judge issued an order authorizing the private respondent to
effect extraterritorial service of summons on defendants therein.
G.R. No. L-58340 July 16, 1991

KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO. LTD., NAIKAI TUG
BOAT SERVICE CO., THE PORT SERVICE CORPORATION, LICENSED LAND SEA PILOTS
ASSOCIATION, HAYAKOMA UNYU K.K., TOKYO KISEN COMPANY, LTD., OMORI
KAISOTEN, LTD., TOHOKU UNYU CO., LTD. AND SEITETSU UNYU CO., LTD., petitioners,
vs.
THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First Instance of Manila,
and C.F. SHARP & CO., INC., respondents.
Subsequently, private respondent filed an urgent ex-parte motion dated June 23, 1980 for
Extraterritorial Service of Summons Upon Defendants by registered mail with return cards
pursuant to Section 17 of Rule 14 of the Rules of Court.
Acting on said motion, the respondent judge issued an order dated June 30, 1980 granting the
motion and authorizing extraterritorial service of summons upon defendants to be effected by
registered mail with return cards.

BIDIN, J.:
This is a petition for certiorari seeking to set aside the orders of the then Court of First Instance
of Manila, * Branch XXIV in Civil Case No. 132077: (a) dated July 13, 1981 denying the special
appearances of petitioners as defendants in said case to question the court's jurisdiction over
the persons of the defendants and (b) dated September 22, 1981, denying the motion for
reconsideration of said order.
The antecedents of this case are as follows:
On March 11, 1981, five of the petitioners, Kawasaki Port Service Corporation, Naikai Shipping
Co., Ltd., Naikai Tug Boat Service Co., Ltd., The Port Service Corporation and Licensed Land
Sea Pilots Association filed their "Special Appearance to Question Jurisdiction of This Honorable
Court Over Persons of Defendants" contending that the lower court does not and cannot acquire
jurisdiction over the persons of defendants on the grounds that private respondent's action does
not refer to its personal status; that the action does not have for subject matter property
contemplated in Section 17 of Rule 14 of the Rules of Court, that the action does not pray that
defendants be excluded from any interest or property in the Philippines; that no property of the
defendants has been attached; that the action is in personam; and that the action does not fall
within any of the four cases mentioned in Section 17, Rule 14 of the Rules of Court.

On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed a complaint for injunction On March 17, 1981, another three of herein petitioners, Hayakoma Unyu K.K., Tokyo Kisen
and/or declaratory relief in the then Court of First Instance of Manila against seventy-nine (79) Company, Ltd. and Omori Kaisoten, Ltd. also filed their special appearance adopting the same
Japanese corporations as defendants, among which are the petitioners herein. Said complaint arguments as that of the first five.
was docketed as Civil Case No. 132077. The complaint alleges, among others, that the plaintiff
is a corporation organized and existing under the laws of the Philippines; that there is another
On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd. and Seitetsu Unyu Co., Ltd.,
corporation organized under the law of Japan with the corporate name C.F. Sharp Kabushiki
filed their "Special Appearance to Question the Jurisdiction of the Honorable Court" over their
Kaisha; that the plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects separate and
persons adopting in toto as theirs the "Special Appearance" dated March 11, 1981 of Kawasaki
distinct from each other; that C.F. Sharp Kabushiki Kaisha appears to have incurred obligations
Port Service.
to several creditors amongst which are defendants, also foreign corporations organized and
existing under the laws of Japan; that due to financial difficulties, C.F. Sharp Kabushiki Kaisha
failed and/or refused to pay its creditors; and that in view of the failure and/or refusal of said C.F. On July 13, 1981, the respondent Court issued its order denying said special appearances. The
Sharp Kabushiki Kaisha to pay its alleged obligations to defendants, the latter have been motion for reconsideration of said order filed by the petitioners was also denied on September
demanding or have been attempting to demand from C.F. Sharp & Co., Inc., the payment of the 22, 1981.
alleged obligations to them of C.F. Sharp Kabushiki Kaisha, notwithstanding that C.F. Sharp &
Co., Inc. is a corporation separate and distinct from that of C.F. Sharp Kabushiki Kaisha and that
the former had no participation whatsoever or liability in connection with the transactions Hence, the present petition.
between the latter and the defendants.
After the required pleadings were filed, the First Division of this Court, in the resolution of April
14, 1982, gave due course to the petition and required both parties to submit simultaneous
memoranda within thirty (30) days from notice. Both parties complied by submitting the required
memoranda.
The main issue in this case is whether or not private respondent's complaint for injunction and/or
declaratory relief is within the purview of the provisions of Section 17, Rule 14 of the Rules of
Court.
The petitioners contend that the respondent judge acted contrary to the provisions of Section 17
of Rule 14 for the following reasons: (1) private respondent's prayer for injunction, as a
consequence of its alleged non-liability to the petitioners for debts of C.F. Sharp Kabushiki
Kaisha of Japan, conclusively establishes that private respondent's cause of action does not
affect its status; (2) the respondent court cannot take jurisdiction of actions against the
petitioners as they are non-residents and own no property within the state; (3) the petitioners
have not as yet claimed a lien or interest in the property within the Philippines at the time the
action was filed which is a requirement under Section 17 of Rule 14; (4) extra-territorial service
on a non-resident defendant is authorized, among others, when the subject of the action is
property within the Philippines in which the relief demanded consists in excluding defendant from
any interest therein; and (5) inasmuch as the reliefs prayed for by the private respondent in the
complaint are in personam, service by registered mail cannot be availed of because Section 17
of Rule 14 authorized this mode of service only in actions in rem or quasi in rem.
For its part, the private respondent countered that (1) the action refers to its status because the
basic issue presented to the lower court for determination is its status as a corporation which
has a personality that is separate, distinct and independent from the personality of another
corporation, i.e., C.F. Sharp Kabushiki Kaisha of Japan; (2) under Section 17 of Rule 14, the
subject matter or property involved in the action does not have to belong to the defendants. The
provisions of said section contemplate of a situation where the property belongs to the plaintiff
but the defendant has a claim over said property, whether that claim be actual or contingent; (3)
the prayer of the plaintiff that the defendants be excluded from any interest in the properties of
the plaintiff within the Philippines has the effect of excluding the defendants from the properties
of the plaintiff in the Philippines for the purpose of answering for the debts of C.F. Sharp
Kabushiki Kaisha of Japan to the defendants in accordance with Section 17 of Rule 14; and (4)
the action before the lower court is an action quasi in rem as the remedies raised in the
complaint affect the personal status of the plaintiff as a separate, distinct and independent
corporation and relates to the properties of the plaintiff in the Philippines over which the
petitioners have or claim an interest, actual or contingent.
The petition is impressed with merit.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service. When the defendant does not reside and is not found in
the Philippines and the action affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims a lien or
interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of court, be effected out of the Philippines
by personal service as under section 7; or by publication in a newspaper of general circulation in
such places and for such times as the court may order, in which case a copy of the summons
and order of the court shall be sent by registered mail to the last known address of the
defendant, or in any other manner the court may deem sufficient. Any order granting such leave
shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within
which the defendant must answer.
This Court had ruled that extraterritorial service of summons is proper only in four (4) instances,
namely: "(1) when the action affects the personal status of the plaintiffs: (2) when the action
relates to, or the subject of which is, property within the Philippines, in which the defendant has
or claims a lien or interest, actual or contingent; (3) when the relief demanded in such action
consists, wholly or in part, in excluding the defendant from any interest in property located in the
Philippines; and (4) when the defendant non-resident's property has been attached within the
Philippines." (De Midgely v. Ferandos, 64 SCRA 23 [1975]; The Dial Corporation v. Soriano, 161
SCRA 737 [1988]).
In the case at bar, private respondent has two (2) alternative principal causes of action, to wit:
either for declaratory relief or for injunction. Allegedly, in both cases, the status of the plaintiff is
not only affected but is the main issue at hand.
As defined, "Status means a legal personal relationship, not temporary in nature nor terminable
at the mere will of the parties, with which third persons and the state are concerned" (Holzer v.
Deutsche Reichsbahn Gesellschaft, 290 NYS 181; cited in 40 Words and Phrases, 129,
Permanent Edition).
It is easy to see in the instant case, that what is sought is a declaration not only that private
respondent is a corporation for there is no dispute on that matter but also that it is separate and
distinct from C.F. Sharp Kabushiki Kaisha and therefore, not liable for the latter's indebtedness.
It is evident that monetary obligations does not, in any way, refer to status, lights and obligations.
Obligations are more or less temporary, but status is relatively permanent. But more importantly,
as cited in the case of (Dy Poco v. Commissioner of Immigration, et al., 16 SCRA 618 [1966]),
the prevailing rule is that "where a declaratory judgment as to a disputed fact would be
determinative of issues rather than a construction of definite stated rights, status and other
relations, commonly expressed in written instrument, the case is not one for declaratory
judgment." Thus, considering the nature of a proceeding for declaratory judgment, wherein relief
may be sought only to declare rights and not to determine or try issues, there is more valid
reason to adhere to the principle that a declaratory relief proceeding is unavailable where
judgment would have to be made, only after a judicial investigation of disputed issues (ibid). In
fact, private respondent itself perceives that petitioners may even seek to pierce the veil of
corporate identity (Rollo, p. 63).
Private respondent alleges that most if not all, of the petitioners have merely demanded or have
attempted to demand from the former the payment of the obligations of C.F. Sharp K.K., (Rollo,
p. 63). Otherwise stated, there is no action relating to or the subject of which are the properties
of the defendants in the Philippines for it is beyond dispute that they have none in this
jurisdiction nor can it be said that they have claimed any lien or interest, actual or contingent
over any property herein, for as above stated, they merely demanded or attempted to demand
from private respondent payment of the monetary obligations of C.F. Sharp K.K., No action in
court has as yet ensued. Verily, the fact that C.F. Sharp Philippines is an entity separate and
distinct from C.F. Sharp K.K., is a matter of defense that can be raised by the former at the
proper time.
Finally, the alternative relief sought is injunction, that is to enjoin petitioners from demanding
from private respondent the payment of the obligations of C.F. Sharp K.K., It was not prayed that
petitioners be excluded from any property located in the Philippines, nor was it alleged, much
less shown, that the properties of the defendants, if any, have been attached.
Hence, as ruled by this Court, where the complaint does not involve the personal status of
plaintiff, nor any property in the Philippines in which defendants have or claim an interest, or
which the plaintiff has attached, but purely an action for injunction, it is a personal action as well
as an action in personam, not an action in rem or quasi in rem. As a personal action, personal or
substituted service of summons on the defendants, not extraterritorial service, is necessary to
confer jurisdiction on the court. In an action for injunction, extra-territorial service of summons
and complaint upon the non-resident defendants cannot subject them to the processes of the
regional trial courts which are powerless to reach them outside the region over which they
exercise their authority. Extra-territorial service of summons will not confer on the court
jurisdiction or Power to compel them to obey its orders (Dial Corporation v. Soriano, 161 SCRA
738 [1988] citing Section 3-a Interim Rules of Court, Section 21, subpar. 1, BP Blg. 129).
Considering that extra-territorial service of summons on the petitioners was improper, the same
was null and void.
WHEREFORE, the petition is Granted and the questioned orders dated July 13, 1981 and
September 22, 1981 of the respondent Judge, are Reversed and Set Aside. SO ORDERED.
