Torts Sep152012 Full Cases

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SECOND DIVISION

[G.R. No. 116100. February 9, 1996]

SPOUSES CRISTINO and BRIGIDA CUSTODIO and SPOUSES LITO and MARIACRISTINA SANTOS,petitioners, vs. COURT OF APPEALS, HEIRS OFPACIFICO C. MABASA and REGIONAL TRIAL COURT OF PASIG, METROMANILA, BRANCH 181,respondents.

D E C I S I O N

REGALADO, J.:

This petition for review on certiorari assails the decision of respondent Court ofAppeals in CA-G.R. CV No. 29115, promulgated on November 10, 1993, which affirmedwith modification the decision of the trial court, as well as its resolution dated July 8,1994 denying petitioners motion for reconsideration. [1]

On August 26, 1982, Civil Case No. 47466 for the grant of an easement of right ofway was filed by Pacifico Mabasa against Cristino Custodio, Brigida R. Custodio,Rosalina R. Morato, Lito Santos and Maria Cristina C. Santos before the Regional TrialCourt of Pasig and assigned to Branch 22 thereof. [2]

The generative facts of the case, as synthesized by the trial court and adopted bythe Court of Appeals, are as follows:

Perusing the record, this Court finds that the original plaintiff Pacifico Mabasa died during the

pendency of this case and was substituted by Ofelia Mabasa, his surviving spouse [and children].

The plaintiff owns a parcel of land with a two-door apartment erected thereon situated at InteriorP. Burgos St., Palingon, Tipas, Taguig, Metro Manila. The plaintiff was able to acquire said

property through a contract of sale with spouses Mamerto Rayos and Teodora Quintero as

vendors last September 1981. Said property may be described to be surrounded by otherimmovables pertaining to defendants herein. Taking P. Burgos Street as the point of reference,

on the left side, going to plaintiffs property, the row of houses will be as follows: That of

defendants Cristino and Brigido Custodio, then that of Lito and Maria Cristina Santos and then

that of Ofelia Mabasa. On the right side (is) that of defendant Rosalina Morato and then a SepticTank (Exhibit D). As an access to P. Burgos Street from plaintiffs property, there are two

possible passageways. The first passageway is approximately one meter wide and is about 20

meters distan(t) from Mabasas residence to P. Burgos Street. Such path is passing in betweenthe previously mentioned row of houses. The second passageway is about 3 meters in width and

length from plaintiff Mabasas residence to P. Burgos Street; it is about 26 meters. In passing

thru said passageway, a less than a meter wide path through the septic tank and with 5-6metersin length has to be traversed.
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When said property was purchased by Mabasa, there were tenants occupying the premises and

who were acknowledged by plaintiff Mabasa as tenants. However, sometime in February, 1982.

one of said tenants vacated the apartment and when plaintiff Mabasa went to see the premises,he saw that there had been built an adobe fence in the first passageway making it narrower in

width. Said adobe fence was first constructed by defendants Santoses along their property which

is also along the first passageway. Defendant Morato constructed her adobe fence and evenextended said fence in such a way that the entire passageway was enclosed (Exhibit 1-Santoses

and Custodios, Exh. D for plaintiff, Exhs. 1-C, 1-D and I -E) And it was then that the

remaining tenants of said apartment vacated the area. Defendant Ma. Cristina Santos testifiedthat she constructed said fence because there was an incident when her daughter was dragged by

a bicycle pedalled by a son of one of the tenants in said apartment along the first passageway.

She also mentioned some other inconveniences of having (at) the front of her house a pathway

such as when some of the tenants were drunk and would bang their doors and windows. Some of

their footwear were even lost. x x x [3] (Italics in original text; corrections in parentheses supplied)

On February 27, 1990, a decision was rendered by the trial court, with this

dispositive part:Accordingly, judgment is hereby rendered as follows:

1) Ordering defendants Custodios and Santoses to give plaintiff permanent access - ingress and

egress, to the public street;

2) Ordering the plaintiff to pay defendants Custodios and Santoses the sum of Eight ThousandPesos (P8,000) as indemnity for the permanent use of the passageway.

The parties to shoulder their respective litigation expenses.[4]

Not satisfied therewith, therein plaintiff represented by his heirs, herein privaterespondents, went to the Court of Appeals raising the sole issue of whether or not thelower court erred in not awarding damages in their favor. On November 10, 1993, asearlier stated, the Court of Appeals rendered its decision affirming the judgment of thetrial court with modification, the decretal portion of which disposes as follows:

WHEREFORE, the appealed decision of the lower court is hereby AFFIRMED WITH

MODIFICATION only insofar as the herein grant of damages to plaintiffs-appellants. The Courthereby orders defendants-appellees to pay plaintiffs-appellants the sum of Sixty Five

Thousand (P65,000) Pesos as Actual Damages, Thirty Thousand (P30,000) Pesos as Moral

Damages, and Ten Thousand (P10,000) Pesos as Exemplary Damages. The rest of the appealed

decision is affirmed to all respects.[5]

On July 8, 1994, the Court of Appeals denied petitioners motion for reconsideration.[6] Petitioners then took the present recourse to us, raising two issues, namely , whetheror not the grant of right of way to herein private respondents is proper, and whether ornot the award of damages is in order.
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With respect to the first issue, herein petitioners are already barred from raising thesame. Petitioners did not appeal from the decision of the court a quogranting privaterespondents the right of way, hence they are presumed to be satisfied with theadjudication therein. With the finality of the judgment of the trial court as to petitioners,the issue of propriety of the grant of right of way has already been laid to rest.

For failure to appeal the decision of the trial court to the Court of Appeals,petitioners cannot obtain any affirmative relief other than those granted in the decisionof the trial court. That decision of the court below has become final as against them andcan no longer be reviewed, much less reversed, by this Court. The rule in this

jurisdiction is that whenever an appeal is taken in a civil case, an appellee who has nothimself appealed may not obtain from the appellate court any affirmative relief otherthan what was granted in the decision of the lower court. The appellee can onlyadvance any argument that he may deem necessary to defeat the appellants claim orto uphold the decision that is being disputed, and he can assign errors in his brief ifsuch is required to strengthen the views expressed by the court a quo. These assignederrors, in turn, may be considered by the appellate court solely to maintain the appealed

decision on other grounds, but not for the purpose of reversing or modifying thejudgment in the appellees favor and giving him other affirmative reliefs.[7]

However, with respect to the second issue, we agree with petitioners that the Courtof Appeals erred in awarding damages in favor of private respondents. The award ofdamages has no substantial legal basis. A reading of the decision of the Court of

Appeals will show that the award of damages was based solely on the fact that theoriginal plaintiff, Pacifico Mabasa, incurred losses in the form of unrealized rentals whenthe tenants vacated the leased premises by reason of the closure of the passageway.

However, the mere fact that the plaintiff suffered losses does not give rise to a rightto recover damages. To warrant the recovery of damages, there must be both a right of

action for a legal wrong inflicted by the defendant, and damage resulting to the plaintifftherefrom. Wrong without damage, or damage without wrong, does not constitute acause of action, since damages are merely part of the remedy allowed for the injurycaused by a breach or wrong.[8]

There is a material distinction between damages and injury. Injury is the illegalinvasion of a legal right; damage is the loss, hurt, or harm which results from the injury;and damages are the recompense or compensation awarded for the damagesuffered. Thus, there can be damage without injury in those instances in which the lossor harm was not the result of a violation of a legal duty. These situations are oftencalled damnum absque injuria.[9]in order that a plaintiff may maintain an action for the

injuries of which he complains, he must establish that such injuries resulted from abreach of duty which the defendant owed to the plaintiff - a concurrence of injury to theplaintiff and legal responsibility by the person causing it. [10] The underlying basis for theaward of tort damages is the premise that an individual was injured in contemplation oflaw. Thus, there must first be the breach of some duty and the imposition of liability forthat breach before damages may be awarded; it is not sufficient to state that thereshould be tort liability merely because the plaintiff suffered some pain and suffering) [11]
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Many accidents occur and many injuries are inflicted by acts or omissions whichcause damage or loss to another but which violate no legal duty to such other person,and consequently create no cause of action in his favor. In such cases, theconsequences must be borne by the injured person alone. The law affords no remedyfor damages resulting from an act which does not amount to a legal injury or wrong. [12]

In other words, in order that the law will give redress for an act causing damage,that act must be not only hurtful, but wrongful. There must be damnum et injuria.[13]If,as may happen in many cases, a person sustains actual damage, that is, harm or lossto his person or property, without sustaining any legal injury, that is, an act or omissionwhich the law does not deem an injury, the damage is regarded as damnum absqueinjuria.[14]

In the case at bar, although there was damage, there was no legal injury. Contraryto the claim of private respondents, petitioners could not be said to have violated theprinciple of abuse of right. In order that the principle of abuse of right provided in Article21 of the Civil Code can be applied, it is essential that the following requisites concur:

(1) The defendant should have acted in a manner that is contrary to morals, goodcustoms or public policy; (2) The acts should be willful; and (3) There was damage orinjury to the plaintiff.[15]

The act of petitioners in constructing a fence within their lot is a valid exercise oftheir right as owners, hence not contrary to morals, good customs or public policy. Thelaw recognizes in the owner the right to enjoy and dispose of a thing, without otherlimitations than those established by law.[16] It is within the right of petitioners, asowners, to enclose and fence their property. Article 430 of the Civil Code provides that(e)very owner may enclose or fence his land or tenements by means of walls, ditches,live or dead hedges, or by any other means without detriment to servitudes constitutedthereon.

