EN BANC
[G.R. No. L-11357. May 31, 1962.]
FELIPE B. OLLADA, ETC., petitioner-appellant, vs. CENTRAL BANK OF
THE PHILIPPINES, respondent-appellee.
Antonio V . Sanchez as amicus curiae.
Felipe B. Ollada for and in his own behalf as petitioner-appellant.
Nat. M . Balboa for respondent-appellee.
SYLLABUS
1. DECLARATORY RELIEF; WHEN IT MAY NOT PROSPER. — A complaint for
declaratory relief will not prosper if filed after a contract, statute or right has been breached or
violated.
2. ID.; WHEN IT SHOULD BE FILED. — An action for declaratory relief should be
filed before there has been a breach of a contract, statute or right. The rule is that an action for
Declaratory Relief is proper only if adequate relief is not available through the means of other
existing forms of action or proceeding (1 C.J.S., 1027-1028).
DECISION
DIZON, J : p
Felipe B. Ollada is a certified public accountant, having passed the examination given by
the Board of Accountancy, and is duly qualified to practice his profession. On July 28, 1952 his
name was placed on the rolls of certified public accountants authorized and accredited to practice
accountancy in the office of the Central Bank of the Philippines. In December, 1955, by reason of
a requirement of the Import-Export Department of said bank that CPAs submit to an accreditation
under oath before they could certify financial statements of their clients applying for import
dollar allocations with its office, Ollada's previous accreditation was nullified.
cdphil
Pursuant to the new requirement, the Import-Export Department of the Central Bank
issued APPLICATION FOR ACCREDITATION OF CERTIFIED PUBLIC ACCOUNTANTS
(CB-IED Form No. 5) and ACCREDITATION CARD FOR CERTIFIED PUBLIC
ACCOUNTANTS (CB-IED Form No. 6) for CPAs to accomplish under oath. Assailing said
accreditation requirement on the ground that it was (a) an unlawful invasion of the jurisdiction of
the Board of Accountancy, (b) in excess of the powers of the Central Bank and (c)
unconstitutional in that it unlawfully restrained the legitimate pursuit of one's trade, Ollada, for
himself and allegedly on behalf of numerous other CPAs, filed a petition for Declaratory Relief in
the Court of First Instance of Manila to nullify said accreditation requirement.
On April 16, 1956 the Central Bank filed a motion to dismiss the petition for Declaratory
Relief for lack of cause of action. Its main contention was that the Central Bank has the
responsibility of administering the Monetary Banking System of the Republic and is authorized
to prepare and issue, through its Monetary Board, rules and regulations to make effective the
discharge of such responsibility; that the accreditation requirement alleged in the petition was
issued in the exercise of such power and authority; that the purpose of such requirement is not to
regulate the practice of accountancy in the Philippines but only the manner in which certified
public accountants should transact business with the Central Bank.
On May 3, 1956 petitioner Ollada applied for a writ of preliminary injunction to restrain
the respondent Central Bank of the Philippines from enforcing the accreditation requirement
aforesaid until final adjudication of the case. In a memorandum submitted by said respondent
opposing the issuance of the writ, it manifested that it was willing to delete paragraph 13 from its
CB-IED Form No. 5 (Application for accreditation of certified public accountants), which
required CPAs to answer the query whether they agreed, if accredited with the Import-Export
Department, Central Bank of the Philippines, to follow strictly the rules and regulations
promulgated by the Philippine Institute of Accountants and, if not, to state their reasons therefor,
and that it was also willing to modify paragraph 14 of the same form to read as follows:
"14. Do you agree, if accredited with the Import-Export Department, to follow
strictly the rules and regulations of the Central Bank of the Philippines concerning the
practice of your profession as CPA, with reference to its importing licensing functions
which may hereinafter be promulgated and which are not inconsistent with the rules and
regulations promulgated by the Board of Accountancy of the Philippines, and to give
written notice(s) of any change(s) in your professional status as practitioner, or the name
and style under which you practice your profession as Certified Public Accountant(s)? . . .
If not, state your reasons: . . ."
On May 22, 1956 the trial court required respondent to submit within ten days from notice,
proof that it had deleted paragraph 13 and modified paragraph 14 of its CB-IED Form No. 5, as
manifested in its memorandum, otherwise the writ of preliminary injunction prayed for by
petitioner would be granted. Having complied with said order by submitting CB-ID Form No. 5
(formerly CB-IED Form No. 5) showing that paragraph 13 of CB-IED Form No. 5 had been
deleted, and paragraph 14 thereof had been modified, the court, on June 27, 1956, denied the
petition for preliminary injunction. On June 29, 1956, petitioner filed a motion for
reconsideration alleging that, despite the deletion of paragraph 13 from respondent's CB-IED
Form No. 5, it was still enforcing the rules and regulations of the Philippine Institute of
Accountants in its CB-IED Form No. 6 (ACCREDITATION CARD FOR CERTIFIED PUBLIC
ACCOUNTANTS) which was still a part of the questioned accreditation requirement. All this
notwithstanding, however, on July 5, 1956 petitioner, in the interests of its clients, filed his
application for accreditation with the CB under protest.