G.R. No. 144101 September 16, 2005
ANTONIO P. TAMBUNTING, JR. and COMMERCIAL HOUSE OF FINANCE, INC., Petitioners,
vs.
SPOUSES EMILIO SUMABAT and ESPERANZA BAELLO, Respondent.
CORONA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court assails the February 11,
2000 decision of the Regional Trial Court (RTC) of Caloocan City, Branch 120, in Civil Case No.
C-16822.
This case involves a dispute over a parcel of land situated in Caloocan City covered by TCT No.
(87655) 18837. It was previously registered in the names of respondents, spouses Emilio
Sumabat and Esperanza Baello. On May 3, 1973, respondents mortgaged it to petitioner
Antonio Tambunting, Jr. to secure the payment of a 7,727.95 loan. In August 1976,
respondents were informed that their indebtedness had ballooned to 15,000 for their failure to
pay the monthly amortizations. In May 1977, because respondents defaulted in their obligation,
petitioner Commercial House of Finance, Inc. (CHFI), as assignee of the mortgage, initiated
foreclosure proceedings on the mortgaged property but the same did not push through. It was
restrained by the then Court of First Instance (CFI) of Caloocan City, Branch 33 (now RTC
Branch 123) in Civil Case No. C-6329, a complaint for injunction filed by respondents against
petitioners. However, the case was subsequently dismissed for failure of the parties to appear at
the hearing on November 9, 1977.
On March 16, 1979, respondents filed an action for declaratory relief with the CFI of Caloocan
City, Branch 33, seeking a declaration of the extent of their actual indebtedness. It was docketed
as Civil Case No. C-7496. Petitioners were declared in default for failure to file an answer within
the reglementary period. They moved for the dismissal of the action on the ground that its
subject, the mortgage deed, had already been breached prior to the filing of the action. The
motion was denied for having been filed out of time and petitioners had already been declared in
default.
On January 8, 1981, the CFI rendered its decision. It fixed respondents liability at 15,743.83
and authorized them to consign the amount to the court for proper disposition. In compliance
with the decision, respondents consigned the required amount on January 9, 1981.
In March 1995, respondents received a notice of sheriffs sale indicating that the mortgage had
been foreclosed by CHFI on February 8, 1995 and that an extrajudicial sale of the property
would be held on March 27, 1995.
On March 27, 1995, respondents instituted Civil Case No. C-16822, a petition for preliminary
injunction, damages and cancellation of annotation of encumbrance with prayer for the issuance
of a temporary restraining order, with the RTC of Caloocan City, Branch 120. However, the
public auction scheduled on that same day proceeded and the property was sold to CHFI as the
highest bidder. Respondents failed to redeem the property during the redemption period. Hence,
title to the property was consolidated in favor of CHFI and a new certificate of title (TCT No.
310191) was issued in its name. In view of these developments, respondents amended their
complaint to an action for nullification of foreclosure, sheriffs sale and consolidation of title,
reconveyance and damages.
On February 11, 2000, the RTC issued the assailed decision. It ruled that the 1981 CFI decision
in Civil Case No. C-7496 (fixing respondents liability at 15,743.83 and authorizing
consignation) had long attained finality. The mortgage was extinguished when respondents paid
their indebtedness by consigning the amount in court. Moreover, the ten-year period within
which petitioners should have foreclosed the property was already barred by prescription. They
abused their right to foreclose the property and exercised it in bad faith. As a consequence, the
trial court nullified the foreclosure and extrajudicial sale of the property, as well as the
consolidation of title in CHFIs name in 1995. It then ordered the register of deeds of Caloocan
City to cancel TCT No. 310191 and to reconvey the property to respondents. It also held
petitioners liable for moral damages, exemplary damages and attorneys fees.
Petitioners moved for a reconsideration of the trial courts decision but it was denied. Hence, this
petition.
Petitioners claim that the trial court erred when it affirmed the validity of the consignation. They
insist that the CFI was barred from taking cognizance of the action for declaratory relief since,
petitioners being already in default in their loan amortizations, there existed a violation of the
mortgage deed even before the institution of the action. Hence, the CFI could not have rendered
a valid judgment in Civil Case No. C-7496 and the consignation made pursuant to a void
judgment was likewise void. Respondents also fault the trial court for holding that their right to
foreclose the property had already prescribed.
True, the trial court erred when it ruled that the 1981 CFI decision in Civil Case No. C-7496 was
already final and executory.
An action for declaratory relief should be filed by a person interested under a deed, will, contract
or other written instrument, and whose rights are affected by a statute, executive order,
regulation or ordinance before breach or violation thereof.1 The purpose of the action is to
secure an authoritative statement of the rights and obligations of the parties under a statute,
deed, contract, etc. for their guidance in its enforcement or compliance and not to settle issues
arising from its alleged breach.2 It may be entertained only before the breach or violation of the
statute, deed, contract, etc. to which it refers.3 Where the law or contract has already been
contravened prior to the filing of an action for declaratory relief, the court can no longer assume
jurisdiction over the action.4 In other words, a court has no more jurisdiction over an action for
declaratory relief if its subject, i.e., the statute, deed, contract, etc., has already been infringed or
transgressed before the institution of the action. Under such circumstances, inasmuch as a
cause of action has already accrued in favor of one or the other party, there is nothing more for
the court to explain or clarify short of a judgment or final order.
Here, an infraction of the mortgage terms had already taken place before the filing of Civil Case
No. C-7496. Thus, the CFI lacked jurisdiction when it took cognizance of the case in 1979. And
in the absence of jurisdiction, its decision was void and without legal effect. As this Court held
in Arevalo v. Benedicto:5
Furthermore, the want of jurisdiction by a court over the subject-matter renders its judgment void
and a mere nullity, and considering that a void judgment is in legal effect no judgment, by which
no rights are divested, from which no rights can be obtained, which neither binds nor bars any
one, and under which all acts performed and all claims flowing out of are void, and considering
further, that the decision, for want of jurisdiction of the court, is not a decision in contemplation of
law, and, hence, can never become executory, it follows that such a void judgment cannot
constitute a bar to another case by reason of res judicata.
Nonetheless, the petition must fail.
Article 1142 of the Civil Code is clear. A mortgage action prescribes after ten years.
An action to enforce a right arising from a mortgage should be enforced within ten years from the
time the right of action accrues.6 Otherwise, it will be barred by prescription and the mortgage
creditor will lose his rights under the mortgage.
Here, petitioners right of action accrued in May 1977 when respondents defaulted in their
obligation to pay their loan amortizations. It was from that time that the ten-year period to
enforce the right under the mortgage started to run. The period was interrupted when
respondents filed Civil Case No. C-6329 sometime after May 1977 and the CFI restrained the
intended foreclosure of the property. However, the period commenced to run again on
November 9, 1977 when the case was dismissed.
The respondents institution of Civil Case No. C-7496 in the CFI on March 16, 1979 did not
interrupt the running of the ten-year prescriptive period because, as discussed above, the court
lacked jurisdiction over the action for declaratory relief. All proceedings therein were without
legal effect. Thus, petitioners could have enforced their right under the mortgage, including its
foreclosure, only until November 7, 1987, the tenth year from the dismissal of Civil Case No. C-
6329. Thereafter, their right to do so was already barred by prescription.
The foreclosure held on February 8, 1995 was therefore some seven years too late. The same
thing can be said about the public auction held on March 27, 1995, the consolidation of title in
CHFIs favor and the issuance of TCT No. 310191 in its name. They were all void and did not
exist in the eyes of the law.
WHEREFORE, the petition is hereby DENIED. Costs against petitioners. SO ORDERED.
G.R. No. 164171 February 20, 2006
HON. EXECUTIVE SECRETARY, HON. SECRETARY OF THE DEPARTMENT OF
TRANSPORTATION AND COMMUNICATIONS (DOTC), COMMISSIONER OF CUSTOMS,
ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE (LTO), COLLECTOR OF
CUSTOMS, SUBIC BAY FREE PORT ZONE, AND CHIEF OF LTO, SUBIC BAY FREE PORT
ZONE, Petitioners,
vs.
SOUTHWING HEAVY INDUSTRIES, INC., represented by its President JOSE T. DIZON,
UNITED AUCTIONEERS, INC., represented by its President DOMINIC SYTIN, and
MICROVAN, INC., represented by its President MARIANO C. SONON, Respondents.
x---------------x
G.R. No. 164172 February 20, 2006
HON. EXECUTIVE SECRETARY, SECRETARY OF THE DEPARTMENT OF
TRANSPORTATION AND COMMUNICATION (DOTC), COMMISSIONER OF CUSTOMS,
ASSISTANT SECRETARY, LAND TRANSPORTATION OFFICE (LTO), COLLECTOR OF
CUSTOMS, SUBIC BAY FREE PORT ZONE AND CHIEF OF LTO, SUBIC BAY FREE PORT
ZONE, Petitioners,
vs.
SUBIC INTEGRATED MACRO VENTURES CORP., represented by its President YOLANDA
AMBAR,Respondent.
x---------------x
G.R. No. 168741 February 20, 2006
HON. EXECUTIVE SECRETARY, HON. SECRETARY OF FINANCE, THE CHIEF OF THE
LAND TRANSPORTATION OFFICE, THE COMMISSIONER OF CUSTOMS, and THE
COLLECTOR OF CUSTOMS, SUBIC SPECIAL ECONOMIC ZONE, Petitioners,
vs.
MOTOR VEHICLE IMPORTERS ASSOCIATION OF SUBIC BAY FREEPORT, INC.,
represented by its President ALFREDO S. GALANG, Respondent.
YNARES-SANTIAGO, J.:
The instant consolidated petitions seek to annul and set aside the Decisions of the Regional
Trial Court of Olongapo City, Branch 72, in Civil Case No. 20-0-04 and Civil Case No. 22-0-04,
both dated May 24, 2004; and the February 14, 2005 Decision of the Court of Appeals in CA-
G.R. SP. No. 83284, which declared Article 2, Section 3.1 of Executive Order No. 156 (EO 156)
unconstitutional. Said executive issuance prohibits the importation into the country, inclusive of
the Special Economic and Freeport Zone or the Subic Bay Freeport (SBF or Freeport), of used
motor vehicles, subject to a few exceptions.
The undisputed facts show that on December 12, 2002, President Gloria Macapagal-Arroyo,
through Executive Secretary Alberto G. Romulo, issued EO 156, entitled "Providing for a
comprehensive industrial policy and directions for the motor vehicle development program and
its implementing guidelines." The challenged provision states:
3.1 The importation into the country, inclusive of the Freeport, of all types of used motor
vehicles is prohibited, except for the following:
3.1.1 A vehicle that is owned and for the personal use of a returning resident or immigrant and
covered by an authority to import issued under the No-dollar Importation Program. Such vehicles
cannot be resold for at least three (3) years;
3.1.2 A vehicle for the use of an official of the Diplomatic Corps and authorized to be imported by
the Department of Foreign Affairs;
3.1.3 Trucks excluding pickup trucks;
1. with GVW of 2.5-6.0 tons covered by an authority to import issued by the DTI.
