SEBASTIAN SARMIENTO, ET AL., PETITIONERS-APPELLEES, VS. HON. ELEUTERIO CAPAPAS, AS COMMISSIONER OF CUSTOMS, ET AL., RESPONDENTS-APPELLANTS. GREGORIO GAMULO, ET AL., INTERVENORS-…

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.
BT1380 (SP).

On June 9, 1958 the petitioners filed a motion to be permitted to
file a 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 on May 8, 1958, the Collector of Internal Revenue issued an
authority to release 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 incumbent Collector for the
Port of Manila, declaring that said 666 hogsheads of tobacco were
imported under the Barter Permit No. BT-1380 (SP) dated January 21,
1958 by the No-Dollar Import Office;

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 of the imported Virginia leaf tobacco
or the release of said 666 hogsheads of tobacco;

That the said shipments of 666 hogsheads of tobacco form part of
several other 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 value to the sum of $4,900,000.00;

That the respondent, Mr. Juan Echiverri, in his capacity as
President of the Ilocos Norte Federation of Facoraas, failed miserably
to protect the Virginia tobacco producers in failing to register the
objections of the different members of the Ilocos Norte Federation
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 Acts 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;

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 Echeverri, 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 endorsements 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
no justiciable for declaratory relief.

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, 1953, respondents Capapas, Angangco and Arafias filed
their joint answer, denying, like their corespondents, 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, Arafias, 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’
andIntervenors, 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.

“In view of the penal provision of
Republic Act 1194, the Clerk j 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. 3639 we held:

“x x x 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., p. 284; (De Borja vs. Villadolid, 85 Phil., pp.
36-39).

Following the above-quoted decision, jf 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 multiplicity of suite. 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 the legal importation be confiscated
under the provisions of the law (Section 1 (e), 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.

Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, and De Leon, JJ., concur.