EN BANC later, the President issued Executive Order No.

478, dated 23 August 1991,

which levied (in addition to the aforementioned additional duty of nine percent
G.R. No. 101273 July 3, 1992 (9%) ad valorem and all other existing ad valorem duties) a special duty of
P0.95 per liter or P151.05 per barrel of imported crude oil and P1.00 per liter
CONGRESSMAN ENRIQUE T. GARCIA (Second District of of imported oil products.
Bataan), petitioner,
vs. In the present Petition for Certiorari, Prohibition and Mandamus, petitioner
THE EXECUTIVE SECRETARY, THE COMMISSIONER OF CUSTOMS, THE assails the validity of Executive Orders Nos. 475 and 478. He argues that
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY, THE TARIFF Executive Orders Nos. 475 and 478 are violative of Section 24, Article VI of the
COMMISSION, THE SECRETARY OF FINANCE, and THE ENERGY 1987 Constitution which provides as follows:
REGULATORY BOARD, respondents.
Sec. 24: All appropriation, revenue or tariff bills, bills authorizing increase of
FELICIANO, J.: the public debt, bills of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may propose or
On 27 November 1990, the President issued Executive Order No. 438 which concur with amendments.
imposed, in addition to any other duties, taxes and charges imposed by law on
all articles imported into the Philippines, an additional duty of five percent He contends that since the Constitution vests the authority to enact revenue
(5%) ad valorem. This additional duty was imposed across the board on all bills in Congress, the President may not assume such power by issuing
imported articles, including crude oil and other oil products imported into the Executive Orders Nos. 475 and 478 which are in the nature of
Philippines. This additional duty was subsequently increased from five percent revenue-generating measures.
(5%) ad valorem to nine percent (9%) ad valorem by the promulgation of
Executive Order No. 443, dated 3 January 1991. Petitioner further argues that Executive Orders No. 475 and 478 contravene
Section 401 of the Tariff and Customs Code, which Section authorizes the
On 24 July 1991, the Department of Finance requested the Tariff Commission President, according to petitioner, to increase, reduce or remove tariff duties
to initiate the process required by the Tariff and Customs Code for the or to impose additional duties only when necessary to protect local industries
imposition of a specific levy on crude oil and other petroleum products, or products but not for the purpose of raising additional revenue for the
covered by HS Heading Nos. 27.09, 27.10 and 27.11 of Section 104 of the government.
Tariff and Customs Code as amended. Accordingly, the Tariff Commission,
following the procedure set forth in Section 401 of the Tariff and Customs Code, Thus, petitioner questions first the constitutionality and second the legality of
scheduled a public hearing to give interested parties an opportunity to be Executive Orders Nos. 475 and 478, and asks us to restrain the
heard and to present evidence in support of their respective positions. implementation of those Executive Orders. We will examine these questions in
that order.
Meantime, Executive Order No. 475 was issued by the President, on 15 August
1991 reducing the rate of additional duty on all imported articles from nine Before doing so, however, the Court notes that the recent promulgation of
percent (9%) to five percent (5%) ad valorem, except in the cases of crude oil Executive Order No. 507 did not render the instant Petition moot and academic.
and other oil products which continued to be subject to the additional duty of Executive Order No. 517 which is dated 30 April 1992 provides as follows:
nine percent (9%) ad valorem.
Sec. 1. Lifting of the Additional Duty. — The additional duty in the nature of ad
Upon completion of the public hearings, the Tariff Commission submitted to valorem imposed on all imported articles prescribed by the provisions of
the President a "Report on Special Duty on Crude Oil and Oil Products" dated Executive Order No. 443, as amended, is hereby lifted; Provided, however,
16 August 1991, for consideration and appropriate action. Seven (7) days that the selected articles covered by HS Heading Nos. 27.09 and 27.10 of
Section 104 of the Tariff and Customs Code, as amended, subject of Annex "A" There shall be levied, collected, and paid upon all imported articles the rates of
hereof, shall continue to be subject to the additional duty of nine (9%) duty indicated in the Section under this section except as otherwise specifically
percent ad valorem. provided for in this Code: Provided, that, the maximum rate shall not exceed
one hundred per cent ad valorem.
Under the above quoted provision, crude oil and other oil products continue to
be subject to the additional duty of nine percent (9%) ad valorem under The rates of duty herein provided or subsequently fixed pursuant to Section
Executive Order No. 475 and to the special duty of P0.95 per liter of imported Four Hundred One of this Code shall be subject to periodic investigation by the
crude oil and P1.00 per liter of imported oil products under Executive Order No. Tariff Commission and may be revised by the President upon recommendation
478. of the National Economic and Development Authority.

Turning first to the question of constitutionality, under Section 24, Article VI of xxx xxx xxx
the Constitution, the enactment of appropriation, revenue and tariff bills, like
all other bills is, of course, within the province of the Legislative rather than (Emphasis supplied)
the Executive Department. It does not follow, however, that therefore
Executive Orders Nos. 475 and 478, assuming they may be characterized as Section 401 of the same Code needs to be quoted in full:
revenue measures, are prohibited to the President, that they must be enacted
instead by the Congress of the Philippines. Section 28(2) of Article VI of the
Sec. 401. Flexible Clause. —
Constitution provides as follows:

a. In the interest of national economy, general welfare and/or national

(2) The Congress may, by law, authorize the President to fix within specified
security, and subject to the limitations herein prescribed, the President, upon
limits, and subject to such limitations and restrictions as it may impose, tariff
recommendation of the National Economic and Development Authority
rates, import and export quotas, tonage and wharfage dues, and other duties
(hereinafter referred to as NEDA), is hereby empowered: (1) to increase,
or imposts within the framework of the national development program of the
reduce or remove existing protective rates of import duty (including any
Government. (Emphasis supplied)
necessary change in classification). The existing rates may be increased or
decreased but in no case shall the reduced rate of import duty be lower than
There is thus explicit constitutional permission 1 to Congress to authorize the the basic rate of ten (10) per cent ad valorem, nor shall the increased rate of
President "subject to such limitations and restrictions is [Congress] may import duty be higher than a maximum of one hundred (100) per cent ad
impose" to fix "within specific limits" "tariff rates . . . and other duties or valorem; (2) to establish import quota or to ban imports of any commodity, as
imposts . . ." may be necessary; and (3) to impose an additional duty on all imports not
exceeding ten (10) per cent ad valorem, whenever necessary; Provided, That
The relevant congressional statute is the Tariff and Customs Code of the upon periodic investigations by the Tariff Commission and recommendation of
Philippines, and Sections 104 and 401, the pertinent provisions thereof. These the NEDA, the President may cause a gradual reduction of protection levels
are the provisions which the President explicitly invoked in promulgating granted in Section One hundred and four of this Code, including those
Executive Orders Nos. 475 and 478. Section 104 of the Tariff and Customs subsequently granted pursuant to this section.
Code provides in relevant part:
b. Before any recommendation is submitted to the President by the NEDA
Sec. 104. All tariff sections, chapters, headings and subheadings and the rates pursuant to the provisions of this section, except in the imposition of an
of import duty under Section 104 of Presidential Decree No. 34 and all additional duty not exceeding ten (10) per cent ad valorem, the Commission
subsequent amendments issued under Executive Orders and Presidential shall conduct an investigation in the course of which they shall hold public
Decrees are hereby adopted and form part of this Code. hearings wherein interested parties shall be afforded reasonable opportunity
to be present, produce evidence and to be heard. The Commission shall also
hear the views and recommendations of any government office, agency or Constitution, as well as to Section 401 of the Tariff and Customs
instrumentality concerned. The Commission shall submit their findings and Code. 3 (Emphasis in the original)
recommendations to the NEDA within thirty (30) days after the termination of
the public hearings. The Court is not persuaded. In the first place, there is nothing in the language
of either Section 104 or of 401 of the Tariff and Customs Code that suggest
c. The power of the President to increase or decrease rates of import duty such a sharp and absolute limitation of authority. The entire contention of
within the limits fixed in subsection "a" shall include the authority to modify petitioner is anchored on just two (2) words, one found in Section 401 (a)(1):
the form of duty. In modifying the form of duty, the corresponding ad "existing protective rates of import duty," and the second in the proviso found
valorem or specific equivalents of the duty with respect to imports from the at the end of Section 401 (a): "protection levels granted in Section 104 of this
principal competing foreign country for the most recent representative period Code . . . . " We believe that the words "protective" and ''protection" are simply
shall be used as bases. not enough to support the very broad and encompassing limitation which
petitioner seeks to rest on those two (2) words.
d. The Commissioner of Customs shall regularly furnish the Commission a
copy of all customs import entries as filed in the Bureau of Customs. The In the second place, petitioner's singular theory collides with a very practical
Commission or its duly authorized representatives shall have access to, and fact of which this Court may take judicial notice — that the Bureau of Customs
the right to copy all liquidated customs import entries and other documents which administers the Tariff and Customs Code, is one of the two (2) principal
appended thereto as finally filed in the Commission on Audit. traditional generators or producers of governmental revenue, the other being
the Bureau of Internal Revenue. (There is a third agency, non-traditional in
e. The NEDA shall promulgate rules and regulations necessary to carry out the character, that generates lower but still comparable levels of revenue for the
provisions of this section. government — The Philippine Amusement and Games Corporation
[PAGCOR].)
f. Any Order issued by the President pursuant to the provisions of this section
shall take effect thirty (30) days after promulgation, except in the imposition In the third place, customs duties which are assessed at the prescribed tariff
of additional duty not exceeding ten (10) per cent ad valorem which shall take rates are very much like taxes which are frequently imposed for both
effect at the discretion of the President. (Emphasis supplied) revenue-raising and for regulatory purposes. 4 Thus, it has been held that
"customs duties" is "the name given to taxes on the importation and
Petitioner, however, seeks to avoid the thrust of the delegated authorizations exportation of commodities, the tariff or tax assessed upon merchandise
found in Sections 104 and 401 of the Tariff and Customs Code, by contending imported from, or exported to, a foreign country." 5 The levying of customs
that the President is authorized to act under the Tariff and Customs Code only duties on imported goods may have in some measure the effect of protecting
"to protect local industries and products for the sake of the national economy, local industries — where such local industries actually exist and are producing
general welfare and/or national security." 2 He goes on to claim that: comparable goods. Simultaneously, however, the very same customs duties
inevitably have the effect of producing governmental revenues. Customs
duties like internal revenue taxes are rarely, if ever, designed to achieve one
E.O. Nos. 478 and 475 having nothing to do whatsoever with the protection of
policy objective only. Most commonly, customs duties, which constitute taxes
local industries and products for the sake of national economy, general welfare
in the sense of exactions the proceeds of which become public funds 6 — have
and/or national security. On the contrary, they work in reverse, especially as
either or both the generation of revenue and the regulation of economic or
to crude oil, an essential product which we do not have to protect, since we
social activity as their moving purposes and frequently, it is very difficult to say
produce only minimal quantities and have to import the rest of what we need.
which, in a particular instance, is the dominant or principal objective. In the
instant case, since the Philippines in fact produces ten (10) to fifteen percent
These Executive Orders are avowedly solely to enable the government to raise (15%) of the crude oil consumed here, the imposition of increased tariff rates
government finances, contrary to Sections 24 and 28 (2) of Article VI of the and a special duty on imported crude oil and imported oil products may be
seen to have some "protective" impact upon indigenous oil production. For the
effective, price of imported crude oil and oil products is increased. At the same Accordingly, we believe and so hold that Executive Orders Nos. 475 and 478
time, it cannot be gainsaid that substantial revenues for the government are which may be conceded to be substantially moved by the desire to generate
raised by the imposition of such increased tariff rates or special duty. additional public revenues, are not, for that reason alone, either
constitutionally flawed, or legally infirm under Section 401 of the Tariff and
In the fourth place, petitioner's concept which he urges us to build into our Customs Code. Petitioner has not successfully overcome the presumptions of
constitutional and customs law, is a stiflingly narrow one. Section 401 of the constitutionality and legality to which those Executive Orders are entitled. 7
Tariff and Customs Code establishes general standards with which the
exercise of the authority delegated by that provision to the President must be The conclusion we have reached above renders it unnecessary to deal with
consistent: that authority must be exercised in "the interest of national petitioner's additional contention that, should Executive Orders Nos. 475 and
economy, general welfare and/or national security." Petitioner, however, 478 be declared unconstitutional and illegal, there should be a roll back of
insists that the "protection of local industries" is the only permissible objective prices of petroleum products equivalent to the "resulting excess money not be
that can be secured by the exercise of that delegated authority, and that needed to adequately maintain the Oil Price Stabilization Fund (OPSF)." 8
therefore "protection of local industries" is the sum total or the alpha and the
omega of "the national economy, general welfare and/or national security." WHEREFORE, premises considered, the Petition for Certiorari, Prohibition
We find it extremely difficult to take seriously such a confined and closed view and Mandamus is hereby DISMISSED for lack of merit. Costs against
of the legislative standards and policies summed up in Section 401. We believe, petitioner.
for instance, that the protection of consumers, who after all constitute the very
great bulk of our population, is at the very least as important a dimension of SO ORDERED.
"the national economy, general welfare and national security" as the
protection of local industries. And so customs duties may be reduced or even
2.G.R. No. 79307 August 29, 1989
removed precisely for the purpose of protecting consumers from the high
prices and shoddy quality and inefficient service that tariff-protected and
subsidized local manufacturers may otherwise impose upon the community. COMMISSIONER OF CUSTOMS, petitioner,
vs.
THE HON. RAMON P. MAKASIAR, RTC Judge, Branch 35, Manila and
It seems also important to note that tariff rates are commonly established and
THE DISTILLERS CO. LTD. OF ENGLAND, respondents.
the corresponding customs duties levied and collected upon articles and goods
which are not found at all and not produced in the Philippines. The Tariff and
Customs Code is replete with such articles and commodities: among the more Quasha, Asperilla, Ancheta, Pena & Nolasco for private respondent.
interesting examples are ivory (Chapter 5, 5.10); castoreum or musk taken
from the beaver (Chapter 5, 5.14); Olives (Chapter 7, Notes); truffles or
European fungi growing under the soil on tree roots (Chapter 7,
Notes); dates (Chapter 8, 8.01); figs (Chapter 8, 8.03); caviar (Chapter 16, CORTES, J.:
16.01); aircraft (Chapter 88, 88.0l); special diagnostic instruments and
apparatus for human medicine and surgery (Chapter 90, Notes); X-ray Petitioner Commissioner of Customs seeks the reversal of respondent judge's
generators; X-ray tubes; decision dated 20 July 1987 in Civil Case No. 82-12821 entitled "The Distillers
X-ray screens, etc. (Chapter 90, 90.20); etc. In such cases, customs duties Co. Ltd., of England v. Victorio Francisco, et al.," the dispositive portion of
may be seen to be imposed either for revenue purposes purely or perhaps, in which reads as follows:
certain cases, to discourage any importation of the items involved. In either
case, it is clear that customs duties are levied and imposed entirely apart from
WHEREFORE, having been issued by the Collector of Customs in excess of his
whether or not there are any competing local industries to protect.
jurisdiction the disputed Warrant of Seizure and Detention dated January 2,
1979, in Seizure Identification No. 2-79 of the Bureau of Customs, as well as
all the proceedings taken thereon are declared NULL and VOID, and the writ of
prohibition prayed for is GRANTED. The public respondent is ordered to 6. Manuel Esteban
REFRAIN and DESIST from conducting any proceedings for the seizure and
forfeiture of the articles in question until after the Court having taken 7. Eugenio Mauricio
cognizance and legal custody thereof has rendered its final judgment in the
criminal cases which involve the same articles. Without costs. [Rollo, pp. 106-107].

SO ORDERED. [RTC Decision, p. 7; Rollo, p. 26]. On 8 December 1978, a composite team from the Ministry of Finance Bureau
of Investigation and Intelligence (herein referred to as BII), the Bureau of
The undisputed acts are as follows: Customs and the Integrated National Police enforced the search and seizure
warrants, and seized and confiscated the following articles, among others,
On 7 December 1978, the then Court of First Instance of Manila (herein found in the premises of the Hercules Bottling Co., Inc. (herein referred to as
referred to as CFI-MANILA) issued Search and Seizure Warrants in Criminal HERCULES) at Isla de Provisor, Paco, Manila:
Case Nos. 8602 and 8603 entitled "People of the Philippines vs. Howard J.
Sosis,, et al.," for violation of Section 11 (a) and/or 11(e) of Republic Act No. Six (6) Tanks of Scotch Whisky; 417 cartons each containing I doz. bottles of
3720, * and violation of Article 188 of the Revised Penal Code (captioned as "Johnnie Walker Black Label Whisky"; 109 empty bottles; Empty Cartons of
"Substituting and altering trademarks, tradenames, or service marks"), "Johnnie Walker Black Label Scotch Whisky" number 900-2044 empty cartons.
respectively, and ordering the seizure of the following: [Rollo, p. 21].

a) Materials: The articles seized remained in the premises of HERCULES guarded and
secured by BII personnel.
All whisky, bottles, labels, caps, cartons, boxes, machinery equipment or
other materials used or intended to be used, or suitable for use, in connection On 2 January 1979, the Collector of Customs for the Port of Manila, after being
with counter-feiting or imitation of Johnnie Walker Scotch Whisky (Emphasis informed of the seizure of the subject goods and upon verification that the
supplied) same were imported contrary to law, issued a warrant of seizure and detention,
in Seizure Identification No. 2-79, and ordered the immediate seizure and
b) Documents: turnover of the seized items to its Auction and Cargo Disposal Division at the
Port of Manila. Seizure and forfeiture proceedings were then initiated against
xxx the above-enumerated articles for alleged violation of Section 2530 (f) of the
Tariff and Customs Code, in relation to Republic Act 3720, to wit:
under the control and possession of:
Sec. 2530. Property subject to forfeiture under Tariff and Customs law:
1. Howard J. Sosis
xxx
2. George Morrison Lonie
(f) Any article the importation or exportation of which is effected or attempted
3. Hercules Bottling Co. contrary to law, or any article of prohibited importation or exportation, and all
other articles which, in the opinion of the collector have been used, are or were
entered to be used as instruments in the importation or exportation of the
4. Lauro Villanueva
former.

