Rule 63

VOL.
515, FEBRUARY 14, 2007 709

Mangahas vs. Paredes
G.R. No. 157866. February 14, 2007. *
AUGUSTO MANGAHAS and MARILOU

VERDEJO, petitioners, vs. HON. JUDGE
VICTORIA ISABEL PAREDES, Presiding
Judge, Br. 124, Regional Trial Court,
Caloocan City; SHERIFF ERLITO
BACHO, Br. 124, Regional Trial Court,
Caloocan City; and AVELINO BANAAG,
respondents.
Hierarchy of Courts; Certiorari; A direct
recourse to the Supreme Court’s original
jurisdiction to issue the writs of certiorari,
prohibition, mandamus, quo warranto, habeas
corpus and injunction is not exclusive and
should be allowed only when there are special
and important reasons therefor, clearly and
specifically set out in the petition.—At the
outset it must be pointed out that petitioners’
direct recourse to this Court via petition for
Declaratory Relief, Certiorari, Prohibition With
Prayer For Provisional Remedy is an utter
disregard of the hierarchy of courts and should
have been dismissed outright. This Court’s
original jurisdiction to issue writs of certiorari,
prohibition, mandamus, quo warranto, habeas
corpus and injunction is not exclusive. It is
shared by this Court with the Regional Trial
Courts and the Court of Appeals. Such
concurrence of jurisdiction does not give the
petitioners unbridled freedom of choice of court
forum. A direct recourse 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.
Declaratory Relief; A petition for declaratory
relief is not among the petitions within the
original jurisdiction of the Supreme Court.—
Equally noteworthy is petitioners’ resort to this
Court through petition for declaratory relief.
This action is not among the petitions within
the original jurisdiction of the Supreme Court.
Rule 63 of the Rules of Court which deals with
actions for declaratory relief, enumerates the
subject matter thereof, i.e., deed, will, contract
or other written instrument, the construction or
validity of statute or ordinance. Inasmuch as
this enumeration is exclusive, petitioners’
action to declare the RTC order denying their
motion to suspend execution,
_______________
* THIRD DIVISION.
710
7 SUPREME COURT REPORTS ANNOTATED
10
not being one of those enumerated, should
warrant the outright dismissal of this case.
Judgments; Law of the Case; The doctrine of
law of the case holds that once an appellate
court has declared the law in a case that
declaration continues to hold even in subsequent
appeal.—The issue involving the binding effect
of the injunction issued by the Quezon City
RTC became the law of the case between the
parties. Under this legal principle, whatever is
irrevocably established as the controlling legal
rule or decision between the parties in the same
case continues to be the law of the case, so long
as the facts on which the decision was
predicated continue. Stated otherwise, the
doctrine holds that once an appellate court has
declared the law in a case that declaration
continues to hold even in subsequent appeal.
The reason lies in the fact that public policy
dictates that litigations must be terminated at
some definite time and that the prevailing
party should not be denied the fruits of his
victory by some subterfuge devised by the
losing party.
Same; Same; Once a decision becomes final
and executory, it is the ministerial duty of the
presiding judge to issue a writ of execution
except in certain cases, as when subsequent
events would render execution of judgment
unjust.—Quite conspicuously, the instant
petition assailing the order of the RTC denying
petitioners’ motion to suspend execution is a
ploy to deprive private respondent of the fruits
of his hard-won case. It must be stressed that
once a decision becomes final and executory, it
is the ministerial duty of the presiding judge to
issue a writ of execution except in certain cases,
as when subsequent events would render
execution of judgment unjust. Petitioners did
not allege nor proffer any evidence that this
case falls within the exception. Hence, there is
no reason to vacate the writ of execution issued
by the RTC.
SPECIAL CIVIL ACTION in the Supreme
Court. Declaratory Relief, Certiorari, and
Prohibition.
The facts are stated in the opinion of the
Court.
Divina Cuejilo for petitioners.
Reynaldo A. Ruiz for Banaag.
711
VOL. 515, FEBRUARY 14, 2007 711
CHICO-NAZARIO, J.:
This petition for Declaratory
Relief, Certiorari, Prohibition With Prayer
For Provisional Remedy filed by
petitioners Augusto Mangahas and
Marilou Verdejo seeks to nullify and set
aside the 14 February 2003 Order of the 1
Regional Trial Court (RTC), Branch 124,

Caloocan City, denying their Motion to
Suspend Execution in Civil Case No. C-
19097.
The instant controversy arose from a
verified complaint for Ejectment filed by
private respondent Avelino Banaag on 31
January 1997 before the Metropolitan
Trial Court (MeTC), Branch 49, Caloocan
City, against petitioners. Private
respondent alleged that he is the
registered owner of the disputed property
identified as Lot 4, Block 21, located in
Maligaya Park Subdivision, Caloocan City,
as evidenced by Transfer Certificate of
Title (TCT) No. 196025 of the Registry of
Deeds of Caloocan City. Private
respondent averred that petitioners
constructed houses on the property
without his knowledge and consent and
that several demands were made, but the
same fell on deaf ears as petitioners
refused to vacate the premises. This
prompted private respondent to refer the
matter to the Lupon Tagapayapa for
conciliation. The recourse proved futile
since the parties were not able to settle
amicably. Private respondent then filed an
ejectment suit before the MeTC.
On 23 April 1997, petitioners filed their
answer denying having unlawfully
deprived private respondent possession of
the contested property. Petitioners claimed
that they have resided in the subject lot
with the knowledge and conformity of the
true owner thereof, Pinagkamaligan Indo-
Agro Development Corporation
(PIADECO), as evidenced by a Certificate
of Occupancy signed by PIADECO’s
president in their favor.
_______________
1 Rollo, pp. 86-88.
712
On 10 July 1997, petitioners filed a

Manifestation And Motion To Suspend
Proceedings on the ground that the subject
property is part of the Tala Estate and
that the RTC of Quezon City, Branch 85,
in Civil Case No. Q-96-29810 issued a Writ
of Preliminary Injunction dated 10
November 1997, enjoining the MeTCs of
Quezon City and Caloocan City from
ordering the eviction and demolition of all
occupants of the Tala Estate. They posited
that the injunction issued by the Quezon
City RTC is enforceable in Caloocan City
because both cities are situated within the
National Capital Region.
In an order dated 7 August 1997, the
MeTC denied said manifestation and
motion. It ratiocinated that the injunction
issued by the Quezon City RTC has
binding effect only within the territorial
boundaries of the said court and since
Caloocan City is not within the territorial
area of same, the injunction it issued is
null and void for lack of jurisdiction.
For failure of the parties to arrive at a
compromise agreement during the
preliminary conference, they were
required to submit their respective
position papers containing their positions
on the following issues: (a) whether or not
the torrens title of private respondent is a
valid basis of his right to eject petitioners,
(b) whether the MeTC has jurisdiction to
hear and decide the case, and (c) whether
either the private respondent or
petitioners are entitled to their respective
claims for damages.
In their position paper, petitioners
insisted that they are entitled to the
possession of the land because they have
been occupants thereof as early as 1978,
long before the property was acquired by
private respondent. Since they possessed
the property for that long, the MeTC has
no jurisdiction to hear and decide the case
as ejectment suit applies only to instances
where possession of the land lasted for a
period of not more than one year. In
addition, they claimed that private
respondent has not proffered any evidence
that he has prior physical possession over
the property. Petitioners reiterated their
posture in the motion to suspend
proceedings wherein they
713
VOL. 515, FEBRUARY 14, 2007 713
urged the MeTC to respect the Writ of

Preliminary Injunction issued by the
Quezon City RTC. They also alleged that
private respondent’s certificate of title
originated from a fictitious title.
In a decision dated 5 October 1999, the
MeTC ruled for private respondent. It
opined that TCT No. 196025 in private
respondent’s name was an indefeasible
proof of his ownership of the lot and his
inherent right to possess the same. This
title entitled private respondent better
right to possess the subject property over
petitioners’ Certificate of Occupancy
executed in their favor by PIADECO. It
held that it has jurisdiction over the
controversy since private respondent filed
the case within one year from the time the
demand to vacate was given to petitioners.
The decretal portion of the decision reads:
“Wherefore, judgment is hereby rendered for the plaintiff, ordering defendants Augusto
Mangahas, Victor Solis, Elisa M. Dionila, Joselito Mangahas and Rogelio Verdejo and all
persons claiming right under them as follows:
1. 1)To vacate the lot in question by removing their houses erected thereat and restore
possession of the lot to the plaintiff;
2. 2)To pay plaintiff a reasonable compensation for their use of the premises for the
period from August, 1996 until the property is vacated at the rate of two thousand
(P2,000.00) pesos per month;
3. 3)To reimburse to plaintiff the sum of ten thousand (P10,000.00) pesos as and for
attorney’s fees; [and]
4. 4)To pay the costs of this suit.”
2
On 2 December 1999, petitioners appealed

to the RTC, which case was docketed as
Civil Case No. C-19097. In a Decision
dated 16 November 2000, the trial court
affirmed in toto the MeTC decision. It
ruled that the MeTC was correct in
_______________
2 Id., at pp. 55-56.
714
denying petitioners’ motion to suspend

proceedings anchored on the Writ of
Preliminary Injunction issued by the
Quezon City RTC reasoning that the writ
of the latter court is limited only to its
territorial area, thus, the same has no
binding effect on the MeTC of Caloocan
City. It sustained the MeTC’s ruling that
the latter court has jurisdiction over the
case as the same has been filed within the
reglementary period from the date of
demand to vacate. Furthermore, the RTC
stated that the validity of private
respondent’s title cannot be assailed
collaterally in the instant case.
On 18 December 2000, petitioners filed a
motion for reconsideration which the RTC
denied in a resolution dated 1 June 2001.
Unfazed, petitioners appealed the ruling
of the RTC to the Court of Appeals on 6
June 2001 which was docketed as CAG.R.
SP No. 65076.
In a Decision dated 25 April 2002, the
3
Court of Appeals affirmed the ruling of the

RTC. Petitioners’ Motion for
Reconsideration was, likewise, denied in a
Resolution dated 20 November 2002.
The decision of the Court of Appeals
became final and executory on 13
December 2002.
Meanwhile, on 11 December 2000,
private respondent filed with the RTC a
motion for execution pending appeal which
was opposed by petitioners. In an order
dated 12 September 2001, the RTC
granted the motion.
To implement and enforce its decision,
the same court on 27 September 2001
issued a Writ of Execution. On 28
September 2001, petitioners filed a Motion
to Reconsider Order dated 12 September
2001 which was denied in an order dated 5
February 2002.
_______________
3Penned by Associate Justice Bienvenido L. Reyes with Associate Justices Roberto A. Barrios and
Edgardo F. Sundiam, concurring; id., at pp. 170-176.
715
VOL. 515, FEBRUARY 14, 2007 715
On 17 January 2003, petitioners filed a

Motion to Suspend Execution before the
RTC. Said motion was denied in an order
dated 14 February 2003. On 05 March
2003, Sheriff Erlito Bacho implemented
and enforced the writ of execution.
Hence, the instant recourse.
At the outset it must be pointed out that
petitioners’ direct recourse to this
Court via petition for Declaratory
Relief, Certiorari, Prohibition With Prayer
For Provisional Remedy is an utter
disregard of the hierarchy of courts and
should have been dismissed outright. This
Court’s original jurisdiction to issue writs
of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction is
not exclusive. It is shared by this Court
4
with the Regional Trial Courts and the

Court of Appeals. Such concurrence of
5
jurisdiction does not give the petitioners

unbridled freedom of choice of court
forum. A direct recourse of the Supreme
6
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. In the instant case,
7
petitioners have not offered any

exceptional or compelling reason not to
observe the hierarchy of courts. Hence, the
petition should have been filed with the
Regional Trial Court.
Equally noteworthy is petitioners’ resort
to this Court through petition for
declaratory relief. This action is not among
the petitions within the original
jurisdiction of the Supreme Court. Rule 63
8
of the Rules of Court which deals with
actions for declaratory relief, enumerates
the subject
_______________
4 Rubenito v. Lagata, G.R. No. 140959, 21 December 2004, 447 SCRA 417, 423-424.
5 Id.
6 Id.
7 Id.
8 Allied Broadcasting Center, Inc. v. Republic, G.R. No. 91500, 18 October 1990, 190 SCRA 782, 786.
716
matter thereof, i.e., deed, will, contract or

other written instrument, the construction
or validity of statute or ordinance.
Inasmuch as this enumeration is
exclusive, petitioners’ action to declare the
RTC order denying their motion to
suspend execution, not being one of those
enumerated, should warrant the outright
dismissal of this case. 9
At any rate, since the complete records of

this case have already been elevated, this
Court deems it wise to resolve the
controversy on the merits.
Petitioners assail the Order dated 14
February 2003 of the RTC Caloocan City
and its Decision dated 16 November 2000
on the sole ground that the said court is
precluded from issuing said Order and
Decision by virtue of the Writ of Injunction
issued on 10 November 1997 by the
Quezon City RTC.
It must be remembered that the issue on
the enforceability of the injunction order
originating from the Quezon City RTC had
already been litigated and finally decided
when the Court of Appeals in CA-G.R. SP
No. 65076 affirmed the Decision of the
RTC in Civil Case No. C-19097. Said
Decision had become final and executory
per Entry of Judgment dated 25 April
2002. The relevant portion of the Court of
10
Appeals’ Decision reads:

‘The petitioners postulate that the Writ of Preliminary Injunction dated November 10, 1997
which emanated from the Regional Trial Court of Quezon City should have prompted the
Regional Trial Court of Caloocan City to suspend the ejectment proceedings then pending
before it. It was the petitioners’ contention that the injunction writ issued in Quezon City is
enforceable also in Caloocan City inasmuch [as] both cities are situated within the National
Capital Region.
Under Sec. 17 of B.P. 129, the exercise of jurisdiction of the Regional Trial Courts and
their judges is basically regional in scope
_______________
9 Vda. de Aviles v. Court of Appeals, G.R. No. 95748, 21 November 1996, 264 SCRA 473, 482.
10 Id., at p. 177.
717
VOL. 515, FEBRUARY 14, 2007 717
(Malaoan vs. Court of Appeals, 232 SCRA 249), but under Sec. 18, it may be limited to the
territorial area of the branch in which the judges sits (OCA vs. Matas, August 2, 1995, 247
SCRA 9).
Sec. 18 of B.P. 129 states:
“Sec. 18. Authority to define territory appurtenant to each branch.—The Supreme Court shall define
the territory over which a branch of the Regional Trial Court shall exercise its authority. The territory
thus defined shall be deemed to be the territorial area of the branch concerned for purposes of
determining the venue of all suits, proceedings or actions, whether civil or criminal, as well as
determining the Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial
Courts over which the said branch may exercise appellate jurisdiction. x x x”
Taking Our bearings from the above pronouncement, the Regional Trial Court of
Caloocan City could not be deemed to have committed a reversible error when it denied the
petitioners’ Motion to Suspend Proceedings. Apparently, the extent of the enforceability of
an injunction writ issued by the Regional Trial Court is defined by the territorial region
where the magistrate presides.’ 11
Consequently, the issue involving the

binding effect of the injunction issued by
the Quezon City RTC became the law of
the casebetween the parties. Under this
legal principle, whatever is irrevocably
established as the controlling legal rule or
decision between the parties in the same
case continues to be the law of the case, so
long as the facts on which the decision was
predicated continue. Stated otherwise, the 12
doctrine holds that once an appellate court

has declared the law in a case that
declaration continues to hold even in
subsequent appeal. The reason lies in the 13
fact that public policy dictates that

litigations must be terminated at some
definite time and that the prevailing party
should not be denied the
_______________
11 Rollo, pp. 173-174.

