TARIFF AND CUSTOMS CODE

CASE DIGESTS

Flexible Tariff Clause

1. Garcia vs Exec. Sec., July 3, 1992

FACTS:

 On 27 November 1990, the President issued Executive Order No. 438 which imposed, in addition to any other duties, taxes
and charges imposed by law on all articles imported into the Philippines, an additional duty of five percent (5%) ad valorem.

o This additional duty was imposed across the board on all imported articles, including crude oil and other oil
products imported into the Philippines.

o This additional duty was subsequently increased from five percent (5%) ad valorem to nine percent (9%) ad
valorem by the promulgation of Executive Order No. 443, dated 3 January 1991.

 On 24 July 1991, the Department of Finance requested the Tariff Commission to initiate the process required by the Tariff
and Customs Code for the imposition of a specific levy on crude oil and other petroleum products , of Section 104 of the
Tariff and Customs Code as amended.

 Accordingly, the Tariff Commission, following the procedure set forth in Section 401 of the Tariff and Customs Code,
scheduled a public hearing to give interested parties an opportunity to be heard and to present evidence in support of
their respective positions.

 Meantime, Executive Order No. 475 was issued by the President, in August 1991 reducing the rate of additional duty on all
imported articles from nine percent (9%) to five percent (5%) ad valorem, except in the cases of crude oil and other oil
products which continued to be subject to the additional duty of nine percent (9%) ad valorem.

 Upon completion of the public hearings, the Tariff Commission submitted to the President a "Report on Special Duty on
Crude Oil and Oil Products", for consideration and appropriate action.

 7 days later, the President issued Executive Order No. 478, which levied (in addition to the aforementioned additional duty
of nine percent (9%) ad valorem and all other existing ad valorem duties) a special duty of P0.95 per liter or P151.05 per
barrel of imported crude oil and P1.00 per liter of imported oil products.

 In the present Petition for Certiorari, Prohibition and Mandamus, petitioner assails the validity of Executive Orders Nos. 475
and 478.

o He argues that Executive Orders Nos. 475 and 478 are violative of Section 24, Article VI of the 1987 Constitution
which provides as follows:

Sec. 24: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments.

o He contends that since the Constitution vests the authority to enact revenue bills in Congress, the President may
NOT assume such power by issuing Executive Orders Nos. 475 and 478 which are in the nature of revenue-
generating measures.
 o Petitioner further argues that Executive Orders No. 475 and 478 contravene Section 401 of the Tariff and Customs
Code, which Section authorizes the President, according to petitioner, to increase, reduce or remove tariff duties
or to impose additional duties only  when necessary to protect local industries or products but  not  for the purpose
of raising additional revenue for the government.

MAIN ISSUE: WON E.O. Nos. 475 & 478 contravenes Section 401 of TCC.

RULING: NO

 Petitioner, however, seeks to avoid the thrust of the delegated authorizations found in Sections 104 and 401 of the Tariff
and Customs Code, by contending that the President is authorized to act under the Tariff and Customs Code  only "to
protect local industries and products  for the sake of the national economy, general welfare and/or national security." He
goes on to claim that:

E.O. Nos. 478 and 475 having nothing to do whatsoever with the protection of local industries and products for the
sake of national economy, general welfare and/or national security. On the contrary, they work in reverse,
especially as to crude oil, an essential product which we do not have to protect, since we produce only minimal
quantities and have to import the rest of what we need.

These Executive Orders are avowedly solely to enable the government to raise government finances, contrary to
Sections 24 and 28 (2) of Article VI of the Constitution, as well as to Section 401 of the Tariff and Customs
Code. (Emphasis in the original)

 The Court is not persuaded.

 In the first place, there is nothing in the language of either Section 104 or of 401 of the Tariff and Customs Code that
suggest such a sharp and absolute limitation of authority.

o The entire contention of petitioner is anchored on just two (2) words, one found in Section 401 (a)(1):
"existing protective  rates of import duty," and the second in the proviso found at the end of Section 401
(a): "protection levels granted in Section 104 of this Code . . . . "

o We believe that the words "protective" and ''protection" are simply not enough to support the very broad and
encompassing limitation which petitioner seeks to rest on those two (2) words.

 In the second place, petitioner's singular theory collides with a very practical fact of which this Court may take judicial
notice — that the Bureau of Customs which administers the Tariff and Customs Code, is one of the two (2) principal
traditional generators or producers of governmental revenue, the other being the Bureau of Internal Revenue. (There is a
third agency, non-traditional in character, that generates lower but still comparable levels of revenue for the government
— The Philippine Amusement and Games Corporation [PAGCOR].)

 In the third place, customs duties which are assessed at the prescribed tariff rates are very much like taxes which are
frequently imposed for both revenue-raising and for regulatory purposes.

o Thus, it has been held that "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."

o The levying of customs duties on imported goods may have in some measure the effect of protecting local
industries — where such local industries actually exist and are producing comparable goods. Simultaneously,
however, the very same customs duties inevitably have the effect of producing governmental revenues.
 o Customs duties like internal revenue taxes are rarely, if ever, designed to achieve one policy objective only.

 Most commonly, customs duties, which constitute taxes in the sense of exactions the proceeds of which
become public funds — have either or both the generation of revenue and the regulation of economic or
social activity as their moving purposes and frequently, it is very difficult to say which, in a particular
instance, is the dominant or principal objective. In the instant case, since the Philippines in fact produces
ten (10) to fifteen percent (15%) of the crude oil consumed here, the imposition of increased tariff rates
and a special duty on imported crude oil and imported oil products may be seen to
have some  "protective" impact upon indigenous oil production.

 For the effective, price of imported crude oil and oil products is increased.

 At the same time, it cannot be gainsaid that substantial revenues for the government are raised by the imposition of such
increased tariff rates or special duty.

 In the fourth place, petitioner's concept which he urges us to build into our constitutional and customs law, is a stiflingly
narrow one.

 Section 401 of the Tariff and Customs Code establishes general standards with which the exercise of the authority
delegated by that provision to the President must be consistent: that authority must be exercised in "the interest of
national economy, general welfare and/or national security."

o Petitioner, however, insists that the "protection of local industries" is the only permissible objective that can be
secured by the exercise of that delegated authority, and that therefore "protection of local industries" is the sum
total or the alpha and the omega of "the national economy, general welfare and/or national security."

o We find it extremely difficult to take seriously such a confined and closed view of the legislative standards and
policies summed up in Section 401.

o We believe, for instance, that the protection of consumers, who after all constitute the very great bulk of our
population, is at the very least as important a dimension of "the national economy, general welfare and national
security" as the protection of local industries.

o And so customs duties may be reduced or even removed precisely for the purpose of protecting consumers from
the high prices and shoddy quality and inefficient service that tariff-protected and subsidized local manufacturers
may otherwise impose upon the community.

SUB ISSUE: WON the aforementioned E.O.’s were unconstitutional.

RULING: NO

 Turning first to the question of constitutionality, under Section 24, Article VI of the Constitution, the enactment of
appropriation, revenue and tariff bills, like all other bills is, of course, within the province of the Legislative rather than the
Executive Department.

 It does not follow, however, that therefore Executive Orders Nos. 475 and 478, assuming they may be characterized as
revenue measures, are prohibited to the President, that they must be enacted instead by the Congress of the Philippines.

 Section 28(2) of Article VI of the Constitution provides as follows:

(2) 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, tonage and wharfage dues, and other
duties or imposts  within the framework of the national development program of the Government. (Emphasis
supplied)
 There is thus explicit constitutional permission to Congress to authorize the President "subject to such limitations and
restrictions is [Congress] may impose" to fix "within specific limits" "tariff rates . . . and other duties or imposts . . ."

 The relevant congressional statute is the Tariff and Customs Code of the Philippines, and Sections 104 and 401, the
pertinent provisions thereof.

 These are the provisions which the President explicitly invoked in promulgating Executive Orders Nos. 475 and 478. Section
104 of the Tariff and Customs Code provides in relevant part:

Sec. 104. All tariff sections, chapters, headings and subheadings and the rates of import duty under Section 104 of
Presidential Decree No. 34 and all subsequent amendments issued under Executive Orders and Presidential
Decrees are hereby adopted and form part of this Code.

There shall be levied, collected, and paid upon all imported articles the rates of duty indicated in the Section under
this section except as otherwise specifically provided for in this Code: Provided, that, the maximum rate shall not
exceed one hundred per cent ad valorem.

The rates of duty herein provided or subsequently fixed  pursuant to Section Four Hundred One of this Code shall be
subject to periodic investigation by the Tariff Commission and may be revised by the President upon
recommendation of the National Economic and Development Authority.

xxx xxx xxx

(Emphasis supplied)

 Section 401 of the same Code needs to be quoted in full:

Sec. 401. Flexible Clause. —

a. In the interest of national economy, general welfare and/or national security, and subject to the limitations
herein prescribed, the President, upon recommendation of the National Economic and Development Authority
(hereinafter referred to as NEDA), is hereby empowered: (1) to increase, reduce or remove existing protective rates
of import duty  (including any necessary change in classification). The existing rates may be increased or decreased
but in no case shall the reduced rate of import duty be lower than the basic rate of ten (10) per cent ad valorem,
nor shall the increased rate of import duty be higher than a maximum of one hundred (100) per cent ad valorem;
(2) to establish import quota or to ban imports of any commodity, as may be necessary; and (3)  to impose an
additional duty on all imports not exceeding ten (10) per cent ad valorem, whenever necessary; Provided , That
upon periodic investigations by the Tariff Commission and recommendation of the NEDA, the President may cause
a gradual reduction of protection levels granted in Section One hundred and four of this Code, including those
subsequently granted pursuant to this section.

b. Before any recommendation is submitted to the President by the NEDA pursuant to the provisions of this
section, except in the imposition of an additional duty not exceeding ten (10) per cent ad valorem , the Commission
shall conduct an investigation in the course of which they shall hold public hearings wherein interested parties
shall be afforded reasonable opportunity to be present, produce evidence and to be heard. The Commission shall
also hear the views and recommendations of any government office, agency or instrumentality concerned. The
Commission shall submit their findings and recommendations to the NEDA within thirty (30) days after the
termination of the public hearings.

c. The power of the President to increase or decrease rates of import duty within the limits fixed in subsection "a"
shall include the authority to modify the form of duty. In modifying the form of duty, the corresponding ad
valorem or specific equivalents of the duty with respect to imports from the principal competing foreign country
for the most recent representative period shall be used as bases.

d. The Commissioner of Customs shall regularly furnish the Commission a copy of all customs import entries as
filed in the Bureau of Customs. The Commission or its duly authorized representatives shall have access to, and the
 right to copy all liquidated customs import entries and other documents appended thereto as finally filed in the
Commission on Audit.

e. The NEDA shall promulgate rules and regulations necessary to carry out the provisions of this section.

f. Any Order issued by the President pursuant to the provisions of this section shall take effect thirty (30) days after
promulgation, except in the imposition of additional duty not exceeding ten (10) per cent ad valorem which shall
take effect at the discretion of the President. (Emphasis supplied)

 It seems also important to note that tariff rates are commonly established and the corresponding customs duties levied and
collected upon articles and goods which are not found at all and not produced in the Philippines. The Tariff and Customs
Code is replete with such articles and commodities: among the more interesting examples are ivory (Chapter 5,
5.10); castoreum or musk taken from the beaver (Chapter 5, 5.14); Olives (Chapter 7, Notes); truffles  or European fungi
growing under the soil on tree roots (Chapter 7, Notes); dates  (Chapter 8, 8.01); figs (Chapter 8, 8.03); caviar  (Chapter 16,
16.01); aircraft (Chapter 88, 88.0l); special diagnostic instruments and apparatus for human medicine and surgery ( Chapter
90, Notes); X-ray generators; X-ray tubes;X-ray screens, etc.  (Chapter 90, 90.20); etc.

o In such cases, customs duties may be seen to be imposed either for revenue purposes purely or perhaps, in certain
cases, to discourage any importation of the items involved. In either case, it is clear that customs duties are levied
and imposed entirely apart from whether or not there are any competing local industries to protect.

 Accordingly, we believe and so hold that Executive Orders Nos. 475 and 478 which may be conceded to be substantially
moved by the desire to generate additional public revenues, are not, for that reason alone, either constitutionally flawed, or
legally infirm under Section 401 of the Tariff and Customs Code. Petitioner has not successfully overcome the presumptions
of constitutionality and legality to which those Executive Orders are entitled. 

The conclusion we have reached above renders it unnecessary to deal with petitioner's additional contention that, should Executive
Orders Nos. 475 and 478 be declared unconstitutional and illegal, there should be a roll back of prices of petroleum products
equivalent to the "resulting excess money not be needed to adequately maintain the Oil Price Stabilization Fund (OPSF)." 8

WHEREFORE, premises considered, the Petition for Certiorari, Prohibition and Mandamus is hereby DISMISSED for lack of merit.
Costs against petitioner. SO ORDERED.

NOTES:

Before doing so, however, the Court notes that the recent promulgation of Executive Order No. 507 did not render the instant
Petition moot and academic. Executive Order No. 517 which is dated 30 April 1992 provides as follows:

Sec. 1. Lifting of the Additional Duty. — The additional duty in the nature of ad valorem imposed on all imported
articles prescribed by the provisions of Executive Order No. 443, as amended, is hereby  lifted; Provided, however,
that the selected articles covered by HS Heading Nos. 27.09 and 27.10 of Section 104 of the Tariff and Customs
Code, as amended, subject of Annex "A" hereof, shall continue to be subject to the additional duty of nine (9%)
percent ad valorem.

Under the above quoted provision, crude oil and other oil products continue to be subject to the additional duty of nine
percent (9%) ad valorem under Executive Order No. 475 and to the special duty of P0.95 per liter of imported crude oil and
P1.00 per liter of imported oil products under Executive Order No. 478.

2. Akbayan Citizens Action Party ("AKBAYAN") vs. Aquino, G.R. No. 170516, July 16, 2008 (Tariff Powers)

Ponente: Carpio-Morales, J.

Rulings In a Nutshell
  Petitioners’ demand to be furnished with a copy of the full text of the JPEPA has become moot and academic, it having
been made accessible to the public since September 11, 2006.
 As for their demand for copies of the Philippine and Japanese offers submitted during the JPEPA negotiations, the same
must be denied, respondents’ claim of executive privilege being valid.
 Diplomatic negotiations have, since the Court promulgated its Resolution in PMPF v. Manglapus on September 13, 1988,
been recognized as privileged in this jurisdiction and the reasons proffered by petitioners against the application of the
ruling therein to the present case have not persuaded the Court.
 Moreover, petitioners—both private citizens and members of the House of Representatives—have failed to present a
“sufficient showing of need” to overcome the claim of privilege in this case.

 That the privilege was asserted for the first time in respondents’ Comment to the present petition, and not during the
hearings of the House Special Committee on Globalization, is of no moment, since it cannot be interpreted as a waiver of
the privilege on the part of the Executive branch.
 For reasons already explained, this Decision shall not be interpreted as departing from the ruling in Senate v. Ermita that
executive privilege should be invoked by the President or through the Executive Secretary “by order of the President”

Nature of the case: This case is a special civil action of mandamus and prohibition in the SC.

FACTS:
 The petitioners—non-government organizations, Congresspersons, citizens and taxpayers—seek via the present petition
for mandamus and prohibition to obtain from respondents the full text of the Japan-Philippines Economic Partnership
Agreement (JPEPA) including the Philippine and Japanese offers submitted during the negotiation process and all pertinent
attachments and annexes thereto

 On January 25, 2005, petitioners Congressmen Lorenzo R. Tañada III and Mario Joyo Aguja filed House Resolution No. 551
calling for an inquiry into the bilateral trade agreements then being negotiated by the Philippine government, particularly
the JPEPA
o The Resolution became the basis of an inquiry subsequently conducted by the House Special Committee on
Globalization (the House Committee) into the negotiations of the JPEPA.

 In the course of its inquiry, the House Committee requested herein respondent Undersecretary Tomas Aquino (Usec.
Aquino), Chairman of the Philippine Coordinating Committee created under Executive Order No. 213 (“Creation of A
Philippine Coordinating Committee to Study the Feasibility of the Japan-Philippines Economic Partnership Agreement”)
o To study and negotiate the proposed JPEPA, and
o To furnish the Committee with a copy of the latest draft of the JPEPA.
 Usec. Aquino did not heed the request, however.

 Congressman Aguja later requested for the same document, but Usec. Aquino replied that the Congressman shall be
provided with a copy thereof “once the negotiations are completed and as soon as a thorough legal review of the
proposed agreement has been conducted”

 In a separate move, the House Committee, through Congressman Herminio G. Teves, requested Executive Secretary
Eduardo Ermita to furnish it with “all documents on the subject including the latest draft of the proposed agreement, the
requests and offers etc”
 Acting on the request, Secretary Ermita wrote Congressman Teves, that the DFA explains that  the Committee’s request to
be furnished all documents on the JPEPA may be difficult to accomplish at this time, since the proposed Agreement has
been a work in progress for about three years
o A copy of the draft JPEPA will however be forwarded to the Committee as soon as the text thereof is settled and
complete

 Congressman Aguja also requested NEDA Director-General Romulo Neri and Tariff Commission Chairman Edgardo Abon
for copies of the latest text of the JPEPA
o However, Chairman Abon replied that the Tariff Commission does not have a copy of the documents being
requested, albeit he was certain that Usec. Aquino would provide the Congressman with a copy “once the
negotiation is completed”
 o Further, the NEDA Assistant Director-General Margarita R. Songco informed the Congressman that his request
addressed to Director-General Neri had been forwarded to Usec. Aquino who would be “in the best position to
respond” to the request

 In its third hearing, the House Committee resolved to issue a subpoena for the most recent draft of the JPEPA, but the
same was not pursued because by Committee Chairman Congressman Teves’ information, then House Speaker Jose de
Venecia had requested him to hold in abeyance the issuance of the subpoena until the President gives her consent to the
disclosure of the documents

 This present petition was filed on December 9, 2005, amid speculations that the JPEPA might be signed by the Philippine
government within December 2005

o The agreement was to be later signed on September 9, 2006 by President Gloria Macapagal-Arroyo and Japanese
Prime Minister Junichiro Koizumi in Helsinki, Finland, following which the President endorsed it to the Senate for
its concurrence pursuant to Article VII, Section 21 of the Constitution
o To date, the JPEPA is still being deliberated upon by the Senate

What is the JPEPA?

 The JPEPA, which will be the first bilateral free trade agreement to be entered into by the Philippines with another country
in the event the Senate grants its consent to it, covers a broad range of topics which respondents enumerate as follows:
o Trade in goods, rules of origin, customs procedures, paperless trading, trade in services, investment, intellectual
property rights, government procurement, movement of natural persons, cooperation, competition policy, mutual
recognition, dispute avoidance and settlement, improvement of the business environment, and general and final
provisions

 While the final text of the JPEPA has now been made accessible to the public since September 11, 2006, respondents do not
dispute that, at the time the petition was filed up to the filing of petitioners’ Reply—when the JPEPA was still being
negotiated—the initial drafts thereof were kept from public view

Petitioners’ Arguments/Grounds relied upon

 First, that the refusal of the government to disclose the documents bearing on the JPEPA negotiations violates their right to
information on matters of public concern and contravenes other constitutional provisions on transparency, such as that on
the policy of full public disclosure of all transactions involving public interest
 Second, that non-disclosure of the same documents undermines their right to effective and reasonable participation in all
levels of social, political, and economic decision-making.
 Lastly, that divulging the contents of the JPEPA only after the agreement has been concluded will effectively make the
Senate into a mere rubber stamp of the Executive, in violation of the principle of separation of powers

 Significantly, the grounds relied upon by petitioners for the disclosure of the latest text of the JPEPA are, except for the last,
the same as those cited for the disclosure of the Philippine and Japanese offers
o The first two grounds relied upon by petitioners which bear on the merits of respondents’ claim of privilege shall
be discussed.
o The last, being purely speculatory given that the Senate is still deliberating on the JPEPA, shall not.

Respondents’ claim of privilege

 It is well-established in jurisprudence that neither the right to information nor the policy of full public disclosure is absolute,
there being matters which, albeit of public concern or public interest, are recognized as privileged in nature
 The types of information which may be considered privileged have been elucidated in a number of cases:
o Almonte v. Vasquez, Chavez v. PCGG, Chavez v. Public Estate’s Authority, and most recently in Senate v. Ermita
where the Court reaffirmed the validity of the doctrine of executive privilege in this jurisdiction and dwelt on its
scope
 In their Comment, among others:
o The categories of information that may be considered privileged includes matters of diplomatic character and
under negotiation and review
o In this case, the privileged character of the diplomatic negotiations has been categorically invoked and clearly
explained by respondents particularly respondent DTI Senior Undersecretary.
 o The documents on the proposed JPEPA as well as the text which is subject to negotiations and legal review by the
parties fall under the exceptions to the right of access to information on matters of public concern and policy of
public disclosure
o They come within the coverage of executive privilege
o At the time when the Committee was requesting for copies of such documents, the negotiations were ongoing as
they are still now and the text of the proposed JPEPA is still uncertain and subject to change .
o Considering the status and nature of such documents then and now, these are evidently covered by executive
privilege consistent with existing legal provisions and settled jurisprudence xxx
o The negotiations of the representatives of the Philippines as well as of Japan must be allowed to explore
alternatives in the course of the negotiations in the same manner as judicial deliberations and working drafts of
opinions are accorded strict confidentiality
 The ground relied upon by respondents is thus not simply that the information sought involves a diplomatic matter, but that
it pertains to diplomatic negotiations then in progress

Petitioners’ Argument re its alleged right on the basis of Congress’ inherent power to regulate commerce:
 Petitioner-members of the House of Representatives claimed to have a right to the subject documents on the basis of
Congress’ inherent power to regulate commerce, be it domestic or international
o That Congress cannot meaningfully exercise the power to regulate international trade agreements such as the
JPEPA without being given copies of the initial offers exchanged during the negotiations thereof.
 Also, argued that the President cannot exclude Congress from the JPEPA negotiations since whatever power and authority
the President has to negotiate international trade agreements is derived only by delegation of Congress, pursuant to Article
VI, Section 28(2) of the Constitution and Sections 401 and 402 of Presidential Decree No. 1464

(In relation to Topic on Tariff Powers; Indirectly discussed)

ISSUE: Whether the information sought is critical to the performance of the functions of Congress.

Ruling:
 No. The petitioners-members of the House of Representatives fail to present a “sufficient showing of need” that the
information sought is critical to the performance of the functions of Congress, functions that do not include treaty-
negotiation.
 The subject of Article VI Section 28(2) of the Constitution is not the power to negotiate treaties and international
agreements, but the power to fix tariff rates, import and export quotas, and other taxes.
 Thus it provides:
o (2) 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.

 As to the power to negotiate treaties, the constitutional basis thereof is Section 21 of Article VII—the article on the
Executive Department—which states:
o No treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all
the Members of the Senate.

 The doctrine in PMPF v. Manglapus that the treaty-making power is exclusive to the President, being the sole organ of the
nation in its external relations, was echoed in BAYAN v. Executive Secretary where the Court held:
o By constitutional fiat and by the intrinsic nature of his office, the President, as head of State, is the sole organ and
authority in the external affairs of the country.
o In many ways, the President is the chief architect of the nation’s foreign policy; his “dominance in the field of
foreign relations is then conceded.”
o Wielding vast powers and influence, his conduct in the external affairs of the nation, as Jefferson describes, is
“executive altogether.”

o As regards the power to enter into treaties or international agreements, the Constitution vests the same in the
President, subject only to the concurrence of at least two thirds vote of all the members of the Senate.

o In this light, the negotiation of the VFA and the subsequent ratification of the agreement are exclusive acts which
pertain solely to the President, in the lawful exercise of his vast executive and diplomatic powers granted him no
 less than by the fundamental law itself. Into the field of negotiation the Senate cannot intrude, and Congress
itself is powerless to invade it. xxx

 The same doctrine was reiterated even more recently in Pimentel v. Executive Secretary where the Court ruled:
o In our system of government, the President, being the head of state, is regarded as the sole organ and authority in
external relations and is the country’s sole representative with foreign nations. 
o As the chief architect of foreign policy, the President acts as the country’s mouthpiece with respect to international
affairs.
o Hence, the President is vested with the authority to deal with foreign states and governments, extend or withhold
recognition, maintain diplomatic relations, enter into treaties, and otherwise transact the business of foreign
relations.
o In the realm of treaty-making, the President has the sole authority to negotiate with other states

 Nonetheless, while the President has the sole authority to negotiate and enter into treaties, the Constitution provides a
limitation to his power by requiring the concurrence of 2/3 of all the members of the Senate for the validity of the treaty
entered into by him. xxx

Power to Fix Tariff Rates vs. Power to enter into Treatises

 While the power then to fix tariff rates and other taxes clearly belongs to Congress, and is exercised by the President only
by delegation of that body, it has long been recognized that the power to enter into treaties is vested directly and
exclusively in the President, subject only to the concurrence of at least two-thirds of all the Members of the Senate for the
validity of the treaty.
 In this light, the authority of the President to enter into trade agreements with foreign nations provided under P.D. 1464
may be interpreted as an acknowledgment of a power already inherent in its office.
 It may not be used as basis to hold the President or its representatives accountable to Congress for the conduct of treaty
negotiations.
 This is not to say, of course, that the President’s power to enter into treaties is unlimited but for the requirement of Senate
concurrence, since the President must still ensure that all treaties will substantively conform to all the relevant provisions of
the Constitution.
 It follows from the above discussion that Congress, while possessing vast legislative powers, may not interfere in the field of
treaty negotiations.

 While Article VII, Section 21 provides for Senate concurrence, such pertains only to the validity of the treaty under
consideration, not to the conduct of negotiations attendant to its conclusion.
 Moreover, it is not even Congress as a whole that has been given the authority to concur as a means of checking the treaty-
making power of the President, but only the Senate.

 Thus, as in the case of petitioners suing in their capacity as private citizens, petitioners-members of the House of
Representatives fail to present a “sufficient showing of need” that the information sought is critical to the performance of
the functions of Congress, functions that do not include treaty-negotiation.

Sub-ISSUE 1: Whether the JPEPA is a matter of public concern.

Ruling:
 Yes. The JPEPA is a matter of public concern.
 To be covered by the right to information, the information sought must meet the threshold requirement that it be a matter
of public concern.
 Apropos is the teaching of Legaspi v. Civil Service Commission:
o In determining whether or not a particular information is of public concern there is no rigid test which can be
applied
o ‘Public concern’ like ‘public interest’ is a term that eludes exact definition
o Both terms embrace a broad spectrum of subjects which the public may want to know, either because these
directly affect their lives, or simply because such matters naturally arouse the interest of an ordinary citizen.
o In the final analysis, it is for the courts to determine on a case by case basis whether the matter at issue is of
interest or importance, as it relates to or affects the public

Application:
  From the nature of the JPEPA as an international trade agreement, it is evident that the Philippine and Japanese offers
submitted during the negotiations towards its execution are matters of public concern.
 And this, the respondents do not dispute.
o They only claim that diplomatic negotiations are covered by the doctrine of executive privilege, thus constituting
an exception to the right to information and the policy of full public disclosure.

Sub-ISSUE 2: Whether diplomatic negotiations are covered by the doctrine of executive privilege.

Ruling:
 Yes. The privileged character of diplomatic negotiations has been recognized in this jurisdiction.
 In discussing valid limitations on the right to information, the Court in Chavez v. PCGG held that:
o “Information on inter-government exchanges prior to the conclusion of treaties and executive agreements may be
subject to reasonable safeguards for the sake of national interest.”
 Even earlier, the same privilege was upheld in People’s Movement for Press Freedom (PMPF) v. Manglapus wherein the
Court discussed the reasons for the privilege in more precise terms.
o In PMPF v. Manglapus, the therein petitioners were seeking information from the President’s representatives on
the state of the then on-going negotiations of the RP-US Military Bases Agreement.
o The Court denied the petition, stressing that “secrecy of negotiations with foreign countries is not violative of the
constitutional provisions of freedom of speech or of the press nor of the freedom of access to information”
o Still in PMPF v. Manglapus, the Court adopted the doctrine in U.S. v. Curtiss-Wright Export Corp. that the
President is the sole organ of the nation in its negotiations with foreign countries

Application
 Applying the principles adopted in PMPF v. Manglapus, it is clear that while the final text of the JPEPA may not be kept
perpetually confidential—since there should be “ample opportunity for discussion before a treaty is approved”—the offers
exchanged by the parties during the negotiations continue to be privileged even after the JPEPA is published.
 It is reasonable to conclude that the Japanese representatives submitted their offers with the understanding that “historic
confidentiality” would govern the same.
 Disclosing these offers could impair the ability of the Philippines to deal not only with Japan but with other foreign
governments in future negotiations
 A ruling that Philippine offers in treaty negotiations should now be open to public scrutiny would discourage future
Philippine representatives from frankly expressing their views during negotiations.
 While, on first impression, it appears wise to deter Philippine representatives from entering into compromises, it bears
noting that treaty negotiations, or any negotiation for that matter, normally involve a process of quid pro quo, and
oftentimes negotiators have to be willing to grant concessions in an area of lesser importance in order to obtain more
favorable terms in an area of greater national interest.
 Indeed, by hampering the ability of our representatives to compromise, we may be jeopardizing higher national goals for
the sake of securing less critical ones.

 Therefore, diplomatic negotiations are recognized as privileged in this jurisdiction, the JPEPA negotiations constituting no
exception.
 However, it bears emphasis that such privilege is only presumptive.
 For as Senate v. Ermita holds, recognizing a type of information as privileged does not mean that it will be considered
privileged in all instances.
o Only after a consideration of the context in which the claim is made may it be determined if there is a public
interest that calls for the disclosure of the desired information, strong enough to overcome its traditionally
privileged status.

Petitioners’ Arguments against the application of PMPF v. Manglapus

 That PMPF v. Manglapus cannot be applied in toto to the present case, due to substantial factual distinctions between the
two
 The first and most fundamental distinction lies in the nature of the treaty involved.
o That PMPF v. Manglapus involved the Military Bases Agreement which necessarily pertained to matters affecting
national security; whereas the present case involves an economic treaty that seeks to regulate trade and
commerce between the Philippines and Japan, matters which, unlike those covered by the Military Bases
Agreement, are not so vital to national security to disallow their disclosure.
  Second, that the petitioners therein consisted entirely of members of the mass media, while petitioners in the present case
include members of the House of Representatives who invoke their right to information not just as citizens but as members
of Congress.
o That the present case involves the right of members of Congress to demand information on negotiations of
international trade agreements from the Executive branch, a matter which was not raised in PMPF v. Manglapus
 Third, that “the socio-political and historical contexts of the two cases are worlds apart”
o Claimed that the constitutional traditions and concepts prevailing at the time PMPF v. Manglapus came about,
particularly the school of thought that the requirements of foreign policy and the ideals of transparency were
incompatible with each other or the “incompatibility hypothesis,” while valid when international relations were
still governed by power, politics and wars, are no longer so in this age of international cooperation

Sub-ISSUE 3: Whether the application of PMPF vs. Manglapus in this case was proper.

Ruling:
 Yes.

As to the First Alleged Distinction

 Petitioners’ argument betrays a faulty assumption that information, to be considered privileged, must involve national
security.
 The recognition in Senate v. Ermita that executive privilege has encompassed claims of varying kinds, such that it may even
be more accurate to speak of “executive privileges,” cautions against such generalization.
 While there certainly are privileges grounded on the necessity of safeguarding national security such as those involving
military secrets, not all are founded thereon.
 One example is the “informer’s privilege,” or the privilege of the Government not to disclose the identity of a person or
persons who furnish information of violations of law to officers charged with the enforcement of that law.
o The suspect involved need not be so notorious as to be a threat to national security for this privilege to apply in
any given instance.
o Otherwise, the privilege would be inapplicable in all but the most high-profile cases, in which case not only would
this be contrary to long-standing practice. It would also be highly prejudicial to law enforcement efforts in general.

 Also illustrative is the privilege accorded to presidential communications, which are presumed privileged without
distinguishing between those which involve matters of national security and those which do not, the rationale for the
privilege being that a frank exchange of exploratory ideas and assessments, free from the glare of publicity and pressure by
interested parties, is essential to protect the independence of decision-making of those tasked to exercise Presidential,
Legislative and Judicial power
 In the same way that the privilege for judicial deliberations does not depend on the nature of the case deliberated upon, so
presidential communications are privileged whether they involve matters of national security.

 However, it bears emphasis that the privilege accorded to presidential communications is not absolute, one significant
qualification being that “the Executive cannot, any more than the other branches of government, invoke a general
confidentiality privilege to shield its officials and employees from investigations by the proper governmental institutions
into possible criminal wrongdoing.”
 This qualification applies whether the privilege is being invoked in the context of a judicial trial or a congressional
investigation conducted in aid of legislation
 Closely related to the “presidential communications” privilege is the deliberative process privilege recognized in the United
States.
o As discussed by the U.S. Supreme Court in NLRB v. Sears, Roebuck & Co, deliberative process covers documents
reflecting advisory opinions, recommendations and deliberations comprising part of a process by which
governmental decisions and policies are formulated.

 Notably, the privileged status of such documents rests, not on the need to protect national security but, on the “obvious
realization that officials will not communicate candidly among themselves if each remark is a potential item of discovery
and front page news,” the objective of the privilege being to enhance the quality of agency decisions

 The diplomatic negotiations privilege bears a close resemblance to the deliberative process and presidential
communications privilege
  It may be readily perceived that the rationale for the confidential character of diplomatic negotiations, deliberative process,
and presidential communications is similar, if not identical.

 The earlier discussion on PMPF v. Manglapus shows that the privilege for diplomatic negotiations is meant to encourage a
frank exchange of exploratory ideas between the negotiating parties by shielding such negotiations from public view.
 Similar to the privilege for presidential communications, the diplomatic negotiations privilege seeks, through the same
means, to protect the independence in decision-making of the President, particularly in its capacity as “the sole organ of the
nation in its external relations, and its sole representative with foreign nations.
 And, as with the deliberative process privilege, the privilege accorded to diplomatic negotiations arises, not on account of
the content of the information per se, but because the information is part of a process of deliberation which, in pursuit of
the public interest, must be presumed confidential.

Decision in the case of Fulbright & Jaworski v. Department of the Treasury

 The decision of the U.S. District Court, District of Columbia enlightens on the close relation between diplomatic
negotiations and deliberative process privileges.
 The plaintiffs in that case sought access to notes taken by a member of the U.S. negotiating team during the U.S.-French tax
treaty negotiations.
 Among the points noted therein were the issues to be discussed, positions which the French and U.S. teams took on some
points, the draft language agreed on, and articles which needed to be amended.
 Upholding the confidentiality of those notes, Judge Green ruled, thus:
o Negotiations between two countries to draft a treaty represent a true example of a deliberative process.
o Much give-and-take must occur for the countries to reach an accord xxx
o The policies behind the deliberative process privilege support non-disclosure
o Much harm could accrue to the negotiations process if these notes were revealed.
o Exposure of the pre-agreement positions of the French negotiators might well offend foreign governments  and
would lead to less candor by the U. S. in recording the events of the negotiations process. As several months pass
in between negotiations, this lack of record could hinder readily the U. S. negotiating team. Further disclosure
would reveal prematurely adopted policies. If these policies should be changed, public confusion would result
easily.
o Finally, releasing these snapshot views of the negotiations would be comparable to releasing drafts of the
treaty, particularly when the notes state the tentative provisions and language agreed on. As drafts of
regulations typically are protected by the deliberative process privilege, Arthur Andersen & Co. v. Internal
Revenue Service, drafts of treaties should be accorded the same protection

 Clearly, the privilege accorded to diplomatic negotiations follows as a logical consequence from the privileged character of
the deliberative process.
 The Court is not unaware that in Center for International Environmental Law (CIEL), et al. v. Office of U.S. Trade
Representative — where the plaintiffs sought information relating to the just-completed negotiation of a United States-
Chile Free Trade Agreement—the same district court, this time under Judge Friedman, consciously refrained from applying
the doctrine in Fulbright and ordered the disclosure of the information being sought.
 Since the factual milieu in CIEL seemed to call for the straight application of the doctrine in Fulbright, a discussion of why
the district court did not apply the same would help illumine this Court’s own reasons for deciding the present case along
the lines of Fulbright
o In both Fulbright and CIEL, the U.S. government cited a statutory basis for withholding information, namely,
Exemption 5 of the Freedom of Information Act (FOIA)
o In order to qualify for protection under Exemption 5, a document must satisfy two conditions:
(1) It must be either inter-agency or intra-agency in nature, and
(2) It must be both pre-decisional and part of the agency’s deliberative or decision-making process
 Judge Friedman, in CIEL, himself cognizant of a “superficial similarity of context” between the two cases, based his decision
on what he perceived to be a significant distinction: he found the negotiator’s notes that were sought in  Fulbright to be
“clearly internal,” whereas the documents being sought in CIEL were those produced by or exchanged with an outside
party, i.e. Chile. xxx
o In fine, Fulbright was not overturned.
o The court in CIEL merely found the same to be irrelevant in light of its distinct factual setting.

In this Present Case:

  The Court recognizes that the information sought by petitioners includes documents produced and communicated by a
party external to the Philippine government, namely, the Japanese representatives in the JPEPA negotiations, and to that
extent this case is closer to the factual circumstances of CIEL than those of Fulbright.
 Nonetheless, for reasons which shall be discussed shortly, this Court echoes the principle articulated in Fulbright that the
public policy underlying the deliberative process privilege requires that diplomatic negotiations should also be accorded
privileged status, even if the documents subject of the present case cannot be described as purely internal in character.
 However, in this jurisdiction, there is no counterpart of the FOIA, nor is there any statutory requirement similar to FOIA
Exemption 5 in particular.

 Hence, Philippine courts, when assessing a claim of privilege for diplomatic negotiations, are more free to focus directly on
the issue of whether the privilege being claimed is indeed supported by public policy, without having to consider—as the
CIEL court did—if these negotiations fulfill a formal requirement of being “inter-agency.”
 Important though that requirement may be in the context of domestic negotiations, it need not be accorded the same
significance when dealing with international negotiations.
 There being a public policy supporting a privilege for diplomatic negotiations for the reasons explained above, the Court
sees no reason to modify, much less abandon, the doctrine in PMPF v. Manglapus.

As to the Second Alleged Distinction

 While indeed the petitioners in PMPF v. Manglapus consisted only of members of the mass media, it would be incorrect to
claim that the doctrine laid down therein has no bearing on a controversy such as the present, where the demand for
information has come from members of Congress, not only from private citizens.

 The privileged character accorded to diplomatic negotiations does not ipso facto lose all force and effect simply because
the same privilege is now being claimed under different circumstances.
 The probability of the claim succeeding in the new context might differ, but to say that the privilege, as such, has no validity
at all in that context is another matter altogether
 The Court’s statement in Senate v. Ermita that:
o “Presidential refusals to furnish information may be actuated by any of at least three distinct kinds of
considerations (state secrets privilege, informer’s privilege, and a generic privilege for internal deliberations),
and may be asserted, with differing degrees of success, in the context of either judicial or legislative
investigations”
o This implies that a privilege, once recognized, may be invoked under different procedural settings.
 That this principle holds true particularly with respect to diplomatic negotiations may be inferred from PMPF v. Manglapus
itself, where the Court held that it is the President alone who negotiates treaties, and not even the Senate or the House of
Representatives, unless asked, may intrude upon that process

 Clearly, the privilege for diplomatic negotiations may be invoked not only against citizens’ demands for information, but
also in the context of legislative investigations.
 Hence, the recognition granted in PMPF v. Manglapus to the privileged character of diplomatic negotiations cannot be
considered irrelevant in resolving the present case, the contextual differences between the two cases notwithstanding.

As to the Third Alleged Distinction

 Without delving into petitioners’ assertions respecting the “incompatibility hypothesis,” the Court notes that the ruling in
PMPF v. Manglapus is grounded more on the nature of treaty negotiations as such than on a particular socio-political
school of thought.
 If petitioners are suggesting that the nature of treaty negotiations have so changed that “an ill-timed speech by one of the
parties or a frank declaration of the concession which are exacted or offered on both sides” no longer “leads to widespread
propaganda to block the negotiations,” or that parties in treaty negotiations no longer expect their communications to be
governed by historic confidentiality, the burden is on them to substantiate the same.
 This petitioners failed to discharge

Petitioners’ Arguments re the extent of the privilege’s applicability

 They admitted that “diplomatic negotiations on the JPEPA are entitled to a reasonable amount of confidentiality so as not
to jeopardize the diplomatic process”
 However, they argue that the same is privileged “only at certain stages of the negotiating process, after which such
information must necessarily be revealed to the public.”
  Added that the duty to disclose this information was vested in the government when the negotiations moved from the
formulation and exploratory stage to the firming up of definite propositions or official recommendations, citing Chavez v.
PCGG and Chavez v. PEA

ISSUE: Whether the privilege in this case applies only at certain stages of the negotiation process.

Ruling:
 No.
 The following statement in Chavez v. PEA suffices to show that the doctrine in both that case and Chavez v. PCGG with
regard to the duty to disclose “definite propositions of the government” does not apply to diplomatic negotiations:
o We rule, therefore, that the constitutional right to information includes official information on on-going
negotiations before a final contract.
o The information, however, must constitute definite propositions by the government and should not cover
recognized exceptions like privileged information, military and diplomatic secrets and similar matters affecting
national security and public order. xxx

Application
 It follows from this ruling that even definite propositions of the government may not be disclosed if they fall under
“recognized exceptions.”
 The privilege for diplomatic negotiations is clearly among the recognized exceptions, for the footnote to the immediately
quoted ruling cites PMPF v. Manglapus itself as an authority.

ISSUE: Whether there is sufficient public interest to overcome the claim of privilege.

Ruling:
 No.
 It being established that diplomatic negotiations enjoy a presumptive privilege against disclosure, even against the
demands of members of Congress for information, the Court shall now determine whether petitioners have shown the
existence of a public interest sufficient to overcome the privilege in this instance.
 To clarify, there are at least two kinds of public interest that must be taken into account.
o One is the presumed public interest in favor of keeping the subject information confidential, which is the reason
for the privilege in the first place, and the other is the public interest in favor of disclosure, the existence of which
must be shown by the party asking for information.

 The criteria to be employed in determining whether there is a sufficient public interest in favor of disclosure may be
gathered from cases such as U.S. v. Nixon, Senate Select Committee on Presidential Campaign Activities v. Nixon, and In re
Sealed Case

 U.S. v. Nixon, which involved a claim of the presidential communications privilege against the subpoena duces tecum of a
district court in a criminal case, emphasized the need to balance such claim of privilege against the constitutional duty of
courts to ensure a fair administration of criminal justice.
o xxx the allowance of the privilege to withhold evidence that is demonstrably relevant in a criminal trial would cut
deeply into the guarantee of due process of law and gravely impair the basic function of the courts.
o A President’s acknowledged need for confidentiality in the communications of his office is general in nature,
whereas the constitutional need for production of relevant evidence in a criminal proceeding is specific and
central to the fair adjudication of a particular criminal case in the administration of justice.
o Without access to specific facts a criminal prosecution may be totally frustrated. The President’s broad interest in
confidentiality of communications will not be vitiated by disclosure of a limited number of conversations
preliminarily shown to have some bearing on the pending criminal cases

 Similarly, Senate Select Committeev. Nixon, which involved a claim of the presidential communications privilege against the
subpoena duces tecum of a Senate committee, spoke of the need to balance such claim with the duty of Congress to
perform its legislative functions.
 The staged decisional structure established in Nixon v. Sirica was designed to ensure that the President and those upon
whom he directly relies in the performance of his duties could continue to work under a general assurance that their
deliberations would remain confidential.
  So long as the presumption that the public interest favors confidentiality can be defeated only by a strong showing of
need by another institution of government—a showing that the responsibilities of that institution cannot responsibly be
fulfilled without access to records of the President’s deliberations—we believed in Nixon v. Sirica, and continue to
believe, that the effective functioning of the presidential office will not be impaired. xxx

 In re Sealed Case involved a claim of the deliberative process and presidential communications privileges against a
subpoena duces tecum of a grand jury
 On the claim of deliberative process privilege, the court stated:
o The deliberative process privilege is a qualified privilege and can be overcome by a sufficient showing of need.
o This need determination is to be made flexibly on a case-by-case, ad hoc basis.
o Each time the deliberative process privilege is asserted the district court must undertake a fresh balancing of the
competing interests, “taking into account factors such as “the relevance of the evidence,” “the availability of
other evidence,” “the seriousness of the litigation,” “the role of the government,” and the “possibility of future
timidity by government employees. Xxx

Application
 Petitioners have failed to present the strong and “sufficient showing of need” referred to in the immediately cited cases.
 The arguments they proffer to establish their entitlement to the subject documents fall short of this standard.
o Petitioners go on to assert that the non-involvement of the Filipino people in the JPEPA negotiation process
effectively results in the bargaining away of their economic and property rights without their knowledge and
participation, in violation of the due process clause of the Constitution.
o They claim, moreover, that it is essential for the people to have access to the initial offers exchanged during the
negotiations since only through such disclosure can their constitutional right to effectively participate in decision-
making be brought to life in the context of international trade agreements.

 Whether it can accurately be said that the Filipino people were not involved in the JPEPA negotiations is a question of fact,
which this Court need not resolve.
 Suffice it to state that respondents had presented documents purporting to show that public consultations were conducted
on the JPEPA.
 Parenthetically, petitioners consider these “alleged consultations” as “woefully selective and inadequate.”

As to the Petitioners’ Alleged Right to Participate in Decision-making

 AT ALL EVENTS, since it is not disputed that the offers exchanged by the Philippine and Japanese representatives have not
been disclosed to the public, the Court shall pass upon the issue of whether access to the documents bearing on them is, as
petitioners claim, essential to their right to participate in decision-making.
 The case for petitioners has, of course, been immensely weakened by the disclosure of the full text of the JPEPA to the
public since September 11, 2006, even as it is still being deliberated upon by the Senate and, therefore, not yet binding on
the Philippines
o Were the Senate to concur with the validity of the JPEPA at this moment, there has already been, in the words of
PMPF v. Manglapus, “ample opportunity for discussion before the treaty is approved.”

 The text of the JPEPA having been published, petitioners have failed to convince this Court that they will not be able to
meaningfully exercise their right to participate in decision-making unless the initial offers are also published.
 It is of public knowledge that various non-government sectors and private citizens have already publicly expressed their
views on the JPEPA, their comments not being limited to general observations thereon but on its specific provisions.
 Numerous articles and statements critical of the JPEPA have been posted on the Internet.
 Given these developments, there is no basis for petitioners’ claim that access to the Philippine and Japanese offers is
essential to the exercise of their right to participate in decision-making.

Petitioners’ Argument re: respondents’ alleged failure to timely claim executive privilege
 On respondents’ invocation of executive privilege, petitioners find the same defective, not having been done seasonably as
it was raised only in their Comment to the present petition and not during the House Committee hearings

ISSUE: Whether the respondents’ claim for executive privilege be given credit.

Ruling:
 Yes.
  That the respondents invoked the privilege for the first time only in their Comment to the present petition does not mean
that the claim of privilege should not be credited
o Petitioners’ position presupposes that an assertion of the privilege should have been made during the House
Committee investigations, failing which respondents are deemed to have waived it.

 When the House Committee and petitioner-Congressman Aguja requested respondents for copies of the documents subject
of this case, respondents replied that the negotiations were still on-going and that the draft of the JPEPA would be released
once the text thereof is settled and complete.
 There was no intimation that the requested copies are confidential in nature by reason of public policy.
 The response may not thus be deemed a claim of privilege by the standards of Senate v. Ermita, which recognizes as claims
of privilege only those, which are accompanied by precise and certain reasons for preserving the confidentiality of the
information being sought.

 Respondents’ failure to claim the privilege during the House Committee hearings may not, however, be construed as a
waiver thereof by the Executive branch.
 As the immediately preceding paragraph indicates, what respondents received from the House Committee and petitioner-
Congressman Aguja were mere requests for information.
 And as priorly stated, the House Committee itself refrained from pursuing its earlier resolution to issue a subpoena duces
tecum on account of then Speaker Jose de Venecia’s alleged request to Committee Chairperson Congressman Teves to hold
the same in abeyance

 While it is a salutary and noble practice for Congress to refrain from issuing subpoenas to executive officials—out of respect
for their office—until resort to it becomes necessary, the fact remains that such requests are not a compulsory process.
 Being mere requests, they do not strictly call for an assertion of executive privilege.

 The privilege is an exemption to Congress’ power of inquiry.

 So long as Congress itself finds no cause to enforce such power, there is no strict necessity to assert the privilege.
 In this light, respondents’ failure to invoke the privilege during the House Committee investigations did not amount to a
waiver thereof.

 However, the Court observes that the claim of privilege appearing in respondents’ Comment to this petition fails to satisfy
in full the requirement laid down in Senate v. Ermita that the claim should be invoked by the President or through the
Executive Secretary “by order of the President.”
 However, respondents’ claim of privilege is being sustained, its flaw notwithstanding, because of circumstances peculiar to
the case.
 The assertion of executive privilege by the Executive Secretary, who is one of the respondents herein, without him adding
the phrase “by order of the President,” shall be considered as partially complying with the requirement laid down in Senate
v. Ermita.
 The requirement that the phrase “by order of the President” should accompany the Executive Secretary’s claim of privilege
is a new rule laid down for the first time in Senate v. Ermita, which was not yet final and executory at the time respondents
filed their Comment to the petition.
 A strict application of this requirement would thus be unwarranted in this case.

Procedural Issue Discussed:

ISSUE: Whether the petitioners have legal standing to file the present case.

RULING:
 Yes.
 For a petition for mandamus to be given due course, it must be instituted by a party aggrieved by the alleged inaction of
any tribunal, corporation, board or person which unlawfully excludes said party from the enjoyment of a legal right
o Respondents deny that petitioners have such standing to sue.
o However, respondents consider it sufficient to cite a portion of the ruling in Pimentel v. Office of Executive
Secretary, which emphasizes the need for a “personal stake in the outcome of the controversy” on questions of
standing
  However, in a petition anchored upon the right of the people to information on matters of public concern, which is a
public right by its very nature, petitioners need not show that they have any legal or special interest in the result , it being
sufficient to show that they are citizens and, therefore, part of the general public which possesses the right.

Application
 The present petition is anchored on the right to information and petitioners are all suing in their capacity as citizens and
groups of citizens including petitioners-members of the House of Representatives who additionally are suing in their
capacity as such, the standing of petitioners to file the present suit is grounded in jurisprudence.

Re: Mootness
 Considering, however, that “the principal relief petitioners are praying for is the disclosure of the contents of the JPEPA
prior to its finalization between the two States parties,” public disclosure of the text of the JPEPA after its signing by the
President, during the pendency of the present petition, has been largely rendered moot and academic
 With the Senate deliberations on the JPEPA still pending, the agreement as it now stands cannot yet be considered as final
and binding between the two States.
 Article 164 of the JPEPA itself provides that the agreement does not take effect immediately upon the signing thereof.
o For it must still go through the procedures required by the laws of each country for its entry into force
 President Arroyo’s endorsement of the JPEPA to the Senate for concurrence is part of the legal procedures, which must be
met prior to the agreement’s entry into force.

 The text of the JPEPA having then been made accessible to the public, the petition has become moot and academic to the
extent that it seeks the disclosure of the “full text” thereof.
 However, the petition is not entirely moot because petitioners seek to obtain, not merely the text of the JPEPA, but also
the Philippine and Japanese offers in the course of the negotiations

OTHER DISCUSSIONS

Response to the Dissenting Opinion of the Chief Justice

 We are aware that behind the dissent of the Chief Justice lies a genuine zeal to protect our people’s right to information
against any abuse of executive privilege
o It is a zeal that we fully share.
 The Court, however, in its endeavor to guard against the abuse of executive privilege, should be careful not to veer towards
the opposite extreme, to the point that it would strike down as invalid even a legitimate exercise thereof.

We respond only to the salient arguments of the Dissenting Opinion which have not yet been sufficiently addressed above.
(1) After its historical discussion on the allocation of power over international trade agreements in the United States, the
dissent concludes that “it will be turning somersaults with history to contend that the President is the sole organ for
external relations” in that jurisdiction.
 With regard to this opinion, we make only the following observations:
 There is, at least, a core meaning of the phrase “sole organ of the nation in its external relations” which is not being
disputed, namely, that the power to directly negotiate treaties and international agreements is vested by our
Constitution only in the Executive.
 Thus, the dissent states that “Congress has the power to regulate commerce with foreign nations but does not have
the power to negotiate international agreements directly”

 What is disputed is how this principle applies to the case at bar.

o The dissent opines that petitioner-members of the House of Representatives, by asking for the subject JPEPA
documents, are not seeking to directly participate in the negotiations of the JPEPA, hence, they cannot be
prevented from gaining access to these documents.
 On the other hand, we hold that this is one occasion where the ruling in Agan v. PIATCO – and in other cases both
before and since—should be applied

 Similarly, while herein petitioners-members of the House of Representatives may not have been aiming to participate
in the negotiations directly, opening the JPEPA negotiations to their scrutiny—even to the point of giving them access
to the offers exchanged between the Japanese and Philippine delegations—would have made a mockery of what the
 Constitution sought to prevent and rendered it useless for what it sought to achieve when it vested the power of direct
negotiation solely with the President.
 Since allowing petitioner-members of the House of Representatives access to the subject JPEPA documents would set a
precedent for future negotiations, leading to the contravention of the public interests articulated above which the
Constitution sought to protect, the subject documents should not be disclosed.

(2) The dissent also asserts that respondents can no longer claim the diplomatic secrets privilege over the subject JPEPA
documents now that negotiations have been concluded, since their reasons for nondisclosure cited in the June 23, 2005
letter of Sec. Ermita, and later in their Comment, necessarily apply only for as long as the negotiations were still pending
 In their Comment, respondents contend that “the negotiations of the representatives of the Philippines as well as of
Japan must be allowed to explore alternatives in the course of the negotiations in the same manner as judicial
deliberations and working drafts of opinions are accorded strict confidentiality.”
 That respondents liken the documents involved in the JPEPA negotiations to judicial deliberations and working drafts
of opinions evinces, by itself, that they were claiming confidentiality not only until, but even after, the conclusion of
the negotiations
 Judicial deliberations do not lose their confidential character once a decision has been promulgated by the courts
 The same holds true with respect to working drafts of opinions, which are comparable to intra-agency
recommendations
 Such intra-agency recommendations are privileged even after the position under consideration by the agency has
developed into a definite proposition, hence, the rule in this jurisdiction that agencies have the duty to disclose  only
definite propositions, and not the inter-agency and intra-agency communications during the stage when common
assertions are still being formulated

(3) The dissent claims that petitioner-members of the House of Representatives have sufficiently shown their need for the
same documents to overcome the privilege.
 Again, we disagree.
 The House Committee that initiated the investigations on the JPEPA did not pursue its earlier intention to subpoena the
documents. This strongly undermines the assertion that access to the same documents by the House Committee is
critical to the performance of its legislative functions.
 If the documents were indeed critical, the House Committee should have, at the very least, issued a subpoena duces
tecum or, like what the Senate did in Senate v. Ermita, filed the present petition as a legislative body, rather than
leaving it to the discretion of individual Congressmen whether to pursue an action or not. Such acts would have served
as strong indicia that Congress itself finds the subject information to be critical to its legislative functions

 Further, given that respondents have claimed executive privilege, petitioner-members of the House of Representatives
should have, at least, shown how its lack of access to the Philippine and Japanese offers would hinder the intelligent
crafting of legislation.
 Mere assertion that the JPEPA covers a subject matter over which Congress has the power to legislate would not suffice
 As Senate Select Committee v. Nixon held, the showing required to overcome the presumption favoring confidentiality
turns, not only on the nature and appropriateness of the function in the performance of which the material was
sought, but also the degree to which the material was necessary to its fulfillment
o This petitioners failed to do

 Furthermore, from the time the final text of the JPEPA including its annexes and attachments was published, petitioner-
members of the House of Representatives have been free to use it for any legislative purpose they may see fit.
 Since such publication, petitioners’ need, if any, specifically for the Philippine and Japanese offers leading to the final
version of the JPEPA, has become even less apparent.
 In asserting that the balance in this instance tilts in favor of disclosing the JPEPA documents, the dissent contends
that the Executive has failed to show how disclosing them after the conclusion of negotiations would impair the
performance of its functions.
o The contention, with due respect, misplaces the onus probandi.
 While, in keeping with the general presumption of transparency, the burden is initially on the Executive to provide
precise and certain reasons for upholding its claim of privilege, once the Executive is able to show that the documents
being sought are covered by a recognized privilege, the burden shifts to the party seeking information to overcome the
privilege by a strong showing of need.
 When it was thus established that the JPEPA documents are covered by the privilege for diplomatic negotiations
pursuant to PMPF v. Manglapus, the presumption arose that their disclosure would impair the performance of
 executive functions. It was then incumbent on petitioner- requesting parties to show that they have a strong need for
the information sufficient to overcome the privilege.
 They have not, however.