5. Vicente Velasco
xxx
On 29 January 1979, the CFI-MANILA issued an order authorizing the transfer In order to stop and enjoin the Hearing Officer of the Bureau of Customs from
and delivery of the seized articles to the customs warehouse located at South taking further action in the seizure proceedings of the subject goods, private
Harbor, Port of Manila, subject to the following conditions: respondent on 24 September 1982 filed a petition for prohibition with
preliminary injunction and/or temporary restraining order, docketed as Civil
1. The Commissioner of Customs is willing to have custody of the same and Case No. 82-12721. It must be noted at this juncture that the petition was
guarantees their safekeeping at all times in the same quantity, quality, heard not before the CFI-MANILA which originally issued the search warrants,
manner and condition when the articles shall be turned over to and received by but before another sala, that of respondent judge of the Regional Trial Court,
the Bureau of Customs in custodia legis, subject to the further orders from the Branch 35, Manila.
Court;
Respondent judge issued a temporary restraining order on 29 September
2. No article shall be transferred without the presence of a representative of 1982. Subsequently, a writ for preliminary injunction was issued as well.
the applicant, the defendants, the Commissioner of Customs and the Court; Petitioner filed an answer on 12 November 1982. On 20 July 1987, respondent
these representatives to secure the necessary escort as guarantee that judge rendered a decision holding that the Collector of Customs acted in
nothing will happen during the transfer of the articles. excess of its jurisdiction in issuing the warrant of seizure and detention
considering that the subject goods had already come under the legal custody
3. The Commissioner of Customs to issue the proper and necessary receipt for of the CFI-MANILA. Hence, petitioner represented by the Solicitor General,
each and every article transferred to and received by the Bureau of Customs filed the instant petition on 11 August 1987.
pursuant to this order [Rollo, p. 22].
In the meantime, Howard Sosis and company were charged for violation of
Meanwhile, the validity and constitutionality of the issuance and service of the Chapter VI, Sec. 11(a) & (e) of Republic Act 3720 in Criminal Case No.
search and seizure warrants issued by the CFI- MANILA were contested in and 88-63157 and for violation of Article 188 of the Revised Penal Code in Criminal
upheld by the Court of Appeals in CA-G.R. No. SP-09153-R entitled "Hercules Case No. 88-63156 before the Regional Trial Court and the Metropolitan Trial
Bottling Co. Inc., et al., v. Victoriano Savellano, et al." HERCULES filed a Court of Manila, respectively [Rollo, p. 83].
petition for certiorari in the Supreme Court but in a resolution dated 26
November 1986 in G.R. No. 55061 captioned as Hercules Bottling Co., Inc. v. In his petition, the Commissioner of Customs assigns as errors the following:
The Court of Appeals, the Court dismissed the petition.
I. RESPONDENT JUDGE ERRED IN ISSUING A TEMPORARY RESTRAINING
Consequently, the City Fiscal of Manila proceeded with the preliminary ORDER AND SUBSEQUENTLY A WRIT OF INJUNCTION IN CIVIL CASE NO.
investigation of the criminal cases, where private respondent, The Distillers Co. 82-12721 NOTWITHSTANDING THE FACT THAT PRIVATE RESPONDENT, THE
Ltd. of England, claiming to be the owner and exclusive manufacturer of DISTILLERS CO., LTD., OF ENGLAND HAS NO VALID CAUSE OF ACTION
Johnnie Walker Scotch Whiskey was the private complainant [Rollo, p. 61], AGAINST HEREIN PETITIONER;
With the dismissal of HERCULES' petition, the Bureau of Customs also
resumed hearing the seizure and forfeiture proceedings over the said articles. II. RESPONDENT RTC JUDGE GRAVELY ERRED IN TAKING COGNIZANCE OF
THE PETITION AND IN PROCEEDING TO HEAR AND RENDER A DECISION IN
The present controversy arose when private respondent, on 11 June 1982, CIVIL CASE NO. 82-12721 NOTWITHSTANDING THE FACT THAT THE TRIAL
objected to the continuation by the Collector of Customs of the seizure COURT HAS NO JURISDICTION OVER THE CASE [Rollo, pp. 10-11].
proceedings claiming, among others, that these proceedings would hamper or
even jeopardize the preliminary investigation being conducted by the fiscal. Petitioner contends that the authority of the Bureau of Customs over seizure
The Collector of Customs ignored the objections. and forfeiture cases is beyond the judicial interference of the Regional Trial
Court, even in the form of certiorari, prohibition or mandamus which are really
attempts to review the Commissioner's actions [Rollo, p. 98]. Petitioner
argues that judicial recourse from the decision of the Bureau of Customs on
seizure and forfeiture cases can only be sought in the Court of Tax Appeals and v. Bocar, G.R. No. L-35260, September 4, 1979,93 SCRA 78; De la Fuente v.
eventually in this Court. De Veyra, G.R. No. L-35385, January 31, 1983, 120 SCRA 451].

Private respondent however contends that while the law may have vested It is likewise well-settled that the provisions of the Tariff and Customs Code
exclusive jurisdiction in the Bureau of Customs over forfeiture and seizure and that of Republic Act No. 1125, as amended ** specify the proper fora for
cases, in this case respondent judge had jurisdiction to enjoin the Bureau of the ventilation of any legal objections or issues raised concerning these
Customs from continuing with its seizure and forfeiture proceedings since the proceedings. Actions of the Collector of Customs are appealable to the
articles here were already in custodia legis, by virtue of the search warrants Commissioner of Customs, whose decisions, in turn, are subject to the
issued by the CFI-MANILA. Private respondent contends that respondent exclusive appellate jurisdiction of the Court of Tax Appeals. Thereafter, an
judge may properly take cognizance of the instant case since unlike the cases appeal lies to this Court through the appropriate petition for review by writ of
cited by petitioner, the action for prohibition was brought not to claim certiorari. Undeniably, regional trial courts do not share these review powers.
ownership or possession over the goods but only to preserve the same and to
prevent the Bureau of Customs from doing anything prejudicial to the The above rule is anchored upon the policy of placing no unnecessary
successful prosecution of the criminal cases [Rollo, p. 123]. hindrance on the government's drive not only to prevent smuggling and other
frauds upon customs, but also, and more importantly, to render effective and
The issue thus presented is whether or not respondent judge may enjoin the efficient the collection of import and export duties due the state. For tariff and
Collector of Customs from continuing with its seizure and forfeiture customs duties are taxes constituting a significant portion of the public
proceedings over goods earlier seized by virtue of search warrants issued by revenue which are the lifeblood that enables the government to carry out
the CFI-MANILA. functions it has been instituted to perform.

The instant petition is impressed with merit. Notwithstanding these considerations, respondent judge entertained private
respondent's petition for prohibition holding that the seizure and forfeiture
This Court finds that respondent-judge has failed to adhere to the prevailing proceedings instituted in the Bureau of Customs was null and void because the
rule which denies him jurisdiction to enjoin the Bureau of Customs from taking subject goods were earlier seized by virtue of the warrants issued by the
further action in the seizure and forfeiture proceedings over the subject goods. CFI-MANILA in Criminal Cases Nos. 8602 and 8603.

Jurisprudence is replete with cases which have held that regional trial courts This holding is erroneous.
are devoid of any competence to pass upon the validity or regularity of seizure
and forfeiture proceedings conducted in the Bureau of Customs, and to enjoin, Even if it be assumed that a taint of irregularity may be imputed to the
or otherwise interfere with, these proceedings. The Collector of Customs exercise by the Collector of Customs of his jurisdiction to institute seizure and
sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear forfeiture proceedings over the subject goods because he had accepted
and determine all questions touching on the seizure and forfeiture of dutiable custody of the same under conditions specified in the CFI-Manila order dated
goods. The regional trial courts are precluded from assuming cognizance over January 29, 1979, it would not mean that respondent judge was
such matters even through petitions of certiorari, prohibition or mandamus correspondingly vested with the jurisdiction to interfere with such proceedings
[See General Travel Service v. David, G.R. No. L-19259, September 23, 1966, (See Ponce Enrile v. Vinuya supra]. It bears repeating that law and settled
18 SCRA 59; Pacis v. Averia, G.R. No. L-22526, November 29, 1966, 18 SCRA jurisprudence clearly deprive the regional trial courts of jurisdiction to enjoin
907; De Joya v. Lantin, G.R. No. L-24037, April 27, 1967, 19 SCRA 893; Ponce the Collector of Customs from exercising his exclusive authority to order
Enrile v. Vinuya G.R. No. L-29043, January 30, 1971, 37 SCRA 381; Collector seizure and forfeiture proceedings over imported goods.
of Customs v. Torres, G.R. No. L-22977, May 31, 1972, 45 SCRA 272; Pacis v.
Geronimo, G.R. No. L-24068, April 23, 1974,56 SCRA 583; Commissioner of Moreover, there is no legal basis for respondent judge's conclusion that the
Customs v. Navarro, G.R. No. L-33146, May 31, 1977, 77 SCRA 264; Republic Collector of Customs is deprived of his jurisdiction to issue the assailed
warrant of seizure and detention, and to institute seizure and forfeiture
proceedings for the subject goods simply because the same were first taken The Court must emphasize at this point that the instant case does not involve
in custodia legis. a conflict of jurisdictions. Proceedings before the regular courts for criminal
prosecutions against Howard Sosis, et al., and seizure and forfeiture
Undeniably, the subject goods have been brought under the legal control of proceedings for the subject goods conducted by the Bureau of Customs may
the CFI-MANILA by virtue of its search and seizure warrants and are, therefore, be maintained simultaneously and independently of each other. For the nature
in custodia legis. But this fact merely serves to deprive any other court or of the two proceedings are entirely different such that a resolution in one is not
tribunal, except one having supervisory control or superior jurisdiction in the decisive of the issue in the other. The latter, which is administrative and civil in
premises, of the right to divest the CFI-MANILA of its custody and control of nature, is directed against the res or articles imported and entails a
the said property [Collector of Internal Revenue v. Flores Vda. de Codinera determination of the legality of its importation. The former is directed against
G.R. No. L-9675, September 28, 1957], or to interfere with and change its those persons who may be held liable for violating the penal laws in connection
possession without its consent [National Power Corporation v. De Veyra, G.R. with the importation [See Diosamito v. Balanque, G.R. No. L-30734, July
No. L-15763, December 22, 1961, 3 SCRA 646; De Leon v. Salvador, G.R. Nos. 28,1969,28 SCRA 836; People v. CFI, G.R. No. L-41686, November 17, 1980,
L-30871 & L-31603, December 28, 1970, 36 SCRA 567; Vlasons Enterprises 101 SCRA 86].
Corporation v. Court of Appeals, G.R. No. 61688, October 28, 1987, 155 SCRA
186]. Private respondent, however, argues that conflict may arise regarding the
disposition of the subject goods if the proceedings before the Collector of
In the instant case, the CFI-Manila was not divested of its jurisdiction over the Customs and the regular courts were allowed to proceed simultaneously.
subject goods, nor were its processes interfered with by the Collector of Private respondent contends that in view of the nature of the seizure and
Customs. It, in fact, authorized the transfer and delivery of the subject goods forfeiture proceedings, a judgment in favor of HERCULES will result in the
from the premises of HERCULES to the Bureau of Customs warehouse/bodega release of the subject goods to the claimants thereof, while an unfavorable
at the South Harbor, Port of Manila thereby entrusting the Bureau of Customs decision will entail their destruction or sale. It is asserted that either of the two
with the actual possession and control of the same. outcomes will hamper or even jeopardize the ongoing criminal prosecutions,
said goods comprising the substantial part of the evidence for the People of the
On the other hand, since the Collector of Customs herein had actual Philippines.
possession and control over the subject goods, his jurisdiction over the goods
was secured for the purpose of instituting seizure and forfeiture proceedings to Proper adherence by both tribunals to the rules of comity as defined in the
determine whether or not the same were imported into the country contrary to leading case of The Government of the Philippines v. Gale [24 Phil. 95 (1931)]
law [See Papa v. Mago, G.R. No. L-27360, February 28, 1968, 22 SCRA 857]. will forestall the conflict feared. In that case the Court had established the rule
This is consistent with the principle that the basic operative fact for the that where the preservation and safekeeping of the subject matter of an action
institution and perfection of proceedings in rem like the seizure and forfeiture is demanded, as it is made to appear that these articles may prove to be of
proceedings pursuant to the Tariff and Customs Code, is the actual or vital importance as exhibits in the prosecution of other charges in another
constructive possession of the res by the tribunal empowered by law to proceeding, the rules for the orderly course of proceedings in courts and
conduct the proceedings [See Dodge v. US, 71 L. ed. 392 (1926); US v. Mack, tribunals forbid the disposition or destruction thereof in one action which
79 L. ed. 1559 (1935) citing The Ann, 3 L. ed. 734 (1815); Fettig Canning Co. would prejudice the other, and vice versa [Id. at pp. 98-99].
v. Steckler, 188 F. 2d 715 (1951) citing Strong v. US, 46 F. 2d 257, 79 ALR 150
(1931)]. The State in the instant case must be given reasonable opportunity to present
its cases for the proper enforcement of the applicable provisions of the Revised
Therefore, contrary to the import of respondent judge's decision, the Collector Penal Code, Republic Act No. 3720, and the Tariff and Customs Code, and the
of Customs was not precluded by law or legal principle from assuming prosecution of the violators thereof. It follows then that the execution of any
jurisdiction over the subject goods. No legal infirmity attended the seizure and final decision in the seizure and forfeiture case before the Bureau of Customs,
forfeiture proceedings over the subject goods. whether it requires the destruction, sale or the release of the subject goods,
should not frustrate the prosecution's task of duly presenting and offering its GQ GARMENTS, Inc., could not be located in its given address at 244 Escolta
evidence in Criminal Cases Nos. 88-63156 and 88-63157. Street, Binondo, Manila, and was thus suspected to be a fictitious
firm. Forfeiture proceedings under Section 2530(f) and (l) (3-5) of the Tariff
It is apropos to note that for evidentiary purposes, it would not be necessary and Customs Code were initiated.
to present each and every item of the goods in question before the courts
AGFHA, Inc., through its president Wilson Kho, filed a motion for
trying the criminal cases. Thus, a representative quantity of the goods, as may
intervention contending that AGFHA, Inc., is the lawful owner and actual
be agreed upon by the authorized customs officials and fiscals prosecuting the
consignee of the subject shipment. The motion for intervention was granted
criminal cases, shall be set aside as evidence to be presented in the above
on 2 March 1993. Following a hearing, the Collector of Customs came up with
criminal cases and retained in custodia legis until final judgment is secured in
a draft decision ordering the lifting of the warrant of seizure and detention on
these cases. The rest of the goods may be disposed of in accordance with the
the basis of its findings that GQ GARMENTS, Inc., was not a fictitious
final decision rendered in the seizure and forfeiture proceedings pursuant to
corporation and that there was a valid waiver of rights over the bales of cloth
the Tariff and Customs Code.
by GQ GARMENTS, Inc., in favor of AGFHA, Inc. The draft decision was
submitted to the Deputy Commissioner for clearance and approval, who, in
WHEREFORE, in view of the foregoing, the respondent judge's decision dated turn, transmitted it to the CIIS for comment. The CIIS opposed the draft
20 July 1987 is REVERSED. The seizure and forfeiture proceedings involving decision, insisting that GQ GARMENTS, Inc., was a fictitious corporation and
the goods in question before the Bureau of Customs may proceed subject to that even if it did exist, its president, John Barlin, had no authority to waive the
the above pronouncements relative to the setting aside of so much of the right over the subject shipment in favor of AGFHA, Inc.
goods as may be required for evidentiary purposes.
The Deputy Commissioner, relying on the comment of the CIIS, rejected
3.REPUBLIC OF THE PHILIPPINES, represented by the the draft decision of the Collector of Customs.
COMMISSIONER OF CUSTOMS, petitioner, vs. THE COURT OF GQ GARMENTS, Inc., and AGFHA, Inc., filed a joint motion for
TAX APPEALS and AGFHA, INCORPORATED, respondents. reconsideration, which was given due course. Convinced that the evidence
presented established the legal existence of GQ GARMENTS, Inc., and finding
DECISION that a resolution passed by the Board of Directors of GQ GARMENTS, Inc.,
ratified the waiver of its president, the Collector of Customs in another draft
VITUG, J.:
decision granted the joint motion. The Office of the Commissioner of Customs,
however, disapproved the new draft decision and denied the release of the
On 12 December 1992, a shipment of bales of textile gray cloth, under Bill goods; it ruled:
of Lading No. HKT-138899, arrived at the Manila International Container Port
(MICP) aboard the vessel "S/S ACX Daisy." The shipment's Inward Foreign
"1. x x x [I]t is quite suspicious that it took more than one month before the
Manifest stated that the bales of cloth were consigned to GQ GARMENTS, Inc.,
alleged error in the consignee was discovered by the shipper and by AGFHA,
of 244 Escolta Street, Binondo, Manila. The Clean Report of Findings (CRF)
Inc., and by GQ Garments especially considering the fact that there is a CRF
issued by the Societe Generale de Surveilance (SGS), however, mentioned
naming therein AGFHA as consignee of the subject shipment which means that
AGFHA, Incorporated, to be the consignee of the shipment. Forthwith, the
the shipper was contracted by SGS so that the latter can inspect the subject
shipping agent, FIL-JAPAN, requested for an amendment of the Inward
shipment to be imported by consignee; that Mr. Wilson Kho admitted it was
Foreign Manifest so as to correct the name of the consignee from that of GQ
AGFHA who ordered the shipment by telephone call; that prior to this
GARMENTS, Inc., to that of AGFHA, Inc.
shipment there was no order placed in the name of GQ Garments from
On 22 January 1993, FIL-JAPAN forwarded to AGFHA, Inc., the amended Indonesia; and that this is already the second of four shipments ordered by
Inward Foreign Manifest which the latter, in turn, submitted to the MICP Law AGFHA, Inc., from Jakarta, Indonesia.
Division. The MICP indorsed the document to the Customs Intelligence
Investigation Services (CIIS). The CIIS placed the subject shipment under "2. Mr. Wilson Kho's explanation that the shipper committed an error in
Hold Order No. H/CI/01/2293/01, dated 22 January 1993, on the ground that naming GQ GARMENTS as the consignee of the subject shipment because his
business card contains the name of both GQ GARMENTS and AGFHA, Inc. Bureau of Customs who ordered the forfeiture of the subject shipments. The
appears to be an afterthought and self-serving. Moreover, he admitted that he BOC, however, failed.
is not an officer nor even a stockholder of GQ GARMENTS so why should his
business card indicate his name as President/General Manager of GQ "x x x x x x x x x
GARMENTS and AGFHA, Inc. That is clearly a misrepresentation.
"'x x x This Court could not fathom any individual or collective importance of
"3. During the hearing on April 15, 1994, Mr. John John Barlin of GQ the x x x findings [of the BOC] as indicative of the actual commission of fraud
GARMENTS admitted that the letter dated February 11, 1993 purportedly or any attempt or frustration thereof. As defined, actual or intentional fraud
signed by him (in which he allegedly informed the Collector of Customs that consists of deception willfully and deliberately done or resorted to in order to
AGFHA, Inc., is the rightful owner of the subject shipment and that GQ induce another to give up some right. It must amount to intentional
GARMENTS is waiving its right over the same) actually came from Wilson wrong-doing with the sole object of avoiding the tax.
Kho. In other words, the said letter is spurious.
`The circumstances or findings presented by the [BOC] do not reveal x x x any
"4. From the admissions of both Mr. Wilson Kho and Mr. John John Barlin, it is kind of deception that could have been played upon [the] Bureau to give up
clear that GQ GARMENTS is actually owned by Mr. Wilson Kho and its some of its right, e.g., to collect correct taxes on properly declared shipment of
corporate franchise appears to be being used to perpetrate fraud and other goods.
scheme to confuse authorities (pp. 1-4, Decision of Commissioner of Customs,
Custom Case No. 94-017)"[1] `x x x x x x x x x