12 Cucueco v. Court of Appeals, G.R. No. 139278, 25 October 2004, 441 SCRA 290, 301.
13 Id., at pp. 300-301.
718
fruits of his victory by some subterfuge

devised by the losing party. 14
Petitioners are therefore barred from

assailing the ruling that the injunction
issued by the Quezon City RTC has no
binding effect to the courts of Caloocan
City as this issue had already been passed
upon with finality. Issues should be laid to
rest at some point; otherwise there would
be no end to litigation. As elucidated
in Hufana v. Genato: 15
“It is well established that when a right or fact has been judicially tried and determined by
a court of competent jurisdiction, so long as it remains unreversed, it should be conclusive
upon the parties and those in privity with them. The dictum therein laid down became the
law of the case and what was once irrevocably established as the controlling legal rule or
decision, continues to be binding between the same parties as long as the facts on which the
decision was predicated, continue to be the facts of the case before the court. Hence, the
binding effect and enforceability of that dictum can no longer be relitigated anew since said
issue had already been resolved and finally laid to rest in that aforementioned case
(Miranda v. CA, 141 SCRA 306 [1986]), if not by the principle of res judicata, but at least by
conclusiveness of judgment.”
Quite conspicuously, the instant petition

assailing the order of the RTC denying
petitioners’ motion to suspend execution is
a ploy to deprive private respondent of the
fruits of his hard-won case. It must be
stressed that once a decision becomes final
and executory, it is the ministerial duty of
the presiding judge to issue a writ of
execution except in certain cases, as when
subsequent events would render execution
of judgment unjust. Petitioners did not 16
allege nor proffer any evidence that this

case falls within the exception. Hence,
_______________
14 Pio Barretto Realty Development Corporation v. Court of Appeals, G.R. No. 132362, 28 June
2001, 360 SCRA 127, 138.
15 G.R. No. 141209, 17 September 2001, 365 SCRA 384, 396.
16 Fideldia v. Songcuan, G.R. No. 151352, 29 July 2005, 465 SCRA 218, 226-227.
719
VOL. 515, FEBRUARY 14, 2007 719
there is no reason to vacate the writ of
execution issued by the RTC.
WHEREFORE, the petition is DENIED.
The Order of the Regional Trial Court,
Branch 124, Caloocan City, denying
petitioners’ Motion to Supend Execution
dated 14 February 2003 in Civil Case No.
C-19097 is AFFIRMED. Costs against
petitioners.
SO ORDERED.
Ynares-Santiago(Chairp
erson), Austria-Martinez and Callejo, Sr.,
JJ., concur.
Nachura, J., On Leave.
Petition denied.
Notes.—A resolution dismissing a
petition for being moot and academic after
“considering the pleadings and the
annexes together with the Comment filed
by the successor of respondent mayor”
resolves the issues raised in the pleadings,
and upon attaining finality, becomes the
law of the case and constitutes a bar to
any relitigation of the same issues in any
other proceeding under the principle of res
judicata. (Rosete vs. Court of Appeals, 264
SCRA 147 [1996])
Whether or not the “law of the case” is
erroneous is immaterial—it still remains
to be the “law of the case.” (Huerta Alba
Resort, Inc. vs. Court of Appeals, 339
SCRA 534 [2000])
——o0o——
Tambunting, Jr. vs. Sumabat
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,
respondents.
Remedial Law; Declaratory Relief; 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.—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. 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. It may be
entertained only before the breach or violation
of the statute, deed, contract, etc. to
_______________
* THIRD DIVISION.
93
VOL. 470, SEPTEMBER 16, 2005 9
3
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.
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.
Same; Civil Law; Mortgages; Prescription; An
action to enforce a right arising from a mortgage
should be enforced within ten years from the
time the right of action accrues.—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. Otherwise, it will be
barred by prescription and the mortgage
creditor will lose his rights under the mortgage.
PETITION for review on certiorari of a
decision of the Court of Appeals.
Court.
Soo, Gutierrez, Leogardo & Lee for
respondents.
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 P7,727.95 loan. In August
1976, respondents were informed that
their indebtedness had ballooned to
P15,000 for their failure to pay the
monthly amorti-
94
zations. 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
P15,743.83 and authorized them to
consign the amount to the court for proper
disposition. In compliance with the
decision, respondents consigned the
required amount on January 9, 1981.
In March 1995, respondents received a
notice of sheriff’s 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
95
VOL. 470, SEPTEMBER 16, 2005 95
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, sheriff’s 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
P15,743.83 and authorizing consignation)
had long attained finality. The mortgage
was extinguished when respondents paid
their indebtedness by consigning the
amount in court. 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 CHFI’s
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 attorney’s fees.
Petitioners moved for a reconsideration
of the trial court’s 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.
96
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. The purpose of the action is to
1
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
2
before the breach or violation of the

statute, deed, contract, etc. to which it
refers. Where the law or contract has
3
already been contravened prior to the

filing of an action for declaratory relief, the
court can no longer assume jurisdiction
over the action. In other words, a court
4
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
_______________
1 Velarde v. Social Justice Society, G.R. No. 159357, 28 April 2004, 428 SCRA 283.
2 Manila Electric Company v. Philippine Consumers Foundation, Inc., 425 Phil. 65; 374 SCRA
262(2002).
3 Id.
4 Cf. Magtibay v. Hon. Alikpala, 116 Phil. 993; 6 SCRA 681 (1962). See also Oscar M.
Herrera, Remedial Law, vol. III, 1991 edition, p. 103.
97
VOL. 470, SEPTEMBER 16, 2005 97
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. Otherwise, it will be barred by
6
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
_______________
5 157 Phil. 175; 58 SCRA 186(1974) cited in Hilado v. Chavez, G.R. No. 134742, 22 September
2004, 438 SCRA 623.
6 Quirino Gonzales Logging Concessionaire v. Court of Appeals, 450 Phil. 218; 402 SCRA 181 (2003).
98
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 CHFI’s 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.
Panganiban(Chairman), Sandoval-
Gutierrez, Carpio-Moralesand Garcia, JJ.,
concur.
Petition denied.
Note.—Although the commencement of a
civil action stops the running of the
statute of prescription or limitations, its
dismissal or voluntary abandonment by
plaintiff leaves the parties in exactly the
same position as though no action had
been commenced at all. ( Laureano vs.
Court of Appeals, 324 SCRA 414[2000])
——o0o——
G.R. No. 161400. September 2, 2005.

161 *
ZENAIDA ORTEGA, represented by Her

Attorney-in-Fact OCTAVIO ALVAREZ
and/or ZEMVE ORTEGA ALVAREZ,
petitioners, vs. THE QUEZON CITY
GOVERNMENT, THE NATIONAL
HOUSING AUTHORITY & THE
NATIONAL HOME MORTGAGE CORP.,
respondents.
Supreme Court; Judicial
Review; Appeals; Municipal Corporations; Local
Government Units; Ordinances; The jurisdiction
of the Supreme Court in cases which assail the
validity of an ordinance is limited to reviewing
or revising final judgments or orders of lower
courts and applying the law based on their
findings of facts brought before it.—This Court
can thus only review, revise, reverse, modify
_______________
* EN BANC.
389

89
Ortega vs. Quezon City Government
on appeal or certiorari finaljudgments and
orders of lowercourts in all cases in which the
constitutionality or validity of, among other
things, an ordinance is in question. Foremost,
therefore, is that there must be first a final
judgment rendered by an inferior court before
this Court can assume jurisdiction over a case
of this nature. Verily, this Court does not
conduct original and full trial of a main factual
issue like what petitioner is raising in the
present petition. It does not analyze or weigh
evidence brought before it at the first instance,
otherwise, it would preempt the primary
function of the lower court to try the case on the
merits, receive evidence, and decide the case
definitively. Its jurisdiction in cases which
assail the validity of an ordinance is limited to
reviewing or revising final judgments or orders
of lower courts and applying the law based on
their findings of facts brought before it.
Same; Same; Declaratory Relief; There is no
statutory or jurisprudential basis for according
to the Supreme Court original and exclusive
jurisdiction over declaratory relief which
advances only questions of law.—Respecting
petitioner’s contention that since the ordinance
violates national laws, the present petition
delves on questions of law over which this
Court has original jurisdiction, the same fails.
As reflected above, petitioner’s assertion that
the invalidity of the ordinance is premised on
her claim that she has a better right to the
parcel of land referred to in the ordinance is a
factual issue. At all events, even if this petition
delves on questions of law, there is no statutory
or jurisprudential basis for according to this
Court original and exclusive jurisdiction over
declaratory relief which advances only
questions of law.
Same; Same; Same; Prohibition; A petition
for declaratory relief may be treated as one for
prohibition if it has far reaching implications
and raises questions that need to be resolved.—
While a petition for declaratory relief may be
treated as one for prohibition if it has far
reaching implications and raises questions that
need to be resolved, there is no allegation of
facts by petitioner tending to show that she is
entitled to such a writ. The judicial policy must
thus remain that this Court will not entertain
direct resort to it, except when the redress
sought cannot be obtained in the proper courts
or when exceptional and compelling
circumstances warrant availment of a remedy
within and calling for the exercise of this
Court’s primary jurisdiction.
390
PETITION to restrain the implementation

of Quezon City Ordinance No. SP 1304,
Series of 2003.
Court.
Jose V. Regalado, Jr.for petitioner.
Office of the City Attorney for
respondent Quezon City Government.
CARPIO-MORALES, J.:
Petitioner Zenaida Ortega comes directly
to this Court assailing the validity of
Quezon City Ordinance No. SP 1304,
Series of 2003, and praying that the
following agencies, National Housing
Authority (NHA), Housing and Land Use
Regulatory Board (HLURB), Department
of Environment and Natural Resources-
Bureau of Land Management, National
Home Mortgage Financing Corporation,
and Home Insurance Guarantee
Corporation, be restrained from
implementing the said ordinance.
Proposed Ordinance No. 2002-07 (PO
2002-07) was filed on January 10, 2002
before the City Council. PO 2002-07
sought to approve “the Subdivision Plan
of Samahang Kapitbahayan ng Barangay
Vasra (Samahang Kapitbahayan), a
Socialized Housing Project (B.P. Blg. 220)
with seventeen (17) lots (Community
Mortgage Program) containing [a total]
area of Six Hundred Sixty Seven (667)
square meters, covered by Original
Certificate of Title No. 735, owned by the
City Government of Quezon City (Vendor)
located at a portion of [an] easement [in]
Barangay Vasra, Quezon City, Metro
Manila, as applied for by the Samahang
Kapitbahayan ng Barangay Vasra
(Vendee) subject to the conditions
prescribed under Quezon City Ordinance
No. SP-56, S-93 and Batas Pambansa Blg.
220.” 1
_______________
1 Rollo at p. 18.
391
VOL. 469, SEPTEMBER 2, 2005 391
Proposed Resolution No. 2003-13 (PR
2003-13) was subsequently filed on
January 20, 2002 to complement PO 2002-
07. The proposed resolution sought to
authorize Quezon City Mayor Feliciano R.
Belmonte to enter into a contract to sell a
portion of an easement located at
Barangay Vasra, Quezon City with the
SAMAHANG KAPITBAHAYAN to be
represented by its President, through the
Community Mortgage Program (CMP) of
the National Home Mortgage Finance
Corporation (NHMFC). 2
On August 5, 2003, the Quezon City

government enacted Ordinance No. SP-
1304, Series of 2003 (the ordinance), which
is being challenged in the present
petition, reclassifying “as residential or
3
converted from its original classification to

residential for distribution or for sale to its
informal settlers” a “parcel of land which
may be considered an accretion/excess lot
and previously conceived and referred to
in Proposed Ordinance No. 2002-07 and
Proposed [Resolution] 2002-13 as portion
of [an] easement situated between Block
14, Psd-39577 of the original subdivision
plan and Culiat Creek, Barangay Vasra,
Quezon City.” 4
The provisions of the assailed ordinance

read:
SECTION 1. A parcel of land which may be considered an accretion/excess lot and
previously conceived and referred to in proposed ordinance no. PO 2002-07 and proposed
ordinance no. PO 2002-13 as portion of easement, situated between Block 14. Psd-
_______________
2 Id., at p. 20.
3 Entitled “An Ordinance Reclassifying a Parcel of Land which may be Considered as an Accretion/Excess
Lot and Previously Conceived and referred to in Proposed Ordinance No. 2002-07 and Proposed [Resolution] No.
2002-13 as Portion of Easement, situated between Block 14, PSD-39577 of the Original Subdivision Plan and
Culiat Creek, Barangay Vasra, Quezon City, as Residential or Converting the same parcel of land from its
Original Classification to Residential for Distribution or for Sale to its Informal Settlers therein.”
4 Rollo at p. 16.
392
39577 of the original subdivision plan and Culiat Creek, Barangay Vasra, Quezon City, is
hereby classified as residential or converted from its original classification to residential for
distribution or for sale to its informal settlers.
SECTION 2. This Ordinance shall take effect immediately upon its approval. 5
Petitioner, who claims to be the rightful

owner of the land subject of the ordinance,
alleges that in enacting the ordinance, her
various letter-protests to the City Council
against proposed Resolutions No. 2002-13,
2002-07 and 2002-239 were not heeded in 6
the City Council, thus violating her

constitutional rights to due process and
equal protection of the law.
Petitioner further claims that the lot
referred to in the ordinance overlaps her
properties as their technical descriptions
in Transfer Certificates of Title Nos. RT-
70472 (296026) and N-152137 issued in
her name show; and that assuming that 7
_______________
5 Id., at p. 17.
6 Id., at pp. 5-6. Petitioner avers that she sent the following letters to the Quezon City Council: (1).
Letter protest dated January 21, 2002 against the proposed Resolutions No. 2002-13, 2002-07 and 2002-
239, wherein she annexed certified copies of her Transfer Certificate of Titles to prove her ownership of
the land; (2). Position papers dated June 10, 2002 invoking her right as owner of accretion, if any, under
RA 457 (riparian rights) and Article 620 (prescription rights) and presenting documents proving that the
purported “awardees” are not informal settlers; (3) Letter protest dated December 12, 2002 enclosing
copies of documents that the purported awarded admitted that they are lessees and therefore not informal
settlers. Attached therewith is a report of Urban Poor Affairs Office disclosing that the “awardees” are not
informal settlers; (4). Protests dated October 27, 2003 submitted by 20 neighboring families who were
excluded by the City Ordinance; (5) Second protest dated November 19, 2003 by 20 families reiterating
their denunciations of the illegal awards to syndicated and professional squatters; (6) Letter appeal
addressed to Councilwoman Wilma Darino dated November 19, 2003.
7 Rollo at pp. 38-39.
393
VOL. 469, SEPTEMBER 2, 2005 393
there exists accretion or easement of the

Culiat Creek, she, being the owner of the
adjoining land, is the rightful owner
thereof following Articles 457 and Article
8
620 of the Civil Code.

