Quickie notes (QMBD)

SPECPRO CASE DIGESTS – declaratory relief

Brother MARIANO "MIKE" Z. VELARDE v. SOCIAL JUSTICE SOCIETY (SJS)
G.R. No. 159357; April 28, 2004
PANGANIBAN, J.:

Case: Petition for Review under Rule 45 of the Rules of Court, assailing the 12 June 2003 and 29 July
2003 Orders of the Manila RTC.

FACTS: The challenged Decision was the offshoot of a Petition for Declaratory Relief filed before the RTC-
Manila by Respondent SJS (a registered political party) against herein Petitioner Velarde, together with His
Eminence, Jaime Cardinal Sin, Executive Minister Eraño Manalo, Brother Eddie Villanueva and Brother
Eliseo Soriano as co-respondents. The Petition, invoking the separation of the church and state, prayed for
the resolution of the question "whether or not the act of a religious leader like any of herein respondents, in
endorsing the candidacy of a candidate for elective office or in urging or requiring the members of his flock
to vote for a specified candidate, is violative of the letter or spirit of the constitutional provisions.

Alleging that the questioned Decision did not contain a statement of facts and a dispositive portion, herein
petitioner filed a Clarificatory Motion and MR before the trial court. The trial court denied such MR. Hence,
this Petition for Review.

ISSUE: Did the Petition for Declaratory Relief raise a justiciable controversy? Did it state a cause of action?
Did respondent have any legal standing to file the Petition for Declaratory Relief?

HELD: Yes to all. The Petition of Brother Mike Velarde is meritorious.

Requisites of Petitions for Declaratory Relief:
(1) there is a justiciable controversy;
(2) the controversy is between persons whose interests are adverse;
(3) the party seeking the relief has a legal interest in the controversy; and
(4) the issue is ripe for judicial determination.

Justiciable Controversy: not present

A justiciable controversy refers to an existing case or controversy that is appropriate or ripe for judicial
determination, not one that is conjectural or merely anticipatory. The SJS Petition for Declaratory Relief fell
short of this test. It miserably failed to allege an existing controversy or dispute between the petitioner and
the named respondents therein. Further, the Petition did not sufficiently state what specific legal right of the
petitioner was violated by the respondents therein; and what particular act or acts of the latter were in
breach of its rights, the law or the Constitution.

Indeed, SJS merely speculated or anticipated without factual moorings that the act of religious leaders in
endorsing candidate/s for elective offices will inevitably enable them to control the government which poses
a clear and present danger of serious erosion of the people’s faith in the electoral process. It is a time-
honored rule that sheer speculation does not give rise to an actionable right.

All that the 5-page SJS Petition prayed for was an opinion of the trial court on whether the speculated acts
of religious leaders endorsing elective candidates for political offices violated the constitutional principle on
the separation of church and state. SJS did not ask for a declaration of its rights and duties; neither did it
pray for the stoppage of any threatened violation of its declared rights. Courts, however, are proscribed
from rendering an advisory opinion.

Cause of Action
A cause of action is an act or an omission of one party in violation of the legal right or rights of another,
causing injury to the latter. Its essential elements are the following: (1) a right in favor of the plaintiff; (2) an
obligation on the part of the named defendant to respect or not to violate such right; and (3) such
defendant’s act or omission that is violative of the right of the plaintiff or constituting a breach of the
obligation of the former to the latter. The failure of a complaint to state a cause of action is a ground for its
outright dismissal. However, in special civil actions for declaratory relief, the concept of a cause of action
under ordinary civil actions does not strictly apply. The reason for this exception is that an action for
declaratory relief presupposes that there has been no actual breach of the instruments involved or of rights
arising thereunder. Nevertheless, a breach or violation should be impending, imminent or at least
threatened.