(4) Respecting the failure of the Executive Secretary to explicitly state that he is claiming the privilege “by order of the
President,” the same may not be strictly applied to the privilege claim subject of this case.
 When the Court in Senate v. Ermita limited the power of invoking the privilege to the President alone, it was laying
down a new rule for which there is no counterpart even in the United States from which the concept of executive
privilege was adopted.
 The rule was thus laid down by this Court, not in adherence to any established precedent, but with the aim of
preventing the abuse of the privilege in light of its highly exceptional nature
 The Court’s recognition that the Executive Secretary also bears the power to invoke the privilege, provided he does so
“by order of the President,” is meant to avoid laying down too rigid a rule, the Court being aware that it was laying
down a new restriction on executive privilege.
 It is with the same spirit that the Court should not be overly strict with applying the same rule in this peculiar instance,
where the claim of executive privilege occurred before the judgment in Senate v. Ermita became final.

(5) To show that PMPF v. Manglapus may not be applied in the present case, the dissent implies that the Court therein erred in
citing US v. Curtiss Wright and the book entitled The New American Government and Its Work since these authorities, so the
dissent claims, may not be used to calibrate the importance of the right to information in the Philippine setting.
 The dissent argues that since Curtiss-Wright referred to a conflict between the executive and legislative branches of
government, the factual setting thereof was different from that of PMPF v. Manglapus which involved a collision
between governmental power over the conduct of foreign affairs and the citizen’s right to information

 That the Court could freely cite Curtiss-Wright—a case that upholds the secrecy of diplomatic negotiations against
congressional demands for information—in the course of laying down a ruling on the public right to information only
serves to underscore the principle mentioned earlier that the privileged character accorded to diplomatic negotiations
does not ipso facto lose all force and effect simply because the same privilege is now being claimed under different
circumstances.
 PMPF v. Manglapus indeed involved a demand for information from private citizens and not an executive-legislative
conflict, but so did Chavez v. PEA which held that “the public’s right to information. . . does not extend to matters
recognized as privileged information under the separation of powers”

 Chavez v. PCGG also involved the public’s right to information, yet the Court recognized as a valid limitation to that
right the same privileged information based on separation of powers—closed-door Cabinet meetings, executive
sessions of either house of Congress, and the internal deliberations of the Supreme Court
 These cases show that the Court has always regarded claims of privilege, whether in the context of an executive-
legislative conflict or a citizen’s demand for information, as closely intertwined, such that the principles applicable to
one are also applicable to the other.
 The reason is obvious.
 If the validity of claims of privilege were to be assessed by entirely different criteria in each context, this may give rise
to the absurd result where Congress would be denied access to a particular information because of a claim of executive
privilege, but the general public would have access to the same information, the claim of privilege notwithstanding. xxx
 As to the claim in the dissent that “it is more doubtful if the same book be used to calibrate the importance of the right
of access to information in the Philippine setting considering its elevation as a constitutional right,” we submit that the
elevation of such right as a constitutional right did not set it free from the legitimate restrictions of executive privilege
which is itself constitutionally-based.
 Hence, the comments in that book which were cited in PMPF v. Manglapus remain valid doctrine

(6) The dissent further asserts that the Court has never used “need” as a test to uphold or allow inroads into rights guaranteed
under the Constitution
 With due respect, we assert otherwise.
 The Court has done so before, albeit without using the term “need.”
 In executive privilege controversies, the requirement that parties present a “sufficient showing of need” only means,
in substance, that they should show a public interest in favor of disclosure sufficient in degree to overcome the claim of
privilege
 Verily, the Court in such cases engages in a balancing of interests.
  Such a balancing of interests is certainly not new in constitutional adjudication involving fundamental rights. Secretary
of Justice v. Lantion, which was cited in the dissent, applied just such a test. xxx
 The dissent, nonetheless, maintains that “it suffices that information is of public concern for it to be covered by the
right, regardless of the public’s need for the information,” and that the same would hold true even “if they simply want
to know it because it interests them.”
 As has been stated earlier, however, there is no dispute that the information subject of this case is a matter of public
concern.
 The Court has earlier concluded that it is a matter of public concern, not on the basis of any specific need shown by
petitioners, but from the very nature of the JPEPA as an international trade agreement.
 The Court holds that, in determining whether an information is covered by the right to information, a specific “showing
of need” for such information is not a relevant consideration, but only whether the same is a matter of public concern
 When, however, the government has claimed executive privilege, and it has established that the information is indeed
covered by the same, then the party demanding it, if it is to overcome the privilege, must show that that the
information is vital, not simply for the satisfaction of its curiosity, but for its ability to effectively and reasonably
participate in social, political, and economic decision-making.

(7) The dissent maintains that “the treaty has thus entered the ultimate stage where the people can exercise their right to
participate in the discussion whether the Senate should concur in its ratification or not.”
 It adds that this right “will be diluted unless the people can have access to the subject JPEPA documents”
 What, to the dissent, is a dilution of the right to participate in decision-making is, to us, simply a recognition of the
qualified nature of the public’s right to information. It is beyond dispute that the right to information is not absolute
and that the doctrine of executive privilege is a recognized limitation on that right.
 Moreover, contrary to the submission that the right to participate in decision-making would be diluted, We reiterate
that our people have been exercising their right to participate in the discussion on the issue of the JPEPA, and they
have been able to articulate their different opinions without need of access to the JPEPA negotiation documents.
 Thus, we hold that the balance in this case tilts in favor of executive privilege.

(8) Against our ruling that the principles applied in U.S. v. Nixon, the Senate Select Committee case, and In re Sealed Case, are
similarly applicable to the present controversy, the dissent cites the caveat in the Nixon case that the U.S. Court was there
addressing only the President’s assertion of privilege in the context of a criminal trial, not a civil litigation nor a
congressional demand for information.
 What this caveat means, however, is only that courts must be careful not to hastily apply the ruling therein to other
contexts. It does not, however, absolutely mean that the principles applied in that case may never be applied in such
contexts. xxx
 Verily, while the Court should guard against the abuse of executive privilege, it should also give full recognition to
the validity of the privilege whenever it is claimed within the proper bounds of executive power, as in this case.
 Otherwise, the Court would undermine its own credibility, for it would be perceived as no longer aiming to strike a
balance, but seeking merely to water down executive privilege to the point of irrelevance.

Rulings In a Nutshell
 Petitioners’ demand to be furnished with a copy of the full text of the JPEPA has become moot and academic, it having
been made accessible to the public since September 11, 2006.
 As for their demand for copies of the Philippine and Japanese offers submitted during the JPEPA negotiations, the same
must be denied, respondents’ claim of executive privilege being valid.
 Diplomatic negotiations have, since the Court promulgated its Resolution in PMPF v. Manglapus on September 13, 1988,
been recognized as privileged in this jurisdiction and the reasons proffered by petitioners against the application of the
ruling therein to the present case have not persuaded the Court.
 Moreover, petitioners—both private citizens and members of the House of Representatives—have failed to present a
“sufficient showing of need” to overcome the claim of privilege in this case.

 That the privilege was asserted for the first time in respondents’ Comment to the present petition, and not during the
hearings of the House Special Committee on Globalization, is of no moment, since it cannot be interpreted as a waiver of
the privilege on the part of the Executive branch.
 For reasons already explained, this Decision shall not be interpreted as departing from the ruling in Senate v. Ermita that
executive privilege should be invoked by the President or through the Executive Secretary “by order of the President”

Disposition: Petition dismissed.

Notes: Other Opinions (re: Tariff Powers)

PUNO, C.J., Dissenting Opinion

 The provision in Article VI, Section 22(2) of the 1935 Constitution to authorize the President, by law, to fix, within specified
limits, tariff rates, import and export quotas, and tonnage and wharfage dues was inspired by a desire to enable the nation,
through the President, to carry out a unified national economic program and to administer the laws of the country to the
end that its economic interests would be adequately protected.
 This intention to implement a unified national economic program was made explicit in the 1987 Constitution with the
addition of the phrase “within the framework of the national development program of the government,” upon motion of
Commissioner Christian Monsod
 In sum, while provision was made for granting authority to the President with respect to the fixing of tariffs, import and
export quotas, and tonnage and wharfage dues, the power of Congress over foreign trade, and its authority to delegate the
same to the President by law, has consistently been constitutionally recognized
 Even Curtiss-Wright, which respondents and the ponencia rely on, make a qualification that the foreign relations power of
the President, “like every other governmental power, must be exercised in subordination to the applicable provisions of the
Constitution.”
 Congress’ power over foreign trade is one such provision that must be considered in interpreting the treaty-making power of
the President.

 Turning to the case at bar, Congress undoubtedly has power over the subject matter of the JPEPA, as this agreement
touches on the fixing of “tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or
imposts.”
o Congress can, in fact, revoke or amend the power of the President to fix these as authorized by law or the Tariff
and Customs Code of 1978.
o Congress can legislate and conduct an inquiry in aid of legislation on this subject matter, as it did pursuant to
House Resolution No. 551.
 The purpose of the legislative inquiry in which the subject JPEPA documents are needed is to aid legislation, which is
different from the purpose of the negotiations conducted by the Executive, which is to conclude a treaty.
Exercised within their proper limits, the power of the House of Representatives to conduct a legislative inquiry in aid of legislation
and the power of the executive to negotiate a treaty

Safeguard duty

1. Southern Cross Cement Corporation vs. Cement Manufacturers Association of the Philippines, 465 SCRA 532
G.R. NO. 158540 : August 3, 2005
TINGA, J.:

FACTS:
 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.
 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.
 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, in accordance with the SMA.
 After the DTI issued a provisional safeguard measure, 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 which stated:
o 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.
 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.
 The Secretary of Justice opined that the DTI could not do so under the SMA, the DTI Secretary then promulgated a Decision
ultimately denying Philcemcor's application for safeguard measures on the ground that the he was bound to do so in
light of the Tariff Commission's negative findings.
 Philcemcor challenged this Decision of the DTI Secretary by filing with the Court of Appeals a Petition for Certiorari,
Prohibition and Mandamus11seeking to set aside the DTI Decision, as well as the Tariff Commission's Report.
 The Court of Appeals partially granted Philcemcor's petition.
o The appellate court ruled that it had jurisdiction over the petition for certiorari since it alleged grave abuse of
discretion.
o While it refused to annul the findings of the Tariff Commission, 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 Secretary's discretionary review.
o It determined that the legislative intent is to grant the DTI Secretary the power to make a final decision on the
Tariff Commission's recommendation.
 On 23 June 2003, Southern Cross filed the present petition, arguing that the Court of Appeals has no jurisdiction over
Philcemcor's 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
court's Decision, there was no longer any legal impediment to his deciding Philcemcor's application for definitive
safeguard measures.
o 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.
o 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.
 On 7 July 2003, Southern Cross filed with the Supreme Court a "Very Urgent Application for a Temporary Restraining
Order and/or A Writ of Preliminary Injunction" ("TRO Application").
o Seeking to enjoin the DTI Secretary from enforcing his Decision of 25 June 2003 in view of the pending petition
before this Court.
 On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing the DTI Secretary's 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.
 After the SC gave due course to Southern Cross's Petition , the Court called the case for oral argument on 18 February
2004.
 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:
o (i) whether the Decision of the DTI Secretary is appealable to the CTA or the Court of Appeals;
o (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.
 After the parties had filed their respective memoranda, the Court's Second Division, to which the case had been assigned,
promulgated its Decision granting Southern Cross's Petition .
o The Decision was unanimous, without any separate or concurring opinion.
o The Court ruled that the Court of Appeals had no jurisdiction over Philcemcor's Petition , the proper remedy
under Section 29 of the SMA being a Petition for Review with the CTA;
o 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.
o Anent the argument that Southern Cross had committed forum-shopping, 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.
o Accordingly, the Decision of the Court of Appeals dated 5 June 2003 was declared null and void.
o 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 .
 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.
 In a Resolution dated 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.

ISSUE: Whether or not an order imposing or denying the safeguard measure is within the jurisdiction of the CTA?

RULING:
 Yes, the CTA has jurisdiction.
 Under Section 29, there are three requisites to enable the CTA to acquire jurisdiction over the petition for review
contemplated therein:
o (i) there must be a ruling by the DTI Secretary;
o (ii) the petition must be filed by an interested party adversely affected by the ruling; and
o (iii) such ruling must be in connection with the imposition of a safeguard measure.
o
 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.
 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.
 By the same token, a ruling not to impose a safeguard measure is also issued in connection with the imposition of a
safeguard measure.
 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.
 Philcemcor imputes intelligent design behind the alleged intent of Congress to limit CTA review only to impositions of the
general safeguard measures.
o It claims that there is a necessary tax implication in case of an imposition of a tariff where the CTA's 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 Court's 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.
  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."
 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 Commission's
findings as basis.
 Necessarily then, such negative determination of the Tariff Commission being an integral part of the DTI Secretary's 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 Secretary's actions may be annulled
on certiorari , notwithstanding the explicit grant of judicial review over that cabinet member's actions under the SMA to the
CTA.

ISSUE: Whether or not the DTI Secretary is barred from imposing a general safeguard measure absent a final determination
rendered by the Tariff Commission?

RULING:
 Yes, absent a final determination rendered by the Tariff Commission, the DTI secretary is barred from imposing a general
safeguard measure.
 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.
 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:
o 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.
 The Court acknowledges the basic postulates ingrained in the provision, and, hence, governing in this case. They are:
o (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.
o (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.
o (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.
o First, there must be a law, such as the SMA.
o Second, there must be specified limits, a detail which would be filled in by the law.
o And further, Congress is further empowered to impose limitations and restrictions on this presidential authority.
o 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 President's 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 egos  of 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.
 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:
o 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.
 There is no question that Section 5 of the SMA operates as a limitation validly imposed by Congress on the
presidential 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.
 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.
ISSUE: Whether or not the DTI Secretary has administrative control over the Tariff Commission, thus, may review their positive
determination?
RULING:
 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 Court's 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.

 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.

 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, which in turn is the
independent planning agency of the government.

 The Tariff Commission does not fall under the administrative supervision of the DTI.

 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.

 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.

 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 latter's 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 Commission's 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.

 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.

 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. 

 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 body to
which the Tariff Commission is attached under the Administrative Code.

 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 Commission's final
determination could be had, but it is not the procedure adopted by respondents and now suggested for affirmation.

 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.

 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.

 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.

 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.

ISSUE: Whether or not the DTI has the power to review the determination made by the Tariff Commission?
RULING:
 No, the DTI cannot review the determination made by the Tariff Commission. If such power of review is allowed, it is the
NEDA that has such power.
 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 the Separate 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 Commission's determination, administratively revised as it may be, that
would serve as the basis for the DTI Secretary's action.
  However, and fatally for the present petitions, such administrative review cannot be conducted by the DTI Secretary.

 Even if conceding that the Tariff Commission's 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 measures motu 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 NEDA's 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 Secretary's 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 Commission's 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 Commission's 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 NEDA's 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 Commission's 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.

DISPOSITIVE PORTION: 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 Cross's Petition for Review with the Court of Tax Appeals, as
adverted to earlier in this Resolution.  SO ORDERED.
Cases on Jurisdiction

1. Ponce Enrile v Vinuya

Facts:
 From the petition filed on May 28, 1968, it would appear that upon the application of the ASAC on February 9, 1968, the
then Collector of Customs of the Port of Manila issued a warrant of seizure and detention against the Cadillac car involved
in this case, the owner-claimant being a certain Rodolfo Ceñadoza, as the taxes and duties had not been paid
 The warrant was served and enforced on April 2, 1968 prior to the filing of a complaint for replevin with respondent Judge
 The circumstances indicative of the alleged failure to pay such taxes and duties on the CadiIlac car are set forth in the
petition thus:
o (a) In securing the registration of said car, Rodolfo Ceñadoza predecessor-in-interest of respondent Andres M.
Vinuya, used Informal Entry No. 1563652 dated May 9, 1967 and Certificate of Payment No. 10868 in the amount
of P1,305.00, both of the Bureau of Customs, but upon checking the records of the Land Transportation
Commission, it was found that said informal entry and certificate of payment corresponded to a 1961 Fiat 600, and
not to the Cadillac car in dispute
o (b) The person who paid the said taxes and duties is one Pablo Cruz, Jr., who does not appear to be one of the
predecessors-in-interest of respondent Vinuya
o (c) As shown by Annex B hereof, when the Cadillac car was seized and detained by ASAC agents, its plate license
was No. H-37264 (67) Rizal, and not Plate No. 35905 (67) Rizal, which was its plate number when it was allegedly
registered
o (d) On February 14, 1968, a certain Jess O. Tuazon, General Manager of the Lee Sabre Car Exchange, Manila,
executed an affidavit ..., to the effect that Rodolfo Ceñadoza had left the said car in his possession for the purpose
of selling the same and that the affiant had obligated himself to 'waive my (his) rights to sell the above-mentioned
car not until the proper taxes due to the government has been satisfactorily paid
o (e) On February 15, 1968, said Jess Tuazon, who then had possession of the said Cadillac car, through his lawyer,
Thomas S. Cortez, executed a promissory note ..., obligating himself to pay the corresponding taxes and duties

 It was moreover shown in the petition that the owner, Rodolfo Ceñadoza, had sold such car to one Francisco Dee from
whom respondent Vinuya acquired the same.
 Under claim that he was aggrieved by such seizure and detention of the car in question, respondent Vinuya filed a
complaint for replevin in the sala of respondent Judge.
 After filing a bond of P60,000.00 an ex-parte order was issued on April 19, 1967 by respondent Judge directing a special
sheriff to take possession of the Cadillac car in question
 On the very same day respondent Judge likewise gave due course to the complaint for replevin and required petitioners to
file their answer
 There was, on the part of petitioners, a motion to dismiss as well as to lift the ex-parte order
 In seeking such dismissal, the attention of respondent Judge was invited to the fact that forfeiture proceedings had already
been instituted before the Collector of Customs who has the sole jurisdiction to determine questions affecting the
disposition of property under seizure as well as the absence of a cause of action
 There was an opposition by respondent Vinuya filed on May 7, 1968 and a denial thereof in an order of respondent Judge
on the ground that such motion to dismiss "is without merit." The matter was thus taken to this Court
 In our resolution of June 4, 1968, respondents were required to answer; at the same time a preliminary injunction was
issued. In the answer filed on July 11, 1968, there was an admission that on February 9, 1968, the Collector of Customs of
the Port of Manila issued a warrant of seizure and detention against the Cadillac car, but there was a denial that the
registration covering the car was illegally secured as respondent Vinuya relied on what appeared to be a public document
valid and regular on its face.
 They base their defense in the illegality of the seizure as the warrant on which it is based is invalid and the seizing officer
was devoid of authority; respondents' principal contention thus is the assertion that an illegal seizure cannot confer
jurisdiction on the Collector of Customs.

Issue: WON the RTC is vested with jurisdiction to entertain a complaint for the recovery of a Cadillac car, subject of a seizure and
forfeiture proceeding by the BOC

Ruling:
 NO
 The prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture cases vested in the Collector of Customs
precludes a court of first instance from assuming cognizance over such a matter
 This has been so, as noted, since Pacis v. Averia.
 In an opinion penned by Justice J. P. Bengzon, there was a statement of the legal provisions that call for application. Thus:
o "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. The Collector's decision is appealable to the
Commissioner of Customs whose decision is in turn appealable to the Court of Tax Appeals.
o An aggrieved party may appeal from a judgment of the Court of Tax Appeals directly to this Court. On the other
hand, Section 44(c) of the Judiciary Act of 1948 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.
o 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.
o This is precisely what took place in this case.
o 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."

 The crucial question whether Section 44 (c) of the Judicial Act should give way to the provisions of the Tariff and Customs
Code was answered in the affirmative, the opinion clearly stating that "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.
 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.
o Otherwise, actions for forfeiture of property for violation of Customs laws could easily be undermined by the
simple devise of replevin.
 This excerpt from the opinion is likewise relevant:
o "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.
o 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." 11

 The principle was reiterated in an opinion of the present Chief Justice in De Joya v. David. Thus:
o "As regards the merits of this case, it is obvious that the Court of First Instance of Manila had no jurisdiction over
the subject-matter of Civil Case No. 56533 thereof, and that neither had the Court of Appeals jurisdiction over the
appeal taken from the decision of said trial Court.
o Indeed, in said Case No. 56533 David sought to obtain possession of the goods which were the object of seizure
proceedings before the Collector of Customs. We have already held that such action is beyond the jurisdiction of
courts of first instance."

 Papa v. Mago likewise deserves to be cited. The opinion of Justice Zaldivar for the Court emphatically asserted the doctrine
anew in the following language:
o "It is the settled rule, therefore, that the Bureau of Customs acquires exclusive jurisdiction over imported goods,
for the purposes of enforcement of the customs laws, from the moment the goods are actually in its possession or
control, even if no warrant of seizure or detention had previously been issued by the Collector of Customs in
connection with seizure and forfeiture proceedings.
o In the present case, the Bureau of Customs actually seized the goods in question on November 4, 1966, and so
from that date the Bureau of Customs acquired jurisdiction over the goods for the purposes of the enforcement of
the tariff and customs laws, to the exclusion of the regular courts.
o Much less than would the Court of First Instance of Manila has jurisdiction over the goods in question after the
Collector of Customs had issued the warrant of seizure and detention on January 12, 1967. And so, it cannot be
 said, as respondents contend, that the issuance of said warrant was only an attempt to divest the respondent
Judge of jurisdiction over the subject matter of the case.
o The court presided by respondent Judge did not acquire jurisdiction over the goods in question when the petition
for mandamus was filed before it, and so there was no need of divesting it of jurisdiction. Not having acquired
jurisdiction over the goods, it follows that the Court of First Instance of Manila had no jurisdiction to issue the
questioned order of March 7, 1967 releasing said goods."

Application:
 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.

2. Republic vs CFI GR No 43747 September 2, 1992

Petitioner – Republic of the PH Collector of Customs
Respondents – CFI and Mayer

Facts:
 A shipment of one standard basic spiral pipe mill, contained in eleven (11) packages arrived at the Port of Manila on March
23, 1975 on board "Puerto Princesa,". The articles were declared as machinery for steel pipe manufacture, including
decoiler forming cut-off equipment under Import Entry No. 26946, series of 1975, with a home consumption value of
£76,600,00 under Tar. Heading No. 84.45 at 10% ad valorem, by Mayer Steel Pipe Corporation, consignee of the shipment.
 The import papers were duly processed and upon payment the shipment was released to Mayer Steel Pipe Corporation on
April 3, 1975. However, upon representation of the Anti-Smuggling Action Center (ASAC) to the effect that the shipment
was grossly misdeclared, misclassified and undervalued, the Collector of Customs issued a warrant of seizure and detention
against the subject machinery. The shipment was seized and the corresponding return made to the Collector of Customs.
 In the course of the proceedings, respondent corporation repeatedly requested with petitioner Collector of Customs to
allow the installation of the machineries at its factory premises to put it "in operation" under Customs guard. And should
the machineries be forfeited, and the Collector of Customs order their removal, respondent was willing to pay for all the
expenses incident thereto.
 Because of these representations, the Collector of Customs issued an order allowing the provisional release of the
machineries, and not a complete and permanent relinquishment of the shipment as contemplated in Section 2301 of the
Tariff and Custom’s Code, pending the seizure proceeding, on the condition that:
o "1. (The machineries will be under) continuous guarding by designated Customs Guards until otherwise directed by
this office; and
o "2. Filing of a surety bond in an amount equivalent to one and one-half times the appraised value of the subject
importation, conditioned either for the dismantling of the machinery at the claimant’s expense and the delivery
thereof to this Bureau, for the payment of the appraised value thereof and/or any fine, expenses and costs which
may be adjudged in the case, in the event that the shipment is finally declared forfeited in favor of the
Government.

 Upon filing by the ASAC of a MR of the above order, the Collector of Customs issued another order (August 19, 1975)
clarifying the nature and extent of the previous order of release:
o "xxx that this Office allowed the provisional release of the machines merely for purposes of installation in view of
the representations of the claimant’s lawyer that ‘the metallurgical engineer authorized by the supplier Byard
Kenwest Ltd. of England to supervise the installation of the machineries has been here for quite some time, and
 the company (Mayer Steel) is shouldering all expenses for his prolonged stay here’ and that ‘the Central Bank also
requires the claimant company to install the machineries so as to make it function and thus enable its designated
Engineer Consultants to evaluate the same for purposes of the approved deferred payment scheme.’
o Clearly, the Order of July 31, 1975, was not intended to allow the claimant to operate the subject machines
pending this seizure proceeding, since this Office was aware of the issue raised by the ASAC concerning the
‘prohibited’ character of this importation and of the fact that it would be wrong to allow the claimant to profit or
benefit from the use of the machines if it had no right to import them in the first place. Mayer Steel Corporation
‘was authorized to secure the provisional release of said shipment in order that the same may be installed and test
run for evaluation by Engineers of Byard Kenwest Ltd. of England, suppliers of the said machinery.’"

Collector of Customs decision

 rendered a decision directing the forfeiture of the machinery for having been imported in violation of the implementing
rules and regulations on overcrowded industries concomitant with the power vested to the Collector of Customs under
Section 2312 of the Tariff and Customs Code.

 September 29, 1975, respondent corporation filed a petition with the respondent court (CFI of Manila Branch XXII), asking
for the annulment of petitioner’s order dated August 19, 1975 and September 8, 1975, and an order restraining petitioner
from enforcing them.
o It is the contention of respondent company that the questioned orders dated August 19 and September 8, 1975 of
petitioner were unjust and rendered with grave abuse of discretion. This was premised on respondent’s allegation
that it was not given notice of the MR of ASAC of petitioner’s order dated July 31, 1975.
 The respondent court CFI denied the Motion to Dismiss of petitioner and observed that after the civil case was
filed, Petitioner, on September 25, 1975 rendered a decision forfeiting the subject machineries, when in fact on September
22, 1975, on motion of counsel for herein respondent, the case was postponed supposedly for October 7, 1975. Thus, the
trial court said:
o "It should be obvious, however, that the decision that (sic) would remove the case from the jurisdiction of this
court cannot refer to any kind of decision. The decision rendered by the respondent with which he would now
want to defeat the jurisdiction of the Court was rendered before the termination of the hearing it is supposed to
decide, its existence as of the date it was supposed to have been rendered was not shown in the logbook in (sic)
the office of the respondent, and was released only to the petitioner several days after this petition was filed and
after respondent has received the order of the Court to answer . . . Certainly, this Court would not want its
jurisdiction to be defeated by a decision rendered under circumstances open to suspicion that would even subject
its very existence suspect."

Issue: WON CFIs have jurisdiction over seizure and forfeiture proceedings?

Ruling: NO.

 The mandate of the law is specific. Section 2312 of the Tariff and Customs Code provides:
o "SEC. 2312. Decision or Action by Collector in Protest And Seizure Cases. — When a protest in 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 the 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 if necessary."

Section 2313 of the same law states:

"SEC. 2313. Review by 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, give written notice to the Collector and one copy furnished to
the Commissioner of his desire to have the matter reviewed by 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." (Emphasis supplied)

o While Section 7 of R.A. 1125 (CTA law) declares, thus:

 "Jurisdiction — The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by
appeal, as herein provided — x          x          x
  "(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 forfeitures or other penalties
imposed in relation thereto; or other matters arising under the Customs Law or other law or part of the
law administered by the Bureau of Customs."

 Clearly then, the question of seizure and forfeiture is for the Collector of Customs to determine in the first instance and
then the Commissioner of Customs. This is a field where the doctrine of primary jurisdiction controls. Thereafter an appeal
may be taken to the Court of Tax Appeals.
 A court of first instance is thus devoid of competence to act on the matter.

 A long line of cases, which goes as far back as 1913 have adopted the doctrine that the Collector of Customs when sitting in
forfeiture proceedings, constitutes a tribunal upon which the law confers jurisdiction to hear and determine all questions
touching the forfeiture and further disposition of the subject matter.

 Enrile v. Vinuya: "the prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture cases vested in the
Collector of Customs precludes a court of first instance from assuming cognizance over such a matter."
 It went on to quote Justice Zaldivar in Papa v. Mago: "it is the settled rule, therefore, that the Bureau of Customs acquires
exclusive jurisdiction over imported goods, for the purposes of enforcement of the customs laws, from the moment the
goods are actually in its possession or control, even if no warrant of seizure or detention had previously been issued by the
Collector of Customs in connection with seizure and forfeiture proceedings."

Another Issue raised: “The respondent CFI erred in declaring that the respondent corporation was deprived of the right to due process
with the promulgation of August 19, 1975 order of the petitioner Collector of Customs in S.I. No. 14665, when the same order was
issued for the mere clarification of the petitioner’s July 31, 1975 order which came into being at the behest of the respondent
corporation.”

 Neither do We find merit to the allegation that petitioner ignored the due process aspect in the seizure proceedings which
appeared to have bothered the respondent court.
 A hearing was conducted and no less than six (6) witnesses were presented by the respondent company before a decision
dated September 25, 1975 was rendered. The fact that respondent company was not given a copy of the MR of the July 31,
1975 order of petitioner filed by ASAC, or even if a decision was supposedly promulgated prior to the termination of the
hearing, would not suffice to vest on the regular court jurisdiction over the case. The remedy of the respondent company is
to go to the Commissioner of Customs who supervises all the proceedings before the Collector.
 Even assuming arguendo that the civil court acquired jurisdiction, we are inclined to agree with petitioner that the decision
of September 25, 1975, has rendered the civil case moot and academic, and that the judge should have dismissed the
petition before him.
 At this juncture it is inconsequential to discuss the other errors raised by the petitioner. Since the respondent court did not
acquire jurisdiction over the petition of the respondent company it follows that the court has no authority to issue an
injunction against the petitioner.

 WHEREFORE, finding the petition meritorious, xxx The respondent corporation is hereby ordered to turn over to the
government, through the Collector of Customs, all proceeds which may now or hereafter he realized, from the sale of spiral
pipes produced and manufactured through the operation of subject machinery. Xxx SO ORDERED.

3. Chia vs. Acting Collector of Customs

G.R. No. L-43810.September 26, 1989
GRIÑO-AQUINO, J.:

FACTS:
 Acting on a verified report of a confidential informant that assorted electronic and electrical equipment and other articles
illegally imported into the Philippines by a syndicate engaged in unlawful "shipside (CHECK NOTES FOR DEFINITION)
activities were found inside "Tom's Electronics" and "Sony Merchandising (Philippines)" stores located at 690 and 691
Gonzalo Puyat corner Evangelista Street, Quiapo, Manila.
 a letter- request dated April 23, 1976 was addressed to the Collector of Customs by the Deputy Director of the Regional
Anti-Smuggling Action Center, Manila Bay Area (RASAC-MBA) for the issuance of warrants of seizure and detention.
 After evaluation, the Collector of Customs issued Warrants of Seizure and Detention Nos: 14925 and 14925-A, directing the
Anti-Smuggling Action Center to seize the goods mentioned therein, which read as follows:
  A RASAC team was formed and given a mission order to enforce the warrants, which it implemented with the assistance of:

o (1) the National Customs Police (augmenting the team with two members),

o (2) the Detective Bureau of the Manila Western Police District Headquarters (with three detectives), as well as,

o (3) Precinct 3 of the Manila Western Police District which exercised jurisdictional control over the place to be
raided.

 The intended raid was entered in the respective police blotters of the police detective bureaus. 

 On the strength of the warrants of seizure and detention, the raid was conducted in the afternoon of April 25,1976 at the
two stores of the petitioner.

 ASAC team leader Gener Sula, together with his agents recovered from the stores, assorted electronic equipment and other
articles, listed in Annex B of the petition, the customs duties on which allegedly had not been paid (p. 12, Rollo).

 They were turned over to the Customs Auction ana Cargo Disposal Unit of the Bureau of Customs.

  On May 17, 1976, in the afternoon, the hearing officer of Acting Collector of Customs Alfredo Francisco conducted a
hearing on the confiscation of the goods taken by Gener Sula and his agents. 

 Two days later, petitioner Tomas Chia filed this petition for certiorari, prohibition and mandamus to enjoin the Collector of
Customs and/or his agents from further proceeding with the forfeiture healing and prayed that the search warrants be
declared null and void, that the respondents be ordered to return the confiscated articles to the petitioner, and to pay
damages.

 Upon filing a Pl,000-bond, the Court issued a writ of preliminary injunction to stop the forfeiture proceedings. 

 The pivotal issue raised in the petition is whether the warrants of seizure and detention (or Seizure Identifications
Nos.14925 and 14925-A) are general warrants issued in violation of Rule 126, Section 3, of the Rules of Court which
provides that:
o A search warrant shall not issue but upon probable cause in connection with one specific offense to be determined
by the judge or justice of the peace after examination under oath or affirmation of the complainant and the
witnesses he may produce, and particularly describing the place to be searched and the persons or things to be
seized. No search warrant shall issue for more than one specific offense.

 On the other hand, the respondents contend that the goods seized from petitioner's stores by the RASAC-MBA team were
only those subject to customs duties and taxes but which were not supported by any evidence of payment of those duties
and taxes.

 Those goods are subject to forfeiture for having been imported in violation of Section 2536 of the Tariff and Customs Code,
as amended, in relation to Section 2530 (m)-l, which provides: 

o SEC. 2536. SEIZURES OF OTHER ARTICLES-The Commissioner of Customs and Collector of Customs and/or any
other customs officer, with the prior authorization in writing by the Commissioner, may demand evidence of
payment of duties and taxes on foreign articles openly offered for sale or kept in storage, and if no such evidence
can be produced, such articles may be seized and subjected to forfeiture proceedings: Provided, however, that
during such proceedings the person or entity from whom such articles have been seized shall be given the
opportunity to prove or show the source of such articles and the payment of duties and taxes thereon.

ISSUE: Whether or not the Bureau of Customs acquired jurisdiction over the case and over the goods?
RULING:
 Yes, the BOC acquired jurisdiction over the case and the goods.
 Not only may goods be seized without a search and seizure warrant under Section 2536 of the Customs and Tariff Code,
when they (the goods) are openly offered for sale or kept in storage in a store as in this case, but the fact is that petitioner's
 stores — Tom's Electronics" and "Sony Merchandising (Phil.)" — were searched upon warrants of search and detention
issued by the Collector of Customs, who, under the 1973 Constitution, was "a responsible officer authorized by law" to
issue them.
 Sections 2208 and 2209 of the Tariff and Customs Code provide when a search may be made without a warrant and when a
warrant is necessary: 

o SEC. 2208. RIGHT OF POLICE OFFICER TO ENTER INCLOSURE — For the more effective discharge of his official
duties, any person exercising the powers herein conferred, may at any time enter, pass through or search any land
or inclosure or any warehouse, store or other building, not being a dwelling house. 

o A warehouse, store or other building or inclosure used for the keeping or storage of articles does not become a
dwelling house within the meaning hereof merely by reason of the fact that a person employed as watchman lives
in the place, nor will the fact that his family stays there with him alter the case.

o SEC. 2209.- SEARCH OF A DWELLING HOUSE. — A dwelling house may be entered and searched only upon warrant
issued by a Judge of the court or such other responsible officers as may be authorized by law, upon sworn
application showing probable cause and particularly describing the place to be searched and the person or thing to
be seized. 

 The warrants issued by the Collector of Customs in this case were not general warrants, as erroneously alleged by the
petitioner for they identified the stores to be searched, described the articles to be seized and specified the provision of the
Tariff and Customs Code violated. 

 Upon effecting the seizure of the goods, the Bureau of Customs acquired exclusive jurisdiction not only over the case but
also over the goods seized for the purpose of enforcing the tariff and customs laws. 

 A party dissatisfied with the decision of the Collector may appeal to the Commissioner of Customs, whose decision is
appealable to the Court of Tax Appeals in the manner and within the period prescribed by law and regulations.

 The decision of the Court of Tax Appeals may be elevated to the Supreme Court for review (Secs. 2309-2316; 2401 & 2402
of the Tariff and Customs Code; Collector of Customs vs. Torres, et al., 45 SCRA 272). 

 Since petitioner did not exhaust his administrative remedies, his recourse to this Court is premature (Acting Collector of
Customs of the Port of Manila vs. Caluag, 20 SCRA 204; Laganapan vs. Asedillo, 154 SCRA 377; National Development Co. vs.
Hervilla, 151 SCRA 520). If for no other reason, the petition is dismissible on that score.

DISPOSITIVE PORTION: WHEREFORE, the petition is dismissed. The writ of preliminary injunction which we issued on May 28, 1976
is hereby lifted and set aside. Costs against petitioner. SO ORDERED.

NOTES:
Unlawful shipside activities- foreign goods are unloaded from foreign ships in transit through Philippine waters into motorized
bancas and landed on Philippine soil without passing through the Bureau of Customs, thereby evading payment of the
corresponding customs duties and taxes thereon)

4. COC vs CA, January 2006

These Petitions for Certiorari and Prohibition, with Prayers for a Writ of Preliminary Injunction and/or Temporary Restraining Order,
are the culmination of several court cases wherein several resolutions and decisions are sought to be annulled. Petitioner
Commissioner of Customs specifically assails the following:
A) Decision of the Regional Trial Court (RTC) of Manila dated February 18, 1991 in Civil Case No. 89-51451;
B) Order of the RTC of Kalookan dated May 28, 1991 in Special Civil Case No. C-234;
C) Resolution of the Court of Appeals (CA) dated March 6, 1992 in CA-G.R. SP No. 24669;
D) Resolution of the CA dated August 6, 1992 in CA-G.R. SP No. 28387;
E) Resolution of the CA dated November 10, 1992 in CA-G.R. SP No. 29317;
F) Resolution of the CA dated May 31, 1993 in CA-G.R. No. CV-32746; and
G) Decision of the CA dated July 19, 1993 in the consolidated petitions of CA-G.R. SP Nos. 24669, 28387 and 29317.
Petitioner also seeks to prohibit the CA and the RTC of Kalookan from further acting in CA-G.R. CV No. 32746 and Civil Case No. 234,
respectively.
FACTS:

 The whole controversy revolves around a vessel and its cargo.

 On January 7, 1989, the vessel M/V "Star Ace," coming from Singapore laden with cargo, entered the Port of San Fernando,
La Union (SFLU) for needed repairs.

o The vessel and the cargo had an appraised value, at that time, of more or less Two Hundred Million Pesos
(P200,000,000).

o When the Bureau of Customs later became suspicious that the vessel’s real purpose in docking was to smuggle its
cargo into the country, seizure proceedings were instituted under S.I. Nos. 02-89 and 03-89 and, subsequently, two
Warrants of Seizure and Detention were issued for the vessel and its cargo.1awph!l.net

 Respondent Cesar S. Urbino, Sr., does not own the vessel or any of its cargo but claimed a preferred maritime lien under a
Salvage Agreement dated June 8, 1989.

o To protect his claim, Urbino initially filed two motions in the seizure and detention cases: a Motion to Dismiss and
a Motion to Lift Warrant of Seizure and Detention.

 Apparently not content with his administrative remedies, Urbino sought relief with the regular courts by filing a case for
Prohibition, Mandamus and Damages before the RTC seeking to restrain the District Collector of Customs from interfering
with his salvage operation.

o The case was docketed as Civil Case No. 89-4267.

 On January 31, 1991 the RTC of SFLU dismissed the case for lack of jurisdiction because of the pending seizure and
detention cases.

 Urbino then elevated the matter to the CA.

 The Commissioner of Customs, in response, filed a Motion to Suspend Proceedings, advising the CA that it intends to
question the jurisdiction of the CA before this Court.

 The motion was denied on May 31, 1993.

 Hence, in this petition the Commissioner of Customs assails the Resolution "F" recited above and seeks to prohibit the CA
from continuing to hear the case.

 On January 9, 1990, while Civil Case No. 89-4267 was pending, Urbino filed another case for Certiorari and Mandamus
with the RTC of Manila, presided by Judge Arsenio M. Gonong, this time to enforce his maritime lien.

o Impleaded as defendants were the Commissioner of Customs, the District Collector of Customs, the owners of the
vessel and cargo, Vlason Enterprises, Singkong Trading Company, Banco do Brazil, Dusit International Company
Incorporated, Thai-Nam Enterprises Limited, Thai-United Trading Company Incorporated and Omega Sea Transport
Company, and the vessel M/V "Star Ace."

o This case was docketed as Civil Case No. 89-51451.

o The Office of the Solicitor General filed a Motion to Dismiss on the ground that a similar case was pending with the
RTC of SFLU.

o The Motion to Dismiss was granted but only insofar as the Commissioner of Customs and the District Collector
were concerned.
 o The RTC of Manila proceeded to hear the case against the other parties and received evidence  ex parte. The RTC of
Manila later rendered a decision on February 18, 1991 finding in favor of Urbino (assailed Decision "A" recited
above).

o Thereafter, on March 13, 1991, a writ of execution was issued by the RTC of Manila.

o Respondent Camangon was appointed as Special Sheriff to execute the decision.

o The COC, upon learning of the notice of levy and sale, filed with the RTC of Manila a motion to recall the writ, but
before it could be acted upon, Camangon had auctioned off the vessel and the cargo to Urbino for P120,000,000.

o The following day, Judge Gonong issued an order commanding Sheriff Camangon to cease and desist from
implementing the writ.

o Despite the order, Camangon issued a Certificate of Sale in favor of Urbino.

o A week later, Judge Gonong issued another order recalling the writ of execution.

o Both cease and desist and recall orders of Judge Gonong were elevated by Urbino to the CA on April 12, 1991
where it was docketed as CA-G.R. SP No. 24669.

o Later, the CA issued a Temporary Restraining Order (TRO) enjoining the RTC of Manila from enforcing its cease and
desist and recall orders. The TRO was eventually substituted by a writ of preliminary injunction.

o A motion to lift the injunction was filed by the COC but it was denied.

o Hence, in this petition the COC assails Resolution "C" recited above.

 On May 8, 1991, Urbino attempted to enforce the RTC of Manila’s decision and the Certificate of Sale against the Bureau
of Customs by filing a third case, a Petition for Certiorari, Prohibition and Mandamus with the RTC of Kaloocan. 

o The case was docketed as Civil Case No. 234.

 On May 28, 1991, the RTC of Kaloocan ordered the issuance of a writ of preliminary injunction to enjoin the Philippine Ports
Authority and the Bureau of Customs from interfering with the relocation of the vessel and its cargo by Urbino (assailed
Order "B" recited above).1awph!l.net

 Meanwhile, on June 5, 1992, Camangon filed his Sheriff’s Return with the Clerk of Court.

 On June 26, 1992, the Executive Judge for the RTC of Manila, Judge Bernardo P. Pardo, having been informed of the
circumstances of the sale, issued an order nullifying the report and all proceedings taken in connection therewith.

o With this order Urbino filed his fourth case with the CA on July 15, 1992, a Petition for Certiorari, Prohibition and
Mandamus against Judge Pardo.

o This became CA-G.R. SP No. 28387.

o The CA issued a Resolution on August 6, 1992 granting the TRO against the Executive Judge to enjoin the
implementation of his June 26, 1992 Order.

o Hence, in this petition the Commissioner of Customs assails Resolution "D" recited above.

 Going back to the seizure and detention proceedings, the decision of the District Collector of Customs was to forfeit the
vessel and cargo in favor of the Government.
  This decision was affirmed by the Commissioner of Customs.

 Three appeals were then filed with the Court of Tax Appeals (CTA) by different parties, excluding Urbino, who claimed an
interest in the vessel and cargo.

 These three cases were docketed as CTA Case No. 4492, CTA Case No. 4494 and CTA Case No. 4500.

 Urbino filed his own case, CTA Case No. 4497, but it was dismissed for want of capacity to sue.

 He, however, was allowed to intervene in CTA Case No. 4500.

 On October 5, 1992, the CTA issued an order authorizing the Commissioner of Customs to assign customs police and guards
around the vessel and to conduct an inventory of the cargo.

 In response, on November 3, 1992, Urbino filed a fifth Petition for Certiorari and Prohibition with the CA to assail the order
as well as the jurisdiction of the Presiding Judge and Associate Judges of the CTA in the three cases.

 That case was docketed as CA G.R. SP No. 29317. On November 10, 1992, the CA issued a Resolution reminding the parties
that the vessel is under the control of the appellate court in CA-G.R. SP No. 24669 (assailed Resolution "E" recited above).

 CA-G.R. SP Nos. 24669, 28387 and 29317 were later consolidated and the CA issued a joint Decision in nullifying and setting
aside: 1) the Order recalling the writ of execution by Judge Gonong of the the RTC of Manila; 2) the Order of Executive
Judge Pardo of the RTC of Manila nullifying the Sheriff’s Report and all proceedings connected therewith; and 3) the
October 19, 1993 Order of the CTA, on the ground of lack of jurisdiction. Hence, in these petitions, which have been
consolidated, the Commissioner of Customs assails Decision "G" recited above.1awph!l.net

 For purposes of deciding these petitions, the assailed Decisions and Resolutions will be divided into three groups:
1. The Resolution of the CA dated May 31, 1993 in CA-G.R. No. CV-32746 with the additional prayer to enjoin the CA from
deciding the said case.
2. The Order of the RTC of Kalookan dated May 28, 1991 in Special Civil Case No. C-234 with the additional prayer to enjoin
the RTC of Kalookan from proceeding with said case.
3. The Decision of the RTC of Manila dated February 18, 1991 in Civil Case No. 89-51451, the Resolutions of the CA dated
March 6, 1992, August 6, 1992, November 10, 1992 and the Decision of the CA dated July 19, 1993 in the consolidated
petitions CA-G.R. SP Nos. 24669, 28387 and 29317.

MAIN ISSUE: WON RTC Kalookan has jurisdiction over the case.

RULING: NO

 Second Group

o The Court now proceeds to consider the Order granting an injunction dated May 28, 1991 in Civil Case No. C-234
issued by the RTC of Kalookan. The Commissioner of Customs seeks its nullification and to prohibit the RTC of
Kalookan from further proceeding with the case.

 The RTC of Kalookan issued the Order against the Philippine Ports Authority and Bureau of Customs solely on the basis of
Urbino’s alleged ownership over the vessel by virtue of his certificate of sale.

 By this the RTC of Kalookan committed a serious and reversible error in interfering with the jurisdiction of customs
authorities and should have dismissed the petition outright.

 In Mison v. Natividad, this Court held that the exclusive jurisdiction of the Collector of Customs cannot be interfered with
by regular courts even upon allegations of ownership.

o To summarize the facts in that case, a warrant of seizure and detention was issued against therein plaintiff over a
number of vehicles found in his residence for violation of customs laws.
 o Plaintiff then filed a complaint before the RTC of Pampanga alleging that he is the registered owner of certain
vehicles which the Bureau of Customs are threatening to seize and praying that the latter be enjoined from doing
so.

o The RTC of Pampanga issued a TRO and eventually, thereafter, substituted it with a writ of preliminary injunction.

o This Court found that the proceedings conducted by the trial court were null and void as it had no jurisdiction over
the res subject of the warrant of seizure and detention, holding that: 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 said proceedings.

o 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 said trial court regular jurisdiction over the case.

o 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.

o Even the illegality of the warrant of seizure and detention cannot justify the trial court’s interference with the
Collector’s jurisdiction.

o In the first place, there is a distinction between the existence of the Collector’s power to issue it and the regularity
of the proceeding taken under such power.

o 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 x x x.

APPLICATION:

 The facts in this case are like those in that case.

 Urbino claimed to be the owner of the vessel and he sought to restrain the PPA and the Bureau of Customs from interfering
with his rights as owner. His remedy, therefore, was not with the RTC but with the CTA where the seizure and detention
cases are now pending and where he was already allowed to intervene.

 Moreover, this Court, on numerous occasions, cautioned judges in their issuance of temporary restraining orders and writs
of preliminary injunction against the Collector of Customs based on the principle enunciated in  Mison v. Natividad and has
issued Administrative Circular No. 7-99 to carry out this policy.

 This Court again reminds all concerned that the rule is clear: the Collector of Customs has exclusive jurisdiction over
seizure and forfeiture proceedings and trial courts are precluded from assuming cognizance over such matters even
through petitions for certiorari, prohibition or mandamus.

ISSUE: WON RTC Manila has jurisdiction over the res.

RULING: NO

 THIRD Group (See notes on preliminary discussions of the SC)

 The Court rules in favor of the Commissioner of Customs.

 First of all, the Court finds the decision of the RTC of Manila, in so far as it relates to the vessel M/V "Star Ace," to be void as
jurisdiction was never acquired over the vessel.
 In filing the case, Urbino had impleaded the vessel as a defendant to enforce his alleged maritime lien. This meant that he
brought an action in rem under the Code of Commerce under which the vessel may be attached and sold.

 However, the basic operative fact for the institution and perfection of proceedings in rem is the actual or constructive
possession of the res by the tribunal empowered by law to conduct the proceedings.

 This means that to acquire jurisdiction over the vessel, as a defendant, the trial court must have obtained either actual or
constructive possession over it. Neither was accomplished by the RTC of Manila.

 In his comment to the petition, Urbino plainly stated that "petitioner has actual physical custody not only of the goods
and/or cargo but the subject vessel, M/V Star Ace, as well."

 This is clearly an admission that the RTC of Manila did not have jurisdiction over the res.

 While Urbino contends that the Commissioner of Custom’s custody was illegal, such fact, even if true, does not deprive the
Commissioner of Customs of jurisdiction thereon. This is a question that ought to be resolved in the seizure and forfeiture
cases, which are now pending with the CTA, and not by the regular courts as a collateral matter to enforce his lien.

o By simply filing a case in rem against the vessel, despite its being in the custody of customs officials, Urbino has
circumvented the rule that regular trial courts are devoid of any competence to pass upon the validity or regularity
of seizure and forfeiture proceedings conducted in the Bureau of Customs, on his mere assertion that the
administrative proceedings were a nullity.

 On the other hand, the Bureau of Customs had acquired jurisdiction over the res ahead and to the exclusion of the RTC of
Manila.

 The forfeiture proceedings conducted by the Bureau of Customs are in the nature of proceedings in rem and jurisdiction
was obtained from the moment the vessel entered the SFLU port. Moreover, there is no question that forfeiture
proceedings were instituted and the vessel was seized even before the filing of the RTC of Manila case.

 The Court is aware that Urbino seeks to enforce a maritime lien and, because of its nature, it is equivalent to an attachment
from the time of its existence.

 Nevertheless, despite his lien’s constructive attachment, Urbino still cannot claim an advantage as his lien only came about
after the warrant of seizure and detention was issued and implemented. The Salvage Agreement, upon which Urbino based
his lien, was entered into on June 8, 1989.

 The warrants of seizure and detention, on the other hand, were issued on January 19 and 20, 1989. And to remove further
doubts that the forfeiture case takes precedence over the RTC of Manila case, it should be noted that forfeiture retroacts
to the date of the commission of the offense, in this case the day the vessel entered the country.

o A maritime lien, in contrast, relates back to the period when it first attached, in this case the earliest retroactive
date can only be the date of the Salvage Agreement. Thus, when the vessel and its cargo are ordered forfeited, the
effect will retroact to the moment the vessel entered Philippine waters.

 Accordingly, the RTC of Manila decision never attained finality as to the defendant vessel, inasmuch as no jurisdiction was
acquired over it, and the decision cannot be binding and the writ of execution issued in connection therewith is null and
void.

 Moreover, even assuming that execution can be made against the vessel and its cargo, as goods and chattels to satisfy the
liabilities of the other defendants who have an interest therein, the RTC of Manila may not execute its decision against
them while, as found by this Court, these are under the proper and lawful custody of the Bureau of Customs.

o This is especially true when, in case of finality of the order of forfeiture, the execution cannot anymore cover the
vessel and cargo as ownership of the Government will retroact to the date of entry of the vessel into Philippine
waters.
Re: Jurisdiction of CTA

 As regards the jurisdiction of the CTA, the CA was clearly in error when it issued an injunction against it from deciding the
forfeiture case on the basis that it interfered with the subject of ownership over the vessel which was, according to the CA,
beyond the jurisdiction of the CTA.

 Firstly, the execution of the Decision against the vessel and cargo, as aforesaid, was a nullity and therefore the sale of the
vessel was invalid.

o Without a valid certificate of sale, there can be no claim of ownership which Urbino can present against the
Government.

 Secondly, as previously stated, allegations of ownership neither divest the Collector of Customs of such jurisdiction nor
confer upon the trial court jurisdiction over the case. Ownership of goods or the legality of its acquisition can be raised as
defenses in a seizure proceeding.

 The actions of the Collectors of Customs are appealable to the Commissioner of Customs, whose decision, in turn, is subject
to the exclusive appellate jurisdiction of the CTA.

 Clearly, issues of ownership over goods in the custody of custom officials are within the power of the CTA to determine.

1awSO ORDERED.

NOTES:

 First Group

o The COC seeks to nullify the Resolution of the CA dated May 31, 1993 denying the Motion to Suspend Proceedings
and to prohibit the CA from further proceeding in CA-G.R. No. CV-32746 for lack of jurisdiction. This issue can be
easily disposed of as it appears that the petition has become moot and academic, with the CA having terminated
CA-G.R. No. CV-32746 by rendering its Decision on May 13, 2002 upholding the dismissal of the case by the RTC of
SFLU for lack of jurisdiction, a finding that sustains the position of the Commissioner of Customs. This decision
became final and entry of judgment was made on June 14, 2002.

 Third Group

 The Decision of the RTC of Manila dated February 18, 1991 has the following dispositive portion:
WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer and evidence adduced, both testimonial and
documentary, the Court is convinced, that, indeed, defendants/respondents are liable to plaintiff/petitioner in the amount
prayed for in the petition for which [it] renders judgment as follows:
1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, Relief Captain of the vessel and Omega Sea Transport
Company, Inc., represented by Frank Cadacio is ordered to refrain from alienating or transfer[r]ing the vessel M/V Star Ace
to any third parties;
2. Singko Trading Company to pay the following:
a. Taxes due the Government;
b. Salvage fees on the vessel in the amount of $1,000,000.00 based on the Lloyd’s Standard Form of Salvage
Agreement;
c. Preservation, securing and guarding fees on the vessel in the amount of $225,000.00;
d. Salaries of the crew from August 16, 1989 to December, in the amount of $43,000.00 and unpaid salaries from
January 1990 up to the present;
e. Attorney’s fees in the amount of P656,000.00;
3. Vlazon Enterprises to pay plaintiff in the amount of P3,000,000.00 for damages;
4. Banco do Brazil to pay plaintiff in the amount of $300,000.00 in damages; and finally,
5. Costs of suit.
SO ORDERED.
  On the other hand, the CA Resolutions are similar orders for the issuance of a writ of preliminary injunction to enjoin Judge
Gonong and Judge Pardo from enforcing their recall and nullification orders and the CTA from exercising jurisdiction over
the case, to preserve the status quo pending resolution of the three petitions.
 Finally, the Decision of the CA dated July 19, 1993 disposed of all three petitions in favor of Urbino, and has the following
dispositive portion:
ACCORDINGLY, in view of the foregoing disquisitions, all the three (3) consolidated petitions for certiorari are hereby
GRANTED.

