Almeda vs. Bathala Marketing Industries GR No.

150806,

was no extraordinary inflation to warrant the application of the said

Januray 28, 2008

Article.

FACTS: Respondent Bathala Marketing Industries renewed its

conditions no. 6 and 7 of the contract of lease. In turn, petitioners

Hence,

respondent

Bathala

instituted

an

action

for

declaratory relief to determine the correct interpretation of the

contract of lease with Ponciano Almeda, the father of Romel Almeda

instituted an action for ejectment, rescission and damages against

and the husband of Eufemia, who are the petitioners in this case.

respondent for failure to heed the demand to vacate the premises. In

The contract of lease contains the following provisions which give rise

addition, they moved to dismiss the action for declaratory relief since

to the instant case, to wit:

respondent already breach the obligation and the case would not end

SIXTH - It is expressly understood by the parties hereto that the

rental rate stipulated is based on the present rate of assessment on
the property, and that in case the assessment should hereafter be
increased or any new tax, charge or burden be imposed by
authorities on the lot and building where the leased premises are
located, LESSEE shall pay, when the rental herein provided becomes
due, the additional rental or charge corresponding to the portion
hereby leased; provided, however, that in the event that the present
assessment or tax on said property should be reduced, LESSEE shall
be entitled to reduction in the stipulated rental, likewise in proportion

the litigation and settle the rights of the parties. The RTC ruled in
favor of Bathala. On appeal, the Court of Appeals affirmed the trial
courts decision. Hence, the matter was raised before the Supreme
Court.
ISSUE: Whether or not declaratory relief was proper considering that
Bathala was in breach of obligation when it filed the action before the
trail court?
HELD: YES. Petitioners insists that respondent was already in breach
of the contract when the petition was filed.

We do not agree. After

to the portion leased by him;

petitioners demanded payment of adjusted rentals and in the months

SEVENTH - In case an extraordinary inflation or devaluation of

forth in their contract of lease by paying the rentals stipulated

Philippine Currency should supervene, the value of Philippine peso at

the time of the establishment of the obligation shall be the basis of
payment;

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

During the effectivity of the contract, Ponciano died. Petitioners

therein in a letter, advised respondent Bathala that it would be
assessed and collect VAT from its monthly rentals.

that followed, respondent complied with the terms and conditions set

subject contract of lease. Thus, respondent is not barred from

instituting before the trial court the petition for declaratory relief.

In response,

Bathala contend that VAT may not be imposed as the rentals fixed on
the contact of lease were supposed to include VAT, in lieu that there
contract was established when the VAT law has been effected.
However, respondent received another letter from the petitioners
informing the former that its monthly rental should be increased by
73% pursuant to condition no. 7 of the contact and Article 1250 of
the civil code. Bathala opposed the said increased arguing that there

A. Requisites of Declaratory Relief:

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

where the rescission case was on appeal, itself initiated the

or other written instrument, statute, executive order or regulation, or

suspension of the proceedings pending the resolution of the action

ordinance;

for declaratory relief.

2) the terms of said documents and the validity thereof are doubtful
and require judicial construction;

We are not unmindful of the doctrine enunciated in Teodoro, Jr. v.

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;

Mirasol where the declaratory relief action was dismissed because the
issue therein could be threshed out in the unlawful detainer suit. Yet,
again, in that case, there was already a breach of contract at the time
of the filing of the declaratory relief petition. This dissimilar factual
milieu proscribes the Court from applying Teodoro to the instant

5) the issue must be ripe for judicial determination; and

case.

6) adequate relief is not available through other means or other forms

of action or proceeding.

Given all these attendant circumstances, the Court is disposed to

B. On the issue on the separate actions instituted by the petitioners:

notwithstanding the pendency of the ejectment/rescission case before

entertain the instant declaratory relief action instead of dismissing it,

Petitioners 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.
We are not convinced.
It

is

true

that

in

Panganiban

v.

Pilipinas

Shell

Petroleum

Corporation17 we held that the petition for declaratory relief should

be dismissed in view of the pendency of a separate action for
unlawful detainer. However, we cannot apply the same ruling to the
instant case. In Panganiban, the unlawful detainer case had already
been resolved by the trial court before the dismissal of the
declaratory relief case; and it was petitioner in that case who insisted
that the action for declaratory relief be preferred over the action for
unlawful detainer. Conversely, 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,

the trial court. The resolution of the present petition would write finis
to the parties' dispute, as it would settle once and for all the question
of the proper interpretation of the two contractual stipulations
subject of this controversy.

The RTC dismissed petitioners complaint on the ground of lack of

jurisdiction.
Petitioners filed two pleadings. A Motion for Reconsideration and
another simply designated as motion. They argued, among others,
that their principal cause of action was for quieting of title; the accion
reivindicacion was included merely to enable them to seek complete
relief from respondents. Their complaint should not have been
dismissed, since Section 1, Rule 63 of the Rules of Court states that
an action to quiet title falls under the jurisdiction of the RTC.