In deference to the directive of the Commissioner, the District Collector of `[BOC] is saying that the shipper knew all along that AGFHA, Inc., was the real
Customs ordered the forfeiture of the shipment. On 14 October 1994, AGFHA, consignee due to the pre-inspection done by SGS and the corresponding
Inc., interposed an appeal to the Office of the Commissioner of Customs. The issuance of the CRF naming AGFHA, Inc. as the consignee. So that in naming
appeal was dismissed consistently with the Commissioner's earlier stand that GQ GARMENTS Inc. as the consignee in the Bill of Lading and Inward Foreign
disapproved the Collector of Customs' draft decision. Manifest, the same was intentional and deliberately done and not a case of
On 5 October 1995, AGFHA, Inc., filed a petition for review with the Court error or inadvertence x x x.
of Tax Appeals questioning the forfeiture of the bales of textile cloth. Finding
merit in the plea of appellants, the Court of Tax Appeals granted the petition `[The Court] could not believe that [BOC] assumed the above circumstance as
and ordered the release of the goods to AGFHA, Inc. a fact in his attempt to forfeit the subject shipment in favor of the
government. The respondent is trying to second guess the act of the shipper
On 27 December 1996, the Commissioner of Customs then challenged that the latter had prior knowledge of AGFHA Inc., as the true consignee
before the Court of Appeals the decision of the tax court. before the shipment. [The Court] deem[s] such conclusion as pure
In its decision, dated 31 May 1999, the Court of Appeals dismissed the hearsay. Obviously, it is only the shipper and/or the SGS who could personally
appeal for lack of merit. Quoting extensively from the assailed decision of the vouch for events that transpired prior to the shipment of the goods subject
tax court, the appellate court ruled that the Bureau of Customs has failed to matter of this case.
satisfy its burden of proving fraud on the part of the importer or consignee. It
expounded thusly: `x x x [AGFHA Inc.] has offered the following controverting and convincing
evidence x x x:
"Section 2530 (f) and (1) 3-5 of the Tariff and Customs Code, provide that in
order that a shipment be liable to forfeiture, it must be proved that fraud has `1. Telex message from the shipping agent of shipper P.T. Mandala Subur
been committed by the importer/consignee to evade payment of the duties Textile Industry to FIL-JAPAN Shipping Company Manila, requesting
due. To establish the existence of fraud, the onus probandi is on the part of the
amendment of the Bill of Lading and other shipping records, to change The Court of Appeals attributed the error in indicating GQ GARMENTS, Inc.,
consignee from GQ Garments, Inc. to Agfha, Inc.; instead of AGFHA, Inc., in the Inward Foreign Manifest as being the consignee
of the subject shipment to the shipping agent. It also noted the finding of the
`2. Application for Amendment of the Inward Foreign Manifest filed by the tax court that GQ GARMENTS, Inc., was, in fact, a registered importer with
shipper's agent, FIL-JAPAN Shipping Company, for approval with the Customs Registration No. 91-5624 per the Customs Intelligence and Investigation
Law Division, Manila International Container Port (MICP), to change the name Service List of Registered Importers contained in Customs Memorandum
of the consignee from GQ Garments, Inc. to Agfha, Inc. Order No. 149-88 for the year 1991.

The BOC instituted the instant petition for review under Rule 45 of the
`3. Letter dated February 10, 1993 by Wilson Kho, president of Agfha, Inc. Revised Rules of Court assailing the affirmance by the Court of Appeals of the
addressed to Atty. Buenaventura Maniego, District Collector of Customs, MICP, tax court's decision of 04 November 1996.
North Harbor, Manila manifesting the former's intention and willingness to pay
the corresponding duties and taxes on the subject shipment based on a higher The appeal is not meritorious.
valuation indicated in the Clean Report of Findings (CRF) as recommended by
Section 2530 (f) and (1) (3-5) provides:
the SGS, as against the lower valuation indicated in the invoice.

"Section 2530. Property Subject to Forfeiture Under Tariff and Customs Law. -
`4. Bill of Lading covering the subject shipment showing the shipper as P.T.
Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the
Mandala Subur Textile Industry and the consignee as GQ Garments, Inc.
following conditions be subjected to forfeiture;

`5. The Clean Report of Findings (CRF) dated December 9, 1992 showing the
"x x x x x x x x x
consignee of the subject shipment as Agfha, Inc. and the shipper as P.T.
Mandala Subur Textile Industry.
"f. Any article the importation or exportation of which is effected or attempted
contrary to law, or any article of prohibited importation or exportation, and all
`6. Import Authority No. (IAN) 18.012.37679, assigned by the Central Bank
other articles which, in the opinion of the Collector, have been used, are or
of the Philippines appearing on the right hand portion of the CRF.
were entered to be used as instruments in the importation or exportation of
the former.
`The above evidence speak for themselves. If any deception is intended by
petitioner Agfha, Inc., why would it apply for an Import Authority Number
"x x x x x x x x x
under its name? It knew for certain that the subject goods will be
pre-inspected by SGS under its name.
"1. Any article sought to be imported or exported:

"x x x x x x x x x
"x x x x x x x x x

`x x x [AGFHA Inc.] expressed its willingness to pay the higher duties and
taxes imposed on the subject shipment as indicated in the CRF. x x x From the "(3) On the strength of a false declaration or affidavit executed by the owner,
very start up to the end, petitioner had been consistent in its actuations. It importer, exporter or consignee concerning the importation of such article;
applied for an Import Authority with the Central Bank of the Philippines which
authority was used by the SGS in making the necessary pre-inspection and "(4) On the strength of a false invoice or other document executed by the
issuing the CRF. It undertook remedial measures to amend the consignee in owner, importer, exporter or consignee concerning the importation or
the Bill of Lading and Inward Foreign Manifest when the shipper made a exportation of such article; and
mistake. It then manifested to pay the correct taxes and duties. The
government stands to lose nothing.'"[2]
"(5) Through any other practice or device contrary to law by means of which WHEREFORE, the petition is hereby DENIED and the assailed decision of
such articles was entered through a customhouse to the prejudice of the the Court of Appeals is AFFIRMED.
government."
SO ORDERED.

The requisites for the forfeiture of goods under Section 2530(f), in

relation to (1) (3-5), of the Tariff and Customs Code are: (a) the wrongful
making by the owner, importer, exporter or consignee of any declaration or 4. G.R. No. 163055 June 11, 2014
affidavit, or the wrongful making or delivery by the same person of any invoice,
letter or paper - all touching on the importation or exportation of merchandise;
THE COMMISSIONER OF CUSTOMS & THE DISTRICT COLLECTOR OF
(b) the falsity of such declaration, affidavit, invoice, letter or paper; and (c) an
CUSTOMS FOR THE PORT OF ILOILO, Petitioners,
intention on the part of the importer/consignee to evade the payment of the
vs.
duties due.[3]
NEW FRONTIER SUGAR CORPORATION, Respondent.
Petitioner asserts that all of these requisites are present in this case. It
contends that it did not presume fraud, rather the events positively point to DECISION
the existence of fraud. Private respondent AGFHA, Inc., on the other hand,
maintains that there has only been an inadvertent error and not an intentional PEREZ, J.:
wrongful declaration by the shipper to evade payment of any tax due. The
resolution of this issue would entail a reevaluation of the attendant Before the Court is a Petition for Review on Certiorari seeking to reverse and
circumstances, a matter that cannot be freely undertaken by this Tribunal. It set aside the 29 March 2004 Decision1of the Court of Appeals (CA) in CA-G.R.
has been a settled rule that the Supreme Court is not a trier of SP No. 48842 which affirmed the Decision and Resolution dated 19 June 1998
facts.[4] Findings of the appellate court are generally binding and cannot be and 23 July 1998, respectively, of the Court of Tax Appeals (CTA) 2 in C.T.A.
disturbed by this Court unless it is sufficiently shown that there has been no Case No. 5347.
evidence on record to support such findings.[5] The assessment made by the
appellate court carry even more weight when it is consistent with that of the
The Facts
trial court.[6] Consonantly, the factual determination of the Court of Tax
Appeals, when supported by substantial evidence, will not be reversed on
appeal unless it is clear that the said court has committed gross error in the As both found by the trial court and appellate court, the factual
process.[7] The Collector of Customs, Court of Tax Appeals and the Court of antecedents3 of the case are as follows:
Appeals are unanimous in concluding that no fraud has been committed by
private respondent in the importation of the bales of cloth. The records do Petitioners are the duly appointed Commissioner of Customs, and the District
appear to sustain this conclusion. Collector of Customs for the Port of Iloilo. Respondent, on the other hand, is a
domestic corporation with office address at the 9th floor of Rufino Center Bldg.,
Fraud must be proved to justify forfeiture.[8] It must be actual, amounting 6784 Ayala Avenue, Makati City. It is duly registered with the Board of
to intentional wrong-doing with the clear purpose of avoiding the Investments on a non-pioneer status and has been granted incentives to
tax.[9] Forfeiture is not favored in law nor in equity.[10] Mere negligence is not modernize and rehabilitate its sugar mill under Certificate of Registration No.
equivalent to the fraud contemplated by law.[11] What is here involved is an 93-452 dated 28 January 1994.
honest mistake, not even directly attributable to private respondent, which
will not deprive the government of its right to collect the proper tax. The
On 25 September 1995, a contract of sale covering 15,000 metric tons of
conclusion of the appellate court, being consistent with the evidence on record
Thailand raw sugar was entered into by and between Ms. Margarita Chua Sia,
and not contrary to law and jurisprudence, hardly can be overturned by this
buyer and President of respondent, and Osumo Nishihara of Maruha
Court.
Corporation, a Japan based trading company, for and in behalf of the seller,
Taiyo (U.K.) Limited.
On 3 October 1995, respondent applied with the United Coconut Planters Bank it was unintentional on the part of respondent; hence, there was no need to
for a letter of credit for the above transaction and was issued L/C No. issue a WSD.7
95-61574-7 on 5 October 1995after the payment of the advance import duty
of ₱64,315,388.00. Upon respondent’s issuance and submission of a post-dated
guarantee/security check in the amount of ₱234,998,950.90, petitioner
In the meantime, said shipment of raw cane sugar arrived at the Port of Iloilo Collector recommended to the petitioner Commissioner that the imposition of
on 4 October 1995 on board the vessel M/V ALTAIR SS, Voyage No. 60, under penalty be dispensed with unless the SGS will not issue the required CRF.
Bill of Lading No. 1. Upon request of the respondent, the shipment was allowed Petitioner Commissioner then created a three-man hearing body to resolve the
by petitioner District Collector (Collector) to be discharged and transferred to issue on whether the lack of CRF was intentional or not, as ordered in Customs
its bodega at Calinog, Iloilo under certain conditions.4 Special Order No. D-03-96 dated 16 January 1996.8

On 6 December 1995, Director Ray M. Allas of the Customs and Intelligence & Pending said hearing, SGS-Manila Liaison Office issued on 18 January 1996
Investigation Service (CIIS) issued Alert Order No. ACI/120695/09 on the CRF No. THL017904 covering the subject shipment. Eventually, the three-man
subject shipment declaring that it violated Joint Order No. 1-91 for lack of hearing body issued a Resolution dated 15 February 1996, the dispositive
Clean Report of Findings (CRF). Thus, a Warrant of Seizure and Detention portion of which is quoted hereunder as follows:
(WSD) against the shipment was recommended for violation of said Joint
Order, in relation to Section 2530(f) of the Tariff and Customs Code of the WHEREFORE, in view of the foregoing and subject to the approval of the
Philippines (TCCP).5 Commissioner of Customs, the District Collector of Customs, Port of Iloilo, is
hereby ordered to initiate a seizure proceeding against the security/guarantee
On 22 December 1995, respondent wrote the petitioner Collector explaining put up by NSFC (respondent herein) to secure the tentative release of the
that its lack of CRF should not be construed as intentional there being good subject shipment for the imposition of appropriate penalty pursuant to CAO No.
faith on its part in complying with the requirements for the issuance of the 4-94 and the collection of proper duties, taxes, penalties and other
Import Advice Note (IAN). Further, respondent explained that Taiyo (U.K.) charges.9 Afterwards, the aforesaid Resolution was approved by the petitioner
Limited was aware of the Societe Generale de Surveillance (SGS) Commissioner with the following handwritten modifications:
pre-shipment inspection requirements and instructed its agent in Thailand to
allow an authorized third party, United Asia Supplier Co. Ltd. (United Asia), to 1. First demand for payment of penalty as instructed in the Commissioner’s
inspect the samples of sugar. Respondent likewise clarified that they were not Memorandum dated 17 January 1996, i.e. "payment of 20% penalty of the
advised by the seller that the sugar ordered was initially shipped-out to China landed cost for failure to undergo the pre-shipment inspection at the Port of
and that the Thailand agent failed to advise it of the SGS pre-shipment exportation"; and
inspection under the impression that the previous inspection and testing made
by United Asia would suffice.6 2. Upon failure by the importer to pay the penalty within (10) days from
receipt of demand, proceed against the security/guarantee by initiating a
In view thereof, respondent requested for the tentative release of the seizure proceeding against the same and deposit immediately the guarantee
shipment on the ground that the SGS pre-shipment inspection was not in accordance with law in order to protect the interest of the government.10
undertaken due to miscommunication and it was without intention to
circumvent the Comprehensive Import Supervision Scheme (CISS). Petitioner Respondent filed a Motion for Reconsideration of the said Resolution but the
Collector approved such request and the shipment was thereafter tentatively same was denied on 27 March 1996. Then, on 29 March 1996, petitioner
released. The CIIS however opposed the tentative release insisting that Collector sent a demand letter to respondent for the payment of the twenty
respondent was not able to prove that its failure to obtain a CRF was percent (20%) penalty within ten (10) days from its receipt, which the latter
unintentional. Petitioner Commissioner of Customs (Commissioner) then actually received on 3 April 1996. However, without waiting for the lapse of the
directed the petitioner Collector to resolve the opposition of the CIIS. It was ten-day grace period, the Bureau of Customs of the Port of Iloilo immediately
found out that the failure to secure CRF was due to the fault of the shipper and
deposited the security check on 2 April 1996, prompting respondent to order subject shipment of respondent may have been subjected to an alleged
for a stop payment of said check.11 automatic seizure, the eventual issuance of the CRF covering the same
shipment cured all deficiencies;17 (4) that respondent’s act of issuing a "STOP
Consequently, petitioner Collector demanded from respondent the payment of PAYMENT" order was justified considering petitioners’ act of depositing the
penalty indicated in the subject Resolution amounting to ₱41,858,550.00. post-dated guarantee/security check being improper and without any legal
Likewise, the subsequent shipment of 9,948,615 metric tons of raw sugar by basis;18 and (5) that petitioner Collector acted beyond his mandate under
respondent was withheld by petitioner Collector for the purpose of being sold Section 1508 of the TCCP when he withheld respondent’s subsequent
at public auction to cover for the 20% penalty.12 shipment of raw sugar considering that there was still no outstanding and
demandable amount (penalty of fine) to be paid. The fine which is the subject
Thereafter, on 10 April 1996, respondent filed a Petition for Review with prayer matter of the instant case was precisely the one being questioned by
for the issuance of a Writ of Preliminary Injunction and/or Temporary respondent; hence, its liability has yet to be determined.19
Restraining Order (TRO) before the CTA, docketed as C.T.A. Case No. 5347.13
Subsequently, on 23 July 1998, the CTA denied petitioners’ Motion for
The Ruling of the CTA Reconsideration for failure to raise any new matter which has yet to be
considered and passed upon in its assailed 19 June 1998 Decision.20

In a Decision dated 19 June 1998,14 the CTA granted respondent’s Petition and
accordingly reversed and set aside the Decision of the petitioner Aggrieved, and following the rules on court hierarchy then prevailing,
Commissioner to impose a 20% penalty on respondent’s subject shipment, the petitioners appealed to the CA by filing a Petition for Review pursuant to Rule
dispositive portion of which reads: 43 of the 1997 Rules of Civil Procedure, docketed as CA-G.R. SP No. 48842.

WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby The Ruling of the CA
GRANTED. Accordingly, the decision to impose a 20% penalty on [respondent]
subject shipment of raw sugar is hereby REVERSED and SET ASIDE. The GSIS The CA affirmed21 both the aforesaid Decision and Resolution rendered by the
Surety Bond with No. G [16] GIF 027358 posted by the [respondent] before CTA in C.T.A. Case No. 5347, pronouncing that seizure of goods starts with the
this Court in the amount of ₱83,717,100.00 is hereby CANCELLED and issuance of a WSD, being a part of the procedural due process, to which
RELEASED of its undertaking.15 respondent is entitled to. Without it, respondent will then be deprived of its
right to avail of the tentative release of the shipment which is expressly
The CTA based its ruling on the following factual and legal findings: (1) that allowed under the conditions set forth in CMO No. 9-95.
since there was no valid seizure proceeding ever conducted by petitioners
against respondent’s case, it therefore failed to comply with Section 2301 of In addition, the appellate court ruled that respondent cannot be faulted in
the TCCP, as amended, which requires the Collector to issue a WSD upon ordering the stop payment of its guarantee/security check because it was
making any seizure, and also with Section 2303 of the same, which provides deposited by petitioners on 2 March 1996, or exactly six (6) days ahead of
the need of a prior written notice of seizure and opportunity to be heard on the respondent’s deadline to pay the alleged 20% penalty. It failed to consider
part of the owner or importer in reference to the alleged delinquency, a clear that before the lapse of the given period, the Bureau of Customs had no right
violation of respondent’s constitutional right to procedural due process;16 (2) to hold the value of the check against respondent. More so, since there was
that since there was no valid seizure as adverted to above, the imposition of already the subsequent issuance of the CRF on 18 January 1996 by the SGS
the 20% penalty under Customs Administrative Order (CAO) No. 4-94 is Manila Liaison, respondent in effect could not have violated any customs laws
outright improper and without any legal basis; (3) that the subsequent which would render it liable to pay for the 20% penalty.
issuance of the CRF over respondent’s shipment under the provisions of
Customs Memorandum Order (CMO) No. 9-95 satisfied the inspection and the Lastly, while it may be argued that the CRF is required to be issued before the
CRF required under paragraph 12 of Joint Order No. 1-91considering that it shipment of the goods, the late issuance of the same to respondent amounts
cleared the said shipment from automatic seizure. Nonetheless, even if the to substantial compliance with the provisions of Joint Order No. 1-91. The
purpose for which the CRF is required has already been served since the the country’s Bureau of Customs with accurate information about the quality
imported goods were already inspected by the SGS. The CA therefore and specification of bulk and break bulk cargo.25 In other words, the
concluded that if the belated issued CRF will be ignored, then it will work pre-shipment inspection requirement simply helps the Governments around
against all the procedures conducted to determine the propriety of issuing the the world in protecting their import revenues, facilitate trade, and minimize
late CRF. the risk of illegal imports.26

Not satisfied, petitioners are now in quest for redemption before this Court, Thereafter, upon inspection and determination that the subject shipment is in
raising that the CA committed serious and reversible error in ruling, that: (a) order, a corresponding CRF shall be issued by the SGS. Only then may the
the issuance of a WSD was necessary; (b) the imposition of the 20% penalty imports be allowed in our country for release, after compliance with other
on respondent’s shipment was not justified; (c) the later issuance of the CRF equally significant requirements, such as but not limited to, filing of import
over the subject shipment had the effect of full compliance with Joint Order No. entry and payment of duty.
1-91; and (d) the deposit of respondent’s check by petitioners was improper
and without legal basis. In the case at bench, it is apropos to look into the allegation that, as stated in
Alert Order No. A/CI/120695/09, respondent violated Joint Order No. 1-91,
The Issue which implements the CISS, particularly paragraph 12 thereof, to wit:

The core issue for the Court’s consideration is whether or not respondent has 12. No Custom Entry shall be filed or accepted or any shipment released in
violated paragraph 12 of Joint Order No. 1-91, in relation to paragraph (f), respect of any goods which require a CRF as provided for by this Joint Order
Section 2530 of the TCCP, as amended, for failure to submit the subject raw where the Importer is unable to produce to the Bureau of Customs the
cane sugar shipment to pre-shipment inspection and to present the authenticated customs copy of the CRF. With or without fault on the part of the
corresponding CRF resulting therefrom. Consequently, if respondent indeed importer, such goods shall be subject to automatic seizure by the Bureau of
violated said provision, the question of the imposition of the 20% penalty Customs. The Seller is therefore warned against the shipment of goods which
pursuant to CAO No. 4-94, on respondent’s subject shipment, then arises. have not been inspected or for which a CRF has not been issued. (Emphasis
supplied)
Our Ruling
Petitioners argue that the above-quoted provision should be read in relation to
We find the petition unmeritorious. paragraph (f),Section 2530 of the TCCP, as amended, quoted hereunder as
follows:
Prefatorily, in accordance with the pertinent customs laws at the time of the
arrival of the subject shipment of this case, it must be pointed out that Sec. 2530. Property Subject to Forfeiture Under Tariff and Customs Laws. –
importers, such as respondent herein, are duty-bound to comply with the Any vessel or aircraft, cargo, articles and other objects shall, under the
provisions of the CISS,22 implemented by Joint Order No. 1-91,23 particularly following conditions, be subject to forfeiture:
as to the requirement of a pre-shipment inspection of the quality, quantity,
and price of the imports coming into the Philippines to be conducted at the xxxx
country of export. Notably, the pre-shipment inspection was intended to
prevent the possibility of the under valuation, misdeclaration, and f. Any article of prohibited importation or exportation, the importation or
overvaluation of imports shipped to our country which may defraud the exportation of which is effected or attempted contrary to law, and all other
Philippine Government of revenues.24 articles which, in the opinion of the Collector, have been used, are or were
intended to be used as instrument in the importation or exportation of the
The aforesaid scheme aims to ensure the quality and quantity specifications of former. (Emphasis supplied)
consignments, and achieved through advance cargo clearance and supplying
Records of the case reveal that, at the time of the arrival of the shipment of which will render every word operative, rather than one which may make the
respondent’s raw cane sugar, it did not have the required CRF. Such lack of words idle and nugatory.28
CRF was due to failure to undergo the needed pre-shipment inspection from its
place of exportation. As a result thereof, pursuant to paragraph 12 of Joint Applying the foregoing principles herein, paragraph 12 of Joint Order No.
Order No. 1-91, read in conjunction with Section 2530(f) of the TCCP, as 1-91should be read in relation to Sections 2301 and 2303 of the TCCP, as
amended, petitioners assert that respondent’s shipment of raw cane sugar amended, in order to effectuate the purposes of which they were enacted,
"shall be subject to automatic seizure." particularly as to the procedural requirements set forth in conducting seizure
proceedings. Thus, in the 19 June1998 Decision in C.T.A. Case No. 5347, the
The phrase "shall be subject to automatic seizure" is not, however, an CTA correctly articulated that a WSD is a condition precedent, before any
unrestrained mandate.1âwphi1 It is not a roving commission to dispense with seizure proceeding can be formally initiated. It therefore emphasized the
the procedural due process of seizure proceedings. This is the particular constitutionally enshrined right to procedural due process of any person,
provision clearly expressed in Sections 2301 and 2303 of the TCCP, as natural or juridical, under investigation especially if it will cause the person
amended, which say: his/its life or property. As previously mentioned, the above-quoted sections
clearly laid down the mandatory procedures to be observed in a seizure case,
Sec. 2301. Warrant for Detention of Property-Cash Bond. – Upon making any to wit: (1) that a WSD must first be issued upon making any seizure; and (2)
seizure, the Collector shall issue a warrant for the detention of the property; that a written notice of such seizure must be served upon the owner or
and if the owner or importer desires to secure the release of the property for importer or his agent. Failure to comply with the foregoing procedural
legitimate use, the Collector shall, with the approval of the Commissioner of requirements would negate the propriety of having the subject shipment of
Customs, surrender it upon the filing of a cash bond, in an amount to be fixed respondent seized and forfeited in favor of the Government in all cases. Hence,
by him, conditioned upon the payment of the appraised value of the article even if the phrase "subject to automatic seizure" was used under paragraph
and/or any fine, expenses and costs which may be adjudged in the case: 12 of Joint Order No. 1-91, the same must be construed together and
Provided, That such importation shall not be released under any bond when harmonized with other related provision of law, i.e. Sections 2301 and 2303 of
there is a prima facie evidence of fraud in the importation of article: Provided, the TCCP, as amended, in order to form a uniform system of jurisprudence on
further, That articles the importation of which is prohibited by law shall not be seizure proceedings.
released under any circumstance whatsoever: Provided, finally, That nothing
in this section shall be construed as relieving the owner or importer from any Likewise, it would be improvident not to state at this juncture that the subject
criminal liability which may arise from any violation of law committed in shipment could not be deemed liable for seizure or even forfeiture on the
connection with the importation of the article.27 (Emphasis supplied) ground of violation of Section 2530(f) of the TCCP, as amended, for it must be
proven first that fraud has been committed by or there was bad faith on the
Sec. 2303. Notification to Owner or Importer. – The Collector shall give the part of the importer/consignee to evade payment of the duties due and
owner or importer of the property or his agent a written notice of the seizure demandable.
and shall give him an opportunity to be heard in reference to the delinquency
which was the occasion of such seizure. Time and again, and consistently, this Court has ruled that the onus probandi
to establish the existence of fraud is lodged with the Bureau of Customs which
x x x x (Emphasis supplied). ordered the forfeiture of the imported goods. Fraud is never presumed. It must
be proved. Failure of proof of fraud is a bar to forfeiture. The reason is that
Ut magis valeat quam pereat. A statute is to be interpreted as a whole. The forfeitures are not favored in law and equity.29 The fraud contemplated by law
provisions of a specific law should be read, considered, and interpreted must be intentional fraud, consisting of deception willfully and deliberately
together as a whole to effectuate the whole purpose of which it was legislated. done or resorted to in order to induce another to give up some right.30 Absent
A section of the law is not to be allowed to defeat another, if by any reasonable fraud, the Bureau of Customs cannot forfeit the shipment in its favor.
construction, the two can be made to stand together. In other words, the court Significantly, based on the records of the present case, it was determined
must harmonize them, if practicable, and must lean in favor of a construction during the administrative proceedings before the petitioner Collector, that
there was no intentional circumvention of the said CISS requirement on the x x x x (Emphasis supplied)
part of respondent because the failure to subject the shipment to SGS
pre-shipment inspection was purely attributable to the fault of the shipper; Relevant thereto, Section 2307 of the TCCP, as amended, provides:
hence, respondent acted in good faith. In other words, since there was no
deliberate circumvention of the CISS, the same therefore cannot be Sec. 2307. Settlement of Case by Payment of Fine of Redemption of Forfeited
recommended for seizure and/or forfeiture. As a matter of fact, pursuant to Property. – Subject to approval of the Commissioner, the district collector may
CMO No. 9-95, it was no other than the petitioner Collector who recommended while the case is still pending, except when there is fraud, accept the
and thereafter allowed that the subject shipment be tentatively released, and settlement of any seizure case provided that the owner, importer, exporter, or
that the imposition of the penalty against it be dispensed with unless the SGS consignee or his agent shall offer to pay to the collector a fine imposed by him
will not issue the required CRF.31These factual circumstances further upon the property, or in case of forfeiture, the owner, exporter, importer or
strengthened the position taken by respondent that it had indeed sufficiently consignee or his agent shall offer to pay for the domestic market value of the
proven its claim of good faith on the non-production of CRF, which likewise seized article. The Commissioner may accept the settlement of any seizure
established lack of fraudulent intent to evade payment of duties on its part. case on appeal in the same manner.
Clearly, petitioners’ failure to comply with the procedural requirements set
forth under the applicable provisions of the TCCP, as amended, in pursuing for
x x x x (Emphasis supplied)
the seizure of the subject shipment under paragraph 12 of Joint Order No.
1-91, was fatal to their cause.
Clearly from the foregoing, the law presupposes a pending seizure proceeding
legally initiated against the shipment intended to be seized in accordance with
Now this Court proceeds to determine whether or not the imposition of the
the pertinent provisions of the TCCP, as amended. Absence of such pending
20% penalty on respondent’s subject shipment is justified under the present
proceeding against respondent’s shipment renders CAO No. 4-94 and Section
factual and legal circumstances of this case.
2307 inapplicable in the present case. Consequently, there would be no legal
basis to hold the subject shipment liable for the aforesaid 20% penalty on the
The aforesaid 20% penalty being collected by petitioners against respondent sole ground of lack of CRF.
was based on the imposition under CAO No. 4-94,32 particularly Part II (C)(C.1)
thereof, which reads: SUBJECT: Schedule of fines to be imposed in the
Accordingly, this Court hereby adopts the factual and legal findings of the CTA
settlement of seizure cases pending hearing pursuant to Section 2307 of the
in its 19 June 1998 Decision,33pertinent portions of which are quoted
Tariff and Customs Code, as amended by Executive Order No. 38.
hereunder as follows:

xxxx
It is to be readily observed that the aforequoted subject of said CAO pertains
to fines imposed on seizure cases. Inasmuch as the instant case has not been
II. SCHEDULE OF FINES put under a valid seizure as adverted to above, the imposition of the 20%
penalty under CAO 4-94 is outright improper and without legal basis. The
In the settlement of seizure cases pending hearing, where settlement thereof problem with [petitioners] is that in its desire to give more teeth to the
is allowed under the existing laws and regulations, the following schedule of administrative requirement for the production of a Clean Report of Findings
fines for the corresponding violations are hereby provided: (CRF) from the SGS, it overlooked one fundamental principle in law – that no
fine, surcharge, forfeiture or any penalty may be imposed except in pursuance
xxxx of a provision of law. In the instant case, the closest provision [petitioners]
could cite is [S]ection 2307 of the Tariff and Customs Code as implemented by
C. ONLY VIOLATION IS LACK OF SGS CLEAN REPORT OF FINDINGS (CRF) CAO 4-94, without realizing that the same pertains only to seizure cases.
Under the provisions imposing fine found in Sections 2505 to 2529 of the same
C.1 First Violation - - - - - - - - - - - - - - - - - - - - 20% Code, not one pertains to non-production of CRF. The Secretary of Finance,
Secretary of Trade and Industry and the Governor of the Central Bank in
issuing the Joint Order No. 1-91, which serves as the basis of the requirement under CAO No. 4-94. The eventual issuance of the required CRF covering
for the production of a CRF, did not provide for the imposition of fine or other respondent’s shipment had indeed cured all deficiencies; thus, leaving
penalties maybe because they realize that the imposition of penalties is a petitioners no right whatsoever in demanding for the value of the
legislative prerogative. The non-production of CRF by itself does not give rise guarantee/security check previously issued by respondent for the sole
to any penalty but may serve as a basis to hold and to investigate the purpose it was made.
particular shipment which may lead to findings of undervaluation,
misdeclaration or misclassification for which the law provides the Parenthetically, this Court finds no abusive or improvident exercise of
corresponding penalty such as surcharge, fine or forfeiture under Sections authority on the part of the CT A. Since there is no showing of gross error or
2503, 2530-2536 of the TCC[P]. These offenses were not shown in the records abuse on the part of the CT A, and its findings are supported by substantial
of the case. On the contrary, there was this finding by the [petitioners] that evidence which were thoroughly considered during the trial, there is no cogent
the non-production of the CRF was not intentional. The mistake or error was reason to disturb its findings and conclusions - and they carry even more
found to be committed by the supplier without prior knowledge on the part of weight when the CA affirms its factual and legal findings.
the [respondent]. In fact, a CRFwas later on produced and the discrepancy
was not enough to constitute undervaluation under Sections (sic) 2503 of the WHEREFORE, the petition is hereby DENIED for lack of merit. No costs.
said Code. The [respondent] was only required by the [petitioners] to pay
additional duties and taxes corresponding to the difference of 4.79% in
SO ORDERED.
valuation.34

5. SUBIC BAY METROPOLITAN AUTHORITY vs Merlino Rodriguez

Lastly, granting arguendo that this Court considers applying the provisions of
CAO No. 4-94 in the present case, we find that substantial compliance by
DECISION
respondent in the provisions of CMO No. 9-95 has rendered the issue on the
imposition of the 20% penalty for lack of CRF moot.

