G.R. No. L-32542 November 26, 1970
THE COMMISSIONER OF CUSTOMS and THE COLLECTOR OF CUSTOMS for the Port of Manila, petitioners, vs. HON. FEDERICO C. ALIKPALA, in his capacity as Judge of the Court of First Instance of Manila, Branch XXII, GONZALO SY and TOMAS Y. DE LEON, respondents.

FACTS

Private respondents Gonzalo Sy (Gonzalo Sy Trading) and Tomas Y. de Leon (T. Y. de Leon Enterprises) imported fresh fruits. The Collector of Customs for the Port of Manila issued warrants of seizure and detention against the cargo on the ground that the importations violated Central Bank circulars in relation to Section 2530-F of the Tariff and Customs Code. Before the private respondents could be heard on the seizure, the Collector issued a notice of sale at public auction scheduled for August 10, 1970. The private respondents filed a petition for injunction with a prayer for a writ of preliminary injunction in the Court of First Instance of Manila (Civil Case No. 80655) to restrain the customs officials from carrying out the seizure and sale and to order the release of the cargo upon the surety bonds they had submitted. The respondent Judge issued a restraining order and, after a hearing, granted the writ of preliminary injunction. The Judge found that the Collector scheduled the sale without first giving the importers an opportunity to be heard, contrary to the requirements of the Tariff and Customs Code, and that the importers had availed of the remedy under Section 2301 by submitting surety bonds, which the Collector rejected by demanding cash bonds instead. The customs officials petitioned the Supreme Court for certiorari and prohibition to annul the lower court’s orders.

ISSUE

1. Whether the Court of First Instance had jurisdiction over the subject matter of the case (the petition for injunction against the seizure and sale of the imported fruits by customs authorities).
2. Whether the respondent Judge acted with grave abuse of discretion in granting the writ of preliminary injunction.
3. Whether the respondent Judge gravely abused his discretion in insisting on the sufficiency of the surety bonds filed by the private respondents.

RULING

1. On Jurisdiction: The Supreme Court held that the Court of First Instance had jurisdiction. The principal question raised in the injunction suit was not the correctness of the seizure itself but whether the Collector of Customs acted without or in excess of jurisdiction by ordering the sale of the perishable goods without first giving the owners an opportunity to be heard, in violation of statutory procedure and the requirements of due process. The Court distinguished this from cases where the exclusive jurisdiction of the Court of Tax Appeals is invoked, noting that the action was fundamentally for the enforcement of due process, over which the Court of First Instance had jurisdiction.
2. On the Grant of Preliminary Injunction: The Supreme Court found no grave abuse of discretion. The Court agreed with the respondent Judge that the Collector of Customs should not have ordered the sale at public auction until after the importers were given the opportunity to be heard as required by Sections 2301 and 2303 of the Tariff and Customs Code. The Court also held that the Collector acted arbitrarily in requiring a cash bond for the release of the goods when the law (Section 2301) only required a “sufficient bond,” and the established practice was to accept surety bonds. The perishable nature of the goods and the threat of irreparable damage justified the injunctive relief.
3. On the Sufficiency of the Bonds: The Supreme Court modified the respondent Judge’s order regarding the bonds. While upholding the authority to accept surety bonds, the Court noted that the bonds were all subscribed by the Communications Insurance Co., Inc., whose maximum writing capacity was only P50,465.52, whereas the aggregate bond amount was P513,865.46. Only a portion of this liability was reinsured. The Court held it incumbent upon the private respondents to either cause a sufficient portion of the bonds to be covered by reinsurance or to put up other acceptable surety bonds, to be justified before the respondent Court in case of dispute.
DISPOSITIVE PORTION: Subject to the condition that the private respondents must either cause sufficient reinsurance for the bonds or put up other acceptable surety bonds, the writ prayed for by the petitioners (customs officials) was denied, the petition was dismissed, and the Supreme Court’s restraining order was lifted. No costs.