G.R. No. 160208 June 30, 2008 RAFAEL R. MARTELINO, BARCHELECHU S. MORALES, ROSELYN S. CACHAPERO, REYNALDO R.

EVANGELISTA, CESAR B. YAPE, LEONORA R. PARAS, SEGUNDINA I. IBARRA, RAQUEL G. HALNIN, ZAMORA I. DIAZ, and ARTHUR L. VEGA, petitioners, vs. NATIONAL HOME MORTGAGE FINANCE CORPORATION and HOME DEVELOPMENT MUTUAL FUND, respondents FACTS: Petitioners filed a petition for declaratory relief and prohibition with urgent prayer for the issuance of a TRO and/or preliminary injunction filed before the RTC of Caloocan City against the NHMFC and HDMF and Sheriff Alberto A. Castillo. Petitioners alleged that they obtained housing loans from respondents who directly released the proceeds to the subdivision developer, Shelter Philippines, Inc. (Shelter). o However, Shelter failed to complete the subdivision according to the subdivision plan. Petitioners spent their own resources to improve the subdivision roads and alleys, and to install individual water facilities. o Respondents failed to ensure Shelters completion of the subdivision. o Respondents ignored their right to suspend amortization payments for Shelters failure to complete the subdivision, charged interests and penalties on their outstanding loans, threatened to foreclose their mortgages and initiated foreclosure proceedings against petitioner Rafael Martelino. o Hence, they prayed that respondents be restrained from foreclosing their mortgages. The RTC set the PI hearing, but said order, including the summons and petition, were served only on the NHMFC and Sheriff Castillo. Subsequently, the RTC ordered that a writ of preliminary injunction be issued restraining the respondents from foreclosing the mortgages on petitioners houses. RTCs RULING: In dismissing the case, the RTC ruled that the issue of non-completion of the subdivision should have been brought before the HLURB. It also ruled that no judicial declaration can be made because the petition was vague. The RTC assumed that the subject of the petition was Republic Act No. 8501 (Housing Loan Condonation Act of 1998) which was cited by petitioners. But the RTC pointed out that petitioners failed to state which section of the law affected their rights and needed judicial declaration. Moreover, the RTC noted that respondents still foreclosed their mortgages, a breach of said law which rendered the petition for declaratory relief improper. The proper remedy was an ordinary civil action. The Court of Appeals affirmed the RTC Order.

(1) The preliminary injunction order against the HDMF is valid NO (2) The petition for declaratory relief and prohibition was properly dismissed NO RULING: Preliminary Injunction We affirm the RTC and Court of Appeals ruling that the preliminary injunction order is not valid against the HDMF. 5, Rule 58 of the Rules of Court expressly states that No preliminary injunction shall be granted without hearing and prior notice to the party or person sought to be enjoined. In the case at bar, petitioners even admit that the HDMF was not notified of the PI hearing. Petitioners do not contest the lower courts ruling that the July 9, 1998 Order cannot apply to the HDMF. They merely contend and insist that HDMF voluntarily submitted to the RTCs jurisdiction. However, such contention is immaterial because the issue involved is the validity of the PI order absent a notice of hearing for its issuance to the HDMF. Declaratory Relief and Prohibition The ruling that the Petition for Declaratory Relief and Prohibition is improper is correct, because the Petition must be filed before the occurrence of breach or any violation. Under 1, Rule 63, a person must file a petition for declaratory relief before breach or violation of a deed, will, contract, other written instrument, statute, executive order, regulation, ordinance or any other governmental regulation. However, petitioners had already suspended payment of amortizations. Clearly giving the HDMF a right to foreclose the mortgage for failure to pay the debt secured by the mortgage. Petitioners actual suspension of payments defeated the purpose of the action to secure an authoritative declaration of their supposed right to suspend payment, for their guidance. o Thus, the RTC could no longer assume jurisdiction over the action for declaratory relief because there was an occurrence of breach before filing the action. PURPOSE OF THE ACTION: 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. WHEN TO FILE THE ACTION: It may be entertained only BEFORE the breach or violation of the statute, deed, contract 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. The Dismissal of the Petition was Improper

ISSUES: Whether or not

If the petition for declaratory relief and prohibition was vague, dismissal is not proper because the respondents may ask for more particulars . Notably, the NHMFC never assailed the supposed vagueness of the petition in its motion to dismiss nor did it ask for more particulars before filing its answer. When the RTC also set the pre-trial conference and ordered the parties to submit their pre-trial briefs, it even noted that the issues had already been joined. Petitioners fairly stated also the necessary ultimate facts, except that their action for declaratory relief was improper. The RTC made an assumption that RA No. 8501 was the subject matter of the case. But while the petition mentioned the law, the declaration that petitioners sought was not anchored on any of its provisions. The petition only stated that despite the effectivity of said law, respondents still acted in bad faith and with undue haste in threatening petitioners with foreclosures, instead of encouraging them to avail of its benefits. COMMENTO: The Condonation Act took effect, but instead of applying for condonation and for the restructuring of their loans, Petitioners filed an erroneous petition before the RTC (siguro akala nila automatic unyay, wala na silang utang!). On the other hand, the RTC was incorrect on the point that the case should have been filed before HLURB. The jurisdiction of the HLURB to hear and decide cases is determined by the nature of the cause of action, the subject matter or property involved and the parties. In this case, the petition for declaratory relief and prohibition did not involve an unsound real estate business practice, or a refund filed by subdivision buyers against the developer, or a specific performance case filed by buyers against the developer.

Conversion of the Petition for Declaratory Relief and Prohibition to Ordinary Action GENERAL RULE: 6, Rule 63 allows the course of action. However, petitioners failed to specify the ordinary action they desired. The Court cannot assume that they seek annulment of the mortgages and further, the issue was not raised before the RTC. Therefore, the CA properly refused to entertain the issue as it cannot be raised for the first time on appeal. Conversion of Petition for Declaratory Relief to an Action for Prohibition GENERAL RULE: In De La Llana, etc., et al. v. Alba, etc., et al., the Court considered a petition erroneously entitled Petition for Declaratory Relief and/or for Prohibition as an action for prohibition. The case involved the constitutionality of BP Blg. 129, it was held that: that if the petition has far-reaching implications and it raises questions that should be resolved, it may be treated as one for prohibition. Under the circumstances, action for prohibition is still improper. PROHIBITION is a remedy against proceedings that are without or in excess of jurisdiction, or with grave abuse of discretion, there being no appeal or other plain, speedy adequate remedy in the ordinary course of law. But here, the petition did not even impute lack of jurisdiction or grave abuse of discretion committed by respondents and Sheriff Castillo regarding the foreclosure proceedings.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision and Resolution of the appellate court are AFFIRMED.