Both Motions were denied by the RTC. The RTC differentiated

between the first and the second paragraphs of Section 1, Rule 63 of
the Rules of Court. The first paragraph refers to an action for
declaratory relief, which should be brought before the RTC. The
second paragraph, however, refers to a different set of remedies,
which includes an action to quiet title to real property. The second
Malana vs. Tappa GR No. 181303, September 17, 2009

paragraph must be read in relation to Republic Act No. 7691, which

FACTS: Petitioners alleged that they are the owners of a parcel of

value of the real property involved does not exceed P50,000.00 in

land situated in Tuguegarao City, Cagayan as they inherited the

Metro Manila and P20,000.00 in all other places.

subject property from late Anastacio Danao. During the lifetime of

Anastacio, he had allowed Consuelo Pauig to build on and occupy the
southern portion of the subject property on agreement that the latter
would vacate the said land at any time that Anastacio and his heirs
might need it. Averring that they already needed it, petitioners
demanded that respondents vacate the same. Respondents, however,
refused to heed petitioners demand. The petitioners referred their
land dispute with respondents to the Barangay. During the

vests the MTC with jurisdiction over real actions, where the assessed

It reasoned that an action to quiet title is a real action under second

paragraph of the Sec.1, Rule 63 and since the assessed value of
subject property per Tax Declaration was P410.00, the real action
involving the same was outside the jurisdiction of the RTC.
ISSUE:

Whether the RTC committed grave abuse of discretion in

dismissing petitioners complaint for lack of jurisdiction.

conciliation proceedings, respondents asserted that they owned the

HELD: NO. The RTC correctly made a distinction between the first

subject property and presented documents ostensibly supporting

and the second paragraphs of Section 1, Rule 63 of the Rules of

their claim of ownership, enough to create clouds on their title. Thus,

Court. As the provision states, a petition for declaratory relief under

petitioners filed before the RTC of Tugegarao City Complaint for

the first paragraph of Section 1, Rule 63 may be brought before the

Reivindicacion, Quieting of Title, and Damages.

appropriate RTC. And to determine which court has jurisdiction over

the actions identified in the second paragraph of Section 1, Rule 63

The first paragraph of Section 1, Rule 63 of the Rules of Court,

of the Rules of Court, said provision must be read together with those

describes the general circumstances in which a person may file a

of the Judiciary Reorganization Act of 1980, as amended.

petition for declaratory relief, to wit:

Furthermore, an action for declaratory relief presupposes that there

Any person interested under a deed, will, contract or other written

has been no actual breach of the instruments involved or of rights

instrument, or whose rights are affected by a statute, executive order

arising thereunder.

Where the law or contract has already been

or regulation, ordinance, or any other governmental regulation may,

contravened prior to the filing of an action for declaratory relief, the

before breach or violation thereof, bring an action in the appropriate

courts can no longer assume jurisdiction over the action. In other

Regional Trial Court to determine any question of construction or

words, a court has no more jurisdiction over an action for declaratory

validity arising, and for a declaration of his rights or duties,

relief if its subject has already been infringed or transgressed before

thereunder. (Emphasis ours.)

the institution of the action.

As the afore-quoted provision states, a petition for declaratory relief

Since petitioners averred in the Complaint that they had already been

under the first paragraph of Section 1, Rule 63 may be brought

deprived of the possession of their property, the proper remedy for

before the appropriate RTC.

them is the filing of an accion publiciana or an accion reivindicatoria,

not a case for declaratory relief. An accion publiciana is a suit for the
recovery of possession, filed one year after the occurrence of the
cause of action or from the unlawful withholding of possession of the
realty. An accion reivindicatoria is a suit that has for its object ones
recovery of possession over the real property as owner.
Petitioners Complaint contained sufficient allegations for an accion
reivindicatoria. Jurisdiction over such an action would depend on the
value of the property involved. Given that the subject property herein
is valued only at P410.00, then the MTC, not the RTC, has
jurisdiction over an action to recover the same. The RTC, therefore,
did not commit grave abuse of discretion in dismissing, without
prejudice, petitioners Complaint in Civil Case No. 6868 for lack of
jurisdiction

Section 1, Rule 63 of the Rules of Court further provides in its second

paragraph that:
An action for the reformation of an instrument, to quiet title to real
property or remove clouds therefrom, or to consolidate ownership under
Article 1607 of the Civil Code, may be brought under this Rule.
(Emphasis ours.)
The second paragraph of Section 1, Rule 63 of the Rules of Court
specifically refers to (1) an action for the reformation of an
instrument, recognized under Articles 1359 to 1369 of the Civil Code;
(2) an action to quiet title, authorized by Articles 476 to 481 of the
Civil Code; and (3) an action to consolidate ownership required by
Article 1607 of the Civil Code in a sale with a right to repurchase.
These three remedies are considered similar to declaratory relief
because they also result in the adjudication of the legal rights of the
litigants, often without the need of execution to carry the judgment

A. Distinction between the first and the second paragraphs of Section

1, Rule 63 of the Rules of Court (Declaratory Relief):

into effect.

B. Jurisdiction of Section 1, par.2 of Rule 63:

To determine which court has jurisdiction over the actions identified

actions which involve title to or possession of real property where the

assessed value does not exceed P20,000.00.

in the second paragraph of Section 1, Rule 63 of the Rules of Court,

As found by the RTC, the assessed value of the subject property as

said provision must be read together with those of the Judiciary

stated in Tax Declaration No. 02-48386 is only P410.00; therefore,

Reorganization Act of 1980, as amended.

petitioners Complaint involving title to and possession of the said

It is important to note that Section 1, Rule 63 of the Rules of Court

does not categorically require that an action to quiet title be filed
before the RTC. It repeatedly uses the word "may" that an action for
quieting of title "may be brought under [the] Rule" on petitions for
declaratory relief, and a person desiring to file a petition for
declaratory relief "may x x x bring an action in the appropriate
Regional Trial Court." The use of the word "may" in a statute denotes
that the provision is merely permissive and indicates a mere
possibility, an opportunity or an option.
In contrast, the mandatory provision of the Judiciary Reorganization
Act of 1980, as amended, uses the word "shall" and explicitly requires
the MTC to exercise exclusive original jurisdiction over all civil

property is within the exclusive original jurisdiction of the MTC, not

the RTC.