2. With GVW above 6.0 tons.
3.1.4 Buses:
1. with GVW of 6-12 tons covered by an authority to import issued by DTI; judgment was rendered declaring that Article 2, Section 3.1 of EO 156 constitutes an unlawful
2. with GVW above 12 tons. usurpation of legislative power vested by the Constitution with Congress. The trial court further
held that the proviso is contrary to the mandate of Republic Act No. 7227 (RA 7227) or the
Bases Conversion and Development Act of 1992 which allows the free flow of goods and capital
3.1.5 Special purpose vehicles:
within the Freeport. The dispositive portion of the said decision reads:

1. fire trucks
WHEREFORE, judgment is hereby rendered in favor of petitioner declaring Executive Order 156
2. ambulances
[Article 2, Section] 3.1 for being unconstitutional and illegal; directing respondents Collector of
3. funeral hearse/coaches
Customs based at SBMA to allow the importation and entry of used motor vehicles pursuant to
4. crane lorries
the mandate of RA 7227; directing respondent Chief of the Land Transportation Office and its
5. tractor heads and truck tractors
subordinates inside the Subic Special Economic Zone or SBMA to process the registration of
6. boom trucks
imported used motor vehicle; and in general, to allow unimpeded entry and importation of used
7. tanker trucks
motor vehicles to the Philippines subject only to the payment of the required customs duties. SO
8. tank lorries with high pressure spray gun
ORDERED.2
9. reefers or refrigerated trucks
10. mobile drilling derricks
11. transit/concrete mixers From the foregoing decision, petitioners sought relief before this Court via a petition for review
12. mobile radiological units on certiorari, docketed as G.R. No. 164171.
13. wreckers or tow trucks
14. concrete pump trucks
G.R. No. 164172:
15. aerial/bucket flat-form trucks
16. street sweepers
17. vacuum trucks On January 20, 2004, respondent Subic Integrated Macro Ventures Corporation (Macro
18. garbage compactors Ventures) filed with the same trial court, a similar action for declaratory relief docketed as Civil
19. self loader trucks Case No. 22-0-04,3 with the same prayer and against the same parties4 as those in Civil Case
20. man lift trucks No. 20-0-04.
21. lighting trucks
22. trucks mounted with special purpose equipment
23. all other types of vehicle designed for a specific use. In this case, the trial court likewise rendered a summary judgment on May 24, 2004, holding that
Article 2, Section 3.1 of EO 156, is repugnant to the constitution. 5 Elevated to this Court via a
petition for review on certiorari, Civil Case No. 22-0-04 was docketed as G.R. No. 164172.
The issuance of EO 156 spawned three separate actions for declaratory relief before Branch 72
of the Regional Trial Court of Olongapo City, all seeking the declaration of the unconstitutionality
G.R. No. 168741
of Article 2, Section 3.1 of said executive order. The cases were filed by herein respondent
entities, who or whose members, are classified as Subic Bay Freeport Enterprises and engaged
in the business of, among others, importing and/or trading used motor vehicles. On January 22, 2003, respondent Motor Vehicle Importers Association of Subic Bay Freeport,
Inc. (Association), filed another action for declaratory relief with essentially the same prayer as
G.R. No. 164171: those in Civil Case No. 22-0-04 and Civil Case No. 20-0-04, against the Executive Secretary,
Secretary of Finance, Chief of the Land Transportation Office, Commissioner of Customs,
Collector of Customs at SBMA and the Chairman of SBMA. This was docketed as Civil Case No.
On January 16, 2004, respondents Southwing Heavy Industries, Inc., (Southwing) United 30-0-2003,6 before the same trial court.
Auctioneers, Inc. (United Auctioneers), and Microvan, Inc. (Microvan), instituted a declaratory
relief case docketed as Civil Case No. 20-0-04,1 against the Executive Secretary, Secretary of
Transportation and Communication, Commissioner of Customs, Assistant Secretary and Head In a decision dated March 10, 2004, the court a quo granted the Associations prayer and
of the Land Transportation Office, Subic Bay Metropolitan Authority (SBMA), Collector of declared the assailed proviso as contrary to the Constitution, to wit:
Customs for the Port at Subic Bay Freeport Zone, and the Chief of the Land Transportation
Office at Subic Bay Freeport Zone. 1. WHEREFORE, judgment is hereby rendered in favor of petitioner declaring
Executive Order 156 [Article 2, Section] 3.1 for being unconstitutional and
illegal; directing respondents Collector of Customs based at SBMA to allow
Southwing, United Auctioneers and Microvan prayed that judgment be rendered (1) declaring
Article 2, Section 3.1 of EO 156 unconstitutional and illegal; (2) directing the Secretary of the importation and entry of used motor vehicles pursuant to the mandate of
Finance, Commissioner of Customs, Collector of Customs and the Chairman of the SBMA to RA 7227; directing respondent Chief of the Land Transportation Office and
its subordinates inside the Subic Special Economic Zone or SBMA to
allow the importation of used motor vehicles; (2) ordering the Land Transportation Office and its
subordinates inside the Subic Special Economic Zone to process the registration of the imported process the registration of imported used motor vehicles; directing the
used motor vehicles; and (3) in general, to allow the unimpeded entry and importation of used respondent Chairman of the SBMA to allow the entry into the Su(1) Its
promulgation must be authorized by the legislature;
motor vehicles subject only to the payment of the required customs duties.
2. (2) It must be promulgated in accordance with the prescribed procedure;
3. (3) It must be within the scope of the authority given by the legislature; and
Upon filing of petitioners answer/comment, respondents Southwing and Microvan filed a motion 4. (4) It must be reasonable.18
for summary judgment which was granted by the trial court. On May 24, 2004, a summary
bic Special Economic Zone or SBMA imported used motor vehicle; and in general, to allow
unimpeded entry and importation of used motor vehicles to the Philippines subject only to the
payment of the required customs duties. SO ORDERED.7
Aggrieved, the petitioners in Civil Case No. 30-0-2003, filed a petition for certiorari8 with the
Court of Appeals (CA-G.R. SP. No. 83284) which denied the petition on February 14, 2005 and
sustained the finding of the trial court that Article 2, Section 3.1 of EO 156, is void for being
repugnant to the constitution. The dispositive portion thereof, reads: WHEREFORE, the instant
petition for certiorari is hereby DENIED. The assailed decision of the Regional Trial Court, Third
Judicial Region, Branch 72, Olongapo City, in Civil Case No. 30-0-2003, accordingly, STANDS.
SO ORDERED.9
The aforequoted decision of the Court of Appeals was elevated to this Court and docketed as
G.R. No. 168741. In a Resolution dated October 4, 2005,10 said case was consolidated with G.R.
No. 164171 and G.R. No. 164172.
Petitioners are now before this Court contending that Article 2, Section 3.1 of EO 156 is valid
and applicable to the entire country, including the Freeeport. In support of their arguments, they
raise procedural and substantive issues bearing on the constitutionality of the assailed proviso.
The procedural issues are: the lack of respondents locus standi to question the validity of EO
156, the propriety of challenging EO 156 in a declaratory relief proceeding and the applicability
of a judgment on the pleadings in this case.
Petitioners argue that respondents will not be affected by the importation ban considering that
their certificate of registration and tax exemption do not authorize them to engage in the
importation and/or trading of used cars. They also aver that the actions filed by respondents do
not qualify as declaratory relief cases. Section 1, Rule 63 of the Rules of Court provides that a
petition for declaratory relief may be filed before there is a breach or violation of rights.
Petitioners claim that there was already a breach of respondents supposed right because the
cases were filed more than a year after the issuance of EO 156. In fact, in Civil Case No. 30-0-
2003, numerous warrants of seizure and detention were issued against imported used motor
vehicles belonging to respondent Associations members.
Petitioners arguments lack merit.
The established rule that the constitutionality of a law or administrative issuance can be
challenged by one who will sustain a direct injury as a result of its enforcement 11 has been
satisfied in the instant case. The broad subject of the prohibited importation is "all types of used
motor vehicles." Respondents would definitely suffer a direct injury from the implementation of
EO 156 because their certificate of registration and tax exemption authorize them to trade and/or
import new and used motor vehicles and spare parts, except "used cars."12 Other types of
motor vehicles imported and/or traded by respondents and not falling within the category
of used cars would thus be subjected to the ban to the prejudice of their business. Undoubtedly,
respondents have the legal standing to assail the validity of EO 156.
As to the propriety of declaratory relief as a vehicle for assailing the executive issuance, suffice it
to state that any breach of the rights of respondents will not affect the case. In Commission on
Audit of the Province of Cebu v. Province of Cebu,13 the Court entertained a suit for declaratory
relief to finally settle the doubt as to the proper interpretation of the conflicting laws involved,
notwithstanding a violation of the right of the party affected. We find no reason to deviate from
said ruling mindful of the significance of the present case to the national economy.
So also, summary judgments were properly rendered by the trial court because the issues
involved in the instant case were pure questions of law. A motion for summary judgment is
premised on the assumption that the issues presented need not be tried either because these
are patently devoid of substance or that there is no genuine issue as to any pertinent fact. It is a
method sanctioned by the Rules of Court for the prompt disposition of a civil action in which the
pleadings raise only a legal issue, not a genuine issue as to any material fact. 14
At any rate, even assuming the procedural flaws raised by petitioners truly exist, the Court is not
precluded from brushing aside these technicalities and taking cognizance of the action filed by
respondents considering its importance to the public and in keeping with the duty to determine
whether the other branches of the government have kept themselves within the limits of the
Constitution.15
We now come to the substantive issues, which are: (1) whether there is statutory basis for the
issuance of EO 156; and (2) if the answer is in the affirmative, whether the application of Article
2, Section 3.1 of EO 156, reasonable and within the scope provided by law.
The main thrust of the petition is that EO 156 is constitutional because it was issued pursuant to
EO 226, the Omnibus Investment Code of the Philippines and that its application should be
extended to the Freeport because the guarantee of RA 7227 on the free flow of goods into the
said zone is merely an exemption from customs duties and taxes on items brought into the
Freeport and not an open floodgate for all kinds of goods and materials without restriction.
In G.R. No. 168741, the Court of Appeals invalidated Article 2, Section 3.1 of EO 156, on the
ground of lack of any statutory basis for the President to issue the same. It held that the
prohibition on the importation of used motor vehicles is an exercise of police power vested on
the legislature and absent any enabling law, the exercise thereof by the President through an
executive issuance, is void.
Police power is inherent in a government to enact laws, within constitutional limits, to promote
the order, safety, health, morals, and general welfare of society. It is lodged primarily with the
legislature. By virtue of a valid delegation of legislative power, it may also be exercised by the
President and administrative boards, as well as the lawmaking bodies on all municipal levels,
including the barangay.16 Such delegation confers upon the President quasi-legislative
power which may be defined as the authority delegated by the law-making body to the
administrative body to adopt rules and regulations intended to carry out the provisions of the law
and implement legislative policy.17 To be valid, an administrative issuance, such as an executive
order, must comply with the following requisites:
Contrary to the conclusion of the Court of Appeals, EO 156 actually satisfied the first
requisite of a valid administrative order. It has both constitutional and statutory bases.