9
Petitioner likewise claims that the

intended beneficiaries under the proposed
ordinance and resolution are not informal
settlers as required under City Ordinance
No. SP-56, Series of 1993, but lessees of
10
her properties who had been ordered

ejected after she filed several unlawful
detainer cases against them. 11
By Comment filed on April 14, 2004, the

12
Quezon City Government, through the

Office of the City Attorney, alleges that
the present petition is premature and
raises questions of fact which entail
reception of evidence; and that petitioner
has not yet established her right of
ownership over the property referred to in
the ordinance, whereas its clear right
thereover is evidenced by Original
Certificate of Title No. 735 issued in its
name. 13
The NHA, by Comment filed on May 17, 14
2004, prayed for the dismissal of the

petition, pointing out that the petition is
actually one for declaratory relief under
Section 1, Rule 63 of the Rules of Court
over which this Court has no original
jurisdiction.
The NHMFC, by Comment filed on June 15
17, 2004, alleged that it is not a party to

any of the transactions with any of the
_______________
8 Article 457. To the owners of lands adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters.

9 Article 620. Continuous and apparent easements are acquired either by virtue of a title or by
prescription of ten years.

10 Rollo at p. 8.
11 Id., at pp. 41-44.
12 Id., at pp. 73-77.
13 Id., at pp. 74-75.
14 Id., at pp. 82-88.
15 Id., at pp. 98-101.
394
parties in the present case. It nevertheless

adopted the comment of the Quezon City
government that the petition is premature
and alleges facts which still need to be
proven. 16
The petition must be dismissed.
Article VIII, Section 5 of the Constitution
provides:
SECTION 5. The Supreme Court shall have the following powers:
xxx
(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the
Rules of Court may provide, final judgments and orders of lower courts in:
(a) All cases in which the constitutionality or validity of any treaty, international or executive
agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in
question.
x x x (Emphasis and italics supplied).
This Court can thus only review, revise,

reverse, modify on appeal or
certiorari final judgments and orders
of lower courts in all cases in which the
constitutionality or validity of, among
other things, an ordinance is in question.
Foremost, therefore, is that there must be
first a final judgment rendered by an
inferior court before this Court can
17
assume jurisdiction over a case of this

nature.
Verily, this Court does not conduct
original and full trial of a main factual
issue like what petitioner is raising in the
present petition. It does not analyze or18
weigh evidence brought before it at the

first instance, otherwise, it would preempt
the primary function of the lower court to
try the case on the merits, receive
evidence, and decide the case de-
_______________
16 Id., at pp. 99-100.

17 Darnoc Realty Devt. Corp. v. Ayala Corporation, 117 SCRA 538, 542 (1982).
18 Lingner & Fisher GMBH v. Intermediate Appellate Court, 125 SCRA 522, 527 (1983).
395
VOL. 469, SEPTEMBER 2, 2005 395
finitively. Its jurisdiction in cases which

19
assail the validity of an ordinance is

limited to reviewing or revising final
judgments or orders of lower courts and
applying the law based on their findings of
facts brought before it. 20
In another vein, if this petition was to be

considered as one for declaratory relief, as
observed by the OSG, it is not embraced
within the original jurisdiction of this
Court. Rule 63 of the Rules of Court
21
provides:
SECTION 1. Who may file petition. Any person interested under a deed, will, contract or
other written instrument, or whose rights are affected by astatute, executive order or
regulation, ordinance, or any other government regulation may, before breach or violation
thereof, bring an action in the appropriate Regional TrialCourt to determine any question
of construction or validity arising from, and for a declaration of his rights or duties,
thereunder.
An action for the reformation of an instrument, or to quiet title to real property or
remove clouds therefrom, or to consolidate ownership under Article 1607 of the Civil Code
may be brought under this Rule.
xxx
SEC. 4. Local government ordinances.—In any action involving the validity of a local
government ordinance, the corresponding prosecutor or attorney of the local government
unit involved shall be similarly notified and entitled to be heard. (Emphasis and italics
supplied)
Respecting petitioner’s contention that

since the ordinance violates national laws,
the present petition delves on ques-
_______________
19 New Owners/Management of TML Garments, Inc. v. Zaragoza, 170 SCRA 563, 568 (1989).
20 Blue Bar Coconut Philippines v. Tantuico, Jr., 163 SCRA 716, 727 (1988).
21 Rural Bank of Olongapo, Inc. v. Commissioner of Land Registration, 102 SCRA 794, 795
(1981); Alliance of Government Workers v. Minister of Labor and Employment, 124 SCRA 1, 10 (1983).
396
tions of law over which this Court has

original jurisdiction, the same fails. 22
As reflected above, petitioner’s assertion

that the invalidity of the ordinance is
premised on her claim that she has a
better right to the parcel of land referred
to in the ordinance is a factual issue.
At all events, even if this petition delves
on questions of law, there is no statutory
or jurisprudential basis for according to
this Court original and exclusive
jurisdiction over declaratory relief which
advances only questions of law.23
Finally, while a petition for declaratory

relief may be treated as one for prohibition
if it has far reaching implications and
raises questions that need to be
resolved, there is no allegation of facts by
24
petitioner tending to show that she is

entitled to such a writ. The judicial policy
must thus remain that this Court will not
entertain direct resort to it, except when
the redress sought cannot be obtained in
the proper courts or when exceptional and
compelling circumstances warrant
availment of a remedy within and calling
for the exercise of this Court’s primary
jurisdiction. 25
WHEREFORE, the petition is hereby

DISMISSED.
Costs against the petitioner.
SO ORDERED.
Davide,
Jr. (C.J.), Puno, Panganiban, Quisumbing,
Sandoval-Gutierrez, Carpio, Austria-
Martinez, Corona, Callejo,
Sr., Azcuna, Tinga, Chico-
Nazario and Garcia, JJ., concur.
_______________
23 Alliance of Government Workers v. Minister of
Labor and Employment, 124 SCRA 1, 10 (1983).

24 Macasiano v. National Housing Authority, 224
SCRA 236, 243 (1993).

25 John Hay Peoples Alternative Coalition v.
Lim, 414 SCRA 356, 369 (2003).
397
7
Philippine Ports Authority (PPA) Employees Hired
After July 1, 1989 vs. Commission on Audit (COA)
Ynares-Santiago, J., On Leave.

Petition dismissed.
Notes.—The Supreme Court does not
possess original jurisdiction to entertain
petitions for declaratory relief. (United
Residents of Dominican Hill, Inc. vs.
Commission on the Settlement of Land
Problems, 353 SCRA 782[2001]) The
purpose of an action for declaratory relief
is to secure an authoritative statement of
the rights and obligations of the parties
under a statute, deed, contract, etc. for
their guidance in the enforcement thereof,
or compliance therewith, and not to settle
issues arising from an alleged breach
thereof—it may be entertained only before
the breach or violation of the statute, deed,
contract, etc., to which it refers. (Manila
Electric Company vs. Philippine
Consumers Foundation, Inc., 374 SCRA
262 [2002])
——o0o——
Baguio Citizens Action, Inc. vs. The City Council
No. L-27247. April 20, 1983. *
IN THE MATTER OF THE PETITION

FOR DECLARATORY JUDGMENT
REGARDING THE VALIDITY OF
ORDINANCE NO. 386 OF THE CITY OF
BAGUIO, BAGUIO CITIZENS ACTION
INC., and JUNIOR CHAMBER OF
BAGUIO CITY, INC., petitioners-
appellants, vs. THE CITY COUNCIL AND
CITY MAYOR OF THE CITY OF
BAGUIO, respondents-appellees.
Judgment; Courts; Ordinances; Squatters; W
here Branch I of the CFI of Baguio merely dealt
with the criminal liability of the accused
____________
* EN BANC.
369
VOL. 121, APRIL 20, 1983 36
9
under some sections of an anti-squatting
ordinance, the CFI of Baguio Branch II, erred in
stating that it cannot pass upon the con-
stitutionality of said ordinance as it would
amount to passing judgment of the validity of
the decision of Branch I.—The case before the
Court of First Instance of Baguio, Branch I,
dealt with the criminal liability of the accused
for constructing their houses without obtaining
building permits, contrary to Section 47 in
relation to Section 52 of the Revised Ordinances
of Baguio, which act the said court considered
as pardoned by Section 2 of Ordinance 386. The
court in said case upheld the power of the
Municipal Council to legalize the acts punished
by the aforesaid provisions of the Revised
Ordinances of Baguio, stating that the
Municipal Council is the policy determining
body of Baguio City and therefore it can amend,
repeal, alter or modify its own laws as it did
when it enacted Ordinance 386. In deciding the
case, the first branch of the court a quo did not
declare the whole Ordinance valid. This is clear
when it stated that “had the issue been the
legalization of illegal occupation of public land,
covered by Republic Act No. 947, x x x the
Ordinance in question should have been ultra
vires and unconstitutional.” Said court merely
confined itself to Sections 2 and 3 of Ordinance
386. It did not make any definite
pronouncement whether or not the City Council
has the power to legalize the illegal occupation
of public land which is the issue in the instant
case. It is noteworthy that the court, in passing
upon the validity of the aforesaid sections, was
apparently guided by the rule that where part
of a statute is void as repugnant to the organic
law, while another part is valid, the valid
portion, if separable from the invalid may stand
and be enforced. Contrary to what was said in
the decision under review, the second branch of
the court a quo was not called upon to
determine the validity of the judgment of the
first branch.
Same; Jurisdiction; Action; Squatters; Declar
atory Relief; The non-inclusion of the squatters
mentioned in the questioned anti-squatting
ordinance as party-defendants cannot defeat the
jurisdiction of the court to resolve the petition
for declaratory relief on the validity of said
ordinance. If at all, the case may be dismissed
under Sec. 5 of Rule 64 which gives courts the
power to refuse to declare rights or construe
instruments.—The non-inclusion of the
squatters mentioned in the Ordinance in
question as party defendants in this case
cannot defeat the jurisdiction of the Court of
First Instance of Baguio. There is nothing in
Section 2 of Rule 64 of the Rules of Court which
says that the non-joinder of persons who have
or claim any interest which would be affected
by the declaration is a jurisdictional defeat.
Said section merely states that “All persons
shall be made
370
70
parties who have or claim any interest which
would be affected by the declaration; and no
declaration shall, except or otherwise provided
in these rules, prejudice the rights of persons
not parties to the action.” This section
contemplates a situation where there are other
persons who would be affected by the
declaration, but were not impleaded as
necessary parties, in which case the declaration
shall not prejudice them. If at all, the case may
be dismissed not on the ground of lack of
jurisdiction but for the reason stated in Section
5 of the same Rule stating that “the Court may
refuse to exercise the power to declare rights
and to construe instruments in any case where
a decision would not terminate the uncertainty
or controversy which gave rise to the action, or
any case where the declaration or construction
is not necessary and proper at the time under
all circumstances.”
Same; Same; Same; Same; Same; Squatters
are not necessary parties to a petition for
declaratory relief filed to determine the validity
of an Anti-Squatting Ordinance.—It must be
noted that the reason for the law requiring the
joinder of all necessary parties is that failure to
do so would deprive the declaration of the final
and pacifying function the action for
declaratory relief is calculated to subserve, as
they would not be bound by the declaration and
may raise the identical issue. In the case at bar,
although it is true that any declaration by the
court would affect the squatters, the latter are
not necessary parties because the question
involved is the power of the Municipal Council
to enact the Ordinances in question. Whether or
not they are impleaded, any determination of
the controversy would be binding upon the
squatters.
Actions; Declaratory Relief; The necessary
party to a suit involving nullity of an Ordinance
is the Mayor and the City Council.—This is not
true in the instant case. A declaration on the
nullity of the ordinance, would give the
squatters no right which they are entitled to
protect. The party most interested to sustain
and defend the legality of the Ordinance is the
body that passed it, the City Council, and
together with the City Mayor, is already a party
in these proceedings.
Municipal
Corporations; Squatters; Statutes; Ejectment; P
ublic Land; An ordinance legalizing the
occupancy by squatters of public lands is null
and void.—Being unquestionably a public land,
no disposition thereof could be made by the City
of Baguio without prior legislative authority. It
is the fundamental principle that the state
possesses plenary power in law to determine
who shall be favored
371
VOL. 121, APRIL 20, 1983 37
1
recipients of public domain, as well as under
what terms such privilege may be granted not
excluding the placing of obstacles in the way of
exercising what otherwise would be ordinary
acts of ownership. And the law has laid in the
Director of Lands the power of exclusive
control, administrations, disposition and
alienation of public land that includes the
survey, classification, lease, sale or any other
form of concessions or disposition and
management of the lands of public domains.
Same; Same; Same; Same; Same; Same.—
Nor could the enactment of Ordinance 386 be
justified by stating that “this Ordinance is
primarily designed to extend a helping hand to
the numerous landless city residents and the so
called squatters within the Baguio townsite in
their desire to acquire residential lots which
they may rightly call their own and that the
reported people who have violated the City’s
building ordinances were not so guided by any
criminal perversity, but were given to it more
by circumstances of necessity and that they are,
therefore, entitled to a more human treatment,
more understanding and more of pity rather
than be herded before the courts, likened to
hardened criminals and deliberate violators of
our laws and ordinances.”
Squatters; Leases; Ejectment; Building
Laws; LOI No. 19 authorizes removal of
squatters’ illegal construction by city and
district engineers and provides for their
relocation.—“Indeed, the government has
enunciated a militant policy against squatters.
Thus, Letter of Instruction No. 19 dated
October 2, 1972 orders city and district
engineers ‘to remove all illegal constructions
including buildings x x x and those built
without permits on public or private property’
and providing for the relocation of squatters (68
O.G. 7962. See Letter of Instruction No. 19-A).
As noted by Justice Sanchez, since the last
global war, squatting on another’s property in
this country has become a widespread vice.
(City of Manila vs. Garcia, L-26053, Feb. 21,
1967, 19 SCRA 413, 418).”
PETITION for declaratory relief in the
Court of First Instance of Baguio, Br. II.
Court.
DE CASTRO, J.:
In this petition for declaratory relief
originally filed in the Court of First
Instance of Baguio, Branch II, what is
involved
372
is the validity of Ordinance 386 passed by

the City Council of Baguio City which took
effect on February 23, 1967, quoted
together with the explanatory note, as
follows:
“ORDINANCE 386
“AN ORDINANCE CONSIDERING ALL SQUATTERS OF PUBLIC LAND, OTHER THAN

