SPECPRO 1
RULE 63
EN BANC
[G.R. No. L-8964. July 31, 1956.]
JUAN EDADES, Plaintiff-Appellant,
vs.
SEVERINO EDADES, ET AL., Defendants-Appellees.
DECISION
BAUTISTA ANGELO, J.:
Plaintiff brought this action before the Court of First Instance of Pangasinan seeking
a declaratory judgment on his hereditary rights in the property of his alleged father
and incidentally the recognition of his status as an illegitimate son of Emigdio
Edades.
In his complaint, he alleges that he is an illegitimate son of Emigdio Edades with
Maria de Venecia, having been born when said Emigdio Edades was legally married
to Maxima Edades with whom Emigdio had eight legitimate children; that he had
always enjoyed the continuous and uninterrupted possession of the status of
illegitimate child by direct and positive acts of his father and of the legitimate
children of the latter; that as such illegitimate child he is entitled to share in the
inheritance of his father under the law; and that as the legitimate children of his
father will deny, as in fact they have denied his right to inherit, and such denial may
ripen into a costly litigation, he brought the present action for the determination of
his hereditary rights.
Defendants, instead of answering, filed a motion to dismiss on the ground that the
complaint does not state facts sufficient to constitute a cause of action. The court
sustained the motion holding that “An action for declaratory relief just for the
purpose of clearing away doubt, uncertainty, or insecurity to the Plaintiff’s status or
rights would seem to be improper and outside the purview of a declaratory relief.
Neither can it be availed of for the purpose of compelling recognition of such rights,
if disputed or objected to.” Consequently, the court dismissed the complaint, without
costs. From the order of dismissal, Plaintiff has appealed and the case was certified
to this court because only questions of law are involved in the appeal.
Under the law, an action for declaratory relief is proper when any person is
interested “under a deed, will, contract or other written instrument, or whose rights
are affected by a statute or ordinance” in order to determine any question of
construction or validity arising under the instrument or statute, or to declare his
rights or duties thereunder (section 1, Rule 66). Moreover, the action should be
predicated on the following conditions: (1) there must be a justiciable controversy;
(2) the controversy must be between persons whose interest are adverse; (3) the
party seeking declaratory relief must have a legal interest in the controversy; (4)
the issue involved must be ripened for judicial determination. (Tolentino vs. Board
of Accountancy, 90 Phil., 83).
The present case does not come within the purview of the law authorizing an action
for declaratory relief for it neither concerns a deed, will, contract or other written
instrument, nor does it affect a statute or ordinance, the construction or validity of
which is involved. Nor is it predicated on any justiciable controversy for admittedly
the alleged rights of inheritance which Plaintiff desires to assert against
the Defendants as basis of the relief he is seeking for have not yet accrued for the
simple reason that his alleged father Emigdio Edades has not yet died. In fact, he is
one of the herein Defendants. And the law is clear that “the rights to the succession
are transmitted from the moment of the death of the decedent” (Article 777, new
Civil Code). Up to that moment, the right to succession is merely speculative for, in
the meantime, the law may change, the will of the testator may vary, or the
circumstances may be modified to such an extent that he who expects to receive
property may be deprived of it. Indeed, the moment of death is the determining
point when an heir acquires a definite right to the inheritance (5 Manresa, 5th ed.,
324). This action therefore cannot be maintained if considered strictly as one for
declaratory relief.
But the present action, though captioned as one for declaratory relief, is not merely
aimed at determining the hereditary right of the Plaintiff to eventually preserve his
right to the property of his alleged father, but rather to establish his status as
illegitimate child in order that, should his father die, his right to inherit may, not be
disputed, as at present, by the other Defendants who are the legitimate children of
his father. In fact, in paragraph 2 of complainant’s prayer he asks
that Defendants be ordered to recognize his status as illegitimate child with right to
inherit. It is true that there is no express provision in the new Civil Code which
prescribe the step that may be taken to establish such status as in case of a natural
child who can bring an action for recognition (Article 285), but this silence
notwithstanding, we declare that a similar action may be brought under similar
circumstances considering that an illegitimate child other than natural is now given
successional rights and there is need to establish his status before such rights can
be asserted and enforced. This right is impliedly recognized by Article 289 which
permits the investigation of the paternity or maternity of an illegitimate child in the
same manner as in the case of a natural child. Considering that the rules of
procedure shall be liberally construed to promote their object and avoid an
expensive litigation (section 2, Rule 1), we hold that the present action may be
maintained in the light of the view herein expressed.
Wherefore, the order appealed from is revoked. The case is remanded to the trial
court for further proceedings in connection with the determination of the alleged
status of the Plaintiff as an illegitimate son of Emigdio Edades, without
pronouncements as to costs.
 SPECPRO 2
RULE 63

EN BANC That on May 8, 1958, the Collector of Internal Revenue issued an authority to release
G.R. No. L-15509 March 31, 1962 the said imported goods, which authority was addressed to his co-respondents Hon.
Eleuterio Capapas, as Commissioner of Customs and/or Hon. Isidro Angangco as
SEBASTIAN SARMIENTO, ET AL., petitioners-appellees, incumbent Collector for the Port of Manila, declaring that said 666 hogsheads of
vs. tobacco were imported under the Barter Permit No. BT-1380 (SP) dated January 21,
HON. ELEUTERIO CAPAPAS, as Commissioner of Customs, et al., 1958 by the No-Dollar Import Office;
respondents-appellants,
GREGORIO GAMULO, ET AL., intervenors-appellees. That on May 13, 1958 the administrator of ACCFA addressed a communication to
the Commissioner of Customs, Manila, stating that he had no objection to the release
Ferdinand E. Marcos for petitioners-appellees. of the imported Virginia leaf tobacco or the release of said 666 hogsheads of
Office of the Solicitor General for respondent-appellant Eleuterio Capapas. tobacco;
Manuel C. Chan for respondent-appellant Harry S. Stonehill.
Deogracias E. Lerma for respondent-appellant Ernesto T. Jimenez. That the said shipments of 666 hogsheads of tobacco form part of several other
Conrado Rubio for intervenors-appellees. shipments of Virginia Type Leaf Tobacco, which are due to arrive at the Port of Manila
under the same Barter Permit No. BT-1380 (SP) which tobacco will aggregate in
LABRADOR, J.: value to the sum of $4,900,000.00;

Appeal from a decision of the Court of First Instance of Ilocos Norte, Hon. Delfin B.
Flores, presiding, in Civil Case No. 2790 of that court, declaring the nullity of Barter
Permit No. BT-1380 (SP) issued to the Philippine Tobacco Flue-Curing and Redrying
Corporation (hereinafter called PTFRC) and all the importations made thereunder,
and ordering the forfeiture to the Government of said importations.
The original action in this case was presented on May 28, 1958 and the petition
seeks the issuance of an injunction against the respondent Collector of Customs and
Commissioner of Customs to prohibit them from releasing the importations made
under the Barter Permit No. BT-1380 (SP) in the name of the Philippine Tobacco
Flue-Curing and Redrying Corporation, and to order the respondents Collector of
Customs and Commissioner of Customs to institute seizure and confiscation
proceedings of the importations of tobacco under said Barter Permit No. BT-1380
(SP).
That the respondent, Mr. Juan Echiverri, in his capacity as President of the Ilocos
Norte Federation of Facomas, failed miserably to protect the virginia tobacco
producers in failing to register the objections of the different members of the Ilocos
Norte Federation of Facomas against the said importations of virginia leaf tobacco;
That the Barter Permit No. BT-1380 (SP) issued by the No-Dollar Import Office on
January 21, 1958, in favor of the Philippine Tobacco Flue-Curing and Redrying
Corporation, was issued in violation of the provisions of existing laws, particularly
Republic Act Nos. 1194 and 1410;
That the certificates issued by the ACCFA and/or the Bureau of Internal Revenue
were false because we have surplusage of indigenous production of Virginia type
leaf tobacco in the Philippines, which is sufficient to maintain the manufacture of
tobacco production;

On June 9, 1958 the petitioners filed a motion to be permitted to file new petition
for declaratory relief, in substitution of the petition for prohibition with preliminary
injunction. The principal allegations of the amended petition are as follows:
That on May 1 to 6, 1958, shipments of 666 hogsheads of Virginia Type Leaf
Tobacco, worth $314,675.62 were imported by the Philippine Tobacco Flue-Curing
and Redrying Corporation under the Barter Permit No. BT-1380 (SP) issued on
January 21, 1958;
That the importations in question are not actually covered by any Central Bank
license whatsoever;
That as early as January, 1958, petitioners had already protested with the Secretary
of Commerce and Industry against the issuance of barter permits for such kind of
tobacco;