Delegation of legislative powers to the President is permitted in Section 28(2) of Article VI of the
Constitution. It provides:
(2) The Congress may, by law, authorize the President to fix within specified limits, and subject
to such limitations and restrictions as it may impose, tariff rates, import and export quotas,
tonnage and wharfage dues, and other duties or imposts within the framework of the national
development program of the Government.19 (Emphasis supplied)
The relevant statutes to execute this provision are:
1) The Tariff and Customs Code which authorizes the President, in the interest of national
economy, general welfare and/or national security, to, inter alia, prohibit the importation of any
commodity. Section 401 thereof, reads:
Sec. 401. Flexible Clause.
a. In the interest of national economy, general welfare and/or national security, and
subject to the limitations herein prescribed, the President, upon recommendation of the
National Economic and Development Authority (hereinafter referred to as NEDA), is
hereby empowered: x x x (2) to establish import quota or to ban imports of any
commodity, as may be necessary; x x x Provided, That upon periodic investigations by the
Tariff Commission and recommendation of the NEDA, the President may cause a gradual
reduction of protection levels granted in Section One hundred and four of this Code, including
those subsequently granted pursuant to this section. (Emphasis supplied)
2) Executive Order No. 226, the Omnibus Investment Code of the Philippines which was issued
on July 16, 1987, by then President Corazon C. Aquino, in the exercise of legislative power
under the Provisional Freedom Constitution,20 empowers the President to approve or reject the
prohibition on the importation of any equipment or raw materials or finished products. Pertinent
provisions thereof, read:
ART. 4. Composition of the board. The Board of Investments shall be composed of seven (7)
governors: The Secretary of Trade and Industry, three (3) Undersecretaries of Trade and
Industry to be chosen by the President; and three (3) representatives from the government
agencies and the private sector x x x.
ART. 7. Powers and duties of the Board.
(12) Formulate and implement rationalization programs for certain industries whose operation
may result in dislocation, overcrowding or inefficient use of resources, thus impeding economic
growth. For this purpose, the Board may formulate guidelines for progressive manufacturing
programs, local content programs, mandatory sourcing requirements and dispersal of
industries. In appropriate cases and upon approval of the President, the Board may
restrict, either totally or partially, the importation of any equipment or raw materials or
finished products involved in the rationalization program; (Emphasis supplied)
3) Republic Act No. 8800, otherwise known as the "Safeguard Measures Act" (SMA), and
entitled "An Act Protecting Local Industries By Providing Safeguard Measures To Be Undertaken
In Response To Increased Imports And Providing Penalties For Violation Thereof," 21 designated
the Secretaries22 of the Department of Trade and Industry (DTI) and the Department of
Agriculture, in their capacity as alter egos of the President, as the implementing authorities of the
safeguard measures, which include, inter alia, modification or imposition of any quantitative
restriction on the importation of a product into the Philippines. The purpose of the SMA is stated
in the declaration of policy, thus:
SEC. 2. Declaration of Policy. The State shall promote competitiveness of domestic industries
and producers based on sound industrial and agricultural development policies, and efficient use
of human, natural and technical resources. In pursuit of this goal and in the public interest, the
State shall provide safeguard measures to protect domestic industries and producers from
increased imports which cause or threaten to cause serious injury to those domestic industries
and producers.
There are thus explicit constitutional and statutory permission authorizing the President to ban or
regulate importation of articles and commodities into the country.
Anent the second requisite, that is, that the order must be issued or promulgated in accordance
with the prescribed procedure, it is necessary that the nature of the administrative issuance is
properly determined. As in the enactment of laws, the general rule is that, the promulgation of
administrative issuances requires previous notice and hearing, the only exception being where
the legislature itself requires it and mandates that the regulation shall be based on certain facts
as determined at an appropriate investigation.23 This exception pertains to the issuance
of legislative rules as distinguished from interpretative rules which give no real consequence
more than what the law itself has already prescribed;24 and are designed merely to provide
guidelines to the law which the administrative agency is in charge of enforcing. 25 A legislative
rule, on the other hand, is in the nature of subordinate legislation, crafted to implement a primary
legislation.
In Commissioner of Internal Revenue v. Court of Appeals,26 and Commissioner of Internal
Revenue v. Michel J. Lhuillier Pawnshop, Inc.,27 the Court enunciated the doctrine that when an
administrative rule goes beyond merely providing for the means that can facilitate or render less
cumbersome the implementation of the law and substantially increases the burden of those
governed, it behooves the agency to accord at least to those directly affected a chance to be
heard and, thereafter, to be duly informed, before the issuance is given the force and effect of
law.
In the instant case, EO 156 is obviously a legislative rule as it seeks to implement or execute
primary legislative enactments intended to protect the domestic industry by imposing a ban on
the importation of a specified product not previously subject to such prohibition. The due process
requirements in the issuance thereof are embodied in Section 40128 of the Tariff and Customs
Code and Sections 5 and 9 of the SMA29 which essentially mandate the conduct of investigation
and public hearings before the regulatory measure or importation ban may be issued.
In the present case, respondents neither questioned before this Court nor with the courts below
the procedure that paved the way for the issuance of EO 156. What they challenged in their
petitions before the trial court was the absence of "substantive due process" in the issuance of
the EO.30 Their main contention before the court a quo is that the importation ban is illogical and
unfair because it unreasonably drives them out of business to the prejudice of the national
economy.
Considering the settled principle that in the absence of strong evidence to the contrary, acts of
the other branches of the government are presumed to be valid, 31 and there being no objection
from the respondents as to the procedure in the promulgation of EO 156, the presumption is that
said executive issuance duly complied with the procedures and limitations imposed by law.
To determine whether EO 156 has complied with the third and fourth requisites of a valid
administrative issuance, to wit, that it was issued within the scope of authority given by the
legislature and that it is reasonable, an examination of the nature of a Freeport under RA 7227
and the primordial purpose of the importation ban under the questioned EO is necessary.
RA 7227 was enacted providing for, among other things, the sound and balanced conversion of
the Clark and Subic military reservations and their extensions into alternative productive uses in
the form of Special Economic and Freeport Zone, or the Subic Bay Freeport, in order to promote
the economic and social development of Central Luzon in particular and the country in general.
The Rules and Regulations Implementing RA 7227 specifically defines the territory comprising
the Subic Bay Freeport, referred to as the Special Economic and Freeport Zone in Section 12 of
RA 7227 as "a separate customs territory consisting of the City of Olongapo and the Municipality
of Subic, Province of Zambales, the lands occupied by the Subic Naval Base and its contiguous
extensions as embraced, covered and defined by the 1947 Philippine-U.S. Military Base
Agreement as amended and within the territorial jurisdiction of Morong and Hermosa, Province
of Bataan, the metes and bounds of which shall be delineated by the President of the
Philippines; provided further that pending establishment of secure perimeters around the entire
SBF, the SBF shall refer to the area demarcated by the SBMA pursuant to Section 1332 hereof."
Among the salient provisions of RA 7227 are as follows:
SECTION 12. Subic Special Economic Zone.
The abovementioned zone shall be subject to the following policies:
(a) Within the framework and subject to the mandate and limitations of the Constitution and the
pertinent provisions of the Local Government Code, the Subic Special Economic Zone shall be
developed into a self-sustaining, industrial, commercial, financial and investment center to
generate employment opportunities in and around the zone and to attract and promote
productive foreign investments;
(b) The Subic Special Economic Zone shall be operated and managed as a separate customs
territory ensuring free flow or movement of goods and capital within, into and exported out of the
Subic Special Economic Zone, as well as provide incentives such as tax and duty-free
importations of raw materials, capital and equipment. However, exportation or removal of goods
from the territory of the Subic Special Economic Zone to the other parts of the Philippine territory
shall be subject to customs duties and taxes under the Customs and Tariff Code and other
relevant tax laws of the Philippines;
The Freeport was designed to ensure free flow or movement of goods and capital within a
portion of the Philippine territory in order to attract investors to invest their capital in a business
climate with the least governmental intervention. The concept of this zone was explained by
Senator Guingona in this wise:
Senator Guingona. Mr. President, the special economic zone is successful in many places,
particularly Hong Kong, which is a free port. The difference between a special economic zone
and an industrial estate is simply expansive in the sense that the commercial activities, including
the establishment of banks, services, financial institutions, agro-industrial activities, maybe
agriculture to a certain extent.
This delineates the activities that would have the least of government intervention, and
the running of the affairs of the special economic zone would be run principally by the
investors themselves, similar to a housing subdivision, where the subdivision owners
elect their representatives to run the affairs of the subdivision, to set the policies, to set
the guidelines.
We would like to see Subic area converted into a little Hong Kong, Mr. President, where
there is a hub of free port and free entry, free duties and activities to a maximum spur
generation of investment and jobs.
While the investor is reluctant to come in the Philippines, as a rule, because of red tape and
perceived delays, we envision this special economic zone to be an area where there will be
minimum government interference.
The initial outlay may not only come from the Government or the Authority as envisioned here,
but from them themselves, because they would be encouraged to invest not only for the land but
also for the buildings and factories. As long as they are convinced that in such an area they can
do business and reap reasonable profits, then many from other parts, both local and foreign,
would invest, Mr. President.33 (Emphasis, added)
With minimum interference from the government, investors can, in general, engage in any kind
of business as well as import and export any article into and out of the Freeport. These are
among the rights accorded to Subic Bay Freeport Enterprises under Section 39 of the Rules and
Regulations Implementing RA 7227, thus
SEC. 39. Rights and Obligations.- SBF Enterprises shall have the following rights and
obligations:
a. To freely engage in any business, trade, manufacturing, financial or service activity, and to
import and export freely all types of goods into and out of the SBF, subject to the provisions of
the Act, these Rules and other regulations that may be promulgated by the SBMA;
Citing, inter alia, the interpellations of Senator Enrile, petitioners claim that the "free flow or
movement of goods and capital" only means that goods and material brought within the Freeport
shall not be subject to customs duties and other taxes and should not be construed as an open
floodgate for entry of all kinds of goods. They thus surmise that the importation ban on motor
vehicles is applicable within the Freeport. Pertinent interpellations of Senator Enrile on the
concept of Freeport is as follows:
Senator Enrile: Mr. President, I think we are talking here of sovereign concepts, not territorial
concepts. The concept that we are supposed to craft here is to carve out a portion of our
terrestrial domain as well as our adjacent waters and say to the world: "Well, you can set up your
factories in this area that we are circumscribing, and bringing your equipment and bringing your
goods, you are not subject to any taxes and duties because you are not within the customs
jurisdiction of the Republic of the Philippines, whether you store the goods or only for purposes
of transshipment or whether you make them into finished products again to be reexported to
other lands."
My understanding of a "free port" is, we are in effect carving out a part of our territory
and make it as if it were foreign territory for purposes of our customs laws, and that
people can come, bring their goods, store them there and bring them out again, as long
as they do not come into the domestic commerce of the Republic.
We do not really care whether these goods are stored here. The only thing that we care is for
our people to have an employment because of the entry of these goods that are being
discharged, warehoused and reloaded into the ships so that they can be exported. That will
generate employment for us. For as long as that is done, we are saying, in effect, that we have
the least contact with our tariff and customs laws and our tax laws. Therefore, we consider these
goods as outside of the customs jurisdiction of the Republic of the Philippines as yet, until we
draw them from this territory and bring them inside our domestic commerce. In which case, they
have to pass through our customs gate. I thought we are carving out this entire area and convert
it into this kind of concept.34
However, contrary to the claim of petitioners, there is nothing in the foregoing excerpts which
absolutely limits the incentive to Freeport investors only to exemption from customs duties and
taxes. Mindful of the legislative intent to attract investors, enhance investment and boost the
economy, the legislature could not have limited the enticement only to exemption from taxes.
The minimum interference policy of the government on the Freeport extends to the kind of
business that investors may embark on and the articles which they may import or export into and
out of the zone. A contrary interpretation would defeat the very purpose of the Freeport and drive
away investors.
