CASE TITLE: PDIC vs CAGR NO.: 126911DATE: April 30, 2003PETITIONER: Philippine Development Insurance CorporationRESPONDENT: CA and Jose Abad

FACTS:

Respondents had 71 Golden Time Deposits(GTDs) in Manila Banking Corporation(MBC). HOWEVER, Bangko Sentral of the Philippines issued a memorandum prohibiting MBC to do business in the Philippines and placed its assets under receivership. On the next banking day, respondent Jose Abad pre-terminated his 71 GTDs and redposited the fund into 28 GTDs in larger denominations. Thereafter, respondent filed their claims for the payment of the insured GTDs.

Petitioner PDIC argued that the insured GTDs should not be recognized since they were mere derivatives of respondents previous account balances pre-terminated at the time the MBC was aslready in serious financial distress. Under its charter, they contend that they are only liable for deposits received in the usual course of business.

Consequently, Petitioner filed a petition for declaratory relief against respondents for a judicial determination of the insurability of respondents. In turn, Jose Abad SET UP A COUNTER-CLAIM against PDIC whereby they asked for payment of the insured deposits.

The SC later on ruled in favor of the respondents due to petitioner having failed to overcome the presumption that it was issued in the ordinary course of business. The trial court then ordered petitioner to pay the balance of the deposit insurance to respondents.

MAIN ISSUE:

WON the trial court erred in ordering the payment of the deposit insurance since a petition for declaratory relief does not essentially entail an executory process- the only relief being granted is a declaration of the rights and duties.

HELD:

NO, the RTC’s action was proper. Without doubt, a petition for declaratory relief does not essentially entail an executory process. HOWEVER, there is nothing in its nature that prohibits a counterclaim from being set-up in the same action.

A special civil action is 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.

Petitioner additionally submits that the issue of determining the amount of deposit insurance due respondents was never tried on the merits since the trial dwelt only on the determination of the viability or validity of the deposits and no evidence on record sustains the holding that the amount of deposit due respondents had been finally determined. This issue was not raised in the court a quo, however, hence, it cannot be raised for the first time in the petition at bar.