That the Commissioner of Customs and the Collector of Customs for Manila are in
possession, custody and control of any and all documents pertaining to the
importations made under the aforesaid Barter Permit No. BT-1380 (SP);
That the Commissioner of Customs and the Collector of Customs threaten to release
the whole or part of said shipment to the Philippine Tobacco Flue-Curing and
Redrying Corporation, some 60 hogsheads having been already released in violation
of existing laws, more specifically Republic Act Nos. 1194 and 1410.
It is prayed that the court determine -
1. Whether the barter permit in question is legal or valid;
2. Whether Sec. 1 of Republic Act No. 1194 in relation to Republic Act No. 1410,
permits barter of Virginia leaf tobacco;
3. Whether the administrator of ACCFA can issue a certificate under the law in view
of the actual and existing fact of surplusage in the production of Virginia leaf
tobacco; and
4. Whether the Virginia leaf tobacco so imported may be forfeited to the
government.
The respondents filed their respective answers. Respondent Echiverri, on June 25,
1958, denied the charge that he failed miserably to protect the interests of tobacco
growers.
Harry Stonehill likewise denied all the material allegations of the petition, but
admitted that the barter permit was issued to the PTFRC, after favorable
indorsements were made for its issuance; that several shipments have already been
made to the company under said barter permit; and that a part of said shipments
has already been delivered to the consignee. As special defenses, he claimed that
he is not the real party in interest, the barter license having been issued to the
PTFRC, of which he is only the President, and that the amended petition is not proper
because there was already a breach of the law upon the issuance of the barter
permit.
Respondent Jimenez denied all the material allegations of the petition, except the
issuance by the No-Dollar Import Office of the barter permit and his certification
authorizing release of the shipment; and as special defense he alleged that the
subject matter is not justifiable for declaratory relief.
SPECPRO 3
RULE 63
Respondent Quirino also filed his answer, claiming that the barter permit was issued
by him in compliance with a Presidential Directive dated January 13, 1958.
On July 14, 1958, respondents Capapas, Angangco and Arañas filed their joint
answer, denying, like their co-respondents, all the material allegations of the
petition. As special defenses, they claim that the petition states no cause of action
against them individually, and that the petition is improper because there is no
justiciable controversy and there is no violation of law.
On November 19, 1958, respondents Capapas, Arañas, Quirino and Stonehill, filed
a joint motion asking the court to set a preliminary hearing on the special defense
that the petition does not state a cause of action for declaratory relief, but the motion
was denied.
After the hearing and on March 12, 1959 the court rendered the decision, which is
now sought to be reviewed, thus;
IN VIEW OF THE FOREGOING, the court finds and so holds that: (1) the report
(indorsement), Exhs. "3-Jimenez", "3 Capapas" and "hh-Intervenors", of respondent
Jimenez recommending the approval of respondent Stonehill's request to import
10,000,000 lbs. of Virginia leaf tobacco by means of barter is manifestly against the
spirit and letter of Sec. 1 of Republic Act No. 1194 construed in relation to Sec. 6 of
Republic Act 1410 and is, therefore, illegal (2) The Barter Permit No. BT-1380
(Special), Exh. "JJ-1" and "JJ-2"; Exhs. "2" and "2-A" and "4" and "4-A", issued by
respondent Carlos Quirino to the Philippine Tobacco Flue-Curing and Redrying
Corporation of which respondent Stonehill is the President must necessarily be
without legal basis. (3) The home grown Virginia leaf tobacco cannot be bartered
with Virginia leaf tobacco coming from abroad because the entrance of Virginia leaf
tobacco to the Philippines unless there is insufficiency of home-grown Virginia
tobacco for local consumption is prohibited by Sec. 1 of Republic Act 1194 construed
in relation to Sec. 6 of Republic Act No. 1410. Therefore, the Virginia leaf tobacco
imported by the Philippine Tobacco Flue-Curing and Redrying Corporation of which
respondent Stonehill is the President from the USA by virtue of the said Barter Permit
No. BT-1380 (Special) has entered this country in flagrant violation of the above-
mentioned laws and, that being the case, (4) all of the said Virginia tobacco so far
imported as above stated must be confiscated in favor of the Government in
accordance with Sec. 1-e of Republic Act No.
1194.chanroblesvirtualawlibrarychanrobles virtual law library
In view of the penal provision of Republic Act 1194, the Clerk of Court is hereby
directed to furnish the honorable Secretary of Justice with a copy of this decision for
his information. .

The most important error assigned on the appeal is the ruling of the trial court that
although there has been a breach of the law, as the breach continued and could
continue up to January 21, 1960, when the barter permit would expire, the breach
is not yet complete.
The above ruling of the court is an express violation of Sec. 2 of Rule 66, which
reads as follows:
SEC. 2. - A contract or statute may be construed before there has been a breach
thereof.
In the case of De Borja vs. Villadolid, 85 Phil., pp. 36-39 we held:
... We are only concerned with the question whether or not the complaint for
declaratory relief filed by plaintiff, and which the Court of First Instance of Manila
dismissed for lack of merit, should be given due course in this Court.
It appears that the Director of the Bureau of Fisheries demanded that plaintiff pay
the license provided in that Act and in view of the insistent refusal of plaintiff to
comply with such demand, he finally turned over the case to the Office of the Fiscal
of the City of Manila for appropriate action. However, plaintiff, upon learning of the
step taken by the Director of the Bureau of Fisheries countered by filing this
complaint for declaratory relief, but this attitude of the plaintiff will only result in
multiplicity of actions which should always be avoided and the Rules of Court
obviously seeks to prevent when, in section 2 of Rule 66, it provides that the action
for declaratory relief must be brought "before there has been a breach" of a contract
or statute the construction of which is sought.
The facts in this case are so clear and unambiguous, that in the light of said section
2 of Rule 66, there is nothing left for the courts to adjudicate or construe regarding
the legal rights, duties and status of appellant in the premises. The general purpose
of a declaratory judgment act is to provide for adjudication of the legal rights, duties,
or status of the respective parties. (1 C.J.S., p. 1022; see also 16 Am. Jur., 284;
(De Borja vs. Villadolid, 85 Phil., pp. 36-39).
Following the above-quoted decision, if an action for declaratory relief were to be
allowed in this case, after a breach of the statute, the decision of the court in the
action for declaratory relief would prejudge the action for violation of the barter law.
The institution of an action for declaratory relief after a breach of contract or statute,
is objectionable on various grounds, among which is that it violates the rule on
SPECPRO 4
RULE 63
multiplicity of suits. If the case at bar were allowed for a declaratory relief, the
judgment therein notwithstanding, another action would still lie against the importer
respondent for violation of the barter law. So, instead of one case only before the
courts in which all issues would be decided, two cases will be allowed, one being the
present action for declaratory relief and a subsequent one for the confiscation of the
importations as a consequence of the breach of the barter law.
The impropriety of allowing an action for declaratory relief, after a breach of the law,
can be seen in the very decision of the court itself, which is now subject of the
appeal. Whereas the case at bar was purported to bring about a simple declaration
of the rights of the parties to the action, the judgment goes further than said
declaration and decrees that the importation by the respondent corporation violates
the law, and further directs that legal importation be confiscated under the
provisions the law (Section 1 (c), R.A. No. 1194.) This confiscation directed by the
court lies clearly beyond the scope and nature of an action for declaratory relief, as
the judgment of confiscation goes beyond the issues expressly raised, and to that
extent it is null and void.
That the proper remedy under the circumstances was an action for injunction, and
not one for declaratory relief, is evident from the fact that the original petition was
for injunction; petitioner herein only changed the nature of the action into one for
declaratory relief when, as they explain, they found out that they did not have funds
for the writ of preliminary injunction..
As a final reason for dismissing the present action, we have the undeniable fact that
as of this date (March 1962) the permit had expired two years before (its life
extended to January 21, 1960 only), and all the shipments under the permit had
already been delivered to the consignee and used in the manufacture of tobacco.
The petitioner did not secure a writ of preliminary injunction, as this remedy is not
proper in an action for declaratory relief; as a result, aside from the complete
violation of the barter law, the importations have already been completely used up
in the manufacture of tobacco during the pendency of these proceedings.
Under the circumstances and at present, of what use will a declaration of the rights
of the parties under the barter law be? In fact as of the date of this decision the
issues have become moot and academic and the court can do no other than declare
the action to be so and of no practical use or value.
FOR THE FOREGOING CONSIDERATIONS, judgment appealed from is set aside and
the action for declaratory relief dismissed. Without costs.

EN BANC
[G.R. No. L-5101. November 28, 1953]
ANGELES S. SANTOS, Petitioner-Appellant,
v.
PATERIO AQUINO, as Municipal Mayor of Malabon, THE MUNICIPAL
COUNCIL OF MALABON, A. A. OLIVEROS, as Municipal Treasurer of
Malabon, Province of Rizal, Respondents-Appellees.
SYLLABUS
1. PLEADING AND PRACTICE; DECLARATORY RELIEF. — The action is not for
declaratory relief if the terms of the ordinances assailed are not ambiguous or of
doubtful meaning which require a construction thereof by the Court.
2. ID.; ID.; WHEN SUCH ACTION MAY BE FILED. — Granting that the validity or
legality of an ordinance may be drawn in question in an action for declaratory relief,
such relief must be asked before a violation of the ordinance be committed (section
2, Rule 66).
3. ID.; ID.; PARTIES; REAL PARTY IN INTEREST. — The rule that actions must be
brought in the name of the real party in interest (section 2, Rule 3) applies to actions
brought under Rule 66 for declaratory relief. As to a theater, its owner, and not its
manager, is the real party in interest.
4. ADMINISTRATIVE LAW; MUNICIPAL COUNCIL, NOT A CONSTITUTIONAL BODY.
— Municipal councils are not constitutional bodies but creatures of the Congress.
The latter may even abolish or replace them with other government
instrumentalities.
5. TAXATION; THEATERS, TAXES ON; MUNICIPAL ORDINANCES; ACTION OF
DEPARTMENT OF FINANCE ON ORDINANCES IMPOSING TAXES. — Commonwealth
Act No. 472 grants to the Department of Finance the authority to disapprove, implied
in the power to approve, an ordinance of a municipal council imposing a tax on
theaters which is more than 50 per centum of the existing tax, or to reduce it, also
implied in the same power. This, of course, is to forestall abuse of power by the
municipal councils. If the Congress has granted to the Department of Finance the
power to reduce such tax, implied in the power to approve or disapprove, there
seems to be no cogent reason for requiring the municipal council concerned to adopt
another ordinance fixing the rate as reduced by the Department of Finance. The
action of that Department in approving an ordinance of a municipal council at a
reduced rate is not in excess of the powers granted to the Department by law.
SPECPRO 5
RULE 63
DECISION
PADILLA, J.:
This action purports to obtain a declaratory relief but the prayer of the petition seeks
to have Ordinance No. 61, series of 1946, and Ordinance No. 10, series of 1947, of
the Municipality of Malabon, Province of Rizal, declared null and void; to prevent the
collection of surcharges and penalties for failure to pay the taxes imposed by the
ordinances referred to, except for such failure from and after the taxpayer shall have
been served with the notice of the effectivity of the ordinances; and to enjoin the
respondents, their agents and all other persons acting for and in their behalf from
enforcing the ordinances referred to and from making any collection thereunder.
Further, petitioner prays for such other remedy and relief as may be deemed just
and equitable and asks that costs be taxed against the respondents.
The petitioner is the manager of a theater known as "Cine Concepción," located and
operated in the Municipality of Malabon, Province of Rizal, and the respondents are
the Municipal Mayor, the Municipal Council and the Municipal Treasurer, of Malabon.
The petitioner avers that Ordinance No. 61, series of 1946, adopted by the Municipal
Council of Malabon on 8 December 1946, imposes a license tax of P1,000 per annum
on the said theater in addition to a license tax on all tickets sold in theaters and
cinemas in Malabon, pursuant to Ordinance No. 58, series of 1946, adopted on the
same date as Ordinance No. 61, the same series; that prior to 8 December 1946 the
municipal license tax paid by the petitioner on "Cine Concepción" was P180,
pursuant to Ordinance No. 9, series of 1945; that on 6 December 1947, the Municipal
Council of Malabon adopted Ordinance No. 10, series of 1947, imposing a graduated
municipal license tax on theaters and cinematographs from P200 to P9,000 per
annum; that the ordinance was submitted for approval to the Department of
Finance, which reduced the rate of taxes provided therein, and the ordinance with
the reduced rate of taxes was approved on 3 November 1948; that notice of
reduction of the tax rate and approval by the Department of Finance of said
graduated municipal license tax provided for in said Ordinance No. 10, as reduced,
was served on the petitioner on 12 February 1949 when the respondent Municipal
Treasurer presented a bill for collection thereof; that Ordinance No. 61, series of
1946, is ultra vires and repugnant to the provisions of the Constitution on taxation;
that its approval was not in accordance with law; that Ordinance No. 10, series of
1947, is also null and void, because the Department of Finance that approved it
acted in excess and against the powers granted it by law, and is unjust, oppressive
and confiscatory; and that the adoption of both ordinances was the result of
persecution of the petitioner by the respondents because from 20 July 1946 to 8
December 1947, or within a period of less than one and a half years, the Municipal
Council of Malabon adopted four ordinances increasing the taxes on cinematographs
and theaters and imposing a penalty of 20 per cent surcharge for late payment.

