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[G.R. No. 139677.October 5, 1999]

MARUBENI CORPORATION vs. PILIPINO TELEPHONE CORPORATION

SECOND DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated OCT 5, 1999.

����������� G.R. No. 139677(Marubeni Corporation vs. Pilipino Telephone Corporation.)

����������� This is a petition for review on certiorari of the order, dated July 9, 1999, of the Regional Trial Court, Branch 150, Makati City, dismissing the petition for declaratory relief filed by petitioner Marubeni Corporation against respondent Pilipino Telephone Corporation for failure to state a cause of action.

����������� The facts of the instant case are as follows:

Petitioner and respondent entered into a Build-Transfer Agreement (BTA) dated August 9, 1996 involving the installation of 400,000 telephone lines in Mindanao. Under the BTA, petitioner undertook to procure, construct, and interconnect the materials and equipment for the installation of the said telephone lines. Upon substantial completion of the project, petitioner agreed to transfer control over the telephone lines to respondent, which would finance the project with the revenues obtained from its operation. Under the BTA, petitioner would retain ownership of the materials and equipment used in the installation of the telephone lines until it was fully paid by respondent.

Apprehensive that the creditors of respondent might attach the materials and equipment for the installation of the telephone lines in the event respondent defaulted, petitioner filed a petition for declaratory relief in the trial court. Petitioner sought a declaration that it was the sole owner of the said materials and equipment. Respondent moved to dismiss the petition on the ground that it failed to state a cause of action. Respondent argued that the interpretation of the BTA was not called for because its provisions were not ambiguous and that it had not been declared in default in paying its creditors. The petition for declaratory relief was thus premature.

In dismissing the petition for declaratory relief, the trial court said in its order dated July 9, 1999:

Section 1 of Rule 63 is specific as to the purpose of declaratory relief. It is to determine any question of construction or, validity arising, and for a declaration of a person's right or duties under a deed, will, contract or written instrument whose rights are affected by a statute, executive order or regulation or any other governmental regulation before breach or violation thereof. In the instant petition, petitioner prays that it be declared as the sole and legal owner of the materials equipments, tools, components, and suppliers which had already been delivered and installed in their project sites in Mindanao covered by the Build and Transfer Agreement dated August 9, 1996 and its subsequent amendment of October 8, 1998.

As correctly pointed out by the movant [Pilipino Telephone Corporation], the terms and conditions of the agreement are clear requiring no judicial construction. Their rights and duties are spelled out clearly and without any ambiguity. Thus, declaration or construction of its terms is not necessary (Sec. 5, Rule 63).

Wherefore, premises considered the instant petition is hereby ordered DISMISSED.

Petitioner filed a motion for reconsideration, which respondent opposed. Respondent argued that any judgment rendered by the trial court would bind only the immediate parties and not third parties such as the creditors of respondent. In an order dated August 12, 1999, the trial court denied the motion for reconsideration of petitioner.

Petitioner now raises the following assignments of error:

I.THE TRIAL COURT COMMITTED GRAVE ERROR IN ISSUING THE ASSAILED ORDERS (ANNEXES A AND B) GRANTING RESPONDENT'S MOTION TO DISMISS

DESPITE THE FACT THAT THE REQUISITES FOR THE SUFFICIENCY OF A PETITION FOR DECLARATORY RELIEF WERE CLEARLY STATED IN THE PETITION, THEREBY ABROGATING THE CLEAR PROVISIONS OF THE RULES AND CASE LAW ON THE MATTER.

II.THE TRIAL COURT GRAVELY� ERRED IN DISMISSING A PETITION FOR DECLARATOTY RELIEF PURPOSELY FILED IN ORDER TO PREVENT THE PROLIFERATION OF NUMEROUS SUITS WHOSE IMMINENCE IS NOT DISPUTED, THEREBY ABROGATING THE CLEAR PROVISIONS OF THE RULES AND CASE LAW ON THE MATTER.

The instant petition is without merit.

As we ruled in Chan v. Galang ¹ 18 SCRA 345 (1966). it is discretionary on the part of the court to entertain a petition for declaratory relief. It may refuse to declare the rights and duties of the parties under an instrument if the construction of the same is not necessary. ² Pickel v. Alonzo, 111 SCRA 341 (1982). Art. 1370 of the Civil Code provides that "if the terms of a contract are clear and leave no doubt upon the intention of the parties, the literal meaning of its stipulations shall control." Since petitioner admits in its petition that the provisions of the BTA are not in any way ambiguous, ³ Petition, Rollo, pp. 17-18. there is no necessity for all interpretation of the contract.

Furthermore, as correctly pointed out by respondent, any judgment in the case cannot affect third parties, such as the creditors of respondent. On this point, Rule 63, �2 of the Rules of Court provides that "no declaration shall, except as otherwise provided in these Rules, prejudice the rights of persons not parties to the action."

WHEREFORE, the petition is DISMISSED. Bellosillo, J ., Chairman is on official leave.

Very truly yours,

(Sgd.) TOMASITA M. DRIS
Clerk of Court

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