It does not mean, however, that the right of Freeport enterprises to import all types of goods and
article is absolute. Such right is of course subject to the limitation that articles absolutely
prohibited by law cannot be imported into the Freeport.35 Nevertheless, in determining whether
the prohibition would apply to the Freeport, resort to the purpose of the prohibition is necessary.
In issuing EO 156, particularly the prohibition on importation under Article 2, Section 3.1, the
President envisioned to rationalize the importation of used motor vehicles and to enhance the
capabilities of the Philippine motor manufacturing firms to be globally competitive producers of
completely build-up units and their parts and components for the local and export markets. 36 In
justifying the issuance of EO 156, petitioners alleged that there has been a decline in the sales
of new vehicles and a remarkable growth of the sales of imported used motor vehicles. To
address the same, the President issued the questioned EO to prevent further erosion of the
already depressed market base of the local motor vehicle industry and to curtail the harmful
effects of the increase in the importation of used motor vehicles. 37
Taking our bearings from the foregoing discussions, we hold that the importation ban runs afoul
the third requisitefor a valid administrative order. To be valid, an administrative issuance must
not be ultra vires or beyond the limits of the authority conferred. It must not supplant or modify
the Constitution, its enabling statute and other existing laws, for such is the sole function of the
legislature which the other branches of the government cannot usurp. As held in United BF
Homeowners Association v. BF Homes, Inc.:38
The rule-making power of a public administrative body is a delegated legislative power, which it
may not use either to abridge the authority given it by Congress or the Constitution or to enlarge
its power beyond the scope intended. Constitutional and statutory provisions control what rules
and regulations may be promulgated by such a body, as well as with respect to what fields are
subject to regulation by it. It may not make rules and regulations which are inconsistent with the
provisions of the Constitution or a statute, particularly the statute it is administering or which
created it, or which are in derogation of, or defeat, the purpose of a statute.
In the instant case, the subject matter of the laws authorizing the President to regulate or forbid
importation of used motor vehicles, is the domestic industry. EO 156, however, exceeded the
scope of its application by extending the prohibition on the importation of used cars to the
Freeport, which RA 7227, considers to some extent, a foreign territory.
The domestic industry which the EO seeks to protect is actually the "customs territory" which
is defined under the Rules and Regulations Implementing RA 7227, as follows:
"the portion of the Philippines outside the Subic Bay Freeport where the Tariff and
Customs Code of the Philippines and other national tariff and customs laws are in force
and effect."39
The proscription in the importation of used motor vehicles should be operative only outside the
Freeport and the inclusion of said zone within the ambit of the prohibition is an invalid
modification of RA 7227. Indeed, when the application of an administrative issuance modifies
existing laws or exceeds the intended scope, as in the instant case, the issuance becomes void,
not only for being ultra vires, but also for being unreasonable.
This brings us to the fourth requisite. It is an axiom in administrative law that administrative
authorities should not act arbitrarily and capriciously in the issuance of rules and regulations. To
be valid, such rules and regulations must be reasonable and fairly adapted to secure the end in
view. If shown to bear no reasonable relation to the purposes for which they were authorized to
be issued, then they must be held to be invalid.40
There is no doubt that the issuance of the ban to protect the domestic industry is a reasonable
exercise of police power. The deterioration of the local motor manufacturing firms due to the
influx of imported used motor vehicles is an urgent national concern that needs to be swiftly
addressed by the President. In the exercise of delegated police power, the executive can
therefore validly proscribe the importation of these vehicles. Thus, in Taxicab Operators of Metro
Manila, Inc. v. Board of Transportation,41 the Court held that a regulation phasing out taxi cabs
more than six years old is a valid exercise of police power. The regulation was sustained as
reasonable holding that the purpose thereof was to promote the convenience and comfort and
protect the safety of the passengers.
The problem, however, lies with respect to the application of the importation ban to the Freeport.
The Court finds no logic in the all encompassing application of the assailed provision to the
Freeport which is outside the customs territory. As long as the used motor vehicles do not enter
the customs territory, the injury or harm sought to be prevented or remedied will not arise. The
application of the law should be consistent with the purpose of and reason for the law. Ratione
cessat lex, et cessat lex. When the reason for the law ceases, the law ceases. It is not the letter
alone but the spirit of the law also that gives it life.42 To apply the proscription to the Freeport
would not serve the purpose of the EO. Instead of improving the general economy of the
country, the application of the importation ban in the Freeport would subvert the avowed purpose
of RA 7227 which is to create a market that would draw investors and ultimately boost the
national economy.
In similar cases, we also declared void the administrative issuance or ordinances concerned for
being unreasonable. To illustrate, in De la Cruz v. Paras,43 the Court held as unreasonable and
unconstitutional an ordinance characterized by overbreadth. In that case, the Municipality of
Bocaue, Bulacan, prohibited the operation of all night clubs, cabarets and dance halls within its
jurisdiction for the protection of public morals. As explained by the Court:
x x x It cannot be said that such a sweeping exercise of a lawmaking power by Bocaue could
qualify under the term reasonable. The objective of fostering public morals, a worthy and
desirable end can be attained by a measure that does not encompass too wide a field. Certainly
the ordinance on its face is characterized by overbreadth. The purpose sought to be achieved
could have been attained by reasonable restrictions rather than by an absolute prohibition. The
admonition in Salaveria should be heeded: "The Judiciary should not lightly set aside legislative
action when there is not a clear invasion of personal or property rights under the guise of police
regulation." It is clear that in the guise of a police regulation, there was in this instance a clear
invasion of personal or property rights, personal in the case of those individuals desirous of
patronizing those night clubs and property in terms of the investments made and salaries to be
earned by those therein employed.
Lupangco v. Court of Appeals,44 is a case involving a resolution issued by the Professional
Regulation Commission which prohibited examinees from attending review classes and
receiving handout materials, tips, and the like three days before the date of examination in order
to preserve the integrity and purity of the licensure examinations in accountancy. Besides being
unreasonable on its face and violative of academic freedom, the measure was found to be more
sweeping than what was necessary, viz:
Needless to say, the enforcement of Resolution No. 105 is not a guarantee that the alleged
leakages in the licensure examinations will be eradicated or at least minimized. Making the
examinees suffer by depriving them of legitimate means of review or preparation on those last
three precious days when they should be refreshing themselves with all that they have
learned in the review classes and preparing their mental and psychological make-up for the
examination day itself would be like uprooting the tree to get rid of a rotten branch. What is
needed to be done by the respondent is to find out the source of such leakages and stop it right
there. If corrupt officials or personnel should be terminated from their loss, then so be it. Fixers
or swindlers should be flushed out. Strict guidelines to be observed by examiners should be set
up and if violations are committed, then licenses should be suspended or revoked. x x x
In Lucena Grand Central Terminal, Inc. v. JAC Liner, Inc.,45 the Court likewise struck down as Said provision is declared VALID insofar as it applies to the Philippine territory outside the
unreasonable and overbreadth a city ordinance granting an exclusive franchise for 25 years, presently fenced-in former Subic Naval Base area and VOID with respect to its application to the
renewable for another 25 years, to one entity for the construction and operation of one common secured fenced-in former Subic Naval Base area. SO ORDERED.
bus and jeepney terminal facility in Lucena City. While professedly aimed towards alleviating the
traffic congestion alleged to have been caused by the existence of various bus and jeepney
G.R. No. 160208 June 30, 2008
terminals within the city, the ordinance was held to be beyond what is reasonably necessary to
solve the traffic problem in the city.
RAFAEL R. MARTELINO, BARCHELECHU S. MORALES, ROSELYN S. CACHAPERO,
REYNALDO R. EVANGELISTA, CESAR B. YAPE, LEONORA R. PARAS, SEGUNDINA I.
By parity of reasoning, the importation ban in this case should also be declared void for its too
IBARRA, RAQUEL G. HALNIN, ZAMORA I. DIAZ, and ARTHUR L. VEGA,* petitioners,
sweeping and unnecessary application to the Freeport which has no bearing on the objective of
vs.
the prohibition. If the aim of the EO is to prevent the entry of used motor vehicles from the
NATIONAL HOME MORTGAGE FINANCE CORPORATION and HOME DEVELOPMENT
Freeport to the customs territory, the solution is not to forbid entry of these vehicles into the
MUTUAL FUND, respondents.
Freeport, but to intensify governmental campaign and measures to thwart illegal ingress of used
motor vehicles into the customs territory.
QUISUMBING, J.:
At this juncture, it must be mentioned that on June 19, 1993, President Fidel V. Ramos issued
Executive Order No. 97-A, "Further Clarifying The Tax And Duty-Free Privilege Within The Subic On appeal is the Decision1 dated April 22, 2003 of the Court of Appeals in C.A.-G.R. CV No.
Special Economic And Free Port Zone," Section 1 of which provides: 70231, which had affirmed the March 12, 2001 Order2 of the Regional Trial Court (RTC), Branch
120, Caloocan City, dismissing Civil Case No. C-551 for declaratory relief and prohibition. Also
assailed is the appellate courts Resolution3 dated September 25, 2003, denying petitioners
SECTION 1. The following guidelines shall govern the tax and duty-free privilege within the
motion for reconsideration.
Secured Area of the Subic Special Economic and Free Port Zone:

The case stemmed from the petition for declaratory relief and prohibition with urgent prayer for
1.1. The Secured Area consisting of the presently fenced-in former Subic Naval Base shall be
the issuance of a temporary restraining order and/or preliminary injunction4 filed before the RTC
the only completely tax and duty-free area in the SSEFPZ. Business enterprises and individuals
of Caloocan City, by petitioners against the National Home Mortgage Finance Corporation
(Filipinos and foreigners) residing within the Secured Area are free to import raw materials,
(NHMFC) and the Home Development Mutual Fund (HDMF), herein respondents, and Sheriff
capital goods, equipment, and consumer items tax and dutry-free. Consumption items, however,
Alberto A. Castillo.5 Petitioners alleged that they obtained housing loans from respondents who
must be consumed within the Secured Area. Removal of raw materials, capital goods,
directly released the proceeds thereof to the subdivision developer, Shelter Philippines, Inc.
equipment and consumer items out of the Secured Area for sale to non-SSEFPZ registered
(Shelter).
enterprises shall be subject to the usual taxes and duties, except as may be provided herein.

However, Shelter failed to complete the subdivision according to its representations and the
In Tiu v. Court of Appeals46 as reiterated in Coconut Oil Refiners Association, Inc. v.
subdivision plan. They were thus compelled to spend their own resources to improve the
Torres,47 this provision limiting the special privileges on tax and duty-free importation in the
subdivision roads and alleys, and to install individual water facilities. Respondents, on the other
presently fenced-in former Subic Naval Base has been declared valid and constitutional and in
hand, failed to ensure Shelters completion of the subdivision. Instead, respondents ignored their
accordance with RA 7227. Consistent with these rulings and for easier management and
right to suspend amortization payments for Shelters failure to complete the subdivision, charged
monitoring of activities and to prevent fraudulent importation of merchandise and smuggling, the
interests and penalties on their outstanding loans, threatened to foreclose their mortgages and
free flow and importation of used motor vehicles shall be operative only within the "secured
initiated foreclosure proceedings against petitioner Rafael Martelino. Hence, they prayed that
area."
respondents be restrained from foreclosing their mortgages.

