G.R. No. L-20577 May 31, 1965
VISAYAN PACKING CORPORATION, petitioner-appellant, vs. REPARATIONS COMMISSION, respondent-appellee.

FACTS

On November 14, 1960, Visayan Packing Corporation (petitioner) and the Reparations Commission (respondent) entered into a “Contract of Conditional Purchase and Sale” of Capital Goods. The contract stipulated a total F.O.B. cost of P1,357,124.67, with the first installment (10% of the F.O.B. cost) amounting to P135,712.47 due on April 5, 1962. The balance was payable in ten equal yearly installments, the first of which was due on April 5, 1963. This payment structure conformed to Section 14, B-3 of the Reparations Commission’s Rules and Regulations promulgated under Republic Act No. 1789 , which the parties expressly made applicable to their contract. Before the due date of the first payment, respondent sent a reminder to petitioner. On March 20, 1962, petitioner filed an action for declaratory relief in the CFI of Manila, seeking an interpretation of the contract regarding when and how much the first payment should be, alleging ambiguity due to two different dates and amounts mentioned. Petitioner also prayed for a preliminary injunction. Respondent opposed, asserting the contract was clear and that petitioner failed to exhaust administrative remedies. Subsequently, on September 27, 1962, respondent filed a separate civil action (Civil Case No. 51713) against petitioner and its surety to recover the P135,712.47 due on April 5, 1962. During the hearing for declaratory relief on October 8, 1962, respondent moved for its dismissal. The CFI dismissed the petition on October 9, 1962, reasoning that the interpretation sought would be resolved in the pending collection case and that the surety company, an indispensable party, was not joined. Petitioner appealed directly to the Supreme Court.

ISSUE

Whether the trial court correctly dismissed the petition for declaratory relief.

RULING

Yes, the Supreme Court affirmed the dismissal of the petition for declaratory relief. The Court held that under the circumstances, particularly the pendency of the collection case (Civil Case No. 51713) filed by the Reparations Commission, any declaration in the declaratory relief action would be superfluous. The collection case would necessarily involve and resolve the interpretation of the contract’s payment terms. Furthermore, the Court found no ambiguity in the contract requiring interpretation. It agreed with the trial court’s observation in the collection case that the contract clearly provided for eleven payments (a first installment due 24 months after delivery and ten yearly installments), consistent with Republic Act No. 1789 . Therefore, the dismissal was proper. Costs were imposed on petitioner.