REPUBLIC OF THE PHILIPPINES

REGIONAL TRIAL COURT

NATIONAL CAPITAL REGION
BRANCH ____
MAKATI CITY

Petitioner,
CASE NO. 02-1010
-versus-

For: Declaratory Relief

with Application for
Temporary Restraining
Order and Writ of

Respondent,

Preliminary

Injunction

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DECISION
The Case
Before this court is a Petition for Declaratory Relief, Injunction with Prayer for a
Temporary Restraining Order and Writ of Preliminary Injunctionfiled by the petitioner,
Factual Antecedents
Petitioner is a partnership duly organized and existing under Philippine law with
office address at 11th Floor, Pacific Star Bldg, (PSBCC) Sen Gil Puyat corner Makati
Avenues, Makati City, Metro Manila. It is a law firm and has the capacity to sue and be
sued.
Respondent is a foreign corporation duly licensed to do business in the
Philippines, and may be served summons at its principal office address at the 30 th floor,
CitibanK Tower, 8741 Paseo de Roxas, Makati City, Metro Manila, through its resident
agent Atty.
On August 26, 1999, Petitioner and Respondent entered into a Contract of
Lease over a condomininium unit situated at the 11th floor of said building. The Contract
of Lease was for an additional period of three (3) years and one (1) month, commencing
on the 16th day of November 1999 and expiring on the 15 th day of December 2002.

Under Paragraphs 5 and 9 of the Contract of Lease, petitioner was obligated to

pay an advance rental equivalent to one (1) month rental and security deposit
equivalent to

three (3) months rental of Leased Premises. Par. 4(a) of the

Contract of Lease provides for the monthly rental for the Leased Premises is One
Million One Hundred Sixty Nine Pesos and Thirty One Centavos (P
1,000,169.31)

Par.5 of the Contract of Lease reads as follows:

ADVANCE RENTAL Upon execution of this Contract, LESSEE shall pay
LESSOR an advance rental (Advance Rental) equivalent to one (1) month
rental of Leased Premises.
Par. 9 of the Contract of Lease reads as follows:
DEPOSIT. Upon signing of this Contract, LESSEE shall pay an amount
equal to three (3) monthly rentals on Leased Premises as a security deposit to be
held and applied by the LESSOR to answer for any and all damages to the
Leased Premises due to the fault of the LESSEE, and as security for the return of
the leased premises in proper condition and for LESSEEs due observation of,
and faithful compliance with the terms and conditions of this Contract. The
security deposit shall not, during the Lease Period or any extension or renewal
thereof, be used to offset the rentals or other payments due to LESSOR from
LESSEE under Sec.4 hereof. The security deposit shall be refundable to
LESSEE, without any interest thereon, within thirty (30) days from the expiration
of the Leased Period or any extension or renewal thereof or the termination of
this Contract, and only after LESSEE shall have vacated the Leased Premises,
deducting therefrom (i) the amount of any damage to the Leased Premises due
to the fault of the LESSEE and (ii) all other amounts that may be payable by
LESSEE to LESSOR under this Contract. LESSEE shall, at all times, maintain
the deposit at an amount equivalent to three monthly rentals. Accordingly, if
during the lease period or any extension or renewal thereof, the deposit is
reduced either as a result of deductions for any damage to the Leased Premises
due to LESSEE, or due to rental increase as provided herein, LESSEE shall,
within five (5) days from demand, make an additional deposit in order to maintain
an amount equivalent to three (3) monthly rentals.
Petitioner claims that it has religiously paid the monthly rentals from the time the
original contract of lease was executed up until the filing of the instant petition. That
petitioner paid respondent a 1-month advance rental and a 3-month security deposit,