At the time of the construction of the fence, the lot was not subject to anyservitudes. There was no easement of way existing in favor of private respondents,either by law or by contract. The fact that private respondents had no existing right overthe said passageway is confirmed by the very decision of the trial court granting acompulsory right of way in their favor after payment of just compensation. It was onlythat decision which gave private respondents the right to use the said passageway afterpayment of the compensation and imposed a corresponding duty on petitioners not tointerfere in the exercise of said right.

Hence, prior to said decision, petitioners had an absolute right over their propertyand their act of fencing and enclosing the same was an act which they may lawfully

perform in the employment and exercise of said right. To repeat, whatever injury ordamage may have been sustained by private respondents by reason of the rightful useof the said land by petitioners is damnum absque injuria.[17]

A person has a right to the natural use and enjoyment of his own property,according to his pleasure, for all the purposes to which such property is usuallyapplied. As a general rule, therefore, there is no cause of action for acts done by oneperson upon his own property in a lawful and proper manner, although such acts
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incidentally cause damage or an unavoidable loss to another, as such damage or lossis damnum absque injuria.[18]When the owner of property makes use thereof in thegeneral and ordinary manner in which the property is used, such as fencing or enclosingthe same as in this case, nobody can complain of having been injured, because theinconvenience arising from said use can be considered as a mere consequence of

community life.[19]

The proper exercise of a lawful right cannot constitute a legal wrong for which anaction will lie,[20] although the act may result in damage to another, for no legal right hasbeen invaded[21] One may use any lawful means to accomplish a lawful purpose andthough the means adopted may cause damage to another, no cause of action arises inthe latters favor. Any injury or damage occasioned thereby is damnum absqueinjuria. The courts can give no redress for hardship to an individual resulting fromaction reasonably calculated to achieve a lawful end by lawful means. [22]

WHEREFORE, under the compulsion of the foregoing premises, the appealeddecision of respondent Court of Appeals is hereby REVERSED and SET ASIDE and the

judgment of the trial court is correspondingly REINSTATED.SO ORDERED.

Romero and Puno, JJ., concur.Mendoza, J., took no part.

[1] Penned by Justice Lourdes K. Tayao-Jaguros, with Justices Vicente V. Mendoza andJesus M. Elbinias, concurring.

[2] Original Record, 1.

[3] Rollo, 28-29.[4] Ibid., 38.

[5] Ibid., 31.

[6] Ibid., 34.

[7] See Lumibao vs. Intermediate Appellate Court, et al., G.R. No. 64677, September 13,1990, 189 SCRA 469; SMI Fish Industries, Inc., et al. vs. National Labor RelationsCommission, et al., G.R. Nos. 96952- 56, September 2, 1992, 213 SCRA 444; Heirs ofJuan Oclarit, et al. vs. Court of Appeals, et al., G.R. No. 96644, June 17, 1994,233SCRA 239.

[8] 22 Am Jur 2d, Damages, Sec. 4,35-36.

[9] Ibid., 113

[10] 1 Am Jur 2d, Actions, Sec. 65, 595; see The Board of Liquidators vs. Kalaw, et al., L-18805, August 14, 1967,20 SCRA 987.

[11] Plummervs.Abbott Laboratories (DC RI), 568, F Supp. 920, CCH Prod Liab Rep9878.
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[12] Ibid., 598.

[13]Comstock vs. Wilson, 257 NY 231 177 NE 421, 76 ALR 676;Haldeman vs. Bruckhart, 45, 45Pa 514.

[14] U.S. - Premier Malt Roducts Co. vs. Kasser, 23 F. (2d)98.

[15] Jurado, D.P., Personal and Family Law, 1984 ed., 41.[16] Jovellanos, et al. vs. Court of Appeals, et al., G.R. No. 100728, June 1992,210SCRA 126.

[17] See Escano, et al. vs. Court of Appeals, et al., L-47207, September 25 1980, 100SCRA 197; Ilocos Norte Electric Co. vs. Court of Appeals, et al., G.R. No. 53401,November 6, 1989, 179 SCRA 5; Albenson Enterprises Corporation, et al. vs. Court of

Appeals, et al., G.R No. 88694, January 11, 1993, 217 SCRA 16.

[18] 1 C.J.S., Actions, Sec. 15, 1007-1008.

[19] Tolentino, A.M., Commentaries and juris-prudence on the Civil Code of

the Philippines, Vol. 11(1987), 59, citing 8 Salvat 614.[20] Coyne vs. Mississippi & R.R. Boom Co., 72 533, 75 NW 748.

[21] White vs. Kincaid, 149 NC 415, 63 SE 109; Fahn vs. Reichart, 8 Wis 255.

[22] OKeefee vs. Local 463, United Asso. P. & G. 277 NY 300, 14 NE 2d 77, 117 ALR817.

Republic of the PhilippinesSUPREME COURT

Manila
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SECOND DIVISION

G.R. No. L-28782 September 12, 1974

AUYONG HIAN (HONG WHUA HANG), Petitioner, vs. COURT OF TAX

APPEALS, COLLECTOR OF CUSTOMS, COMMISSIONER OF CUSTOMS,CONSOLIDATED INDUSTRIES OF THE PHILIPPINES, INC. (CTIP), and

LUZON STEVEDORING CORPORATIONS, Respondents.

ZALDIVAR, J.:

This is the fifth time that a case involving the 600 hogsheads of Virginia leaftobacco is before this Court. The first case was the case of "Cesar Climaco,et al., vs. Hon. Manuel Barcelona," G.R. No. L-19597, July 31, 1962 1,hereinafter referred to as the Barcelona case; the second, the case ofCollector of Customs, et al., vs. Hon. Francisco Arca, et al.," G.R. No. L-21839, July 17, 1964 2, hereinafter referred to as the Arca case; the third,the case of "Auyong Hian vs. Judge Gaudencio Cloribel, et al.," G.R. No.L-24704, July 10, 1967 3hereinafter referred to as the Cloribel case; and thefourth, "Auyong Hian vs. Court of Tax Appeals, et al.," G.R. No. L-25181,January 11, 1967 4, which was an appeal from the resolution of the Court ofTax Appeals in CTA Case No. 1560, dismissing Auyong Hian's petition forreview of the decision of the Commissioner of Customs that affirmed thedecision of the Collector of Customs upon the ground of lack of jurisdiction,and which will be hereinafter referred to as the "First CTACase".chanroblesvirtualawlibrary chanrobles virtual law library

The instant case, the fifth, is a petition for review of the decision of theCourt of Tax Appeals in its CTA Case No. 1560, dated January 31, 1968,finding without merit petitioner's appeal from the decision of theCommissioner of Customs that affirmed the decision of the Collector ofCustoms of Manila which ordered the seizure and forfeiture of the 600hogsheads of Virginia Leaf tobacco imported by petitioner from the UnitedStates. The instant case may well be called the "Second CTACase".chanroblesvirtualawlibrary chanrobles virtual law library

The antecedent facts, and the proceedings that spawned the instant case,briefly stated, are as follows: chanrobles virtual law library

On June 29, 1953, the import Control Commission approved petitionerAuyong Hian's application for four no dollar remittance licenses to importVirginia leaf tobacco with an aggregate value of two million dollars, of whichapproval petitioner was advised on the following day, June 30, 1953-the daywhen the effectivity of the Import Control Law (Republic Act No. 650)


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expired. In October, 1961, the Office of the President approved the use ofthe aforesaid licenses, and petitioner paid the license fees on November 2,1961. On December 30, 1961 600 hogsheads of Virginia leaf tobacco arrivedin the Port of Manila aboard the "SS Fernstate", consigned topetitioner.chanroblesvirtualawlibrary chanrobles virtual law library