On July 7, 1956, the court reconsidered its previous order and issued another granting the
petition for the writ of preliminary injunction upon the filing of a bond in the sum of P2,000.00
on the ground that CPAs applying for accreditation with respondent were still required to execute
under oath CB-IED Form No. 6 (Accreditation card for certified public accountants) to be
governed by the rules and regulations of the Philippine Institute of Accountants. In a motion for
the reconsideration of this last order, respondent stated that CB- IED Form No. 6 of its Import-
Export Department had been modified by CB-ID Form No. 6 wherein the requirement that the
applicant should sign a statement under oath has been eliminated, and that, upon accreditation, a
CPA would be governed by the rules and regulations of the Central Bank and not by those of the
Philippine Institute of Accountants. The modified form (CB-ID No. 6) read as follows:
"I/We hereby agree to be governed by your rules and regulations relating to the
practice of my/our profession as Certified Public Accountant (s), particularly Memorandum
to Accredited CPAs No. 1 of the Central Bank of the Philippines dated June 15, 1956. Please
recognize my/our certification(s) of exhibit(s), statement(s), schedule(s), or other form(s) of
accountancy work issued in behalf of my/our clients under the following signature(s)."
Consequently, on July 12, 1956 the court set aside its order of July 7, 1956 granting the writ of
preliminary injunction.
Finally, on July 31, 1956, the lower court, resolving the motion to dismiss filed by
respondent, dismissed the complaint. The order to that effect says, in part, the following:
"The only issue in this case is whether or not the respondent Central Bank of the
Philippines has the authority under its charter to require petitioner and all other certified
public accountants to accredit themselves before they can transact business with
respondent Import and Export Department.
"This Court is of the opinion that the respondent is not barred from promulgating
internal rules and regulations necessary to carry out its purpose pursuant to the charter
creating it provided, however, that such rules and regulations are not contrary to law,
public morals or public policy.
"The only objectionable features of respondent's aforementioned requirement have
already been eliminated by said respondent having deleted from its CB-IED Form No. 5
known as Application for Accreditation of Certified Public Accountants (Annex B of
petitioner's Petition), paragraph 13 and modified paragraph 14 thereof, as well as by
modifying CB-IED Form No. 6 known as Accreditation Card for Certified Public
Accountants (Annex C of Petitioner's Petition).
"It appears, therefore, that after respondent had eliminated said objectionable
features, the petition for declaratory relief has become groundless and should be
dismissed."
Upon motion of petitioner, We issued a resolution dated November 5, 1956 granting a writ
of preliminary injunction restraining respondent from requiring CPAs to comply with the
accreditation requirement of its Import-Export Department, on the ground that there was nothing
in the record showing that the same was issued by its Monetary Board or by someone else duly
authorized by the latter.
The main issue involved in this appeal is whether upon the facts alleged in the petition for
Declaratory Relief and others elicited from the parties and made of record by them prior to the
issuance of the order appealed from, this case was properly dismissed. prLL
The Monetary Board of the Central Bank has authority to prepare and issue such rules and
regulations as it may consider necessary for the effective discharge of the responsibilities and
exercise of the powers assigned to it and to the Central Bank under the provisions of Section 1(a),
Republic Act No. 265. The Governor of the Central Bank is also authorized to delegate his power
to represent the Bank "to other officers of the Bank upon his own responsibility (Sec. 17[d], Rep.
Act 265).
To implement its authority to temporarily suspend or restrict sales of exchange by the
Central Bank and subject all transactions in gold and foreign exchange to license by the latter
(Sec. 74, Rep. Act 265), the Monetary Board approved Resolution No. 1528, Minutes No. 80
dated August 30, 1955 authorizing the Import-Export Department to revise quota allocations and
to prepare revised procedures for the determination of violations of Central Bank Import-Export
regulations. Among the revised procedures adopted by the aforesaid Department was its
accreditation system, the purpose of which was to correct certain irregularities committed by
some CPAs in their certification of the financial statements of their clients applying for dollar
allocations.
As held by the lower court, "the only objectionable features of respondent's
aforementioned requirement had already been eliminated . . . from its CB-IED Form No. 5" and
that CB-IED Form No. 6 had also been modified. For this reason, the court held that "the petition
for declaratory relief has become groundless" and, as a result, ordered its dismissal.