A motion to dismiss was filed by the Assistant Provincial Fiscal of Rizal, but upon
suggestion of the Court at the hearing thereof, the respondents were prevailed upon
to file their answer.
In their answer the respondents allege that both ordinances adopted by the
Municipal Council of Malabon are not ultra vires, the same not being under any of
the exceptions provided for in section 3 of Commonwealth Act No. 472; that the
ordinances were adopted pursuant to the policy enunciated by the Secretary of the
Interior in a circular issued on 20 June 1946 which in substance suggested and urged
the municipal councils to increase their revenues and not to rely on the National
Government which was not in a position to render any help and to make such
increase dependent upon the taxpayer’s ability to pay; that both ordinances assailed
by the petitioner had been submitted to, and approved by, the Department of
Finance, as required by section 4 of Commonwealth Act No. 472, and took effect on
1 January 1947 and 1 January 1948, respectively; that the petitioner had filed a
protest with the Secretary of Finance against such increase of taxes, as fixed by the
municipal ordinances in question but the Department of Finance although reducing
the amount of taxes imposed in Ordinance No. 10, series of 1947, and changing the
date of effectivity of both ordinances, upheld the legality thereof; and that the
petitioner brought this action for declaratory relief with the evident purpose of
evading payment of the unpaid balance of taxes due from the "Cine Concepción."
By way of special defense the respondents allege that the petition does not state
facts sufficient to constitute a cause of action; that the Court has no jurisdiction over
the subject matter of the petition for declaratory relief; that the petitioner should
have paid under protest the taxes imposed by the ordinances in question on "Cine
Concepción" and after payment thereof should bring an action under section 1579
of the Revised Administrative Code; that this being an action for declaratory relief,
the Provincial Fiscal of Rizal should have been notified thereof but the petitioner
failed to do so; that the petition does not join all the necessary parties and,
therefore, a judgment rendered in the case will not terminate the uncertainty or the
controversy that is sought to be settled and determined.
After hearing the Court rendered judgment holding that the ordinances in question
are valid and constitutional and dismissing the petition with costs against the
petitioner. The latter has appealed. This is not an action for declaratory relief,
because the terms of the ordinances assailed are not ambiguous or of doubtful
meaning which require a construction thereof by the Court. And granting that the
validity or legality of an ordinance may be drawn in question in an action for
declaratory relief, such relief must be asked before a violation of the ordinance be
committed. 1 When this action was brought on 12 May 1949, payment of the
municipal license taxes imposed by both ordinances, the tax rate of the last having
been reduced by the Department of Finance, was already due, and the prayer of the
SPECPRO 6
RULE 63
petition shows that the petitioner had not paid them. In those circumstances the
petitioner cannot bring an action for declaratory relief.
Angeles S. Santos, the petitioner, does not aver nor does he testify that he is the
owner or part-owner of "Cine Concepción." He alleges that he is only the manager
thereof. For that reason he is not an interested party. He has no interest in the
theater known as "Cine Concepción" which may be affected by the municipal
ordinances in question and for that reason he is not entitled to bring this action
either for declaratory relief or for prohibition, which apparently is the purpose of the
action as may be gleaned from the prayer of the petition. The rule that actions must
be brought in the name of the real party in interest 2 applies to actions brought
under Rule 66 for declaratory relief. 3 The fact that he is the manager of the theater
does not make him a real party in interest. 4 Nevertheless, laying aside these
procedural defects, we are of the opinion and so hold that under Commonwealth Act
No. 472 the Municipal Council of Malabon is authorized and empowered to adopt the
ordinances in question, and there being no showing, as the evidence does not show,
that the rate of the municipal taxes therein provided is excessive, unjust, oppressive
and confiscatory, their validity and legality must be upheld. The rate of the taxes in
both ordinances, to wit: P1,000 a year for "Class A Cinematographs having
orchestra, balcony and loge seats" in Ordinance No. 61, series of 1946, 5 and P2,000
for each theater or cinematograph with gross annual receipts amounting to
P130,000 or more in Ordinance No. 10, series of 1947, 6 under which the "Cine
Concepción" falls, is not excessive but fair and just. It is far from being oppressive
and confiscatory. Pursuant to said Commonwealth Act if the increase of the
municipal taxes is more than 50 per cent over the previous ones already in
existence, the Municipal Council adopting such increase must submit it for approval
to the Department of Finance which, although it cannot increase it, may reduce it
and may approve it as reduced, or may disapprove it. It is contended that as only
municipal councils are authorized by law to adopt ordinances, after the reduction by
the Department of Finance of the tax rate imposed in Ordinance No. 10, series of
1947, duly adopted by the Municipal Council of Malabon, the latter should adopt
another ordinance accepting or fixing the rate tax as reduced by the Department of
Finance. The contention is without merit, because the rate of taxes imposed on
theaters or cinematographs in Ordinance No. 10, series of 1947, was the only one
reduced by the Department of Finance and the reduction was for the benefit of the
taxpayer as it was very much lower than the rate fixed by the Municipal Council. The
authority and discretion to fix the amount of the tax was exercised by the Municipal
Council of Malabon when it fixed the same at P9,000 a year. Certainly, the Municipal
Council of Malabon that fixed the tax at P9,000 a year also approved the tax at
P2,000 a year, this being very much less than that fixed in the ordinance. The power
and discretion exercised by the Municipal Council of Malabon when it fixed the tax
at P9,000 a year must be deemed to have been exercised also by it when the
Department of Finance reduced it to P2,000 a year, for the greater includes the
 SPECPRO 7
RULE 63

lesser. The adoption of another ordinance fixing the tax at P2,000 a year would be
an idle ceremony and waste of time. Moreover, it must be borne in mind that
municipal councils are not constitutional bodies but creatures of the Congress. The
latter may even abolish or replace them with other government instrumentalities.
Commonwealth Act No. 472 grants to the Department of Finance the authority to
disapprove, implied in the power to approve, an ordinance imposing a tax which is
more than 50 per cent of the existing tax, or to reduce it, also implied in the same
power. This, of course, is to forestall abuse of power by the municipal councils. If
the Congress has granted to the Department of Finance the power to reduce such
tax, implied in the power to approve or disapprove, there seems to be no cogent
reason for requiring the municipal council concerned to adopt another ordinance
fixing the tax as reduced by the Department of Finance. Therefore, the action of the
Department of Finance in approving Ordinance No. 10, series of 1947, at a reduced
rate, is not in excess of the powers granted it by law. The evidence does not show
that the adoption of the ordinances in question by the Municipal Council of Malabon
was the result of persecution of the petitioner.
Secretary of Finance can only be taken as a recommendation, so that the modified
ordinance will have no effect until it is repassed by the municipal council, in the
same way that a tax bill already approved by the Legislative but returned to that
body by the President with a recommendation for an increase or decrease in the
rate of tax does not become a law unless repassed by the Legislature with the
changes proposed by the Chief Executive.
It is, therefore, my opinion that Ordinance No. 10, series of 1947, of the municipality
of Malabon which has been modified by the Secretary of Finance, cannot be enforced
unless repassed by the municipal council as so modified. The judgment below should
accordingly be modified.
Paras, C.J., concurs.

The judgment appealed from is affirmed, with costs against the Appellant.

REYES, J., dissenting:

I dissent insofar as the majority opinion holds that Ordinance No. 10, series of 1947,
of the municipality of Malabon, Rizal, as modified by the Secretary of Finance, is
valid and enforceable.

Under the Revised Administrative Code, the legislative power of a municipality is

lodged in the municipal council. It is true that the exercise of that power by the
council is subject to a certain degree of supervisory control on the part of certain
officers of the National Government. And as an instance of this supervisory control,
it is provided in section 4 of Commonwealth Act No. 472 that if a municipal ordinance
increases the rate of a license tax on business, occupation or privilege in certain
cases by more than 50 per cent, "the approval of the Secretary of Finance shall be
secured." But having in mind the principle of separation of powers which pervades
the system of government ordained by our Constitution, I take it that the veto power
thus conferred upon the Secretary of Finance only authorizes that officer to approve
or disapprove an ordinance that is submitted to him in accordance with the above-
quoted provision of the Commonwealth Act, and that it does not empower him to
change, alter or modify the terms of the ordinance, for that would be investing an
executive officer with legislative functions. Where a municipal ordinance, therefore,
increases or decreases in certain cases the rate of a license tax on business,
occupation or privilege by more than 50 per cent and the Secretary of Finance
increases or decreases the new rate prescribed in the ordinance, the action of the

