Facts:

In the case of Auyong Hian (Hong Whua Hang) vs. Court of Tax Appeals, Collector of Customs, Commissioner of Customs, Consolidated Industries of the Philippines, Inc., and Luzon Stevedoring Corporations (G.R. No. L-28782, September 12, 1974), the petitioner, Auyong Hian, sought a review of the decision of the Court of Tax Appeals in CTA Case No. 1560. This case revolved around the legality of the importation of 600 hogsheads of Virginia leaf tobacco that Auyong Hian imported from the United States. The history of this matter is extensive, marking the fifth occasion this issue reached the Supreme Court.

The events began when the Import Control Commission granted Auyong Hian four no-dollar remittance licenses, allowing him to import Virginia leaf tobacco valued collectively at $2,000,000. However, on December 30, 1961, the shipment was brought into the Port of Manila aboard the SS Fernstate. The Collector of Customs of Manila, questioning the legality of this importation, detained

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Facts:

Overview of the Case History

• This case is the fifth judicial proceeding involving the 600 hogsheads of Virginia leaf tobacco imported by petitioner Auyong Hian.
• Previous related cases include:
• The Barcelona case – G.R. No. L-19597 (July 31, 1962)
• The Arca case – G.R. No. L-21839 (July 17, 1964)
• The Cloribel case – G.R. No. L-24704 (July 10, 1967)
• The "First CTA Case" – Auyong Hian vs. Court of Tax Appeals, et al. (January 11, 1967)
• The present case is referred to as the “Second CTA Case” and involves a petition for review of the Court of Tax Appeals’ decision (CTA Case No. 1560, January 31, 1968) which dismissed petitioner’s appeal from the decision of the Commissioner of Customs.

Timeline and Procedural History

• June 29, 1953 – The Import Control Commission approved petitioner’s application for four no-dollar remittance licenses to import tobacco, with an aggregate value of two million dollars.
• June 30, 1953 – Petitioner was informed of the approval, even though it coincided with the expiry of the effectivity of the Import Control Law (Republic Act No. 650).
• October 1961 – The Office of the President approved the use of the licenses.
• November 2, 1961 – Petitioner paid the license fees, effectively completing the administrative requirements.
• December 30, 1961 – 600 hogsheads of Virginia leaf tobacco arrived in the Port of Manila aboard the “SS Fernstate” and were consigned to petitioner.
• Shortly thereafter – The Collector of Customs of Manila refused to release the shipment, questioning the legality of the importation.
• March 19, 1962 – Judge Barcelona of the Court of First Instance issued an order for the release of the tobacco; subsequently, the Collector and the Commissioner of Customs sought certiorari from the Supreme Court in the Barcelona case.
• July 31, 1962 – The Supreme Court ruled in the Barcelona case that the Court of First Instance lacked jurisdiction and that the importation was illegal because it occurred after the expiry of the Import Control Law and in violation of government policy as expressed in Republic Acts Nos. 698 and 1194.

Administrative and Forfeiture Proceedings

• November 8, 1962 – The Collector of Customs initiated seizure proceedings and issued a warrant of seizure (Seizure Identification Case No. 6669).
• April 23, 1963 – The Collector declared the tobacco forfeited and ordered a public auction for June 10, 1963.
• May 21, 1963 – Petitioner filed his notice of appeal with the Commissioner of Customs.
• December 7, 1964 – The Commissioner of Customs affirmed the Collector’s decision.
• January 8, 1965 – Petitioner elevated the issue to the Court of Tax Appeals by filing a petition for review in CTA Case No. 1560, challenging the decisions based on jurisdictional and substantive grounds established in earlier cases.

Seizure Hearing and Due Process Allegations

• The hearing officer scheduled a hearing regarding the seizure proceedings related to the tobacco shipment.
• Petitioner filed a motion for an indefinite postponement of the hearing on November 26, 1962.
• The motion was either not acted upon or, if acted upon, the petitioner was not properly notified.
• Petitioner’s failure to appear at the hearing resulted in a declaration of default by the hearing officer.
• Petitioner argued that being declared in default without adequate notice deprived him of his due process right to a meaningful hearing.

