Friday, February 12, 2021

PILIPINAS SHELL PETROLEUM CORPORATION, CALTEX PHILIPPINES, INC., AND PETRON CORPORATION, NECESSARY PARTIES.

 

EN BANC

[ G.R. No. 188760, June 30, 2020 ]

THE COMMISSION ON AUDIT, REPRESENTED BY ITS CHAIRMAN, THE BUREAU OF INTERNAL REVENUE, REPRESENTED BY ITS COMMISSIONER, AND THE BUREAU OF CUSTOMS, REPRESENTED BY ITS COMMISSIONER, PETITIONERS, VS. HON. SILVINO T. PAMPILO, JR., IN HIS CAPACITY AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT, MANILA, BRANCH 26, SOCIAL JUSTICE SOCIETY AND VLADIMIR ALARIQUE T. CABIGAO, RESPONDENTS;

PANGKALAHATANG SANGGUNIAN MANILA AND SUBURBS DRIVER'S ASSOCIATION NATIONWIDE (PASANG MASDA), INCORPORATED, RESPONDENT-INTERVENOR;

PILIPINAS SHELL PETROLEUM CORPORATION, CALTEX PHILIPPINES, INC., AND PETRON CORPORATION, NECESSARY PARTIES.

[G.R. No. 189060]

CHEVRON PHILIPPINES, INC., PETITIONER, VS. HON. SILVINO T. PAMPILO, JR., PRESIDING JUDGE, REGIONAL TRIAL COURT OF MANILA, BRANCH 26, SOCIAL JUSTICE SOCIETY AND VLADIMIR ALARIQUE T. CABIGAO, RESPONDENTS;

PANGKALAHATANG SANGGUNIAN MANILA AND SUBURBS DRIVER'S ASSOCIATION NATIONWIDE (PASANG MASDA), INCORPORATED, RESPONDENT-INTERVENOR;

[G.R. No. 189333]

PETRON CORPORATION, PETITIONER, VS. HON. SILVINO T. PAMPILO, JR., SOCIAL JUSTICE SOCIETY, VLADIMIR ALARIQUE T. CABIGAO, AND PANGKALAHATANG SANGGUNIAN MANILA AND SUBURBS DRIVERS ASSOCIATION NATIONWIDE, INC. (PASANG MASDA), RESPONDENTS.

D E C I S I O N


HERNANDO, J.:

Before this Court are Consolidated Petitions for Certiorari[1] filed under Rule 65 of the Rules of Court assailing the Orders issued by the Regional Trial Court (RTC) of Manila, Branch 26, in Civil Case No. 03-106101, on the following dates: April 27, 2009,[2] May 5, 2009,[3] June 23, 2009[4] and July 7, 2009[5] (collectively referred to as the Assailed Orders).

Factual Antecedents

The material and relevant facts are as follows:

On March 21, 2003, private respondent Social Justice Society (SJS), a political parry duly registered with the Commission of Elections, filed with the RTC of Manila, a Petition for Declaratory Relief,[6] docketed as Civil Case No. 03-106101, against Pilipinas Shell Petroleum Corporation (Shell); Caltex Philippines, Inc. (Caltex), and Petron Corporation (Petron), collectively referred to as the "Big 3." In its Petition, private respondent SJS raised as an issue the oil companies' business practice of increasing the prices of their petroleum products whenever the price of crude oil increases in the world market despite that fact that they had purchased their inventories at a much lower price long before the increase. SJS argued that such practice constitutes monopoly and combination in restraint of trade, prohibited under Article 186[7] of the Revised Penal Code (RPC). SJS likewise contended that the acts of these oil companies of increasing the prices of its oil products whenever their competitors increase their prices fall under the term "combination or concerted action" used in Section 11 (a)[8] of Republic Act (RA) No. 8479, otherwise known as the Downstream Oil Industry Deregulation Act of 1998 (Approved on February 10, 1998). The Petition was later amended to include private respondent Atty. Vladmir Alarique T. Cabigao (Cabigao), a member of private respondent SJS, as an additional petitioner to the case.[9]

The Big 3 separately moved for the dismissal of the case on the grounds of lack of legal standing, lack of cause of action, lack of jurisdiction, and failure to exhaust administrative remedies.[10]

On December 17, 2003, public respondent RTC issued an Order[11] denying the motions to dismiss and directing the parties to refer the matter to the Joint Task Force of the Department of Energy (DOE) and Department of Justice (DOJ) pursuant to Section 11 of RA 8479. In the meantime, public respondent RTC ordered the suspension of the proceedings.

Chevron sought reconsideration but public respondent RTC denied the same in its June 30, 2004 Order.[12]

Thereafter, the DOE-DOJ Joint Task Force submitted its Report[13] finding no clear evidence that the Big 3 violated Article 186 of the RPC or Section 11 (a) of RA 8479. Based on the said report, the Big 3 orally moved for the dismissal of the case.[14] Private respondents, on the other hand, moved to open and examine the books of account of the Big 3 to enable the court to determine whether Section 11 (a) of RA 8479 had been violated.[15]

Ruling of the Regional Trial Court

On April 27, 2009, public respondent RTC issued the first assailed Order, which resolved to:
(1)
deny the motions to dismiss of the Big 3;
(2)
grant private respondents' motion to open and examine the books of accounts of the Big 3; and
(3)
order the Commission on Audit (COA), Bureau of Internal Revenue (BIR), and the Bureau of Customs (BOC) to open and examine the books of accounts of the Big 3.
The dispositive portion of the Order reads:
IN VIEW OF THE FOREGOING, the Motion[s] to Dismiss [are] hereby DENIED and Motion for the Opening and Examination of the Books of Account of the [Big 3] is hereby GRANTED. Accordingly, the [COA], [BIR], and [BOC] are hereby ordered to open and examine the cash receipts, cash disbursement books, the purchase orders on the petroleum products, delivery receipts, sales invoices and other related documents on the purchases of the petroleum products covering the period January 2003 to December 2003. The three government agencies are hereby ordered to take necessary actions to comply with the Order of this Court.

Furnish copy of this Order to the [COA], [BIR], and [BOC].

SO ORDERED.[16]
The Big 3 separately sought reconsideration.[17] Private respondents, on the other hand, moved[18] for the production of records and the inclusion of private respondent Cabigao as part of the team that would open and examine the books of accounts of the Big 3.

On May 5, 2009, public respondent RTC issued the second assailed Order, directing the Chairman of COA and the Commissioners of the BIR and the BOC to form a panel of examiners to conduct an examination of the books of a9counts of the Big 3 and to submit a report thereon within three (3) months from receipt of the Order.[19]

Though not parties to the case, the COA, the BIR, and the BOC, through the Office of the Solicitor General (OSG), were constrained to file a Motion for Reconsideration[20] of the April 27 and May 5, 2009 Orders on the ground that the order of examination is unwarranted and beyond their respective jurisdictions.

Meanwhile, private respondent-intervenor Pangkalahatang Sanggunian Manila and Suburbs Drivers' Association Nationwide (Pasang Masda), Inc. filed a Motion for Intervention with attached Petition-in-Intervention,[21] which the Big 3 opposed.

On June 23, 2009, public respondent RTC issued the third assailed Order, granting Pasang Masda's Motion for Intervention and thereby admitting its Petition-in-Intervention.[22]

On July 7, 2009, the RTC issued the fourth assailed Order denying the motions for reconsideration of the Big 3 and the OSG and granting private respondents' motion to include private respondent Cabigao as part of the panel of examiners.[23] Public respondent RTC stood pat on its April 27, 2009 Order citing the doctrine of parens patriae.[24]

A few days later, on July 24, 2009, the RTC, acting on the manifestation of private respondents that the government agencies have not acted to comply with its order, directed the COA, the BIR, and the BOC to explain within 72 hours from notice why they should not be cited in contempt for failure to comply.[25]

After the lapse of the 72-hour period, private respondents moved for the issuance of a warrant of arrest against the Chairman of COA and the Commissioners of the BIR and BOC for their refusal to obey the orders of the RTC.[26] Accordingly, the RTC issued an Order[27] giving the Chairman of COA and the Commissioners of the BIR and BOC five (5) days from receipt of the notice within which to file a comment or opposition to the motion for the issuance of a warrant of arrest against them.

Left with no other recourse, the COA, represented by its Chairman, the BIR and the BOC, represented by their respective Commissioners, through the OSG, filed before this Court, on July 31, 2009, a Petition for Certiorari with Application for Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction,[28] docketed as G.R. No. 188760, assailing the April 27 and May 5, 2009 Orders of the public respondent RTC. Direct resort to this Court was made because the issues raised were purely legal, which is an exception to the doctrine of hierarchy of courts.

Finding the application for TRO meritorious, this Court on August 4, 2009 issued a TRO,[29] enjoining the implementation of the April 27 and May 5, 2009 Orders of public respondent RTC.

Chevron and Petron followed suit and filed with this Court their respective petitions for certiorari. Chevron filed a Petition for Certiorari and Prohibition with Application for TRO and/Writ of Preliminary Injunction with Motion for Consolidation,[30] docketed as G.R. No. 189060, assailing the April 27 and July 7, 2009 Orders while Petron filed a Petition for Certiorari (with prayer for issuance of TRO and/or Writ of Preliminary Injunction),[31] docketed as G.R. No. 189333, assailing the April 27, June 23, and July 7, 2009 Orders of public respondent RTC. Both Petitions were consolidated with G.R. No. 188760.[32]

Shell, on the other hand, filed with the Court of Appeals (CA) a Petition for Certiorari with prayer for the issuance of a TRO and/or a writ of preliminary injunction, docketed as CA-G.R. SP No. 110050,[33] assailing the April 27, June 23, and July 7, 2009 Orders of public respondent RTC.

On August 6, 2010, the CA rendered a Decision[34] on the Petition for Certiorari, docketed as CA-G.R. SP No. 110050. Finding grave abuse of discretion on the part of public respondent RTC, the CA reversed and set aside the April 27, June 23, and July 7, 2009 Orders, and ordered the dismissal of the case for declaratory relief for lack of cause of action. The appellate court, in essence, opined that the issues raised by private respondents cannot be made subject of an action for declaratory relief. As to the propriety of the intervention of Pasang Masda, it ruled that Pasang Masda had no legal interest in the matter.