A perusal of the Petition filed by SJS before the RTC discloses no explicit allegation that the former had
any legal right in its favor that it sought to protect. We can only infer the interest, supposedly in its favor,
from its bare allegation that it “has thousands of members who are citizens-taxpayers-registered voters and
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SPECPRO CASE DIGESTS – declaratory relief
who are keenly interested in a judicial clarification of the constitutionality of the partisan participation of
religious leaders in Philippine politics and in the process to insure adherence to the Constitution by
everyone.” Such general averment does not, however, suffice to constitute a legal right or interest. Not only
is the presumed interest not personal in character; it is likewise too vague, highly speculative and
uncertain. The Rules require that the interest must be material to the issue and affected by the questioned
act or instrument, as distinguished from simple curiosity or incidental interest in the question raised.

Legal Standing
Legal standing or locus standi has been defined as a personal and substantial interest in the case, such
that the party has sustained or will sustain direct injury as a result of the challenged act. Interest means a
material interest in issue that is affected by the questioned act or instrument, as distinguished from a mere
incidental interest in the question involved.

FIRST, there is no allegation, whether express or implied, that taxpayers’ money is being illegally
disbursed.

SECOND, there was no showing in the Petition for Declaratory Relief that SJS as a political party or its
members as registered voters would be adversely affected by the alleged acts of the respondents below, if
the question at issue was not resolved.

FINALLY, the allegedly keen interest of its "thousands of members who are citizens-taxpayers-registered
voters" is too general and beyond the contemplation of the standards set by our jurisprudence. Not only is
the presumed interest impersonal in character; it is likewise too vague, highly speculative and uncertain to
satisfy the requirement of standing.

Transcendental Importance
In the instant case, the Court deemed the constitutional issue raised in the SJS Petition to be of paramount
interest to the Filipino people. The issue did not simply concern a delineation of the separation between
church and state, but ran smack into the governance of our country. The issue was both transcendental in
importance and novel in nature, since it had never been decided before. The Court, thus, called for Oral
Argument to determine with certainty whether it could resolve the constitutional issue despite the barren
allegations in the SJS Petition.

Much to its chagrin (annoyance) however, counsels for the parties -- particularly for Respondent SJS --
made no satisfactory allegations or clarifications that would supply the deficiencies hereinabove discussed.
Hence, even if the Court would exempt this case from the stringent locus standi requirement, such heroic
effort would be futile because the transcendental issue cannot be resolved anyway.

Proceedings Before The Trial Court In The Instant Case.

1) With respect to the initiatory pleading of the SJS. Even a cursory perusal of the Petition
immediately reveals its gross inadequacy. It contained no statement of ultimate facts upon which
the petitioner relied for its claim. Furthermore, it did not specify the relief it sought from the court,
but merely asked it to answer a hypothetical question.
2) With respect to the trial court proceedings: Apparently, contrary to the requirement of Section 2 of
Rule 16 of the Rules of Court, the Motions were not heard. Worse, the Order purportedly resolving
the Motions to Dismiss did not state any reason at all for their denial, in contravention of Section 3
of the said Rule 16. There was not even any statement of the grounds relied upon by the Motions;
much less, of the legal findings and conclusions of the trial court.

After the MRs were filed, the trial court again transgressed the Rules of Court when it immediately
proceeded to issue its Decision, even before tackling the issues raised in those Motions. Furthermore, the
RTC issued its "Decision" without allowing the parties to file their answers. For this reason, there was no
joinder of the issues.

All in all, during the loosely abbreviated proceedings of the case, the trial court indeed acted with
inexplicable haste, with total ignorance of the law -- or, worse, in cavalier disregard of the rules of
procedure -- and with grave abuse of discretion.

Ruling: WHEREFORE, the Petition for Review of Brother Mike Velarde is GRANTED. The SJS Petition for
Declaratory Relief is DISMISSED for failure to state a cause of action.
_____________________________________________________________________________________

G.R. No. 157866 February 14, 2007

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AUGUSTO MANGAHAS & MARILOU VERDEJO v. Hon. JUDGE VICTORIA ISABEL PAREDES, et. al.
G.R. No. 157866; February 14, 2007
CHICO-NAZARIO, J.:

FACTS: The instant controversy arose from a verified complaint for Ejectment filed by private respondent
Avelino Banaag on 31 January 1997 before the MeTC of Caloocan City, against petitioners. Private
respondent alleged that he is the registered owner of the disputed property identified as Lot 4, Block 21,
located in Maligaya Park Subdivision, Caloocan City. It averred that petitioners constructed houses on the
property without his knowledge and consent and that several demands were made, but the same fell on
deaf ears as petitioners refused to vacate the premises. This prompted private respondent to refer the
matter to the Lupon Tagapayapa for conciliation. The recourse proved futile since the parties were not able
to settle amicably. Private respondent then filed an ejectment suit before the MeTC.