THE assailed Order of respondent Judge Arsenio Gonong of the Regional Trial Court of Manila, Branch 8, dated, April 5,
1991, in the first assailed petition for certiorari (CA-G.R. SP No. 24669); the assailed Order of Judge Bernardo Pardo,
Executive Judge of the Regional Trial Court of Manila, Branch 8, dated July 6, 1992, in the second petition for certiorari ( CA-
G.R. SP No. 28387); and Finally, the assailed order or Resolution en banc of the respondent Court of Tax Appeals[,] Judges
Ernesto Acosta, Ramon de Veyra and Manuel Gruba, under date of October 5, 1992, in the third petition for certiorari ( CA-
G.R. SP No. 29317) are all hereby NULLIFIED and SET ASIDE thereby giving way to the entire decision dated February 18,
1991 of the respondent Regional Trial Court of Manila, Branch 8, in Civil Case No. 89-51451 which
remains valid, final and executory, if not yet wholly executed.

THE writ of preliminary injunction heretofore issued by this Court on March 6, 1992 and reiterated on July 22, 1992 and this
date against the named respondents specified in the dispositive portion of the judgment of the respondent Regional Trial
Court of Manila, Branch 8, in the first petition for certiorari, which remains valid, existing and enforceable, is hereby MADE
PERMANENT without prejudice (1) to the petitioner’s remaining unpaid obligations to herein party-intervenor in
accordance with the Compromise Agreement or in connection with the decision of the respondent lower court in CA-G.R.
SP No. 24669 and (2) to the government, in relation to the forthcoming decision of the respondent Court of Tax Appeals on
the amount of taxes, charges, assessments or obligations that are due, as totally secured and fully guaranteed payment by
petitioner’s bond, subject to relevant rulings of the Department of Finance and other prevailing laws and jurisprudence.
We make no pronouncement as to costs. SO ORDERED.

5. Asian Terminals, Inc. vs. Bautista-Ricafort, G.R. No. 166901, October 27, 2006 (Courts cannot interfere)

Ponente: Callejo, Sr., J.

Nature of the case: This case is a petition for review on certiorari of a decision of CA, which affirmed the order of RTC for replevin
and damages.

FACTS:
 Section 1 of RA No. 8506 (which took effect on February 22, 1998), provides that:
o “It shall be unlawful for any person to import, cause the importation of, register, cause the registration of, use or
operate any vehicle with its steering wheel right hand side thereof in any highway, street or road, whether private
or public, or at the national or local xxx.”

 Noel Tabuelog, Ernesto de Jesus, Norma Pondevida, Renato Claros, Ernesto M. Chua, Cecilia T. Saulog, Jenelita S. Napárate,
Rodolfo F. Mago, and Amalia C. Edamura are duly-licensed importers of vehicles

 Sometime in April and May 1998, they imported 72 secondhand right-hand drive buses from Japan
 When the shipment arrived at the South Harbor, Port of Manila, the District Collector of Customs impounded the vehicles
and ordered them stored at the warehouse of the Asian Terminals, Inc. (ATI), a customs-bonded warehouse under the
custody of the Aviation and Cargo Regional Division
 Conformably with Section 2607 of the Tariff and Customs Code, the District Collector of Customs issued Warrants of
Distraint against the shipment and set the sale at public auction on September 10, 1998

 In the meantime, on October 28, 1998, the Secretary of Justice rendered Opinion No. 127, S. of 1998, stating that:
o Shipments of right hand wheel vehicles loaded and exported at the port of origin before February 22, 1998 were
not covered by RA No. 8506 unless the same were loaded and imported after said date.

 On November 11, 1998, the importers, through their Attorney-in-Fact Samuel N. Rosete, filed a complaint with the RTC of
Parañaque City, against the Secretary of Finance, Customs Commissioner, and the Chief Executive of the Societe Generale
de Surillee, for replevin with prayer for the issuance of a writ of preliminary and mandatory injunction and damages
Plaintiffs’ Arguments, among others:
 That in accordance with the opinion of the Assistant Director of the Customs Legal Service and the Office of the Legal Affairs
of the Department of Finance, the importation of right-hand drive vehicles are not prohibited under RA No. 8506 provided
that conversion kits are included in the imported vehicles
 As such, there was no factual and legal basis for the seizure of the shipment and the storage thereof at the ATI.

Complaint
 Contained the following prayer: xxx
 A. PRIOR TO HEARING:
1. A Writ of Replevin be issued upon the posting of a bond of P12,000,000 (double the value of the vehicles) executed in
favor of defendants to answer for damages, and approved by this Court, directing the Sheriff or his deputies to
forthwith take custody of the said vehicles which are in the possession and custody of the defendants or their agents at
the Bureau of Customs Holding Area, located at South Harbor, Port Area, Manila City, and retain it in its custody;

B. AFTER HEARING:
1. To pay the sum of P6,000,000 if the Writ of Replevin cannot be implemented successfully plus interest until fully paid;
2. To pay compensatory damages of not less than P840,000 for unrealized profits, moral damages of not less than
P1,000,000, exemplary damages of not less than P250,000, litigation and necessary expenses of not less than P500,000,
attorney’s fees on a contingent basis, not less than P1,000,000 actual damages if and when plaintiffs are legally obliged
to pay storage fees;
3. Such other reliefs just and equitable under the premises.

RTC Ruling:
 Granted the application for a writ of replevin on a bond of P12,000,000

 However, George Jeroes, the Chief of Customs Police and four (4) customs policemen prevented the Sheriff and the
policemen assisting him from taking custody of the vehicles
 He claimed that the District Collector of Customs had jurisdiction over the vehicles.

RTC’s Order on Motion of Plaintiffs

 Directed the PNP Director to assist the Sheriff in implementing the writ it issued and to arrest anyone who would obstruct
the implementation of its order
 The Sheriff served a copy of the Order on ATI and succeeded in taking custody of the vehicles and signed a receipt therefor.
 The District Collector of Customs agreed to transfer the custody of the vehicles to the RTC, on the condition that the
required taxes, dues, and other charges be paid
 The Customs Commissioner approved the decision of the District Collector

 Hence, the plaintiffs paid the requisite taxes, dues, and other charges amounting to P7,528,635
 They were able to take possession of the vehicles over the objections of ATI

Defendants’
 On November 27, 1998, the defendants, through the Office of the Solicitor General, filed an Omnibus Motion – seeking the
reconsideration of the RTC Order granting plaintiffs’ plea for a writ of replevin
 It likewise prayed that the writ of replevin issued by the court be quashed on the ground that the RTC has no jurisdiction
over the vehicles subject of seizure and detention before the Bureau of Customs

OSG
 Declared that the Bureau of Customs, which had custody of the vehicles through ATI “had exclusive jurisdiction over said
vehicles and on the issues of the seizure and detention thereof.”
 The ATI filed a motion for the court to allow the vehicles to remain in its warehouse.

ATI filed a Third-Party Claim

 ATI filed a Third-Party Claim over the shipment, alleging that it had a lien over the vehicles for accumulated and unpaid
storage and arrastre charges, and wharfage dues amounting to P13,036,480.94
 It prayed that the vehicles be returned and remain with it until payment of said dues.
 In 1998, ATI filed a Motion seeking to require plaintiffs (third-party defendants) to post a bond to insure payment of its
claims against the plaintiffs, or to order the Sheriff to return possession of the vehicles to it.
Plaintiffs’ Opposition to ATI’s Third-Party Claim
 Claimed that the latter failed to allege in its Affidavit of Third-Party Claim any factual and legal basis for its alleged lien and
to present documentary evidence to prove the same
 ATI has no cause of action against them for wharfage/arrastre services because there was no contract to cover said charges

 Before the court could resolve the motions, plaintiffs filed a “Motion/Notice to Dismiss/Withdraw Complaint” against the
officials of the Bureau of Customs and Department of Finance, on the ground that said defendants had agreed to the
implementation of the writ of replevin issued by the court on condition that plaintiffs pay the taxes, dues, and other
charges on the importation amounting to P7,528,635 to the government and that plaintiffs had paid the said amount

 The OSG opposed the motion.

 The instant Complaint states that the subject importation is legal.
 This is a matter which cannot be admitted by defendants simply because the law and the Opinion of the Secretary of Justice
are crystal clear.
 Likewise, all the erroneous statements of law and legal conclusions stated therein cannot be hypothetically admitted.
3. Hence, it is imperative that the Omnibus Motion be resolved first prior to any other incident for the same delves on the
very merits of the instant case.
4. The release of the imported right-hand drive buses by the Bureau of Customs cannot make the said importation legal;
otherwise, said act will constitute a violation of R.A. No. 8506 which declares illegal the act of importation of this type
of vehicle.
5. The Bureau of Customs was constrained to release the subject vehicles on November 27, 1998 because of this Court’s
Order dated November 23, 1998

ATI filed a Motion for Intervention and for Admission of its Complaint-in-Intervention
 Alleged that it had a lien on the vehicles to the extent of P13,820,150.93, representing accumulated storage and arrastre
charges and wharfage dues
 Prayed that its Complaint-in-Intervention be admitted, and that after due proceedings judgment be rendered in its favor

Plaintiffs’ Opposition on the Motion of ATI

 Based on the following grounds:
1) ATI failed to allege and present any contract covering the deposit/storage of the vehicles in its warehouse;
2) ATI has no legal interest over the matter in litigation; and
3) The adjudication of the rights of the parties may be delayed or prejudiced while those of ATI may be protected in a
separate proceeding.

 OSG opposed the motion of the plaintiffs and the notice to dismiss/withdraw the complaint, praying that the court resolve
its pending motions

RTC’s Order:
 Dismissed the complaint on the following grounds:
1) Plaintiffs themselves filed a Motion to Dismiss against Secretary of Finance and Commissioner of Customs.
2) This Court has no jurisdiction over the case. “The Court of Tax Appeals exercises exclusive appellate jurisdiction to
review the ruling of the Commissioner in seizure and confiscation cases and that power is to the exclusion of the Court
of First Instance which may not interfere with the Commissioner’s decisions xxx”

OSG filed MR
 That the court resolve the issue as to who is entitled to the possession of the vehicles as required by Sections 9 and 10, Rule
60 of the Rules of Court
 For its part, ATI filed a motion for clarification of the order, alleging that the court failed to resolve its motion
 It also pleaded for the court to admit its Complaint-in-Intervention and its motion seeking to require plaintiffs to post a
bond to insure payment of its claims for wharfage/arrastre charges

 RTC dismissed the Complaint-in-Intervention

 ATI filed MR, which the court denied

 While it recognized the arguments of ATI, the court held that its rights could be fully protected in a separate proceeding.
 It declared that the subject buses were under custodia legis by virtue of the writ of replevin it had issued.
  However, due to the dismissal of the plaintiffs’ complaint, the subject buses have to be returned to the person who was in
custody prior to the implementation of the writ.
 MR filed by ATI and the opposition filed by plaintiffs were likewise denied
 Hence, ATI filed a petition under Rule 65 before the CA

CA’s Ruling
 Dismissed the petition for lack of merit.
 Ruled that the RTC had no jurisdiction over the complaint filed by respondents
 Under the Customs and Tarriff Code, the Collector of Customs sitting in seizure and forfeiture proceedings had the
exclusive jurisdiction to hear and determine all questions relating on the seizure and forfeiture of dutiable goods.
 The RTC had no review powers over such proceedings, it is the Court of Tax Appeals under RA No. 1125
 Since the RTC had no jurisdiction over the main case, it was also bereft of authority to hear the third-party claim or the
complaint-in-intervention filed by ATI
 Citing Saw v. Court of Appeals, the appellate court ruled that intervention was not an independent proceeding but merely
an ancillary and supplemental one, which, in the nature of things, is subordinate to the main proceeding unless otherwise
provided for by statute or by the Rules of Court.
o The general rule is that an intervention is limited to the field of litigation open to the original parties. The RTC had
dismissed the main action; thus, there was no more principal proceeding in which petitioner ATI may intervene. 

 ATI filed MR, which CA denied.

 Hence, this petition.

Petitioner’s Arguments in SC:

 Maintained that the dismissal of the original complaint filed by respondents cannot, in any way, result in the denial of its
complaint-in-intervention
 That its consent as intervenor is necessary for the dismissal of the main action, and that the original parties cannot “isolate”
it and agree, among themselves, to dismiss the complaint
 That, even if the original complaint was properly dismissed, its complaint-in-intervention survives the original complaint and
may proceed as long as the existence of an actual controversy had been established by the pleadings
o It insists that the intervention has to be heard regardless of the disposition of the principal action
 That even on the assumption that the lower court has no jurisdiction over the principal action, the third-party complaint
may still be maintained
 That the appellate court erred in relying on Barangay Matictic v. Elbinias because in that case, the third-party-complaint
was filed after the decision in the main case had already become final, whereas, in the present case, the third-party claim
and third-party complaint before the RTC dismissed respondents’ action
 That the Metropolitan case is thus applicable, and points out that the Court therein ruled that the complaint-in-intervention
should be preserved regardless of the outcome of the original complaint

Respondents’:
 Asserted that the CA decision is in accord with the Rules of Court

ISSUE: Whether the RTC had jurisdiction to take cognizance of the petition for replevin by respondents herein.

RULING:
 No.
 We rule that the trial court acted in accordance with the Tariff and Customs Code (TCC) and the rulings of this Court when
it issued the assailed Orders.

 Section 602 of the TCC provides that the Bureau of Customs shall exercise exclusive jurisdiction over seized and forfeited
cars.
 It is tasked to enforce tariff, and supervise and control customs law and all other laws, rules and regulations relating to the
tariff and customs administration; and
o To supervise and control all import and export cargoes, loaded or stored in piers, terminal facilities, including
container yards and freight stations, for the protection of government revenues.

 Under Section 2301 of the TCC, the Collector of Customs is empowered to make a seizure of cargoes and issue a receipt for
the detention thereof:
 o Section 2301. Warrant for Detention of Property-Cash Bond. – Upon making any seizure, the Collector shall issue
a warrant for the detention of the property; and if the owner or importer desires to secure the release of the
property for legitimate use, the Collector shall, with the approval of the Commissioner of Customs, surrender it
upon the filing of a cash bond, in an amount to be fixed by him, conditioned upon the payment of the appraised
value of the article and/or any fine, expenses and costs which may be adjudged in the case: Provided, That such
importation shall not be released under any bond when there is a prima facie evidence of fraud in the importation
of the article: Provided further, That articles the importation of which is prohibited by law shall not be released
under any circumstance whomsoever, Provided, finally, That nothing in this section shall be construed as relieving
the owner or importer from any criminal liability which may arise from any violation of law committed in
connection with the importation of the article. (Emphasis supplied)

 Section 2530 of the TCC enumerates the properties subject of seizure and forfeiture:
o Section 2530. Property Subject of Forfeiture Under Tariff and Customs Laws.— Any vehicle, vessel or aircraft,
cargo, article and objects shall, under the following conditions be subject to forfeiture:
xxx

(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 entered to be used as instruments in the importation or exportation of the former.

 As the Court ruled in Jao v. Court of Appeals, 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.
 It is the Collector of Customs, sitting in seizure and forfeiture proceedings, who 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 or mandamus.
 The Court further explained:
o 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.
o 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

Application
 Thus, the RTC had no jurisdiction to take cognizance of the petition for replevin by respondents herein, issue the writ of
replevin and order its enforcement.
 The Collector of Customs had already seized the vehicles and set the sale thereof at public auction.

 The RTC should have dismissed the petition for replevin at the outset
 By granting the plea of respondents (plaintiffs) for the seizure of the vehicles and the transfer of custody to the court, the
RTC acted without jurisdiction over the action and the vehicles subject matter thereof.

 It bears stressing that the forfeiture of seized goods in the Bureau of Customs is a proceeding against the goods and not
against the owner.
 It is in the nature of a proceeding in rem, i.e., directed against the res or imported articles and entails a determination of the
legality of their importation.
 In this proceeding, it is, in legal contemplation, the property itself which commits the violation and is treated as the
offender, without reference whatsoever to the character or conduct of the owner.

 In fine, the initial orders of the RTC granting the issuance of the writ of replevin and its implementation are void
  While it is true that the District Collector of Customs allowed the release of the vehicles and the transfer thereof to the
custody of the RTC upon the payment by the private respondents of the required taxes, duties and charges, he did not
thereby lose jurisdiction over the vehicles
 Neither did it vest jurisdiction on the RTC to take cognizance of and assume jurisdiction over the petition for replevin.
 As very well explained by the OSG, the District Collector of Customs agreed to transfer the vehicles to the custody of the
RTC since the latter had ordered the arrest of those who would obstruct the implementation of the writ.
 The District Collector of Customs had yet to resolve whether to order the vehicles forfeited in favor of the government, in
light of the opinion of the Secretary of Justice that, under RA No. 8506, the importation was illegal.

 Hence, the RTC cannot be faulted for dismissing petitioner’s complaint-in-intervention.

 Considering that it had no jurisdiction over respondents’ action and over the shipment subject of the complaint, all
proceedings before it would be void
 The RTC had no jurisdiction to take cognizance of the complaint-in-intervention and act thereon except to dismiss the same.
 Moreover, considering that intervention is merely ancillary and supplemental to the existing litigation and never an
independent action, the dismissal of the principal action necessarily results in the dismissal of the complaint-in-intervention
 Likewise, a court which has no jurisdiction over the principal action has no jurisdiction over a complaint-in-intervention
 Intervention presupposes the pendency of a suit in a court of competent jurisdiction
 Jurisdiction of intervention is governed by jurisdiction of the main action

Disposition: Petition denied.

6. Pilipinas Shell v Republic

Facts:
 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.
 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
 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, and had to be cancelled.
 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
 Petitioner assailed the action of the DOF.
o It asserted that there was no legal and factual basis to invalidate the TCCs
o 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
o Petitioner likewise pointed out discrepancies between the amount claimed by respondent and those it (petitioner)
actually paid in satisfaction of its liabilities.
 Despite petitioner's objections, Commissioner Nelson A. Tan of the BoC demanded from it the amount of ₱209,129,141.
 Thus, petitioner filed a formal protest on December 23, 1999
 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)
 Meanwhile, on April 3, 2002, respondent filed a complaint for collection in the Regional Trial Court (RTC) of Manila, Branch
19.
o It alleged that the TCCs petitioner purchased from Filipino Way Industries amounting to ₱10,088,912 were
spurious and were used by petitioner to pay customs duties and taxes on its importations in 1997.
o Thus, in view of the invalidation, petitioner still owed respondent the amount of ₱10,088,912 in unpaid customs
duties and taxes.
 Petitioner immediately moved to dismiss the collection case.
 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.
 On June 7, 2002, the RTC denied petitioner's motion and instead ordered it to file an answer
 On June 14, 2002, petitioner filed an answer ex abundanti cautela
 Petitioner questioned the jurisdiction of the RTC.
 o 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.
o According to Yabes, the RTC acquires jurisdiction over a collection case only if an assessment made by the
Commissioner of Internal Revenue has become final and incontestable.
 On June 21, 2002, the RTC issued a notice of pre-trial.
o Petitioner moved for the reconsideration of the June 7, 2002 order but it was denied in an order dated June 28,
2002
 Aggrieved, petitioner filed a petition for certiorari in the CA, but was denied
o According to the CA, the BoC's assessment had already become final and conclusive.
o 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).Thus, the jurisdiction over the subject matter was well within the
jurisdiction of the RTC, not the CTA.
 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. 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).
Issue 1: WON the filing of the collection case was a proper remedy?

Ruling:
 YES
 Assessments inform taxpayers of their tax liabilities.
 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.
 Liquidation is the final computation and ascertainment by the Collector of Customs of the duties due on imported
merchandise based 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.
 A liquidation is considered to have been made when the entry is officially stamped "liquidated."
 Petitioner claims that it paid the duties due on its importations.
 Section 1603 of the old TCCP stated:
o Finality of Liquidation.
o 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.
 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. There was fraud
b. There is a pending protest or
c. The liquidation of import entry was merely tentative.

Application:
 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 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 and because of the cancellation of the TCCs, respondent had the right to file a collection
case.
 Section 1204 of the TCCP provides:
o Liability of Importer for Duties. ―
o Unless relieved by laws or regulations, the liability for duties, taxes, fees and other charges attaching on
importation constitutes a personal 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.
o It also constitutes a lien upon the articles imported which may be enforced while such articles are in the custody or
subject to the control of the government.
 Under this provision, import duties constitute a personal debt of the importer that must be paid in full.
 The importer’s 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 (respondent’s) 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

Issue 2: WON the RTC has jurisdiction over the collection case?

Ruling:
 YES
 Respondent filed its complaint for collection on April 3, 2002. The governing law at that time was RA43 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
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

Application
 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:

o Section 19. Jurisdiction in Civil Cases. ― Regional Trial Courts shall exercise exclusive original jurisdiction:

(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

7. Chua vs Villanueva G.R. No. 157591 December 16, 2005

Petitioners – Chua Jr and Carillo
Respondents – Comm. Villanueva etc

Facts:
 23 September 2001, the vessel M/V Criston carrying the shipment consisting of 35,000 bags of rice from the Port of Manila
docked at the Port of Tabaco, Albay. The rice was shipped to petitioners Antonio Chua, Jr. and Carlos Carillo by their
supplier in Manila and to be paid upon delivery thereof to Tabaco, Albay. Upon the arrival of the said vessel, Acting Port
Collector Rosalino L. Maravillo immediately conducted the usual Verification Order and/or Hold Order based on the
documents submitted.
 Commissioner of Customs Titus Villanueva, who had been earlier informed by the NCR-Central Luzon Philippine Coast
Guard that M/V Criston was never given any departure clearance by the said office, issued a verbal instruction to then
District Collector Atty. Marcial F. Lopez to issue immediately a WSD against M/V Criston and its cargo. Since it was a Sunday,
District Collector Lopez instructed his Deputy District Collector Atty. Winston B. Florin to issue a WSD against the vessel and
its rice cargo.
 To protect their property rights and interests against the alleged illegality of the actions of the respondents Bureau of
Customs officers, petitioners filed a Petition for Prohibition with Prayer for the Issuance of Preliminary Injunction and TRO
 before the RTC of Tabaco, Albay, Branch 15, questioning the authority exercised by the Customs officials in issuing an invalid
WSD with grave abuse of discretion amounting to lack of jurisdiction.
 After finding the petition to be sufficient in form and substance and considering that the matter involved was of extreme
urgency as the applicants would suffer grave injustice, Judge Arnulfo B. Cabredo of the RTC issued a 72-hour TRO
conditioned upon the filing by the petitioners of a Bond in the amount of ₱31,450,000.00 representing the value of the
goods.
 02 October 2001, then District Collector Atty. Marcial F. Lopez filed a motion to lift the TRO which motion was denied for
lack of merit.
 Thereafter, Atty. Lopez filed a Motion to Dismiss the Petition on the ground of lack of jurisdiction. On 22 October 2001, the
RTC denied the Motion to Dismiss on the ground that the WSD issued does not state any violation of Section 2530 of the
Tariff and Customs Code of the Philippines, as amended, and that the trial court is not aware of any seizure or forfeiture
proceedings against the vessel and the 35,000 bags of rice, being conducted by the Bureau of Customs.

 MR dated 07 November 2001 was filed by the District Collector. The motion was given a favorable ruling by the trial court
owing to the fact that the Bureau of Customs of the Port of Legazpi had finally exercised its jurisdiction over the subject
matter and therefore it had no other alternative but to dismiss the Petition. The trial court held:
o In the light, however, of the ruling of the High Court in Narciso O. Jao, et al. vs. Court of Appeals, et al., and,
Narciso O. Jao, et al. vs. The Honorable Ombudsman Conrado M. Vasquez, et al., that:
 xxx 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." this Court has no
alternative but to dismiss this case.

 Petitioners filed a MR which was also denied by the trial court

 The petitioners next sought recourse before the CA by way of an Appeal under Rule 41 of the ROC. The CA dismissed
 Petitioners filed a MR which the CA denied for lack of merit.
 Hence, this Petition for Review on Certiorari under Rule 45 of the ROC.

Issue: WON the respondents-appellees Bureau of Customs validly acquired jurisdiction over the subject res by virtue of a Warrant of
Seizure and Detention No. 06-2001 considering that the same expressly state that there was no violation committed under the Tariff
and Customs Code of the Philippines, as amended, nor the same was amended to cure the apparent fatal defect?

Ruling: YES.
Petitioners’ contention
 In support of their argument, petitioners cite Section 2535 of the Tariff and Customs Code of the Philippines which reads:
o Section 2535. Burden of Proof in Seizure and/or Forfeiture. – In all proceedings taken for the seizure and/or
forfeiture of any vessel, vehicle, aircraft, beast or articles under the provisions of the tariff and customs laws, the
burden of proof shall lie upon the claimant: Provided, That probable cause shall first be shown for the institution
of such proceedings and that seizure and/or forfeiture was made under the circumstances and in the manner
described in the preceding sections of this Code. (Emphasis supplied.)
 Petitioners further cite Customs Memorandum Order No. 8-84 which provides:
o 1. All applications for issuance of a warrant of seizure and detention shall be accompanied with a report of seizure
properly accomplished and signed by the official concerned and in prescribed form (BC Form 100). The report of
seizure shall state the specific grounds or conditions upon which the application is based and the provision of the
customs law or regulations violated. x x x
o 2. In cases of seizures/apprehension for violation of the customs laws or regulations made prior to issuance of a
warrant, by elements of the NCP, the CIID or other authorized law enforcement agency, the application for a
warrant shall, in addition to the report of seizure, contain a brief statement of the fact and circumstances
surrounding the apprehension or seizure and the basis thereof. . .
 Petitioners insist that the above requirements were not observed.

 In resolving to deny the appeal, the CA relied heavily on the case of Rallos v. Gako, Jr.:
o 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. 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 for
certiorari, prohibition or mandamus. . . .
 o 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.
o 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." [Citing Jao versus Court of Appeals, 49 SCRA 35].
o The Supreme Court went on further to state that:
 . . . Administrative Circular No. 07-99 (Entitled "RE EXERCISE OF UTMOST CAUTION, PRUDENCE, AND
JUDICIOUSNESS IN ISSUANCE OF TEMPORARY RESTRAINING ORDERS AND WRITS OF PRELIMINARY
INJUNCTION," dated June 25, 1999), cautioning lower court judges in their issuance of temporary
restraining orders and writs of preliminary injunctions, emphasized this lack of jurisdiction of trial courts.
It stressed, inter alia, the rule enunciated in Mison v. Natividad: that the Collector of Customs has
exclusive jurisdiction over seizure and forfeiture proceedings.

 The petition is devoid of merit.

 Jurisdiction over the instant case is well-settled by law and jurisprudence.
 The Tariff and Customs Code of the Philippines under Section 602 provides:
o SECTION 602. Functions of the Bureau. - The general duties, powers and jurisdiction of the Bureau shall include: . . .
(g) Exercise exclusive original jurisdiction over seizure and forfeiture cases under the tariff and customs laws.
 The most recent case of R.V. Marzan v. Court of Appeals, citing Jao v. Court of Appeals, laid down the following
jurisprudence:
o In Jao v. Court of Appeals, we held that the RTC is 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 the said proceedings even if the seizure was illegal. Such act does not deprive the Bureau of Customs of
jurisdiction thereon. Thus, we held:
 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. 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 or mandamus.
 It is likewise well-settled that the provisions of the Tariff and Customs Code and that of Republic Act No.
1125, 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.
 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."
 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).
 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."

 From the foregoing jurisprudential declarations and from the clear and unambiguous language of Section 602 of the Tariff
and Customs Code of the Philippines, there leaves no room for doubt as to the RTC’s lack of jurisdiction over the  res which
has already been made the subject of seizure and forfeiture proceedings.
 WHEREFORE, the instant Petition is denied for lack of merit. The decision of the Court of Appeals dated 26 December 2002
is Affirmed. Costs against the petitioners. SO ORDERED.

8. Philippine Ports Authority vs. Fuentes

G.R. No. 91259. April 16, 1991.
GRIÑO-AQUINO, J.:

(CHECK NOTES FOR LAWS GOVERNING APPELLATE JURISDICTION)

FACTS:
 On July 11, 1974, P.D. No. 505 was promulgated, creating the Philippine Ports Authority (PPA).

 The Decree was later amended by P.D. No. 857 dated December 23, 1975 (otherwise known as the Revised PPA Charter).

o Under the Decree, the PPA is entrusted with the function of carrying out an integrated program for the planning,
development, financing and operation of ports and port districts throughout the country.

o The powers, duties and jurisdiction of the Bureau of Customs concerning arrastre operations were transferred to
and vested in the petitioner PPA (Philippine Ports Authority vs. Mendoza, 138 SCRA 496, 503).

o PPA was authorized to "regulate the rates or charges for port services or port related services so that, taking one
year with another, such rates or charges furnish adequate working capital and produce an adequate return on the
assets of the Authority" (PPA) (Section 20[b] and "to levy dues, rates, or charges for the use of the premises, works,
appliances, facilities, or for services provided by or belonging to the Authority or any other organization concerned
with port operations" (Section 6[b] [IX]).

o Furthermore, the PPA was authorized to impose a ten percent (10%) charge on the monthly gross earnings of the
operators of arrastre and stevedoring services (also known as Government Share), (Pernito Arrastre Services, Inc.
vs. Mendoza, 146 SCRA 430.)

 In its Board Resolution No. 7 dated April 21, 1976 embodying the "Memorandum Agreement," PPA laid down the terms and
conditions under TEFASCO was allowed to construct specialized port and terminal facilities for incoming and outgoing
foreign and domestic vessels and authorized to render port services, particularly, arrastre and stevedoring services on
incoming and outgoing cargoes loaded on or unloaded from foreign and domestic vessels. (p. 112, Rollo.)

 On August 30, 1988, TEFASCO filed in the trial court a complaint for "declaration of nullity, prohibition, mandamus and
damages with writ of preliminary injunction" against PPA, asking the court to restrain PPA: (a) from imposing and/or
collecting any form of income sharing whether under the guise of a government share or privilege fee or by such other
name or designation whether based on gross receipts from TEFASCO's arrastre/stevedoring or other port-related services
or operations; (b) from collecting from TEFASCO, PPAs share of ten percent (10%) or any other percentage from the cargo-
handling revenue based on gross income; . . . (h) from collecting 100% wharfage, harbor, and berthing dues on cargoes and
vessels availing of TEFASCO's port terminal facilities. (Annex E, pp. 6-7, Rollo.)

 On October 27, 1988, PPA filed an Answer to the Complaint (Annex F).

 The parties exchanged numerous other pleadings and memoranda.

  In an order dated December 14, 1988 (Annex C), the trial court granted TEFASCO's application for a writ of preliminary
injunction. 
 Upon the posting of a P1 million bond by TEFASCO, respondent trial court issued a writ of preliminary injunction against
PPA on January 10, 1989. 
 PPA filed a Motion for Reconsideration and for Dissolution of the Writ of Preliminary Injunction with Offer of Counterbond
(Annex O).
o It was opposed by TEFASCO
 In an order dated June 21, 1989 (Annex B), Judge Fuentes denied the motion. 
 On September 11, 1989, PPA filed an "Urgent Motion to Dismiss" the case on the ground among others that the trial court
has no jurisdiction over the subject matter of the action which is essentially an action for injunction to restrain the
collection of dues, fees, and other assessments in the nature of taxes or charges under the Customs law
 TEFASCO opposed the Motion to Dismiss, alleging mainly that it is the trial court, not the Court of Tax Appeals, which has
jurisdiction over its causes of action 
o In an order dated October 5, 1989, Judge Fuentes denied the Motion to Dismiss for lack of merit. 
 On December 15, 1989, PPA filed this petition for  certiorari and prohibition with prayer for the issuance of a writ of
preliminary injunction and/or restraining order.
 On December 21, 1989, the First Division of this Court, without giving due course to the petition, required TEFASCO to
comment (not to file a motion to dismiss) and issued a temporary restraining order, effective immediately and until further
orders from this Court, enjoining the trial court from enforcing and/or implementing the Orders dated December 14, 1988,
June 21, 1989, and October 5, 1989, and the writ of preliminary injunction dated January 10, 1989.

 PPA anchors its petition on Sections 39 and 29 of PD 857, in conjunction with Sections 7, 11 and 18 of Title VII, Book II of
Republic Act 1125 to support its theory that wharfage dues, berthing fees, and the so-called "government share"
are customs charges that fall under the exclusive appellate jurisdiction of the Court of Tax Appeals.

ISSUE: Whether or not the wharfage dues, berthing fees, and the government share are customs charges that fall under the
exclusive appellate jurisdiction of the Court of Tax Appeals?
RULING:

 No, the CTA does not have exclusive appellate jurisdiction over the wharfage dues, berthing fees, and the government
share.

 Since jurisdiction is conferred by law (Commissioner of Internal Revenue vs. Villa, 22 SCRA 4); and under P.D. 857, the
collection of port charges ceased to be an administrative function of the Bureau of Customs and was transferred to the
PPA;

 neither P.D. 857 nor R.A. 1125 contains a provision for an appeal to the Court of Tax Appeals from decisions of the PPA;
and further considering that the Court of Tax Appeals is a specialized court of limited jurisdiction, no appellate jurisdiction
over PPA decisions may be vested in the Court of Tax Appeals by mere implication.

o This issue was set at rest by the decision of this Court in Victorias Milling Co., Inc. vs. Court of Tax Appeals (CTA
Case No. 3466, Victorias Milling Co., Inc. vs. PPA), G.R. No. 66381, February 29, 1984, where we ruled:

o There is no law or statute which expressly vests jurisdiction upon the Court of Tax Appeals to review appeals from
decisions or rulings of the Philippine Ports Authority . . . . The jurisdiction of a court to take cognizance of a case,
we believe, should be clearly conferred and should not be deemed to exist on mere implication, specifically with
respect to the Court of Tax Appeals which is a specialized court of limited jurisdiction. (Emphasis supplied.)

DISPOSITIVE PORTION: WHEREFORE, the petition for certiorari and prohibition is DENIED for lack of merit, with costs against the
petitioners. The temporary restraining order dated December 21, 1989 is lifted and set aside. SO ORDERED.

NOTES:

Sections 39 and 29 of P.D. 857 (PD 505 created PPA) creating the PPA provide as follows:
 Sec. 39. Bureau of Customs. — The Tariff and Customs Code is hereby modified or amended to the extent that all the
powers, duties and jurisdiction of the Bureau of Customs concerning the following matters shall be transferred to and be
vested in the Authority:

a) All dues, fees and rates collectible on vessels and cargoes under Title VII but excluding Part VII of the Code, AS
AMENDED BY P.D. 34, REGARDLESS OF THE PORT OR PLACE OF CALL OF THE VESSEL, WHETHER ON GOVERNMENT
OR PRIVATE PORT (As amended by Executive Order No. 513);

b) The general supervision, control and regulation of all matters and affairs that pertain to the operation of and the
issuance of permits or license to construct ports, port facilities, warehouses, and other facilities, within port
districts;

c) All such other powers, duties and jurisdictions vested in the Bureau of Customs, pertaining to every matter
concerning port facilities, port, operations or port works.

Sec. 29. Existing Regulations. — Anything to the contrary notwithstanding and until new rules and regulations are
promulgated by the Authority under Sections 26 and 27 of this Decree, the rules, regulations or orders made under the
Customs Code or any other law of the Philippines relating to the matters covered by Sections 26, 27 and 28 shall continue to
apply as if they were made under said sections and any reference to a customs official or any other officials under any law
of the Philippines shall be deemed a reference to an equivalent official of the Authority. (Emphasis supplied.)

Sections 7, 11 and 18 of Republic Act 1125 creating the Court of Tax Appeals provide;

Sec. 7. Jurisdiction. — The Court of Tax Appeals shall exercise appellate jurisdiction to review by appeal, as herein provided:

(2) Decisions of the Commissioner of Customs in cases involving the liability for customs duties, fees or other
money charges, seizure, detention or release of property affected; fines, forfeiture or other penalties imposed in
relation thereto; or other matters arising under the Customs Law or other law or part of law administered by the
Bureau of Customs; and

Sec. 11. Who may appeal; effect of appeal — Any person, association or corporation adversely affected by a decision or
ruling of the Collector of Internal Revenue (now Commissioner), the Collector of Customs (now Commissioner) or any
provincial or City Board of Assessment Appeals may file an Appeal in the Court of Tax Appeals within thirty (30) days after
the receipt of such decision or ruling.

Collector of Customs (now Commissioner) cf. Rufino & Sons vs. Court of Tax Appeals (100 Phil. 850), shall suspend the
payment, levy, distraint and/or sale of any property of the taxpayer for the satisfaction of his tax liability as provided by
existing law;  Provided, however, that when in the opinion of the Court the collection by the Bureau of Internal Revenue may
jeopardize the interest of the Government and/or the taxpayer, the Court at any stage of the proceeding may suspend the
said collection and require the taxpayer either to deposit the amount claimed or to file a surety bond for not more than
double the amount with the Court.

Sec. 18. Appeal to the Supreme Court. — No judicial proceeding against the Government involving matters arising under the
National Internal Revenue Code, the Customs Law, or the Assessments Law shall be maintained except as herein provided,
until and unless an appeal has been previously filed with the Court of Tax Appeals and disposed of in accordance with the
provisions of this Act.

Any party adversely affected by any ruling, order or decision of the Court of Tax Appeals may appeal therefrom to the
Supreme Court . . . (Emphasis supplied.

9. SBMA vs Rodriguez, April, 2010

FACTS:

 On 29 September 2001, a cargo shipment described as "agricultural product" and valued at US$6,000 arrived at the Port of
Subic, Subic Bay Freeport Zone.
 On the basis of its declared value, the shipment was assessed customs duties and taxes totaling ₱57,101 which were paid by
respondent WIRA, the shipment’s consignee.

 On 23 October 2001, Raval Manalas, Acting COO III of the Bureau of Customs, Port of Subic (BOC Subic Port), issued a
Memorandum addressed to the BOC Subic Port District Collector, stating that upon examination, the subject shipment was
found to contain rice.

 The Memorandum further stated as follows: that the importer claimed there was a misshipment since it also had a pending
order for rice; that the "warehousing entry" was amended to reflect the change in description from "agricultural product"
to rice; that the shipment, as a warehoused cargo inside the freeport zone, was duty and tax free, and was not
recommended for any imposition of penalty and surcharge; that the consumption entry was changed to reflect a shipment
of rice; and that the consumption entry, together with supporting documents belatedly received by the importer, was
submitted to the bank although not yet filed with the BOC.

 On 24 October 2001, Hilda Bacani (respondents’ authorized representative) wrote BOC Subic Port District Collector Billy
Bibit, claiming that she was the representative of Metro Star Rice Mill (Metro Star), the importer of the subject cargo.

o She stated that there was a "misshipment" of cargo which actually contained rice, and that Metro Star is an
authorized importer of rice as provided in the permits issued by the National Food Authority (NFA).

o Bacani requested that the "misshipment" be upgraded from "agricultural product" to a shipment of rice, and at the
same time manifested willingness to pay the appropriate duties and taxes.

 The following day, or on 25 October 2001, the BOC issued Hold Order No. 14/C1/2001 1025-101, directing BOC Subic Port
officers to (1) hold the delivery of the shipment, and (2) to cause its transfer to the security warehouse.

 On 26 October 2001, respondent WIRA, as the consignee of the shipment, paid the amount of ₱259,874 to the BOC
representing additional duties and taxes for the upgraded shipment.

 On 30 October 2001, BOC Commissioner Titus Villanueva issued a directive stating as follows:

Returned to the District Collector of Customs, Port of Subic, the within (sic) Import Entry No. C 2550-01 covering the
shipment of 2,000 bags Thai Rice 25% broken consigned to WIRA INT’L TRADING CORPORATION (METRO STAR RICE MILL)
ex MV Resolution V0139 with NFA Import Permit IP SN 000032 and IP SN 000033 both dated on 13 September 2001 duly
issued by the Administrator, National Food Authority.

Accordingly, the same may be released subject to payment of duties and taxes based on an upgraded value as provided for
by the National Food Authority at $153.00/MT and compliance with all existing rules and regulations.

Further, ensure cancellation of NFA Import Permit IP SN 000032 and IP SN 000033, to prevent the same from being
recycled.

 In accordance with the shipment upgrade, respondent WIRA paid a further amount of ₱206,212 as customs duties and
taxes.

 On 4 December 2001, Fertony G. Marcelo, Officer-in-Charge of the Cash Division of BOC Subic Port issued a
certification/letter addressed to Mr. Augusto Canlas, General Manager of the Seaport Department, stating thus:

This is to certify that the undersigned Collecting Officer validate[d] a revenue of Php 523,187.00 from above-mentioned
importation covered by O.R. Numbers 8083840 dated October 23, 2001, 8084068 dated October 26, 2001 and 8165208
dated November 28, 2001, respectively. And a Gate Pass was issued on December 3, 2001 with signature of Mr. Percito V.
Lozada, Chief Assessment in behalf of the District Collector Billy C. Bibit.

 Despite the above certification/letter, petitioner SBMA, through Seaport Department General Manager Augusto Canlas,
refused to allow the release of the rice shipment.
 Hence, respondents filed with the RTC of Olongapo City, a complaint for Injunction and Damages with prayer for issuance of
Writ of Preliminary Prohibitory and Mandatory Injunction and/or Temporary Restraining Order against petitioner SBMA and
Augusto L. Canlas.

 The succeeding events were summarized by the trial court and reproduced by the Court of Appeals, as follows:

1. On June 11, 2002, a complaint for Injunction and Damages with prayer for issuance of Writ of Preliminary Prohibitory and
Mandatory Injunction and/or Temporary Restraining Order was filed by the plaintiff/petitioners Mernilo E. Rodriguez, doing
business under the name and style "Metro Star Rice Mill," represented by Attorney-in-fact Hilda M. Bacani, and WIRA
International Trading, Inc. likewise represented by Hilda M. Bacani as authorized representative, against Subic Bay
Metropolitan Authority (SBMA) and Augusto L. Canlas, in his personal and official capacity as General Manager of the
Seaport Department of said SBMA. The complaint was docketed as Civil Case No. 261-0-[2002].

2. On June 13, 2002, an Order was issued by the Executive Judge of the Regional Trial Court of Olongapo City, Branch 72,
where plaintiffs/petitioners’ application for injunctive relief was granted. Said order restrained the defendants/respondents
for seventy-two (72) hours, from interfering with plaintiffs/petitioners’ right to enter the premises of the CCA compound
located within the Bureau of Customs territory and authority within the Subic Bay Freeport Zone (SBFZ), Olongapo City, and
to withdraw and release from said CCA warehouse the rice importation of plaintiffs and to take and possess the said
imported rice consisting of 2,000 bags; and from interfering in any manner whatsoever with plaintiffs/petitioners’ rights and
possession over the aforesaid imported rice. On the same day also, June 13, 2002, the raffle of the case was set on June 18,
2002 at 8:30 in the morning.

3. Copy of the complaint with summons together with aforesaid Temporary Restraining Order (TRO) was served by Sheriff
Leopoldo Rabanes and Leandro Madarang of the Office of the Clerk of Court of the Regional Trial Court, Olongapo City,
upon the defendants/respondents on the same day, June 13, 2002, at around 3:40 in the afternoon as shown by the
Sheriff's return of service (Exh. "A-3" and Exh. "B-1") typed and found in the same pleadings.

4. The following day, on June 14, 2002, the same Sheriffs went back to defendants/respondents' office to determine
whether or not the TRO issued by Branch 72 and served by them was followed. They were however, met by
defendants/respondents Attys. Abella and Katalbas, in the office of defendant/respondent Canlas, who after much
discussion, refused to honor the TRO issued by Branch 72 alleging among other[s], that said Order was illegal and therefore,
will not be followed by the defendants/respondents.

5. Unsuccessful in their efforts, the Sheriffs of this Court prepared and filed their report dated June 17, 2002 outlining
therein what transpired on June 14, 2002 and the circumstances surrounding the refusal by defendants/respondents to
honor the TRO issued by Branch 72-RTC, Olongapo City (Exh. "C"). On the same day also, June 17, 2002,
plaintiffs/petitioners-movants filed in the instant case a verified indirect contempt charge alleging therein that because of
the defiance exhibited by the defendants/respondents[,] specifically Augusto L. Canlas, Attys. Francisco A. Abella, Jr. and
Rizal V. Katalbas. Jr.[,] in not honoring the court's TRO, they prayed that said defendants/respondents, after due notice and
hearing, be declared and adjudged guilty of indirect contempt committed against the court for having directly failed and
refused to comply with the TRO dated June 13, 2002, and that they be punished with imprisonment and/or fine in
accordance with Rule 71 of the 1997 Rules of Civil Procedure.

6. On June 18, 2002, the case was raffled to Branch 74 of herein court.

7. On June 24, 2002, a comment and/or opposition to the verified indirect contempt charge was filed by the
defendants/respondents alleging therein that they cannot be cited for contempt of court because they had legal basis to
refuse to honor the TRO.1avvphi1

8. Trial was conducted by the court in the indirect contempt charge on July 12, 2002 as per the court’s Order of even date.
Plaintiffs/petitioners presented Sheriff Leopoldo Rabanes who testified on direct examination. During the August 20, 2002
hearing, Sheriff Rabanes was cross-examined. Thereafter, the testimony of his co-Sheriff Leandro Madarang was stipulated
upon the parties considering that his testimony would only corroborate in all principal points the testimony of Sheriff
Rabanes.

9. On that same hearing also[,] plaintiffs/petitioners formally offered their evidence and rested. Defendants/respondents[,]
however, in the meantime had earlier filed a motion on August 1, 2002[,] asking leave of court to file a motion to dismiss
 with attached "Motion to Dismiss" and in the said August 20, 2002 hearing, defendants/respondents further manifested
that they were adopting their legal arguments marshalled in the said motion to dismiss insofar as the indirect contempt
charge was concerned.

10. Thereafter, on August 29, 2002, defendants/respondents filed a manifestation with formal offer of evidence in the
indirect contempt case essentially alleging that it is the Bureau of Customs that has jurisdiction over this case in view of a
Warrant of Seizure and Detention case filed against the plaintiff/petitioners and denominated as Seizure Identification No.
200[2]-10. Therefore, since it is the Bureau of Customs that has jurisdiction, the indirect contempt case has no legal leg to
stand on and as such, defendants/respondents had the right to refuse to comply with the subject TRO in this case.

11. With the said formal offer of exhibits filed by the defendants/respondents, the indirect contempt case was considered
submitted for decision by this court.

 In addition to the foregoing, on 19 July 2002, petitioner SBMA and Augusto Canlas filed their Answer to the Complaint for
Injunction and Damages with Counterclaim.

 On 1 August 2002, petitioner SBMA, Augusto Canlas, Francisco A. Abella, Jr. and Rizal V. Katalbas, Jr. filed a Consolidated
Motion to Dismiss which sought the dismissal of (1) Civil Case No. 261-0-2002 (Complaint for Injunction and Damages) and
(2) Civil Case No. 262-0-2002 (Petition for Indirect Contempt), alleging the existence of a Warrant of Seizure and Detention,
dated 22 May 2002, issued against the subject rice shipment.

 On 21 November 2002, the RTC issued an Order on the indirect contempt case, stating thus:

X x x all of the defendants/respondents guilty of indirect contempt of court. Atty. Francisco A. Abella, Jr. is sentenced to
suffer the penalty of imprisonment of ten (10) days and fined the amount of ₱10,000.00 Atty. Rizal V. Katalbas, Jr. is
sentenced to pay a fine of ₱10,000.00. Augusto L. Canlas is sentenced to pay a fine of ₱5,000.00. Subsidiary imprisonment
in case of insolvency for all.

 On 27 November 2002, the RTC issued another Order considering the pending incidents in the injunction case. The RTC held
that there should be prior determination by the BOC on whether the 2,000 bags of imported rice were smuggled

 The Court of Appeals’ Ruling

 On 20 June 2003, the CA rendered a Decision dismissing the petition for lack of merit and affirming the Orders issued by the
RTC.

 Hence, this appeal.

ISSUE: WON BOC has exclusive jurisdiction over seizure and forfeiture proceedings.

RULING: YES

 As a rule, actions for injunction and damages lie within the jurisdiction of the RTC pursuant to Section 19 of Batas Pambansa
Blg. 129 (BP 129), otherwise known as the "Judiciary Reorganization Act of 1980," as amended by Republic Act (RA) No.
7691.

 An action for injunction is a suit which has for its purpose the enjoinment of the defendant, perpetually or for a particular
time, from the commission or continuance of a specific act, or his compulsion to continue performance of a particular act.

o It has an independent existence, and is distinct from the ancillary remedy of preliminary injunction which cannot
exist except only as a part or an incident of an independent action or proceeding. In an action for injunction, the
auxiliary remedy of preliminary injunction, prohibitory or mandatory, may issue.

 Until the propriety of granting an injunction, temporary or perpetual, is determined, the court (i.e., the RTC in this case)
may issue a temporary restraining order.
  A TRO is an interlocutory order or writ issued by the court as a restraint on the defendant until the propriety of granting an
injunction can be determined, thus going no further in its operation than to preserve the status quo until that
determination. A TRO is not intended to operate as an injunction pendente lite, and should not in effect determine the
issues involved before the parties can have their day in court.

 Petitioner alleges that the RTC of Olongapo City has no jurisdiction over the action for injunction and damages filed by
respondents on 11 June 2002 as said action is within the exclusive original jurisdiction of the BOC pursuant to Section 602
of Republic Act No. 1937, otherwise known as the "Tariff and Customs Code of the Philippines," as amended. Section 602
provides, thus:

Sec. 602. Functions of the Bureau.- The general duties, powers and jurisdiction of the bureau shall include:

xxx

g. Exercise exclusive original jurisdiction over seizure and forfeiture cases under the tariff and customs laws.

 Petitioner contends that the imported 2,000 bags of rice were in the actual physical control and possession of the BOC as
early as 25 October 2001, by virtue of the BOC Subic Port Hold Order of even date, and of the BOC Warrant of Seizure and
Detention dated 22 May 2002. As such, the BOC had acquired exclusive original jurisdiction over the subject shipment, to
the exclusion of the RTC.

 We agree with petitioner.

 It is well settled that 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 at naught.

 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.

o Regional trial courts are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture
proceedings conducted by the BOC and to enjoin or otherwise interfere with these proceedings. Regional trial
courts are precluded from assuming cognizance over such matters even through petitions for certiorari, prohibition
or mandamus.

 Verily, the rule is that from the moment imported goods are actually in the possession or control of the Customs
authorities, even if no warrant for seizure or detention had previously been issued by the Collector of Customs in
connection with the seizure and forfeiture proceedings, the BOC acquires exclusive jurisdiction over such imported goods
for the purpose of enforcing the customs laws, subject to appeal to the Court of Tax Appeals whose decisions are
appealable to this Court.

o As we have clarified in Commissioner of Customs v. Makasiar,  the rule that RTCs 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.

APPLICATION:

 Based on the records of this case, the BOC Subic Port issued a Hold Order against the subject rice shipment on 25 October
2001.

 However, on 30 October 2001, BOC Commissioner Titus Villanueva issued a directive to the BOC District Collector stating
that the shipment "may be released subject to payment of duties and taxes based on an upgraded value x x x and
compliance with all existing rules and regulations."

 Accordingly, respondents made additional payments of customs duties and taxes for the upgraded shipment.
 Consequently, on 4 December 2001, the Officer-in-Charge of the BOC Subic Port Cash Division issued a certification/letter
addressed to Augusto Canlas, the General Manager of the Subic Seaport Department, stating that respondents have already
paid the customs taxes and duties due on the shipment, and "a Gate Pass was issued on December 3, 2001 with signature
of Mr. Percito V. Lozada, Chief Assessment (sic) in behalf of the District Collector Billy C. Bibit."

 Thus, the Hold Order previously issued by the BOC had been superseded, and made ineffective, by the succeeding BOC
issuances.1avvphi1

 However, BOC Subic Port District Collector Felipe A. Bartolome subsequently issued a Warrant of Seizure and Detention
dated 22 May 2002 against the subject rice shipment. The warrant was issued upon recommendation made by Atty.
Baltazar Morales of the Customs Intelligence and Investigation Service (CIIS) on 29 April 2002. With the issuance of the
warrant of seizure and detention, exclusive jurisdiction over the subject shipment was regained by the BOC.

 We note that the appellate court found suspicious the existence of the warrant of seizure and detention at the time of filing
of the injunction and damages case with the RTC by respondents.

o The CA pointed out that petitioner did not mention the existence of the warrant in its Answer to the Complaint for
Injunction and Damages, filed on 19 July 2002, and only mentioned the warrant in its Consolidated Motion to
Dismiss [the Complaint for Injunction and Damages, and the Petition for Indirect Contempt], filed on 1 August
2002.

 We do not agree with the appellate court.

 Petitioner's apparent neglect to mention the warrant of seizure and detention in its Answer is insufficient to cast doubt on
the existence of said warrant.

 Respondents filed a case for indirect contempt against Augusto L. Canlas, Atty. Francisco A. Abella, Jr., and Atty. Rizal V.
Katalbas, Jr. for allegedly defying the TRO issued by the RTC in connection with the complaint for injunction and damages
previously filed by respondents.

 Contempt constitutes disobedience to the court by setting up an opposition to its authority, justice and dignity.

 It signifies not only a willful disregard or disobedience of the court's orders but such conduct as tends to bring the authority
of the court and the administration of law into disrepute or in some manner to impede the due administration of justice.

 There are two kinds of contempt punishable by law: direct contempt and indirect contempt.

 Direct contempt is committed when a person is guilty of misbehavior in the presence of or so near a court as to obstruct or
interrupt the proceedings before the same, including disrespect toward the court, offensive personalities toward others, or
refusal to be sworn or to answer as a witness, or to subscribe an affidavit or deposition when lawfully required to do so.

 Indirect contempt or constructive contempt is that which is committed out of the presence of the court.

Section 3 of Rule 71 of the Revised Rules of Civil Procedure includes, among the grounds for filing a case for indirect
contempt, the following:

Section 3. Indirect contempt to be punished after charge and hearing. –

After charge in writing has been filed, and an opportunity given to the accused to be heard by himself or counsel, a person
guilty of any of the following acts may be punished for contempt:

xxx

(b) Disobedience of or resistance to a lawful writ, process, order, judgment or command of a court, or injunction granted by
a court or judge, x x x
 (c) Any abuse of or any unlawful interference with the process or proceedings of a court not constituting direct contempt
under Section 1 of this rule;

(d) Any improper conduct tending, directly or indirectly, to impede, obstruct or degrade the administration of justice;

xxx

APPLICATION:

 When the TRO issued by the RTC was served upon the SBMA officers on 13 June 2002, there was already an existing
warrant of seizure and detention (dated 22 May 2002) issued by the BOC against the subject rice shipment.

 Thus, as far as the SBMA officers were concerned, exclusive jurisdiction over the subject shipment remained with the BOC,
and the RTC had no jurisdiction over cases involving said shipment.

 Consequently, the SBMA officers refused to comply with the TRO issued by the RTC.

 Considering the foregoing circumstances, we believe that the SBMA officers may be considered to have acted in good faith
when they refused to follow the TRO issued by the RTC.

 The SBMA officers' refusal to follow the court order was not contumacious but due to the honest belief that jurisdiction
over the subject shipment remained with the BOC because of the existing warrant of seizure and detention against said
shipment.

 Accordingly, these SBMA officers should not be held accountable for their acts which were done in good faith and not
without legal basis. Thus, we hold that the RTC Order dated 21 November 2002 which found the SBMA officers guilty of
indirect contempt for not complying with the RTC's TRO should be invalidated.

 Finally, the RTC stated in its Order dated 27 November 2002 that based on the records, "there is a pending case with the
Bureau of Customs District XIII, Port of Subic, Olongapo City, identified and docketed as Seizure Identification No. 2002-
10 and involving the same 2,000 bags of imported rice that is also the subject matter of the case herein. The existence and
pendency of said case before the Bureau of Customs have in fact been admitted by the parties."

