HON. JUAN PONCE ENRILE, AS COMMISSIONER OF CUS­TOMS; JUANITO A. AGBAYANI, AS COLLECTOR OF CUSTOMS OF THE PORT OF CEBU; AND JOSE SYBICO, AS CUSTOMS ARRASTRE SUPERVISOR OF THE POR…

On October 19, 1966 the Commissioner of Customs, acting under the
authority of section 1213 of the Tariff and Customs Code+ and in representation of the Bureau
of Customs (hereinafter referred to as the Bureau), entered into a Management
Contract with the Cebu Port Terminal, Inc.
(hereinafter referred to as CPTI), whereby the latter corporation was
designated as sole manager of the arrastre service at
the port of Cebu for a period of five (5) years
unless sooner terminated in accordance with the contract.

Time came when the Bureau, through the Cebu
Collector of Customs and the Customs Arrastre
Supervisor, called the attention of CPTI to its numerous violations of the con­tract,
ranging from failure to provide the necessary pier facilities to avoid
congestion of cargoes to non-submission of the required monthly reports of operations.  Attention was likewise directed to complaints
aired by several Cebu-based merchants, decrying the
inefficiency of CPTI in the handling and delivery of imported articles.  Specific demands were formally made by the
Bureau for immediate compliance in order to attain a more satisfactory and
efficient service.  To these
demands, according to petitioners, no answer or explanation was received by the
Bureau.

On February 10, 1967
the Commissioner of Customs formally notified CPTI, by letter addressed to its
president and general manager, that the Bureau was taking over the arrastre operations at the port
of Cebu
pursuant to paragraph 32 of the Management Contract, which provides:

“32.  It is understood
and expressly agreed that violation of any of the terms and conditions of this
Contract shall be sufficient ground for revocation and can­cellation of this
Contract.  The Bureau upon
discovery of the violation, shall inform the CONTRACTOR in writing of such
violation.  If within one (1) week
from such notice, the CONTRACTOR shall fail to satisfy the BUREAU that such
violation has not been committed or does not exist, it is expressly agreed that
the BUREAU shall take over the management and operations of the whole arrastre service.” (under­lining supplied.)

On the same date the Commissioner also issued Customs
Administrative Order (CAO) No. 1-67, directing the Customs Arrastre
Service (created under unnumbered Customs Adminis­trative Order dated June 23,
1966) to take over the manage­ment and operation of the arrastre
service at the port of Cebu.  On March
7, 1967 the Commissioner wrote another letter to CPTI, reiterating
the Bureau’s cancellation and termina­tion on the management contract effective
as of the date of actual take-over, i.e., February 13, 1967.

In February 1967 CPTI filed a complaint (Civil Case No. 9846)
against herein petitioners in the Court of First Instance of Cebu (Branch VI), with an “application for temporary
restraining order and/or temporary injunction,” alleging, inter alia that the management contract had been
terminated by the Commissioner in violation of paragraph 32 thereof; that since
said contract was bilateral the act of the Commissioner in terminating it was
without due pro­cess of law, arbitrary and unlawful; and that the Bureau should
have filed an action for rescission instead. 
The reliefs prayed for were preliminary
injunction pending trial, and, after trial, final injunction, damages and
attorney’s fees.

On February 16, 1967 the court a quo issued ex-parte a writ of preliminary injunction, “enjoining the
defendants and their representatives and workers from performing the arrastre services in the piers, wharves and ports of Cebu and from preventing them to enter said areas in order
to carry oat their arrastre functions, upon
plaintiff’s filing a bond in the amount of P20,000.00 to answer for whatever
damages defendants may suffer by reason thereof.” On February 17, 1967 the
same court suspended the effect of the writ of preliminary injunction issued
the day before by ordering a status quo in the sense that the arrastre services, which had been taken over by herein
petitioners, were temporarily allowed to remain under the Bureau’s super­vision
pending final resolution as to whether to dissolve the writ or to maintain it.

