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G.R. No.

L-24170

December 16, 1968

ILLUH ASAALI, HATIB ABDURASID, INGKOH BANTALA, BASOK INGKIN,


and
MOHAMMAD
BANTALLA,petitioners,
vs.
THE COMMISSIONER OF CUSTOMS, respondent.
FERNANDO, J.:
The policy relentlessly adhered to and unhesitatingly pursued to minimize, if not
to do away entirely, with the evil and corruption that smuggling brings in its wake
would be frustrated and set at naught if the action taken by respondent
Commissioner of Customs in this case, as affirmed by the Court of Tax Appeals,
were to be set aside and this appeal from the decision of the latter were to
succeed. Fortunately, the controlling principles of law do not call for a contrary
conclusion. It cannot be otherwise if the legitimate authority vested in the
government were not to be reduced to futility and impotence in the face of an
admittedly serious malady, that at times has assumed epidemic proportions.
The principal question raised by petitioners, owners of five sailing vessels and
the cargo loaded therein declared forfeited by respondent Commissioner of
Customs for smuggling, is the validity of their interception and seizure by
customs officials on the high seas, the contention being raised that importation
had not yet begun and that the seizure was effected outside our territorial
waters..
Why such a plea could not be given the least credence without doing violence to
common sense and placing the law in disrepute would be apparent from a
statement of the case and the findings of facts as set forth in the decision now
under review, of the Court of Tax Appeals, dated November 19, 1964, the opinion
being penned by the late Associate Judge Augusto M. Luciano.
His opinion starts thus: "This is an appeal from the decision of the Acting
Commissioner of Customs in Customs Case No. 113, dated September 26, 1961,
(Jolo Seizure Identification Cases Nos. 38, 39, 40, 41 & 42) decreeing the
forfeiture of five (5) sailing vessels (kumpits) named 'Iroc-Iroc,' 'Lahat-lahat,'
'Liberal Wing III,' 'Sulu Area Command,' and 'Business,' with their respective
cargoes of blue seal cigarettes and rattan chairs for violation of Section 1363(a)
of the Revised Administrative Code and Section 20 of Republic Act No. 426 in
relation with Section 1363(f) of the Revised Administrative Code." 1
The facts according to the above opinion "are not controverted." Thus: "It
appears that on September 10, 1950, at about noon time, a customs patrol team
on board Patrol Boat ST-23 intercepted the five (5) sailing vessels in question on
the high seas, between British North Borneo and Sulu while they were heading
towards Tawi-tawi, Sulu. After ordering the vessels to stop, the customs officers
boarded and found on board, 181 cases of 'Herald' cigarettes, 9 cases of 'Camel'
cigarettes, and some pieces of rattan chairs. The sailing vessels are all of
Philippine registry, owned and manned by Filipino residents of Sulu, and of less
than thirty (30) tons burden. They came from Sandakan, British North Borneo,
but did not possess any permit from the Commissioner of Customs to engage in
the importation of merchandise into any port of the Sulu sea, as required by
Section 1363(a) of the Revised Administrative Code. Their cargoes were not
covered by the required import license under Republic Act No. 426, otherwise
known as the Import Control Law." 2
Respondent Commissioner of Customs, as noted at the outset, affirmed the
decision rendered by the Collector of Customs of Jolo, who found cause for
forfeiture under the law of the vessels and the cargo contained therein. He was,
as also already made known, sustained by the Court of Tax Appeals. Hence this
petition for review.
The first two errors assigned by petitioners would impugn the jurisdiction of the
Bureau of Customs to institute seizure proceedings and thereafter to declare the
forfeiture of the vessels in question and their cargo. They would justify their stand
thus: "In the light of the fact that the vessels involved with the articles laden
therein were apprehended and seized on the high seas, beyond the territorial
waters of the Philippines, the said vessels could not have touched any place or
port in the Philippines, whether a port or place of entry or not, consequently, the
said vessels could not have been engaged in the importation of the articles laden
therein into any Philippine port or place, whether a port or place of entry or not, to
have incurred the liability of forfeiture under Section 1363(a) of the Revised
Administrative Code."3
Such a contention was advanced by petitioners before the Court of Tax Appeals.
It met the repudiation that it deserved. Thus: "We perfectly see the point of the
petitioners but considering the circumstances surrounding the apprehension of
the vessels in question, we believe that Section 1363(a) of the Revised
Administrative Code should be applied to the case at bar. It has been established
that the five vessels came from Sandakan, British North Borneo, a foreign port,
and when intercepted, all of them were heading towards Tawi-tawi, a domestic
port within the Sulu sea. Laden with foreign manufactured cigarettes, they did not
possess the import license required by Republic Act No. 426, nor did they carry a
permit from the Commissioner of Customs to engage in importation into any port
in the Sulu sea. Their course announced loudly their intention not merely to skirt
along the territorial boundary of the Philippines but to come within our limits and
land somewhere in Tawi-tawi towards which their prows were pointed. As a
matter of fact, they were about to cross our aquatic boundary but for the
intervention of a customs patrol which, from all appearances, was more than
eager to accomplish its mission."4
The sense of realism and the vigorous language employed by the late Judge
Luciano in rejecting such a plea deserve to be quoted. Thus: "To entertain even
for a moment the thought that these vessels were probably not bound for a
Philippine port would be too much a concession even for a simpleton or a
perennial optimist. It is quite irrational for Filipino sailors manning five Philippine
vessels to sneak out of the Philippines and go to British North Borneo, and come
a long way back laden with highly taxable goods only to turn about upon reaching
the brink of our territorial waters and head for another foreign port." 5
1. We find no plausible reason not to accept in its entirety such a conclusion
reached by the Court of Tax Appeals. Nor, even if the persuasive element in the
above view were not so overwhelming, could we alter the decisive facts as found
by it. For it is now beyond question that its finding, if supported by substantial
evidence, binds us, only questions of law being for us to resolve. Where the
issue raised belongs to the former category, we lack the power of review. 6
Moreover, for understandable reasons, we feel extreme reluctance to substitute
our own discretion for that of the Court of Tax Appeals in its appreciation of the
relevant facts and its appraisal of their significance. As we had occasion to state
in a relatively recent decision: "Nor as a matter of principle is it advisable for this
Court to set aside the conclusion reached by an agency such as the Court of Tax
Appeals which is, by the very nature of its function, dedicated exclusively to the
study and consideration of tax problems and has necessarily developed an
expertise on the subject, ..., there has been an abuse or improvident exercise of
its authority." 7
2. We thus could rest our decision affirming that of the Court of Tax Appeals on
the above consideration.

It might not be amiss however to devote some degree of attention to the legal
points raised in the above two assignment of errors, discussed jointly by
petitioners-appellants, alleging the absence of jurisdiction, the deprivation of
property without due process of law and the abatement of liability consequent
upon the repeal of Republic Act No. 426. Not one of the principles of law relied
upon suffices to call for reversal of the action taken by the respondent
Commissioner of Customs, even if the facts presented a situation less conclusive
against the pretension of petitioners-appellants.
From the apprehension and seizure of the vessels in question on the high seas
beyond the territorial waters of the Philippines, the absence of jurisdiction of
Commissioner of Customs is predicated. Such contention of petitionersappellants is without merit.
It is unquestioned that all vessels seized are of Philippine registry. The Revised
Penal Code leaves no doubt as to its applicability and enforceability not only
within the Philippines, its interior waters and maritime zone, but also outside of its
jurisdiction against those committing offense while on a Philippine ship ... 8 The
principle of law that sustains the validity of such a provision equally supplies a
firm foundation for the seizure of the five sailing vessels found thereafter to have
violated the applicable provisions of the Revised Administrative Code. 9
Moreover, it is a well settled doctrine of International Law that goes back to Chief
Justice Marshall's opinion in Church v. Hubbart, 10 an 1804 decision, that a state
has the right to protect itself and its revenues, a right not limited to its own
territory but extending to the high seas. In the language of Chief Justice Marshall:
"The authority of a nation within its own territory is absolute and exclusive. The
seizure of a vessel within the range of its cannon by a foreign force is an invasion
of that territory, and is a hostile act which it is its duty to repel. But its power to
secure itself from injury may certainly be exercised beyond the limits of its
territory."
The question asked in the brief of petitioners-appellants as to whether the
seizure of the vessels in question and the cargoes on the high seas and thus
beyond the territorial waters of the Philippines was legal must be answered in the
affirmative.
4. The next question raised is the alleged denial of due process arising from such
forfeiture and seizure. The argument on the alleged lack of validity of the action
taken by the Commissioner of Customs is made to rest on the fact that the
alleged offense imputed to petitioners-appellants is a violation of Section 1363(a)
and not Section 1363(f). The title of Section 1363 is clear, "Property subject to
forfeiture under customs laws." The first subsection thereof, (a) cover any vessel
including cargo unlawfully engaged in the importation of merchandise except a
port of entry. Subsection (f) speaks of any merchandise of any prohibited
importation, the importation of which is effected or attempted contrary to law and
all other merchandise which in the opinion of the Collector of Customs have been
used are or were intended to be used as instrument in the importation or
exportation of the former.
From the above recital of the legal provisions relied upon, it would appear most
clearly that the due process question raised is insubstantial. Certainly, the facts
on which the seizure was based were not unknown to petitioners-appellants. On
those facts the liability of the vessels and merchandise under the above terms of
the statute would appear to be undeniable. The action taken then by the
Commissioner of Customs was in accordance with law.
How could there be a denial of due process? There was nothing arbitrary about
the manner in which such seizure and forfeiture were effected. The right to a
hearing of petitioners-appellants was respected. They could not have been
unaware of what they were doing. It would be an affront to reason if under the
above circumstances they could be allowed to raise in all seriousness a due
process question. Such a constitutional guaranty, basic and fundamental,
certainly should not be allowed to lend itself as an instrument for escaping a
liability arising from one's own nefarious acts.
5. Petitioners-appellants would further assail the validity of the action taken by
the respondent Commissioner of Customs by the plea that the repeal of Republic
Act No. 426 abated whatever liability could have been incurred thereunder. This
argument raised before the Court of Tax Appeals was correctly held devoid of any
persuasive force. The decision under review cited our opinion in Golay-Buchel &
Cie v. Commissioner of Customs11 to the effect that the expiration of the Import
Control Law "did not produce the effect of declaring legal the importation of
goods which were illegally imported and the seizure and forfeiture thereof as
ordered by the Collector of Customs illegal or null and void."
Roxas v. Sayoc 12 announced that principle earlier. Thus: "Herein, we are
concerned with the effect of the expiration of a law, not with the abrogation of a
law, and we hold the view that once the Commissioner of Customs has acquired
jurisdiction over the case, the mere expiration of Republic Act No. 650 will not
divest him of his jurisdiction thereon duly acquired while said law was still in
force. In other words, we believe that despite the expiration of Republic Act No.
650 the Commissioner of Customs retained his jurisdiction over the case and
could continue to take cognizance thereof until its final determination, for the
main question brought in by the appeal from the decision of the Collector of
Customs was the legality or illegality of the decision of the Collector of Customs,
and that question could not have been abated by the mere expiration of Republic
Act No. 650. We firmly believe that the expiration of Republic Act No. 650 could
not have produced the effect (1) of declaring legal the importation of the cotton
counterpanes which were illegally imported, and (2) of declaring the seizure and
forfeiture ordered by the Collector of Customs illegal or null and void; in other
words it could not have the effect of annulling or setting aside the decision of the
Collector of Customs which was rendered while the law was in force and which
should stand until it is revoked by the appellate tribunal."
As late as 1965, in Bombay Dept. Store v. Commissioner of Customs, 13 we had
occasion to reaffirm the doctrine in the above two decisions, the present Chief
Justice, speaking for the Court, stating that such expiration of the period of
effectivity of Republic Act No. 650 "did not have the effect of depriving the
Commissioner of Customs of the jurisdiction, acquired by him prior thereto, to act
on cases of forfeiture pending before him, which are in the nature of
proceeding in rem...."
It is thus most evident that the Court of Tax Appeals had not in any wise refused
to adhere faithfully to controlling legal principles when it sustained the action
taken by respondent Commissioner of Customs. It would be a reproach and a
reflection on the law if on the facts as they had been shown to exist, the seizure
and forfeiture of the vessels and cargo in question were to be characterized as
outside the legal competence of our government and violative of the
constitutional rights of petitioners-appellants. Fortunately, as had been made
clear above, that would be an undeserved reflection and an unwarranted
reproach. The vigor of the war against smuggling must not be hampered by a
misreading of international law concepts and a misplaced reliance on a
constitutional guaranty that has not in any wise been infringed.
WHEREFORE, the decision of respondent Court of Tax Appeals of November 19,
1964, is affirmed. With costs against petitioners-appellants.

[G.R. NO. 176380 : June 18, 2009]


PILIPINAS
SHELL
PETROLEUM
CORPORATION, Petitioner, v. COMMISSIONER OF CUSTOMS,Respondent.
DECISION
BRION, J.:
Before us is the Petition for Review on Certiorari 1 filed by petitioner Pilipinas
Shell Petroleum Corporation (Shell) questioning the Decision 2 of the Court of
Appeals (CA) in CA-G.R. SP No. 78564. The CA decision set aside the
resolutions3 issued by the Court of Tax Appeals (CTA) in CTA Case No. 6484,
which in turn denied the respondent Commissioner of Customs' (respondent)
Motion to Dismiss the Petition for Review Shell filed with the tax court. The CA
decision effectively dismissed Shell's tax protest case.
BACKGROUND FACTS
Shell is a domestic corporation engaged, among others, in the importation of
petroleum and its by-products into the country. For these importations, Shell was
assessed and required to pay customs duties and internal revenue taxes.
In 1997 and 1998, Shell settled its liabilities for customs duties and internal
revenue taxes using tax credit certificates (TCCs) that were transferred to it for
value by several Board of Investment (BOI)-registered companies. The transfers
of the TCCs to Shell were processed by the transferors-BOI-registered
companies and were eventually approved by the One Stop Shop Inter-Agency
Tax Credit and Duty Drawback Center (the Center). The Center is composed of
the following government agencies: the Department of Finance (DOF), the
Bureau of Internal Revenue (BIR), the Bureau of Customs (BOC), and the BOI.
On the belief the TCCs were actually good and valid, both the BIR and the BOC
accepted and allowed Shell to use them to pay and settle its tax liabilities.
In a letter dated November 3, 1999 (Center's November 3 letter), the Center,
through the Secretary of the DOF, informed Shell that it was cancelling the TCCs
transferred to and used as payment by the oil company, pursuant to its EXCOM
Resolution No. 03-05-99. The Center claimed that after conducting a post-audit
investigation, it discovered that the TCCs had been fraudulently secured by the
original grantees who thereafter transferred them to Shell; no categorical finding
was made regarding Shell's participation in the fraud. In view of the cancellation,
the Center required Shell to pay the BIR and BOC the amounts corresponding to
the TCCs Shell had used to settle its liabilities.
Shell objected to the cancellation of the TCCs claiming that it had been denied
due process. Apparently, Shell had sent a letter to the Center on November 3,
1999 (Shell's November 3 letter) adducing reasons why the TCCs should not be
cancelled; Shell claimed that the Center's November 3 letter cancelling the TCCs
was issued without considering its letter of the same date.
The Center did not act on Shell's November 3 letter; instead, the respondent sent
a letter dated November 19, 1999 (respondent's November 19 letter) to Shell
requiring it to replace the amount equivalent to the amount of the cancelled TCCs
used by Shell to satisfy its customs duties and taxes. The pertinent portion of the
respondent's November 19 letter states:
In view of such cancellation, it becomes apparent that the Customs Official
Receipts previously issued to [Shell] with the applications of the [TCCs] cited in
said lists becomes null and void ab initio. In view thereof, your corporation must
have to replace amount of P209,129,141.00 which is equivalent to the amount of
the [TCCs] cancelled. The corresponding interest, surcharge and penalties
thereof shall be relayed to you in due time after the recomputation.
Your immediate response to this demand letter shall be appreciated.
Shell submitted its reply letter dated December 23, 1999. 4 Shell maintained that
the cancellation was improper since this was done without affording the
corporation its right to due process. It further claimed that the existence of fraud
in the issuance and transfer of the TCCs, or even Shell's participation in the
alleged fraud, had not been sufficiently established.
Three years later, through letters dated February 15, February 20, and April 12,
2002 (respondent's collection letters), the respondent, through Atty. Gil Valera
(Atty. Valera), Deputy Commissioner for Revenue Collections Monitoring Group,
formally demanded from Shell payment of the amounts corresponding to the
listed TCCs that the Center had previously cancelled. Except for the amount due,
the respondent's collection letters were similarly worded, as follows:
In as much as the same [TCCs] were reported as having been utilized to pay
your government obligations earlier, formal demand is hereby being made upon
you to pay back the total amount of x x x within five (5) days from receipt thereof
[sic]. Failure on your part to settle your obligation would constrain the Bureau of
Customs to initiate legal action in the regular court.
Please consider this as our last and final demand.
As mentioned, all three letters were signed by Atty. Valera.
Shell replied to the respondent's February 15 and 20, 2002 collection letters via
letters dated February 27 and March 4, 2002. Before it could reply to the
respondent's April 12, 2002 collection letter, Shell received on April 23, 2002 the
summons in one5 of the three collection cases 6 filed by respondent against Shell
before the Regional Trial Court (RTC) of Manila. In these collection cases, the
respondent sought to recover the amounts covered by the cancelled TCCs; the
complaints were all similarly worded except for the amount and TCCs involved,
and were signed by Atty. Valera.
On May 23, 2002, Shell filed with the CTA a Petition for Review questioning the
BOC collection efforts for lack of legal and factual basis. To quote the issues
Shell submitted in its CTA petition:
1. Whether or not the TCCs subject of the instant petition for are genuine and
authentic;
2. Whether or not petitioner's right to due process of law was violated by the
issuance of the 1999 collection letter and/or the filing of the collection cases, both
of which seek to enforce the Excom Resolution;
3. Whether or not attempts to collect unpaid duties and taxes, being based on the
bare allegation that the TCCs were fraudulently issued and transferred, can be
given any effect considering that fraud is never presumed but must be proven;
4. Assuming arguendo that fraud was present in the issuance of the original
TCCs, whether or not such fraud can work to the prejudice of an innocent
purchaser for value who is not a party to such fraud;
5. Whether or not the respondent and the DOF/Center are stopped from
invalidating the TCCs and the transfers and utilizations thereof;
6. Whether or not the TCCs, having been utilized, are already functus officio and
can no longer be cancelled.7
The respondent filed a motion to dismiss Shell's Petition for Review on the
ground of prescription. The respondent claimed that Shell's petition was filed
beyond the 30-day period provided by law for appeals of decisions of the
Commissioner of Customs to the CTA. The respondent also contended that this
30-day period should be counted from the time Shell received the respondent's
collection letters.

Shell countered by invoking the case of Yabes v. Flojo, 8 where this Court ruled,
under the circumstances of that case, that a complaint for collection filed in court
may be considered a final decision or assessment of the Commissioner 9 that
opened the way for an appeal to the CTA. Applying that principle, Shell contends
the 30-day reglementary period should be counted from the date it received the
summons for one of the collection cases filed by respondent or, specifically, on
April 23, 2002, not from the date that it received the respondent's collection
letters. The Petition for Review, having been filed on May 23, 2002, was thus
instituted within the period provided by law.
The CTA found the respondent's contentions unmeritorious, and thus denied his
motion to dismiss in a Resolution dated January 28, 2003. 10 The tax court noted
that the collection letters were issued and signed only by Atty. Valera, not by the
respondent, so that Shell was justified in not heeding the demand. The CTA
consequently declared that it is the filing of the collection cases in court that
should instead be considered as the final decision of the respondent, and only
then should the 30-day period to appeal commence. The respondent elevated
the CTA decision to the CA after the CTA denied its motion for reconsideration. 11
The appellate court annulled and set aside the CTA rulings in its decision dated
May 3, 2006.12 It found the collection letters written by Atty. Valera "indicative of
[respondent's] final rulings on the assessments concerning the spurious TCCs
xxx which were then already appealable to the respondent CTA. Each letter
carried a clear demand to pay within five (5) days from receipt, and each also
carried a warning that 'this [is] our last and final demand.' " On the authority of
Atty. Valera to issue the collection letters, the appellate court pointed to Customs
Memorandum Circular (CMC) No. 27-2001 that delegated the Commissioner's
authority on matters relating to tax credit and transfers of tax credit to Atty.
Valera, and to Customs Memorandum Order (CMO) No. 40-2001 that delegated
the authority to sign, file, and prosecute civil complaints likewise to Atty. Valera.
Shell's attempt to have the CA decision reconsidered proved unsuccessful;
hence, this petition.
THE PETITION
Shell insists, in this Petition for Review on Certiorari, that its Petition for Review
with the CTA was filed within the 30-day reglementary period that, it posits,
should be counted from the date it received the summons for the collection cases
filed by respondent against it before the regular court. Shell cites this Court's
ruling in Yabes v. Flojo.13
On the assumption that the collection letters amounted to a decision on its
protest, Shell submits that these are not "decision[s] of the Commissioner of
Customs" appealable to the CTA under Section 7, Republic Act (RA) No. 1125, as
amended by RA No. 9282. 14 It maintains that it is the Commissioner's decision on
the taxpayer's liability for customs duties and taxes, not the decision of his
subordinate, which is the proper subject of the appeal to the CTA, the delegation
of authority under CMC No. 27-2001 and CMO No. 40-2001 notwithstanding. It
additionally claims that Atty. Valera was prohibited from carrying out his
delegated duties under the injunctive writ issued the RTC of Manila in its Order
dated August 27, 2001, and the Temporary Restraining Order the CA issued on
April 4, 2002.
THE COURT'S RULING
We resolve to DENY Shell's petition; the present case does not involve a tax
protest case within the jurisdiction of the CTA to resolve.
The parties argue over which act serves as the decision of the respondent that,
under the law, can be the subject of an appeal before the CTA, and from which
act the 30-day period to appeal shall be reckoned. Shell insists it should be the
filing of the collection suits as this was indicative of the finality of the respondent's
action. The respondent, on the other hand, claims, it should be the earlier act of
sending the collection letters where the respondent finally indicated his resolve to
collect the duties due and demandable from Shell.
Section 7 of RA No. 1125, as amended, states:
Sec. 7. Jurisdiction. - The CTA shall exercise:
(a) Exclusive appellate jurisdiction to review by appeal xxx;
xxx
4. Decisions of the Commissioner of Customs in cases involving liability for
customs duties, fees or other money charges, seizure, detention, or release or
property affected, fines, forfeitures or other penalties in relation thereto, or other
matters arising under the Customs Law or other laws administered by the Bureau
of Customs;
These decisions of the respondent involving customs duties specifically refer to
his decisions onadministrative tax protest cases, as stated in Section 2402 of the
Tariff and Customs Code of the Philippines (TCCP):
Section 2402. Review by Court of Tax Appeals. - The party aggrieved by a ruling
of the Commissioner in any matter brought before him upon protest or by his
action or ruling in any case of seizure may appeal to the Court of Tax Appeals, in
the manner and within the period prescribed by law and regulations.
Unless an appeal is made to the Court of Tax Appeals in the manner and within
the period prescribed by laws and regulations, the action or ruling of the
Commissioner shall be final and conclusive. [Emphasis supplied.]
A tax protest case, under the TCCP, involves a protest of the liquidation of import
entries. A liquidation is the final computation and ascertainment by the collector
of the duties on imported merchandise, based on official reports as to the
quantity, character, and value thereof, and the collector's own finding as to the
applicable rate of duty; it is akin to an assessment of internal revenue taxes
under the National Internal Revenue Code 15 where the tax liability of the taxpayer
is definitely determined.
In the present case, the facts reveal that Shell received three sets of letters:
A. the Center's November 3 letter, signed by the Secretary of Finance, informing
it of the cancellation of the TCCs;
b. the respondent's November 19 letter requiring it to replace the amount
equivalent to the amount of the cancelled TCCs used by Shell; andcralawlibrary
c. the respondent's collection letters issued through Atty. Valera, formally
demanding the amount covered by the cancelled TCCs.
None of these letters, however, can be considered as a liquidation or an
assessment of Shell's import tax liabilities that can be the subject of an
administrative tax protest proceeding before the respondent whose decision is
appealable to the CTA. Shell's import tax liabilities had long been computed and
ascertained in the original assessments, 16 and Shell paid these liabilities using
the TCCs transferred to it as payment. It is even an error to consider the letters
as a "reassessment" because they refer to the same tax liabilities on the same
importations
covered
by
the
original
assessments.
The
letters
merely reissued the original assessments that were previously settled by Shell
with the use of the TCCs. However, on account of the cancellation of the TCCs,
the tax liabilities of Shell under the original assessments were considered unpaid;
hence, the letters and the actions for collection. When Shell went to the CTA, the
issues it raised in its petition were all related to the fact and efficacy of the
payments made, specifically the genuineness of the TCCs; the absence of due
process in the enforcement of the decision to cancel the TCCs; the facts
surrounding the fraud in originally securing the TCCs; and the application of

estoppel. These are payment and collection issues, not tax protest issues within
the CTA's jurisdiction to rule upon.rbl r l l lbrr
We note in this regard that Shell never protested the original assessments of its
tax liabilities and in fact settled them using the TCCs. These original
assessments, therefore, have become final, incontestable, and beyond any
subsequent protest proceeding, administrative or judicial, to rule upon.
To be very precise, Shell's petition before the CTA principally questioned the
validity of the cancellation of the TCCs - a decision that was made not by the
respondent, but by the Center. As the CTA has no jurisdiction over decisions of
the Center, Shell's remedy against the cancellation should have been
a certiorari petition before the regular courts, not a tax protest case before the
CTA. Records do not show that Shell ever availed of this remedy. Alternatively, as
we held in Shell v. Republic of the Philippines, 17 the appropriate forum for Shell
under the circumstances of this case should be at the collection cases before the
RTC where Shell can put up the fact of its payment as a defense.
Parenthetically, our conclusions are fully in step with what we held in Shell v.
Republic18 that a case becomes ripe for filing with the RTC as a collection matter
after the finality of the respondent's assessment. We hereby confirm that this
assessment has long been final, and this recognition of finality removes all
perceived hindrances, based on this case, to the continuation of the collection
suits. In Dayrit v. Cruz,19 we declared on the matter of collection that:
[A] suit for the collection of internal revenue taxes, where the assessment has
already become final and executory, the action to collect is akin to an action to
enforce the judgment. No inquiry can be made therein as to the merits of the
original case or the justness of the judgment relied upon.
In light of our conclusion that the present case does not involve a decision of the
respondent on a matter brought to him as a tax protest, Atty. Valera's lack of
authority to issue the collection letters and to institute the collection suits is
irrelevant. For this same reason, the injunction against Atty. Valera cannot be
invoked to enjoin the collection of unpaid taxes due from Shell.
WHEREFORE,
we DENY Shell's
Petition
for
Review
on Certiorari and AFFIRM the result of the Decision of the Court of Appeals
dated May 3, 2006 in CA-G.R. SP No. 78564, based on the principles and
conclusion laid down in this Decision. Shell's Petition for Review before the Court
of Tax Appeals, docketed as CTA Case No. 6484, is DISMISSED.
SO ORDERED.

G.R. No. 104604 October 6, 1995


NARCISO O. JAO and BERNARDO M. EMPEYNADO, petitioners,
vs.
COURT OF APPEALS; COMMISSIONER OF CUSTOMS; COLLECTOR OF
CUSTOMS, Port of Manila; Col. SINDULFO R. SEBASTIAN, Director,
Enforcement and Security Services, Bureau of Customs; and Maj. JAIME
MAGLIPON, Chief, Operations and Intelligence Staff, Enforcement and
Security Services, Bureau of Customs, respondents.
G.R. No. 111223 October 6, 1995
NARCISO O. JAO and BERNARDO M. EMPEYNADO, petitioners,
vs.
THE HONORABLE OMBUDSMAN CONRADO M. VASQUEZ, and SINDULFO
SEBASTIAN, JAIME MAGLIPON; JOSE YUCHONGCO; RICARDO
CORONADO; VICTOR BARROS; DENNIS BANTIGUE; ROY LARA;
BENJAMIN SANTOS; RODOLFO GONDA; ADONIS REJOSO; DANIEL
PENAS; NICANOR BONES; ABUNDIO JUMAMOY; ARTEMIO CASTILLO;
ANDRESITO ABAYON; RUBEN TAGUBA; JAIME JAVIER; HERBERT
DOLLANO, all with the Bureau of Customs; JOVY GUTIERREZ of the Makati
police, and 'JOHN DOES',respondents.
ROMERO, J.:
G.R. No. 104604 is a petition for certiorari of the decision 1 of the Court of
Appeals, the dispositive portion of which states:
WHEREFORE, the petition is hereby GRANTED. The
orders issued by the respondent judge dated November
20, 1990, December 10, 1990, January 3, 1991 and all
subsequent orders in the Civil Case No. 90-2382 of the
Regional Trial Court of Makati are SET ASIDE. Having no
jurisdiction over the case, the respondent judge is hereby
enjoined from proceeding with Civil Case No. 90-2382
and further, Case No. 90-2382 is hereby DISMISSED.
SO ORDERED.
G.R. No. 111223 is a petition for certiorari of the resolution of the
2
Ombudsman dismissing the case filed before it by herein petitioner.
The above-docketed cases were consolidated per resolution of the Court on
August 26, 1993, as the facts in both cases were the same.
These facts are the following:
On August 10, 1990, the Office of the Director, Enforcement and Security
Services (ESS), Bureau of Customs, received information regarding the
presence of allegedly untaxed vehicles and parts in the premises owned by a
certain Pat Hao located along Quirino Avenue, Paranaque and Honduras St.,
Makati. After conducting a surveillance of the two places, respondent Major
Jaime Maglipon, Chief of Operations and Intelligence of the ESS, recommended
the issuance of warrants of seizure and detention against the articles stored in
the premises.
On August 13, 1990, District Collector of Customs Titus Villanueva issued the
warrants of seizure and detention.
On the same date, respondent Maglipon coordinated with the local police
substations to assist them in the execution of the respective warrants of seizure
and detention. Thereafter, the team searched the two premises.
In Makati, they were barred from entering the place, but some members of the
team were able to force themselves inside. They were able to inspect the
premises and noted that some articles were present which were not included in
the list contained in the warrant.. Hence, on August 15, 1990, amended warrants
of seizure and detention were issued by Villanueva.
On August 25, 1990, customs personnel started hauling the articles pursuant to
the amended warrants. This prompted petitioners Narciso Jao and Bernardo
Empeynado to file a case for Injunction and Damages, docketed as Civil Case
No. 90-2382 with prayer for Restraining Order and Preliminary Injunction before
the Regional Trial Court of Makati Branch 56 on August 27, 1990 against
respondents. On the same date, the trial court issued a Temporary Restraining
Order.
On September 7, 1990, respondents filed a Motion to Dismiss on the ground that
the Regional Trial Court has no jurisdiction over the subject matter of the
complaint, claiming that it was the Bureau of Customs that had exclusive
jurisdiction over it.
On November 20, 1990, the trial court denied respondents' motion to dismiss.

On November 29, 1990, petitioners' application for preliminary prohibitory and


mandatory injunction was granted conditioned upon the filing of a one million
peso bond.
The Court also prohibited respondents from seizing, detaining, transporting and
selling at public auction petitioners' vehicles, spare parts, accessories and other
properties located at No. 2663 Honduras St., San Isidro, Makati and at No. 240
Quirino Avenue, Tambo, Paranaque, Metro Manila. Respondents were further
prohibited from disturbing petitioners' constitutional and proprietary rights over
their properties located at the aforesaid premises. Lastly, respondents were
ordered to return the seized items and to render an accounting and inventory
thereof.
On December 13, 1990, respondents filed a motion for reconsideration based on
the following grounds:
a) the lower court having no jurisdiction over the subject
matter of the complaint, it has no recourse but to dismiss
the same; and
(b) the lower court had no legal authority to issue an
injunction therein.
On January 3, 1991 the motion for reconsideration was denied. Respondents
then went to the Court of Appeals on the ground that the judge acted with grave
abuse of discretion in denying their motion to dismiss and in granting petitioners'
application for preliminary injunction. They argued that the Regional Trial Court
had no jurisdiction over seizure and forfeiture proceedings, such jurisdiction
being exclusively vested in the Bureau of Customs.
The Court of Appeals set aside the questioned orders of the trial court and
enjoined it from further proceeding with Civil Case No. 90-2382. The appellate
court also dismissed the said civil case.
On May 2, 1992, petitioners filed a petition with this Court to review the decision
of the Court of Appeals docketed as G.R. No. 104604.
As regards G.R. No. 111223, petitioners filed criminal charges against
respondents, other officers and employees of the Bureau of Customs and
members of the Makati Police before the Office of the Ombudsman for Robbery,
Violation of Domicile and Violation of Republic Act No. 3019, docketed as OMB
Case No. 0-90-2027.
Respondent Ombudsman summarized the case before it as follows:
This is an affidavit-complaint filed by the complainants
against the respondents, Officers and Employees of the
Bureau of Customs and members of the Makati Police
allegedly for violation of Domicile and Robbery defined
and penalized under Articles 128, 293 and 294 of the
Revised Penal Code and for violation of R.A. 3019
committed as follows, to wit:
That on August 11, 1990, after
receiving intelligence information
of the presence of smuggled
goods, some of the respondents
headed by Jaime Maglipon posed
themselves as Meralco inspectors
and
entered
complainants'
stockyards and residence located
at 2663 Honduras Street, Makati,
Metro Manila and at 240 Quirino
Avenue, Tambo Paranaque for the
purpose of searching smuggled
goods found therein without the
consent of the owner thereof;
That after the search, respondents
on August 13, 1990 up to August
25, 1990, this time clothed with a
Warrant of Seizure and Detention,
with the aid of the Makati Police
and several heavily armed men
entered complainants stockyard
located at 2663 Honduras St.,
Makati, Metro Manila, and pulled
out therefrom several machineries
and truck spare parts without
issuing the corresponding receipts
to the complainants to cover all
the items taken.
Respondents claimed in their consolidated and verified
comment that they are not liable for violation of domicile
because the places entered and searched by them
appear not to be the residences of the complainants but
only their warehouses. As proof of this allegation, the
respondents presented the pictures of said warehouses,
which are attached to their comment as Annexes "6", "6A" to "6-C" and the Sheriff's return likewise attached to
their verified comments as Annex "7". According to the
respondents, a charge for violation of domicile may apply
only if the place entered into against the will of the owner
is used exclusively for dwelling. In the case at bar, the
place entered into was used more of a warehouse than a
dwelling place.
Further respondents also claimed not liable for robbery
(sic) because the complainants appear not to be the
owners of the properties taken. Moreover, the
respondents claimed that the taking is lawful because the
same proceeded from a warrant of Seizures and
Detention; there was no violence or intimidation of person
committed and that there was no intent to gain on the part
of the respondents, the purpose of the seizure of the
subject goods being to collect customs duties and taxes
due the government.
Lastly, the respondents disclaimed liability for a violation
of R.A. 3019 because they deny having demanded from
the complainants the sum of P100,000.00. Instead
according to the respondents, it was the complainants
who offered them P70,000.00 to delay the hauling of the
seized goods as attested to in the joint affidavit of CPSGT,
Ricardo Coronado and Dennis Bantequi.
A preliminary investigation was conducted and on May 31, 1991, another hearing
was held to give the parties a chance to submit further evidence to support their
respective claims.
On March 15, 1993 respondent Ombudsman issued a Resolution recommending
that the case be dismissed for lack of merit.