 The RTC then proceeded to order the suspension of court proceedings, and directed the BOC Subic Port Chief of the Law
Division and Deputy Collector for Administration, Atty. Titus Sangil, to resolve the seizure case and submit to the RTC its
resolution within fifteen (15) days from receipt of the court order. We quote the dispositive portion of the RTC Order dated
27 November 2002, to wit:

WHEREFORE, the Bureau of Customs, Customs District XIII, Port of Subic, Olongapo City through Atty. Titus A. Sangil, Chief,
Law Division and Deputy Collector for Administration is hereby directed to resolve Seizure Identification Case No. 2002-10
and submit to the court its resolution therewith, within fifteen (15) days from receipt of this order. Meantime, the
proceedings in this case are suspended until the court is in receipt of the resolution of the Bureau of Customs.

 We find the issuance of the RTC Order dated 27 November 2002 improper.

 The pendency of the BOC seizure proceedings which was made known to the RTC through petitioner's consolidated motion
to dismiss should have prompted said court to dismiss the case before it.

 As previously discussed, the BOC has exclusive original jurisdiction over seizure cases under Section 602 of the Tariff and
Customs Code.

 The rule that the RTC must defer to the exclusive original jurisdiction of the BOC in cases involving seizure and forfeiture of
goods is absolute.

 Thus, the RTC had no jurisdiction to issue its Order dated 27 November 2002.
WHEREFORE, we GRANT the petition. We REVERSE the Court of Appeals’ Decision dated 20 June 2003 and Resolution dated 8
October 2003 in CA-G.R. SP No. 74989. We declare VOID the Regional Trial Court Orders dated 21 November 2002 and 27 November
2002. SO ORDERED.

Cases on Smuggling

1. Rodriguez vs. Court of Appeals, G.R. No. 115218, September 18, 1995

Ponente: Puno, J.

Nature of the case: This case is a petition to review the decision and resolution of CA.

Petitioners: Angel O. Rodriguez, Eulogio O. Rodriguez, Jose O. Rodriguez, and Tomas Ngo
Respondents: CA and People of the Philippines

FACTS:
 Petitioners Angel O. Rodriguez, Eulogio O. Rodriguez, Jose O. Rodriguez and Tomas Ngo, together with Manuel S. Pena
(Pena) and Alfredo Fiesta (Fiesta) were charged with a violation of Section 3602 in relation to Section 3601 of the Tariff
and Customs Code of the Philippines
o Accused Pena died before the information was filed in court while accused Fiesta was at large.
o Only Tomas Ngo and the brothers Angel, Eulogio and Jose Rodriguez appeared and were tried before the trial
court.

As established by the Prosecution:

 On September 9, 1983, the vessel S/S Neptune Agate arrived at the Manila International Port from Hongkong carrying,
among others:
o One 40-foot container van, containing 29,000 kilos consisting of 44,885,015 yards of 100% cotton-dyed fabric
o The fabric had a home consumption value of U.S. $93,809.68 and a dutiable value of P1,032,047.10 and was
consigned to Philippine Inter-Fashion, Inc. (located at 5th Floor, Vernida I Condominium, Amorsolo St., Legaspi
Village, Makati, Metro Manila) – a domestic corporation engaged in the manufacture of garments for export

 Meanwhile, one Ernesto M. Ereno (Ereno), Import-Export Manager of the EME Customs Brokerage, Inc., filed with the
Bureau of Customs Special Permit to Transfer No. 1703 with Serial No. 150387 seeking to transfer the said container van
from the Manila International Container Port to Customs Bonded Warehouse No. 725 of the Philippine Inter-fashion, Inc.
at Bagong Bayan, Dasmarinas, Cavite
 The permit appeared to have been approved and signed by the proper Customs authorities on the basis of which a gate
pass was issued by the Customs wharfinger for the release of said container

 At 5pm of September 12, 1983, the container was loaded on a truck and in accordance with Customs rules, escorted by
Customs guard accused Fiesta, until its receipt at the Customs Bonded Warehouse at Dasmariñas, Cavite
 Once outside the Customs zone, the truck did not proceed to Cavite but went to Quezon City to the White Plains
Subdivision (White Plains)
o The truck entered the said subdivision towards the direction of Interior 56 Queensville Compound (residence of
accused Manuel Pena)
 The vehicle was maneuvering inside when it hit the perimeter wall at the other end of the subdivision, causing it to stop.
 Forthwith, Manuel Pena informed his son-in-law, Eulogio Rodriguez (who lived in the same compound) to remove the
cargo from the stalled vehicle and transfer the same to their compound.
 Eulogio acceded to this request and finished transferring the cargo after midnight

 The following morning, September 13, 1983, Eulogio called his brothers, Angel and Jose Rodriguez, to help him transport
the textile from White Plains to Parañaque, Metro Manila
o First delivery: They came over and were able to deliver some 80 rolls of the textile to No. 25 9th Street, United
Parañaque Subdivision (residence of their co-petitioner Tomas Ngo)
o Second delivery: They made another delivery in the afternoon of the same day.
  The next day, September 14, 1983, at around 1:30 P.M., Jose and Angel were on their way to make a third delivery when
they were intercepted by agents of the Customs Intelligence and Investigation Division

DISCOVERY of the FRAUDULENT ACTS

 Earlier, Colonel Guillermo Parayno, Jr., then Chief of the Customs Intelligence and Investigation Division, noticed that the
container van consigned to the Philippine Inter-Fashion, Inc., was missing from the container yard
 On inquiry, the President of the said company denied ordering any shipment from abroad and claimed, that they were not
expecting any such cargo
 Immediately, Colonel Parayno formed teams to trace the movement of the container and finally located it at the White
Plains Subdivision in Quezon City
 One team of agents was on its way to the said subdivision when their attention was called to the delivery van along White
Plains Avenue
 The team chased the van and ordered the driver to stop
 The van stopped and the agents found the two petitioners, Angel and Jose Rodriguez, one driver and one helper
 They opened the door of the van and found it full of textile which, according to the driver and helper, came from the
residence of Manuel Pena at the White Plains Subdivision
o They disclosed that they were taking their cargo to No. 25 9th Street, Parañaque

 The team proceeded to Manuel Pena’s residence, where Colonel Parayno informed Pena that they were going to search
his house for the textile
 Pena denied possessing or keeping any textile and invited Colonel Parayno and his men inside his house
 The Customs agents looked around and found behind Pena’s house a structure that appeared to be a stock room
 They opened the room and found nothing.
 They noticed another room behind, opened it and found it full of the same textile as those they saw in the delivery van
 Mr. Pena informed the agents that the stock room belonged to Eulogio who also owned the house behind it
 Pena likewise claimed that the textile belonged to a certain “Rolly” whose truck happened to hit the subdivision wall near
his (Mr. Pena’s) house and that the textile was being stored in his compound until delivery to its final destination at
Parañaque

 The next day, September 15, 1983, the Customs agents were armed with a search warrant and went to Tomas Ngo’s
residence in Parañaque
 They discovered in his bodega several rolls of the same textile they found in the delivery van and in Pena’s compound

 The agents seized all the textile they found in the delivery van, in Pena’s compound and in Tomas Ngo’s residence
 They conducted an investigation and discovered that:
o The container van did not belong to the consignee and
o It was released from the container port by virtue of a Special Permit to Transfer in which all signatures of the
approving Customs personnel, except for one, were forged

Petitioners Rodriguez brothers’ Defense

 The Rodriguez brothers sought to establish the fact that the textile belong to one “Rolly” who asked Manuel Pena for help
to transport it after his truck met an accident near Mr. Pena’s residence
 Eulogio claimed that Mr. Pena in turn asked him to transfer the textile from the stalled truck and keep them safe in his
servants’ quarters
 Rolly returned the following morning and again requested him, through Manuel Pena, to transport the textile to Parañaque
for a consideration of P4,000
 Eulogio agreed because his father-in-law must have wanted him to earn extra money
 He however was not feeling very well, so he called up his brother, Jose, and requested him to deliver the cargo to
Parañaque
 Their other brother, Angel, happened to be in Jose’s house and so they proceeded to White Plains and with some of their
helpers loaded some textile into one of Manuel Pena’s delivery vans
 They followed Rolly, who was in his car, to the residence of Tomas Ngo in Parañaque
 Tomas Ngo met them and the cargo was unloaded in his house
 The brother and their helpers returned to White Plains without Rolly and made another delivery in the afternoon
 They were on their way to make a third delivery the following day when they were intercepted by the Customs agents

Petitioner Tomas Ngo’s Defense

  Claimed that he merely purchased the textile from Rolly who offered 30,000 yards to him in Divisoria on September 12,
1983
 Rolly allegedly assured him that he got the textile from an auction sale at the Bureau of Customs and that all customs duties
and taxes thereon had already been paid

Trial Court’s Decision

 Found the accused (petitioners) guilty of the crime charged
 Dismissed the case against accused Pena who died who had died even before the filing of the information.
 As against accused Alfredo Fiesta, it was ordered archived until his arrest

CA' Decision
 Affirmed the trial court’s decision
 Denied petitioners’ MR
 Hence, this petition

Petitioners’ Claims/Arguments in SC:

 Rodriquez brothers – claimed to be merely innocent substitute truckers of the textile goods
 Thomas Ngo – claimed to be merely an innocent prospective buyer of the textile goods, which purchase did not even
materialize
 That the alleged fake special permit to transfer appeared genuine

Note: (Please refer to Notes below for these provisions)

 Section 3601 – Unlawful Importation
o Now, under Section 1401 of the CMTA, Unlawful Importation or Exportation
 Section 3602 – Various Fraudulent Practices against Customs Revenue
o Now, under Section 1403 of the CMTA, Other Fraudulent Practices Against Customs Revenue

ISSUE: Whether the petitioners are guilty for violation of Sections 3601 and 3602 of the Tariff and Customs Code.

RULING:
 Yes.

As to Section 3601
 Under Section 3601 of the Tariff and Customs Code, SMUGGLING is committed by any person who:
(1) Fraudulently imports or brings into the Philippines or assists in importing or bringing into the Philippines any
article, contrary to law; or
(2) Receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment or sale of such article
after importation, knowing the same to have been imported contrary to law.

 Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unload
and is deemed terminated upon payment of the duties, taxes and other charges due upon the articles and the legal permit
for withdrawal shall have been granted.
o If the articles are free of duties, taxes and other charges, importation is terminated until the articles shall have
legally left the jurisdiction of the customs.

 After importation, the act of facilitating the transportation, concealment or sale of the unlawfully imported article must be
with the knowledge that the article was smuggled.
 However, if upon trial the defendant is found to have been in possession of such article, this shall be sufficient to authorize
conviction unless the defendant explains his possession to the satisfaction of the court.

As to Section 3602
 Section 3602 of the Code enumerates the various fraudulent practices against customs revenue such as:
o The entry of imported or exported articles by means of any false or fraudulent invoice, statement or practice
o The entry of goods at less than the true weight or measure, or
o The filing of any false or fraudulent entry for the payment of drawback or refund of duties
 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.

Application
 In the instant case, the textile from the Manila International Container Port was passed through the Customs house and
released by means of the Special Permit to Transfer purportedly accomplished and signed by the authorized Customs
personnel
 The permit form was genuine but all the signatures thereon, except for one, were forged
o The trial court found that the one genuine signature of Deputy Collector of Customs Juan P. Calabig was affixed on
the belief that the permit had been regularly signed by the other authorized personnel

 The fraudulent entry of the textile makes it fall under Section 3602 of the Tariff and Customs Code
 The receipt, concealment, sale, purchase or the facilitation thereof after the unlawful importation with the knowledge
that the textile is smuggled becomes punishable under Section 3601 of the Code.

 Petitioners do not dispute the appellate court’s finding that the textile was imported and that it passed through the
Customs house under fraudulent circumstances.
 However, they claim that it erred in convicting them when, by its own finding, petitioners had no actual participation in the
release of said textile and the diversion of the container van to Quezon City.

 While it is true that the evidence does not show their participation in the release of the smuggled cargo, petitioners were
actually found to have been in possession of the textile after its release
o Some of the textile materials were found in Eulogio’s stock room and in Tomas Ngo’s bodega and the others in the
delivery van where Jose and Angel were riding

 Petitioners have never disputed but in fact admitted their possession of the textile and as a result of this admission they
are presumed to have been engaged in smuggling pursuant to the last paragraph of Section 3601 of the Code
 The burden of proof shifted to them.
o To rebut this presumption, it is not enough for petitioners to claim good faith and lack of knowledge of the
unlawful source of the textile.
o Petitioners should have presented evidence to support their claim and satisfy the court of their non-complicity.

 Petitioners failed to sufficiently explain how they came into possession of the smuggled textile.
o They ascribe all their acts to Mr. Pena who has long since died and to Rolly who has since disappeared, if he ever
existed
o The testimony of a witness as to what he heard other persons say about certain facts in dispute is hearsay
evidence and cannot be admitted.
o Moreover, petitioners’ version of their participation is self-serving, strains the imagination and taxes our credulity.

 On the contrary, the evidence shows that the truck carrying the container van with the textile left the container port for
Mr. Pena’s residence at White Plains, Quezon City.
 The truck was allowed to enter the private subdivision because Mr. Pena was a registered homeowner and he sought
permission for it to go to his house.
 Clearly, the truck and its cargo did not just happen to pass through White Plains.
 The container was actually intended for delivery at Mr. Pena’s compound.
 Mr. Pena was said to have been engaged in the trucking business but he passed on the job of transporting the cargo to
Eulogio who in turn passed it on to his brothers, Jose and Angel
 It is difficult to comprehend why the Rodriguez brothers went out of their way to help Rolly whom they never knew when
Mr. Pena provided the delivery van and Rolly himself had some helpers to load and unload the cargo
 The three brothers were businessmen.
o Eulogio and Angel were engaged in general merchandise and had their own stores at the Zaragosa Shopping
Center, Zaragosa Street, Tondo, Manila
 Eulogio said that Mr. Pena gave him the job because he wanted him to earn extra money.
 This claim is made incredible by the fact that the brothers were to transport the textile for a fee of P4,000
 If they needed the extra money, they never bothered to ask for it or any portion thereof from Rolly or Mr. Pena
 Rolly did not return to White Plains after the first delivery but Jose and Angel continued to work and even intended to finish
the job without exerting any effort to ensure payment therefor

 Tomas Ngo’s claim that he never knew of the textile’s illegal origin cannot likewise be given credence.
 o Tomas Ngo testified that he asked Rolly if the taxes on the textile had been paid, and that Rolly answered in the
affirmative and in fact assured him that he would present the tax receipts later
 After the first delivery, Rolly said that he needed the receipts to show the authorities during the delivery
 And yet Tomas Ngo, who was engaged in the buy and sell business of plastic materials and textile, never bothered to check
or glance at these tax receipts
 Rolly disappeared without leaving any receipts with Jose and Angel and neither did the brothers ask for said receipts

 Indeed, petitioners’ claim of good faith and lack of knowledge of the origin of the textile cannot stand in the light of
contrary evidence.
o As the lower courts well found, petitioners have miserably failed to rebut the presumption that they were
engaged in smuggling at the time they were apprehended
 Evidence, to be believed, must proceed not only from the mouth of a credible witness but must be credible in itself as when
it conforms to the common experience and observation of mankind.

Disposition: Petition denied.

Notes:
Sections 3601 and 3602 of the Tariff and Customs Code provide:

SECTION 3601. Unlawful Importation. – Any person who shall fraudulently import or bring into the Philippines, or assist in so doing,
any article, contrary to law, or shall receive, conceal, buy, sell, or in any manner facilitate the transportation, concealment, or sale
of such article after importation, knowing the same to have been imported contrary to law, shall be guilty of smuggling and shall
be punished with:

1. A fine of not less than fifty pesos nor more than two hundred pesos and imprisonment of not less than five days nor more
than twenty days, if the appraised value, to be determined in the manner prescribed under this Code, including duties and
taxes, of the article unlawfully imported does not exceed twenty-five pesos;

2. A fine of not less than eight hundred pesos nor more than five thousand pesos and imprisonment of not less than six
months and one day nor more than four years, if the appraised value, to be determined in the manner prescribed under
this Code, including duties and taxes, of the article unlawfully imported exceeds twenty-five pesos but does not exceed fifty
thousand pesos;

3. A fine of not less than six thousand pesos nor more than eight thousand pesos and imprisonment of not less than five years
and one day nor more than eight years, if the appraised value, to be determined in the manner prescribed under this Code,
including duties and taxes, of the article unlawfully imported is more than fifty thousand pesos but does not exceed one
hundred fifty thousand pesos.

4. A fine of not less than eight thousand pesos nor more than ten thousand pesos and imprisonment of not less than eight
years and one day nor more than twelve years, if the appraised value, to be determined in the manner prescribed under
this Code, including duties and taxes, of the article unlawfully imported exceeds one hundred fifty thousand pesos

5. The penalty of prision mayor shall be imposed when the crime of serious physical injuries shall have been committed and
the penalty of reclusion perpetua to death shall be imposed when the crime of homicide shall have been committed by
reason or on the occasion of the unlawful importation.

In applying the above scale of penalties, if the offender is an alien and the prescribed penalty is not death, he shall be deported after
serving the sentence without further proceedings for deportation; if the offender is a government official or employee, the penalty
shall be the maximum as hereinabove prescribed and the offender shall suffer an additional penalty of perpetual disqualification
from public office, to vote and to participate in any public election.

When, upon trial for violation of this section, the defendant is shown to have had possession of the article in question, possession
shall be deemed sufficient evidence to authorize conviction unless the defendant shall explain the possession to the satisfaction of
the court: Provided, however, That payment of the tax due after apprehension shall not constitute a valid defense in any
prosecution under this section.

SECTION 3602. Various Fraudulent Practices Against Customs Revenue. – Any person who makes or attempts to make any entry of
imported or exported article by means of any false or fraudulent invoice, declaration, affidavit, letter, paper or by any means of any
false statement, written or verbal, or by any means of any false or fraudulent practice whatsoever, or knowingly effects any entry of
goods, wares or merchandise, at less than the true weight or measures thereof or upon a classification as to quality or value, or by
the payment of less than the amount legally due, or knowingly and willfully files and false or fraudulent entry or claim for the
payment of drawback or refund of duties upon the exportation of merchandise, or makes or files any affidavit, abstract, record,
certificate or other document, with a view to securing the payment to himself or others of any drawback, allowance or refund of
duties on the exportation of merchandise, greater than that legally due thereon, or who shall be guilty of any willful act or omission,
shall, for each offense, be punished in accordance with the penalties prescribed in the preceding section.
(Emphases supplied)

2. Rieta v People

Facts
 Petitioner and his six co-accused -- Arturo Rimorin, Fidel Balita, Gonzalo Vargas, Robartolo Alincastre, Guillermo Ferrer and
Ernesto Miaco -- were charged for smuggling for importing (305) cases of assorted brands of blue seal cigarettes which are
foreign articles valued at P513,663.47

Version of the Prosecution (Respondent)

 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

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

 At around 5 minutes before 4:00 o'clock 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. 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. Lacson's 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

 Lacson's 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

Version of the Defense (Petitioner)

 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 petitioner's
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 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.

 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

Main Issue 1: WON the corpus delicti of smuggling was proved

Ruling
 YES
 Corpus delicti refers to the specific injury or loss sustained.It is the fact of the commission of the crime that may be proved
by the testimony of eyewitnesses. In its legal sense, corpus delicti does not necessarily refer to the body of the person
murdered, to the firearms in the crime of homicide with the use of unlicensed firearms, to the ransom money in the crime
of kidnapping for ransom, or -- in the present case -- to the seized contraband cigarettes.

 In Rimorin v. People, 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:

o "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.

o "Both the RTC and the CA ruled that the corpus delicti had been competently established by respondent's
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 Lacson's testimony on the apprehension of petitioner and on the
seizure of the blue seal cigarettes was clear and straightforward.

o "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.

o "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."
  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 motive23 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 latter's 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 2nd 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.

 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 colonel's 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.

Sub Issue 1: WON Courtroom Identification is necessary

 NO
 Petitioner belabors the failure of the prosecution to ask Colonel Lacson to identify him in open court. However, the
colonel's positive and categorical testimony pointing to him as one of the passengers of the cargo truck, as well as
petitioner's own admission of his presence therein, dispelled the need for a courtroom identification. In People v. Quezada,
the Court said:
o " 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:
o 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.'
 o "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."

Application
 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-VI-137

Sub-Issue 2: WON Prima Facie Proof of Nonpayment of Taxes is Sufficient

Ruling:
 YES
 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. Julian-Fernandez, we held:
o "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 defendant's 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."
 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 2nd COSAC Detachment;
(2) the truck was intercepted at the unholy hour of 4:00 a.m.; (3) it fitted the undisclosed informer's 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.

Main Issue 2: WON the accused had Knowledge of the Illegal Nature of Goods

 YES
 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.
o 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.

 Petitioner's 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. 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 non-complicity.
 In the case adverted to earlier, Rimorin v. People, we held thus:
o "In his discussion of a similarly worded provision of Republic Act No. 455, a criminal law authority explained thus:
o '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)

Application
 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:
 o "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.

o 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 'Boy's' 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."

 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.
 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.

Sub issue 3: WON the arrest was valid

Ruling
 Yes
 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 Tañada v. Tuvera, to have no force and effect. Thus, he asserts, any evidence obtained pursuant
thereto is inadmissible in evidence.
 We do not agree. In Tañada, 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:
o "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:

o '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.

o 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.'

o "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 statement of a principle of absolute retroactive
invalidity cannot be justified.'"
  The Chicot doctrine cited in Tañada 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 Tañada 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 exceptions36 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.

Application
 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.

3. Republic vs Caguioa G.R. No. 168584 October 15, 2007

Facts:
 1992, Congress enacted R.A No. 7227 or the Bases Conversion and Development Act of 1992 which created the Subic
Special Economic and Freeport Zone (SBF) and the Subic Bay Metropolitan Authority (SBMA).
 R.A. No. 7227 envisioned the SBF to be developed into a "self-sustaining, industrial, commercial, financial and investment
center to generate employment opportunities in and around the zone and to attract and promote productive foreign
investments." 
 Pursuant to the law, private respondents Indigo Distribution Corporation, W Star Trading and Warehousing Corporation,
Freedom Brands Philippines Corporation, Branded Warehouse, Inc., Altasia, Inc., Tainan Trade (Taiwan) Inc., Subic Park ‘N
Shop, Incorporated, Trading Gateways International Philipines, Inc., Duty Free Superstore (DFS) Inc., Chijmes Trading, Inc.,
Premier Freeport, Inc., Future Trade Subic Freeport, Inc., Grand Comtrade Int’l., Corp., and First Platinum International, Inc.,
which are all domestic corporations doing business at the SBF, applied for and were granted Certificates of Registration and
Tax Exemption by the SBMA.
o These certificates allowed them to engage in the business either of trading, retailing or wholesaling, import and
export, warehousing, distribution and/or transshipment of general merchandise, including alcohol and tobacco
products, and uniformly granted them tax exemptions for such importations
 Congress subsequently passed R.A. No. 9334, effective on January 1, 2005, Section 6 of which provides:
o Sec. 6. Section 131 of the National Internal Revenue Code of 1977, as amended, is hereby amended to read as
follows:
 Sec. 131. Payment of Excise Taxes on Imported Articles. –
 (A) Persons Liable. – Excise taxes on imported articles shall be paid by the owner or importer to
the Customs Officers, conformably with the regulations of the Department of Finance and before
the release of such articles from the customshouse or by the person who is found in possession
of articles which are exempt from excise taxes other than those legally entitled to exemption.
 In the case of tax-free articles brought or imported into the Philippines by persons, entities or
agencies exempt from tax which are subsequently sold, transferred or exchanged in the
Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered
the importers thereof, and shall be liable for the duty and internal revenue tax due on such
importation.
 The provision of any special or general law to the contrary notwithstanding, the importation of
cigars and cigarettes, distilled spirits, fermented liquors and wines into the Philippines, even if
destined for tax and duty free shops, shall be subject to all applicable taxes, duties, charges,
including excise taxes due thereon. This shall apply to cigars and cigarettes, distilled spirits,
fermented liquors and wines brought directly into the duly chartered or legislated freeports of
the Subic Economic Freeport Zone, created under Republic Act No. 7227; x x x and such other
freeports as may hereafter be established or created by law: Provided, further, That importations
of cigars and cigarettes, distilled spirits, fermented liquors and wines made directly by a
 government-owned and operated duty-free shop, like the Duty Free Philippines (DFP), shall be
exempted from all applicable duties only: x x x Provided, finally, That the removal and transfer of
tax and duty-free goods, products, machinery, equipment and other similar articles other than
cigars and cigarettes, distilled spirits, fermented liquors and wines, from one Freeport to another
Freeport, shall not be deemed an introduction into the Philippine customs territory. x x x.
(Emphasis and underscoring supplied)

 On the basis of Section 6 of R.A. No. 9334, SBMA issued a Memorandum declaring that effective January 1, 2005, all
importations of cigars, cigarettes, distilled spirits, fermented liquors and wines into the SBF, including those intended to be
transshipped to other free ports in the Philippines, shall be treated as ordinary importations subject to all applicable taxes,
duties and charges, including excise taxes.
 Meanwhile, on February 3, 2005, former BIR Commissioner Guillermo L. Parayno, Jr. requested then Customs Commissioner
George M. Jereos to immediately collect the excise tax due on imported alcohol and tobacco products brought to the Duty-
Free Philippines (DFP) and Freeport zones.
 Accordingly, the Collector of Customs of the port of Subic directed the SBMA Administrator to require payment of all
appropriate duties and taxes on all importations of cigars and cigarettes, distilled spirits, fermented liquors and wines; and
for all transactions involving the said items to be covered from then on by a consumption entry and no longer by a
warehousing entry.

 SBMA issued a Memorandum directing the departments concerned to require locators/importers in the SBF to pay the
corresponding duties and taxes on their importations of cigars, cigarettes, liquors and wines before said items are cleared
and released from the freeport. However, certain SBF locators which were "exclusively engaged in the transshipment of
cigarette products for foreign destinations" were allowed by the SBMA to process their import documents subject to their
submission of an Undertaking with the Bureau of Customs.

 private respondents wrote the offices of respondent Collector of Customs and the SBMA Administrator requesting for a
reconsideration of the directives on the imposition of duties and taxes, particularly excise taxes, on their shipments of
cigars, cigarettes, wines and liquors. Despite these letters, however, they were not allowed to file any warehousing entry for
their shipments.
 Thus, private respondent enterprises, through their representatives, brought before the RTC of Olongapo City a special civil
action for declaratory relief to have certain provisions of R.A. No. 9334 declared as unconstitutional. In the main, private
respondents submitted that
o (1) R.A. No. 9334 should not be interpreted as altering, modifying or amending the provisions of R.A. No. 7227
because repeals by implication are not favored;
o (2) a general law like R.A. No. 9334 cannot amend R.A. No. 7727, which is a special law; and
o (3) the assailed law violates the one bill-one subject rule embodied in Section 26(1), Article VI of the Constitution
as well as the constitutional proscription against the impairment of the obligation of contracts.
o Alleging that great and irreparable loss and injury would befall them as a consequence of the imposition of taxes
on alcohol and tobacco products brought into the SBF, private respondents prayed for the issuance of a writ of PI
and/or TRO and PMI to enjoin the directives of herein petitioners.

 Petitioners duly opposed the private respondents’ prayer, arguing that

o (1) tax exemptions are not presumed and even when granted, are strictly construed against the grantee;
o (2) an increase in business expense is not the injury contemplated by law, it being a case of damnum absque
injuria; and
o (3) the drawback mechanism established in the law clearly negates the possibility of the feared injury.
o Petitioners pointed out that courts are enjoined from issuing a writ of injunction and/or TRO on the grounds of an
alleged nullity of a law, ordinance or administrative regulation or circular or in a manner that would effectively
dispose of the main case. Taxes, they stressed, are the lifeblood of the government and their prompt and certain
availability is an imperious need. They maintained that greater injury would be inflicted on the public should the
writ be granted.

Trial Court decision

 May 4, 2005, the court a quo granted private respondents’ application for the issuance of a writ of PI, after it found that the
essential requisites for the issuance of a preliminary injunction were present.
 As investors duly licensed to operate inside the SBF, the trial court declared that private respondents were entitled to enjoy
the benefits of tax incentives under R.A. No. 7227, particularly the exemption from local and national taxes under Section
 12(c); the aforecited provision of R.A. No. 7227, coupled with private respondents’ Certificates of Registration and Tax
Exemption from the SBMA, vested in them a clear and unmistakable right or right in esse that would be violated should R.A.
No. 9334 be implemented; and the invasion of such right is substantial and material as private respondents would be
compelled to pay more than what they should by way of taxes to the national government.
 The trial court thereafter ruled that the prima facie presumption of validity of R.A. No. 9334 had been overcome by private
respondents, it holding that as a partial amendment of the NIRC of 1997, as amended, R.A. No. 9334 is a general law that
could not prevail over a special statute like R.A. No. 7227 notwithstanding the fact that the assailed law is of later
effectivity.
 The repealing provision of Section 10 of R.A. No. 9334 does not expressly mention the repeal of R. A. No. 7227, hence, its
repeal can only be an implied repeal, which is not favored; and since R.A. No. 9334 imposes new tax burdens, whatever
doubts arising therefrom should be resolved against the taxing authority and in favor of the taxpayer.
 The trial court furthermore held that R.A. No. 9334 violates the terms and conditions of private respondents’ subsisting
contracts with SBMA, which are embodied in their Certificates of Registration and Exemptions in contravention of the
constitutional guarantee against the impairment of contractual obligations; that greater damage would be inflicted on
private respondents if the writ of injunction is not issued as compared to the injury that the government and the general
public would suffer from its issuance; and that the damage that private respondents are bound to suffer once the assailed
statute is implemented – including the loss of confidence of their foreign principals, loss of business opportunity and
unrealized income, and the danger of closing down their businesses due to uncertainty of continued viability – cannot be
measured accurately by any standard.
 With regard to the rule that injunction is improper to restrain the collection of taxes under Section 218 of the NIRC, the trial
court held that what is sought to be enjoined is not per se the collection of taxes, but the implementation of a statute that
has been found preliminarily to be unconstitutional.
 Additionally, the trial court pointed out that private respondents’ taxes have not yet been assessed, as they have not filed
consumption entries on all their imported tobacco and alcohol products, hence, their duty to pay the corresponding excise
taxes and the concomitant right of the government to collect the same have not yet materialized.
 May 11, 2005, the trial court issued a Writ of PI directing petitioners and the SBMA Administrator as well as all persons
assisting or acting for and in their behalf
o 1) to allow the operations of [private respondents] in accordance with R.A. No. 7227;
o 2) to allow [them] to file warehousing entries instead of consumption entries as regards their importation of
tobacco and alcohol products; and
o 3) to cease and desist from implementing the pertinent provisions of R.A. No. 9334 by not compelling [private
respondents] to immediately pay duties and taxes on said alcohol and tobacco products as a condition to their
removal from the port area for transfer to the warehouses of [private respondents].
 The injunction bond was approved at P1,000,000.
 Without moving for reconsideration, petitioners have come directly to this Court to question the May 4, 2005 Order and the
Writ which, they submit, were issued by public respondent with grave abuse of discretion amounting to lack or excess of
jurisdiction.

Issue: WON the writ of preliminary injunction was correctly issued?

Ruling: NO.

 For a writ of preliminary injunction to issue, the plaintiff must be able to establish that
o (1) there is a clear and unmistakable right to be protected,
o (2) the invasion of the right sought to be protected is material and substantial, and
o (3) there is an urgent and paramount necessity for the writ to prevent serious damage.
 Conversely, failure to establish either the existence of a clear and positive right which should be judicially protected through
the writ of injunction, or of the acts or attempts to commit any act which endangers or tends to endanger the existence of
said right, or of the urgent need to prevent serious damage, is a sufficient ground for denying the preliminary injunction.

 It is beyond cavil that R.A. No. 7227 granted private respondents exemption from local and national taxes, including excise
taxes, on their importations of general merchandise, for which reason they enjoyed tax-exempt status until the effectivity
of R.A. No. 9334.
 By subsequently enacting R.A. No. 9334, however, Congress expressed its intention to withdraw private respondents’ tax
exemption privilege on their importations of cigars, cigarettes, distilled spirits, fermented liquors and wines.
 Juxtaposed to show this intention are the respective provisions of Section 131 of the NIRC before and after its amendment
by R.A. No. 9334: x x x x.
Sec. 131 of NIRC before R.A. No. 9334 Sec. 131, as amended by R.A. No. 9334
Sec. 131. Payment of Excise Taxes on Imported Sec. 131. Payment of Excise Taxes on Imported
Articles. – Articles. –
(A) Persons Liable. – Excise taxes on imported (A) Persons Liable. – Excise taxes on imported
articles shall be paid by the owner or importer articles shall be paid by the owner or importer
to the Customs Officers, conformably with the to the Customs Officers, conformably with the
regulations of the Department of Finance and regulations of the Department of Finance and
before the release of such articles from the before the release of such articles from the
customs house or by the person who is found customs house or by the person who is found
in possession of articles which are exempt in possession of articles which are exempt
from excise taxes other than those legally from excise taxes other than those legally
entitled to exemption. entitled to exemption.
In the case of tax-free articles brought or In the case of tax-free articles brought or
imported into the Philippines by persons, imported into the Philippines by persons,
entities or agencies exempt from tax which are entities or agencies exempt from tax which are
subsequently sold, transferred or exchanged in subsequently sold, transferred or exchanged in
the Philippines to non-exempt persons or the Philippines to non-exempt persons or
entities, the purchasers or recipients shall be entities, the purchasers or recipients shall be
considered the importers thereof, and shall be considered the importers thereof, and shall be
liable for the duty and internal revenue tax liable for the duty and internal revenue tax
due on such importation. due on such importation.
The provision of any special or general law to The provision of any special or general law to
the contrary notwithstanding, the importation the contrary notwithstanding, the
of cigars and cigarettes, distilled spirits, importation of cigars and cigarettes, distilled
fermented liquors and wines into the spirits, fermented liquors and wines into the
Philippines, even if destined for tax and duty Philippines, even if destined for tax and duty
free shops, shall be subject to all applicable free shops, shall be subject to all applicable
taxes, duties, charges, including excise taxes taxes, duties, charges, including excise taxes
due thereon. Provided, however, That this due thereon. This shall apply to cigars and
shall not apply to cigars and cigarettes, cigarettes, distilled spirits, fermented liquors
fermented spirits and wines brought directly and wines brought directly into the duly
into the duly chartered or legislated freeports chartered or legislated freeports of the Subic
of the Subic Economic Freeport Zone, created Economic Freeport Zone, created under
under Republic Act No. 7227; the Cagayan Republic Act No. 7227; the Cagayan Special
Special Economic Zone and Freeport, created Economic Zone and Freeport, created under
under Republic Act No. 7922; and the Republic Act No. 7922; and the Zamboanga
Zamboanga City Special Economic Zone, City Special Economic Zone, created under
created under Republic Act No. 7903, and are Republic Act No. 7903, and such other
not transshipped to any other port in the freeports as may hereafter be established or
Philippines: Provided, further, That created by law: Provided, further, That
importations of cigars and cigarettes, distilled importations of cigars and cigarettes, distilled
spirits, fermented liquors and wines made spirits, fermented liquors and wines made
directly by a government-owned and operated directly by a government-owned and operated
duty-free shop, like the Duty Free Philippines duty-free shop, like the Duty Free Philippines
(DFP), shall be exempted from all applicable (DFP), shall be exempted from all applicable
duties, charges, including excise tax due duties only: Provided still further, That such
thereon; Provided still further, That such articles directly imported by a government-
articles directly imported by a government- owned and operated duty-free shop, like the
owned and operated duty-free shop, like the Duty-Free Philippines, shall be labeled "tax and
Duty-Free Philippines, shall be labeled "tax and duty-free" and "not for resale": Provided,
duty-free" and "not for resale": Provided, still finally, That the removal and transfer of tax
further, That if such articles brought into the and duty-free goods, products, machinery,
duly chartered or legislated freeports under equipment and other similar articles other
Republic Acts Nos. 7227, 7922 and 7903 are than cigars and cigarettes, distilled spirits,
subsequently introduced into the Philippine fermented liquors and wines, from one
customs territory, then such articles shall, Freeport to another Freeport, shall not be
upon such introduction, be deemed imported deemed an introduction into the Philippine
into the Philippines and shall be subject to all customs territory.
imposts and excise taxes provided herein and x x x x.
 other statutes: Provided, finally, That the
removal and transfer of tax and duty-free
goods, products, machinery, equipment and
other similar articles, from one freeport to
another freeport, shall not be deemed an
introduction into the Philippine customs
territory.
x x x x.
(Emphasis and underscoring supplied)

 To note, the old Section 131 of the NIRC expressly provided that all taxes, duties, charges, including excise taxes shall not
apply to importations of cigars, cigarettes, fermented spirits and wines brought directly into the duly chartered or legislated
freeports of the SBF.
 On the other hand, Section 131, as amended by R.A. No. 9334, now provides that such taxes, duties and charges, including
excise taxes, shall apply to importation of cigars and cigarettes, distilled spirits, fermented liquors and wines into the SBF.

 Without necessarily passing upon the validity of the withdrawal of the tax exemption privileges of private respondents, it
behooves this Court to state certain basic principles and observations that should throw light on the propriety of the
issuance of the writ of preliminary injunction in this case.

 First. Every presumption must be indulged in favor of the constitutionality of a statute. The burden of proving the
unconstitutionality of a law rests on the party assailing the law. In passing upon the validity of an act of a co-equal and
coordinate branch of the government, courts must ever be mindful of the time-honored principle that a statute is
presumed to be valid.
 Second. There is no vested right in a tax exemption, more so when the latest expression of legislative intent renders its
continuance doubtful. Being a mere statutory privilege, a tax exemption may be modified or withdrawn at will by the
granting authority. To state otherwise is to limit the taxing power of the State, which is unlimited, plenary, comprehensive
and supreme. The power to impose taxes is one so unlimited in force and so searching in extent, it is subject only to
restrictions which rest on the discretion of the authority exercising it.
 Third. As a general rule, tax exemptions are construed strictissimi juris against the taxpayer and liberally in favor of the
taxing authority. The burden of proof rests upon the party claiming exemption to prove that it is in fact covered by the
exemption so claimed. In case of doubt, non-exemption is favored.
 Fourth. A tax exemption cannot be grounded upon the continued existence of a statute which precludes its change or
repeal. Flowing from the basic precept of constitutional law that no law is irrepealable, Congress, in the legitimate exercise
of its lawmaking powers, can enact a law withdrawing a tax exemption just as efficaciously as it may grant the same under
Section 28(4) of Article VI38 of the Constitution. There is no gainsaying therefore that Congress can amend Section 131 of
the NIRC in a manner it sees fit, as it did when it passed R.A. No. 9334.
 Fifth. The rights granted under the Certificates of Registration and Tax Exemption of private respondents are not absolute
and unconditional as to constitute rights in esse – those clearly founded on or granted by law or is enforceable as a matter
of law. These certificates granting private respondents a "permit to operate" their respective businesses are in the nature of
licenses, which the bulk of jurisprudence considers as neither a property nor a property right. The licensee takes his license
subject to such conditions as the grantor sees fit to impose, including its revocation at pleasure. A license can thus be
revoked at any time since it does not confer an absolute right. While the tax exemption contained in the Certificates of
Registration of private respondents may have been part of the inducement for carrying on their businesses in the SBF, this
exemption, nevertheless, is far from being contractual in nature in the sense that the non-impairment clause of the
Constitution can rightly be invoked.

Smuggling
 Sixth. Whatever right may have been acquired on the basis of the Certificates of Registration and Tax Exemption must yield
to the State’s valid exercise of police power. It is well to remember that taxes may be made the implement of the police
power. It is not difficult to recognize that public welfare and necessity underlie the enactment of R.A. No. 9334.
 As petitioners point out, the now assailed provision was passed to curb the pernicious practice of some unscrupulous
business enterprises inside the SBF of using their tax exemption privileges for smuggling purposes. Smuggling in whatever
form is bad enough; it is worse when the same is allegedly perpetrated, condoned or facilitated by enterprises hiding
behind the cloak of their tax exemption privileges.
 Seventh. As a rule, courts should avoid issuing a writ of preliminary injunction which would in effect dispose of the main
case without trial. This rule is intended to preclude a prejudgment of the main case and a reversal of the rule on the burden
of proof since by issuing the injunctive writ, the court would assume the proposition that petitioners are inceptively duty
bound to prove.
 Eighth. A court may issue a writ of PI only when the petitioner assailing a statute has made out a case of unconstitutionality
or invalidity strong enough, in the mind of the judge, to overcome the presumption of validity, in addition to a showing of a
clear legal right to the remedy sought. Thus, it is not enough that petitioners make out a case of unconstitutionality or
invalidity to overcome the prima facie presumption of validity of a statute; they must also be able to show a clear legal right
that ought to be protected by the court. The issuance of the writ is therefore not proper when the complainant’s right is
doubtful or disputed.

 Ninth. The feared injurious effects of the imposition of duties, charges and taxes on imported cigars, cigarettes, distilled
spirits, fermented liquors and wines on private respondents’ businesses cannot possibly outweigh the dire consequences
that the non-collection of taxes, not to mention the unabated smuggling inside the SBF, would wreak on the government.
Whatever damage would befall private respondents must perforce take a back seat to the pressing need to curb smuggling
and raise revenues for governmental functions.

 All told, while the grant or denial of an injunction generally rests on the sound discretion of the lower court, this Court may
and should intervene in a clear case of abuse.

 One such case of grave abuse obtained in this case when public respondent issued his Order of May 4, 2005 and the Writ of
Preliminary Injunction on May 11, 2005 despite the absence of a clear and unquestioned legal right  of private respondents.
 In holding that the presumption of constitutionality and validity of R.A. No. 9334 was overcome by private respondents for
the reasons public respondent cited in his May 4, 2005 Order, he disregarded the fact that as a condition sine qua non to
the issuance of a writ of preliminary injunction, private respondents needed also to show a clear legal right that ought to be
protected. That requirement is not satisfied in this case.

 To stress, the possibility of irreparable damage without proof of an actual existing right would not justify an injunctive relief.
 Besides, private respondents are not altogether lacking an appropriate relief under the law. As petitioners point out in their
Petition before this Court, private respondents may avail themselves of a tax refund or tax credit should R.A. No. 9334 be
finally declared invalid.
 Indeed, Sections 204 and 229 of the NIRC provide for the recovery of erroneously or illegally collected taxes which would be
the nature of the excise taxes paid by private respondents should Section 6 of R.A. No. 9334 be declared unconstitutional or
invalid.

 It may not be amiss to add that private respondents can also opt not to import, or to import less of, those items which no
longer enjoy tax exemption under R.A. No. 9334 to avoid the payment of taxes thereon.
 The Court finds that public respondent had also ventured into the delicate area which courts are cautioned from taking
when deciding applications for the issuance of the writ of preliminary injunction. Having ruled preliminarily against
the prima facie validity of R.A. No. 9334, he assumed in effect the proposition that private respondents in their petition for
declaratory relief were duty bound to prove, thereby shifting to petitioners the burden of proving that R.A. No. 9334 is not
unconstitutional or invalid.
 In the same vein, the Court finds public respondent to have overstepped his discretion when he arbitrarily fixed the
injunction bond of the SBF enterprises at only P1million.
 The alleged sparseness of the testimony of Indigo Corporation’s representative on the injury to be suffered by private
respondents may be excused because evidence for a preliminary injunction need not be conclusive or complete.
Nonetheless, considering the number of private respondent enterprises and the volume of their businesses, the injunction
bond is undoubtedly not sufficient to answer for the damages that the government was bound to suffer as a consequence
of the suspension of the implementation of the assailed provisions of R.A. No. 9334.
 Rule 58, Section 4(b) provides that a bond is executed in favor of the party enjoined to answer for all damages which it may
sustain by reason of the injunction. The purpose of the injunction bond is to protect the defendant against loss or damage
by reason of the injunction in case the court finally decides that the plaintiff was not entitled to it, and the bond is usually
conditioned accordingly.
 Recalling this Court’s pronouncements in Olalia v. Hizon that:
o x x x [T]here is no power the exercise of which is more delicate, which requires greater caution, deliberation and
sound discretion, or more dangerous in a doubtful case, than the issuance of an injunction. It is the strong arm of
equity that should never be extended unless to cases of great injury, where courts of law cannot afford an
adequate or commensurate remedy in damages.
 o Every court should remember that an injunction is a limitation upon the freedom of action of the defendant and
should not be granted lightly or precipitately. It should be granted only when the court is fully satisfied that the law
permits it and the emergency demands it, it cannot be overemphasized that any injunction that restrains the
collection of taxes, which is the inevitable result of the suspension of the implementation of the assailed Section 6
of R.A. No. 9334, is a limitation upon the right of the government to its lifeline and wherewithal.
o The power to tax emanates from necessity; without taxes, government cannot fulfill its mandate of promoting the
general welfare and well-being of the people. That the enforcement of tax laws and the collection of taxes are of
paramount importance for the sustenance of government has been repeatedly observed. Taxes being the lifeblood
of the government that should be collected without unnecessary hindrance, 60 every precaution must be taken not
to unduly suppress it.
o Whether this Court must issue the writ of prohibition, suffice it to stress that being possessed of the power to act
on the petition for declaratory relief, public respondent can proceed to determine the merits of the main case. To
halt the proceedings at this point may be acting too prematurely and would not be in keeping with the policy that
courts must decide controversies on the merits.
o Moreover, lacking the requisite proof of public respondent’s alleged partiality, this Court has no ground to prohibit
him from proceeding with the case for declaratory relief. For these reasons, prohibition does not lie.
 WHEREFORE, the Petition is PARTLY GRANTED. The writ of certiorari to nullify and set aside the Order of May 4, 2005 as
well as the Writ of Preliminary Injunction issued by respondent Judge Caguioa on May 11, 2005 is GRANTED. The assailed
Order and Writ of Preliminary Injunction are hereby declared NULL AND VOID and accordingly SET ASIDE. The writ of
prohibition prayed for is, however, DENIED. SO ORDERED.

4. Commissioner of Customs vs. Court of Tax Appeals

G.R. No. 132929; March 27, 2000
MENDOZA, J.:

FACTS:
 PAGCOR is a government corporation with exclusive franchise to operate and maintain gambling casinos.
 On July 5, 1977, it entered into a contract with PCOC for the operation of its floating casino off Manila Bay.
 This establishment was, however, gutted by fire in 1979, for which reason, PAGCOR shifted its operations to land-based
casinos and entered into another contract with PCOC for the management of a casino at the Provident International
Resources Corporation (PIRC) building on Imelda Avenue, Parañaque City. 
 From 1982 to 1984, PCOC imported various articles and equipment which, on the strength of endorsements of exemption it
had procured from the Ministry of Finance, were released from the Bureau of Customs free of tax.
 Sometime in May 1988, the Customs Bureau received confidential information that PCOC had been able to obtain tax
exemption through fraud and misrepresentation.
o Accordingly, the District Collector of Customs issued a warrant for the seizure of the imported articles.
 On March 12, 1989, agents of the Bureau served the warrants at the PIRC building, where the articles were kept, and
several auto parts, escalators, elevators, power systems, kitchen equipment and other heavy equipment were seized or
detained.
 After hearing, the District Collector of Customs ordered on February 22, 1990 the forfeiture of the imported articles.
o PCOC appealed, but the Commissioner of Customs, on February 12, 1991, affirmed the ruling.
 PCOC elevated the case to the CTA, which, on May 28, 1997, reversed the ruling of the Commissioner of Customs and
ordered the release of the articles to PCOC.
 On June 20, 1997, the Commissioner filed a motion for reconsideration but his motion was denied on the ground that it was
filed late.
 The CTA, therefore, ordered the entry of its judgment.
 The Commissioner then filed a petition for certiorari.
o But in its decision dated March 3, 1998, the Court of Appeals dismissed the petition.
 Hence, this petition for review on certiorari.

ISSUE: Whether or not the forfeiture of the illegally released equipment was proper under Section 2530, pars. (f) and (l), sub-
paragraph 3, 4 and 5 of the and Customs Code, as amended?
RULING:
 Prescinding from what has been said, we hold that the forfeiture of the illegally released equipment was proper under
§2530, pars. (f) and (l), sub-paragraph 3, 4 and 5 of the and Customs Code, as amended.
 Contrary to private respondent's contention, the forfeiture proceedings were not barred by prescription as the one year
prescriptive period under Sec. 1603 of the Tariff and Customs Code, as amended, applies only in the absence of fraud.
  In this case, PCOC's importations were released by the Bureau of Customs free of tax by virtue of endorsements issued by
the Ministry (now Department) of Finance.
 These, in turn, were issued on certain misrepresentations of Constancio Francisco, an interlocking officer of PCOC and
PIRC, to the effect that the importations were exempt from taxes and duties.
 The following letter is typical of the requests he made. (CHECK NOTES)
 Nor can we give merit to Francisco's claims that his representations were sanctioned under the concessionaire's contract
between PAGCOR and PCOC.
 In light of Francisco's own admission that he is not in any way connected with PAGCOR and the fact that the former
Ministry of Finance favorably acted on the requests for exemptions on the basis of such misrepresentations, thereby
causing enormous losses to the government in the form of uncollected taxes, the Collector of Customs' finding of fraud on
the part of PCOC, as affirmed by petitioner, was therefore well founded.
 The essence of fraud is the intentional and willful employment of deceit deliberately done or resorted to in order to induce
another to give up some right.

ISSUE: Whether or not PCOC is exempt from payment of Duties, taxes and other imposts on importations?
RULING:
 No, PCOC is not exempt.
 the CTA ruled that the importations of PCOC were exempt from tax pursuant to §4(2)(b) of B.P. Blg. 1067-B, as amended by
P.D. No. 1399,13 , which provides:

Sec. 4. EXEMPTIONS. —

(2) Income and other taxes. —

(b) Others: The exemption herein granted for earnings derived from the operations conducted under the franchise,
specifically from the payment of any tax, income or otherwise, as well as any form of charges, fees, or levies, shall inure to
the benefit of and extend to corporation/s, association/s, agency/ies, or individual/s with whom the Franchisee [PAGCOR]
has any contractual relationship in connection with the operations of the casino/s authorized to be conducted under the
franchise and to those receiving compensation or other remuneration from the Franchise Holder as a result of essential
facilities furnished and/or technical services rendered to the Franchise Holder.

 This provision is not applicable because it refers to income tax exemption.

 As PCOC claims to be exempt from the payment of duties, taxes, and other imposts for imported articles, the CTA should
have applied instead the provision of the first paragraph of §4(1), to wit:

Sec. 4. EXEMPTIONS. —

(1) Duties, taxes and other imposts on importations — All importations of equipment, vehicles, automobiles, boats, ships,
barges, aircraft and such other gambling paraphernalia, including accessories or related facilities, for the sole and exclusive
use of the casinos, the proper and efficient management and administration thereof, and such other clubs, recreation or
amusement places to be established under and by virtue of this Franchise shall be exempt from the payment of duties,
taxes and other imposts, including all kinds of fees, levies, or charges of any kind or nature.

Vessels and/or accessory ferry boats imported or to be imported by any corporation having existing contractual
arrangements with the Franchisee, for the sole and exclusive use of the casino or to be used to service the operations and
requirements of the casino, shall likewise be totally exempt from the payment of all taxes, duties and other imposts,
including all kinds of fees, levies, assessments or charges of any kind or nature, whether National or local.

 Under the first paragraph above, full exemption from the payment of importation-related taxes is granted to PAGCOR —
and no other — irrespective of the type of article imported.

 On the other hand, while the second paragraph grants exemption not only to PACCOR but also to "any corporation having
existing contractual arrangements with [it]," the exemption covers only the importation of vessels and/or accessory ferry
boats, whereas the imported articles involved in this case consisted of auto parts, elevators, escalators, power systems,
kitchen equipment and other heavy equipment.
  PCOC admittedly did not import vessels or accessory ferry boats so as to be exempt from the payment of customs duties.

 Nonetheless, the CTA ruled that PAGCOR's exemption under the first paragraph of 4(1) extends to PCOC by virtue of the
concessionaire's contract under which PCOC was allowed to import equipment and facilities for the use of PAGCOR's
casinos.

 This is not correct.

 It is settled that tax exemptions should be strictly construed against those claiming to be qualified thereto.

 The CTA's ruling in Philippine Casino Operators Corporation v. Commissioner of Internal Revenue, which it cited in deciding
this case, is not in point.

 The sole issue posed in that case, which it answered in the affirmative using §4(2)(b), was whether PCOC was exempt from
paying income tax, surtax of improperly accumulated profits, and business tax.

ISSUE: Whether or not service to the deputized lawyer tantamount to service to the Office of the Solicitor General, the principal
counsel?
RULING:
 No, although the OSG may have deputized the lawyers in a government agency represented by it, the OSG continues to be
the principal counsel, and, therefore, service on it of legal processes, and not that on the deputized lawyers, is decisive.

 Petitioner was represented in the CTA by the Office of the Solicitor General which deputized lawyers in the Legal Service
Division of the Bureau of Customs to serve as collaborating counsels.

 In accordance with this arrangement, lawyers in both offices (Bureau of Customs and the OSG) were served copies of
decisions of the CTA.

 The lawyers at the Bureau received a copy of the decision of the CTA on May 30, 1997, while the OSG received its own on
June 5, 1997.

 As earlier stated, the OSG filed its motion for reconsideration on June 20, 1997.

 Counted from this date, the motion was seasonably filed, but if the period for appealing or filing a motion for
reconsideration were reckoned from the date of receipt of the decision by the lawyers of the Bureau of Customs, then the
motion was filed five days late.

 The Court of Appeals ruled that service of the copy of the CTA decision on the lawyers of the Bureau of Customs was
equivalent to service on the OSG, and, therefore, the motion for reconsideration was filed late.

 This is error. In National Power Corp. v. NLRC,5 it was already settled that although the OSG may have deputized the
lawyers in a government agency represented by it, the OSG continues to be the principal counsel, and, therefore, service on
it of legal processes, and not that on the deputized lawyers, is decisive. It was explained:

o The lawyer deputized and designated as "special attorney-OSG" is a mere representative of the OSG and the latter
retains supervision and control over the deputized lawyer.

o The OSG continues to be the principal counsel . . . . and as such, the Solicitor General is the party entitled to be
furnished copies of the orders, notices and decisions.

o The deputized special attorney has no legal authority to decide whether or not an appeal should be made.

 As a consequence, copies of orders and decisions served on the deputized counsel, acting as agent or representative of the
Solicitor General, are not binding until they are actually received by the latter.
  We have likewise consistently held that the proper basis for computing reglementary period to file an appeal and for
determining whether a decision had attained finality is service on the OSG .

 In ruling that it is service of the adverse decision on the deputized lawyers and not that on the OSG which is decisive, the CA
cited the cases of Republic v.  Soriano and National Irrigation Administration v.  Regino.

o These cases are not in point.

 In Soriano, the Court dismissed the petition of the OSG not because it was bound by the earlier service of its orders on the
deputized counsel but because, counted from the OSG's receipt of the questioned orders, its Motion for Reconsideration
was filed late.

 Thus, it was stated:

o The three . . . Orders in question were received by the OSG on October 14, 1986 having been referred to it by the
Insurance Commissioner on that same day . . . Applying the Interim Rules and Guidelines of the Rules of Court, the
OSG had until October 29, 1986 to file its appeal from the questioned Orders. Consequently, the Motion for
Reconsideration filed on November 10, 1986 was filed out of time. . . .

 On the other hand, the case of National Irrigation Administration v.Regino is different because there the OSG did not
deputize any special counsel.

o The other counsel of record, Atty. Basuil, was deputized by the NIA.

o Thus, the Court's ruling therein that the service of the lower court's order (denying motion for reconsideration) to
Atty. Basuil was also deemed service to the OSG was based on Rule 13, 2 of the Rules of Court.

o The Court itself impliedly recognized that had Atty. Basuil been a deputized special counsel of the OSG, he would
have no authority to decide on his own what action to take on any incident regarding the case.

o The Court stated: "[A]s aptly noted by the private respondent, the Solicitor General did not appoint Atty. Basuil a
special attorney or his deputy."

