COMMISSIONER OF CUSTOMS AND COLLECTOR OF CUSTOMS FOR MANILA AND CONRADO SOLEDAD, EDMUNDO POSTRERO, MAXIMINO ABRUGENA, GERONIMO DERILO, SANTOS GUINTO, AND EUSTAQUIO MARANAN, AS E…

Petition for certiorari and prohibition to annul and set
aside several orders of respondent court all of which together in effect:  (1) permitted ex-parte private
respondents Jose and Susana Cochingyan to file a third-party complaint for mandamus
against petitioners in a special civil action for declaratory relief in which
said Cochingyans were defendants and which was already tried and almost ready
for decision; on the same day, (2) admitted said third-party complaint and (3)
further issued immediately a writ of preliminary mandatory injunction likewise ex-parte;
and which (4) were intended to
enforce said writ of injunction.

There was pending before respondent court as Civil Case No.
52318, entitled Macario M. Ofilada vs. Reparations Com­mission, Jose Cochingyan
and Susana Cochingyan, a special civil action for declaratory relief, wherein
Ofilada, as the Second Receiver of the World War II Veterans Enterprises, Inc.
(Warvets) in Civil Case No. 34998, likewise pending in another Branch of the
Court of First Instance of Manila, sought a judicial declaration as to whether,
under the allocation granted to said Warvets to purchase reparations goods, the
conversion into pesos of the dollar prices of said goods should be at the rate
of two pesos to one dollar or at the prevailing market rate at the time for
payment, which would be much higher. 
Civil Case No. 34998 was a minority suit filed by certain stockholders of
Warvets alleging irregularities in the management and disposition of the goods
being purchased by the corporation by virtue of the aforementioned allocation,
hence the need for receivers, of which there were two, the first being one
Ramon E. Saura and the second, Ofilada. 
In the same Civil Case No. 34998, an order had been issued on October 9, 1962 ordering Ofilada to
deliver to the Cochingyans the second shipment of goods under Warvets’
allocation.  (The Cochingyans had a
contract with Warvets regarding said goods.) It appears, however, that a motion
for the reconsideration of the just mentioned order of October 9, 1962 had been filed and was still
unresolved when on February 9, 1963,
the Honorable Judge Francisco Arca (now deceased) issued the following order:

“Considering all the foregoing, the Court is of the opinion
that the petition of Atty. Magno to defer action on the motion for contempt
against the intervenors should be granted until after it can be definitely
known whether or not the parties can settle this case amicably.  Resolutions on all pending incidents, such
as the motion for reconsideration of the order authorizing the release of the
second shipment, and the motions for the release of the third, fourth and
fifth shipments, are also held in abeyance until such time that the
Court knows the result of the pending settlement being negotiated among the
parties.”

“In view of all the above, the Court hereby orders that all
incidents pending resolution be held in abeyance until after the parties have
definitely decided whether they are going to settle this case or not. ”
(Underscoring supplied.)

It was shortly after the issuance of this order which in effect
freezed the order of release of October
9, 1962, that the incidents subject of the instant petition took
place.  On February 13, 1963, the
Cochingyans filed in Civil Case No. 52318 then already tried although not yet
decided by Judge Gaudencio Cloribel (now also deceased) – who on February 9,
1963 had written the Secretary of Justice asking for permission to go on leave
for a week starting February 12, 1973 but who later changed the starting date
to February 13, 1973 – an ex-parte motion asking permission to file a
third-party complaint, which was forthwith granted.  On the same day, another motion was filed
asking for immediate admission of the third-party complaint, which likewise,
was forth­with granted.  The third-party
complaint included in the prayer, among other reliefs, the following:

“1 Immediately
upon the filing of the herein third-party complaint this Honorable Court issue
a writ of preliminary mandatory injunction ex-parte, without notice to
the other parties, ordering the third-party defendants Commissioner of Customs
and Collector of Customs and Reparations Commission to release immediately to
the third-party plaintiffs the balance of the 202 packages of rayon clothing
forming part of the shipment of consumer goods originally consigned to the
Reparations Commission which arrived in Manila aboard the SS GUILLERMO on
September 10, 1962, and which to the present are still under the custody and
possession of the Collector of Customs and Commissioner of Customs, upon the
filing of a bond by the third-party plaintiffs in such amount as may be fixed
by this Honorable Court to pay for any damages that the third-party defendants
may suffer should this Honorable Court find that issuance of the preliminary
mandatory injunction is not proper.” (Page 87, Record.)