On May 17, 1993, petitioners moved for the reconsideration of said resolution,
but the same was denied on July 8, 1993.
Hence, the petition in G.R. No. 111223, which was filed on August 16, 1993.
In G.R. No. 111223, petitioners claim that respondent Ombudsman gravely
abused his discretion in dismissing the case and in denying petitioners' motion
for reconsideration.
They allege that respondent Ombudsman ignored evidence incriminatory to the
raiders; that the receipts did not tally with petitioners' receipts nor with the
Commission on Audit's inventory; that the respondents are guilty of robbery and
of violating petitioners' constitutional right against violation of domicile. For these
reasons, petitioners pray that the Ombudsman's resolution be reversed and that
the Court direct the Ombudsman to cause the filing of criminal charges as may
be warranted against respondents.
We find the petition in G.R. No. 111223 devoid of merit.
The Court, recognizing the investigatory and prosecutory powers granted by the
Constitution to the Office of the Ombudsman and for reasons of practicality,
declared, in an En Banc resolution dated August 30, 1993, issued in G.R. Nos.
103446-47 3 that the Court will not interfere nor pass upon findings of public
respondent Ombudsman to avoid its being hampered by innumerable petitions
assailing the dismissal of investigatory proceedings conducted by the Office of
the Ombudsman with regard to complaints filed before it, and that it will not
review the exercise of discretion on the part of the fiscals or prosecuting
attorneys each time they decide to file an information in court or dismiss a
complaint by a private complainant. The dismissal by the Ombudsman of
petitioners' complaint, therefore, stands.
We will now discuss G.R. No. 104604.
Petitioners contend: (1) that the Court of Appeals erred in not holding that the
Collector of Customs could no longer order the seizure for the second time of
items previously seized and released after amnesty payments of duties and
taxes; (2) that the Bureau of Customs has lost jurisdiction to order the seizure of
the items because the importation had ceased; (3) that the seizure of the items
deprived the petitioners of their properties without due process of law; and (4)
that there is no need to exhaust administrative remedies.
We find no merit in petitioners' contentions.
There is no question that Regional Trial Courts are devoid of any competence to
pass upon the validity or regularity of seizure and forfeiture proceedings
conducted by the Bureau of Customs and to enjoin or otherwise interfere with
these proceedings 4 The Collector of Customs sitting in seizure and forfeiture
proceedings has exclusive jurisdiction to hear and determine all questions
touching on the seizure and forfeiture of dutiable goods. The Regional Trial
Courts are precluded from assuming cognizance over such matters even through
petitions of certiorari, prohibition ormandamus. 5
It is likewise well-settled that the provisions of the Tariff and Customs Code and
that of Republic Act No. 1125, as amended, otherwise known as "An Act Creating
the Court of Tax Appeals," specify the proper fora and procedure for the
ventilation of any legal objections or issues raised concerning these proceedings.
Thus, actions of the Collector of Customs are appealable to the Commissioner of
Customs, whose decision, in turn, is subject to the exclusive appellate jurisdiction
of the Court of Tax Appeals and from there to the Court of Appeals.
The rule that Regional Trial Courts have no review powers over such
proceedings is anchored upon the policy of placing no unnecessary hindrance on
the government's drive, not only to prevent smuggling and other frauds upon
Customs, but more importantly, to render effective and efficient the collection of
import and export duties due the State, which enables the government to carry
out the functions it has been instituted to perform. 6
Even if the seizure by the Collector of Customs were illegal, which has yet to be
proven, we have said that such act does not deprive the Bureau of Customs of
jurisdiction thereon.
Respondents assert that respondent Judge could
entertain the replevin suit as the seizure is illegal,
allegedly because the warrant issued is invalid and the
seizing officer likewise was devoid of authority. This is to
lose sight of the distinction between the existence of the
power and the regularity of the proceeding taken under it.
The governmental agency concerned, the Bureau of
Customs, is vested with exclusive authority. Even if it be
assumed that in the exercise of such exclusive
competence a taint of illegality may be correctly imputed,
the most that can be said is that under certain
circumstances the grave abuse of discretion conferred
may oust it of such jurisdiction. It does not mean however
that correspondingly a court of first instance is vested with
competence when clearly in the light of the decisions the
law has not seen fit to do so. 7
The allegations of petitioners regarding the propriety of the seizure should
properly be ventilated before the Collector of Customs. We have had occasion to
declare:
The Collector of Customs when sitting in forfeiture
proceedings constitutes a tribunal expressly vested by
law with jurisdiction to hear and determine the subject
matter of such proceedings without any interference from
the Court of First Instance. (Auyong Hian v. Court of Tax
Appeals, et al., 19 SCRA 10). The Collector of Customs of
Sual-Dagupan in Seizure Identification No. 14-F-72
constituted itself as a tribunal to hear and determine
among other things, the question of whether or not the
M/V Lucky Star I was seized within the territorial waters of
the Philippines. If the private respondents believe that the
seizure was made outside the territorial jurisdiction of the
Philippines, it should raise the same as a defense before
the Collector of Customs and if not satisfied, follow the
correct appellate procedures. A separate action before the
Court of First Instance is not the remedy.8
WHEREFORE, the petitions in G.R. No. 104604 and in G.R. No. 111223 are
hereby DISMISSED for lack of merit.
SO ORDERED.

[G.R.

No.

82586.

September

11,

1992.]

HON. SALVADOR M. MISON, Commissioner of Customs, and CARLOS L.


RAZO, Collector of Customs of the Subport of Clark, Petitioners, v. HON.
ELI G.C. NATIVIDAD, Presiding Judge of the Regional Trial Court, Branch
XLVIII, San Fernando, Pampanga, and CESAR SONNY CARLOS/CVC
TRADING, Respondents.
Cruz, Durian, Agabin, Atienza, Alday & Tuason for Private Respondent.

SYLLABUS
1. TAXATION; TARIFF AND CUSTOMS CODE; COLLECTOR OF CUSTOMS
HAS EXCLUSIVE ORIGINAL JURISDICTION OVER THE RES SUBJECT OF
THE WARRANT OF SEIZURE AND DETENTION TO THE EXCLUSION OF THE
REGIONAL TRIAL COURT. The court a quo has no jurisdiction over the res
subject of the warrant of seizure and detention. The respondent Judge, therefore,
acted arbitrarily and despotically in issuing the temporary restraining order,
granting the writ of preliminary injunction and denying the motion to dismiss,
thereby removing the res from the control of the Collector of Customs and
depriving him of his exclusive original jurisdiction over the controversy.
Respondent Judge exercised a power he never had and encroached upon the
exclusive original jurisdiction of the Collector of Customs. By express provision of
law, amply supported by well-settled jurisprudence, the Collector of Customs has
exclusive jurisdiction over seizure and forfeiture proceedings and regular courts
cannot interfere with his exercise thereof or stifle or put it to naught.
2. ISSUANCE OF WARRANT OF SEIZURE AND DETENTION PRECLUDES
INTERFERENCE OF THE REGIONAL TRIAL COURT; ILLEGALITY OF THE
WARRANT CANNOT JUSTIFY REGIONAL TRIAL COURTS INTERFERENCE;
OWNERSHIP OF GOODS OR LEGALITY OF THEIR ACQUISITION CAN BE
RAISED IN SEIZURE PROCEEDINGS. A warrant of seizure and detention
having already been issued, presumably in the regular course of official duty, the
Regional Trial Court of Pampanga was indisputably precluded from interfering in
the said proceedings. That in his complaint in Civil Case No. 8109 private
respondent alleges ownership over several vehicles which are legally registered
in his name, having paid all the taxes and corresponding licenses incident
thereto, neither divests the Collector of Customs of such jurisdiction nor confers
upon the said trial court regular jurisdiction over the case. Ownership of goods or
the legality of its acquisition can be raised as defenses in a seizure proceeding; if
this were not so, the procedure carefully delineated by law for seizure and
forfeiture cases may easily be thwarted and set to naught by scheming parties.
Even the illegality of the warrant of seizure and detention cannot justify the trial
courts interference with the Collectors jurisdiction. In the first place, there is a
distinction between the existence of the Collectors power to issue it and the
regularity of the proceeding taken under such power. In the second place, even if
there be such an irregularity in the latter, the Regional Trial Court does not have
the competence to review, modify or reverse whatever conclusions may result
therefrom.
DECISION
DAVIDE, JR., J.:
This is a petition for certiorari and prohibition filed on 6 April 1988 to annul, for
having been issued without jurisdiction or with grave abuse of discretion, the 26
February 1988 Resolution of respondent Judge denying petitioners motion to
dismiss Civil Case No. 8109 pending before Branch 48 of the Regional Trial
Court (RTC) of Pampanga and granting private respondents motion therein for
the issuance of a writ of preliminary injunction and to enjoin respondent Judge
from proceeding further in said case. It resurrects a long-settled issue of the
jurisdiction of the Regional Trial Court over actions involving articles subject to
seizure proceedings under the Tariff and Customs Code.chanrobles.com.ph :
virtual
law
library
In the Resolution of 18 April 1988, this Court required the respondents to
comment on the petition and issued a Temporary Restraining Order restraining
the respondent Judge from further proceeding with the aforementioned Civil
Case No. 8109 or from enforcing and/or carrying out his Resolution of 26
February
1988.
1
Private respondent subsequently filed his Comment 2 to the petition, to which
petitioners filed a Reply. 3 Private respondent then filed a Rejoinder 4 to the
latter.
This Court gave due course to the petition and required the parties to submit their
respective Memoranda. 5 Both manifested that they have sufficiently expounded
on the relevant issues in their respective Memoranda, which the Court noted and
granted.
The factual antecedents disclosed in the petition are as follows:chanrob1es
virtual
1aw
library
In a sworn letter 6 dated 7 February 1988 and addressed to the Commissioner of
Customs, one Butch Martinez informed the former of the existence of both
"assembled and disassembled" knocked-down vehicles, particularly Toyota Lite
Aces, at the compound CVC Trading, which is owned by a certain Mr. Castro and
located at St. Jude Avenue, St. Jude Village, San Fernando, Pampanga.
Martinez requested for an immediate investigation thereon and prosecution for
the
violation
of
customs
laws.
On the basis thereof, Gen. Benjamin C. Cruz, Acting Director of the National
Customs Police, formed a team composed of National Customs Police (NCP)
and Customs Intelligence and Investigation Division (CIID) members, issuing the
same a Mission Order 7 on 11 February 1988. The team proceeded to San
Fernando, Pampanga on the same day, giving due notice of their presence to the
PC Region III Command and the PC-INP Station at San Fernando, Pampanga.

Upon arrival at the place pinpointed by Mr. Martinez at around 11:00 p.m., the
team found a fenced area containing twenty (20) units of fully and partly
assembled Toyota Lite Ace vans. It immediately took possession and control of
the motor vehicles by cordoning off the enclosure. Thereafter, at about 11:30 p
m., two (2) members of the team were designated to secure a warrant of seizure
and detention from the Collector of Customs of the Subport of Clark, 8 herein
petitioner Carlos L. Razo. The latter instituted seizure proceedings against the
abovementioned vehicles (Seizure Identification No. CAB-01-88), entitled
"Republic of the Philippines versus Twenty (20) units Toyota Lite-Ace, CVC
Trading St. Jude Ave., Dolores Homesite, San Fernando, Pampanga,
OWNER/CLAIMANT", for the violation of "Section 2530 (f) and (1)-1 & 5" of the
Tariff and Customs Code, in relation to Central Bank regulations. Accordingly, at
about 8:00 a.m. on 12 February 1988, he issued a Warrant of Seizure and
Detention.
9
Since receipt of the warrant was refused by the owner/claimant or any of his
representatives, the same was served by substituted service through the posting
of a copy thereof on one of the subject motor vehicles found near the gate of the
stockyard. An inventory of the vehicles was conducted and a copy thereof was
attached to the return of the warrant made to the issuing authority.
At about 11:00 a.m. on 12 February 1988, when the team was about to haul the
motor vehicles away, two (2) Regional Trial Court sheriffs arrived with a
temporary restraining order issued on that date by the respondent Judge, as
Executive Judge of the Regional Trial Court of San Fernando, Pampanga; the
order was issued in connection with Civil Case No. 8109, entitled "Sonny Carlos,
plaintiff, versus Bureau of Customs and/or Customs Police from seizing or
confiscating the vehicles until further ordered, and directed the defendants to
attend the raffle of the case on 26 February 1988 at 9:00 oclock in the morning
and show cause why a writ of preliminary injunction should not be issued against
them. It further required plaintiff to submit within twenty four (24) hours from that
date the list of vehicles in question and "not to dispose any (sic) of them pending
further
order
of
the
court."
10
In his Complaint 11 in the above-entitled case, private respondent alleges that he
is the owner of several vehicles which are legally registered in his name and that
he has paid all the taxes and "corresponding licenses" therefor; he further avers
that elements of the defendant Bureau of Customs and/or Customs Police have
surrounded his residence threatening to take possession of the vehicles. He
finally prays that the latter be enjoined from doing so and that they be ordered to
pay
damages
in
the
sum
of
P50,000.00.
By virtue of the restraining order, the physical transfer of the vehicles was
deferred, however, elements of the National Customs Police and the PC
Regional Command remained deployed in the area to assert possession and
control over the seized motor vehicles by the Bureau of Customs.chanrobles
virtualawlibrary
chanrobles.com:chanrobles.com.ph
On 16 February 1988, lawyers of the Bureau of Customs filed a Motion to
Dismiss 12 Civil Case No. 8109 alleging therein (a) the lack of jurisdiction of the
Regional Trial Court over the subject vehicles in view of the exclusive jurisdiction
of the Collector of Customs over seizure and forfeiture cases, and (b) the failure
of
the
plaintiff
to
exhaust
administrative
remedies.
On 17 February 1988, the private respondent filed an Oppositions/Comment on
the Motion to Dismiss 13 alleging, among others, that the Warrant of Seizure and
Detention did not comply with the requirements for a valid search warrant under
the Constitution, and that taxes for the vehicles have been paid to the Bureau of
Internal
Revenue
(BIR).
The Motion to Dismiss was heard on 19 February 1988 by the respondent Judge,
to whose branch the case was raffled off. After said hearing, the private
respondents motion and application for preliminary injunction were deemed
submitted
for
resolution.
On 22 February 1988, private respondent filed an Amended Complaint 14
changing his name from "Sonny Carlos" to "CESAR SONNY CARLOS" and
naming as defendants, in place of the "BUREAU OF CUSTOMS AND/OR
CUSTOMS POLICE", "ATTY. CARLOS L. RAZO, in his capacity as Collector of
Customs; LOUIE ROMERO, BILLY BIBIT, their authorized deputies and JOHN
DOES." In this Amended Complaint, private respondent assails the subject
warrant for being patently "illegal and fatally defective" and void of any virtue;
reiterates his willingness to post a bond "in an amount the Court may fix
conditioned upon the damages that the defendants may suffer as a consequence
of the issuance of the injunction;" and asks for P500,000.00 as actual damages,
P100,000.00 as exemplary and corrective damages, P50,000.00 as moral
damages
and
P50,000.00
as
attorneys
fees.
In the meantime, the hearing of Seizure Identification No. CAB-01-88 was set for
18 and 19 February 1988, per Notice of Hearing dated 15 February 1988 and
issued by petitioner Collector of Customs. Since the owner/claimant CVC Trading
refused to accept a copy of the said notice, a follow-up notice of hearing was
transmitted to it thru a telegram; the latter replied also by telegram,15 declaring
that:jgc:chanrobles.com.ph
"We are the legal possessors/owners (sic) of the vehicles in our compound there
can be no forfeiture since a case has been lodged before the civil courts hearing
on Feb. 19, 1988 the courts have assumed jurisdiction to your exclusion.
Moreover elementary due process requires service of documents complaint.
There can be no service of summons (sic) or notice of hearing thru
telegrams."cralaw
virtua1aw
library
At the hearing on 18 February 1988, Attys. Napoleon Gatmaitan and Conrado
Unlayao, CIID, Bureau of Customs, appeared for the Government. No
appearance was entered for the owner/claimant. Thus, the Government was
allowed
to
present
evidence
ex-parte.
On 26 February 1988, petitioner Collector of Customs rendered a Decision 16 in
the said seizure proceedings, the dispositive portion of which reads:chanrobles
virtual
lawlibrary
"WHEREOF, by authority of law vested in the undersigned, it is hereby ordered
that the Twenty (20) Units Toyota Lite Ace covered by this seizure case be, as
they are hereby, declared forfeited in favor of the Government to be disposed of
in
the
manner
provided
for
by
law.

Let copies of this Decision be furnished all parties and office (sic) concerned, with
a copy thereof posted in the Bulletin Board of this Customhouse, for their
information guidance and appropriate action."cralaw virtua1aw library
On the same date, the respondent Judge issued a Resolution 17 in Civil Case
No. 8109 denying the motion to dismiss and granting the application for a writ of
preliminary injunction. The pertinent portions thereof read:jgc:chanrobles.com.ph
"I. Resolution on the Motion to Dismiss with Prayer to Lift Restraining Order
x
x
x
A reading of the complaint will show that it was alleged that the plaintiff is the
owner of the subject vehicles. He is in actual and physical possession of the
same. Plaintiff enjoys the presumption of ownership, to (sic) which he has to
protect.
x
x
x
It is to be noted that the subject matter of the complaint is the legal ownership of
the vehicles and damages being asked by plaintiff, thus, this Court can assume
jurisdiction over the case. The mere allegation of the defendants that the subject
vehicles were smuggled based on reliable information will not divest this Court
of jurisdiction.
x
x
x
In this particular case, there is no showing that plaintiff is an importer who
imported dutiable goods, in entering the port of Clark Air Base, imported thru that
port. The goods are in private (sic) place owned by plaintiff, and not in the
possession of the collector of customs.
x
x
x
The numerous Supreme Court decisions cited by movant in his motion to dismiss
have very remote pertinence at the case at car. In the cited cases, dutiable
imported goods or articles were seized while on vessels and/or customs zone
(sic), and the alleged owners filed cases of replevin or recovery of personal
properties.
II. Resolution in the Issuance of Writ of Preliminary Injunction
x
x
x
Having substantiated the said allegations, in his complaint with Annexes and
considering the oral arguments of the parties, it is hereby ordered and directed
that after the plaintiff filed (sic) the bond in the amount of P100,000.00 as fixed by
this Court, all the defendants and any other persons acting under their command,
or for (sic) in their behalf, to (sic) desist and refrain from guarding the area of the
plaintiff and from seizing or confiscating the vehicles involved in this case
pending termination of this litigation and/or unless a contrary order is issued by
this Court. Thus, the defendants is (sic) hereby inhibited for the meantime to
guard the area or commit trespass of plaintiffs premises in any manner restrain
(sic) the movement of herein plaintiff and his representatives or employees,
considering that there is standing (sic) of this Court that pending the termination
of this case, the said vehicles should not be disposed of."cralaw virtua1aw library
Hence, this petition which We find to be meritorious. It should be
granted.chanroblesvirtualawlibrary
The court a quo jurisdiction over the res subject of the warrant of seizure and
detention. The respondent Judge, therefore, acted arbitrarily and despotically in
issuing the temporary restraining order, granting the writ of preliminary injunction
and denying the motion to dismiss, thereby removing the res from the control of
the Collector of Customs and depriving him of his exclusive original jurisdiction
over the controversy. Respondent Judge exercised a power he never had and
encroached upon the exclusive original jurisdiction of the Collector of Customs.
By express provision of law, amply supported by well-settled jurisprudence, the
Collector of Customs has exclusive jurisdiction over seizure and forfeiture
proceedings and regular courts cannot interfere with his exercise thereof or stifle
or
put
it
to
naught.
In the 1966 case of Pacis v. Averia, 18 this Court, speaking through Mr. Justice
J.P.
Bengzon,
held
that:jgc:chanrobles.com.ph
"The Tariff and Customs Code, in Section 2530 thereof, lists the kinds of property
subject to forfeiture. At the same time, in Part 2 of Title VI thereof, it provides for
the procedure in seizure and forfeiture cases and vests in the Collector of
Customs the authority to hear and decide said cases. [Section 2312, R.A. 1937]
The Collectors decision is appealable to the Commissioner of Customs Section
2313, R.A. 1937] whose decision is in turn appealable to the Court of Tax
Appeals. [Section 2402, R.A. 1937, Sections 7 and 11, R.A. 1125]. An aggrieved
party may appeal from a judgment of the Court of Tax Appeals directly to this
Court [Section 18, R.A. 1125; Rule 44, Rules of Court]. On the other hand,
Section 44(c) of the Judiciary Act of 1948 [As amended by R.A. 3828] lodges in
the Court of First Instance original jurisdiction in all cases in which the value of
the property in controversy amounts to more than ten thousand pesos. This
original jurisdiction of the Court of First Instance, when exercised in an action for
recovery of personal property which is a subject of a forfeiture proceeding in the
Bureau of Customs, tends to encroach upon, and to render futile, the jurisdiction
of the Collector of Customs in seizure and forfeiture proceedings. This is
precisely what took place in this case. The seizure and forfeiture proceedings
against the M/B Bukang Liwayway before the Collector of Customs of Manila,
was stifled by the issuance of a writ of replevin by the Court of First Instance of
Cavite.
Should Section 44(c) of the Judiciary Act of 1948 give way to the provisions of
the Tariff and Customs Code. or vice versa? In Our opinion, in this particular
case, the Court of First Instance should yield to the jurisdiction of the Collector of
Customs. The jurisdiction of the Collector of Customs is provided for in Republic
Act 1937 which took effect on July 1, 1957, much later than the Judiciary Act of
1948. It is axiomatic that a later law prevails over a prior statute [Herman v. Radio
Corporation of the Philippines, 50 Phil. 490; Pampanga Sugar Mills v. Trinidad,
279 U.S. 211, 73 L. ed. 665]. Moreover, on grounds of public policy, it is more
reasonable to conclude that the legislators intended to divest the Court of First
Instance of the prerogative to replevin a property which is a subject of a seizure

and forfeiture proceedings for violation of the Tariff and Customs Code.
Otherwise, actions for forfeiture of property for violation of Customs laws could
easily be undermined by the simple device of replevin.chanrobles.com.ph : virtual
law
library
Furthermore, Section 2303 of the Tariff and Customs Code requires the Collector
of Customs to give to the owner of the property sought to be forfeited written
notice of the seizure and to give him the opportunity to be heard in his defense.
This provision clearly indicates the intention of the law to confine in the Bureau of
Customs the determination of all questions affecting the disposal of property
proceeded against in a seizure and forfeiture case. The judicial recourse of the
property owner is not in the Court of First Instance but in the Court of Tax
Appeals, and only after exhausting administrative remedies in the Bureau of
Customs."cralaw
virtua1aw
library
In De Joya v. Lantin, 19 this Court, speaking again through Mr. Justice J.P.
Bengzon,
declared:jgc:chanrobles.com.ph
"The goods in question are imported articles entered at the Port of Cebu. Should
they be found to have been released irregularly from Customs custody in Cebu
City, they are subject to seizure and forfeiture, the proceedings for which comes
within the jurisdiction of the Bureau of Customs pursuant, to Republic Act 1937.
Said proceedings should be followed; the owner of the goods may set up
defenses therein (Pacis v. Averia, L-22526, Nov. 29, 1966). From the decision of
the Commissioner of Customs appeal lies to the Court of Tax Appeals, as
provided in Sec. 2402 of Republic Act 1937 and Sec. 11 of Republic Act 1125. To
permit recourse to the Court of First Instance in cases of seizure of imported
goods would in effect render ineffective the power of the Customs authorities
under the Tariff Code and deprive the Court of Tax Appeals of one of its exclusive
appellate jurisdiction. As this Court has ruled in Pacis v. Averia, supra, Republic
Acts 1937 and 1125 vest jurisdiction over seizure and forfeiture proceedings
exclusively upon the Bureau of Customs and the Court of Tax Appeals. Such law
being special in nature, while the Judiciary Act defining the jurisdiction of Courts
of First Instance is a general legislation, not to mention that the former are later
enactments, the Court of First Instance should yield to the jurisdiction of the
Customs
authorities."cralaw
virtua1aw
library
This rule was subsequently reiterated in Romualdez v. Arca, 20 De Joya v. David,
21 Diosamito v. Balanque, 22 Lopez v. Commissioner of Customs,23 Ponce
Enrile v. Vinuya, 24 Collector of Customs v. Torres, 25 Pacis v. Geronimo 26 and
De
la
Fuente
v.
De
Veyra.
27
The language of the foregoing rule is simple, clear and leaves no doubt as to the
Regional Trial Courts lack of jurisdiction over the res which has already been
made the subject of seizure and forfeiture proceedings. Frankly, this Court is
unable to understand why the respondent Judge misread the same; perhaps, he
simply chose to ignore it. At any rate, such behavior is highly
condemnable.cralawnad
A warrant of seizure and detention having already been issued, presumably in
the regular course of official duty, 28 the Regional Trial Court of Pampanga was
indisputably precluded from interfering in the said proceedings. That in his
complaint in Civil Case No. 8109 private respondent alleges ownership over
several vehicles which are legally registered in his name, having paid all the
taxes and corresponding licenses incident thereto, neither divests the Collector of
Customs of such jurisdiction nor confers upon the said trial court regular
jurisdiction over the case. Ownership of goods or the legality of its acquisition can
be raised as defenses in a seizure proceeding; 29 if this were not so, the
procedure carefully delineated by law for seizure and forfeiture cases may easily
be thwarted and set to naught 30 by scheming parties. Even the illegality of the
warrant of seizure and detention cannot justify the trial courts interference with
the Collectors jurisdiction. In the first place, there is a distinction between the
existence of the Collectors power to issue it and the regularity of the proceeding
taken under such power. In the second place, even if there be such an
irregularity in the latter, the Regional Trial Court does not have the competence to
review, modify or reverse whatever conclusions may result therefrom. In Ponce
Enrile v. Vinuya, 31 this Court had the occasion to state:jgc:chanrobles.com.ph
"2. Respondents, however, notwithstanding the compelling force of the above
doctrines, would assert that respondent Judge could entertain the replevin suit as
the seizure is illegal, allegedly because the warrant issued is invalid and the
seizing officer likewise was devoid of authority. This is to lose sight of the
distinction, as earlier made mention of, between the existence of the power and
the regularity of the proceeding taken under it. The governmental agency
concerned, the Bureau of Customs, is vested with exclusive authority. Even if it
be assumed that in the exercise of such exclusive competence a taint of illegality
may be correctly imputed, the most that can be said is that under certain
circumstances the grave abuse of discretion conferred may oust it of such
jurisdiction. It does not mean however that correspondingly a court of first
instance is vested with competence when clearly in the light of the above
decisions the law has not seen fit to do so. The proceeding before the Collector
of Customs is not final. An appeal lies to the Commissioner of Customs and
thereafter to the Court of Tax Appeals. It may even reach this Court through the
appropriate petition for review. The proper ventilation of the legal issues raised is
thus indicated. Certainly a court of first instance is not therein included. It is
devoid
of
jurisdiction."cralaw
virtua1aw
library
WHEREFORE, the Resolution of respondent Judge of 26 February 1988 in Civil
Case No. 8109 before Branch 48 of the Regional Trial Court of Pampanga, and
all proceedings had therein, are NULLIFIED and SET ASIDE and the said case is
hereby
ordered
DISMISSED.chanroblesvirtualawlibrary

[G.R. No. 134114. July 6, 2001]


NESTLE PHILIPPINES, INC., (FORMERLY FILIPRO, INC.) petitioner, vs.
HONORABLE COURT OF APPEALS, COURT OF TAX APPEALS and
COMMISSIONER OF CUSTOMS, respondents.
DECISION
DE LEON, JR., J.:

Challenged in this petition for review on certiorari is the Decision[1] in CAG.R. SP. No. 43188[2] dated September 23, 1997 of the Court of Appeals which
affirmed the Decision[3] dated May 30, 1995 of the Court of Tax Appeals in C.T.A.
Case No. 4478[4] dismissing petitioners petition for review to compel the
Commissioner of Customs to grant it a refund of allegedly overpaid import duties,
on its various importations of milk and milk products, amounting to Five Million
Eight Thousand and Twenty-Nine Pesos (P5,008,029.00).
Petitioners motion for reconsideration thereof was denied by the Court of
Appeals in a Resolution[5] dated June 9, 1998.
The antecedent facts are as follows.
Petitioner is a duly organized domestic corporation engaged in the
importations of milk and milk products for processing, distribution and sale in the
Philippines. Between July and November 1984, petitioner transacted sixteen
(16) separate importations of milk and milk products from different
countries. Petitioner was assessed customs duties and advance sales taxes by
the Collector of Customs of Manila for each of these separate importations on the
basis of the published Home Consumption Value (HCV) indicated in the Bureau
of Customs Revision Orders. Petitioner paid the same but seasonably filed the
corresponding protests before the said Collector of Customs from October 25 to
December 5, 1984, uniformly alleging therein that the latter erroneously applied
higher home consumption values in determining the dutiable value for each of
these separate importations. In the said protests, petitioner claims for refund of
both the alleged overpaid import duties amounting to Five Million Eight Thousand
and Twenty-Nine Pesos (P5,008,029.00) and advance sales taxes aggregating to
Four Million Five Hundred Sixty-Four Thousand One Hundred Seventy-Nine
Pesos and Thirty Centavos (P4,564,179.30).
On October 14, 1986, petitioner formally filed a claim for refund of
allegedly overpaid advance sales taxes with the Bureau of Internal Revenue
(BIR) amounting to Four Million Five Hundred Sixty-Four Thousand One Hundred
Seventy-Nine Pesos and Thirty Centavos (P4,564,179.30) covering the same
sixteen (16) importations of milk and milk products from different countries. Not
long after, on October 15, 1986 and within the two-year prescriptive period
provided for under the National Internal Revenue Code (NIRC) for claiming a tax
refund, petitioner filed the corresponding petition for review with the Court of Tax
Appeals (CTA) which was docketed therein as C.T.A. Case No. 4114. On
January 3, 1994, the tax court ruled in favor of petitioner and forthwith ordered
the BIR to refund to the petitioner the sum of Four Million Four Hundred EightyNine Thousand Six Hundred Sixty-One Pesos and Ninety-Four Centavos
(P4,489,661.94) representing the overpaid Advance Sales Taxes on the aforesaid
importations.
On the other hand, the sixteen (16) protest cases for refund of alleged
overpaid customs duties amounting to Five Million Eight Thousand Twenty-Nine
Pesos (P5,008,029.00) were left with the Collector of Customs of
Manila. However, the said Collector of Customs failed to render his decision
thereon after almost six (6) years since petitioner paid under protest the customs
duties on the said sixteen (16) importations of milk and milk products and filed
the corresponding protests.
Consequently, in order to prevent these claims from becoming stale on the
ground of prescription, petitioner immediately filed a petition for review docketed
as C.T.A. Case No. 4478, with the Court of Tax Appeals on August 2, 1990
despite the absence of a ruling on its protests from both the Collector of Customs
of Manila and the Commissioner of Customs.
On May 30, 1995, the CTA rendered judgment dismissing C.T.A. Case No.
4478 for want of jurisdiction. [6] The subsequent motion for reconsideration filed by
the petitioner on July 11, 1995 was denied for lack of merit in a
Resolution[7] dated January 6, 1997.
Aggrieved, petitioner appealed on February 10, 1999 the said judgment
and resolution of the CTA in C.T.A. Case No. 4478 to the Court of Appeals by
way of petition for review on certiorari under Rule 45 of the Rules of
Court. However, this appeal was later dismissed by the appellate court on
September 23, 1997 for lack of merit. The Court of Appeals opined, inter alia,
that the CTAs jurisdiction is not concurrent with the appellate jurisdiction of the
Commissioner of Customs since there was no decision or ruling yet of the
Collector of Customs of Manila on the matter; that the petition does not fall under
any of the recognized exceptions on exhaustion of administrative remedies to
justify petitioners immediate resort to the CTA; that the petitioner failed to move
for the early resolution of its claims for refund nor was there any notice given that
the said Collector of Customs continued inaction on its claims would be deemed
a denial of its claims; and that petitioner also neglected to cite any law or
jurisprudence which prescribes a period for filing an appeal in the CTA even if
there was no action yet by the Commissioner of Customs.
On June 9, 1998, the appellate court issued a Resolution [8] denying
petitioners motion for reconsideration for lack of merit.
Hence, this petition.
Petitioner assigns the following as errors, to wit:
1.

2.

The temporary restraining order issued by this Court on 18 April 1988 is hereby
made
permanent.
SO ORDERED.

3.