Inasmuch as the Collector of Customs in Manila, apparently doubting thelegality of the importation, refused to release the shipment of said Virginialeaf tobacco, petitioner filed in the Court of First Instance of Manila an actionfor mandamus (Civil Case No. 49639), to compel the Collector of Customsand the Commissioner of Customs to release the tobacco to petitioner. OnMarch 19, 1962 Judge Barcelona issued an order to release the tobaccoshipment to petitioner. The Collector of Customs and the Commissioner ofCustoms then filed with the Supreme Court a petition for certiorari to annulthe order of release. This was the Barcelona case. On July 31, 1962 thisCourt, in its decision, ruled that the Court of First Instance of Manila had nojurisdiction to issue the (questioned) order releasing the tobacco shipment;and this Court incidentally declared that the importation of the tobacco,notwithstanding the alleged approval of the importation by the President ofthe Philippines, was illegal upon the ground that the importation was madelong after the expiration of the effectivity of the Import Control Law, andthat the importation contravened the government policy as declared inRepublic Acts Nos. 698 and 1194. 5 chanrobles virtual law library

On November 8, 1962, the Collector of Customs instituted seizureproceedings against the 600 hogsheads of tobacco, and issued a warrant of

seizure and detention, in Seizure Identification Case No. 6669. On April 23,1960 the Collector of Customs rendered a decision declaring the tobaccoforfeited to the government, and ordering the sale thereof at public auctionon June 10, 1963. Petitioner received copy of the decision on May 7, 1963.From this decision petitioner filed, on May 21, 1963, his notice of appeal tothe Commissioner of Customs. On December 7, 1964, the Commissioner ofCustoms affirmed the decision of the. Collector ofCustoms.chanroblesvirtualawlibrary chanrobles virtual law library

On January 8, 1965 petitioner filed in the Court of Tax Appeals, in CTA CaseNo. 1560, a petition for review by way of appeal from the decision of theCommissioner of Customs. On June 22, 1965 the Court of Tax Appealsdismissed the petition upon the ground that it had no jurisdiction toentertain the appeal because the Supreme Court had already decided in theBarcelona and Area cases that the importation in question was illegal. Fromthis resolution Auyong Hian appealed to the Supreme Court. This was the"First CTA Case" that We have earlier adverted to, This Court, on January11, 1967 6remanded the case to the Court of Tax Appeals for further


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proceedings, and for decision, on matters that this Court had refrained fromdeciding.chanroblesvirtualawlibrary chanrobles virtual law library

After the case has been remanded to the Court of Tax Appeals, petitionerfiled in said court an amended petition for review to include the Consolidated

Tobacco Industries of the Philippines (hereinafter referred to as CTIP) andthe Luzon Stevedoring Corporation, as parties-respondents.chanroblesvirtualawlibrary chanrobles virtual law library

After hearing, respondent Court of Tax Appeals, in its decision dated January31, 1968, found the appeal to be without merit and dismissed the same,with costs against petitioner. This is the decision that is now sought to bereviewed in the instant petition for review before thisCourt.chanroblesvirtualawlibrary chanrobles virtual law library

While this case was pending decision, the Solicitor General, on February 22,1972, filed a "motion for leave", praying that pending final determination ofthe case, respondents Collector of Customs and Commissioner of Customsbe authorized to refund to the CTIP the storage charges of the tobacco inquestion pursuant to Section 2605-c of the Tariff and Customs Code. In aresolution dated February 28, 1972 this Court deferred action on the petitionof the Solicitor General until the case is considered on themerits.chanroblesvirtualawlibrary chanrobles virtual law library

In the present appeal, petitioner Auyong Hian assigns twelve (12) errorsallegedly committed by the Court of Tax Appeals in its decision of January

31, 1968 dismissing the appeal from the decision of the Commissioner ofCustoms. The points raised in the assignment of errors boil down to thequestion of whether or not the Court of Tax Appeals had correctly sustainedthe decision of the Commissioner of Customs which affirmed the decision ofthe Collector of Customs in connection with the seizure, forfeiture and thesale of the 600 hogsheads of Virginia leaf tobacco that were imported intothe country at the instance of petitioner Auyong Hian. It must be recalledthat in the Barcelona and Arca cases, supra, this Court had categorically heldthat the importation of the 600 hogsheads of Virginia leaf tobacco wasillegal. It was for this reason that the Court of Tax Appeals, in its resolutionof June 22, 1965, in CTA Case No. 1560 (First CTA Case), dismissed theappeal of Auyong Hian from the decision of the Commissioner of Customs.But this Court, in the first CTA Case held that the Court of Tax Appeals, hadjurisdiction to pass upon the appeal of Auyong Hian from the decision of theCommissioner of Customs because the appeal involved matters related tothe administrative proceedings in connection with the seizure, forfeiture andsale of the tobacco in question. Here is what this Court said:


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... It appears to Us that the Court of Tax Appeals had overlooked the factthat the appeal of Auyong Hian from the decision of the Commissioner ofCustoms had raised not only the question of the legality of the importationbut also other matters which called for a ruling by the Court of Tax Appealsin the exercise of its appellate jurisdiction - especially the question of

whether the tobacco thus imported were goods the importation of which wasrelatively prohibited or absolutely prohibited, and also the questionregarding the disposal of the tobacco that was thus seized. The declarationby this Court, in the Barcelona and Arca cases, supra, that the importation ofthe tobacco in question was illegal was not intended to stop the course ofthe administrative proceedings in relation to the importation of said tobacco.Let it be noted that when the Barcelona case was decided on July 31, 1962the seizure proceedings against the 600 hogsheads of tobacco in questionhad not yet been instituted by the Collector of Customs. It was not untilNovember 8, 1962 when Seizure Identification No. 6669 was instituted. ...

And so this Court, in the First CTA case, declared the Court of Tax Appealsas possessed of jurisdiction to pass upon the questions raised by AuyongHian in his appeal from the decision of the Commissioner of Customsregarding administrative matters relating to the seizure proceedings of the600 hogsheads of tobacco in question.chanroblesvirtualawlibrary chanroblesvirtual law library

(1) Auyong Hian claims that he was not given a chance to be heard in theseizure proceedings. He claims that he filed a motion for postponement ofthe hearing scheduled for November 26, 1962 based on some valid reasons,

that said motion for postponement was not acted upon by the hearingofficer, or if it was acted upon at all the hearing officer did not notify him ofthe action taken on said motion, and that he was not notified about thesubsequent hearing because he was declared in default by the hearingofficer. Auyong Hian maintains that there can not be a declaration of defaultin purely administrative proceedings. In short, it is the contention of AuyongHian that in the seizure proceedings of the 600 hogsheads of tobacco inquestion he was not afforded the benefits of due process oflaw.chanroblesvirtualawlibrary chanrobles virtual law library

It is a settled doctrine that due process is applicable to administrativeproceedings (Asprec vs. Itchon, et al., L-21685, April 30, 1966, 16 SCRA921, 925; Cornejo vs. Gabriel, 41 Phil. 188, 193); that the essence of dueprocess is the requirement of notice and hearing (Algabre vs. Court ofAppeals, L-24458-64, July 31, 1969, 26 SCRA 1130, 1140); that thepresence of a party at a trial is not always of the essence of due process,and all that due process requires is an opportunity to be heard (Asprec vs.


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Itchon, et al., supra).chanroblesvirtualawlibrary chanrobles virtual lawlibrary

In this connection, the Court of Tax Appeals made the following findings:

The records show that petitioner was given a notice of hearing in SeizureIdentification No. 6669 (re the 600 hogsheads of Virginia leaf tobacco); thaton the date of hearing petitioner filed a motion for indefinite postponement,which was not acted upon or resolved by the proper Customs officials; thatupon failure of petitioner to appear on the date of hearing, the hearingofficer declared petitioner in default; and that the hearing was conductedthereafter in the absence of petitioner. (Decision CTA Case No. 1560;Record, pp. 32-33).

Petitioner's having filed a motion for postponement, even if the motion is notentirely groundless, confers on him no right either to assume that themotion for postponement would be granted or to be absent at, and shy awayfrom, the hearing. Petitioner was consequently guilty of carelessness andneglect when he failed to appear at the trial. He cannot rightfully claim thatthe hearing officer was guilty of abuse of discretion in refusing to grant thepostponement (Sarreal vs. Hon. Tan, et al., 92 Phil. 689, 692). And after aparty has been declared in default, he is not entitled to notice of the orderplacing him in default; neither is he entitled to notice of proceedingssubsequent to default (Lim Toco v. Go Fay, 80 Phil. 166, 168). Petitioner,therefore, has no cause to complain that he was not afforded a chance to beheard or that he was denied his day in

court.chanroblesvirtualawlibrary chanrobles virtual law library

The contention of petitioner that in administrative proceedings a party cannot be declared in default is untenable. If a respondent in an administrativeproceeding cannot be declared in default when he fails to appear, asrequired, the continuance of an administrative proceeding would bedependent on the will and caprice of said party to the proceedings, andwould render helpless the officer or board conducting an administrativeproceeding. We hold that if the party duly summoned, or duly notified, toappear at an administrative investigation, refuses to appear, he may bedeclared in default, and the investigation may proceed without hispresence.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner's first assignment of error is not only not sustained by the facts. Itis furthermore negated by the pronouncements of this Court which hasalready passed directly on the issue of whether or not petitioner AuyongHian was deprived of due process of law in the seizure proceedings. In theArca case, respondent therein claimed that the decision in the seizure


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proceedings was arbitrary because the hearing officer and the Collector ofCustoms declared Auyong Hian in default without notifying him of the actiontaken on his motion to postpone the seizureproceedings.chanroblesvirtualawlibrary chanrobles virtual law library

This Court rejected the contention saying:

The record shows that Auyong Hian received on November 21, 1963 noticeof hearing on the seizure proceedings scheduled for November 26, 1962. Itis true that he filed a motion to postpone the hearing, but it was for anindefinite period of time and only in the morning of the date of hearing. Hedid not bother to find out what action the Collector of Customs would takeon his motion. Continuation of the seizure proceedings was made onDecember 6, and December 10, 1962, yet Auyong Hian did not take thetrouble to find out about its status. The facts, therefore, show that AuyongHian was not deprived of due process of law, but that he is guilty ofabandonment or gross negligence in the protection of his rights, for which healone is to blame.