Aggrieved, private respondents sought to have the August 6, 2010 Decision reconsidered. However, having been informed of the existence of G.R. No. 188760 assailing the same Orders of public respondent RTC, the CA resolved in its November 12, 2010 Resolution[35] to defer any action on the case.

On June 4, 2013, this Court issued a Resolution[36] directing the CA to resolve the pending motion for reconsideration in CA-G.R. SP No. 110050 with dispatch and to inform the Court of whatever action in may take thereon.

In compliance with this Court's directive, on August 6, 2013, the CA issued a Resolution[37] denying the Motion for Reconsideration filed by private respondents.

Issues

Hence, the instant consolidated Petitions, raising the following issues:

In G.R. No. 188760, the OSG contends that public respondent RTC gravely abused [its] discretion in that:
I.

[It] ordered [the COA, the BIR, and the BOC] to do a patently ultra vires act, directing COA to audit beyond its constitutional mandate and directing BIR and BOC to examine outside their statutory powers.

II.

[It] invoked parens patriae and Rule 27 on Production or Inspection of Documents in [its] compulsory designation of COA, BIR and BOC as anti-trust auditors while usurping the authority of the [DOE-DOJ Joint] Task Force created by the Oil Deregulation Law for anti-trust monitoring.

III.

[It] disregarded Due Process, to enforce [its] void orders, by threatening COA, BIR, and BOC with contempt despite lack of notice and being non-parties to the case.[38]
In G.R. No. 189060, Chevron interposes the following issues:
I. WHETHER [PRIVATE RESPONDENTS'] PETITION IN CIVIL CASE NO. 03-106101:

(i) RAISES A JUSTICIABLE CONTROVERSY OR ACTUAL CASE THAT IS RIPE FOR JUDICIAL DETERMINATION; AND

(ii) REQUIRES EXERCISE OF POWER AND AUTHORITY BEYOND THE SCOPE OF THE "JUDICIAL POWER" OF COURTS AS PROVIDED UNDER THE CONSTITUTION;

II. WHETHER THE [PUBLIC RESPONDENT RTC] OF MANILA HAS JURISDICTION TO CONDUCT A PRELIMINARY INVESTIGATION ON WHETHER PLAYERS IN THE DOWNSTREAM OIL INDUSTRY HAVE COMMITTED A VIOLATION OF THE ANTI-TRUST SAFEGUARDS UNDER R.A. 8479.[39]
In G.R. No. 189333, Petron alleges that:
A.

[PUBLIC RESPONDENT RTC] COMMITTED GRAVE ABUSE OF DISCRETION AMOUTING TO LACK OR EXCESS OF JURISDICTION IN DENYING PETRON'S MOTION TO DISMISS DESPITE THE FACT THAT [PRIVATE RESPONDENT] SJS' AMENDED PETITION FOR DECLARATORY RELIEF MERELY SEEKS AN ADVISORY OPINION OF THE COURT ON WHETHER X X X PETRON AND THE OTHER OIL COMPANIES, PILIPINAS SHELL PETROLEUM CORPORATION AND CHEVRON PHILIPPINES, INC. HAVE VIOLATED THE LAWS AGAINST MONOPOLY, COMBINATIONS IN RESTRAINT OF TRADE OR CARTELIZATION.

B.

[PUBLIC RESPONDENT RTC] COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN [IT] DENIED PETRON'S MOTION TO DISMISS [PRIVATE RESPONDENT] SJS' AMENDED PETITION AFTER THE [DOE-DOJ] JOINT TASK FORCE TO WHICH [PUBLIC RESPONDENT RTC] REFERRED THE CASE "FOR THE SPEEDY DISPOSITION OF THE PENDING CONTROVERSY," SUBMITTED ITS REPORT DATED APRIL 17, 2008 THAT THERE IS NO MONOPOLY OR COMBINATION IN RESTRAINT OF TRADE OR CARTELIZATION COMMITTED BY PETRON, SHELL AND CHEVRON.

C.

[PUBLIC RESPONDENT RTC] COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN [IT] ORDERED THE INSPECTION AND EXAMINATION OF THE BOOKS OF ACCOUNT OF PETRON, SHELL AND CHEVRON NOTWITHSTANDING THAT THE SAME IS EXCLUSIVELY COGNIZABLE BY THE [DOE-DOJ] JOINT TASK FORCE CREATED UNDER R.A. 8479.

D.

[PUBLIC RESPONDENT RTC] COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN [IT] ADMITTED PASANG MASDA'S PETITION-IN-INTERVENTION DESPITE THE LATTER'S LACK OF MATERIAL, DIRECT AND IMMEDIATE LEGAL INTEREST IN THE MATTER OF LITIGATION BEFORE THE LOWER COURT.[40]
Simply put, the issues to be resolved are as follows:
(1)
Whether public respondent RTC committed grave abuse of discretion in not dismissing the Amended Petition for Declaratory Relief;


(2)
Whether public respondent RTC committed grave abuse of discretion in ordering the COA, the BIR, and the BOC to examine the books of accounts of the Big 3 and in including private respondent Cabigao as part of the "panel of examiners;" and


(3)
Whether public respondent RTC committed grave abuse of discretion in allowing Pasang Masda to intervene in the case.
The Parties' Arguments

G.R. No. 188760

The OSG assails the April 27 and May 5, 2009 Orders of the RTC on the ground that it would be legally impossible for the COA, the BIR, and the BOC to comply with the said Orders because it is beyond the mandates of these government agencies to examine the books of accounts of the Big 3.[41] Also, the OSG asserts that the orders are not sanctioned by the Rules of Court, specifically Rule 27 on the Production or Inspection of Documents or Things, and RA 8479.[42] In fact, under RA 8479, it is the DOE-DOJ Joint Task Force which has the power and authority to monitor or investigate oil companies, and initiate the filing of a complaint, if necessary.[43] In this case, considering that public respondent RTC already referred the case to the DOE-DOJ Joint Task Force for investigation, there was no need for public respondent RTC to issue said orders as it is bound by the task force's finding that no violation was committed by the Big 3 under the doctrine of conclusive finality.[44]

Shell

Shell, impleaded as a necessary party, likewise argues that public respondent RTC committed grave abuse of discretion in ordering the opening of the books of accounts of the Big 3 as this is beyond the scope of a petition for declaratory relief, which is only limited to the declaration of legal rights.[45] Shell claims that it is beyond the mandates and statutory powers of the COA, the BIR, and the BOC to examine the books of accounts of the Big 3,[46] and that such order is a violation of the Big 3's right to due process.[47]

G.R. No. 189060

Chevron ascribes grave abuse of discretion on the part of the RTC in issuing the April 27 and July 7, 2009 Orders. Chevron argues that the Amended Petition for Declaratory Relief filed by private respondents failed to raise a justiciable controversy and to establish a cause of action for a declaratory relief.[48] Chevron points out that there is no factual allegation in the Petition that private respondents' rights are being threatened or that there is an imminent violation thereof that should be prevented by the declaratory relief sought.[49] Instead, from the allegations, it appears that private respondents want public respondent RTC to investigate and render an opinion on whether the Big 3 violated Article 186 of the RPC or Section 11 of RA 8479.[50] This, however, is not the function of the court.[51] Rather, it is the DOE-DOJ Joint Task Force that has primary jurisdiction to investigate whether there was a violation of Section 11 of RA 8479.[52] Thus, the RTC exceeded its power or authority when it created its own procedure, ordering the government agencies to investigate the Big 3 and allowing private respondent Cabigao to become part of the panel of examiners.[53] To justify its orders, the RTC cites the doctrine of parens patriae. Chevron, however, avers that this doctrine is inapplicable as this only applies to measures taken by the State to protect those who cannot protect themselves such as minors, insane, and incompetent persons.[54]

G.R. No. 189333

Petron imputes grave abuse of discretion on the part of the public respondent trial court in issuing the April 27, June 23 and July 7, 2009 Orders. Echoing the arguments of Chevron, Petron posits that a petition for declaratory relief is not available in the instant case because the requisites for an action for declaratory relief are not present, specifically there is no justiciable controversy, and that a reading of the petition readily shows that private respondents are merely asking for an advisory opinion, which courts are proscribed from rendering.[55] Neither do private respondents have a cause of action in view of the factual findings of the DOE-DOJ Joint Task Force that the Big 3 did not commit any violation of Section 11 of RA 8479 and Article 186 of the RPC.[56] Also, public respondent RTC exceeded its authority when it ordered the COA, the BIR, and the BOC to inspect and examine the books of accounts of the Big 3 because under RA 8479, it is the DOE-DOJ Joint Task Force which has the primary jurisdiction to monitor, investigate, and file the necessary cases in court against any person or entity in the oil industry.[57] Moreover, public respondent RTC cannot use the doctrine of parens patriae to justify its order because the doctrine only refers to the inherent power of the State to provide protection to those who lack the legal capacity to act on their own behalf.[58] With regard to the June 23, 2009 Order, Petron contends that public respondent RTC committed grave abuse of discretion in allowing Pasang Masda to intervene despite the fact that it lacked legal interest in the subject matter of litigation.[59] Furthermore, Petron claims that the Pasang Masda's Petition-in­-Intervention was filed beyond the time allowed by the rules as the parties have already pleaded their respective positions and the DOE-DOJ Joint Task Force had already submitted its Report.[60]

Private respondents' arguments

Private respondents, on the other hand, assert that they availed of the proper recourse and that all the requisites for a declaratory relief are present.[61] They maintain that the RTC has jurisdiction over their Petition and that the rule on primary jurisdiction invoked by the Big 3 is not a hard-and-fast rule.[62] They insist that the jurisdiction of the DOE-DOJ Joint Task Force is not exclusive and that its findings are not conclusive.[63] As regards the order of public respondent RTC to open and examine the books of accounts of the Big 3, private respondents opine that this is in accordance with the principles of social justice and Article 24 of the Civil Code, which grants power to the court to issue such order to protect the consuming public.[64]

Pasang Masda's arguments

Similarly, Pasang Masda banks on the social justice provisions of the Constitution as legal basis for the orders of public respondent RTC.[65] It avers that the auditing powers of the COA is not limited to government entities because as a member of the United Nations Board of Auditors (UNBOA), it was previously deployed as part of the auditing team of 17 UN agencies.[66] In addition, Pasang Masda cites the case of Manila Electric Company (MERALCO) v. Lualhati,[67] where the COA was tasked by the Energy Regulatory Commission to audit MERALCO, as precedent for the orders of public respondent RTC.[68] It also posits that the creation of the DOE-DOJ Joint Task Force cannot divest the court of its judicial power over the instant case and that its findings are merely recommendatory.[69] Regarding its intervention, Pasang Masda claims that there had been cases where the court allowed a party to intervene despite the fact that the parties have already submitted a compromise agreement as long as the intervenor had an interest in the case.[70] In this case, it insists that it has an interest in the outcome of the case as consumers of oil products.[71]

Ruling

The Petitions are meritorious.

