G.R. No. L-49588 - Diong Bi Chu vs. Court of Appeals

In Civil Case No. 42189 pending appeal, plaintiffs Bienvenido Ferrer and Eduardo Bravo obtained a garnishment on October 31, 1961, involving 33 cases of rayon and synthetic textiles.
The textiles were consigned in 1961 to Cotabato Palay & Corn Producers, Inc. and were under the custody of the Collector of Customs of Manila.

On December 19, 1963, the garnished textiles were transferred to the bonded warehouse of Chavez, Salinas & Co. by the sheriff, who instructed the warehouseman not to release the goods without his written authorization.
Nine days later, on December 28, 1963, the textiles were released by means of two delivery permits involving Jose Santiago as the customs broker, purportedly with clearance from the shipping agent and the sheriff.

Nearly five years later, on December 3, 1968, after a judgment for P90,000 had been affirmed by the Court of Appeals, Collector Jose Viduya – unaware of the earlier release – sent a letter to the sheriff requesting the release of the textiles, believing they were still in custody.
The warehouseman confirmed that the goods had already been released five years prior, with all the necessary formalities having been observed.
An investigation by the National Bureau of Investigation revealed that the note on the delivery permits, attached by the sheriff, was a forgery; however, no customs employee was found to be involved.

On May 19, 1969, Ferrer and Bravo filed a motion in Civil Case No. 42189 to compel payment by the Collector of Customs and the sheriff for the invoice value of the textiles, amounting to $17,504.46.
Judge Villasor, at the trial level, denied the motion, holding that the Collector was not liable under Section 3511 of the Tariff and Customs Code, attributing the release to a fortuitous event and noting that the warehouseman had custody of the goods.
The Court of Appeals reversed Judge Villasor’s ruling, finding the Collector liable due to the negligence of the customs employee (storekeeper) in the bonded warehouse.
The Collector subsequently appealed to the Supreme Court.

Former Solicitor General Estelito P. Mendoza, on behalf of the Collector, filed a motion for reconsideration arguing that:

The Appellate Court’s findings – regarding the negligence of the storekeeper and the absence of proper verification of the sheriff’s signature – should be reviewed because they conflicted with the trial court’s findings.
The controlling precedent (Lung Chea Kung Kee & Co. vs. Aldanese and Chua Soco) was inapplicable.
Even if Section 3511 were applicable, the Collector could only be held officially liable, not personally liable.

The motion for reconsideration was denied on July 22, 1985, and judgment was entered on August 5, 1985, declaring the Supreme Court’s decision final and executory.
A second motion for reconsideration, invoking nearly identical grounds, was filed and later denied on October 16, 1985.
Private respondents then moved for a writ of execution, which was served on Collector Guillermo Orbos amid conflicting opinions regarding whether the liability was official or personal.
The Office of the Manila District Collector of Customs, relying on internal legal opinions, maintained that the liability was personal and should attach to former Collector Jose T. Viduya.
The Solicitor General, in his subsequent comment on the omnibus motion, asserted that the liability was personal, reversing the earlier argument of official liability.

The ruling in Lung Chea Kung Kee & Co. vs. Aldanese and Chua Soco (45 Phil. 784) was extensively cited, wherein the Court had explained that:

Under sections 1316 and 1408 of the Administrative Code (the latter being identical to section 3511 of the Tariff and Customs Code), the misdelivery of goods by a subordinate without a bill of lading or bond rendered the Collector liable.

The later decision in The American Express Co., Inc. vs. Natividad further clarified the issue, underscoring that the Collector’s liability in cases of misdelivery was personal in character.
Additional reasoning was provided in Lung Chea Kung Kee & Co. vs. Wright, reinforcing that the government funds could not satisfy a judgment against property that was not personally owned by the Collector.

Whether the Collector of Customs is liable officially or personally for the misdelivery of garnished goods.
Whether the negligence of the bonded warehouse storekeeper, who failed to verify the authenticity of the sheriff’s signature, transfers personal liability to the Collector.

The proper application of Section 3511 of the Tariff and Customs Code in cases of misdelivery.
Whether the case of Lung Chea Kung Kee & Co. vs. Aldanese and Chua Soco and its clarificatory progeny, such as The American Express Co., Inc. vs. Natividad, should govern the determination of liability.
The impact of conflicting legal opinions (from the Office of the Solicitor General and the Law Division of the Bureau of Customs) on the characterization of the liability.

Whether the factual findings of the Appellate Court, which established negligence in the delivery process, should bind the Supreme Court.
The appropriateness of revisiting factual determinations that conflict between the trial court and the Appellate Court.

Whether the actions of Isauro C. Garcia, Chief of the Legal and Intelligence Division, in preparing an official opinion that conflicted with the Supreme Court’s ruling, constituted contempt of court.