RESPONDENT COURT OF APPEALS ACTED WITH GRAVE


ABUSE OF DISCRETION IN HOLDING THAT THE FILING
OF PROTEST CASES BEFORE THE COLLECTOR OF
CUSTOMS HAD EFFECTIVELY INTERRUPTED THE
RUNNING OF THE SIX-YEAR PRESCRIPTIVE PERIOD;
RESPONDENT COURTS COMMITTED FUNDAMENTAL
ERRORS AND ACTED WITH GRAVE ABUSE OF
DISCRETIONS IN HOLDING THAT PETITIONER HAD
FAILED TO EXHAUST ADMINISTRATIVE REMEDIES,
NOTWITHSTANDING ALMOST 6 YEARS
OF
PROCTRACTED HEARINGS OF THE 16 PROTEST CASES
WITH THE CUSTOMS COLLECTOR, AND FILING OF THE
PETITION ONLY WHEN THE SIX-YEAR PRESCRIPTIVE
PERIOD
WAS ABOUT TO EXPIRE TO AVOID
NULLLIFICATION OF CLAIMS ON GROUND OF
PRESCRIPTION;
THE RESPONDENT COURTS GRAVELY ERRED IN
DISMISSING ON SHEER TECHNICALITIES PETITIONERS
CLAIMS FOR THE REFUND OF P5,008,029.08 (SIC)
OVERPAID
DUTIES,
WHEN
THE
FACTS
OF

OVERPAYMENTS HAD BEEN EARLIER RESOLVED IN CTA


CASE NO. 4114, HOLDING THAT THE WRONG
APPLICATION OF THE HIGHER HOME CONSUMPTION
VALUES RESULTED IN THE OVERPAYMENTS OF DUTIES
AND TAXES, AND UPON WHICH, IT ORDERED THE
REFUND OF P4,489,661.94 IN OVERPAID TAXES. THERE
IS NO VALID REASON THEREFORE WHY THE
CORRESPONDING
OVERPAYMENTS
IN
CUSTOMS
DUTIES CAN NOT ALSO BE REFUNDED TO ITS RIGHTFUL
OWNER, THE PETITIONER HEREIN.
In this petition, petitioner asserts that tax refunds are based on quasicontract or solutio indebiti, which under Article 1145[9] of the Civil Code,
prescribes in six (6) years. Consequently, the pendency of its protest cases
before the office of the Collector of Customs of Manila did not interrupt the
running of the prescriptive period under the aforesaid provision of law
considering that it is only an administrative body performing only quasi-judicial
function and not a regular court of justice. [10] Thus, in like manner the thirty-day
period for appealing to the CTA must be made within the six-year prescriptive
period.
Petitioner further contends that the fact of overpayment of customs duties
has been duly established and resolved with finality by the Court of Tax Appeals
on January 3, 1994 in C.T.A. Case No. 4114. [11] In that case, the tax court found
that the Bureau of Customs erroneously used the wrong home consumption
value in assessing the petitioner the Advance Sales Tax on its subject sixteen
(16) importations. The tax court then ordered the Commissioner of Internal
Revenue to refund to the petitioner the sum of Four Million Four Hundred EightyNine Thousand Six Hundred Sixty-One Pesos and Ninety-Four Centavos
(P4,489,661.94), representing overpaid advance sales tax covering the same
sixteen (16) importations. It is also from the same 16 separate importations of
milk and milk products that petitioner based its claims for refund of overpayment
of customs duties. Thus, petitioner avers that its claims for refund of overpaid
customs duties must likewise be granted and awarded in its favor.
In lieu of Comment, [12] the Solicitor General manifested that there is merit
in petitioners argument considering that petitioners cause of action to recover a
tax erroneously paid is based on solutio indebiti which is expressly classified as a
quasi-contract under the Civil Code; that petitioners cause of action would have
prescribed on August 2, 1990 if it did not bring the matter before the CTA; and
that the Collector of Customs has not even acted or resolved the petitioners
several protests it had filed before his office within six (6) years after it made the
earliest payment of advance customs duties on its importations.
There was also no violation of the principle of exhaustion of administrative
remedies in this case. This doctrine does not apply to the case at bar since its
observance would only result in the nullification of the claim for refund being
asserted nor would it provide a plain, speedy and adequate remedy under the
circumstances. This notwithstanding, however, the Solicitor General further
opined that this case should be remanded to the CTA in order for the tax court to
determine the veracity of petitioners claim.
On the other hand, respondent Commissioner of Customs, in his
Comment[13] dated August 21, 2000, admitted with regret, their official inaction
adverted to by the petitioner. Respondent Commissioner expressed the view
that petitioners claim for refund of customs duties should not outrigthly be denied
by virtue of the strict adherence to the rules to prevent grave injustice to hapless
taxpayers; that this does not justify, however, an outright award of the refund of
alleged overpayment of customs duties in favor of petitioner; and that there is no
definite factual determination yet that the customs duties and taxes in
question were overpaid and refundable, and if refundable how much is the
refundable amount. The fact that the Collector of Customs of Manila failed to act
or decide on the petitioners protest cases filed before his Office does not relieve
the petitioner of its burden to prove that it is entitled to the refund sought
for. Thus, respondent Commissioner of Customs, thru his special counsel,
recommended that this case be remanded to the court of origin, namely, the CTA.
The recommendations of both the Solicitor General and the respondent
Commissioner of Customs are well taken. After a meticulous consideration of
this case, we find that the recommended remand of this case to the CTA is
warranted for the proper verification and determination of the factual basis and
merits of this petition and in order that the ends of substantial justice and fair play
may be subserved. We are of the view that the said recommendation is in accord
with the provisions of the Tariff and Customs Code as hereinafter discussed.
The right to claim for refund of customs duties is specifically governed by
Section 1708 of the Tariff and Customs Code, which provides that Sec. 1708. Claim for Refund of Duties and Taxes and Mode of Payment. All
claims for refund of duties shall be made in writing and forwarded to the
Collector to whom such duties are paid, whoupon receipt of such
claim, shall verify the same by the records of his Office, and if found to be
correct and in accordance with law, shall certify the same to the Commissioner
with his recommendation together with all necessary papers and
documents. Upon receipt by the Commissioner of such certified claim he shall
cause the same to be paid if found correct.
It is clear from the foregoing provision of the Tariff and Customs Code
that in all claims for refund of customs duties, the Collector to whom such
customs duties are paid and upon receipt of such claim is mandated to verify the
same by the records of his Office. If such claim is found correct and in
accordance with law, the Collector shall certify the same to the
Commissioner with his recommendationtogether with all the necessary papers
and documents. This is precisely one of the reasons why the Court of Appeals
upheld the dismissal of the case on the ground that the CTAs jurisdiction [14] under
the Tariff and Customs Code is not concurrent with that of the respondent
Commissioner of Customs due to the absence of any certification from the
Collector of Customs of Manila. Accordingly, petitioners contention that its
claims for refund of alleged overpayment of customs duties may be deemed
established from the findings of the tax court in C.T.A. Case No. 4114 on the
Advance Sales Tax is not necessarily correct in the light of the above-cited
provision of the Tariff and Customs Code.
Customs duties is the name given to taxes on the importation and
exportation of commodities, the tariff or tax assessed upon merchandise
imported from, or exported to, a foreign country. [15] Any claim for refund of
customs duties, therefore, take the nature of tax exemptions that must be
construed strictissimi juris against the claimants and liberally in favor of the taxing
authority.[16] This power of taxation being a high prerogative of sovereignty, its
relinquishment is never presumed. Any reduction or diminution thereof with
respect to its mode or its rate must be strictly construed, and the same must be
couched in clear and unmistakable terms in order that it may be applied. [17]

Thus, any outright award for the refund of allegedly overpaid customs
duties in favor of petitioner on its subject sixteen (16) importations is not favored
in this jurisdiction unless there is a direct and clear finding thereon. The fact
alone that the tax court, in C.T.A. Case No. 4114, has awarded in favor of the
petitioner the refund of overpaid Advance Sales Tax involving the same sixteen
(16) importations does not in any way excuse the petitioner from proving its
claims for refund of alleged overpayment of customs duties. We have scrutinized
the decision rendered by the tax court in C.T.A. Case No. 4114 and found no
clear indication therein that the tax court has ruled on petitioners claims for
alleged overpayment of customs duties.
The petitioner is mistaken in its contention that its claims for refund of
allegedly overpaid customs duties are governed by Article 2154 [18] of the New
Civil Code on quasi-contract, or the rule on solutio indebiti, which prescribes in
six (6) years pursuant to Article 1145 of the same Code.
Sections 2308 and 2309 of the Tariff and Customs Code provide that:
Sec. 2308. Protest and Payment upon Protest in Civil Matter. When a ruling
or decision of the collector is made whereby liability for duties , taxes, fees,
or other charges are determined, except the fixing of fines in seizure cases, the
party adversely affected may protest such ruling or decision by presenting
to the Collector at the time when payment of the amount claimed to be due the
government is made, or within fifteen (15) days thereafter, a written protest
setting forth his objection to the ruling or decision in question, together
with the reasons therefor. No protest shall be considered unless payment
of the amount due after final liquidation has first been made and the
corresponding docket fee, as provided for in Section 3301.
Sec. 2309. Protest Exclusive Remedy in Protestable Case.In all cases
subject to protest, the interested party who desires to have the action of the
collector reviewed, shall make a protest, otherwise, the action of the
collector shall be final and conclusive against him, x x x.
SEC. 2312. Decision or Action by the collector in Protest and Seizure Cases.
- When a protest in a proper form is presented in a case where protest is
required, the collector shall issue an order for hearing within fifteen (15)
days from receipt of the protest and hear the matter thus presented. Upon
termination of the hearing, the Collector shall render a decision within thirty
(30) days, and if the protest is sustained, in whole or in part, he shall make the
appropriate order, the entry reliquidated necessary. x x x .
In the light of the above-cited provisions of the Tariff and Customs Code, it
appears that in all cases subject to protest, the claim for refund of customs duties
may be foreclosed only when the interested party claiming refund fails to file a
written protest before the Collector of Customs. This written protest which must
set forth the claimants objection to the ruling or decision in question together with
the reasons therefor must be made either at the time when payment of the
amount claimed to be due the government is made or within fifteen (15) days
thereafter. In conjunction with this right of the claimant is the duty of the Collector
of Customs to hear and decide such protest in accordance and within the period
of time prescribed by the law.
Accordingly, once a written protest is seasonably filed with the Collector of
Customs the failure or inaction of the latter to promptly perform his mandated
duty under the Tariff and Customs Code should not be allowed to prejudice the
right of the party adversely affected thereby. Technicalities and legalisms,
however exalted, should not be misused by the government to keep money not
belonging to it, if any is proven, and thereby enrich itself at the expense of the
taxpayers. If the State expects its taxpayers to observe fairness and honesty in
paying their taxes, so must it apply the same standard against itself in refunding
excess payments, if any, of such taxes. Indeed the State must lead by its own
example of honor, dignity and uprightness.
Here, it is undisputed that the inaction of the Collector of Customs of
Manila for nearly six (6) years on the protests seasonably filed by the petitioner
has caused the latter to immediately resort to the CTA. The petitioner did so on
the mistaken belief that its claims are governed by the rule on quasi-contract
or solutio indebiti which prescribes in six (6) years under Article 1145 of the New
Civil Code.
This belief or contention of the petitioner is misplaced. In order for the rule
on solutio indebiti to apply it is an essential condition that petitioner must first
show that its payment of the customs duties was in excess of what was required
by the law at the time when the subject sixteen (16) importations of milk and milk
products were made. Unless shown otherwise, the disputable presumption of
regularity of performance of duty lies in favor of the Collector of Customs.
In the present case, there is no factual showing that the collection of the
alleged overpaid customs duties was more than what is required of the petitioner
when it made the aforesaid separate importations. There is no factual finding yet
by the government agency concerned that petitioner is indeed entitled to its claim
of overpayment and, if true, for how much it is entitled. It bears stress that in
determining whether or not petitioner is entitled to refund of alleged overpayment
of customs duties, it is necessary to determine exactly how much the
Government is entitled to collect as customs duties on the importations. Thus, it
would only be just and fair that the petitioner-taxpayer and the Government alike
be given equal opportunities to avail of the remedies under the law to contest or
defeat each others claim and to determine all matters of dispute between them
in one single case.[19] If the State expects its taxpayers to observe fairness and
honesty in paying their taxes, so must it apply the same standard against itself in
refunding excess payments, if truly proven, of such taxes. Indeed, the State
must lead by its own example of honor, dignity and uprightness.
The ratiocination of the Court of Appeals is in accord with a ruling of this
Court which is applicable to the case at bar, to wit:
As stated by the respondent court in its Resolution dated January 6, 1997,
the petitioners claim cannot be deemed to prescribe because the Collector
of Customs has not acted on the protest, and the period for filing an appeal
to the Commissioner of Customs has not commenced to run. Moreover,
delay or inaction of a subordinate official, does not constitute an exception to the
afore-cited principle as the delay should be brought to the attention of a superior
administrative officer for immediate adjudication (Commissioner of Immigration
vs. Vamenta, Jr., 54 SCRA 342; Barte vs. Dichoso, 47 SCRA 77).
WHEREFORE, the assailed Decision dated September 23, 1997 of the
Court of Appeals in CA-G.R. SP. No. 43188 is hereby SET ASIDE; and C.T.A.
Case No. 4478 is REINSTATED and REMANDED to the Court of Tax Appeals for
hearing and reception of evidence relative to petitioners claims for refund of
alleged overpayment of customs duties. The Court of Tax Appeals is directed to
dispose of the said case with dispatch.

SO ORDERED.

CHEVRON PHILIPPINES, INC.,

G.R. No. 178759


Petitioner,
P
resent:
P
UNO, C.J.,
Chairperso
n,

-versus-

CAR
PIO,
AUSTRIA-MARTINEZ,*
CORONA and
LEONA
RDO-DE
CASTRO, JJ.

COMMISSIONER OF
THE
BUREAU
OF
CUSTOMS,
Respondent.

Promulgated:
ugust
2008

A
11,

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

CORONA, J.:
This is a petition for review on certiorari [1] of the decision[2] and
resolution[3] of the Court of Tax Appeals (CTA) en banc dated March 1, 2007 and
July 5, 2007, respectively, in CTA EB Nos. 121 and 122 which reversed the
decision of the CTA First Division dated April 5, 2005 in CTA Case No. 6358.
Petitioner Chevron Philippines, Inc. [4] is engaged in the business of
importing, distributing and marketing of petroleum products in the Philippines. In
1996, theimportations subject of this case arrived and were covered by eight bills
of lading, summarized as follows:

66,229,960 liters
Nan Hai Crude Oil

On August 1, 2000, petitioner received from the District Collector of


Customs of the Port of Batangas (District Collector) a demand letter requiring the
immediate settlement of the amount of P73,535,830 representing the difference
between the 10% and 3% tariff rates on the shipments. In response, petitioner
wrote the District Collector to inform him of the pending request for the creation
of a unified team with the exclusive authority to investigate the
matter. Furthermore, petitioner objected to the demand for payment of customs
duties using the 10% duty rate and reiterated its position that the 3% tariff rate
should instead be applied. It likewise raised the defense of prescription against
the assessment pursuant to Section 1603 of the Tariff and Customs Code
(TCC). Thus, it prayed that the assessment for deficiency customs duties be
cancelled and the notice of demand be withdrawn. [10]
In a letter petitioner received on October 12, 2000, respondent
Commissioner of the BOC [11] stated that it was the IPD-CIIS which was
authorized to handle the investigation, to the exclusion of the Legal Division and
the District Collector.[12]
The IPD-CIIS, through Special Investigator II Domingo B. Almeda and
Special Investigator III Nemesio C. Magno, Jr., issued a finding dated February 2,
2001 that the import entries were filed beyond the 30-day non-extendible period
prescribed under Section 1301 of the TCC. They concluded that the importations
were already considered abandoned in favor of the government. They also
found that fraud was committed by petitioner in collusion with the former District
Collector.[13]
Thereafter, respondent[14] wrote petitioner on October 29, 2001
informing it of the findings of irregularity in the filing and acceptance of the import
entries beyond the period required by customs law and in the release of the
shipments after the same had already been deemed abandoned in favor of the
government. Petitioner was ordered to pay the amount of P1,180,170,769.21
representing the total dutiable value of the importations. [15]

DECISION

PRODUCT

of the BOC, to submit pertinent documents in connection with the subject


shipments pursuant to the investigation he was conducting thereon. It appeared,
however, that the Legal Division of the BOC was also carrying out a separate
investigation. Atty. Roberto Madrid (of the latter office) had gone to petitioners
Batangas Refinery and requested the submission of information and documents
on the same shipments. This prompted petitioner to seek the creation of a
unified team to exclusively handle the investigation.[9]

DATE

ARRIVAL
VESSEL

This prompted petitioner to file a petition for review in the CTA First
Division on November 28, 2001, asking for the reversal of the decision of
respondent.[16]
In a decision promulgated on April 5, 2005, the CTA First Division ruled
that respondent was correct when he affirmed the findings of the IPD-CIIS on the
existence
of
fraud.
Therefore,
prescription
was
not
applicable.
Ironically, however, it also held that petitioner did not abandon the
shipments. The shipments should be subject to the 10% rate prevailing at the
time of their withdrawal from the custody of the BOC pursuant to Sections 204,
205 and 1408 of the TCC. Petitioner was therefore liable for deficiency customs
duties in the amount of P105,899,569.05.[17]

3/8/1996

Ex MT
Bona Spray

6,990,712 liters
Reformate

3/18/1996

Ex MT
Orient Tiger

16,651,177 liters
FCCU Feed Stock

3/21/1996

Ex MT
Probo Boaning

After both respondent and petitioner had filed their petitions for review
with the CTA en banc, docketed as CTA EB No. 121 and CTA EB No. 122,
respectively, the petitions were consolidated.

236,317,862 liters
Oman/Dubai
Crude Oil

3/26/1996

Ex MT
Violet

51,878,114 liters
Arab Crude Oil

4/10/1996

Ex MT
Crown Jewel[5]

In a decision dated March 1, 2007, the CTA en banc held that it was
the filing of the IEIRDs that constituted entry under the TCC. Since these were
filed beyond the 30-day period, they were not seasonably entered in
accordance with Section 1301 in relation to Section 205 of the
TCC. Consequently, they were deemed abandoned under Sections 1801 and
1802 of the TCC. It also ruled that the notice required under Customs
Memorandum Order No. 15-94 (CMO 15-94) was not necessary in view of
petitioners actual knowledge of the arrival of the shipments. It likewise agreed
with the CTA Divisions finding that petitioner committed fraud when it failed to file
the IEIRD within the 30-day period with the intent to evade the higher
rate. Thus, petitioner was ordered to pay respondent the total dutiable value of
the oil shipments amounting toP893,781,768.21.[19]

Petitioner sought reconsideration of the April 5, 2005 decision while


respondent likewise filed his motion for partial reconsideration. Both motions
were denied in a resolution dated September 9, 2005. [18]

The shipments were unloaded from the carrying vessels onto petitioners
oil tanks over a period of three days from the date of their arrival. Subsequently,
the import entry declarations (IEDs) were filed and 90% of the total customs
duties were paid. The import entry and internal revenue declarations (IEIRDs) of
the shipments were thereafter filed on the following dates:

Hence this petition.


ENTRY
NO.
606-96
604-96
605-96
600-96
601-96
602-96
603-96
818-96

PRODUCT

ARRIVAL
DATE
3/8/1996

IED

IEIRD

66,229,960 liters
Nan Hai Crude Oil
6,990,712 liters
3/18/1996
Reformate
16,651,177 liters
3/21/1996
FCCU Feed Stock
236,317,862 liters
3/26/1996
Oman/Dubai Crude Oil

3/12/1996

5/10/1996

3/26/1996

5/10/1996

3/26/1996

5/10/1996

3/28/1996

5/10/1996

51,878,114 liters
Arab Crude Oil

4/10/1996

6/21/1996

4/10/1996

The importations were appraised at a duty rate of 3% as provided under RA


8180[6] and petitioner paid the import duties amounting to P316,499,021.[7] Prior
to the effectivity of RA 8180 on April 16, 1996, the rate of duty on imported crude
oil was 10%.
Three years later, then Finance Secretary Edgardo Espiritu received
a letter (with annexes) dated June 10, 1999 from a certain Alfonso A. Orioste
denouncing the deliberate concealment, manipulation and scheme employed by
petitioner and Pilipinas Shell in the importation of crude oil, thereby resulting in
huge losses of revenue for the government. This letter was endorsed to the
Bureau of Customs (BOC) for investigation on July 19, 1999. [8]
On January 28, 2000, petitioner received a subpoena duces tecum/ad
testificandum from Conrado M. Unlayao, Chief of the Investigation and
Prosecution Division, Customs Intelligence and Investigation Service (IPD-CIIS)

There are three issues for our resolution:


1.
whether entry under Section 1301 in relation to Section
1801 of the TCC refers to the IED or the IEIRD;
2.
whether fraud was perpetrated by petitioner and
3.
whether the importations can be considered abandoned
under Section 1801.
ENTRY
IN
SECTIONS 1301 AND
1801 OF THE
TCC
REFERS TO BOTH
THE IED AND IEIRD
Under Section 1301 of the TCC, imported articles must be entered within a
non-extendible period of 30 days from the date of discharge of the last package
from a vessel. Otherwise, the BOC will deem the imported goods impliedly
abandoned under Section 1801. Thus:
Section 1301. Persons Authorized to Make
Import Entry. - Imported articles must be entered in
the customhouse at the port of entry within thirty (30)
days, which shall not be extendible from date of
discharge of the last package from the vessel or
aircraft either (a) by the importer, being holder of the bill
of lading, (b) by a duly licensed customs broker acting
under authority from a holder of the bill or (c) by a person
duly empowered to act as agent or attorney-in-fact for
each holder: Provided, That where the entry is filed by a
party other than the importer, said importer shall himself
be required to declare under oath and under the penalties

of falsification or perjury that the declarations and


statements contained in the entry are true and
correct: Provided, further, That such statements under
oath shall constitute prima facie evidence of knowledge
and consent of the importer of violation against applicable
provisions of this Code when the importation is found to
be unlawful. (Emphasis supplied)

Exhibit A, logically lead to the conclusion that the


declaration of the weight of the 800 cases of eggs made
in said application, is merely a provisional entry, and as it
is subject to verification by the customhouse examiner, it
cannot be considered fraudulent for the purpose of
imposing a surcharge of customs duties upon the
importer.[24] (Emphasis supplied)

Section 1801. Abandonment, Kinds and Effect of.


- An imported article is deemed abandoned under any
of the following circumstances:

The congressional deliberations on House Bill No. 4502 which was


enacted as RA 7651[25] amending the TCC lay down the policy considerations for
the non-extendible 30-day period for the filing of the import entry in Section 1301:

xxx
xxx

xxx

MR. JAVIER (E.).


xxx

b. When the owner, importer, consignee or


interested party after due notice, fails to file an entry
within thirty (30) days, which shall not be extendible,
from the date of discharge of the last package from
the vessel or aircraft, or having filed such entry, fails to
claim his importation within fifteen (15) days, which shall
not likewise be extendible, from the date of posting of the
notice to claim such importation. (Emphasis supplied)

Under Sections 1210[26] and 1301 of the


[TCC], Mr. Speaker, import entries for imported articles
must be filed within five days from the date of discharge
of the last package from the vessel. The five-day
period, however, Mr. Speaker, is subject to an indefinite
extension at the discretion of the collector of
customs, which more often than not stretches to more
than three months, thus resulting in considerable
delay in the payment of duties and taxes.

Petitioner argues that the IED is an entry contemplated by these sections.


According to it, the congressional deliberations on RA 7651 which amended the
TCC to provide a non-extendible 30-day period show the legislative intent to
expedite the procedure for declaring importations as abandoned. Filing an entry
serves as notice to the BOC of the importers willingness to complete the
importation and to pay the proper taxes, duties and fees. Conversely, the nonfiling of the entry within the period connotes the importers disinterest and
enables the BOC to consider the goods as abandoned. Since the IED is a BOC
form that serves as basis for payment of advance duties on importation as
required under PD 1853,[20] it suffices as an entry under Sections 1301 and 1801
of the TCC.[21]

This bill, Mr. Speaker, seeks to amend


Sections 1210 and 1301 by extending the five-day
period to thirty days, which will no longer be
extendible, within which import entries must be filed for
imported articles. Moreover, to give the importer
reasonable time, the bill prescribes a period of fifteen
days which may not be extended within which to claim
his importation from the time he filed the import
entry. Failure to file an import entry or to claim the
imported articles within the period prescribed under the
proposed measure, such imported articles will be
treated as abandoned and declared as ipso facto the
property of the government to be sold at public auction.

We disagree.
The term entry in customs law has a triple meaning. It means (1)
the documents filed at the customs house; (2) the submission and acceptance of
the documents and (3) the procedure of passing goods through the customs
house.[22]
The IED serves as basis for the payment of advance duties on
importations whereas the IEIRD evidences the final payment of duties and
taxes. The question is: was the filing of the IED sufficient to constitute entry
under the TCC?

Under
this
new
procedure,
Mr.
Speaker, importers will be constrained under the
threat of having their importation declared as
abandoned and forfeited in favor of the government to
file import entries and claim their importation as
early as possible thus accelerating the collection of
duties and taxes. But providing for a non-extendible
period of 30 days within which to file an import entry, an
appeal of fifteen days within which to claim the imported
article, the bill has removed the discretion of the
collector of Customs to extend such period thus
minimizing opportunity for graft. Moreover, Mr. Speaker,
with these non-extendible periods coupled with the
threat of declaration of abandonment of imported
articles, both the [BOC] and the importer are under
pressure to work for the early release of cargo, thus
decongesting all ports of entry and facilitating the
release of goods and thereby promoting trade and
commerce.

The law itself, in Section 205, defines the meaning of the technical
term entered as used in the TCC:
Section 205. Entry, or Withdrawal from
Warehouse, for Consumption. - Imported articles shall
be deemed entered in the Philippines for
consumption when the specified entry form is
properly filed and accepted, together with any related
documents regained by the provisions of this Code and/or
regulations to be filed with such form at the time of entry,
at the port or station by the customs official designated to
receive such entry papers and any duties, taxes, fees
and/or other lawful charges required to be paid at the time
of making such entry have been paid or secured to be
paid with the customs official designated to receive such
monies, provided that the article has previously arrived
within the limits of the port of entry.
xxx
xxx
(Emphasis supplied)

xxx

xxx

Finally, Mr. Speaker, the speedy release of


imported cargo coupled with the sanctions of declaration
of abandonment and forfeiture will minimize the
pilferage of imported cargo at the ports of entry.
[27]
(Emphasis supplied)

xxx

Clearly, the operative act that constitutes entry of the imported


articles at the port of entry is the filing and acceptance of the specified entry
form together with the other documents required by law and regulations. There
is no dispute that the specified entry form refers to the IEIRD. Section 205
defines the precise moment when the imported articles are deemed entered.
Moreover, in the old case of Go Ho Lim v. The Insular Collector of
Customs,[23] we ruled that the word entry refers to the regular consumption entry
(which, in our current terminology, is the IEIRD) and not the provisional entry (the
IED):
It is disputed by the parties whether the
application for the special permit. Exhibit A, containing the
misdeclared weight of the 800 cases of eggs, comes
within the meaning of the word "entry" used in section
1290 of the Revised Administrative Code, or said
word "entry" means only the "original entry and
importer's declaration." The court below reversed the
decision of the Insular Collector of Customs on the
ground that the provisions of section 1290 of the Revised
Administrative Code refer to the regular consumption
entry and not to a provisional declaration made in an
application for a special permit, as the one filed by the
appellee, to remove the cases of eggs from the
customhouse.
This court is of the opinion that certainly the
application, Exhibit A, cannot be considered as a final
regular entry of the weight of the 800 cases of eggs
imported by the appellee, taking into account the fact that
said application sought the delivery of said 800 cases of
eggs "from the pier after examination," and the special
permit granted, Exhibit E, provided for "delivery to be
made after examination by the appraiser." All the
foregoing, together with the circumstance that the
appellee had to file the regular consumption entry which
he bound himself to do, as shown by the application,

The filing of the IEIRDs has several important purposes: to ascertain


the value of the imported articles, collect the correct and final amount of customs
duties and avoid smuggling of goods into the country. [28] Petitioners interpretation
would have an absurd implication: the 30-day period applies only to the IED while
no deadline is specified for the submission of the IEIRD. Strong issues of public
policy militate against petitioners interpretation. It is the IEIRD which
accompanies the final payment of duties and taxes. These duties and taxes must
be paid in full before the BOC can allow the release of the imported articles from
its custody.
Taxes are the lifeblood of the nation. Tariff and customs duties are
taxes constituting a significant portion of the public revenue which enables the
government to carry out the functions it has been ordained to perform for the
welfare of its constituents. [29] Hence, their prompt and certain availability is an
imperative need[30] and they must be collected without unnecessary hindrance.
[31]
Clearly, and perhaps for that reason alone, the submission of the IEIRD
cannot be left to the exclusive discretion or whim of the importer.
We hold, therefore, that under the relevant provisions of the TCC,
both the IED and IEIRD should be filed within 30 days from the date of
discharge of the last package from the vessel or aircraft. As a result, the position
of petitioner, that the import entry to be filed within the 30-day period refers to the
IED and not the IEIRD, has no legal basis.
[32]

THE
EXISTENC
E
OF
FRAUD
WAS
ESTABLIS
HED
Petitioner also denies the commission of fraud. It maintains that it
had no predetermined and deliberate intention not to comply with the 30-day
period in order to evade the payment of the 10% rate of duty. Its sole reason for
the delayed filing of IEIRDs was allegedly due to the late arrival of the original
copies of the bills of lading and commercial invoices which its suppliers could
send only after the latter computed the average monthly price of crude oil based

on worldwide trading. It claims that the BOC required these original documents
to be attached to the IEIRD.
Petitioners arguments lack merit.

Collector to have been abandoned after notice thereof is


given to the interested party as in seizure cases.
Any person who abandons an imported article
renounces all his interests and property rights therein.[42]

Fraud, in its general sense, is deemed to comprise anything


calculated to deceive, including all acts, omissions, and concealment involving a
breach of legal or equitable duty, trust or confidence justly reposed, resulting in
the damage to another, or by which an undue and unconscionable advantage is
taken of another. [33] It is a question of fact and the circumstances constituting it
must be alleged and proved in the court below. [34] The finding of the lower court
as to the existence or non-existence of fraud is final and cannot be reviewed here
unless clearly shown to be erroneous. [35] In this case, fraud was established by
the IPD-CIIS of the BOC. Both the CTA First Division and en bancagreed
completely with this finding.
The evidence showed that petitioner bided its time to file the IEIRD so
as to avail of a lower rate of duty. (At or about the time these developments were
taking place, the bill lowering the duty on these oil products from 10% to 3% was
already under intense discussion in Congress.) There was a calculated and
preconceived course of action adopted by petitioner purposely to evade the
payment of the correct customs duties then prevailing. This was done in
collusion with the former District Collector, who allowed the acceptance of the
late IEIRDs and the collection of duties using the 3% declared rate. A clear
indication of petitioners deliberate intention to defraud the government was its
non-disclosure of discrepancies on the duties declared in the IEDs (10%) and
IEIRDs (3%) covering the shipments.[36]
It was not by sheer coincidence that, by the time petitioner filed its
IEIRDs way beyond the mandated period, the rate of duty had already been
reduced from 10% to 3%. Both the CTA Division and en banc found the
explanation of petitioner (for its delay in filing) untruthful. The bills of lading and
corresponding invoices covering the shipments were accomplished immediately
after loading onto the vessels. [37] Notably, the memorandum of a district collector
cited by petitioner as basis for its assertion that original copies were required by
the BOC was dated October 30, 2002.[38] There is no showing that in 1996, the
time pertinent in this case, this was in fact a requirement.
More importantly, the absence of supporting documents should not
have prevented petitioner from complying with the mandatory and non-extendible
period, specially since the consequences of delayed filing were extremely
serious. In addition, these supporting documents were not conclusive on the
government.[39] If this kind of excuse were to be accepted, then the collection of
customs duties would be at the mercy of importers.
Hence, due to the presence of fraud, the prescriptive period of the
finality of liquidation under Section 1603 was inapplicable:
Section 1603. Finality of Liquidation. When
articles have been entered and passed free of duty or
final adjustments of duties made, with subsequent
delivery, such entry and passage free of duty or
settlements of duties will, after the expiration of one (1)
year, from the date of the final payment of duties, in the
absence of fraud or protest or compliance audit pursuant
to the provisions of this Code, be final and conclusive
upon all parties, unless the liquidation of the import entry
was merely tentative.[40]
THE
IMPORTAT
IONS
WERE
ABANDON
ED
IN FAVOR
OF
THE
GOVERN
MENT

After it was amended by RA 7651, there was an indubitable shift in


language as to what could be considered implied abandonment:
Section 1801. Abandonment, Kinds and
Effect
of. - An
imported
article
is deemed
abandoned under any of the following circumstances:
a. When the owner, importer, consignee of the imported
article expressly signifies in writing to the Collector of
Customs his intention to abandon; or
b. When the owner, importer, consignee or interested
party after due notice, fails to file an entry within thirty
(30) days, which shall not be extendible, from the date
of discharge of the last package from the vessel or
aircraft xxxx
From the wording of the amendment, RA 7651 no longer requires that
there be other acts or omissions where an intent to abandon can be inferred. It is
enough that the importer fails to file the required import entries within the
reglementary period. The lawmakers could have easily retained the words used
in the old law (with respect to the intention to abandon) but opted to omit them.
[43]
It would be error on our part to continue applying the old law despite the clear
changes introduced by the amendment.
NOTICE
WAS NOT
NECESSA
RY
UNDER
THE
CIRCUMS
TANCES
OF THIS
CASE
Petitioner also avers that the importations could not be deemed impliedly
abandoned because respondent did not give it any notice as required by Section
1801 of the TCC:
Sec. 1801. Abandonment, Kinds and Effect
of. - An imported article is deemed abandoned under any
of the following circumstances:
xxx
xxx

xxx

b. When the owner, importer, consignee or interested


party after due notice, fails to file an entry within thirty
(30) days, which shall not be extendible, from the date of
discharge of the last package from the vessel or
aircraft xxx (Emphasis supplied)
Furthermore, it claims that notice and abandonment proceedings
were required under the BOCs guidelines on abandonment (CMO 15-94):
SUBJECT: REVISED
ABANDONMENT

GUIDELINES

xxx
B.

The law is clear and explicit. It gives a non-extendible period of 30 days


for the importer to file the entry which we have already ruled pertains to both the
IED and IEIRD. Thus under Section 1801 in relation to Section 1301, when the
importer fails to file the entry within the said period, he shall be deemed to have
renounced all his interests and property rights to the importations and these
shall be considered impliedly abandoned in favor of the government:
Section 1801. Abandonment, Kinds and Effect of.
xxx
xxx

ON

xxx

xxx

ADMINISTRATIVE PROVISIONS
xxx
xxx

xxx

B.2 Implied abandonment occurs when:


B.2.1 The owner, importer, consignee, interested party or
his authorized broker/representative, after due notice,
fails to file an entry within a non-extendible period of thirty
(30) days from the date of discharge of last package from
the carrying vessel or aircraft.

xxx

Any person who abandons an article or


who fails to claim his importation as provided for in the
preceding paragraph shall be deemed to have
renounced all his interests and property rights
therein.
According to petitioner, the shipments should not be considered impliedly
abandoned because none of its overt acts (filing of the IEDs and paying advance
duties) revealed any intention to abandon the importations. [41]
Unfortunately for petitioner, it was the law itself which considered the
importation abandoned when it failed to file the IEIRDs within the allotted
time. Before it was amended, Section 1801 was worded as follows:
Sec. 1801.
Abandonment, Kinds and
Effect of. Abandonment is express when it is made
direct to the Collector by the interested party in writing
and it is implied when, from the action or omission of
the interested party, an intention to abandon can be
clearly inferred. The failure of any interested party to file
the import entry within fifteen days or any extension
thereof from the discharge of the vessel or aircraft, shall
be implied abandonment. An implied abandonment shall
not be effective until the article is declared by the

xxx

xxx

xxx

Due
notice
to
the
consignee/importer/owner/interested party shall be
by means of posting of a notice to file entry at the
Bulletin Board seven (7) days prior to the lapse of the
thirty (30) day period by the Entry Processing Division
listing the consignees who/which have not filed the
required import entries as of the date of the posting of the
notice and notifying them of the arrival of their
shipment, the name of the carrying vessel/aircraft, Voy.
No. Reg. No. and the respective B/L No./AWB No., with a
warning,
as
shown
by
the
attached
form,
entitled: URGENT NOTICE TO FILE ENTRY which is
attached hereto as Annex A and made an integral part of
this Order.
xxx
C.

xxx

xxx

OPERATIONAL PROVISIONS
xxx

xxx
C.2

On Implied Abandonment:
C.2.1 When no entry is filed

xxx

C.2.1.1
Within twenty-four (24) hours after the completion
of the boarding formalities, the Boarding Inspector must submit
the manifests to the Bay Service or similar office so that the Entry
Processing Division copy may be put to use by said office as soon as
possible.

HON. QUIMPO. Because Im thinking, Mr.


Chairman. Im thinking of certain situations where the
importer even though, you know, in the normal course of
business sometimes they fail to keep up the date or
something to that effect.

C..2.1.2
Within twenty-four (24) hours after the completion
of the unloading of the vessel/aircraft, the Inspector assigned in
the vessel/aircraft, shall issue acertification addressed to the
Collector of Customs (Attention: Chief, Entry Processing Division),
copy furnished Chief, Data Monitoring Unit, specifically stating the
time and date of discharge of the last package from the vessel/aircraft
assigned to him. Said certificate must be encoded by Data
Monitoring Unit in the Manifest Clearance System.

THE CHAIRMAN. Sometimes their cargoes get


lost.
HON. QUIMPO. So just to, you know . . . anyway,
this is only a notice to be sent to them that they have a
cargo there.
xxx
xxx

C.2.1.3
Twenty-three (23) days after the discharge of the
last package from the carrying vessel/aircraft, the Chief, Data
Monitoring Unit shall cause the printing of the URGENT NOTICE TO
FILE ENTRY in accordance with the attached form, Annex A hereof,
sign the URGENT NOTICE and cause its posting continuously for
seven (7) days at the Bulletin Board for the purpose until the
lapse of the thirty (30) day period.

MR. PARAYNO. Your Honor, I think as a


general rule, five days [extendible] to another five days is
a good enough period of time. But we cannot discount
that there are some consignees of shipments located
in rural areas or distant from urban centers where the
ports are located to come to the [BOC] and to ask for
help particularly if a ship consignment is made to an
individual who is uninitiated with customs
procedures. He will probably have the problem of
coming over to the urban centers, seek the advice of
people on how to file entry. And therefore, the five
day extendible to another five days might really be a
tight period for some. But the majority of our
importers are knowledgeable of procedures. And in
fact, it is in their interest to file the entry even before the
arrival of the shipment. Thats why we have a procedure
in the bureau whereby importers can file their entries
even before the shipment arrives in the country.
[45]
(Emphasis supplied)

C.2.1.4
The Chief, Data Monitoring Unit, shall submit a
weekly report to the Collector of Customs with a listing by vessel,
Registry Number of shipments/ importations which shall be deemed
abandoned for failure to file entry within the prescribed period
and with certification that per records available, the thirty (30) day
period within which to file the entry therefore has lapsed without the
consignee/importer filing the entry and that the proper posting of
notice as required has been complied with.