An action for declaratory relief is not the proper remedy.

A petition for declaratory relief is an action instituted by a person interested in a deed, will, contract or other written instrument, executive order or resolution, to determine any question of construction or validity arising from the instrument, executive order or regulation, or statute and for a declaration of his rights and duties thereunder.[72] It must be filed before the breach or violation of the statute, deed or contract to which it refers; otherwise, the court can no longer assume jurisdiction over the action.[73] Thus, "[t]he only issue that may be raised in such [an action] is the question of construction or validity of provisions in an instrument or statute."[74]

In the instant case, private respondents, in their Amended Petition, alleged that "[the Big 3] now and then increase the price of their petroleum products" and that "an increase in prices declared by one of them is inevitably followed by increases by the others."[75] Private respondents, thus, interposed the following issues:
(A) WHETHER X X X THE ACT OF OIL COMPANIES, INCLUDING [THE BIG 3], IN INCREASING THE PRICE OF THEIR OIL PRODUCTS WHENEVER THE PRICE OF CRUDE OIL IN THE WORLD MARKET INCREASES, DESPITE THE FACT THAT THEY HAD PURCHASED THEIR INVENTORY OF CRUDE OIL LONG BEFORE SUCH INCREASE IN WORLD MARKET PRICE AND AT A MUCH LOWER PRICE, IS VIOLATIVE OF THE FOREGOING LEGAL PROVISIONS.

(B) WHETHER X X X THE ACT OF AN OIL COMPANY IN INCREASING THE PRICES OF ITS OIL PRODUCTS WHENEVER ITS PROPOSED COMPETITORS INCREASE THEIR PRICES FALLS UNDER THE TERM 'COMBINATION OR CONCERTED ACTIONS' USED IN SECTION 11 (A) OF [RA] 8479.[76]
Based on the foregoing, the core issue involved in the Amended Petition is whether the business practice of the Big 3 violates the RPC and RA 8479. This, however, cannot be made the subject matter of a declaratory relief.

Private respondents filed their Amended Petition based on acts already committed or being committed by the Big 3, which they believe are in violation of the RPC and RA 8479. It appears therefore that the filing of the Amended Petition was done on the assumption that there was already a breach or violation on the part of the Big 3, which cannot be the subject of a declaratory relief. It must be stressed that an action for declaratory relief presupposes that there has been no actual breach as such action is filed only for the purpose of securing an authoritative statement of the rights and obligations of the parties under a contract, deed or statute.[77] It cannot be availed of if the statute, deed or contract has been breached or violated because, in such a case, the remedy is for the aggrieved party to file the appropriate ordinary civil action in court.[78] Thus, the Court has consistently ruled that "[i]f adequate relief is available through another form or action or proceeding, the other action must be preferred over an action for declaratory relief."[79]

Worth mentioning at this point is the ruling in Sarmiento v. Hon. Capapas,[80] where the Court explained that:
x x x if an action for declaratory relief were to be allowed in this case, after a breach of the statute, the decision of the court in the action for declaratory relief would prejudge the action for violation of the barter law.

The institution of an action for declaratory relief after a breach of contract or statute, is objectionable on various grounds, among which is that it violates the rule on multiplicity of suits. If the case at bar were allowed for a declaratory relief, the judgment therein notwithstanding, another action would still lie against the importer respondent for violation of the barter law. So, instead of one case only before the courts in which all issues would be decided, two cases will be allowed, one being the present action for declaratory relief and a subsequent one for the confiscation of the importations as a consequence of the breach of the barter law.

The impropriety of allowing an action for declaratory relief, after a breach of the law, can be seen in the very decision of the court itself, which is now subject of the appeal. Whereas the case at bar was purported to bring about a simple declaration of the rights of the parties to the action, the judgment goes further than said declaration and decrees that the importation by the respondent corporation violates the law, and further directs that the legal importation be confiscated under the provisions of the law (Section 1 (e), R.A. No. 1194). This confiscation directed by the court lies clearly beyond the scope and nature of an action for declaratory relief, as the judgment of confiscation goes beyond the issues expressly raised, and to that extent it is null and void.[81]
Similarly, in this case, an action for declaratory relief may no longer be allowed considering that private respondents are not merely asking for a declaration of their rights but are actually asking public respondent RTC to determine whether there was a violation of Section 11 of RA 8479, for which the Big 3 may be prosecuted and found criminally liable. And since there is already an alleged breach, it cannot be the subject of a declaratory relief. Public respondent RTC therefore committed grave abuse of discretion in not dismissing the Amended Petition.

The DOE-DOJ Joint Task Force is duly authorized by law to investigate and to order the prosecution of cartelization.

Moreover, the determination of such issue lies with the DOE-DOJ Joint Task Force. Section 13 of RA 8479 pertinently provides:
SEC. 13. Remedies. -

a) Government Action - Whenever it is determined by the Joint Task Force created under Section 14 (d) of this Act, that there is a threatened, imminent or actual violation of Section 11 of this Act, it shall direct the provincial or city prosecutors having jurisdiction to institute an action to prevent or restrain such violation with the Regional Trial Court of the place where the defendant or any of the defendants reside or has his place of business. Pending hearing of the complaint and before final judgment, the court may at any time issue a [TRO] or an order of injunction as shall be deemed just within the premises, under the same conditions and principles as injunctive relief is granted under the Rules of Court.

Whenever it is determined by the Joint Task Force that the Government or any of its instrumentalities or agencies, including government-owned or controlled corporations, shall suffer loss or damage in its business or property by reason of violation of Section 11 of this Act, such instrumentality, agency or corporation may file an action to recover damages and the costs of suit with the Regional Trial Court which has jurisdiction as provided above.

b) Private Complaint. - Any person or entity shall report any violation of Section 11 of this Act to the Joint Task Force. The Joint Task Force shall investigate such reports in aid of which the DOE Secretary may exercise the powers granted under Section 15 of this Act. The Joint Task Force shall prepare a report embodying its findings and recommendations as a result of any such investigation, and the report shall be made public at the discretion of the Joint Task Force. In the event that the Joint Task Force determines that there has been a violation of Section 11 of this Act, the private person or entity shall be entitled to sue for and obtain injunctive relief, as well as damages, in the Regional Trial Court having jurisdiction over any of the parties, under the same conditions and principles as injunctive relief is granted under the Rules of Court.
Corollarily, DOE Department Circular No. 98-03-004 or the Rules and Regulations Implementing [RA] 8479, "Downstream Oil Industry Deregulation Act of 1998" provides in Section 17 thereof, viz.:
SECTION 17. Remedies

The DOE-DOJ Task Force, created under Section 14 (d) of the Act, shall take the following remedial measures:

a. investigate and act upon complaints or reports from any person of an unreasonable rise in the prices of petroleum products and may motu proprio, investigate and/or file the necessary complaint with the proper court or agency;

b. investigate and act upon complaints or reports of commission of the prohibited acts under Section 11 of the Act, and after determination of such violation endorse the same to the provincial or city prosecutor having jurisdiction for institution of the appropriate action;

c. prepare and submit a report to the Secretary of Energy and Secretary of Justice embodying its findings and recommendations as a result of its investigation of the alleged violation of Section 11 of the Act;

d. investigate and act upon a complaint by any instrumentality or agency of the Government including government-owned or -controlled corporations, that loss or damage has been suffered or incurred by such instrumentality, agency or government corporation by reason of violation of Section 11 of the Act; and

e. perform such other functions as may jointly be assigned by the Secretary of Energy and the Secretary of Justice.
In Cong. Garcia v. Hon. Corona,[82] the Court made it clear that it is the DOE-DOJ Task Force which has the power to investigate and cause the prosecution of violators. It ruled that:
Article 186 of the [RPC], as amended, punishes as a felony the creation of monopolies and combinations in restraint of trade. The Solicitor General, on the other hand, cites provisions of RA 8479 intended to prevent competition from being corrupted or manipulated. Section 11, "Anti-Trust Safeguards," defines and prohibits cartelization and predatory pricing. It penalizes the persons and officers involved with imprisonment of three (3) to seven (7) years and fines ranging from One Million to Two million pesos. For this purpose, a Joint Task Force from the [DOE] and [DOJ] is created under Section 14 to investigate and order the prosecution of violations.

x x x x

Section 13 of the Act provides for "Remedies," under which the filing of actions by government prosecutors and the investigation of private complainants by the Task Force is provided. Sections 14 and 15 provide how the [DOE] shall monitor .and prevent the occurrence of collusive pricing in the industry.