EN BANC
G.R. No. 91500 October 18, 1990
ALLIED BROADCASTING CENTER, INC., petitioner,
vs.
REPUBLIC OF THE PHILIPPINES, DEPARTMENT OF TRANSPORTATION AND
COMMUNICATIONS and NATIONAL TELECOMMUNICATIONS
COMMISSION, respondents.
GANCAYCO, J.:
This is a petition for the declaration of the unconstitutionality of Presidential Decree
No. 576-A with a prayer for the issuance of a temporary restraining order and/or a
writ of preliminary injunction.
The allegations of the petition are that on January 19, 1960, Republic Act No. 3001
was passed granting petitioner the permit or franchise to construct, maintain and
operate radio broadcasting stations in the Philippines. Petitioner was able to
construct, maintain and operate ten (10) radio broadcasting stations all over the
country. Through said broadcasting stations, petitioner was able to provide adequate
public service which enabled the government to reach the population on important
public issues, and assist the government in programs relating to public information
and education. Its radio stations have never been used for the broadcasting of
obscene or indecent language or speech, or for the dissemination of misleading
information or willful misrepresentation, or to the detriment of the public health, or
to incite, encourage or assist in subversion or treasonable acts.
Under Section 10 of Republic Act No. 3001, petitioner's franchise or permit "shall be
subject to amendment, alteration or repeal by the Congress of the Philippines when
the public interest so requires . ..."
On November 11, 1974, Presidential Decree No. 576-A entitled "Decree Regulating
The Ownership And Operation Of Radio And Television Stations And For Other
Purposes" was issued and duly published in the December 2, 1974 supplemental
issue of the Official Gazette. 1
Sections 3, 4, 5 and 6 of the said Decree provide as follows:
Sec. 3. No person or corporation may own, operate, or manage more than one
radio or television station in one municipality or city; nor more than five AM and
FM radio stations; nor more than five television channels in the entire country,
SPECPRO 8
RULE 63
and no radio or television station shall be utilized by any single-interest group
to disseminate information or otherwise influence the public or the government
to serve or support the ends of such group.
Sec. 4. Any person or corporation which owns more than the number of radio or
television stations authorized in the preceding section shall divest itself of the
excess stations or channels. Any excess station shall be sold through the Board
of Communications.
The divestiture provided herein shall be made not later than December 31, 1981.
Thereafter, a person or corporation shall make such divestiture within one year
from the discovery of the offense.
Sec. 5. Failure to divest as provided in the foregoing section shall, in addition to
the penalties provided in Section 6, subject the person or corporation guilty of
such failure to cancellation of the franchise of every excess station and to
confiscation of the station and its facilities without compensation.
Sec. 6. All franchises, grants, licenses, permits, certificates or other forms of
authority to operate radio or television broadcasting systems shall terminate on
December 31, 1981. Thereafter, irrespective of any franchise, grant, license,
permit, certificate or other forms of authority to operate granted by any office,
agency or person, no radio or television station shall be authorized to operate
without the authority of the Board of Communications and the Secretary of Public
Works and Communications or their successors who have the right and authority
to assign to qualified parties frequencies, channels or other means of Identifying
broadcast systems; Provided, however, that any conflict over, or disagreement
with, a decision of the aforementioned authorities may be appealed finally to the
Office of the President within fifteen days from the date the decision is received
by the party in interest.
Pursuant to Section 6 of the said Decree, all franchises, grants, licenses, permits,
certificates, or other forms of authority to operate radio or television broadcasting
systems/stations, including the franchise or permit of petitioner under Republic Act
No. 3001, have been deemed terminated or revoked effective December 31, 1981.
Thus, petitioner is left with only 3 radio stations located in Iloilo City, Bacolod City
and Roxas City.
Petitioner alleged that said Decree has caused it great and irreparable damage,
because — (a) it divested petitioner of its franchise without due process of law and

forced it to divest itself of some of its radio stations; (b) it deprived petitioner of its
right to further construct, maintain and operate radio broadcasting stations in other
cities or municipalities of the country;2 (c) it deprived petitioner of its right to avail
of loan facilities or renew its existing loan availments from any bank or financial
institution in order to expand and continue the operation of its radio broadcasting
business; and (d) petitioner suffered loss of income.
Hence, this petition to declare Presidential Decree No. 576-A as unconstitutional and
null and void ab initio. The grounds of the petition are as follows:
I THE ISSUANCE OF PRESIDENTIAL DECREE NO. 576-A SUMMARILY
TERMINATING THE PETITIONER'S FRANCHISE OR PERMIT ON DECEMBER 31,
1981 CONSTITUTES AN UNLAWFUL TAKING OR DEPRIVATION OF THE
PROPERTY RIGHTS (FRANCHISE OR PERMIT) OF PETITIONER WITHOUT DUE
PROCESS OF LAW AND/OR PAYMENT OF JUST COMPENSATION;
II. THE ISSUANCE OF THE AFORESAID DECREE FORCED THE PETITIONER TO
DlVEST ITSELF OF SOME OF ITS RADIO STATIONS AND THE TERMINATION OF
ITS CONGRESSIONAL FRANCHISE CONSTITUTES A VIOLATION AND
IMPAIRMENT OF PETITIONER'S OR THE PEOPLE'S RIGHT OR FREEDOM OF
SPEECH, EXPRESSION AND/OR OF THE PRESS;
III. THE ISSUANCE OF THE AFORESAID DECREE FORCED THE PETITIONER TO
DIVEST ITSELF OF SOME OF ITS RADIO STATIONS AND THE ARBITRARY
TERMINATION OF ITS CONGRESSIONAL FRANCHISE CONSTITUTES AN
UNLAWFUL IMPAIRMENT OF THE OBLIGATION OF CONTRACT BETWEEN THE
STATE AND THE PETITIONER; AND
IV. THE ISSUANCE OF THE AFORESAID DECREE RESTRICTING PETITIONER OR
ANY OTHER PERSON OR ENTITY TO OPERATE A CERTAIN NUMBER OF RADIO OR
TELEVISION STATIONS IN ONE CITY OR MUNICIPALITY, OR IN THE ENTIRE
COUNTRY FOR THAT MATTER, AND FURTHER TERMINATING THE
CONGRESSIONAL FRANCHISE OF PETITIONER CONSTITUTES AN UNLAWFUL
RESTRAINT OF TRADE; 3
Without giving due course to the petition, the respondents were required to submit
their comment thereto within ten (10) days from notice. After the comment of the
respondents was submitted, the petitioner was required to file a reply thereto. As
said reply was filed the Court required respondents to submit their rejoinder. The
rejoinder of respondents had been duly submitted so the case is now due for
resolution.
SPECPRO 9
RULE 63
After a careful deliberation on the petition, the Court finds the same to be devoid of
merit.
The petition seeks a declaration of the unconstitutionality and/or nullity of
Presidential Decree No. 576-A. As such, it must be treated as one seeking
declaratory relief under Rule 64 of the Rules of Court. Such an action should be
brought before the Regional Trial Court and not before the Supreme Court. A petition
for declaratory relief is not among the petitions within the original jurisdiction of the
Supreme Court even if only questions of law are involved. 4
Thus, the present petition should be dismissed on this score.
Moreover, there is no actual case or controversy involving the law sought to be
annulled. Petitioner does not allege that it has filed an application for a license to
operate a radio or television station in excess of the authorized number and that the
same is being denied or refused on the basis of the restrictions under Presidential
Decree No. 576-A. Petitioner does not also allege that it had been penalized or is
being penalized for a violation under said Decree. There is, likewise, no allegation
that any of the petitioner's stations had been confiscated or shut down pursuant to
Presidential Decree No. 576-A. Obviously, the constitutional challenge is not being
raised in the context of a specific case or controversy wherein the petitioner has
asserted his rights. All that petitioner seeks is the nullification of Presidential Decree
No. 576-A and the reinstatement of its rights under Republic Act No. 3001.
Judicial review cannot be exercised in vacuo. Judicial power is "the right to
determine actual controversies arising between adverse litigants." 5
The function of the courts is to determine controversies between litigants and not to
give advisory opinions. 6 The power of judicial review can only be exercised in
connection with a bona fide case or controversy which involves the statute sought
to be reviewed. 7
Petitioner alleges that it used to maintain and operate at least ten (10) radio
broadcasting stations but pursuant to Sections 3, 4, 5 and 6 of Presidential Decree
No. 576-A it divested itself of the "excess stations" thus leaving it with three (3)
radio stations located in Iloilo City, Bacolod City and Roxas City. Petitioner did not
allege that it challenged the constitutionality of the decree at any time since it took
effect on December 31, 1981. It does not appear that petitioner's compliance was
made under protest. In view of its acquiescence with Presidential Decree No. 576-
A, the petitioner is now estopped from challenging the same under the principle of
estoppel that "one who sleeps on his rights shall not be heard to complain."
 SPECPRO 10
RULE 63

The allegation of petitioner that its petition should be treated as a petition for
prohibition does not place petitioner in any better position. The petition cannot be
considered as one for prohibition as it does not seek to prohibit further proceedings
being conducted by any tribunal, corporation, board or person exercising judicial or
ministerial functions. 8

In the instant petition, petitioner does not seek to prohibit any proceeding being
conducted by public respondent which adversely affects its interest. Petitioner does
not claim that it has a pending application for a broadcast license which is about to
be denied under Presidential Decree No. 576-A. Apparently, what petitioner seeks
to prohibit is the possible denial of an application it may make to operate radio or
television stations on the basis of the restrictions imposed by Presidential Decree
No. 576-A. Obviously, the petition is premature.

Petitioner prays for reinstatement of its rights under its original franchise.
Reinstatement is an affirmative remedy and cannot be secured through a writ of
prohibition which is essentially a preventive and not a corrective remedy. It cannot
correct an act that is a fait accompli. 9

WHEREFORE, the petition is DISMISSED with costs against petitioner.

SO ORDERED.