On February 27, 1967 herein petitioners moved to dismiss the
complaint and “to dissolve or maintain dissolu­tion of the ancillary
writ,” alleging among other things that the Court had no jurisdiction to
review the actuation of the Commissioner in taking over the arrastre
service pursuant to Sec. 1213 of the Tariff and Customs Code, for the reason
that such jurisdiction pertained to the Court of Tax Appeals; that respondent
Court had no jurisdiction to enforce a writ of injunction, whether permanent or
temporary, outside its territorial jurisdiction, in accordance with section
44(h) of Republic Act 296 and the decisions of the Supreme Court on the matter;
that as herein petitioners were being sued for damages arising from acts
committed in their official capacities and in the performance of their official
duties, the action was in reality a suit against the State, which had not given
its consent to be sued; and that the complaint states no cause of action
because paragraph 32 of the management contract authorizes the Commissioner to
revoke the contract and/or take over the operation and management of the arrastre service.

On February 28, 1967,
upon motion of CPTI, respondent Court granted the parties five (5) days within
which to submit their respective memoranda. 
On March 8, 1967,
after ruling that it had jurisdiction to grant the questioned writ, the Court
issued the following order:

“Considering all the foregoing, this Court hereby maintains
the writ of pre­liminary injunction authorized by its order dated February 16,
1967 and enjoins all of the defendants and their represent­atives from
preventing the plaintiff, its representatives, personnel, laborers, and workers
from performing the arrastre ser­vices in all the
piers, wharves, and ports of Cebu City, and from preventing
them to enter all of the said areas together with all of their equipments,
vehicles, and any other properties in order to carry out their arrastre functions. 
In the interest of the public this order of injunction shall be
effective immediately upon service upon the defendant Collector of Customs of Cebu City, Juanito A. Agbayani.”

Petitioners thereupon filed a petition for prohibition and
certiorari, with preliminary injunction, in the Court of Appeals.  Pending final resolution of the issues presented,
said Court issued on March 13, 1967 a writ of preliminary injunction
temporarily restraining respondent Court of First Instance from executing,
enforcing and/or implementing its orders dated February 16 and March 8, 1967.  After hearing, however, the appellate Court
ruled in favor of respondents, dismissed the petition and dissolved the
injunction it had previously issued.

The case is now before us on review by certiorari.  On June 5, 1967 we issued a temporary
restraining order directed to the Presiding Judge of the Court of First Ins­tance
of Cebu (Branch VI) restraining him, his agents,
repre­sentatives and/or any person acting in his behalf from “exe­cuting,
enforcing and/or implementing (his) orders of February 16 and March 9 (should
be the 8th), 1967, and the writ of preliminary injunction issued pursuant
thereto; and from otherwise proceeding in any manner whatsoever with the hear­ings
in Civil Case No. R-9846, x x x
until further orders from this Court.”

In assailing the validity of the writ of preliminary injunction
issued by the Court a quo, petitioners maintain that it has no
jurisdiction over the subject-matter and that such jurisdiction pertains to the
Court of Tax Appeals, pur­suant to Section 7 of Republic Act 1125, which
provides:

“SEC. 7.  Jurisdiction.-
The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to
review by appeal, as herein provided –

x x
x

“(2) Decisions of the Commissioner of Customs in cases
involving liability for customs duties, fees or other money charges; seizure,
detention or release of property affected; fines, forfeitures or other
penalties imposed in relation thereto; or other matters arising under the
Customs Law or other law or part of law administered by the Bureau of Customs;

x x x
“

Petitioners contend that inasmuch as the Commissioner awarded the
arrastre management contract by virtue of his
authority under Section 1213 of the Tariff and Customs Code, said contract is
covered by the phrase “other matters arising under the Customs Law or other
law or part of law adminis­tered by the Bureau of Customs.”