 Without loss of time and
without hearing the third-party defendants, the following order, was issued on the
same day, February 12, 1963:

“In a verified third-party complaint for mandamus
against the Commissioner of Customs, the Collector of Customs and others,
third-party plaintiffs Jose and Susana Cochingyan, doing business under the
name and style “The Catholic Church Mart”, alleged that a shipment of
402 packages of rayon cloth which was procured by the Reparations Commission to
cover an allocation granted by the Commission to the World War II Veterans
Enterprises (WARVETS) for reparation consumer goods from Japan arrived in
Manila on September 10, 1962,
consigned to the Reparations Commission; that this Court in Civil Case No.
34998 entitled ‘Pilar Normandy et al., vs. Calixto Duque, et al.” authorized
in its order of October 9, 1962, the Second Receiver of WARVETS, Mr. Macario M.
Ofilada, to release said goods to Jose and Susana Cochingyan; that pursuant to
said order of October 9, 1962, Mr. Ofilada, in his capacity as second receiver
of WARVETS, signed a contract of absolute sale with the Reparations Commission
covering the described reparation consumer goods and paid in full the purchase
price of said goods; that after receiving full payment of the purchase price of
said goods the Commission instead of releasing the goods from customs and
delivering them requested the Collector of Customs to verify and make an
appraisal of the value of the goods and complying with said request, the
Collector of Customs opened and inspected each and all of the bales and
packages comprising said shipment; that after com­pleting said inspection and
verification the Collector of Customs advised the third-party plaintiffs herein
that the shipment cannot be released unless the advance sales tax due on the
goods be first paid; that said Collector of Customs also advised the
Reparations Commission that the goods, being reparations goods and as such
owned by the Philippine Government, cannot be subject to seizure or forfeiture
proceedings; that of the 402 packages the Commissioner and Collector of Customs
have released to the said third-party plain­tiffs only 200 packages but have retained 202 packages supposedly to secure the payment of advance sales tax
assessed on the shipment as recomputed on the basis of an opinion of the
Collector of Internal Revenue; that notwithstanding the fact that there are no
unpaid liens, fines, surcharges, taxes (except the advance sales tax the
payment of which was tendered by third-party plaintiffs and refused and the
amount deposited with the Clerk of this Court) customs duties, and consular
fees (of which the goods are exempt under Section 14 of the Reparations Law)
and notwithstanding the fact that there are no pending proceedings for the
seizure and forfeiture of the goods for the same have been imported by the
Reparations Commission which made the proper declaration of entry therefor,
third-party defendants Commissioner of Customs and Collector of Customs have
refused without any legal reason or justification whatsoever to release and deliver
the balance of the shipment to the third-party plaintiffs; that the duty of the
Collector of Customs and Commissioner of Customs to deliver or release said
goods to third-party plaintiffs is clear as under the cir­cumstances above
recited said officials have no discretion to decide whether or not to release
said goods.

“Third-party plaintiffs further alleged that the delay in the
release of the goods to them has caused and will cause them grave and
irreparable damage and injury; and unless a writ of preliminary injunction were
to be issued ex-parte they will suffer greater and grave damages.