Petitioners claimed that they have resided in the subject lot with the knowledge and conformity of the true
owner thereof, Pinagkamaligan Indo-Agro Development Corporation (PIADECO), as evidenced by a
Certificate of Occupancy signed by PIADECO’s president in their favor.

Petitioners filed a Manifestation and Motion to Suspend Proceedings on the ground that the subject
property is part of the Tala Estate and that the RTC of Quezon City in Civil Case No. Q-96-29810 issued a
Writ of Preliminary Injunction enjoining the MeTCs of Quezon City and Caloocan City from ordering the
eviction and demolition of all occupants of the Tala Estate. They posited that the injunction issued by the
Quezon City RTC is enforceable in Caloocan City because both cities are situated within the National
Capital Region. The the MeTC denied said manifestation and motion.

For failure of the parties to arrive at a compromise agreement during the preliminary conference, they were
required to submit their respective position papers.

The MeTC ruled for private respondent. It opined that TCT No. 196025 in private respondent’s name was
an indefeasible proof of his ownership of the lot and his inherent right to possess the same. Petitioners
appealed to the RTC but the latter affirmed in toto the MeTC decision. MR was likewise denied. On appeal,
the CA likewise affirmed the ruling of the RTC. MR was likewise denied and the CA Decision became final.
Sheriff Erlito Bacho implemented and enforced the writ of execution. Hence, the instant recourse.

ISSUE: WON the petitioners’ direct recourse to the SC via petition for Declaratory Relief, Certiorari,
Prohibition With Prayer For Provisional Remedy is correct.

HELD: No. The petitioners’ direct recourse to this Court via petition for Declaratory Relief, Certiorari,
Prohibition With Prayer For Provisional Remedy is an utter disregard of the hierarchy of courts and should
have been dismissed outright. This Court’s original jurisdiction to issue writs of certiorari, prohibition,
mandamus, quo warranto, habeas corpus and injunction is not exclusive. It is shared by this Court with the
RTCs and the CA. A direct recourse of the Supreme Court’s original jurisdiction to issue these writs should
be allowed only when there are special and important reasons therefor, clearly and specifically set out in
the petition.

In the instant case, petitioners have not offered any exceptional or compelling reason not to observe the
hierarchy of courts. Hence, the petition should have been filed with the RTC.

Equally noteworthy is petitioners’ resort to this Court through petition for declaratory relief. This
action is not among the petitions within the original jurisdiction of the Supreme Court. Rule 63 of
the Rules of Court which deals with actions for declaratory relief, enumerates the subject matter
thereof, i.e., deed, will, contract or other written instrument, the construction or validity of statute or
ordinance. Inasmuch as this enumeration is exclusive, petitioners’ action to declare the RTC order
denying their motion to suspend execution, not being one of those enumerated, should warrant the
outright dismissal of this case.

At any rate, since the complete records of this case have already been elevated, this Court deems it wise
to resolve the controversy on the merits.

Petitioners are barred from assailing the ruling that the injunction issued by the Quezon City RTC has no
binding effect to the courts of Caloocan City as this issue had already been passed upon with finality.
Issues should be laid to rest at some point; otherwise there would be no end to litigation. Quite
conspicuously, the instant petition assailing the order of the RTC denying petitioners’ motion to suspend
execution is a ploy to deprive private respondent of the fruits of his hard-won case. Petition denied.
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_____________________________________________________________________________________

FELIPE B. OLLADA v. CENTRAL BANK OF THE PHILIPPINES

G.R. No. L-11357; May 31, 1962
DIZON, J.:

FACTS: Petitioner Ollada is a CPA, having passed the examination given by the Board of Accountancy,
and is duly qualified to practice his profession. On July 22, 1952, his name was placed in 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 (PURPOSE: to correct certain irregularities
committed by some CPAs in their certification of the financial statements of their clients applying for dollar
allocations), Ollada's previous accreditation was nullified.