This pronouncement, though found only in the opinion, cannot be accuratelycalled, as contended by petitioner, an obiter dictum just because it was notincorporated in the dispositive portion of the decision. This Court has alreadyremarked that the dispositive part does not always constitute a judgmentand that the judicial pronouncements in the body of the decision must beconsidered. (Millare, et al. vs. Millare, et al., 106 Phil. 298-299.) An obiterdictum has been defined as an opinion expressed by a court upon some

question of law which is not necessary to the decision of the case before it(Bouvier's Law Dictionary, third revision, Vol. I, p. 863). Although thequestion of whether petitioner Auyong Hian was deprived of due process inthe seizure proceedings was not the precise issue in the Arca case, for thisCourt itself said that the legal question posed in that case was:

Who has a better right to the tobacco in question, petitioner Collector ofCustoms who has ordered the seizure and declared the forfeiture thereof asa result of Manila Seizure Identification No. 6669, or respondent TomasCloma in whose favor a writ of attachment was issued by the Court of FirstInstance of Manila covering said shipment in Civil Case No. 53874, broughtby Cloma against Auyong Hian for services rendered to the latter? (Collectorof Customs v. Area, L-21389, July 17, 1964, 11 SCRA 529, 534-535).

Yet, the pronouncement made by this Court upon said question cannot besaid to be totally extraneous, and was not necessary, to the adjudication ofthe case before it, for to arrive at the conclusion that the Collector ofCustoms had a better right, by virtue of the seizure proceedings, that had


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already been terminated before Cloma's action was brought, the validity andlegality of the seizure proceedings, and necessarily the issue of thedeprivation of due process, had to be passed upon. With respect to a courtof last resort, all that is needed to render its decision authoritative is thatthere was an application of the judicial mind to the precise question

adjudged, and that the point was investigated with care and considered in itsfullest extent (Alexander v. Worthington, 5 Md. 488, cited in Bouvier's LawDictionary, third revision, Vol. 1, p. 864). A perusal of the decision in theArca case shows that the precise question of deprivation of due process wasextensively and explicitly discussed with a view to settle it, and consequentlythe pronouncement on said point cannot be considered a dictum.

2. Petitioner anchors the alleged invalidity of the seizure proceedings on hishaving been deprived his day in court. This basis has been shown to beuntenable.

Petitioner, however, tried to emasculate respondents' argument by assertingthat the declaration of the illegality of the tobacco importationwas incidentallymade; hence it has no bindingforce.chanroblesvirtualawlibrary chanrobles virtual law library

An analysis of the Barcelona case shows that even if the pronouncementtherein made regarding the illegality of the importation was incidentallymade, it did not and could not mean that the pronouncement wasextraneous to the subject matter and that it was, therefore,unauthoritative.chanroblesvirtualawlibrary chanrobles virtual law library

The Barcelona case was a petition for certiorari to set aside a writ ofpreliminary mandatory injunction. issued by the Hon. Judge Manuel P.Bareelona in Civil Case No. 49639 of the Court of First Instance of Manila,ordering the respondents therein, Cesar Climaco and Teotimo Roja, to allowentry of the 600 hogsheads of Virginia leaf tobacco imported under authorityof licenses Nos. 17166, 17169, 17196, and 17199 issued by the defunctImport Control Commission on May 8, 1953 under the provisions of RepublicAct No. 650. Respondents therein opposed the issuance of the writ ofpreliminary injunction, alleging among other things that the Court of FirstInstance had no jurisdiction to order the release of the importation on theground that the importer Auyong Hian was not entitled as a matter of rightand equity to import the tobacco, for the licenses, under which theimportation was made, were issued under a law that ceased to exist eightyears before the importation, and that the importation was a violation ofRep. Act No. 1194 at the time of importation; and that the importedtobacco, being under customs custody, could not be ordered released by theCourt of First Instance which had no jurisdiction to review the actuations of


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customs authorities in any case involving the seizure, detention or release ofany property.chanroblesvirtualawlibrary chanrobles virtual law library

One of the reasons given by the respondent court therein for granting thewrit of preliminary mandatory injunction was that the importation was legal

on the ground that the President had issued the licenses in accordance withthe supposed opinions of the Secretary of Justice Nos. 32 and 145, series of1961.chanroblesvirtualawlibrary chanrobles virtual law library

Although the principal question therein was the court's jurisdiction and theprimary relief prayed for by petitioners was to set aside the preliminarymandatory injunction dated March 20, 1962, the resolution thereof hingedon another question, which was, to quote the Court:

The question that is, therefore squarely presented for the decision of thisCourt is whether, under the facts and circumstances above indicated, thepetitioner has the clear legal right to make the importation in question andthe respondents the clear legal duty to allow entry and release of saidimportation.

The above question in turn depended on whether the importation was legallymade.chanroblesvirtualawlibrary chanrobles virtual law library

This Court in the dispositive portion of its decision in said case ruled for thereasons therein given that:

... We are constrained to declare, as we hereby declare, that the importationin question has been illegally made ... And We, therefore, hereby grant thepetition and set aside the order of the court below on March 19, 1962 andthe writ of preliminary injunction issued in accordance therewith ....

Said ruling regarding the illegality of the importation, contained in thedispositive portion cannot be said, as claimed by petitioner, unauthoritativeand not binding. Said declaration of illegality was reiterated in the Arca casethus:

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 inRepublic Acts Nos. 698 and 1194. (Collector of Customs v. Arca, L-21389,July 17, 1964, 11 SCRA 529, 535.) chanrobles virtual law library

3. Petitioner's insistence that the tobacco importation was valid and legaltogether with the grounds asserted to sustain the same is not tenable. ThisCourt already had occasion to examine in the Barcelona case the import


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licenses claimed to be valid by petitioner. To the petition in said case wereappended copies of the licenses and the receipt evidencing payment of thefees thereon in November, 1961. The alleged reason that said licenses werevalid because the President had issued them in accordance with thesupposed opinions of the Secretary of Justice No. 32 and 145, series of 1961

was already passed upon. This Court said that: chanrobles virtual law library

An examination of the licenses shows that the same were approved by theImport Control Commission on June 29, 1953. The following statement iscontained in each of the licenses:chanrobles virtual law library

This license is valid from date of issue until fully consummated, providedthat this license must be presented to an Authorized Agent (NegotiatingBank) of the Central Bank, and Bank Credit established within thirty (30)days after date of release. It is not transferable/assignable without authorityfrom the Import Control Commission and is subject to revocation for cause.Commodities covered by this license must be shipped from the country oforigin before the expiry date of the license, and are subject to Sec. 13 ofRepublic Act No. 650.chanroblesvirtualawlibrary chanrobles virtual lawlibrary

The following provision of Republic Act No. 650 is to be noted: chanroblesvirtual law library

Sec. 8. Unless extended in accordance with the rules and regulations, importlicenses issued under this Act and which are not used within thirty days after

the issue by the opening of a letter of credit or a similar transaction shall benull and void. Import licenses are non-transferable.chanroblesvirtualawlibrary chanrobles virtual law library

The petitioner has not shown that steps were ever taken to open thecorresponding letters of credit amounting to $500,000 to cover the paymentof the Virginia leaf tobacco to he imported, as required by the above-quotedprovision of the law. Neither is it shown that immediately, or within areasonable time after the approval of the licenses and their issuance, stepswere taken to order the tobacco to be shipped to the Philippines. Certainlythis was not done because the licenses were not fully completed untilNovember 2, 1961, when the corresponding fees chargeable on the licenseswere paid to the Office of the President. (Climaco vs. Barcelona, L-19597,July 31, 1962, 5 SCRA 850-851.)

and after discussing why the decision in Commissioner of Customs v.Auyong Hian, G.R. No. L-11719, April 29, 1959 could not be applied to thesaid case, this Court concluded that:


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The importation [of the tobacco] in question, therefore, is a gross violationof the policy contained in Republic Acts Nos. 698 and 1194, limiting theVirginia leaf tobacco importation only to such amounts as could not be metwith by the local production of Virginia leaf tobacco, hence clearlyillegal.chanroblesvirtualawlibrary chanrobles virtual law library

The supposed approval of the licenses by the President has been alleged asa ground for the validity of the importation. The President may not extendthe life of licenses issued under Republic Act No. 650; he cannot make theillegal importation valid; he has no legal authority to do so and his act wouldbe clearly violative of the express provisions of Republic Act 1194. (Climacov. Bareelona, L-19597, July 31, 1962, 5 SCRA 846, 848, 850, 853.)