CARPIO, J.:
CMO No. 9-95 categorically provides the revised procedures on the tentative
release of shipments lacking the required CRF. Its objectives are as follows: (1)
to avoid delays in the processing and releasing of shipments arising from the The Case
lack of SGS-CRF in relation to Joint Order No. 1-91, as amended; (2) to further
facilitate trade and provide adequate security to government revenue; and (3)
to enable the prompt collection of revenue due the government.35Simply put, This is a petition for review[1] of the Court of Appeals (CA)
the aforesaid Order provides a remedy for importers or consignees who have Decision[2] dated 20 June 2003 and Resolution dated 8 October 2003 in
failed to undergo their shipments to pre-shipment inspections under the CISS CA-G.R. SP No. 74989. The CA dismissed the petition for certiorari and
which arrived in the country and entered in a customs house without the prohibition[3] with prayer for temporary restraining order, preliminary or
permanent injunction filed by Subic Bay Metropolitan Authority (SBMA)
requisite CRF. More importantly, Part V(1), Step 5 of CMO No. 9-95 clearly
against Judge Ramon S. Caguioa of the Regional Trial Court (RTC) of Olongapo
states that the processing of the SGS-CRF by the SGS affiliate in the country of
City, Branch 74, and Merlino E. Rodriguez and Wira International Trading
exportation shall be deemed "as if inspection has taken place" and that the
Corporation (WIRA), both represented by Hilda Bacani. The CA also affirmed
issuance of the SGS-CRF shall be done by SGS-Manila Liaison Office. Verily, it the Orders dated 21 November 2002 and 27 November 2002 issued by the
was proper for the CTA and CA to rule that the subsequent issuance of the CRF RTC.
over respondent’s subject shipment pursuant to the provisions of CMO No.
9-95 substantially complied and satisfied the mandatory inspection and
corresponding CRF required under paragraph 12 of Joint Order No, 1-91. The Antecedent Facts
Therefore, the subsequent issuance of the CRF on 18 January 1996 cleared the
shipment from the alleged automatic seizure and 20% penalty imposable
 The factual and procedural antecedents of this case, as culled from
the records, are as follows: 2nd Indorsement
30 October 2001
On 29 September 2001, a cargo shipment described as agricultural product
and valued at US$6,000 arrived at the Port of Subic, Subic Bay Freeport Returned to the District Collector of Customs, Port of Subic,
Zone.[4] On the basis of its declared value, the shipment was assessed the within (sic) Import Entry No. C 2550-01 covering the
customs duties and taxes totaling P57,101 which were paid by respondent
shipment of 2,000 bags Thai Rice 25% broken consigned to
WIRA, the shipments consignee.[5]
WIRA INTL TRADING CORPORATION (METRO STAR RICE MILL)
ex MV Resolution V0139 with NFA Import Permit IP SN 000032
On 23 October 2001, Raval Manalas, Acting COO III of the Bureau of Customs, and IP SN 000033 both dated on 13 September 2001 duly
Port of Subic (BOC Subic Port), issued a Memorandum addressed to the BOC issued by the Administrator, National Food Authority.
Subic Port District Collector, stating that upon examination, the subject
shipment was found to contain rice. The Memorandum further stated as Accordingly, the same may be released subject to
follows: that the importer claimed there was a misshipment since it also had a payment of duties and taxes based on an upgraded
pending order for rice; that the warehousing entry was amended to reflect the
value as provided for by the National Food Authority at
change in description from agricultural product to rice; that the shipment, as a
$153.00/MT and compliance with all existing rules and
warehoused cargo inside the freeport zone, was duty and tax free, and was not
recommended for any imposition of penalty and surcharge; that the regulations.
consumption entry was changed to reflect a shipment of rice; and that the
consumption entry, together with supporting documents belatedly received by Further, ensure cancellation of NFA Import Permit IP SN
the importer, was submitted to the bank although not yet filed with the BOC.[6] 000032 and IP SN 000033, to prevent the same from being
recycled.
On 24 October 2001, Hilda Bacani (respondents authorized representative)
wrote BOC Subic Port District Collector Billy Bibit, claiming that she was the Report to this office your compliance of herein directives.
representative of Metro Star Rice Mill (Metro Star), the importer of the subject
cargo. She stated that there was a misshipment of cargo which actually Be guided accordingly.
contained rice, and that Metro Star is an authorized importer of rice as
provided in the permits issued by the National Food Authority (NFA). Bacani
(Sgd.) Titus Villanueva, CESO 1
requested that the misshipment be upgraded from agricultural product to a
Commissioner
shipment of rice, and at the same time manifested willingness to pay the
appropriate duties and taxes.[7] The following day, or on 25 October 2001, the
BOC issued Hold OrderNo. 14/C1/2001 1025-101, directing BOC Subic Port In accordance with the shipment upgrade, respondent WIRA paid on 28
officers to (1) hold the delivery of the shipment, and (2) to cause its transfer
to the security warehouse.[8] November 2001 a further amount of P206,212 as customs duties and

taxes.[11] On 4 December 2001, Fertony G. Marcelo, Officer-in-Charge of the

On 26 October 2001, respondent WIRA, as the consignee of the shipment,
Cash Division of BOC Subic Port issued a certification/letter addressed to Mr.
paid the amount of P259,874 to the BOC representing additional duties and
Augusto Canlas, General Manager of the Seaport Department, stating thus:[12]
taxes for the upgraded shipment.[9]
This is to certify that the undersigned Collecting Officer
validate[d] a revenue of Php 523,187.00 from
On 30 October 2001, BOC Commissioner Titus Villanueva issued a directive above-mentioned importation[13] covered by O.R. Numbers
8083840 dated October 23, 2001, 8084068 dated October 26,
stating as follows:[10] 2001 and 8165208 dated November 28, 2001,
 respectively. And a Gate Pass was issued on December Customs territory and authority within the Subic Bay Freeport
3, 2001 with signature of Mr. Percito V. Lozada, Chief Zone (SBFZ), Olongapo City, and to withdraw and release
Assessment in behalf of the District Collector Billy C. from said CCA warehouse the rice importation of plaintiffs and
Bibit. to take and possess the said imported rice consisting of 2,000
bags; and from interfering in any manner whatsoever with
(Sgd.) Fertoni G. Marcelo plaintiffs/petitioners rights and possession over the aforesaid
Officer-in-charge, Cash Division imported rice. On the same day also, June 13, 2002, the raffle
(Collecting Officer) of the case was set on June 18, 2002 at 8:30 in the morning.

Noted: 3. Copy of the complaint with summons together with

(Sgd. For) Coll. Billy C. Bibit aforesaid Temporary Restraining Order (TRO) was served by
Sheriff Leopoldo Rabanes and Leandro Madarang of the Office
Despite the above certification/letter, petitioner SBMA, through Seaport of the Clerk of Court of the Regional Trial Court, Olongapo City,
Department General Manager Augusto Canlas, refused to allow the release of upon the defendants/respondents on the same day, June 13,
the rice shipment. Hence, on 11 June 2002, respondents filed with the RTC of 2002, at around 3:40 in the afternoon as shown by the
Olongapo City, a complaint for Injunction and Damages with prayer for Sheriff's return of service (Exh. A-3 and Exh. B-1) typed and
issuance of Writ of Preliminary Prohibitory and Mandatory Injunction and/or found in the same pleadings.
Temporary Restraining Order against petitioner SBMA and Augusto L. Canlas,
and the case was docketed as Civil Case No. 261-0-2002.
4. The following day, on June 14, 2002, the same Sheriffs
went back to defendants/respondents' office to determine
The succeeding events were summarized by the trial court and reproduced by
the Court of Appeals, as follows:[14] whether or not the TRO issued by Branch 72 and served by
them was followed. They were however, met by
defendants/respondents Attys. Abella and Katalbas, in the
1. On June 11, 2002, a complaint for Injunction and Damages office of defendant/respondent Canlas, who after much
with prayer for issuance of Writ of Preliminary Prohibitory and discussion, refused to honor the TRO issued by Branch 72
Mandatory Injunction and/or Temporary Restraining Order alleging among other[s], that said Order was illegal and
was filed by the plaintiff/petitioners Mernilo E. Rodriguez, therefore, will not be followed by the
doing business under the name and style Metro Star Rice Mill, defendants/respondents.
represented by Attorney-in-fact Hilda M. Bacani, and WIRA
International Trading, Inc. likewise represented by Hilda M. 5. Unsuccessful in their efforts, the Sheriffs of this Court
Bacani as authorized representative, against Subic Bay prepared and filed their report dated June 17, 2002 outlining
Metropolitan Authority (SBMA) and Augusto L. Canlas, in his therein what transpired on June 14, 2002 and the
personal and official capacity as General Manager of the circumstances surrounding the refusal by
Seaport Department of said SBMA. The complaint was defendants/respondents to honor the TRO issued by Branch
docketed as Civil Case No. 261-0-[2002]. 72-RTC, Olongapo City (Exh. C). On the same day also, June
17, 2002, plaintiffs/petitioners-movants filed in the instant
2. On June 13, 2002, an Order was issued by the Executive case a verified indirect contempt charge alleging therein that
Judge of the Regional Trial Court of Olongapo City, Branch 72, because of the defiance exhibited by the
where plaintiffs/petitioners application for injunctive relief defendants/respondents[,] specifically Augusto L. Canlas,
was granted. Said order restrained the Attys. Francisco A. Abella, Jr. and Rizal V. Katalbas. Jr.[,] in
defendants/respondents for seventy-two (72) hours, from not honoring the court's TRO, they prayed that said
interfering with plaintiffs/petitioners right to enter the defendants/respondents, after due notice and hearing, be
premises of the CCA compound located within the Bureau of declared and adjudged guilty of indirect contempt committed
against the court for having directly failed and refused to leg to stand on and as such, defendants/respondents had the
comply with the TRO dated June 13, 2002, and that they be right to refuse to comply with the subject TRO in this case.
punished with imprisonment and/or fine in accordance with
Rule 71 of the 1997 Rules of Civil Procedure. 11. With the said formal offer of exhibits filed by the
defendants/respondents, the indirect contempt case was
6. On June 18, 2002, the case was raffled to Branch 74 of considered submitted for decision by this court.
herein court.[15]

7. On June 24, 2002, a comment and/or opposition to the

In addition to the foregoing, on 19 July 2002, petitioner SBMA and Augusto
verified indirect contempt charge was filed by the
Canlas filed their Answer to the Complaint for Injunction and Damages with
defendants/respondents alleging therein that they cannot be Counterclaim.[16] On 1 August 2002, petitioner SBMA, Augusto Canlas,
cited for contempt of court because they had legal basis to Francisco A. Abella, Jr. and Rizal V. Katalbas, Jr. filed a Consolidated Motion to
refuse to honor the TRO. Dismiss which sought the dismissal of (1) Civil Case No. 261-0-2002
(Complaint for Injunction and Damages) and (2) Civil Case No. 262-0-2002
8. Trial was conducted by the court in the indirect contempt (Petition for Indirect Contempt), alleging the existence of a Warrant of Seizure
charge on July 12, 2002 as per the courts Order of even and Detention, dated 22 May 2002, issued against the subject rice
date. Plaintiffs/petitioners presented Sheriff Leopoldo shipment.[17]
Rabanes who testified on direct examination. During the
August 20, 2002 hearing, Sheriff Rabanes was On 21 November 2002, the RTC issued an Order on the indirect contempt case,
cross-examined. Thereafter, the testimony of his co-Sheriff stating thus:
Leandro Madarang was stipulated upon the parties
WHEREFORE, foregoing considered, judgment is hereby
considering that his testimony would only corroborate in all
rendered finding all of the defendants/respondents guilty of
principal points the testimony of Sheriff Rabanes.
indirect contempt of court. Atty. Francisco A. Abella, Jr. is
sentenced to suffer the penalty of imprisonment of ten (10)
9. On that same hearing also[,] plaintiffs/petitioners formally days and fined the amount of P10,000.00 Atty. Rizal V.
offered their evidence and rested. Defendants/respondents[,] Katalbas, Jr. is sentenced to pay a fine
however, in the meantime had earlier filed a motion on August of P10,000.00. Augusto L. Canlas is sentenced to pay a fine
1, 2002[,] asking leave of court to file a motion to dismiss with of P5,000.00. Subsidiary imprisonment in case of insolvency
attached Motion to Dismiss and in the said August 20, 2002 for all.
hearing, defendants/respondents further manifested that
they were adopting their legal arguments marshalled in the Let a warrant of arrest issue against Atty. Francisco A. Abella,
said motion to dismiss insofar as the indirect contempt charge Jr. The Clerk of Court, Atty. John V. Aquino, of the Regional
was concerned. Trial Court, Olongapo City is directed to collect the
corresponding fine from each of the respondents immediately
upon receipt of this order and to report the same to the court.
10. Thereafter, on August 29, 2002, defendants/respondents
filed a manifestation with formal offer of evidence in the
SO ORDERED.[18]
indirect contempt case essentially alleging that it is the
Bureau of Customs that has jurisdiction over this case in view On 27 November 2002, the RTC issued another Order considering the pending
of a Warrant of Seizure and Detention case filed against the incidents in the injunction case. The RTC held that there should be prior
plaintiff/petitioners and denominated as Seizure Identification determination by the BOC on whether the 2,000 bags of imported rice were
No. 200[2]-10. Therefore, since it is the Bureau of Customs smuggled, and thus issued the following order:
that has jurisdiction, the indirect contempt case has no legal
 WHEREFORE, the Bureau of Customs, Customs District XIII,
Port of Subic, Olongapo City through Atty. Titus A. Sangil,
Chief, Law Division and Deputy Collector for Administration is The issue for resolution in this case is whether the CA erred in affirming the
hereby directed to resolve Seizure Identification Case No.
2002-10 and submit to the court its resolution therewith, RTC Orders dated 21 November 2002 and 27 November 2002.
within fifteen (15) days from receipt of this order. Meantime,
the proceedings in this case are suspended until the court is in
receipt of the resolution of the Bureau of Customs. The Courts Ruling

Furnish a copy of this order to Atty. Titus A. Sangil at his

abovecited office address. We find the appeal meritorious.

SO ORDERED.[19] As a rule, actions for injunction and damages lie within the jurisdiction of the
RTC pursuant to Section 19 of Batas Pambansa Blg. 129 (BP 129), otherwise
The Court of Appeals Ruling known as the Judiciary Reorganization Act of 1980, as amended by Republic
Act (RA) No. 7691.[22]
An action for injunction is a suit which has for its purpose the enjoinment of the
Petitioner filed with the CA a Petition for Certiorari and Prohibition with prayer defendant, perpetually or for a particular time, from the commission or
continuance of a specific act, or his compulsion to continue performance of a
for Temporary Restraining Order and Preliminary or Permanent Injunction particular act.[23] It has an independent existence, and is distinct from the
seeking to nullify and set aside the RTC Orders dated 21 November 2002 and ancillary remedy of preliminary injunction which cannot exist except only as a
part or an incident of an independent action or proceeding.[24] In an action for
27 November 2002. On 20 June 2003, the CA rendered a Decision dismissing injunction, the auxiliary remedy of preliminary injunction, prohibitory or
mandatory, may issue.[25]
the petition for lack of merit and affirming the Orders issued by the RTC. We Until the propriety of granting an injunction, temporary or perpetual, is
quote the dispositive portion of the CA decision below. determined, the court (i.e., the RTC in this case) may issue a temporary
restraining order. [26]A TRO is an interlocutory order or writ issued by the court
as a restraint on the defendant until the propriety of granting an injunction can
WHEREFORE, premises considered, the be determined, thus going no further in its operation than to preserve the
assailed Orders dated November 21, 2002 and November 27, status quo until that determination.[27] A TRO is not intended to operate as an
2002 are hereby AFFIRMED in toto and the present petition is injunction pendente lite, and should not in effect determine the issues involved
hereby DENIED DUE COURSE and accordingly DISMISSED for before the parties can have their day in court.[28]
lack of merit.
Petitioner alleges that the RTC of Olongapo City has no jurisdiction over the
SO ORDERED.[20] action for injunction and damages filed by respondents on 11 June 2002 as
said action is within the exclusive original jurisdiction of the BOC pursuant to
Section 602 of Republic Act No. 1937, otherwise known as the Tariff and
Petitioners Motion for Reconsideration was denied by the CA in its Resolution Customs Code of the Philippines, as amended.Section 602 provides, thus:

of 8 October 2003.[21]
Sec. 602. Functions of the Bureau.- The general duties,
Hence, this appeal. powers and jurisdiction of the bureau shall include:
xxx
g. Exercise exclusive original jurisdiction over seizure
The Issue and forfeiture cases under the tariff and customs laws.
 BOC Subic Port Cash Division issued a certification/letter addressed to
Augusto Canlas, the General Manager of the Subic Seaport Department,
Petitioner contends that the imported 2,000 bags of rice were in the actual stating that respondents have already paid the customs taxes and duties due
physical control and possession of the BOC as early as 25 October 2001, by on the shipment, and a Gate Pass was issued on December 3, 2001 with
virtue of the BOC Subic Port Hold Order of even date, and of the BOC Warrant signature of Mr. Percito V. Lozada, Chief Assessment (sic) in behalf of the
of Seizure and Detention dated 22 May 2002. As such, the BOC had acquired District Collector Billy C. Bibit.[35] Thus, the Hold Order previously issued by
exclusive original jurisdiction over the subject shipment, to the exclusion of the BOC[36] had been superseded, and made ineffective, by the succeeding
the RTC. BOC issuances.