Petitioner’s contention: The action 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(s) 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.

Assailing said accreditation requirement Ollada, for himself and allegedly on behalf of numerous other
CPAs, filed a petition for Declaratory Relief in the CFI of Manila to nullify said accreditation requirement.
The Central Bank filed a motion to dismiss the petition for Declaratory Relief for lack of cause of action.

ISSUE: WON petition for declaratory relief has become groundless and was properly dismissed.

HELD: Yes. The Monetary Board of the Central Bank has authority to prepare and issue such rules and
regulations 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 law.

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.

Ruling: WHEREFORE, the order of dismissal appealed from is hereby affirmed.

_____________________________________________________________________________________

PHILIPPINE DEPOSIT INSURANCE CORPORATION v. CA, ET. AL.

G.R. No. 126911; April 30, 2003
CARPIO MORALES, J.:

FACTS: Prior to 22 May 1997, respondents had, individually or jointly with each other, 71 certificates of
time deposits denominated as "Golden Time Deposits" (GTD) with an aggregate face value of
P1,115,889.96. On 22 May 1987, the Monetary Board (MB) of the Central Bank of the Philippines, now
Bangko Sentral ng Pilipinas (BSP), issued Resolution 5052 prohibiting Manila Banking Corporation (MBC)
to do business in the Philippines, and placing its assets and affairs under receivership. The Resolution,
however, was not served on MBC until 26 May 1987, when the designated Receiver took over.

On 25 May 1987, following the issuance of the MB Resolution, respondent Jose Abad was at the MBC at
9:00a.m. for the purpose of pre-terminating the 71 aforementioned GTDs and re-depositing the fund
represented thereby into 28 new GTDs in denominations of P40,000.00 or less under the names of herein
respondents individually or jointly with each other. Of the 28 new GTDs, Jose Abad pre-terminated 8 and
withdrew the value thereof in the total amount of P320,000.00. Respondents thereafter filed their claims
with the PDIC for the payment of the remaining 20 insured GTDs.
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SPECPRO CASE DIGESTS – declaratory relief
PDIC paid respondents the value of 3 claims in the total amount of P120,000.00. PDIC, however, withheld
payment of the 17 remaining claims after Washington Solidum, Deputy Receiver of MBC-Iloilo, submitted a
report to the PDIC7 that there was massive conversion and substitution of trust and deposit accounts on
May 25, 1987 at MBC-Iloilo.

Because of the report, PDIC entertained serious reservation in recognizing respondents' GTDs as deposit
liabilities of MBC-Iloilo. Thus, on 30 August 1991, it filed a petition for declaratory relief against respondents
with the RTC of Iloilo City, for a judicial declaration determination of the insurability of respondents' GTDs at
MBC-Iloilo.

Respondents set up a counterclaim against PDIC whereby they asked for payment of their insured
deposits. In its Decision, the Iloilo RTC declared the 20 GTDs of respondents to be deposit liabilities of
MBC, hence, are liabilities of PDIC as statutory insurer. The CA affirmed the RTC decision. Hence, this
case.

ISSUE: WON the CA erred in affirming the holding of the RTC that ordering petitioner to pay respondents'
claims for payment of insured deposits for the reason that an action for declaratory relief does not
essentially entail an executory process as the only relief that should have been granted by the trial court is
a declaration of the rights and duties of petitioner under R.A. 3591

HELD: No. Without doubt, a petition for declaratory relief does not essentially entail an executory process.
There is nothing in its nature, however, that prohibits a counterclaim from being set-up in the same action.