In the Arca case, this Court again said:

There is no question that the importation was illegal having been made inclear violation of the policy contained in Republic Acts Nos. 698 and 1194. Tothis effect is the decision of this Court in Climaco vs. Judge Barcelona, et al.,G.R. No. L-19597, July 31, 1962. (Collector of Customs vs. Arca, No. L-21389, July 17, 1964, 11 SCRA 529, 535.)

Petitioner's claim that the Government is estopped to deny the validity of thelicense cannot be seriously defended. Time and again, this Court has ruledthat the doctrine of estoppel is not applicable against the Government suingin its capacity as sovereign or asserting governmental rights; theGovernment is never estopped by mistake or errors on the part of its

agents. (Republic v. Go Bon Lee, L-11499, April 29, 1961, 1 SCRA 1166,1170; Republic vs. Philippine Rabbit Bus Lines, Inc., L-26862, March 30,1970, 32 SCRA 211, 218; Luciano vs. Estrella, L-31622, August 31, 1970,34 SCRA 769, 776.) Moreover, estoppel cannot give validity to an act that isprohibited by law or is against public policy. (Republic v. Go BonLee, supra.) chanrobles virtual law library

The tobacco importation in question was, therefore, subject to seizure andforfeiture in accordance with Section 2530 of the Tariff and Customs Codeand the Collector of Customs had the power to order the seizure inaccordance with the provisions of Section 2205 of the Tariff and CustomsCode, as has already been ruled by this Court in the Arcacase.chanroblesvirtualawlibrary chanrobles virtual law library

But the Court of Tax Appeals, insists petitioner, should have decided whetherthe importation was absolutely prohibited or merely prohibited, on theground that in this Court's decision in the Court of Tax Appeals case, it wassaid that "the question of whether the tobacco thus imported were goods the


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importation of which was relatively prohibited or absolutely prohibited""called for a ruling of the Court of Tax Appeals in the exercise of its appellatejurisdiction." (19 SCRA 10, 22). Petitioner also claims that the respondentCourt of Tax Appeals erred when it did not hold that the importation was atworst, only relatively prohibited. In the decision of the Court of Tax Appeals

sought to be reviewed, it appears that the Tax Court discussed theclassification of articles subject to forfeiture under the Customs Law, and therights of the importer to the delivery of the imported article under Sections2301 and 2307 of the same Code, and it concluded that the failure todeclare the tobacco imported as merely qualifiedly prohibited did not affectthe substantive rights of petitioner. Said the Tax Court:

There is no evidence of record to show that petitioner herein exercised orattempted to exercise any of the rights afforded an importer under Sections2301 and 2307 of the Tariff and Customs Code. ... At any rate, even if hesought the release of said tobacco by filing a bond for its appraised value orby paying the redemption price, it is evident that the same could not havebeen granted because the delivery of said tobacco to him would be contraryto law. ... It is quite plain that the failure of respondents to declare saidtobacco as an article which merely qualifiedly prohibited has not adverselyaffected the substantive right of petitioner. (Decision-CTA Case No. 1560,Record, pp. 47-48.)

The Court of Tax Appeals did not commit a reversible error on this point.There is no question, as this Court has declared, that the importation madein December, 1961, of tobacco leaf in question was illegal. The same was

made in clear violation of the policy enunciated in Republic Act No. 698,approved May 9, 1952 limiting the importation of foreign leaf tobacco, andalso of its amendatory Act, Republic Act No. 1194, approved August 25,1954. These' statutes not only limit the importation of Virginia leaf tobaccobut also provide that the "Virginia-type leaf tobacco authorized to beimported therein shall be allocated and distributed by the Monetary Board ofthe Central Bank among legitimate manufacturers of Virginia-typecigarettes; that the licenses for such importation shall be issued ... by theCentral Bank ... that the leaf-tobacco imported without the necessary licenseissued under said Act shall be forfeited to the Government" (Sec. 2). Saidimportation is also subject to forfeiture under Sec. 2530 of the Tariff andCustoms Code.chanroblesvirtualawlibrary chanrobles virtual law library

The substantive right of petitioner is not affected, as declared by the TaxCourt, by the failure to declare whether the importation was absolutely orqualifiedly prohibited.chanroblesvirtualawlibrary chanrobles virtual lawlibrary


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Although the illegally imported subject tobacco may not be absolutelyprohibited, but only qualifiedly prohibited under Sec. 102 (K) of the Tariffand Customs Code, for it may be imported subject to certain conditions, it isnonetheless prohibited and is a contraband (Comm. of Customs vs. CTA &Dichoco, L-33471, Jan. 31, 1972), and the legal effects of the importation of

qualifiedly prohibited articles are the same as those of absolutely prohibitedarticles (Geotina vs. Court of Tax Appeals, No. L-33500, August 30, 1971,40 SCRA 362, 379, 383; Comm. of Customs vs. CTA &Dichoco, supra).chanroblesvirtualawlibrary chanrobles virtual law library

Under Sec. 2301 of the Tariff and Customs Code, upon making any seizure,the Collector of Customs shall issue a warrant for the detention of property;and if the owner or importer desires to secure the release of the property forlegitimate use, the Collector may surrender it upon the filing of a sufficientbond, in an amount to be fixed by him, conditioned for the payment of theappraised value of the article and/or any fine, expenses and costs which maybe adjudged in the case, provided, the articles the importation of which isprohibited by law shall not be released under bond. Pursuant, thereto, theimporter of the subject tobacco, the importation of which is prohibited bylaw, has no right that the tobacco be released to him even if he puts up abond to be determined by the Collector ofCustoms.chanroblesvirtualawlibrary chanrobles virtual law library

Sec. 2307 of the Tariff and Customs Code, which authorizes in a seizure casethe settlement of the case by payment of fine or the redemption of forfeitedproperty, also provides that:

Redemption of forfeited property shall not be allowed in any case where theimportation is absolutely prohibited or where the surrender of the propertyto the persons offering to redeem the same would be contrary to law.(Emphasis supplied.)

Petitioner Auyong Hian would, accordingly, not even be entitled to redeem,even if he wanted to, the forfeited tobacco, for the surrender to him of saidtobacco would be contrary to law, because petitioner could not really belegally entitled to import it inasmuch as he was not a legitimatemanufacturer of Virginia-type cigarettes, among whom alone shall beallocated and distributed by the Monetary Board of the Central Bank theVirginia-type leaf tobacco authorized to be imported. (Sec. 2, Rep. Act No.1194.) chanrobles virtual law library

What has been said above would have applied even if petitioner hadattempted to exercise the right of redemption under Sec. 2307 of the Tariff


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and Customs Code. The fact, however, as found by the Court of Tax Appealsis -

There is no evidence or record to show that petitioner herein exercised orattempted to exercise any of the rights afforded an importer under Section

2307 of the Tariff and Customs Code. All that he sought was the release oftobacco in question upon payment of the duties and taxes due thereonbecause of his insistence that the importation was made in accordance withlaw.