Without deciding the question of whether the petition under consideration has, in reality
"become groundless", we believe that, upon the facts appearing of record, said petition was
correctly dismissed.
As stated heretofore, in connection with the motion to dismiss filed by respondent,
petitioner filed a written opposition in which he alleged that his petition
"has sufficiently alleged ultimate facts which violated his right as a duly qualified
and accredited Certified Public Accountant by the Board of Accountancy (which is the
only Government body with absolute powers to regulate the practice of CPAs), and in
addition to such allegations, he has also alleged that by virtue of the violation of his right
and that of numerous CPAs, he has suffered serious injury in that the questioned
requirement which is collaterally attacked by this action (in the honest belief of the
petitioner that the same) is an unlawful restraint of the free pursuit and practice of
petitioner's profession as a CPA; and also that the action of the respondent Central Bank of
the Philippines complained of, is also an unlawful invasion into the exclusive jurisdiction
of the Board of Accountancy as the sole body vested by our laws to lay down rules and
regulations for the practice of public accountancy in the Philippines. . . .
"In order to dismiss an action under the aforecited ground, Sutherland, Code of
Pleadings, Practice and Form, 167, has laid down the essential test which should serve as
the controlling guide in determining whether a petition states a cause of action, to wit:
1. Does the complaint show the plaintiff suffered an injury?
2. Is it an injury the law recognizes as a wrong?
3. Is the defendant liable for the alleged wrong?
4. If the defendant is liable, to what extent is he liable and what will be
legal remedy from such injury? (Sutherland, Code of Pleadings, supra.)
"It is clear from the allegations of the petition that the petitioner has sufficiently
stated facts to satisfy the foregoing requisites of a pleading in order that petitioner's action
should be given due course by this Court.
"Petitioner submits that the respondent's requirement complained of (CB-IED
Forms No. 5 and 6), is an act of constituting a violation of the Constitution and also a
violation of the petitioner's right to freely practice his profession anywhere and in any
government office in the Philippines . . . .It is undisputed that the only body that can
regulate the practice of accountancy in the Philippines is the Board of Accountancy. The
action thus of the respondent in requiring the accreditation of CPAs before they can
practice with the Central Bank of the Philippines is an unlawful invasion into the exclusive
jurisdiction of the said Board of Accountancy. Why was petitioner's right as a CPA
violated by the respondent? Because the respondent's placing of a ban to CPAs including
the petitioner with respect to certification of financial statements of their clients applying
for dollar ($) allocation in the Central Bank of the Philippines has resulted in the unlawful
restraint in the practice of CPAs in the Office of the Central Bank of the Philippines."
(Emphasis supplied) (Rec. on Appeal pp. 17, 18-20.)
Again, in his brief petitioner reiterates the same view in the following language:
"On April 20, 1956, petitioner-appellant filed his opposition to respondent's motion
to dismiss on the simple and fundamental ground that, from its face, the complaint's
allegations of facts make clear showing of petitioner's rights having been violated by
respondent, and that he (petitioner) has suffered serious injury therefrom that such injury
is recognized by law as a wrong, and that the respondent is liable therefor to a great
extent." (Emphasis supplied) (Petitioner's brief, p. 5.)liblex
Petitioner commenced this action as, and clearly intended it to be one for Declaratory
Relief under the provisions of Rule 66 of the Rules of Court. On the question of when a special
civil action of this nature would prosper, we have already held that the complaint for declaratory
relief will not prosper if filed after a contract, statute or right has been breached or violated. In the
present case such is precisely the situation arising from the facts alleged in the petition for
declaratory relief. As vigorously claimed by petitioner himself, respondent had already invaded
or violated his right and caused him injury — all these giving him a complete cause of action
enforceable in an appropriate ordinary civil action or proceeding. The dismissal of the action was,
therefore, proper in the light of our ruling in De Borja vs. Villadolid, 85 Phil., 36; 47 Off. Gaz. (5)
p. 2315, and Samson vs. Andal, 89 Phil., 627 where we held that an action for declaratory relief
should be filed before there has been a breach of a contract, statute or right, and that it is
sufficient, to bar such action, that there had been a breach — which would constitute actionable
violation. The rule is that an action for Declaratory Relief is proper only if adequate relief is not
available through the means of other existing forms of action or proceeding (1 C.J.S. 1027-
1028).
WHEREFORE, the order of dismissal appealed from is hereby affirmed, without prejudice
to the aggrieved party seeking relief in another appropriate action. The writ of preliminary
injunction issued by Us on November 5, 1956 is hereby set aside, and the motion for contempt
filed by petitioner on September 30, 1957 is denied. With costs against appellant.
Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and Paredes, JJ .,
concur.