In sum, the Court finds that Article 2, Section 3.1 of EO 156 is void insofar as it is made
Moreover, petitioners specifically sought a declaration from the RTC (1) that their right as house
applicable to the presently secured fenced-in former Subic Naval Base area as stated in Section
and lot buyers to suspend payment to Shelter for its failure to fully develop the subdivision also
1.1 of EO 97-A. Pursuant to the separability clause48 of EO 156, Section 3.1 is declared valid
applied to respondents who released their loans directly to Shelter; and (2) that during the
insofar as it applies to the customs territory or the Philippine territory outside the presently
suspension of payment, respondents should not assess them accrued interests and penalties.
secured fenced-in former Subic Naval Base area as stated in Section 1.1 of EO 97-A. Hence,
Petitioners further prayed that they be allowed to pay their housing loans without interest and
used motor vehicles that come into the Philippine territory via the secured fenced-in former
penalties.
Subic Naval Base area may be stored, used or traded therein, or exported out of the Philippine
territory, but they cannot be imported into the Philippine territory outside of the secured fenced-in
former Subic Naval Base area. In its June 17, 1998 Order,6 the RTC set the preliminary injunction hearing, but said order,
including the summons and petition, were served only on the NHMFC and Sheriff
Castillo.7 Despite notice, the NHMFC failed to attend the preliminary injunction hearing. On July
WHEREFORE, the petitions are PARTIALLY GRANTED and the May 24, 2004 Decisions of
9, 1998, the RTC ordered that a writ of preliminary injunction be issued restraining the
Branch 72, Regional Trial Court of Olongapo City, in Civil Case No. 20-0-04 and Civil Case No.
respondents from foreclosing the mortgages on petitioners houses. 8 The writ9 was issued on
22-0-04; and the February 14, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 63284,
July 14, 1998.
are MODIFIED insofar as they declared Article 2, Section 3.1 of Executive Order No. 156, void in
its entirety.
On July 22, 1998, the NHMFC filed its Answer with Special and Affirmative
Defenses.10 Thereafter, the RTC ordered the parties to submit their pre-trial briefs and scheduled
the pre-trial conference.11
On August 10, 1998, the NHMFC filed a Manifestation and Motion to Dismiss the Petition on the
ground that the RTC had no jurisdiction over its person or over the subject matter of the case. 12
The next day, the HDMF moved to set aside the July 9, 1998 preliminary injunction order on the
ground that it was not notified of the hearing. The HDMF also stated that the petition should
have been filed with the Housing and Land Use Regulatory Board (HLURB) as the case involved
the developers failure to complete the subdivision. The HDMF alleged that the RTC had no
jurisdiction over the case or even to implead the HDMF which only financed petitioners housing
loans.13
Petitioners opposed the NHMFCs motion to dismiss and the HDMFs motion to set aside the
July 9, 1998 Order.14They said that the NHMFC stated no basis why the RTC lacked jurisdiction.
Since they sought a judicial declaration of their right to suspend amortization payments to
respondents, not to the subdivision developer, the HLURB had no jurisdiction over the case.
Petitioners also averred that the HDMF cannot claim ignorance of the preliminary injunction
hearing because the NHMFC was duly notified. They claimed that the HDMFs motion
constituted voluntary submission to the RTCs jurisdiction which cured the lack of service of
summons.
On February 10, 2000, petitioners moved to cite Atty. Florentino C. Delos Santos, Manager of
HDMFs Legal Department, in contempt for foreclosing the mortgage of Rosella T. Rosete15 and
threatening to pursue similar actions against petitioners, in defiance of the preliminary injunction
order.16
On March 12, 2001, the RTC, Branch 120, Caloocan City, issued an Order, decreeing as
follows:
WHEREFORE, premises considered: 1) The motion to set aside [the] order of this Court dated
July 9, 1998 is hereby granted; 2) The motion to cite defendant HDMF in contempt is denied;
and 3) The motion to dismiss is hereby granted and the herein petition is DISMISSED.SO
ORDERED.17
The RTC held that the July 9, 1998 Order was not applicable to the HDMF since it was not
notified of the preliminary injunction hearing. Thus, no basis existed to declare Atty. Delos
Santos in contempt of court.
In dismissing the case, the RTC ruled that the issue of non-completion of the subdivision should
have been brought before the HLURB. It also ruled that no judicial declaration can be made
because the petition was vague. The RTC assumed that the subject of the petition was Republic
Act No. 850118 or the Housing Loan Condonation Act of 1998 which was cited by petitioners. But
the RTC pointed out that petitioners failed to state which section of the law affected their rights
and needed judicial declaration. The RTC also noted that, as stated by petitioners, respondents
still foreclosed their mortgages, a breach of said law which rendered the petition for declaratory
relief improper. The proper remedy was an ordinary civil action, the RTC concluded.
The Court of Appeals affirmed the RTC Order. First, the appellate court ruled that the writ of
preliminary injunction was not valid against the HDMF since under Section 5,19 Rule 58 of the
Rules of Court, no preliminary injunction shall be granted without hearing and prior notice to the
party or person sought to be enjoined. The HDMF was not notified of the hearing and only
appeared before the RTC to object to its jurisdiction for non-service of summons. Second, the
appellate court held that petitioners were not denied due process because the motions to
dismiss and to set aside the July 9, 1998 Order both raised the issue of jurisdiction and were
duly heard. Petitioners even filed a memorandum. Third, the appellate court did not entertain the
issue of whether the petition for declaratory relief can be converted to an ordinary action for it
was not raised before the RTC. The Court of Appeals also denied the motion for reconsideration.
In this appeal, petitioners contend that the Court of Appeals erred:
I. IN AFFIRMING THE ORDER OF DISMISSAL OF THE TRIAL COURT BASED ON
A GROUND NOT ALLEGED IN THE MOTION TO DISMISS;
II. IN APPLYING THE RULING IN U. BAEZ ELECTRIC LIGHT CO., vs. ABRA
ELECTRIC COOPERATIVE[,] INC., (119 SCRA 90) TO SUPPORT THE ORDER OF
DISMISSAL BY THE TRIAL COURT;
III. IN NOT HOLDING THAT PETITIONERS WERE DENIED THEIR RIGHT TO DUE
PROCESS OF LAW WHEN THE TRIAL COURT FAVORABLY RESOLVED THE
MOTION TO DISMISS BASED ON A GROUND NOT RAISED IN THE MOTION TO
DISMISS;
IV. IN NOT HOLDING THAT THE PETITION SHOULD BE CONVERTED INTO AN
ORDINARY ACTION ASSUMING THAT DECLARATORY RELIEF IS NOT THE
PROPER REMEDY;
V. IN NOT HOLDING THAT THE TRIAL COURT HAD COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR . . . EXCESS OF JURISDICTION IN
GRANTING THE MOTION TO DISMISS;
VI. IN SUSTAINING THE RTC ORDER SETTING ASIDE THE INJUNCTIVE ORDER
BY NOT HOLDING THAT THE HOME DEVELOPMENT MUTUAL FUND IS DEEMED
TO HAVE VOLUNTARILY SUBMITTED TO THE JURISDICTION OF THE LOWER
COURT[.]20
In brief, the basic issues pertain (1) to the validity of the preliminary injunction order against the
HDMF and (2) the propriety of dismissing the petition for declaratory relief and prohibition.
Petitioners point out that, contrary to the finding of the Court of Appeals, the HDMF did not
question the lack of service of summons upon it nor did it raise the issue of jurisdiction of the
RTC over its person. What the HDMF protested, they say, were the lack of notice of the
preliminary injunction hearing and the RTCs lack of jurisdiction over the subject matter. But by
filing the motion to set aside the July 9, 1998 Order, the HDMF voluntarily submitted to the
RTCs jurisdiction.21
In its comment, the HDMF maintains that it was not notified of the preliminary injunction hearing
and this fact is admitted by petitioners. Thus, the preliminary injunction order is null and void. 22
We affirm the RTC and Court of Appeals ruling that the preliminary injunction order is not valid
against the HDMF. Section 5, Rule 58 of the Rules of Court expressly states that "[n]o
preliminary injunction shall be granted without hearing and prior notice to the party or person
sought to be enjoined." Here, petitioners even admit that the HDMF was not notified of the
preliminary injunction hearing. In fact, petitioners do not contest the lower courts ruling that the
July 9, 1998 Order cannot apply to the HDMF. They merely contend and insist that the HDMF
voluntarily submitted to the RTCs jurisdiction. Unfortunately, such contention is immaterial. The
issue involves the validity of the preliminary injunction order absent a notice of hearing for its
issuance to the HDMF, and not the HDMFs voluntary submission to the RTCs jurisdiction.
Petitioners also argue that the Court of Appeals erred when it sustained the RTCs dismissal of
the petition on a ground not relied upon by respondents. They contend that the RTC went
beyond the issue of jurisdiction raised by respondents by determining the sufficiency of the
petition and ruling that it was vague and improper. The basic issue petitioners raised is whether
their right under Section 2323 of Presidential Decree No. 95724 to suspend amortization
payments to the subdivision developer is equally available against respondents.
In response, the NHMFC "reiterates and adheres" to the lower courts ruling that the petition for
declaratory relief is a case of forum shopping considering consolidated HLRB Cases Nos. REM-
111585-4240 and REM-022690-4355 (HLRB cases) which were decided allegedly in petitioners
favor. The NHMFC also maintains that the RTC had no jurisdiction since petitioners complaint of
the developers failure to complete the subdivision is a case cognizable by the HLURB.
After a careful study of the case, we are in agreement to uphold the dismissal of the petition for
declaratory relief and prohibition.
I. Worthy of recall, the RTC held that respondents25 act of initiating foreclosure proceedings was
in breach of Rep. Act No. 8501 and rendered the action of declaratory relief improper. The RTC
suggested that the proper remedy is an ordinary civil action. Incidentally, this point is also related
to petitioners contention that the Court of Appeals should have ordered the conversion of their
petition filed before the RTC to an ordinary civil action, under the provisions of Section 6, 26 Rule
63 of the Rules of Court.
We agree with the RTC but hasten to point out that the RTC had not ruled on whether the
petition was also improper as a petition for prohibition. Indeed, under Section 1,27 Rule 63, a
person must file a petition for declaratory relief before breach or violation of a deed, will,
contract, other written instrument, statute, executive order, regulation, ordinance or any other
governmental regulation. In this case, the petitioners had stated in their petition that respondents
assessed them interest and penalties on their outstanding loans, initiated foreclosure
proceedings against petitioner Rafael Martelino as evidenced by the notice of extra-judicial
sale28 and threatened to foreclose the mortgages of the other petitioners, all in disregard of their
right to suspend payment to Shelter for its failure to complete the subdivision. Said statements
clearly mean one thing: petitioners had already suspended paying their amortization payments.
Unfortunately, their actual suspension of payments defeated the purpose of the action to secure
an authoritative declaration of their supposed right to suspend payment, for their guidance.
Thus, the RTC could no longer assume jurisdiction over the action for declaratory relief because
its subject initially unspecified, now identified as P.D. No. 957 and relied upon -- correctly or
otherwise -- by petitioners, and assumed by the RTC to be Rep. Act No. 8501, was breached
before filing the action. As we said in Tambunting, Jr. v. Sumabat:29
. . . The purpose of the action [for declaratory relief] is to secure an authoritative statement of the
rights and obligations of the parties under a statute, deed, contract, etc. for their guidance in its
enforcement or compliance and not to settle issues arising from its alleged breach. It may be
entertained only before the breach or violation of the statute, deed, contract, etc. to which it
refers. Where the law or contract has already been contravened prior to the filing of an action for
declaratory relief, the court can no longer assume jurisdiction over the action. Under such
circumstances, inasmuch as a cause of action has already accrued in favor of one or the other
party, there is nothing more for the court to explain or clarify short of a judgment or final order. 30
Under the circumstances, may the Court nonetheless allow the conversion of the petition for
declaratory relief and prohibition into an ordinary action? We are constrained to say: no.