We see no merit in the contention.  The case at bar is not one involving
liability for customs duties, fees or other money charges.  It does not involve seizure, detention or release
of property affected, nor fines, forfeitures or other penalties imposed in
relation thereto.  It arose from a
contract of services or, more specifically, from an al­leged violation
thereof.  While the authority of the Com­missioner
to enter into such contract emanates from the Tariff and Customs Code, the
controversy itself concerns rights and obligations which proceed from the
contract, not from the Commissioner’s administration of the customs laws.  The following statement of this Court in a
previous case is apropos:

“Note that the law gives to the Court of Tax Appeals exclusive
appellate jurisdiction to review the decision of the x x
x Commissioner of Customs, x x
x.  Note also
that in defining the cases that may be reviewed, the law begins by enumerating
them and then adds a general clause per­taining to other matters that may arise
under the x x x Customs law
x x x.  This shows that the ‘other matters’ that may
come under the general clause should be of the same nature as those that have preceeded them applying the rule of construction known as ejusdem generis.  In other words, in order that a matter may
come under the general clause, it is necessary that it belongs to the same kind
or class therein specifically en­umerated. 
Otherwise, it should be deemed foreign or extraneous and is not
included.” (011ada vs. Court of Tax Appeals, 99 Phil. 604)

Petitioners plead non-suability of the State alleging that
because they are sued in their official capacities, any judgment for damages
against them would in effect result in loss of money by the government.  Syquia vs. Almeda Lopez (47 O.G. 665) is cited, particularly the
following statement of this Court therein:

“Where the judgment (in a suit by a private citizen against
officers of the government) would result not only in the recovery of the
possession of property in favor of said citizen but also in a charge against or
financial liability to the government, then the suit should be regarded as one
against the government itself, and consequently it cannot prosper or be entertained
by courts except with the consent of said government.”

It is not necessary to consider the issue of State non-suability
here.  That issue may be raised at the
proper time in the answer to the complaint, as a defense to the claim for
damages.  The question before us relates
to the propriety of the writ of preliminary injunction issued by the Court
below, and it is not pretended that acts of government officers, even if
illegal, oppressive, or viola­tive of contracts with
private citizens, are beyond the power of the courts to enjoin.  In the context of this case, that question,
stated otherwise, is whether or not, on the basis of the pleadings and of the
evidence so far before the said Court, the unilateral termination of the
management contract by the Bureau, followed by its take­over of the operation
of the arrastre service, was justi­fied.

CPTI first contends that a judicial action for rescission of said
contract should have been filed.  In this
connection it should be noted that under paragraph 32 of the management
contract the same may be revoked and can­celled for violation of any of its
terms and conditions.  All that is
required before cancellation is (a) that the Bureau inform the contractor
(respondent CPTI) in writing of such violation, and (b) that the contractor
fail within one week to satisfy the Bureau that such violation has not been
committed or does not exist, whereupon the Bureau may take over the management
and operation of the whole arrastre service.  Resort to judicial action for rescission is
obviously not contemplated under the circumstances just mentioned.  The validity of the stipulation cannot be
seriously disputed.  It is in the nature
of a facultative resolutory condition, which in many
cases has been upheld by this Court.

“Judicial permission to cancel the agreement is not necessary
because of the agreement that NDC may cancel the contract.  Judicial action is proper only where there is
absence of a special provision granting the power of cancel­lation.” (De
La Rama Steamship Co., Inc. vs. Tan, et al., L-8784,
May 21, 1956)

“There is nothing in the law that prohibits the parties from
entering into agreement that violation of the terms of the contract would cause
can­cellation thereof, even without court intervention.  In other words, it is not always necessary
for the injured party to resort to court for rescission of the contract.”
(Froilan vs. Pan Oriental Ship­ping Company, L-11897,
October 31, 1964)

“ART. 1256 of the Civil Code (now Art. 1308) x x x creates no impediment to the
insertion in a contract for personal service of a resolutory
condition permitting the cancellation of the contract by one of the
parties.  Such a stipulation x x x does not make either the validity
or the fulfillment of the contract dependent upon the will of the party to whom
is conceded the privilege of cancellation; for where the contracting parties
have agreed that such option shall exist, the exercise of the option is as much
in the fulfillment of the contract as any other act which may have been the
subject of agreement.  In­deed, the
cancellation of a contract in accordance with conditions agreed upon beforehand
is fulfillment.” (Taylor vs. Uy Tieng Piao, 43 Phil. 873.)