4. What has been said in the third assignment of error suffices to dispose ofthe fourth and fifth assignments. Therein it was shown that pursuant to theprovisions of Republic Acts Nos. 650 and 1194, petitioner was disqualified toimport the Virginia-leaf tobacco, he not being a legitimate manufacturer ofthis type of cigarette, and under the provisions of Secs. 2301 and 2307 ofthe Tariff and Customs Code, the tobacco could not be delivered to him,even if he had made attempts to put up a bond. Neither could the tobaccobe legally delivered to him even if he had attempted to redeem it. Hence,the alleged error committed by the Court of Tax Appeals in finding thatpetitioner did not attempt to exercise any of the rights afforded an importerunder Section 2307 of the Tariff and Customs Code, even if sustained, wouldnot affect the outcome of the instantpetition.chanroblesvirtualawlibrary chanrobles virtual law library

5. Petitioner's contention that the sale to the CTIP was invalid cannot beupheld.chanroblesvirtualawlibrary chanrobles virtual law library

It has been shown in the previous discussion that the decision of theCollector of Customs in ordering the forfeiture and sale of the subjecttobacco was correct and legal. Seized property, other than contraband,pursuant to Sections 2601 and 2602 of the Tariff and Customs Code, shallbe sold, or otherwise disposed of, upon the order of the Collector of the portwhere the property in question is found. The property shall be sold at publicauction after ten days notice conspicuously posted at the port and suchother advertisements as may appear to the Collector to be advisable in theparticular case (Sec. 2603). If the article seized, however, is perishable, theCollector may proceed to advertise and sell the same at auction upon noticeas he shall deem to be reasonable (Sec.2607).chanroblesvirtualawlibrary chanrobles virtual law library

Implementing his decision dated May 9, 1963, to have the seized tobaccosold to buyers who could meet certain qualifications and conditions, andafter having created a Committee to implement the decision, the Collector ofCustoms issued a notice of sale (Exhibit 6 - Customs), setting the public


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auction sale "at June 10, 1963 at 9:00 A.M. and every morning thereafteruntil terminated." which notice of sale was given the requisite publication atleast ten days before the auction sale (before June 10, 1963) in accordancewith Section 2603 of the Tariff and Customs Code. The sale, therefore, couldnot have been invalid, for lack of public

notice.chanroblesvirtualawlibrary chanrobles virtual law library

Two prospective bidders - the respondent CTIP and the Philippine AssociatedResources - registered with the Special Bidding Committee - but only theCTIP was found to be a qualifiedbidder.chanroblesvirtualawlibrary chanrobles virtual law library

On June 10, 1963, the date set for the public auction sale, the Collector ofCustoms was served the writ of preliminary injunction issued by JudgeFrancisco Arca in Civil Case No. 53824 directing the former to desist fromholding the auction sale. This writ was served upon him at 8:55 A.M. (pp.270-272, 329, 360 t.s.n., Brief for Respondent CTIP, p. 48), but before thewrit was served, the CTIP had submitted its bid at around 8:00 A.M. ( Ibid.,p. 48), and these facts were not impugned by petitioner (See Petitioner'sReply Brief, pp. 26-27). At any rate, even if the bid were submitted after theCollector had been served with the writ of preliminary injunction, his actwould not constitute a violation of the writ for the submission and receptionof a bid could not constitute a consummated sale. But on June 17, 1963 theSupreme Court issued a preliminary injunction in L-21389 (Arca case)prohibiting Judge Arca from executing or enforcing the writ of preliminaryinjunction issued by him against the petitioner in Civil Case No. 53874 (11

SCRA 529, 532-533).chanroblesvirtualawlibrary chanrobles virtual lawlibrary

On June 26, 1963, the bid of the CTIP was finally approved and the tobaccowas awarded to it. This took place before 5:00 p.m. However, at 5:38 p.m.of the same day another restraining order from the Supreme Court in theArca case directed the Collector to desist temporarily from continuing withthe public auction of the tobacco until July 3, 1963. Before the Collectorreceived the restraining order, CTIP had already paid P500,000 on accountof its approved and accepted bid of P1,500,000.00 and had filed the requiredsurety bond of P1,000,000 to guarantee the exportation of the locally growntobacco. It is clear, therefore, that at the time the bid of the CTIP wasapproved and at the time payment was made, there was no restrainingorder either of the CFI or of the Supreme Court enjoining thesale.chanroblesvirtualawlibrary chanrobles virtual law library

But even assuming arguendo that at the time the sale was made there wasalready a restraining order enjoining it, the sale would still not be null and


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void. A restraining order like injunction operates upon a person as it isgranted in exercise of equity jurisdiction, and an injunction has no inrem effect to invalidate an act done in contempt of an order of the courtexcept where by statutory authorization the decree is so framed as to act inrem on property. (Town of Fond Du Lac v. City of Fond Du Lac, 22 Wis. 2d

525,126 NW 2d 206). In 42 Am. Jur. 2d, pp. 1144-1145, we read:

Where an injunction is granted and the decree operates in personam, an actdone in violation of injunction is not a nullity. On the contrary, the act isordinarily valid and legally effective, except as to the person who obtainedthe injunction and those claiming under him, and as to them, the act is validunless and until they attack it in a proper manner. If an injunction prohibitsthe defendant from transferring property, but he transfers the property inviolation of the injunction, and the transfer is made to an innocent thirdperson, the transferee obtains good title and the injunction. does not affecthis rights.

Neither may petitioner's contention that the continuation of the sale formore than three days, i.e. from June 10 to June 26, 1963 would render thesale void, because it is violative of Section 2607 of the Tariff and CustomsCode, be sustained. Said section in part provides:

Section 2607. Disposition of article liable to deterioration. - Perishablearticles shall not be deposited in a bonded warehouse; and, if notimmediately entered for export or for transportation from the vessel oraircraft in which imported or entered for consumption and the duties and

taxes paid thereon, such articles may be sold at auction, after such publicnotice, not exceeding three days, as the necessities of the case permit.

The three days mentioned in said section refers to the period of publicnotice, not to continuation of the sale as contended bypetitioner.chanroblesvirtualawlibrary chanrobles virtual law library

Untenable also is petitioner's contention that the Collector had no right tohave the tobacco sold because the Bureau of Customs was not yet the ownerof the tobacco at the time of the sale. This contention loses sight of the factthat the Collector of Customs when sitting in forfeiture proceedings,constitutes a tribunal upon which the law confers jurisdiction to determine allquestions touching the forfeiture and further disposition of the illegallyimported merchandise. (Commissioner of Customs v. Cloribel, L-20266, Jan.31, 1967, 19 SCRA 234; Auyong Hian vs. Court of Tax Appeals, L-25181,January 11, 1967, 19 SCRA 10). The Tariff and Customs Code requires theCollector, upon making any seizure to issue a warrant for the detention ofthe property (Section 2301); to make in writing, after hearing, a declaration


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of forfeiture (Section 2312), and to sell or otherwise dispose of the propertyunder customs custody (Sec. 2602). The forfeiture constitutes a statutorytransfer of the right of property. Title is vested in the government byadministrative forfeiture, although such title may not be absolute, butresoluble subject to the right of redemption on the part of the owner of the

forfeited merchandise (Sec. 1388 Administrative Code). The consequence ofthis forfeiture was already declared by this Court in the Arca case when itsaid:

It is to be noted that the seizure proceedings had already been terminatedand the tobacco shipment declared forfeited to the Government, therebyceasing to be the property of Auyong Hian .... The seizure proceedings weretaken by the Collector of Customs in the exercise of its jurisdiction of thecustoms law (Secs. 2205 and 2530, Tariff and Customs Code) ... (11 SCRA529, 537).

And this Court continued:

Auyong Hian, therefore, had lost all his rights to the shipment, not onlybecause we declared the licenses void and the shipment illegal in the caseofClimaco vs. Barcelona, G.R. No. L-19597, but also because the seizureproceedings have been found to be regular and had deprived Auyong Hian ofhis rights to the shipment as importer; at least while the order of seizure hasnot been set aside. (11 SCRA 529, 538.)

Petitioner, however, insists that the Collector could not sell the forfeited

tobacco after he lost jurisdiction thereof upon the perfection of the appeal onMay 21, 1963 to the Commissioner of Customs. Petitioner seems to implythat the sale, if any, should have been made by, or at least with, theapproval of the Commissioner of Customs. This is what happened. When theCollector of Customs approved, on June 26, 1963, the offer of the CTIP, hisaction was backed by prior approval of the Commissioner of Customs. Tothis effect we read in the appealed decision, thus:

Apparently, to preclude any doubt as to the regularity of the sale, theCollector of Customs, on June 11, 1963, sought the advice of the Secretaryof Finance, and the latter referred the matter to the Secretary of Justice,who, at that time, was the Chairman of the Cabinet Committee on PublicBidding of Tobacco. In an indorsement (rated June 24, 1963, signed by theSecretary of Justice and all the members of the said Cabinet Committee, thesale was approved. The indorsement of the Cabinet Committee wastransmitted to the Secretary of Finance and the Commissioner of Customs,who informed the Collector of Customs of such approval (See Exhs. "E", "F"and "G", CTIP, pp. 205-211, CTA Records), When, therefore, the Collector of


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the invalidity of a contract. Anent this matter Article 1355 of the Civil Codeprovides:

Except in cases specified by law, lesion or inadequacy of cause shall notinvalidate a contract, unless there has been fraud, mistake or undue

influence.