C.2.1.5
Upon receipt of the report, the Collector of Customs
shall issue an order to the Chief, Auction and Cargo Disposal
Division, to dispose of the shipmentenumerated in the report
prepared by the Chief, Data Monitoring Unit on the ground that those
are abandoned and ipso facto deemed the property of the
Government to be disposed of as provided by law.

xxx

Under the peculiar facts and circumstances of this case, due notice
was not necessary. The shipments arrived in 1996. The IEDs and IEIRDs were
also filed in 1996. However, respondent discovered the fraud which attended the
importations and their subsequent release from the BOCs custody only in
1999. Obviously, the situation here was not an ordinary case of abandonment
wherein the importer merely decided not to claim its importations. Fraud was
established against petitioner; it colluded with the former District
Collector. Because of this, the scheme was concealed from respondent. The
government was unable to protect itself until the plot was uncovered. The
government cannot be crippled by the malfeasance of its officials and
employees. Consequently, it was impossible for respondent to comply with the
requirements under the rules.
By the time respondent learned of the anomaly, the entries had
already been belatedly filed and the oil importations released and presumably
used or sold. It was a fait accompli. Under such circumstances, it would have
been against all logic to require respondent to still post an urgent notice to file
entry before declaring the shipments abandoned.
The minutes of the deliberations in the House of Representatives
Committee on Ways and Means on the proposed amendment to Section 1801 of
the TCC show that the phrase after due notice was intended for owners,
consignees, importers of the shipments who live in rural areas or distant places
far from the port where the shipments are discharged, who are unfamiliar with
customs procedures and need the help and advice of people on how to file an
entry:

x
xxx

MR. FERIA. 1801, your Honor. The question


that was raised here in the last hearing was whether
notice is required to be sent to the importer. And, it has
been brought forward that we can dispense with the
notice to the importer because the shipping companies
are notifying the importers on the arrival of their
shipment. And, so that notice is sufficient to . . . sufficient
for the claimant or importer to know that the shipments
have already arrived.
Second, your Honor, the legitimate businessmen
always have . . . they have their agents with the shipping
companies, and so they should know the arrival of their
shipment.
xxx

xxx

xxx
HON. QUIMPO. Okay. Comparing the two, Mr.
Chairman, I cannot help but notice that in the substitution
now there is a failure to provide the phrase AFTER
NOTICE THEREOF IS GIVEN TO THE INTERESTED
PARTY, which was in the original. Now in the second, in
the substitution, it has been deleted. I was first wondering
whether this would be necessary in order to provide for
due process. Im thinking of certain cases, Mr. Chairman,
where the owner might not have known. This is now on
implied abandonment not the express abandonment.

xxx

xxx

Petitioner, a regular, large-scale and multinational importer of oil and


oil products, fell under the category of a knowledgeable importer which was
familiar with the governing rules and procedures in the release of importations.

We disagree.

xxx

Furthermore, notice to petitioner was unnecessary because it was


fully aware that its shipments had in fact arrived in the Port of Batangas. The oil
shipments were discharged from the carriers docked in its private pier or wharf,
into its shore tanks. From then on, petitioner had actual physical possession of
its oil importations. It was thus incumbent upon it to know its obligation to file the
IEIRD within the 30-day period prescribed by law. As a matter of fact, importers
such as petitioner can, under existing rules and regulations, file in advance an
import entry even before the arrival of the shipment to expedite the release of the
same. However, it deliberately chose not to comply with its obligation under
Section 1301.
The purpose of posting an urgent notice to file entry pursuant to
Section B.2.1 of CMO 15-94 is only to notify the importer of the arrival of its
shipment and the details of said shipment. Since it already had knowledge of
such, notice was superfluous. Besides, the entries had already been filed, albeit
belatedly. It would have been oppressive to the government to demand a literal
implementation of this notice requirement.
AN
ABANDON
ED
ARTICLE
SHALL IP
SO FACT
O BE
DEEMED
THE
PROPERT
Y OF THE
GOVERN
MENT

x
Section 1802 of the TCC provides:
Sec. 1802. Abandonment of Imported
Articles. - An abandoned article shall ipso facto be
deemed the property of the Government and shall be
disposed of in accordance with the provisions of this
Code. (Emphasis supplied)
The term ipso facto is defined as by the very act itself or by mere
act. Probably a closer translation of the Latin term would be by the fact
itself.[46] Thus, there was no need for any affirmative act on the part of the
government with respect to the abandoned imported articles since the law itself
provides that the abandoned articles shallipso facto be deemed the property of
the government. Ownership over the abandoned importation was transferred to
the government by operation of law under Section 1802 of the TCC, as amended
by RA 7651.
A historical review of the pertinent provisions of the TCC dispels any
view that is contrary to the automatic transfer of ownership of the abandoned
articles to the government by the mere fact of an importers failure to file the
required entries within the mandated period.
Under the former Administrative Code, Act 2711, [47] Section 1323 of
Article XV thereof provides:
Sec. 1323.
When implied abandonment
takes effect Notice An implied abandonment shall
not take effect until after the property shall be declared by
the collector to have been abandoned and notice to the
party in interest as in seizure cases.
Thereafter, RA 1937[48] was enacted. Section 1801 thereof provides:

xxx
xxx

xxx

Sec. 1801.
Abandonment, Kinds and
Effect of. Abandonment is express when it is made
direct to the Collector by the interested party in writing
and it is implied when, from the action or omission of the
interested party, an intention to abandon can be clearly
inferred. The failure of any interested party to file the
import entry within fifteen days or any extension thereof
from the discharge of the vessel or aircraft, shall be
implied abandonment. An implied abandonment shall not
be effective until the article is declared by the Collector to
have been abandoned after notice thereof is given to the
interested party as in seizure cases.

government. Accordingly, it became liable for the total dutiable value of the
shipments of imported crude oil amounting to P1,210,280,789.21 reduced by the
total amount of duties paid amounting to P316,499,021.00 thereby leaving a
balance of P893,781,768.21.

Any person who abandons an imported article


renounces all his interests and property rights therein.

WHEREFORE, the petition is hereby DENIED. Petitioner Chevron


Philippines, Inc. is ORDERED to pay the amount of EIGHT HUNDRED NINETY
THREE MILLION SEVEN HUNDRED EIGHTY ONE THOUSAND SEVEN
HUNDRED SIXTY EIGHT PESOS AND TWENTY-ONE CENTAVOS
(P893,781,768.21) plus six percent (6%) legal interest per annum accruing from
the date of promulgation of this decision until its finality. Upon finality of this
decision, the sum so awarded shall bear interest at the rate of twelve percent
(12%) per annum until its full satisfaction.

PD 1464[49] did not amend the provisions of the TCC on


abandonment. The latest amendment was introduced by Section 1802 of RA
7651 which provides:
Sec. 1802.
Abandonment of Imported
Articles. An abandoned article shall ipso facto be
deemed the property of the Government and shall be
disposed of in accordance with the provisions of this
Code.
The amendatory law, RA 7651, deleted the requirement that there
must be a declaration by the Collector of Customs that the goods have been
abandoned by the importers and that the latter shall be given notice of said
declaration before any abandonment of the articles becomes effective.
No doubt, by using the term ipso facto in Section 1802 as amended
by RA 7651, the legislature removed the need for abandonment proceedings and
for a declaration that the imported articles have been abandoned before
ownership thereof can be transferred to the government. [50]
Petitioner claims it is arbitrary, harsh and confiscatory to deprive
importers of their property rights just because of their failure to timely file the
IEIRD. In effect, petitioner is challenging the constitutionality of Sections 1801
and 1802 by contending that said provisions are violative of substantive and
procedural due process. We disallow this collateral attack on a presumably valid
law:
We have ruled time and again that the
constitutionality or validity of laws, orders, or such other
rules with the force of law cannot be attacked collaterally.
There is a legal presumption of validity of these laws and
rules. Unless a law or rule is annulled in a direct
proceeding, the legal presumption of its validity stands. [51]
Besides,
[a] law is deemed valid unless declared null
and void by a competent court; more so when the issue
has not been duly pleaded in the trial court. The question
of constitutionality must be raised at the earliest
opportunity. xxx The settled rule is that courts will not
anticipate a question of constitutional law in advance of
the necessity of deciding it.[52]
Be that as it may, the intent of Congress was unequivocal. Our policy
makers wanted to do away with lengthy proceedings before an importation can
be considered abandoned:
xxx
xxx
xxx
MR. PARAYNO. Thank you, Mr. Chairman. The
proposed amendment to Section 1801 on the
abandonment, kinds and effects. This aimed to facilitate,
Mr. Chairman, the process by which this activity is being
acted upon at the moment. The intention, Mr. Chairman,
is for the Customs Administration to be able to maximize
the revenue that can be derived from abandoned goods,
and the problem that we are encountering at the moment
is that we have to go through a lengthy process similar to
a seizure proceedings to be able to finally declare the
cargo, the abandoned cargo forfeited in favor of the
government and therefore, may be disposed of pursuant
to law. And that therefore, the proposed amendment
particularly on the implied abandonment as framed
here will do away with the lengthy process of seizure
proceedings and therefore, enable us to dispose of the
shipments through public auction and other modes of
disposal as early as possible.
THE
CHAIRMAN. In
other
words,
Commissioner, therell be no need for a seizure in the
case of abandonment because under the proposed
bill its considered to be government property.[53]
x
x

xxx

x
xxx

CONCLUS
ION
Petitioners failure to file the required entries within a non-extendible
period of thirty days from date of discharge of the last package from the carrying
vessel constituted implied abandonment of its oil importations. This means that
from the precise moment that the non-extendible thirty-day period lapsed, the
abandoned shipments were deemed (that is, they became) the property of the
government. Therefore, when petitioner withdrew the oil shipments for
consumption, it appropriated for itself properties which already belonged to the

By the very nature of its functions, the CTA is a highly specialized


court specifically created for the purpose of reviewing tax and customs cases. It
is dedicated exclusively to the study and consideration of revenue-related
problems and has necessarily developed an expertise on the subject. Thus, as a
general rule, its findings and conclusions are accorded great respect and are
generally upheld by this Court, unless there is a clear showing of a reversible
error or an improvident exercise of authority. There is no such showing here.

Costs against petitioner.


SO ORDERED.

G.R. Nos. 166309-10


March 9, 2007
REPUBLIC OF THE PHILIPPINES, represented by the COMMISSIONER OF
CUSTOMS, Petitioner,
vs.
UNIMEX MICRO-ELECTRONICS GmBH, Respondent.
DECISION
CORONA, J.:
This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to
nullify and set aside the decision of the Court of Appeals (CA) dated August 30,
20041 and its amended decision of November 30, 2004 2 in CA-G.R. SP No.
75359 and CA-G.R. SP No. 75366.
The antecedent facts follow.
Sometime in April 1985, respondent Unimex Micro-Electronics GmBH (Unimex)
shipped a 40-foot container and 171 cartons of Atari game computer cartridges,
duplicators, expanders, remote controllers, parts and accessories to Handyware
Phils., Inc. (Handyware). Don Tim Shipping Corporation transported the goods
with Evergreen Marine Corporation as shipping agent.
After the shipment arrived in the Port of Manila on July 9, 1985, the Bureau of
Customs (BOC) agents discovered that it did not tally with the description
appearing on the cargo manifest. As a result, BOC instituted seizure proceedings
against Handyware and later issued a warrant of seizure and detention against
the shipment.
On June 5, 1987, the Collector of Customs issued a default order against
Handyware for failing to appear in the seizure proceedings. After an ex
parte hearing, the Collector of Customs forfeited the goods in favor of the
government.
Subsequently, on June 15, 1987, respondent Unimex (as shipper and owner of
the goods) filed a motion to intervene in the seizure proceedings. The Collector of
Customs granted the motion but later on declared the June 5, 1987 default order
against Handyware as final and executory, thus affirming the goods forfeiture in
favor of the government.
Respondent filed a petition for review against petitioner Commissioner of
Customs (BOC Commissioner) in the Court of Tax Appeals (CTA). This case was
docketed as CTA Case No. 4317.3
In a decision4 dated June 15, 1992, the CTA reversed the forfeiture decree and
ordered the release of the subject shipment to respondent subject to the payment
of customs duties. The CTA decision became final and executory on July 20,
1992. The decision read:
WHEREFORE, the decree of forfeiture of [petitioner] Commissioner of Customs
is hereby reversed and the subject shipment is hereby ordered released to
[respondent] subject to the condition that the correct duties, taxes, fees and other
charges thereon be paid to the Bureau of Customs based on the actual quality
and condition of the shipments at the time of the filing of the corresponding
import entry in compliance with this decision and further subject to the
presentation of Central Bank Release Certificate.5
Unfortunately, however, respondents counsel failed to secure a writ of execution
to enforce the CTA decision. Instead, it filed separate claims for damages against
Don Tim Shipping Corporation and Evergreen Marine Corporation 6 but both
cases were dismissed.
On September 5, 2001, respondent filed in the CTA a petition for the revival of its
June 15, 1992 decision. It prayed for the immediate release by BOC of its
shipment or, in the alternative, payment of the shipments value plus damages.
The BOC Commissioner failed to file his answer, hence, he was declared in
default.
During the ex parte presentation of respondents evidence, BOC informed the
court that the subject shipment could no longer be found at its warehouses.
In its decision of September 19, 2002, 7 the CTA declared that its June 15, 1992
decision could no longer be executed due to the loss of respondents shipment
so it ordered the BOC Commissioner to pay respondent the commercial value of
the goods based on the prevailing exchange rate at the time of their importation.
The dispositive portion of the decision read:
WHEREFORE, premises considered, the instant petition is PARTIALLY
GRANTED. Accordingly, [petitioner] is ORDERED to PAY [respondent] the
amount of P8,675,200.22 representing the commercial value of the shipment at
the time of importation subject, however, to the payment of the proper taxes,
duties, fees and other charges thereon. The payment shall be taken from the sale
or sales of the goods or properties seized or forfeited by the Bureau of Customs. 8
The BOC Commissioner and respondent filed their respective motions for
reconsideration (MRs) of the above decision.
In his MR, the BOC Commissioner argued that the CTA altered its June 15, 1992
decision by converting it from an action for specific performance into a money
judgment.9 On the other hand, respondent contended that the exchange rate
prevailing at the time of actual payment should apply. It also argued that the CTA
erred in not imposing legal interest on BOCs obligation.
The CTA denied both MRs. The BOC Commissioner and the respondent then
filed separate petitions in the CA. The BOC Commissioners appeal was

docketed as CA-G.R. SP No. 75359 and respondents as CA-G.R. SP No.


75366. The CA consolidated the two cases.
On August 30, 2004, the CA dismissed the BOC Commissioners appeal and
granted respondents.
In CA-G.R. SP No. 75359, the CA held that the BOC Commissioner was liable for
the value of the subject shipment as the same was lost while in its custody. On
the other hand, in CA-G.R. SP No. 75366, it ruled that the CTA erred in using as
basis the prevailing peso-dollar exchange rate at the time of the importation
instead of the prevailing rate at the time of actual payment pursuant to RA
4100.10 It added that respondent was also entitled to legal interest. According to
the CA:
Considering that the BOC was grossly negligent in handling the subject
shipment, this Court finds Unimex entitled to legal interests. Accordingly, the
actual damages thus awarded shall be subject to 6% interest per annum.
Be that as it may, such interest shall accrue only from the date of the CTA
Decision on 19 September 2002 since it is from that the quantification of
Unimexs damages have been reasonably ascertained
xxx xxx xxx
Finally, Unimex is likewise entitled to 12% interest per annum in lieu of 6% per
annum from the time this Decision becomes final and executory until fully paid, in
as much as the interim period is equivalent to a forbearance of credit.
xxx xxx xxx
WHEREFORE, the appealed Decision, dated 19 September 2002, is
hereby AFFIRMED WITH MODIFICATION in that the Bureau of Customs is
adjudged liable to Unimex for the value of the subject shipment in the amount of
$466,885.54. The Bureau of Customs liability may be paid in Philippine currency,
computed at the exchange rate prevailing at the time of actual payment with legal
interest thereon at the rate of 6% per annum from 19 September 2002 up to its
finality. Upon finality of this Decision, the rate of legal interest shall be 12% per
annum until the value of the subject shipment is fully paid. 11
The BOC Commissioner and respondent again filed their respective MRs of the
above decision. The Commissioner insisted that the BOC was not liable to
respondent. On the other hand, respondents MR sought payment of the goods
value in euros, not in US dollars. 12 It also demanded that the 6% legal interest be
reckoned from the date of its judicial demand on June 15, 1987.
On November 30, 2004, the CA denied the BOC Commissioners MR and
granted respondents. Accordingly, the decretal portion of its amended decision
read:
WHEREFORE, the appealed Decision, dated 19 September 2002, is
hereby AFFIRMED WITH MODIFICATION in that the Bureau of Customs is
adjudged liable to Unimex for the value of the subject shipment in the amount of
Euro 669,982.565. The Bureau of Customs liability [may be] paid in the
Philippine currency, computed at the exchange rate prevailing at the time of
actual payment with legal interests thereon at the rate of 6% per annum from 15
June 1987 up to the finality of this Decision. In lieu of the 6% interest, the rate of
legal interest shall be 12% per annum upon finality of this Decision until the value
of the subject shipment is fully paid.13
The Republic of the Philippines, represented by the BOC Commissioner, now
comes to us via this petition assailing the CTA decision on the following grounds:
(1) the June 15, 1992 CTA judgment could not be altered after it became final
and executory; (2) laches has already set in, hence, respondents case (reviving
the June 15, 1992 CTA judgment) should have been dismissed outright; (3) the
legal interest imposed was erroneous and (4) the government funds cannot be
charged with respondents claim without a corresponding appropriation.
Modification of a Final And Executory Judgment
In support of its first argument, petitioner contends that once a judgment
becomes final and executory, it becomes immutable and unalterable, thus the
CTA erred in changing the tenor of its June 15, 1992 decision by ordering it to
instead pay the value of the goods. 14
We disagree.
Indeed, the general rule is that once a decision becomes final and executory, it
cannot be altered or modified. However, this rule is not absolute. In some
cases,15 we held that where facts or events transpire after a decision has become
executory, which facts constitute a supervening cause rendering the final
judgment unenforceable, said judgment may be modified. Also, a final judgment
may be altered when its execution becomes impossible or unjust.
In the case at bar, parties do not dispute the fact that after the June 15, 1992
CTA decision became final and executory, respondents goods were inexplicably
lost while under the BOCs custody. Certainly, this fact presented a supervening
event warranting the modification of the CTA decision. Even if the CTA had
maintained its original decision, still petitioner would have been unable to comply
with it for the obvious reason that there was nothing more to deliver to
respondent.
Laches Did Not Set in to Frustrate Respondents Petition to Revive The
June 15, 1992 CTA Decision
Regarding petitioners second argument, we hold that it cannot impugn
respondents claim on the basis of laches. Laches is the failure or negligence to
assert a right within a reasonable time, giving rise to a presumption that a party
has abandoned it or declined to assert it. 16 It is not a mere question of lapse or
passage of time but is principally a question of the inequity or unfairness of
permitting a right or claim to be asserted. 17
It is clear from the records that respondent was not guilty of negligence or
omission. Neither did it abandon its claim against petitioner. We agree with the
CTA (as later affirmed by the CA) that:
There was never negligence or omission to assert its right within a reasonable
period of time on the part of [respondent]. In fact, from the moment it intervened
in the proceedings before the Bureau of Customs up to the present time,
[respondent] is diligently trying to fight for what it believes is right. [Respondent]
may have failed to secure a writ of execution with this court when the [CTA
decision] became final and executory due to wrong legal advice, yet it does not
mean that it was sleeping on its right for it filed a case against the shipping agent
and/or the sub-agent. Therefore, there [was never] an occasion wherein
petitioner had abandoned or declined to assert its right. 18
The rule is that the findings of fact by the lower court, 19 if affirmed by the CA, are
conclusive on us.20 Absent any reason that compels us to deviate from the rule,
as in this case, we shall not disturb such findings.
Moreover, the doctrine of laches is based upon grounds of public policy and
equity. It is invoked to discourage stale claims but is entirely addressed to the
sound discretion of the court.21 Since it is an equitable doctrine, its application is
likewise controlled by reasonable considerations. Thus, the better rule is that
courts, under the principle of equity, should not be bound by the doctrine of
laches if wrong or injustice will result. 22
Given the attendant circumstances, laches cannot stall respondents right to
recover what is due to it especially where BOCs negligence in the safekeeping of
the goods appears indubitable. There is no denying that BOC exhibited gross
carelessness and ineptitude in the performance of its duty as it could not even
explain why or how the goods vanished while in its custody. With this, it is difficult

to exonerate petitioner from liability; otherwise, we would countenance a wrong


and exacerbate respondents loss which to this day has remained
unrecompensed.
More importantly, laches never set in because respondent filed its petition for
revival of judgment within the period set by the Rules. In particular, Rule 39,
Section 6 states:
SEC. 6. Execution by motion or by independent action. A final and executory
judgment or order may be executed on motion within five (5) years from the date
of its entry. After the lapse of such time, and before it is barred by the statute of
limitations, a judgment may be enforced by action. The revived judgment may
also be enforced by motion within five (5) years from the date of its entry and
thereafter by action before it is barred by the statute of limitations.
Furthermore, Article 1144 of the Civil Code, an action "upon a judgment" may be
brought within ten (10) years from the time the right of action accrues.
The CTA judgment sought to be revived became final and executory on July 20,
199223 and was accordingly entered into the book of judgments on the same
date. On the other hand, the petition to revive said judgment was filed on
September 5, 2001. Clearly, the filing of the petition for the revival of judgment
was well within the reglementary period provided by law.
Legal Interest May Be Imposed for Use of Money or as Compensatory
Damages
Petitioner likewise argues that the CA erred in imposing the 6% p.a. legal
interest. According to petitioner, the obligation to pay legal interest only arises by
virtue of a contract or on account of damages due to delay or failure to pay the
principal on which the interest is exacted. It added that since the June 15, 1992
CTA decision did not involve a monetary award but merely the release of the
goods to respondent, there was no basis for the computation and/or imposition of
the 6% p.a. legal interest.
We agree with petitioner.
Interest may be paid only either as compensation for the use of money (monetary
interest)24 or as damages (compensatory interest). 25 We quote in agreement the
CTAs disquisition in its decision dated September 19, 2002:
Interest may be paid either as compensation for the use of money (monetary
interest) referred to in Article 1956 of the New Civil Code or as damages
(compensatory interest) under Article 2209 above cited. As clearly provided in
[Article 2209], interest is demandable if: a) there is monetary obligation and b)
debtor incurs delay.
This case does not involve a monetary obligation to be covered by Article 2209.
There is no dispute that this case was originally filed questioning the seizure of
the shipment by the Bureau of Customs. Our decision subject of this action for
revival [of judgment] did not refer to any monetary obligation by [petitioner]
towards the [respondent]. In fact, if there was any monetary obligation
mentioned, it referred to the obligation of [respondent] to pay the correct taxes,
duties, fees and other charges before the release of the goods can be had. In
one case, the Supreme Court held:
"In a comprehensive sense, the term "debt" embraces not merely money due by
contract, but whatever one is bound to render to another, either for contract or
the requirement of the law, such as tax where the law imposes personal liability
therefor."
Therefore, the government was never a debtor to the petitioner in order that
[Article] 2209 could apply. Nor was it in default for there was no monetary
obligation to pay in the first place. There is default when after demand is made
either judicially or extrajudicially. In other words, for interest to be demandable
under Article 2209, there should be a monetary obligation and the debtor was in
default
In the instant case, [petitioner] was never under monetary obligation to
[respondent], no demand can be made either judicially or extrajudicially. Parallel
thereto, there could be no default 26
No doubt, the present case does not fall within the first situation. Neither can it be
considered as one involving interest based on damages under the second
situation.
More importantly, interest is not chargeable against petitioner except when it has
expressly stipulated to pay it or when interest is allowed by the legislature or in
eminent domain cases where damages sustained by the owner take the form of
interest at the legal rate.27 Consequently, the CAs imposition of the 12% p.a.
legal interest upon the finality of the decision of this case until the value of the
goods is fully paid (as forbearance of credit) is likewise bereft of any legal anchor.
Government Liability For Actual Damages
Finally, petitioner argues that a money judgment or any charge against the
government requires a corresponding appropriation and cannot be decreed by
mere judicial order.
Although it may be gainsaid that the satisfaction of respondents demand will
ultimately fall on the government, and that, under the political doctrine of "state
immunity," it cannot be held liable for governmental acts (jus imperii),28 we still
hold that petitioner cannot escape its liability. The circumstances of this case
warrant its exclusion from the purview of the state immunity doctrine.
As previously discussed, the Court cannot turn a blind eye to BOCs ineptitude
and gross negligence in the safekeeping of respondents goods. We are not
likewise unaware of its lackadaisical attitude in failing to provide a cogent
explanation on the goods disappearance, considering that they were in its
custody and that they were in fact the subject of litigation. The situation does not
allow us to reject respondents claim on the mere invocation of the doctrine of
state immunity. Succinctly, the doctrine must be fairly observed and the State
should not avail itself of this prerogative to take undue advantage of parties that
may have legitimate claims against it. 29
In Department of Health v. C.V. Canchela & Associates, 30 we enunciated that this
Court, as the staunch guardian of the peoples rights and welfare, cannot
sanction an injustice so patent in its face, and allow itself to be an instrument in
the perpetration thereof. Over time, courts have recognized with almost pedantic
adherence that what is inconvenient and contrary to reason is not allowed in
law.31 Justice and equity now demand that the States cloak of invincibility against
suit and liability be shredded.
Accordingly, we agree with the lower courts directive that, upon payment of the
necessary customs duties by respondent, petitioners "payment shall be taken
from the sale or sales of goods or properties seized or forfeited by the Bureau of
Customs."32
WHEREFORE, the assailed decisions of the Court of Appeals in CA-G.R. SP
Nos. 75359 and 75366 are herebyAFFIRMED with MODIFICATION. Petitioner
Republic of the Philippines, represented by the Commissioner of the Bureau of
Customs, upon payment of the necessary customs duties by respondent Unimex
Micro-Electronics GmBH, is hereby ordered to pay respondent the value of the
subject shipment in the amount of Euro 669,982.565. Petitioners liability may be
paid in Philippine currency, computed at the exchange rate prevailing at the time
of actual payment.
SO ORDERED.

FELICISIMO RIETA,

G.R. No. 147817


Petitioner,

- versus

PEOPLE OF THE PHILIPPINES,


Promulgated: AUG 12, 2004
Respondent.
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --- -- -- -- -- -- -- x

some police and military personnel. He fielded three


surveillance stake-out teams the following night along
Roxas Boulevard and Bonifacio Drive near Del Pan
Bridge, whereby they were to watch out for a cargo truck
with Plate No. T-SY-167 bound for Malabon. Nothing
came out of it. On the basis of his investigation, [it was
discovered that] the truck was registered in the name of
Teresita Estacio of Pasay City.
At around 9:00 oclock in the evening of October 14, 1979, Col. Lacson and his men
returned to the same area, with Col. Lacson posting himself at the immediate vicinity of the
2nd COSAC Detachment in Port Area, Manila, because as per information given to him, the said
cargo truck will come out from the premises of the 2nd COSAC Detachment. COSAC stands for
Constabulary Off-Shore Anti-Crime Battalion. The night watch lasted till the wee hours of the
following morning. About 3:00 a.m. an Isuzu panel came out from the place of the 2nd COSAC

DECISION

Detachment. It returned before 4:00 a.m. of [the] same day.

PANGANIBAN , J.:

At around 5 minutes before 4:00 oclock that


morning, a green cargo truck with Plate No. T-SY-167
came out from the 2nd COSAC Detachment followed and escorted closely by a light
brown Toyota Corona car with Plate No. GR-433 and with 4 men on board. At that time, Lt. Col.

C orpus delicti refers to the fact of the commission of the crime. It may be
proven by the credible testimonies of witnesses, not necessarily by physical
evidence. In-court identification of the offender is not essential, as long as the
identity of the accused is determined with certainty by relevant
evidence. In the present case,
______________________
*
On leave.
there is no doubt that petitioner was the same person apprehended by the
authorities and mentioned in the Information. His possession of the smuggled
cigarettes carried the prima facie presumption that he was engaged in
smuggling. Having failed to rebut this presumption, he may thus be convicted of
the crime charged.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of
Court, seeking to set aside the December 22, 2000 Decision [2] of the Court of
Appeals (CA) in CA-GR CR No. 17338. The CA affirmed with modification the
February 18, 1994 Consolidated Judgment [3] of the Regional Trial Court (RTC)
[4]
of Manila (Branch 46) in Criminal Case Nos. CCC-VI-137(79) and CCC-VI138(79), finding Felicisimo Rieta guilty of smuggling. The assailed CA Decision
disposed as follows:
WHEREFORE, the assailed Decision is
hereby MODIFIED as follows:
(a) The Court AFFIRMS the decision of the
trial court finding Felicisimo Rieta, Arturo Rimorin,
Pacifico Teruel and Carmelo Manaois GUILTY BEYOND
REASONABLE DOUBT of the crime charged.
(b) Appellants Ernesto Miaco, Guillermo
Ferrer, Fidel Balita, Robartolo Alincastre and Ernesto de
Castro are ACQUITTED as recommended by the
Solicitor General.[5]

Reconsideration was denied in the April 16, 2001 CA Resolution, [6] which
petitioner also assails.
Petitioner and his six co-accused -- Arturo Rimorin, Fidel Balita,
Gonzalo Vargas, Robartolo Alincastre, Guillermo Ferrer and Ernesto Miaco -were charged in an Information, which reads:
That on or about October 15, 1979, in the City of
Manila, Philippines, the said accused, conspiring and
confederating together and helping one another, with the
evident intent to defraud the government of the Republic
of the Philippines of the legitimate duties accruing to it
from merchandise imported into this country, did then and
there [willfully], unlawfully [and] fraudulently import or
bring into the Philippines or assist in so doing contrary to
law, three hundred five (305) cases of assorted brands of
blue seal cigarettes which are foreign articles valued
at P513,663.47 including duties and taxes, and/or buy,
sell, transport or assist and facilitate the buying, selling
and transporting of the above-named foreign articles after
importation knowing the same to have been imported
contrary to law which was found in the possession of said
accused and under their control which articles said
accused fully well knew have not been properly declared
and that the duties and specific taxes thereon have not
been paid to the proper authorities in violation of said
Sec. 3601 of the Tariff and Customs Code of the
Philippines, as amended by Presidential Decree No. 34,
in relation to Sec. 3602 of said Code and Sec. 184 of the
National Internal Revenue Code. [7]

The Facts
Version of the Prosecution (Respondent)

The Office of the Solicitor General (OSG)[8] presents the prosecutions version of the facts as follows:
On October 12, 1979, Col. Panfilo Lacson, the[n]
Chief of the Police Intelligence Branch of the Metrocom
Intelligence and Security Group (MISG for brevity),
received information that certain syndicated groups were
engaged in smuggling activities somewhere in Port Area,
Manila. It was further revealed that the activities [were
being] done at nighttime and the smuggled goods in a
delivery panel and delivery truck [were] being escorted by

Panfilo Lacson had no information whatsoever about the car, so he gave an order by radio to his
men to intercept only the cargo truck. The cargo truck was intercepted. Col. Lacson noticed that
the Toyota car following the cargo truck suddenly made a sharp U-turn towards the North, unlike the
cargo truck [that] was going south. Almost by impulse, Col. Lacsons car also made a U-turn and
gave chase to the speeding Toyota car, which was running between 100 KPH to 120 KPH. Col.
Lacson sounded his siren. The chase lasted for less than 5 minutes until said car made a stop
along Bonifacio Drive, at the foot of Del Pan Bridge. Col. Lacson and his men searched the car and
they found several firearms, particularly: three (3) .45 cal. Pistols and one (1) armalite M-16
rifle. He also discovered that T/Sgt. Ernesto Miaco was the driver of the Toyota car, and his
companions inside the car were Sgt. Guillermo Ferrer, Sgt. Fidel Balita and Sgt. Robartolo
Alincastre, [all] belonging to the 2nd COSAC Detachment. They were found not to be equipped
with mission orders.