We agree with petitioner. However, BOC Subic Port District Collector Felipe A. Bartolome subsequently
issued a Warrant of Seizure and Detention dated 22 May 2002 against the
It is well settled that the Collector of Customs has exclusive jurisdiction over subject rice shipment.The warrant was issued upon recommendation made
seizure and forfeiture proceedings, and regular courts cannot interfere with his by Atty. Baltazar Morales of the Customs Intelligence and Investigation
exercise thereof or stifle or put it at naught.[29] The Collector of Customs Service (CIIS) on 29 April 2002.[37] With the issuance of the warrant of
sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear seizure and detention, exclusive jurisdiction over the subject shipment was
and determine all questions touching on the seizure and forfeiture of dutiable regained by the BOC.
goods.[30] Regional trial courts are devoid of any competence to pass upon the
validity or regularity of seizure and forfeiture proceedings conducted by the We note that the appellate court found suspicious the existence of the warrant
BOC and to enjoin or otherwise interfere with these proceedings.[31] Regional of seizure and detention at the time of filing of the injunction and damages
trial courts are precluded from assuming cognizance over such matters even case with the RTC by respondents. The CA pointed out that petitioner did not
through petitions for certiorari, prohibition or mandamus.[32] mention the existence of the warrant in its Answer to the Complaint for
Injunction and Damages, filed on 19 July 2002, and only mentioned the
warrant in its Consolidated Motion to Dismiss [the Complaint for Injunction and
Verily, the rule is that from the moment imported goods are actually in Damages, and the Petition for Indirect Contempt], filed on 1 August
the possession or control of the Customs authorities, even if no warrant for 2002.[38] We do not agree with the appellate court. Petitioner's apparent
seizure or detention had previously been issued by the Collector of Customs in neglect to mention the warrant of seizure and detention in its Answer is
connection with the seizure and forfeiture proceedings, the BOC acquires insufficient to cast doubt on the existence of said warrant.
exclusive jurisdiction over such imported goods for the purpose of enforcing
the customs laws, subject to appeal to the Court of Tax Appeals whose Respondents filed a case for indirect contempt against Augusto L. Canlas, Atty.
decisions are appealable to this Court.[33] As we have clarified Francisco A. Abella, Jr., and Atty. Rizal V. Katalbas, Jr. for allegedly defying the
in Commissioner of Customs v. Makasiar, [34] the rule that RTCs have no TRO issued by the RTC in connection with the complaint for injunction and
review powers over such proceedings is anchored upon the policy of placing no damages previously filed by respondents.
unnecessary hindrance on the government's drive, not only to prevent
smuggling and other frauds upon Customs, but more importantly, to render Contempt constitutes disobedience to the court by setting up an opposition to
effective and efficient the collection of import and export duties due the State, its authority, justice and dignity.[39] It signifies not only a willful disregard or
which enables the government to carry out the functions it has been instituted disobedience of the court's orders but such conduct as tends to bring the
to perform. authority of the court and the administration of law into disrepute or in some
manner to impede the due administration of justice.[40] There are two kinds of
Based on the records of this case, the BOC Subic Port issued a Hold Order contempt punishable by law: direct contempt and indirect contempt. Direct
against the subject rice shipment on 25 October 2001. However, on 30 contempt is committed when a person is guilty of misbehavior in the presence
October 2001, BOC Commissioner Titus Villanueva issued a directive to the of or so near a court as to obstruct or interrupt the proceedings before the
BOC District Collector stating that the shipment may be released subject to same, including disrespect toward the court, offensive personalities toward
payment of duties and taxes based on an upgraded value x x x and others, or refusal to be sworn or to answer as a witness, or to subscribe an
compliance with all existing rules and regulations. Accordingly, respondents affidavit or deposition when lawfully required to do so.[41] Indirect contempt or
made additional payments of customs duties and taxes for the upgraded constructive contempt is that which is committed out of the presence of the
shipment. Consequently, on 4 December 2001, the Officer-in-Charge of the court.[42]
 2002 which found the SBMA officers guilty of indirect contempt for not
Section 3 of Rule 71 of the Revised Rules of Civil Procedure includes, among complying with the RTC's TRO should be invalidated.
the grounds for filing a case for indirect contempt, the following:
Finally, the RTC stated in its Order dated 27 November 2002 that based on the
records, there is a pending case with the Bureau of Customs District XIII, Port
Section 3. Indirect contempt to be punished after charge and of Subic, Olongapo City, identified and docketed as Seizure Identification No.
hearing. 2002-10 and involving the same 2,000 bags of imported rice that is also the
subject matter of the case herein. The existence and pendency of said case
After charge in writing has been filed, and an before the Bureau of Customs have in fact been admitted by the parties.[43]
opportunity given to the accused to be heard by himself or
counsel, a person guilty of any of the following acts may be The RTC then proceeded to order the suspension of court proceedings, and
punished for contempt: directed the BOC Subic Port Chief of the Law Division and Deputy Collector for
Administration, Atty. Titus Sangil, to resolve the seizure case and submit to
xxx
the RTC its resolution within fifteen (15) days from receipt of the court
(b) Disobedience of or resistance to a lawful writ, process, order. We quote the dispositive portion of the RTC Order dated 27 November
order, judgment or command of a court, or injunction granted 2002, to wit:
by a court or judge, x x x
(c) Any abuse of or any unlawful interference with WHEREFORE, the Bureau of Customs, Customs District XIII,
the process or proceedings of a court not constituting direct Port of Subic, Olongapo City through Atty. Titus A. Sangil,
contempt under Section 1 of this rule; Chief, Law Division and Deputy Collector for Administration is
hereby directed to resolve Seizure Identification Case No.
(d) Any improper conduct tending, directly or 2002-10 and submit to the court its resolution therewith,
indirectly, to impede, obstruct or degrade the administration within fifteen (15) days from receipt of this order. Meantime,
of justice; the proceedings in this case are suspended until the court is in
xxx receipt of the resolution of the Bureau of Customs.

Furnish a copy of this order to Atty. Titus A. Sangil at his

When the TRO issued by the RTC was served upon the SBMA officers on 13 abovecited office address.[44]
June 2002, there was already an existing warrant of seizure and detention
(dated 22 May 2002) issued by the BOC against the subject rice
shipment. Thus, as far as the SBMA officers were concerned, exclusive We find the issuance of the RTC Order dated 27 November 2002 improper. The
jurisdiction over the subject shipment remained with the BOC, and the RTC pendency of the BOC seizure proceedings which was made known to the RTC
had no jurisdiction over cases involving said shipment. Consequently, the through petitioner's consolidated motion to dismiss should have prompted
SBMA officers refused to comply with the TRO issued by the RTC. said court to dismiss the case before it. As previously discussed, the BOC has
exclusive original jurisdiction over seizure cases under Section 602 of the
Considering the foregoing circumstances, we believe that the SBMA officers Tariff and Customs Code. The rule that the RTC must defer to the exclusive
may be considered to have acted in good faith when they refused to follow the original jurisdiction of the BOC in cases involving seizure and forfeiture of
TRO issued by the RTC. The SBMA officers' refusal to follow the court order goods is absolute. Thus, the RTC had no jurisdiction to issue its Order dated 27
was not contumacious but due to the honest belief that jurisdiction over the November 2002.
subject shipment remained with the BOC because of the existing warrant of
seizure and detention against said shipment. Accordingly, these SBMA officers
WHEREFORE, we GRANT the petition. We REVERSE the Court of Appeals
should not be held accountable for their acts which were done in good faith and
Decision dated 20 June 2003 and Resolution dated 8 October 2003 in CA-G.R.
not without legal basis. Thus, we hold that the RTC Order dated 21 November
SP No. 74989.We declare VOID the Regional Trial Court Orders dated 21
November 2002 and 27 November 2002.
SO ORDERED. Subic Free Port on August 20, 2001 with the inward foreign manifest indicating
the final destinations of the shipment. However, the Sea Port Department of
the Subic Bay Metropolitan Authority (SBMA) allowed the vessel to berth only
22 days later, or on September 11, 2001. SBMA advised the vessel agent to
6. G.R. No. 158150 September 10, 2014 secure from the National Food Authority (NFA) an amendment of the import
permit issued in favor of R&C Agro Trade to change the discharging port from
AGRIEX CO., LTD., Petitioner, the Port of Cebu to the Port of Subic.
vs.
HON. TITUS B. VILLANUEVA, Commissioner, Bureau of Customs (now Due to the delay in the berthing and unloading of the cargo from the vessel,
replaced by HON. ANTONIO M. BERNARDO), and HON. BILLY C. BIBIT, the petitioner, through its agent in Subic, applied for a vessel exit clearance to
Collector of Customs, Port of Subic (now replaced by HON. EMELITO allow the MV Hung Yen to sail for the Labuan Free Port in Malaysia. On August
VILLARUZ), Respondents. 24, 2001, the Bureau of Customs issued a Clearance of Vessel to a Foreign Port,
granting the petitioner’s request to allow the MV Hung Yen and cargo to exit for
DECISION Malaysia.4 Despite the issuance of the clearance, the MV Hung Yen did not set
sail for the Labuan Free Port on August 26, 2001.

BERSAMIN, J.:
On September 10, 2001, the petitioner requested permission from the Bureau
of Customs to unload the entire shipment of 200,000 bags of Thai white rice
The Court affirms the exclusive jurisdiction of the Bureau of Customs over
because the MV Hung Yen must return to Vietnam.5 Upon the
seizure cases within the Subic Freeport Zone.
recommendation of Atty. James F. Enriquez and Atty. Clemente P. Heraldo, as
indicated in their After Mission Report dated September 4, 2001,6 respondent
The Case Commissioner Titus B. Villanueva issued his 1st Indorsement on September
11, 2001 directing respondent Collector of Customs Billy C. Bibit to issue a
This appeal by petition for review on certiorari is brought by Agriex Co., Ltd. to Warrant of Seizure and Detention (WSD) against the 20,000 bags of Thai
reverse the decision promulgated on November 18, 2002 in CA-G .R. CV No. white rice consigned to R&C Agro Trade.7
67593,1 whereby the Court of Appeals (CA) dismissed its petition for certiorari
and prohibition to nullify and set aside the Notice of Sale dated October 18, Accordingly, Collector Bibit issued WSD No. 2001-13 dated September 12,
2001 issued by respondent Billy C. Bibit as the Collector of Customs in the Port 2001 against the 20,000 bags of Thai white rice consigned to R&C Agro Trade
of Subic. notwithstanding that no bag of rice had yet been unloaded from the vessel.8

Antecedents After the unloading, transfer and storage of the rice shipment at SBMA’s
warehouse, Collector Bibit issued amended WSDs on September 27, 2001 to
On July 19, 2001, the petitioner, a foreign corporation whose principal office cover the MV Hung Yen and the remaining 180,000 bags of Thai white rice
was in Bangkok, Thailand, entered into a contract of sale with PT. Gloria Mitra intended for transshipment.9
Niagatama International of Surabaya, Indonesia (PT. Gloria Mitra) for 180,000
bags (or 9,000 metric tons) of Thai white rice.2 Later on, it entered into On October 4, 2001, the petitioner filed with the Bureau of Customs in the Port
another contract of sale with R&C Agro Trade of Cebu City (R&C Agro Trade) of Subic an Urgent Motion to Quash Warrant of Seizure, inclusive of WSD No.
for 20,000 bags of Thai white rice. On July 27, 2001, it chartered the vessel MV 2001-13 (20,000 bags consigned to R&C Agro Trade), WSD No. 2001-13A (MV
Hung Yen to transport the 200,000 bags of Thai white rice to the Subic Free Hung Yen) and WSD No. 2001-13B (180,000 bags for transshipment).10
Port for transshipment to their designated consignees in the Fiji Islands and
Indonesia (for the 180,000 bags), and in Cebu City (for the 20,000 bags).3 The
On October 26, 2001, Collector Bibit quashed WSD No. 2001-13A over the MV
MV Hung Yen left Bangkok, Thailand on August 15, 2001 and arrived at the
Hung Yen on the ground thatthe vessel was not chartered or leased.11
Pending hearing of the seizure proceedings vis-à-vis the rice shipments, release ofthe 20,000 bags of Thai rice to claimants, R&C AGRO TRADE or to its
Collector Bibit issued a Notice of Sale on October 18, 2001, setting therein the duly authorized representative, upon payment of the settlement value of
auction sale of the 200,000 bags of Thai white rice on November 22, 2001 and EIGHT MILLION FOUR HUNDRED THOUSAND PESOS (Php8,400,000.00) and
November 23, 2001.12 AFFIRMING the FORFEITURE under S.I. No. 2001-13-B of the 180,000 bags of
Thai rice consigned to different non-existing consignees in Indonesia and the
The petitioner filed a Manifestation and Urgent Motion for Reconsideration on denial of ownership by B.I. Naidu and Sons Ltd. of Fiji Island.
October 19, 2001, but Collector Bibit did not act on the motion.13
Let copies of this Order be furnished to all parties and offices concerned for
Consequently, the petitioner instituted the petition for certiorariand information and guidance.
prohibition in the CA on November 12,2001 (with prayer for the issuance of a
temporary restraining order and/or writ of injunction), alleging grave abuse of SO ORDERED.21
discretion on the part of the respondents for issuing the October 18, 2001
Notice of Sale notwithstanding thatthey had no jurisdiction over the 180,000 On February 20, 2002, the petitioner filed in the CA its Comment on the
bags of Thai white rice intended for transshipment to other countries.14 respondents’ Manifestation and Motion dated December 3, 2001, arguing that
the issue concerning the October 18, 2001 Notice of Sale had not been
Accordingly, Commissioner Villanueva issued his memorandum dated rendered moot and academicbut merely suspended; that it would move for the
November 19, 2001 directing Collector Bibit not to proceed with the scheduled reconsideration of the February 4, 2002 Consolidated Order of Commissioner
auction of the 180,000 bags ofThai white rice until further orders from his Villanueva; and that shouldits motion for reconsideration be denied, it would
office.15 elevate the issues relative to the injunctive relief to the Court of Tax Appeals
(CTA) by petition for certiorari.22
On November 22, 2001, the CA issued a temporary restraining order enjoining
the respondents to desistfrom holding the scheduled public auction.16 On April 2, 2002, the CA denied the respondents’ Manifestation and Motion
dated December 3, 2001.23
The respondents did not file their Comment vis-à-vis the petition for certiorari
and prohibition. Instead, they filed a Manifestation and Motion dated On July 22, 2002, Commissioner Antonio M. Bernardo, who had meanwhile
December 3, 2001, whereby they prayed for the dismissal of the petition on succeeded Commissioner Villanueva, released the 2nd Indorsement directing
the ground of mootness due to Commissioner Villanueva’s November 19, 2001 the sale of the 180,000 bags of Thai white rice at public auction.24Accordingly,
memorandum.17 District Collector Felipe Bartolome issued a Notice of Sale scheduling the public
auction on July 29, 2002 and July 30, 2002.25 The public auction was reset to
In the resolution promulgated on April 2, 2002,18 the CA denied the August 5, 2002 and August 6, 2002, however, following the CA’s promulgation
respondents’ Manifestation and Motion dated December 3, 2001. Meanwhile, of its resolution on July 29, 2002 granting the petitioner’s motion for the
on November 14, 2001, Collector Bibit denied the motion for the quashal of the issuance of a writ of preliminary injunction.26
warrant of seizure issued against the rice shipments, and ordered their
forfeiture in favor of the Government.19 Eventually, the auction sale went onas scheduled on August 5, 2002 and
August 6, 2002, and the proceeds amounting to ₱116,640,000.00 were
The petitioner appealed the November 14, 2001 ruling by Collector Bibit to deposited in the Land Bank of the Philippines, Subic Branch, under Bureau of
Commissioner Villanueva,20 who resolved the appeal through the Customs Trust Fund II Account No. 1572100800.
Consolidated Order of February 4, 2002, disposing thusly:
Judgment of the CA
WHEREFORE, the ORDER Appealed from is hereby MODIFIED, granting the
Motion for Settlement under S.I. No. 2001-13 and accordingly ORDER the
On November 18, 2002, the CA rendered its assailed judgment on the petition decision dated November 14, 2001 by the Collector of Customs and instead
for certiorariand prohibition, viz: ordered the forfeiture of the subject bags of rice in favor of the government.