THOSE EARMARKED FOR PUBLIC USE IN THE CITY OF BAGUIO WHO ARE DULY
REGISTERED AS SUCH AT THE TIME OF THE PROMULGATION OF THIS
ORDINANCE AS BONAFIDE OCCUPANTS OF THEIR RESPECTIVE LOTS AND
WHICH SHALL HEREAFTER BE EMBRACED AS A CITY GOVERNMENT HOUSING
PROJECT AND PROVIDING FOR OTHER PURPOSES.”
“Upon strong recommendation of the Vice-Mayor and Presiding Officer, on Motion of all
the Councilors, seconded by the same, be it ordained by the City Council assembled:
“Section 1.—All public lands within Baguio townsite which are occupied by squatters
who are duly registered as such at the time of the promulgation of this Ordinance such
public lands not designated by city and national authorities for public use, shall be
considered as embraced and comprising a City Government Housing Project; PROVIDED,
HOWEVER, That areas covered by Executive Orders or Presidential Proclamations but the
city had made official representation for the lifting of such orders or proclamation shall be
deemed to be part of the Baguio Townsite for the purposes of this ordinance;
“Section 2.—Building permits shall have been deemed issued to all squatters as
contemplated by this Ordinance, giving such squatters five years from the approval of this
Ordinance to satisfactorily comply with city building specifications and payment of the
corresponding city building permit fees;
“Section 3.—All cases pending in court against squatters be dropped without prejudice to
the full prosecution of all subsequent violations in relation to the provisions of existing city
ordinances and/or resolutions;
“Section 4.—All squatters be given all the necessary and needed protection of the City
Government against the stringent provisions of the Public Land Act, particularly on public
bidding, in that the lots occupied by said squatters be awarded to them by direct sale
through Presidential Proclamation;
373
VOL. 121, APRIL 20, 1983 373
“Section 5.—The City Government shall not be interested in making financial profit out
of the project and that the appraisal and evaluation of the said lots shall be made at
minimum cost per square meters, the total cost of the lots made payable within the period
of ten years;
“Section 6.—The minimum lot area requirements shall be disregarded in cases where it
could not be implemented due to existing congestion of houses, and that, if necessary, areas
applied for under this ordinance shall be reduced to that which is practical under the
circumstances; PROVIDED, HOWEVER, That squatters in congested areas shall be given
preference in the transfer to resettlement areas or government housing projects earmarked
as such under the provisions of this ordinance, if and when it becomes necessary to ease
congestion or when their lots shall be traversed by the laying of roads or are needed for
public use;
“Section 7.—The amount of P20,000.00 or so much as is necessary, for the lot survey of
each squatter’s lot be appropriated, such survey of which shall be conducted by licensed
private surveyors through public biddings; PROVIDED, That, said expenses for survey
shall be included in the overall cost of each lot;
“Section 8.—The three-man control committed for the Quirino-Magsaysay housing
project which was previously created under City Ordinance No. 344, shall exercise
administration and supervision of the city government housing projects created under this
Ordinance shall, furthermore, be entrusted with the duty of: (1) Consolidating a list of all
city squatters who shall be benefitted in contemplation and under the provisions of this
Ordinance; (2) To assist and help the squatters in the preparation of all the necessary and
required paper work and relative items in connection with their application over their
respective lots; (3) To seek and locate other areas within the Baguio Townsite conveniently
situated and which will be earmarked as subsequently housing projects of the city for
landless bonafide city residents; and (4) To carry out and implement the provisions of this
Ordinance without the least possible delay.”
EXPLANATORY NOTE
“This ordinance is primarily designed to extend a helping hand to the numerous landless
city residents and the so-called ‘Squatters’ within the Baguio Townsite in their desire to
acquire residential lots which they may rightly call their own.
“The reported people who have violated the City’s building ordinances were not so
guarded by any criminal perversity, but where
374
given to it more by circumstances of necessity and that they are, therefore, entitled to a
more human treatment, more of understanding and more of pity rather than be herded
before the courts, likened to hardened criminals and deliberate violators of our laws and
ordinances.”
“PRESENT AND VOTING:

Hon. Norberto de —Vice Mayor and Presiding
Guzman Officer
Hon. Gaudencio —Councilor
Floresca
Hon. Jose S. Florendo —Councilor
Hon. Francisco G. Mayo —Councilor
Hon. Braulio D. —Councilor and
Yaranon
Hon. Sinforoso Fañgonil —Councilor
The petition for declaratory relief filed

with the Court of First Instance of Baguio,
Branch II, prays for a judgment declaring
the Ordinance as invalid and illegal ab
initio. The respondents-appellees, the City
Council and the City Mayor, filed motions
to dismiss the petition which were denied.
Nonetheless, in the decision thereafter
rendered, the petition was dismissed on
the grounds that: 1) another court, the
Court of First Instance of Baguio, Branch
I, had declared the Ordinance valid in a
criminal case filed against the squatters
for illegal construction, and the Branch II
of the same court cannot, in a declaratory
proceeding, review and determine the
validity of said judgment pursuant to the
policy of judicial respect and stability; 2)
those who come within the protection of
the ordinance have not been made parties
to the suit in accordance with Section 2 of
Rule 64 and it has been held that the non-
joinder of such parties is a jurisdictional
defect; and 3) the court is clothed with
discretion to refuse to make any
declaration where the declaration is not
necessary and proper at the time under all
circumstances, e.g. where the declaration
would be of no practical help in ending the
controversy or would not stabilize the
disputed legal relation, citing Section 5 of
Rule 64; ICJS 1033-1034; 16 AM. JUR
287-289; Hoskyns vs. National City Bank
of New York, 85 Phil. 201.
Hence, the instant appeal which was
perfected in accordance with the
provisions of Rule 42, before the approval
of Republic Act No. 5440 on September 9,
1968.
375
VOL. 121, APRIL 20, 1983 375
1. The case before the Court of First

Instance of Baguio, Branch I, dealt with
the criminal liability of the accused for
constructing their houses without
obtaining building permits, contrary to
Section 47 in relation to Section 52 of the
Revised Ordinances of Baguio, which act
the said court considered as pardoned by
Section 2 of Ordinance 386. The court in
said case upheld the power of the
Municipal Council to legalize the acts
punished by the aforesaid provisions of the
Revised Ordinances of Baguio, stating that
the Municipal Council is the policy
determining body of Baguio City and
therefore it can amend, repeal, alter or
modify its own laws as it did when it
enacted Ordinance 386. In deciding the
case, the first branch of the court a quo did
not declare the whole Ordinance valid.
This is clear when it stated that “had the
issue been the legalization of illegal
occupation of public land, covered by
Republic Act No. 947, x x x the Ordinance
in question should have been ultra
vires and unconstitutional.” Said court
1
merely confined itself to Sections 2 and 3

of Ordinance 386. It did not make any
definite pronouncement whether or not the
City Council has the power to legalize the
illegal occupation of public land which is
the issue in the instant case. It is
noteworthy that the court, in passing upon
the validity of the aforesaid sections, was
apparently guided by the rule that where
part of a statute is void as repugnant to
the organic law, while another part is
valid, the valid portion, if separable from
the invalid may stand and be enforced.
Contrary to what was said in the decision
under review, the second branch of the
court a quo was not called upon to
determine the validity of the judgment of
the first branch.
2. The non-inclusion of the squatters
mentioned in the Ordinance in question as
party defendants in this case cannot defeat
the jurisdiction of the Court of First
Instance of Baguio. There is nothing in
Section 2 of Rule 64 of the Rules of Court
which says that the non-joinder of persons
who have or claim any interest which
would be affected by the declaration is a
jurisdictional defect. Said section merely
states that “All persons shall be made
parties who have or claim any interest
_________________
1 Record on Appeal (Decision of the CFI of Baguio, Branch I in Criminal Case Nos. 2553 to 2690), p. 93.
376
which would be affected by the

declaration; and no declaration shall,
except or otherwise provided in these
rules, prejudice the rights of persons not
parties to the action.” This section
contemplates a situation where there are
other persons who would be affected by the
declaration, but were not impleaded as
necessary parties, in which case the
declaration shall not prejudice them. If at
all, the case may be dismissed not on the
ground of lack of jurisdiction but for the
reason stated in Section 5 of the same
Rule stating that “the Court may refuse to
exercise the power to declare rights and to
construe instruments in any case where a
decision would not terminate the
uncertainty or controversy which gave rise
to the action, or any case where the
declaration or construction is not
necessary and proper at the time under all
circumstances.”
It must be noted that the reason for the
law requiring the joinder of all necessary
parties is that failure to do so would
deprive the declaration of the final and
pacifying function the action for
declaratory relief is calculated to subserve,
as they would not be bound by the
declaration and may raise the identical
issue. In the case at bar, although it is
2
true that any declaration by the court

would affect the squatters, the latter are
not necessary parties because the question
involved is the power of the Municipal
Council to enact the Ordinances in
question. Whether or not they are
impleaded, any determination of the
controversy would be binding upon the
squatters.
A different situation obtains in the case
of Degala v. Reyes cited in the decision 3
under review. The Degala case involves

the validity of the trust created in the will
of the testator. In the said case, the Roman
Catholic Church which was a necessary
party, being the one which would be most
vitally affected by the declaration of the
nullity of the will was not brought in as
party. The Court therefore, refused to
make any declaratory judgment on ground
of jurisdictional defect, for there can be no
final judgment that could be rendered and
the Roman Catholic not being bound by
such judgment might
________________
2 Degala v. Reyes, 87 Phil. 649citing Hoskyn’s v. National City Bank of New York, 85 Phil. 201.
3 Ibid, citing 7 C.J.S., 1049.
377
VOL. 121, APRIL 20, 1983 377
raise the identical issue, making therefore
the declaration a mere exercise in futility.
This is not true in the instant case. A
declaration on the nullity of the ordinance,
would give the squatters no right which
they are entitled to protect. The party
most interested to sustain and defend the
legality of the Ordinance is the body that
passed it, the City Council, and together
with the City Mayor, is already a party in
these proceedings.
3. The Ordinance in question is a patent
nullity. It considered all squatters of
public land in the City of Baguio as bona-
fide occupants of their respective lots. As
we have stated in City of Manila v.
Garcia, et al.: 4
“Squatting is unlawful and no amount of acquiescence on the part of the city officials will
elevate it into a lawful act. In principle, a compound of illegal entry and official permit to
stay is obnoxious to our concept of proper official norm of conduct. Because, such permit
does not serve social justice; it fosters moral decadence. It does not promote public welfare;
it abets disrespect for the law. It has its roots in vice; so it is an infected bargain. Official
approval of squatting should not, therefore, be permitted to obtain in this country where
there is an orderly form of government.”
In the same case, squatting was
characterized as a widespread vice and a
blight. Thus:
“Since the last global war, squatting on another’s property in this country has become a
widespread vice. It was and is a blight. Squatter’s areas pose problems of health, sanitation.
They are breeding places for crime. They constitute proof that respect for the law and the
rights of others, even those of the government are being flouted. Knowingly, squatters have
embarked on the pernicious act of occupying property whenever and wherever convenient to
their interests without as much as leave, and even against the will, of the owner. They are
emboldened seemingly because of their belief that they could violate the law with impunity.
The pugnaciousness of some of them has tied up the hands of legitimate owners. The latter
are thus prevented from recovering possession by peaceful means. Government lands have
not been spared by them. They know, of course, that instrusion into property, government
or private, is
_____________
4 19 SCRA 413.
378
wrong. But, then, the wheels of justice grind slow, mainly because of lawyers who, by
means, fair or foul, are quite often successful in procuring delay of the day of reckoning.
Rampancy of forcible entry into government lands particularly, is abetted by the apathy of
some public officials to enforce the government’s rights. Obstinacy of these squatters is
difficult to explain unless it is spawned by official tolerance, if not outright encouragement
or protection. Said squatters have become insensible to the difference between right and
wrong. To them, violation of law means nothing. With the result that squatters still exists,
much to the detriment of public interest. It is high time that, in this aspect, sanity and the
rule of law be restored. It is in this environment that we look into the validity of the
permits granted defendants herein.”
In the above cited case, the land occupied

by the squatters belongs to the City of
Manila. In the instant case, the land
occupied by the squatters are portions of
water sheds, reservations, scattered
portions of the public domain within the
Baguio townsite. Certainly, there is more
reason then to void the actions taken by
the City of Baguio through the questioned
ordinance.
Being unquestionably a public land, no
disposition thereof could be made by the
City of Baguio without prior legislative
authority. It is the fundamental principle
that the state possesses plenary power in
law to determine who shall be favored
recipients of public domain, as well as
under what terms such privilege may be
granted not excluding the placing of
obstacles in the way of exercising what
otherwise would be ordinary acts of
ownership. And the law has laid in the
Director of Lands the power of exclusive
control, administrations, disposition and
alienation of public land that includes the
survey, classification, lease, sale or any
other form of concessions or disposition
and management of the lands of public do-
mains. 5
Nor could the enactment of Ordinance

386 be justified by stating that “this
Ordinance is primarily designed to extend
a helping hand to the numerous landless
city residents and the so called squatters
within the Baguio townsite in their desire
to acquire residential lots which they may
rightly call their
_______________
5 Francisco v. Rodriguez, 67 SCRA 212, 217.
379
VOL. 121, APRIL 20, 1983 379
own and that the reported people who

have violated the City’s building
ordinances were not so guided by any
criminal perversity, but were given to it
more by circumstances of necessity and
that they are, therefore, entitled to a more
human treatment, more understanding
and more of pity rather than be herded
before the courts, likened to hardened
criminals and deliberate violators of our
laws and ordinances.” 6
Our pronouncement in Astudillo vs.