When the cargo truck with Plate No. T-SY-167 was


searched, 305 cases of blue seal or untaxed cigarettes
were found inside. The cargo truck driver known only as
Boy was able to escape while the other passengers or
riders of said truck were apprehended, namely: Police
Sgt. Arturo Rimorin of Pasay City Police Force, Pat.
Felicisimo Rieta of Kawit Police Force, and Gonzalo
Vargas, a civilian.
x x x

xxx

xxx

Lacsons men hauled the intercepted vehicles, the


arrested men and confiscated goods to Camp Crame,
Quezon City. All the 371 cases (305 + 66) of blue seal
cigarettes were turned over to the Bureau of
Customs. Sgt. Bienvenido Balaba executed an Affidavit
of Arrest together with Arnel Acuba. The Booking and
Information Sheet of Ernesto de Castro showed that he
was arrested by the MISG after delivering assorted blue
seal cigarettes at 185 Sanciangco St., Tonsuya,
Malabon. [9]

Version of the Defense (Petitioner)

met Boy with a companion, who was introduced to him as


Gonzalo Vargas, his co-accused in the instant
case. Thereafter, they proceeded to a gasoline station
nearby. At the gasoline station, at the corner of Taylo and
Taft Avenue, near Cartimar, they picked up another
person who was later on introduced to him as Felicisimo
Rieta. Then the four of them (Boy, Gonzalo, Rieta and
Rimorin) boarded the cargo truck and they proceeded to
Divisoria. It was Boy who drove the cargo truck, while
petitioner was seated next to Boy while accused Rimorin
and Gonzalo to his right. While enroute to Divisoria,
along Roxas Boulevard before reaching Del Pan Bridge,
Boy turned right under the bridge. He commented that it
was not the route to Divisoria, and Boy answered meron
lang ikakarga dito. On the other hand, Rieta told Boy
that he was hungry, and thus, Boy pulled-over at a
carinderia at Del Pan Bridge near Delgado Bros. When
Rieta alighted he followed, while Boy and Gonzalo
proceeded. After less than an hour, Boy and Gonzalo
returned. They
then
proceeded
towards
Roxas
Boulevard, Bonifacio Drive, and Boy drove straight at the
corner of Aduana to Roxas Boulevard. When he noticed
that the truck was not bound for Divisoria as earlier
informed, he asked Boy why they were not taking the
route going to Divisoria. Boy replied bukas na lang wala
ng espasyo. Immediately, they were intercepted by two
vehicles and one of the occupants thereof ordered the
driver to pull over. The driver pulled over, and they were
ordered to raise their hands and to lay flat on their belly
on the pavement right in front of the truck, and they were
bodily frisked but they found nothing. He asked the
Metrocom soldiers what was it all about, but the
Metrocom soldiers were shouting asan ang blue
seal. Then they were ordered to board a jeep owned by
the Metrocom soldiers, and they were brought to Camp
Crame. Before they left the area, he did not see the
Metrocom soldiers open the cargo truck. He was brought
to the MISG at Camp Crame. When they arrived at
Camp Crame, the soldiers thereat were clapping their
hands, thus he asked ano ba talaga ito and he got an
answer from Barrameda, yun ang dahilan kung bakit ka
makukulong, pointing to a truck. When he saw the truck,
it was not the same truck they boarded in the early
morning of October 15, 1979. The truck they boarded
was galvanized iron pale sheet covered with canvass
while the one at Camp Crame was color red and not
covered. He entertained the idea that they were being
framed-up. Two days after, he was interrogated and the
alleged blue seal cigarettes were shown to him, and he
was informed by the investigator that the same blue seal
cigarettes were the contents of the cargo truck. When
the alleged blue seal cigarettes were taken out of the
cargo truck, he was not asked to be present. He asked
for the whereabouts of Boy, but he was informed that the
latter escaped. The more he believed that there was
something fishy or wrong in their apprehension. It was
very [conspicuous] that the driver was able to escape
because at the time they were apprehended they were the
only people at Bonifacio Drive, and thus the possibility of
escape was very remote, considering that they were
unarmed and the Metrocom soldiers were all fully armed. In
both cases at bar, there were about three Pasay policemen
who were apprehended. He was detained at Camp Bagong
Diwa for more than a year. He knew nothing about the charge
against him. When he was at Camp Crame he tried getting
in touch with a lawyer and his family, but the MISG did not let
him use the telephone.[10]

Petitioner, on the other hand, denied any knowledge of the alleged


smuggling of the blue-seal cigarettes. He sets forth his version of the facts as
follows:
Petitioner Rieta testified that he was a policeman
assigned at Kawit Cavite. In the early morning of October
15, 1979, he was in Manila together with Boy. He met
Boy in 1978 when the latter figured in a vehicular
accident in Kawit, Cavite. x x x After a week, Boy visited
him at the Kawit Police Station and thereafter, met him
four to five times. He learned that Boy was a
businessman hauling slippers, fish and vegetables from
Divisoria. For several times, he had accompanied Boy on
his business trips when [the latter] hauled fish, vegetables
and slippers from Divisoria to Cavite. He was requested
by Boy to accompany him on his various trips because
there were times when policemen on patrol were
demanding money from [the latter]. At other times, other
policemen accompanied Boy aside from him, on his trips.
In the early morning of October 15, 1979 he met Boy in
front of the Kawit Town Hall. He learned that Boy will
haul household appliances from Divisoria. They boarded
a jeep driven by Boy and they proceeded to Cartimar,
Pasay City. At Cartimar, Boy left him at a gasoline
station, and told him to standby because Boy will get the
cargo truck they will use. When Boy returned, he had
companions, who were introduced to him as Gonzalo
Vargas and Sgt. Rimorin, the petitioners co-accused in
Criminal Case No. CC-VI-138 (79). From Cartimar, the
four (4) of them proceeded to Divisoria and they passed
under the Del Pan Bridge. While passing therein, he told
Boy that he was hungry, so that when they passed by a
small restaurant, he alighted and Sgt. Rimorin
followed. Boy told them that he and Gonzalo will proceed
to the Port Area and will be back. After thirty to forty five
minutes, Boy and Gonzalo returned, and he and Sgt.
Rimorin boarded the truck and proceeded to Roxas
Boulevard. While they were along Roxas Boulevard near
the Daily Express Building, two (2) vehicles intercepted
them and ordered them to pull-over. The passengers of
the said vehicles introduced themselves as Metrocom
soldiers, and ordered them to alight and to raise their
hands while poking guns at them. They were ordered to
l[ie down] flat on their belly on the pavement and were
bodily frisked and searched. The Metrocom soldiers did
not find anything from their bodies. Thereafter, they
(Rieta, Rimorin and Gonzalo) were ordered by the
Metrocom soldiers to transfer to a jeep. While they were
aboard the jeep, he overheard from the Metrocom
soldiers that their driver was able to escape. Likewise,
they were also informed by the Metrocom soldiers that
the cargo truck was loaded with blue seal cigarettes. The
cargo truck was not opened in their presence, nor were
the contents thereof shown to them upon their
apprehension. From the time he boarded the cargo truck
in Cartimar until he and Sgt. Rimorin alighted to take their
snacks, up to the time they were apprehended by the
Metrocom soldiers, he had not seen a pack of blue
cigarette in the cargo truck. He did not notice whether
the Metrocom soldiers opened the cargo truck. At Camp
Crame, he was investigated without the benefit of
counsel, but, nonetheless, he executed and signed a
statement because as far as he was concerned he has
done nothing wrong. He was detained at Bicutan for
more than a year.
In the early morning of October 15, 1979 he was not
carrying any firearm because he has no mission order to
do so, and besides Manila was not his jurisdiction. He
was suspended from the service, but was reinstated in
January 1981. After he was released from Bicutan, he
looked for Boy so that he could clear the matter, but he
[did not find] Boy anymore.
In corroboration with the testimony of petitioner Rieta,
accused Rimorin, a policeman assigned at Pasay City,
testified that the first time he met Boy was in 1978 in the
wake and internment of the Late Police Officer Ricardo
Escobal. Thereafter, Boy dropped by on several
occasions at the Pasay Police Station to request for
assistance. Prior to October 15, 1979, Boy again
dropped by at the police station and asked him if he had
an appointment on the next day. He told Boy that he had
no appointment, and the latter requested to accompany
him to Sta. Maria, Bulacan to get some rice. Prior
thereto, in one of their casual conversations, he learned
that Boy was a businessman engaged in hauling various
merchandise. He agreed to the request of Boy to
accompany him to Sta. Maria, Bulacan. At Sta. Maria,
Bulacan, they proceeded to a warehouse containing bags
of rice, and they hauled several bags into a truck, and
thereafter, proceed[ed] to Quezon City. As compensation
Boy gave him a sack of rice. The said transaction was
followed by another on October 15, 1979. In the
afternoon of October 14, 1979, Boy again dropped by at
the police station and requested him to accompany him to
haul household fixtures. They usually haul vegetables
and rice early in the morning to avoid the traffic and that
was the reason why they met in the early morning of
October 15, 1979. He told [Boy] that he will see if he will
have [the] time, but just the same they made
arrangements that they will see each other at Cartimar,
Pasay City not later than 2:30 a.m. in the early morning of
October 15, 1979. At the appointed time and place, he

Ruling of the Court of Appeals

Affirming the RTC, the CA noted that while petitioner and his co-accused
had mainly raised questions of fact, they had nonetheless failed to point out
specific errors committed by the trial court in upholding the credibility of the
prosecutions witnesses. The defense of denial proffered by petitioner was
considered weak and incapable of overturning the overwhelming testimonial and
documentary evidence of respondent. Further, the appellate court ruled that the
non-presentation in court of the seized blue-seal cigarettes was not fatal to
respondents cause, since the crime had sufficiently been established by other
competent evidence.
The CA rejected the belated claim of petitioner that his arrest was
irregular. It ruled that the alleged defect could not be raised for the first time on
appeal, especially in the light of his voluntary submission to and participation in
the proceedings before the trial court.
The appellate court, however, found no sufficient evidence against
the other co-accused who, unlike petitioner, had not been found to be in
possession of blue-seal cigarettes.
Hence, this Petition.[11]

Issues

In his Memorandum, petitioner submits the following issues for

the Courts

consideration:

1.

The

respondents trial and appellate courts


committed grave abuse of discretion
tantamount to lack and/or excess of
jurisdiction when [they] convicted herein
petitioner notwithstanding the prosecutions
failure to prove the guilt of the petitioner
beyond reasonable doubt.

2.

The evidence obtained against the accused is


inadmissible in evidence because petitioner
and his co-accused were arrested without a
warrant but by virtue of an arrest and seizure
order (ASSO) which was subsequently
declared illegal and invalid by this Honorable
Supreme Court. [12]

The Courts Ruling

The Petition has no merit.


First Issue:
Sufficiency of Evidence

Petitioner contends that the existence of the untaxed blue seal


cigarettes was not established, because the prosecution had not presented them
as evidence. He further argues that there was no crime committed, as the corpus
delicti was never proven during the trial.

Corpus Delicti Established


by Other Evidence
We do not agree. Corpus delicti refers to the specific injury or loss
sustained.[13] It is the fact of the commission of the crime [14] that may be proved
by the testimony of eyewitnesses. [15] In its legal sense, corpus delicti does not
necessarily refer to the body of the person murdered, [16] to the firearms in the
crime of homicide with the use of unlicensed firearms, [17] to the ransom money in
the crime of kidnapping for ransom, [18] or -- in the present case -- to the seized
contraband cigarettes. [19]
In Rimorin v. People,[20] the petitioner therein similarly equated the
actual physical evidence -- 305 cases of blue-seal cigarettes -- with the corpus
delicti. The appellate court allegedly erred in not acquitting

him on reasonable doubt arising from the non-presentation in court of


the confiscated contraband cigarettes. Holding that corpus delicti could be
established by circumstantial evidence, the Court debunked his argument thus:
Since the corpus delicti is the fact of the
commission of the crime, this Court has ruled that even a
single witness uncorroborated testimony, if credible, may
suffice to prove it and warrant a conviction
therefor. Corpus delicti may even be established by
circumstantial evidence.
Both the RTC and the CA ruled that the
corpus delicti had been competently established by
respondents evidence, which consisted of the
testimonies of credible witnesses and the Custody
Receipt issued by the Bureau of Customs for the
confiscated goods.
Col. Panfilo Lacsons testimony on the
apprehension of petitioner and on the seizure of the blue
seal cigarettes was clear and straightforward. He
categorically testified as follows:
Q

Let us go back to the truck after you


apprehended the COSAC soldiers
on board the [C]orona car, what
did you do thereafter?
We took them to the place where the
cargo truck was intercepted, Sir.

Q
A

What did you notice thereat?


Inside the truck were hundreds of
cases of blue seal cigarettes, and
I also found out that my men were
able to apprehend the occupants
of the cargo truck although they
reported to me that the driver
managed to make good escape,
Sir.

Now you stated that a search was


made on the truck and you found
how many cases of blue seal
cigarettes?
Three hundred five (305) cases, Sir.

Q
A

Blue seal cigarettes?


Yes, Sir.

What do you mean by blue seal


cigarettes?
Blue seal cigarettes are untaxed
cigarettes, Sir.

Did you find out how many were there


on board the truck which was
intercepted by your men per your
order?
Yes, Sir, [there] were three.

Q
A

Who?
They were P/Sgt. Arturo Rimorin, Sr.

Q
A

P/Sgt. Of what department?


Of Pasay City Police Force, Sir, and
Pat. Felicisimo Rieta.

Q
A

Of that police department?


Of Kawit, Cavite Police Force, and
Gonzalo Vargas, Sir.

Q
A

Who is this Gonzalo Vargas?


Civilian Sir.
x

xxx

Fiscal Macaraeg:
I am showing to you a Custody
Receipt dated October 15, 1979,
which states: Received from Lt.
Col. Rolando N. Abadilla, AC of S,
M2/CC, MISG. PC METROCOM
(Thru S/Sgt. Rodolfo Bucao, PC)
THREE HUNDRED SEVENTY
ONE (371) cases of assorted
brands of Blue Seal Cigarettes,
which were intercepted and
confiscated by elements of the
MISG, PC METROCOM on or
about 0400 15 October 79 along
Bonifacio Drive, Manila, which for
[purposes] of identification we
respectfully request that it be
marked [on] evidence as Exhibit
A.
COURT:
Mark it Exhibit A.
Fiscal Macaraeg:
Q
Will you please do examine Exhibit A
and tell us whether this is the
same receipt?
A
This is the same receipt, Sir.
Q

By the way, were photographs taken


of the car as well as the vehicle
involved in this case, together with
the blue seal cigarettes that were
confiscated?
Yes, Sir.

Do

A
Q
A

you have copies of these


photographs?
The copies are with our evidence
custodian, Sir.
Can you bring those
required next time?
Yes, Sir.

pictures

if

So, too, did Gregorio Abrigo customs


warehouse storekeeper of the Bureau categorically
testify that the MISG had turned over to him the seized
blue seal cigarettes, for which he issued a Custody
Receipt dated October 15, 1979.
We find no reason to depart from the oft
repeated doctrine of giving credence to the narration of
prosecution witnesses, especially when they are public
officers who are presumed to have performed their duties
in a regular manner.[21]
Petitioner argues that the receipt issued by Abrigo, a customs official,
was beset with doubt because: 1) it did not state specifically that the blue-seal
cigarettes identified therein had been confiscated from petitioner and turned over
to Abrigo by Colonel Lacson and/or his men; and 2) it mentioned 371 (instead of
305) cases of confiscated blue-seal cigarettes.
We note, however, that Colonel Lacson himself identified the Custody
Receipt as the same one issued for the 305 cases of cigarettes found in the cargo
truck, in which petitioner and his co-accused rode, and from which the 66 cases of
cigarettes -- subject of Criminal Case No. CCC-VI-138(79) -- were confiscated in
Malabon, Metro Manila.[22] This fact (305 plus 66) explains why 371 cases were
indicated therein. At any rate, petitioner argues on minor discrepancies that do not affect
the

integrity of the Receipt, issued in due course by a customs official who


was duty-bound to put the seized contraband cigarettes in safekeeping.
The existence of the 305 cases of blue-seal cigarettes found in the
possession of petitioner and his co-accused was duly proven by the testimonies
of the prosecution witnesses -- Lacson and Abrigo. They had testified in
compliance with their duty as enforcers of the law. Their testimonies were rightly
entitled to full faith and credit, especially because there was no showing of any
improper motive[23] on their part to testify falsely against petitioner. Further, the
Court accords great respect to the factual conclusions drawn by the trial court,
especially when affirmed by the appellate court as in this case. [24]
Absurd is the claim of petitioner that, because Colonel Lacson was
not the officer who had actually intercepted the cargo truck in which the former
rode, the latters testimony was therefore hearsay. The testimony of the colonel
on his participation in the apprehension of the truck sufficiently rebutted this
contention.

Lacson testified that he had personally received information regarding


the smuggling activities being conducted by a syndicated group in that place. He
was also informed that smuggled items would be transported from the
2nd COSAC Detachment in the Port Area to Malabon by a cargo truck with Plate
No. T-SY-167. During the stakeout surveillance on the night of October 14, 1979,
he saw -- from his post within the vicinity of the 2 nd COSAC Detachment -- the
identified cargo truck coming out of the Port Area. While trailing behind, he
radioed his men posted along Roxas Boulevard to stop the truck. Later in court,
he described how his men had actually intercepted it. [25]
Petitioner insists that Colonel Lacson, who had given chase to a
Toyota car and was not among the officers who had intercepted the truck, could
not have seen him as one of the passengers of the latter vehicle. Notably,
however, the chase of the Toyota car had lasted no more than 5 minutes, and the
colonels team immediately returned to the subject truck after the chase.
[26]
Lacson, however, categorically said that he had seen 305 cases of blue-seal
cigarettes inside the cargo

vehicle, and that petitioner was one of its passengers.


It should be borne in mind that Colonel Lacson -- as head of that
particular surveillance operation -- had full knowledge, control and supervision of
the whole process. He had organized the surveillance teams and given orders to
his men prior to the apprehension of the vehicles suspected of carrying smuggled
items. Furthermore, he was present during the surveillance operations until the
apprehension of the cargo truck. Thus, he was clearly competent to testify on
the matter.
The denial by petitioner that he was among the occupants of the truck
is highly self-serving and riddled with inconsistencies. He had been directly
identified as one of its passengers. Besides, he himself admitted that he had
been on board the vehicle when it was intercepted, and that there were no other
person in the area.
Courtroom Identification
Unnecessary

Next, petitioner belabors the failure of the prosecution to ask Colonel


Lacson to identify him in open court. However, the colonels positive and
categorical testimony pointing to him as one of the passengers of the cargo truck,
as well as petitioners own admission of his presence therein, dispelled the need
for a courtroom identification. In People v. Quezada, the Court said:
x x x. While positive identification by a
witness is required by the law to convict an accused, it
need not always be by means of a physical courtroom
identification. As the Court held in People v. Paglinawan:
x x x. Although it is
routine procedure for witnesses to
point out the accused in open
court by way of identification, the
fact that the witness x x x did not
do so in this case was because
the public prosecutor failed to ask
her to point out appellant, hence
such omission does not in any
way affect or diminish the truth or
weight of her testimony.
In-court identification of the offender is
essential only when there is a question or doubt on
whether the one alleged to have committed the crime is
the same person who is charged in the information and
subject of the trial.[27]
In the present case, there is no doubt that petitioner was a passenger
of the truck, that he was apprehended by the authorities, and that he was the
same individual charged under the Information in Criminal Case No. CCC-VI137(79).

Prima Facie Proof of


Nonpayment of Taxes Sufficient
There is no merit, either, in the claim of petitioner that the prosecution
failed to prove the nonpayment of the taxes and duties on the confiscated
cigarettes. There is an exception to the general rule requiring the prosecution to
prove a criminal charge predicated on a negative allegation, or a negative
averment constituting an essential element of a crime. In People v. JulianFernandez, we held:
Where the negative of an issue does not
permit of direct proof, or where the facts are more
immediately within the knowledge of the accused,
the onus probandi rests upon him. Stated otherwise, it is
not incumbent upon the prosecution to adduce
positive evidence to support a negative averment the
truth of which is fairly indicated by established
circumstances and which, if untrue, could readily be
disproved by the production of documents or other
evidence within the defendants knowledge or
control. For example, where a charge is made that a
defendant carried on a certain business without a
license
x x x, the fact that he has a license is a
matter which is peculiar[ly] within his knowledge and he
must establish that fact or suffer conviction. [28](Emphasis
supplied)
The truth of the negative averment that the duties and specific taxes
on the cigarettes were not paid to the proper authorities is fairly indicated by the
following circumstances that have been established: (1) the cargo truck, which
carried the contraband cigarettes and some passengers including petitioner,
immediately came from the 2 nd COSAC Detachment; (2) the truck was
intercepted at the unholy hour of 4:00 a.m.; (3) it fitted the undisclosed informers
earlier description of it as one that was carrying contraband; and (4) the driver
ran away. Hence, it was up to petitioner to disprove these damning
circumstances, simply by presenting the receipts showing payment of the
taxes. But he did not do so; all that he could offer was his bare and self-serving
denial.
Knowledge of the Illegal
Nature of Goods

The fact that 305 cases of blue-seal cigarettes were found in the
cargo truck, in which petitioner and his co-accused were riding, was properly
established. Nonetheless, he insists that his presence there was not enough to
convict him of smuggling, because the element of illegal possession had not
been duly proved. He adds that he had no knowledge that untaxed cigarettes
were in the truck.
Petitioners contention is untenable. Persons found to be in
possession of smuggled items are presumed to be engaged in smuggling,
pursuant to the last paragraph of Section 3601 of the

Tariff and Customs Code.[29] The burden of proof is thus shifted to


them. To rebut this presumption, it is not enough for petitioner to claim good faith
and lack of knowledge of the unlawful source of the cigarettes. He should have
presented evidence to support his claim and to convince the court of his noncomplicity.
In the case adverted to earlier, Rimorin v. People, we held thus:
In his discussion of a similarly worded
provision of Republic Act No. 455, a criminal law authority
explained thus:
In order that a person
may be deemed guilty of smuggling
or illegal importation under the
foregoing statute three requisites
must concur: (1) that the
merchandise must have been
fraudulently or knowingly imported
contrary to law; (2) that the
defendant, if he is not the importer
himself, must have received,
concealed, bought, sold or in any
manner
facilitated
the
transportation, concealment or sale
of the merchandise; and (3) that
the defendant must be shown to
have
knowledge
that
the
merchandise had been illegally
imported. If
the
defendant,
however, is shown to have had
possession of the illegally imported
merchandise, without satisfactory
explanation, such possession shall
be deemed sufficient to authorize
conviction.[30] (Emphasis supplied)
In the present case, the explanation given by petitioner was found to
be unacceptable and incredible by both the RTC and the CA, which said:
Now on the explanations of Police Sgt.
Rimorin of Pasay City Police Force and Pat. Rieta of
Kawit Police Force, riders in the loaded cargo truck driven
by Boy. Their claim that they did not have any
knowledge about the cargo of blue seal cigarettes is not
given credence by the court. They tried to show lack of
knowledge by claiming that along the way, Boy and
Gonzalo Vargas left them behind at a certain point for
snacks and picked them up later after the cargo had been
loaded. The Court cannot see its way through how two
policemen, joining Boy in the dead of the night, explicitly
to give him and his goods some protection, which service
would be paid, yet would not know what they are out to
protect. And neither could the Court see reason in Boys
leaving them behind when he was going to pick up and
load the blue seal cigarettes. Boy knew the risks. He
wanted them for protection, so why will he discard
them? How so unnatural and so contrary to reason. [31]

Being contrary to human experience, his version of the facts is too


pat and stereotyped to be accepted at face value. Evidence, to be believed, not
only must proceed from the mouth of a credible witness; it must also be credible
in itself, as when it conforms to common experience and observation of
humankind.[32]
The absence of any suspicious reaction on the part of petitioner was
not in accordance with human nature. The involvement or participation he and
his co-accused had in the smuggling of the goods was confirmed by their lack of
proper and reasonable justification for the fact that they had been found inside
the cargo truck, seated in front, when it was intercepted by the
authorities. Despite his protestation, it is obvious that petitioner was aware of the
strange nature of the transaction, and that he was willing to do his part in
furtherance thereof. The evidence presented by the prosecution established his
work of guarding and escorting the contraband to facilitate its transportation from
the Port Area to Malabon, an act punishable under Section 3601 of the Tax Code.
Second Issue:
Validity of the Search and Seizure
Petitioner contends that his arrest by virtue of Arrest Search and Seizure
Order (ASSO) No. 4754 was invalid, as the law upon which it was predicated -General Order No. 60, issued by then President Ferdinand E. Marcos -- was
subsequently declared by the Court, in Taada v. Tuvera,[33] to have no force and
effect. Thus, he asserts, any evidence obtained pursuant thereto is inadmissible
in evidence.
We do not agree. In Taada, the Court addressed the possible
effects of its declaration of the invalidity of various presidential
issuances. Discussing therein how such a declaration might affect acts done on
a presumption of their validity, the Court said:
x x x. In similar situations in the past this
Court had taken the pragmatic and realistic course set
forth in Chicot County Drainage District vs. Baxter Bank
to wit:
The courts below
have proceeded on the theory that
the Act of Congress, having been
found to be unconstitutional, was
not a law; that it was inoperative,
conferring no rights and imposing
no duties, and hence affording no
basis for the challenged decree. x
x x It is quite clear, however, that

such broad statements as to the


effect of a determination of
unconstitutionality must be taken
with qualifications. The actual
existence of a statute, prior to [the
determination of its invalidity], is
an operative fact and may have
consequences which cannot justly
be ignored. The past cannot
always be erased by a new
judicial declaration. The effect of
the subsequent ruling as to
invalidity may have to be
considered in various aspects
with respect to particular conduct,
private and official. Questions of
rights claimed to have become
vested, of status, of prior
determinations deemed to have
finality
and
acted
upon
accordingly, of public policy in the
light of the nature both of the
statute and of its previous
application,
demand
examination. These questions are
among the most difficult of those
which have engaged the attention
of courts, state and federal, and it
is manifest from numerous
decisions that an all-inclusive
statement of a principle of
absolute retroactive
invalidity
cannot be justified.
xxx

xxx

Similarly, the implementation/enforcement of


presidential decrees prior to their publication in the
Official Gazette is an operative fact which may have
consequences which cannot be justly ignored. The past
cannot always be erased by a new judicial declaration x x
x that an all-inclusive

xxx

statement of a principle of
retroactive invalidity cannot be justified.[34]

absolute

Carillo posted the required bond, the 35,000 bags of rice were released to them.
[6]

The Chicot doctrine cited in Taada advocates that, prior to the


nullification of a statute, there is an imperative necessity of taking into account its
actual existence as an operative fact negating the acceptance of a principle of
absolute retroactive invalidity. Whatever was done while the legislative or the
executive act was in operation should be duly recognized and presumed to be
valid in all respects.[35] The ASSO that was issued in 1979 under General Order
No. 60 -- long before our Decision in Taada and the arrest of petitioner -- is an
operative fact that can no longer be disturbed or simply ignored.
Furthermore, the search and seizure of goods, suspected to have been
introduced into the country in violation of customs laws, is one of the seven doctrinally
accepted exceptions[36] to the constitutional provision. Such provision mandates that
no search or seizure shall be made except by virtue of a warrant issued by a
judge who has personally determined the existence of probable cause. [37]
Under the Tariff and Customs Code, a search, seizure and arrest may be
made even without a warrant for purposes of enforcing customs and tariff
laws. Without mention of the need to priorly obtain a judicial warrant, the Code
specifically allows police authorities to enter, pass through or search any land,
enclosure, warehouse, store or building that is not a dwelling house; and also to
inspect, search and examine any vessel or aircraft and any trunk, package, box or
envelope or any person on board; or to stop and search and examine any vehicle,
beast or person suspected of holding or conveying any dutiable or prohibited article
introduced into the Philippines contrary to law.[38]
WHEREFORE, the Petition is DENIED,
Decision AFFIRMED. Costs against petitioner.

and

the

assailed

The Legaspi District Collector held in abeyance the proceedings for the
forfeiture of M/V Criston and its cargo under Seizure Identification No. 06-2001
and Seizure Identification No. 06-2001-A pending the resolution by the RTC of
Civil Case No. T-2170. When the RTC granted the Motion to Dismiss Civil Case
No. T-2170 filed by the BOC, the Legaspi District Collector set the hearing
of Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A. A
notice of the scheduled hearing of the aforementioned seizure cases was sent to
Glucer Shipping but it failed to appear at the hearing so set. After a second
notice of hearing was ignored by Glucer Shipping, the prosecutor was allowed to
present his witnesses. [7]
In
the
meantime,
while
M/V
Criston
was
berthing
at
the Port of Tabaco under the custody of the BOC, the Province of Albay was hit
by typhoon Manang. In order to avert any damage which could be caused by
the typhoon, the vessel was allowed to proceed to another anchorage area to
temporarily seek shelter. After typhoon Manang had passed through Albay
province, M/V Criston, however, failed to return to the Port of Tabaco and was
nowhere to be found.[8]
Alarmed, the BOC and the Philippine Coast Guard coordinated with the
Philippine Air Force to find the missing vessel. On 8 November 2001, the BOC
received information that M/V Criston was found in the waters of Bataan sporting
the name of M/V Neptune Breeze.[9]
Based on the above information and for failure of M/V Neptune
Breeze to present a clearance from its last port of call, a Warrant of Seizure and
Detention under Seizure Identification No. 2001-208 was issued against the
vessel by the BOC District Collector of the Port of Manila.[10]
For the same reasons, the Legaspi District Collector rendered a
Decision on 27 June 2002 in Seizure Identification No. 06-2001 and Seizure
Identification No. 06-2001-A ordering the forfeiture of the M/V Criston, also
known as M/V Neptune Breeze, and its cargo, for violating Section 2530 (a), (f)
and (k) of the Tariff and Customs Code.[11]

SO ORDERED.

EL GRECO SHIP MANNING AND MANAGEMENT CORPORATION,


Petitioner,

- versus -

COMMISSIONER OF CUSTOMS,
Respondent.
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the
Revised Rules of Court, filed by petitioner El Greco Ship Manning and
Management Corporation (El Greco), seeking to reverse and set aside the
Decision[1] of the Court of Tax Appeals (CTA) En Banc dated 14 March
2007 in C.T.A. EB No. 162. In its assailed Decision, the CTA En Banc affirmed
the Decision[2] dated 17 October 2005 of the CTA Second Division in CTA Case
No. 6618, ordering the forfeiture of the vessel M/V Criston, also known as M/V
Neptune Breeze, for having been involved in the smuggling of 35,000 bags of
imported rice.
The factual and procedural antecedents of this case are as follows:
On 23 September 2001, the vessel M/V Criston docked at
the Port of Tabaco, Albay, carrying a shipment of 35,000 bags of imported rice,
consigned to Antonio Chua, Jr. (Chua) and Carlos Carillo (Carillo), payable upon
its delivery to Albay. Glucer Shipping Company, Inc. (Glucer Shipping) is the
operator of M/V Criston.[3]
Upon the directive of then Commissioner Titus Villanueva of the Bureau of
Customs (BOC), a Warrant of Seizure and Detention, Seizure Identification No.
06-2001, was issued by the Legaspi District Collector, on 23 September 2001 for
the 35,000 bags of imported rice shipped by M/V Criston, on the ground that it
left the Port of Manila without the necessary clearance from the Philippine Coast
Guard. Since the earlier Warrant covered only the cargo, but not M/V Criston
which transported it, a subsequent Warrant of Seizure and Detention, Seizure
Identification No. 06-2001-A, was issued on 18 October 2001 particularly for the
said vessel. The BOC District Collector of the Port of Legaspithereafter
commenced proceedings for the forfeiture of M/V Criston and its cargo
under Seizure Identification No. 06-2001-A and Seizure Identification No. 062001, respectively.[4]
To protect their property rights over the cargo, consignees Chua and
Carillo filed before the Regional Trial Court (RTC) of Tabaco, Albay, a Petition for
Prohibition with Prayer for the Issuance of Preliminary Injunction and Temporary
Restraining Order (TRO) assailing the authority of the Legaspi District Collectors
to issue the Warrants of Seizure and Detention and praying for a permanent
injunction against the implementation of the said Warrants. Their Petition was
docketed as Civil Case No. T-2170.[5]
After finding the Petition sufficient in form and substance and
considering the extreme urgency of the matter involved, the RTC issued a 72hour TRO conditioned upon the filing by Chua and Carillo of a bond in the
amount of P31,450,000.00, representing the value of the goods. After Chua and

In the meantime, El Greco, the duly authorized local agent of the


registered owner of M/V Neptune Breeze, Atlantic Pacific Corporation, Inc.
(Atlantic Pacific), filed with the Manila District Collector, in Seizure Identification
No. 2001-208, a Motion for Intervention and Motion to Quash Warrant of Seizure
Detention with Urgent Prayer for the Immediate Release of M/V Neptune
Breeze. El Greco claimed that M/V Neptune Breeze was a foreign registered
vessel owned by Atlantic Pacific, and different from M/V Criston which had been
involved in smuggling activities in Legaspi, Albay.[12]
Acting favorably on the motion of El Greco, the Manila District Collector
issued an Order[13] dated 11 March 2002 quashing the Warrant of Seizure and
Detention it issued against M/V Neptune Breeze in Seizure Identification No.
2001-208 for lack of probable cause that the said vessel was the same one
known as M/V Criston which fled from the jurisdiction of the BOC Legaspi District
after being seized and detained therein for allegedly engaging in smuggling
activities. According to the decretal part of the Manila District Collectors Order:
WHEREFORE, pursuant to the authority
vested in me by law, it is hereby ordered and decreed that
the Warrant of Seizure and Detention issued thereof be
Quashed for want of factual or legal basis, and that the
vessel M/V Neptune Brreze be released to [El Greco]
after clearance with the Commissioner of Customs,
proper identification and compliance with existing rules
and regulations pertinent in the premises.
On automatic review by BOC Commissioner Antonio Bernardo, the
Order dated 11 March 2002 of the District Collector of the Port of Manila was
reversed after finding that M/V Neptune Breeze and M/V Criston were one and
the same and that the Legaspi District Collector had already acquired prior
jurisdiction over the vessel. The Decision dated 15 January 2003 of the BOC
Commissioner, contained in his 2 nd Indorsement[14] to the Manila District Collector,
decreed:
Respectfully returned to the District Collector,
POM, the within case folders in POM S. I. No. 2001-208,
EL GRECO SHIP MANNING AND MANAGEMENT
CORPORATION,
Claimant/Intervenor,
with
the
information that the Decision of that Port in the aforesaid
case is hereby REVERSED in view of the following
reasons:
1.

Subject vessel MV
NEPTUNE
BREEZE and MV CRISTON are
one and the same as shown by
the vessels documents retrieved
by the elements of the Philippine
Coast Guard from MV CRISTON
during the search conducted on
board thereof when the same was
apprehended in Tabaco, Albay,
indicating therein the name of the
vessel MV NEPTUNE BREEZE,
the name of the master of the
vessel a certain YUSHAWU
AWUDU, etc. These facts were
corroborated by the footage of
ABS-CBN taken on board the
vessel when the same was
subjected to search.

2.

Hence, prior jurisdiction over the said


vessel was already acquired by
the Port of Legaspi when the said
Port issued WSD S.I. No. 062001-A
and
therefore,
the
Decision of the latter Port forfeiting
the subject vessel supercedes the

Decision of that Port ordering its


release.
Seeking the reversal of the Decision dated 15 January 2003 of the
BOC Commissioner, El Greco filed a Petition for Review with the CTA which was
lodged before its Second Division as CTA Case No. 6618. El Greco averred that
the BOC Commissioner committed grave abuse of discretion in ordering the
forfeiture of the M/V Neptune Breeze in the absence of proof that M/V Neptune
Breeze and M/V Criston were one and the same vessel. [15] According to El
Greco, it was highly improbable that M/V Criston was merely assuming the
identity of M/V Neptune Breeze in order to evade liability since these were
distinct and separate vessels as evidenced by their Certificates of Registry. While
M/V Neptune Breeze was registered in St. Vincent and the Grenadines[16] as
shown in its Certificate of Registry No. 7298/N, M/V Criston was registered in
thePhilippines. Additionally, El Greco argued that the Order dated 11 March
2002 of the Manila District Collector already became final and executory for
failure of the BOC Commissioner to act thereon within a period of 30 days in
accordance with Section 2313 of the Tariff and Customs Code.
On 17 October 2005, the CTA Second Division rendered a
Decision[17] in CTA Case No. 6618 sustaining the 15 January 2003 Decision of
the BOC Commissioner ordering the forfeiture of M/V Neptune Breeze. Referring
to the crime laboratory report submitted by the Philippine National Police (PNP)
stating that the serial numbers of the engines and the generators of both M/V
Criston and M/V Neptune Breeze were identical, the CTA Second Division
concluded that both vessels were indeed one and the same vessel. The CTA
Second Division further ruled that nothing in the provisions of Section 2313 of the
Tariff and Customs Code could buttress El Grecos contention that the Order
dated 11 March 2002 of the Manila District Collector already became final and
executory. The dispositive portion of the Decision of the CTA Second Division
reads:
WHEREFORE, premises considered, the
present Petition for Review is hereby DISMISSED. The
Decision in the 2nd Indorsement dated January 15,
2003 of
then
Commissioner
Bernardo
is
hereby AFFIRMED.[18]
In a Resolution[19] dated 7 February 2006, the CTA Second Division
denied the Motion for Reconsideration of El Greco for failure to present issues
that had not been previously threshed out in its earlier Decision.
Undaunted, El Greco elevated its case to the CTA En Banc through a
Petition for Review, docketed as C.T.A. EB No. 162, this time lamenting that it
was being deprived of its property without due process of law. El Greco asserted
that the CTA Second Division violated its constitutional right to due process when
it upheld the forfeiture of M/V Neptune Breeze on the basis of the evidence
presented before the Legaspi District Collector in Seizure Identification No. 062001 and Seizure Identification No. 06-2001-A, of which El Greco was not
notified and in which it was not able to participate. [20]
In its Decision[21] promulgated on 14 March 2007, the CTA En
Banc declared that the CTA Second Division did not commit any error in its
disquisition, and dismissed the Petition of El Greco in C.T.A. EB No. 162 for lack
of merit. According to the CTA En Banc, the appreciation and calibration of
evidence on appeal (from the ruling of the BOC) lies within the sound discretion
of its Division, and the latters findings and conclusions cannot be set aside
unless it has been sufficiently shown that they are not supported by evidence on
record. The CTA En Banc thus disposed:
WHEREFORE, the instant petition is hereby
DISMISSED. Accordingly, the assailed Decision
promulgated on October 17, 2005 and Resolution
dated February 7, 2006 of the Second Division of this
Court, are hereby AFFIRMED.[22]
Without filing a Motion for Reconsideration with the CTA, El Greco
already sought recourse before this Court via this Petition for Review
on Certiorari, raising the following issues:
I.
WHETHER OR NOT EL GRECO WAS DENIED OF ITS
RIGHT TO DUE PROCESS.
II.
WHETHER OR NOT M/V NEPTUNE BREEZE AND M/V
CRISTON ARE ONE AND THE SAME VESSEL.
III.