“WHEREFORE, finding the petition for the issuance of a writ of
preliminary injunction to be meritorious, the same is hereby granted, and upon
the filing by the third-party plaintiffs of a bond in the sum of P5,000.00 to
answer for all damages that the third-party defendants may sustain by reason of
this injunction if it be finally decided that the third-party plaintiffs are
not entitled thereto, let a writ of preliminary mandatory injunction be issued
ordering the third-party defendants Commissioner of Customs, Collector of
Customs, and the Reparations Commission, their representatives, agents, su­bordinates
and other persons acting in their behalf to release and deliver immediately to
the third-party plaintiffs Jose and Susana Cochingyan, doing business under the
name and style ‘The Catholic Church Mart’, the 202 packages of rayon cloth
presently in their possession, custody and/or control, which goods are part of
the shipment of reparation consumer goods which arrived in Manila aboard the SS
Guillermo from Japan consigned to the Reparations Commission.

“SO ORDERED.”

The writ issued pursuant to this order was served on the Law
Division of the Bureau of Customs at 4:55
o’clock in the afternoon of the same day, February 12, 1963.  But com­pliance therewith did not
materialize.  A motion to lift the writ
was filed, and in the meanwhile, the Chairman of the Committee on Reparations
of the House of Representatives, which was then investigating the
implementation of the Warvets allocation, asserted jurisdiction over the goods
by ordering the Collector of Customs to deliver the same to the
Sergeant-at-Arms of the House. 
Respondent court denied the motion to lift and threatened the agents of
the Committee on Reparations, herein co-petitioners, with contempt.  Still, there was no release.  The goods were, therefore, still unreleased
to the Cochingyans when the petition now at bar was filed.

We deem it unnecessary to dwell on the many interesting issues
extensively and brilliantly discussed by distinguished counsel of both
petitioners and respondents.  In Our view
of this case, the only question We have to resolve in order to dispose of it is
whether or not respondent court gravely abused its discretion in allowing the
filing of and in admitting the third-party complaint of the Cochingyans.  In the affirmative, it should follow that the
writ of preliminary mandatory injunction in question would have no legal basis,
as also all subsequent orders of respondent court tending to enforce the
same.  And it is Our considered opinion
and so We hold that it was highly irregular and totally unwarranted for
respondent court to have allowed said third-party complaint.  The circumstances surrounding the allowance
and admission thereof indicate that respondent court’s action was hasty,
baseless and arbitrary.

As already stated, Civil Case No. 52318 was a special civil
action for declaratory relief under Rule 66 of the Rules of 1940 which were in force
when it was filed.  The only purpose
thereof was to secure from the court the proper interpretation or construc­tion
of the reparations contract between the Reparations Commission and Warvets in
regard to the rate of conversion of the dollar to the peso of the purchase
price Warvets had to pay.  No positive
affirmative, much less any material relief, was being therein.  Indeed, it is in the very nature of a
declaratory special civil action that “the Relief is confined to a case of
actual controversy within the Court’s jurisdiction, without the need of
injunction, execution, or other relief beyond the adjudication of the legal
rights which are the subject of controversy between the parties.” (3
Moran, Comments on the Rules of Court, p. 146, 1970 ed.) In other words, the
plaintiff Ofilada in said case did not, as he could not pray for anything to be
awarded or granted to him.

Now, as regards the nature and purpose of a third-party
complaint, Section 1 of Rule 12 of the Rules of 1940 provided:

“SECTION 1.  Claim
against one not a party to an action. – When a defendant claims to be
entitled against a person not a party to the action, hereinafter called the
third-party defendant, to contribution, indemnity, subrogation or any other
relief, in respect of the plaintiff’s claim, he may file, with leave of court,
against such person a pleading which shall state the nature of his claim and
shall be called the third-party complaint.”

