Zomer Development Company, Inc. v.
Special Twentieth Division of the Court of
Appeals, Cebu City and Union Bank of the Philippines
G.R. No. 194461, January 7, 2020
Facts:
Zomer, a domestic corporation, owned three (3) parcels of land in Cebu City, which were
mortgaged to International Exchange Bank (IEB) as security for its loan. When Zomer
Development failed to pay its indebtedness, IEB foreclosed on the properties. Auction was
conducted, IEB emerged as the highest bidder. Sheriff issued to it Certificates of Sale on
November 19, 2001, and provided for a period of redemption of twelve months from
registration, "or sooner and/or later, as provided for under applicable laws."
Zomer filed a Complaint for Declaration of Nullity of Notice of Sale, Certificate of Sale &
TCTs and Declaration as Unconstitutional Sec. 47, RA 8791. It argued that Section 47 of RA
8791 (General Banking Law of 2002), violates its right to equal protection since the law
provides a shorter period for redemption of three (3) months or earlier to juridical entities
compared to the one (1) year redemption period given to natural persons. This
discrimination, it argued, gives "undue advantage to lenders who are non-banks."
RTC dismissed the Complaint and refused to rule on the constitutionality of RA 8791,
Section 47. According to the trial court, to rule on the issue will deprive the Republic of its
right to due process since it was not heard on the issue and was not impleaded as party
defendant in the case.
Zomer appealed to the CA, arguing that the Republic was not required to be impleaded
when questions regarding the constitutionality of a statute are raised.
CA dismissed the appeal "without prejudice to appellant's filing of the appropriate case
before the SC. " CA categorized Zomer's Complaint as one for declaratory relief and refused
to "make a definitive ruling" on the constitutionality issue, citing Rule 63, Section 5 of the
Rules of Court on the discretion of courts to entertain petitions for declaratory relief.
Zomer filed a Petition for Mandamus before the SC praying that the CA be compelled to
resolve the issue on the constitutionality of RA 8791, Section 47.
Issues:
1. Is the trial court correct in dismissing the Complaint on the ground that the Office of the
Solicitor General was not impleaded as a party? - NO
2. Can the CA be compelled by writ of mandamus to pass upon the constitutionality of a
statute? NO
Held:
1. The trial court erred in dismissing the Complaint on the ground that the Republic,
represented by the Office of the Solicitor General, was not impleaded in this case.
The Complaint, while denominated as a Declaration of Nullity of Notice of Sale,
Certificate of Sale & TCTs and Declaration as Unconstitutional Sec. 47, RA No. 8791, was,
in reality, an action for declaratory relief. Petitioner, in seeking the nullification of the
foreclosure sale, questioned the validity of RA 8791, Section 47 insofar as the law limits
the redemption period for juridical persons to only three (3) months. Petitioner was a
juridical person affected by the shorter redemption period. Under Rule 63, Section 1
of the Rules of Court, any person whose rights are affected by a statute may bring
an action before the trial court to determine its validity.
In dismissing the action, the trial court cited Rule 63, Section 3 of the Rules of Court, in
that the Solicitor General was required to be impleaded in all actions where the validity
of a statute was in question. The Rules, however, only require that notice be given to
the Solicitor General. They do not state that if the Solicitor General fails to participate
in the action, the action would be dismissed.
The trial court dismissed the action on the ground that the Solicitor General may be
deprived of due process. Due process, however, has already been accorded to the
Solicitor General when he/she was furnished with a copy of the Complaint. The
Solicitor General's failure to comment on the Complaint should have the effect of
waiving his or her right to participate in the case. To hold otherwise would be to give
the Solicitor General more power than what the law grants. The Solicitor General does
not have and should not have unbridled control over cases that were originally filed
between private parties.
2. The grant of declaratory relief is discretionary on the courts. Courts may refuse to
declare rights or to construe instruments if it will not terminate the controversy or if it
is unnecessary and improper under the circumstances. A discretionary act cannot be
the subject of a petition for mandamus.
Although the RTCs have exclusive original jurisdiction over actions for declaratory
relief, the CA exercises appellate jurisdiction over final judgments of the trial court.
Thus, the CA may, in appeals of actions for declaratory relief, apply Rule 63 of the Rules
of Court in resolving the appeal.
The CA, in deferring the question of the validity of RA 8791, Section 47 to the CA, cited
Rule 63, Section 5of the Rules of Court, and held that to resolve the Petition "would be
an empty discourse and will not terminate the controversy. " This was an exercise of the
CA’s discretion.
Mandamus may issue only to compel the performance of a ministerial duty. It cannot
be issued to compel the performance of a discretionary act. In Metro Manila
Development Authority v. Concerned Residents of Manila Bay:
Generally, the writ of mandamus lies to require the execution of a ministerial
duty. A ministerial duty is one that "requires neither the exercise of official
discretion nor judgment." It connotes an act in which nothing is left to the
discretion of the person executing it. It is a "simple, definite duty arising
under conditions admitted or proved to exist and imposed by
law." Mandamus is available to compel action, when refused, on matters
involving discretion, but not to direct the exercise of judgment or discretion
one way or the other.
Petitioner cannot file a petition for mandamus to compel what is essentially a
discretionary act on the CA. What Petitioner should have done was to file a petition for
certiorari to question the exercise of the CA’s discretion. Unfortunately, Petitioner filed
the wrong remedy. As such, the Petition must be denied.
