COLLECTOR OF CUSTOMS FOR THE PORT OF MANILA, PETITIONER, VS. HON. FRANCISCO ARCA, AS PRESIDING JUDGE OF BRANCH I, COURT OF FIRST INSTANCE OF MANILA AND TOMAS CLOMA, RESPONDENTS.…

Petition for certiorari and prohibition with preliminary injunction,
to set aside the orders dated June 5 and June 6, 1963 as well as the
writ of preliminary injunction dated June 7, 1963, issued by the
respondent Court of First Instance of Manila, Hon. Francisco Area,
presiding, against herein petitioner, in Civil Case No. 63874 of said
court.

The series of incidents leading to the present petition may be
summarized as follows: On November 8, 1962, petitioner Collector of
Customs instituted seizure proceedings (Manila Seizure Identification
No. 6669), and subsequently issued warrant of seizure and detention of
600 hogsheads of Virginia leaf tobacco consigned to Auyong Hian and
deposited at the Bureau of Customs, Manila. In the decision of this
Court in Climaco vs. Auyong Hian, G.R. No. L-19597,
promulgated July 31, 1962, We declared that the importation of said
tobacco was illegal, as the importation was made in gross violation of
the policy contained in Republic Acts Nos. 398 and 1194. Notice of the
seizure proceedings, scheduled for hearing on November 26, 1962 at 2:00
o’clock p.m. was received by Auyong Hian on November 21, 1962. In the
morning of the scheduled date of hearing Auyong Hian filed a letter
asking for an indefinite postponement of the hearing on the ground that
Civil Case No. 49639 of the Court of First Instance of Manila (G.R. No.
L-19597 of this Court adverted to above), was still pending final
decision. (Entry of judgment in case L-19597 was made on October 18,
1962.) The petition for respondent was denied and Auyong Hian was
declared in default.

The seizure proceedings continued on December 6 and 10, 1962, in the
absence of Auyong Hian who, it appears, did not bother to find out for
himself what action was taken on his petition for postponement. Austin
Co., Inc. and Sanford Tobacco Co., Tnc, who claim to be the owners,
slippers and consignees of the subject Virginia leaf tobacco
intervened, claiming that they had entered into contracts of sale with
Auyong Hian covering said shipment, but had, pursuant to said
contracts, consigned the same to themselves because payment of the
purchase price was not made in full; and that the seizure proceedings
against the shipment in question was improper because the importation
was made on the strength of actual licenses issued by the Government.

On April 23, 1963, the Collector of Customs denied the claim of the
intervenors on the ground that the bills of lading covering the
shipments had already been duly endorsed by them as shippers, and hence
under the law, they had ceased to have any right or interest in the
shipment in accordance with Section 1203 of the Tariff and Customs
Code. Therefore, pursuant to Sections 2312 and 2609 of the said Code,
the Collector declared the tobacco forfeited in favor of the Republic
of the Philippines, and ordered the sale thereof in accordance with
Section 2607 of said Code, to buyers who could meet with the necessary
qualifications and conditions of the law. For this purpose, said
Collector created a Special Bidding Committee to implement the decision
and to take charge of the sale at public auction of the tobacco in
question.

Notice of the sale was accordingly published and advertised to the
public (Annex “C” of Petition). At the auction sale there were only two
bidders, the herein intervenor Consolidated Tobacco Industries of the
Philippines (CTIP), Inc. and the Philippine Associated Resources. The
former was declared as the qualified bidder (as per notice to it by the
Collector on June 7, 1963), so it submitted its bid in writing. (Annex
“E”, CTIP’s Petition for Intervention.) The CTIP’s bid was for
P1,500,000 and was approved by the Collector of Customs on June 26,
1963 (Annex “G-l”, Ibid.) Thereafter the company paid the balance of
P500,000 to complete the price of P1,500,000 (its deposit of P1,000,000
having been credited in its favor).

