ALBERTO DE JOYA, AS ACTING COMMISSIONER OF CUSTOMS (VICE JOSE B. LINGAD) AND PEDRO PACIS, AS ACTING COLLECTOR OF CUSTOMS, PETITIONERS, VS. JUAN T. DAVID AND THE HONORABLE COURT …

De Joya versus David

The Case

This is an original action for certiorari and prohibition, with preliminary injunction, brought by the Commissioner of Customs and the Collector of Customs against a private lawyer and the Court of Appeals. The Government asks the Supreme Court to dissolve a writ of preliminary injunction issued by the Court of Appeals in a civil case involving a seized shipment, and to restrain that court from hearing the case at all. The case matters because it fixes the boundary between the regular courts and the Bureau of Customs in seizure and forfeiture proceedings, and because it illustrates when a lawyer's insertion of words on a document does not amount to contempt.

Procedural History

The private respondent, Juan T. David, filed a civil case in the Court of First Instance of Manila against the customs officials, seeking to restrain the seizure proceedings, to recover the cargo or its proceeds, and to nullify the warrant of seizure. The customs officials moved to dismiss on the grounds of lack of jurisdiction, failure to exhaust administrative remedies, and lack of real party in interest. The trial court dismissed the case. David's motion for reconsideration was denied, and he appealed to the Court of Appeals. While the appeal was pending, he filed a motion in the Court of Appeals for release of the cargo for transshipment, with or without bond, or for a writ of preliminary mandatory injunction. Without hearing the customs officials, a Division of the Court of Appeals resolved to require an answer and provided that upon filing of a bond, a writ of preliminary injunction would issue. The writ was issued. The Solicitor General then filed with the Supreme Court this petition for certiorari and prohibition with preliminary injunction, and the Supreme Court issued a resolution restraining the Court of Appeals from hearing the appeal and from enforcing its writ.

Facts

On May 28, 1962, a shipment of thirty-six crates described in the bills of lading as stone grinders arrived at Manila aboard the SS Mentor. That same day, without the required customs permit, the cargo was unloaded shipside unto the barge M/L Davao and towed toward the Estero Dead End of Cristobal Street in Pandacan, Manila. Before reaching its destination, a combined team of Manila police and Bureau of Customs operatives inspected the crates. The contents turned out to be, not stone grinders, but highly dutiable goods such as Union and Salem cigarettes, Ban-lon shirts, and French veils. The goods were seized under Seizure Identification Number 6439 for alleged violation of Central Bank Circular Number 133 in relation to Section 2530 of the Tariff and Customs Code, and the lighter and tugboat were seized under Seizure Identification Number 6439-A. A criminal case was later filed against fifteen persons for violation of Section 3602 of Republic Act Number 1937, involving taxes and duties in the aggregate sum of 1,291,975.61 pesos.

On August 1, 1962, David appeared at a hearing in the seizure proceedings as counsel for the alleged shipper and consignee. After the Government rested, he moved to dismiss, but the Collector deferred resolution and directed the presentation of the claimant's evidence. David then filed an ex parte motion for release of the shipment under bond, claiming the goods were in transit to Singapore and included perishable items. The Collector denied the motion, noting that the claim over the shipment had not been satisfactorily established and that steps had been taken for public auction of perishable goods under Section 2607 of the Tariff and Customs Code. David protested the sale, and the Collector later denied his motion to dismiss and his motion for reconsideration.

On March 16, 1964, David instituted a civil case in the Court of First Instance of Manila against the customs officials, in their official and personal capacities, seeking injunctive relief, surrender of the cargo or its proceeds, nullification of the warrant of seizure, and damages. The trial court dismissed the case, and the appeal and the incidental injunction proceedings in the Court of Appeals followed, leading to this petition. A separate charge of contempt arose from statements in the Government's pleadings about a handwritten insertion David had made on the manifest.

Issues

• Whether or not the Court of First Instance of Manila had jurisdiction over the civil case seeking possession of goods that were the object of seizure and forfeiture proceedings before the Collector of Customs.
• Whether or not the Court of Appeals had jurisdiction over the appeal from the order of dismissal.
• Whether or not the writ of preliminary injunction issued by the Court of Appeals was valid.
• Whether or not the customs officials should be cited for contempt for the derogatory statements made against David.