It is pertinent to bear in mind that what we are asked to review
here is not only the issuance of the writ of injunc­tion by the Court a quo
but also the decision of the Court of Appeals dismissing the petition for
certiorari and prohibi­tion filed before it by herein petitioners, and
dissolving the writ of preliminary injunction it had theretofore issued.  Insofar as the prayer for prohibition is
concerned, based as it is on the ground of the trial court is lack of
jurisdiction over the subject-matter of the action, we are of the opinion that
the dismissal was proper.  As has been
pointed out, the case below is one cognizable by the court a quo
and not by the Court of Tax Appeals under Section 7 of Republic Act No. 1125.

On the certiorari aspect of the petition in the Court of Appeals,
which had to do primarily with the writ of preliminary injunction issued by the
Court a quo on February 16, 1967, and with its order of March 8,
1967, maintaining the said writ and directing its implementation, the question
is wether or not the said Court thereby exceeded its
jurisdic­tion or committed a grave abuse of discretion.  To resolve the question, the writ must be
viewed in its setting when issued.

Before the trial Court, first of all, was the com­plaint of
respondent CPTI.  The only allegations
therein ad­vanced to support the prayer for preliminary injunction aside from
the recital of the acts sought to be enjoined, were “that without due
process or hearing to the plaintiff corporation and without any opportunity at
all to it to present formally the true facts concerning its operations,”
and without having been given the one-week notice required in paragraph 32 of
the management contract, it was served with the Commissioner’s letter of
termination dated February 10, 1967.^[1]
But before the Court likewise was the herein petitioner’s motion to dis­miss
the complaint and “to dissolve or maintain dissolution of ancillary
writ” dated February 27,1967,
containing, inter alia, the following
allegations:

“During the progress of plaintiff’s operations under the said
Management Contract, defendants Collector of Customs and Customs Arrastre Supervisor notified plaintiff of several
violations of the Management Contract, notices of which violations are hereto
attached as Annexes “1”, “1-A”, “2”,
“3”, “4” and “5”, all of which are made integral
parts hereof.  Despite the lapse of more
than the required period of one week under Paragraph 32 of the Management
Contract, plaintiff failed to answer them in a manner satisfactory to the
Bureau of Customs represented by defendants. 
This forced defendant Commissioner of Customs to write a letter to the
President and General Manager, Cebu Port Terminal,
Inc., dated February 10, 1967, copy attached as Annex “6” hereof,
informing him of the immediate taking over by the Bureau of Customs of the arrastre operations at the Port of Cebu.  Said letter was duly served on plaintiff on
or about the afternoon of February 13,
1967, immediately after which the Bureau of Customs entered into
the management of the arrastre operations up to the
present, without any untoward incident.”

It bears emphasis that the foregoing allegations were accompanied
by undisputed documentary evidence to substantiate them.  Annex 1 is a letter dated December 2, 1966, signed by the
Customs Arrastre Supervisor and addressed to Rolando Veloso, Board Chairman of CPTI, enclosing copy of a
memorandum of the Collector of Customs dated December 1, 1966. 
The said memoran­dum, Annex 1-A, called attention to specific instances
of in­efficient handling of imported cargoes by CPTI and ordering specific
methods to be followed to remedy the situation. 
Annex 2, dated December 5, 1966,
is another letter to Veloso, signed by the Acting
Collector of Customs himself, making reference to numerous complaints from
importers concerning deficiencies in the arrastre
service, particularly the insufficient number and capacity of the forklifts in
operation.  Annex 3, dated January 9, 1967, called attention to
the great delay in the deliveries of imported cargoes to the consignees due to
lack of sufficient laborers employed in the piers.  Annex 4, dated January 24, 1967, signed by the Acting Collector of
Customs, refers to the failure of CPTI to submit to him the monthly reports of
operation for November and December 1966, in spite of a previous directive that
such monthly report must be submitted within the first five days of every
succeeding month.  Annex 5, dated February 6, 1967, reiterated the
demand made in Annex 4.