On May 4, 1963, herein respondent Tomas Cloma instituted Civil Case
No. 53874 in the Court of First Instance of Manila against Auyong Hian,
for the collection of alleged fees for services rendered to the latter
in obtaining from the President of the Philippines confirmation or
activation of Import Control Licenses Nos. 17166, 17169, 17196 and
17199 in the name of Auyong Hian. It was by virtue of these licenses
that the latter was enabled to import the 600 hogsheads of Virginia
leaf tobacco in question (which as already heretofore pointed out, was
declared by this Court to be illegal). Cloma at the same time applied
for a writ of attachment, which respondent judge granted on May
14,1963, upon Cloma’s filing a bond in the amount of P20,000.

On May 16, 1963, the sheriff of Manila served a copy of the order of
attachment upon herein petitioner, informing that the 600 hogsheads of
Virginia leaf tobacco subject of Manila Seizure Identification No. 6669
were subject of the court order. Whereupon petitioner executed an
affidavit captioned “Third-Party Claim” and served the same upon the
sheriff of Manila in accordance with Section 14 of Rule 59 of the Rules
of Court. In said affidavit petitioner informed the sheriff that the
tobacco in question had been declared forfeited by the Government as
having been illegally imported as per decision of this Court in G.R.
No. L-19597. Petitioner claimed that the tobacco was in cjistodia legis
of his office and the Same could not be the subject of attachment.
Cloma moved to dismiss the third-party claim and applied for a
restraining order and/or preliminary injunction ex partc. In said
motion he questioned the validity of the seizure proceedings conducted
by herein petitioner, and sought to restrain the latter from selling
the 600 hogsheads of Virginia leaf tobacco involved. Petitioner herein
objected, but respondent judge nevertheless issued on June 5, 1962 the
writ of preliminary injunction restraining the Collector of Customs
irom enforcing his decision dated April 23, 1963 in Seizure
Identification No. 6669 and ordering him to desist from proceedings
with the sale at public auction of the forfeitedleaf tobacco set for
June 10, 1963. Petitioner’s motion to have the said order reconsidered
was denied on June 6, 1963, so respondent Cloma filed a surety bond for
the sum of P20.000. Respondent judge issued a writ of preliminary
injunction on June 7,1963. The above orders of the lower court dated
June 5, June 6, and June 7, 1963 are the subject of the instant
petition for certiorari.

Acting upon the prayer contained in the present petition, We issued
a writ of preliminary injunction prohibiting respondent judge from
executing or enforcing the writ of preliminary injunction issued by him
against petitioner in Civil Case No. 53874, and from enforcing and/or
giving effect to the order of attachment and other pertinent orders
issued in said case.

Auyong Hian filed a petition for leave to intervene (granted June 25, 1963) and, later, an urgent motion ex parte
praying this Court that, pending decision of herein petition, a writ of
preliminary injunction be issued restraining the Collector of Customs
or his agents from seizing and selling the 600 hogsheads of tobacco in
question and enforcing his decision of April 23,1963 which was pending
review by the Commissioner of Customs. Basis of intervenor’s motion ex
parte is the claim that enforcement of said decision would cause great
injustice and damage to him and render any favorable decision by the
Commissioner of Customs on his appeal ineffectual and without any
further benefit to him. Finding from the verified answer of the
intervenor to the present petition that the order of the Collector of
Customs in the seizure proceedings covering the tobacco in question had
been timely appealed to the Commissioner of Customs, before whom tho
administrative proceedings is still pending, We issued on June 26, 1963
a restraining order, upon intervenor’s filing a bond in the amount of
P20,000, directing the Collector of Customs to desist temporarily from
continuing with the public auction of the tobacco, until July 3, 1963,
and ordering the said Collector to show cause why a preliminary writ of
injunction should nob issue. After due hearing, this Court resolved to
grant intervenor Auyong Ilian’s petition upon his filing a bond of
P50.000, without prejudice to petitioner’s filing within live days from
the court’s resolution an opposition on the merits to the petition of
intervenor; and likewise allowing the Consolidated Tobacco Industries
of the Philippines, Inc. to file a petition for intervention, which it
did on July 9, 1963.