It can be seen, therefore, that instead of the price controls advocated by the petitioner, Congress .has enacted anti-trust measures which it believes will promote free and fair competition. Upon the other hand, the disciplined, determined, consistent and faithful execution of the law is the function of the President. As stated by public respondents, the remedy against unreasonable price increases is not the nullification of Section 19 of R.A. 8479 but the setting into motion of its various other provisions.[83]
Again, in Congressman Garcia v. The Executive Secretary, et al.,[84] the Court declared that:
x x x The remedy against the perceived failure of the Oil Deregulation Law to combat cartelization is not to declare it invalid, but to set in motion its anti-trust safeguards under Sections 11, 12, and 13.

x x x x

x x x R.A. No. 8479, x x x does not condone these acts; indeed, Section 11 (a) of the law expressly prohibits and punishes cartelization, which is defined in the same section as "any agreement, combination or concerted action by refiners, importers and/or dealers, or their representatives, to fix prices, restrict outputs or divide markets, either by products or by areas, or allocate markets, either by products or by areas, in restraint of trade or free competition, including any contractual stipulation which prescribes pricing levels and profit margins." This definition is broad enough to include the alleged acts of overpricing or price-fixing by the Big 3. R.A. No. 8479 has provided, aside from prosecution for cartelization, several other anti-trust mechanisms, including the enlarged scope of the [DOE's] monitoring power and the creation of a Joint Task Force to immediately act on complaints against unreasonable rise in the price of petroleum products. Petitioner Garcia's failure is that he failed to show that he resorted to these measures before filing the instant petition. His belief that these oversight mechanisms are unrealistic and insufficient does not permit disregard of these remedies.[85]
Here, the RTC initially resolved to refer the instant case to the DOE-DOJ Joint Task Force for investigation and determination of whether the Big 3 were in violation of Section 11 of RA 8479. However, upon receipt of the report of the DOE-DOJ Joint Task Force that there was no violation committed by the Big 3, the RTC, instead of dismissing the case, ordered the COA, the BIR, and the BOC to open and examine the books of accounts of the Big 3 and even allowed private respondent Cabigao to be part of the panel of examiners. In doing so, the trial court divested the DOE-DOJ Joint Task Force of its power and authority and vested the same to the COA, the BIR, the BOC and private respondent Cabigao.

To justify its orders, the public respondent trial court invokes the doctrine of parens patriae.

Under the doctrine of parens patriae (father of his country), the judiciary, as an agency of the State, has the supreme power and authority to intervene and to provide protection to persons non sui juris - those who because of their age or incapacity are unable to care and fend for themselves.[86] In Maynilad Water Services, Inc. v. Secretary of the Department of Environment and Natural Resources,[87] this Court even went further and ruled that "Filipino consumers have become such persons of disability deserving protection by the State, as their welfare are being increasingly downplayed, endangered, and overwhelmed by business pursuits."

This doctrine, however, cannot be applied in this case considering that Congress by enacting RA 8479 has already provided for the mechanism to protect the interest of the Filipino consumers. Public respondent RTC, therefore, cannot create a new panel of examiners to replace the DOE-DOJ Joint Task Force as this goes against RA 8479.

It is beyond the mandates of the COA, the BIR, and the BOC to open and examine the books of accounts of the Big 3 in the instant case.

Besides, it is beyond the mandates of the COA, the BIR, and the BOC to open and examine the books of accounts of the Big 3.

In Fernando v. [COA],[88] the Court explained the audit jurisdiction of the COA:
Section 2, Article IX-D of the 1987 Constitution provides for the COA's audit jurisdiction:
SECTION 2. (1) The [COA] shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non­governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.
The COA was envisioned by our Constitutional framers to be a dynamic, effective, efficient and independent watchdog of the Government. It granted the COA the authority to determine whether government entities comply with laws and regulations in disbursing government funds, and to disallow illegal or irregular disbursements of government funds.

In the case of Funa v. Manila Economic and Cultural Office, et al., this Court enumerated and clarified the COA's jurisdiction over various governmental entities. In that case, this Court stated that the COA's audit jurisdiction extends to the following entities:

1. The government, or any of its subdivisions, agencies and instrumentalities;

2. GOCCs with original charters;

3. GOCCs without original charters;

4. Constitutional bodies, commissions and offices that have been granted fiscal autonomy under the Constitution; and

5. Non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the government, which are required by law or the granting institution to submit to the COA for audit as a condition of subsidy or equity.

COA's authority to examine and audit the accounts of government and, to a certain extent, non-governmental entities, is consistent with Section (Sec.) 29 (1) of Presidential Decree (P.D.) No. 1445 otherwise known as the Auditing Code of the Philippines, which grants the COA visitorial authority over the following non-governmental entities:

1. Non-governmental entities "subsidized by the government;"

2. Non-governmental entities "required to pay levy or government share;"

3. Non-governmental entities that have "received counterpart funds from the government;" and

4. Non-governmental entities "partly funded by donations through the government."

COA's audit jurisdiction is also laid down in Section 11, Chapter 4, Subtitle B, Title I, Book V of the Administrative Code of 1987:
SECTION 11. General Jurisdiction. (1) The Commission on Audit shall have the power, authority, and duty to examine, audit, and settle all accounts pertaining to the revenue and receipts of, and expenditures or uses of funds and property, owned or held in trust by, or pertaining to, the Government, or any of its subdivisions, agencies, or instrumentalities, including government-owned or controlled corporations with original charters, and on a post-audit basis: (a) constitutional bodies, commissions and offices that have been granted fiscal autonomy under this Constitution; (b) autonomous state colleges and universities; (c) other government-owned or controlled corporations and their subsidiaries; and (d) such non-governmental entities receiving subsidy or equity, directly or indirectly, from or through the Government, which are required by law or the granting institution to submit to such audit as a condition of subsidy or equity. However, where the internal control system of the audited agencies is inadequate, the Commission may adopt such measures, including temporary or special pre-audit, as are necessary and appropriate to correct the deficiencies. It shall keep the general accounts of the Government and, for such period as may be provided by law, preserve the vouchers and other supporting papers pertaining thereto.
x x x   x x x   x x x

As can be gleaned from the foregoing, the COA's audit jurisdiction generally covers public entities. However, its authority to audit extends even to non-governmental entities insofar as the latter receives financial aid from the government. Thus, it is clear that the determination of COA's jurisdiction over a specific entity does not merely require an examination of the nature of the entity. Should the entity be found to be non-governmental, further determination must be had as to the source of its funds or the nature of the account sought to be audited by the COA.

In the analysis of an entity's nature, this Court, in prior cases, examined the statutory origin, the charter, purpose and the relations that a particular entity has with the State.

In Phil. Society for the Prevention of Cruelty to Animals v. [COA], this Court clarified that totality of an entity's relations with the State must be considered. If the corporation is created by the State as the latter's own agency or instrumentality to help it in carrying out its governmental functions, then that corporation is considered public; otherwise, it is private. This Court examined the charter of therein petitioner, Philippine Society for the Prevention of Cruelty to Animals, its employees' membership to social insurance system, and the presence of x x x government officials in its board, among others. In that case, this Court ruled that the mere public purpose of an entity's existence does not, per se, make it a public corporation:
Fourth. The respondents contend that the petitioner is a "body politic" because its primary purpose is to secure the protection and welfare of animals which, in turn, redounds to the public good.

This argument, is, at best, specious. The fact that a certain juridical entity is impressed with public interest does not, by that circumstance alone, make the entity a public corporation, inasmuch as a corporation may be private although its charter contains provisions of a public character, incorporated solely for the public good. This class of corporations may be considered quasi-public corporations, which are private corporations that render public service, supply public wants or pursue other eleemosynary objectives. While purposely organized for the gain or benefit of its members, they are required by law to discharge functions for the public benefit. Examples of these corporations are utility, railroad, warehouse, telegraph, telephone, water supply corporations and transportation companies. It must be stressed that a quasi-public corporation is a species of private corporations, but the qualifying factor is the type of service the former renders to the public: if it performs a public service, then it becomes a quasi-public corporation.

Authorities are of the view that the purpose alone of the corporation cannot be taken as a safe guide, for the fact is that almost all corporations are nowadays created to promote the interest, good, or convenience of the public. A bank, for example, is a private corporation; yet, it is created for a public benefit. Private schools and universities are likewise private corporations; and yet, they are rendering public service. Private hospitals and wards are charged with heavy social responsibilities. More so with all common carriers. On the other hand, there may exist a public corporation even if it is endowed with gifts or donations from private individuals.
Meanwhile, in Engr. Feliciano v. [COA], this Court ruled that regardless of the nature of the corporation, the determining factor of COA's audit jurisdiction is government ownership or control of the corporation. In this case, the Court found that local water districts (LWDs), are owned and controlled by the government, as evidenced from the fact that "there [was] no private party involved in their creation, ownership of the national or local government of their assets, the manner of appointment of their board of directors and their employees' being subject to civil service laws." The Court also noted as an indication of the government's control, the latter's power to appoint LWD directors, to provide for their compensation, as well as the Local Water Utilities Administration's power to require LWDs to merge or consolidate their facilities or operations.

In Boy Scouts of the Philippines v. [COA], the Court, in arriving at the conclusion that BSP is subject to the COA's audit jurisdiction, examined its charter, Commonwealth Act No. 111, and the provisions of the same concerning BSP's governing body, its classification and relationship with the National Government, specifically as an attached agency of then Department of Education, Culture and Sports (DECS), as well as its sources of funds.
Without a doubt, the case of the Big 3 would not fall under the audit jurisdiction of COA. They are not public entities nor are they non­ governmental entities receiving financial aid from the government.

As to Pasang Masda's reliance on the case of Meralco v. Lualhati,[89] this is misplaced. That case involves a situation different from the present case as what was in issue therein was the authority of the COA under Section 22 of the Administrative Code of 1987 to examine the books, records and accounts of public utilities in connection with the fixing of rates for the purpose of determining franchise taxes. Thus, it cannot be used as precedent to justify the orders of public respondent RTC.

With respect to the BIR, its Commissioner is authorized to examine books, paper, record, or other data of taxpayers but only to ascertain the correctness of any return, or in making a return when none was made, or in determining the liability of any person for any internal revenue tax, or in collecting such liability, or evaluating the person's tax compliance.[90] The BOC, on the other hand, is authorized to audit or examine all books, records, and documents of importers necessary or relevant for the purpose of collecting the proper duties and taxes.[91] Since there are no taxes or duties involved in this case, the BIR and the BOC likewise have no power and authority to open and examine the books of accounts of the Big 3.

As previously discussed, it is the DOE-DOJ Joint Task Force that has the sole power and authority to monitor, investigate, and endorse the filing of complaints, if necessary, against oil companies. And considering that the remedy against cartelization is already provided by law, the public respondent trial court exceeded its jurisdiction and gravely abused its discretion when it ordered the COA, the BIR, and the BOC to open and examine the books of account of the Big 3 and allowed private respondent Cabigao, a certified public accountant, to become part of the panel of examiners. Clearly, the RTC not only failed to uphold the law but worse, he contravened the law.

Pasang Masda failed to satisfy all the requirements for intervention.