Although Section 6, Rule 63 might allow such course of action, the respondents did not argue
the point, and we note petitioners failure to specify the ordinary action they desired. We also
cannot reasonably assume that they now seek annulment of the mortgages. Further, the records
support the Court of Appeals finding that this issue was not raised before the RTC. 31 The Court
of Appeals therefore properly refused to entertain the issue as it cannot be raised for the first
time on appeal.32
Relatedly, the Court had considered De La Llana, etc., et al. v. Alba, etc., et al.,33 where this
Court considered a petition erroneously entitled Petition for Declaratory Relief and/or for
Prohibition as an action for prohibition. That case involved the constitutionality of Batas
Pambansa Blg. 129 or the Judiciary Reorganization Act of 1980. Citing De La Llana, Justice
Florenz D. Regalado opined in his book34 that if the petition has far-reaching implications and it
raises questions that should be resolved, it may be treated as one for prohibition.
Assuming the Court can also treat the Petition for Declaratory Relief and Prohibition as an action
for prohibition, we must still hold that prohibition is improper. Prohibition is a remedy against
proceedings that are without or in excess of jurisdiction, or with grave abuse of discretion, there
being no appeal or other plain, speedy adequate remedy in the ordinary course of law. 35 But
here, the petition did not even impute lack of jurisdiction or grave abuse of discretion committed
by respondents and Sheriff Castillo regarding the foreclosure proceedings. Foreclosure of
mortgage is also the mortgagees right in case of non-payment of a debt secured by mortgage.
The mortgagee can sell the encumbered property to satisfy the outstanding debt. 36 Hence, the
HDMF cannot be faulted for exercising its right to foreclose the mortgages, 37 under the
provisions of Act No. 313538 as amended by Act No. 4118.39 We are not saying, however, that
the HDMF must exercise its right at all cost, considering that Rep. Act No. 8501 allows
condonation of loan penalties when appropriate.
We note that Rep. Act No. 8501 not only allows condonation of loan penalties, 40 it also grants to
the HDMF Board of Trustees the power to condone penalties imposed on loans of HDMF
members-borrowers who for, justifiable reasons, failed to pay on time any obligation due to the
HDMF.41 Notably, the law applies to borrowers who failed or refused to pay their monthly
amortizations due to structurally defective or substandard housing units and/or subdivisions
lacking in basic amenities such as water, light, drainage, good roads and others as required by
law.42And the rules promulgated by the HDMF provide that such refusal shall be considered as a
justifiable reason for failure to pay the required amortization.43 Furthermore, the Board of
Trustees of the HDMF may also consider other causes similarly justifiable. 44
Petitioners wanted to avail of the benefits of Rep. Act No. 8501 and said that "the most that
[respondents] should have done under the circumstances was to advise [them] about the
effectivity of said law and encourage them to apply thereunder."45 But instead of applying for
condonation of penalties and restructuring of their loans, they filed an erroneous petition before
the RTC. They need not wait for encouragement because the HDMF, the assignee of petitioners
loans, had already issued and published its rules according to the NHMFC. 46 Petitioners need
only to apply with the HDMF and squarely raise before the HDMF not only their refusal to pay
amortizations because of the defective subdivision a justifiable reason according to the rules
but also their implied imputation of negligence against respondents who allegedly released the
proceeds of their loans directly to Shelter, despite its failure to complete the subdivision.
The HDMF could then determine if the latter ground is also a justifiable cause for non-payment
of amortization. Surely, respondents would not espouse a policy to go after petitioners if they
were found justified. Respondents could even enhance administrative controls for releasing
future loans to protect borrower-mortgagors against subdivision developers who renege on their
obligations.
II. We cannot agree, however, with the RTCs ruling that the vagueness of the petition furnished
additional justification for its dismissal. If the petition for declaratory relief and prohibition was
vague, dismissal is not proper because the respondents may ask for more particulars. 47 Notably,
the NHMFC never assailed the supposed vagueness of the petition in its motion to dismiss nor
did it ask for more particulars before filing its answer. When the RTC also set the pre-trial
conference and ordered the parties to submit their pre-trial briefs, it even noted that the issues
had already been joined.48 Petitioners fairly stated also the necessary ultimate facts, except that
their action for declaratory relief was improper.
Moreover, the RTC made an assumption that Rep. Act No. 8501 was the subject matter of the
case. But while the petition mentioned the law, the declaration that petitioners sought was not
anchored on any of its provisions. The petition only stated that despite the effectivity of said law,
respondents still acted in bad faith and with undue haste in threatening petitioners with
foreclosures, instead of encouraging them to avail of its benefits.
III. On the matter of forum shopping, we find the claim unsubstantiated. The NHMFC has not
explained why there is forum shopping.49 It failed to show the elements of forum shopping, i.e.,
(1) identity of parties in the HLRB cases and this case; (2) identity of rights asserted or relief
prayed for; and (3) identity of the two preceding particulars so that the judgment in the HLRB
cases will be res judicata in this case.50 In any event, the decision in the HLRB cases, as
affirmed with modification by the HLURB Board of Commissioners, 51 ordered Shelter to complete
the subdivision roads, sidewalks, water, electrical and drainage systems. Thus, there is no forum
shopping since the petition for declaratory relief and prohibition filed by petitioners against
respondents is entirely different from the HLRB cases. Involved were different parties, rights
asserted and reliefs sought. Obviously, the NHMFC invokes a ruling of the RTC and Court of
Appeals that petitioners committed forum shopping, when no such ruling exists.
IV. Respondents contention that the case should or could have been filed with the HLURB lacks
merit. The jurisdiction of the HLURB is defined under Section 1 of P.D. No. 1344, 52 to wit:
SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in
addition to its powers provided for in Presidential Decree No. 957, the National Housing
Authority [now HLURB] shall have exclusive jurisdiction to hear and decide cases of the
following nature:
A. Unsound real estate business practices;
B. Claims involving refund and any other claims filed by subdivision lot or condominium unit
buyer against the project owner, developer, dealer, broker or salesman; and
C. Cases involving specific performance of contractual and statutory obligations filed by buyers
of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.
As we previously held, the jurisdiction of the HLURB to hear and decide cases is determined by
the nature of the cause of action, the subject matter or property involved and the parties. 53 In this
case, the petition for declaratory relief and prohibition did not involve an unsound real estate
business practice, or a refund filed by subdivision buyers against the developer, or a specific
performance case filed by buyers against the developer. Rather, the petition specifically sought
a judicial declaration that petitioners right to suspend payment to the developer for failure to
complete the subdivision also applies to respondents who provided them housing loans and
released the proceeds thereof to the developer although the subdivision was not completed.
Note also that the buyers (petitioners) are not suing the developer but their creditor-
mortgagees54 (respondents).
WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision and Resolution of
the appellate court are AFFIRMED. No pronouncement as to costs. SO ORDERED.
G.R. No. L-24153 February 14, 1983
TOMAS VELASCO, LOURDES RAMIREZ, SY PIN, EDMUNDO UNSON, APOLONIA
RAMIREZ and LOURDES LOMIBAO, as component members of the STA. CRUZ
BARBERSHOP ASSOCIATION, in their own behalf and in representation of the other
owners of barbershops in the City of Manila, petitioners-appellants,
vs.
HON. ANTONIO J. VILLEGAS, City Mayor of Manila, HON. HERMINIO A. ASTORGA, Vice-
Mayor and Presiding Officer of the Municipal Board in relation to Republic Act 4065, THE
MUNICIPAL BOARD OF THE CITY OF MANILA and EDUARDO QUINTOS SR., Chief of
Police of the City of Manila, respondents-appellees.
FERNANDO, C.J.:
This is an appeal from an order of the lower court dismissing a suit for declaratory relief
challenging the constitutionality based on Ordinance No. 4964 of the City of Manila, the
contention being that it amounts to a deprivation of property of petitioners-appellants of their
means of livelihood without due process of law. The assailed ordinance is worded thus: "It shall
be prohibited for any operator of any barber shop to conduct the business of massaging
customers or other persons in any adjacent room or rooms of said barber shop, or in any room
or rooms within the same building where the barber shop is located as long as the operator of
the barber shop and the room where massaging is conducted is the same person." 1 As noted in
the appealed order, petitioners-appellants admitted that criminal cases for the violation of this
ordinance had been previously filed and decided. The lower court, therefore, held that a petition
for declaratory relief did not lie, its availability being dependent on there being as yet no case
involving such issue having been filed. 2
Even if such were not the case, the attack against the validity cannot succeed. As pointed out in
the brief of respondents-appellees, it is a police power measure. The objectives behind its
enactment are: "(1) To be able to impose payment of the license fee for engaging in the
business of massage clinic under Ordinance No. 3659 as amended by Ordinance 4767, an
entirely different measure than the ordinance regulating the business of barbershops and, (2) in
order to forestall possible immorality which might grow out of the construction of separate rooms
for massage of customers." 3 This Court has been most liberal in sustaining ordinances based
on the general welfare clause. As far back as U.S. v. Salaveria, 4 a 1918 decision, this Court
through Justice Malcolm made clear the significance and scope of such a clause, which
"delegates in statutory form the police power to a municipality. As above stated, this clause has
been given wide application by municipal authorities and has in its relation to the particular
circumstances of the case been liberally construed by the courts. Such, it is well to really is the
progressive view of Philippine jurisprudence." 5 As it was then, so it has continued to be. 6 There
is no showing, therefore, of the unconstitutionality of such ordinance.
WHEREFORE, the appealed order of the lower court is affirmed. No costs.
G.R. No. 189571 January 21, 2015
THE HONORABLE MONETARY BOARD and GAIL U. FULE, Director, Supervision and
Examination Department II, and BANGKO SENTRAL NG PILIPINAS, Petitioners,
vs.
PHILIPPINE VETERANS BANK, Respondent.
PERALTA, J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court seeking to
reverse and set aside the Decision1 dated June 15, 2009 and Order2 dated August 25, 2009 of
the Regional Trial Court (RTC) of Makati City in Civil Case No. 07-271.
The factual antecedents follow.
Respondent established a pension loan product for bona fide veterans or their surviving
spouses, as well as salary loan product for teachers and low-salaried employees pursuant to its
mandate under Republic Act (RA) Nos. 35183and 71694 to provide financial assistance to
veterans and teachers.
As its clientele usually do not have real estate or security to cover their pension or salary loan,
other than their continuing good health and/or employment, respondent devised a program by
charging a premium in the form of a higher fee known as Credit Redemption Fund(CRF) from
said borrowers. Resultantly, Special Trust Funds were established by respondent for the
pension loans of the veteran-borrowers, salary loans of teachers and low-salaried employees.
These trust funds were, in turn, managed by respondents Trust and Investment Department,
with respondent as beneficiary. The fees charged against the borrowers were credited to the
respective trust funds, which would beused to fully pay the outstanding obligation of the
borrowers in case of death.