Although it is true that the Port of Subic is a free zone, being a portion of the Furthermore, on appeal to the Commissioner of Customs of the Order
Subic Special Economic Zone, and as such, it shall be operated and managed forfeiting the 180,000 bags of Thai rice seized under S.I. No. 2001-13B, the
as a separate customs territory ensuring free flow or movement of goods and same was affirmed, per Consolidated Order dated February 4, 2002.
capital within, into and exported out of the Subic Special Economic Zone under
Republic Act No. 2779 (sic), particularly Section 12 thereof, yet, when Consequently, it is not correct as claimed by the petitioner that the notice
probable cause is shown that the foreign goods are considered as contraband (auction) sale dated October 18, 2001, as well as, the subsequent notices of
or smuggled goods, the Commissioner of Customs has the primary jurisdiction auction sale are invalid because they were issued pursuant to a valid Warrant
to have the goods seized through the issuance of a warrant of seizure and of Seizure and Detention Order S.I. No. 2001-13B, dated September 27, 2001.
detention order, which is the situation obtaining in this instant case because
when public respondent Collector Billy C. Bibit as District Collector of Customs, Finally, since the jurisdiction to determine the validity or regularity of the
Port of Subic, issued an amended warrant of seizure and detention order S.I. seizure and forfeiture proceedings is lodged or vested on the Collector of
No. 2001-13-B, dated September 27, 2001 to include in the seizure Customs and then, to the Commissioner of Customs, which has already been
proceeding the subject 180,000 bags ofrice, it was done due to the information done in this case before the actual conduct of the auction sale of the subject
supplied by the Directorate General of Customs and Excise Directorate of 180,000 bags of rice, the next move that petitioner should have done is to
Prevention and Investigation of the Ministry of Finance of the Republic of appeal the Consolidated Order dated February 4, 2002 to the Court of Tax
Indonesia and the information obtained from the Director for Enforcement of Appeals and afterward, if unsatisfied, to this Court, by filing a petition for
the Fiji Revenue and Customs Authorities of Fiji Island Customs Service, that reviewunder Rule 43 of the 1997 Rules of Civil Procedure, as amended.
the alleged consignees in Indonesia are not actually existing and that B.I.
Naidu and Sons, Ltd. of Fiji Island is not engaged in the importation of rice.
WHEREFORE, foregoing premises considered, this petition, being filed
prematurely, is DENIED. SO ORDERED.27
In accordance with Section 2535 of the Tariff and Customs Code, as amended,
since the government has already complied with the two (2) conditions set
The petitioner moved for reconsideration, but the CA denied the motion on
forth therein, the burden of proof now lies upon the complainant, who in this
May 8, 2003.28 Issues
case is the petitioner, to prove otherwise.

In its petition for review, the petitioner contends that:

Moreover, contrary to the contention of the petitioner that it was denied due
process of law when the amended Warrant of Seizure and Detention Order S.I.
No. 2002-13B dated September 27, 2001 was issued, because it was done 1. THE COURT OF APPEALS ERRED IN NOT DECLARING THE SEIZURE
without giving them an opportunity to be heard and explain their side, suffice PROCEEDINGS NULL AND VOID FOR LACK OF JURISDICTION OVER
it to say that "the essence of due process is simply to be heard or as applied to PETITIONER’S RICE SHIPMENT.
administrative proceedings, to explain one’s side or an opportunity to seek
reconsideration of an action or ruling complained of " (National Police 2. THE COURT OF APPEALS ERRED IN NOT DECLARING THE RESPONDENTS TO
Commission v. Bernabe, 332 SCRA 74) and "due process does not HAVE GRAVELY ABUSED THEIR DISCRETION IN THE SALE OF PETITIONER’S
necessarilyrequire conducting an actual hearing but simply giving the party RICE SHIPMENT.
concerned due notice and affording an opportunity or right to be heard"
(Ramoran v. Jardine CMG Life Insurance Company, Inc.) which opportunity 3. THE COURT OF APPEALS ERRED IN FINDING THAT PETITIONER’S REMEDY
was given to the petitioner since it was able to file an UrgentMotion to Quash IS AN APPEAL TO THE COURT OF TAX APPEALS.29
Warrant of Seizure dated October 1, 2001 and Manifestation and Urgent
Motion for Reconsideration dated October 19, 2001 which were all denied in a
We note that a few days after the petitioner instituted the certiorari carve out a portion of our terrestrial domain as well as our adjacent waters and
proceedings in the CA on November12, 2001, Commissioner Villanueva say tothe world: "Well, you can set up your factories in this area that weare
countermanded Collector Bibit’s October 18, 2001 Notice of Sale through his circumscribing, and bringing your equipment and bringing your goods, you are
November 19, 2001 memorandum. Thereupon, the October 18, 2001 Notice not subject to any taxes and duties because you are not within the customs
of Sale could no longer be enforced, thereby rendering the resolution of the jurisdiction of the Republic of the Philippines, whether you store the goods or
validity of the October 18, 2001 Notice of Sale moot and academic. A moot and only for purposes of transshipment or whether you make theminto finished
academic case is one thatceases to present a justiciable controversy by virtue products again to be reexported to other lands."
of supervening events, so that a declaration thereon would be of no practical
use or value.30 xxxx

As matters stand, WSD No. 2001-13A issued against the MV Hung Yen was My understanding of a "free port" is, we are in effect carving out a part of our
quashed by the October 26, 2001 order of Collector Bibit; while WSD No. territory and make it as if it were foreign territory for purposes of our customs
2001-13 issued against the 20,000 bags of rice consigned to R&C Agro Trade laws, and that people can come, bring their goods, store them there and bring
had been effectively lifted by Commissioner Villanueva’s Consolidated Order them out again, as long as they do not come into the domestic commerce of
dated February 4, 2002 following R&C Agro Trade’s payment of the settlement the Republic.
value of ₱8,400,000.00.
We do not really care whether these goods are stored here. The only thing that
The pending seizure proceedings under WSD No. 2001-13B of the 180,000 we care is for our people to have an employment because of the entry of these
bags of rice remained, and became the basis for the issuance of the goods that are being discharged, warehoused and reloaded into the ships so
subsequent notice of sale by Collector Bartolome. Consequently, the that theycan be exported. That will generate employment for us. For as long as
controversy on the jurisdiction of the Bureau of Customs over the seizure and that is done, we are saying, in effect, that we have the least contact with our
forfeiture of goods and articles entering the free port area lingers and requires tariff and customs laws and our tax laws. Therefore, we consider these goods
the Court’s intervention. as outside of the customs jurisdiction of the Republic of the Philippines as yet,
until we draw them from this territory and bring them inside our
Ruling domesticcommerce. In which case, they have to pass through our customs
gate. I thought we are carving out this entire area and convert it into this kind
The appeal lacks merit. of concept.31

The Subic Special Economic Zone, or the Subic Bay Freeport, was established On the basis of the concept, the petitioner claims that the Collector of Customs
pursuant to Section 12 of Republic Act No. 7227 (The Bases Conversion and had no jurisdiction to issue WSD No. 2001-13B and the October 18, 2001
Development Act of 1992), to be operated and managed as a special customs Notice of Sale concerning the 180,000 bags of Thai white rice, which had
territory. On the other hand, the Subic Bay Metropolitan Authority (SBMA) was entered the SBF only for transshipment to other countries.32 It insists that the
created under Section 13 of RA No. 7227 to serve "as an operating and auction sale of the 180,000 bags was null and void for failing to comply with
implementing arm of the Conversion Authority" within the SBF. Executive Order No. 272, which required presidential approval when the
amount to be generated from the sale was at least ₱50 Million;33 that the sale
The concept of a Freeport as a separate customs territory was described disregarded the memorandum of agreement between the Bureau of Customs
during Senator Enrile’s interpellations during the sponsorship of the bill that and the NFA;34 that the rice was sold at ₱785.00 per 50-kilo bag instead of
later on became RA No. 7227, to wit: ₱1,100.00, the price established by the Bureau of Agricultural Statistics; 35 and
that no notice of auction sale was sent to the NFA or its accredited dealers.36

Senator Enrile: Mr. President, I think we are talking here of sovereign concepts,
not territorial concepts. The concept that we are supposed to craft here is to In contrast, the respondents soughtthe dismissal of the petition on the ground
of lack of jurisdiction, maintaining that an appeal to the Court of Tax Appeals
(CTA) was the proper remedy to assail the decision of the Commissioner of without payment of duties and taxes, shall be subject to seizure and forfeiture
Customs, which the petitioner itself expressly recognized in its February 20, proceedings pursuant to the pertinent provisions of the Tariff and Customs
2002 Comment vis-à-vis their Manifestation and Motion dated December 3, Code and the National Internal Revenue Code of the Philippines, without
2001; and that because the petitioner did not appeal to the CTA within the prejudice toany criminal and/or administrative actions that may be instituted
prescribed period,the February 4, 2002 Consolidated Order of Commissioner against the person/persons liable/responsible therefor.
Villanueva became final and executory, and could no longer be the subject of
review in the present proceedings.37 C. Taxes and Fiscal Obligations

The Court declares that the Collector of Customs was authorized to institute xxxx
seizure proceedings and to issue WSDs in the Subic Bay Freeport, subject to
the review by the Commissioner of Customs. Accordingly, the proper remedy Sec. 60. Search, Arrest, and Seizure by Customs Officials. – Persons, baggage,
to question the order orresolution of the Commissioner of Customs was an vehicles and cargo entering or leaving the SBF are subject to search by
appeal to the CTA, not to the CA. Customs officials as a condition to enter or leave the SBF. Customs officials are
authorized to examine any merchandise held by the SBF Enterprises during
Although RA No. 7227 is silent as to the person or entity vested with the regular business hours.
authority to seize and forfeit or detain goods and articles entering the Subic
Bay Freeport, the implementing rules and regulations (IRR) of RA No. 7227 Customs officers may seize any article found during a Customs search upon
contained the following provisions, to wit: entering or leaving the SBF to be in violation of any provision of the customs
laws for which a seizure is authorized, and such seizure shall be disposed
Sec. 11. Responsibilities of the SBMA. – Other than the powers and functions ofaccording to the customs laws. Articles which are prohibited or excluded
prescribed in Section 10 of these Rules, the SBMA shall have the following from the SBF under the rules and regulations of the SBMA which are found by
responsibilities: the Customs officials during an audit, examination or check within the SBF
may be seized by them and turned over to the SBMA for disposition.
xxxx
The SBMA may secure the assistance of and/or coordinate with Customs
f. Consistent with the Constitution, the SBMA shall have the following powers officers to arrest persons in the SBF for violations of the customs laws for
to enforce the law and these Rules in the SBF: which arrest is authorized concerning articles in the Customs Territory
destined to the SBF or articles which have been removed from the SBF to the
xxxx Customs Territory. (Bold underscoring supplied for emphasis)

(4) to seize articles, substances, merchandise and records considered to be in Customs Administrative Order No. 4-93 (CAO 4-93), also known as the Rules
violation of the law and these Rules, and to provide for their return to the and Regulations for Customs Operations in the Subic Special Economic and
enterprise or person from whom they were seized, or their forfeiture to the Freeport Zone, similarly provides the following:
SBMA; x x x
CHAPTER II. GENERAL PROVISIONS
B. Transactions with the Customs Territory
xxxx
xxxx
B. AUDIT, SEARCH, SEIZURE AND ARREST IN ZONE
Sec. 52. Seizure of Foreign Articles. – Foreign articles withdrawn transported
or taken in commercialquantities from the SBF to the Customs Territory xxxx
3. SEIZURE We would like to see Subic area converted into a little Hong Kong, Mr.
President, where there is a hub of free port and free entry, free duties and
Any prohibited or excluded articles found upon search, or through any activities to a maximum spur generation of investment and jobs.
examination, audit or check of articles in the Zone by Customs may be seized
by Customs for violations of Tariff and Customs Code of the Philippines as While the investor is reluctant to come in the Philippines, as a rule, because of
amended and disposed of in accordance with law.38 red tape and perceived delays, we envision this special economic zone to be an
area where there will be minimum government interference.
Under these statutory provisions, both the SBMA and the Bureau of Customs
have the power to seize and forfeit goods or articles entering the Subic Bay The initial outlay may not only come from the Government or the Authority as
Freeport, except that SBMA’sauthority to seize and forfeit goods or articles envisioned here, but from them themselves, because they would be
entering the Subic Bay Freeport has been limited only to cases involving encouraged to invest not only for the land but also for the buildings and
violations of RA No. 7227 or its IRR. There is no question therefore, that the factories. As long as they are convinced that in such an area they can do
authority of the Bureau of Customs is larger in scope because it covers cases business and reap reasonable profits, then many from other parts, both local
concerning violations of the customs laws. and foreign, would invest, Mr. President.

The authority of the Bureau of Customs to seize and forfeit goods and articles Yet, the treatment of the Subic Bay Freeport as a separate customs territory
entering the Subic Bay Freeport does not contravene the nature of the Subic cannot completely divest the Government of its right to intervene in the
Bay Freeport as a separatecustoms authority. Indeed, the investors can operations and management of the Subic Bay Freeport, especially when
generally and freely engage in any kind of business as well as import into and patent violations of the customs and tax laws are discovered. After all, Section
export out goods with minimum interference from the Government. 39 The 602 of the Tariff and Customs Code vests exclusive original jurisdiction in the
Court has thus observed in Executive Secretary v. Southwing Heavy Industries, Bureau of Customs over seizure and forfeiture cases in the enforcement of the
Inc.40: tariff and customs laws.

The Freeport was designed to ensure free flow or movement of goods and In this case, an examination of the shipment by the customs officials pursuant
capital within a portion of the Philippine territory inorder to attract investors to to Mission Order No. 06-2001 initially revealed no cause to hold the release of
invest their capitalin a business climate with the least governmental the 180,000 bags of rice. In their September 4, 2001 After Mission Report,
intervention. The concept of this zone was explained by Senator Guingona in Atty. Enriquez and Atty. Heraldo pertinently stated:
this wise:
FINDINGS:
Senator Guingona. Mr. President,the special economic zone is successful in
many places, particularly Hong Kong, which is a free port. The difference Prescinding from the foregoing factual environment, we find no reason to hold
between a special economic zone and an industrial estate is simply expansive the departure of the 180,000 bags of rice and the vessel unless we could
in the sense that the commercial activities, including the establishment of establish the falsity ofthe transhipment manifest of this shipment, e.g. the
banks, services, financial institutions, agro-industrial activities, maybe alleged ultimate consignees are non-existing entities or if they are existing,
agriculture to a certain extent. that they did not order for the shipment thereof. x x x