Significantly, the Court of Appeals, in its decision, took note
of the foregoing factual background, thus:

“During the progress of the operation of respondent CPTI under
the said Management Contract, petitioning Commissioner and Supervisor notified
the CPTI of several violations of the Management Contract.  x x x Several merchants in Cebu,
so petitioners alleged, also formally complained to the Collector for the
inefficient handling of the arrastre operations in Cebu. 
Customs Lawyers and investigators were dispatched by the Commissioner to
Cebu City to look into the complaint and alleged
violations of the contract, and after hearing all the parties, including the
officers of the respondent CPTI, they found that said respondent violated
paragraphs 3,8,9,11,12,15,17,18,19,20,21,25 and 26 of the Management Contract.  Despite the lapse of more than the required
period of one (1) week under said paragraph 32 of the Management Contract,
respondent CPTI failed to explain the violations in a manner satisfactory to
the Bureau of Cus­toms

“On February 10, 1967,
the Commissioner wrote a letter to the President and Gen­eral Manager of the
CPTI informing him of the taking over by the Bureau of Customs of the arrastre operations at the Port
of Cebu.  Likewise, on the same date, the Commissioner
issued Customs Administrative Order (CAO) No. 1-67, directing the Customs Arrastre Service, created under CAO dated June 23, 1966 to take over the
management and operation of the arrastre service in
the Port of Cebu.”

It was therefore a fact sufficiently demonstrated at that
stage of the case before the trial Court, albeit sub­ject to the outcome of
the trial on the merits upon due presentation of evidence by both parties, that
numerous violations of the management contract had been committed by CPTI; that
CPTI had been duly informed thereof in writing; and that not only had CPTI
failed to satisfy the Bureau that such violations had been committed or did not
exist, but had failed utterly to give any explanation despite the lapse of the
period of one week stipulated for that purpose. 
Prima facie at least, at that stage of the case before the trial
court, the take-over by the Bureau of the operation of the arrastre service at the port of Cebu
was clearly justified under the terms of the said management contract.  Indeed, the take-over was a compelling
necessity under the circumstances.  For
an overriding consideration, which the said Court overlooked when it issued the
injunction, is that the case involves not merely the private rights of the con­tracting
parties.  Over and above such rights is the
para­mount public interest, both in respect of the receiving, handling, custody
and delivery of all cargoes imported and exported, or in transit, through the
port of Cebu and in respect of the income that the
government derives from the arrastre service, which
under the contract is 46.1% of the total gross receipts of the contractor from
all sources, whether actually collected or not, “payable monthly within
the first five (5) days of the succeeding month.” This public interest, in
the light of the facts then before the trial Court, stood in serious jeopardy
in the hands of CPTI as arrastre operator.  The burden was squarely and plainly upon it
to show otherwise, and pending satisfactory showing to that effect the issuance
of a preliminary injunction against herein petitioners was an improvident act,
amount­ing to grave abuse of discretion correctible by certiorari.

WHEREFORE the decision of the Court of Appeals is
reversed; the writ of preliminary injunction issued by the Court a quo
is set aside; the case is remanded for continua­tion of the proceedings; and
the restraining order issued by this Court against such continuation is pro
tanto dissolved.  With costs.

Concepcion, C.J., Dizon,
Zaldivar, Sanchez, Ruiz Castro, Fernando, Capistrano,
and Teehankee,
JJ., concur.

Reyes, JBL, J., on leave.

Fernando, J., in the result.

Barredo, J., did not take part.

+
“The Bureau of Customs shall have ex­clusive supervision and control over
the receiving, handling, custody and delivery of articles on the wharves and
piers at all ports of entry and in the exercise of its functions it is hereby
authorized to acquire, take over, operate and superintend such plants and
facilities as may be necessary for the receiving, handling, custody and
delivery of articles, and the convenience and comfort of passengers and the
handling of baggage, as well as to acquire fire protection equipment for use in
the piers:  Provided, that whenever in
his judgment the receiving, handling custody and delivery of articles can be
carried on by private parties with greater efficiency, the Commissioner may,
after public bidding and subject to the approval of the department head,
contract with any private party for the service of receiving, handling, custody
and delivery of articles, and in such event, the contract may include the sale
or lease of government owned equip­ment al d facilities used in such
service.”

^[1]
There was also, of course, the other allegation, already disposed of earlier in
this decision, that the Commissioner should have filed an action for rescission
of the contract instead of cancelling it extrajudicially.