which amounted to Three Million Five Hundred Thirty Three Thousand Sixty Two Pesos
and Ninety Five Centavos (P 3,533,662.95). That petitioner paid the advance rental
amounting to Eight Hundred Twenty Eight Thousand Seven Hundred Seventy Pesos
and Ninety One Centavos (P 828,770.91) to Ms. Cita Dinglasan sometime in November
1999 in accordance with their lease agreement. That the payment to Ms. Dinglasan
constituted as payment of, and should be credited against, the advance rental referred
to in Par. 5 of the Contract of Lease.
Petitioner claims that under Par. 9 of the Contract, Respondent is obliged to
refund the security deposit to Petitioner within 30 days from the expiration of the lease
period. The Contract of Lease will expire on Dec. 15, 2002.
Petitioner claims that respondent is no longer in the position to refund to
petitioner its security deposit because respondent is currently in financial distress and is
actually in a state of imminent bankruptcy since respondent mortgaged the Leased
Premises to Security Bank and subsequently respondent failed to pay its loans upon
their maturity resulting to foreclosure proceedings of the Leased property. Also,
petitioner claims that respondent owes the PSBCC close to P 10,000,000 in
condominium dues, building insurance, real estate taxes, and others. Respondent is
over ninety days in delay in its obligations.
Petitioner submits that its advance rental and security deposit currently held
respondent is adequate and sufficient to cover its monthly rentals from the time of the
filing of the present petition until the expiration of the Contract of Lease on Dec. 15,
2002. That under the circumstances, an application of the advance rental and security
deposits for the payment of the monthly rentals will further the interests of both
petitioner and respondent. Further, petitioner submits that respondents right to receive
the monthly rentals beginning September 2002 until the expiration of the Contract of
Lease in December 2002 will not at all be prejudiced because the remaining rentals are
sufficiently covered by petitioners advance rental and security deposit.
That to require petitioner to continue paying its monthly rentals until the
expiration of the lease without any solid assurance from respondent that it can refund to
petitioner its substantial security deposit would work a grave and irreparable injustice to
petitioner. Moreover, respondent has indicated that it will not honor the Commission
Agreement and that it will not consider petitioner payment to Ms. Dinglasan as payment
of the one-month advance rental under Par 5 of the Contract of Lease. Hence, there is
every indication that respondent will not refund to petitioner its security deposit even if it
could, which is highly doubtful.
Respondent denies for lack of sufficient information that petitioner has been
religiously paying the monthly rentals on the original contract of lease with the previous
owner of the leased premises, and further, that since renewal of the subject lease

contract between herein parties on August 26, 1999, Petitioner has been in default as to
the timely payment of the advance rental; that it has sent Petitioner several written
demands to pay the advance rental to its authorized representative and that it was only
in November 1999 that Petitioner gave P828, 770.91 to the broker allegedly pursuant to
the Offer to Lease and Commission Agreement.
Respondent admits of its obligation to refund petitioner but alleges that its
obligation to return the security deposit arises only within 30 days from the expiration of
the lease period subject to the qualification that it shall be refunded only after the
Lessee has vacated the leased premises, and further, said contract has not been
renewed/extended and that the filing of instant petition has rendered such
renewal/extension legally untenable. Petitioners demand is premature.
Respondent also denies that it is not in the position to refund the security deposit
and that it is under financial distress and in a state of imminent bankruptcy, such being
baseless. It also denies that it owes PSBCC not only because it is untrue but because
petitioner is a total stranger to the contractual relationship between respondent and
PSBCC and the state of such relationship is irrelevant and immaterial to petitioners
cause of action in instant petition. Further, respondent states Sec. 9 of the Contract
which specifically provides that such deposit cannot be used to offset the rentals due to
Lessor; that the broker is not authorized under the Contract and Petitioner was under
specific written instruction to pay the same to respondent. Therefore, there is no valid
payment of the advance rental as contemplated under Sec.5 of the Contract which
Petitioner has failed to remedy despite due written notices; that such failure constitutes
an Event of Default under Sec 20 (b) of the Contract and it reiterated that Petitioners
demand to use the security deposit to offset rentals due for the period beginning
September 16, 2002 to December 15, 2002 contravenes the agreement of parties under
Sec. 9 of the Contract.
Respondent move that that the instant petition must be dismissed based on the
fact that the petition do not state a cause of action and is a ground to dismiss the same
under Section 1 (g) of Rule 16. Respondent also filed a Compulsory Counterclaim
alleging that the violation by the petitioner of any terms and conditions as stipulated in
the Contract of Lease and such violation remains unremedied after due notice shall
constitute an Event of Default to which the petitioner is already in default.

The Petition
The petitioner, in his petition claims that he is entitled to the relief
demanded based on the following arguments:

A. That respondents clear inability to comply with its obligation to return the
security deposit to petitioner would work injustice to petitioner.
B. That there is a serious risk that petitioner will not be able to get a refund of the
amount Php 4,362, 433.86, representing its advance rental and security
deposit, despite having faithfully complied with all the terms and conditions of
the Contract of Lease.
C. That the relief prayed for must be immediately granted by this Honorable
Court for reasons of urgency and to prevent further and irreparable injury to
the petitioner.
On the other hand, the respondent on his Compulsory Claim move for the
dismissal of the case based on the following arguments:
A. That the allegations in the Petition states no cause of action because the
relief sought contravenes the Contract between herein parties.
B. That the petitioner is already in default, hence respondent has the right to
terminate the contract immediately and to enforce such other rights and
causes of action under the contract.