Sale of the Forfeited Tobacco

• Following the forfeiture, the Collector of Customs proceeded with the sale procedure.
• A notice of sale was issued in compliance with Section 2603 of the Tariff and Customs Code, with public auction scheduled for June 10, 1963.
• Despite a writ of preliminary injunction issued just before the auction, the CTIP managed to submit its bid and fulfill the required conditions.
• The bid for the tobacco was approved and later ratified by the Commissioner of Customs and a Cabinet Committee, reinforcing its regularity.
• Petitioner contended that:
• The sale was invalid due to the alleged inadequacy of public notice and the timing of the restraining orders.
• The sum adjudged (for example, the P1,500,000 received by CTIP) and the overall process adversely affected his rights.

Petitioner’s Contentions and Grounds of Appeal

• Due Process Violation
• Petitioner alleged noncompliance with due process in both the seizure proceedings and subsequent default declaration.
• He claimed that failure to resolve his motion for postponement or offer further notice amounted to a denial of his right to be heard.
• Legality of the Importation
• Petitioner maintained that the tobacco importation was valid and that the alleged presidential approval under the Secretary of Justice’s opinions should validate the licenses.
• The Supreme Court’s earlier pronouncements in the Barcelona and Arca cases, however, held that the importation was illegal.
• Validity of the Sale
• Petitioner argued that the sale of the forfeited tobacco to CTIP was improper, questioning both the procedural basis (including public notice and auction process) and the adequacy of the consideration received.
• He further asserted that as a non-party to the sale, his interest was nevertheless adversely affected, justifying a declaration of nullity of the sale.

Issue:

Due Process in the Seizure Proceedings

• Whether petitioner Auyong Hian was given a sufficient opportunity to be heard in the administrative seizure proceedings.
• Whether the failure to act on or notify petitioner regarding his motion for postponement, and the consequent declaration of default, amounted to a violation of his due process rights.

Legality of the Tobacco Importation

• Whether the importation of the tobacco, conducted long after the expiry of the Import Control Law (Republic Act No. 650), was legal.
• Whether the incidental reference to the importation’s illegality in previous Supreme Court decisions binds the present proceedings.

Validity of the Sale of Forfeited Tobacco

• Whether the sale of the 600 hogsheads of tobacco to Consolidated Tobacco Industries of the Philippines (CTIP) complied with the procedural requirements of the Tariff and Customs Code.
• Whether the alleged deficiencies in the public notice, timing of injunctions, and adequacy of bid consideration invalidate the sale.

The Importer’s Rights Post-Seizure

• Whether petitioner, despite the forfeiture, retained any substantive rights (such as the right to redeem the tobacco by posting a bond under Sections 2301 and 2307 of the Tariff and Customs Code).
• Whether his interest in challenging the sale as a non-party to the contract is legally sustainable.

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Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Application of Due Process in Administrative Hearings

• Administrative proceedings require notice and an opportunity to be heard, but an absence after a valid motion for postponement (if not acted upon) does not automatically render a default declaration unconstitutional.

• The fact that petitioner was declared in default following his non-appearance, after being duly notified, satisfies the minimal due process requirements.

Legality of the Importation and Its Consequences

• The importation was made after the expiry of the effectivity of Republic Act No. 650 and in contravention of the policies contained in Republic Acts Nos. 698 and 1194.
• Even if a presidential act was cited as support for the licenses, such approval could not validate an importation that was inherently illegal under the existing statutes.
• The statutory provisions governing importation, seizure, and forfeiture (Sections 2205, 2530, 2301, and 2307 of the Tariff and Customs Code) provide that illegally imported goods are subject to administrative forfeiture without any right of redemption.

Validity of the Sale Despite Procedural Anomalies

• The sale of the forfeited goods remains valid provided the administrative and statutory procedures are observed.
• The presence of a restraining order or concerns over the bid’s adequacy do not invalidate the sale if the proper process, including approval by multiple governmental authorities, has been followed.
• The doctrine that an act done in violation of an injunction (in rem) does not necessarily render the act null is recognized

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