RULE 63 –DECLARATORY RELIEF

17.

IN THE MATTER OF A PETITION FOR DECLARATORY JUDGMENT REGARDING THE

CONSTRUCTION OF SECTION 3 OF REPUBLIC ACT No. 875, KNOWN AS THE INDUSTRIAL
PEACE ACT. THE PHILIPPINE-AMERICAN MANAGEMENT & FINANCING COMPANY,
INC., Petitioner, vs. MANAGEMENT & SUPERVISORS ASSOCIATION OF THE PHILIPPINE-
AMERICAN MANAGEMENT & FINANCING COMPANY, INC., ARTHUR ABIERA, ALFONSO
BRIONES, JR., EUGENIO DE LA CUADRA, RAUL DIYCO, LIBRADA MARQUINEZ, PLARIDEL
PAMATIAN CLEMENTE ROMAN, VALERIO TIGNO and ROSALINO MARTIN, Respondents.,
G.R. No. L-27953 November 29, 1972

PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION EMPLOYEES ASSOCIATION-

(CUGCO), Petitioner, vs. THE HONORABLE JUDGE HONORATO B. MASAKAYAN OF THE
COURT OF FIRST INSTANCE OF RIZAL, QUEZON CITY BRANCH; ROSENDO ESTOYE,
RAMON ENCARNACION, JR., RICARDO AGUILA, CASIANO LEDDA, FERNANDO
MANANGAN, FEDERICO B. MORENO, E. P. LA ROSA and ABELARDO SUBIDO, Respondents.,
G.R. No. L-29538 November 29, 1972.

FACTS: In the first case, the Philippine American Management Financing Company, Inc. (PAMFCI)
v. Managers and Supervisors Association of Philippine American Management Financing Company,
Inc. (MSAPAMFC), PAMFCI filed a petition for declaratory relief regarding the construction of
Section 3 of RA No. 875 (The Industrial Peace Act), seeking an interpretation of whether or not
under the then existing collective bargaining contract between the parties, department managers
could join respondent Union, with the CFI. Respondent below, as well as here, the MSAPAMFC and
some of its officers, moved to dismiss the petition on the ground of lack of jurisdiction because it was
for the Court of Industrial Relations (CIR) to pass upon. The CFI sustained the motion and dismissed
the case. Hence this appeal on question of law.

In the second case, a certiorari and prohibition proceeding, Philippine Virginia Tobacco

Administration Employees Association-(CUGCO) (PVTAEAC) v. The Honorable Honorato B.
Masakayan, the CFI denied a motion to dismiss a petition for declaratory relief as to whether a
provision again of an existing collective bargaining contract between the PVTAEAC and the
Philippine Virginia Tobacco Administration Employees Association could be implemented without the
approval of the Commissioner of Civil Service. PVTAEAC strongly objected to the assumption of
jurisdiction, primarily on the ground that there was then pending in the CIR an unfair labor practice
case with which it was interrelated. The CFI continued asserting jurisdiction. Hence, this petition.

ISSUE: Is a CFI vested with jurisdiction to pass upon a petition for declaratory relief regarding the
interpretation of a collective bargaining agreement?

RULING: No. Policy considerations dictate that as much as possible the matter of adjusting labor-
management relations should be left to the Court of Industrial Relations. Accordingly, the Court
affirm the order of dismissal in the first case and reverse in the second.

Increasingly, the Court has been committed to the view that unless the law speaks clearly and
unequivocally, the choice should fall on the Court of Industrial Relations. Thus: "That such a result is
not to be deplored should be obvious to all, for no agency is better equipped by training, experience,
and background to handle labor controversies than the Court of Industrial Relations. The regular
courts 'have not intervened in labor cases [since 1936], and are therefore ill-prepared to apply labor
laws and policies. And the frequency with which this Court has had to upset their labor injunctions
attests to the fact.” In Republic Savings Bank v. Court of Industrial Relations, the Court stated that
collective bargaining does not end with the execution of an agreement. It is a continuous process.
The duty to bargain imposes on the parties during the term of their agreement the mutual obligation
"to meet and confer promptly and expeditiously and in good faith ... for the purpose of adjusting any
grievances or question arising under such agreement" . Once it is admitted that a violation of a
collective bargaining agreement is an unfair labor practice, the jurisdiction of the Court of
Industrial Relations is correspondingly enlarged for such class of disputes is exclusively
within its competence. In the case of Mindanao Rapid Co., Inc. v. Omandam, it was stated that
"whenever the existence of such dispute and of other facts placing the issue within the
exclusive jurisdiction of the Court of Industrial Relations has been duly established, this
Court has not hesitated to declare that the court of first instance has no authority to hear and
decide the case." 

In this case, the very allegations in the petition in the PAMFCI case, the allegation of non-
compliance with the terms of a collective bargaining agreement could plausibly be maintained by
respondent and appellant Managers and Supervisors Association. In the certiorari proceeding filed
by the Philippine Virginia Tobacco Administration Employees Association, it is undeniable that as far
back as August 7, 1967, the allegation of bad faith by way of a retaliatory action for union activity,
the basis of an unfair labor practice charge, had already been made. The petition then for
declaratory relief filed before the CFI by someone from management came much later and certainly
furnished no basis for the CFI acting thereon.