Petitioner has not shown that the instant sale is a case exempted by lawfrom the operation of Art. 1355; neither has petitioner shown that there wasfraud, mistake or undue influence in the sale. Hence, this Court cannot butconclude with the Court of Tax Appeals that "In these circumstances, we findno reason to invalidate the sale of said tobacco to Consolidated TobaccoIndustries of the Philippines." chanrobles virtual law library

The Court of Tax Appeals is claimed to have erred also in holding that thesubject tobacco was deteriorating. We note, that the imported tobacco has avery unique nature. According to petitioner, it is highly perishable, but inspite of the lapse of several years, it has not deteriorated. In Civil Case No.49639 of the Court of First Instance of Manila, petitioner herein averred thatthe Virginia leaf tobacco imported is highly perishable in nature so that delayin the release thereof would cause him irreparable injury (Climaco v.Barcelona, L-19597, July 31, 1962, 5 SCRA 846, 848). In his "petition torelease tobacco under bond" dated March 14, 1967, filed with respondentcourt, he alleged that:

16. That considering the time that has elapsed since the arrival in Manila of

the 600 hogsheads of Virginia leaf tobacco same may be deteriorated unlesssooner disposed of ...

Now he claims that the tobacco has notdeteriorated.chanroblesvirtualawlibrary chanrobles virtual law library

But let us give petitioner the benefit of the doubt. We do not see, however,how the deterioration or not of the tobacco will affect the outcome of thispetition. Hence, it is unnecessary to deal on itfurther.chanroblesvirtualawlibrary chanrobles virtual law library

Petitioner's contention that the Court of Tax Appeals erred in holding that hehad no legal personality to question the legality of the sale, should besustained. Even if petitioner had lost all his rights to the tobacco shipmentafter the same has been seized and forfeited, such loss of right was stillsubject to a contingency - that is, "at least while the order of seizure has notbeen set aside." It is unwarranted to conclude that the loss of his rights tothe tobacco while the seizure has not been set aside carried with it the loss


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of his legal personality to question the legality of the sale. The Tariff andCustoms Code itself expressly gives to any person aggrieved by the decisionor action of the Collector of Customs in any case of seizure, the right to havethe decision reviewed by the Commissioner of Customs (Section 2313), andfrom the decision of the latter, he has a right to appeal to the Court of Tax

Appeals (Section 2402), and from the latter's decision to the SupremeCourt.chanroblesvirtualawlibrary chanrobles virtual law library

Neither can it be accurately said that petitioner has no right to have thecontract of sale to the CTIP annulled, on the ground that he was not a partybound either principally or subsidiarily by the contract. (Art. 1397 CivilCode.) Petitioner seeks the declaration of the nullity of the sale not as aparty to the sale, but because he had an interest that was affected by thesale. This Court has held that a person who is not a party obliged principallyor subsidiarily in a contract may exercise an action for nullity of the contractif he is prejudiced in his rights with respect to one of the contracting parties,and can show the detriment which would positively result to him from thecontract in which he had no intervention. (Ibaez v. Hongkong and ShanghaiBank, 22 Phil. 572, 584-585; Teves vs. People's Homesite and HousingCorporation, et al., L-21498, June 27, 1968, 23 SCRA 1141, 1147-1148). Itwould be stating the obvious that in the instant case the petitioner will sufferdetriment as a consequence of the sale, in case it is not setaside.chanroblesvirtualawlibrary chanrobles virtual law library

As a matter of fact, this Court has recognized the personality of petitioner toquestion the legality of the sale when in the Court of Appeals case, L-25181,

this Court remanded the case to the Court of Tax Appeals to decide thevalidity of the administrative proceedings and the question regarding thedisposal and sale of the tobacco that was seized. It was therein implied thatpetitioner had personality to question thesale.chanroblesvirtualawlibrary chanrobles virtual law library

The error assigned regarding the amount of warehousing charges that hadaccumulated is immaterial to the decision of the instant case, and whetherthe Court of Tax Appeals did commit the error or not, will not affect theresult of the case. This point, therefore, need not be commentedon.chanroblesvirtualawlibrary chanrobles virtual law library

This Court recognizes that petitioner has the right to take all legal steps toenforce his legal and/or equitable rights to the tobacco in question. One whomakes use of his own legal right does no injury. Qui jure suo utitur mullumdamnum facit. If damage results from a person's exercising his legal rights,it is damnum absque injuria. The consequent delay in the delivery of thetobacco is an incident to said exercise of his rights. But, again, whatever


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might be petitioner's motive in this regard will hardly affect the outcome ofthis case.chanroblesvirtualawlibrary chanrobles virtual law library

6. The property, subject of litigation is not by that fact a line, in custodialegis. "When property is lawfully taken, by virtue of legal process, it is in the

custody of the law, and not otherwise." (Gilman v. Williams, Wis. 334, 76Am. Dec. 219.) chanrobles virtual law library

In the case ofMillare et all, vs. Millare et al., 106 Phil. 203, 299, a motionfor contempt was filed in this Court by appellant charging respondents withhaving committed contempt by selling or otherwise disposing the land inquestion pending the appeal. This Court held that there being noattachment, injunction or receivership issued with respect to the land, and inview of the conclusion reached on the merits of the case, there was noreason to declare the respondents guilty of contempt. This ruling is in pointin the instant case. At the time the CTIP took possession of the tobacco anddisposed it on September 12, 1967, there was no existing order of the Courtof Tax Appeals restraining such possession and disposition. By specific orderof the Court of Tax Appeals, it declared that the restraining order previouslyissued by it was of no further effect on September 12, 1967 due toappellants' failure to post the bondrequired.chanroblesvirtualawlibrary chanrobles virtual law library

It has been shown above, furthermore, that petitioner herein was notentitled to the tobacco, consequently he had no right to the proceeds of thesale, and to have the proceeds thereof deposited.

7. Regarding the "Motion for Leave" filed by the Solicitor General's Officepraying authority to refund the storage charges of the subject tobacco to theCTIP, this Court notes that the same is not in issue in the instant case, and,therefore, abstains from making any resolution regarding the matter. Theclaim of the CTIP for refund must be prosecuted administratively.

WHEREFORE, the instant petition for review is dismissed, and the decision ofthe Court of Tax Appeals, appealed from isaffirmed.chanroblesvirtualawlibrary chanrobles virtual law library

It is so ordered.

Fernando, Barredo, Antonio, Fernandez and Aquino, JJ., concur.


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Manila

EN BANC

G.R. No. L-15908 June 30, 1961

BASILAN LUMBER COMPANY, petitioner,vs.CAGAYAN TIMBER EXPORT COMPANY, PEOPLE'S SURETY & INSURANCE CO.,and THE COURT OF APPEALS (Third Division), respondents.

Ross, Selph and Carrascoso for petitioner.Altavas Liboro and Daza for respondent People's Surety & Insurance Company.Manuel V. San Jose and Luis G. Enriquez for respondent Cagayan Timber Export

Company.

LABRADOR, J.:

Appeal from a decision of the Court of Appeals, reversing a judgment of the Court ofFirst Instance of Manila in favor of plaintiff and dismissing the complaint.

In a nutshell, the question at issue is: In an action for breach of contract of sale of logs,caused by the failure of the supplier to furnish the agreed quantity, as a result of whichthe exporter of the logs became liable for demurrage and dead freight, may the exporterbe allowed to recover the amount of demurrage and dead freight even if the same has

not been actually paid for by the exporter? Stated otherwise, in an action for damagesresulting from a breach of contract to supply, may the exporter recover from a supplierthe amount of damages for which it would be held liable under its contract with aJapanese buyer even if such damages have not yet been demanded from and paid byit, and before said exporter actually paid the same?

The facts of the case are not disputed, and may be briefly stated as follows: The plaintiffBasilan Lumber Company entered into a contract with the defendant Cagayan TimberExport Company, whereby the latter agreed to deliver to the former 1,200,000 boardfeet of exportable logs not later than May 31, 1951. This contract is dated April 25,1951. Subsequently, in an agreement dated July 3, 1951, the logs to be delivered were

reduced to 500,000 board feet and the delivery thereof was to be made not later thanJuly 15, 1951. But in another agreement of August 22, 1951, the contract was againamended, increasing the amount to be delivered to 740,000 board feet of logs to bedelivered on or about September 1,1951. In this contract, it was further agreed that aminimum of 50,000 board feet per gang per hatch per weather working day would beloaded.


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The plaintiff sold the logs to a Japanese buyer, who had entered into a contract with theplaintiff through the East Asiatic Company, which acted as intermediary. The logs wereto be loaded on the "Kanatsu Maru" which was chartered by the Japanese buyer andwhich arrived in the Philippines on September 9, 1951, at the place agreed upon forloading. It stayed in port for a total of 8 days, but was able to load only 483,672 board

feet supplied by defendant.

There were four hatches in the vessel, hence the loading was to have lasted two and ahalf days, more or less. However, it actually took 7 days to load because no sufficientlogs were available at the place where the loading was to take place and because of thepoor stevedoring service. Hence the demurrage amounted, as per decision of the Courtof First Instance, to $4,141.16. As to dead freight, which corresponds to the freight ofthe logs which were not delivered shipside, the same amounted to $5,673.43. So, thetotal amount of demurrage and dead freight is $9,814.59, or P19,629.18. This is theamount awarded in the Court of First Instance. Legal interest on the said amount andattorney's fees amounting to P2,000 were also granted.

