Understanding the courts’ power of declaratory relief
“Judges are like umpires,” said United States Supreme Court Chief Justice John Roberts. “Umpires don’t make the rules. They apply them.”
“[Judges and umpires] make sure everybody plays by the rules. But it is a limited role. Nobody ever went to a ballgame to see the umpire.”
Among the powers granted to courts by the current procedural rules is that to entertain an action for declaratory relief. This action may only be filed by a person interested in a deed, will, contract or other written instrument, executive order or resolution, who seeks the court to: (a) interpret its meaning or intent by its authors; and based thereon, (b) declare his rights and duties.
According to the Philippine Supreme Court, an action for declaratory relief is filed to secure an authoritative statement of the rights and obligations of the parties under a statute, deed or contract for their guidance in complying with or enforcing its provisions and thus, presupposes that there has been no actual breach of any of these instruments. If before the final termination of this action, a breach or violation of the disputed instrument shall take place, it may be converted into an ordinary action; thus, allowing the parties to file pleadings as may be necessary and proper.
An action for declaratory relief lies even when it has been captioned as one for declaration for nullity of Notice of Sale, Certificate of Sale and Transfer Certificate of Titles (TCTs), as in the case of Zomer Development Company Inc. v. Court of Appeals.
In this case, Zomer mortgaged its three parcels of land to the International Exchange Bank (IEB) to secure a loan. When Zomer failed to pay, IEB foreclosed the properties and issued the corresponding Notice of Extrajudicial Foreclosure Sale, informing the public of the sale of these properties at an auction.
IEB emerged as the highest bidder at the auction. Thus, the Sheriff issued a Certificate of Sale, providing for a period of redemption of 12 months from registration, “or sooner and/or later, as provided for under applicable laws.” Moreover, upon causing this Certificate to be registered, the corresponding TCTs were issued in IEB’s name.
These developments prompted Zomer to file before the Regional Trial Court (RTC) a complaint for Declaration of Nullity of Notice of Sale, Certificate of Sale and TCTs, and declaration as unconstitutional Section 47 of the General Banking Law. In its complaint, Zomer argued that, among others, this section violates its right to equal protection since it provides a shorter period for redemption of three months or earlier to judicial entities, compared to the one-year redemption period given to natural persons.
While copies of Zomer’s complaint were furnished to the Office of the Solicitor General (OSG), the latter did not participate in the proceedings, prompting the RTC to dismiss the same. According to the RTC, to rule on the issue raised by Zomer would deprive the Republic, through the OSG, of its right to due process since it was neither heard on the issue nor impleaded as a defendant therein.
Zomer appealed this decision to the Court of Appeals. The latter court, however, denied Zomer’s appeal and refused to make a definitive ruling on the constitutionality issue.
Consequently, Zomer filed a petition for mandamus before the Supreme Court, seeking that the Court of Appeals be compelled to resolve the constitutionality of Section 47 of the General Banking Law.
In denying Zomer’s petition, the Supreme Court first upheld the finding that its complaint before the RTC is actually one for declaratory relief. In this regard, the Court of Appeals and other courts may refuse to declare rights or to construe instruments, which are being sought in this action, if it will not terminate the controversy or if it is unnecessary and improper under the circumstances.
Nevertheless, even if the Court of Appeals may be compelled to rule on the constitutionality of Section 47 of the General Banking Law, the Supreme Court reiterated its earlier ruling that it did not violate the equal protection clause.
The difference in the treatment of juridical persons like Zomer rested on the nature of the foreclosed properties—whether these were used as residence, for which the more liberal one-year redemption period was retained, or used for industrial or commercial purposes, in which case a shorter term was deemed necessary to reduce the period of uncertainty over the ownership of the property and enable mortgagee banks to dispose them.
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