The CTIP’s petition in intervention alleges that it was the
qualified bidder at the public auction sale of the tobacco in question
and its bid had already been approved by the Collector, and prays that
(1) Auyong Hian’s petition for intervention be dismissed; (2) the writ
of preliminary injunction issued against the Collector of Customs be
lifted and dissolved; and (3) Auyong Hian be ordered to pay damages for
P100,000 or any amount which this Court may award on account of the
injunction issued at his instance; etc.

On July 3, 1963, respondent Cloma filed his answer to the present
petition, making specific denials and offering special and affirmative
defenses, and in general questioning the validity of the April 23, 1963
decision of the Collector of Customs.

On May 5, 1964, Auyong Hian filed a “Manifestation” in this Court
based on newly discovered evidence (Annex “A” to “Manifestation”). The
evidence consists of a copy of a “Contract to Buy And Sell” executed
between Consolidated Tobacco Industries of the Philippines, Inc. and La
Suerte Cigar & Cigarette Factory, dated June 5, 1963 (or five days
before the day set for the auction sale of the tobacco in question),
whereby the former agreed to sell and the latter to buy, the 600
hogsheada of imported Virginia and/or Bur ley leaf tobacco then stored
at the Bureau of Customs, and whereby the CTIP, Inc. received
Pl,000,000 as advance payment on account of the total purchase price of
said tobacco. The newly-discovered evidence, Auyong Hian argues,
bolsters his claim that the cost of the tobacco in question is not
merely P1,500,000 but P7,000,000, more or less, and the auction sale
set for June 19, 1963 was rigged and pre-arranged as indicated by the
prior sale of June 5, 1963 by the CTIP, Inc.

This Court, having found that intervenor Auyong Hian had made a
timely appeal from the decision of the Collector of Customs of April
23, 1963 to the Commissioner of Customs before whom the appeal is still
pending action (see Resolution of June 26, 1963), will refrain from
passing upon the validity of the administrative proceedings therein
questioned and will instead proceed to determine the respective rights
of the parties to the present action.

The legal question posed by the present petition, considering the
above facts and circumstances, is: Who has a better right to the
tobacco in question, petitioner Collector of Customs who has ordered
the seizure and declared the forfeiture thereof as a result of Manila
Seizure Identification No. 6669, or respondent Tomas Cloma in whose
favor a writ of attachment was issued by the Court of First Instance of
Manila covering the said shipment in Civil Case No. 53874, brought by
Cloma against Auyong Hian for services rendered to the latter?

There is no question that the importation of the tobacco leaf in
question was illegal, having been made in clear violation of the policy
contained in Republic Act Nos. 698 and 1194. To this effect is the
decision of this Court in Climaco vs. Judge Barcelona, et
al., G. R. No. L-19597, July 31, 1962. The tobacco, therefore, is
subject to forfeiture in accordance with Section 2530 of the Tariff and
Customs Code (formerly Section 1363[f], Revised

Administrative Code), which reads:

“SEC. 2530. Property subject to forfeiture under Tariff and Customs Laws.—Any vessel or aircraft, cargo, articles and other objects shall, under the following conditions, be subject to forfeiture:

“(f)
Any article of prohibited importation or exportation, the importation
or exportation of which is effected or attempted contrary to law, and
all other articles which, in the opinion of the Collector, have been
used, are or were intended to be used as instrument in the importation
or exportation of the former.”

And the Collector of Customs had the power to order theseizure in
accordance with the provisions of Section 2205 of the Tariff and
Customs Code, thus:

“SEC. 2205. Exercise of Power of Seizure and, Arrest.—It
shall be within the power of a customs’ official or person authorized
as aforesaid, and it shall be his duty to make seizure of any vessel,
aircraft, cargo, articles, animal or other movable property when the
same is subject to forfeiture or liable for any fine imposed under the
customs and tariff laws, and also to arrest any person subject to
arrest for violation of any customs and tariff laws, such power to be
exercised in conformity with the law and the provisions of this Code.”