As regards the issue of intervention, Section 1,[92] Rule 19 of the Rules of Court requires that: (1) the movant must have a legal interest in the matter being litigated; (2) the intervention must not unduly delay or prejudice the adjudication of the rights of the parties; and (3) the claim of the intervenor must not be capable of being properly decided in a separate proceeding. The right to intervene, however, is not an absolute right as the granting of a motion to intervene is addressed to the sound discretion of the court and may only be allowed if the movant is able to satisfy all the requirements.[93]

In this case, Pasang Masda's allegation that its members consume petroleum products is not sufficient to show that they have legal interest in the matter being litigated considering that there are other oil players in the market aside from the Big 3. Jurisprudence mandates that legal interest must be actual, substantial, material, direct and immediate, and not simply contingent or expectant.[94] Such is not the situation in this case. In fact, there is no showing that Pasang Masda has something to gain or lose in the outcome of the case. Thus, it was grave abuse of discretion on the part of public respondent RTC in allowing Pasang Masda to intervene despite its failure to comply with the first requirement.

Besides, even if the Court relaxes the definition of "legal interest" in the instant case, the granting of the motion to intervene would still be improper because the subject matter of the petition-in-intervention, just like the petition, cannot be the subject of an action for declaratory relief Since an intervention is not an independent action but is ancillary and supplement to the main case, the dismissal of the main case would necessarily include the dismissal of the ancillary case.[95]

All told, the Court finds grave abuse of discretion on the part of public respondent RTC as to its issuance of the Assailed Orders.

WHEREFORE, the Consolidated Petitions are hereby GRANTED. The April 27, 2009, May 5, 2009, June 23, 2009, and July 7, 2009 Orders of the Regional Trial Court of Manila, Branch 26, in Civil Case No. 03-106101 are hereby REVERSED and SET ASIDE. The Temporary Restraining Order dated August 4, 2009 is hereby made PERMANENT. Accordingly, the Petition for Declaratory Relief is ordered DISMISSED.

SO ORDERED.

Peralta, C. J., Perlas-Bernabe, Leonen, Caguioa, Gesmundo, J. Reyes, Jr., Carandang, Lazaro-Javier, Inting, Lopez, Delos Santos, and Gaerlan, JJ., concur.
Zalameda,* J., no part.


* No part due to prior participation in the CA proceedings.

[1] Rollo, G.R. No. 188760; Volume I, pp. 2-62; rollo, G.R. No. 189060, pp. 3-61; and rollo, G.R. No. 18933, pp.3-71.

[2] Rollo, G.R. No. 188760, Volume I, pp. 64-66; penned by Presiding Judge Silvino T. Pampilo, Jr.

[3] Id. at 68.

[4] Id. at 1166-1167.

[5] Id. at 70-71.

[6] Id. at 136-142.

[7] Art. 186. Monopolies and combinations in restraint of trade. The penalty  of prision correccional in its minimum period or a fine ranging from, two hundred to six thousand pesos, or both; shall be imposed upon. Any person, who shall enter into any contract or agreement or shall take part in any conspiracy or combination in the form of a trust or otherwise, in restraint of trade or commerce or to prevent by artificial means free competition in the market; 2. Any person who shall monopolize any merchandise or object of trade or commerce, or shall combine with any other person or persons to monopolize said merchandise or object in order to 3. Any person who, being a manufacturer, producer, or processor of any merchandise or object of commerce or an importer of any merchandise or object of commerce from any foreign country, either as principal or agent, wholesaler or retailer, shall combine, conspire or agree in any manner with any person likewise engaged in the manufacture, production, processing, assembling or importation of such merchandise or object of commerce or with any other persons not so similarly engaged for the purpose of making transactions prejudicial to lawful commerce, or of increasing the market price in any part of the Philippines, of any such merchandise or object of commerce manufactured, produced, processed, assembled in or imported into the Philippines, or of any article in the manufacture of which such manufactured, produced, processed, or imported merchandise or object of commerce is used.

If the offense mentioned in this Article affects any food substance, motor fuel or lubricants, or other articles of prime necessity, the penalty shall be that of prision mayor in its minimum and medium periods, it being sufficient for the imposition thereof that the initial steps have been taken toward carrying out the purposes of the combination.

Any property possessed under any contract or by any combination mentioned in the preceding paragraphs, and being the subject thereof, shall be forfeited to the Government of the Philippines.

Whenever any of the offenses described above is committed by a corporation or association, the president and each one of the directors or managers of said corporation or association or its agent or representative in the Philippines in case of a foreign corporation or association, who shall have knowingly permitted or failed to prevent the commission of such offenses, shall be held liable as principals thereof.

[8] SECTION 11. Anti-Trust Safeguards. - To ensure fair competition and prevent cartels and monopolies in the Industry, the following acts are hereby prohibited:

a) Cartelization which means any agreement, combination or concerted action by refiners, importers and/or dealers, or their representatives, to fix prices, restrict outputs or divide markets, either by products or by areas, or allocate markets, either by products or by areas, in restraint of trade or free competition, including any contractual stipulation which prescribes pricing levels and profit margins;

[9] Rollo, G.R. No. 188760, Volume I, pp, 181-187.

[10] Id. at 144-180 and 246-278.

[11] Id. at 188-189; penned by Acting Presiding Judge Oscar P. Barrientos.

[12] Id. at 514.

[13] Id. at 190-197.

[14] Rollo, G.R. No. 189333, p. 13; and rollo, G.R. No. 189060, p. 15.

[15] Rollo, G.R. No. 188760, Volume I, pp. 198-201.

[16] Id. at 65-66.

[17] Id. at 578-632.

[18] Id. at 279-282.

[19] Id. at 68.

[20] Id. at 205-230.

[21] Id. at 321-338.

[22] Id. at 1166-1167.

[23] Id. at 70-71.

[24] Id. at 71.

[25] Id. at 235.

[26] Id. at 677-680.

[27] Id. at 112.

[28] Id. at 2-62.

[29] Id. at 74-76.

[30] Rollo, G.R. No. 189060, pp. 3-61.

[31] Rollo, G.R. No. 189333, pp. 3-71.

[32] Id. at 554-555 and Rollo, G.R. No. 188760, Volume 1, pp. 770-A-770-B (Volume I).

[33] Rollo, G.R. No. 188760, Volume I, pp. 682-770.

[34] Id., Volume III, pp. 1840-1883 (Volume III); penned by Presiding Justice Andres B. Reyes, Jr. (now retired SC Justice) and concurred in by Associate Justices Vicente S.E. Veloso and Jane Aurora C. Lantion.

[35] Id. at 1908-1914.

[36] Id. at 1982.

[37] Id. at 1987-1991; penned by Associate Justice Vicente S.E. Veloso and concurred in by Associate Justices Jane Aurora C. Lantion and Rodil V. Zalameda (now a Member of this Court).

[38] Id., Volume I, pp. 12-13.

[39] Rollo, G.R. No. 189060, p. 22.

[40] Rollo, G.R. No. 189333, pp. 21-22.

[41] Rollo, G.R. No. 188760, Volume I, pp. 13-24.

[42] Id. at 24-26.

[43] Id. at 29-32.

[44] Id. at 32-34.

[45] Id. at 421-423.

[46] Id. at 428-432.

[47] Id. at 432-438.

[48] Rollo, G.R. No. 189060, pp. 22-32.

[49] Id. at 28-32.

[50] Id. at 22-28.

[51] Id. at 26.

[52] Id. at 32-41.

[53] Id. at 41-45.

[54] Id. at 46-49.

[55] Rollo, G.R. No. 189333, pp. 23-36.

[56] Id. at 36-48.

[57] Id. at 48-51.

[58] Id. at 51-53.

[59] Id. at 54-58.

[60] Id. at 58-60.

[61] Rollo, G.R. No. 188760, Volume II, pp. 1687-1689.

[62] Id., Volume I, pp. 789-792 and Volume II, p. 1246.

[63] Id. Volume II, pp. 1689-1690.

[64] Id., Volume I, pp. 783-789.

[65] Id., Volume II, pp. 1663-1668.

[66] Id. at 1668-1669.

[67] 539 Phil. 509 (2006).

[68] Rollo, G.R. No. 188760, Volume II, pp. 1669-1670.

[69] Id. at 1670-1674.

[70] Rollo, G.R. No. 189333, pp. 599-602.

[71] Id.

[72] Section 1, Rule 63 of the Rules of Court reads:

Section 1. Who may file petition. -

Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder.

An action for the reformation of an instrument, 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.

[73] Tambunting, Jr. v. Sps. Sumabat, 507 Phil. 94, 98-99 (2005).

[74] Monetary Board v. Philippine Veterans Bank, 751 Phil. 176, 182 (2015).

[75] Rollo, G.R. No. 188760, Volume I, p. 182.

[76] Id. at 185.

[77] Aquino v. Municipality of Malay, Aklan, 744 Phil. 497, 509-510 (2014).

[78] City of Lapu-Lapu v. Philippine Economic Zone Authority, 748 Phil. 473, 511 (2014).

[79] Id.

[80] 114 Phil. 756 (1962).

[81] Id. at 762.

[82] 378 Phil. 848 (1999).

[83] Id. at 868-869.

[84] 602 Phil. 64 (2009).

[85] Id. at 80-83.

[86] Vasco v. Court of Appeals, 171 Phil. 673, 677 (1978); Cabanas v. Pilapil, 157 Phil. 97, 101-102, (1974); and Nery v. Lorenzo, 150-A Phil. 241, 248-249 (1972).

[87] G.R. Nos. 202897, 206823 & 207969, August 6, 2019.

[88] G.R. Nos. 237938 & 237944-45, December 4, 2018.

[89] Supra note 67.

[90] Section 5 of Republic Act No. 8424 (Approved on December 11, 1997) or the Tax Reform Act of 1997 provides:

SECTION 5. Power of the Commissioner to Obtain Information, and to Summon, Examine, and Take Testimony of Persons. - In ascertaining the correctness of any return, or in making a return when none has been made, or in determining the liability of any person for any internal revenue tax, or in collecting any such liability, or in evaluating tax compliance, the Commissioner is authorized:

(A) To examine any book, paper, record, or other data which may be relevant or material to such inquiry;

x x x

[91] Sections 3515 and 3516 of Presidential Decree No. 1464, as amended by Republic Act No. 9135 (Approved on April 27, 2001) or An Act Amending Certain Provisions of Presidential Decree No. 1464, provide:

SEC. 3515. Compliance Audit or Examination of Records. - The importers/customs brokers shall allow any customs officer authorized by the Bureau of Customs to enter during office hours any premises or place where the records referred to in the preceding section are kept to conduct audit examination, inspection, verification and/or investigation of those records either in relation to specific transactions or to the adequacy and integrity of the manual or electronic system or systems by which such records are created and stored. For this purpose, a duly authorized customs officer shall have full and free access to all books, records, and documents necessary or relevant for the purpose of collecting the proper duties and taxes.

