DECLARATORY RELIEF:
with the SC. The petitioners argued that RTC, Branch 33, erred when it
CASE: Tambunting vs. Sps. Sumabat GR No. 144101, September
16, 2005
FACTS: Facts: Spouses Sumabat and Baello were the registered land
owners of a parcel of land in Caloocan. In May 1973, and in order to obtain
a P7,727.95 loan from petitioner Tambunting, the spouses mortgaged said
land to the former. Subsequently, Tambunting assigned his rights to the
mortgaged to Commercial House Finance (CHFI). And because respondent
spouses have not been paying their monthly amortizations, they were
informed that their indebtedness has ballooned to P15k.
And so, CHFI and Tambunting filed a case for foreclosure but was
restrained by Branch 33 of the RTC of Caloocan. The reason for the
restraint was because the respondents were able to file an action for
declaratory relief with said RTC. In their action, respondents were praying
that the court rule on the extent or amount of their actual indebtedness.
In said RTC case, which was filed March 1979, herein petitioners were
declared in default. Thus, even when the Tambunting, et al moved for the
dismissal of the case on the ground that mortgaged deed/contract had
already been breached prior to the action, said motion was denied for
having been filed out of time.
On Jan. 1981, the RTC rendered a decision finding that respondents
liability, by virtue of their mortgage deed/contract, was P15,743.83.
Pursuant to this decision, the respondents made a consignation with the
RTC in said amount.
After almost 14 years, or on Feb 1995, CHFI again foreclosed on the
contested land. The respondents came to know of this because they
received a notice of foreclosure sale, to be conducted by the sheriff, of the
land in question
This time, the petitioners filed an action with Branch 120 of the RTC of
Caloocan for injunction against the foreclosure sale. But, the sale still
pushed thru, with CHFI being declared the highest bidder. A new TCT was
then issued to CHFI. Thus, respondent spouses amended their complaint to
an action for nullification of the foreclosure/sheriffs sale, the new TCT of
CHFI, as well as reconveyance.
On Feb 2000, Branch 120 of the RTC declared the foreclosure sale as void.
It likewise ruled that reconveyance of the property should be made to the
respondents. This decision was grounded on the fact that consignation of
P15k has already been made by CHFI pursuant to the earlier decision of
the Branch 33 of the RTC.
After a denial of petitioners MR, they filed petition for review on certiorari
ordered the consignation of P15k. As earlier pointed out, the action in first
case was for declaratory relief. But petitioner points out the fact that
respondents are not entitled anymore to file an action for declaratory relief
because there had already been a violation of the mortgaged contract
when the spouses defaulted on their amortizations. Furthermore the action
for foreclosure by CHFI on 1995 has already prescribed
ISSUES:
1. Was the decision of Branch 120 of the RTC wrong when it ordered the
nullification of the foreclosure sale on the ground that consignation has
already been made in a previous case?
2. Was the foreclosure action in 1995 and subsequent sale of the property
already barred by prescription?
3. Thus, should the action for nullification and reconveyance filed by the
respondents be dismissed?
HELD: The trial court erred when it affirmed the validity of the
consignation. The RTC should have been barred from taking cognizance of
the action for declaratory relief since petitioners, being already in default
in their loan amortizations, there existed a violation of the mortgage deed
even before the institution of the action. Hence, the CFI could not have
rendered a valid judgment in Civil Case No. C-7496, and the consignation
made pursuant to a void judgment was likewise void.
An action for declaratory relief should be filed by a person interested
under a deed, will, contract or other written instrument, and whose rights
are affected by a statute, executive order, regulation or ordinance before
breach or violation thereof. The purpose of the action is to secure an
authoritative statement of the rights and obligations of the parties under a
statute, deed, contract, etc. for their guidance in its enforcement or
compliance and not to settle issues arising from its alleged breach. It may
be entertained only before the breach or violation of the statute, deed,
contract, etc. to 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.
Nonetheless, the petition must fail.
Article 1142 of the Civil Code is clear. A mortgage action prescribes after
ten years.
Here, petitioners right of action accrued in May 1977 when respondents
defaulted in their obligation to pay their loan amortizations. It was from
that time that the ten-year period to enforce the right under the mortgage
started to run. The period was interrupted when respondents filed Civil
Case No. C-6329 sometime after May 1977 and the CFI restrained the
intended foreclosure of the property. However, the period commenced to
run again on November 9, 1977 when the case was dismissed.

A. Nature of Declaratory Relief:

An action for declaratory relief should be filed by a person interested under

a deed, will, contract or other written instrument, and whose rights are
affected by a statute, executive order, regulation or ordinance before
breach or violation thereof.

B. Purpose of Declaratory Relief:

The purpose of the action is to secure an authoritative statement of the

rights and obligations of the parties under a statute, deed, contract, etc.
for their guidance in its enforcement or compliance and not to settle issues
arising from its alleged breach.2 It may be entertained only before the
breach or violation of the statute, deed, contract, etc. to which it refers.