On appeal to the Court of Appeals, the judgment of the Court of First Instance wasreversed. The reasons of the said appellate court in reversing the judgment, are asfollows:

Because the damages in question are yet to be suffered and are not actual, theymay fall under the general category of prospective damages. We are notunaware of American decisions to the effect that, in estimating the pecuniary losssustained by a party as a result of another's tort or breach of contract, theformer's right of recovery must be for all damages resulting therefrom, whetherpast, present, and prospective (15 American Jurisprudence, 416), and that

prospective damages may be allowed upon proof that they are reasonablycertain occur (Watt vs. Nevada etc., 23 Nev. 154, 44 P. 423, 46 P. 52, 726, 62Am. St. Rep. 772), but in this jurisdiction the rule is that no recovery of damagescan be had without satisfactory proof of the real existence of such damages(Articles 1106 and 1107 of the Old Civil Code; Articles 2200 and 2201, New CivilCode; Sanz vs. Levin, 6:299; Rubio vs. Rivera, 41:39), and that the true measureof damages for the breach of a contract is what the plaintiff has lost by thebreach (De la Cruz vs. Seminario, etc., 18:830). The rule in this matter is terselystated by Manresa as follows: '. . . el resarcimiento de danos y perjuicios . . .exije la existencia real del dano (8 Manresa, 4th Ed., pages 144-145).

In this Court, the appellant argues that the demurrage and dead freight due the buyer inJapan had already been paid by the East Asiatic Company, Ltd., through which theBasilan Lumber Company sold the logs. The receipts evidencing such payment hadbeen submitted as Exhibits "I-1", "J" and "K", in accordance with debit notes (Exhs. "G"and "H" Deposition). It is further argued that in accordance with the decisions of UnitedStates courts, it is enough that there is proof or reasonable certainty that substantialfuture damages will result in order that a recovery for damages can be had; that the


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majority of the provisions of the Uniform Sales Law had been adopted in the Civil Code,so that the decisions of American courts in the matter of damages should be applied.

It is also argued that the contract between the plaintiff and the defendant contains thefollowing terms:

In case of non-compliance by the SELLER with the amended contract conditions,the SELLER hereby agrees to indemnify the BUYER for whatever damages theBUYER would be held liable to their buyers in Japan as a Consequencethereof, . . . (Exhibit "O").

All other terms and conditions enumerated in the original agreement of April 21,1951, and amendments thereto dated June 18th and July 3rd 1951, remainunchanged." (Exhibit "D").

. . . any claims arising out of default or failure of the SELLER to comply with

loading capacity of the vessel shall be for account of the SELLER. (Exhibit "F")(See Petitioner's brief, page 11.)

from which, the intention of the parties to make the seller liable to plaintiff for the validclaims of Japanese buyers, is evident.

Our answer to the foregoing arguments of counsel for petitioner is the expressprovisions of Article 2199 of the Civil Code of the Philippines to the effect that damagesmust be "duly proved." This new provision, which did not exist in the Civil Code ofSpain, denies the grant of speculative damages, damages not actually proved to haveexisted and to have been caused to the party claiming the same. In the case at bar the

evidence shows that actual damage was caused to the agentthrough which petitionersold the logs to a Japanese buyer, as said agent had already paid the same to thelatter. However, there is no proof that respondent had already paid the agent saiddamages, or that it had already been required to pay the same, and while these havenot happened the damage to the petitioner may not, under the above-cited article of theCivil Code, be deemed to have actually been caused to him.

As regards the express terms of the agreement holding the seller liable for the damagesit may cause the buyer, the same are merely declaratory of the obligation assumed, notan obligation which the obligee may demand in compliance with upon breach of theterms of the contract and even before actual payment of damages by the one who

breached the agreement, because the obligee has not yet actually suffered the damageor paid the same to the person to whom damage was caused. It is only when theobligee actually suffers the damage, that compliance, with the obligation may bedemanded.

WHEREFORE, the judgment sought to be reversed is hereby affirmed. Without costs.


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Bengzon, C.J., Concepcion, Reyes, J.B.L., Barrera, Paredes and Natividad, JJ., concur.Padilla and Dizon, JJ., took no part.


Manila

EN BANC


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G.R. No. L-16439 July 20, 1961

ANTONIO GELUZ, petitioner,vs.THE HON. COURT OF APPEALS and OSCAR LAZO, respondents.

Mariano H. de Joya for petitioner.A.P. Salvador for respondents.

REYES, J.B.L., J.:

This petition forcertioraribrings up for review question whether the husband of awoman, who voluntarily procured her abortion, could recover damages from physicianwho caused the same.

The litigation was commenced in the Court of First Instance of Manila by respondent

Oscar Lazo, the of Nita Villanueva, against petitioner Antonio Geluz, a physician.Convinced of the merits of the complaint upon the evidence adduced, the trial courtrendered judgment favor of plaintiff Lazo and against defendant Geluz, ordering thelatter to pay P3,000.00 as damages, P700.00 attorney's fees and the costs of the suit.On appeal, Court of Appeals, in a special division of five, sustained the award by amajority vote of three justices as against two, who rendered a separate dissentingopinion.

The facts are set forth in the majority opinion as follows:

Nita Villanueva came to know the defendant (Antonio Geluz) for the first time in

1948 through her aunt Paula Yambot. In 1950 she became pregnant by herpresent husband before they were legally married. Desiring to conceal herpregnancy from her parent, and acting on the advice of her aunt, she had herselfaborted by the defendant. After her marriage with the plaintiff, she again becamepregnant. As she was then employed in the Commission on Elections and herpregnancy proved to be inconvenient, she had herself aborted again by thedefendant in October 1953. Less than two years later, she again becamepregnant. On February 21, 1955, accompanied by her sister Purificacion and thelatter's daughter Lucida, she again repaired to the defendant's clinic on Carriedoand P. Gomez streets in Manila, where the three met the defendant and his wife.Nita was again aborted, of a two-month old foetus, in consideration of the sum of

fifty pesos, Philippine currency. The plaintiff was at this time in the province ofCagayan, campaigning for his election to the provincial board; he did not knowof, nor gave his consent, to the abortion.

It is the third and last abortion that constitutes plaintiff's basis in filing this action andaward of damages. Upon application of the defendant Geluz we granted certiorari.


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The Court of Appeals and the trial court predicated the award of damages in the sum ofP3,000.06 upon the provisions of the initial paragraph of Article 2206 of the Civil Codeof the Philippines. This we believe to be error, for the said article, in fixing a minimumaward of P3,000.00 for the death of a person, does not cover the case of an unbornfoetus that is not endowed with personality. Under the system of our Civil Code, "la

criatura abortiva no alcanza la categoria de persona natural y en consscuencia es unser no nacido a la vida del Derecho" (Casso-Cervera, "Diccionario de Derecho Privado",Vol. 1, p. 49), being incapable of having rights and obligations.

Since an action for pecuniary damages on account of personal injury or death pertainsprimarily to the one injured, it is easy to see that if no action for such damages could beinstituted on behalf of the unborn child on account of the injuries it received, no suchright of action could derivatively accrue to its parents or heirs. In fact, even if a cause ofaction did accrue on behalf of the unborn child, the same was extinguished by its pre-natal death, since no transmission to anyone can take place from on that lacked juridicalpersonality (or juridical capacity as distinguished from capacity to act). It is no answer to

invoke the provisional personality of a conceived child (conceptus pro nato habetur)under Article 40 of the Civil Code, because that same article expressly limits suchprovisional personality by imposing the condition that the child should be subsequentlyborn alive: "provided it be born later with the condition specified in the following article".In the present case, there is no dispute that the child was dead when separated from itsmother's womb.

The prevailing American jurisprudence is to the same effect; and it is generally held thatrecovery can not had for the death of an unborn child (Stafford vs. Roadway TransitCo., 70 F. Supp. 555; Dietrich vs. Northampton, 52 Am. Rep. 242; and numerous casescollated in the editorial note, 10 ALR, (2d) 639).

This is not to say that the parents are not entitled to collect any damages at all. But suchdamages must be those inflicted directly upon them, as distinguished from the injury orviolation of the rights of the deceased, his right to life and physical integrity. Becausethe parents can not expect either help, support or services from an unborn child, theywould normally be limited to moral damages for the illegal arrest of the normaldevelopment of the spes hominis that was the foetus, i.e., on account of distress andanguish attendant to its loss, and the disappointment of their parental expectations (Civ.Code Art. 2217), as well as to exemplary damages, if the circumstances should warrantthem (Art. 2230). But in the case before us, both the trial court and the Court of Appealshave not found any basis for an aw

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