Now, there is nothing in the nature of a special civil action for declaratory relief that proscribes the filing of a
counterclaim based on the same transaction, deed or contract subject of the complaint. A special civil
action is after all not essentially different from an ordinary civil action, which is generally governed by Rules
1 to 56 of the Rules of Court, except that the former deals with a special subject matter which makes
necessary some special regulation. But the identity between their fundamental nature is such that the same
rules governing ordinary civil suits may and do apply to special civil actions if not inconsistent with or if they
may serve to supplement the provisions of the peculiar rules governing special civil actions.
_____________________________________________________________________________________

MATALIN COCONUT CO., INC. v. THE MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR
G.R. No. L-28138; August 13, 1986
YAP, J.:

FACTS: On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur, invoking the authority of
Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, enacted Municipal
Ordinance No. 45-46, entitled "AN ORDINANCE IMPOSING A POLICE INSPECTION FEE OF P.30 PER
SACK OF CASSAVA STARCH PRODUCED AND SHIPPED OUT OF THE MUNICIPALITY OF
MALABANG AND IMPOSING PENALTIES FOR VIOLATIONS THEREOF." Any person violating the
ordinance "is liable to a fine or to suffer imprisonment or both, in the discretion of the court.

The validity of the ordinance was challenged by the Matalin Coconut, Inc. in a petition for declaratory relief
filed with the then CFI of Lanao del Sur against the Municipal Council for being unreasonable, oppressive
and confiscatory. It prayed that:
 the ordinance be declared null and void ab initio,
 the respondent Municipal Treasurer be ordered to refund the amounts paid by petitioner under the
ordinance; and
 during the pendency of the action, a preliminary injunction be issued enjoining the respondents
from enforcing the ordinance. (denied by the CFI)

Purakan Plantation Company was granted leave to intervene in the action. The intervenor alleged that the
enactment of the Ordinance refrained it from transporting its products from its cassava flour factory through
the Municipality of Malabang in order to ship them by sea to other places. The CFI declared the municipal
ordinance in question null and void; ordering the respondent Municipal Treasurer to refund to the petitioner
the payments it made under the said ordinance.

ISSUE: WON the trial court erred in adjudicating the money claim of the petitioner in an action for
declaratory relief.

HELD: No. The respondent’s contention is that it was error for the trial court, in an action for declaratory
relief, to order the refund to petitioner-appellee of the amounts paid by the latter under the municipal
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ordinance in question. It is the contention of respondents-appellants that in an action for declaratory relief,
all the court can do is to construe the validity of the ordinance in question and declare the rights of those
affected thereby. The court cannot declare the ordinance illegal and at the same time order the refund to
petitioner of the amounts paid under the ordinance, without requiring petitioner to file an ordinary action to
claim the refund after the declaratory relief judgment has become final.

The Court found no merit in the respondent’s contention stating that under Sec. 6 of Rule 64, the action for
declaratory relief may be converted into an ordinary action and the parties allowed to file such pleadings as
may be necessary or proper, if before the final termination of the case "a breach or violation of an
ordinance, should take place." In the present case, no breach or violation of the ordinance occurred. The
petitioner decided to pay "under protest" the fees imposed by the ordinance. Such payment did not affect
the case; the declaratory relief action was still proper because the applicability of the ordinance to future
transactions still remained to be resolved, although the matter could also be threshed out in an ordinary suit
for the recovery of taxes paid (Shell Co. of the Philippines, Ltd. vs. Municipality of Sipocot, L-12680, March
20, 1959). In its petition for declaratory relief, petitioner-appellee alleged that by reason of the enforcement
of the municipal ordinance by respondents it was forced to pay under protest the fees imposed pursuant to
the said ordinance, and accordingly, one of the reliefs prayed for by the petitioner was that the respondents
be ordered to refund all the amounts it paid to respondent Municipal Treasurer during the pendency of the
case. The inclusion of said allegation and prayer in the petition was not objected to by the respondents in
their answer. During the trial, evidence of the payments made by the petitioner was introduced.
Respondents were thus fully aware of the petitioner's claim for refund and of what would happen if the
ordinance were to be declared invalid by the court.

Respondents' contention, if sustained, would in effect require a separate suit for the recovery of the fees
paid by petitioner under protest. Multiplicity of suits should not be allowed or encouraged and, in the
context of the present case, is clearly uncalled for and unnecessary.

Ruling: The decision of the court a quo is hereby affirmed.