Board of Directors of PHHC is relevant to 7
this case. Thus—

“In carrying out its social re-adjustment policies, the government could not simply lay aside
moral standards, and aim to favor usurpers, squatters, and intruders, unmindful of the
lawful and unlawful origin and character of their occupancy. Such a policy would
perpetuate conflicts instead of attaining their just solution. (Bernar-do vs. Bernardo, 96
Phi. 202, 206.)
“Indeed, the government has enunciated a militant policy against squatters. Thus,
Letter of Instruction No. 19 dated October 2, 1972 orders city and district engineers ‘to
remove all illegal constructions including buildings x x x and those built without permits on
public or private property’ and providing for the relocation of squatters (68 O.G. 7962. See
Letter of Instruction No. 19-A). As noted by Justice Sanchez, since the last global war,
squatting on another’s property in this country has become a widespread vice. (City of
Manila vs. Garcia, L-26053, Feb. 21, 1967, 19 SCRA 413, 418).”
WHEREFORE, in view of the foregoing,

Ordinance 386 is hereby rendered nullified
and without force and effect.
SO ORDERED.
Fernando,
C.J., Makasiar, Concepcion,
Jr., Guerrero, Abad Santos, Melencio-
Herrera, Plana, Escolin, Vasquez, Relova a
nd Gutierrez, JJ., concur.
Teehankee, J., took no part.
Aquino, J., on leave.
Ordinance 386 nullified.
_________________
6 Record on Appeal (Explanatory note of ordinance 386 pp. 87-88.

7 3 SCRA 15.
380
Francisco vs. Secretary of Agriculture and Natural
Resources
Notes.—Squatters should not be

permitted to obstruct the whells of
progress such as the construction of good
roads, by invoking trifling technicalities,
which will only delay the disposal of cases.
(De la Cruz vs. Tianco,11 SCRA 623.)
The Mayor of Manila cannot legalize
forcible entry into public property by the
simple expedient of giving permits, or for
that matter, by executing leases. (City of
Manila vs. Garcia, 19 SCRA 413.)
The houses of squatters on lands
belonging to the City of Manila constitute
a public nuisance per se. (City of Manila
vs. Garcia, 19 SCRA 413.)
For purposes of a petition for preliminary
injunction, finality of adverse decision in
forcible entry case may be of very little
importance in the face of existence of a
petition for quieting of title filed by party
defeated in forcible entry case. (Vda. de
Legaspi vs. Avendaño, 79 SCRA 135.)
There is no time limit within which an
order of demolition should be carried out.
(Albetz Investments, Inc. vs. C.A., 75 SCRA
310.)
Squatting is against public policy and an
attorney should not encourage it.
(Catelang vs. Medina, 91 SCRA 403.)
——o0o——
Philippine Deposit Insurance Corporation vs. Court of
Appeals
G.R. No. 126911. April 30, 2003. *
PHILIPPINE DEPOSIT INSURANCE

CORPORATION, petitioner vs. THE
HONORABLE COURT OF APPEALS and
JOSE ABAD, LEONOR ABAD, SABINA
ABAD, JOSEPHINE “JOSIE” BEATA
ABAD-ORLINA, CECILIA ABAD, PIO
ABAD, DOMINIC ABAD, TEODORA
ABAD, respondents.
Remedial Law; Declaratory Relief; There is
nothing in the nature of a special civil action for
declaratory relief that proscribes the filing of a
counterclaim based on the same transaction,
deed or contract subject of the complaint.—
Without doubt, a petition for declaratory relief
does not essentially entail an executory process.
There is nothing in its nature, however, that
prohibits a counterclaim from being set-up in
the same action. Now, there is nothing in the
nature of a special civil action for declaratory
relief that proscribes the filing of a
deed or contract subject of the complaint. A
special civil action is after all not essentially
different from an ordinary civil action, which is
generally governed by Rules 1 to 56 of the Rules
of Court, except that the former deals with a
special subject matter which makes necessary
some special regulation. But the identity
between their fundamental nature is such that
the same rules governing ordinary civil suits
may and do apply to special civil actions if not
inconsistent with or if they may serve to
supplement the provisions of the peculiar rules
governing special civil actions.
Same; Appeals; Issue not raised in the court a
quo cannot be raised for the first time in the
petition at bar.—Petitioner additionally submits
that the issue of determining the amount of
deposit insurance due respondents was never
tried on the merits since the trial dwelt only on
the “determination of the viability or validity of
the deposits” and no evidence on record
sustains the holding that the amount of deposit
due respondents had been finally determined.
This issue was not raised in the court a
quo, however, hence, it cannot be raised for the
first time in the petition at bar.
PETITION for review on certiorari of a
decision of the Court of Appeals.
Court.
Office of the Chief Legal Counsel for
petitioner.
Dolores P. Abad and Leonora P.
Abad for private respondents.
_______________
* THIRD DIVISION.
195
VOL. 402, APRIL 30, 2003 195
Appeals
CARPIO-MORALES, J.:
The present petition for review assails the
decision of the Court of Appeals affirming
that of the Regional Trial Court of Iloilo
City, Branch 30, finding petitioner
Philippine Deposit Insurance Corporation
(PDIC) liable, as statutory insurer, for the
value of 20 Golden Time Deposits
belonging to respondents Jose Abad,
Leonor Abad, Sabina Abad, Josephine
“Josie” Beata Abad-Orlina, Cecilia Abad,
Pio Abad, Dominic Abad, and Teodora
Abad at the Manila Banking Corporation
(MBC), Iloilo Branch.
Prior to May 22, 1997, respondents had,
individually or jointly with each other, 71
certificates of time deposits denominated
as “Golden Time Deposits” (GTD) with an
aggregate face value of Pl,115,889.96.
1
On May 22, 1987, a Friday, the Monetary

Board (MB) of the Central Bank of the
Philippines, now Bangko Sentral ng
Pilipinas, issued Resolution
505 prohibiting MBC to do business in the
2
Philippines, and placing its assets and

affairs under receivership. The Resolution,
however, was not served on MBC until
Tuesday the following week, or on May 26,
1987, when the designated Receiver took
over. 3
On May 25, 1987, the next banking day

following the issuance of the MB
Resolution, respondent Jose Abad was at
the MBC at 9:00 a.m. for the purpose of
pre-terminating the 71 aforementioned
GTDs and re-depositing the fund
represented thereby into 28 new GTDs in
denominations of P40,000.00 or less under
the names of herein respondents
individually or jointly with each other. Of 4
the 28 new GTDs, Jose Abad pre-

terminated 8 and withdrew the value
thereof in the total amount of
P320,000.00. 5
Respondents thereafter filed their claims

with the PDIC for the payment of the
remaining 20 insured GTDs. 6
On February 11, 1988, PDIC paid

respondents the value of 3 claims in the
total amount of P120,000.00. PDIC,
however, with-
_______________
1 Records at pp. 210-211.

2 Id., at pp. 208-209.
3 Rollo at p. 13.
4 Id., at p. 12.
5 Ibid.
6 Id., at p. 13.
196
Appeals
held payment of the 17 remaining claims
after Washington Solidum, Deputy
Receiver of MBC-Iloilo, submitted a report
to the PDIC that there was massive
7
conversion and substitution of trust and

deposit accounts on May 25, 1987 at MBC-
Iloilo. The pertinent portions of the report
8
stated:
xxx
On May 25, 1987 (Monday) or a day prior to the official announcement and take-over by
CB of the assets and liabilities of The Manila Banking Corporation, the Iloilo Branch was
found to have recorded an unusually heavy movements in terms of volume and amount for
all types of deposits and trust accounts. It appears that the impending receivership of
TMBC was somehow already known to many depositors on account of the massive
withdrawals paid on this day which practically wiped out the branch’s entire cash position .
...
xxx
. . . The intention was to maximize the availment of PDIC coverage limited to P40,000 by
spreading out big accounts to as many certificates under various nominees . . . .
9
xxx
Because of the report, PDIC entertained

serious reservation in recognizing
respondents’ GTDs as deposit liabilities of
MBC-Iloilo. Thus, on August 30, 1991, it
filed a petition for declaratory relief
against respondents with the Regional
Trial Court (RTC) of Iloilo City, for a
judicial declaration determination of the
insurability of respondents’ GTDs at MBC-
Iloilo. 10
In their Answer filed on October 24, 1991

and Amended Answer filed on January 9, 11
1992, respondents set up a counterclaim

against PDICwhereby they asked for
payment of their insured deposits. 12
In its Decision of February 22,

1994, Branch 30 of the Iloilo RTC
13
declared the 20 GTDs of respondents to be

deposit liabilities
_______________
7 Records at pp. 214-218; Exhibit “D.”

8 Rollo at p. 23.
197
VOL. 402, APRIL 30, 2003 197
Appeals
of MBC, hence, are liabilities of PDIC as

statutory insurer. It accordingly disposed
as follows:
“WHEREFORE, premises considered, judgment is hereby rendered:
1. 1.Declaring the 28 GTDs of the Abads which were issued by the TMBC-Iloilo on May
25, 1987 as deposits or deposit liabilities of the bank as the term is defined under
Section 3 (f) of R.A. No. 3591, as amended;
2. 2.Declaring PDIC, being the statutory insurer of bank deposits, liable to the Abads
for the value of the remaining 20 GTDs, the other 8 having been paid already by
TMBC-Iloilo on May 25, 1987;
3. 3.Ordering PDIC to pay the Abads the value of said 20 GTDs less the value of 3
GTDs it paid on February 11, 1988, and the amounts it may have paid the Abads
pursuant to the Order of this Court dated September 8, 1992;
4. 4.Ordering PDIC to pay immediately the Abads the balance of its admitted liability
as contained in the aforesaid Order of September 8, 1992, should there be any,
subject to liquidation when this case shall have been finally decided; and
5. 5.Ordering PDIC to pay legal interest on the remaining insured deposits of the
Abads from February 11, 1988 until they are fully paid.
SO ORDERED.”
On appeal, the Court of Appeals, by the

assailed Decision of October 21,
1996, affirmed the trial court’s decision
14
except as to the award of legal interest

which it deleted.
Hence, PDIC’s present Petition for
Review which sets forth this lone
assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF
THE TRIAL COURT THAT THE AMOUNT REPRESENTED IN THE FACES OF THE SO
CALLED “GOLDEN TIME DEPOSITS” WERE INSURED DEPOSITS EVEN AS THEY
WERE MERE DERIVATIVES OF RESPONDENTS’ PREVIOUS ACCOUNT BALANCES
WHICH WERE PRE-TERMINATED/TERMINATED AT THE TIME THE MANILA
BANKING CORPORATION WAS ALREADY IN SERIOUS FINANCIAL DISTRESS.
_______________
14 Id., at pp. 37-44.
198
Appeals
In its supplement to the petition, PDIC
adds the following assignment of error:
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE HOLDING OF
THE TRIAL COURT ORDERING PETITIONER TO PAY RESPONDENTS’ CLAIMS FOR
PAYMENT OF INSURED DEPOSITS FOR THE REASON THAT AN ACTION FOR
DECLARATORY RELIEF DOES NOT ESSENTIALLY ENTAIL AN EXECUTORY
PROCESS AS THE ONLY RELIEF THAT SHOULD HAVE BEEN GRANTED BY THE
TRIAL COURT IS A DECLARATION OF THE RIGHTS AND DUTIES OF PETITIONER
UNDER R.A. 3591, AS AMENDED, PARTICULARLY SECTION 3(F) THEREOF AS
CONSIDERED AGAINST THE SURROUNDING CIRCUMSTANCES OF THE MATTER
IN ISSUE SOUGHT TO BE CONSTRUED WITHOUT PREJUDICE TO OTHER
MATTERS THAT NEED TO BE CONSIDERED BY PETITIONER IN THE PROCESSING
OF RESPONDENTS’ CLAIMS.
Under its charter, PDIC (hereafter 15
petitioner) is liable only for deposits

received by a bank “in the usual course of
business.” Being of the firm conviction
16
that, as the reported May 25, 1987 bank

transactions were so massive, hence,
irregular, petitioner essentially seeks a
judicial declaration that such transactions
were not made “in the usual course of
business” and, therefore, it cannot be
made liable for deposits subject thereof. 17
Petitioner points that as MBC was

prohibited from doing further business by
MB Resolution 505 as of May 22, 1987, all
transactions subsequent to such date were
not done “in the usual course of business.”
Petitioner further posits that there was
no consideration for the 20 GTDs subject
of respondents’ claim. In support of this
submission, it states that prior to March
25, 1987, when the 20 GTDs
_______________
15 RA 3591, as amended.
16 Section 3, R.A. 3591, provides: “(f) The term “deposit” means the unpaid balance of money or its
equivalent received by a bank in the usual course of business and for which it has given or is obliged to
give credit to a commercial, checking, savings, time or thrift account or which is evidenced by its
certificate of deposit, and trust funds held by such bank whether retained or deposited in any department
of such bank or deposited in another bank, together with such other obligations of a bank as the Board of
Directors shall find and shall prescribe by regulations to be deposit liabilities of the Bank x x x”
199
VOL. 402, APRIL 30, 2003 199
Appeals
were made, MBC had been experiencing

liquidity problems, e.g., at the start of
banking operations on March 25, 1987, it
had only P2,841,711.90 cash on hand and
at the end of the day it was left with
P27,805.81 consisting mostly of mutilated
bills and coins. Hence, even if respondents
18
had wanted to convert the face amounts of

the GTDs to cash, MBC could not have
complied with it.
Petitioner theorizes that after MBC had
exhausted its cash and could no longer
sustain further withdrawal transactions, it
instead issued new GTDs as “payment” for
the pre-terminated GTDs of respondents
to make sure that all the newly-issued
GTDs have face amounts which are within
the statutory coverage of deposit
insurance.
Petitioner concludes that since no cash
was given by respondents and none was
received by MBC when the new GTDs
were transacted, there was no
consideration therefor and, thus, they
were not validly transacted “in the usual
course of business” and no liability for
deposit insurance was created. 19
Petitioner’s position does not persuade.