THIRD DIVISION
G.R. No. L-58340 July 16, 1991
KAWASAKI PORT SERVICE CORPORATION, NAIKAI SHIPPING CO. LTD.,
NAIKAI TUG BOAT SERVICE CO., THE PORT SERVICE CORPORATION,
LICENSED LAND SEA PILOTS ASSOCIATION, HAYAKOMA UNYU K.K., TOKYO
KISEN COMPANY, LTD., OMORI KAISOTEN, LTD., TOHOKU UNYU CO., LTD.
AND SEITETSU UNYU CO., LTD., petitioners,
vs.
THE HON. AUGUSTO M. AMORES, Judge of Br. XXIV, Court of First Instance
of Manila, and C.F. SHARP & CO., INC., respondents.
BIDIN, J.:
This is a petition for certiorari seeking to set aside the orders of the then Court of
First Instance of Manila, * Branch XXIV in Civil Case No. 132077: (a) dated July 13,
1981 denying the special appearances of petitioners as defendants in said case to
question the court's jurisdiction over the persons of the defendants and (b) dated
September 22, 1981, denying the motion for reconsideration of said order.
The antecedents of this case are as follows:
On May 7, 1980, the private respondent C.F. Sharp & Co., Inc. filed a complaint for
injunction and/or declaratory relief in the then Court of First Instance of Manila
against seventy-nine (79) Japanese corporations as defendants, among which are
the petitioners herein. Said complaint was docketed as Civil Case No. 132077. The
complaint alleges, among others, that the plaintiff is a corporation organized and
existing under the laws of the Philippines; that there is another corporation
organized under the law of Japan with the corporate name C.F. Sharp Kabushiki
Kaisha; that the plaintiff and C.F. Sharp Kabushiki Kaisha are in all respects separate
and distinct from each other; that C.F. Sharp Kabushiki Kaisha appears to have
incurred obligations to several creditors amongst which are defendants, also foreign
corporations organized and existing under the laws of Japan; that due to financial
difficulties, C.F. Sharp Kabushiki Kaisha failed and/or refused to pay its creditors;
and that in view of the failure and/or refusal of said C.F. Sharp Kabushiki Kaisha to
pay its alleged obligations to defendants, the latter have been demanding or have
been attempting to demand from C.F. Sharp & Co., Inc., the payment of the alleged
obligations to them of C.F. Sharp Kabushiki Kaisha, notwithstanding that C.F. Sharp
& Co., Inc. is a corporation separate and distinct from that of C.F. Sharp Kabushiki
Kaisha and that the former had no participation whatsoever or liability in connection
with the transactions between the latter and the defendants.
SPECPRO 11
RULE 63
As alleged in the complaint, the private respondent prayed for injunctive relief
against the petitioners' demand from the private respondent for the payment of C.F.
Sharp Kabushiki Kaisha's liabilities to the petitioners.
As an alternative to injunction, the private respondent prayed that a judicial
declaration be made that, as a separate and independent corporation, it is not liable
for the obligations and liabilities of C.F. Sharp Kabushiki Kaisha.
Since the defendants are non-residents, without business addresses in the
Philippines but in Japan, the private respondent prayed for leave of court to effect
extraterritorial service of summons.
On June 11, 1980, the respondent judge issued an order authorizing the private
respondent to effect extraterritorial service of summons on defendants therein.
Subsequently, private respondent filed an urgent ex-parte motion dated June 23,
1980 for Extraterritorial Service of Summons Upon Defendants by registered mail
with return cards pursuant to Section 17 of Rule 14 of the Rules of Court.
Acting on said motion, the respondent judge issued an order dated June 30, 1980
granting the motion and authorizing extraterritorial service of summons upon
defendants to be effected by registered mail with return cards.
On March 11, 1981, five of the petitioners, Kawasaki Port Service Corporation, Naikai
Shipping Co., Ltd., Naikai Tug Boat Service Co., Ltd., The Port Service Corporation
and Licensed Land Sea Pilots Association filed their "Special Appearance to Question
Jurisdiction of This Honorable Court Over Persons of Defendants" contending that
the lower court does not and cannot acquire jurisdiction over the persons of
defendants on the grounds that private respondent's action does not refer to its
personal status; that the action does not have for subject matter property
contemplated in Section 17 of Rule 14 of the Rules of Court, that the action does
not pray that defendants be excluded from any interest or property in the
Philippines; that no property of the defendants has been attached; that the action
is in personam; and that the action does not fall within any of the four cases
mentioned in Section 17, Rule 14 of the Rules of Court.
On March 17, 1981, another three of herein petitioners, Hayakoma Unyu K.K., Tokyo
Kisen Company, Ltd. and Omori Kaisoten, Ltd. also filed their special appearance
adopting the same arguments as that of the first five.

On April 28, 1981, the two other petitioners, Tohoku Unyu Co., Ltd. and Seitetsu
Unyu Co., Ltd., filed their "Special Appearance to Question the Jurisdiction of the
Honorable Court" over their persons adopting in toto as theirs the "Special
Appearance" dated March 11, 1981 of Kawasaki Port Service.
On July 13, 1981, the respondent Court issued its order denying said special
appearances. The motion for reconsideration of said order filed by the petitioners
was also denied on September 22, 1981.
Hence, the present petition.
After the required pleadings were filed, the First Division of this Court, in the
resolution of April 14, 1982, gave due course to the petition and required both
parties to submit simultaneous memoranda within thirty (30) days from notice. Both
parties complied by submitting the required memoranda.
The main issue in this case is whether or not private respondent's complaint for
injunction and/or declaratory relief is within the purview of the provisions of Section
17, Rule 14 of the Rules of Court.
The petitioners contend that the respondent judge acted contrary to the provisions
of Section 17 of Rule 14 for the following reasons: (1) private respondent's prayer
for injunction, as a consequence of its alleged non-liability to the petitioners for
debts of C.F. Sharp Kabushiki Kaisha of Japan, conclusively establishes that private
respondent's cause of action does not affect its status; (2) the respondent court
cannot take jurisdiction of actions against the petitioners as they are non-residents
and own no property within the state; (3) the petitioners have not as yet claimed a
lien or interest in the property within the Philippines at the time the action was filed
which is a requirement under Section 17 of Rule 14; (4) extra-territorial service on
a non-resident defendant is authorized, among others, when the subject of the
action is property within the Philippines in which the relief demanded consists in
excluding defendant from any interest therein; and (5) inasmuch as the reliefs
prayed for by the private respondent in the complaint are in personam, service by
registered mail cannot be availed of because Section 17 of Rule 14 authorized this
mode of service only in actions in rem or quasi in rem.
For its part, the private respondent countered that (1) the action refers to its status
because the basic issue presented to the lower court for determination is its status
as a corporation which has a personality that is separate, distinct and independent
from the personality of another corporation, i.e., C.F. Sharp Kabushiki Kaisha of
Japan; (2) under Section 17 of Rule 14, the subject matter or property involved in
the action does not have to belong to the defendants. The provisions of said section
SPECPRO 12
RULE 63
contemplate of a situation where the property belongs to the plaintiff but the
defendant has a claim over said property, whether that claim be actual or
contingent; (3) the prayer of the plaintiff that the defendants be excluded from any
interest in the properties of the plaintiff within the Philippines has the effect of
excluding the defendants from the properties of the plaintiff in the Philippines for
the purpose of answering for the debts of C.F. Sharp Kabushiki Kaisha of Japan to
the defendants in accordance with Section 17 of Rule 14; and (4) the action before
the lower court is an action quasi in rem as the remedies raised in the complaint
affect the personal status of the plaintiff as a separate, distinct and independent
corporation and relates to the properties of the plaintiff in the Philippines over which
the petitioners have or claim an interest, actual or contingent.
The petition is impressed with merit.
Section 17, Rule 14 of the Rules of Court provides:
Section 17. Extraterritorial service. — When the defendant does not reside and
is not found in the Philippines and the action affects the personal status of the
plaintiff or relates to, or the subject of which is, property within the Philippines,
in which the defendant has or claims a lien or interest, actual or contingent, or
in which the relief demanded consists, wholly or in part, in excluding the
defendant from any interest therein, or the property of the defendant has been
attached within the Philippines, service may, by leave of court, be effected out
of the Philippines by personal service as under section 7; or by publication in a
newspaper of general circulation in such places and for such times as the court
may order, in which case a copy of the summons and order of the court shall be
sent by registered mail to the last known address of the defendant, or in any
other manner the court may deem sufficient. Any order granting such leave shall
specify a reasonable time, which shall not be less than sixty (60) days after
notice, within which the defendant must answer.
This Court had ruled that extraterritorial service of summons is proper only in four
(4) instances, namely: "(1) when the action affects the personal status of the
plaintiffs: (2) when the action relates to, or the subject of which is, property within
the Philippines, in which the defendant has or claims a lien or interest, actual or
contingent; (3) when the relief demanded in such action consists, wholly or in part,
in excluding the defendant from any interest in property located in the Philippines;
and (4) when the defendant non-resident's property has been attached within the
Philippines." (De Midgely v. Ferandos, 64 SCRA 23 [1975]; The Dial Corporation v.
Soriano, 161 SCRA 737 [1988]).
 SPECPRO 13
RULE 63

In the case at bar, private respondent has two (2) alternative principal causes of
action, to wit: either for declaratory relief or for injunction. Allegedly, in both cases,
the status of the plaintiff is not only affected but is the main issue at hand.
As defined, "Status means a legal personal relationship, not temporary in nature nor
terminable at the mere will of the parties, with which third persons and the state
are concerned" (Holzer v. Deutsche Reichsbahn Gesellschaft, 290 NYS 181; cited in
40 Words and Phrases, 129, Permanent Edition).
It is easy to see in the instant case, that what is sought is a declaration not only
that private respondent is a corporation for there is no dispute on that matter but
also that it is separate and distinct from C.F. Sharp Kabushiki Kaisha and therefore,
not liable for the latter's indebtedness. It is evident that monetary obligations does
not, in any way, refer to status, lights and obligations. Obligations are more or less
temporary, but status is relatively permanent. But more importantly, as cited in the
case of (Dy Poco v. Commissioner of Immigration, et al., 16 SCRA 618 [1966]), the
prevailing rule is that "where a declaratory judgment as to a disputed fact would be
determinative of issues rather than a construction of definite stated rights, status
and other relations, commonly expressed in written instrument, the case is not one
for declaratory judgment." Thus, considering the nature of a proceeding for
declaratory judgment, wherein relief may be sought only to declare rights and not
to determine or try issues, there is more valid reason to adhere to the principle that
a declaratory relief proceeding is unavailable where judgment would have to be
made, only after a judicial investigation of disputed issues (ibid). In fact, private
respondent itself perceives that petitioners may even seek to pierce the veil of
corporate identity (Rollo, p. 63).
the Philippines, nor was it alleged, much less shown, that the properties of the
defendants, if any, have been attached.
Hence, as ruled by this Court, where the complaint does not involve the personal
status of plaintiff, nor any property in the Philippines in which defendants have or
claim an interest, or which the plaintiff has attached, but purely an action for
injunction, it is a personal action as well as an action in personam, not an action in
rem or quasi in rem. As a personal action, personal or substituted service of
summons on the defendants, not extraterritorial service, is necessary to confer
jurisdiction on the court. In an action for injunction, extra-territorial service of
summons and complaint upon the non-resident defendants cannot subject them to
the processes of the regional trial courts which are powerless to reach them outside
the region over which they exercise their authority. Extra-territorial service of
summons will not confer on the court jurisdiction or Power to compel them to obey
its orders (Dial Corporation v. Soriano, 161 SCRA 738 [1988] citing Section 3-a
Interim Rules of Court, Section 21, subpar. 1, BP Blg. 129).
Considering that extra-territorial service of summons on the petitioners was
improper, the same was null and void.1âwphi1
WHEREFORE, the petition is Granted and the questioned orders dated July 13, 1981
and September 22, 1981 of the respondent Judge, are Reversed and Set Aside.
SO ORDERED.