In addition, the authorized customs officer may make copies of, or take extracts from any such documents. The records or documents must, as soon as practicable after copies of such have been taken, be returned to the person in charge of such documents.

A copy of any such document certified by or on behalf of the importer/broker is admissible in evidence in all courts as if it were the original.

An authorized customs officer is not entitled to enter any premises under this Section unless, before so doing, the officer produces to the person occupying or apparently in charge of the premises written evidence of the fact that he or she is an authorized officer. The person occupying or apparently in charge of the premises entered by an officer shall provide the officer with all reasonable facilities and assistance for the effective exercise of powers under this Section.

Unless otherwise provided herein or in other provisions of law, the Bureau of Customs may, in case of disobedience, invoke the aid of the proper regional trial court within whose jurisdiction the matter falls. The court may punish contumacy or refusal as contempt. In addition, the fact that the importer/broker denies the authorized customs officer full and free access to importation records during the conduct of a post-entry audit shall create a presumption of inaccuracy in the transaction value declared for their imported goods and constitute grounds for the Bureau of Customs to conduct a re-assessment of such goods.

This is without prejudice to the criminal sanctions imposed by this Code and administrative sanctions that the Bureau of Customs may impose against contumacious importers under existing laws and regulations including the authority to hold delivery or release of their imported articles.

SEC. 3516. Scope of the Audit. -

(a) The audit of importers shall be undertaken:

(1) When firms are selected by a computer-aided risk management system, the parameters of which are to be based on objective and quantifiable data and are to be approved by the Secretary of Finance upon recommendation of the Commissioner of Customs. The criteria for selecting firms to be audited shall include, but not be limited to, the following:

(a) Relative magnitude of customs revenue from the firm;

(b) The rates of duties of the firm's imports;

(c) The compliance track record of the firm; and

(d) An assessment of the risk to revenue of the firm's import activities.

(2) When errors in the import declaration are detected;

(3) When firms voluntarily request to be audited, subject to the approval of the Commissioner of Customs.

(b) Brokers shall be audited to validate audits of their importer clients and/or fill in information gaps revealed during an audit of their importer clients.

[92] Section 1, Rule 19 of the Rules of Court reads:

Section 1. Who may intervene. - A person who has a legal interest in the matter in litigation, or in the success of either of the parties, or an interest against both, or is so situated as to be adversely affected by a distribution or other disposition of property in the custody of the court or of an officer thereof may, with leave of court, be allowed to intervene in the action. The court shall consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the original parties, and whether or not the intervenor's rights may be fully protected in a separate proceeding.

[93] The Board of Regents of the Mindanao State University v. Osop, 682 Phil. 437, 461 (2012).

[94] Mactan-Cebu International Airport Authority v. Heirs of Estanislao Miñoza, 656 Phil. 537, 547 (2011).

[95] B. Sta. Rita & Co., Inc. v. Gueco, 716 Phil. 776, 785-786 (2013).

RAFAEL R. MARTELINO, BARCHELECHU S. MORALES, ROSELYN S. CACHAPERO, REYNALDO R. EVANGELISTA, CESAR B. YAPE, LEONORA R. PARAS, SEGUNDINA I. IBARRA, RAQUEL G. HALNIN, ZAMORA I. DIAZ, AND ARTHUR L. VEGA,* PETITIONERS, VS. NATIONAL HOME MORTGAGE FINANCE CORPORATION AND HOME DEVELOPMENT MUTUAL FUND, RESPONDENTS.the propriety of dismissing the petition for declaratory relief and prohibition.(2008)

 

SECOND DIVISION

[ G.R. No. 160208, June 30, 2008 ]

RAFAEL R. MARTELINO, BARCHELECHU S. MORALES, ROSELYN S. CACHAPERO, REYNALDO R. EVANGELISTA, CESAR B. YAPE, LEONORA R. PARAS, SEGUNDINA I. IBARRA, RAQUEL G. HALNIN, ZAMORA I. DIAZ, AND ARTHUR L. VEGA,* PETITIONERS, VS. NATIONAL HOME MORTGAGE FINANCE CORPORATION AND HOME DEVELOPMENT MUTUAL FUND, RESPONDENTS.

DECISION


QUISUMBING, J.:

On appeal is the Decision[1] dated April 22, 2003 of the Court of Appeals in C.A.-G.R. CV No. 70231, which had affirmed the March 12, 2001 Order[2] of the Regional Trial Court (RTC), Branch 120, Caloocan City, dismissing Civil Case No. C-551 for declaratory relief and prohibition. Also assailed is the appellate court's Resolution[3] dated September 25, 2003, denying petitioners' motion for reconsideration.

The case stemmed from the petition for declaratory relief and prohibition with urgent prayer for the issuance of a temporary restraining order and/or preliminary injunction[4] filed before the RTC of Caloocan City, by petitioners against the National Home Mortgage Finance Corporation (NHMFC) and the Home Development Mutual Fund (HDMF), herein respondents, and Sheriff Alberto A. Castillo.[5] Petitioners alleged that they obtained housing loans from respondents who directly released the proceeds thereof to the subdivision developer, Shelter Philippines, Inc. (Shelter).

However, Shelter failed to complete the subdivision according to its representations and the subdivision plan. They were thus compelled to spend their own resources to improve the subdivision roads and alleys, and to install individual water facilities. Respondents, on the other hand, failed to ensure Shelter's completion of the subdivision. Instead, respondents ignored their right to suspend amortization payments for Shelter's failure to complete the subdivision, charged interests and penalties on their outstanding loans, threatened to foreclose their mortgages and initiated foreclosure proceedings against petitioner Rafael Martelino. Hence, they prayed that respondents be restrained from foreclosing their mortgages.

Moreover, petitioners specifically sought a declaration from the RTC (1) that their right as house and lot buyers to suspend payment to Shelter for its failure to fully develop the subdivision also applied to respondents who released their loans directly to Shelter; and (2) that during the suspension of payment, respondents should not assess them accrued interests and penalties. Petitioners further prayed that they be allowed to pay their housing loans without interest and penalties.

In its June 17, 1998 Order,[6] the RTC set the preliminary injunction hearing, but said order, including the summons and petition, were served only on the NHMFC and Sheriff Castillo.[7] Despite notice, the NHMFC failed to attend the preliminary injunction hearing. On July 9, 1998, the RTC ordered that a writ of preliminary injunction be issued restraining the respondents from foreclosing the mortgages on petitioners' houses.[8] The writ[9] was issued on July 14, 1998.

On July 22, 1998, the NHMFC filed its Answer with Special and Affirmative Defenses.[10] Thereafter, the RTC ordered the parties to submit their pre-trial briefs and scheduled the pre-trial conference.[11]

On August 10, 1998, the NHMFC filed a Manifestation and Motion to Dismiss the Petition on the ground that the RTC had no jurisdiction over its person or over the subject matter of the case.[12]

The next day, the HDMF moved to set aside the July 9, 1998 preliminary injunction order on the ground that it was not notified of the hearing. The HDMF also stated that the petition should have been filed with the Housing and Land Use Regulatory Board (HLURB) as the case involved the developer's failure to complete the subdivision. The HDMF alleged that the RTC had no jurisdiction over the case or even to implead the HDMF which only financed petitioners' housing loans.[13]

Petitioners opposed the NHMFC's motion to dismiss and the HDMF's motion to set aside the July 9, 1998 Order.[14] They said that the NHMFC stated no basis why the RTC lacked jurisdiction. Since they sought a judicial declaration of their right to suspend amortization payments to respondents, not to the subdivision developer, the HLURB had no jurisdiction over the case. Petitioners also averred that the HDMF cannot claim ignorance of the preliminary injunction hearing because the NHMFC was duly notified. They claimed that the HDMF's motion constituted voluntary submission to the RTC's jurisdiction which cured the lack of service of summons.

On February 10, 2000, petitioners moved to cite Atty. Florentino C. Delos Santos, Manager of HDMF's Legal Department, in contempt for foreclosing the mortgage of Rosella T. Rosete[15] and threatening to pursue similar actions against petitioners, in defiance of the preliminary injunction order.[16]

On March 12, 2001, the RTC, Branch 120, Caloocan City, issued an Order, decreeing as follows:
WHEREFORE, premises considered:

1) The motion to set aside [the] order of this Court dated July 9, 1998 is hereby granted;

2) The motion to cite defendant HDMF in contempt is denied; and

3) The motion to dismiss is hereby granted and the herein petition is DISMISSED.

SO ORDERED.[17]
The RTC held that the July 9, 1998 Order was not applicable to the HDMF since it was not notified of the preliminary injunction hearing. Thus, no basis existed to declare Atty. Delos Santos in contempt of court.

In dismissing the case, the RTC ruled that the issue of non-completion of the subdivision should have been brought before the HLURB. It also ruled that no judicial declaration can be made because the petition was vague. The RTC assumed that the subject of the petition was Republic Act No. 8501[18] or the Housing Loan Condonation Act of 1998 which was cited by petitioners. But the RTC pointed out that petitioners failed to state which section of the law affected their rights and needed judicial declaration. The RTC also noted that, as stated by petitioners, respondents still foreclosed their mortgages, a breach of said law which rendered the petition for declaratory relief improper. The proper remedy was an ordinary civil action, the RTC concluded.

The Court of Appeals affirmed the RTC Order. First, the appellate court ruled that the writ of preliminary injunction was not valid against the HDMF since under Section 5,[19] Rule 58 of the Rules of Court, no preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined. The HDMF was not notified of the hearing and only appeared before the RTC to object to its jurisdiction for non-service of summons. Second, the appellate court held that petitioners were not denied due process because the motions to dismiss and to set aside the July 9, 1998 Order both raised the issue of jurisdiction and were duly heard. Petitioners even filed a memorandum. Third, the appellate court did not entertain the issue of whether the petition for declaratory relief can be converted to an ordinary action for it was not raised before the RTC. The Court of Appeals also denied the motion for reconsideration.