This Court has had occasion in the past to uphold the action of the
Collector of Customs in ordering the seizure of goods or articles
imported or exported in violation of existing laws and regulations, and
their forfeiture in favor of the Government. (See Tong Tek, et al. vs.
The Commissioner of Customs, 105 Phil., 1071; Pascual vs. The
Commissioner of Customs, 105 Phil., 1039; Commissioner of Customs vs.
Pascual, 106 Phil., 488; Commissioner of Customs vs. Serree Investment Co., May 16, 1960.)

Respondent Cloma justifies the issuance of the writ of attachment
dated May 14, 1963 he secured in the court below by the alleged
illegality of the seizure proceedings which culminated in the April 28,
1963 decision of the Collector of Customs. He claims that said decision
is arbitrary because the hearing officer and the petitioner herein
declared claimant Auyong Hian in default without notifying him of the
action taken on his motion to postpone the seizure proceedings, and for
lack of notice to respondent Cloma of the said proceedings. So Cloma
claims that the sale at public auction was null and void as not
authorized by Republic Act No. 1194 and as violative of Section 2601 of
the Tariff and Customs Code.

The record shows that Auyong Hian received on November 21,3963
notice of the hearing of the seizure proceedings scheduled for November
26, 1962. It is true, he filed a motion to postpone the hearing, but it
was for an indefinite period of time and only in the morning of the
date of hearing. He did not bother to find out what action the
Collector of Customs would take on his motion. Continuation of the
seizure proceedings was made on December 6, and December 10, 1962, yet
Auyong Hian did not take the trouble to find out about its status. The
facts, therefore, show that Auyong Hian was not deprived of due procees
of law, but that he is guilty of abandonment or gross negligence in the
protection of his rights, for which he alone is to blame.

As to the lack of notice to respondent Cloma of the seizure
proceedings, the same may not be taken against the Collector of Customs
who had no way of knowing Cloma’s supposed interest in the questioned
shipment. The seizure proceedings began on November 8, 1962 and
decision thereon was rendered on April 23, 1963, whereas Cloma’s action
against Auyong Hian (CFI Civil Case No. 53874) was brought only on May
4, 1963, six months after the start of the seizure proceedings. As the
Collector of Customs had no way of knowing the alleged claim of Cloma
against the subject of the seizure proceedings, said Collector could
not be expected to give him not’ce of the said proceedings; the absence
of notice to him does not affect the validity of the proceedings.

Respondent Cloma also claims that as the Court of First Instance of
Manila has acquired jurisdiction to try the merits of the complaint in
Civil Case No. 53874, it has likewise, the power to issue ancillary
writs and processes as well as interlocutory orders in the exercise of
its jurisdiction, like the writ of attachment issued on May 14,1963, in
favor of respondent Cloma, covering the questioned shipment; and that
by virtue of petitioner’s filing of a third-party claim in said civil
case, petitioner had become a party thereto and made subject to the
jurisdiction and authority of respondent court

It is to be noted that the seizure proceedings had already been
terminated and the tobacco shipment declared forfeited to the
Government, thereby ceasing to be the property of Auyong Hian, when
Civil Case No. 53874 was brought by Cloma. The seizure proceedings were
taken by the Collector of Customs in the exercise of its jurisdiction
of the customs law (Sees. 2205 and 2530, Tariff and Customs Code). As
early as 1913 the exercise by the Collector of Customs of such
jurisdiction had already been recognized, thus:

“The Insular Collector of Customs (now Collector of
Customs), when sitting in forfeiture proceedings as provided by Act No.
355 (now Republic Act No. 1937), constitutes a tribunal upon which the
law expressly confers jurisdiction to hear and determine all questions
touching forfeiture and further disposition of the subject matter of
such proceeding.” (Govt. of the Phils., vs. Gale, 24 Phil., 95).