While the MB issued Resolution 505 on
May 22, 1987, a copy thereof was served
on MBC only on May 26, 1987. MBC and
its clients could be given the benefit of the
doubt that they were not aware that the
MB resolution had been passed, given the
necessity of confidentiality of placing a
banking institution under receivership.” 20
The evident implication of the law, therefore, is that the appointment of a receiver may be
made by the Monetary Board without notice and hearing but its action is subject to judicial
inquiry to insure the protection of the banking institution. Stated otherwise, due process
does not necessarily require a prior hearing; a hearing or an opportunity to be heard may
be subsequent to the closure. One can just imagine the dire consequences of a prior hearing:
bank runs would be the order of the day, resulting in panic and hysteria. In the process,
fortunes may be wiped out, and disillusionment will run the gamut of the entire banking
community. (Italics supplied). 21
_______________
18 Rollo at pp. 17-18; Records at p. 59.

19 Rollo at pp. 18, 122-123.
20 Vide Rural Bank of Buhi v. Court of Appeals, 162 SCRA 288(1988).
21 Ibid., at p. 303.
200
Appeals
Mere conjectures that MBC had actual

knowledge of its impending closure do not
suffice. The MB resolution could not thus
have nullified respondents’ transactions
which occurred prior to May 26, 1987.
That no actual money in bills and/or
coins was handed by respondents to MBC
does not mean that the transactions on the
new GTDs did not involve money and that
there was no consideration therefor. For
the outstanding balance of respondents’ 71
GTDs in MBC prior to May 26, 1987 in the
22
amount of P1,115,889.15 as earlier

mentioned was re-depositedby respondents
under 28 new GTDs. Admittedly, MBC
had P2,841,711.90 cash on hand—more
than double the outstanding balance of
respondent’s 71 GTDs—at the start of the
banking day on May 25, 1987. Since
respondent Jose Abad was at MBC soon
after it opened at 9:00 a.m. of that day,
petitioner should not presume that MBC
had no cash to cover the new GTDs of
respondents and conclude that there was
no consideration for said GTDs.
Petitioner having failed to overcome the
presumption that the ordinary course of
business was followed, this Court finds
23
that the 28 new GTDs were deposited “in
the usual course of business” of MBC.
In its second assignment of error,
petitioner posits that the trial court erred
in ordering it to pay the balance of the
deposit insurance to respondents,
maintaining that the instant petition
stemmed from a petition for declaratory
relief which does not essentially entail an
executory process, and the only relief that
should have been granted by the trial
court is a declaration of the parties’ rights
and duties. As such, petitioner continues,
no order of payment may arise from the
case as this is beyond the office of
declaratory relief proceedings.24
Without doubt, a petition for declaratory

relief does not essentially entail an
executory process. There is nothing in its
nature, however, that prohibits a
counterclaim from being set-up in the
same action. 25
_______________
22 Rollo at pp. 18, 122-123.
23 Section 3(q), Rule 131, Rules of Court.
24 Rollo at pp. 82, 125.
25 Visayan Packing Corp. v. Reparations Commission, 155 SCRA 542 (1987).
201
VOL. 402, APRIL 30, 2003 201
Appeals
Now, there is nothing in thee nature of a special civil action for declaratory relief that
proscribes the filing of a counterclaim based on the same transaction, deed or contract
subject of the complaint. A special civil action is after all not essentially different from an
ordinary civil action, which is generally governed by Rules 1 to 56 of the Rules of Court,
except that the former deals with a special subject matter which makes necessary some
special regulation. But the identity between their fundamental nature is such that the
same rules governing ordinary civil suits may and do apply to special civil actions if not
inconsistent with or if they may serve to supplement the provisions of the peculiar rules
governing special civil actions. 26
Petitioner additionally submits that the

issue of determining the amount of deposit
insurance due respondents was never tried
on the merits since the trial dwelt only on
the “determination of the viability or
validity of the deposits” and no evidence
on record sustains the holding that the
amount of deposit due respondents had
been finally determined. This issue was 27
not raised in the court a quo, however,

hence, it cannot be raised for the first time
in the petition at bar. 28
Finally, petitioner faults respondents for
availing of the statutory limits of the PDIC
law, presupposing that, based on the
conduct of respondent Jose Abad on March
25, 1987, he and his corespondents
“somehow knew” of the impending closure
of MBC. Petitioner ascribes bad faith to
respondent Jose Abad in transacting the
questioned deposits, and seeks to
disqualify him from availing the benefits
under the law. 29
Good faith is presumed. This, petitioner

failed to overcome since it offered mere
presumptions as evidence of bad faith.
_______________
26 Id., at p. 546.
27 Supplement to Petition for Review and Reply to Respondents’ Comment, Rollo at pp. 82-83 & 108,
respectively.
28 Philippine Basketball Association v. Court of Appeals, 337 SCRA 358, 370 (2000) citing Ruby
Industrial Corporation v. Court of Appeals, 284 SCRA 445 (1998); Salao v. Court of Appeals, 284 SCRA
493 (1998); Heirs of Pascasio Uriarte v. Court of Appeals, 284 SCRA 511 (1998).
29 CA Rollo at pp. 49-51.
202
Lantin vs. Court of Appeals
WHEREFORE, the assailed decision of the

Court of Appeals is hereby AFFIRMED.
SO ORDERED.
Puno (Chairman), Panganiban, Sand
oval-Gutierrez and Corona, JJ.,concur.
Judgment affirmed.
Note.—Basic is the rule that parties may
not bring on appeal issues that were not
raised on trial. (PAMECA Wood Treatment
Plant, Inc. vs. Court of Appeals, 310 SCRA
281[1999])
——o0o——
VOL. 170, FEBRUARY 9, 1989
Adlawan vs. Intermediate Appellate Court
G.R. No. 73022. February 9, 1989. *
GEORGIA ADLAWAN, Owner, RAMON

VILLORDON and MANUEL
VILLORDON, Shareholders and
Operators/Managers of the GALLERA
BAGONG LIPUNAN, and the
SANGGUNIANG BAYAN OF
MINGLANILLA, CEBU,
petitioners, vs. THE HON.
INTERMEDIATE APPELLATE COURT,
THE HON. REGIONAL TRIAL COURT,
Branch XIII, Cebu City, the PHILIPPINE
GAMEFOWL COMMISSION, NICOLAS
ENAD, ABELARDO LARUMBE and
MARTINIANO DE LA CALSADA, all
Shareholders of the MINGLANILLA
JUNIOR COLISEUM, respondents.
Public Corporations; Local
Government; Municipal Council; Operation of
Cockpits; It is discretionary upon the municipal
council to fix the location of cockpits in their
jurisdiction, and determine the
_______________
* SECOND DIVISION.
166
66
allowable distance thereof from public
buildings thru the passage of ordinances.—Prior
to the imposition of martial law, the governing
law on Philippine cockfighting was Republic Act
No. 1224, effective on May 17, 1955, which
specifically vested regulatory and supervisory
powers over cockpits in the local legislative
bodies. x x x It is clear from this statutory
provision that it is discretionary upon the
municipal council to fix the location of cockpits
in their jurisdiction and determine the
buildings, thru the passage of a municipal
ordinance. Republic Act. No. 1224, however,
specifically prohibits the retroactive application
of any such municipal ordinance to cockpits
already existing at the time of its enactment,
specifically with respect to the fixing of
distances at which said cockpits may be
established.
Same; Same; Municipal Mayors; Authority to
Issue Permits for Operation of Cockpits; Sec. 6,
PD 449 specifically entrusts the sole authority to
issue licenses for the operation of cockpits to
municipal Mayors.—Section 6 of Presidential
Decree No. 449 empowered the municipal
mayors to issue licenses for the operation of
cockpits, initially subject to the approval of the
Chief of Constabulary or his authorized
representative and, as later amended, subject to
the review and supervision of the Philippine
Gamefowl Commission. For all intents and
purposes, this provision of law specifically
entrusts the sole authority to issue permits to
the mayors. The municipal council’s duty is
merely to ratify the mayor’s decision before the
same can be actually implemented. But the
council cannot, on its own instance or initiative,
pass upon the licensability of a particular
cockpit and thereafter recommend it to the
mayor for approval. This reverse procedure is
what petitioners would wish to be adopted,
albeit erroneously, in pleading the
aforementioned Resolution No. 40 which
recognized petitioners’ Gallera as the legal
municipal cockpit. Furthermore, Resolution No.
40 was passed by the Municipal Council of
Minglanilla with the concurrence only of the
vice-mayor. The then mayor of Minglanilla, the
late Felicisimo Cana, had no participation
therein, as correctly found by the trial court. On
these considerations, said ultra viresresolution
has no binding effect and cannot be plausibly
invoked by petitioners.
Remedial Law; Civil Procedure; Declaratory
Relief; Affirmative Reliefs; Even if the action is
one for declaratory judgment, but the complaint
alleges other matters sufficient to make out a
case for specific performance, and defendant
failed to challenge the form of action availed of,
the court may grant such affirmative reliefs as
the evidence may warrant.—A note on a
procedural aspect in this case is,
167
VOL. 170, FEBRUARY 9, 1989 1
67
however, in order. This action was initiated
on a petition for declaratory relief, ostensibly
for declaration of the rights and obligations of
the parties under the laws and ordinances
involved therein or invoked by them.
Consequently, in such special civil action the
judgment does not essentially entail an
executory process since generally, other than a
declaration of such rights and duties, other
affirmative reliefs, as these are understood in
ordinary civil actions, are not sought by the
proponent. However, the Court has held that
although the action is for a declaratory
judgment but the allegations in the complaints
are sufficient to make out a case for specific
performance or recovery of property with claims
for damages, and the defendants did not raise
an issue in the trial court to challenge the
remedy or form of the action availed of, the
court can grant such affirmative relief as may
be warranted by the evidence. This decisional
rule applies to the case at bar.
PETITION to review the resolution of the
then Intermediate Appellate Court.
Court.
REGALADO, J.:
Before the Court is a petition to declare
null and void the decision of the former
Court of First Instance of Cebu, Branch
XIII, in Special Civil Action No. R-13186
for declaratory relief with injunction, and
the resolution of the then Intermediate
Appellate Court dismissing the appeal
therefrom. Petitioners further seek the
cancellation or setting aside of the entry of
judgment made on September 17, 1985 by
the respondent appellate court consequent
to its aforesaid dismissal of the appeal.
Prior to the advent of martial law, there
were two cockpits operating under license
in the municipality of Minglanilla, Cebu,
namely, (1) the Minglanilla Junior
Coliseum (hereinafter also referred to as
the Coliseum), which has been existing
since July, 1955, now owned and operated
by private respondents after their
acquisition thereof from their predecessor-
in-interest Felix Obejero, and which is 1
located in the center of the poblacion of the

Muncipality of Minglanilla; and (2) the
_______________
1 Petition, Annex B, 3; Rollo, 35.
168
Gallera Bagong Lipunan, formerly known

as Bag-Ong Bulangan, and later also
known as La Gallera de Minglanilla
(hereinafter also referred to as Gallera),
which was established in 1967, then
owned and operated by Catalino Villaflor
who was succeeded by several operators
and eventually by herein petitioners, and
which is located in Barrio Calajo-an of the
same municipality. 2
With the promulgation of Presidential

Decree No. 449, otherwise known as the
Cockfighting Law of 1974, which provided
for the “one cockpit for every municipality”
rule, the present controversy arose.
The findings of respondent trial court
establish that on November 27, 1972, the
Office of the Mayor of Minglanilla, Cebu,
received a radio message from the Cebu
Provincial Command of the Philippine
Constabulary laying down the policy
governing cockpits, the pertinent
provisions of which state that: (1) only
licensed municipal cockpits shall be
allowed to operate in every municipality;
(2) barrio cockpits, even if licensed shall
not be allowed to operate; (3) if there is no
municipal cockpit, a barrio cockpit may be
allowed or considered a municipal cockpit
when the mayor certifies to that effect;
and (4) in no case shall the operation of
more than one cockpit be allowed in every
municipality. With the receipt of the
aforesaid message, the question arose as to
which cockpit shall remain to operate and
which shall be closed, the final
determination whereof was held in
abeyance, with the municipal council of
Minglanilla instead referring the matter to
the Philippine Constabulary unit which
had jurisdiction over the same. Thereafter,
the Provincial Command rendered a
decision, dated December 8, 1972,
upholding the Coliseum, private
respondents’ cockpit, as the municipal
cockpit of Minglanilla, Cebu. The then
operator of the barrio cockpit Bag-Ong
Bulangan, or Gallera as previously
indicated, appealed the decision to the
Zone Commander who in turn referred the
matter back to said municipal council. 3
Thereafter, the Committee on Laws and

Ordinances of the Municipal Council of
Minglanilla submitted a report on the
_______________
2 Ibid., ibid., 1; Rollo, 33.

3 Ibid., ibid., 1-2; ibid., 33-34.
169
169 VOL. 170, FEBRUARY 9, 1989
cockpit controversy, which was

adopted and later approved by the
4
Municipal Council recommending the 5
retention and certification of the Bag-Ong

Bulangan, or the Gallera, as the municipal
cockpit of Minglanilla. The Committee
based its recommendation on Section 1 of
Republic Act No. 1224, which was
approved on May 7, 1955 and was then the
prevailing law on cockpits, and an
Unnumbered Provincial Circular,
supposedly circularized by the Office of the
Provincial Governor of Cebu on January 3,
1969 and entitled “Prohibition to Establish
and/or Operate Cockpits within the
Poblaciones of Municipalities and
Municipal Districts and within a Radius of
200 Lineal Meters from any Public
Building, Schools, Hospitals and
Churches, Request for—.” 6
The committee reported that under

Republic Act No. 1224 the power to
determine the distance limit of cockpits
from certain public structures is left to the
discretion of the municipal board or
council, except that no municipal
ordinance fixing the distances of cockpits
shall apply to those already licensed and
operating at the time of the enactment of
such municipal ordinance. It also noted
that Paragraph 5 of the aforestated
Unnumbered Provincial Circular provides
that, in the exercise of their discretion, the
local officials are requested to prohibit the
establishment, maintenance and/or
operation of cockpits within the poblacion
of the municipality, the same to be allowed
only within a reasonable distance but in
no case less than 200 lineal meters from
any public buildings, schools, hospitals
and churches, as in the case of other
amusement places mentioned in the law. 7
On the basis of the actual distances of

the Coliseum and the Gallera cockpits
from the aforesaid public structures, the
committee concluded that the Coliseum
failed to meet the required distance limit,
hence it opined that the Gallera should
rightfully be maintained as the municipal
cockpit. The committee agreed that
Republic Act No. 1224 prohibits the
retroactive application of any municipal
ordinance, which may subsequently
_______________
4 Resolution No. 38; Rollo, 21-31.