In this appeal, petitioners contend that the Court of Appeals erred:
I.

...IN AFFIRMING THE ORDER OF DISMISSAL OF THE TRIAL COURT BASED ON A GROUND NOT ALLEGED IN THE MOTION TO DISMISS;

II.

...IN APPLYING THE RULING IN U. BAÑEZ ELECTRIC LIGHT CO., vs. ABRA ELECTRIC COOPERATIVE[,] INC., (119 SCRA 90) TO SUPPORT THE ORDER OF DISMISSAL BY THE TRIAL COURT;

III.

...IN NOT HOLDING THAT PETITIONERS WERE DENIED THEIR RIGHT TO DUE PROCESS OF LAW WHEN THE TRIAL COURT FAVORABLY RESOLVED THE MOTION TO DISMISS BASED ON A GROUND NOT RAISED IN THE MOTION TO DISMISS;

IV.

...IN NOT HOLDING THAT THE PETITION SHOULD BE CONVERTED INTO AN ORDINARY ACTION ASSUMING THAT DECLARATORY RELIEF IS NOT THE PROPER REMEDY;

V.

...IN NOT HOLDING THAT THE TRIAL COURT HAD COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR . . . EXCESS OF JURISDICTION IN GRANTING THE MOTION TO DISMISS;

VI.

...IN SUSTAINING THE RTC ORDER SETTING ASIDE THE INJUNCTIVE ORDER BY NOT HOLDING THAT THE HOME DEVELOPMENT MUTUAL FUND IS DEEMED TO HAVE VOLUNTARILY SUBMITTED TO THE JURISDICTION OF THE LOWER COURT[.][20]
In brief, the basic issues pertain (1) to the validity of the preliminary injunction order against the HDMF and (2) the propriety of dismissing the petition for declaratory relief and prohibition.

Petitioners point out that, contrary to the finding of the Court of Appeals, the HDMF did not question the lack of service of summons upon it nor did it raise the issue of jurisdiction of the RTC over its person. What the HDMF protested, they say, were the lack of notice of the preliminary injunction hearing and the RTC's lack of jurisdiction over the subject matter. But by filing the motion to set aside the July 9, 1998 Order, the HDMF voluntarily submitted to the RTC's jurisdiction.[21]

In its comment, the HDMF maintains that it was not notified of the preliminary injunction hearing and this fact is admitted by petitioners. Thus, the preliminary injunction order is null and void.[22]

We affirm the RTC and Court of Appeals ruling that the preliminary injunction order is not valid against the HDMF. Section 5, Rule 58 of the Rules of Court expressly states that "[n]o preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined." Here, petitioners even admit that the HDMF was not notified of the preliminary injunction hearing. In fact, petitioners do not contest the lower courts' ruling that the July 9, 1998 Order cannot apply to the HDMF. They merely contend and insist that the HDMF voluntarily submitted to the RTC's jurisdiction. Unfortunately, such contention is immaterial. The issue involves the validity of the preliminary injunction order absent a notice of hearing for its issuance to the HDMF, and not the HDMF's voluntary submission to the RTC's jurisdiction.

Petitioners also argue that the Court of Appeals erred when it sustained the RTC's dismissal of the petition on a ground not relied upon by respondents. They contend that the RTC went beyond the issue of jurisdiction raised by respondents by determining the sufficiency of the petition and ruling that it was vague and improper. The basic issue petitioners raised is whether their right under Section 23[23] of Presidential Decree No. 957[24] to suspend amortization payments to the subdivision developer is equally available against respondents.

In response, the NHMFC "reiterates and adheres" to the lower courts' ruling that the petition for declaratory relief is a case of forum shopping considering consolidated HLRB Cases Nos. REM-111585-4240 and REM-022690-4355 (HLRB cases) which were decided allegedly in petitioners' favor. The NHMFC also maintains that the RTC had no jurisdiction since petitioners' complaint of the developer's failure to complete the subdivision is a case cognizable by the HLURB.

After a careful study of the case, we are in agreement to uphold the dismissal of the petition for declaratory relief and prohibition.

I. Worthy of recall, the RTC held that respondents'[25] act of initiating foreclosure proceedings was in breach of Rep. Act No. 8501 and rendered the action of declaratory relief improper. The RTC suggested that the proper remedy is an ordinary civil action. Incidentally, this point is also related to petitioners' contention that the Court of Appeals should have ordered the conversion of their petition filed before the RTC to an ordinary civil action, under the provisions of Section 6,[26] Rule 63 of the Rules of Court.

We agree with the RTC but hasten to point out that the RTC had not ruled on whether the petition was also improper as a petition for prohibition. Indeed, under Section 1,[27] Rule 63, a person must file a petition for declaratory relief before breach or violation of a deed, will, contract, other written instrument, statute, executive order, regulation, ordinance or any other governmental regulation. In this case, the petitioners had stated in their petition that respondents assessed them interest and penalties on their outstanding loans, initiated foreclosure proceedings against petitioner Rafael Martelino as evidenced by the notice of extra-judicial sale[28] and threatened to foreclose the mortgages of the other petitioners, all in disregard of their right to suspend payment to Shelter for its failure to complete the subdivision. Said statements clearly mean one thing: petitioners had already suspended paying their amortization payments. Unfortunately, their actual suspension of payments defeated the purpose of the action to secure an authoritative declaration of their supposed right to suspend payment, for their guidance. Thus, the RTC could no longer assume jurisdiction over the action for declaratory relief because its subject initially unspecified, now identified as P.D. No. 957 and relied upon -- correctly or otherwise -- by petitioners, and assumed by the RTC to be Rep. Act No. 8501, was breached before filing the action. As we said in Tambunting, Jr. v. Sumabat:[29]
. . . The purpose of the action [for declaratory relief] is to secure an authoritative statement of the rights and obligations of the parties under a statute, deed, contract, etc. for their guidance in its enforcement or compliance and not to settle issues arising from its alleged breach. It may be entertained only before the breach or violation of the statute, deed, contract, etc. to which it refers. Where the law or contract has already been contravened prior to the filing of an action for declaratory relief, the court can no longer assume jurisdiction over the action.... Under such circumstances, inasmuch as a cause of action has already accrued in favor of one or the other party, there is nothing more for the court to explain or clarify short of a judgment or final order.[30]
Under the circumstances, may the Court nonetheless allow the conversion of the petition for declaratory relief and prohibition into an ordinary action? We are constrained to say: no. Although Section 6, Rule 63 might allow such course of action, the respondents did not argue the point, and we note petitioners' failure to specify the ordinary action they desired. We also cannot reasonably assume that they now seek annulment of the mortgages. Further, the records support the Court of Appeals' finding that this issue was not raised before the RTC.[31] The Court of Appeals therefore properly refused to entertain the issue as it cannot be raised for the first time on appeal.[32]

Relatedly, the Court had considered De La Llana, etc., et al. v. Alba, etc., et al.,[33] where this Court considered a petition erroneously entitled Petition for Declaratory Relief and/or for Prohibition as an action for prohibition. That case involved the constitutionality of Batas Pambansa Blg. 129 or the Judiciary Reorganization Act of 1980. Citing De La Llana, Justice Florenz D. Regalado opined in his book[34] that if the petition has far-reaching implications and it raises questions that should be resolved, it may be treated as one for prohibition.

Assuming the Court can also treat the Petition for Declaratory Relief and Prohibition as an action for prohibition, we must still hold that prohibition is improper. Prohibition is a remedy against proceedings that are without or in excess of jurisdiction, or with grave abuse of discretion, there being no appeal or other plain, speedy adequate remedy in the ordinary course of law.[35] But here, the petition did not even impute lack of jurisdiction or grave abuse of discretion committed by respondents and Sheriff Castillo regarding the foreclosure proceedings. Foreclosure of mortgage is also the mortgagee's right in case of non-payment of a debt secured by mortgage. The mortgagee can sell the encumbered property to satisfy the outstanding debt.[36] Hence, the HDMF cannot be faulted for exercising its right to foreclose the mortgages,[37] under the provisions of Act No. 3135[38] as amended by Act No. 4118.[39] We are not saying, however, that the HDMF must exercise its right at all cost, considering that Rep. Act No. 8501 allows condonation of loan penalties when appropriate.

We note that Rep. Act No. 8501 not only allows condonation of loan penalties,[40] it also grants to the HDMF Board of Trustees the power to condone penalties imposed on loans of HDMF members-borrowers who for, justifiable reasons, failed to pay on time any obligation due to the HDMF.[41] Notably, the law applies to borrowers who failed or refused to pay their monthly amortizations due to structurally defective or substandard housing units and/or subdivisions lacking in basic amenities such as water, light, drainage, good roads and others as required by law.[42] And the rules promulgated by the HDMF provide that such refusal shall be considered as a justifiable reason for failure to pay the required amortization.[43] Furthermore, the Board of Trustees of the HDMF may also consider other causes similarly justifiable.[44]

Petitioners wanted to avail of the benefits of Rep. Act No. 8501 and said that "the most that [respondents] should have done under the circumstances was to advise [them] about the effectivity of said law and encourage them to apply thereunder."[45] But instead of applying for condonation of penalties and restructuring of their loans, they filed an erroneous petition before the RTC. They need not wait for encouragement because the HDMF, the assignee of petitioners' loans, had already issued and published its rules according to the NHMFC.[46] Petitioners need only to apply with the HDMF and squarely raise before the HDMF not only their refusal to pay amortizations because of the defective subdivision - a justifiable reason according to the rules - but also their implied imputation of negligence against respondents who allegedly released the proceeds of their loans directly to Shelter, despite its failure to complete the subdivision.

The HDMF could then determine if the latter ground is also a justifiable cause for non-payment of amortization. Surely, respondents would not espouse a policy to go after petitioners if they were found justified. Respondents could even enhance administrative controls for releasing future loans to protect borrower-mortgagors against subdivision developers who renege on their obligations.