In a much recent case (Po Eng vs. Commissioner of Customs,
110 Phil., 83), this Court, ruling on the jurisdiction of the Collector
of Customs to seize and forfeit the goods involved therein, said:

“In accordance with Section 1250 of the Revised
Administrative Code, the Collector of Customs has jurisdiction, indeed
has the duty to exercise jurisdiction to prevent importation or
otherwise secure compliance with all legal requirements in the case of
merchandise of prohibited importation or subject to importation only
upon conditions prescribed by law. In the exercise of this
jurisdiction, he may subject lo forfeiture cargoes and other objects of
prohibited importation, in accordance with Section 1363 (f), Revised
Administrative Code.”

And in the aforementioned case of Climaco vs. Judge
Barcelona, wherein the illegality of the importation of the subject
tobacco was declared, this Court upheld the action of the Collector of
Customs in refusing to release the tobacco in question when it set
aside the order of the lower court requiring such release as well as
the writ of preliminary injunction issued in accordance therewith.

Auyong Hian, therefore, had lost all his rights to the shipment, not
only because We declared the licenses void and the shipment illegal in
the case of Climaco vs. Barcelona, G. R. No. L—19597, but also because
the seizure proceedings have been found to be regular and had deprived
Auyong Hian of his rights to the shipment as importer; at least while
the order of seizure has not been set aside.

It is further to be noted that the right of Cloma asserted in Civil
Case No. 53874, CFI of Manila, is not a right against the shipment
itself, but a contractual right to require Auyong Hian to pay him an
amount for securing the revaiidation of the licenses. It is a personal
right that he had against Auyong Hian and not a real right against the
property that Auyong Hian had imported, and, therefore, not subject to
attachment as the property of Auyong Hian (Rule 57, Sec. 1, Rules of
Court). Consequently, the issuance of the writ of attachment against
the tobacco shipment is, for the various reasons above indicated,
absolutely null and void. As a direct consequence of the invalidity of
the writ of attachment, and Cloma’s lack of any right or interest over
the tobacco shipment subject of the seizure proceedings, the issuance
of the writ of preliminary injunction to stop the seizure proceedings
is also absolutely null and void, as the same was issued with grave
abuse of discretion or authority on the part of respondent judge.

Whether the purchaser at the auction sale should or must comply with
the conditions imposed on all Virginia tobacco by Republic Act No.
1194, especially Sec. 2 thereof authorizing the Monetary Board to
allocate and distribute the leaf tobacco among legitimate
manufacturers, We do not now decide, as the matter is not in issue
before us. For the purpose of the present suit it is sufficient to note
that Sec. 2601 of the Tariff and Customs Code subjects to sale seized
property after liability to sale had been established by proper
administrative or judicial proceedings in conformity with the
provisions of the Tariff and Customs Code.

In view of the foregoing, the petition for certiorari and injunction
is granted, and the orders of respondent judge of first instance dated
June 5 and 6, and the writ of preliminary injunction dated June 7, 1963
and other pertinent orders issued by him, are set aside, and respondent
judge is hereby declared without jurisdiction over the shipment
involved in Manila Seizure Identification No. 6669 and to pass upon the
validity of the actuations of petitioner Collector of Customs. Pending
action by the Commissioner of Customs on the appeal taken by Auyong
Hian from the April 23, 1963 decision of the Collector of Customs in
the above-mentioned seizure proceedings, the writ of preliminary
injunction issued by this Court against said Collector restraining him
from proceeding with the sale of the subject tobacco to intervenor
Consolidated Tobacco Industries of the Philippines, Inc., shall
continue to, remain in full force and effect. Costs against respondent
Tomas Cloma.

Bengzon, C. J., Padilla, Bautista Angelo, Concepcion, Reyes, J. B. L., Paredes, Regala and Makalintal, JJ., concur.