Further, there is greater probability that, not only because of the proficiency, background and
temperament of the personnel of the CIR, but likewise because of its sworn duty to enforce the
Industrial Peace Act, that in an appraisal of the meaning to be accorded stipulations in the collective
bargaining agreement, the result arrived at is likely to be more in conformity with the wishes of the
parties.

18.

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., G.R. No. L-58340, July 16, 1991.

FACTS:

The private respondent C.F. Sharp & Co., Inc. (CFSCI) filed a complaint for injunction and/or
declaratory relief in the CFI against 79 Japanese corporations as defendants, among which are the
petitioners herein. It alleges, among others, that it is a domestic corporation; that there is another
corporation organized under the law of Japan with the corporate name C.F. Sharp Kabushiki Kaisha;
that the CFSCI 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 (Japan), then it failed and/or refused to pay
its creditors and because of that the latter have been demanding from CFSCI, the payment of the
alleged obligations to them of C.F. Sharp Kabushiki Kaisha.
CFSCI prayed for injunctive relief against the petitioners' demand for the payment of C.F. Sharp
Kabushiki Kaisha's liabilities. As an alternative to injunction, it 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. The CFI issued an order authorizing extraterritorial service
of summons upon defendants to be effected by registered mail with return cards.

The petitioners filed their "Special Appearance to Question Jurisdiction of This Honorable Court Over
Persons of Defendants". They contend that the CFI 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.

The CFI denied such petitions and their MR thereafter. Hence, the present petition.

ISSUE: Is declaratory relief proper in this case?

RULING: No. The case being 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. Considering that extra-territorial service of summons on the petitioners was
improper, the same was null and void.

According to Section 17 Rule 14 of the Rules of Court, 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])

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 (a legal personal relationship with
which third persons and the state are concerned), rights and obligations. Obligations are more or
less temporary, but status is relatively permanent.

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."
Further, the CFSCI has no action relating to or the subject of which are the properties of the
defendants in the Philippines because they have none nor can it be said that they have claimed any
lien or interest, actual or contingent over any property herein. The petitioners merely demanded or
attempted to demand from CFSCI payment of the monetary obligations of C.F. Sharp K.K.

Finally, it was not prayed that petitioners be excluded from any property located in the Philippines,
nor was it alleged, much less shown, that the properties of the defendants, if any, have been
attached.

19.
JUAN EDADES, Plaintiff-Appellant, vs. SEVERINO EDADES, ET AL., Defendants-Appellees,
G.R. No. L-8964.  July 31, 1956.

FACTS: Plaintiff brought this action before the CFI 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. He allegedly 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.
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 and ordered
the dismissal of the complaint 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.” Hence, this appealed case as
certified to the Supreme Court as it only involves questions of law.
ISSUE: Is an action for declaratory relief proper in this case?
RULING: Yes. The case is remanded to the trial court for further proceedings in connection with the
determination of the alleged status of the Plaintiff.
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; and (4) the issue involved must be ripened for judicial determination.
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. This action therefore cannot be
maintained if considered strictly as one for declaratory relief.
But the present action is not merely aimed at determining the hereditary right of the Plaintiff, 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.
The new Civil Code is silent as to the steps that may be taken to establish such status as in case of
a natural child who can bring an action for recognition. But the Court declared 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. Considering that the rules of procedure shall be liberally construed to
promote their object and avoid an expensive litigation, the Court hold that the present action may be
maintained in the light of the view herein expressed.

20.

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,
G.R. No. L-28138 August 13, 1986.

FACTS:

The Municipal Council of Malabang, Lanao del Sur, enacted Municipal Ordinance (M.O.)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." Any person violating the ordinance is liable to a fine and
penalty or to suffer imprisonment, 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 CFI against the respondents. Alleging among others that the ordinance is not
only ultra vires, being violative of R.A 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 but this was denied by the CFI. Purakan
Plantation Company was granted leave to intervene in the action.

The CFI declared the municipal ordinance in question null and void and ordered the Treasurer to
refund to the petitioner the payments it made under the said ordinance. Hence, this appeal.

ISSUE: Did the trial court erred in adjudicating the money claim of the petitioner in an action for
declaratory relief?

RULING: No. The decision of the CFI is affirmed.

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, 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. Multiplicity of suits should not be allowed or
encouraged and, in the context of the present case, is clearly uncalled for and unnecessary (to file a
separate suit for the refund). 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.

As to the validity of the ordinance, 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. It is a fixed tax (not percentage tax based on sales as per the CFI) of P.30 per bag
of cassava starch or flour "shipped out" of the municipality. However, the tax imposed should be
stricken down on the ground that it is "unjust and unreasonable.". This is because the job of the
policeman is only 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, however, (1) 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, which they are not competent to do, and (2) the trucks are escorted by a
policeman from the police checkpoint to the beach for the purpose of protecting the truck and its
cargoes from molestation, but 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.

Finally, the Court finds the inspection fee of P0.30 per bag, imposed by the ordinance in question to
be excessive and confiscatory as analyzed and compared to the marginal average profit of P0.40,
per bag realized by the petitioner. Its imposition would force the petitioner to close or stop its
cassava flour starch milling business.