Well-entrenched is the rule that findings of facts of the CTA are


binding on this Court and can only be disturbed on appeal if not supported by
substantial evidence.[23] Substantial evidence is that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion. [24]
A review of the records of the present case unveils the overwhelming
and utterly significant pieces of evidence that more than meets the quantum of
evidence necessary to establish that M/V Neptune Breeze is the very same
vessel as M/V Criston, which left the anchorage area at Legaspi, Albay, without
the consent of the customs authorities therein while under detention for
smuggling 35,000 bags of imported rice.
The crime laboratory report of the PNP shows that the serial numbers
of the engines and generators of the two vessels are identical. El Greco failed to
rebut this piece of evidence that decisively identified M/V Neptune Breeze as the
same as M/V Criston. We take judicial notice that along with gross tonnage, net
tonnage, length and breadth of the vessel, the serial numbers of its engine and
generator are the necessary information identifying a vessel. In much the same
way, the identity of a land motor vehicle is established by its unique motor and
chassis numbers. It is, thus, highly improbable that two totally different vessels
would have engines and generators bearing the very same serial numbers; and
the only logical conclusion is that they must be one and the same vessel.
Equally significant is the finding of the Legaspi District Collector that
all the documents submitted by M/V Criston were spurious, including its
supposed registration in thePhilippines. In a letter dated 14 March 2002, Marina
Administrator Oscar M. Sevilla attested that M/V Criston was not registered with
the Marina.
Finally, Customs Guard Adolfo Capistrano testified that the features
of M/V Criston and M/V Neptune Breeze were similar; while Coast Guard
Commander Cirilo Ortiz narrated that he found documents inside M/V Criston
bearing the name M/V Neptune Breeze. These testimonies further fortified the
conclusion reached by the Legaspi District Collector that M/V Criston and M/V
Neptune Breeze were one and the same.
We also take note that the purported operator of M/V Criston, Glucer
Shipping, was a total no-show at the hearings held in Seizure Identification No.
06-2001 and Seizure Identification No. 06-2001-A before the Legaspi District
Collector. Despite being sent several notices of hearing to its supposed address,
Glucer Shipping still failed to appear in the said proceedings. It becomes highly
unfathomable for an owner to ignore proceedings for the seizure of its vessel,
risking the loss of a property of enormous value.
From the foregoing, we can only deduce that there is actually no
Glucer Shipping and no M/V Criston. M/V Criston appears to be a mere fictional
identity assumed by M/V Neptune Breeze so it may conduct its smuggling
activities with little risk of being identified and held liable therefor.
We cannot give much credence to the self-serving denial by El Greco
that M/V Neptune Breeze is not the same as M/V Criston in light of the
substantial evidence on record to the contrary. The foreign registration of M/V
Neptune Breeze proves only that it was registered in a foreign country; but it
does not render impossible the conclusions consistently reached by the Legaspi
District Collector, the CTA Second Division and the CTA en banc, and presently
by this Court, that M/V Neptune Breeze was the very same vessel used in the
conduct of smuggling activities in the name M/V Criston.
Neither can we permit El Greco to evade the forfeiture of its vessel,
as a consequence of its being used in smuggling activities, by decrying denial of
due process.
In administrative proceedings, such as those before the BOC,
technical rules of procedure and evidence are not strictly applied and
administrative due process cannot be fully equated with due process in its strict
judicial sense.[25] The essence of due process is simply an opportunity to be
heard or, as applied to administrative proceedings, an opportunity to explain
one's side or an opportunity to seek reconsideration of the action or ruling
complained of.[26]
Although it was not able to participate in the proceedings in Seizure
Identification No. 06-2001 and Seizure Identification No. 06-2001-A before the
Legaspi District Collector, it had ample opportunity to present its side of the
controversy in Seizure Identification No. 2001-208 before the Manila District
Collector. To recall, full proceedings were held before the Manila District
Collector in Seizure Identification No. 2001-208. Even the evidence presented
by El Greco in the latter proceedings fails to persuade. The only vital evidence it
presented before the Manila District Collector in Seizure Identification No. 2001208 was the foreign registration of M/V Neptune Breeze. It was still the same
piece of evidence which El Greco submitted to this Court. Even when taken into
consideration and weighed against each other, the considerably sparse evidence
of El Greco in Seizure Identification No. 2001-208 could not successfully refute
the substantial evidence in Seizure Identification No. 06-2001 and Seizure
Identification No. 06-2001-A that M/V Neptune Breeze is the same as M/V
Criston.

The primordial issue to be determined by this Court is whether M/V


Neptune Breeze is one and the same as M/V Criston which had been detained at
the Port of Tabaco, Albay, for carrying smuggled imported rice and had fled the
custody of the customs authorities to evade its liabilities.

Moreover, the claim of El Greco that it was denied due process


flounders in light of its ample opportunity to rebut the findings of the Legaspi
District Collector in Seizure Identification No. 06-2001 and No. 06-2001-A before
the CTA Second Division in CTA Case No. 6618 and the CTA En Banc in C.T.A.
EB No. 162, and now before this Court in the Petition at bar. Unfortunately, El
Greco was unable to make full use to its advantage of these repeated
opportunities by offering all possible evidence in support of its case. For example,
evidence that could establish that M/V Neptune Breeze was somewhere else at
the time when M/V Criston was being held by customs authority at the Port of
Legaspi, Albay, would have been helpful to El Grecos cause and very easy to
secure, but is glaringly absent herein.

El Greco insists that M/V Neptune Breeze and M/V Criston are not
the same vessel. In support of its position, El Greco again presents the foreign
registration of its vessel as opposed to the local registration of M/V Criston.

After having established that M/V Neptune Breeze is one and the
same as M/V Criston, we come to another crucial issue in the case at bar, that is,
whether the order of forfeiture of the M/V Neptune Breeze is valid.

WHETHER OR NOT M/V NEPTUNE BREEZE IS


QUALIFIED TO BE THE SUBJECT OF FORFEITURE
UNDER SECTION 2531 OF THE TARIFF AND
CUSTOMS CODE.

The CTA En Banc, however, affirming the findings of the CTA Second
Division, as well as the Legaspi District Collector, concluded otherwise.
We sustain the determination of the CTA En Banc on this matter.

The pertinent provisions of the Tariff and Customs Code read:


SEC. 2530. Property Subject to Forfeiture Under Tariff
and Customs Law. Any vehicle, vessel or aircraft, cargo,

articles and other objects shall, under the following


conditions, be subject to forfeiture:
a.

Any vehicle, vessel or aircraft, including cargo,


which shall be used unlawfully in the
importation or exportation of articles or in
conveying and/or transporting contraband or
smuggled articles in commercial quantities
into or from any Philippine port or place. The
mere carrying or holding on board of
contraband
or
smuggled
articles
in
commercial quantities shall subject such
vessel, vehicle, aircraft or any other craft to
forfeiture; Provided, That the vessel, or aircraft
or any other craft is not used as duly
authorized common carrier and as such a
carrier it is not chartered or leased;
xxxx

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 other articles which, in the opinion of
the Collector, have been used, are or were
intended to be used as instruments in the
importation or exportation of the former;
xxxx

k.

Any conveyance actually being used for the


transport of articles subject to forfeiture under
the tariff and customs laws, with its equipage
or trappings, and any vehicle similarly used,
together with its equipage and appurtenances
including the beast, steam or other motive
power drawing or propelling the same. The
mere conveyance of contraband or smuggled
articles by such beast or vehicle shall be
sufficient cause for the outright seizure and
confiscation of such beast or vehicle, but the
forfeiture shall not be effected if it is
established that the owner of the means of
conveyance used as aforesaid, is engaged as
common carrier and not chartered or leased,
or his agent in charge thereof at the time has
no knowledge of the unlawful act.

The penalty of forfeiture is imposed on any vessel engaged in


smuggling, provided that the following conditions are present:
(1) The vessel is used unlawfully in the importation or exportation of
articles into or from the Philippines;
(2) The articles are imported to or exported from any Philippine port
or place, except a port of entry; or

decision shall be automatically reviewed by the


Commissioner and the records of the case elevated within
five (5) days from the promulgation of the decision of the
Collector. The Commissioner shall render a decision on
the automatic appeal within thirty (30) days from receipts
of the records of the case. If the Collectors decision is
reversed by the Commissioner, the decision of the
Commissioner shall be final and executory. However, if
the Collectors decision is affirmed, or if within thirty (30)
days from receipt of the record of the case by the
Commissioner no decision is rendered or the decision
involves imported articles whose published value is five
million pesos (P5,000,000.00) or more, such decision
shall be deemed automatically appealed to the
Secretary of Finance and the records of the proceedings
shall be elevated within five (5) days from the
promulgation of the decision of the Commissioner or of
the Collector under appeal, as the case may
be: Provided, further, That if the decision of the
Commissioner or of the Collector under appeal as the
case may be, is affirmed by the Secretary of Finance or if
within thirty (30) days from receipt of the records of the
proceedings by the Secretary of Finance, no decision is
rendered, the decision of the Secretary of Finance, or of
the Commissioner, or of the Collector under appeal, as
the case may be, shall become final and executory.
In any seizure proceeding, the release of
imported articles shall not be allowed unless and until a
decision of the Collector has been confirmed in writing by
the Commissioner of Customs. (Emphasis ours.)
There is nothing in Section 2313 of the Tariff and Customs Code to
support the position of El Greco. As the CTA en banc explained, in case the
BOC Commissioner fails to decide on the automatic appeal of the Collectors
Decision within 30 days from receipt of the records thereof, the case shall again
be deemed automatically appealed to the Secretary of Finance. Also working
against El Greco is the fact that jurisdiction over M/V Neptune Breeze, otherwise
known as M/V Criston, was first acquired by the Legaspi District Collector; thus,
the Manila District Collector cannot validly acquire jurisdiction over the same
vessel. Judgment rendered without jurisdiction is null and void, and void
judgment cannot be the source of any right whatsoever. [28]
Finally, we strongly condemn the ploy used by M/V Neptune Breeze,
assuming a different identity to smuggle goods into the country in a brazen
attempt to defraud the government and the Filipino public and deprive them of
much needed monetary resources. We further laud the efforts of the
Commissioner of the Customs Bureau and the other executive officials in his
department to curb the proliferation of smuggling syndicates in the country which
deserves no less than our full support.
WHEREFORE, in view of the foregoing, the instant Petition
is DENIED. The Decision dated 17 October 2005 and Resolution dated 7
February 2006 of the Court of Tax Appeals En Banc in CTA EB No. 172
are AFFIRMED. Costs against the petitioner.
SO ORDERED.

(3) If the vessel has a capacity of less than 30 tons and is used in
the importation of articles into any Philippine port or place other than a port of the
Sulu Sea, where importation in such vessel may be authorized by the
Commissioner, with the approval of the department head." [27]

There is no question that M/V Neptune Breeze, then known as M/V


Criston, was carrying 35,000 bags of imported rice without the necessary papers
showing that they were entered lawfully through a Philippine port after the
payment of appropriate taxes and duties thereon. This gives rise to the
presumption that such importation was illegal. Consequently, the rice subject of
the importation, as well as the vessel M/V Neptune Breeze used in importation
are subject to forfeiture. The burden is on El Greco, as the owner of M/V Neptune
Breeze, to show that its conveyance of the rice was actually legal. Unfortunately,
its claim that the cargo was not of foreign origin but was merely loaded at North
Harbor, Manila, was belied by the following evidence - the Incoming Journal of
the Philippine Coast Guard, Certification issued by the Department of
Transportation and Communications (DOTC) Port State Control Center of Manila,
and the letter dated 4 October 2001 issued by the Sub-Port of North Harbor
Collector Edward de la Cuesta, confirming that there was no such loading of rice
or calling of vessel occurring at North Harbor, Manila. It is, therefore,
uncontroverted that the 35,000 bags of imported rice were smuggled into
the Philippines using M/V Neptune Breeze.
We cannot give credence to the argument of El Greco that the Order
dated 11 March 2002 of the Manila District Collector, finding no probable cause
that M/V Neptune Breeze is the same as M/V Criston, has already become final
and executory, thus, irreversible, pursuant to Section 2313 of the Tariff and
Customs Code. According to said provision:
SEC. 2313. Review of Commissioner. The
person aggrieved by the decision or action of the
Collector in any matter presented upon protest or by his
action in any case of seizure may, within fifteen (15) days
after notification in writing by the Collector of his action or
decision, file a written notice to the Collector with a copy
furnished to the Commissioner of his intention to appeal
the action or decision of the Collector to the
Commissioner. Thereupon the Collector shall forthwith
transmit all the records of the proceedings to the
Commissioner, who shall approve, modify or reverse the
action or decision of the Collector and take such steps
and make such orders as may be necessary to give effect
to his decision: Provided, That when an appeal is filed
beyond the period herein prescribed, the same shall be
deemed dismissed.
If in any seizure proceedings, the Collector
renders a decision adverse to the Government, such

PILIPINAS SHELL PETROLEUM


CORPORATION,
Petitioner,

-versus-

REPUBLIC OF THE PHILIPPINES,


represented by the BUREAU OF
CUSTOMS,
Respondent.

G.R. No. 161953


Present:
PUNO, C.J., Chairperson,
CARPIO,
CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.

Promulgated:
March 6, 2008

x---------------------------------------------------x
DECISION
CORONA, J.:
This petition for review on certiorari [1] seeks to set aside the decision
of the Court of Appeals (CA) in CA-G.R. SP No. 71756 [2] and its resolution
denying reconsideration.[3]
The present controversy sprang from the cancellation of tax debit
memos (TDMs) and the corresponding tax credit certificates (TCCs) assigned to
petitioner Pilipinas Shell Petroleum Corporation (Shell) by various entities. [4] The
assignment to Shell had the approval of the Board of Investments and the One
Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (Center). Some of
these TCCs were subsequently accepted as payment by the Bureau of Customs
(BoC) for petitioner's taxes and import duties in 1997 and 1998. [5]
On November 3, 1999, then Secretary Edgardo B. Espiritu of the
Department of Finance (DOF) informed petitioner that its TDMs and TCCs were
fraudulently issued and transferred, [6] and had to be cancelled.[7] He asked
petitioner to immediately pay the BoC and the Bureau of Internal Revenue the
value of the canceled TCCs as well as the related penalties, surcharges and
interests.[8]

Petitioner assailed the action of the DOF.[9] It asserted that there was
no legal and factual basis to invalidate the TCCs. [10] Because petitioner was an
assignee in good faith (i.e., it observed the procedure prescribed by the Center),
the TCCs were authentic and genuine as far as it was concerned. [11] Petitioner
likewise pointed out discrepancies between the amount claimed by respondent
and those it (petitioner) actually paid in satisfaction of its liabilities. [12]

without protest using its TCCs. Finally, the liquidation was not a tentative one as
the assessment had long become final and incontestable. Consequently,
pursuant to Yabes[41] and because of the cancellation of the TCCs, respondent
had the right to file a collection case.
Section 1204 of the TCCP provides:

Despite petitioner's objections, Commissioner Nelson A. Tan of the


BoC demanded from it the amount of P209,129,141.[13] Thus, petitioner filed a
formal protest on December 23, 1999. [14] However, the BoC did not act on this
protest. Consequently, petitioner filed a petition for review questioning the legality
of the cancellation of the TCCs in the Court of Tax Appeals (CTA).[15]

Section 1204. Liability of Importer for Duties. Unless


relieved by laws or regulations, the liability for duties,
taxes, fees and other charges attaching on
importation constitutes apersonal debt due from
the importer to the government which can be
discharged only by payment in full of all duties, taxes,
fees and other charges legally accruing. It also
constitutes alien upon the articles imported which
may be enforced while such articles are in the
custody or subject to the control of the
government. (emphasis supplied)

Meanwhile, on April 3, 2002, respondent filed a complaint for


collection[16] in the Regional Trial Court (RTC) of Manila, Branch 19. It alleged that
the TCCs petitioner purchased from Filipino Way Industries amounting
to P10,088,912 were spurious[17] and were used by petitioner to pay customs
duties and taxes on its importations in 1997. [18] Thus, in view of the invalidation,
petitioner still owed respondent the amount of P10,088,912 in unpaid customs
duties and taxes.[19]
Petitioner immediately moved to dismiss the collection case. [20] It
contended that the RTC had no jurisdiction over the subject matter and that the
complaint for collection was prematurely filed in view of its pending petition for
review in the CTA.[21] On June 7, 2002, the RTC denied petitioner's motion and
instead ordered it to file an answer. [22] On June 14, 2002, petitioner filed an
answer ex abundanti cautela.[23]
Petitioner questioned the jurisdiction of the RTC. It averred that, in
view of its pending petition for review in the CTA, the RTC had no jurisdiction
over the subject matter pursuant to Yabes v. Flojo.[24] According to Yabes, the
RTC[25] acquires jurisdiction over a collection case only if an assessment made by
the Commissioner of Internal Revenue has become final and incontestable. [26]
On June 21, 2002, the RTC issued a notice of pre-trial. [27] Petitioner
moved for the reconsideration of the June 7, 2002 order [28] but it was denied in an
order dated June 28, 2002.[29]
Aggrieved, petitioner filed a petition for certiorari in the CA assailing the
June 7, 2002 and June 28, 2002 orders of the RTC. [30] This petition was denied
by the appellate court in a decision dated October 23, 2003. [31] According to the
CA, the BoC's assessment had already become final and conclusive. Hence, its
written demand for payment was not an assessment that could still be protested
under the Tariff and Customs Code of the Philippines (TCCP). [32] Thus, the
jurisdiction over the subject matter was well within the jurisdiction of the RTC, not
the CTA.[33]
Petitioner moved for reconsideration but it was denied. Thus, this petition.
Petitioner essentially contends that the RTC had no jurisdiction over the
collection case inasmuch as the CTA had not yet decided the petition for review.
[34]
Therefore, the RTC should have dismissed the collection case and transfered
it to the CTA where it should be treated as a counterclaim (in the petition for
review).[35]
We deny the petition.

Under this provision, import duties constitute a personal debt of the importer that
must be paid in full. The importers liability therefore constitutes a lien on the
article which the government may choose to enforce while the imported articles
are either in its custody or under its control.
When respondent released petitioner's goods, its (respondents) lien over
the imported goods was extinguished. Consequently, respondent could only
enforce the payment of petitioner's import duties in full by filing a case for
collection against petitioner.[42]
THE
SUBJECT
MATTER
FALLS
WITHIN
THE
JURISDIC
TION OF
THE RTC
Respondent filed its complaint for collection on April 3, 2002. The
governing law at that time was RA [43] 1125 or the old CTA Law. Section 7 thereof
stated:
Section 7. Jurisdiction. The Court of Tax Appeals
shall exercise exclusive appellate jurisdiction to review
by appeal, as herein provided
(1)
Decision of the Commissioner of Internal
Revenue in cases involving disputed assessment,
refunds of internal revenue taxes, fees or other charges,
penalties imposed in relation thereto, or other matters
arising under the National Internal Revenue Code or
other laws or part of law administered by the Bureau of
Internal Revenue;
(2)
Decisions of the Commissioner of
Customs in cases involving liability for customs
duties, fees or other money charges; seizure,
detention or release of property affected; fines and
forfeitures or other penalties imposed in relation
thereto; or other matters arising under Customs
Law or other laws or part of law administered by the
Bureau of Customs; and

THE
FILING
OF
THE
COLLECT
ION
CASE W
AS A PR
OPER RE
MEDY

(3) Decisions of the provincial or city Boards of


Assessment Appeals in cases involving the assessment
and taxation of real property or other matters arising
under the Assessment Law, including rules and
regulations relative thereto. [44] (emphasis supplied)

Assessments inform taxpayers of their tax liabilities. [36] Under the TCCP,
the assessment is in the form of a liquidation made on the face of the import
entry return and approved by the Collector of Customs. [37] Liquidation is the final
computation and ascertainment by the Collector of Customs of the duties
due on imported merchandisebased on official reports as to the quantity,
character and value thereof, and the Collector of Customs' own finding as to the
applicable rate of duty.[38] A liquidation is considered to have been made when the
entry is officially stamped liquidated. [39]
Petitioner claims that it paid the duties due on its importations. Section
1603 of the old TCCP stated:
Section 1603. Finality of Liquidation. When articles have
been entered and passed free of duty or final
adjustments of duties made, with subsequent delivery,
such entry and passage free of duty or settlement of
duties will, after the expiration of one year from the date
of the final payment of duties, in the absence of fraud or
protest, be final and conclusive upon all parties, unless
the liquidation of the import entry was merely tentative.
[40]

An assessment or liquidation by the BoC attains finality and


conclusiveness one year from the date of the final payment of duties except
when:
(a)
(b)
(c)

there was fraud;


there is a pending protest or
the liquidation of import entry was merely tentative.

None of the foregoing exceptions is present in this case. There was no


fraud as petitioner claimed (and was presumed) to be in good faith. Respondent
does not dispute this. Moreover, records show that petitioner paid those duties

Inasmuch as the present case did not involve a decision of the


Commissioner of Customs in any of the instances enumerated in Section 7(2) of
RA 1125, the CTA had no jurisdiction over the subject matter. It was the RTC that
had jurisdiction under Section 19(6) of the Judiciary Reorganization Act of 1980,
as amended:[45]
Section 19.
Jurisdiction in Civil Cases.
Regional Trial Courts shall exercise exclusive original
jurisdiction:
xxx

xxx

xxx

(6)
In all cases not within the exclusive
jurisdiction of any court, tribunal, person or body
exercising judicial or quasi-judicial functions,
xxx.
In view of the foregoing, the RTC should forthwith proceed with Civil Case
No. 02-103191 and determine the extent of petitioner's liability.
We are not unmindful of petitioner's pending petition for review in the
CTA where it is questioning the validity of the cancellation of the TCCs. However,
respondent cannot and should not await the resolution of that case before it
collects petitioner's outstanding customs duties and taxes for such delay will
unduly restrain the performance of its functions. [46] Moreover, if the ultimate
outcome of the CTA case turns out to be favorable to petitioner, the law affords it
the adequate remedy of seeking a refund.
WHEREFORE, this petition is hereby DENIED. The Regional Trial Court of
Manila, Branch 19 is ordered to proceed expeditiously with the pre-trial
conference and trial of Civil Case No. 02-103191.
Costs against petitioner.
SO ORDERED

[G.R. No. 158540. August 3, 2005]


SOUTHERN CROSS CEMENT CORPORATION, petitioner, vs. CEMENT
MANUFACTURERS ASSOCIATION OF THE PHILIPPINES, THE
SECRETARY OF THE DEPARTMENT OF TRADE AND INDUSTRY,
THE SECRETARY OF THE DEPARTMENT OF FINANCE and THE
COMMISSIONER OF THE BUREAU OF CUSTOMS, respondents.
RESOLUTION
TINGA, J.:
Cement is hardly an exciting subject for litigation. Still, the parties in this
case have done their best to put up a spirited advocacy of their respective
positions, throwing in everything including the proverbial kitchen sink. At present,
the burden of passion, if not proof, has shifted to public respondents Department
of Trade and Industry (DTI) and private respondent Philippine Cement
Manufacturers Corporation (Philcemcor), [1] who now seek reconsideration of
our Decision dated 8 July 2004 (Decision), which granted the petition of petitioner
Southern Cross Cement Corporation (Southern Cross).
This case, of course, is ultimately not just about cement. For respondents,
it is about love of country and the future of the domestic industry in the face of
foreign competition. For this Court, it is about elementary statutory construction,
constitutional limitations on the executive power to impose tariffs and similar
measures, and obedience to the law. Just as much was asserted in
the Decision, and the same holds true with this present Resolution.
An extensive narration of facts can be found in the Decision.[2] As can well
be recalled, the case centers on the interpretation of provisions of Republic Act
No. 8800, the Safeguard Measures Act (SMA), which was one of the laws
enacted by Congress soon after the Philippines ratified the General Agreement
on Tariff and Trade (GATT) and the World Trade Organization (WTO) Agreement.
[3]
The SMA provides the structure and mechanics for the imposition of
emergency measures, including tariffs, to protect domestic industries and
producers from increased imports which inflict or could inflict serious injury on
them.[4]
A brief summary as to how the present petition came to be filed by
Southern Cross. Philcemcor, an association of at least eighteen (18) domestic
cement manufacturers filed with the DTI a petition seeking the imposition of
safeguard measures on gray Portland cement, [5] in accordance with the SMA.
After the DTI issued a provisional safeguard measure, [6] the application was
referred to the Tariff Commission for a formal investigation pursuant to Section 9
of the SMA and its Implementing Rules and Regulations, in order to determine
whether or not to impose a definitive safeguard measure on imports of gray
Portland cement. The Tariff Commission held public hearings and conducted its
own investigation, then on 13 March 2002, issued its Formal Investigation Report
(Report). The Report determined as follows:
The elements of serious injury and imminent threat of serious injury not having
been established, it is hereby recommended that no definitive general safeguard
measure be imposed on the importation of gray Portland cement. [7]
The DTI sought the opinion of the Secretary of Justice whether it could still
impose a definitive safeguard measure notwithstanding the negative finding of
the Tariff Commission. After the Secretary of Justice opined that the DTI could
not do so under the SMA, [8] the DTI Secretary then promulgated
a Decision[9] wherein he expressed the DTIs disagreement with the conclusions
of the Tariff Commission, but at the same time, ultimately denying Philcemcors
application for safeguard measures on the ground that the he was bound to do
so in light of the Tariff Commissions negative findings.[10]
Philcemcor challenged this Decision of the DTI Secretary by filing with the
Court of Appeals a Petition for Certiorari, Prohibition and Mandamus [11] seeking to
set aside the DTIDecision, as well as the Tariff Commissions Report. It prayed
that the Court of Appeals direct the DTI Secretary to disregard the Report and to
render judgment independently of the Report. Philcemcor argued that the DTI
Secretary, vested as he is under the law with the power of review, is not bound to
adopt the recommendations of the Tariff Commission; and, that the Report is
void, as it is predicated on a flawed framework, inconsistent inferences and
erroneous methodology.[12]
The Court of Appeals Twelfth Division, in a Decision[13] penned by Court of
Appeals Associate Justice Elvi John Asuncion, [14] partially granted Philcemcors
petition. The appellate court ruled that it had jurisdiction over the petition for
certiorari since it alleged grave abuse of discretion. While it refused to annul the
findings of the Tariff Commission, [15] it also held that the DTI Secretary was not
bound by the factual findings of the Tariff Commission since such findings are
merely recommendatory and they fall within the ambit of the Secretarys
discretionary review. It determined that the legislative intent is to grant the DTI
Secretary the power to make a final decision on the Tariff Commissions
recommendation.[16]
On 23 June 2003, Southern Cross filed the present petition, arguing that
the Court of Appeals has no jurisdiction over Philcemcors petition, as the proper
remedy is a petition for review with the CTA conformably with the SMA, and; that
the factual findings of the Tariff Commission on the existence or non-existence of
conditions warranting the imposition of general safeguard measures are binding
upon the DTI Secretary.
Despite the fact that the Court of Appeals Decision had not yet become
final, its binding force was cited by the DTI Secretary when he issued a
new Decision on 25 June 2003, wherein he ruled that that in light of the appellate
courts Decision, there was no longer any legal impediment to his deciding
Philcemcors application for definitive safeguard measures. [17] He made a
determination that, contrary to the findings of the Tariff Commission, the local
cement industry had suffered serious injury as a result of the import surges.
[18]
Accordingly, he imposed a definitive safeguard measure on the importation of
gray Portland cement, in the form of a definitive safeguard duty in the amount
of P20.60/40 kg. bag for three years on imported gray Portland Cement. [19]
On 7 July 2003, Southern Cross filed with the Court a Very Urgent
Application for a Temporary Restraining Order and/or A Writ of Preliminary
Injunction (TRO Application), seeking to enjoin the DTI Secretary from
enforcing his Decision of 25 June 2003 in view of the pending petition before this
Court. Philcemcor filed an opposition, claiming, among others, that it is not this
Court but the CTA that has jurisdiction over the application under the law.
On 1 August 2003, Southern Cross filed with the CTA a Petition for
Review, assailing the DTI Secretarys 25 June 2003 Decision which imposed the
definite safeguard measure. Yet Southern Cross did not promptly inform this
Court about this filing. The first time the Court would learn about this Petition with
the CTA was when Southern Cross mentioned such fact in a pleading dated 11
August 2003 and filed the next day with this Court. [20]
Philcemcor argued before this Court that Southern Cross had deliberately
and willfully resorted to forum-shopping; that the CTA, being a special court of
limited jurisdiction, could only review the ruling of the DTI Secretary when a
safeguard measure is imposed; and that the factual findings of the Tariff
Commission are not binding on the DTI Secretary.[21]

After giving due course to Southern Crosss Petition, the Court called the
case for oral argument on 18 February 2004. [22] At the oral argument, attended by
the counsel for Philcemcor and Southern Cross and the Office of the Solicitor
General, the Court simplified the issues in this wise: (i) whether the Decision of
the DTI Secretary is appealable to the CTA or the Court of Appeals; (ii) assuming
that the Court of Appeals has jurisdiction, whether its Decision is in accordance
with law; and, whether a Temporary Restraining Order is warranted.[23]
After the parties had filed their respective memoranda, the Courts Second
Division, to which the case had been assigned, promulgated its Decision granting
Southern Crosss Petition.[24]The Decision was unanimous, without any separate
or concurring opinion.
The Court ruled that the Court of Appeals had no jurisdiction over
Philcemcors Petition, the proper remedy under Section 29 of the SMA being a
petition for review with the CTA; and that the Court of Appeals erred in ruling that
the DTI Secretary was not bound by the negative determination of the Tariff
Commission and could therefore impose the general safeguard measures, since
Section 5 of the SMA precisely required that the Tariff Commission make a
positive final determination before the DTI Secretary could impose these
measures. Anent the argument that Southern Cross had committed forumshopping, the Court concluded that there was no evident malicious intent to
subvert procedural rules so as to match the standard under Section 5, Rule 7 of
the Rules of Court of willful and deliberate forum shopping. Accordingly,
the Decision of the Court of Appeals dated 5 June 2003 was declared null and
void.
The Court likewise found it necessary to nullify the Decision of the DTI
Secretary dated 25 June 2003, rendered after the filing of this present Petition.
This Decision by the DTI Secretary had cited the obligatory force of the null and
void Court of Appeals Decision, notwithstanding the fact that the decision of the
appellate court was not yet final and executory. Considering that the decision of
the Court of Appeals was a nullity to begin with, the inescapable conclusion was
that the new decision of the DTI Secretary, prescinding as it did from the
imprimatur of the decision of the Court of Appeals, was a nullity as well.
After the Decision was reported in the media, there was a flurry of
newspaper articles citing alleged negative reactions to the ruling by the counsel
for Philcemcor, the DTI Secretary, and others. [25] Both respondents promptly filed
their respective motions for reconsideration.
On 21 September 2004, the Court En Banc resolved, upon motion of
respondents, to accept the petition and resolve the Motions for Reconsideration.
[26]
The case was then reheard [27] on oral argument on 1 March 2005. During the
hearing, the Court elicited from the parties their arguments on the two central
issues as discussed in the assailed Decision, pertaining to the jurisdictional
aspect and to the substantive aspect of whether the DTI Secretary may impose a
general safeguard measure despite a negative determination by the Tariff
Commission. The Court chose not to hear argumentation on the peripheral issue
of forum-shopping,[28] although this question shall be tackled herein shortly.
Another point of concern emerged during oral arguments on the exercise of
quasi-judicial powers by the Tariff Commission, and the parties were required by
the Court to discuss in their respective memoranda whether the Tariff
Commission could validly exercise quasi-judicial powers in the exercise of its
mandate under the SMA.
The Court has likewise been notified that subsequent to the rendition of
the Courts Decision, Philcemcor filed a Petition for Extension of the Safeguard
Measure with the DTI, which has been referred to the Tariff Commission. [29] In
an Urgent Motion dated 21 December 2004, Southern Cross prayed that
Philcemcor, the DTI, the Bureau of Customs, and the Tariff Commission be
directed to cease and desist from taking any and all actions pursuant to or under
the null and void CA Decision and DTI Decision, including proceedings to extend
the safeguard measure.[30] In a Manifestation and Motion dated 23 June 2004, the
Tariff Commission informed the Court that since no prohibitory injunction or order
of such nature had been issued by any court against the Tariff Commission, the
Commission proceeded to complete its investigation on the petition for extension,
pursuant to Section 9 of the SMA, but opted to defer transmittal of its report to
the DTI Secretary pending guidance from this Court on the propriety of such a
step considering this pending Motion for Reconsideration. In a Resolutiondated 5
July 2005, the Court directed the parties to maintain the status quo effective of
even date, and until further orders from this Court. The denial of the pending
motions for reconsideration will obviously render the pending petition for
extension academic.
I. Jurisdiction of the Court of Tax Appeals
Under Section 29 of the SMA
The first core issue resolved in the assailed Decision was whether the
Court of Appeals had jurisdiction over the special civil action for certiorari filed by
Philcemcor assailing the 5 April 2002 Decision of the DTI Secretary. The general
jurisdiction of the Court of Appeals over special civil actions for certiorari is
beyond doubt. The Constitution itself assures that judicial review avails to
determine whether or not there has been a grave abuse of discretion amounting
to lack or excess of jurisdiction on the part of any branch or instrumentality of the
Government. At the same time, the special civil action of certiorari is available
only when there is no plain, speedy and adequate remedy in the ordinary course
of law.[31] Philcemcors recourse of special civil action before the Court of Appeals
to challenge the Decision of the DTI Secretary not to impose the general
safeguard measures is not based on the SMA, but on the general rule on
certiorari. Thus, the Court proceeded to inquire whether indeed there was no
other plain, speedy and adequate remedy in the ordinary course of law that
would warrant the allowance of Philcemcors special civil action.
The answer hinged on the proper interpretation of Section 29 of the SMA,
which reads:
Section 29. Judicial Review. Any interested party who is adversely affected by
the ruling of the Secretary in connection with the imposition of a safeguard
measure may file with the CTA, a petition for review of such ruling within thirty
(30) days from receipt thereof. Provided, however, that the filing of such petition
for review shall not in any way stop, suspend or otherwise toll the imposition or
collection of the appropriate tariff duties or the adoption of other appropriate
safeguard measures, as the case may be.
The petition for review shall comply with the same requirements and shall follow
the same rules of procedure and shall be subject to the same disposition as in
appeals in connection with adverse rulings on tax matters to the Court of
Appeals.[32] (Emphasis supplied)
The matter is crucial for if the CTA properly had jurisdiction over the
petition challenging the DTI Secretarys ruling not to impose a safeguard
measure, then the special civil action of certiorari resorted to instead by
Philcemcor would not avail, owing to the existence of a plain, speedy and
adequate remedy in the ordinary course of law. [33] The Court of Appeals, in
asserting that it had jurisdiction, merely cited the general rule on certiorari
jurisdiction without bothering to refer to, or possibly even study, the import of
Section 29. In contrast, this Court duly considered the meaning and ramifications
of Section 29, concluding that it provided for a plain, speedy and adequate