Private respondent alleges that most if not all, of the petitioners have merely
demanded or have attempted to demand from the former the payment of the
obligations of C.F. Sharp K.K., (Rollo, p. 63). Otherwise stated, there is no action
relating to or the subject of which are the properties of the defendants in the
Philippines for it is beyond dispute that they have none in this jurisdiction nor can it
be said that they have claimed any lien or interest, actual or contingent over any
property herein, for as above stated, they merely demanded or attempted to
demand from private respondent payment of the monetary obligations of C.F. Sharp
K.K., No action in court has as yet ensued. Verily, the fact that C.F. Sharp Philippines
is an entity separate and distinct from C.F. Sharp K.K., is a matter of defense that
can be raised by the former at the proper time.

Finally, the alternative relief sought is injunction, that is to enjoin petitioners from
demanding from private respondent the payment of the obligations of C.F. Sharp
K.K., It was not prayed that petitioners be excluded from any property located in

EN BANC
G.R. No. L-23645 October 29, 1968
BENJAMIN P. GOMEZ, petitioner-appellee,
vs.
ENRICO PALOMAR, in his capacity as Postmaster General, HON. BRIGIDO
R. VALENCIA, in his capacity as Secretary of Public Works and
Communications, and DOMINGO GOPEZ, in his capacity as Acting
Postmaster of San Fernando, Pampanga, respondent-appellants.
CASTRO, J.:
This appeal puts in issue the constitutionality of Republic Act 1635,1 as amended by
Republic Act 2631,2 which provides as follows:
To help raise funds for the Philippine Tuberculosis Society, the Director of Posts
shall order for the period from August nineteen to September thirty every year
the printing and issue of semi-postal stamps of different denominations with face
value showing the regular postage charge plus the additional amount of five
centavos for the said purpose, and during the said period, no mail matter shall
be accepted in the mails unless it bears such semi-postal stamps: Provided, That
no such additional charge of five centavos shall be imposed on newspapers. The
additional proceeds realized from the sale of the semi-postal stamps shall
constitute a special fund and be deposited with the National Treasury to be
expended by the Philippine Tuberculosis Society in carrying out its noble work
to prevent and eradicate tuberculosis.
Adm. Order 7, amending the fifth paragraph of Adm. Order 3, reads as follows:
The respondent Postmaster General, in implementation of the law, thereafter issued
four (4) administrative orders numbered 3 (June 20, 1958), 7 (August 9, 1958), 9
(August 28, 1958), and 10 (July 15, 1960). All these administrative orders were
issued with the approval of the respondent Secretary of Public Works and
Communications.
The pertinent portions of Adm. Order 3 read as follows:
Such semi-postal stamps could not be made available during the period from
August 19 to September 30, 1957, for lack of time. However, two denominations
of such stamps, one at "5 + 5" centavos and another at "10 + 5" centavos, will
soon be released for use by the public on their mails to be posted during the
same period starting with the year 1958.
SPECPRO 14
RULE 63
xxx xxx xxx
During the period from August 19 to September 30 each year starting in 1958,
no mail matter of whatever class, and whether domestic or foreign, posted at
any Philippine Post Office and addressed for delivery in this country or abroad,
shall be accepted for mailing unless it bears at least one such semi-postal stamp
showing the additional value of five centavos intended for the Philippine
Tuberculosis Society.
In the case of second-class mails and mails prepaid by means of mail permits or
impressions of postage meters, each piece of such mail shall bear at least one
such semi-postal stamp if posted during the period above stated starting with
the year 1958, in addition to being charged the usual postage prescribed by
existing regulations. In the case of business reply envelopes and cards mailed
during said period, such stamp should be collected from the addressees at the
time of delivery. Mails entitled to franking privilege like those from the office of
the President, members of Congress, and other offices to which such privilege
has been granted, shall each also bear one such semi-postal stamp if posted
during the said period.
Mails posted during the said period starting in 1958, which are found in street
or post-office mail boxes without the required semi-postal stamp, shall be
returned to the sender, if known, with a notation calling for the affixing of such
stamp. If the sender is unknown, the mail matter shall be treated as nonmailable
and forwarded to the Dead Letter Office for proper disposition.
In the case of the following categories of mail matter and mails entitled to
franking privilege which are not exempted from the payment of the five centavos
intended for the Philippine Tuberculosis Society, such extra charge may be
collected in cash, for which official receipt (General Form No. 13, A) shall be
issued, instead of affixing the semi-postal stamp in the manner hereinafter
indicated:
1. Second-class mail. — Aside from the postage at the second-class rate, the
extra charge of five centavos for the Philippine Tuberculosis Society shall be
collected on each separately-addressed piece of second-class mail matter, and
the total sum thus collected shall be entered in the same official receipt to be
issued for the postage at the second-class rate. In making such entry, the total
number of pieces of second-class mail posted shall be stated, thus: "Total charge

for TB Fund on 100 pieces . .. P5.00." The extra charge shall be entered separate
from the postage in both of the official receipt and the Record of Collections.
2. First-class and third-class mail permits. — Mails to be posted without postage
affixed under permits issued by this Bureau shall each be charged the usual
postage, in addition to the five-centavo extra charge intended for said society.
The total extra charge thus received shall be entered in the same official receipt
to be issued for the postage collected, as in subparagraph 1.
3. Metered mail. — For each piece of mail matter impressed by postage meter
under metered mail permit issued by this Bureau, the extra charge of five
centavos for said society shall be collected in cash and an official receipt issued
for the total sum thus received, in the manner indicated in subparagraph 1.
4. Business reply cards and envelopes. — Upon delivery of business reply cards
and envelopes to holders of business reply permits, the five-centavo charge
intended for said society shall be collected in cash on each reply card or envelope
delivered, in addition to the required postage which may also be paid in cash.
An official receipt shall be issued for the total postage and total extra charge
received, in the manner shown in subparagraph 1.
5. Mails entitled to franking privilege. — Government agencies, officials, and
other persons entitled to the franking privilege under existing laws may pay in
cash such extra charge intended for said society, instead of affixing the semi-
postal stamps to their mails, provided that such mails are presented at the post-
office window, where the five-centavo extra charge for said society shall be
collected on each piece of such mail matter. In such case, an official receipt shall
be issued for the total sum thus collected, in the manner stated in subparagraph
1.
Mail under permits, metered mails and franked mails not presented at the post-
office window shall be affixed with the necessary semi-postal stamps. If found
in mail boxes without such stamps, they shall be treated in the same way as
herein provided for other mails.
Adm. Order 9, amending Adm. Order 3, as amended, exempts "Government and its
Agencies and Instrumentalities Performing Governmental Functions." Adm. Order
10, amending Adm. Order 3, as amended, exempts "copies of periodical publications
received for mailing under any class of mail matter, including newspapers and
magazines admitted as second-class mail."
SPECPRO 15
RULE 63
The FACTS. On September l5, 1963 the petitioner Benjamin P. Gomez mailed a
letter at the post office in San Fernando, Pampanga. Because this letter, addressed
to a certain Agustin Aquino of 1014 Dagohoy Street, Singalong, Manila did not bear
the special anti-TB stamp required by the statute, it was returned to the petitioner.
In view of this development, the petitioner brough suit for declaratory relief in the
Court of First Instance of Pampanga, to test the constitutionality of the statute, as
well as the implementing administrative orders issued, contending that it violates
the equal protection clause of the Constitution as well as the rule of uniformity and
equality of taxation. The lower court declared the statute and the orders
unconstitutional; hence this appeal by the respondent postal authorities.
For the reasons set out in this opinion, the judgment appealed from must be
reversed.
I.
Before reaching the merits, we deem it necessary to dispose of the respondents'
contention that declaratory relief is unavailing because this suit was filed after the
petitioner had committed a breach of the statute. While conceding that the mailing
by the petitioner of a letter without the additional anti-TB stamp was a violation of
Republic Act 1635, as amended, the trial court nevertheless refused to dismiss the
action on the ground that under section 6 of Rule 64 of the Rules of Court, "If before
the final termination of the case a breach or violation of ... a statute ... should take
place, the action may thereupon be converted into an ordinary action."
The prime specification of an action for declaratory relief is that it must be brought
"before breach or violation" of the statute has been committed. Rule 64, section 1
so provides. Section 6 of the same rule, which allows the court to treat an action for
declaratory relief as an ordinary action, applies only if the breach or violation occurs
after the filing of the action but before the termination thereof.3
Hence, if, as the trial court itself admitted, there had been a breach of the statute
before the firing of this action, then indeed the remedy of declaratory relief cannot
be availed of, much less can the suit be converted into an ordinary action.
Nor is there merit in the petitioner's argument that the mailing of the letter in
question did not constitute a breach of the statute because the statute appears to
be addressed only to postal authorities. The statute, it is true, in terms provides that
"no mail matter shall be accepted in the mails unless it bears such semi-postal
stamps." It does not follow, however, that only postal authorities can be guilty of