II. We cannot agree, however, with the RTC's ruling that the vagueness of the petition furnished additional justification for its dismissal. If the petition for declaratory relief and prohibition was vague, dismissal is not proper because the respondents may ask for more particulars.[47] Notably, the NHMFC never assailed the supposed vagueness of the petition in its motion to dismiss nor did it ask for more particulars before filing its answer. When the RTC also set the pre-trial conference and ordered the parties to submit their pre-trial briefs, it even noted that the issues had already been joined.[48] Petitioners fairly stated also the necessary ultimate facts, except that their action for declaratory relief was improper.

Moreover, the RTC made an assumption that Rep. Act No. 8501 was the subject matter of the case. But while the petition mentioned the law, the declaration that petitioners sought was not anchored on any of its provisions. The petition only stated that despite the effectivity of said law, respondents still acted in bad faith and with undue haste in threatening petitioners with foreclosures, instead of encouraging them to avail of its benefits.

III. On the matter of forum shopping, we find the claim unsubstantiated. The NHMFC has not explained why there is forum shopping.[49] It failed to show the elements of forum shopping, i.e., (1) identity of parties in the HLRB cases and this case; (2) identity of rights asserted or relief prayed for; and (3) identity of the two preceding particulars so that the judgment in the HLRB cases will be res judicata in this case.[50] In any event, the decision in the HLRB cases, as affirmed with modification by the HLURB Board of Commissioners,[51] ordered Shelter to complete the subdivision roads, sidewalks, water, electrical and drainage systems. Thus, there is no forum shopping since the petition for declaratory relief and prohibition filed by petitioners against respondents is entirely different from the HLRB cases. Involved were different parties, rights asserted and reliefs sought. Obviously, the NHMFC invokes a ruling of the RTC and Court of Appeals that petitioners committed forum shopping, when no such ruling exists.

IV. Respondents' contention that the case should or could have been filed with the HLURB lacks merit. The jurisdiction of the HLURB is defined under Section 1 of P.D. No. 1344,[52] to wit:
SECTION 1. In the exercise of its functions to regulate the real estate trade and business and in addition to its powers provided for in Presidential Decree No. 957, the National Housing Authority [now HLURB] shall have exclusive jurisdiction to hear and decide cases of the following nature:
  1. Unsound real estate business practices;

  2. Claims involving refund and any other claims filed by subdivision lot or condominium unit buyer against the project owner, developer, dealer, broker or salesman; and

  3. Cases involving specific performance of contractual and statutory obligations filed by buyers of subdivision lot or condominium unit against the owner, developer, dealer, broker or salesman.
As we previously held, the jurisdiction of the HLURB to hear and decide cases is determined by the nature of the cause of action, the subject matter or property involved and the parties.[53] In this case, the petition for declaratory relief and prohibition did not involve an unsound real estate business practice, or a refund filed by subdivision buyers against the developer, or a specific performance case filed by buyers against the developer. Rather, the petition specifically sought a judicial declaration that petitioners' right to suspend payment to the developer for failure to complete the subdivision also applies to respondents who provided them housing loans and released the proceeds thereof to the developer although the subdivision was not completed. Note also that the buyers (petitioners) are not suing the developer but their creditor-mortgagees[54] (respondents).

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision and Resolution of the appellate court are AFFIRMED.

No pronouncement as to costs.

SO ORDERED.

Carpio Morales, Tinga, Velasco, Jr., and Brion, JJ., concur.



* The other twenty-three (23) petitioners before the Court of Appeals did not join this petition.

[1] Rollo, pp. 39-47. Penned by Associate Justice Jose L. Sabio, Jr., with Associate Justices B.A. Adefuin-De La Cruz and Hakim S. Abdulwahid concurring.

[2] Records, pp. 405-412. Penned by Judge Victorino S. Alvaro.

[3] Rollo, pp. 49-51.

[4] Records, pp. 8-20.

[5] In this petition, Sheriff Alberto A. Castillo is not impleaded.

[6] Records, p. 23.

[7] Id. at 25.

[8] Id. at 74-76.

[9] Id. at 117-118.

[10] Id. at 132-135.

[11] Id. at 144.

[12] Id. at 145.

[13] Id. at 147-150.

[14] Id. at 158-169.

[15] One of the original petitioners/plaintiffs who did not join this petition.

[16] Records, pp. 265-273.

[17] Id. at 412.

[18] AN ACT TO RESCUE THE NATIONAL SHELTER PROGRAM OF THE GOVERNMENT BY CONDONING THE PENALTIES ON ALL OUTSTANDING/DELINQUENT HOUSING LOAN ACCOUNTS WITH ANY OF THE GOVERNMENT INSTITUTIONS AND AGENCIES INVOLVED IN THE NATIONAL SHELTER PROGRAM AND BY AMENDING PRESIDENTIAL DECREE NO. 1752, AS AMENDED, APPROVED ON FEBRUARY 13, 1998.

[19] SEC. 5. Preliminary injunction not granted without notice; exception. - No preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined. ...

x x x x

[20] Rollo, pp. 11-12.

[21] Id. at 29-30.

[22] Id. at 123-124.

[23] SEC. 23. Non-Forfeiture of Payments. ─ No installment payment made by a buyer in a subdivision or condominium project for the lot or unit he contracted to buy shall be forfeited in favor of the owner or developer when the buyer, after due notice to the owner or developer, desists from further payment due to the failure of the owner or developer to develop the subdivision or condominium project according to the approved plans and within the time limit for complying with the same. Such buyer may, at his option, be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.

[24] THE SUBDIVISION AND CONDOMINIUM BUYERS' PROTECTIVE DECREE, DONE ON JULY 12, 1976.

[25] The records show that only the HDMF initiated the foreclosure proceedings.

[26] SEC. 6. Conversion into ordinary action. - If before the final termination of the case, a breach or violation of an instrument or a statute, executive order or regulation, ordinance, or any other governmental regulation should take place, the action may thereupon be converted into an ordinary action, and the parties shall be allowed to file such pleadings as may be necessary or proper. (Emphasis supplied.)

[27] SECTION 1. Who may file petition. - Any person interested under a deed, will, contract or other written instrument, or whose rights are affected by a statute, executive order or regulation, ordinance, or any other governmental regulation may, before breach or violation thereof, bring an action in the appropriate Regional Trial Court to determine any question of construction or validity arising, and for a declaration of his rights or duties, thereunder. (Emphasis supplied.)

x x x x

[28] Records, p. 40.

[29] G.R. No. 144101, September 16, 2005, 470 SCRA 92.

[30] Id. at 96.

[31] Records, pp. 381-391.

[32] Pineda v. Heirs of Eliseo Guevara, G.R. No. 143188, February 14, 2007, 515 SCRA 627, 634.

[33] 198 Phil. 1, 37 (1982).

[34] I F. REGALADO, REMEDIAL LAW COMPENDIUM 771 (9th rev. ed., 2005).

[35] RULES OF COURT, RULE 65, Sec. 2.

SEC. 2. Petition for prohibition. - When the proceedings of any tribunal, corporation, board, officer or person, whether exercising judicial, quasi-judicial or ministerial functions, are without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal or any other plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered commanding the respondent to desist from further proceedings in the action or matter specified therein, or otherwise granting such incidental reliefs as law and justice may require.
x x x x

[36] CIVIL CODE, Art. 2087. It is also of the essence of these contracts [pledge and mortgage] that when the principal obligation becomes due, the things in which the pledge or mortgage consists may be alienated for the payment to the creditor. Guanzon v. Argel, No. L-27706, June 16, 1970, 33 SCRA 474, 478-479; Caviles v. Seventeenth Division, Court of Appeals, G.R. No. 126857, September 18, 2002, 389 SCRA 306, 314-315.

[37] Supra note 28.

[38] AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL ESTATE MORTGAGES, approved on March 6, 1924.

[39] AN ACT TO AMEND ACT NUMBERED THIRTY-ONE HUNDRED AND THIRTY-FIVE, ENTITLED "AN ACT TO REGULATE THE SALE OF PROPERTY UNDER SPECIAL POWERS INSERTED IN OR ANNEXED TO REAL-ESTATE MORTGAGES," approved on December 7, 1933.

[40] SEC. 2. Condonation Clause. - (a) All unpaid penalties on housing loans from any of the government institutions and agencies involved in the National Shelter Program of the Government, including . . . [HDMF], National Home Mortgage Finance Corporation (NHMFC), . . . are hereby condoned: ...
x x x x

[41] SEC. 3. Amendatory Clause. - . . .

"SEC. 12. Powers of the Board. - . . .
x x x x
(d) To condone, in whole or in part, penalties imposed on loans of members-borrowers of the fund who for justifiable reasons, failed to pay on time any obligation due to the Fund ...

[42] SEC. 4. Applicability on Delinquent Accounts Due to Defective Housing Units. - This Act shall likewise apply to borrowers who failed or refused to pay their monthly amortizations due to structurally defective or substandard housing units and/or subdivisions lacking in basic amenities such as water, light, drainage, good roads and others and as required by law.

[43] Rule and Regulations Implementing Republic Act No. 8501 (Otherwise known as the Housing Loan Condonation Act of 1998), Rule IV, Section 2.

Section 2. Justifiable Reasons. . . .
x x x x
f) Failure or refusal to pay his monthly amortizations due to structurally defective or substandard housing units and/or subdivisions lacking in basic amenities such as water, light, drainage, good roads and others and as required by law;
x x x x

[44] Id.
h) Other causes as may be considered as justifiable by the Board of Trustees.

[45] Records, p. 16.

[46] Id. at 134.

[47] Ilano v. Español, G.R. No. 161756, December 16, 2005, 478 SCRA 365, 373.

[48] Records, p. 144.

[49] Rollo, p. 110.

[50] Silangan Textile Manufacturing Corporation v. Demetria, G.R. No. 166719, March 12, 2007, 518 SCRA 160, 168.

[51] Records, pp. 200-223.

[52] EMPOWERING THE NATIONAL HOUSING AUTHORITY TO ISSUE WRIT OF EXECUTION IN THE ENFORCEMENT OF ITS DECISION UNDER PRESIDENTIAL DECREE No. 957, done on April 2, 1978.

[53] Delos Santos v. Sarmiento, G.R. No. 154877, >March 27, 2007, 519 SCRA 62, 73.

[54] Supra note 28.