remedy that Philcemcor could have resorted to instead of filing the special civil
action before the Court of Appeals.
Philcemcor still holds on to its hypothesis that the petition for review
allowed under Section 29 lies only if the DTI Secretarys ruling imposes a
safeguard measure. If, on the other hand, the DTI Secretarys ruling is not to
impose a safeguard measure, judicial review under Section 29 could not be
resorted to since the provision refers to rulings in connection with the
imposition of the safeguard measure, as opposed to the non-imposition. Since
the Decision dated 5 April 2002 resolved against imposing a safeguard measure,
Philcemcor claims that the proper remedial recourse is a petition for certiorari
with the Court of Appeals.
Interestingly, Republic Act No. 9282, promulgated on 30 March 2004,
expressly vests unto the CTA jurisdiction over [d]ecisions of the Secretary of
Trade and Industry, in case of nonagricultural product, commodity or article . . .
involving . . . safeguard measures under Republic Act No. 8800, where either
party may appeal the decision to impose or not to impose said duties.[34] It
is clear that any future attempts to advance the literalist position of the
respondents would consequently fail. However, since Republic Act No. 9282
has no retroactive effect, this Court had to decide whether Section 29
vests jurisdiction on the CTA over rulings of the DTI Secretary not to impose a
safeguard measure. And the Court, in its assailed Decision, ruled that the CTA is
endowed with such jurisdiction.
Both respondents reiterate their fundamentalist reading that Section 29
authorizes the petition for review before the CTA only when the DTI Secretary
decides to impose a safeguard measure, but not when he decides not to. In
doing so, they fail to address what the Court earlier pointed out would be the
absurd consequences if their interpretation is followed to its logical end. But in
affirming, as the Court now does, its previous holding that the CTA has
jurisdiction over petitions for review questioning the non-imposition of safeguard
measures by the DTI Secretary, the Court relies on the plain reading that Section
29 explicitly vests jurisdiction over such petitions on the CTA.
Under Section 29, there are three requisites to enable the CTA to acquire
jurisdiction over the petition for review contemplated therein: (i) there must be a
ruling by the DTI Secretary; (ii) the petition must be filed by an interested party
adversely affected by the ruling; and (iii) such ruling must be in connection with
the imposition of a safeguard measure. Obviously, there are differences between
a ruling for the imposition of a safeguard measure, and one issued in
connection with the imposition of a safeguard measure. The first adverts to a
singular type of ruling, namely one that imposes a safeguard measure. The
second does not contemplate only one kind of ruling, but a myriad of rulings
issued in connection with the imposition of a safeguard measure.
Respondents argue that the Court has given an expansive interpretation
to Section 29, contrary to the established rule requiring strict construction against
the existence of jurisdiction in specialized courts. [35] But it is the express
provision of Section 29, and not this Court, that mandates CTA jurisdiction
to be broad enough to encompass more than just a ruling imposing the
safeguard measure.
The key phrase remains in connection with. It has connotations that are
obvious even to the layman. A ruling issued in connection with the imposition of
a safeguard measure would be one that bears some relation to the imposition of
a safeguard measure. Obviously, a ruling imposing a safeguard measure is
covered by the phrase in connection with, but such ruling is by no means
exclusive. Rulings which modify, suspend or terminate a safeguard measure are
necessarily in connection with the imposition of a safeguard measure. So does a
ruling allowing for a provisional safeguard measure. So too, a ruling by the DTI
Secretary refusing to refer the application for a safeguard measure to the Tariff
Commission. It is clear that there is an entire subset of rulings that the DTI
Secretary may issue in connection with the imposition of a safeguard measure,
including those that are provisional, interlocutory, or dispositive in character. [36] By
the same token, a ruling not to impose a safeguard measure is also issued in
connection with the imposition of a safeguard measure.
In arriving at the proper interpretation of in connection with, the Court
referred to the U.S. Supreme Court cases of Shaw v. Delta Air Lines, Inc.
[37]
and New York State Blue Cross Plans v. Travelers Ins.[38] Both cases
considered the interpretation of the phrase relates to as used in a federal
statute, the Employee Retirement Security Act of 1974. Respondents criticize
the citations on the premise that the cases are not binding in our jurisdiction and
do not involve safeguard measures. The criticisms are off-tangent considering
that our ruling did not call for the application of the Employee Retirement Security
Act of 1974 in the Philippine milieu. The American cases are not relied upon as
precedents, but as guides of interpretation. Certainly, if there are applicable local
precedents pertaining to the interpretation of the phrase in connection with,
then these certainly would have some binding force. But none avail, and neither
do the respondents demonstrate a countervailing holding in Philippine
jurisprudence.
Yet we should consider the claim that an expansive interpretation was
favored in Shaw because the law in question was an employees benefit law that
had to be given an interpretation favorable to its intended beneficiaries. [39] In the
next breath, Philcemcor notes that the U.S. Supreme Court itself was alarmed by
the expansive interpretation in Shaw and thus in Blue Cross, the Shaw ruling was
reversed and a more restrictive interpretation was applied based on
congressional intent.[40]
Respondents would like to make it appear that the Court acted rashly in
applying a discarded precedent in Shaw, a non-binding foreign precedent
nonetheless. But the Court did make the following observation in
its Decision pertaining to Blue Cross:
Now, let us determine the maximum scope and reach of the phrase in
connection with as used in Section 29 of the SMA. A literalist reading or
linguistic survey may not satisfy. Even the U.S. Supreme Court in New York
State Blue Cross Plans v. Travelers Ins.[41] conceded that the phrases relate to
or in connection with may be extended to the farthest stretch of indeterminacy
for, universally, relations or connections are infinite and stop nowhere. [42] Thus, in
the case the U.S. High Court, examining the same phrase of the same
provision of law involved in Shaw, resorted to looking at the statute and its
objectives as the alternative to an uncritical literalism. A similar inquiry
into the other provisions of the SMA is in order to determine the scope of
review accorded therein to the CTA.[43]
In the next four paragraphs of the Decision, encompassing four pages, the
Court proceeded to inquire into the SMA and its objectives as a means to
determine the scope of rulings to be deemed as in connection with the
imposition of a safeguard measure. Certainly, this Court did not resort to the
broadest interpretation possible of the phrase in connection with, but instead
sought to bring it into the context of the scope and objectives of the SMA. The
ultimate conclusion of the Court was that the phrase includes all rulings of the
DTI Secretary which arise from the time an application or motu proprio initiation
for the imposition of a safeguard measure is taken. [44] This conclusion was
derived from the observation that the imposition of a general safeguard measure

is a process, initiated motu proprio or through application, which undergoes


several stages upon which the DTI Secretary is obliged or may be called upon to
issue a ruling.
It should be emphasized again that by utilizing the phrase in connection
with, it is the SMA that expressly vests jurisdiction on the CTA over petitions
questioning the non-imposition by the DTI Secretary of safeguard measures.
The Court is simply asserting, as it should, the clear intent of the legislature in
enacting the SMA. Without in connection with or a synonymous phrase, the
Court would be compelled to favor the respondents position that only rulings
imposing safeguard measures may be elevated on appeal to the CTA. But
considering that the statute does make use of the phrase, there is little sense in
delving into alternate scenarios.
Respondents fail to convincingly address the absurd consequences
pointed out by the Decision had their proposed interpretation been adopted.
Indeed, suffocated beneath the respondents legalistic tinsel is the elemental
questionwhat sense is there in vesting jurisdiction on the CTA over a decision
to impose a safeguard measure, but not on one choosing not to impose. Of
course, it is not for the Court to inquire into the wisdom of legislative acts, hence
the rule that jurisdiction must be expressly vested and not presumed. Yet
ultimately, respondents muddle the issue by making it appear that
the Decision has uniquely expanded the jurisdictional rules. For the respondents,
the proper statutory interpretation of the crucial phrase in connection with is to
pretend that the phrase did not exist at all in the statute. The Court, in taking the
effort to examine the meaning and extent of the phrase, is merely giving breath to
the legislative will.
The Court likewise stated that the respondents position calls for split
jurisdiction, which is judicially abhorred. In rebuttal, the public respondents cite
Sections 2313 and 2402 of the Tariff and Customs Code (TCC), which allegedly
provide for a splitting of jurisdiction of the CTA. According to public respondents,
under Section 2313 of the TCC, a decision of the Commissioner of Customs
affirming a decision of the Collector of Customs adverse to the government is
elevated for review to the Secretary of Finance. However, under Section 2402 of
the TCC, a ruling of the Commissioner of the Bureau of Customs against a
taxpayer must be appealed to the Court of Tax Appeals, and not to the Secretary
of Finance.
Strictly speaking, the review by the Secretary of Finance of the decision of
the Commissioner of Customs is not judicial review, since the Secretary of
Finance holds an executive and not a judicial office. The contrast is apparent
with the situation in this case, wherein the interpretation favored by the
respondents calls for the exercise of judicial review by two different courts over
essentially the same questionwhether the DTI Secretary should impose general
safeguard measures. Moreover, as petitioner points out, the executive
department cannot appeal against itself. The Collector of Customs, the
Commissioner of Customs and the Secretary of Finance are all part of the
executive branch. If the Collector of Customs rules against the government, the
executive cannot very well bring suit in courts against itself. On the other hand, if
a private person is aggrieved by the decision of the Collector of Customs, he can
have proper recourse before the courts, which now would be called upon to
exercise judicial review over the action of the executive branch.
More fundamentally, the situation involving split review of the decision of
the Collector of Customs under the TCC is not apropos to the case at bar. The
TCC in that instance is quite explicit on the divergent reviewing body or official
depending on which party prevailed at the Collector of Customs level. On the
other hand, there is no such explicit expression of bifurcated appeals in Section
29 of the SMA.
Public respondents likewise cite Fabian v. Ombudsman [45] as another
instance wherein the Court purportedly allowed split jurisdiction. It is argued that
the Court, in ruling that it was the Court of Appeals which possessed appellate
authority to review decisions of the Ombudsman in administrative cases while the
Court retaining appellate jurisdiction of decisions of the Ombudsman in nonadministrative cases, effectively sanctioned split jurisdiction between the Court
and the Court of Appeals.[46]
Nonetheless, this argument is successfully undercut by Southern Cross,
which points out the essential differences in the power exercised by the
Ombudsman in administrative cases and non-administrative cases relating to
criminal complaints. In the former, the Ombudsman may impose an
administrative penalty, while in acting upon a criminal complaint what the
Ombudsman undertakes is a preliminary investigation. Clearly, the capacity in
which the Ombudsman takes on in deciding an administrative complaint is wholly
different from that in conducting a preliminary investigation. In contrast, in ruling
upon a safeguard measure, the DTI Secretary acts in one and the same role. The
variance between an order granting or denying an application for a safeguard
measure is polar though emanating from the same equator, and does not arise
from the distinct character of the putative actions involved.
Philcemcor imputes intelligent design behind the alleged intent of
Congress to limit CTA review only to impositions of the general safeguard
measures. It claims that there is a necessary tax implication in case of an
imposition of a tariff where the CTAs expertise is necessary, but there is no such
tax implication, hence no need for the assumption of jurisdiction by a specialized
agency, when the ruling rejects the imposition of a safeguard measure. But of
course, whether the ruling under review calls for the imposition or non-imposition
of the safeguard measure, the common question for resolution still is whether or
not the tariff should be imposed an issue definitely fraught with a tax
dimension. The determination of the question will call upon the same kind of
expertise that a specialized body as the CTA presumably possesses.
In response to the Courts observation that the setup proposed by
respondents was novel, unusual, cumbersome and unwise, public respondents
invoke the maxim that courts should not be concerned with the wisdom and
efficacy of legislation.[47] But this prescinds from the bogus claim that the CTA
may not exercise judicial review over a decision not to impose a safeguard
measure, a prohibition that finds no statutory support. It is likewise settled in
statutory construction that an interpretation that would cause inconvenience and
absurdity is not favored. Respondents do not address the particular illogic that
the Court pointed out would ensue if their position on judicial review were
adopted. According to the respondents, while a ruling by the DTI Secretary
imposing a safeguard measure may be elevated on review to the CTA and
assailed on the ground of errors in fact and in law, a ruling denying the imposition
of safeguard measures may be assailed only on the ground that the DTI
Secretary committed grave abuse of discretion. As stressed in the Decision,
[c]ertiorari is a remedy narrow in its scope and inflexible in its character. It is not
a general utility tool in the legal workshop. [48]
It is incorrect to say that the Decision bars any effective remedy should
the Tariff Commission act or conclude erroneously in making its determination
whether the factual conditions exist which necessitate the imposition of the
general safeguard measure. If the Tariff Commission makes a negative final
determination, the DTI Secretary, bound as he is by this negative determination,
has to render a decision denying the application for safeguard measures citing

the Tariff Commissions findings as basis. Necessarily then, such negative


determination of the Tariff Commission being an integral part of the DTI
Secretarys ruling would be open for review before the CTA, which again is
especially qualified by reason of its expertise to examine the findings of the Tariff
Commission. Moreover, considering that the Tariff Commission is an
instrumentality of the government, its actions (as opposed to those undertaken
by the DTI Secretary under the SMA) are not beyond the pale of certiorari
jurisdiction. Unfortunately for Philcemcor, it hinged its cause on the claim that the
DTI Secretarys actions may be annulled on certiorari, notwithstanding the explicit
grant of judicial review over that cabinet members actions under the SMA to the
CTA.
Finally on this point, Philcemcor argues that assuming this Courts
interpretation of Section 29 is correct, such ruling should not be given retroactive
effect, otherwise, a gross violation of the right to due process would be had. This
erroneously presumes that it was this Court, and not Congress, which vested
jurisdiction on the CTA over rulings of non-imposition rendered by the DTI
Secretary. We have repeatedly stressed that Section 29 expressly confers CTA
jurisdiction over rulings in connection with the imposition of the safeguard
measure, and the reassertion of this point in the Decision was a matter of
emphasis, not of contrivance. The due process protection does not shield those
who remain purposely blind to the express rules that ensure the sporting play of
procedural law.
Besides, respondents claim would also apply every time this Court is
compelled to settle a novel question of law, or to reverse precedent. In such
cases, there would always be litigants whose causes of action might be vitiated
by the application of newly formulated judicial doctrines. Adopting their claim
would unwisely force this Court to treat its dispositions in unprecedented,
sometimes landmark decisions not as resolutions to the live cases or
controversies, but as legal doctrine applicable only to future litigations.
II. Positive Final Determination
By the Tariff Commission an
Indispensable Requisite to the
Imposition of General Safeguard Measures
The second core ruling in the Decision was that contrary to the holding of
the Court of Appeals, the DTI Secretary was barred from imposing a general
safeguard measure absent a positive final determination rendered by the Tariff
Commission. The fundamental premise rooted in this ruling is based on the
acknowledgment that the required positive final determination of the Tariff
Commission exists as a properly enacted constitutional limitation imposed on the
delegation of the legislative power to impose tariffs and imposts to the President
under Section 28(2), Article VI of the Constitution.
Congressional Limitations Pursuant
To Constitutional Authority on the
Delegated Power to Impose
Safeguard Measures
The safeguard measures imposable under the SMA generally involve
duties on imported products, tariff rate quotas, or quantitative restrictions on the
importation of a product into the country. Concerning as they do the foreign
importation of products into the Philippines, these safeguard measures fall within
the ambit of Section 28(2), Article VI of the Constitution, which states:
The Congress may, by law, authorize the President to fix within specified
limits, and subject to such limitations and restrictions as it may impose ,
tariff rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts within the framework of the national development program of
the Government.[49]
The Court acknowledges the basic postulates ingrained in the provision,
and, hence, governing in this case. They are:
(1) It is Congress which authorizes the President to impose tariff
rates, import and export quotas, tonnage and wharfage dues, and other
duties or imposts. Thus, the authority cannot come from the Finance
Department, the National Economic Development Authority, or the World Trade
Organization, no matter how insistent or persistent these bodies may be.
(2) The authorization granted to the President must be embodied in a
law. Hence, the justification cannot be supplied simply by inherent executive
powers. It cannot arise from administrative or executive orders promulgated by
the executive branch or from the wisdom or whim of the President.
(3) The authorization to the President can be exercised only within
the specified limits set in the law and is further subject to limitations and
restrictions which Congress may impose. Consequently, if Congress
specifies that the tariff rates should not exceed a given amount, the President
cannot impose a tariff rate that exceeds such amount. If Congress stipulates that
no duties may be imposed on the importation of corn, the President cannot
impose duties on corn, no matter how actively the local corn producers lobby the
President. Even the most picayune of limits or restrictions imposed by Congress
must be observed by the President.
There is one fundamental principle that animates these constitutional
postulates. These impositions under Section 28(2), Article VI fall within the
realm of the power of taxation, a power which is within the sole province of
the legislature under the Constitution.
Without Section 28(2), Article VI, the executive branch has no
authority to impose tariffs and other similar tax levies involving the
importation of foreign goods. Assuming that Section 28(2) Article VI did not
exist, the enactment of the SMA by Congress would be voided on the ground that
it would constitute an undue delegation of the legislative power to tax. The
constitutional provision shields such delegation from constitutional infirmity, and
should be recognized as an exceptional grant of legislative power to the
President, rather than the affirmation of an inherent executive power.
This being the case, the qualifiers mandated by the Constitution on this
presidential authority attain primordial consideration. First, there must be a law,
such as the SMA. Second, there must be specified limits, a detail which would be
filled in by the law. And further, Congress is further empowered to impose
limitations and restrictions on this presidential authority. On this last power, the
provision does not provide for specified conditions, such as that the limitations
and restrictions must conform to prior statutes, internationally accepted practices,
accepted jurisprudence, or the considered opinion of members of the executive
branch.
The Court recognizes that the authority delegated to the President under
Section 28(2), Article VI may be exercised, in accordance with legislative
sanction, by the alter egos of the President, such as department secretaries.
Indeed, for purposes of the Presidents exercise of power to impose tariffs under
Article VI, Section 28(2), it is generally the Secretary of Finance who acts as alter
ego of the President. The SMA provides an exceptional instance wherein it is the
DTI or Agriculture Secretary who is tasked by Congress, in their capacities
as alter egosof the President, to impose such measures. Certainly, the DTI
Secretary has no inherent power, even as alter ego of the President, to levy
tariffs and imports.

Concurrently, the tasking of the Tariff Commission under the SMA should
be likewise construed within the same context as part and parcel of the
legislative delegation of its inherent power to impose tariffs and imposts to the
executive branch, subject to limitations and restrictions. In that regard, both the
Tariff Commission and the DTI Secretary may be regarded as agents of
Congress within their limited respective spheres, as ordained in the SMA, in the
implementation of the said law which significantly draws its strength from the
plenary legislative power of taxation. Indeed, even the President may be
considered as an agent of Congress for the purpose of imposing safeguard
measures. It is Congress, not the President, which possesses inherent
powers to impose tariffs and imposts. Without legislative authorization
through statute, the President has no power, authority or right to impose
such safeguard measures because taxation is inherently legislative, not
executive.
When Congress tasks the President or his/her alter egos to impose
safeguard measures under the delineated conditions, the President or
the alter egos may be properly deemed as agents of Congress to perform
an act that inherently belongs as a matter of right to the legislature . It is
basic agency law that the agent may not act beyond the specifically delegated
powers or disregard the restrictions imposed by the principal. In short, Congress
may establish the procedural framework under which such safeguard measures
may be imposed, and assign the various offices in the government bureaucracy
respective tasks pursuant to the imposition of such measures, the task
assignment including the factual determination of whether the necessary
conditions exists to warrant such impositions. Under the SMA, Congress
assigned the DTI Secretary and the Tariff Commission their respective
functions[50] in the legislatures scheme of things.
There is only one viable ground for challenging the legality of the
limitations and restrictions imposed by Congress under Section 28(2) Article VI,
and that is such limitations and restrictions are themselves violative of the
Constitution. Thus, no matter how distasteful or noxious these limitations and
restrictions may seem, the Court has no choice but to uphold their validity unless
their constitutional infirmity can be demonstrated.
What are these limitations and restrictions that are material to the present
case? The entire SMA provides for a limited framework under which the
President, through the DTI and Agriculture Secretaries, may impose safeguard
measures in the form of tariffs and similar imposts. The limitation most relevant to
this case is contained in Section 5 of the SMA, captioned Conditions for the
Application of General Safeguard Measures, and stating:
The Secretary shall apply a general safeguard measure upon a positive final
determination of the [Tariff] Commission that a product is being imported into
the country in increased quantities, whether absolute or relative to the domestic
production, as to be a substantial cause of serious injury or threat thereof to the
domestic industry; however, in the case of non-agricultural products, the
Secretary shall first establish that the application of such safeguard measures will
be in the public interest.[51]
Positive Final Determination
By Tariff Commission Plainly
Required by Section 5 of SMA
There is no question that Section 5 of the SMA operates as a limitation
validly imposed by Congress on the presidential [52] authority under the SMA to
impose tariffs and imposts. That the positive final determination operates as an
indispensable requisite to the imposition of the safeguard measure, and that it is
the Tariff Commission which makes such determination, are legal propositions
plainly expressed in Section 5 for the easy comprehension for everyone but
respondents.
Philcemcor attributes this Courts conclusion on the indispensability of the
positive final determination to flawed syllogism in that we read the proposition if
A then B as if it stated if A, and only A, then B. [53] Translated in practical terms,
our conclusion, according to Philcemcor, would have only been justified had
Section 5 read shall apply a general safeguard measure upon, and only upon, a
positive final determination of the Tariff Commission.
Statutes are not designed for the easy comprehension of the five-year old
child. Certainly, general propositions laid down in statutes need not be expressly
qualified by clauses denoting exclusivity in order that they gain efficacy. Indeed,
applying this argument, the President would, under the Constitution, be
authorized to declare martial law despite the absence of the invasion, rebellion or
public safety requirement just because the first paragraph of Section 18, Article
VII fails to state the magic word only. [54]
But let us for the nonce pursue Philcemcors logic further. It claims that
since Section 5 does not allegedly limit the circumstances upon which the DTI
Secretary may impose general safeguard measures, it is a worthy pursuit to
determine whether the entire context of the SMA, as discerned by all the other
familiar indicators of legislative intent supplied by norms of statutory
interpretation, would justify safeguard measures absent a positive final
determination by the Tariff Commission.
The first line of attack employed is on Section 5 itself, it allegedly not
being as clear as it sounds. It is advanced that Section 5 does not relate to the
legal ability of either the Tariff Commission or the DTI Secretary to bind or
foreclose review and reversal by one or the other. Such relationship should
instead be governed by domestic administrative law and remedial law.
Philcemcor thus would like to cast the proposition in this manner: Does it run
contrary to our legal order to assert, as the Court did in its Decision, that a body
of relative junior competence as the Tariff Commission can bind an administrative
superior and cabinet officer, the DTI Secretary? It is easy to see why Philcemcor
would like to divorce this DTI Secretary-Tariff Commission interaction from the
confines of the SMA. Shorn of context, the notion would seem radical and
unjustifiable that the lowly Tariff Commission can bind the hands and feet of the
DTI Secretary.
It can be surmised at once that respondents preferred interpretation is
based not on the express language of the SMA, but from implications derived in
a roundabout manner. Certainly, no provision in the SMA expressly authorizes
the DTI Secretary to impose a general safeguard measure despite the absence
of a positive final recommendation of the Tariff Commission. On the other hand,
Section 5 expressly states that the DTI Secretary shall apply a general
safeguard measure upon a positive final determination of the [Tariff]
Commission. The causal connection in Section 5 between the imposition by the
DTI Secretary of the general safeguard measure and the positive final
determination of the Tariff Commission is patent, and even respondents do not
dispute such connection.
As stated earlier, the Court in its Decision found Section 5 to be clear,
plain and free from ambiguity so as to render unnecessary resort to the
congressional records to ascertain legislative intent. Yet respondents, on the
dubitable premise that Section 5 is not as express as it seems, again latch on to
the record of legislative deliberations in asserting that there was no legislative
intent to bar the DTI Secretary from imposing the general safeguard measure

anyway despite the absence of a positive final determination by the Tariff


Commission.
Let us take the bait for a moment, and examine respondents commonly
cited portion of the legislative record. One would presume, given the intense
advocacy for the efficacy of these citations, that they contain a smoking
gun express declarations from the legislators that the DTI Secretary may
impose a general safeguard measure even if the Tariff Commission refuses to
render a positive final determination. Such smoking gun, if it exists, would
characterize our Decision as disingenuous for ignoring such contrary expression
of intent from the legislators who enacted the SMA. But as with many things, the
anticipation is more dramatic than the truth.
The excerpts cited by respondents are derived from the interpellation of
the late Congressman Marcial Punzalan Jr., by then (and still is) Congressman
Simeon Datumanong.[55]Nowhere in these records is the view expressed that the
DTI Secretary may impose the general safeguard measures if the Tariff
Commission issues a negative final determination or otherwise is unable to make
a positive final determination. Instead, respondents hitch on the observations of
Congressman Punzalan Jr., that the results of the [Tariff] Commissions findings .
. . is subsequently submitted to [the DTI Secretary] for the [DTI Secretary] to
impose or not to impose; and that the [DTI Secretary] here iswho would make
the final decision on the recommendation that is made by a more technical body
[such as the Tariff Commission].[56]
There is nothing in the remarks of Congressman Punzalan which
contradict our Decision. His observations fall in accord with the respective roles
of the Tariff Commission and the DTI Secretary under the SMA. Under the SMA,
it is the Tariff Commission that conducts an investigation as to whether the
conditions exist to warrant the imposition of the safeguard measures. These
conditions are enumerated in Section 5, namely; that a product is being imported
into the country in increased quantities, whether absolute or relative to the
domestic production, as to be a substantial cause of serious injury or threat
thereof to the domestic industry. After the investigation of the Tariff Commission,
it submits a report to the DTI Secretary which states, among others, whether the
above-stated conditions for the imposition of the general safeguard measures
exist. Upon a positive final determination that these conditions are present, the
Tariff Commission then is mandated to recommend what appropriate safeguard
measures should be undertaken by the DTI Secretary. Section 13 of the SMA
gives five (5) specific options on the type of safeguard measures the Tariff
Commission recommends to the DTI Secretary.
At the same time, nothing in the SMA obliges the DTI Secretary to adopt
the recommendations made by the Tariff Commission. In fact, the SMA requires
that the DTI Secretary establish that the application of such safeguard measures
is in the public interest, notwithstanding the Tariff Commissions recommendation
on the appropriate safeguard measure upon its positive final determination.
Thus, even if the Tariff Commission makes a positive final determination, the DTI
Secretary may opt not to impose a general safeguard measure, or choose a
different type of safeguard measure other than that recommended by the Tariff
Commission.
Congressman Punzalan was cited as saying that the DTI Secretary makes
the decision to impose or not to impose, which is correct since the DTI
Secretary may choose not to impose a safeguard measure in spite of a positive
final determination by the Tariff Commission. Congressman Punzalan also
correctly stated that it is the DTI Secretary who makes the final decision on the
recommendation that is made [by the Tariff Commission], since the DTI
Secretary may choose to impose a general safeguard measure different from that
recommended by the Tariff Commission or not to impose a safeguard measure at
all. Nowhere in these cited deliberations was Congressman Punzalan, or any
other member of Congress for that matter, quoted as saying that the DTI
Secretary may ignore a negative determination by the Tariff Commission as to
the existence of the conditions warranting the imposition of general safeguard
measures, and thereafter proceed to impose these measures nonetheless. It is
too late in the day to ascertain from the late Congressman Punzalan himself
whether he had made these remarks in order to assure the other legislators that
the DTI Secretary may impose the general safeguard measures notwithstanding
a negative determination by the Tariff Commission. But certainly, the language of
Section 5 is more resolutory to that question than the recorded remarks of
Congressman Punzalan.
Respondents employed considerable effort to becloud Section 5 with
undeserved ambiguity in order that a proper resort to the legislative deliberations
may be had. Yet assuming that Section 5 deserves to be clarified through an
inquiry into the legislative record, the excerpts cited by the respondents are far
more ambiguous than the language of the assailed provision regarding the key
question of whether the DTI Secretary may impose safeguard measures in the
face of a negative determination by the Tariff Commission. Moreover, even
Southern Cross counters with its own excerpts of the legislative record in support
of their own view.[57]
It will not be difficult, especially as to heavily-debated legislation, for two
sides with contrapuntal interpretations of a statute to highlight their respective
citations from the legislative debate in support of their particular views. [58] A futile
exercise of second-guessing is happily avoided if the meaning of the statute is
clear on its face. It is evident from the text of Section 5 that there must be a
positive final determination by the Tariff Commission that a product is
being imported into the country in increased quantities (whether absolute
or relative to domestic production), as to be a substantial cause of serious
injury or threat to the domestic industry. Any disputation to the contrary is, at
best, the product of wishful thinking.
For the same reason that Section 5 is explicit as regards the essentiality
of a positive final determination by the Tariff Commission, there is no need to
refer to the Implementing Rules of the SMA to ascertain a contrary intent. If there
is indeed a provision in the Implementing Rules that allows the DTI Secretary to
impose a general safeguard measure even without the positive final
determination by the Tariff Commission, said rule is void as it cannot supplant the
express language of the legislature. Respondents essentially rehash their
previous arguments on this point, and there is no reason to consider them anew.
The Decision made it clear that nothing in Rule 13.2 of the Implementing Rules,
even though captioned Final Determination by the Secretary, authorizes the DTI
Secretary to impose a general safeguard measure in the absence of a positive
final determination by the Tariff Commission. [59]Similarly, the Rules and
Regulations to Govern the Conduct of Investigation by the Tariff Commission
Pursuant to Republic Act No. 8800 now cited by the respondent does not
contain any provision that the DTI Secretary may impose the general safeguard
measures in the absence of a positive final determination by the Tariff
Commission.
Section 13 of the SMA further bolsters the interpretation as argued by
Southern Cross and upheld by the Decision. The first paragraph thereof states
that [u]pon its positive determination, the [Tariff] Commission shall recommend
to the Secretary an appropriate definitive measure, clearly referring to the
Tariff Commission as the entity that makes the positive determination. On the

other hand, the penultimate paragraph of the same provision states that [i]n the
event of a negative final determination, the DTI Secretary is to immediately issue
through the Secretary of Finance, a written instruction to the Commissioner of
Customs authorizing the return of the cash bonds previously collected as a
provisional safeguard measure. Since the first paragraph of the same provision
states that it is the Tariff Commission which makes the positive determination, it
necessarily follows that it, and not the DTI Secretary, makes the negative final
determination as referred to in the penultimate paragraph of Section 13. [60]
The Separate Opinion considers as highly persuasive of former Tariff
Commission Chairman Abon, who stated that the Commissions findings are
merely recommendatory.[61] Again, the considered opinion of Chairman Abon is of
no operative effect if the statute plainly states otherwise, and Section 5 bluntly
does require a positive final determination by the Tariff Commission before the
DTI Secretary may impose a general safeguard measure. [62]Certainly, the Court
cannot give controlling effect to the statements of any public officer in serious
denial of his duties if the law otherwise imposes the duty on the public office or
officer.
Nonetheless, if we are to render persuasive effect on the considered
opinion of the members of the Executive Branch, it bears noting that the
Secretary of the Department of Justice rendered an Opinion wherein he
concluded that the DTI Secretary could not impose a general safeguard measure
if the Tariff Commission made a negative final determination. [63] Unlike Chairman
Abons impromptu remarks made during a hearing, the DOJ Opinion was
rendered only after a thorough study of the question after referral to it by the DTI.
The DOJ Secretary is the alter ego of the President with a stated mandate as the
head of the principal law agency of the government. [64] As the DOJ Secretary has
no denominated role in the SMA, he was able to render his Opinion from the
vantage of judicious distance. Should not his Opinion, studied and direct to the
point as it is, carry greater weight than the spontaneous remarks of the Tariff
Commissions Chairman which do not even expressly disavow the binding power
of the Commissions positive final determination?
III. DTI Secretary has No Power of Review
Over Final Determination of the Tariff Commission
We should reemphasize that it is only because of the SMA, a legislative
enactment, that the executive branch has the power to impose safeguard
measures. At the same time, by constitutional fiat, the exercise of such power is
subjected to the limitations and restrictions similarly enforced by the SMA. In
examining the relationship of the DTI and the Tariff Commission as established in
the SMA, it is essential to acknowledge and consider these predicates.
It is necessary to clarify the paradigm established by the SMA and
affirmed by the Constitution under which the Tariff Commission and the DTI
operate, especially in light of the suggestions that the Courts rulings on the
functions of quasi-judicial power find application in this case. Perhaps the
reflexive application of the quasi-judicial doctrine in this case, rooted as it is in
jurisprudence, might allow for some convenience in ruling, yet doing so ultimately
betrays ignorance of the fundamental power of Congress to reorganize the
administrative structure of governance in ways it sees fit.
The Separate Opinion operates from wholly different premises which are
incomplete. Its main stance, similar to that of respondents, is that the DTI
Secretary, acting as alter ego of the President, may modify and alter the findings
of the Tariff Commission, including the latters negative final determination by
substituting it with his own negative final determination to pave the way for his
imposition of a safeguard measure. [65] Fatally, this conclusion is arrived at without
considering the fundamental constitutional precept under Section 28(2), Article
VI, on the ability of Congress to impose restrictions and limitations in its
delegation to the President to impose tariffs and imposts, as well as the express
condition of Section 5 of the SMA requiring a positive final determination of the
Tariff Commission.
Absent Section 5 of the SMA, the President has no inherent,
constitutional, or statutory power to impose a general safeguard measure.
Tellingly, the Separate Opinion does not directly confront the inevitable question
as to how the DTI Secretary may get away with imposing a general safeguard
measure absent a positive final determination from the Tariff Commission without
violating Section 5 of the SMA, which along with Section 13 of the same law,
stands as the only direct legal authority for the DTI Secretary to impose such
measures. This is a constitutionally guaranteed limitation of the highest order,
considering that the presidential authority exercised under the SMA is inherently
legislative.
Nonetheless, the Separate Opinion brings to fore the issue of whether the
DTI Secretary, acting either as alter ego of the President or in his capacity as
head of an executive department, may review, modify or otherwise alter the final
determination of the Tariff Commission under the SMA. The succeeding
discussion shall focus on that question.
Preliminarily, we should note that none of the parties question the
designation of the DTI or Agriculture secretaries under the SMA as the imposing
authorities of the safeguard measures, even though Section 28(2) Article VI
states that it is the President to whom the power to impose tariffs and imposts
may be delegated by Congress. The validity of such designation under the SMA
should not be in doubt. We recognize that the authorization made by Congress in
the SMA to the DTI and Agriculture Secretaries was made in contemplation of
their capacities as alter egos of the President.
Indeed, in Marc Donnelly & Associates v. Agregado [66] the Court upheld
the validity of a Cabinet resolution fixing the schedule of royalty rates on metal
exports and providing for their collection even though Congress, under
Commonwealth Act No. 728, had specifically empowered the President and not
any other official of the executive branch, to regulate and curtail the export of
metals. In so ruling, the Court held that the members of the Cabinet were acting
as alter egos of the President. [67] In this case, Congress itself authorized the DTI
Secretary as alter ego of the President to impose the safeguard measures. If the
Court was previously willing to uphold the alter egos tariff authority despite the
absence of explicit legislative grant of such authority on the alter ego, all the
more reason now when Congress itself expressly authorized the alter ego to
exercise these powers to impose safeguard measures.
Notwithstanding, Congress in enacting the SMA and prescribing the roles
to be played therein by the Tariff Commission and the DTI Secretary did not
envision that the President, or his/her alter ego, could exercise supervisory
powers over the Tariff Commission. If truly Congress intended to allow the
traditional alter ego principle to come to fore in the peculiar setup established
by the SMA, it would have assigned the role now played by the DTI Secretary
under the law instead to the NEDA. The Tariff Commission is an attached agency
of the National Economic Development Authority,[68] which in turn is the
independent planning agency of the government. [69]
The Tariff Commission does not fall under the administrative supervision
of the DTI.[70] On the other hand, the administrative relationship between the
NEDA and the Tariff Commission is established not only by the Administrative
Code, but similarly affirmed by the Tariff and Customs Code.