On April 30, 2002, an examination was conducted by the Supervision and Examination
Department (SED) II of the Bangko Sentral ng Pilipinas (BSP). It found, among other things, that
respondents collection of premiums from the proceeds of various salary and pension loans of
borrowers to guarantee payment of outstanding loans violated Section 54 of RA No. 8791 5 which
states that banks shall not directly engage in insurance business as insurer.
Subsequently, respondent wrote a letter to petitioners justifying the existence of the CRF.
In a letter dated March 17, 2003, the BSP notified respondent about the Insurance
Commissions opinion that the CRF is a form of insurance. Thus, respondent was requested to
discontinue the collection of said fees.
On February 24, 2004, respondent complied with the BSPs directive and discontinued the
collection of fees for CRF.
On September 16, 2005, petitioners issued Monetary Board (MB) Resolution No. 1139 directing
respondents Trust and Investment Department to return to the borrowers all the balances of the
CRF in the amount of 144,713,224.54 as of August31, 2004, and to preserve the records of
borrowers who were deducted CRFs from their loan proceeds pending resolution or ruling of the
Office of the General Counsel of the BSP. Thus, respondent requested reconsideration of said
MB Resolution. However, the same was denied ina letter dated December 5, 2006.
Accordingly, respondent filed a Petition for Declaratory Relief with the RTC of Makati City.
In response, petitioners filed a Motion to Dismiss alleging that the petition for declaratory relief
cannot prosper due to respondents prior breach of Section 54 of RA No. 8791.
In an Order6 dated September 24, 2007, the RTC dismissed respondents petition for declaratory
relief and held as follows: Upon a thorough analysis of the allegations of the petition and the
documents attached thereto as annexes,the arguments of both parties in support of their
respective position on the incident up for resolution, the Court finds that an ordinary civil action
or other else but certainly not the present action for declaratory relief, is the proper remedy.
Clearly, as gleaned from the verydocuments attached to the petition, and as correctly pointed
out by the [petitioners], [respondent], as found by the BSP examiners and confirmed by the
Monetary Board, violated Section 54 of RA No. 8791, subject matter of the instant case, by
engaging in an insurance activity which is prohibited by such law. To be precise, the law so
provides thus: "SEC. 54. Prohibition to Act as Insurer. A bank shall not directly engaged (sic) in
the business as the insurer."
Hence, the issue of whether or not petitioner violated the foregoing law can only be fittingly
resolved thru an ordinaryaction. For which reason, the Court has no recourse but to put an end
to this case.
In view of the foregoing, the Court deems it unnecessary to tackle the other grounds relied upon
by [petitioners] in their motion to dismiss.
WHEREFORE, for reasons afore-stated, the petition is hereby DISMISSED. SO ORDERED.
Almost a year later, respondent filed a Motion to Admit its Motion for Reconsideration against
said order alleging that it did not receive a copy thereof until September 3, 2008.
Petitioners opposed said motion on the ground that per Certification of the Philippine Postal
Office, an official copy of the RTCs Order was duly served and received by respondent on
October 17, 2007.
Despite the foregoing, the RTC allowed respondents motion for reconsideration and required
petitioners to file their answer.
In a Decision dated June 15, 2009,the RTC of Makati City granted respondents petition for
declaratory relief disposing as follows: WHEREFORE, premises considered, it is hereby
DECLARED that [respondent], when it collected additional fees known as "Credit Redemption
Fund (CRF)" from its loan borrowers was not directly engaged in insurance business as insurer;
hence, it did not violate Sec. 54, R.A. 8791, otherwise known as the "General Banking Law of
2000." The Monetary Board Resolution No. 1139 dated August 26, 2005 is hereby DECLARED
null and void. SO ORDERED.7
Petitioners filed a motion for reconsideration against said decision, but the same was denied in
anOrder dated August 25, 2009.
Hence, the present petition wherein petitioners raise the following grounds to support their
petition:
I.THE COURT A QUOGRIEVOUSLY ERRED IN TAKING COGNIZANCE OF THE PETITION
FOR DECLARATORY RELIEF DESPITE:
(i) THE FINALITY OF THE BSP MB RESOLUTION: (a) DECLARING RESPONDENT
VETERANS BANKS CRF SCHEME AS VIOLATIVE OF SECTION 54 OF RA 8791; and (b)
DIRECTING RESPONDENT TO RETURN THE ILLEGAL PROCEEDS THEREOF TO ITS
BORROWERS; and
(ii) THE BLATANT IMPROPRIETY OF RESORTING TO SUCH PETITION FOR
DECLARATORY RELIEF, CONSIDERING RESPONDENT VETERANS BANKS PRIOR
BREACH OF THE MONETARY BOARD RESOLUTION SUBJECT THEREOF [ASSUMING
ARGUENDO THAT THE SUBJECT BSP RESOLUTION HASNOT BECOME FINAL];
II.THE COURT A QUOS ORDER, DISMISSING THE PETITION FOR DECLARATORY RELIEF
HAS LONG BECOME FINAL AND EXECUTORY AND MAY NO LONGER BE DISTURBED.
III.PETITIONERS FINDING,THAT RESPONDENT VETERANS BANK IS ENGAGED IN
"INSURANCE BUSINESS," IS IN ACCORD WITH LAW.8
In essence, the issue is whether or not the petition for declaratory relief is proper.
We rule in the negative.
Section 1, Rule 63 of the Rules of Court governs petitions for declaratory relief, viz.: SECTION 1.
Who may file petition. Any person interested under a deed, will, contract or other written
instrument, whose rights are affected by a statute, executive order or regulation, ordinance, or
any other governmental regulation may, before breach or violation thereof, bring an action in the
appropriate Regional Trial Court to determine any question of construction or validity arising, and
for a declaration of his rights or duties, thereunder.
Declaratory relief is defined as an action by any person interested in a deed, will, contract or
other written instrument, executive order or resolution, to determine any question of construction
or validity arising from the instrument, executive order or regulation, or statute; and for a
declaration of his rights and duties thereunder. The only issue that may be raised in such a
petition is the question of construction or validity of provisions in an instrument or statute. 9 Ergo,
the Court, in CJH Development Corporation v. Bureau of Internal Revenue,10 held that in the
same manner that court decisions cannot be the proper subjects of a petition for declaratory
relief, decisions of quasijudicial agencies cannot be subjects of a petition for declaratory relief for
the simple reason that if a party is not agreeable to a decision either on questions of law or of
fact, it may avail of the various remedies provided by the Rules of Court.
In view of the foregoing, the decision of the BSP Monetary Board cannot be a proper subject
matter for a petition for declaratory relief since it was issued by the BSP Monetary Board inthe
exercise of its quasi-judicial powers or functions.
The authority of the petitioners to issue the questioned MB Resolution emanated from its powers
under Section 3711of RA No. 765312 and Section 6613 of RA No. 879114 to impose, at its
discretion, administrative sanctions, upon any bank for violation of any banking law.
The nature of the BSP Monetary Board as a quasi-judicial agency, and the character of its
determination of whether or not appropriate sanctions may be imposed upon erring banks, as
anexercise of quasi-judicial function, have been recognized by this Court in the case of United
Coconut Planters Bank v. E. Ganzon, Inc.,15 to wit:
A perusal of Section 9(3) of Batas Pambansa Blg. 129, as amended, and Section 1, Rule 43 of
the 1997 Rules of Civil Procedure reveals that the BSP Monetary Board is not included among
the quasi judicial agencies explicitly named therein, whose final judgments, orders, resolutions
or awards are appealableto the Court of Appeals. Such omission, however, does not necessarily
mean that the Court of Appeals has no appellate jurisdiction over the judgments, orders,
resolutions, or awards of the BSP Monetary Board.
It bears stressing that Section 9(3) of Batas Pambansa Blg. 129, as amended, on the appellate
jurisdiction of the Court of Appeals, generally refers to quasi-judicial agencies, instrumentalities,
boards or commissions. The use of the word "including" in the said provision, prior to the naming
of several quasi-judicial agencies, necessarily conveys the very idea of non-exclusivity of the
enumeration. The principle of expressio unius est exclusio alterius does not apply where other
circumstances indicate that the enumeration was not intended to be exclusive, or where the
enumeration is by way of example only.
Similarly, Section 1, Rule 43 of the 1997 Revised Rules of Civil Procedure merely mentions
several quasi-judicial agencies without exclusivity in the phraseology. The enumeration of the
agencies therein mentioned is not exclusive. The introductory phrase "[a]mong these agencies
are" preceding the enumeration of specific quasi-judicial agencies only highlights the fact that
the list is not meant to be exclusive or conclusive. Further, the overture stresses and
acknowledges the existence of other quasi-judicial agencies not included inthe enumeration but
should be deemed included.
A quasi-judicial agency or body isan organ of government other than a court and other thana
legislature, which affects the rights of private parties through either adjudication or rule-making.
The very definition of an administrative agency includes itsbeing vested with quasi-judicial
powers. The ever increasing variety of powers and functions given to administrative agencies
recognizes the need for the active intervention of administrative agencies in matters calling for
technical knowledge and speed in countless controversies which cannot possibly be handled by
regular courts. A "quasi-judicial function" is a term which applies to the action, discretion, etc. of
public administrative officers or bodies, who are required to investigate facts, or ascertain the
existence of facts, hold hearings, and draw conclusions from them, as a basis for their official
action and to exercise discretion of a judicial nature.
Undoubtedly, the BSP Monetary Board is a quasi-,judicial agency exercising quasi-,judicial
powers or functions.1wphi1 As aptly observed by the Court of Appeals, the BSP Monetary
Board is an independent central monetary authority and a body corporate with fiscal and
administrative autonomy, mandated to provide policy directions in the areas of money, banking,
and credit. It has the power to issue subpoena, to sue for contempt those refusing to obey the
subpoena without justifiable reason, to administer oaths and compel presentation of books,
records and others, needed in its examination, to impose fines and other sanctions and to issue
cease and desist order. Section 37 of Republic Act No. 7653, in particular, explicitly provides
that the BSP Monetary Board shall exercise its discretion in determining whether administrative
sanctions should be imposed on banks and quasi-banks, which necessarily implies that the BSP
Monetary Board must conduct some form of investigation or hearing regarding the same. 16
A priori, having established that the BSP Monetary Board is indeed a quasi-judicial body
exercising quasi-judicial functions, then its decision in MB Resolution No. 1139 cannot be the
proper subject of declaratory relief.
Lastly, also worth noting is the fact that the court a quo's Order dated September 24, 2007,
which dismissed respondent's petition for declaratory relief, had long become final and
executory.
To recall, said Order was duly served on and received by respondent on October 1 7, 2007, as
evidenced by the Ce1iification issued by the Philippine Postal Corporation. Almost a year later,
however, or on October 15, 2008, respondent moved for reconsideration of the court a quo's
Order of dismissal, claiming it received a copy of said Order only on September 3, 2008. Thus,
respondent's self-serving claim should not have prevailed over the Certification issued by the
Philippine Postal Corporation. It was error for the trial court to ente1iain it for the second time
despite the lapse of almost a year before respondent filed its motion for reconsideration against
said Order.
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The Decision
dated June 15, 2009 and Order dated August 25, 2009 of the Regional Trial Court of Makati City
in Civil Case No. 07-271 are REVERSED and SET ASIDE. The Order dated September 24,
2007 of the Regional Trial Court ofMakati City is hereby REINSTATED.
SO ORDERED.