ISSUE: Whether or not appeal and not a petition for certiorari under Rule 65 was the proper remedy?
RULING:
 No, appeal was not the proper remedy.
 The Court of Appeals ruled that petitioner should have filed an appeal and not a petition for certiorari under Rule 65 of the
1997 Rules of Civil Procedure because even assuming that the CTA erred in ruling that PCOC is exempt from the payment
of importation-related taxes, its error would be an error of judgment committed in the exercise of its jurisdiction.
 We disagree.
 In its order of August 14, 1997, the CTA denied petitioner's motion for reconsideration and ordered the entry of judgment.
 As far as petitioner was concerned, there was no longer any appeal and execution of the decision was in order, whereas
the prime specification of petition for certiorari  is that there is no appeal, nor any other plain, speedy, adequate remedy in
the ordinary course of law.

DISPOSITIVE PORTION: WHEREFORE, the decision of the Court of Appeals is REVERSED and the decision of the Commissioner of
Customs, dated February 12, 1991, is REINSTATED. SO ORDERED.

NOTES:

PHILIPPINE AMUSEMENT & GAMING CORPORATION METRO MANILA

April 22, 1983.

THE HONORABLE MINISTER
Ministry of Finance
Manila

Sir:

Re: Shipment of 62 Packages Containing five units Traction Geared Elevators Per Eastern B/L No. YMA-20 From: Nippon Otis Elevator
Company, Tokyo

This is in connection with the above-captioned importation consisting of 62 packages traction geared elevator shipped per Eastern
B/L No. YMA-20 by Nippon Otis Elevator Co. relating shipping documents of which are hereto attached.

In as much as the said shipment shall be for the sole and exclusive use of the Casino, we are requesting for an authority to secure
release of said shipment, tax-free and duty-free, under the provisions of P.D. No. 1067-B and quoted herein-below as follows:

Sec. 4. Exemptions —

1) Duties, taxes and other imposts on Importations —

All importations of equipment, vehicles, boats, ships, aircrafts and other recreations or amusement places to be established
under and by virtue of this Franchise shall be exempt from the payment of duties, taxes and other imposts.

Likewise, we are requesting that the proper [i]ndorsement be addressed to the Commissioner of Customs and then to the Collector
of Customs, South Harbor, Manila, allowing release from Customs the above-mentioned shipment.

Very truly yours,

PHILIPPINE AMUSEMENT & GAMING CORP.

(SGD.)
CONSTANCIO D. FRANCISCO

The corresponding endorsement22 for such request reads:

REPUBLIKA NG PILIPINAS
MINISTRI NG PANANALAPI
MAYNILA

1st Indorsement

April 26, 1983

Respectfully referred to the Commissioner of Customs Manila.

In view of the representation of Mr. Constancio D. Francisco of the Philippine Amusement and Gaming Corporation in his herein . . .
letter dated April 22 . ., 1983, the shipments consigned to the said Corporation for the exclusive use of the Philippine Casino
Operators Corporation consisting of:

Sixty two (62) packages of five (5) units Geared Traction Elevators covered by Bill of Lading No. YMA-20 of the vessel
"EASTERN METEOR" and Proforma Invoice dated My 18, 1982

xxx       xxx       xxx

may be released without the pre-payment of duties and taxes required by Section 23 6f PD No. 1177, pursuant to the Joint Circular
Issued by the Budget Commission and the Ministry of Finance dated May 9, 1978 . . . .
By Authority of the Minister:

(SGD .)

IGNACIO D. RAMIREZ
Chief Local Tax Adviser
and concurrently Officer-In-Charge
Finance Revenue Service

5. PILIPINAS SHELL PETROLEUM CORPORATION v. COMMISSIONER OF CUSTOMS, Dec. 2016

FACTS:

 On 16 April 1996, R.A. No. 8180, otherwise known as the "Downstream Oil Industry Deregulation Act of 1996" took effect.
 It provides, among others, for the reduction of the tariff duty on imported crude oil from ten percent (10%) to three
percent (3%). The particular provision of which is hereunder quoted as follows:

Section 5. Liberalization of Downstream Oil Industry and Tariff Treatment. - x x x

b) Any law to the contrary notwithstanding and starting with the effectivity of this Act, tariff shall be imposed and collected
on imported crude oil at the rate of three percent (3%) and imported refined petroleum products at the rate of seven
percent (7%), except fuel oil and LPG, the rate for which shall be the same as that for imported crude oil  Provided, That
beginning on January 1, 2004 the tariff rate on imported crude oil and refined petroleum products shall be the
same: Provided, further, That this provision may be amended only by an Act of Congress.

 Prior to its effectivity, petitioner's importation of 1,979,674.85 U.S. barrels of Arab Light Crude Oil, thru the  Ex MT Lanistels,
arrived on 7 April 1996, 9 days earlier than the effectivity of the liberalization provision.
o Within a period of three days thereafter, or specifically on 10 April 1996, said shipment was unloaded from the
carrying vessels docked at a wharf owned and operated by petitioner, to its oil tanks located at Batangas City.
 Subsequently, petitioner filed the Import Entry and Internal Revenue Declaration and paid the import duty of said shipment
in the amount of P11,231,081.00 on 23 May 1996.
 More than four (4) years later, petitioner received a demand letter dated July 2000 from the Bureau of Customs (BOC),
through the District Collector of Batangas, assessing it to pay the deficiency customs duties in the amount of
P120,162,991.00 due from the aforementioned crude oil importation, representing the difference between the amount
allegedly due (at the old rate often percent (10%) or before the effectivity of R.A. No. 8180) and the actual amount of duties
paid by petitioner (on the rate of 3%).
 Petitioner protested the assessment on 14 August 2000, to which the District Collector of the BOC replied on 4 September
2000 reiterating his demand for the payment of said deficiency customs duties.
 On 11 October 2000, petitioner appealed the 4 September 2000 decision of the District Collector of the BOC to the
respondent and requested for the cancellation of the assessment for the same customs duties.
 However, five years after petitioner paid the allegedly deficient import duty it received by telefax from the respondent a
demand letter for the payment of the amount of P936,899,885.90, representing the dutiable value of its 1996 crude oil
importation which had been allegedly abandoned in favor of the government by operation of law.
o Respondent stated that Import Entry No. 683-96 covering the subject importation had been irregularly filed and
accepted beyond the thirty-day (30) period prescribed by law.
o Petitioner protested the aforesaid demand letter on 7 November 2001 for lack of factual and legal basis, and on
the ground of prescription.
 Seeking clarification as to what course of action the BOC is taking, and reiterating its position that the respondent's demand
letters dated 29 October 2001 and 27 July 2000 have no legal basis, petitioner sent a letter to the Director of Legal Service
of the BOC on 3 December 2001 for said purpose.
 On 28 December 2001, BOC Deputy Commissioner Gil A. Valera sent petitioner a letter which stated that the latter had not
responded to the respondent's 29 October 2001 demand letter and demanded payment of the amount of P936,899,885.90,
under threat to hold delivery of petitioner's subsequent shipments, pursuant to Section 1508 of the Tariff and Customs
Code of the Philippines (TCCP), and to file a civil complaint against petitioner.
 In reply thereto, petitioner sent a letter to the BOC Deputy Commissioner and expressed that it had already responded to
the aforesaid demand letter through the letters dated 7 November 2001 and 3 December 2001 sent to respondent and to
the Director of Legal Service of the BOC, respectively.
  On April 2002, the BOC filed a civil case for collection of sum of money against petitioner, together with Caltex Philippines,
Inc. as co-party therein, docketed as Civil Case No. 02103239, before Branch XXV, Regional Trial Court (RTC), of the City of
Manila.
 Consequently, on 27 May 2002, petitioner filed with the Court of Tax Appeals (CTA) a Petition for Review, raffled to the
Former First Division (CTA in Division, upon consideration that the civil complaint filed in the RTC of Manila was the final
decision of the BOC on its protest.
 Respondent filed on August 2002 a motion to dismiss the said petition raising lack of jurisdiction and failure to state a cause
of action as its grounds, which the CTA in Division denied in the Resolution. Likewise, respondent's motion for
reconsideration filed was denied on its June 2003 Resolution.
 Subsequently, respondent, through the OSG, filed before the Court of Appeals (CA) a Petition for Certiorari and Prohibition
with Prayer for the Issuance of a Temporary Restraining Order and Writ of Preliminary Injunction, praying for the reversal
and setting aside of the CTA in Division's Resolutions dated 17 January 2003 and 16 June 2003.
 In the interim, respondent filed his Answer to the petition which reiterated the lack of jurisdiction and failure to state a
cause of action. Thereafter, trial on the merits ensued.
 On 15 February 2007, the Former First Division of the CA dismissed respondent's petition in CA-G.R. SP No. 78563. Similarly,
respondent's motion for reconsideration of the 15 February 2007 Decision was denied.

The Ruling of the CTA in Division

 In a Decision, the CTA in Division ruled to dismiss the Petition for Review on C.T.A. Case No. 6485 for lack of merit and
accordingly ordered petitioner to pay the entire amount of P936,899,883.90 representing the total dutiable value of the
subject shipment of Arab Light Crude Oil on the ground of implied abandonment pursuant to Sections 1801 and 1802 of
the TCCP.
 Relevant thereto, the CTA in Division made the following factual and legal findings:
o (a) that petitioner filed the specified entry form (Import Entry and Internal Revenue Declaration) beyond the 30-
day period prescribed under Section 1301 of the TCCP;
o (b) that for failure to file within the aforesaid 30-day period, the subject importation was deemed abandoned in
favor of the government in accordance with Sections 1801 and 1802 of the TCCP;
o (c) that petitioner's excuses in the delay of filing its Import Entry and Internal Revenue Declaration were
implausible;
o (d) that since the government became the owner of the subject shipment by operation of law, petitioner has no
right to withdraw the same and should be held liable to pay for the total dutiable value of said shipment computed
at the time the importation was withdrawn from the carrying vessel pursuant to Section 204 of the TCCP;
o (e) that there was fraud in the present case considering that "the District Collector, in conspiracy with the officials
of Caltex and Shell acted without authority or [with] abused (sic) [of] authority by giving undue benefits to the
importers by allowing the processing, payment and subsequent release of the shipments to the damage and
prejudice of the government who, under the law is already the owner of the shipments x x x;" thus, prescription
under Section 1603 of the TCCP does not apply herein; and
o (f) that the findings of facts of administrative bodies charged with their specific field of expertise, are afforded
great weight by the courts; and in the absence of substantial showing that such findings are made from an
erroneous estimation of the evidence presented, they are conclusive, and in the interest of stability of the
government structure, should not be disturbed.
 On 24 February 2009, the CTA in Division denied petitioner's Motion for Reconsideration for lack of merit citing Section
5(b), Rule 6 of the 2005 Revised Rules of the CTA, as sole legal basis in considering the Memorandum dated 2 February 2001
issued by the Customs Intelligence & Investigation Service, Investigation & Prosecution Division (CIIS-IPD) of the BOC as
evidence to establish fraud, and the case of Chevron Phils., Inc. v. Commissioner of the Bureau of Customs, as the
jurisprudential foundation therein.
 Aggrieved, petitioner appealed to the CTA Former En Banc by filing a Petition for Review , under Section 3(b), Rule 8 of the
2005 Revised Rules of the CTA, as amended, in relation to Rule 43 of the 1997 Rules of Civil Procedure, as amended.

The Ruling of the CTA Former En Banc

 Affirmed the CTA in Division's ruling pertaining to the implied abandonment caused by petitioner's failure to file the Import
Entry and Internal Revenue Declaration within the 30-day period, and transfer of ownership by operation of law to the
government of the subject shipment in accordance with Sections 1801 and 1802, in relation to Section 13.01, of the TCCP,
and with the pronouncements made in the Chevron case.
 Notably however, the ponente of the assailed Decision declared therein that the existence of fraud is not controlling in the
case at bench and would not actually affect petitioner's liability to pay the dutiable value of its imported crude oil, pertinent
portion of which are quoted hereunder for ready reference, to wit:

As regards the issue on the existence of fraud, it should be emphasized that fraud is not controlling in this case. Even in
the absence of fraud, petitioner Shell is still liable for the payment of the dutiable value by operation of law. The liability
of petitioner Shell for the payment of the dutiable value of its imported crude oil arose from the moment it appropriated
for itself the said importation, which were already a property of the government by operation of law.  Absence of fraud in
this case would not exclude petitioner Shell from the coverage of Sections 1801 and 1802 of the TCCP. (Emphasis
supplied)

Furthermore, citing the case of Eastern Shipping Lines, Inc. v. Court of Appeals and Mercantile Insurance Company, Inc., the
CTA Former En Banc imposed an additional legal interest of six percent (6%) per annum  on the total dutiable value of
P936,899,883.90, accruing from the date said decision was promulgated until its finality; and afterwards, an interest rate of
twelve percent (12%) per annum shall be applied until its full satisfaction.

 Not satisfied, petitioner filed a motion for reconsideration thereof which was denied.
 Consequently, this Petition for Review wherein petitioner seeks the reversal and setting aside of the aforementioned
Decision and Resolution dated 13 May 2010 and 22 February 2011, respectively, and accordingly prays that a decision be
rendered finding:
o (a) that petitioner has already paid the proper duties on its importation and therefore not liable anymore; and
o (b) that petitioner is not deemed to have abandoned its subject shipment; or, in the alternative,
o (c) that respondent's attempt to collect is devoid of any legal and factual basis considering that the right to collect
against petitioner relating to its subject shipment has already prescribed.
 Petitioner asseverates that:
o (a) in the absence of fraud, the right of respondent to claim against petitioner, assuming there is any, has already
prescribed since an action involving payment of customs duties demanded after a period of one (1) year from the
date of final payment of duties shall not succeed, relying on Section 1603 of the TCCP;
o (b) the alleged Memorandum dated 2 February 2001 issued by the Investigation and Prosecution Division (IPD) of
the BOC, which served as the court a quo's basis in finding fraud on the part of petitioner, was never presented,
authenticated, marked, identified, nor formally offered in evidence; hence, inadmissible and cannot be the basis of
any finding of fraud;
o (c) even if the Memorandum dated 2 February 2001 is legally admitted in evidence, it still does not constitute clear
and convincing proof to establish any fraud on the part of petitioner since, unlike in the  Chevron case, it was
entitled to avail of the reduced three percent (3%) rate under R.A. No. 8180, which was already in effect as early as
16 April 1996; thus, petitioner did not gain any undue advantage or benefit from its justifiable delay in filing the
Import Entry and Internal Revenue Declaration within the 30-day mandatory period; and
o (d) the evidence on record and the acts of petitioner [filing of Import Entry Declaration (JED) and paying advance
duties] disclose honest and good faith on its part showing clear absence of any fraudulent intent to evade the
payment of the proper customs duties and taxes due at the time of the entry of its imported crude oil in the
Philippines.
 Petitioner further argues that the government suffered or lost nothing when petitioner filed its Import Entry and Internal
Revenue Declaration thirteen (13) days beyond the period allowed by law, considering that the former did not lose any tax
collection when petitioner had allegedly paid in advance the amount of P71,923,285.00 for the regular tariff duty of 10%
then prevailing, notwithstanding its entitlement to the reduced 3% rate under RA No. 8180.
o Consequently, by ordering petitioner to pay for the entire dutiable value amounting to P936,899,883.90, the
government shall be guilty of unjust enrichment, and such would result to deprivation of property on the part of
petitioner without due process of law.
 Moreover, it is petitioner's contention that the principles enunciated in the Chevron case were misapplied in the case at
bench.
o It explained that the reason for such ruling establishing the "ipso facto abandonment" doctrine was because there
was a finding of fraud on the part of Chevron, being the importer.
 The existence of fraud was a critical and essential fact in the disposition on the issues in the Chevron
case that justified the goods to be deemed impliedly abandoned in favor of the government.
o Corollarily, in the absence of fraud, goods cannot be deemed impliedly abandoned and ipso facto owned by the
government arising from a mere delay in the submission of the Import Entry and Internal Revenue Declaration,
such as in the present case.
 o In other words, petitioner is convinced that the provisions of Sections 1801 and 1802 cannot be applied blindly
which may cause goods to be impliedly abandoned in favor of the government, without even recognizing the
peculiar circumstances of the case and without allowing the importer (petitioner herein) to provide justifications
for the delay in the submission of its Import Entry and Internal Revenue Declaration.
o Allegedly, both notices to the importer to file entry and for its failure to file an entry within the non -extendible
period of 30 days are essential before a shipment can be considered impliedly abandoned.
o Otherwise, to do so would constitute violation of the basic substantial constitutional rights of petitioner.
 Petitioner explains that, in issuing Customs Administrative Order (CAO) No. 5-93 dated 1 September 1993 and Customs
Memorandum Order (CMO) No. 15-94 dated 29 April 1994, respondent even recognized the significance of the due notice
requirement before any goods may be deemed impliedly abandoned articles.
o Such notice purportedly refers to notice to file entry, and not notice of arrival as mistakenly interpreted by the CTA
Former En Banc.
o Thus, in the absence of such notice in the present case, there could have been no implied abandonment in favor of
the government of the said imported crude oil by petitioner pursuant to Section 1801 of the TCCP.
 Lastly, petitioner believes that affirmance of the ruling a quo, would be tantamount to a clear violation of international
laws, i.e. the Revised Kyoto Convention, which generally prohibit the imposition of substantial penalties for errors when
there is no fraud or gross negligence on the part of an importer.
 Consequently, such current and reasonable trend in the international and uniform application of customs rules and laws
shows how unreasonable, unjust, confiscatory, iniquitous and incongruent the disposition made against petitioner in the
instant case; hence, the very need to set aside the assailed Decision and Resolution of the CTA Former En Banc in C.T.A. EB
No. 472, in order to prevent the creation of a legal precedent which contravenes State commitments.
 Respondent, on the other hand, counters that petitioner's failure to file its Import Entry and Internal Revenue Declaration
within the non-extendible period of 30 days was fatal to its cause of action.
o Resultantly, the subject imported crude oil is deemed abandoned in favor of the government by reason of such
non-filing of the imported entries within said prescriptive period. 38

ISSUE:

RULING:

 The submissions of the parties to this case bring to fore two timelines and the consequences of the lapse of the prescribed
periods.
 Petitioner appears to be covered by Section 1801, in relation to Section 1301, which respectively states:

Sec. 1801. Abandonment, Kinds and Effects of. - An imported article is deemed abandoned under any of the following
circumstances:

(a) When the owner, importer, or consignee of the imported article expressly signifies in writing to the Collector of Customs
his intentions 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, 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)

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.

xxxx

Sec. 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 the 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 violations against applicable provisions of this Code when the importation is
found to be unlawful.

 Tersely put, when an importer after due notice fails to file an Import Entry and Internal Revenue Declaration within an
unextendible period of thirty (30) days from the discharge of the last package, the imported article is deemed abandoned in
favor of the government.
 Upon the other hand, respondent is covered in a manner likewise mandatory, by the provisions of Section 1603 which
states that:

Sec. 1603. Finality of Liquidation. - When articles have been entered and passed free of duty or final adjustment 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. (Emphasis supplied)

 We rule that in this case, Section 1603 is squarely applicable.

 The finality of liquidation which arises one (1) year after the date of the final payment of duties, which is in this case 23 May
1996, renders inoperable the provisions of Section 1801.

Discussion

 At the outset, it bears emphasis that the determination of the issues presented in this case requires a comprehensive
assessment of the pronouncements made in the case of Chevron Philippines, Inc. v. Commissioner of the Bureau of
Customs; thus, we find it imperative to reproduce hereunder the points there considered which are germane to the
controversy under review.

ISSUE: WON the imported articles were abandoned.

RULING: YES

 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. -

xxxx

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.
 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 tile 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.

Any person who abandons an imported article renounces all his interests and property rights therein.
 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;

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 x x x.

 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. 
o 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.
o It would be error on our part to continue applying the old law despite the clear changes introduced by the
amendment. (Emphasis and underlining supplied)
 Based on the foregoing, it appears that in the Chevron case, the Court simply applied the clear provision of Section 1801(b),
in relation to Section 1301, of the TCCP, as amended, which categorically provides that mere failure on the part of the
owner, importer, consignee or interested party, after due notice, to file an entry within a non-extendible period of 30 days
from the date of discharge of the last package (shipment) from the vessel, would mean that such owner, importer,
consignee or interested party is deemed to have abandoned said shipment.
 Consequently, abandonment of such shipment (imported article) constitutes renouncement of all his interests and property
rights therein.
 The rationale of strict compliance with the non-extendible period of 30 days within which import entries (IEIRDs) must be
filed for imported articles are as follows:
o (a) to prevent considerable delay in the payment of duties and taxes;
o (b) to compel importers to file import entries and claim their importation as early as possible under the threat of
having their importation declared as abandoned and forfeited in favor of the government;
o (c) to minimize the opportunity of graft;
o (d) to compel both the BOC and the importers to work for the early release of cargo, thus decongesting all ports of
entry;
o (e) to facilitate the release of goods and thereby promoting trade and commerce; and
o (f) to minimize the pilferage of imported cargo at the ports of entry. The aforesaid policy considerations were
significant to justify a firm observance of the aforesaid prescriptive period.
 It was observed that it is the law itself that considers an imported article abandoned for failure to file the corresponding
Import Entry and Internal Revenue Declaration within the allotted time.
o No acts or omissions to establish intent to abandon is necessary to effectuate the clear provision of the law.
o Since Section 1801(b) does not provide any qualification as to what may have caused such failure in filing said
import entry within the prescriptive period in order to render the imported article abandoned, this Court shall
likewise make no distinction and plainly apply the law as clearly stated.
o Hence, upon the lapse of the aforesaid non-extendible period of 30 days, without the required import entry filed
by the importer within said period, its imported article is therefore deemed abandoned.
 Moreover, Section 1802 of the same Code states to whom said abandoned imported articles belong as a consequence of
such renouncement by the owner, importer, consignee or interested party. It 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.

x x x x (Emphasis supplied)

 In the Chevron case, we explained that the term "ipso facto" is defined as "by the very act itself” or "by mere act."
 Hence, there is no need for any affirmative act on the part of the government with respect to abandoned imported articles
given that the law itself categorically provides that said articles shall  ipso facto be deemed the property of the government.
  By using the term "ipso facto" in Section 1802 of the TCCP, as amended by R.A. No. 7651, the legislature removed the need
for abandonment proceedings and for any declaration that imported articles have been abandoned before ownership
thereof can be effectively transferred to the government.
 In other words, ownership over the abandoned imported articles is transferred to the government by operation of law.
 The rulings in Chevron was generously applied by CTA Former En Banc in the present case. Thus:

Petitioner Shell's failure to file the required entries, within the prescribed non-extendible period of thirty (30) days from
the date of discharge of the last package from the carrying vessel, constitutes implied abandonment of its oil
importation. This means, that from the precise moment that the non-extendible thirty-day period had lapsed, the
abandoned shipment was deemed the property of the government. Therefore, when petitioner withdrew the oil shipment
for consumption, it appropriated for itself properties which already belonged to the government. x x x

Petitioner Shell's contention that the belated filing of its import entries is justified due to the late arrival of its import
documents, which are necessary for the proper computation of the import duties, cannot be sustained.

xxxx

 The [CTA Former En Banc] cannot also accept such excuses, as the absence of supporting documents should not have
prevented petitioner Shell from complying with the mandatory non-extendible period, since the law prescribes an
extremely serious consequence for delayed filing. If this kind of excuse was to be accepted, then the collection of customs
duties would be at the mercy of importers, which our lawmakers try to avoid.

For all the foregoing, we rule that the late filing of the IEIRDs alone, which constituted implied abandonment, makes
petitioner Shell liable for the payment of the dutiable value of the imported crude oil. x x x 43 (Emphasis supplied)

APPLICATION:

 Since it is undisputed that the Import Entry and Internal Revenue Declaration was belatedly filed by petitioner on 23 May
1996, or more than 30 days from the last day of discharge of its importation counted from 10 April 1996, the importation
may be considered impliedly abandoned in favor of the government.
 Petitioner argues that before Section 1802 can be applied and the ipso facto provision invoked, the requirement of due
notice to file entry and the determination of the intent of the importer are essential in order to consider the subject
imported crude oil of petitioner impliedly abandoned in favor of the government.
o It further asserts that, in the Chevron case, it was conceded that as a general rule, due notice is indeed required
before any imported article can be considered impliedly abandoned, but Chevron's non-entitlement to such prior
notice was legally justified because of the finding of fraud established against it, rendering it impossible for the
BOC to comply with the due notice requirement under the prevailing rules.
o Consequently, it is petitioner's conclusion that such finding of fraud is indispensable in order to waive the "due
notice requirement," that would eventually consider the subject imported crude oil impliedly abandoned in favor
of the government.
 In Chevron, we observed that:

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:

xxxx

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.

xxxx

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. I'm thinking of certain cases, Mr. Chairman, where the  owner
might not have known. This is now on implied abandonment not the express abandonment.

xxxx

HON. QUIMPO. Because I'm thinking, Mr. Chairman. I'm 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.

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.

xxxx

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. That's why we have a procedure in the bureau whereby importers can file their entries
even before the shipment arrives in the country. (Emphasis supplied)

xxxx

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.
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 entrv 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.44 (Emphasis
and underlining supplied)

 Therefrom, it is without a doubt that the requirement of due notice contemplated under Section 1801(b) of the TCCP, as
amended, refers to the notice to the owner, importer, consignee or interested party of the arrival of its
shipment and details thereof.
  The legislative intent was clear in emphasizing the importance of said notice of arrival, which is intended solely to persons
not considered as knowledgeable importers, or those who are not familiar with the governing rules and procedures in the
release of importations.
 We as much as said that the due notice requirement under Section 1801(b), do not apply to knowledgeable importers, such
as Chevron in the above-cited case, for having been considered as one of the regular, large-scale and multinational
importers of oil and oil products, familiar with said rules and procedures (including the duty and obligation of filing the
IEIRD within a non-extendible period of 30 days) and fully aware of the arrival of its shipment on its privately owned pier or
wharf in the Port of Batangas.
 Applying Chevron, the decision assailed here said:

The due notice required under Section 1301 is the notice of the arrival of the shipment. In this case, pursuant to the
Chevron case, notice to petitioner Shell is not required under the peculiar circumstances of the case.  Petitioner Shell, like
Chevron, is a regular, large-scale and multinational importer of oil and oil products, who falls under the category of a
knowledgeable importer, familiar with the governing rules and procedures in the release of importations.

More importantly, petitioner Shell even admitted that it filed an application for Special Permit to Discharge and paid the
corresponding advance duties on March 22, 1996 (Exhibits "K" and "P"),, which undeniably proved knowledge on the
part of petitioner Shell of the arrival of the shipment. Likewise, upon arrival of the shipment, they were unloaded from
the carrying vessels docked at the wharf owned by petitioner Shell at Tabangao, Batangas City; thus, petitioner Shell was
fully aware that their importation had already arrived. (Emphasis supplied)

ISSUE: WON there is fraud on the part of Shell.

RULING: NO

 The foregoing having been said, we must with equal concern, go to the other timeline which is provided for in Section 1603
of the TCCP, to wit:

Sec. 1603. Finality of Liquidation. - When articles have been entered and passed free of duty or final adjustment 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.

 Petitioner insists that, in the absence of fraud, the right of respondent to claim against it has already prescribed considering
that an action involving the entry and payment of customs duties involving imported articles demanded after a period of
one (1) year from the date of final payment of duties, shall not succeed, pursuant to the clear provision of Section 1603.
o It therefore contends that even if the subject imported crude oil of petitioner is by law deemed abandoned by
operation of law under Sections 1801(b), in relation to Section 1301, of the Code, respondent's right to claim
abandonment had already lapsed since fraud is wanting in this case.
 On the other hand, respondent counters that since there was a factual finding of fraud committed by petitioner in the filing
of its Import Entry and Internal Revenue Declaration beyond the 30-day period prescribed under Section 1301 of the TCCP,
the 1-year prescriptive period under Section 1603 therefore does not apply.
 At this point, it bears emphasis that in a petition for review on certiorari under Rule 45 of the Rules of Court, only questions
of law may be raised. x x x However, it is already a settled matter that, the Court had recognized several exceptions to this
rule, to wit: x x x (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by
the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by
the parties, which, if properly considered, would justify a different conclusion.

APPLICATION:

 Records of this case reveal that the CTA in Division in its 19 June 2008 Decision made a pronouncement that there was
indeed fraud committed by petitioner based on the factual finding contained in the Memorandum dated 2 February 2001
issued by Special Investigator II Domingo B. Almeda and Special Investigator III Nemesio C. Magno, Jr. of the CIIS-IPD of the
BOC.
 Consequently, since such memorandum made such factual finding of fraud against petitioner, the court a quo ruled that
prescription does not set in even if respondent's claim was made beyond the 1-year reglementary period.
 Upon an assiduous review of the factual finding of fraud, we find petitioner's contention meritorious.
 Hence, the instant case falls among the exceptions to the general rule previously mentioned which would require this
Court's judicial prerogative to review the court  a quo's findings of fact.
 Generally, fraud has been defined as "the deliberate intention to cause damage or prejudice. It is voluntary execution of a
wrongful act, or a willful omission, knowing and intending the effects which naturally and necessarily arise from such act or
omission.
o For fraud to exist, it must be intentional, consisting of deception willfully and deliberately done or resorted to in
order to induce another to give up some right. 52 It is never presumed and the burden of proof to establish lies in
the person making such allegation since every person is presumed to be in good faith. 53 To discharge this burden,
fraud must be proven by clear and convincing evidence.
o Also, fraud must be alleged and proven as a fact where the following requisites must concur: (a) the fraud must be
established by evidence; and (b) the evidence of fraud must be clear and convincing, and not merely
preponderant. Upon failure to establish these two (2) requisites, the presumption of good faith must prevail.
 Section 3611(c) of the TCCP, as amended defines the term fraud as the occurrence of a "material false statement or act in
connection with the transaction which was committed or omitted knowingly, voluntarily and intentionally, as established by
clear and convincing evidence."
 Again, such factual finding of fraud should be established based on clear, convincing, and uncontroverted evidence.
 Relevant thereto, in the landmark case of Aznar v. Court of Tax Appeals, we explained the general concept of fraud as
applied to tax cases in the following fashion:

The fraud contemplated by law is actual and not constructive. It must be intentional fraud, consisting of deception
willfully and deliberately done or resorted to in order to induce another to give up some legal right.  Negligence, whether
slight or gross, is not equivalent to the fraud with intent to evade the tax contemplated by the law. It must amount to
intentional wrong doing with the sole object of avoiding the tax. 

It necessarily follows that a mere mistake cannot be considered as fraudulent intent, and if both petitioner and
respondent Commissioner of Internal Revenue committed mistakes in making entries in the returns and in the
assessment, respectively, under the inventory method of determining tax liability, it would be unfair to treat the
mistakes of the petitioner as tainted with fraud and those of the respondent as made in good faith. (Emphasis supplied)

 In the case at bench, a perusal of the records reveals that there is neither any iota of evidence nor concrete proof offered
and admitted to clearly establish that petitioner committed any fraudulent acts.
 The CTA in Division relied solely on the Memorandum dated 2 February 2001 issued by the CIIS-IPD of the BOC in ruling the
existence of fraud committed by petitioner. However, there is no showing that such document was ever presented,
identified, and testified to or offered in evidence by either party before the trial court.
 Time and again, this Court has consistently declared that cases filed before the CTA are litigated  de novo, party-litigants
must prove every minute aspect of their cases.
 Section 8 of R.A. No. 1125, as amended by R.A. No. 9282, categorically described the CTA as a court of record.
 Indubitably, no evidentiary value can be given to any documentary evidence merely attached to the BOC Records, as the
rules on documentary evidence require that such documents must be formally offered before the CTA.
 Pertinent is Section 34, Rule 132 of the Rules of Court which reads:

Section 34. Offer of evidence. - The court shall consider no evidence which has not been formally offered. The purpose for
which the evidence is offered must be specified.

 From the foregoing provision, it is clear that for evidence to be considered by the court, the same must be formally offered.
 Corollarily, the mere fact that a particular document is identified and marked as an exhibit does not mean that it has
already been offered as part of the evidence of a party.
 In Interpacific Transit, Inc. v. Aviles, we had the occasion to make a distinction between identification of documentary
evidence and its formal offer as an exhibit.
 We said that the first is done in the course of the trial and is accompanied by the marking of the evidence as an exhibit
while the second is done only when the party rests its case and not before.
 A party, therefore, may opt to formally offer his evidence if he believes that it will advance his cause or not to do so at all. In
the event he chooses to do the latter, the trial court is not authorized by the Rules to consider the same.
 The Rule on this matter is patent that even documents which are identified and marked as exhibits cannot be considered
into evidence when the same have not been formally offered as part of the evidence, but more so if the same were not
identified and marked as exhibits, such as in the present case.
 An assay of the records reveals that the subject Memorandum dated 2 February 2001 was neither identified nor offered
in evidence by respondent during the entire proceedings before the CTA in Division.
 Consequently, this is fatal to respondent's cause in establishing the existence of fraud committed by petitioner since the
burden of proof to establish the same lies with the former alone.
 As a matter of fact, even if the aforesaid documentary evidence was included as part of the ROC Records submitted before
the CTA in compliance with a lawful order of the court, this does not permit the trial court to consider the same in view of
the fact that the Rules prohibit it.
 The reasoning forwarded by the CTA in Division in its Resolution dated 24 February 2009, that the apparent purpose of
transmittal of the records is to enable it to appreciate and properly review the proceedings and findings before an
administrative agency, is misplaced.
 Unless any of the party formally offered in evidence said Memorandum, and accordingly, admitted by the court  a quo, it
cannot be considered as among the legal and factual bases in resolving the controversy presented before it.
 By analogy, in Dizon v. CTA, this Court underscored the importance of a formal offer of evidence and the corresponding
admission thereafter. We quote:

While the CTA is not governed strictly by technical rules of evidence, as rules of procedure are not ends in
themselves and are primarily intended as tools in the administration of justice, the presentation of the BIR's
evidence is not a mere procedural technicality which may be disregarded considering that it is the only means by
which the CTA may ascertain and verify the truth of BIR's claims against the Estate. The BIR's failure to formally
offer these pieces of evidence, despite CTA's directives, is fatal to its cause. Such failure is aggravated by the fact
that not even a single reason was advanced by the BIR to justify such fatal omission. This, we take against the BIR.

Per the records of this case, the BIR was directed to present its evidence in the hearing of February 21, 1996, but
BIR's counsel failed to appear. The CTA denied petitioner's motion to consider BIR's presentation of evidence as
waived, with a warning to BIR that such presentation would be considered waived if BIR's evidence would not be
presented at the next hearing. Again, in the hearing of March 20, 1996, BIR's counsel failed to appear. Thus, in its
Resolution dated March 21, 1996, the CTA considered the BIR to have waived presentation of its evidence. In the
same Resolution, the parties were directed to file their respective memorandum. Petitioner complied but BIR
failed to do so. In all of these proceedings, BIR was duly notified. Hence, in this case, we are constrained to apply
our ruling in Heirs of Pedro Pasag v. Parocha:

A formal offer is necessary because judges are mandated to rest their findings of facts and their
judgment only and strictly upon the evidence offered by the parties at the trial. Its function is to enable
the trial judge to know the purpose or purposes for which the proponent is presenting the evidence. On
the other hand, this allows opposing parties to examine the evidence and object to its admissibility.
Moreover, it facilitates review as the appellate court will not be required to review documents' not
previously scrutinized by the trial court.

Strict adherence to the said rule is not a trivial matter. The Court in Constantino v. Court of Appeals ruled
that the formal offer of one's evidence is deemed waived after failing to submit it within a considerable
period of time. It explained that the court cannot admit an offer of evidence made after a lapse of three
(3) months because to do so would ''condone an inexcusable laxity if not non-compliance with a court
order which, in effect, would encourage needless delays and derail the speedy administration of
justice."

Applying the aforementioned principle in this case, we find that the trial court had reasonable ground to consider
that petitioners had waived their right to make a formal offer of documentary or object evidence. Despite several
extensions of time to make their formal offer, petitioners failed to comply with their commitment and allowed
almost five months to lapse before finally submitting it. Petitioners' failure to comply with the rule on
admissibility of evidence is anathema to the efficient, effective, and expeditious dispensation of
justice. (Emphasis and underlining supplied)

 Clearly therefore, evidence not formally offered during the trial cannot be used for or against a party litigant by the trial
court in deciding the merits of the case.
 Neither may it be taken into account on appeal. Since the rule on formal offer of evidence is not a trivial matter, failure to
make a formal offer within a considerable period of time shall be deemed a waiver to submit it.
 Consequently, any evidence that has not been offered and admitted thereafter shall be excluded and rejected.
  Moreover, even if not submitted as a contention herein, We find it apropos to rule that the CTA likewise cannot  motu
proprio justify the existence of fraud committed by petitioner by applying the rules on judicial notice.
 Judicial notice is the cognizance of certain facts which judges may properly take and act on without proof because they
already know them. Under the Rules of Court, judicial notice may either be mandatory or discretionary. (See Notes Re:
Provisions of Rule 129)

ISSUE: WON the claim of respondent against petitioner has already prescribed.

RULING: YES

 There being no evidence to prove that petitioner committed fraud in belatedly filing its Import Entry and Internal Revenue
Declaration within the 30-day period prescribed under Section 1301 of the TCCP, as amended, respondent's rights to
question the propriety thereof and to collect the amount of the alleged deficiency customs duties, more so the entire value
of the subject shipment, have already prescribed.
 Simply put, in the absence of fraud, the entry and corresponding payment of duties made by petitioner becomes final and
conclusive upon all parties after one (1) year from the date of the payment of duties in accordance with Section 1603 of the
TCCP, as amended:

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 as well, 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. (Emphasis and underscoring supplied)

 The above provision speaks of  entry and passage free of duty or settlements of duties.
 Generally, in customs law, the term "entry" has a triple meaning, to wit:
o (1) the documents filed at the customs house;
o (2) the submission and acceptance of the documents and
o (3) the procedure of passing goods through the customs house.
o As explained in the Chevron case, it specifically refers to the filing and acceptance of the Import Entry and Internal
Revenue Declaration of the imported article.
o Simply put, the entry of imported goods at the custom house consists in submitting them to the inspection of the
revenue officers, together with a statement or description of such goods, and the original invoices of the same, for
the purpose of estimating the duties to be paid thereon.
o The term "duty" used therein denotes a tax or impost due to the government upon the importation or exportation
of goods.
o It means that the duties on imports signify not merely a duty on the act of importation, but a duty on the thing
imported.
o It is not confined to a duty levied while the article is entering the country, but extends to a duty levied after it has
entered the country.
 Based on the foregoing definitions, it is commonsensical that the finality of liquidation referred to under Section 1603
covers the propriety of the submission and acceptance of the Import Entry and Internal Revenue Declaration covering the
imported articles being brought in the country for the sole purpose of determining whether it is subject to tax or not; and if
it is, whether the computation of the tax or impost to be paid to the government was properly made.
 These shall include, among others, the declarations and statements contained in the entry, made under oath and under the
penalties of falsification or perjury that such declarations and statements contained therein are true and correct, which
shall constitute prima facie evidence of knowledge and consent of the importer of violation against applicable provisions of
the TCCP when the importation is found to be unlawful.
 Indubitably, the matters which become final and conclusive against all parties include the timeliness of filing the import
entry within the period prescribed by law, the declarations and statements contained therein, and the payment or non-
payment of customs duties covering the imported articles by the owner, importer, consignee or interested party.
 Since the primordial issue presented before us focuses on petitioner's non-compliance in filing its Import Entry and Internal
Revenue Declaration within a non-extendible period of 30 days from the date of discharge of' the last package from the
vessel, respondent may only look into it within a limited period of one (1) year in accordance with the above-quoted
provision.

APPLICATION:
  In the case at bench, it is undisputed that petitioner filed its IEIRD and paid the remaining customs duties due on the subject
shipment only on 23 May 1996.
 Yet, it was only on 1 August 2000, or more than four (4) years later, that petitioner received a demand letter from the
District Collector of Batangas for the alleged unpaid duties covering the said shipment.
 Thereafter, on 29 October 2001, or after more than five (5) years, petitioner received another demand letter from
respondent seeking to collect for the entire dutiable value of the same shipment amounting to P936,899,855.90.
 Consequently, applying the foregoing provision and considering that we have determined already that there is no factual
finding of fraud established herein, the liquidation of petitioner's imported crude oil shipment became final and conclusive
on 24 May 1997, or exactly upon the lapse of the 1-year prescriptive period from the date of payment of final duties.
 As such, any action questioning the propriety of the entry and settlement of duties pertaining to such shipment initiated
beyond said date is therefore barred by prescription.
 Since time immemorial, this Court has consistently recognized and applied the statute of limitations to preclude the
Government from exercising its power to assess and collect taxes beyond the prescribed period, and we intend to abide by
our rulings on prescription and to strictly apply the same in the case of petitioner; otherwise, both the procedural and
substantive rights of petitioner would be violated.
 After all, prescription is a substantive defense that may be invoked to prevent stale claims from being resurrected causing
inconvenience and uncertainty to a person who has long enjoyed the exercise. Thus, symptomatic of the magnitude of the
concept of prescription, this Court has elucidated that:

The law prescribing a limitation of actions for the collection of the income tax is beneficial both to the Government and to
its citizens; to the Government because tax officers would be obliged to act promptly in the making of assessment, and to
citizens because after the lapse of the period of prescription citizens would have a feeling of security against
unscrupulous tax agents who will always find an excuse to inspect the books of taxpayers, not to determine the latter's
real liability, but to take advantage of every opportunity to molest peaceful, law-abiding citizens. Without such legal
defense taxpayers would furthermore be under obligation to always keep their books and keep them open for inspection
subject to harassment by unscrupulous tax agents. The law on prescription being a remedial measure should be
interpreted in a way conducive to bringing about the beneficient purpose of affording protection to the taxpayer within the
contemplation of the Commission which recommend (sic) the approval of the law.(Emphasis supplied)

 Basic is the rule that provisions of the law should be read in relation to other provisions therein. A statute must be
interpreted to give it efficient operation and effect as a whole avoiding the nullification of cognate provisions. Statutes are
read in a manner that makes it wholly operative and effective, consistent with the legal maxim  ut res magis valeat quam
pereat.
 This maxim applied, we read Sections 1301, 1801, and 1802, together with Section 1603 of the TCCP.
 Thus, should there be failure on the part of the owner, importer, consignee or interested party, after due notice of the
arrival of its shipment (except in cases of knowledgeable owners or importers), to file an entry within the non-extendible
period of 30 days from the date of discharge of the last package (shipment) from the vessel, such owner, importer,
consignee or interested party is deemed to have abandoned said shipment in favor of the government.
 As imperative, however, is the strict compliance with Section 1603 of the TCCP, which should be read as we have ruled.
 Any action or claim questioning the propriety of the entry and settlement of duties pertaining to such shipment made
beyond the 1-year prescriptive period from the date of payment of final duties, is barred by prescription.
 In the present case, the failure on the part of respondent to timely question the propriety of the entry and settlement of
duties by petitioner involving the subject shipment, renders such entry and settlement of duties final and conclusive
against both parties.
 Hence, respondent cannot any longer have any claim from petitioner.
 Sections 1301, 1801, and 1802 of the TCCP have been rendered inoperable by reason of the lapse of the period stated in
Section 1603 of the same Code.
 Indeed, if the prescriptive period of one year specified in Section 1603 of the TCCP is not applied against the respondent,
the reality that the shipment has been unloaded from the carrying vessels to petitioner's oil tanks and that import duty in
the amount of P11,231,081.00 has been paid would be obliterated by the application of the principle
of deemed abandonment four years after the occurrence of the facts of possession and payment, as a consequence of
which application, the petitioner would be made to pay the government the entire value of the shipment it had as vendee
of the shipper already paid.

WHEREFORE, the petition is GRANTED. Accordingly, the Decision dated 13 May 2010 and Resolution dated 22 February 2011 of the
Court of Tax Appeals Former En Banc in C.T.A. EB No. 472 are hereby REVERSED and SET ASIDE on the ground of prescription. SO
ORDERED.
NOTES:

RULE 129

What Need Not Be Proved

Section 1. Judicial notice, when mandatory. - A court shall take judicial notice, without the introduction of evidence, of the existence
and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the
admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of
legislative, executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical
divisions.

Section 2. Judicial notice, when discretionary. - A court may take judicial notice of matters which are of public knowledge, or are
capable to unquestionable demonstration, or ought to be known to judges because of their judicial functions.

Section 3. Judicial notice, when hearing necessary. -During the trial, the court, on its own initiative, or on request of a party, may
announce its intention to take judicial notice of any matter and allow the parties to be heard thereon.

After the trial, and before judgment or on appeal, the proper court, on its own initiative or on request of a party, may take judicial
notice of any matter and allow the parties to be heard thereon if such matter is decisive of a material issue in the case.

xxxx

In relation thereto, it has been held that the doctrine of judicial notice rests on the wisdom and discretion of the courts; however,
the power to take judicial notice is to be exercised by the courts with caution; care must be taken that the requisite notoriety exists;
and every reasonable doubt upon the subject should be promptly resolved in the negative. 65

As a general rule, courts are not authorized to take judicial notice of the contents of the records of other cases, even when such
cases have been tried or are pending in the same court, and notwithstanding the fact that both cases may have been tried or are
actually pending before the same judge. 66 However, this rule is subject to the exception that in the absence of objection and as a
matter of convenience to all parties, a court may properly treat all or any part of the original record of the case filed in its archives as
read into the records of a case pending before it, when with the knowledge of the opposing party, reference is made to it, by name
and number or in some other manner by which it is sufficiently designated. 67 Thus, for said exception to apply, the party concerned
must be given an opportunity to object before the court could take judicial notice of any record pertaining to other cases pending
before it.

Such being the case, it would also be an error for the CTA in Division to even take judicial notice of the subject Memorandum being
merely a part of the BOC Records submitted before the court a quo, without the same being identified by a witness, offered in and
admitted as evidence, and effectively, depriving petitioner, first and foremost, an opportunity to object thereto. Hence, the subject
Memorandum should not have been considered by the CTA in Division in its disposition.

It is well-settled that procedural rules are designed to facilitate the adjudication of cases. Courts and litigants alike are enjoined to
abide strictly by the rules. While it is true that litigation is not a game of technicalities, it is equally true that every case must be
prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy administration of justice. Party litigants
and their counsel are well advised to abide by, rather than flaunt, procedural rules for these rules illumine the path of the law and
rationalize the pursuit of justice.68

6. Jardeleza vs. People, G.R. No. 165265, February 6, 2006

Ponente: Callejo, Sr., J.

Nature of the case: This case is a petition for review on certiorari of a decision of the CA, affirming on appeal the decision of RTC –
convicting accused Maribel B. Jardeleza for violation of the Tariff and Customs Code (TCC) of the Philippines, as amended

Petitioner: Maribel B. Jardeleza (Jardeleza) – flight stewardess of PAL

Respondent: People of the Philippines
FACTS:
 On October 23, 1997, an Information was filed charging Jardeleza with violation of the TCC

Case for the Prosecution

 On February 27, 1997, Lt. Aquilino Ancheta of the Customs Police at the Ninoy Aquino International Airport (NAIA) issued
an “ALERT ORDER” directing all customs policemen to monitor an alleged carrier of jewelry on board Philippine Airlines
(PAL) Flight No. PR-502, scheduled to fly in from Singapore the next day
 Special Customs Agent Antonio Fuentebella was assigned as Team Leader of X-Ray Operations, while Police Officer
Rodrigo Rañada was assigned as one of its members

 The Customs Law Enforcement Chief also directed the examiners to conduct rigid luggage inspection of said crew
members
o Accordingly, customs operation police officers prepared to conduct the surveillance operations.

 On February 28, 1997, Customs Examiner Estelita Nario was assigned in the arrival area at the NAIA, Lane 1, which was
exclusively for crew members of incoming passenger planes, including flight attendants and stewardesses
 Jardeleza, a flight stewardess of PAL Flight No. PR 502, approached Lane 1 for baggage checking at about 1:00 p.m. to 2:00
p.m.
 She had two pieces of hand-carried luggage – a black bag and black hanger (zipper) bag.
 She approached Nario to have the bags examined, and showed the Customs Declaration Form she had accomplished and
signed.
 Rañada was about two feet away.
 Fuentebella was inspecting the baggage of the incoming passengers.

 Nario asked Jardeleza if she had anything to declare, and the latter replied, “No.”
 Nario checked Jardeleza’s Customs Declaration Form, and found that nothing was written or marked on the form
o Nario then checked the black hand-carried bag, and found that it contained Jardeleza’s personal belongings.
o Nario next told Jardeleza to place her hanger bag on top of the examination table and to open it for inspection
o Jardeleza complied and opened her hanger bag.
 Nario unzipped the bag and found some clothes inside.
 Nario proceeded to unzip the interior pockets of the bag and found three black leatherette envelopes, each measuring
about one foot by a little over one foot, no more than three inches thick.
 Nario opened one of the leatherette envelopes and found Bosch spark plug brochures stacked inside.
 As she emptied the envelope of its contents, she felt something bulging (matambok) beneath the lining
 She slipped her hand into the opening and found pieces of jewelry

 Nonplussed, Jardeleza stopped Nario.

 She placed her hands on the envelope and the hand that held it, looked Nario in the eye, and requested that she be brought
inside the examination room at the arrival area because there were media people and law enforcers close by
 To keep Jardeleza from being embarrassed, Nario relented
 Fuentebella and Rañada helped Jardeleza carry her handbags to the examination room.
 Once inside, Nario placed the three leatherette envelopes on the table.
o Deputy Collector for Passenger Services Rodolfo Buendia and Chief of the Legal and Investigation Staff Atty.
Lourdes Mangaoang had been alerted of the incident
 The envelopes were opened and their contents examined in the presence of Buendia and Atty. Mangaoang.
 Pictures of the bags, including the examination, were taken.

 Nario removed the brochures from the leatherette envelopes.

 While she saw nothing else inside, she noticed the bulge beneath the lining.
 She tried to look for an opening until she saw that it was already partially detached.
 She slipped her hand through the detached portion and retrieved a pack of light brown paper which, when opened,
revealed several pieces of jewelry

 Nario opened the second leatherette envelope, and also found brochures.
 When she emptied the envelope of its contents, she noticed a similar bulging beneath the lining.
 Once opened, she discovered gold earrings wrapped in a light brown paper.
  An inspection of the third leatherette envelope yielded pieces of gold rings hidden beneath the lining.
 Nario placed the jewelry back in the envelopes and placed her signature thereon.

 Nario prepared Held-Baggage Receipt No. 16592, where she listed the pieces of jewelry found in Jardeleza’s bags,
including their gross weight
 She signed the receipt and gave a copy to Jardeleza.
 Nario then turned over the jewelry to the Customs In-Bound Room.
o The receipt was duly noted by Buendia

 Nario then prepared and signed a report to the district collector, recommending that the seized jewelries be confiscated
for violation of Sections 3601 and 3602, in relation to Section 2505 of the TCC.

 When apprised of the foregoing, Atty. Luis Adviento, the District Commander of the Customs Police, ordered that Jardeleza
be brought to the Legal and Investigation Staff for investigation.
 Aurelio B. Cabugao of the Legal and Investigation Staff of the Customs Police Division investigated the case and submitted a
Memorandum to the Customs Police Director, which was duly noted by Atty. Mangaoang

 He reported that based on initial investigation, Fuentebella had asked Jardeleza if she had anything to declare, she replied
that she was carrying taxable items and asked that they proceed to the Baggage Extension Office.
 He also recommended that a seizure and detention order of the jewelry be issued pursuant to Section 2505 of the TCC.
 Alma Duplito, a customs jewelry appraiser, assessed the value of the jewelry at P2,979,021.50 and their dutiable value at
P4,583,000

 On March 31, 1997, Cabugao submitted his Final Report on the investigation.
 He stated that Jardeleza did not declare the assorted jewelries and recommended that charges be filed against her for
violation of Sections 3601 and 3602, in relation to Section 2505, of the TCC.
o On April 30, 1997, Nario executed her Affidavit relative to the incident.

Case for the Accused

 Jardeleza testified that she had been with PAL for 23 years
 She was assigned to domestic flights during her first year, and in the succeeding years, to international flights
 She knew the policy of the Bureau of Customs regarding the exclusive lane through which arriving airline crew members
have to pass
 She also knew the policy requiring a “100% examination” of all pieces of baggage carried by them
 She further narrated that her retirement from PAL was approaching.
 She decided to invest in the jewelry business with her friend Alberto, and she would get a percentage from the business
venture
 Her friend acquired assorted jewelries worth P2,000,000 and gave them to her for transportation to the Philippines.
 The pieces of jewelry were placed inside the leatherette bags, which she, in turn, placed in her handbags.
 Albert also gave her a list of the jewelry

 According to Jardeleza, she knew that the jewelry items were taxable , and that she was obliged to declare them in the
Customs Declaration Form of the Customs Bureau
 When PAL Flight No. PR-502 landed from Singapore, she was carrying three pieces of baggage: a shoulder bag, a traveling
bag and a hanger bag.
 Her hanger bag contained jewelry items, but she did not declare them in the Customs Declaration Form because they were
numerous and could not be accommodated in the tiny form.

 As she was completely aware of the two Customs policies, she readily told Nario (in the presence of two other customs
people one of whom was Fuentebella), about the taxable items she was carrying.
 Fuentebella approached her and asked what was inside her bag.
 She readily answered that they were jewelry items.
 Jardeleza then requested that her bags be examined inside the examination room to avoid the mischievous eyes of press
people.
 Her request was granted, and the three of them – Nario, Fuentebella and Rañada helped carry her luggage to the
examination room
 There she opened her luggage and, thereafter, a count was made of the jewelry items.
  While the examination was being conducted, Deputy District Collector Buendia and Atty. Mangaoang entered and they too
witnessed the examination of her baggage.
 After the inventory, pictures were taken.

 Later, Nario left but Atty. Mangaoang told her to come to her office at the NAIA Terminal 1 basement.
 When she reached the office, she saw a man in front of the computer whom Atty. Mangaoang introduced as Aurelio
Cabugao, the assigned investigator on the case
 While peeping through the screen, she saw the name of a certain Fuentebella
 Curiously, they left Cabugao alone in the room

 According to Jardeleza, Atty. Mangaoang demanded P100,000 for her and another P400,000 for the rest of the Customs
people involved
 She told Atty. Mangaoang that she did not have that kind of money
 When she told Atty. Mangaoang that she would think it over, she was asked to write the following phone numbers on a
piece of paper a girl had given her: 912-7845 in the bedroom, and 913-3670 in the living room
 She was also instructed to call if she had the money.
 Then, at about 7:00 p.m., after some six hours, the Customs people allowed her to go home

 Jardeleza adduced in evidence the following:

o Memorandum of Cabugao dated February 28, 1997 to the District Commander;
o The 1st Indorsement of Atty. Louie Adviento of said report to the District Collector of Customs, and
o The Warrant of Seizure and Detention Order issued on March 25, 1997 by the Customs District Collector

 Daniel Aquino, a customs police at the NAIA, testified that:

o He discovered the affidavit of Fuentebella dated February 28, 1997 in the computer files in Atty. Mangaoang’s
office, where Fuentebella stated that Jardeleza admitted to him that she was carrying taxable items
o He also read the April 30, 1997 Affidavit of Fuentebella and noticed that Jardeleza’s admissions contained in the
February 28, 1997 Affidavit were not stated therein
o On cross-examination, Aquino admitted that said affidavits/computer files were not signed by the supposed
officers
 Atty. Estelita Diaz, who was designated as Hearing Officer in the NAIA Lane Division during the period from 1988 to 1997,
testified on the need for customs examiners to follow the procedure laid down in Memorandum Order (MO) No. 40, Series
of 1957, and reiterated in MO No. 53, Series of 1958, of the Bureau of Customs.