_____________________________________________________________________________________

DEPARTMENT OF BUDGET AND MANAGEMENT v. MANILA’S FINEST RETIREES ASSN. INC.

(MFRAI)
G.R. No. 169466; May 9, 2007
GARCIA, J.:

FACTS: In 1975, P.D. No. 765 was issued constituting the Integrated National Police (INP) to be composed
of the Philippine Constabulary (PC) as the nucleus and the integrated police forces as components thereof.
On December 1990, R.A. No. 6975 or the Philippine National Police (PNP) Law, was enacted. Under
Section 23 of said law, the PNP would initially consist of the members of the INP, created under P.D. No.
765, as well as the officers and enlisted personnel of the PC.

On February 1998, R.A. No. 6975 was amended by R.A. No. 8551, otherwise known as the "PHILIPPINE
NATIONAL POLICE REFORM AND REORGANIZATION ACT OF 1998." Among other things, the
amendatory law reengineered the retirement scheme in the police organization. Relevantly, PNP
personnel, under the new law, stood to collect more retirement benefits than what INP members of
equivalent rank, who had retired under the INP Law, received.

Hence, on 03 June 2002, in the RTC of Manila, all INP retirees, spearheaded by the MFRAI (collectively
referred to as the INP Retirees), filed a petition for declaratory relief, thereunder impleading, as
respondents, the DBM, the PNP, the NAPOLCOM, the CSC, and the GSIS.

They prayed that a DECLARATORY JUDGMENT be rendered in their favor, DECLARING with certainty
that they, as INP-retirees, are equally considered as PNP-retirees and thus, entitled to enjoy the SAME or
IDENTICAL retirement benefits being bestowed to PNP-retirees. The RTC rendered decision in the
respondents’ favor. On appeal, the CA affirmed the RTC’s ruling. MR before the CA was denied.

ISSUE: WON the CA committed a serious error in law in affirming the decision of the trial court
notwithstanding that it is contrary to law and established jurisprudence.

HELD: No. The INP - by looking at the history of the enactment of the laws establishing INP and PNP - was
never, as posited by the petitioners, abolished or terminated out of existence by R.A. No. 6975. Nowhere in
R.A. No. 6975 does the words "abolish" or "terminate" appear in reference to the INP. Instead, what the law
provides is for the "absorption," "transfer," and/or "merger" of the INP, as well as the other offices
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comprising the PC-INP, with the PNP. Clearly, "abolition" cannot be equated with "absorption." True it is
that Section 9015 of R.A. No. 6975 speaks of the INP "[ceasing] to exist" upon the effectivity of the law. It
ought to be stressed, however, that such cessation is but the logical consequence of the INP being
absorbed by the PNP.

The [respondents’] retirement prior to the passage of R.A. No. 6975 did not exclude them from the benefits
provided by R.A. No. 6975, as amended by R.A. No. 8551, since their membership in the INP was an
antecedent fact that nonetheless allowed them to avail themselves of the benefits of the subsequent laws.

PETITIONERS’ CONTENTION: They fault the trial court for ordering the immediate adjustments of the
respondents’ retirement benefits when the basic petition filed before it was one for declaratory relief. To the
petitioners, such petition does not essentially entail an executory process, the only relief proper under that
setting being a declaration of the parties’ rights and duties.

Petitioners’ above posture is valid to a point. However, the execution of judgments in a petition for
declaratory relief is not necessarily indefensible. In Philippine Deposit Insurance Corporation [PDIC] v.
CA, wherein the Court affirmed the order for the petitioners therein to pay the balance of the deposit
insurance to the therein respondents, we categorically ruled: Now, there is nothing in the nature of a
special civil action for declaratory relief that proscribes the filing of a counterclaim based on the same
transaction, deed or contract subject of the complaint. A special civil action is after all not essentially
different from an ordinary civil action, x x x, except that the former deals with a special subject matter which
makes necessary some special regulation.