The Issues
The main issue in this case is WHETHER OR NOT PETITIONER, BY
ASSERTING HIS RIGHT AS A LESSEE OF THE SUBJECT PROPERTY, SHOULD BE
GRANTED THE RELIEFS PRAYED FOR.

Our Ruling
The issue posed in the petition undoubtedly does not deserves serious
consideration. Under the contract of lease that was validly executed on August 26, 1999
and it was agreed under Section 5 thereof that the Lessee shall pay an advance rental
equivalent to (1) month rental on the Leased Premises upon the execution thereof.
While under Section 9 (b) (c) of the contract, the security deposit cannot be offset the
rentals or other payments due from Lessee and that it shall be refundable without any
interest thereon within (30) days from the expiration of the leased period or any
extensions or renewal thereof. Clearly, considering that the parties entered into a
contract, it shall constitute the law between them. The agreement between the parties
is the formal expression of the parties rights, duties and obligations. Being the primary
law between the parties, it governs the adjudication of their rights and obligations. When
the terms of the contract are clear and leave no room for interpretation, the literal
meaning of its stipulations shall, therefore, control. A court has no alternative but to

enforce the contractual stipulations in the manner they have been agreed upon and
written. The petitioner was, therefore, bound to respect the decision of the respondent
not to continue on with the lease. Absent any allegation that a stipulation is contrary to
law, morals, good customs, public order or public policy, it must be complied with in
good faith.
Petitioner has also utterly failed to allege that there are enough factual and
legal bases to resolve the paramount issue. Petitioner failed to state directly the ultimate
facts that it relied upon for its claim based on the complaint. At best, Petitioner did not
ask for a declaration of its rights and duties; neither did it pray for the stoppage of any
threatened violation of its declared rights. Courts, however, are proscribed from
rendering an advisory opinion
.
In order to shed light in the issue presented before Us, it is imperative that the
petition for Declaratory relief be defined. This Honorable Court in the case of Mirando v.
Wellington Ty & Bros., Inc., G.R. No. L-44062, February 16, 1978 has made it clear that
a Declaratory Relief is an action by which any person interested under a deed, will,
contract, or other written instrument, or whose rights are affected by a statute, executive
order or regulation, or ordinance, may, before breach or violation thereof, bring to
determine any question of construction or validity arising under the instrument or statute
and for a declaration of their rights or duties thereunder.||
The essential requisites of the action for declaratory relief are as follows: (1) there is a
justiciable controversy; (2) the controversy is between persons whose interests are
adverse; (3) the party seeking the relief has a legal interest in the controversy; and (4)
the issue is ripe for judicial determination. These requisite facts are wanting and,
therefore, the complaint must fail for lack of sufficient cause of action.As held by this
Honorable Court in the case of Velarde v. Social Justice Society, GR no. 159357, April
28, 2004:
A justiciable controversy refers to an existing case or controversy that is
appropriate or ripe for judicial determination, not one that is conjectural or merely
anticipatory. The SJS Petition for Declaratory Relief fell short of this test. It
miserably failed to allege an existing controversy or dispute between the petitioner
and the named respondents therein. Further, the Petition did not sufficiently state
what specific legal right of the petitioner was violated by the respondents therein;
and what particular act or acts of the latter were in breach of its rights, the law or
the Constitution.
The Supreme Court of Pennsylvania summarized its exhaustive opinion on the
requisites of justiciability of an action for declaratory relief by saying that the court must
be "satisfied that an actual controversy, or the ripening seeds of one, exists between

parties, all of whom are sui juris and before the court, and that the declaration sought
will be a practical help in ending the controversy." Justice Brandeis thought that "the fact
that the plaintiff's desires are thwarted by its own doubts, or by the fears of others does
not confer a cause of action." But the doubt becomes a justiciable controversy when it is
translated into a claim of right which is actually contested. (Moran's Comm. on the Rules
of Court, vol. II, pp. 131-132, 3rd Ed.)
Indeed, the Court finds in the Petition for Declaratory Relief that no single allegation of
fact upon which Petitioner could base a right of relief from the Respondents. In any
event, even granting that it sufficiently asserted a legal right it sought to protect, there
was nevertheless no certainty that such right would be invaded, jeopardized or violated
by the said Respondents.
Clearly, the requirements of an action for declaratory relief have not been met.
WHEREFORE, the instant petition is DENIED for lack of merit. Costs against petitioner.
SO ORDERED.