VISAYAN PACKING CORPORATION, PETITIONER AND APPELLANT, VS. REPARATIONS COMMISSION, RESPONDENT AND APPELLEE.

On November 14, 1960, the
petitioner herein, Visayan Packing Corporation and the
respondent Reparations Commission, entered into a ‘Contract of Conditional
Purchase and Sale” of Capital Goods, the pertinent portions of which are as
follows:

“Date of Complete Delivery— April
5, 1960

Total F. O. B. Cost—P1,357,194.67

Amount of First Installment (10%
F. O. B. cost)—P135,712.47

Due date of 1st Installment—
April 5, 1962

Ten (10) equal
yearly installments.”

Under these terms, were listed
the dates when the remaining ten (10) yearly installments were due, the 1st
installment on said ten (10) yearly installments being April 5, 1963, in the
amount of P143,186.78, until April 5, with 3%
interest on the balance.

The contract, specially that
which requires the payment of the first installment (apparently a down
payment) equivalent to 10% of the total purchase price, to be made on April
5, 1962, is in accordance with the provisions of Section 14, B-3 of the Rules
and Regulations of the respondent-appellee Reparations Commission, promulgated pursuant
to Republic Act No. 1780, which provides:

“Capital Goods
and Services—Sales on Installment Basis.

“* * *. Sales on credit shall be
payable in installments, the first installment shall be paid within 24 months
after complete delivery of the capital goods and the balance to be paid in equal
3’eajly installments within a period not exceeding 10 years * *
*.”

The parties have expressly bound
themselves to make the above provision of the Rules and Regulations, applicable
to the contract.

Before the date of the 1st
payment, the amount of which was P135,712.47 (10% of
the total cost), respondent wrote petitioner a reminder, dated March 8, 1962,
although the due date was mistakenly stated as March 21, 1962. On March 20,
1962, petitioner filed an action for declaratory relief, before the CFI of
Manila, asking for an interpretation of the contract, specially that portion as
to when should it pay the 1st payment and/or installment In the complaint, it
was alleged that petitioner did not know when exactly to make payment and
how much, since the contract itself contains two (2) dates of payment of
1st installment and two (2) different amounts to be paid. A writ of preliminary
injunction was also prayed for, allegjng that a
misconstruction of the contract will cause “Separable damage to the
petitioner.

Respondent, after admitting and
denying the allegations in the complaint, interposed various defenses, all of
which tended to show that no other interpretation could be given to the terms of
the contract; that the contract itself is clear that the 1st payment should be
made on April 5, 1962, in the amount of P135,712.47, which was the 10% on the
total contract price; that petitioner had not shown a clear right to the
issuance of the writ of injunction; and that it has not exhausted all the
administrative remedies provided for by law.

On October 8, 1962, the date of
the hearing, respondent verbally moved for the dismissal of the action. On
October 9, 19G2, the CFI of Manila handed down an Order, the pertinent portions
of which read:

“At the hearing, counsel for the
respondent verbally moved for the dismissal of the petition on the ground that
there is now pending in this Court, but assigned to another branch, a civil
action which the Reparations Commission filed against the Visayan Packing Corporation and the Fieldmen’s Insurance Co., Inc. (Civil Cafe No. 51713, filed
on Sept. 27, 1962) for the recovery of the sum of P135,712.47, representing the
first payment, without interest, on the purchase price of the reparations goods
acquired by the first therein named defendant (herein petitioner), which was
equivalent to 10% of the F.O.B. cost and due as of April 5, 1962. To said motion
counsel for the petitioner interposed an objection and contended that the
instant petition for declaratory relief is a prejudicial question to the said
civil action and for this reason this case should not be
dismissed.

“The construction of the contract
entered into between the herein parties, in the opinion of the Court, is no
longer necessary. This is so because the subject matter of the present petition
would necessarily be threshed out in Civil Case No. 51713 of this Court, wherein
the question at issue is whether or not the sum P135,712.47, which the plaintiff
therein (respondent in this ease) seeks to recover, was tine and demandable as
of April 5, 1962 * * *.

“Moreover, the Fieldmen’s Insurance Co., Inc., which executed a performance
bond, guaranteeing the faithful observance and compliance by the Visayan Packing Corporation of the terms and conditions of
the contract of “Conditional Purchase and Sale of Reparations Goods,” was not
joined as a party to the present action, although it has an interest in the
subject matter thereof and would necessarily be affected by any declaration that
may rendered therein. The non-joinder of said bonding
company would deprive the declaratory judgment of the final and pacifying
function it was calculated to subserve (* *
*).

“In the light of the foregoing
circumstances, the Court, in the exercise of the discretion vested in it by the
Rules of Court, deems it unnecessary and improper to construe the contract in
question (Sec. 6, Rule 66 of the Rules of Court).

“Wherefore, the petition for
declaratory relief is hereby dismissed, without any pronouncement as to
costs.”

Petitioner Visayan Packing Corporation brought the matter directly to
this Court, on a lone assignment of error—the propriety of the dismissal of its
complaint for a declaratory relief on the contract.

The lower court was correct in
dismissing the petition. Under the circumstances obtaining then, such as the
institution of the case for the recovery and/or collection of the 1st
payment of April 5, 1962, for the sum of P135,712.47, the declaration sought
to be made in the case, would be a mere surplusage.
The collection case instituted by respondent Reparations Commission would
necessarily go into the merits and or interpretation of the whole contract. In
addition, We are also of the opinion that there was
nothing to interpret in the contract. The terms thereof, are clear. In fact, the
trial court in Civil Case No. 51713, in its decision dated March 27, 1963
said:

“The main issue in this case is
the interpretation of the schedule of payments* * *. The plaintiff contends, * *
* the first payment for the reparation goods obtained by defendant Visayan backing Corporation is P135,712.47, which became due on April 5, 1962. On the other
hand, the defendants contend that the first installment is P143,186.78 and will became due on April 5, 1963. The Court is
inclined to interpret the schedule of payments * * * in consonance with the
contention of plaintiff for the reason that, under Sec. 12 of Rip. Act 1789,
reparation goods are to be paid in eleven (11) payments, the first one within
twenty-four (24) months after complete delivery and the balance in ten years or
in ten (10) installments and Exhibit A-l provides for eleven payments, whereas.
under the interpretation of the defendants there would
be only ten payments in all, contrary to Sec. 12 of Rep. Act No. 1789, which
provides in effect for eleven payments.

* * * * * * *
*

The above is a clear and explicit
connotation of the terms of the contract sought to be interpreted, and this
Court agrees with such observations.

In
view of the foregoing, the order appealed from should
be, as it is hereby affirmed in all respects, with costs against petitioner
Visayan Packing Corporation.

Bengzon, C. J., Bautista Angelo, Reyes,
J. B. L., Barrera, Regala, Makalintal, Bengzon, J.
P. and Zaldivar, JJ.,
concur.