Other Evidence of the Prosecution

 Atty. Mangaoang denied Jardeleza’s accusation of bribery
 She testified that she was at her office at the basement of the NAIA in the afternoon of February 28, 1997 when Atty.
Adviento (who was at the arrival area) called her because somebody had been apprehended for bringing in jewelry.
 She then proceeded to the interview room at the arrival area, where she met Jardeleza, a PAL stewardess who told her and
Adviento that there were still pieces of jewelry on the plane
 She instructed the Customs Police to search the plane, but the search yielded negative results.
 She insisted that she never demanded any money from Jardeleza or from anyone, and that it was the first time she had met
the woman
 After Jardeleza had been apprehended, Customs Deputy Collector for Passenger Services Rodolfo Buendia told her,
“Attorney, 1.5 million ang panggastos dyan”
 She clarified that Buendia has since been separated from the service
 She further revealed that the “1.5 million offer” was reiterated by Ding Villanueva, a Customs broker

 Atty. Estelita Diaz, the hearing officer in the seizure case, also offered her P10,000 not to file the case
 Ramon Tan, an intelligence officer of the Bureau of Immigration and Deportation, also approached her and said, “Pwede ba
nating aregluhin ang kaso ni Jardeleza, may panggastos ito”
 One of the men under her, Daniel Aquino, asked for Jardeleza’s passport, but Aurelio Cabugao, the investigator, refused to
hand it over
 The passport was later stolen from her office
 Carlota Gabriel approached her sometime in March, and informed her that Atty. Sancho Almeda might handle the case.
 She was also asked if the seizure case could be settled
  Further, Atty. Mangaoang testified that there were other people in the office when Deputy Collector Buendia tried to bribe
her, but they were not within hearing distance
o When Ding Villanueva told her that there was 1.5 million “for the boys,” they were alone
o She also claimed that Atty. Diaz offered the P10,000 to her at the arrival area
 While she did not charge, she filed an administrative case against Atty. Diaz before the Office of the Ombudsman.
 Jardeleza herself, in turn, charged her (Atty. Mangaoang) before the same office
 Cabugao executed an affidavit corroborating, in part, Atty. Mangaoang’s testimony

RTC’s Ruling
 Convicted the accused of violating Section 3601 of the TCC, as amended (crime of SMUGGLING as defined under Section
3601 of the TCC)
o The trial court gave credence and probative weight to the collective testimonies of the witnesses for the
prosecution.
o It rejected the defense of the accused that her importation of the jewelry was not absolutely or unqualifiedly
prohibited by law

CA’s Ruling:
 On appeal to CA, the latter affirmed the decision of the RTC
o It ruled that, based on the material averments of the Information, Jardeleza was charged with smuggling under
Section 3601 of the TCC
o It affirmed the RTC ruling that the prosecution mustered the requisite quantum of evidence to prove her guilt
beyond reasonable doubt
 According to the CA, Jardeleza committed actual fraud when she brought 20.1 kilograms of taxable assorted jewelries
into the country without declaring them in the customs declaration form as required by law.
 Moreover, she denied having said articles in her possession and hid them beneath the lining of the leatherette envelopes in
her hanger bag.
 CA affirmed the trial court’s finding that Jardeleza smuggled the jewelry items into the country, and that such importation
was contrary to law
 Declared that petitioner was caught in flagrante delicto
o When dutiable goods are omitted in a baggage declaration and the omission is not due to inadvertence or
ignorance, it is deemed to be fraudulent
 That petitioner could not stretch the phrase “contrary to law” as descriptive of the word “article” to exempt her from the
illegal importation.
o The law considers any person who, contrary to law, imports any article as guilty of smuggling without regard to
whether the article itself is absolutely or qualifiedly prohibited.
 Declared that the crime sought to be punished by this law is the act of importing or bringing into the Philippines any
article contrary to law
o It does not concern itself with the nature of the article so imported or brought in

 It also ruled that the inconsistencies attributed to the testimonial and documentary evidence of the prosecution were minor
and peripheral
 Further, that petitioner’s interpretation of Sections 2505 and 3602 of the law is untenable
 CA pointed out that Section 2505 speaks of “failure to declare baggage” which can be seized and be released only to its
owner upon payment of the taxes and duties unless such failure was attended by fraud
 On the other hand, Section 3602 lays down the various acts of importation, entry or exportation of articles considered as
fraudulent.
 In short, Section 2505 pertains to compliance with a requirement in declaring a baggage, Section 3602 enumerates the
fraudulent acts in smuggling, while Section 3601 prescribes the penalty therefor
o The appellate court stated that these three provisions are harmonized into one interpretation and application
befitting the circumstances in the case at bench.

 Jardeleza filed MR, which the CA denied

 Hence, this petition.

Petitioner’s Arguments:
 That she was charged with violating Section 2505 of the TCC under the Information, and that the prosecution adduced
evidence to prove her liability; hence, her conviction for violation of Section 3601 of the TCC is erroneous; and
  That the prosecution failed to prove her guilt beyond reasonable doubt for violation of Section 3601, in relation to Section
2505, of the TCC

 She maintains that, under the Information and the evidence adduced by the prosecution, she was charged and found guilty
of violating Section 2505 of the TCC.
o That the provision specifically refers to an arriving person, including airline crew, who brings in dutiable articles
without declaring the same in the customs declaration, and
o That for failing to make such declaration or to mention the same verbally may result in the seizure of the baggage
and articles, unless it can be satisfactorily explained that such failure was without fraud
 That the law specifically refers to “baggage declaration” and not to an import or export entry.
 In contrast, Section 3601 of the TCC covers importing or bringing into the country, in a fraudulent manner, any article,
contrary to law, or one who assists in such criminal act or receives, conceals, brings or sells or, in any way, helps in the
transportation, concealment or sale of such article, knowing the same to have been imported contrary to law
 That it refers to rampant smuggling in any port in the Philippines without the filing of an import or export entry, and is
called “swing”
 That the law does not speak of any entry or baggage declaration.
 Section 3601 is general in its scope, while Section 2505 is special and applies only to a criminal case following under it.
o The words “contrary to law” are descriptive of, and qualifies the word “article” and not to the manner of
importation.
 In contrast, Section 3602 refers to the filing of a false entry.
 She asserted that Sections 2505, 3601 and 3602 of the TCC are separate and distinct from one another, penalizing as they
do different offenses of smuggling
 The facts constituting the filing of one charge cannot interchangeably be held to constitute the crime under any of the other
two provisions, as the laws cannot be mixed with one set of facts.

Respondent’s Arguments (through the OSG):

 That there is no question that petitioner brought into the country 20.1 kilograms of assorted gold jewelries which she
placed inside three black leatherette envelopes and contained in the baggage she personally carried
 What made the act punishable under Section 3601 of the TCC was her failure to declare the items in the Customs
Declaration Form as required under Section 2505 of the TCC, thus, making petitioner’s act contrary to law
 In other words, the phrase “contrary to law” refers to the petitioner’s act, and not to dutiable goods brought into the
country

Note:
Section 2505 of the TCC is now under Section 1404 of the CMTA (Failure to Declare Baggage)
Section 3601 of the TCC is now, under Section 1401 of the CMTA, (Unlawful Importation or Exportation)
Section 3602 of the TCC is now, under Section 1403 of the CMTA, (Other Fraudulent Practices Against Customs Revenue)

Sub-ISSUE: Whether Sections 2505, 3601 and 3602 of the TCC contradicts each other.

Ruling:
 No. These provisions do not contradict each other.

As to Section 2505 of TCC

 The contention of petitioner that Section 2505 of the TCC defines a crime is not correct.
 Title No. VI, Part 4, Section 2505 of the TCC reads:
o SEC. 2505. Failure to Declare Baggage. – Whenever any dutiable article is found in the baggage of any person
arriving within the Philippines which is not included in the baggage declaration, such article shall be seized and the
person in whose baggage it is found may obtain release of such article, if not imported contrary to any law, upon
payment of treble and appraised value of such article plus all duties, taxes and other charges due thereon unless it
shall be established to the satisfaction of the Collector that the failure to mention or declare said dutiable article
was without fraud.

Nothing in this section shall preclude the bringing of criminal action against the offender.

 A person arriving in the Philippines with baggages containing dutiable articles is bound to declare the same in all
respects.
  In order to meet the convenience of the travelers, a simple and more expeditious method of customs clearance is provided
for baggages occupying the passage therein for goods imported in the regular manner.
 Official entry forms and forms of baggage declaration are supplied to the passengers to be filled before the customs officer.
 The traveler has the burden of carrying forward items that have to be declared before examination of the cargo has
begun.
 Adequate reporting of dutiable merchandise being brought into the country is absolutely necessary to the enforcement of
customs laws, and failure to comply with those requisites is as condemnable as failure to pay customs fees.

Application 1
 The provision is Part 4 of Title VI, Section 2505, of the TCC, which enumerates the administrative penalties in the form of
surcharges, fines and forfeitures imposed by law on imported dutiable goods.
 It does not define a crime.
 It merely provides, inter alia, for the administrative remedies which can be resorted to by the Bureau of Customs when
seizing the dutiable articles found in the baggage of any person arriving in the Philippines which is not included in the
accomplished baggage declaration submitted to the customs authorities, and the administrative penalties that such person
must pay for the release of such goods if not imported contrary to law.
 Any administrative penalty that may be imposed on the person arriving in the Philippines with undeclared dutiable articles
is separate from and independent of the criminal liability for smuggling under Section 3601 of the TCC and for violation of
other penal provisions in the TCC
 The criminal liability of such person can only be determined in the appropriate criminal proceedings, prescinding from the
outcome in any administrative case that may have been filed and disposed of by the customs authorities.
 Indeed, the second paragraph of Section 2505 provides that nothing in this Section shall prevent the bringing of criminal
action against the offender for smuggling under Section 3601 of the TCC.

As to Section 3601 of TCC

 Section 3601 of the TCC provides:
o Sec. 3601. Unlawful Importation. – Any person who shall fraudulently import or bring into the Philippines, or assist
in so doing, any article, contrary to law, or shall receive, conceal, buy, sell, or in any manner facilitate the
transportation, concealment, or sale of such article after importation, knowing the same to have been imported
contrary to law, shall be guilty of smuggling.

 The last paragraph of said provision reads:

o When, upon trial for violation of this section, the defendant is shown to have had possession of the article in
question, possession shall be deemed sufficient evidence to authorize conviction unless the defendant shall explain
the possession to the satisfaction of the court: Provided, however, That payment of the tax due after apprehension
shall not constitute a valid defense in any prosecution under this section.

Smuggling is penalized as follows:

1. A fine of not less than fifty pesos nor more than two hundred pesos and imprisonment of not less than five days nor more
than twenty days, if the appraised value, to be determined in the manner prescribed under this Code, including duties and
taxes, of the article unlawfully imported does not exceed twenty-five pesos;
2. A fine of not less than eight hundred pesos nor more than five thousand pesos and imprisonment of not less than six
months and one day nor more than four years, if the appraised value, to be determined in the manner prescribed under
this Code, including duties and taxes, of the article unlawfully imported exceeds twenty-five pesos but does not exceed fifty
thousand pesos;
3. A fine of not less than six thousand pesos nor more than eight thousand pesos and imprisonment of not less than five years
and one day nor more than eight years, if the appraised value, to be determined in the manner prescribed under this Code,
including duties and taxes, of the article unlawfully imported is more than fifty thousand pesos but does not exceed one
hundred fifty thousand pesos;
4. A fine of not less than eight thousand pesos nor more than ten thousand pesos and imprisonment of not less than eight
years and one day nor more than twelve years, if the appraised value, to be determined in the manner prescribed under
this Code, including duties and taxes, of the article unlawfully imported exceeds one hundred fifty thousand pesos;
5. The penalty of prision mayor shall be imposed when the crime of serious physical injuries shall have been committed and
the penalty of reclusion perpetua to death shall be imposed when the crime of homicide shall have been committed by
reason or on the occasion of the unlawful importation.

 In applying the above scale of penalties, if the offender is an alien and the prescribed penalty is not death, he shall be
deported after serving the sentence without further proceedings for deportation
  If the offender is a government official or employee, the penalty shall be the maximum as hereinabove prescribed and the
offender shall suffer an additional penalty of perpetual disqualification from public office, to vote and to participate in any
public election.

Application 2
 Thus, in contrast to Section 2505, Section 3601 of the TCC is a penal provision.
 It defines the crime of smuggling and provides compound penalties of graduated fine and imprisonment based on the
appraised values of the imported articles to be determined in the manner provided in the TCC.

 There is no conflict between Section 2505 and Section 3601 .

 In point of fact, the two sections and Section 3602 complement each other.

 Section 3601 of the TCC was designed to supplement the existing provisions of the TCC against the means leading up to
smuggling, which might render it beneficial by a substantive and criminal statement separately providing for the
punishment of smuggling.
 The law was intended not to merge into one and the same offense all the many acts, which are classified and punished by
different penalties, penal or administrative, but to legislate against the overt act of smuggling itself.
 This is manifested by the use of the words “fraudulently” and “contrary to law” in the law.

HOW IS SMUGGLING COMMITTED

 Smuggling is committed by any person who:
(1) Fraudulently imports or brings into the Philippines any article contrary to law
(2) Assists in so doing any article contrary to law, or
(3) Receives, conceals, buys, sells or in any manner facilitate the transportation, concealment or sale of such goods
after importation, knowing the same to have been imported contrary to law.

 The phrase “contrary to law” in Section 3601 qualifies the phrases “imports or brings into the Philippines” and “assists in so
doing,” and not the word “article.”
 The law penalizes the importation of any merchandise in any manner contrary to law
 The word “law” includes regulations having the force and effect of law, meaning substantive or legislative type rules as
opposed to general statements of policy or rules of agency, organization, procedures or positions.
 An inherent characteristic of a substantive rule is one affecting individual rights and obligations
o The regulation must have been promulgated pursuant to a congressional grant of quasi-legislative authority
o The regulation must have been promulgated in conformity to with congressionally-imposed procedural requisites

 IMPORTATION consists of bringing an article into the country from the outside.
 The crime of unlawful importation is complete, in the absence of a bona fide intent to make entry and pay duties when the
prohibited article enters Philippine territory.
 Importation is complete when the taxable, dutiable commodity is brought within the limits of the port of entry.
 Entry through a customs house is not the essence of the act.

As to Section 3602 of the TCC

 Section 3602 of the TCC, on the other hand, provides:
o Sec. 3602. Various Fraudulent Practices Against Customs Revenue. – Any person who makes or attempts to make
any entry of imported or exported article by means of any false or fraudulent invoice, declaration, affidavit, letter,
paper or by any means of any false statement, written or verbal, or by any means of any false or fraudulent
practice whatsoever, or knowingly effects any entry of goods, wares or merchandise, at less than the true weight
or measures thereof or upon a false classification as to quality or value, or by the payment of less than the amount
legally due, or knowingly and willfully files any false or fraudulent entry or claim for the payment of drawback or
refund of duties upon the exportation of merchandise, or makes or files any affidavit, abstract, record, certificate
or other document, with a view to securing the payment to himself or others of any drawback, allowance or refund
of duties on the exportation of merchandise, greater than that legally due thereon, or who shall be guilty of any
willful act or omission shall, for each offense, be punished in accordance with the penalties prescribed in the
preceding section.

 The provision enumerates the various fraudulent practices against customs revenue, such as:
o The entry of imported or exported articles by means of any false or fraudulent invoice, statement or practice
o The entry of goods at less than the true weight or measure, or
 o The filing of any false or fraudulent entry for the payment of drawback or refund of duties.

 The FRAUD contemplated by law must be intentional fraud, consisting of deception, willfully and deliberately dared or
resorted to in order to give up some right.
 The offender must have acted knowingly and with the specific intent to deceive for the purpose of causing financial loss to
another
 Even false representations or statements or omissions of material facts come within fraudulent intent.
 The fraud envisaged in the law includes the suppression of a material fact which a party is bound in good faith to disclose.
 Fraudulent nondisclosure and fraudulent concealment are of the same genre

Re: Fraudulent concealment

 Fraudulent concealment presupposes a duty to disclose the truth and that disclosure was not made when opportunity to
speak and inform was present, and that the party to whom the duty of disclosure as to a material fact was due was thereby
induced to act to his injury.

 Fraud is not confined to words or positive assertions

o It may consist as well of deeds, acts or artifice of a nature calculated to mislead another and thus allow one to
obtain an undue advantage

Re: ENTRY
 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

 Customs declaration forms or customs entry forms required to be accomplished by passengers of incoming vessels or
passenger planes are envisaged in the section.
 There is thus no conflict between Sections 2505, 3601 and 3602 of the TCC.
 In point of fact, the three provisions complement each other.

Application 3
 The bare fact that, under the second paragraph of the Information, petitioner is alleged to have imported the jewelry into
the country by, inter alia, not declaring it in the customs declaration form, it cannot thereby be concluded that she was
being charged of a crime under Section 2505 of the TCC
 The acts alleged therein are descriptive of the fraudulent manner petitioner imported her jewelries into the country.
 Petitioner was mandated to indicate in the Customs Declaration Form that she had jewelry in her possession to be imported
into the country valued at more than US$350
 Worse, when asked by Nario if she had goods or articles to declare, she spontaneously answered “No.”
 Petitioner’s intentional concealment or nondisclosure that she had such jewelry items in the leatherette bags constituted
fraud under Sections 3601 and 3602 of the TCC, aimed at depriving the government of customs revenue.

Other Assertions of Petitioner

 That the People failed to prove her guilt for smuggling beyond reasonable doubt because she readily admitted to Nario that
the first leatherette envelope contained jewelry even before its lining was opened, and that she also admitted to Rañada
that her hanger bag contained jewelry before Nario discovered the said items
 That her contention is buttressed by the affidavit of Nario, the February 28, 1997 Memorandum of Cabugao to the District
Commander, and the affidavit executed by Rañada

ISSUE: Whether the petitioner is guilty for the crime of smuggling.

RULING:
 Yes.
 The rule is that in all criminal prosecutions, the prosecution is burdened to prove the guilt of the accused beyond
reasonable doubt.
 In this case, the burden of the prosecution was complied with, as it was able to prove that petitioner possessed the
jewelry in question when Nario examined her luggage.
 Under the last paragraph of Section 3601 of the TCC, such evidence shall be deemed sufficient evidence to authorize
conviction.
  The burden was then shifted to petitioner, the accused, to explain her possession to the satisfaction of the court.
 The last paragraph of Section 3601 reads:
o When, upon trial for violation of this section, the defendant is shown to have had possession of the article in
question, possession shall be deemed sufficient evidence to authorize conviction unless the defendant shall explain
the possession to the satisfaction of the court: Provided, however, That payment of the tax due after apprehension
shall not constitute a valid defense in any prosecution under this section.

Application 1
 In this case, petitioner admitted her possession of the jewelries and that she brought the same from Singapore.
 She declared that she and her business partner Albert acquired the same for their business.
 The trial court did not believe her claim of having spontaneously informed Nario that she had jewelries in her handbag, and
ruled that, contrary to law, she fraudulently imported the jewelries into the country.
 Thus, the trial court found her guilty as charged, with its illuminating findings and encompassing ratiocinations which we
find are based on the evidence on record:
o But the incriminating evidence that tops them all is the manner the accused attempted to smuggle her jewelry to
this country
o Accused testified that it was she herself who placed and arranged the jewelry inside three leatherette bags, which
she placed inside her hanger bag.
o Nario showed this court just exactly how the accused arranged her things inside her hanger bag when she
inspected it
o The jewelry was securely hidden in a place not meant to be seen by anybody but the accused
o The hanger bag was stuffed with accused’s clothing.
o But it has pockets in the interior the contents of which are not visible to the eyes unless the pockets, which are
secured shut by zippers are opened
o When the pockets were unzipped only then did the three black leatherette envelopes come to view
o When one of the leatherette envelopes was removed from one of the pockets and opened, the viewer is given the
impression that all that it contained were commercial brochures as nothing else can be seen, if the viewer is
merely content with using her sense of sight
o Even after all the brochures are removed from the envelope, the viewer sees only an empty space, if she uses only
sight
o But the brochures turned out to be mere decoys to lull the viewer into believing that there is nothing more to see
and the inspection should stop at that point.
o But Nario, the inspector, did not only use her sense of sight
o She noticed that even after the envelope was emptied of its contents, it was still heavy and she felt something
bulging ("matambok") beneath the synthetic fabric that serves as its lining.
o She looked for a gap in the lining by tracing its borders with her hands until she came upon a part where the
stitches were undone or deliberately broken, thereby creating a secret pocket.
o She slipped her hand into the secret pocket to retrieve the bulging thing that was hidden in it.
o This bulging thing turned out to be objects wrapped in a sturdy light brown paper flattened out by pressure.
o When the wrapper was opened, pieces of gold jewelry came into view.
o The two other leatherette bags yielded one pack of gold jewelry each.
o Both packs were securely hidden in exactly the same manner as the first.
o Alma Duplito, a Customs appraiser, appraised the dutiable value of the jewelry at ₱4,598,000 and the total taxes
and duties at ₱2,379,021.02

o The ingenuity with which accused tried to conceal from view her jewelry shattered all her pretensions of having
declared or even just an intention to declare them for proper assessment of the corresponding customs duties and
taxes.
o On the contrary, her stacking the envelope with worthless commercial brochures as decoys to confuse or divert
the attention of the Customs inspectors and her deliberate breaking of the stitches of the lining of the bags to
create a secret pocket in which to hide and conceal from view her jewelry are unmistakable badges of an intention
to spirit them away into this country in violation of its customs and tariffs law.
o In this sense, it is a direct evidence of the crime of smuggling. xxx

 As gleaned from his decision, the Presiding Judge of the trial court was able to observe, at close range, the demeanor and
conduct of Nario when she testified
 He was convinced of her honesty and found her testimony credible:
 o Nario impresses this court as an honest witness compared with the manner accused testified.
o Thus, this court finds it easy to believe Nario’s steadfast testimony that accused did not declare her jewelry, than
accused’s claim that she did
o Besides, credence to the narration of the incident and presumption of regularity in the performance of duty are
given to public officers in the absence of contrary evidence xxx

o No witness who came forward to testify is in a better position to state what the accused did than Estelita Nario
o Accused herself declared that it was Nario who checked her baggages.
o Nario testified that the first thing she did when accused presented to her baggage for inspection was to ask her if
she has anything to declare, and accused said “No”
o She noted that accused’s response tallied with her Customs Baggage Declaration
o There was not an instance prior to the discovery of the jewelry, Nario stressed, that the accused declared before
her, even verbally, that she had jewelry items with her

 In contrast, the trial court gave no credence and probative weight to petitioner’s testimony and her claim that she
divulged to Nario, Fuentebella, Cabugao and Rañada that she was carrying dutiable jewelry before Nario examined her
handbag:
o Accused cannot take refuge under Cabugao’s Memorandum, which tends to show that a certain SA I Antonio
Fuentebella allegedly revealed that accused admitted that she was carrying taxable items.
o This evidence is hearsay because Cabugao gathered this piece of information from Fuentebella who did not testify.
o Besides, Cabugao clarified that it was Nario, the examiner, who had direct contact with the accused, not he or
Fuentebella.
o When he investigated Nario on March 1, 1997, she told him, “Inamin na pagkatapos buksan ang bagahe.”

o If accused really declared the jewelry she was bringing to the Customs inspectors, there would have been no fuss
over it and that day would have passed, for her and the customs people, uneventfully.
o But the ensuring scene as she herself described after her baggage was inspected belies her claim.
o Several media reporters took interest in the conduct of the inspection of her baggage.
o Later, Atty. Lourdes Mangaoang, who is the Chief of the Legal Investigation Unit, even Customs Deputy Collector
for Passenger Services Rodolfo Buendia, were called in to get a piece of the action.
o The furor that her jewelry generated even prompted Atty. Mangaoang and the Customs people to hide her from
the press and prevented from being photographed by them.
o This certainly could not be the scene when a passenger is caught smuggling highly dutiable items.
o Everybody seems interested to dip their hands and try to get a piece of the pie

 The CA affirmed the trial court’s findings on appeal, as well as its calibration of the testimony of the witnesses.
 Jurisprudence has it that the findings of facts of the trial court, which the CA affirmed on appeal, are conclusive on this
Court unless it can be shown that cogent facts and circumstances of substance were misunderstood or misinterpreted
which, if considered, would alter or reverse the outcome of the case.

Application 2
 If petitioner had no intention to fraudulently import the jewelries and defraud the government of the duties/taxes due
thereon, she should have indicated in the Customs Declaration Form that she was carrying jewelries valued at more than
US$350, and accomplished the Customs Entry Form
 Petitioner failed to do so.
 She even deliberately concealed her possession of the jewelries, and told Nario that she had nothing to declare.
 Even as petitioner realized that the discovery of the jewelry items was inevitable, she merely requested Nario to continue
with her examination of the leatherette envelopes in the examination room, beyond the prying eyes of the media.
 In fine, petitioner was more concerned with her exposure to the media than her liabilities for violation of the TCC
o Such was her mindset.

 Petitioner cannot evade criminal liability for her claim that when Nario was about to unzip the leatherette envelopes and
discover the jewelries contained therein, she told Nario and Rañada that she imported jewelries.
 Petitioner made her revelation to avoid being embarrassed, as there were media in the area where Nario and Rañada
discovered that she had imported the jewelries, which she did not declare in the Customs Declaration Form
  To paraphrase Justice Oliver Wendell Holmes, petitioner cannot get rid of the duty of declaring the jewelries to the
customs examiner by hiding the jewelries in the leatherette envelopes covered by brochures and beneath the lining of the
envelopes.
 She cannot purge herself of the consequences of her fraud even by confessing when she saw that she was on the point of
being discovered or, as might have been found, after she had been.
 Neither can petitioner rely on the memorandum of Cabugao to the Customs District Commander on February 28, 1997, to
wit:
o Initial investigation showed that when SA I Antonio Fuentebella asked from crew members if they have anything to
declare, a crew member later known as Maribel B. Jardeleza admitted that she was carrying taxable items, and
asked that they proceed to the Baggage extension room.
o Examination was therefore conducted by Customs Examiner Estelita Nario and found inside three (3) leatherette
envelopes approximately 20.1 kgs of Assorted Jewelry

 It must be stressed that petitioner failed to present Fuentebella as her witness.

 The information allegedly relayed by Fuentebella to Cabugao is thus hearsay evidence, barren of probative weight.
 Moreover, Fuentebella alleged the following in his affidavit, that:
o I am employed as Special Agent I at the Bureau of Customs, and presently assigned at the Arrival Area, as Team
Leader, X-Ray Operations
o On February 27, 1997, an Alert Order was issued by the District Commander, directing us to monitor an alleged
courier of assorted jewelry on board flight PR-502 which came from Singapore
o X-Ray operations were conducted on baggage from flight PR-502, but proved negative.
o At the same time, surveillance operations were conducted on all passengers and flight crew members
o Ms. Maribel Jardeleza, PAL flight stewardess approached Customs Examiner Estelita Nario for the usual
examination of her baggages
o During the process of examination, Ms. Nario found black envelopes inside the lining of the hanger bag of Ms.
Jardeleza, hence, the examination was transferred to the interview room for rigid examination
o Found inside Ms. Maribel Jardeleza’s baggage were assorted jewelry, placed inside three (3) black leatherette
envelopes weighing more or less 20.1 kgs (Gross)

 According to Nario, she sought the assistance of Fuentebella and Rañada to bring petitioner’s hanger bag to the
examination room only after petitioner requested her to continue the search of her belongings inside the examination room
to avoid embarrassment.

Disposition: Petition denied.

Cases on Seizure and Forfeiture

1. COC v Manila Star Ferry, Inc

Facts:
 Respondents Manila Star Ferry, Inc. and the United Navigation & Transport Corporation are engaged in the lighterage
business
o Owners and operators, respectively, of the tugboat Orestes and the barge-lighter UN-L-106.
 Respondent Ceaba Shipping Agency, Inc. (Ceaba) is the local shipping agent of the Chiat Lee Navigation Trading Co. of
Hongkong, the registered owner and operator of the S/S Argo, an ocean-going vessel
 On June 12, 1966, the S/S Argo, the Orestes and the UN-L-106, as well as two wooden bancas of unknown ownership, were
apprehended for smuggling by a patrol boat of the Philippine Navy along the Explosives Anchorage Area of Manila Bay
 The patrol boat caught the crew of the S/S Argo in the act of unloading foreign-made goods onto the UN-L-106, which was
towed by the Orestes and escorted by the two wooden bancas
 The goods of 330 cases of foreign-made cigarettes, assorted ladies' wear, clothing material and plastic bags, all of which
were not manifested and declared by the vessel for discharge in Manila
 No proper notice of arrival of the S/S Argo was given to the local customs authorities
 Thereafter, seizure and forfeiture proceedings were separately instituted before the Collector of Customs for the Port of
Manila against the S/S Argo (Seizure Identification Case No. 10009, Manila) and its cargo (S.I. No. 10009-C, Manila), the
Orestes (S.I. No. 10009-A, Manila), the UN-L-106 (S.I. No. 1009-B, Manila) and the two bancas (S.I. No. 10009-D, Manila),
charging them with violations of Section 2530 (a), (b) and (c) of the Tariff and Customs Code.
 Criminal charges were likewise filed against the officers and crew of said vessels and watercraft
  In the seizure and forfeiture proceedings, the Collector of Customs rendered a consolidated decision dated December 27,
1966, declaring the forfeiture of said vessels and watercraft in favor of the Philippine government
 All respondents therein, except the owner of the two wooden bancas, separately appealed the consolidated decision of the
Collector of Customs for the Port of Manila to the Commissioner of Customs.
 In his Decision dated February 1, 1967, the Acting Commissioner of Customs found the Collector's decision to be in order
and affirmed the same accordingly
 The same respondents separately elevated the matter to the CTA, which, substantially modified the decision of the
Commissioner of Customs by merely imposing a fine on respondents
 It is this decision of the Court of Tax Appeals that is being questioned by the Commissioner of Customs before this Court.

Issue 1: WON the respondents were guilty of smuggling

Ruling:
 YES
 There is no question that the vessel S/S Argo was apprehended while unloading goods of foreign origin onto the barge UN-
L-106 and the tugboat Orestes, without the necessary papers showing that the goods were entered lawfully though a port
of entry and that taxes and duties on said goods had been paid.
 The claim that the S/S Argo made an emergency call at the Port of Manila for replacement of crew members and had to
stop at the Explosives Anchorage Area because it was carrying nitric acid, a dangerous cargo, cannot be upheld, much less
given credence by this Court
 The facts found by the Court of Tax Appeals are in consonance with the findings of the Collector of Customs, and the
Commissioner of Customs.
 Absent a showing of any irregularity, or arbitrariness, the findings of fact of quasi-judicial and administrative bodies are
entitled to great weight and are conclusive and binding on this Court
 Moreover, the Collector of Customs in S.I. No. 10009-C, Manila, ordered on July 28, 1966 the forfeiture of the subject cargo
after finding that they were, in truth and in fact, smuggled articles (Rollo, p. 7).
 Respondent Ceaba did not appeal from said order and the same has become final

Issue 2: WON the vessel S/S Argo may be seized/forfeited

Ruling:
 NO
 Section 2530 (a) and (c) of said law reads as follows:
o Sec. 2530. Property Subject to Forfeiture under Tariff and Customs Laws. — Any vessel or aircraft, cargo, articles
and other objects shall, under the following conditions, be subject to forfeiture:
(a) Any vessel or aircraft, including cargo, which shall, be used unlawfully in the importation or exportation of
articles into or from any Philippine port or place except a port of entry; and any vessel which, being of less than
thirty tons capacity shall be used in the importation of articles into any Philippine port or place except into a port
of the Sulu sea where importation in such vessel may be authorized by the Commissioner, with the approval of the
department head.
xxx xxx xxx
(c) Any vessel or aircraft into which shall be transferred cargo unladen contrary to law prior to the arrival of the
importing vessel or aircraft at her port of destination.
 The penalty of forfeiture is imposed on any vessel, engaged in smuggling if the conditions enumerated in Section 2530 (a)
are present
 These conditions are:
1. The vessel is "used unlawfully in the importation or exportation of articles into or from" the Philippines
2. The articles are imported or exported into or from "any Philippine port or place, except a port of entry;" or
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."

Application
 In its decision, the Court of Tax Appeals held that while the S/S Argo was caught unloading smuggled goods in Manila Bay,
the said vessel and the goods cannot be forfeited in favor of the government because the Port of Manila is a port of entry
  The Commissioner of Customs argues that the phrase "except a port of entry" should mean "except a port of destination,"
and inasmuch as there is no showing that the Port of Manila was the port of destination of the S/S Argo, its forfeiture was in
order
 We disagree.
 Section 2530(a) in unmistakable terms provides that a vessel engaged in smuggling "in a port of entry" cannot be forfeited.
 This is the clear and plain meaning of the law.
 It is not within the province of the Court to inquire into the wisdom of the law, for indeed, we are bound by the words of
the statute.
 Neither can we put words in the mouths of the lawmaker.
 A verba legis non est recedendum.
 It must be noted that the Revised Administrative Code of 1917 from which the Tariff and Customs Code is based, contained
in Section 1363(a) thereof almost exactly the same provision in Section 2530(a) of the Tariff and Customs Code, including
the phrase "except a port of entry."
 If the lawmakers intended the term "port of entry" to mean "port of destination," they could have expressed facilely such
intention when they adopted the Tariff and Customs Code in 1957.
 Instead on amending the law, Congress reenacted verbatim the provision of Section 1363(a) of the Revised Administrative
Code of 1917.
 Congress, in the very same Article 2530 of the Tariff and Customs Code, used the term "port of destination" in subsections
(c) and (d) thereof.
 This is a clear indication that Congress is aware of the distinction between the two wordings
 It was only in 1972, after this case was instituted, when the questioned exception ("except a port of entry") in Section
2530(a) of the Tariff and Customs Code was deleted by P.D. No. 74
 Nevertheless, although the vessel cannot be forfeited, it is subject to a fine of not more than P10,000.00 for failure to
supply the requisite manifest for the unloaded cargo under Section 2521 of Code, which reads as follows:
 Sec. 2521. Failure to Supply Requisite Manifests
o If any vessel or aircraft enters or departs from a port of entry without submitting the proper manifest to the
customs authorities, or shall enter or depart conveying unmanifested cargo other than as stated in the next
preceding section hereof, such vessel or aircraft shall be fined in a sum not exceeding ten thousand pesos.

Issue 3: WON the barge UN-L-106 and the tugboat Orestes may be seized/forfeited

Ruling:
 YES
 The barge-lighter UN-L-106 and the tugboat Orestes, on the other hand, are subject to forfeiture under paragraph (c) of
Section 2530 of the Tariff and Customs Code.
 The barge-lighter and tugboat fall under the term "vessel" which includes every sort of boat, craft or other artificial
contrivance used, or capable of being used, as a means of transportation on water (R.A. No. 1937, Section 3514).
 Said section 2530 (c) prescribes the forfeiture of any vessel or aircraft into which shall be transferred cargo unladen
contrary to law before the arrival of the vessel or aircraft at her port of destination Manila was not the port of destination,
much less a port of call of the S/S Argo, the importing vessel.
 The S/S Argo left Hongkong and was bound for Jesselton, North Borneo, Djakarta and Surabaja, Indonesia; and yet it
stopped at the Port of Manila to unload the smuggled goods onto the UN-L-106 and the Orestes

Issue 4: WON owners of the barge/tugboats can raise the defense of lack of knowledge to oppose the forfeiture

Ruling
 NO
 Forfeiture proceedings are proceedings in rem and are directed against the res.
 It is no defense that the owner of the vessel sought to be forfeited had no actual knowledge that his property was used
illegally.
 The absence or lack of actual knowledge of such use is a defense personal to the owner himself which cannot in any way
absolve the vessel from the liability of forfeiture

2. FEEDER INTERNATIONAL LINE, PTE., LTD., by its agent, FEEDER INTERNATIONAL (PHILS.) INC., petitioner, vs. COURT OF
APPEALS, Fourteenth Division, COURT OF TAX APPEALS, and COMMISSIONER OF CUSTOMS, respondents.
G.R. No. 94262 May 31, 1991
Facts:
 The M/T "ULU WAI" foreign vessel of Honduran registry, owned and operated by Feeder International Shipping Lines of
Singapore, left Singapore on May 6, 1986 carrying 1,100 metric tons of gas oil and 1,000 metric tons of fuel oil consigned to
Far East Synergy Corporation of Zamboanga, Philippines.
 May 14, 1986, the vessel anchored at the vicinity of Guiuanon Island in Iloilo without notifying the Iloilo customs
authorities. The presence of the vessel only came to the knowledge of the Iloilo authorities by information of the civilian
informer in the area. Acting on said information, the Acting District Collector of Iloilo dispatched a Customs team on May
19, 1986 to verify the report.
 The Customs team found out that the vessel did not have on board the required ship and shipping documents, except for a
clearance from the port authorities of Singapore clearing the vessel for "Zamboanga."
 In view thereof, the vessel and its cargo were held and a Warrant of Seizure and Detention over the same was issued after
due investigation. The petitioner then filed its Motion to Dismiss and to Quash the Warrants of Seizure and Detention which
the District Collector denied.
 March 17, 1987, the District Collector found the M/T "ULU WAI" guilty of violating Section 2530 (a) of the Tariff and
Customs Code of the Philippines (PD 1464), as amended, while her cargo of 1,100 M/T Gas Oil and 1,000 M/T Fuel Oil are
hereby found guilty of violating Section 2530* (a), (f), and (1-1) under the same Code and are hereby forfeited in favor of
the Republic of the Philippines.

 Petitioner appealed to the Commissioner of Customs who rendered a decision dated May 13, 1987 that the decision dated
March 19, 1987 of the District Collector of Customs of Iloilo is hereby affirmed in toto.

 Petitioner filed a petition for review of the decisions of the Collector and the Commissioner of Customs with the CTA,
praying for the issuance of a writ of PI and/or a restraining order to enjoin the Commissioner from implementing his
decision. the CTA affirmed the decision
 Petitioner filed a petition for review of the CTA’s decision with this Court.
 March 21, 1990, we issued a resolution referring the disposition of the case to the CA in view of our decision
in Development Bank of the Philippines vs. Court of Appeals, et al. holding that final judgments or decrees of the CTA are
within the exclusive appellate jurisdiction of the CA.

CA Decision
 May 8, 1990, CA affirmed the decision of the CTA.

Issue: WON illegal importation, or at least an attempt thereof, has been committed with the use of the vessel M/T "ULU WAI," thus
warranting the forfeiture of said vessel and its cargo pursuant to the provisions of the Tariff and Customs Code?
Ruling: YES.

 1. It must be here emphasized that a forfeiture proceeding under tariff and customs laws is not penal in nature, contrary
to the argument advanced by herein petitioner. In the case of People vs. Court of first Instance of Rizal etc.,  et al., this Court
made an exhaustive analysis of the nature of forfeiture proceedings, in relation to criminal proceedings, as follows:
o . . . It is quite clear that seizure and forfeiture proceedings under the tariff and customs laws are not criminal in
nature as they do not result in the conviction of the offender nor in the imposition of the penalty provided for in
Section 3601 of the Code. As can be gleaned from Section 2533 of the code, seizure proceedings, such as those
instituted in this case, are purely civil and administrative in character, the main purpose of which is to enforce the
administrative fines or forfeiture incident to unlawful importation of goods or their deliberate possession. The
penalty in seizure cases is distinct and separate from the criminal liability that might be imposed against the
indicted importer or possessor and both kinds of penalties may be imposed.
o In the case at bar, the decision of the Collector of Customs, as in other seizure proceedings, concerns the res rather
than the  persona. The proceeding is a probe on contraband or illegally imported goods. These merchandise
violated the revenue law of the country, and as such, have been prevented from being assimilated in lawful
commerce until corresponding duties are paid thereon and the penalties imposed and satisfied either in the form
of fine or of forfeiture in favor of the government who will dispose of them in accordance with law. The importer
or possessor is treated differently. The fact that the administrative penalty be falls on him is an inconsequential
incidence to criminal liability. By the same token, the probable guilt cannot be negated simply because he was not
held administratively liable. The Collector's final declaration that the articles are not subject to forfeiture does not
detract his findings that untaxed goods were transported in respondents' car and seized from their possession by
agents of the law. Whether criminal liability lurks on the strength of the provision of the Tariff and Customs Code
adduced in the information can only be determined in a separate criminal action. Respondents' exoneration in the
 administrative cases cannot deprive the State of its right to prosecute. But under our penal laws, criminal
responsibility, if any, must be proven not by preponderance of evidence but by proof beyond reasonable doubt.

 Considering, therefore, that proceedings for the forfeiture of goods illegally imported are not criminal in nature since they
do not result in the conviction of the wrongdoer nor in the imposition upon him of a penalty, proof beyond reasonable
doubt is not required in order to justify the forfeiture of the goods. In this case, the degree of proof required is merely
substantial evidence which means such relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.
 In the case at bar, we find and so hold that the Government has sufficiently established that an illegal importation, or at
least an attempt thereof, has been committed with the use of the vessel M/T "ULU WAI," thus warranting the forfeiture
of said vessel and its cargo pursuant to the provisions of the Tariff and Customs Code.

 Before we proceed to a discussion of the factual findings of the Court of Appeals, it bears mention that petitioner, which is a
corporate entity, has no personality to invoke the right to be presumed innocent which right is available only to an
individual who is an accused in a criminal case.

 2. Section 1202 of the Tariff and Customs Code provides that importation begins when the carrying vessel or aircraft enters
the jurisdiction of the Philippines with intention to unload therein. It is clear from the provision of the law that mere intent
to unload is sufficient to commence an importation. And "intent," being a state of mind, is rarely susceptible of direct proof,
but must ordinarily be inferred from the facts, and therefore can only be proved by unguarded, expressions, conduct and
circumstances generally.
 In the case at bar, that petitioner is guilty of illegal importation, there having been an intent to unload, is amply supported
by substantial evidence as clearly demonstrated by this comprehensive discussion in respondent court's decision:
o It is undisputed that the vessel M/T "ULU WAI" entered the jurisdiction of the Philippines. The issue that calls for
Our resolution is whether or not there was an intention to unload. The facts and circumstances borne by the
evidence convince Us that there was intent to unload. The following circumstances unmistakably point to this
conclusion.
 1. Considering that the vessel came from Singapore, the route to Zamboanga was shorter and Iloilo lies
further north. It is not logical for the sailing vessel to travel a longer distance to get the necessary repairs.
 2. When the vessel M/T "ULU WAI" anchored at Guiuanon Island, Guimaras, Iloilo, it did not notify the
Iloilo port or Customs authorities of its arrival. The master of the vessel did not file a marine protest until
12 days after it had anchored, despite the supposed urgency of the repairs needed and notwithstanding
the provision (Sec. 1016) of the Code requiring the master to file protest within 24 hours.
 3. At the time of boarding by the customs personnel, the required ship's and shipping documents were
not on board except the clearance from Singaporean port officials clearing the vessel for Zamboanga.
Petitioner claims that these were turned over to the shipping agent who boarded the vessel on May 15,
1986. However, this claim is belied by the sworn marine protest of the master of M/T "ULU WAI" Mr.
Romeo Deposa.
 It was only on or about the 20th of May when I instructed one of the crew to: get down of (sic) the vessel
and find means and ways to contact the vessel's representative.
 Moreover, in such Sworn Statement, ship agent, Antonio Torres, stated that he did not know the buyer of
the oil, which is impossible if he had the Local Purchase Order of the alleged buyer, Pogun Construction
SDN. Torres also swore that his knowledge came from the vessel's owner, without mentioning the
shipping documents which indicate such data. He also said that he did not know the consignee of the oil
which would have been patent from the documents. Lastly, as also pointed out by the court a quo, the
captain of the vessel M/T "ULU WAI" Romeo Deposa, in his sworn statement to custom authorities on
May 26, 1986, enumerated the documents he allegedly gave to Mr. Antonio Torres, but did not mention
as among them the Local Purchase Order of Pogun Construction SDN and the Bill of Lading.
 4. When the vessel was inspected, the tugboat M/T "CATHEAD", and the large M/T "SEMIRANO NO. 819"
were alongside it. A fixture note revealed that the barge and the tugboat were contracted by Consignee
Far East Synergy to load the cargo of the vessel into the awaiting barge and to discharge the same to
Manila.
 It is of no moment that the fixture note did not expressly mention the vessel M/T "ULU WAI" Government
witnesses, Asencio and Lumagpas, testified that it was the vessel's cargo which was to be unloaded and
brought to Manila by them.

 The aforequoted findings of fact of respondent CA are in consonance with the findings of both the Collector and the
Commissioner of Customs, as affirmed by the CTA.
  We, therefore, find no compelling reason to deviate from the elementary principle that findings of fact of the Court of
Appeals, and of the administrative and quasi-judicial bodies for that matter, are entitled to great weight and are conclusive
and binding upon this Court absent a showing of a grave abuse of discretion amounting to lack of jurisdiction.

 3. The fact that the testimonies of Deposa and Torres were given without the assistance of counsel may not be considered
an outright violation of their constitutional right to be assisted by counsel. Nera vs. The Auditor General:
o The right to the assistance of counsel is not indispensable to due process unless required by the Constitution or a
law. Exception is made in the charter only during the custodial investigation of a person suspected of a crime, who
may not waive his right to counsel except in writing and in the presence of counsel, and during the trial of the
accused, who has the right "to be heard by himself and counsel," either retained by him or provided for him by the
government at its expense. In other proceedings, however, the need for the assistance of counsel is not as urgent
nor is it deemed essential to their validity. There is nothing in the Constitution that says a party in a non-criminal
proceeding is entitled to be represented by counsel and that without such representation he will not be bound by
such proceedings. The assistance of lawyers, while desirable, is not indispensable. The ordinary citizen is not that
helpless that he cannot validly act at all except only with a lawyer at his side.

 Besides, if ever there was any doubt as to the veracity of the sworn statements of Deposa and Torres, they should have
been presented during any appropriate stage of the proceedings to refute or deny the statements they made. This was not
done by petitioner. Hence, the presumption that official duty was regularly performed stands. In addition, petitioner does
not deny that Torres is himself a lawyer. Finally, petitioner simply contends that the sworn statements were taken without
the assistance of counsel but, however, failed to allege or prove that the same were taken under anomalous circumstances
which would render them inadmissible as evidence against petitioner. We thus find no compelling reason to doubt the
validity or veracity of the said sworn statements. WHEREFORE, the instant petition is DENIED for lack of merit and the
judgment appealed from is hereby AFFIRMED  in toto. SO ORDERED.

3. Yaokasin vs. Commissioner of Customs

G.R.No. 84111. December 22, 1989.
GRIÑO-AQUINO, J.:

This petition questions the power of automatic review of the Commissioner of Customs over the decision of the Collector of
Customs in protest and seizure cases.

FACTS:
 On May 27, 1988, the Philippine Coast Guard seized 9000 bags/ sacks of refined sugar, which were being unloaded from the
M/V Tacloban, and turned them over to the custody of the Bureau of Customs.
 The petitioner presented a sales invoice from the Jordan Trading of Iloilo (Annex A, Petition) to prove that the sugar was
purchased locally.
 The District Collector of Customs, however, proceeded with the seizure of the bags of sugar.
 On June 3 and 6, 1988, show-cause hearings were conducted.
 On June 7, 1988, the District Collector of Customs ordered the release of the sugar. 
 On June 10, 1988, the decision, together with the entire records of the case, were transmitted to, and received by, the
Commissioner of Customs.
 On June 14, 1988, without modifying his decision, the District Collector of Customs ordered the warehouse, wherein the
bags of sugar were stored, to be sealed.

 On June 19, 1988, the Economic Intelligence and Investigation Board (EIIB) filed a Motion for Reconsideration (Annex I,
Petition, p. 278, Rollo), for "further hearing on the merits", based on evidence that the seized sugar was of foreign origin.

 Petitioner opposed the motion for being merely pro forma and/or that the same was, in effect, a motion for new trial. 

 Hearing Officer Paula Alcazaren set the Motion for reconsideration for hearing on July 13, 1988.
 But before that, or on July 4, 1988, the Commissioner of Customs by "2nd Indorsement" returned to the District Collector of
Customs the folder of Tacloban S.I. No. 06-01 (R.P. vs. 9000 bags/sacks of refined sugar, MR. JIMMY YAOKASIN,
consignee/claimant), together with the proposed decision, for hearing and/or resolution of the government is motion for
reconsideration.
  On the same date, July 4, 1988, petitioner applied for and secured a writ of replevin from the Regional Trial Court of Leyte
through a Petition/Complaint for certiorari Prohibition with Replevin and Damages with Preliminary Injunction and/or
Restraining Order.

 On July 12, 1988, respondent District Collector of Customs filed an Answer assailing the court's jurisdiction.

 On the same day, the District Collector and the Commissioner of Customs filed in the Court of Appeals a Petition for
certiorari and Prohibition with Application for a Writ of Preliminary Injunction and/or Restraining Order to annul the July
4, 1988 — "Order Granting Replevin with Temporary Restraining Order."

 On July 15, 1988, the Collector of Customs reconsidered his June 7, 1988 decision finding that:
o the 9,000 bags/sacks of refined sugar in question are of foreign origin, smuggled into the country, and declares
them forfeited in favor of the government.
 Also, on the same day, the Court of Appeals: (a) gave due course to respondent's petition; and (b) restrained Judge Pedro S.
Espina, Regional Trial Court, Leyte, from further proceeding in Civil Case No. 7627, and from enforcing his Order of July 4,
1988.

PETITIONER’S CONTENTION:
 It is petitioner's contention that the June 7, 1988 decision of the District Collector of Customs became final and executory,
in view of the absence of an appeal therefrom by the "aggrieved party" (himself) within the 15-day period provided for in
Sec. 2313 of the Tariff and Customs Code.
 Hence, the release of the 9,000 bags of sugar must be upheld.

RESPONDENT’S CONTENTION:
 On the other hand, the District Collector and the Commissioner of Customs argue that since the June 7, 1988 decision
is adverse to the government, the case should go to the Commissioner of Customs on automatic review, pursuant to
Memorandum Order No. 20-87, dated May 18, 1987, of former Acting Commissioner of Customs Alexander Padilla
o The memorandum order implements Section 12 (Art. IV, Part. IV, Vol. I) of the Integrated Reorganization Plan.
(CHECK NOTES)

ISSUE: Whether or not Section 12 of the Plan applies to petitioner;s shipment of 9,000 bags of sugar?
RULING:
 Section 12 of the Plan applies to petitioner's shipment of 9,000 bags of sugar.
 Taxes being the lifeblood of the Government, Section 12, which the Commissioner of Customs in his Customs Memorandum
Order No. 20-87, enjoined all collectors to follow strictly, is intended to protect the interest of the Government in the
collection of taxes and customs duties in those seizure and protest cases which, without the automatic review provided
therein, neither the Commissioner of Customs nor the Secretary of Finance would probably ever know about.

 Without the automatic review by the Commissioner of Customs and the Secretary of Finance, a collector in any of our
country's far-flung ports, would have absolute and unbridled discretion to determine whether goods seized by him are
locally produced, hence, not dutiable or of foreign origin, and therefore subject to payment of customs duties and taxes.

 His decision, unless appealed by the aggrieved party (the owner of the goods), would become final with 'the no one the
wiser except himself and the owner of the goods.

 The owner of the goods cannot be expected to appeal the collector's decision when it is favorable to him.

 A decision that is favorable to the taxpayer would correspondingly be unfavorable to the Government, but who will appeal
the collector's decision in that case certainly not the collector. 

 Evidently, it was to cure this anomalous situation (which may have already defrauded our government of huge amounts of
uncollected taxes), that the provision for automatic review by the Commissioner of Customs and the Secretary of Finance
of unappealed seizure and protest cases was conceived to protect the government against corrupt and conniving customs
collectors.
ISSUE: Whether or not Section 12 of the Plan and Section 2313 of the Tariff and Customs Code conflict with each other?
RULING:
 Section 12 of the Plan and Section 2313 of the Tariff and Customs Code do not conflict with each other.
 They may co-exist. Section 2313 of the Code provides for the procedure for the review of the decision of a collector in
seizure and protest cases upon appeal by the aggrieved party, i.e., the importer or owner of the goods.
 On the other hand, Section 12 of the Plan refers to the general procedure in appeals in seizure and protest cases with a
special proviso on automatic review when the collector's decision is adverse to the government.
 Section 2313 and the proviso in Section 12, although they both relate to the review of seizure and protest cases, refer to
two different situations — when the collector's decision is adverse to the importer or owner of the goods, and when the
decision is adverse to the government.
 The decision of the Court in the case of Sy Man vs. Jacinto (93 Phil. 1093 [19531]), which the petitioner invokes as
precedent, is riot in point.
o In the present case the Acting Commissioner, in issuing the memorandum circular, was directing strict compliance
with an existing provision of law, which mandates automatic review of decisions of collectors in seizure and protest
cases which are adverse to the government.
o On the other hand, in Sy Man, the memorandum order of the Insular Collector of Customs directed the elevation
of records in seizure and forfeiture cases for automatic review even if he had not been expressly granted such
power under the then existing law. 

ISSUE: Whether or not CMO No. 20-87 (The Plan) needs to be published in the Official Gazette?
RULING:
 No, publication in the Official Gazette is not necessary.
 The objection to the enforcement of Section 12 of the Plan and CMO No. 20-87 on the ground that they had not been
published in the Official Gazette, is not well taken.
 The Plan, as part of P.D. No. 1, was "adopted, approved and made as part of the law of the land" and published in Volume
68, No. 40, p. 7797 of the Official Gazette issue of October 2, 1972. 
 Article 2 of the Civil Code, which requires laws to be published in the Official Gazette, does not apply to CMO No. 20-87
which is only an administrative order of the Commissioner of Customs addressed to his subordinates. the customs
collectors. 
 Commonwealth Act No. 638 (an Act to Provide for the Uniform Publication and Distribution of the Official Gazette)
enumerates what shall be published in the Official Gazette besides legislative acts and resolutions of a public nature of the
Congress of the Philippines.
 Executive and administrative orders and proclamations, shall also be published in the Official Gazette, except such as have
no general applicability." 
 CMO No. 20-87 requiring collectors of customs to comply strictly with Section 12 of the Plan, is an issuance which is
addressed only to particular persons or a class of persons(the customs collectors).
 "It need not be published, on the assumption that it has been circularized to all concerned" (Tanada vs. Tuvera, 136 SCRA
27). 

ISSUE: Whether or not Section 12 of the Plan is still operative?

RULING:
 Yes, it is still operative.
 In Presidential Decree No. 1, dated September 24, 1972, former President Marcos decreed and ordered that the Plan be (4
adopted, approved, and made as part of the law of the land."

 Under the 1987 Constitution, "[a]ll existing laws, decrees, executive orders, proclamations, letters of instruction, and other
executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed, or revoked"
(Sec. 3, Art. XVIII).

 While some provisions of the Plan have ceased to be operative because of subsequent reorganizations, other provisions,
such as Section 12 have not been repealed by subsequent legislation. 

MEDIALDEA, J., Dissenting Opinion

ISSUE: Whether or not intent to give the COC the power of automatic review was manifests?
RULING:
 No, intent to give the COC the automatic power of review was not shown.
  As will be noted, the Plan grants the Commissioner of Customs the power to review automatically, decisions of the
Collector of Customs in seizure and protest cases adverse to the government.

 Cases not decided by the Commissioner within 30 days from receipt of the records become final and executory. 

 There is no question that P. D. No. 1/ the Plan is still a valid law.

 However, I do not agree that this is legal authority to uphold the Commissioner's right to automatically review decisions
of the Collector of Customs in seizure cases, and, in the process, allow a reversal of a decision favorable to the importer.

 When the Plan became law pursuant to P.D. No. 1, Section 2313 of RA 1937 (Tariff and Customs Code of the Philippines)
already governed the review powers of the Commissioner of Customs.

 Thus, while both Section 12 of the Plan and 2313 of the Tariff and Customs Code deal with the review powers of the
Commissioner of Customs, the Plan is a general law, as it concerns itself with the reorganization of the executive branch of
the government in a martial law regime, whereas the Code is a special law, i.e., specifically on tariff and customs duties.
Consequently, the Plan is subservient to the Code and the automatic review power granted therein can not be upheld.

 Prior to subsequent amendments, Section 2313 of the Code provided as follows:

SEC. 2313. Review by 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 days after notification in
writing by the collector of his action or decision, give written notice to the Collector of his desire to have the matter
reviewed by 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. (Emphasis ours)

 As will be noted, the foregoing provision does not contain any automatic review powers of the Commissioner of Customs. 