violating it by accepting mails without the payment of the anti-TB stamp. It is
obvious that they can be guilty of violating the statute only if there are people who
use the mails without paying for the additional anti-TB stamp. Just as in bribery the
mere offer constitutes a breach of the law, so in the matter of the anti-TB stamp the
mere attempt to use the mails without the stamp constitutes a violation of the
statute. It is not required that the mail be accepted by postal authorities. That
requirement is relevant only for the purpose of fixing the liability of postal officials.
Nevertheless, we are of the view that the petitioner's choice of remedy is correct
because this suit was filed not only with respect to the letter which he mailed on
September 15, 1963, but also with regard to any other mail that he might send in
the future. Thus, in his complaint, the petitioner prayed that due course be given to
"other mails without the semi-postal stamps which he may deliver for mailing ... if
any, during the period covered by Republic Act 1635, as amended, as well as other
mails hereafter to be sent by or to other mailers which bear the required postage,
without collection of additional charge of five centavos prescribed by the same
Republic Act." As one whose mail was returned, the petitioner is certainly interested
in a ruling on the validity of the statute requiring the use of additional stamps.
II.
We now consider the constitutional objections raised against the statute and the
implementing orders.
1. It is said that the statute is violative of the equal protection clause of the
Constitution. More specifically the claim is made that it constitutes mail users into a
class for the purpose of the tax while leaving untaxed the rest of the population and
that even among postal patrons the statute discriminatorily grants exemption to
newspapers while Administrative Order 9 of the respondent Postmaster General
grants a similar exemption to offices performing governmental functions. .
The five centavo charge levied by Republic Act 1635, as amended, is in the nature
of an excise tax, laid upon the exercise of a privilege, namely, the privilege of using
the mails. As such the objections levelled against it must be viewed in the light of
applicable principles of taxation.
To begin with, it is settled that the legislature has the inherent power to select the
subjects of taxation and to grant exemptions.4 This power has aptly been described
as "of wide range and flexibility."5 Indeed, it is said that in the field of taxation, more
than in other areas, the legislature possesses the greatest freedom in
classification.6 The reason for this is that traditionally, classification has been a
SPECPRO 16
RULE 63
device for fitting tax programs to local needs and usages in order to achieve an
equitable distribution of the tax burden.7
That legislative classifications must be reasonable is of course undenied. But what
the petitioner asserts is that statutory classification of mail users must bear some
reasonable relationship to the end sought to be attained, and that absent such
relationship the selection of mail users is constitutionally impermissible. This is
altogether a different proposition. As explained in Commonwealth v. Life Assurance
Co.:8
While the principle that there must be a reasonable relationship between
classification made by the legislation and its purpose is undoubtedly true in some
contexts, it has no application to a measure whose sole purpose is to raise
revenue ... So long as the classification imposed is based upon some standard
capable of reasonable comprehension, be that standard based upon ability to
produce revenue or some other legitimate distinction, equal protection of the
law has been afforded. See Allied Stores of Ohio, Inc. v. Bowers, supra, 358 U.S.
at 527, 79 S. Ct. at 441; Brown Forman Co. v. Commonwealth of Kentucky, 2d
U.S. 56, 573, 80 S. Ct. 578, 580 (1910).
We are not wont to invalidate legislation on equal protection grounds except by the
clearest demonstration that it sanctions invidious discrimination, which is all that
the Constitution forbids. The remedy for unwise legislation must be sought in the
legislature. Now, the classification of mail users is not without any reason. It is based
on ability to pay, let alone the enjoyment of a privilege, and on administrative
convenience. In the allocation of the tax burden, Congress must have concluded
that the contribution to the anti-TB fund can be assured by those whose who can
afford the use of the mails.
The classification is likewise based on considerations of administrative convenience.
For it is now a settled principle of law that "consideration of practical administrative
convenience and cost in the administration of tax laws afford adequate ground for
imposing a tax on a well-recognized and defined class."9 In the case of the anti-TB
stamps, undoubtedly, the single most important and influential consideration that
led the legislature to select mail users as subjects of the tax is the relative ease and
convenience of collecting the tax through the post offices. The small amount of five
centavos does not justify the great expense and inconvenience of collecting through
the regular means of collection. On the other hand, by placing the duty of collection
on postal authorities the tax was made almost self-enforcing, with as little cost and
as little inconvenience as possible.

And then of course it is not accurate to say that the statute constituted mail users
into a class. Mail users were already a class by themselves even before the
enactment of the statue and all that the legislature did was merely to select their
class. Legislation is essentially empiric and Republic Act 1635, as amended, no more
than reflects a distinction that exists in fact. As Mr. Justice Frankfurter said, "to
recognize differences that exist in fact is living law; to disregard [them] and
concentrate on some abstract identities is lifeless logic."10
Granted the power to select the subject of taxation, the State's power to grant
exemption must likewise be conceded as a necessary corollary. Tax exemptions are
too common in the law; they have never been thought of as raising issues under the
equal protection clause.
It is thus erroneous for the trial court to hold that because certain mail users are
exempted from the levy the law and administrative officials have sanctioned an
invidious discrimination offensive to the Constitution. The application of the lower
courts theory would require all mail users to be taxed, a conclusion that is hardly
tenable in the light of differences in status of mail users. The Constitution does not
require this kind of equality.
As the United States Supreme Court has said, the legislature may withhold the
burden of the tax in order to foster what it conceives to be a beneficent
enterprise.11 This is the case of newspapers which, under the amendment introduced
by Republic Act 2631, are exempt from the payment of the additional stamp.
As for the Government and its instrumentalities, their exemption rests on the State's
sovereign immunity from taxation. The State cannot be taxed without its consent
and such consent, being in derogation of its sovereignty, is to be strictly
construed.12 Administrative Order 9 of the respondent Postmaster General, which
lists the various offices and instrumentalities of the Government exempt from the
payment of the anti-TB stamp, is but a restatement of this well-known principle of
constitutional law.
The trial court likewise held the law invalid on the ground that it singles out
tuberculosis to the exclusion of other diseases which, it is said, are equally a menace
to public health. But it is never a requirement of equal protection that all evils of the
same genus be eradicated or none at all.13 As this Court has had occasion to say, "if
the law presumably hits the evil where it is most felt, it is not to be overthrown
because there are other instances to which it might have been applied."14
SPECPRO 17
RULE 63
2. The petitioner further argues that the tax in question is invalid, first, because it
is not levied for a public purpose as no special benefits accrue to mail users as
taxpayers, and second, because it violates the rule of uniformity in taxation.
The eradication of a dreaded disease is a public purpose, but if by public purpose
the petitioner means benefit to a taxpayer as a return for what he pays, then it is
sufficient answer to say that the only benefit to which the taxpayer is constitutionally
entitled is that derived from his enjoyment of the privileges of living in an organized
society, established and safeguarded by the devotion of taxes to public purposes.
Any other view would preclude the levying of taxes except as they are used to
compensate for the burden on those who pay them and would involve the
abandonment of the most fundamental principle of government — that it exists
primarily to provide for the common good.15
Nor is the rule of uniformity and equality of taxation infringed by the imposition of
a flat rate rather than a graduated tax. A tax need not be measured by the weight
of the mail or the extent of the service rendered. We have said that considerations
of administrative convenience and cost afford an adequate ground for classification.
The same considerations may induce the legislature to impose a flat tax which in
effect is a charge for the transaction, operating equally on all persons within the
class regardless of the amount involved.16 As Mr. Justice Holmes said in sustaining
the validity of a stamp act which imposed a flat rate of two cents on every $100 face
value of stock transferred:
One of the stocks was worth $30.75 a share of the face value of $100, the
other $172. The inequality of the tax, so far as actual values are concerned,
is manifest. But, here again equality in this sense has to yield to practical
considerations and usage. There must be a fixed and indisputable mode of
ascertaining a stamp tax. In another sense, moreover, there is equality.
When the taxes on two sales are equal, the same number of shares is sold
in each case; that is to say, the same privilege is used to the same extent.
Valuation is not the only thing to be considered. As was pointed out by the
court of appeals, the familiar stamp tax of 2 cents on checks, irrespective of
income or earning capacity, and many others, illustrate the necessity and
practice of sometimes substituting count for weight ...17
According to the trial court, the money raised from the sales of the anti-TB stamps
is spent for the benefit of the Philippine Tuberculosis Society, a private organization,
without appropriation by law. But as the Solicitor General points out, the Society is
not really the beneficiary but only the agency through which the State acts in
carrying out what is essentially a public function. The money is treated as a special
fund and as such need not be appropriated by law.18
 SPECPRO 18
RULE 63

3. Finally, the claim is made that the statute is so broadly drawn that to execute it
the respondents had to issue administrative orders far beyond their powers. Indeed,
this is one of the grounds on which the lower court invalidated Republic Act 1631,
as amended, namely, that it constitutes an undue delegation of legislative power.

Administrative Order 3, as amended by Administrative Orders 7 and 10, provides

that for certain classes of mail matters (such as mail permits, metered mails,
business reply cards, etc.), the five-centavo charge may be paid in cash instead of
the purchase of the anti-TB stamp. It further states that mails deposited during the
period August 19 to September 30 of each year in mail boxes without the stamp
should be returned to the sender, if known, otherwise they should be treated as
non-mailable.

It is true that the law does not expressly authorize the collection of five centavos
except through the sale of anti-TB stamps, but such authority may be implied in so
far as it may be necessary to prevent a failure of the undertaking. The authority
given to the Postmaster General to raise funds through the mails must be liberally
construed, consistent with the principle that where the end is required the
appropriate means are given.19

The anti-TB stamp is a distinctive stamp which shows on its face not only the amount
of the additional charge but also that of the regular postage. In the case of business
reply cards, for instance, it is obvious that to require mailers to affix the anti-TB
stamp on their cards would be to make them pay much more because the cards
likewise bear the amount of the regular postage.

It is likewise true that the statute does not provide for the disposition of mails which
do not bear the anti-TB stamp, but a declaration therein that "no mail matter shall
be accepted in the mails unless it bears such semi-postal stamp" is a declaration
that such mail matter is non-mailable within the meaning of section 1952 of the
Administrative Code. Administrative Order 7 of the Postmaster General is but a
restatement of the law for the guidance of postal officials and employees. As for
Administrative Order 9, we have already said that in listing the offices and entities
of the Government exempt from the payment of the stamp, the respondent
Postmaster General merely observed an established principle, namely, that the
Government is exempt from taxation.

ACCORDINGLY, the judgment a quo is reversed, and the complaint is dismissed,

without pronouncement as to costs.