Similarly, in Matalin Coconut Co., Inc. v. Municipal Council of Malabang, Lanao del Sur: the Court
upheld the lower court’s order for a party to refund the amounts paid by the adverse party under the
municipal ordinance therein questioned, stating: x x x Under Sec. 6 of Rule 64, the action for declaratory
relief may be converted into an ordinary action and the parties allowed to file such pleadings as may be
necessary or proper, if before the final termination of the case "a breach or violation of an ordinance,
should take place." In the present case, no breach or violation of the ordinance occurred. The petitioner
decided to pay "under protest" the fees imposed by the ordinance. Such payment did not affect the case;
the declaratory relief action was still proper because the applicability of the ordinance to future transactions
still remained to be resolved, although the matter could also be threshed out in an ordinary suit for the
recovery of taxes paid.

The Court sees no reason for treating this case differently from PDIC and Matalin. This disposition
becomes all the more appropriate considering that the respondents pleaded for the immediate adjustment
of their retirement benefits which, significantly, the herein petitioners did not object to. Being aware of said
prayer, the petitioners then already knew the logical consequence if, as it turned out, a declaratory
judgment is rendered in the respondents’ favor. Hence, the trial court’s judgment forestalled multiplicity of
suits. It is thus for this Court to already write finis to this case.

Ruling: The instant petition is DENIED and the assailed decision and resolution of the CA are AFFIRMED.
_____________________________________________________________________________________

INOCENCIO Y. LUCASAN for himself and as the Judicial Administrator of the Intestate Estate of the late
JULIANITA SORBITO LUCASAN v. PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC) as
receiver and liquidator of the defunct PACIFIC BANKING CORPORATION (PBC)
G.R. No. 176929; July 4, 2008
NACHURA, J.:

FACTS: Petitioner Lucasan and his wife Julianita Sorbito (now deceased) were the owners of Lot (Nos.
1500-A and 229-E) situated in Bacolod City, (respectively covered by TCT Nos. T-68115 and T-13816.)
PBC extended a P5,000.00 loan to Lucasan, with Carlos Benares as his co-maker. Both of them failed to
pay the loan when it became due and demandable. Consequently, PBC filed a collection case with the
RTC of Bacolod City. (Civil Case No. 12188.)

RTC:
 rendered a decision ordering Lucasan and Benares to jointly and severally pay PBC P7,199.99.
Lucasan failed to pay the monetary award.
 issued a writ of execution directing the sheriff to effect a levy on the properties owned by Lucasan
and sell the same at public auction.
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City Sheriff of Bacolod: issued a Notice of Embargo and such was annotated on Lucasan’s TCTs.
Annotated as prior encumbrances on the same titles were the mortgages in favor of PNB and Republic
Planter’s Bank (RPB) executed to secure Lucasan’s loans with the banks.

In May 1981, lots were sold at public auction and were awarded to PBC as the highest bidder. A certificate
of sale was executed in its favor and was registered and annotated on the same TCTs. The mortgagees
however did not redeem the property. PBC did not file a petition for consolidation of ownership.

Lucasan:
 wrote a letter to the PDIC, PBC’s receiver and liquidator seeking the cancellation of the certificate
of sale and offering to pay PBC’s claim against Lucasan. (denied by PDIC)
 paid his loans with the PNB and RPB. The mortgagee banks executed their respective releases of
mortgage, resulting in the cancellation of the prior encumbrances in favor of PNB and RPB.
 filed a petition denominated as declaratory relief with the RTC of Bacolod City (Civil Case No. 02-
11874.) He sought confirmation of his rights provided in the second paragraph of Section 1, Rule
63 of the Rules of Court in relation to Section 75 of P.D. No. 1529. Lucasan also pleaded for the
lifting and/or cancellation of the notice of embargo and the certificate of sale annotated on the
TCTs, and offered to pay P100,000.00 or any amount determined by the RTC.
As gleaned from the averments of the complaint, Lucasan’s action was one for quieting of title under Rule
63 of the Rules of Court. Essentially, he sought the cancellation of the notice of embargo and the certificate
of sale annotated on the subject TCTs claiming that the said annotations beclouded the validity and
efficacy of his title.