5 Resolution No. 39; ibid., 31.
6 Rollo, 24-25.
7 Ibid., 26-27.
170
be passed pursuant thereto, to a licensed

cockpit already existing at the time of the
enactment of the ordinance. In this regard,
the committee observed that Municipal
Ordinance No. 4 adopted by the Municipal
Council on February 9, 1969 provided for
only a 50-meter limit, but it contended
that said ordinance could not be properly
invoked by herein private respondents
because of its theory that the same is not
valid and enforceable for lack of approval
from the Provincial Board of Cebu. 8
Subsequently, Resolution No. 40, Series

of 1973, was passed wherein the municipal
council “resolved to request the Municipal
Mayor of this municipality to make and
issue a Certification to the effect that the
“BAG-ONG BULANGAN” Cockpit is the
Municipal Cockpit at Calajo-an of this
municipality x x x.” 9
Aggrieved by the actuations and
resolutions of the municipal council,
herein private respondents Nicolas Enad
and Abelardo Larumbe filed an action for
declaratory relief with injunction, as
petitioners praying for a judicial
interpretation of their rights under all
pertinent laws governing cockpits, against
the municipal council, the mayor of
Minglanilla and Catalino Villaflor, the
then owner of Gallera, before the
aforementioned Court of First Instance of
Cebu which in due course rendered the
decision subject of this petition, the fallo of
which reads:
“IN VIEW OF THE FOREGOING, Judgment is hereby rendered in favor of the petitioners
and against the respondents, as follows:
1. a.Orders the Municipal Mayor to issue immediately upon receipt of the decision the
license-permit for the year 1982 to and in favor of petitioners for having complied
(sic) all requirements of pertinent laws;
2. b.Orders the Sangguniang Bayan of Minglanilla to pass a resolution confirming the
license-permit issued by the Mayor to the petitioners immediately upon receipt of
this decision;
3. c.Orders the Philippine Gamefowl Commission to register, accept the registration or
cause the registration immediately upon receipt of this decision, the petitioners’
cockpit for the year 1982 and all the years thereafter;
4. d.Orders the immediate closure of respondent’s cockpit, Bag-
_______________
8 Ibid., 26-27.
9 Ibid., 31-32.
171
VOL. 170, FEBRUARY 9, 1989 171
1. Ong Bulangan, now known as Gallera de Minglanilla; and

2. e.Declare (sic) the Writ of Preliminary Injunction as PERMANENT, against the
Municipal Mayor of Minglanilla, Cebu, the Sangguniang Bayan of Minglanilla,
Cebu, all police agencies local or otherwise and the Philippine Gamefowl
Commission.” 10
From this decision, Ma. Luz Rosete Diores,

who had acquired the Gallera cockpit from
Catalino Villaflor, appealed to the then
Intermediate Appellate Court under CA-
GR UDK No. 4914. During the pendency of
this appeal, Diores executed a deed of
absolute sale, dated July 14, 1984,
whereby she ceded and transferred all her
rights and interests over the Gallera
cockpit to herein petitioner Georgia
Adlawan, payable on installment basis
until October 15, 1985. 11
Thereafter, Diores filed a motion to

withdraw and/or dismiss her appeal on
September 12, 1985 and respondent
appellate court granted the same and
considered the appeal withdrawn. Said12
resolution became final and was entered

on September 13, 1985. 13
On September 19, 1985, petitioner

Georgia Adlawan, allegedly as the new
owner of the Gallera, filed a motion for the
reconsideration of the aforesaid order of
dismissal alleging, inter alia, that Diores
acted with malice and bad faith in moving
for the withdrawal and/or dismissal of the
appeal since the latter was no longer the
owner of the Gallera cockpit the same
having been sold to said petitioner who
thus became the real party in interest in
the appeal.14
On October 14, 1985, upon motion of

herein private respondents, the trial court
ordered the issuance of a writ of execution
for the enforcement of its decision by
reason of the dismissal of the appeal
therefrom.15
Meanwhile, on October 10, 1985 the
Philippine Gamefowl
_______________
10 Petition, Annex B, 10; Rollo, 40.

11 Ibid., Annex H; Rollo, 56-57.
12 Ibid., Annex C; Rollo, 42; Third Civil Cases Division, Jorge R. Coquia, J., Chairman, Mariano A. Zosa
and Floreliana Castro-Bartolome, JJ., Members.

13 Ibid., Annex G; ibid., 55.
14 Ibid., Annex E; ibid., 45.
15 Ibid., Annex D; ibid., 43.
172
Commission passed a resolution ordering

the cancellation and revocation of the
certificate of registration of Gallera
Bagong Lipunan and approving the
registration of Minglanilla Junior
Coliseum. 16
Subsequently, on November 27, 1985 the

Intermediate Appellate Court denied
petitioner’s motion for reconsideration on
the ground that entry of judgment had
already been made on September 13,
1985. 17
Hence, this resort to Us, petitioners

contending that the decision of the
respondent trial court is illegal for having
been rendered with obvious disregard of
existing laws and is, therefore, null and
void.
Such submission cannot be sustained;
the denial of this recourse is irremissible.
Prior to the imposition of martial law,
the governing law on Philippine
cockfighting was Republic Act No. 1224,
effective on May 17, 1955, which
specifically vested regulatory and
supervisory powers over cockpits in the
local legislative bodies, thus:
“Section 1. The municipal or city board or council of each chartered city and the municipal
council of each municipality and municipal district shall have the power to regulate or
prohibit by ordinance the establishment, maintenance and operation of cockpits, x x x and
other similar places of amusement within its territorial jurisdiction: Provided, however,
That no such places of amusement mentioned herein shall be established, maintained
and/or operated within a radius of 200 lineal meters in the case of nightclubs, x x x, and 50
lineal meters in the case of dancing schools, x x x except cockpits the distance of which shall
be left to the discretion of the municipal council, from any public building, schools, hospitals
and churches: Provided, further, that no municipal or city ordinance fixing distances at
which such places of amusement may be established or operated shall apply to those
already licensed and operating at the time of the enactment of such municipal ordinance,
nor will the subject opening of any public building or other premises from which distances
shall be measured prejudice any place of amusement already then licensed and operating, x
x x” (Italics supplied).
_______________
16 Counter-Argument to Urgent Motion for Preliminary Mandatory Injunction, Annex 5; Rollo, 139.
17 Petition, Annex F; Rollo, 53.
173
VOL. 170, FEBRUARY 9, 1989 173
It is clear from this statutory provision

that it is discretionary upon the municipal
council to fix the location of cockpits in
their jurisdiction and determine the
buildings, thru the passage of a municipal
ordinance. Republic Act No. 1224,
however, specifically prohibits the
retroactive application of any such
municipal ordinance to cockpits already
existing at the time of its enactment,
specifically with respect to the fixing of
distances at which said cockpits may be
established.
In accordance therewith and as
hereinbefore stated, the Municipal Council
of Minglanilla passed Ordinance No. 4 on
February 9, 1969 which provided that
municipal cockpits must be at least 50
lineal meters away from public buildings.
Considering the specific proscription
against the retroactive application of such
municipal ordinances, since the
Minglanilla Junior Coliseum was
established in 1955 whereas Municipal
Ordinance No. 4 was passed only in 1969,
obviously the provisions thereof cannot
prejudice or adversely affect the existence
and operation of said cockpit.
Assuming arguendo that private
respondents’ cockpit is indeed covered by
the municipal ordinance, the same is well
within the limits allowed therein. It was
duly certified by the Provincial Engineer of
Cebu City, after proper investigation, that
18
the Minglanilla cockpit is located more

than the required 50 lineal meter distance
from the public buildings contemplated, in
accordance with the mandate of the
pertinent local legislation.
Contrary to petitioners’ pretension that
the law unqualifiedly provides for a 200
lineal meter distance limit, a cursory
perusal of Presidential Decree No. 449
(Cockfighting Law) and Presidential
Decree No. 1802 (creating the Philippine
Gamefowl Commission) reveals that
neither of these issuances imposed any
mandatory delimitation except when there
is no existing local ordinance which
prescribes a limit on distances.
Presidential Decree No. 449 specifically
states in Section 5 thereof that:
_______________
18 Ibid., Annex I; Rollo, 58.
174
“(c) Cockpits Site and Construction.—Cockpits shall be constructed and operated within the
appropriate areas as prescribed in the Zoning Law or Ordinance. In the absence of such law
or ordinance, the local executives shall see to it that no cockpits are constructed within or
near existing residential or commercial areas, hospitals, school buildings, churches, or other
public buildings. x x x”
This subsequent law merely adopted and

upheld the discretionary power of the local
officials in determining the proper location
of cockpits vis-a-vis the public buildings
contemplated in and recognized by
Republic Act No. 1224. That the limitation
prescribed by the zoning ordinance
controls is further stressed by the later
enactment, Presidential Decree No. 449.
This discretionary power was thereafter
exercised with the passage of Municipal
Ordinance No. 4. We do not find the
enactment of said ordinance to have been
attended with grave abuse of discretion or
any flaw which would render it invalid and
for which reason it should remain
enforceable until it is repealed or revoked.
On this score, We have reviewed the
research findings of the court a quowhich
are hereunder quoted with approval:
“A careful study on all laws on cockpits as: RA 1224, PD 449 and PD 1802, this Court finds
that it is not mandatory that a cockpit should not be less than 200 meters from a public
building except when there is no ordinance in a given municipality. As petitioners had
correctly claimed, there is no law before, during and after Martial Law which mandates
that a cockpit should not be less than 200 meters from a public building. While RA 1224
mentions about 200 meters distance from public buildings, the same refers only to
nightclubs, cabarets, and similar places, but when it comes to cockpit, the local government
is given the authority to determine the distance. Again this (sic) substantially reiterated in
Sec. 6, PD 449; while PD 1802 is silent on the specific distance of a cockpit from a public
building. The implementing rules and regulations duly promulgated by the Philippine
Gamefowl Commission practically quoted and reproduced verbatim Sec. 6 of PD 449. It
reiterates the provision in PD 449 that a cockpit shall be operated in accordance with
existing ordinance. This is the first phase of the provision. In the absence of an existing
ordinance the local executive, referring to the mayor, must see to it that no cockpit shall be
allowed to operate within 200 meters from a residential or commercial area. In the
Municipality of
175
VOL. 170, FEBRUARY 9, 1989 175
Minglanilla Ordinance No. 4 is the prevailing ordinance.” 19
The Municipal Council of Minglanilla,

relying on the Unnumbered Provincial
Circular in recommending the retention
20
of Bag-Ong Bulangan, or Gallera, as the

municipal cockpit, merely cited the title of
the alleged circular. However, there is no
showing, nor did the council demonstrate,
how that circular affected or could have
negated the application of the exclusionary
clause in Section 1 of Republic Act No.
1224. Consequently, such exception
continues to operate in favor of private
respondents’ cockpit.
Setion 6 of Presidential Decree No. 449
empowered the municipal mayors to issue
licenses for the operation of cockpits,
initially subject to the approval of the
Chief of Constabulary or his authorized
representative and, as later amended,
subject to the review and supervision of
the Philippine Gamefowl
Commission. For all intents and purposes,
21
this provision of law specifically entrusts

the sole authority to issue permits to the
mayors. The municipal council’s duty is
merely to ratify the mayor’s decision
before the same can be actually
implemented. But the Council cannot, on
its own instance or initiative, pass upon
the licensability of a particular cockpit and
thereafter recommend it to the mayor for
approval. This reverse procedure is what
petitioners would wish to be adopted,
albeit erroneously, in pleading the
aforementioned Resolution No. 40 which
recognized petitioners’ Gallera as the legal
municipal cockpit. Furthermore,
Resolution No. 40 was passed by the
Municipal Council of Minglanilla with the
concurrence only of the vice-mayor. The
then mayor of Minglanilla, the late
Felicisimo Cana, had no participation
therein, as correctly found by the trial
court. On these considerations, said ultra
22
vires resolution has no binding effect and

cannot be plausibly invoked by petitioners.
Advertence is made to the fact that the
Philippine Gamefowl Commission
subsequently ordered the cancellation of
the reg-
_______________
19 Rollo, 39. Penned by Presiding Judge Celso Avelino.