FIRST DIVISION
G.R. No. L-28138 August 13, 1986
MATALIN COCONUT CO., INC., petitioner-appellee,
vs.
THE MUNICIPAL COUNCIL OF MALABANG, LANAO DEL SUR, AMIR M.
BALINDONG and HADJI PANGILAMUN MANALOCON, MUNICIPAL MAYOR
and MUNICIPAL TREASURER OF MALABANG, LANAO DEL SUR, respondents-
appellants. PURAKAN PLANTATION COMPANY, intervenor-appellee.
YAP, J.:
On August 24, 1966, the Municipal Council of Malabang, Lanao del Sur, invoking the
authority of Section 2 of Republic Act No. 2264, otherwise known as the Local
Autonomy Act, enacted Municipal Ordinance No. 45-46, entitled "AN ORDINANCE
IMPOSING A POLICE INSPECTION FEE OF P.30 PER SACK OF CASSAVA STARCH
PRODUCED AND SHIPPED OUT OF THE MUNICIPALITY OF MALABANG AND
IMPOSING PENALTIES FOR VIOLATIONS THEREOF." The ordinance made it unlawful
for any person, company or group of persons "to ship out of the Municipality of
Malabang, cassava starch or flour without paying to the Municipal Treasurer or his
authorized representatives the corresponding fee fixed by (the) ordinance." It
imposed a "police inspection fee" of P.30 per sack of cassava starch or flour, which
shall be paid by the shipper before the same is transported or shipped outside the
municipality. Any person or company or group of individuals violating the ordinance
"is liable to a fine of not less than P100.00, but not more than P1,000.00, and to
pay Pl.00 for every sack of flour being illegally shipped outside the municipality, or
to suffer imprisonment of 20 days, or both, in the discretion of the court.
The validity of the ordinance was challenged by the Matalin Coconut, Inc. in a
petition for declaratory relief filed with the then Court of First Instance of Lanao del
Sur against the Municipal Council, the Municipal Mayor and the Municipal Treasurer
of Malabang, Lanao del Sur. Alleging among others that the ordinance is not
only ultra vires, being violative of Republic Act No. 2264, but also unreasonable,
oppressive and confiscatory, the petitioner prayed that the ordinance be declared
null and void ab initio, and that the respondent Municipal Treasurer be ordered to
refund the amounts paid by petitioner under the ordinance. The petitioner also
prayed that during the pendency of the action, a preliminary injunction be issued
enjoining the respondents from enforcing the ordinance. The application for
preliminary injunction, however, was denied by the trial court; instead respondent
Municipal Treasurer was ordered to allow payment of the taxes imposed by the
ordinance under protest.
SPECPRO 19
RULE 63
Claiming that it was also adversely affected by the ordinance, Purakan Plantation
Company was granted leave to intervene in the action. The intervenor alleged that
while its cassava flour factory was situated in another municipality, i.e., Balabagan,
Lanao del Sur, it had to transport the cassava starch and flour it produced to the
seashore through the Municipality of Malabang for loading in coastwise vessels; that
the effect of the enactment of Ordinance No. 45-46, is that intervenor had to refrain
from transporting its products through the Municipality of Malabang in order to ship
them by sea to other places.
After trial, the Court a quo rendered a decision declaring the municipal ordinance in
question null and void; ordering the respondent Municipal Treasurer to refund to the
petitioner the payments it made under the said ordinance from September 27, 1966
to May 2, 1967, amounting to P 25,500.00, as well as all payments made
subsequently thereafter; and enjoining and prohibiting the respondents, their agents
or deputies, from collecting the tax of P.30 per bag on the cassava flour or starch
belonging to intervenor, Purakan Plantation Company, manufactured or milled in the
Municipality of Balabagan, but shipped out through the Municipality of Malabang.
After the promulgation of the decision, the Trial Court issued a writ of preliminary
mandatory injunction, upon motion of petitioner, requiring the respondent Municipal
Treasurer to deposit with the Philippine National Bank, Iligan Branch, in the name
of the Municipality of Malabang, whatever amounts the petitioner had already paid
or shall pay pursuant to the ordinance in question up to and until final termination
of the case; the deposit was not to be withdrawn from the said bank without any
order from the court. On motion for reconsideration by respondents, the writ was
subsequently modified on July 20, 1967, to require the deposit only of amounts paid
from the effectivity of the writ up to and until the final termination of the suit.
From the decision of the trial court, the respondents appealed to this Court.
A motion to dismiss appeal filed by petitioner-appellee, was denied by this court in
its resolution of October 31, 1967. Subsequently, respondents-appellants filed a
motion to dissolve the writ of preliminary mandatory injunction issued by the trial
court on July 20, 1967. This motion was also denied by this Court on January 10,
1968.
Of the assignments of error raised by the appellants in their Brief, only the following
need be discussed: (1) that the trial court erred in adjudicating the money claim of
the petitioner in an action for declaratory relief; and (2) that the trial court erred in
declaring the municipal ordinance in question null and void.

The respondents-appellants maintain that it was error for the trial court, in an action
for declaratory relief, to order the refund to petitioner-appellee of the amounts paid
by the latter under the municipal ordinance in question. It is the contention of
respondents-appellants that in an action for declaratory relief, all the court can do
is to construe the validity of the ordinance in question and declare the rights of those
affected thereby. The court cannot declare the ordinance illegal and at the same
time order the refund to petitioner of the amounts paid under the ordinance, without
requiring petitioner to file an ordinary action to claim the refund after the declaratory
relief judgment has become final. Respondents maintain that under Rule 64 of the
Rules of Court, the court may advise the parties to file the proper pleadings and
convert the hearing into an ordinary action, which was not done in this case.
We find no merit in such contention. Under Sec. 6 of Rule 64, the action for
declaratory relief may be converted into an ordinary action and the parties allowed
to file such pleadings as may be necessary or proper, if before the final termination
of the case "a breach or violation of an...ordinance, should take place." In the
present case, no breach or violation of the ordinance occurred. The petitioner
decided to pay "under protest" the fees imposed by the ordinance. Such payment
did not affect the case; the declaratory relief action was still proper because the
applicability of the ordinance to future transactions still remained to be resolved,
although the matter could also be threshed out in an ordinary suit for the recovery
of taxes paid (Shell Co. of the Philippines, Ltd. vs. Municipality of Sipocot, L-12680,
March 20, 1959). In its petition for declaratory relief, petitioner-appellee alleged
that by reason of the enforcement of the municipal ordinance by respondents it was
forced to pay under protest the fees imposed pursuant to the said ordinance, and
accordingly, one of the reliefs prayed for by the petitioner was that the respondents
be ordered to refund all the amounts it paid to respondent Municipal Treasurer
during the pendency of the case. The inclusion of said allegation and prayer in the
petition was not objected to by the respondents in their answer. During the trial,
evidence of the payments made by the petitioner was introduced. Respondents were
thus fully aware of the petitioner's claim for refund and of what would happen if the
ordinance were to be declared invalid by the court.
Respondents' contention, if sustained, would in effect require a separate suit for the
recovery of the fees paid by petitioner under protest. Multiplicity of suits should not
be allowed or encouraged and, in the context of the present case, is clearly uncalled
for and unnecessary.
The main issue to be resolve in this case whether not Ordinance No. 45-66 enacted
by respondent Municipal Council of Malabang, Lanao del Sur, is valid. The
respondents-appellants contend that the municipality has the power and authority
SPECPRO 20
RULE 63
to approve the ordinance in question pursuant to Section 2 of the Local Autonomy
Act (Republic Act No. 2264).
Since the enactment of the Local Autonomy Act, a liberal rule has been followed by
this Court in construing municipal ordinances enacted pursuant to the taxing power
granted under Section 2 of said law. This Court has construed the grant of power to
tax under the above-mentioned provision as sufficiently plenary to cover
"everything, excepting those which are mentioned" therein, subject only to the
limitation that the tax so levied is for public purposes, just and uniform (Nin Bay
Mining Company vs. Municipality of Roxas, Province of Palawan, 14 SCRA 661; C.N.
Hodges vs. Municipal Board, Iloilo City, et al., 19 SCRA 28).
We agree with the finding of the trial court that the amount collected under the
ordinance in question partakes of the nature of a tax, although denominated as
"police inspection fee" since its undeniable purpose is to raise revenue. However,
we cannot agree with the trial court's finding that the tax imposed by the ordinance
is a percentage tax on sales which is beyond the scope of the municipality's authority
to levy under Section 2 of the Local Autonomy Act. Under the said provision,
municipalities and municipal districts are prohibited from imposing" any percentage
tax on sales or other taxes in any form based thereon. " The tax imposed under the
ordinance in question is not a percentage tax on sales or any other form of tax based
on sales. It is a fixed tax of P.30 per bag of cassava starch or flour "shipped out" of
the municipality. It is not based on sales.
However, the tax imposed under the ordinance can be stricken down on another
ground. According to Section 2 of the abovementioned Act, the tax levied must be
"for public purposes, just and uniform" (Emphasis supplied.) As correctly held by
the trial court, the so-called "police inspection fee" levied by the ordinance is "unjust
and unreasonable." Said the court a quo:
... It has been proven that the only service rendered by the Municipality of
Malabang, by way of inspection, is for the policeman to verify from the driver of
the trucks of the petitioner passing by at the police checkpoint the number of
bags loaded per trip which are to be shipped out of the municipality based on
the trip tickets for the purpose of computing the total amount of tax to be collect
(sic) and for no other purpose. The pretention of respondents that the police,
aside from counting the number of bags shipped out, is also inspecting the
cassava flour starch contained in the bags to find out if the said cassava flour
starch is fit for human consumption could not be given credence by the Court
because, aside from the fact that said purpose is not so stated in the ordinance
in question, the policemen of said municipality are not competent to determine
if the cassava flour starch are fit for human consumption. The further pretention
 SPECPRO 21
RULE 63

of respondents that the trucks of the petitioner hauling the bags of cassava flour
starch from the mill to the bodega at the beach of Malabang are escorted by a
policeman from the police checkpoint to the beach for the purpose of protecting
the truck and its cargoes from molestation by undesirable elements could not
also be given credence by the Court because it has been shown, beyond doubt,
that the petitioner has not asked for the said police protection because there has
been no occasion where its trucks have been molested, even for once, by bad
elements from the police checkpoint to the bodega at the beach, it is solely for
the purpose of verifying the correct number of bags of cassava flour starch
loaded on the trucks of the petitioner as stated in the trip tickets, when unloaded
at its bodega at the beach. The imposition, therefore, of a police inspection fee
of P.30 per bag, imposed by said ordinance is unjust and unreasonable.

The Court finally finds the inspection fee of P0.30 per bag, imposed by the
ordinance in question to be excessive and confiscatory. It has been shown by
the petitioner, Matalin Coconut Company, Inc., that it is merely realizing a
marginal average profit of P0.40, per bag, of cassava flour starch shipped out
from the Municipality of Malabang because the average production is P15.60 per
bag, including transportation costs, while the prevailing market price is P16.00
per bag. The further imposition, therefore, of the tax of P0.30 per bag, by the
ordinance in question would force the petitioner to close or stop its cassava flour
starch milling business considering that it is maintaining a big labor force in its
operation, including a force of security guards to guard its properties. The
ordinance, therefore, has an adverse effect on the economic growth of the
Municipality of Malabang, in particular, and of the nation, in general, and is
contrary to the economic policy of the government.

Having found the ordinance in question to be invalid, we find it unnecessary to rule

on the other errors assigned by the appellants.

WHEREFORE, petition is dismissed. The decision of the court a quo is hereby

affirmed. No costs.

SO ORDERED.