Wednesday, February 29, 2012

Almeda vs. Bathala Marketing Industries,Inc.

Facts: In May 1997, respondent Bathala Marketing Industries, Inc. (lessee) entered into a contract of lease with petitioners (lessors). Provisions of the contract of lease include: 

6th - Lessee shall pay an increased rent if there is any new tax imposed on the property 

7th - In case of supervening extraordinary inflation or devaluation of the PHP, the value of PHP at the time of the establishment of the obligation shall be the basis of payment 

Petitioners later demanded payment of VAT and 73% adjusted rentals pursuant to the foregoing provisions. Respondent refused and filed an action for declaratory relief. Petitioners filed an action for ejectment. 

Issue: Whether or not declaratory relief is proper. 

Held: YES. Petitioners insist that respondent was already in breach of the contract when the petition was filed, thus, respondent is barred from filing an action for declaratory relief. However, after petitioners demanded payment of adjusted rentals and in the months that followed, 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. Thus, respondent is not barred from instituting before the trial court the petition for declaratory relief. 

Petitioners further claim that the instant petition is not proper because a separate action for rescission, ejectment and damages had been commenced before another court; thus, the construction of the subject contractual provisions should be ventilated in the same forum. 

As a rule, the petition for declaratory relief should be dismissed in view of the pendency of a separate action for unlawful detainer. In this case, however, 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, initiated the suspension of the proceedings pending the resolution of the action for declaratory relief.

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