PDIC moved to dismiss the complaint for lack of cause of action. Lucasan opposed the motion.
RTC: granted PDIC’s motion to dismiss; Lucasan filed a motion for reconsideration, but was denied.
CA: affirmed in toto the RTC ruling; Lucasan sought a reconsideration of the CA Decision, but was denied

ISSUE: WON the CA erred the dismissal of Lucasan’s complaint was proper.

HELD: No. The RTC correctly dismissed Lucasan’s complaint for quieting of title. Thus, the CA committed
no reversible error in sustaining the RTC.

Quieting of title is a common law remedy for the removal of any cloud of doubt or uncertainty with respect
to real property. The Civil Code authorizes the said remedy in the following language:

ART. 476. Whenever there is a cloud on title to real property or ART. 477. The plaintiff must have legal or equitable title to, or
any interest therein, by reason of any instrument, record, claim, interest in the real property which is the subject-matter of the
encumbrance or proceeding which is apparently valid or effective action. He need not be in possession of said property.
but is in truth and in fact invalid, ineffective, voidable, or
unenforceable, and may be prejudicial to said title, an action may
be brought to remove such cloud or to quiet the title.

An action may also be brought to prevent a cloud from being cast

upon title to real property or any interest therein.

To avail of the remedy of quieting of title, two (2) indispensable requisites must concur, namely:
(1) the plaintiff or complainant has a legal or an equitable title to or interest in the real property subject of
the action; and
(2) the deed, claim, encumbrance or proceeding claimed to be casting a cloud on his title must be shown to
be in fact invalid or inoperative despite its prima facie appearance of validity or legal efficacy. Stated
differently, the plaintiff must show that he has a legal or at least an equitable title over the real property in
dispute, and that some deed or proceeding beclouds its validity or efficacy.

Unfortunately, the foregoing requisites are wanting in this case.

Lucasan admitted that he failed to redeem the properties within the redemption period, on account of his
then limited financial situation. It was only 15 years later that he manifested his desire to reacquire the
properties. Clearly thus, he had lost whatever right he had over the lots. The payment of loans made by
Lucasan to PNB and RPB in 1997 cannot, in any way, operate to restore whatever rights he had over the
subject properties. Such payment only extinguished his loan obligations to the mortgagee banks and the
liens which Lucasan claimed were subsisting at the time of the registration of the notice of embargo and
certificate of sale. Neither can he capitalize on PBC’s failure to file a petition for consolidation of ownership
after the expiration of the redemption period.
Quickie notes (QMBD)
SPECPRO CASE DIGESTS – declaratory relief
Note must be taken of the fact that under the Rules of Court the expiration of that one-year period
forecloses the owner's right to redeem, thus making the sheriff's sale absolute. The issuance thereafter of a
final deed of sale becomes a mere formality, an act merely confirmatory of the title that is already in the
purchaser and constituting official evidence of that fact. Certainly, Lucasan no longer possess any legal or
equitable title to or interest over the subject parcels of land; hence, he cannot validly maintain an action for
quieting of title.

Furthermore, Lucasan failed to demonstrate that the notice of embargo and the certificate of sale are
invalid or inoperative. In fact, he never put in issue the validity of the levy on execution and of the certificate
of sale duly registered on June 5, 1981. It is clear, therefore, that the second requisite for an action to quiet
title is, likewise, absent.

Redemption v. Repurchase
The right to redeem becomes functus officio on the date of its expiry, and its exercise after the period is not
really one of redemption but a repurchase. Distinction must be made because redemption is by force of
law; the purchaser at public auction is bound to accept redemption. Repurchase however of foreclosed
property, after redemption period, imposes no such obligation. After expiry, the purchaser may or may not
re-sell the property but no law will compel him to do so. And, he is not bound by the bid price; it is entirely
within his discretion to set a higher price, for after all, the property already belongs to him as owner.

Tender Of Payment Even After The Lapse Of The Redemption Period

Verily, in several cases, this Court allowed redemption even after the lapse of the redemption period. But in
those cases a valid tender was made by the original owners within the redemption period. Even in Cometa,
the redemption was allowed beyond the redemption period because a valid tender of payment was made
within the redemption period. The same is not true in the case before us.

Ruling: WHEREFORE, the petition is DENIED. The Decision of the CA is affirmed.