 On October 27, 1972, former President Marcos issued P.D. No. 34, amending the Tariff and Customs Revision Act of 1972
(earlier issued by the former Congress, martial law having been proclaimed) without any reference to the provisions of Sec.
12 of P.D. No. 1. 

As amended by P.D. No. 34, Section 2313 provided as follows:

SEC. 2313. Review by Commissioner. — The person aggieved 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 notificaton
in writing by the Collector of his action or decision, give written notice to the Collector and one copy furnished to
the Commissioner of his desire to have the matter reviewed by 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. (Emphasis ours)

 One notes that except for the phrase requiring a copy of the notice to be furnished to the Commissioner of Customs, no
other substantial change was introduced by P.D. No. 34. Consequently, the right to elevate the case to the Commissioner of
Customs remained an exclusive authority of the aggrieved party. 

 On June 11, 1978, P.D. No. 1464 was issued directing the consolidation and codification of the tariff and customs laws of the
Philippines into a single code, to be known as the Tariff and Customs Code of 1978.

 The Code was subsequently codified as the "Tariff and Customs Code of 1982" pursuant to Executive Order No. 688, dated
May 9, 1981, again without any reference to Section 12 of P.D. No. 1.

 Throughout the various amendments/modifications of the tariff and customs laws, the review power of the
Commissioner of Customs in seizure cases has remained the same, i.e., it arises only upon appeal of the aggrieved party.
  Hence, if no appeal is made, the decision of the Collector of Customs becomes final and executory, even as against the
government.

 It is therefore clear that while it was intended by the Plan to invest the Commissioner of Customs with automatic review
powers over decisions of the Collector of Customs in seizure cases, more importantly in cases adverse to the government,
this intention was never carried out.

ISSUE: Whether or not CMO No. 20-87 (The Plan) implements the automatic review powers?

RULING:

 Private respondents contend that CMO No. 20-87 implements the Plan on the automatic review powers.

 I do not agree. Section 12 of the Plan/P.D. No. 1 is no longer good law, as earlier pointed out, since despite various
presidential issuances and amendments on customs laws, the Commissioner of customs was never granted any
automatic review power.

 The power of review of the Commissioner of customs found in Sec. 2313 is different from the supervisory authority of the
Commissioner of Customs presently embodied in Sec. 2315 of the Tariff Customs Code, quoted below, and which gives him
the authority of automatic review of the decisions of the Collector of Customs in assessment of duties adverse to the
government.

 SEC. 2315. Supervisory Authority of Commissioner and of Secretary of Finance in Certain Cases — If in any case involving
the assessment of duties, the Collector renders a decision adverse to the government, such decision shall automatically be
elevatedto and reviewed by, the Commissioner; and if the Collector's decision would be affirmed by the Commissioner, such
decision shall be automatically elevated to, and be finally reviewed by, the Secretary of Finance: Provided, however, That if
within thirty (30) days from receipt of the record of the case by the Commissioner or by the Secretary of the Finance: as the
case may be, no decision is rendered by either of them, the decision under review shall become final and
executory: Provided, further, That any party aggrieved by either the decision of the Commissioner or of the Secretary of
Finance may appeal to the Court of Tax Appeal within thirty (30) days from receipt of a copy of such decision. For to
purpose Republic Act Numbered Eleven Hundred and twenty-five is hereby amended accordingly. ( Emphasis Ours)

 Prior to the amendment introduced by P.D. No. 34, Sec. 2315 read as follows:

o SEC. 2315. Supervisory Authority of Commissoner and of Department Head in Certain Cases. — If in any case
involving the assessment of duties the importer shall fail to protest the ruling of the Collector, and the
Commissioner shall be of the opinion that the ruling was erroneous and unfavorable to the Government, the latter
may order a reliquidation; and if the ruling of the Commissioner in any unprotested case should, in the opinion of
the department head, be erroneous and unfavorable to the government, the department head may require the
Commissioner to order a reliquidation. (Emphasis ours)

 Under the old provision, We note that the Commissioner of Customs had the right to order a reliquidation in unprotested
cases of assesment of duties, where he is "of the opinion that the ruling of the Collector of Customs was erroneous and
unfavorable to the government."

 As amended, Sec. 2315 has been rephrased, giving the Commissioner of Customs the power of "automatic review" (not
reliquidation) over adverse decisions of the Collector of Customs in cases involving assessment of duties, but must do so
within a period of thirty days; otherwise, his decision becomes final and executory. 

 The 30-day period appears to be a response to a defect We noted in the Sy Man case found in the old provision of Sec. 2315
which did not prescribe a period within which a reliquidation may be undertaken.

 The absence of a period was "decidedly unsatisfactory and even unjust, if not oppressive" to the importer, who was willing
"to abide by the decision of the Collector, to pay the amounts fixed, including the fines, and desired to get the goods
released so as to be able to dispose of them," but was unable to do so because of the prolonged inaction of the
Commissioner.
  In the Sy Man case, We noted two defects.

o The first pertained to the absence of the period found in Sec. 2315, while the second referred to a need for a
provision on review and revision by the Commissioner of Customs on unappealed seizure cases, as governed by
Sec. 2313.

 But if the Government deems it necessary to provide for review and revision by the Commissioner or even by the
Department Head of the decision of the Collector of Customs in an unappealed seizure cases, the Legislature may be
requested to insert a section in the Revised Administrative Code similar to Section 1393 (now Section of the Customs
Law) which applies to unprotested cases of assessment duties.

o The defect in said section however is that it does not fix the period within which the automatic review and
revision or reliquidation to be ordered by the Commissioner and the Secretary of Finance must be effected. This
defect should be remedied. (p. 1107)

 Unfortunately, as can be seen, our legislators merely acted on the defect found in Sec. 2315 by providing for a period in
cases of assessment of duties.

 Additionally, they invested the Commissioner with automatic review powers where an assessment was adverse to the
government, thus, eliminating any possible prejudice to the government.

 They did not, however, provide any authority for automatic review in unappealed seizure cases, similar to that found in
Sec. 2313, thus belying any intent to implement the Plan with respect to the automatic review powers.

 We believe that for as long as the procedure laid down in Sec. 2302 is observed, there can be no resulting prejudice to the
government in unappealed seizure cases, since the Commissioner in the exercise of his supervisory authority can ask the
Collector to "withhold action on the seizure or hold in abeyance within a reasonable time the promulgation of a decision,
until after he has conferred with the Collector," in cases of unusual or important seizure.

 As it now stands therefore, there is no law allowing automatic review in seizure cases. For this reason, CMO No. 20-87,
issued supposedly in implementation of Sec. 12 of the Plan/P.D. No. 1, which has since been amended/modified, is void and
of no effect, being inconsistent with law.

 In contrast, CMO No. 20-87 enlarges the power of the Commissioner of Customs by investing him with automatic powers in
seizure cases, in effect amending COA No. 226.

 Expectedly, the memorandum must be published in accordance with Sec. 551 of the Revised Administrative Code not only
for effectivity but also to fully apprise third persons. Absent such publication, the same cannot be upheld for non-
compliance with Sec. 551 of the Revised Administrative Code.

DISPOSITIVE PORTION: WHEREFORE, the petition for review is denied for lack of merit. The temporary restraining order which we
issued in this case is hereby made permanent. Cost against the petitioner. SO ORDERED.

NOTES:

The memorandum order implements Section 12 (Art. IV, Part. IV, Vol. I) of the Integrated Reorganization Plan (hereafter, "PLAN")
which provides:

12. The Collector of Customs at each principal port of entry shall be the official head of the customs service in his
port and district responsible to the Commissioner. He shall have the authority to take final action on the
enforcement of tariff and customs laws within his collection district and on administrative matters in accordance
with Chapter III, Part II of this Plan. Decisions of the Collector of Customs in seizure and protest cases are subject to
review by the Commissioner upon appeal as provided under existing laws; provided, however, that where a
decision of a Collector of Customs in such seizure and protest cases is adverse to the government, it shall
automatically be reviewed by the Commissioner of Customs which, if affirmed, shall automatically be elevated for
final review by the Secretary of Finance; provided, further that if within thirty days from receipt of the records of
 the case by the Commissioner of Customs or the Secretary of Finance, no decision is rendered by the Commissioner
of Customs or the Secretary of Finance, the decision under review shall become final and executory. (Emphasis
supplied)

4. ACTING COMMISSIONER OF CUSTOMS vs. CTA, April 1984

A proceeding for review on certiorari of the Decision of respondent Court of Tax Appeals in CTA Case No. 3201, which reversed the
Decision of petitioner, the Acting Commissioner of Customs, decreeing the forfeiture of various foreign currencies found in the
possession of private respondent (Charles Joseph Andrulis) for violation of Central Bank Circular No. 534, in relation to section
2530(f) of the Revised Tariff and Customs Code.

FACTS:

 On 20 February 1980, Andrulis representing himself as an American businessman "on joint ventures with his Filipino
counterparts", arrived in Manila and checked in at the Century Park Sheraton Hotel.

 Two days later, he left the hotel surreptitiously without paying for his bills in the amount of P2,000.00.

 Col. Felix Zerrudo, Chief Security Officer of the Hotel, timely discovered the scheduled departure of Andrulis on that same
day, and immediately tipped-off the Customs authorities on Andrulis' intention to abscond.

 At the Manila International Airport (MIA), the Customs authorities looked for Andrulis from among the passengers who
were already on board the plane bound for Singapore.

 Apprehensive, Andrulis locked himself inside the airplane's comfort room.

 In the course of negotiations for him to come out, he slipped through an opening bills worth US$300.00.

 Andrulis finally yielded to the authorities and surrendered the luggage he was carrying which, when opened by the
authorities, contained various foreign currencies consisting of US$59,639.00; 53,100 Indonesian Rupiah, and Singapore
$308.00.

 A criminal charge was filed for violation of CB Circular No. 534 in relation to RA 265, the Central Bank Charter.

 On 10 March 1980, the Assistant City Fiscal dismissed the charge on the rationalization that the Government had failed to
present evidence that the currencies were not brought in by Andrulis.

 Proceedings for the seizure of the foreign currencies were also commenced at the Customs Office of the MIA in Pasay
City.

 During the hearing, Andrulis submitted the case for resolution on the basis of the following documentary evidence:

1. Sworn Affidavit of Charles Joseph Andrulis, stating that the foreign exchange in question are owned by claimant;

2. Resolution of the City Fiscal of Pasay City in I.S. No. 80-94112, entitled MIA Customhouse vs. Charles Joseph
Andrulis, dismissing the alleged charge of violation of Central Bank Circular No. 534, in relation to Central Bank
Circular No. 265, to show that there was no violation as charged. 

 For its part, the prosecution submitted the case on the basis of the following:

A. Affidavit of Col. Felix A. Zerrudo (Ret.) Chief Security Officer of the Century Park Sheraton-Manila Hotel,
executed on February 29, 1980;

B. Certification issued by Col. Felix A. Zerrudo (Ret.) dated February 29, 1980;
 C. Certification of Mr. Domingo J. Galicia, Acting Credit Manager of the Manila Hotel dated February 28, 1980;

D. Letter of Demand dated July 9, 1979 issued by Robert L. Maniquiz, Credit and Collection Manager of the Resort
Hotels Corporation addressed to Mr. Charles Andrulis;

E. Sworn statement dated February 22, 1980 of Mr. Ramonchito Liongson, a Customs Officer, who apprehended
the various foreign currencies herein subject to seizure." 

 Items "C" and "D" above-listed tended to show that Andrulis had, on previous occasions, also tried to abscond without
payment of his bills from the Manila Hotel and the Pines Hotel in Baguio.

 On 3 June 1980, the Acting District Collector of Customs rendered a Decision, which found Andrulis to have violated Central
Bank Circular No. 534 in relation to section 2530(f) of the Tariff and Customs Code.

 Andrulis appealed to the Acting Commissioner of Customs, who affirmed the same.

 On 23 January 1981, Andrulis filed a Notice of Appeal and on 16 February 1981, a Petition for Review with the Court of Tax
Appeals.

 On 30 June 1982, respondent Court reversed the appealed Decision on the theory that the legal presumption of ownership
has to be accorded the possessor of the res, who need not be obliged to show or prove it pursuant to Section 5(j) of Rule
131 of the Rules of Court and Article 541 of the Civil Code.

 On 10 September 1982, petitioner filed a Motion for Reconsideration on the principal ground that respondent Court had
failed to consider that claimant Andrulis had the burden of proof to show that the foreign currencies seized from him were
brought into the Philippines by him.

 The motion was denied on 2 December 1982.

 Hence, the instant Petition for Review on certiorari by the Acting Commissioner of Customs represented by the Solicitor
General.

ISSUE: Who has the burden of proof in seizure or forfeiture proceedings?

RULING: Claimant

 The pertinent legal provisions provide:

o Section 3. Unless specifically authorized by the Central Bank or allowed under existing international
agreements or Central Bank regulations, no person shall take or attempt to take or transmit foreign
exchanges, in any form, out of the Philippines, directly, through other persons, through mails, or through
international carriers;

The provisions of this section shall not apply to tourists and non-resident temporary visitors who are
taking or sending out of the Philippines their own foreign exchange brought in by them. (CB Circular No.
534)

o Section 2530. Property Subject to Forfeiture Under Tariff and Customs Law.  — Any vehicle, vessel or
aircraft, cargo, article and other objects shall, under the following condition be subject to forfeiture;

xxx xxx xxx

(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 au other articles which, in the
opinion of the Collector, have been used, are or were entered to be used as instruments in the
importation or exportation of the former.  (Emphais supplied)
  In his defense, private respondent seeks refuge behind the exception in the aforequoted CB Circular No. 534 giving tourists
the right to take out of the Philippines their own foreign exchange brought in by them.

 Private respondent also relies heavily on his acquittal in the criminal charge filed against him for violation of CB Circular No.
534.

 The applicable law, Section 2535 of the Tariff and Customs Code, is explicit in this regard.

SEC. 2535. Burden of Proof in Seizure and/or Forfeiture. —  In  all proceedings taken for the seizure and/or
forfeiture of any vehicle, vessel, aircraft, beast or articles under the provisions of the tariff and customs laws, the
burden of proof shall lie upon the claimant: Provided, That probable cause shall be first shown for the institution of
such proceedings and that seizure and/or forfeiture was made under the circumstances and in the manner
described in the preceding sections of this Code  (Emphais ours).

APPLICATION:

 Upon the facts of the case, the requirement of the law that the existence of probable cause should first be shown before
firing of the forfeiture proceedings, had been fully met.

 When Andrulis was apprehended at the MIA and was found to have in his possession the various foreign currencies, he
could not produce the required Central Bank authorization allowing him to bring them out of the country.

 This constituted prima facie evidence of infringement of the provisions of CB Circular No. 534 and provided sufficient basis
for the seizure 'of the said foreign exchange.

 Probable cause having been shown, the burden of proof was upon Andrulis to establish that he fell within the purview of
the exception prescribed in the second paragraph of the aforequoted Section 3 of CB Circular No. 534 in that he actually
brought into the country the foreign currencies and was just taking them out. 

 This burden, Andrulis had failed to satisfactorily discharge.

 The legal presumption in Section 5(j), Rule 131 of the Rules of Court and Article 541 of the Civil Code, relied upon by
respondent Court, are of a general character and cannot prevail over the specific provisions of the Tariff and Customs Code.

 Aside from Andrulis' suspicious actuations when about to be apprehended on board the plane, which cast doubt on his
alleged bona fide possession of the foreign currencies, his bare assertion in his Affidavit, claiming that "he came into the
country with the intention of investing here and of going into joint ventures with local counterparts", has not been
corroborated by other convincing evidence.

 The observations of the Solicitor General on this point finds relevance:

If it was really his intention to invest, he could have presented documents to support his assertion . He could have
produced papers required by the Government of foreigners intending to invest in the Philippines. He could have
presented as witnesses Filipino businessmen with whom he entered into joint ventures or at least discussed the
prospects thereof. He could at the least have revealed the nature of the business he intended to engage in, the
capital requirements thereof, the situs of the business, the form of the entity he intended to form to carry on
the business, etc. He had done none of these.

Private respondent implies that the foreign currencies seized from him were intended to be invested in business
ventures in the Philippines. If this is so, why was it necessary for him to have three kinds of currencies: US dollars,
Indonesian Rupiah and Singapore dollars. Besides, businessmen usually do not personally carry the cash which
they intend to invest. They remit them through the banks. 

ISSUE: WON Andrulis’ acquittal in the criminal charge operates as res judicata in a seizure or forfeiture proceeding.

RULING: NO
  A distinction exists between the proceedings before the Fiscal which are in personam since they are directed against the
owner or holder of the thing, whereas, a forfeiture proceeding is one in rem directed against the thing itself.

There is a split of authority as to whether a former conviction of a criminal offense based upon the same facts
amounts to a bar. ... The authorities are by no means agreed, however, that a prior conviction for a Criminal charge
bars an action for a forfeiture of property. Thus, it has been held that since the forfeiture proceedings is one  in
rem under which the offense is attached primarily to the thing rather than the offender, the forfeiture proceedings
stands independent of, and wholly unaffected by, any criminal proceeding in personam and is not barred by a
conviction of the individual under a criminal charge. 

 In a similar vein, it was also held in C.F. Sharp & Co., Inc. vs. Commissioner of Customs, 22 SCRA 765 (1968) that the result of
criminal proceedings in a separate case before a different tribunal, being dependent upon the evidence adduced therein,
would not necessarily influence the judgment in a forfeiture proceeding.

OTHERS:

 Finally, Andrulis contends that no foreign currency declaration is required of any incoming or outgoing passenger and that it
is not the intention of the Government to entrap unwary foreigners. True, Resolution No. 594, dated 14 April 1969, of the
Monetary Board, provides:

Henceforth, no currency declaration of any kind shall be required either from outgoing or incoming passengers. 

 However, tourists are not precluded from submitting proof, other than a currency declaration, to show the legitimate
source of the currency in their possession.

 Besides, Resolution No. 594 must be deemed superseded by Resolution No. 1412, dated 16 July 1976, which requires that
persons taking or transmitting or attempting to take or transmit foreign exchange out of the Philippines must have
authorization from the Central Bank allowing them to do so.

WHEREFORE, the Decision of respondent Court of Tax Appeals, promulgated on 30 June 1982, is hereby reversed and set aside, and
the Decision of the Acting Commissioner of Customs, dated 15 December 1980, hereby ordered reinstated. No costs. SO ORDERED.

5. Commissioner of Customs vs. Delgado Shipping Agency, G.R. No. 49298, April 26, 1990

Ponente: Padilla, J.

Nature of the case: This case is a petition for review from the decision of the CTA.

Petitioner: Commissioner of Customs

Respondents: Delgado Shipping Agency (Private Respondent); CTA (Respondent Court)

FACTS:
 On April 14, 1970, the vessel SS “Eurygenes” arrived in the port of Manila and discharged thereat a shipment of 123 bales
of assorted textile remnants
 The gross weight of the shipment as declared in the Bill of Lading was 61,500 pounds
 But upon examination and appraisal by customs authorities, it was found that the actual weight thereof was 136,343
pounds, or 74,843 pounds more than the weight declared in the bill of lading

In CTA
 Based on the above undisputed facts, respondent Court of Tax Appeals (CTA) correctly found, as the petitioner
Commissioner of Customs earlier did, the vessel SS “Eurygenes”, represented by its agent, Delgado Shipping Agency (the
private respondent), to have violated Sec. 2523 of the Tariff and Customs Code
 But respondent CTA in its decision imposed a fine of only P18,000, thereby reducing the fine of P58,400, as originally
imposed by petitioner Commissioner of Customs.

 In this petition, the petitioner does not assail the basis of the appealed decision of respondent court but questions it only
insofar as it reduced the fine from P58,400 to only P18,000.
  Section 2523 of the Tariff and Customs Code reads as follows:
o SEC. 2523. DISCREPANCY BETWEEN ACTUAL & DECLARED WEIGHT OF MANIFESTED ARTICLE. — If the gross
weight of any article or package described in the manifest exceed by more than twenty per centum the gross
weight as declared in the manifest or bill of lading thereof, and the Collector shall be of the opinion that such
discrepancy was due to the carelessness or incompetency of the master or pilot in command, owner or employee
of the vessel or aircraft, a fine of not more than fifteen per centum of the value of the package or article in respect
to which the discrepancy exists, may be imposed upon the importing vessel or aircraft.

Petitioner’s Contentions:
 That the respondent court erred in reducing the administrative fine imposed by him on the vessel, with the finding that the
negligence of the master or owner of the vessel did not amount to “willful negligence”
 Petitioner calls attention to the fact that the respondent court itself found there was inexcusable laxity on the part of the
master or owner of the vessel, resulting in the excessive discrepancy in the declared weight of the cargo, which is penalized
under the law, and held that the administrative fine of P58,400 imposed by petitioner was not really unjust, oppressive and
confiscatory and not more than fifteen (15) per centum of the value of the merchandise in respect to which the deficiency
existed
 Further, petitioner states that while the law allows some latitude in the imposition of the fine, such latitude or discretion to
reduce the fine must be exercised only in the presence of extenuating and mitigating factors
 The indiscriminate reduction of the fine, without proof of extenuating circumstances, is contrary to the spirit of the above-
quoted Section 2523.
 That, in imposing the fine of only P18,000, notwithstanding absence of any extenuating and mitigating factors, respondent
court disregarded the spirit and purpose of the law and created an atmosphere that could only embolden would-be
smugglers to further their nefarious activities knowing that they could get away with such activities under a minimum fine.

Private Respondent’s Argument:

 Since there was no hearing conducted by petitioner, it follows that no evidence was presented to prove that the
discrepancy in weight was due to the carelessness and incompetence of the master, owner or employees of the vessel

Note: Section 2523 of the Tariff and Customs Code is now under Section 1414 of the CMTA (Discrepancy Between Actual and
Declared Weight of Manifested Goods)

ISSUE: Whether CTA’s reduction on the administrative fine imposed by petitioner Commissioner of Customs is contrary to Section
2523 of the Tariff and Customs Code.

RULING:
 Yes. It is contrary to the sprit of Section 2523 of the Tariff and Customs Code.
 The evident purpose of the codal provision requiring vessels to declare the correct weight of their cargo is to curb
smuggling due to underdeclarations.
 Hence, imposing the maximum fine on vessels which grossly fail to comply with the obligation to declare the correct weight
of their cargo truly promotes the spirit and purpose of the law, since imposing a minimum fine would only embolden
would-be smugglers and foster gross negligence on the part of the master of the vessel in checking the true weight of the
cargo.

Re: the DUTY of the Vessel’s Master, Owner or Employees

 It cannot be overstressed that it is the duty of the vessel’s master, owner or employees to check and verify the correct
weight of its cargoes.
o “xxx the vessel’s master, owner or employees are duty bound under the cited codal section under pain of the
penalty of fine therein provided to check and verify the correct weight of the cargo or shipment so as to prevent a
misdeclaration or underdeclaration of weight.
o The vessel master’s discharge of such obligation imposed by law to properly determine and verify the weight of
cargos carried by it is certainly pertinent to and important for the proper assessment of the collectible customs
duties and taxes, and is not a burdensome task in the present era of containerized cargoes.”

Other Discussion:
Re: Private Respondent’s Argument on the absence of hearing:
 The records do not sustain this argument.
 The decision of the CTA clearly states that the Collector of Customs informed private respondent about his finding of a
discrepancy of more than 20% between the declared weight and the actual weight of the disputed cargo discharged by SS
“Eurygenes” and required the latter to explain in writing and show cause why no administrative fine should be imposed on
the vessel.
 Since no reply was made by private respondent, administrative proceeding was instituted against the vessel and private
respondent was duly notified of the hearing
 On appeal to respondent court, private respondent submitted the case for decision based on the pleadings and records of
the Bureau of Customs.
o “xxx No trial on the merits was conducted by this Court.
o One who prays for judgment on the pleadings without offering proof as to the truth of his own allegations, and
without giving the opposing party an opportunity to introduce evidence, must be understood to admit the truth of
all the material and relevant allegations of the opposing party and to rest his motion for judgment on these
allegations taken together with such of his own as are admitted in the pleadings.
(Bauermann vs. Casas; Evangelista vs. De la Rosa, et al.)”

o “And even more, proceedings before the CTA is a trial de novo.

o If petitioner desired to present evidence in addition to those already filed in the Customs records forwarded to this
Court, it could have easily done so instead of submitting this case based on the pleadings. (C.F. Sharp & Co. Inc. v.
Commissioner of Customs)”

Disposition: Decision of CTA is modified by:

 Setting aside the reduction in fine ordered, and
 Reinstating the administrative fine of P58,400 imposed in the petitioner’s decision

6. Farolan Jr, v CTA

Facts:
 On January 30, 1972, the vessel S/S "Pacific Hawk" with Registry No. 170 arrived at the Port of Manila carrying, among
others, 80 bales of screen net consigned to Bagong Buhay Trading (Bagong Buhay).
 Said importation was declared through a customs broker under Entry No. 8651-72 as 80 bales of screen net of 500 rolls with
a gross weight of 12,777 kilograms valued at $3,750.00 and classified under Tariff Heading No. 39.06-B of the Tariff and
Customs Code at 35% ad valorem.
 Since the customs examiner found the subject shipment reflective of the declaration, Bagong Buhay paid the duties and
taxes due in the amount of P11,350.00
 Thereafter, the customs appraiser made a return of duty
 Acting on the strength of an information that the shipment consisted of "mosquito net" made of nylon dutiable under Tariff
Heading No. 62.02 of the Tariff and Customs Code, the Office of the Collector of Customs ordered a re-examination of the
shipment.
 A report on the re-examination revealed that the shipment consisted of 80 bales of screen net, each bale containing 20 rolls
or a total of 1,600 rolls
 Re-appraised, the shipment was valued at $37,560.00 or $10.15 per yard instead of $.075 per yard as previously declared.
 Furthermore, the Collector of Customs determined the subject shipment as made of synthetic (polyethylene) woven fabric
classifiable under Tariff Heading No. 51.04-B at 100% ad valorem.
 Thus, Bagong Buhay Trading was assessed P272,600.00 as duties and taxes due on the shipment in question.
 Since the shipment was also misdeclared as to quantity and value, the Collector of Customs forfeited the subject shipment
in favor of the government
 Private respondent then appealed the decision of the Collector of Customs by filing a petition for review with the
Commissioner of Customs.
 On November 25, 1972 the Commissioner affirmed the Collector of Customs
 CTA
o Reversed the decision of the Commissioner of Customs. It ruled that the Commissioner erred in imputing fraud
upon private respondent because fraud is never presumed and thus concluded that the forfeiture of the articles in
question was not in accordance with law.
 Consequently, private respondent posted a cash bond to secure the release of 64 bales out of the 80 bales originally
delivered on January 30, 1972. Sixteen bales remain missing
  Private respondent alleges that of the 143,454 yards (64 bales) released to Bagong Buhay, only 116,950 yards were in good
condition and the 26,504 yards were in bad condition.
 Consequently, private respondent demands that the Bureau of Customs be ordered to pay for damages for the 43,050
yards it actually lost.

Issue 1: WON the shipment in question is subject to forfeiture under Section 2530-M subparagraphs (3), (4) and (5) of the Tariff and
Customs Code

Ruling
 NO
 Section 2530, paragraph m, subparagraphs (3), (4) and (5) states:

Sec. 2530. Property Subject to Forfeiture Under Tariff and Customs Law. — Any vehicle, vessel or aircraft, cargo, article and
other objects shall, under the following conditions be subjected to forfeiture:

m. Any article sought to be imported or exported.

xxx xxx xxx
(3) On the strength of a false declaration or affidavit or affidavit executed by the owner, importer, exporter or consignee
concerning the importation of such article;
(4) On the strength of a false invoice or other document executed by the owner, importer, exporter or consignee
concerning the importation or exportation of such article; and.
(5) Through any other practice or device contrary
to law by means of which such articles was entered through a custom-house to the prejudice of government

 Petitioner contends that there has been a misdeclaration as to the quantity in rolls of the shipment in question, the
undisputed fact being that the said shipment consisted of 1,600 rolls and not 500 rolls as declared in the import entry.
 We agree with the contention of the petitioner.
 In declaring the weight of its shipment in an import entry, through its customs broker as 12,777 kilograms when in truth
and in fact the actual weight is 13,600 kilograms, an apparent misdeclaration as to the weight of the questioned goods was
committed by private respondent.
 Had it not been for a re-examination and re-appraisal of the shipment by the Collector of Customs which yielded a
difference of 823 kilograms, the government would have lost revenue derived from customs duties
 Although it is admitted that indeed there was a misdeclaration, such violation, however, does not warrant forfeiture for
such act was not committed directly by the owner, importer, exporter or consignee as set forth in Section 2530, paragraph
m, subparagraph (3), and/or (4)
 In defense of its position denying the commission of misdeclaration, private respondent contends that its import entry was
based solely on the shipping documents and that it had no knowledge of any flaw in the said documents at the time the
entry was filed.
 For this reason, private respondent believes that if there was any discrepancy in the quantity of the goods as declared and
as examined, such discrepancy should not be attributed to Bagong Buhay.
 Private respondent's argument is persuasive.
 Under Section 2530, paragraph m, subparagraphs (3) and (4), the requisites for forfeiture are:
1. the wrongful making by the owner, importer, exporter or consignees of any declaration or affidavit, or the
wrongful making or delivery by the same persons of any invoice, letter or paper — all touching on the importation
or exportation of merchandise; and
2. that such declaration, affidavit, invoice, letter or paper is false

Application:
 In the case at bar, although it cannot be denied that private respondent caused to be prepared through its customs broker a
false import entry or declaration, it cannot be charged with the wrongful making thereof because such entry or declaration
merely restated faithfully the data found in the corresponding certificate of origin, certificate of manager of the shipper, the
packing lists and the bill of lading which were all prepared by its suppliers abroad.
 If, at all, the wrongful making or falsity of the documents above-mentioned can only be attributed to Bagong Buhay's
foreign suppliers or shippers
 With regard to the second requirement on falsity, it bears mentioning that the evidence on record, specifically, the
decisions of the Collector of Customs and the Commissioner of Customs, do not reveal that the importer or consignee,
Bagong Buhay Trading had any knowledge of any falsity on the subject importation
  Since private respondent's misdeclaration can be traced directly to its foreign suppliers, Section 2530, paragraph m,
subparagraphs (3) and (4) cannot find application
 Applying subparagraph (5), fraud must be committed by an importer/consignee to evade payment of the duties due.
 We support the stance of the Court of Tax Appeals that the Commissioner of Customs failed to show that fraud had been
committed by the private respondent.
 The fraud contemplated by law must be actual and not constructive.
 It must be intentional fraud, consisting of deception willfully and deliberately done or resorted to in order to induce another
to give up some right.
 As explained earlier, the import entry was prepared on the basis of the shipping documents provided by the foreign
supplier or shipper. Hence, Bagong Buhay Trading can be considered to have acted in good faith when it relied on these
documents.

Issue 2: What is the correct classification of the questioned shipments?

Ruling:
 polyethylene plastic taxable under Tariff Heading No. 39.02
 Petitioner contends that the same falls under Tariff Heading No. 51.04 being a "synthetic (polyethylene) woven fabric."
 On the other hand, private respondent contends that these fall under Tariff Heading No. 39.06 (should be 39.02), having
been found to be made of polyethylene plastic
 Heading No. 39.02 of the Tariff and Customs Code provides:
 39.02 — Polymerisation and copolymerisation products (for example, polyethylene, polytetrahaloethylene,
polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl acetate, polyvinyl chloroacetate and other polyvinyl derivatives,
polyacrylic and polymethacrylic derivatives, coumaroneindene resins).
 The principal products included in this heading are:
1. Polymerization products of ethylene or its substitution derivatives, particularly the halogen derivatives.
Examples of these are polyethylene, polytetrafluro-ethylene and polychlorotrifluro-ethylene. Their characteristic is
that they are translucent, flexible and light in weight. They are used largely for insulating electric wire.
 On the other hand, Tariff Heading No. 51.04 provides:
o 51.04. — Woven fabrics of man-made fibers (continuous) including woven fabrics of monofil or strip of heading
No. 51.01 or 51.02
o This heading covers woven fabrics (as described in Part [I] [C] of the General Explanatory Note on Section XI) made
of yarns of continuous man-made fibers, or of monofil or strip of heading 51.01 and 51.02; it includes a very large
variety of dress fabrics, linings, curtain materials, furnishing fabrics, tyre fabrics, tent fabrics, parachute fabrics, etc.

Application:
 To correctly classify the subject importation, we need to refer to chemical analysis submitted before the Court of Tax
Appeals.
 Mr. Norberto Z. Manuel, an Analytical Chemist of the Bureau of Customs and an Assistant to the Chief of the Customs
Laboratory, testified that a chemical test was conducted on the sample and "the result is that the attached sample
submitted under Entry No. 8651 was found to be made wholly of Polyethylene plastic."
 A similar result conducted by the Adamson University Testing Laboratories provides as follows:
o The submitted sample, being insoluble in 10% sodium carbonate; hydrochloric acid, glacial acetic acid, toluene,
acetone, formic acid, and nitric acid, does not belong to the man-made fibers, i.e., cellulosic and alginate rayons,
poly (vinyl chloride), polyacrylonitrile, copolymer or polyester silicones including Dolan, Dralon, Orlin, PAN, Redon,
Courtelle, etc., Tarylene, Dacron; but it is a type of plastic not possessing, the properties of the man-made fibers.
27 (Emphasis supplied)
 Consequently, the Court of Tax Appeals, relying on the laboratory findings of the Bureau of Customs and Adamson
University correctly classified the questioned shipment as polyethylene plastic taxable under Tariff Heading No. 39.02
instead of synthetic (polyethylene) woven fabric under Tariff Heading 51.04, to wit:
o While it is true that the finding and conclusion of the Collector of Customs with respect to classification of
imported articles are presumptively correct, yet as matters that require laboratory tests or analysis to arrive at the
proper classification, the opinion of the Collector must yield to the finding of an expert whose opinion is based on
such laboratory test or analysis unless such laboratory analysis is shown to be erroneous.
o And this is especially so in this case where the test and analysis were made in the laboratory of the Bureau of
Customs itself. It has not been shown why such laboratory finding was disregarded. There is no claim or pretense
that an error was committed by the laboratory technician. Significantly, the said finding of the Chief, Customs
Laboratory finds support in the "REPORT OF ANALYSIS" submitted by the Adamson University Testing Laboratories,
dated September 21, 1966. 2
Issue 3: WON the BOC can be held liable for damages that the respondent sustained with regard to the goods

Ruling
 NO
 The Bureau of Customs cannot be held liable for actual damages that the private respondent sustained with regard to its
goods.
 Otherwise, to permit private respondent's claim to prosper would violate the doctrine of sovereign immunity
 Since it demands that the Commissioner of Customs be ordered to pay for actual damages it sustained, for which ultimately
liability will fall on the government, it is obvious that this case has been converted technically into a suit against the state
 On this point, the political doctrine that "the state may not be sued without its consent," categorically applies.
 As an unincorporated government agency without any separate juridical personality of its own, the Bureau of Customs
enjoys immunity from suit.
 Along with the Bureau of Internal Revenue, it is invested with an inherent power of sovereignty, namely, taxation.
 As an agency, the Bureau of Customs performs the governmental function of collecting revenues which is definitely not a
proprietary function.
 Thus, private respondent's claim for damages against the Commissioner of Customs must fail.

7. UTE PATEROK, petitioner-appellant, vs. BUREAU OF CUSTOMS and HON. SALVADOR N. MISON, respondents-appellees.

G.R. Nos. 90660-61 January 21, 1991

Facts:
 March 1986, the petitioner shipped from Germany to the Philippines two (2) containers, one with used household goods
and the other with two (2) used automobiles (one Bourgetti and one Mercedes Benz 450 SLC). The first container was
released by the Bureau of Customs and later on, the Bourgetti car, too. The Mercedes Benz, however, remained under the
custody of the said Bureau.
 December 1987, after earnest efforts to secure the release of the said Mercedes Benz, the petitioner received a notice of
hearing from the legal officer of the Manila International Container Port, Bureau of Customs informing the former that
seizure proceedings were being initiated against the said Mercedes Benz for violation of Batas Pambansa Blg. 73 in relation
to Section 2530(F) of the TCCP, as amended, and CBC 1069.
 While the said case was pending, the petitioner received only on April, 1988, a letter informing her that a decision ordering
the forfeiture of her Mercedes Benz had been rendered on December 16, 1986 by the District Collector of Customs. The
petitioner had not been informed that a separate seizure case was filed on the same Mercedes Benz in question before the
said District Collector, an office likewise under the Bureau of Customs.
 The petitioner later found out that on November 13, 1986, a Notice of Hearing set on December 2, 1986, concerning the
said Mercedes Benz, was posted on the bulletin board of the Bureau of Customs at Port Area, Manila.
 The petitioner, thereafter, filed a motion for new trial before the Collector of Customs, Port of Manila, but the latter, in an
order dated May 30, 1988, denied the same, invoking the failure of the former to appear in the said hearing despite the
posting of the notice on the bulletin board.
 Moreover, the Collector of Customs contended that a reopening of the case was an exercise in futility considering that the
forfeited property, a Mercedes Benz 450 SLC, had an engine displacement of more than 2800 cubic centimeters and
therefore was under the category of prohibited importation pursuant to B.P. Blg. 73.
 Subsequently, the petitioner filed a petition for review with the Department of Finance, which petition the latter referred to
the public respondent. The petitioner likewise addressed a letter to the Hon. Cancio Garcia, the Assistant Executive
Secretary for Legal Affairs, Office of the President, Malacañang, requesting the latter's assistance for a speedy resolution of
the said petition.
 Finally, the public respondent rendered a decision on September 22, 1989 affirming the previous order of the Collector of
Customs for the Forfeiture of the Mercedes Benz in question in favor of the government.

 Hence, this petition for certiorari alleging that:

III-1. THE RESPONDENT-APPELLEE (Bureau of Customs) ERRED IN THE RULING THAT A NOTICE OF HEARING POSTED IN [sic]
THE BULLETIN BOARD IS SUFFICIENT NOTICE AND FAILURE OF PETITIONER-APPELLANT TO APPEAR CAUSED HER
DECLARATION IN DEFAULT;
 III-2. ERRED IN RULING THAT THEIR OFFICE WAS LEFT WITH NO ALTERNATIVE BUT TO FORFEIT THE SHIPMENT AS
MANDATED BY BATAS PAMBANSA BLG. 73;
III-3. ERRED IN RULING THAT THE RESPONDENT OF OFFICE FINDS THE RE-OPENING OF THE CASE AN EXERCISE IN FUTILITY
AND THAT THERE IS NO POINT IN DISTURBING THE DECISION DECREEING THE FORFEITURE OF THE SHIPMENT.

Issue #1: WON a notice of hearing posted on the bulletin board of the public respondent is sufficient compliance with proper
service and procedural due process?
Ruling #1: NO.

 We agree with the petitioner that a notice of hearing posted on the bulletin board of the public respondent in a forfeiture
proceeding where the owner of the alleged prohibited article is known does not constitute sufficient compliance with
proper service of notice and procedural due process.
 Time and again, the Court has emphasized the imperative necessity for administrative agencies to observe the elementary
rules of due process. And no rule is better established under the due process clause of the Constitution than that which
requires notice and opportunity to be heard before any person can be lawfully deprived of his rights.
 In the present case, although there was a notice of hearing posted on the bulletin board, the said procedure is premised on
the ground that the party or owner of the property in question is unknown. This is clear from the provisions of the TCCP
relied upon by the public respondent, namely, Sections 2304 and 2306, captioned "Notification of Unknown Owner and
"Proceedings in Case of Property Belonging to Unknown Parties," respectively, wherein the posting of the notice of hearing
on the bulletin board is specifically allowed.
 But in the case at bar, the facts evidently show that the petitioner could not have been unknown.
 The petitioner had previous transactions with the Bureau of Customs and in fact, the latter had earlier released the first
container consisting of household goods and the Bourgetti car to the former at her address (as stated in the Bill of Lading).
Moreover, there was a similar seizure case that had been instituted by the Manila International Container Port, docketed as
S.I. No. 86-224, covering the same Mercedes Benz in question and involving the same owner, the petitioner herein.
 If only the public respondents had exercised some reasonable diligence to ascertain from their own records the identity and
address of the petitioner as the owner and the consignee of the property in question, the necessary information could have
been easily obtained which would have assured the sending of the notice of hearing properly and legally. Then, the
petitioner would have been afforded the opportunity to be heard and to present her defense which is the essence of
procedural due process. But the public respondent regrettably failed to perform such basic duty.
 Notwithstanding the procedural infirmity aforementioned, for which the Court expresses its rebuke, the petition
nonetheless can not be granted.

Issue #2: WON the Customs office was left with no alternative but to forfeit the shipment as mandated by BP Blg 73?
Ruling #2: YES.

 Batas Pambansa Blg. 73, a law intended to promote energy conservation, provides that:
o Sec. 3. Towards the same end and to develop a more dynamic and effective program for the rational use of energy,
the following acts are hereby prohibited:
 (a) The importation, manufacture or assembling of gasoline-powered passenger motor cars with engine
displacement of over 2,800 cubic centimeters or Kerbweight exceeding 1,500 kilograms, including
accessories.

 The petitioner does not dispute the fact that the motor car in question, a Mercedes Benz 450 SLC, has an engine
displacement of over 2,800 cubic centimeters which clearly falls within the prohibited importation specified in the law
aforequoted and as such, is liable for seizure and forfeiture by the public respondents.

 On the other hand, the petitioner claims that the said prohibition involves only "direct" and not 'indirect" importation as
when both the shipper and the consignee are one and the same person which is the case at bar.
o Be that as it may, the law is clear and when it does not make any distinction on the term "importation", we
likewise must not distinguish. "Ubi lex non distinguit nec nos distinguiere debemus."

 Finally, the petitioner invokes Sec. 2307 of the TCCP, as amended by Executive Order No. 38, which provides an alternative
in lieu of the forfeiture of the property in question, that is, the payment of fine or redemption of the forfeited property. But
the last paragraph of the said section, as amended, categorically states that:
 o Redemption of forfeited property shall not be allowed in any case where the importation is absolutely prohibited
or where the surrender of the property to the person offering to redeem the same would be contrary to law.
(Emphasis ours)

 Inasmuch as it would be contrary to law, i.e., B.P. Blg. 73, to allow the petitioner to redeem the Mercedes Benz in question,
there is therefore no alternative, as correctly claimed by the public respondents, but to forfeit the same.
 We cannot agree with the proposition that the Collector of Customs is authorized to release the motor vehicle in question
to the petitioner which, in effect, would absolve the latter from any liability.
 In the matter of disposing of contrabands, Section 2609(c) of the Tariff and Customs Code specifically provides that the
prerogative of the Collector of Customs is not the release of the contraband like the Mercedes Benz in question but its sale,
which presupposes a prior custody pursuant to forfeiture and seizure proceedings as in the case at bar.
 As thus worded:
o Sec. 2609. Disposition of Contraband. — Article of prohibited importation or exportation, known as contraband,
shall, in the absence of special provision, be dealt with as follows: x x x
(c) Other contraband of commercial value and capable of legitimate use may be sold under such restrictions as will
insure its use for legitimate purposes only . . .

 There is nothing in the Code that authorizes the Collector to release the contraband in favor of an importer.
 The Code, on the other hand, is clear that the thing may be disposed of by sale alone "under such restrictions as will insure
its use for legitimate purposes." To be sure, the restrictions to be prescribed by the Collector must coincide with the
purpose underlying Batas Blg. 73, that is, to conserve energy.
 Hence, he cannot allow its use (after sale), in this case a Mercedes Benz with an engine displacement of more than 2,800
cubic centimeters, that would set at naught that purpose. He must make sure that the engine is changed before it is
allowed to ply Philippine soil.
 In all cases, forfeiture is a must. WHEREFORE, the petition for certiorari is DISMISSED. No costs. SO ORDERED.

8. El Greco Ship Manning and Management Corporation v Commissioner of Customs

G.R. No. 177188. December 4, 2008.
CHICO-NAZARIO, J.:

FACTS:
 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.

 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 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 Legaspi thereafter commenced proceedings for the forfeiture of M/V Criston and
its cargo under Seizure Identification No. 06-2001-A and Seizure Identification No. 06-2001, respectively.

 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.

o Their Petition was docketed as Civil Case No. T-2170.

 The RTC issued a 72-hour 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.
 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.

 The Province of Albay was hit by typhoon "Manang" and 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.

 Alarmed, the BOC and the Philippine Coast Guard coordinated with the Philippine Air Force to find the missing vessel.

o 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.

 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.

 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.

 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.

o 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.
 The Manila District Collector issued an Order 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.
 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.
 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.
 On 17 October 2005, the CTA Second Division rendered a Decision in CTA Case No. 6618 sustaining the 15 January 2003
Decision of the BOC Commissioner ordering the forfeiture of M/V Neptune Breeze.
o 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.
o The CTA Second Division further ruled that nothing in the provisions of Section 2313 of the Tariff and Customs
Code could buttress El Greco’s contention that the Order dated 11 March 2002 of the Manila District Collector
already became final and executory.
  In a Resolution 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.
 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.
o 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. 06-2001 and Seizure Identification No. 06-2001-A, of which El Greco was not notified
and in which it was not able to participate.
 In its Decision promulgated on 14 March 2007, the CTA En Bancdeclared 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. 
 Without filing a Motion for Reconsideration with the CTA, El Greco already sought recourse before this Court via this
Petition for Review on Certiorari.

ISSUE: Whether or not the order of forfeiture was valid?

RULING:
 Yes, the order of forfeiture was valid because it was proven that the goods were smuggled.
 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 –

o the Incoming Journal of the Philippine Coast Guard, Certification issued by the Department of Transportation and
Communications (DOTC) Port State Control Center of Manila;

o 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.

ISSUE: Whether or not the Order dated March 12, 2002 of the Manila District Collector had become final and executory?
RULING:
 No, the March 12, 2002 order by the Manila District Collector has not attained finality and was subject of execution.
 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.
o 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.

o If in any seizure proceedings, the Collector renders a decision adverse to the Government, such 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 Collector’s decision is reversed by the
Commissioner, the decision of the Commissioner shall be final and executory. However, if the Collector’s 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.

 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 Collector’s
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.

 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.

FACTUAL ISSUE: 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?
RULING:
 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.

 Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.

 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.

 The crime laboratory report of the PNP shows that the serial numbers of the engines and generators of the two vessels
are identical.

o 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 the Philippines.

 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.

ISSUE: Whether or not there was a violation of El Greco’s right to due process?
RULING:
 No, the due process clause was not violated.
 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. 
 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.
 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. 2001-208 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.
 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 Greco’s cause and very
easy to secure, but is glaringly absent herein.

DISPOSITIVE PORTION: 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.

9. THE COMMISSIONER OF CUSTOMS & THE DISTRICT COLLECTOR OF CUSTOMS FOR THE PORT OF ILOILO vs. NEW FRONTIER
SUGAR CORPORATION, June 2014

FACTS:

 Petitioners are the duly appointed Commissioner of Customs, and the District Collector of Customs for the Port of Iloilo.

 Respondent, on the other hand, is a domestic corporation.

 On 25 September 1995, a contract of sale covering 15,000 metric tons of Thailand raw sugar was entered into by and
between Ms. Margarita Chua Sia, buyer and President of respondent, and Osumo Nishihara of Maruha Corporation, a Japan
based trading company, for and in behalf of the seller, Taiyo (U.K.) Limited.

 On 3 October 1995, respondent applied with the United Coconut Planters Bank for a letter of credit for the above
transaction and was issued L/C No. 95-61574-7 on 5 October 1995 after the payment of the advance import duty of
₱64,315,388.00.

 In the meantime, said shipment of raw cane sugar arrived at the Port of Iloilo on 4 October 1995 on board the vessel M/V
ALTAIR SS, Voyage No. 60, under Bill of Lading No. 1.

 Upon request of the respondent, the shipment was allowed by petitioner District Collector (Collector) to be discharged and
transferred to its bodega at Calinog, Iloilo under certain conditions.

 On 6 December 1995, Director Ray M. Allas of the Customs and Intelligence & Investigation Service (CIIS) issued Alert Order
on the subject shipment declaring that it violated Joint Order No. 1-91 for lack of Clean Report of Findings (CRF).

o Thus, a Warrant of Seizure and Detention (WSD) against the shipment was recommended for violation of said Joint
Order, in relation to Section 2530(f) of the Tariff and Customs Code of the Philippines (TCCP).

 On 22 December 1995, respondent wrote the petitioner Collector explaining that its lack of CRF should not be construed as
intentional there being good faith on its part in complying with the requirements for the issuance of the Import Advice Note
(IAN).

o Further, respondent explained that Taiyo (U.K.) Limited was aware of the Societe Generale de Surveillance (SGS)
pre-shipment inspection requirements and instructed its agent in Thailand to allow an authorized third party,
United Asia Supplier Co. Ltd. (United Asia), to inspect the samples of sugar.
 o Respondent likewise clarified that they were not advised by the seller that the sugar ordered was initially shipped-
out to China and that the Thailand agent failed to advise it of the SGS pre-shipment inspection under the
impression that the previous inspection and testing made by United Asia would suffice.

 In view thereof, respondent requested for the tentative release of the shipment on the ground that the SGS pre-shipment
inspection was not undertaken due to miscommunication and it was without intention to circumvent the Comprehensive
Import Supervision Scheme (CISS).

 Petitioner Collector approved such request and the shipment was thereafter tentatively released.

 The CIIS however opposed the tentative release insisting that respondent was not able to prove that its failure to obtain a
CRF was unintentional.

 Petitioner Commissioner of Customs (Commissioner) then directed the petitioner Collector to resolve the opposition of the
CIIS.

o It was found out that the failure to secure CRF was due to the fault of the shipper and it was unintentional on the
part of respondent; hence, there was no need to issue a WSD.

 Upon respondent’s issuance and submission of a post-dated guarantee/security check in the amount of ₱234,998,950.90,
petitioner Collector recommended to the petitioner Commissioner that the imposition of penalty be dispensed with unless
the SGS will not issue the required CRF. Petitioner Commissioner then created a three-man hearing body to resolve the
issue on whether the lack of CRF was intentional or not, as ordered in Customs Special Order No. D-03-96 dated 16 January
1996.

 Pending said hearing, SGS-Manila Liaison Office issued on 18 January 1996 CRF No. THL017904 covering the subject
shipment. Eventually, the three-man hearing body issued a Resolution dated 15 February 1996, the dispositive portion of
which is quoted hereunder as follows:

WHEREFORE, in view of the foregoing and subject to the approval of the Commissioner of Customs, the District
Collector of Customs, Port of Iloilo, is hereby ordered to initiate a seizure proceeding against the
security/guarantee put up by NSFC (respondent herein) to secure the tentative release of the subject shipment for
the imposition of appropriate penalty pursuant to CAO No. 4-94 and the collection of proper duties, taxes,
penalties and other charges.

 Afterwards, the aforesaid Resolution was approved by the petitioner Commissioner with the following
handwritten modifications:

1. First demand for payment of penalty as instructed in the Commissioner’s Memorandum dated 17
January 1996, i.e. "payment of 20% penalty of the landed cost for failure to undergo the pre-shipment
inspection at the Port of exportation"; and

2. Upon failure by the importer to pay the penalty within (10) days from receipt of demand, proceed
against the security/guarantee by initiating a seizure proceeding against the same and deposit
immediately the guarantee in accordance with law in order to protect the interest of the government.

 Respondent filed a Motion for Reconsideration of the said Resolution but the same was denied.

 Then, on 29 March 1996, petitioner Collector sent a demand letter to respondent for the payment of the twenty percent
(20%) penalty within ten (10) days from its receipt, which the latter actually received on 3 April 1996.

 However, without waiting for the lapse of the ten-day grace period, the Bureau of Customs of the Port of Iloilo immediately
deposited the security check on 2 April 1996, prompting respondent to order for a stop payment of said check.

 Consequently, petitioner Collector demanded from respondent the payment of penalty indicated in the subject Resolution
amounting to ₱41,858,550.00.
  Likewise, the subsequent shipment of 9,948,615 metric tons of raw sugar by respondent was withheld by petitioner
Collector for the purpose of being sold at public auction to cover for the 20% penalty.

 Thereafter, on 10 April 1996, respondent filed a Petition for Review with prayer for the issuance of a Writ of Preliminary
Injunction and/or Temporary Restraining Order (TRO) before the CTA.

The Ruling of the CTA

 In a Decision, the CTA granted respondent’s Petition and accordingly reversed and set aside the Decision of the petitioner
Commissioner to impose a 20% penalty on respondent’s subject shipment.

 The CTA based its ruling on the following factual and legal findings:

o (1) that since there was no valid seizure proceeding ever conducted by petitioners against respondent’s case, it
therefore failed to comply with Section 2301 of the TCCP, as amended, which requires the Collector to issue a WSD
upon making any seizure, and also with Section 2303 of the same, which provides the need of a prior written
notice of seizure and opportunity to be heard on the part of the owner or importer in reference to the alleged
delinquency, a clear violation of respondent’s constitutional right to procedural due process;

o (2) that since there was no valid seizure as adverted to above, the imposition of the 20% penalty under Customs
Administrative Order (CAO) No. 4-94 is outright improper and without any legal basis;

o (3) that the subsequent issuance of the CRF over respondent’s shipment under the provisions of Customs
Memorandum Order (CMO) No. 9-95 satisfied the inspection and the CRF required under paragraph 12 of Joint
Order No. 1-91considering that it cleared the said shipment from automatic seizure. Nonetheless, even if the
subject shipment of respondent may have been subjected to an alleged automatic seizure, the eventual issuance
of the CRF covering the same shipment cured all deficiencies;

o (4) that respondent’s act of issuing a "STOP PAYMENT" order was justified considering petitioners’ act of
depositing the post-dated guarantee/security check being improper and without any legal basis; and

o (5) that petitioner Collector acted beyond his mandate under Section 1508 of the TCCP when he withheld
respondent’s subsequent shipment of raw sugar considering that there was still no outstanding and demandable
amount (penalty of fine) to be paid. The fine which is the subject matter of the instant case was precisely the one
being questioned by respondent; hence, its liability has yet to be determined.

 Subsequently, on 23 July 1998, the CTA denied petitioners’ Motion for Reconsideration.

 Aggrieved, and following the rules on court hierarchy then prevailing, petitioners appealed to the CA by filing a Petition for
Review pursuant to Rule 43.

The Ruling of the CA

 The CA affirmed both the aforesaid Decision and Resolution rendered by the CTA in C.T.A. Case No. 5347, pronouncing that
seizure of goods starts with the issuance of a WSD, being a part of the procedural due process, to which respondent is
entitled to. Without it, respondent will then be deprived of its right to avail of the tentative release of the shipment which is
expressly allowed under the conditions set forth in CMO No. 9-95.

 In addition, the appellate court ruled that respondent cannot be faulted in ordering the stop payment of its
guarantee/security check because it was deposited by petitioners on 2 March 1996, or exactly six (6) days ahead of
respondent’s deadline to pay the alleged 20% penalty. It failed to consider that before the lapse of the given period, the
Bureau of Customs had no right to hold the value of the check against respondent. More so, since there was already the
subsequent issuance of the CRF on 18 January 1996 by the SGS Manila Liaison, respondent in effect could not have violated
any customs laws which would render it liable to pay for the 20% penalty.
  Lastly, while it may be argued that the CRF is required to be issued before the shipment of the goods, the late issuance of
the same to respondent amounts to substantial compliance with the provisions of Joint Order No. 1-91. The purpose for
which the CRF is required has already been served since the imported goods were already inspected by the SGS.

o The CA therefore concluded that if the belated issued CRF will be ignored, then it will work against all the
procedures conducted to determine the propriety of issuing the late CRF.

 Not satisfied, petitioners are now in quest for redemption before this Court, raising that the CA committed serious and
reversible error in ruling, that: (a) the issuance of a WSD was necessary; (b) the imposition of the 20% penalty on
respondent’s shipment was not justified; (c) the later issuance of the CRF over the subject shipment had the effect of full
compliance with Joint Order No. 1-91; and (d) the deposit of respondent’s check by petitioners was improper and without
legal basis.