It is obvious from this definition that a third-party complaint
is inconceivable when the main case is one for nothing more than a declaratory
relief.  In a third-party complaint, the
defendant or third-party plaintiff is supposed to seek contribution, indemnity,
subrogation or any other relief from the third-party defendant in respect to
the claim of the plaintiff against him. 
In the case at bar, what possible relief could the Cochingyans, as
defendants in Civil Case No. 52318, for declaratory relief, have asked for by
way of con­tribution, indemnity, subrogation or any other relief from those
they have named third-party defendants, the Collector of Customs, Commissioner
of Customs, Reparations Commission, their co­defendant, and Macario Ofilada,
the very plaintiff, in respect to the construction or interpretation that Ofilada was asking the
court to make?  At the risk of quoting
again part thereof, the complete prayer in the third-party complaint in
question reads thus:

“1. Immediately
upon the filing of the herein third-party complaint this Honorable Court issue
a writ of preliminary mandatory injunction ex-parte, without notice to
the other parties, ordering the third-party defendants Commissioner of Customs
and Collector of Customs and Reparations Commission to release immediately to
the third-party plaintiffs the balance of the 202 packages of rayon clothing
forming part of the shipment of consumer goods originally consigned to the
Reparations Commission which arrived in Manila aboard the SS GUILLERMO on
September 10, 1962, and which to the present are still under the custody and
possession of the Collector of Customs and Commissioner of Customs, upon the
filing of a bond by the third-party plaintiffs in such amount as may be fixed
by this Honorable Court to pay for any damages that the third-party defendants
may suffer should this Honorable Court find that issuance of the preliminary
mandatory injunction is not proper.

“2. That after
hearing on the merits this Honorable Court confirm and make final its order of
mandatory preliminary injunction.

“The third-party plaintiffs further pray for such other relief
as may be just and equitable -under the premises.” (Pp. 87-88, Record.)

According to Moran:

“Tests of propriety. – The tests to determine whether
the claim for indemnity in a third-party complaint in respect to plaintiff’s
claim is proper, are (a) whether it arises out of the same transaction on which
plaintiff’s claim is based; or whether the third-party’s claim, although
arising out of another or different contract or transaction, is connected with
plaintiff’s claim; (U. S. Commercial Co. v. Guevara, et al., 48 O.G. 612.) (b)
whether the third-party defendant would be liable to the plaintiff or to the
defendant for all or part of the plaintiff’s claim against the original
defendant, although the third-party defendant’s liability arises out of another
transaction; or (c) whether the third-party defendant may assert any defense
which the third-party plaintiff has, or may have, against plaintiff’s
claim.  (Capayas v. Court of First
Instance, 77 Phil. 181.) Failing these tests, the complaint is improper.  x x x” (1 Moran, Comments on the Rules
of Court, p. 281, 1970 ed.)

It is thus too evident to call for more elaborate discussion that
respondent court’s action in allowing the filing of Cochingyans’ third-party
complaint completely disregarded, due presumably to ignorance thereof, the
basic concepts of the remedies of declaratory relief and third-party complaint.

Moreover, respondent court also paid no heed to the requirement
of Section 2 of Rule 12 of the 1940 Rules to the effect that: “Before the
service of his answer a defendant may move ex parte or, after the
service of his answer, on notice to the plaintiff, for leave as third-party
plaintiff to file a complaint against a third-party defendant.” In the
present case, it is a fact that the motions of the Cochingyans for leave to
file their third-party complaint and for the admission thereof were granted ex-­parte
notwithstanding that the trial of the case had already been terminated.

IN CONSEQUENCE OF THE FOREGOING, We have no other alternative
than to declare as We do declare null and void all the orders herein complained
of.^[1]
They are all hereby set aside and respondent court is enjoined to desist from
carrying any of them into effect.  Costs
against respondents Jose and Susana Cochingyan.

Antonio, Muñoz Palma, Concepcion, Jr., and Martin, JJ., concur.

Fernando and Aquino, JJ., did
not take part.

^[1]
The orders dated February 12, 1963 allowing the filing of a third-party
complaint, admitting said third-party complaint and issuing the preliminary
injunction sought by the Cochingyans as well as the subsequent ones dated
February 25, 26, 27 and 28 and March 1, 1963 denying the motion to lift the
injunction and otherwise tending to enforce the same.