Declaratory Relief

EUFEMIA ALMEDA and ROMEL ALMEDA vs.
BATHALA MARKETING INDUSTRIES,

INC.
Facts: Sometime in May 1997, respondent Bathala Marketing Industries, Inc., as
lessee, represented by its president Ramon H. Garcia, renewed its Contract of Lease
with Ponciano L. Almeda (Ponciano), as lessor, husband of petitioner Eufemia and
father of petitioner Romel Almeda. Under the said contract, Ponciano agreed to lease a
portion of the Almeda Compound in Makati City. for a term of four (4) years from May 1,
1997 unless sooner terminated as provided in the contract. The contract of lease
contained pertinent provisions which gave rise to the instant case, wherein, the lessee
should pay additional rental or charge in case there is increased of tax rate imposed on
the said building and in case an extraordinary inflation or devaluation of Philippine
Currency should supervene, the value of Philippine peso at the time of the
establishment of the obligation shall be the basis of payment. During the effectivity of
the contract, Ponciano died.Thereafter, respondent dealt with petitioners. Petitioners
informed respondents that they will increased the rental rate pursuant to imposition of
vat and extraordinary inflation or deflation as indicated in the contract of lease.
Respondents refused to pay the VAT and adjusted rentals. The respondent instituted
an action for declaratory relief for purposes of determining the correct interpretation of
conditions of the lease contract to prevent damage and prejudice. Petitioners later
moved for the dismissal of the declaratory relief case for being an improper remedy
considering that respondent was already in breach of the obligation and that the case
would not end the litigation and settle the rights of the parties. The trial court, however,
was not persuaded, and consequently, denied the motion. RTC ruled in favor of the
respondents on the grounds that: the burden of paying the VAT was not a new tax that
would call for application and the demand in rental increase, there being no
extraordinary inflation or devaluation. The respondent made payment of the rental
adjustment demanded by petitioners, thus, the court ordered the restitution by the latter
to the former of the amounts paid, notwithstanding the well-established rule that in an
action for declaratory relief, other than a declaration of rights and obligations, affirmative
relief are not sought by or awarded to the parties. On appeal, CA affirmed decision of
RTC, however, it found that the trial court exceeded its jurisdiction in granting affirmative
relief to the respondent, particularly the restitution of its excess payment.
Issue: Whether the action for declaratory relief is proper.
Held: Yes. Declaratory relief is defined as an action by any person interested in a deed,
will, contract or other written instrument, executive order or resolution, to determine any
question of construction or validity arising from the instrument, executive order or
regulation, or statute, and for a declaration of his rights and duties thereunder. General
rule that such an action must be justified, as no other adequate relief or remedy is
available under the circumstances.
Decisional law enumerates the requisites of an action for declaratory relief, as follows:
1) the subject matter of the controversy must be a deed, will, contract or other
written instrument, statute, executive order or regulation, or ordinance;
2) the terms of said documents and the validity thereof are doubtful and require
judicial construction;
3) there must have been no breach of the documents in question;
4) there must be an actual justiciable controversy or the ripening seeds of one between
persons whose interests are adverse;
5) the issue must be ripe for judicial determination; and
6) adequate relief is not available through other means or other forms of action or
proceeding.
After petitioners demanded payment of adjusted rentals, respondent complied with the
terms and conditions set forth in their contract of lease by paying the rentals stipulated
therein. Respondent religiously fulfilled its obligations to petitioners even during the
pendency of the present suit. There is no showing that respondent committed an act
constituting a breach of the subject contract of lease. Further, it is true that in
Panganiban v. Pilipinas Shell Petroleum Corporation the Court held that the petition for
declaratory relief should be dismissed in view of the pendency of a separate action
for unlawful detainer. In the case at bench, the trial court had not yet resolved the
rescission/ejectment case during the pendency of the declaratory relief petition. In fact,
the trial court, where the rescission case was on appeal, itself initiated the
suspension of the proceedings pending the resolution of the action for declaratory
relief.

Declaratory Relief

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EUFEMIA ALMEDA and ROMEL ALMEDA vs.

BATHALA MARKETING INDUSTRIES,

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