Applicable Provisions

Section 2530 of the Tariff and Customs Code, as discussed in the decision, lists the kinds of property subject to forfeiture:

The Tariff and Customs Code, in Section 2530 thereof, lists the kinds of property subject to forfeiture.

This provision defines the property that may be proceeded against in the Bureau of Customs, and it anchors the Collector's exclusive authority over such property.

Section 2303 of the Tariff and Customs Code, as quoted in the decision, provides:

Furthermore Section 2303 of the Tariff and Customs Code requires the Collector of Customs to give to the owner of the property sought to be forfeited, written notice of the seizure and to give him the opportunity to be heard in his defense.

This notice and hearing requirement shows that the law intended to confine in the Bureau of Customs the determination of all questions affecting the disposal of property in a seizure and forfeiture case.

Section 44(c) of the Judiciary Act of 1948 is the general jurisdictional grant to courts of first instance, which the decision weighs against the Customs Code:

Should Section 44(c) of the Judiciary Act of 1948 give way to the provisions of the Tariff and Customs Code, or vice versa?

The Court resolves this conflict in favor of the Customs Code, because it is the later law and because public policy favors the administrative forum.

Ruling

On the first issue, the Court held that the Court of First Instance of Manila had no jurisdiction over the subject matter of the civil case. David sought possession of goods that were the object of seizure proceedings before the Collector of Customs, and such an action is beyond the jurisdiction of courts of first instance. The Court relied on its earlier ruling in Pacis versus Averia, quoting its reasoning that the Collector's jurisdiction under the Tariff and Customs Code is exclusive, that the Code took effect later than the Judiciary Act of 1948, and that a later law prevails over a prior statute. The Court also stressed public policy:

Otherwise, actions for forfeiture of property for violation of Customs laws could easily be undermined by the simple device of replevin.

The Court added that the property owner's judicial recourse is not in the Court of First Instance but in the Court of Tax Appeals, and only after exhausting administrative remedies in the Bureau of Customs. Alternatively, if the civil case were regarded as an attempt to review the acts of the Collector and the Commissioner, that power of review is vested exclusively in the Court of Tax Appeals.

On the second issue, the Court held that the Court of Appeals had no jurisdiction to entertain the appeal, because jurisdiction was involved in the appeal and because the amount in controversy exceeded 200,000 pesos. The value of the cargo was placed at 628,844.87 pesos more or less, while the taxes due amounted to 1,291,975.61 pesos according to the information, or 1,920,820.48 pesos according to the decision in the criminal case.

On the third issue, the Court held that the writ of preliminary injunction issued by the Court of Appeals was null and void, since that court had no jurisdiction over the case in which it was issued.

On the fourth issue, the Court dismissed the charge of contempt. The record showed that David's handwritten insertion of the words in transit for Singapore on the manifest was made with the authority of the hearing officer of the Bureau of Customs, so that the copy would conform with the original manifest in the criminal case. The Solicitor General was not aware of this circumstance when he made the derogatory averments, because the only records then available to him were those of the Bureau of Customs. The Court found that the statements were made in good faith, and that the officials seasonably placed on record the additional facts showing that David had acted above board.

Doctrine

The Collector of Customs has exclusive jurisdiction to hear and decide seizure and forfeiture proceedings under the Tariff and Customs Code. A court of first instance cannot entertain an action to recover personal property that is the subject of such proceedings, because that would encroach upon and render futile the Collector's jurisdiction. The remedy of the property owner is an appeal to the Commissioner of Customs, then to the Court of Tax Appeals, and only after exhausting administrative remedies in the Bureau of Customs. Where the Judiciary Act of 1948 and the Tariff and Customs Code conflict, the later law prevails, and public policy forbids the use of replevin to undermine forfeiture actions. Finally, statements in a pleading made in good faith, and corrected seasonably once the true facts are discovered, do not constitute contempt.

Disposition

The Supreme Court granted the writ, made permanent its own preliminary injunction, nullified the writ issued by the Court of Appeals, dismissed the charge of contempt, and ordered David to pay the costs.

Remember This

Memorize the line that forfeiture actions cannot be undermined by the simple device of replevin, because the Collector of Customs has exclusive jurisdiction over seized goods. Examiners use this case to test the jurisdiction of the Bureau of Customs and the Court of Tax Appeals over seizure and forfeiture proceedings, and to test the limits of contempt charges against counsel.