Justice Florentino Feliciano, in his ponencia in Garcia v. Executive


Secretary[71], acknowledged the interplay between the NEDA and the Tariff
Commission under the Tariff and Customs Code when he cited the relevant
provisions of that law evidencing such setup. Indeed, under Section 104 of the
Tariff and Customs Code, the rates of duty fixed therein are subject to periodic
investigation by the Tariff Commission and may be revised by the President upon
recommendation of the NEDA.[72] Moreover, under Section 401 of the same law, it
is upon periodic investigations by the Tariff Commission and recommendation of
the NEDA that the President may cause a gradual reduction of protection levels
granted under the law.[73]
At the same time, under the Tariff and Customs Code, no similar role or
influence is allocated to the DTI in the matter of imposing tariff duties. In fact, the
long-standing tradition has been for the Tariff Commission and the DTI to
proceed independently in the exercise of their respective functions. Only very
recently have our statutes directed any significant interplay between the Tariff
Commission and the DTI, with the enactment in 1999 of Republic Act No. 8751
on the imposition of countervailing duties and Republic Act No. 8752 on the
imposition of anti-dumping duties, and of course the promulgation a year later of
the SMA. In all these three laws, the Tariff Commission is tasked, upon referral
of the matter by the DTI, to determine whether the factual conditions exist to
warrant the imposition by the DTI of a countervailing duty, an anti-dumping duty,
or a general safeguard measure, respectively. In all three laws, the
determination by the Tariff Commission that these required factual conditions
exist is necessary before the DTI Secretary may impose the corresponding duty
or safeguard measure. And in all three laws, there is no express provision
authorizing the DTI Secretary to reverse the factual determination of the Tariff
Commission.[74]
In fact, the SMA indubitably establishes that the Tariff Commission is no
mere flunky of the DTI Secretary when it mandates that the positive final
recommendation of the former be indispensable to the latters imposition of a
general safeguard measure. What the law indicates instead is a relationship of
interdependence between two bodies independent of each other under the
Administrative Code and the SMA alike. Indeed, even the ability of the DTI
Secretary to disregard the Tariff Commissions recommendations as to the
particular safeguard measures to be imposed evinces the independence from
each other of these two bodies. This is properly so for two reasons the DTI and
the Tariff Commission are independent of each other under the Administrative
Code; and impropriety is avoided in cases wherein the DTI itself is the one
seeking the imposition of the general safeguard measures, pursuant to Section 6
of the SMA.
Thus, in ascertaining the appropriate legal milieu governing the
relationship between the DTI and the Tariff Commission, it is imperative to apply
foremost, if not exclusively, the provisions of the SMA. The argument that the
usual rules on administrative control and supervision apply between the Tariff
Commission and the DTI as regards safeguard measures is severely undercut by
the plain fact that there is no long-standing tradition of administrative interplay
between these two entities.
Within the administrative apparatus, the Tariff Commission appears to be
a lower rank relative to the DTI. But does this necessarily mean that the DTI has
the intrinsic right, absent statutory authority, to reverse the findings of the Tariff
Commission? To insist that it does, one would have to concede for instance that,
applying the same doctrinal guide, the Secretary of the Department of Science
and Technology (DOST) has the right to reverse the rulings of the Civil
Aeronautics Board (CAB) or the issuances of the Philippine Coconut Authority
(PCA). As with the Tariff Commission-DTI, there is no statutory authority granting
the DOST Secretary the right to overrule the CAB or the PCA, such right
presumably arising only from the position of subordinacy of these bodies to the
DOST. To insist on such a right would be to invite department secretaries to
interfere in the exercise of functions by administrative agencies, even in areas
wherein such secretaries are bereft of specialized competencies.
The Separate Opinion notes that notwithstanding above, the Secretary of
Department of Transportation and Communication may review the findings of the
CAB, the Agriculture Secretary may review those of the PCA, and that the
Secretary of the Department of Environment and Natural Resources may pass
upon decisions of the Mines and Geosciences Board. [75] These three officers may
be alter egos of the President, yet their authority to review is limited to those
agencies or bureaus which are, pursuant to statutes such as the Administrative
Code of 1987, under the administrative control and supervision of their respective
departments. Thus, under the express provision of the Administrative Code
expressly provides that the CAB is an attached agency of the DOTC [76], and that
the PCA is an attached agency of the Department of Agriculture. [77] The same law
establishes the Mines and Geo-Sciences Bureau as one of the Sectoral Staff
Bureaus[78] that forms part of the organizational structure of the DENR. [79]
As repeatedly stated, the Tariff Commission does not fall under the
administrative control of the DTI, but under the NEDA, pursuant to the
Administrative Code. The reliance made by the Separate Opinion to those three
examples are thus misplaced.
Nonetheless, the Separate Opinion asserts that the SMA created a
functional relationship between the Tariff Commission and the DTI Secretary,
sufficient to allow the DTI Secretary to exercise alter ego powers to reverse the
determination of the Tariff Commission. Again, considering that the power to
impose tariffs in the first place is not inherent in the President but arises only from
congressional grant, we should affirm the congressional prerogative to impose
limitations and restrictions on such powers which do not normally belong to the
executive in the first place. Nowhere in the SMA does it state that the DTI
Secretary may impose general safeguard measures without a positive final
determination by the Tariff Commission, or that the DTI Secretary may reverse or
even review the factual determination made by the Tariff Commission.
Congress in enacting the SMA and prescribing the roles to be played
therein by the Tariff Commission and the DTI Secretary did not envision that the
President, or his/her alter egocould exercise supervisory powers over the Tariff
Commission. If truly Congress intended to allow the traditional alter ego principle
to come to fore in the peculiar setup established by the SMA, it would have
assigned the role now played by the DTI Secretary under the law instead to the
NEDA, the body to which the Tariff Commission is attached under the
Administrative Code.
The Court has no issue with upholding administrative control and
supervision exercised by the head of an executive department, but only over
those subordinate offices that are attached to the department, or which are,
under statute, relegated under its supervision and control. To declare that a
department secretary, even if acting as alter ego of the President, may exercise
such control or supervision over all executive offices below cabinet rank would
lead to absurd results such as those adverted to above. As applied to this case,
there is no legal justification for the DTI Secretary to exercise control,
supervision, review or amendatory powers over the Tariff Commission and its
positive final determination. In passing, we note that there is, admittedly, a
feasible mode by which administrative review of the Tariff Commissions final

determination could be had, but it is not the procedure adopted by respondents


and now suggested for affirmation. This mode shall be discussed in a
forthcoming section.
The Separate Opinion asserts that the President, or his/her alter
ego cannot be made a mere rubber stamp of the Tariff Commission since Section
17, Article VII of the Constitution denominates the Chief Executive exercises
control over all executive departments, bureaus and offices. [80] But let us be clear
that such executive control is not absolute. The definition of the structure of the
executive branch of government, and the corresponding degrees of
administrative control and supervision, is not the exclusive preserve of the
executive. It may be effectively be limited by the Constitution, by law, or by
judicial decisions.
The Separate Opinion cites the respected constitutional law authority Fr.
Joaquin Bernas, in support of the proposition that such plenary power of
executive control of the President cannot be restricted by a mere statute passed
by Congress. However, the cited passage from Fr. Bernas actually states, Since
the Constitution has given the President the power of control, with all its
awesome implications, it is the Constitution alone which can curtail such
power.[81] Does the President have such tariff powers under the Constitution in
the first place which may be curtailed by the executive power of control? At the
risk of redundancy, we quote Section 28(2), Article VI: The Congress may, by
law, authorize the President to fix within specified limits, and subject to such
limitations and restrictions as it may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts within the
framework of the national development program of the Government. Clearly the
power to impose tariffs belongs to Congress and not to the President.
It is within reason to assume the framers of the Constitution deemed it too
onerous to spell out all the possible limitations and restrictions on this
presidential authority to impose tariffs. Hence, the Constitution especially allowed
Congress itself to prescribe such limitations and restrictions itself, a prudent
move considering that such authority inherently belongs to Congress and not the
President. Since Congress has no power to amend the Constitution, it should be
taken to mean that such limitations and restrictions should be provided by mere
statute. Then again, even the presidential authority to impose tariffs arises only
by mere statute. Indeed, this presidential privilege is both contingent in
nature and legislative in origin. These characteristics, when weighed
against the aspect of executive control and supervision, cannot militate
against Congresss exercise of its inherent power to tax.
The bare fact is that the administrative superstructure, for all its
unwieldiness, is mere putty in the hands of Congress. The functions and
mandates of the particular executive departments and bureaus are not created
by the President, but by the legislative branch through the Administrative
Code. [82] The President is the administrative head of the executive department,
as such obliged to see that every government office is managed and maintained
properly by the persons in charge of it in accordance with pertinent laws and
regulations, and empowered to promulgate rules and issuances that would
ensure a more efficient management of the executive branch, for so long as such
issuances are not contrary to law.[83] Yet the legislature has the concurrent power
to reclassify or redefine the executive bureaucracy, including the relationship
between various administrative agencies, bureaus and departments, and
ultimately, even the power to abolish executive departments and their
components, hamstrung only by constitutional limitations. The DTI itself can be
abolished with ease by Congress through deleting Title X, Book IV of the
Administrative Code. The Tariff Commission can similarly be abolished through
legislative enactment. [84]
At the same time, Congress can enact additional tasks or responsibilities
on either the Tariff Commission or the DTI Secretary, such as their respective
roles on the imposition of general safeguard measures under the SMA. In doing
so, the same Congress, which has the putative authority to abolish the
Tariff Commission or the DTI, is similarly empowered to alter or expand its
functions through modalities which do not align with established norms in
the bureaucratic structure. The Court is bound to recognize the legislative
prerogative to prescribe such modalities, no matter how atypical they may be, in
affirmation of the legislative power to restructure the executive branch of
government.
There are further limitations on the executive control adverted to by
the Separate Opinion. The President, in the exercise of executive control, cannot
order a subordinate to disobey a final decision of this Court or any courts. If the
subordinate chooses to disobey, invoking sole allegiance to the President, the
judicial processes can be utilized to compel obeisance. Indeed, when public
officers of the executive department take their oath of office, they swear
allegiance and obedience not to the President, but to the Constitution and the
laws of the land. The invocation of executive control must yield when under its
subsumption includes an act that violates the law.
The Separate Opinion concedes that the exercise of executive control and
supervision by the President is bound by the Constitution and law. [85] Still, just
three sentences after asserting that the exercise of executive control must be
within the bounds of the Constitution and law, the Separate Opinion asserts, the
control power of the Chief Executive emanates from the Constitution; no act of
Congress may validly curtail it. [86] Laws are acts of Congress, hence valid
confusion arises whether the Separate Opinion truly believes the first proposition
that executive control is bound by law. This is a quagmire for the Separate
Opinion to resolve for itself
The Separate Opinion unduly considers executive control as the ne plus
ultra constitutional standard which must govern in this case. But while the
President may generally have the power to control, modify or set aside the
actions of a subordinate, such powers may be constricted by the Constitution, the
legislature, and the judiciary. This is one of the essences of the check-andbalance system in our tri-partite constitutional democracy. Not one head of a
branch of government may operate as a Caesar within his/her particular fiefdom.
Assuming there is a conflict between the specific limitation in Section 28
(2), Article VI of the Constitution and the general executive power of control and
supervision, the former prevails in the specific instance of safeguard measures
such as tariffs and imposts, and would thus serve to qualify the general grant to
the President of the power to exercise control and supervision over his/her
subalterns.
Thus, if the Congress enacted the law so that the DTI Secretary is bound
by the Tariff Commission in the sense the former cannot impose general
safeguard measures absent a final positive determination from the latter the
Court is obliged to respect such legislative prerogative, no matter how such
arrangement deviates from traditional norms as may have been enshrined in
jurisprudence. The only ground under which such legislative determination as
expressed in statute may be successfully challenged is if such legislation
contravenes the Constitution. No such argument is posed by the respondents,
who do not challenge the validity or constitutionality of the SMA.
Given these premises, it is utterly reckless to examine the interrelationship
between the Tariff Commission and the DTI Secretary beyond the context of the

SMA, applying instead traditional precepts on administrative control, review and


supervision. For that reason, the Decision deemed inapplicable respondents
previous citations of Cario v. Commissioner on Human Rights and Lamb v.
Phipps, since the executive power adverted to in those cases had not been
limited by constitutional restrictions such as those imposed under Section 28(2),
Article VI.[87]
A similar observation can be made on the case of Sharp International
Marketing v. Court of Appeals,[88] now cited by Philcemcor, wherein the Court
asserted that the Land Bank of the Philippines was required to exercise
independent judgment and not merely rubber-stamp deeds of sale entered into
by the Department of Agrarian Reform in connection with the agrarian reform
program. Philcemcor attempts to demonstrate that the DTI Secretary, as with the
Land Bank of the Philippines, is required to exercise independent discretion and
is not expected to just merely accede to DAR-approved compensation packages.
Yet again, such grant of independent discretion is expressly called for by statute,
particularly Section 18 of Rep. Act No. 6657 which specifically requires the joint
concurrence of the landowner and the DAR and the [Land Bank of the
Philippines] on the amount of compensation. Such power of review by the Land
Bank is a consequence of clear statutory language, as is our holding in
the Decision that Section 5 explicitly requires a positive final determination by the
Tariff Commission before a general safeguard measure may be imposed.
Moreover, such limitations under the SMA are coated by the constitutional
authority of Section 28(2), Article VI of the Constitution.
Nonetheless, is this administrative setup, as envisioned by Congress and
enshrined into the SMA, truly noxious to existing legal standards?
The Decision acknowledged the internal logic of the statutory framework,
considering that the DTI cannot exercise review powers over an agency such as
the Tariff Commission which is not within its administrative jurisdiction; that the
mechanism employed establishes a measure of check and balance involving two
government offices with different specializations; and that safeguard measures
are the exception rather than the rule, pursuant to our treaty obligations. [89]
We see no reason to deviate from these observations, and indeed can
add similarly oriented comments. Corollary to the legislative power to decree
policies through legislation is the ability of the legislature to provide for means in
the statute itself to ensure that the said policy is strictly implemented by the body
or office tasked so tasked with the duty. As earlier stated, our treaty obligations
dissuade the State for now from implementing default protectionist trade
measures such as tariffs, and allow the same only under specified conditions.
[90]
The conditions enumerated under the GATT Agreement on Safeguards for the
application of safeguard measures by a member country are the same as the
requisites laid down in Section 5 of the SMA. [91] To insulate the factual
determination from political pressure, and to assure that it be conducted by an
entity especially qualified by reason of its general functions to undertake such
investigation, Congress deemed it necessary to delegate to the Tariff
Commission the function of ascertaining whether or not the those factual
conditions exist to warrant the atypical imposition of safeguard measures. After
all, the Tariff Commission retains a degree of relative independence by virtue of
its attachment to the National Economic Development Authority, an independent
planning agency of the government, [92] and also owing to its vaunted expertise
and specialization.
The matter of imposing a safeguard measure almost always involves not
just one industry, but the national interest as it encompasses other industries as
well. Yet in all candor, any decision to impose a safeguard measure is
susceptible to all sorts of external pressures, especially if the domestic industry
concerned is well-organized. Unwarranted impositions of safeguard measures
may similarly be detrimental to the national interest. Congress could not be
blamed if it desired to insulate the investigatory process by assigning it to a body
with a putative degree of independence and traditional expertise in ascertaining
factual conditions. Affected industries would have cause to lobby for or against
the safeguard measures. The decision-maker is in the unenviable position of
having to bend an ear to listen to all concerned voices, including those which
may speak softly but carry a big stick. Had the law mandated that the decision
be made on the sole discretion of an executive officer, such as the DTI Secretary,
it would be markedly easier for safeguard measures to be imposed or withheld
based solely on political considerations and not on the factual conditions that are
supposed to predicate the decision.
Reference of the binding positive final determination to the Tariff
Commission is of course, not a fail-safe means to ensure a bias-free
determination. But at least the legislated involvement of the Commission in the
process assures some measure of measure of check and balance involving two
different governmental agencies with disparate specializations. There is no legal
or constitutional demand for such a setup, but its wisdom as policy should be
acknowledged. As prescribed by Congress, both the Tariff Commission and the
DTI Secretary operate within limited frameworks, under which nobody acquires
an undue advantage over the other.
We recognize that Congress deemed it necessary to insulate the process
in requiring that the factual determination to be made by an ostensibly
independent body of specialized competence, the Tariff Commission. This
prescribed framework, constitutionally sanctioned, is intended to prevent the
baseless, whimsical, or consideration-induced imposition of safeguard measures.
It removes from the DTI Secretary jurisdiction over a matter beyond his putative
specialized aptitude, the compilation and analysis of picayune facts and
determination of their limited causal relations, and instead vests in the Secretary
the broad choice on a matter within his unquestionable competence, the
selection of what particular safeguard measure would assist the duly
beleaguered local industry yet at the same time conform to national trade policy.
Indeed, the SMA recognizes, and places primary importance on the DTI
Secretarys mandate to formulate trade policy, in his capacity as the
Presidents alter ego on trade, industry and investment-related matters.
At the same time, the statutory limitations on this authorized power of the
DTI Secretary must prevail since the Constitution itself demands the
enforceability of those limitations and restrictions as imposed by Congress.
Policy wisdom will not save a law from infirmity if the statutory provisions violate
the Constitution. But since the Constitution itself provides that the President shall
be constrained by the limits and restrictions imposed by Congress and since
these limits and restrictions are so clear and categorical, then the Court has no
choice but to uphold the reins.
Even assuming that this prescribed setup made little sense, or seemed
uncommonly silly, [93] the Court is bound by propriety not to dispute the wisdom
of the legislature as long as its acts do not violate the Constitution. Since there is
no convincing demonstration that the SMA contravenes the Constitution, the
Court is wont to respect the administrative regimen propounded by the law, even
if it allots the Tariff Commission a higher degree of puissance than normally
expected. It is for this reason that the traditional conceptions of administrative
review or quasi-judicial power cannot control in this case.

Indeed, to apply the latter concept would cause the Court to fall into a
linguistic trap owing to the multi-faceted denotations the term quasi-judicial has
come to acquire.
Under the SMA, the Tariff Commission undertakes formal hearings,
[94]
receives and evaluates testimony and evidence by interested parties, [95] and
renders a decision is rendered on the basis of the evidence presented, in the
form of the final determination. The final determination requires a conclusion
whether the importation of the product under consideration is causing serious
injury or threat to a domestic industry producing like products or directly
competitive products, while evaluating all relevant factors having a bearing on
the situation of the domestic industry.[96] This process aligns conformably with
definition provided by Blacks Law Dictionary of quasi-judicial as the action,
discretion, etc., of public administrative officers or bodies, who are required to
investigate facts, or ascertain the existence of facts, hold hearings, weigh
evidence, and draw conclusions from them, as a basis for their official action, and
to exercise discretion of a judicial nature. [97]
However, the Tariff Commission is not empowered to hear actual cases or
controversies lodged directly before it by private parties. It does not have the
power to issue writs of injunction or enforcement of its determination. These
considerations militate against a finding of quasi-judicial powers attributable to
the Tariff Commission, considering the pronouncement that quasi-judicial
adjudication would mean a determination of rights privileges and duties resulting
in a decision or order which applies to a specific situation. [98]
Indeed, a declaration that the Tariff Commission possesses quasi-judicial
powers, even if ascertained for the limited purpose of exercising its functions
under the SMA, may have the unfortunate effect of expanding the Commissions
powers beyond that contemplated by law. After all, the Tariff Commission is by
convention, a fact-finding body, and its role under the SMA, burdened as it is with
factual determination, is but a mere continuance of this tradition. However,
Congress through the SMA offers a significant deviation from this traditional role
by tying the decision by the DTI Secretary to impose a safeguard measure to the
required positive factual determination by the Tariff Commission. Congress is not
bound by past traditions, or even by the jurisprudence of this Court, in enacting
legislation it may deem as suited for the times. The sole benchmark for judicial
substitution of congressional wisdom is constitutional transgression, a standard
which the respondents do not even attempt to match.
Respondents Suggested Interpretation
Of the SMA Transgresses Fair Play
Respondents have belabored the argument that the Decisions
interpretation of the SMA, particularly of the role of the Tariff Commission vis-vis the DTI Secretary, is noxious to traditional notions of administrative control
and supervision. But in doing so, they have failed to acknowledge the
congressional prerogative to redefine administrative relationships, a license
which falls within the plenary province of Congress under our representative
system of democracy. Moreover, respondents own suggested interpretation falls
wayward of expectations of practical fair play.
Adopting respondents suggestion that the DTI Secretary may disregard
the factual findings of the Tariff Commission and investigatory process that
preceded it, it would seem that the elaborate procedure undertaken by the
Commission under the SMA, with all the attendant guarantees of due process, is
but an inutile spectacle. As Justice Garcia noted during the oral arguments, why
would the DTI Secretary bother with the Tariff Commission and instead conduct
the investigation himself.[99]
Certainly, nothing in the SMA authorizes the DTI Secretary, after making
the preliminary determination, to personally oversee the investigation, hear out
the interested parties, or receive evidence. [100] In fact, the SMA does not even
require the Tariff Commission, which is tasked with the custody of the submitted
evidence,[101] to turn over to the DTI Secretary such evidence it had evaluated in
order to make its factual determination. [102] Clearly, as Congress tasked it to be, it
is the Tariff Commission and not the DTI Secretary which acquires the necessary
intimate acquaintance with the factual conditions and evidence necessary for the
imposition of the general safeguard measure. Why then favor an interpretation of
the SMA that leaves the findings of the Tariff Commission bereft of operative
effect and makes them subservient to the wishes of the DTI Secretary, a
personage with lesser working familiarity with the relevant factual milieu? In fact,
the bare theory of the respondents would effectively allow the DTI Secretary to
adopt, under the subterfuge of his discretion, the factual determination of a
private investigative group hired by the industry concerned, and reject the
investigative findings of the Tariff Commission as mandated by the SMA. It would
be highly irregular to substitute what the law clearly provides for a dubious setup
of no statutory basis that would be readily susceptible to rank chicanery.
Moreover, the SMA guarantees the right of all concerned parties to be
heard, an elemental requirement of due process, by the Tariff Commission in the
context of its investigation. The DTI Secretary is not similarly empowered or
tasked to hear out the concerns of other interested parties, and if he/she does so,
it arises purely out of volition and not compulsion under law.
Indeed, in this case, it is essential that the position of other than that of the
local cement industry should be given due consideration, cement being an
indispensable need for the operation of other industries such as housing and
construction. While the general safeguard measures may operate to the better
interests of the domestic cement industries, its deprivation of cheaper cement
imports may similarly work to the detriment of these other domestic industries
and correspondingly, the national interest. Notably, the Tariff Commission in this
case heard the views on the application of representatives of other allied
industries such as the housing, construction, and cement-bag industries, and
other interested parties such as consumer groups and foreign governments. [103] It
is only before the Tariff Commission that their views had been heard, and this is
because it is only the Tariff Commission which is empowered to hear their
positions. Since due process requires a judicious consideration of all relevant
factors, the Tariff Commission, which is in a better position to hear these parties
than the DTI Secretary, is similarly more capable to render a determination
conformably with the due process requirements than the DTI Secretary.
In a similar vein, Southern Cross aptly notes that in instances when it is
the DTI Secretary who initiates motu proprio the application for the safeguard
measure pursuant to Section 6 of the SMA, respondents suggested
interpretation would result in the awkward situation wherein the DTI Secretary
would rule upon his own application after it had been evaluated by the Tariff
Commission. Pertinently cited is our ruling in Corona v. Court of Appeals[104] that
no man can be at once a litigant and judge. [105] Certainly, this anomalous
situation is avoided if it is the Tariff Commission which is tasked with arriving at
the final determination whether the conditions exist to warrant the general
safeguard measures. This is the setup provided for by the express provisions of
the SMA, and the problem would arise only if we adopt the interpretation urged
upon by respondents.
The Possibility for Administrative Review
Of the Tariff Commissions Determination

The Court has been emphatic that a positive final determination from the
Tariff Commission is required in order that the DTI Secretary may impose a
general safeguard measure, and that the DTI Secretary has no power to exercise
control and supervision over the Tariff Commission and its final determination.
These conclusions are the necessary consequences of the applicable provisions
of the Constitution, the SMA, and laws such as the Administrative Code.
However, the law is silent though on whether this positive final determination may
otherwise be subjected to administrative review.
There is no evident legislative intent by the authors of the SMA to provide
for a procedure of administrative review. If ever there is a procedure for
administrative review over the final determination of the Tariff Commission, such
procedure must be done in a manner that does not contravene or disregard
legislative prerogatives as expressed in the SMA or the Administrative Code, or
fundamental constitutional limitations.
In order that such procedure of administrative review would not
contravene the law and the constitutional scheme provided by Section 28(2),
Article VI, it is essential to assert that the positive final determination by the Tariff
Commission is indispensable as a requisite for the imposition of a general
safeguard measure. The submissions of private respondents and theSeparate
Opinion cannot be sustained insofar as they hold that the DTI Secretary can
peremptorily ignore or disregard the determinations made by the Tariff
Commission. However, if the mode of administrative review were in such a
manner that the administrative superior of the Tariff Commission were to modify
or alter its determination, then such reversal may still be valid within the
confines of Section 5 of the SMA, for technically it is still the Tariff Commissions
determination, administratively revised as it may be, that would serve as the
basis for the DTI Secretarys action.
However, and fatally for the present petitions, such administrative review
cannot be conducted by the DTI Secretary. Even if conceding that the Tariff
Commissions findings may be administratively reviewed, the DTI Secretary has
no authority to review or modify the same. We have been emphatic on the
reasons such as that there is no traditional or statutory basis placing the
Commission under the control and supervision of the DTI; that to allow such
would contravene due process, especially if the DTI itself were to apply for the
safeguard measuresmotu proprio. To hold otherwise would destroy the
administrative hierarchy, contravene constitutional due process, and disregard
the limitations or restrictions provided in the SMA.
Instead, assuming administrative review were available, it is the NEDA
that may conduct such review following the principles of administrative law, and
the NEDAs decision in turn is reviewable by the Office of the President. The
decision of the Office of the President then effectively substitutes as the
determination of the Tariff Commission, which now forms the basis of the DTI
Secretarys decision, which now would be ripe for judicial review by the CTA
under Section 29 of the SMA. This is the only way that administrative review of
the Tariff Commissions determination may be sustained without violating the
SMA and its constitutional restrictions and limitations, as well as administrative
law.
In bare theory, the NEDA may review, alter or modify the Tariff
Commissions final determination, the Commission being an attached agency of
the NEDA. Admittedly, there is nothing in the SMA or any other statute that would
prevent the NEDA to exercise such administrative review, and successively, for
the President to exercise in turn review over the NEDAs decision.
Nonetheless, in acknowledging this possibility, the Court, without
denigrating the bare principle that administrative officers may exercise control
and supervision over the acts of the bodies under its jurisdiction, realizes that this
comes at the expense of a speedy resolution to an application for a safeguard
measure, an application dependent on fluctuating factual conditions. The further
delay would foster uncertainty and insecurity within the industry concerned, as
well as with all other allied industries, which in turn may lead to some measure of
economic damage. Delay is certain, since judicial review authorized by law and
not administrative review would have the final say. The fact that the SMA did not
expressly prohibit administrative review of the final determination of the Tariff
Commission does not negate the supreme advantages of engendering exclusive
judicial review over questions arising from the imposition of a general safeguard
measure.
In any event, even if we conceded the possibility of administrative review
of the Tariff Commissions final determination by the NEDA, such would not deny
merit to the present petition. It does not change the fact that the Court of Appeals
erred in ruling that the DTI Secretary was not bound by the negative final
determination of the Tariff Commission, or that the DTI Secretary acted without
jurisdiction when he imposed general safeguard measures despite the absence
of the statutory positive final determination of the Commission.
IV. Courts Interpretation of SMA
In Harmony with Other
Constitutional Provisions
In response to our citation of Section 28(2), Article VI, respondents elevate
two arguments grounded in constitutional law. One is based on another
constitutional provision, Section 12, Article XIII, which mandates that [t]he State
shall promote the preferential use of Filipino labor, domestic materials and locally
produced goods and adopt measures that help make them competitive. By no
means does this provision dictate that the Court favor the domestic industry in all
competing claims that it may bring before this Court. If it were so, judicial
proceedings in this country would be rendered a mockery, resolved as they would
be, on the basis of the personalities of the litigants and not their legal positions.
Moreover, the duty imposed on by Section 12, Article XIII falls primarily
with Congress, which in that regard enacted the SMA, a law designed to protect
domestic industries from the possible ill-effects of our accession to the global
trade order. Inconveniently perhaps for respondents, the SMA also happens to
provide for a procedure under which such protective measures may be enacted.
The Court cannot just impose what it deems as the spirit of the law without giving
due regard to its letter.
In like-minded manner, the Separate Opinion loosely states that the
purpose of the SMA is to protect or safeguard local industries from increased
importation of foreign products. [106]This inaccurately leaves the impression that
the SMA ipso facto unravels a protective cloak that shelters all local industries
and producers, no matter the conditions. Indeed, our country has knowingly
chosen to accede to the world trade regime, as expressed in the GATT and WTO
Agreements, despite the understanding that local industries might suffer illeffects, especially with the easier entry of competing foreign products. At the
same time, these international agreements were designed to constrict
protectionist trade policies by its member-countries. Hence, the median, as
expressed by the SMA, does allow for the application of protectionist measures
such as tariffs, but only after an elaborate process of investigation that ensures
factual basis and indispensable need for such measures. More accurately, the
purpose of the SMA is to provide a process for the protection or safeguarding of
domestic industries that have duly established that there is substantial injury or
threat thereof directly caused by the increased imports. In short, domestic

industries are not entitled to safeguard measures as a matter of right or


influence.
Respondents also make the astounding argument that the imposition of
general safeguard measures should not be seen as a taxation measure, but
instead as an exercise of police power. The vain hope of respondents in
divorcing the safeguard measures from the concept of taxation is to exclude from
consideration Section 28(2), Article VI of the Constitution.
This argument can be debunked at length, but it deserves little attention.
The motivation behind many taxation measures is the implementation of police
power goals. Progressive income taxes alleviate the margin between rich and
poor; the so-called sin taxes on alcohol and tobacco manufacturers help
dissuade the consumers from excessive intake of these potentially harmful
products. Taxation is distinguishable from police power as to the means
employed to implement these public good goals. Those doctrines that are unique
to taxation arose from peculiar considerations such as those especially punitive
effects of taxation,[107] and the belief that taxes are the lifeblood of the state.
[108]
These considerations necessitated the evolution of taxation as a distinct legal
concept from police power. Yet at the same time, it has been recognized that
taxation may be made the implement of the states police power. [109]
Even assuming that the SMA should be construed exclusively as a police
power measure, the Court recognizes that police power is lodged primarily in the
national legislature, though it may also be exercised by the executive branch by
virtue of a valid delegation of legislative power. [110] Considering these premises, it
is clear that police power, however illimitable in theory, is still exercised within
the confines of implementing legislation. To declare otherwise is to sanction rule
by whim instead of rule of law. The Congress, in enacting the SMA, has
delegated the power to impose general safeguard measures to the executive
branch, but at the same time subjected such imposition to limitations, such as
the requirement of a positive final determination by the Tariff Commission under
Section 5. For the executive branch to ignore these boundaries imposed by
Congress is to set up an ignoble clash between the two co-equal branches of
government. Considering that the exercise of police power emanates from
legislative authority, there is little question that the prerogative of the legislative
branch shall prevail in such a clash.
V. Assailed Decision Consistent
With Ruling in Taada v. Angara
Public respondents allege that the Decision is contrary to our holding
in Taada v. Angara,[111] since the Court noted therein that the GATT itself
provides built-in protection from unfair foreign competition and trade practices,
which according to the public respondents, was a reason why the Honorable
[Court] ruled the way it did. On the other hand, the Decisioneliminates
safeguard measures as a mode of defense.
This is balderdash, as with any and all claims that the Decision allows
foreign industries to ride roughshod over our domestic enterprises.
The Decision does not prohibit the imposition of general safeguard measures to
protect domestic industries in need of protection. All it affirms is that the positive
final determination of the Tariff Commission is first required before the general
safeguard measures are imposed and implemented, a neutral proposition that
gives no regard to the nationalities of the parties involved. A positive
determination by the Tariff Commission is hardly the elusive Shangri-la of
administrative law. If a particular industry finds it difficult to obtain a positive final
determination from the Tariff Commission, it may be simply because the industry
is still sufficiently competitive even in the face of foreign competition. These
safeguard measures are designed to ensure salvation, not avarice.
Respondents well have the right to drape themselves in the colors of the
flag. Yet these postures hardly advance legal claims, or nationalism for that
matter. The fineries of the costume pageant are no better measure of patriotism
than simple obedience to the laws of the Fatherland. And even assuming that
respondents are motivated by genuine patriotic impulses, it must be remembered
that under the setup provided by the SMA, it is the facts, and not impulse, that
determine whether the protective safeguard measures should be imposed. As
once orated, facts are stubborn things; and whatever may be our wishes, our
inclinations, or the dictates of our passions, they cannot alter the state of facts
and evidence.[112]
It is our goal as judges to enforce the law, and not what we might deem as
correct economic policy. Towards this end, we should not construe the SMA to
unduly favor or disfavor domestic industries, simply because the law itself
provides for a mechanism by virtue of which the claims of these industries are
thoroughly evaluated before they are favored or disfavored. What we must do is
to simply uphold what the law says. Section 5 says that the DTI Secretary shall
impose the general safeguard measures upon the positive final determination of
the Tariff Commission. Nothing in the whereas clauses or the invisible ink
provisions of the SMA can magically delete the words positive final
determination and Tariff Commission from Section 5.
VI. On Forum-Shopping
We remain convinced that there was no willful and deliberate forumshopping in this case by Southern Cross. The causes of action that animate this
present petition for review and the petition for review with the CTA are distinct
from each other, even though they relate to similar factual antecedents. Yet it
also appears that contrary to the undertaking signed by the President of
Southern Cross, Hironobu Ryu, to inform this Court of any similar action or
proceeding pending before any court, tribunal or agency within five (5) days from
knowledge thereof, Southern Cross informed this Court only on 12 August 2003
of the petition it had filed with the CTA eleven days earlier. An appropriate
sanction is warranted for such failure, but not the dismissal of the petition.
VII. Effects of Courts Resolution
Philcemcor argues that the granting of Southern Crosss Petition should
not necessarily lead to the voiding of the Decision of the DTI Secretary dated 5
August 2003 imposing the general safeguard measures. For Philcemcor, the
availability of appeal to the CTA as an available and adequate remedy would
have made the Court of Appeals Decision merely erroneous or irregular, but not
void. Moreover, the said Decision merely required the DTI Secretary to render a
decision, which could have very well been a decision not to impose a safeguard
measure; thus, it could not be said that the annulled decision resulted from the
judgment of the Court of Appeals.
The Court of Appeals Decision was annulled precisely because the
appellate court did not have the power to rule on the petition in the first place.
Jurisdiction is necessarily the power to decide a case, and a court which does
not have the power to adjudicate a case is one that is bereft of jurisdiction. We
find no reason to disturb our earlier finding that the Court of Appeals Decision is
null and void.
At the same time, the Court in its Decision paid particular heed to the
peculiarities attaching to the 5 August 2003 Decision of the DTI Secretary. In the
DTI Secretarys Decision, he expressly stated that as a result of the Court of
Appeals Decision, there is no legal impediment for the Secretary to decide on
the application. Yet the truth remained that there was a legal impediment,
namely, that the decision of the appellate court was not yet final and executory.

Moreover, it was declared null and void, and since the DTI Secretary expressly
denominated the Court of Appeals Decision as his basis for deciding to impose
the safeguard measures, the latter decision must be voided as well. Otherwise
put, without the Court of AppealsDecision, the DTI Secretarys Decision of 5
August 2003 would not have been rendered as well.
Accordingly,
the
Court
reaffirms
as
a
nullity
the
DTI
Secretarys Decision dated 5 August 2003. As a necessary consequence, no
further action can be taken on Philcemcors Petition for Extension of the
Safeguard Measure. Obviously, if the imposition of the general safeguard
measure is void as we declared it to be, any extension thereof should likewise be
fruitless. The proper remedy instead is to file a new application for the imposition
of safeguard measures, subject to the conditions prescribed by the SMA. Should
this step be eventually availed of, it is only hoped that the parties involved would
content themselves in observing the proper procedure, instead of making a
mockery of the rule of law.
WHEREFORE, respondents Motions for Reconsideration are DENIED
WITH FINALITY.
Respondent DTI Secretary is hereby ENJOINED from taking any further
action on the pending Petition for Extension of the Safeguard Measure.
Hironobu Ryu, President of petitioner Southern Cross Cement
Corporation, and Angara Abello Concepcion Regala & Cruz, counsel petitioner,
are hereby given FIVE (5) days from receipt of this Resolution to EXPLAIN why
they should not be meted disciplinary sanction for failing to timely inform the
Court of the filing of Southern Crosss Petition for Review with the Court of Tax
Appeals, as adverted to earlier in this Resolution.
SO ORDERED.