This delineates the activities that would have the least of government xxxx
intervention, and the running of the affairs of the special economic zone would
be run principally by the investors themselves, similar to a housing subdivision, RECOMMENDATION:
where the subdivision owners elect their representatives to run the affairs of
the subdivision, to set the policies, to set the guidelines.
xxxx
With respect to the 180,000 bags of rice allegedly for transshipment, we 2001-13B by the Collector ofCustoms were well within the jurisdiction of the
should expeditethe verification of the ultimate consignees. Should they really Bureau of Customs.
exist and in fact ordered this shipment, we should allow the transshipment
thereof of let it remain on board the subject vessel which will transport the In Subic Bay Metropolitan Authority v. Rodriguez,45 the Court has already
same, per advise of the shipping agent, to the Free Port of Labuan Malaysia, its recognized the exclusive jurisdiction of the Bureau of Customs and its officials
next foreign fort pursuant to the clearance to be issued therefor in order to over seizure cases although the articles were within the Freeport zone,
allow the lawful departure of the vessel. Conversely, if after verification, the holding:
contrary is found, we should amend the Warrant to include the latter portion of
the shipment in question for having been imported contraryto law or at least Petitioner alleges that the RTC of Olongapo City has no jurisdiction over the
an attempt at importation in violation of law. x x x41 action for injunction and damages filed by respondents on 11 June 2002 as
said action is within the exclusive original jurisdiction of the BOC pursuant to
However, further investigation led to the discoverythat the consignees of the Section 602 ofRepublic Act No. 1937, otherwise known as the "Tariff and
180,000 bags of rice in Indonesia were non-existent, and the consignee in the Customs Code of the Philippines," as amended. Section 602 provides, thus:
Fiji Islands denied being involved in the importation of rice. These findings
were summarizedin Commissioner Villanueva’s Consolidated Order, to wit: Sec. 602. Functions of the Bureau.- The general duties, powers and
jurisdiction of the bureau shall include:
x x x The information supplied by the Directorate General of Customs and
Excise Directorate of Prevention and Investigation of the Ministry of Finance of xxxx
the Republic of Indonesia, and the information supplied by the Director for
Enforcement of the Fiji Revenue and Customs Authorities of Fiji Island
g. Exercise exclusive original jurisdiction over seizure and forfeiture cases
Customs Service, that the alleged consignees in Indonesia are not actually
under the tariff and customs laws.
existing and that B.I. Naidu and Sons Ltd. Of Fiji Island is not engaged in the
importation of rice to be a solid ground to hold the remaining shipment of
180,000 bagsof rice forfeited as charged. Moreover it should be stressed Petitioner contends that the imported 2,000 bags of rice were in the actual
thatduring the hearing on the Motion to Quash the WSD issued against the physical control and possession of the BOC as early as 25 October 2001, by
carrying vessel, the witness who is the General Manager of Overseas Vietnam virtue of the BOC Subic Port Hold Order of even date, and of the BOC Warrant
Shipping testified that that prefix BKK/PLP on the Bills of Lading stands for of Seizure and Detention dated 22 May 2002. As such, the BOC had acquired
Bangkok/Philippines. Stated differently, if indeed the 180,000 bags of rice exclusive original jurisdiction over the subject shipment, to the exclusion of
were for transhipment to Indonesia and Fiji Island, then why they were the RTC.
prefixed like the 20,000 bags of rice covered by B/L No. BKK/PLP-01? The said
Bills of Lading should have been prefixed as BKK/IND for those shipments We agree with petitioner.
bound for Indonesia and BKK/FJI for those bound for Fiji Island or in any
similar manner. Likewise, the TSN would bearus out that the witness for the It is well settled that the Collector of Customs has exclusive jurisdiction over
vessel also confirmed during his testimony that there were alterations made seizure and forfeiture proceedings, and regular courts cannot interfere with his
on the Mate’s Receipt of the cargo which were used as the basis in the exercise thereof or stifle or put it at naught. The Collector of Customs sitting in
preparation of the questionable Bills of Lading.42 seizure and forfeiture proceedings has exclusive jurisdiction to hear and
determine all questionstouching on the seizure and forfeiture of dutiable goods.
The findings constituted sufficientprobable cause, as required by Section 2535 Regional trial courts are devoid of any competence to pass upon the validity or
of the Tariff and Customs Code,43that violations of the customs laws, regularity of seizure and forfeiture proceedings conducted by the BOC and to
particularly Section 102(k) and Section 2530, (a), (f) and (l), par. 3, 4, and 5 enjoin or otherwise interfere with these proceedings. Regional trial courts are
of the Tariff and Customs Code,44 had been committed.1âwphi1 For that precluded from assuming cognizance over such matters even through
reason, the institution of the seizure proceedings and the issuance of WSD No. petitions for certiorari, prohibition or mandamus.
Verily, the rule is that fromthe moment imported goods are actually in the respectively. The decedents left real estate, cash, shares of stock and other
possession orcontrol of the Customs authorities, even if no warrant for seizure personal properties.
or detention had previously been issued by the Collector of Customs in
On April 17, 1991, Perico instituted a petition for issuance of letters of
connection with the seizure and forfeiture proceedings, the BOC acquires
administration before the Regional Trial Court of Quezon City, Branch 99, over
exclusive jurisdiction over such imported goods for the purpose of enforcing
the estate of his parents, docketed as Special Proceedings No.
the customs laws, subject to appeal to the Court of Tax Appeals whose
Q-91-8507.[1] Pending the appointment of a regular administrator, Perico
decisions are appealable to this Court. As we have clarified in Commissioner of
moved that he be appointed as special administrator. He alleged that his
Customs v. Makasiar, the rule that RTCs have no review powers oversuch
brother, Rodolfo, was gradually dissipating the assets of the estate. More
proceedings is anchored upon the policy of placing no unnecessary hindrance
particularly, Rodolfo was receiving rentals from real properties without
on the government's drive, not only to prevent smuggling and other frauds
rendering any accounting, and forcibly opening vaults belonging to their
upon Customs, but more importantly, to render effective and efficient the
deceased parents and disposing of the cash and valuables therein.
collection of import and export duties due the State, which enables the
government to carry out the functions it has been instituted to perform.46 Rodolfo moved for the dismissal of the petition on the ground of improper
venue.[2] He argued that the deceased spouses did not reside in Quezon City
The issuance of the October 18, 2001Notice of Sale was merely an incident of either during their lifetime or at the time of their deaths. The decedents actual
the seizure proceedings commenced by the Collector of Customs. residence was in Angeles City, Pampanga, where his late mother used to run
Consequently, the correctness of its issuance was necessarily subsumed to the and operate a bakery. As the health of his parents deteriorated due to old age,
determination of the propriety of the seizure proceedings, a matter that was they stayed in Rodolfos residence at 61 Scout Gandia Street, Quezon City,
within the exclusive jurisdiction ofthe Bureau of Customs.1awp++i1 In that solely for the purpose of obtaining medical treatment and
context, the proper recourse of the petitioner from the February 4, 2002 hospitalization. Rodolfo submitted documentary evidence previously executed
Consolidated Order of Commissioner Villanueva, which reviewed the by the decedents, consisting of income tax returns, voters affidavits,
November 14, 2001 action of Collector Bibit,47 was an appeal in due course to statements of assets and liabilities, real estate tax payments, motor vehicle
the CTA, in accordance with Section 7(4) of RA No. 1125, as amended, 48 in registration and passports, all indicating that their permanent residence was in
relation to Section 2402 of the Tariff and Customs Code,49 within 30 days after Angeles City, Pampanga.
the receipt of the order.50 Without the appeal having been timely filed in the
CTA, the February 4, 2002 Consolidated Order became final and executory. In his opposition,[3] Perico countered that their deceased parents actually
resided in Rodolfos house in Quezon City at the time of their deaths. As a
matter of fact, it was conclusively declared in their death certificates that their
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS
last residence before they died was at 61 Scout Gandia Street, Quezon
the decision promulgated on November 18, 2002 in CA-G.R. CV No. 67593;
City.[4] Rodolfo himself even supplied the entry appearing on the death
and ORDERS the petitioner to pay the costs of suit.
certificate of their mother, Andrea, and affixed his own signature on the said
document.
SO ORDERED.
Rodolfo filed a rejoinder, stating that he gave the information regarding
7. RODOLFO V. JAO, petitioner, vs. COURT OF APPEALS and PERICO V. the decedents residence on the death certificates in good faith and through
JAO, respondents. honest mistake. He gave his residence only as reference, considering that
their parents were treated in their late years at the Medical City General
Hospital in Mandaluyong, Metro Manila. Their stay in his house was merely
DECISION
transitory, in the same way that they were taken at different times for the
YNARES-SANTIAGO, J.: same purpose to Pericos residence at Legaspi Towers in Roxas Boulevard. The
death certificates could not, therefore, be deemed conclusive evidence of the
Rodolfo and Perico Jao were the only sons of the spouses Ignacio Jao decedents residence in light of the other documents showing otherwise.[5]
Tayag and Andrea V. Jao, who died intestate in 1988 and 1989,
 The court required the parties to submit their respective nominees for the RESPONDENT COURT HAD DECIDED A QUESTION OF SUBSTANCE IN A WAY
position.[6] Both failed to comply, whereupon the trial court ordered that the NOT IN ACCORD WITH THE LAW AND IS DIRECTLY CONTRADICTORY TO THE
petition be archived.[7] APPLICABLE DECISION ALREADY RENDERED BY THIS HONORABLE COURT.

Subsequently, Perico moved that the intestate proceedings be

II
revived.[8] After the parties submitted the names of their respective nominees,
the trial court designated Justice Carlos L. Sundiam as special administrator of
the estate of Ignacio Jao Tayag and Andrea Jao.[9] RESPONDENT COURT ERRED IN DISREGARDING THE RULING OF THIS
HONORABLE COURT IN THE CASE OF EUSEBIO VS. EUSEBIO, 100 PHILS. 593,
On April 6, 1994, the motion to dismiss filed by petitioner Rodolfo was WHICH CLEARLY INTERPRETED WHAT IS MEANT BY RESIDENCE IN SEC. 1 OF
denied, to wit: RULE 73 OF THE RULES OF COURT.

A mere perusal of the death certificates of the spouses issued separately in III
1988 and 1989, respectively, confirm the fact that Quezon City was the last
place of residence of the decedents. Surprisingly, the entries appearing on the RESPONDENT COURT ERRED IN HOLDING THAT PHYSICAL PRESENCE IN A
death certificate of Andrea V. Jao were supplied by movant, Rodolfo V. Jao, PLACE AT THE TIME OF DEATH IS DETERMINATIVE OF DECEDENTS
whose signature appears in said document. Movant, therefore, cannot disown RESIDENCE RATHER THAN THE INTENTION OF THE DECEDENTS TO
his own representation by taking an inconsistent position other than his own ESTABLISH THEIR PERMANENT RESIDENCE IN ANOTHER PLACE.
admission. xxx xxx xxx.

IV
WHEREFORE, in view of the foregoing consideration, this court DENIES for lack
of merit movants motion to dismiss.
RESPONDENT COURT ERRED IN APPLYING BY ANALOGY THE RESIDENCE
CONTEMPLATED IN SEC. 2 OF RULE 4 FOR THE PURPOSE OF SERVING
SO ORDERED.[10] SUMMONS TO A DEFENDANT IN A PERSONAL ACTION TO THE RESIDENCE
CONTEMPLATED IN SEC. 1 OF RULE 73 FOR THE PURPOSE OF DETERMINING
Rodolfo filed a petition for certiorari with the Court of Appeals, which was VENUE IN THE SETTLEMENT OF THE ESTATE OF A DECEASED.
docketed as CA-G.R. SP No. 35908. On December 11, 1996, the Court of
Appeals rendered the assailed decision, the dispositive portion of which reads: V

WHEREFORE, no error, much less any grave abuse of discretion of the court a RESPONDENT COURT ERRED IN GIVING MORE WEIGHT TO THE ENTRY OF
quo having been shown, the petition for certiorari is hereby DISMISSED. The PETITIONER AND PRIVATE RESPONDENT IN THE RESPECTIVE DEATH
questioned order of the respondent Judge is affirmed in toto. CERTIFICATES OF THE DECEDENTS RATHER THAN THE OVERWHELMING
EVIDENCE SHOWING THE CLEAR INTENTION OF THE DECEDENTS TO
SO ORDERED.[11] ESTABLISH THEIR PERMANENT RESIDENCE IN ANGELES CITY.

Rodolfos motion for reconsideration was denied by the Court of Appeals in VI

the assailed resolution dated February 17, 1997.[12] Hence, this petition for
review, anchored on the following grounds: RESPONDENT COURT ERRED IN APPLYING THE PRINCIPLE OF ESTOPPEL AS
I AGAINST PETITIONER WHICH CAN NOT BE MORE PERSUASIVE THAN THE
CLEAR INTENTION OF THE DECEDENTS THEMSELVES TO ESTABLISH
PERMANENT RESIDENCE IN ANGELES CITY.
 VII The facts in Eusebio were different from those in the case at bar. The
decedent therein, Andres Eusebio, passed away while in the process of
RESPONDENT COURT ERRED IN DISMISSING THE PETITION FOR transferring his personal belongings to a house in Quezon City. He was then
CERTIORARI DESPITE THE CLEAR ABUSE OF DISCRETION ON THE PART OF suffering from a heart ailment and was advised by his doctor/son to purchase
THE TRIAL COURT IN INSISTING TO TAKE COGNIZANCE OF SP. PROCEEDING a Quezon City residence, which was nearer to his doctor. While he was able to
NO. Q-91-8507.[13] acquire a house in Quezon City, Eusebio died even before he could move
therein. In said case, we ruled that Eusebio retained his domicile --- and hence,
The main issue before us is: where should the settlement proceedings be residence --- in San Fernando, Pampanga. It cannot be said that Eusebio
had --- in Pampanga, where the decedents had their permanent residence, or changed his residence because, strictly speaking, his physical presence in
in Quezon City, where they actually stayed before their demise? Quezon City was just temporary.

Rule 73, Section 1 of the Rules of Court states: In the case at bar, there is substantial proof that the decedents have
transferred to petitioners Quezon City residence. Petitioner failed to
sufficiently refute respondents assertion that their elderly parents stayed in
Where estate of deceased persons be settled. If the decedent is an inhabitant
his house for some three to four years before they died in the late 1980s.
of the Philippines at the time of his death, whether a citizen or an alien, his will
shall be proved, or letters of administration granted, and his estate settled, in Furthermore, the decedents respective death certificates state that they
the Court of First Instance in the province in which he resides at the time of his were both residents of Quezon City at the time of their demise. Significantly, it
death, and if he is an inhabitant of a foreign country, the Court of First was petitioner himself who filled up his late mothers death certificate. To our
Instance of any province in which he had estate. The court first taking mind, this unqualifiedly shows that at that time, at least, petitioner recognized
cognizance of the settlement of the estate of a decedent shall exercise his deceased mothers residence to be Quezon City. Moreover, petitioner failed
jurisdiction to the exclusion of all other courts. The jurisdiction assumed by a to contest the entry in Ignacios death certificate, accomplished a year earlier
court, so far as it depends on the place of residence of the decedent, or of the by respondent.
location of his estate, shall not be contested in a suit or proceeding, except in
an appeal from that court, in the original case, or when the want of jurisdiction The recitals in the death certificates, which are admissible in evidence,
appears on the record. (underscoring ours) were thus properly considered and presumed to be correct by the court a
quo. We agree with the appellate courts observation that since the death
certificates were accomplished even before petitioner and respondent
Clearly, the estate of an inhabitant of the Philippines shall be settled or
quarreled over their inheritance, they may be relied upon to reflect the true
letters of administration granted in the proper court located in the province
situation at the time of their parents death.
where the decedent resides at the time of his death.
The death certificates thus prevailed as proofs of the decedents
Petitioner Rodolfo invokes our ruling in the case of Eusebio v. Eusebio, et
residence at the time of death, over the numerous documentary evidence
al.,[14] where we held that the situs of settlement proceedings shall be the
presented by petitioner. To be sure, the documents presented by petitioner
place where the decedent had his permanent residence or domicile at the time
pertained not to residence at the time of death, as required by the Rules
of death. In determining residence at the time of death, the following factors
of Court, but to permanent residence or domicile. In Garcia-Fule v. Court
must be considered, namely, the decedent had: (a) capacity to choose and
of Appeals,[16] we held:
freedom of choice; (b) physical presence at the place chosen; and (c) intention
to stay therein permanently.[15] While it appears that the decedents in this
case chose to be physically present in Quezon City for medical convenience, xxx xxx xxx the term resides connotes ex vi termini actual residence as
petitioner avers that they never adopted Quezon City as their permanent distinguished from legal residence or domicile. This term resides, like the
residence. terms residing and residence, is elastic and should be interpreted in the light of
the object or purpose of the statute or rule in which it is employed. In the
The contention lacks merit. application of venue statutes and rules Section 1, Rule 73 of the Revised Rules
of Court is of such nature residence rather than domicile is the significant
factor. Even where the statute uses the word domicile still it is construed as the matter, as the question of where to keep records or retain properties is
meaning residence and not domicile in the technical sense. Some cases make entirely dependent upon an individuals choice and peculiarities.
a distinction between the terms residence and domicile but as generally used
At any rate, petitioner is obviously splitting straws when he differentiates
in statutes fixing venue, the terms are synonymous, and convey the same
between venue in ordinary civil actions and venue in special
meaning as the term inhabitant. In other words, resides should be viewed or
proceedings. In Raymond v. Court of Appeals[19] and Bejer v. Court of
understood in its popular sense, meaning, the personal, actual or physical
Appeals,[20] we ruled that venue for ordinary civil actions and that for special
habitation of a person, actual residence or place of abode. It signifies physical
proceedings have one and the same meaning. As thus defined, residence, in
presence in a place and actual stay thereat. In this popular sense, the term
the context of venue provisions, means nothing more than a persons actual
means merely residence, that is, personal residence, not legal residence or
residence or place of abode, provided he resides therein with continuity and
domicile. Residence simply requires bodily presence as an inhabitant in a
consistency.[21] All told, the lower court and the Court of Appeals correctly held
given place, while domicile requires bodily presence in that place and also an
that venue for the settlement of the decedents intestate estate was properly
intention to make it ones domicile. No particular length of time of residence is
laid in the Quezon City court.
required though; however, the residence must be more than temporary.[17]
WHEREFORE, in view of the foregoing, the petition is DENIED, and the
Both the settlement court and the Court of Appeals found that the decision of the Court of Appeals in CA-G.R. SP No. 35908 is AFFIRMED.
decedents have been living with petitioner at the time of their deaths and for
some time prior thereto. We find this conclusion to be substantiated by the SO ORDERED.
evidence on record. A close perusal of the challenged decision shows that,
contrary to petitioners assertion, the court below considered not only the
decedents physical presence in Quezon City, but also other factors indicating
that the decedents stay therein was more than temporary. In the absence of
any substantial showing that the lower courts factual findings stemmed from
an erroneous apprehension of the evidence presented, the same must be held
to be conclusive and binding upon this Court.

Petitioner strains to differentiate between the venue provisions found in

Rule 4, Section 2,[18] on ordinary civil actions, and Rule 73, Section 1, which
applies specifically to settlement proceedings. He argues that while venue in
the former understandably refers to actual physical residence for the purpose
of serving summons, it is the permanent residence of the decedent which is
significant in Rule 73, Section 1. Petitioner insists that venue for the
settlement of estates can only refer to permanent residence or domicile
because it is the place where the records of the properties are kept and where
most of the decedents properties are located.

Petitioners argument fails to persuade.

It does not necessarily follow that the records of a persons properties are
kept in the place where he permanently resides. Neither can it be presumed
that a persons properties can be found mostly in the place where he
establishes his domicile. It may be that he has his domicile in a place different
from that where he keeps his records, or where he maintains extensive
personal and business interests. No generalizations can thus be formulated on