20 Rollo, 24.
21 Sec. 4, P.D. 1802, as amended by Sec. 1, P.D. 1802-A.
22 Rollo, 36.
176
istration certificate of petitioner’s cockpit,

but that in 1986 it granted an
interlocutory order to Gallera to operate.
We have, however, held that with regard
to ordinary local cockpits, and where the
holding of international derbies is not
involved, it is the mayor who has the
primary authority to issue permits, with
the authorization of the Sanggunian and
on the basis of guidelines issued by said
commission. The commission can merely
supervise compliance with said guidelines
but cannot disapprove a license granted by
the mayor and issue a cockpit license to
another. Its aforesaid actuations,
therefore, do not detract from the factual
and legal conclusions as hereinbefore
discussed.23
The observations of the trial court

correctly show that the equities of this
case also decidedly incline in favor of
private respondents’ cause. While the
contending cockpits both possess the
qualifications as to distance, even from the
standpoint of seniority the Coliseum
enjoys the distinct advantage of having
been in operation since 1955 while the
Gallera was established only in 1967. Also,
the former is located in the poblacion
while the latter is in a barrio. These, and
the other points already discussed,
establish the right of private respondents’
Coliseum to be considered the municipal
cockpit of Minglanilla, Cebu.
With the resolution of the foregoing
decisive issues, it is not necessary to pass
upon the other minutiae posed by the
parties, some of which are of dubious
factual or probative value.
A note on a procedural aspect in this case
is, however, in order. This action was
initiated on a petition for declaratory
relief, ostensibly for a declaration of the
rights and obligations of the parties under
the laws and ordinances involved therein
or invoked by them. Consequently, in such
special civil action the judgment does not
essentially entail an executory process
since generally, other than a declaration of
such rights and duties, other affirmative 24
reliefs, as these are understood in ordinary

civil actions, are not sought by the
proponent.
_______________
23 Philippine Gamefowl Commission, et al. vs. Hon. Intermediate Applellate Court, et al., 146 SCRA
294 (1986); Municipality of Malolos vs. Libangang Malolos, Inc., et al., G.R. No. 78592, April 8, 1988.
24 Sec. 1, Rule 64, Rules of Court.
177
VOL. 170, FEBRUARY 9, 1989 177
However, the Court has held that although

the action is for a declaratory judgment
but the allegations in the complaints are
sufficient to make out a case for specific
performance or recovery of property with
25 26
claims for damages, and the defendants

did not raise an issue in the trial court to
challenge the remedy or form of the action
availed of, the court can grant such
affirmative relief as may be warranted by
the evidence. This decisional rule applies
to the case at bar.
WHEREFORE, the petition is DENIED
and the challenged decision and resolution
are AFFIRMED.
SO ORDERED.
Melencio-Herrera,
(Chairman), Paras, Padillaand Sarmiento,
JJ., concur.
Petition denied. Decision and resolution
affirmed.
Notes.—When it comes to ordinary, local
cockpits, it is the mayor with the authority
of the Sanggunian and on the basis of
guidelines issued by Philippine Gamefowl
Commission, who has primary authority to
issue permits. The Philippine Game-fowl
Commission licensing power is limited to
International derbies only. (Philippine
Gamefowl Commission vs. Intermediate
Appellate Court, 146 SCRA 295).
The power of Philippine Gamefowl
Commission over mayors in granting local
cockpits licenses is merely to supervise
that the latter complies with its
guidelines. It cannot disapprove a license
granted by the mayor and ipso facto issue
a cockpit license to another. (Philippine
Gamefowl Commission vs. Intermediate
Appellate Court, 146 SCRA 295).
——o0o——
Visayan Packing Corp. vs. Reparations Commission
No. L-29673. November 12, 1987. *
THE VISAYAN PACKING

CORPORATION, petitioner, vs. THE
REPARATIONS COMMISSION and THE
COURT OF APPEALS, respondents.
Civil Procedure; Counterclaim; Failure to
assert a compulsory counterclaim in the same
suit involving the same transaction or
occurrence not irremediable or irreversibly fatal;
Remedy for failure to set up a counterclaim.—It
is indeed the rule, embodied in Section 4, Rule 9
of the Rules of Court, that a counterclaim not
set up shall be barred if it arises out of or is
necessarily connected with the transaction or
occurrence that is thesubject matter of the
opposing party’s claim and does not require for
its adjudication the presence of third parties of
whom the court cannot acquire jurisdiction. In
other words, a compulsory counterclaim cannot
be made the subject of a separate action but
should be asserted in the same suit involving
the same transaction or occurrence giving rise
to it. The omission is not however irremediable
or irreversibly fatal. The Rules provide that
when a pleader fails to set up a counterclaim
through oversight, inadvertence, or excusable
negligence, or when justice requires, he may, by
leave of court, set up the counterclaim or cross-
claim by amendment before judgment. Where
the counterclaim is made the subject of a
separate suit, it may be abated upon a plea
of auter action pendant or lids pendentia, and/or
dismissed on the ground of res adjudicata. Res
adjudicata may be pleaded as a ground for
dismissal if the opposing party’s claim,
involving the same transaction or occurence as
the counterclaim, has already been adjudicated
on the merits by a court of competent
jurisdiction, and the judgment has become
final; this, on the theory that what is barred by
prior judgment are not only the matters
squarely raised and litigated, but all such other
matters as could have been raised but were not.
Same; Same; Declaratory Relief; Nothing in
the nature of a special civil action for
declaratory relief that proscribes the filing of a
______________
* FIRST DIVISION.
543
VOL. 155, NOVEMBER 12, 1987 5
43
deed or contract subject of the complaint.—Now,
there is nothing in the nature of a special civil
action for declaratory relief that proscribes the
filing of a counterclaim based on the same
transaction, deed or contract subject of the
complaint. A special civil action is after all not
essentially different from an ordinary civil
action, which is generally governed by Rules 1
to 56 of the Rules of Court, except that the
former deals with a special subject matter
which makes necessary some special regulation.
But the identity between their fundamental
nature is such that the same rules governing
ordinary civil suits may and do apply to special
civil actions if not inconsistent with or if they
may serve to supplement the provisions of the
peculiar rules governing special civil actions.
Same; Same; Same; Rules of procedure are
laid down to attain justice; Form cannot prevail
over substance.—Rules of procedure are after all
laid down in order to attain justice. They cannot
be applied to prevent the achievement of that
goal. Form cannot prevail over substance.
PETITION to review the decision of the
Court of Appeals.
Court.
NARVASA, J.:
The proceedings at bar had their origin in
an agreement denominated “Contract of
Conditional Purchase and Sale of
Reparation Goods” entered into between
petitioner Visayan Packing Corporation
(hereafter, simply VISPAC) and the
Reparations Commission (hereafter,
simply REPACOM). Subject of the contract
were a cannery plant, a tin manufacturing
plant, and three (3) fishing boats sold to
VISPAC, for which it bound itself to pay
the total price of P1,135,712.47 in ten ( 1 0
) equal yearly installments with interest.2
Prior to the due date of the first
installment, REPACOM sent VISPAC a
written reminder thereof. VISPAC’s
response was to file in the Court of First
Instance of Manila two (2)
_______________
1 The contract was awarded by the REPACOM to VISPAC in virtue of Resolution No. 240.
2 The contract was dated November 16, 1960.
544
special civil actions for declaratory

relief, alleging ambiguity in the contract
3
between it and REPACOM consisting in

the agreement’s failure to clearly state the
precise time when the obligation to pay
the first installment of the price would
arise. 4
On the other hand, when V ISP AC

subsequently failed, despite several
demands, to pay the first installment of
the price (P135,712.47) on what
REPACOM deemed to be the due date, the
latter instituted an ordinary civil action
for collection thereof. VISPAC moved to
5
dismiss this collection suit on the ground

of the pendency of the declaratory relief
actions,arguing that until and unless the
latter were resolved, no cause of action
could be deemed to exist in favor of
REPACOM for collection of said first
installment. The motion to dismiss was
denied; and after trial, the Court of First
Instance rendered judgment dated March
27, 1963 ordering VISPAC to pay
REPACOM the sum claimed, P135,712.47,
with interest at the legal rate from date of
filing of the complaint until fully paid.
VISPAC appealed to the Court of
Appeals claiming error on the part of the
Trial Court in not holding that
the collection suit was barred by the
pendency of the declaratory relief
casesearlier instituted.
But the declaratory relief actions had
been earlier dismissed by Order of the
Court of First Instance dated October 9,
1962, the Court holding that the issues
raised would be necessarily threshed out
in the collection suit. VISPAC appealed to
this Court but was rebuffed. By decision
6
rendered on May 31, 1965, this Court

affirmed the dismissal of the declaratory
relief suits,holding that the clarity of the
terms of the contract eliminated all
occasion for interpretation thereof.
VISPAC also received an unfavorable
verdict in its appeal to the Court of
Appeals from the decision of the Trial
Court in the collection action against it.
That Appellate Court, on October 2, 1968,
promulgated judgment affirming that of
the
_______________
3 Docketed as Civil Cases No. 49913 and 50517.

4 According to it, the contract set out two (2) discrepant dates: April 5,1962 and April 5, 1963, and two
(2) different amounts.
5 Docketed as Civil Case No. 51713.
6 The appeal was docketed as G.R. No. L-20577.
545
VOL. 155, NOVEMBER 12, 1987 545
Court of First Instance. It is this
affirmance of the Court of Appeals that is
subject of the instant appeal taken to this
Court by VISPAC. VISPAC’s contention is
that it was error on the Appellate Court’s
part to have affirmed the Trial Court’s
decision for the collection of the first
installment of the price due from it under
its contract with REPACOM, because that
money claim should have been set up as
a compulsory counterclaim in
the declaratory relief action,and since
REPACOM had not done this, but had
instead set it up in a separate suit, the
claim had thereby become barred.
It is indeed the rule, embodied in Section
4, Rule 9 of the Rules of Court, that a
counterclaim not set up shall be barred if
it arises out of or is necessarily connected
with the transaction or occurrence that is
the subject matter of the opposing party’s
claim and does not require for its
adjudication the presence of third parties
of whom the court cannot acquire
jurisdiction. In other words, a compulsory
counterclaim cannot be made the subject
of a separate action but should be asserted
in the same suit involving the same
transaction or occurrence giving rise to it.
The omission is not however irremediable
or irreversibly fatal. The Rules provide
that when a pleader fails to set up a
counterclaim through oversight,
inadvertence, or excusable negligence, or
when justice requires, he may, by leave of
court, set up the counterclaim or cross-
claim by amendment before
judgment. Where the counter-claim is
7
made the subject of a separate suit, it may

be abated upon a plea of auter action
pendant or litis pendentia, and/or
8
dismissed on the ground of res

adjudicata. Res adjudicatamay be pleaded
9
as a ground for dismissal if the opposing

party’s claim, involving the same
transaction or occurrence as the
counterclaim, has already been
adjudicated on the merits by a court of
competent jurisdiction, and the judgment
has become final; this, on the theory that
what is barred by prior judgment are not
only the matters squarely raised and
litigated, but all such other matters
as could have been raised but were not. 10
_______________
7 Sec. 3, Rule 9.
8 Sec. 1 (e), Rule 16, Rules of Court.
9 Sec. 1 (f), Rule 16.
10 Sec. 49 (b), Rule 39.
546
Now, there is nothing in the nature of a

special civil action for declaratory relief
that proscribes the filing of a counterclaim
based on the same transaction, deed or
contract subject of the complaint. A special
civil action is after all not essentially
different from an ordinary civil action,
which is generally governed by Rules 1 to
56 of the Rules of Court, except that the
former deals with a special subject matter
which makes necessary some special
regulation. But the identity between their
11
fundamental nature is such that the same

rules governing ordinary civil suits may
and do apply to special civil actions if not
inconsistent with or if they may serve to
supplement the provisions of the peculiar
rules govermng special civil actions.12
Ideally, in the case at bar, the

separate action for collection should have
been dismissed and set up as a compulsory
counterclaim in the declaratory relief
suits,by way of an amended answer. This
was not done.The actions proceeded
separately and were decided on the
merits. The final verdict was that
the declaratory relief suitsinstituted by
VISPAC were unmeritorious, quite
without foundation and, in the light of all
the relevant facts, appear to have been
initiated by VISPAC merely to obstruct
and delay the payment of the installments
clearly due from it, payment of which was
decreed in the collection suit. Under the
circumstances, and taking account of the
not inconsiderable length of time that the
case at bar has been pending, it would be
to do violence to substantial justice to
pronounce the proceedings fatally
defective for breach of the rule on
compulsory counterclaims. Rules of
procedure are after all laid down in order
to attain justice. They cannot be applied to
prevent the achievement of that goal.Form
cannot prevail over substance. 13
_______________
11 Ledesma v. Morales, 87 Phil. 19; Chan v. Galang, 18 SCRA 344.

12 Rule 62, Rules of Court.
13 Alonso v. Villamor, 16 Phil. 321; Palma v. Oreta, 34 SCRA 739; Pangasi v. CA, 71 SCRA 614; Tan v.
Director of Forestry 125 SCRA 302; Toribio v. Bidin, 134 SCRA 162; Gotico v. Leyte Chinese Chamber of
Commerce, 136 SCRA 218.
547
VOL. 155, NOVEMBER 12, 1987 547
Teodoro vs. Court of Appeals
WHEREFORE, the petition is dismissed
for lack of merit, with costs against the
petitioner.
Teehankee (C.J.),
Cruz, Paras and Gancayco, JJ., concur.
**
Petition dismissed.
Notes.—Counterclaim is not ancilliary to
the new action but can be maintained
separately. (Zabat, Jr. vs. CA, 142 SCRA
587).
A defendant in an action for ejectment
may set up a counterclaim for moral
damage and some may be awarded to
defendant. (Agustin vs. Bacalan, 135
SCRA 340.)
——o0o——

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VOL.

515, FEBRUARY 14, 2007 709

G.R. No. 157866. February 14, 2007. *

AUGUSTO MANGAHAS and MARILOU

Regional Trial Court (RTC), Branch 124,

1 Rollo, pp. 86-88.

On 10 July 1997, petitioners filed a

urged the MeTC to respect the Writ of

On 2 December 1999, petitioners appealed

2 Id., at pp. 55-56.

denying petitioners’ motion to suspend

Court of Appeals affirmed the ruling of the

On 17 January 2003, petitioners filed a

with the Regional Trial Courts and the

jurisdiction does not give the petitioners

Court’s original jurisdiction to issue these

petitioners have not offered any

matter thereof, i.e., deed, will, contract or

At any rate, since the complete records of

Appeals’ Decision reads:

Consequently, the issue involving the

doctrine holds that once an appellate court

fact that public policy dictates that

11 Rollo, pp. 173-174.

fruits of his victory by some subterfuge

Petitioners are therefore barred from

Quite conspicuously, the instant petition

allege nor proffer any evidence that this

G.R. No. 144101. September 16, 2005. *

ANTONIO P. TAMBUNTING, JR. and

zations. In May 1977, because respondents

redeem the property during the

True, the trial court erred when it ruled

secure an authoritative statement of the

before the breach or violation of the

already been contravened prior to the

has no more jurisdiction over an action for

was void and without legal effect. As this

Nonetheless, the petition must fail.

prescription and the mortgage creditor will

ten-year prescriptive period because, as

G.R. No. 161400. September 2, 2005.

ZENAIDA ORTEGA, represented by Her

VOL. 469, SEPTEMBER 2, 2005 3

PETITION to restrain the implementation

On August 5, 2003, the Quezon City

converted from its original classification to

The provisions of the assailed ordinance

Petitioner, who claims to be the rightful

the City Council, thus violating her

there exists accretion or easement of the

620 of the Civil Code.

Petitioner likewise claims that the

her properties who had been ordered

By Comment filed on April 14, 2004, the

Quezon City Government, through the

2004, prayed for the dismissal of the

17, 2004, alleged that it is not a party to

gradually receive from the effects of the current of the waters.

prescription of ten years.

11 Id., at pp. 41-44.

12 Id., at pp. 73-77.