ISSUE: WON respondent has violated paragraph 12 of Joint Order No. 1-91, in relation to paragraph (f), Section 2530 of the TCCP, as
amended, for failure to submit the subject raw cane sugar shipment to pre-shipment inspection and to present the corresponding
CRF resulting therefrom.

RULING: NO

 Prefatorily, in accordance with the pertinent customs laws at the time of the arrival of the subject shipment of this case, it
must be pointed out that importers, such as respondent herein, are duty-bound to comply with the provisions of the
CISS, implemented by Joint Order No. 1-91, particularly as to the requirement of a pre-shipment inspection of the quality,
quantity, and price of the imports coming into the Philippines to be conducted at the country of export.

o Notably, the pre-shipment inspection was intended to prevent the possibility of the under valuation,
misdeclaration, and overvaluation of imports shipped to our country which may defraud the Philippine
Government of revenues.

 The aforesaid scheme aims to ensure the quality and quantity specifications of consignments, and achieved through
advance cargo clearance and supplying the country’s Bureau of Customs with accurate information about the quality and
specification of bulk and break bulk cargo. In other words, the pre-shipment inspection requirement simply helps the
Governments around the world in protecting their import revenues, facilitate trade, and minimize the risk of illegal imports.

 Thereafter, upon inspection and determination that the subject shipment is in order, a corresponding CRF shall be issued by
the SGS.

 Only then may the imports be allowed in our country for release, after compliance with other equally significant
requirements, such as but not limited to, filing of import entry and payment of duty.

 In the case at bench, it is apropos to look into the allegation that, as stated in Alert Order No. A/CI/120695/09, respondent
violated Joint Order No. 1-91, which implements the CISS, particularly paragraph 12 thereof, to wit:

12. No Custom Entry shall be filed or accepted or any shipment released in respect of any goods which require a
CRF as provided for by this Joint Order where the Importer is unable to produce to the Bureau of Customs the
authenticated customs copy of the CRF. With or without fault on the part of the importer, such goods shall be
subject to automatic seizure by the Bureau of Customs. The Seller is therefore warned against the shipment of
goods which have not been inspected or for which a CRF has not been issued. (Emphasis supplied)

 Petitioners argue that the above-quoted provision should be read in relation to paragraph (f),Section 2530 of the TCCP, as
amended, quoted hereunder as follows:

Sec. 2530. Property Subject to Forfeiture Under Tariff and Customs Laws. – Any vessel or aircraft, cargo, articles
and other objects shall, under the following conditions, be subject to forfeiture:
 xxxx

f. Any article of prohibited importation or exportation, the importation or exportation of which is effected
or attempted contrary to law, and all other articles which, in the opinion of the Collector, have been used,
are or were intended to be used as instrument in the importation or exportation of the former. (Emphasis
supplied)

 Records of the case reveal that, at the time of the arrival of the shipment of respondent’s raw cane sugar, it did not have
the required CRF.

 Such lack of CRF was due to failure to undergo the needed pre-shipment inspection from its place of exportation.

 As a result thereof, pursuant to paragraph 12 of Joint Order No. 1-91, read in conjunction with Section 2530(f) of the TCCP,
as amended, petitioners assert that respondent’s shipment of raw cane sugar "shall be subject to automatic seizure."

 The phrase "shall be subject to automatic seizure" is not, however, an unrestrained mandate.

o It is not a roving commission to dispense with the procedural due process of seizure proceedings.

 This is the particular provision clearly expressed in Sections 2301 and 2303 of the TCCP, as amended, which say:

Sec. 2301. Warrant for Detention of Property-Cash Bond. – Upon making any seizure, the Collector shall issue a
warrant for the detention of the property; and if the owner or importer desires to secure the release of the
property for legitimate use, the Collector shall, with the approval of the Commissioner of Customs, surrender it
upon the filing of a cash bond, in an amount to be fixed by him, conditioned upon the payment of the appraised
value of the article and/or any fine, expenses and costs which may be adjudged in the case: Provided, That such
importation shall not be released under any bond when there is a prima facie evidence of fraud in the importation
of article: Provided, further, That articles the importation of which is prohibited by law shall not be released under
any circumstance whatsoever: Provided, finally, That nothing in this section shall be construed as relieving the
owner or importer from any criminal liability which may arise from any violation of law committed in connection
with the importation of the article.27 (Emphasis supplied)

Sec. 2303. Notification to Owner or Importer. – The Collector shall give the owner or importer of the property or
his agent a written notice of the seizure and shall give him an opportunity to be heard in reference to the
delinquency which was the occasion of such seizure.

x x x x (Emphasis supplied).

 Ut magis valeat quam pereat. A statute is to be interpreted as a whole.

 The provisions of a specific law should be read, considered, and interpreted together as a whole to effectuate the whole
purpose of which it was legislated. A section of the law is not to be allowed to defeat another, if by any reasonable
construction, the two can be made to stand together. In other words, the court must harmonize them, if practicable, and
must lean in favor of a construction which will render every word operative, rather than one which may make the words
idle and nugatory.

APPLICATION:

 Applying the foregoing principles herein, paragraph 12 of Joint Order No. 1-91should be read in relation to Sections 2301
and 2303 of the TCCP, as amended, in order to effectuate the purposes of which they were enacted, particularly as to the
procedural requirements set forth in conducting seizure proceedings.

 Thus, in the 19 June 1998 Decision in C.T.A. Case No. 5347, the CTA correctly articulated that a WSD is a condition
precedent, before any seizure proceeding can be formally initiated. It therefore emphasized the constitutionally
enshrined right to procedural due process of any person, natural or juridical, under investigation especially if it will cause
the person his/its life or property.
  As previously mentioned, the above-quoted sections clearly laid down the mandatory procedures to be observed in a
seizure case, to wit:

o (1) that a WSD must first be issued upon making any seizure; and

o (2) that a written notice of such seizure must be served upon the owner or importer or his agent.

Failure to comply with the foregoing procedural requirements would negate the propriety of having the subject
shipment of respondent seized and forfeited in favor of the Government in all cases.

Hence, even if the phrase "subject to automatic seizure" was used under paragraph 12 of Joint Order No. 1-91, the
same must be construed together and harmonized with other related provision of law, i.e. Sections 2301 and 2303
of the TCCP, as amended, in order to form a uniform system of jurisprudence on seizure proceedings.

ISSUE: WON fraud has been committed by respondent in the case at bar.

RULING: NO

 Likewise, it would be improvident not to state at this juncture that the subject shipment could not be deemed liable for
seizure or even forfeiture on the ground of violation of Section 2530(f) of the TCCP, as amended, for it must be proven first
that fraud has been committed by or there was bad faith on the part of the importer/consignee to evade payment of the
duties due and demandable.

 Time and again, and consistently, this Court has ruled that the onus probandi to establish the existence of fraud is lodged
with the Bureau of Customs which ordered the forfeiture of the imported goods.

 Fraud is never presumed. It must be proved. Failure of proof of fraud is a bar to forfeiture. The reason is that forfeitures are
not favored in law and equity.

 The fraud contemplated by law must be intentional fraud, consisting of deception willfully and deliberately done or
resorted to in order to induce another to give up some right.

 Absent fraud, the Bureau of Customs cannot forfeit the shipment in its favor.

APPLICATION:

 Significantly, based on the records of the present case, it was determined during the administrative proceedings before the
petitioner Collector, that there was no intentional circumvention of the said CISS requirement on the part of respondent
because the failure to subject the shipment to SGS pre-shipment inspection was purely attributable to the fault of the
shipper; hence, respondent acted in good faith.

 In other words, since there was no deliberate circumvention of the CISS, the same therefore cannot be recommended for
seizure and/or forfeiture.

 As a matter of fact, pursuant to CMO No. 9-95, it was no other than the petitioner Collector who recommended and
thereafter allowed that the subject shipment be tentatively released, and that the imposition of the penalty against it be
dispensed with unless the SGS will not issue the required CRF.

 These factual circumstances further strengthened the position taken by respondent that it had indeed sufficiently proven its
claim of good faith on the non-production of CRF, which likewise established lack of fraudulent intent to evade payment of
duties on its part.

 Clearly, petitioners’ failure to comply with the procedural requirements set forth under the applicable provisions of the
TCCP, as amended, in pursuing for the seizure of the subject shipment under paragraph 12 of Joint Order No. 1-91, was fatal
to their cause.
ISSUE: WON the imposition of the 20% penalty on respondent’s subject shipment is justified under the present factual and legal
circumstances of this case.

RULING: NO

 The aforesaid 20% penalty being collected by petitioners against respondent was based on the imposition under CAO No. 4-
94, particularly Part II (C)(C.1) thereof, which reads: SUBJECT: Schedule of fines to be imposed in the settlement of seizure
cases pending hearing pursuant to Section 2307 of the Tariff and Customs Code, as amended by Executive Order No. 38.

xxxx

II. SCHEDULE OF FINES

In the settlement of seizure cases pending hearing, where settlement thereof is allowed under the existing laws
and regulations, the following schedule of fines for the corresponding violations are hereby provided:

xxxx

C. ONLY VIOLATION IS LACK OF SGS CLEAN REPORT OF FINDINGS (CRF)

C.1 First Violation - - - - - - - - - - - - - - - - - - - - 20%

x x x x (Emphasis supplied)

 Relevant thereto, Section 2307 of the TCCP, as amended, provides:

Sec. 2307. Settlement of Case by Payment of Fine of Redemption of Forfeited Property. – Subject to approval of the
Commissioner, the district collector may while the case is still pending, except when there is fraud, accept the settlement of
any seizure case provided that the owner, importer, exporter, or consignee or his agent shall offer to pay to the collector a
fine imposed by him upon the property, or in case of forfeiture, the owner, exporter, importer or consignee or his agent
shall offer to pay for the domestic market value of the seized article. The Commissioner may accept the settlement of any
seizure case on appeal in the same manner.

x x x x (Emphasis supplied)

 Clearly from the foregoing, the law presupposes a pending seizure proceeding legally initiated against the shipment
intended to be seized in accordance with the pertinent provisions of the TCCP, as amended.

 Absence of such pending proceeding against respondent’s shipment renders CAO No. 4-94 and Section 2307 inapplicable in
the present case.

 Consequently, there would be no legal basis to hold the subject shipment liable for the aforesaid 20% penalty on the sole
ground of lack of CRF.

 Accordingly, this Court hereby adopts the factual and legal findings of the CTA in its 19 June 1998 Decision, pertinent
portions of which are quoted hereunder as follows:

o It is to be readily observed that the aforequoted subject of said CAO pertains to fines imposed on seizure cases.

o Inasmuch as the instant case has not been put under a valid seizure as adverted to above, the imposition of the
20% penalty under CAO 4-94 is outright improper and without legal basis.

o The problem with [petitioners] is that in its desire to give more teeth to the administrative requirement for the
production of a Clean Report of Findings (CRF) from the SGS, it overlooked one fundamental principle in law – that
no fine, surcharge, forfeiture or any penalty may be imposed except in pursuance of a provision of law.
 o In the instant case, the closest provision [petitioners] could cite is [S]ection 2307 of the Tariff and Customs Code as
implemented by CAO 4-94, without realizing that the same pertains only to seizure cases. Under the provisions
imposing fine found in Sections 2505 to 2529 of the same Code, not one pertains to non-production of CRF.

o The Secretary of Finance, Secretary of Trade and Industry and the Governor of the Central Bank in issuing the Joint
Order No. 1-91, which serves as the basis of the requirement for the production of a CRF, did not provide for the
imposition of fine or other penalties maybe because they realize that the imposition of penalties is a legislative
prerogative.

o The non-production of CRF by itself does not give rise to any penalty but may serve as a basis to hold and to
investigate the particular shipment which may lead to findings of undervaluation, misdeclaration or
misclassification for which the law provides the corresponding penalty such as surcharge, fine or forfeiture under
Sections 2503, 2530-2536 of the TCC[P].

o These offenses were not shown in the records of the case.

o On the contrary, there was this finding by the [petitioners] that the non-production of the CRF was not intentional.

o The mistake or error was found to be committed by the supplier without prior knowledge on the part of the
[respondent]. In fact, a CRFwas later on produced and the discrepancy was not enough to constitute
undervaluation under Sections (sic) 2503 of the said Code.

o The [respondent] was only required by the [petitioners] to pay additional duties and taxes corresponding to the
difference of 4.79% in valuation.

OTHERS:

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

 CMO No. 9-95 categorically provides the revised procedures on the tentative release of shipments lacking the required
CRF.

 Its objectives are as follows: (1) to avoid delays in the processing and releasing of shipments arising from the lack of SGS-
CRF in relation to Joint Order No. 1-91, as amended; (2) to further facilitate trade and provide adequate security to
government revenue; and (3) to enable the prompt collection of revenue due the government.

 Simply put, the aforesaid Order provides a remedy for importers or consignees who have failed to undergo their shipments
to pre-shipment inspections under the CISS which arrived in the country and entered in a customs house without the
requisite CRF.

 More importantly, Part V(1), Step 5 of CMO No. 9-95 clearly states that the processing of the SGS-CRF by the SGS affiliate in
the country of exportation shall be deemed "as if inspection has taken place" and that the issuance of the SGS-CRF shall be
done by SGS-Manila Liaison Office. Verily, it was proper for the CTA and CA to rule that the subsequent issuance of the CRF
over respondent’s subject shipment pursuant to the provisions of CMO No. 9-95 substantially complied and satisfied the
mandatory inspection and corresponding CRF required under paragraph 12 of Joint Order No, 1-91.

 Therefore, the subsequent issuance of the CRF on 18 January 1996 cleared the shipment from the alleged automatic seizure
and 20% penalty imposable under CAO No. 4-94.

 The eventual issuance of the required CRF covering respondent’s shipment had indeed cured all deficiencies; thus,
leaving petitioners no right whatsoever in demanding for the value of the guarantee/security check previously issued by
respondent for the sole purpose it was made.

WHEREFORE, the petition is hereby DENIED for lack of merit. No costs. SO ORDERED.
10. M/V "Don Martin" Voy 047 vs. Secretary of Finance, G.R. No. 160206, July 15, 2015

Ponente: Bersamin, J.

Nature of the case: This case is a petition for review on certiorari of the decision and resolution of the CA respectively affirming the
forfeiture by the customs authorities of the vessel M/V Don Martin Voy 047 and its cargo of 6,500 sacks of rice, and denying the
petitioners’ MR
 Reversing the ruling and resolution issued by the CTA

Petitioners: M/V "Don Martin" Voy 047 (M/V Don Martin); Palacio Shipping, Inc., and Leopoldo "Junior" Pamulaklakin
Respondents: Hon. Secretary of Finance, BOC, and District Collector of Cagayan de Oro City

FACTS:
 This case involves the seizure and forfeiture of the rice cargo and its carrying vessel on the ground that the rice cargo had
been smuggled.

 Petitioner Palacio Shipping, Inc. (Palacio) was the owner of the M/V Don Martin, a vessel of Philippine registry engaged in
coastwise trade
 On January 25, 1999, the M/V Don Martin docked at the port of Cagayan de Oro City with its cargo of 6,500 sacks of rice
consigned to petitioner Leopoldo “Junior” Pamulaklakin (Pamulaklakin)
 According to the petitioners, the vessel left Calbayog City on January 24, 1999 loaded with the 6,500 sacks of rice purchased
in Sablayan, Occidental Mindoro

 Based on an intelligence report to the effect that the cargo of rice being unloaded from the M/V Don Martin had been
smuggled, the Economic Intelligence and Investigation Bureau (EIIB), with the assistance of the Bureau of Customs (BOC),
apprehended and seized the vessel and its entire rice cargo on January 26, 1999
 The District Collector of Customs in Cagayan de Oro City then issued a warrant of seizure and detention pursuant to
Section 2301 of the Tariff and Customs Code of the Philippines (TCCP)

 At the hearing on the seizure, the petitioners represented that the vessel was a common carrier, and
 That the 6,500 sacks of rice had been locally produced and acquired
 In substantiation, they submitted several documents (Refer to Notes below for the enumeration of these documents)

Ruling of the District Collector of Customs Marietta Z. Pacasum (March 24, 1999)
(Authority vested under Section 2312 of the TCCP)
 She concluded that in the absence of a showing of lawful entry into the country, the 6,500 sacks of rice were of foreign
origin and thus subject to seizure and forfeiture for violation of Section 2530 (f) and (1) No. 1 of the TCCP, as amended
 The presentation of the supporting documents by the claimants was a strategy to conceal the true nature and origin of the
rice cargo in order to mislead the Customs authorities into believing that the rice was locally produced and locally
purchased, and
 Considering that the evidence to support the seizure and forfeiture of the carrying vessel was insufficient, the release of
the vessel was to be ordered.

 Pertinent portions of the ruling:

o The results of the Laboratory Analysis of samples of the subject rice by the NFA and the Philippine Rice Institute
reveal that the grain length is unusually long with 7.2 mm. for both Orion and Platinum 2000 rice samples as
compared to the grain length of most Philippine varieties, which ranges from 5.8 to 6.9 mm. only
o It was also found out that rice with grain length of more than 7.0 mm. are more common in the countries of Brazil,
Bolivia, Guatemala and Thailand, although the said imported variety could be purchased locally through the NFA.
o Furthermore, it also appears that some white sacks/containers were marked with Premium Rice whereas per
Philippine Grains Standardization, yellow color is for premium while white color is for ordinary rice.
o On the basis of the above findings, it can be safely concluded that the 6,500 sacks of rice subject of this
proceedings are of foreign origin and therefore subject to seizure and forfeiture for violation of Section 2530 (f)
and (1) no. 1 of the TCCP, as amended, in the absence of showing of its lawful entry into the country
o The presentation of the supporting documents by respondents/claimants was a strategy to conceal the true nature
and origin of the cargoes and to mislead the Customs Authorities into believing that subject rice are locally
produced and locally purchased.
o Hence, said documents have no probative value whatsoever insofar as the subject cargoes are concerned.
  Section 2530 provides: Property Subject to Forfeiture Under Tariff and Customs Law. xxx
(L) Any article sought to be imported or exported:
1. Without going through a Customhouse, whether the act was consummated, frustrated or attempted.
o Since the subject rice was established to be of the imported variety and considering that the said cargoes are not
covered by proper import documents, the importation of the same fall squarely on the above quoted provision of
the TCCP.

o With respect to the carrying vessel, MV "DON MARTIN", which is a common carrier, no evidence sufficient enough
to warrant its forfeiture in favor of the government was presented to satisfy the provision of Section 2530
paragraph a and k of the TCCP
o On the other hand, respondent/claimant was able to show proof to defeat a forfeiture decree, by presentation of
pertinent documents relative to the following requirements, viz:
1. That the owner is engaged in the business for which the conveyance is generally used
2. That the owner is financially in a position to own such conveyance and
3. That the vessel has not been used for smuggling at least twice before, in compliance with the provision of
Section 2531 of the TCCP

BOC’s Ruling on Appeal (April 19, 1999)

 Pamulaklakin appealed
 But BOC Deputy Commissioner Emma M. Rosqueta upheld District Collector Pacasum’s ruling

Re: Order to Release the Vessel – elevated to Secretary of Finance for Automatic Review
 Meanwhile, the order to release the vessel, being adverse to the interest of the Government, was elevated to the
Secretary of Finance for automatic review pursuant to Section 2313 of the TCCP

Secretary of Finance: 3rd Indorsement (by then Secretary of Finance Edgardo B. Espiritu) – (May 11, 1999)
 Reversed the order for the release of the vessel based on the finding that “the operator of the vessel is the shipper of the
smuggled goods.”

CTA
 On June 21, 1999, petitioners brought a petition for review in the CTA:
o To seek the nullification of the May 11, 1999 3 rd Indorsement of the Secretary of Finance, and
o To obtain the release of the rice shipment and the vessel.

CTA’s Resolution (pending resolution of the appeal) - November 8, 1999

 Ordered the release of the vessel and the rice cargo upon the petitioners’ filing of GSIS Surety Bond 032899 and GSIS
Surety Bond 032900 in the respective amounts of P5,550,0000 and P6,682,000 in favor of the BOC

CTA’s Decision (May 22, 2001)

 Ruled in favor of the petitioners

 Respondents filed Motion for Partial Reconsideration, but denied by CA (on August 30, 2001)
o Cited the sole ground that the April 19, 1999 decision by BOC Deputy Commissioner Rosqueta upholding the
forfeiture of the 6,500 sacks of rice had already attained finality, and
o That the CTA lacked the jurisdiction to resolve the issue on the forfeiture of the 6,500 sacks of rice because the
appeal to the CTA had been limited to the forfeiture of the vessel.

In CA
 Respondents appealed to the CA, reiterating that the CTA did not acquire jurisdiction over the issue of the forfeiture of the
6,500 sacks of rice.

Petitioners’ Counter-arguments in CA:

 That the April 19, 1999 decision of BOC Deputy Commissioner Rosqueta did not yet attain finality because they had been
belatedly furnished a copy of it, and
 The respondents raised the issue of jurisdiction only after receiving the adverse decision of the CTA

CTA resolution (pending resolution of the appeal) - February 19, 2003

 Granting the petitioners’ Manifestation and Motion to Release/Cancel GSIS Surety Bonds
  However, upon motion of the respondents, the CA issued a 60-day TRO to enjoin the CTA from implementing its February
19, 2003 resolution

CA’s Decision (July 29, 2003)

 Reversed the decision and resolution of the CTA which ordered the release of the 6,500 sacks of rice and its carrying vessel
M/V “Don Martin”
 The same is ordered forfeited in favor of the Government

 Petitioners’ MR was denied by CA (on September 25, 2003)

 Hence, this appeal before SC.

Re: FORFEITURE

ISSUE: Whether the forfeiture of the 6,500 sacks of rice and its carrying vessel was proper.

RULING:
 No. It was not proper.
 The 6,500 sacks of rice were not unlawfully imported into the Philippines.
 Hence, there was no legal ground for the forfeiture of the rice and its carrying vessel.

 In resolving the issue whether the rice shipment constituted smuggling or unlawful importation, the CTA observed that —
xxx:
o In order that a shipment be liable to forfeiture, it must be proved that fraud has been committed by the
consignee/importer to evade the payment of the duties due
o This is clear under Section 2530 (1) and (1) of the TCCP.
o To establish the existence of fraud, the onus probandi rests on the Respondents who ordered the forfeiture of the
shipment of rice and its carrying vessel M/V “Don Martin” xxx

o The Special and Affirmative Defenses of the Respondents generally averred that the subject 6,500 bags of rice are
of imported variety which are not covered by proper import documents, hence should be declared forfeited in
favor of the government.
o However, we do not agree.

o The said ratiocination of Respondents did not clearly indicate any actual commission of fraud or any attempt or
frustration thereof.
o As defined, actual or intentional fraud consist of deception willfully and deliberately done or resorted to in order
to induce another to give up some right (Hon Farolan, Jr. vs. CTA)
o It must amount to intentional wrong doing with the sole object of avoiding the tax (Aznar vs. CTA)

o The circumstances presented by the Respondents in their Answer do not reveal to us any kind of deception
committed by Petitioners.

o Such circumstances are nothing more than mere half-baked premises that fail to support the proposition sought
to be established which is the commission of fraud in accordance with Section 2530 (f) and (1) of the TCCP, as
amended. xxx

o The Court is in total acquiescence with the argument of Petitioners that it is non sequitur to conclude that the
subject rice was imported simply because its grain length is more common in other foreign countries.
o Firstly, the said laboratory analysis by both the NFA and Philippine Rice Research Institute are not conclusive.
 In fact, the Head of the Rice Chemistry and Food Science Division of the Philippine Rice Research Institute,
Mr. James Patindol, admitted that it is premature to conclude that the samples are indeed imported by
simply relying on the grain length
o Secondly, these inconclusive findings do not and cannot overcome the documentary evidence of Petitioners that
show that said rice was produced, milled and acquired locally
 o And thirdly, at the time the vessel M/V “Don Martin” and its cargo of rice were seized on January 26, 1999, the
agents of the EIIB and the Bureau of Customs never had a probable cause that would warrant the filing of the
seizure proceedings
o The Government agents only made their inquiries about the alleged smuggling only 3 days after the seizure.
o This is a gross violation of Section 2535 in relation to Section 2531 of the TCCP xxx

 CA reversed the CTA, and adopted the findings by the District Collector Pacasum and the Secretary of Finance to buttress its
conclusion that the rice was of imported variety and origin
o That there were no proper import documents that accompanied the importation as required by law, and
o That the forfeiture of the vessel was in order because its operator was also the shipper of the 6,500 sacks of rice.

WHAT WARRANTS FORFEITURE

 To warrant forfeiture, Section 2530(a) and (f) of the TCCP requires that the importation must have been unlawful or
prohibited.
 According to Section 3601 of the TCCP:
o Any person who shall fraudulently import or bring into the Philippines, or assist in so doing, any article, contrary to
law, or shall receive, conceal, buy, sell, or in any manner facilitate the transportation, concealment, or sale of such
article after importation, knowing the same to have been imported contrary to law, shall be guilty of smuggling.”

 Was the rice cargo the product of smuggling or unlawful importation?

 The resolution of this query requires the re-examination of the evidence.

 Ordinarily, the Court, not being a trier of facts, does not do the re-examination, but in view of the conflicting conclusions
reached by the CTA and the CA on the matter, the Court should review and re-assess the evidence in order to resolve the
issues submitted in this appeal.
 After careful review, the Court upholds the CTA.

 To warrant the forfeiture of the 6,500 sacks of rice and the carrying vessel, there must be a prior showing of probable
cause that the rice cargo was smuggled.
 Once probable cause has been shown, the burden of proof is shifted to the claimant.

 The M/V Don Martin and its cargo of rice were seized and forfeited for allegedly violating Section 2530 (a), (f), (k) and (l),
paragraph (1), of the TCCP, to wit:
o Section 2530. Properly Subject to Forfeiture Under Tariff and Customs Laws. - 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; xxx

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 entered to be used as instruments in the importation or exportation of the former; xxx

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 or 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;

l. Any article sought to be imported or exported:

(1) Without going through a customhouse, whether the act was consummated, frustrated or attempted; xxx
PROBABLE CAUSE SHOULD BE ESTABLISHED PRIOR TO FORFEITURE
 Therefore, conformably with the foregoing, the respondents should establish probable cause prior to forfeiture by
proving:
(1) That the importation or exportation of the 6,500 sacks of rice was effected or attempted contrary to law, or that
the shipment of the 6,500 sacks of rice constituted prohibited importation or exportation; and
(2) That the vessel was used unlawfully in the importation or exportation of the rice, or in conveying or transporting
the rice, if considered as contraband or smuggled articles in commercial quantities, into or from any Philippine port
or place.

Application 1
 A review of the records discloses that no probable cause existed to justify the forfeiture of the rice cargo and the vessel.

 To prove that the rice shipment was imported, rice samples were submitted to and examined by the Philippine Rice
Research Institute (PRRI), which, however, could not reach a definitive conclusion on the origin of the rice shipment, and
even deemed itself inadequate to reach such conclusion, opining that:
o “It is premature to conclude though that your samples are indeed imported, by simply relying on the grain length
data. More thorough analyses need to be done.”
o PRRI explained:
 xxx We are sorry to inform you, however, that our institute does not have the capability yet to identify
local milled rice from imported ones.
 Routine grain quality analysis in our institute only includes: grain size and shape, % chalky grains, %
amylose, % protein, gel consistency, gelatinization temperature, and cooked rice texture.
 Based on experience, these parameters are not reliable enough to be used as criteria in identifying local
from imported cultivars.
 The samples submitted to us are indica types.
 This further complicates the identification since our local cultivars are indica types as well.
 However, based on our initial analysis, we noticed that the grain length of your samples is unusually long.
 It is 7.2 mm for both Orion and Platinum 2000.
 Milled rice grain length of most Philippine varieties usually ranges from 5.8 to 6.9 mm only.
 We seldom encounter local cultivars with milled rice grain length of more than 7.0 mm.
 I tried to browse the Handbook on Grain Quality of World Rices xxx and I found out that cultivars with
grain length above 7.0 mm are more common in the countries of Brazil, Bolivia, Guatemala, and Thailand.
 It is premature to conclude though that your samples are indeed imported, by simply relying on the
grain length data. More thorough analyses need to be done.

o The National Food Authority (NFA) made a separate laboratory analysis of the rice grain samples, and concluded
that the samples resembled “NFA imported rice”
o It issued a certification dated January 29, 1999 to the effect that –
 xxx per Philippine Grains Standardization Program there was a mislabelling of the rice stocks samples
confiscated by Economic Intelligence and Investigation Bureau (EIIB) last January 27, 1999 unloaded
from MV Don Martin at Cagayan de Oro City port.
o Observed deficiencies are as follows:
1. Some white sacks/containers were marked with Premium Rice (per PGS yellow color is for premium variety while
white color is for ordinary rice).
2. No information available on the quality parameters such as classification, grade, milling degree, date of milling and
its miller/packer on all containers used (with logo, Platinum 2000 and Orion).

 The results of the laboratory analyses of the rice samples were rendered by the PRRI and the NFA only on February 4, 1999
and February 5, 1999, respectively.
 Therefore, it is clear that the evidence offered by the respondents to establish that the 6,500 sacks of rice were smuggled or
were the subject of illegal importation was obtained only after the forfeiture of the 6,500 sacks of rice had been effected
on January 26, 1999

Application 2 (Proof of illegal importation was patently insufficient)

 Moreover, there is no question that the proof of the rice being smuggled or the subject of illegal importation was patently
insufficient.
 Although the rice samples from the shipment dominantly bore foreign rice characteristics as compared with the Philippine
varieties, the PRRI itself opined that further analysis was necessary to turn up with a more concrete result.
  But no additional analysis was made.
 There was also no proof to establish that the petitioners had been responsible for the mislabelling in the packaging of the
rice shipment, or that the mislabelling had been intentionally done to evade the payment of customs duties.

 In contrast, the records showed that the 6,500 sacks of rice were of local origin, having been purchased from Sablayan,
Occidental Mindoro from a licensed grains dealer.
 The local origin was substantiated by the official receipts, business license and certificate of registration issued by the NFA
in favor of the source in Sablayan, Occidental Mindoro, Mintu Rice Mill, and its proprietor, Godofredo Mintu
 The petitioners likewise submitted a copy of the Coastwise License issued to the M/V Don Martin, proving that the vessel
had been registered only for coastwise trade.
 A craft engaged in the coastwise and interisland trade was one that carried passengers and/or merchandise for hire
between ports and places in the Philippine Islands
 Under Section 902 of the TCCP, the right to engage in the Philippine coastwise trade was limited to vessels carrying a
certificate of Philippine registry, like the M/V Don Martin.

 To legally engage in coastwise trade, the vessel owner must further submit other documents, like the bill of lading and
coastwise manifest, documents that were also presented by the petitioners during the forfeiture proceedings
 In the absence of any showing by the respondents that the vessel was licensed to engage in trade with foreign countries
and was not limited to coastwise trade, the inference that the shipment of the 6,500 sacks of rice was transported only
between Philippine ports and not imported from a foreign country became fully warranted

Application 3
 In this case, the importation of rice was not among the prohibited importations provided under Section 101 of the TCCP.
 Nor was there any other law that prohibited the importation of rice.
 Still, the respondents insist that the 6,500 sacks of rice were unlawfully imported because the shipment was not
accompanied by the necessary import documents.
o The insistence was unreasonable and unwarranted.

 The law penalizes the importation of any merchandise in any manner contrary to law.
 Yet, the shipment of the 6,500 sacks of rice was clearly not contrary to law
 Hence, it did not constitute unlawful importation as defined under Section 3601 of the TCCP.
 The phrase contrary to law in Section 3601 qualifies the phrases imports or brings into the Philippines and assists in so
doing, not the word “article.”

 The respondents' insistence was based on the premise that the rice shipment was imported.
o The premise was plainly erroneous.

 With the petitioners having convincingly established that the 6,500 sacks of rice were of local origin, the shipment need not
be accompanied by import documents.
 Nor was it shown that the shipment did not meet other legal requirements.
 There were no other circumstances that indicated that the 6,500 sacks of rice were fraudulently transported into the
Philippines
 On the contrary, the petitioners submitted documents supporting the validity and regularity of the shipment.
 It then becomes unavoidable to address the fate of the M/V Don Martin.

 The penalty of forfeiture could be imposed on any vessel engaged in smuggling, provided that the following conditions
were present, to wit:
(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
(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.”

 With the absence of the first and second conditions, the M/V Don Martin must be released.

Re: JURISDICTION
ISSUE: Whether the CTA had jurisdiction to resolve the issue on the forfeiture of the 6,500 sacks of rice and of the vessel.
RULING:
 Yes. The CTA had jurisdiction to resolve the issue on the forfeiture of the 6,500 sacks of rice and of the vessel
 At the time of the filing on June 21, 1999 in the CTA of the petition for review, the jurisdiction of the CTA was defined and
governed by Section 7 of Republic Act No. 1125 (An Act Creating the CTA), which relevantly states:
o Section 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by
appeal, as herein provided.
xxx

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, forfeitures or other penalties imposed in relation
thereto or other matters arising under the Customs Law or other law or part of law administered by the Bureau of
Customs.
xxx

 The TCCP contained a counterpart provision that reads:

o 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.

Application
 Conformably with the foregoing provisions, the action of the Collector of Customs was appealable to the Commissioner of
Customs, whose decision was subject to the exclusive appellate jurisdiction of the CTA, whose decision was in turn
appealable to the CA

 Nonetheless, the respondents contend that the petitioners did not appeal the April 19, 1999 decision of BOC Deputy
Commissioner Rosqueta on the forfeiture of the 6,500 sacks of rice, and
o That in accordance with Section 11 of R.A. No. 1125 the decision consequently became final and executory 30 days
from their receipt of the decision.
o The respondents' contention is bereft of merit.

 The April 19, 1999 decision of BOC Deputy Commissioner Rosqueta on the forfeiture of the 6,500 sacks of rice would
become final and immutable if the petitioners did not appeal it in the CTA within 30 days from receipt thereof.
 Such period of appeal was expressly set in Section 11 of R.A. No. 1125, which relevantly declares:
o Section 11. Who may appeal; effect of appeal. – Any person, association or corporation adversely affected by a
decision or ruling of the Collector of Internal Revenue, the Collector of Customs or any provincial or city Board of
Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such
decision or ruling. xxx

 The petitioners insisted in their Comment/Opposition (To Respondents Motion for Partial Reconsideration), however, that
they were not furnished a copy of the decision of BOC Deputy Commissioner Rosqueta; and
o That they only learned of the decision on June 1, 1999 after the issuance of the May 11, 1999 3 rd Indorsement of
the Secretary of Finance
 Considering that the respondents did not dispute such insistence of the petitioners, and did not present evidence showing
the contrary, the 30-day period for filing the appeal in the CTA commenced to run for the petitioners only after June 1,
1999, which was the date when they unquestionably acquired notice of the adverse decision.
 Accordingly, they had until July 1, 1999 within which to appeal.
 With their petition for review being filed on June 21, 1999, which was well within the 30-day period provided in Section 11,
supra, their appeal was timely.
 Moreover, the records indicated that the petitioners’ appeal in the CTA raised that the respondents erred in:
o Declaring that the subject vessel M/V “Don Martin” be forfeited in favor of the government for violation of Section
2530 (a) and (k) (sic) the TCCP
o Declaring that the subject cargo of rice be forfeited in favor of the government despite the testimonial and
documentary evidence of petitioners indisputably showing that the same was produced and acquired locally
o And they prayed for the release of both the vessel and its cargo of rice
  They also extensively presented in their petition for review their arguments on the illegality of the forfeiture of the rice.
 Under the circumstances, the issue on the legality of the forfeiture of the rice was fully raised and submitted in the CTA,
which thus had adequate basis to resolve it.
 Lastly, under Section 2530 (a) and (k) of the TCCP, the forfeiture of a vehicle, vessel or aircraft is anchored on its being used
unlawfully in the transport of contraband or smuggled articles into or from any Philippine port.
 Consequently, the determination of the legality of the forfeiture of the M/V Don Martin was necessarily contingent on
whether the customs authorities had validly and properly seized the shipment of 6,500 sacks of rice on account of the rice
being smuggled.
 Given this logical correlation, the CTA could not be divested of its jurisdiction to determine the legality of the forfeiture of
the rice.

 In this regard, we hold it fitting to reiterate that:

o Once a court acquires jurisdiction over a case, it has wide discretion to look upon matters, which, although not
raised as an issue, would give life and meaning to the law.
o Indeed, the Rules of Court recognize the broad discretionary power of an appellate court to consider errors not
assigned. Xxx
o Thus, an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors
in the appeal in these instances: (a) grounds not assigned as errors but affecting jurisdiction over the subject
matter; (b) matters not assigned as errors on appeal but are evidently plain or clerical errors within contemplation
of law; (c) matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just
decision and complete resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal
justice; (d) matters not specifically assigned as errors on appeal but raised in the trial court and are matters of
record having some bearing on the issue submitted which the parties failed to raise or which the lower court
ignored; (e) matters not assigned as errors on appeal but closely related to an error assigned; and (f) matters not
assigned as errors on appeal but upon which the determination of a question properly assigned, is dependent.

Sub-issue: Did the CA reverse the factual findings of the CTA?

Ruling:
 No. The CA did not reverse the factual findings of the CTA.

 The petitioners argue that the CA should not have reversed the factual findings of the CTA because such findings were
supported by substantial evidence
o That the CA should not have favored the assumption by the Secretary of Finance that the operator of the vessel
was also the shipper of the smuggled goods, and
o That the cargo of rice should not have been found as unlawfully imported considering that all the documents they
had presented to prove the contrary had been verified and uncontested.
o The petitioners’ arguments are unfounded

 It is true that the CTA is a highly specialized body specifically created for the purpose of reviewing tax cases
 Hence, its findings of fact are to be accorded utmost respect.
 Indeed, the factual findings of the CTA, when supported by substantial evidence, are not to be disturbed on appeal unless
there is a showing that the CTA committed gross error or abuse in the appreciation of facts.

Application
 Here, however, it was obvious that the CA did not modify or alter any of the factual findings of the CTA , but only re-
assessed the findings because of the conflicting conclusions reached by the CTA and the BOC
 After its re-assessment, the CA declared that the conclusions by the BOC and the Secretary of Finance were more
sustainable and convincing than those of the CTA
 By so declaring, the CA did not change the factual findings of the CTA but only arrived at a different interpretation of the
findings that tilted its appellate resolution in favor of the respondents
 The CA thereby simply exercised its power of appellate review
 Indeed, the CA, as the appellate court, had the authority to either affirm, or reverse, or modify the appealed decision of the
CTA.
 To withhold from the CA its power to render an entirely new decision would trench on its power of review, and would, in
effect, render it incapable of correcting the patent errors of the lower court.
Disposition: Petition granted.

Notes:
Documents presented by the Petitioners (At the hearing on the seizure)
1. Certificate of Ownership - to prove that Palacio Shipping, Inc. is the owner of M/V “Don Martin”
2. Coastwise License - to prove that Palacio Shipping, Inc. is duly licensed to engage in coastwise Trading and as such, is a
common carrier and is financially capable to engage in shipping business
3. Mintu Rice Mill Official Receipt No. 2753 dated January 18, 1999 - to prove that the origin of the rice is Sablayan,
Occidental Mindoro and also to show that the rice is of regular mill and not smuggled
4. NFA, Sablayan, Occidental Mindoro Clearance - to show that the bags of rice purchased under Exhibit “3” has been cleared
for shipment by the National Food Authority of Sablayan, Occidental Mindoro
5. Old NFA License of Godofredo Mintu
5-A - Renewal of the NFA License of Godofredo Mintu expiring May 31, 1999 - to show that the purchased rice came from a
duly licensed Grains Trader

6. NFA License of Florentino J. Palacio, owner of the EMP Commercial, the shipper - to prove that the shipper is a duly
Licensed NFA wholesaler
6-1 Renewal Receipt for NFA License for Fiscal Year 1998-1999

7. NFA Clearance of Catbalogan, Western Samar — to prove that the cargo of M/V "DON MARTIN" was cleared for Cagayan
de Oro City
7-1 PPASeal
7-2 Coast Guard Seal
7-3 Page 2 of NFA Clearance

8. Bill of Lading - to prove that the cargo was duly covered with a Bill of Lading, a requirement in coastwise shipping
9. Coasting Manifest - to prove that the cargo of rice was duly reflected in its manifest - also a requirement for coastwise
shipping
10. Birth Certificate and photo of Leopoldo “Junior” Pamulaklakin
10-A Residence Certificate of Leopoldo “Junior” Pamulaklakin - to prove that the consignee is a living person and not
fictitious person.
10-B Picture of Leopoldo "Junior" Pamulaklakin - to prove that the consignee is a living person and not a fictitious person

Cases on Authority of BOC

1. Airlift Asia Customs Brokerage, Inc v CA

Facts:
 CAO 3-2006 was issued by the then Commissioner of the Bureau of Customs, with the approval of then Secretary of
Finance, on March 2, 2006.
 It covers the Rules and Regulations Governing the Accreditation of the Customs Brokers Transacting with the BOC and
essentially requires the accreditation by the BOC of customs brokers who intend to practice before the BOC
 Part I of CAO 3-2006 defines accreditation as “the process for registration and/or listing of customs brokers desiring to
engage in customs brokers practice.”
 Accordingly, the accreditation process is included in the issuance’s definition of a “custom broker”:

2.1. “Customs Broker” refers to any bona fide holder of a valid Certificate of Registration/Personal Identification Card
issued by the Professional Regulatory Board and the Professional Regulatory Commission, who is accredited to practice in
the Bureau of Customs

 Thus, CAO 3-2006 requires “customs brokers desiring to practice their profession at the BOC [to] apply for accreditation and
[to] obtain a Certificate of Accreditation before they may engage in customs brokerage practice.”
 Once accredited, customs brokers are entitled to practice their profession in any port of entry in the Philippines
 The petitioners assailed the validity of CAO 3-2006 thru an action for declaratory relief before the RTC
 They primarily claimed that CAO 3-2006 was issued without authority, contravenes Republic Act No. 9280 (RA 9280) or the
Customs Brokers Act of 2004, and violates their right to practice the customs broker profession
  RTC ruling
o Upheld the petitioners’ contentions and nullified CAO 3-2006.
o It found that the BOC Commissioner had no authority to issue rules governing the practice of the customs
brokerage profession
o This power, initially lodged with the Commissioner of the Civil Service under Section 3409 of the Tariff and Customs
Code of the Philippines (TCCP), had been transferred upon the passage of RA 9280 to the Professional Regulatory
Board for Customs Brokers (PRBCB), which is under the supervision and administrative control of the Professional
Regulation Commission (PRC).
o The trial court also held that the required accreditation amounted to a licensing requirement prohibited under
Section 19 of RA No. 9280. This provision states that customs brokers who have been issued certificates of
registration by the PRBCB shall be allowed to practice the profession in any collection district without the need of
securing another license from the BOC. By requiring accreditation, CAO 3-2006 imposed an additional qualification
not found in the law.

 CA ruling
o Reversed the RTC ruling finding its construction of CAO 3-2006 rigid and crippling on the BOC’s efforts to ensure
efficient customs administration and collection of taxes and duties.
o Although the accreditation requirement was an added burden to customs brokers, it nevertheless bore a
reasonable connection to the BOC’s aim to ensure accountability and integrity in the transactions involving
customs duties and tariff laws.

Issue: WON the issuance of CA 3-2006 was valid

Ruling
 NO
 RA No. 9280 expressly repealed Sections 3401 to 3409 of the TCCP and transferred the supervision and regulation of the
customs brokerage profession from the Board of Examiners to the PRBCB
 Prior to the passage of RA 9280, the TCCP (specifically, Sections 3401 to 3409 thereof) governed the entry, regulation, and
supervision of the customs broker profession
 Sections 3401 and 3402 of the TCCP required all applicants for customs brokers’ certificates to pass a written examination
given by the Board of Examiners for Customs Brokers under the supervision of the Civil Service Commission (CSC)
 The Board of Examiners was composed of the BOC Commissioner as ex-officio chairman, the Tariff Commissioner, and three
other members appointed by the President.
 An examinee who passes the exam would be issued a certificate as customs broker signed by the members of the Board of
Examiners and the Civil Service Commissioner.
 If the certified customs broker would like to establish a customs brokerage business in any port in the Philippines, he/she
must secure an annual license from the Collector of Customs of the port concerned
 A complaint for suspension or revocation of the custom broker’s certificate is filed with the Board of Examiners, which
conducts the investigation and submits its findings and recommendations with the Civil Service Commissioner who makes
the final decision.
 If the charge involves smuggling, the BOC Commissioner may likewise revoke his/her license
 Considering the BOC Commissioner’s functions as ex-officio Chairman of the Board of Examiners, the TCCP has effectively
allowed him to exercise control over the customs broker profession.
 The enactment of RA 9280, however, brought about significant changes

Application
 Section 39 of RA 9280 expressly repealed the TCCP provisions (Section 3401 to 3409) on the customs brokers profession.
 Section 39 of RA 9280 further declared that “all laws…and parts thereof which are inconsistent with [RA 9280] are [deemed]
modified, suspended, or repealed accordingly.”
 In lieu of the Board of Examiners, RA 9280 created the PRBCB whose members are appointed by the President from a list of
recommendees submitted by the PRC which has supervisory and administrative control over the PRBCB
 Significantly, RA 9280 excluded the BOC Commissioner as member of the PRBCB.
 The exclusion of the BOC Commissioner as a member of the PRBCB evinces the legislative intent to remove any power he
previously exercised over custom brokers, and to transfer the supervision, control and regulation of this profession to the
PRBCB.
 This intent is likewise apparent from a reading of the powers granted to the PRBCB:

Section 7. Powers and Functions of the Board. – x x x

 (b) Supervise and regulate the licensure, registration, and practice of customs brokers profession;

xxxx

(e) Register successful examinees in the licensure examination and issue the corresponding Certificate of Registration and
Professional Identification Card;

xxxx

(g) Look into the conditions affecting the practice of customs brokerage, adopt measures for the enhancement of the
profession and the maintenance of high professional, technical, and ethical standards, and conduct ocular inspection of
places where customs brokers practice their profession; [emphasis supplied]

 By conferring these powers on the PRBCB, the declared policy of RA 9280 to professionalize the practice of the customs
broker profession is executed and fulfilled

Issue 2: WON RA 9280 divested the BOC of its authority over customs brokers

Ruling
 YES
 The assailed CA decision, however, declared that the passage of RA 9280 did not divest the BOC Commissioner of his
authority over customs brokers. The BOC Commissioner retains the general power “to regulate the activities of licensed
customs brokers insofar as the enforcement of tariff laws and prevention of smuggling and other illegal schemes to defraud
the government of lawful revenues.” It adds that “[t]o strip the BOC [Commissioner] of any disciplinary and supervisory
authority over license customs brokers… would not only cripple the [BOC’s] intensified drive to combat smuggling and derail
the all-out program…to increase collection targets.”

 Although we cannot deny that the BOC Commissioner has the mandate to enforce tariff laws and prevent smuggling, these
powers do not necessarily include the power to regulate and supervise the customs broker profession through the issuance
of CAO 3-2006

 The BOC Commissioner’s power under Section 608 of the TCCP is a general grant of power to promulgate rules and
regulations necessary to enforce the provisions of the TCCP.
 Under the rules of statutory construction, this general rule-making power gives way to the specific grant of power to
promulgate rules and regulations on the practice of customs brokers profession to the CSC Commissioner under Section
3409 of the TCCP.
 Indeed, in the exercise of this specific power, the Board of Examiners (of which the BOC Commissioner serves as ex-officio
chairman) was to perform only a recommendatory role.
 With the repeal of Section 3409 of the TCCP by RA 9280, this specific rule-making power was transferred to the PRBCB to
complement its supervisory and regulatory powers over customs brokers. Section 37 of RA 9280 provides:

SEC. 37. Implementing Rules and Regulations. – The [PRBCB], subject to the approval by the Commission, in coordination
with the accredited professional organization, shall issue and promulgate the rules and regulations, including the Code of
Ethics for customs broker profession needed to implement the provision of this Act.

Application:
 The BOC, like the Bureau of Internal Revenue (BIR), performs a critical role in government revenue collection.
 The integrity and efficiency of transactions before both these agencies is important, and all persons dealing with them must
strictly adhere to their respective rules and regulations.
 The similarity in the functions and concerns of the BOC and the BIR, however, does not support a grant of power to accredit
customs brokers to the BOC Commissioner.
 Unlike the BOC Commissioner whose power over customs brokers was – at the very least – implied and indirect, the BIR
Commissioner was given express and specific powers to accredit and register tax agents under Section 6(G) of the National
Internal Revenue Code (NIRC):

SEC. 6. Power of the Commissioner to Make assessments and Prescribe additional Requirements for Tax Administration and
Enforcement. – x x x
 (G) Authority to Accredit and Register Tax Agents. - The Commissioner shall accredit and register, based on their
professional competence, integrity and moral fitness, individuals and general professional partnerships and their
representatives who prepare and file tax returns, statements, reports, protests, and other papers with or who appear
before, the Bureau for taxpayers. x x x

Issue 3: WON CAO 3-2006 amounts to a licensing requirement that restricts the practice of profession of customs brokers and is
prohibited by RA 9280

Ruling:
 YES
 Attempts to uphold the validity of CAO 3-2006 were made by arguing that CAO 3-2006 intends to regulate only the practice
before the BOC, which is claimed to be one aspect of the multi-faceted brokerage profession.
 The accreditation requirement being limited only to a particular facet of the practice of the profession, CAO 3-2006
purportedly does not preclude licensed customs brokers from pursuing other areas of practice even without having been
accredited by the BOC
 We find this view misplaced for several reasons
 The practice of customs brokers admittedly involves a variety of activities as enumerated in Section 6 of RA 9280:

SEC. 6. Scope of the Practice of Customs Brokers.

Customs Broker Profession involves services consisting of consultation, preparation of customs requisite document for
imports and exports, declaration of customs duties and taxes, preparation signing, filing, lodging and processing of import
and export entries; representing importers and exporters before any government agency and private entities in cases
related to valuation and classification of imported articles and rendering of other professional services in matters relating to
customs and tariff laws its procedures and practices.

 A customs brokers and shall be considered in the practices of the profession if the nature and character of his/her
employment in private enterprises requires professional knowledge in the field of customs and tariff administration.
 He/She is also deemed in the practice of custom Broker profession if he/she teaches customs and tariff administration
subjects in any university, college or school duly recognized by the government
 Notably, with the exception of consulting with clients, and teaching tariff and customs administration, most of the above-
enumerated activities involve dealing with the BOC.
 In other words, a large part of a custom brokers’ work involves practice before the BOC, and CAO 3-2006 practically
compels all customs brokers – already certified by the PRC – to comply with the accreditation requirement for them to
practice their profession.
 This is contrary to the terms of Section 19 of RA 9280, which provides that a customs broker “shall be allowed to practice
the profession in any collection district without the need of securing another license from the [BOC].”

Application:
 We are unconvinced by the BOC Commissioner’s claim that CAO 3-2006’s accreditation requirement is not a form of license.
 A license is a “permission to do a particular thing, to exercise a certain privilege or to carry on a particular business or to
pursue a certain occupation.”
 Since it is only by complying with CAO 3-2006 that a customs broker can practice his profession before the BOC, the
accreditation takes the form of a licensing requirement proscribed by the law.
 It amounts to an additional burden on PRC-certified customs brokers and curtails their right to practice their profession.
 Under RA 9280, a successful examinee of the customs brokers examinations acquires a Certificate of Registration, which
entitles him to practice the profession as a customs broker with all the benefits and privileges appurtenant thereto
 Moreover, a reading of CAO 3-2006 does not appear to be restricted only to “practice before the BOC.”
 Pars. 1 and 2, Part IV of CAO 3-2006 requires custom brokers to maintain complete records covering their professional
practice.
 Par. 11, Part IV of the same issuance governs the custom broker’s role in advising clients.
 Although it may be argued that these duties/activities have reasonable connection with practice before the BOC as to be
within the scope of CAO 3-2006, this reasoning only reinforces the position that the practice by the customs broker of his
profession is mainly tied with practice before the BOC.
2. COMMISSIONER OF CUSTOMS and the DISTRICT COLLECTOR OF THE PORT OF SUBIC, Petitioners, vs. HYPERMIX FEEDS
CORPORATION, Respondent. G.R. No. 179579 February 1, 2012

Facts:
 7 November 2003, petitioner Commissioner of Customs issued CMO 27-2003.
o For tariff purposes, wheat was classified according to the following: (1) importer or consignee; (2) country of origin;
and (3) port of discharge. The regulation provided an exclusive list of corporations, ports of discharge, commodity
descriptions and countries of origin. Depending on these factors, wheat would be classified either as food grade or
feed grade. The corresponding tariff for food grade wheat was 3%, for feed grade, 7%.
o further provided for the proper procedure for protest or Valuation and Classification Review Committee (VCRC)
cases. Under this procedure, the release of the articles that were the subject of protest required the importer to
post a cash bond to cover the tariff differential.

 19 December 2003, respondent filed a Petition for Declaratory Relief with the RTC of Las Piñas City. It anticipated the
implementation of the regulation on its imported and perishable Chinese milling wheat in transit from China. Contended
that CMO 27-2003 was issued without following the mandate of the Revised Administrative Code on public participation,
prior notice, and publication or registration with the UP Law Center.
o Respondent also alleged that the regulation summarily adjudged it to be a feed grade supplier without the benefit
of prior assessment and examination; thus, despite having imported food grade wheat, it would be subjected to
the 7% tariff upon the arrival of the shipment, forcing them to pay 133% more than was proper.
o Furthermore, respondent claimed that the equal protection clause of the Constitution was violated when the
regulation treated non-flour millers differently from flour millers for no reason at all.
o Lastly, respondent asserted that the retroactive application of the regulation was confiscatory in nature.

 19 January 2004, the RTC issued a TRO effective for 20 days from notice.
 Petitioners thereafter filed a Motion to Dismiss. They alleged that:
o (1) the RTC did not have jurisdiction over the subject matter of the case, because respondent was asking for a
judicial determination of the classification of wheat;
o (2) an action for declaratory relief was improper;
o (3) CMO 27-2003 was an internal administrative rule and not legislative in nature; and
o (4) the claims of respondent were speculative and premature, because the Bureau of Customs (BOC) had yet to
examine respondent’s products. They likewise opposed the application for a writ of preliminary injunction on the
ground that they had not inflicted any injury through the issuance of the regulation; and that the action would be
contrary to the rule that administrative issuances are assumed valid until declared otherwise.

Trial Court decision

 the RTC rendered its Decision without having to resolve the application for preliminary injunction and the Motion to
Dismiss.
 The trial court ruled in favor of respondent:
o xxx subject CMO 27-2003 is declared INVALID and OF NO FORCE AND EFFECT. xxx immediately cease and desist
from enforcing the said CMO 27-2003. SO ORDERED.
 The RTC held that it had jurisdiction over the subject matter, given that the issue raised by respondent concerned the quasi-
legislative powers of petitioners. It likewise stated that a petition for declaratory relief was the proper remedy, and that
respondent was the proper party to file it. The court considered that respondent was a regular importer, and that the latter
would be subjected to the application of the regulation in future transactions.
 the trial court found that petitioners had not followed the basic requirements of hearing and publication in the issuance of
CMO 27-2003. It likewise held that petitioners had "substituted the quasi-judicial determination of the commodity by a
quasi-legislative predetermination." The lower court pointed out that a classification based on importers and ports of
discharge were violative of the due process rights of respondent.

 Petitioners appealed to the CA, raising the same allegations in defense of CMO 27-2003.
 The appellate court dismissed the appeal. It held that, since the regulation affected substantial rights of petitioners and
other importers, petitioners should have observed the requirements of notice, hearing and publication.
 Hence, this Petition.

Issue: WON Commissioner of Customers went beyond his powers in issuing CMO 27-2003?
Ruling: YES.
  Petitioner Commissioner of Customs also went beyond his powers when the regulation limited the customs officer’s
duties mandated by Section 1403 of the Tariff and Customs Law, as amended. The law provides:
o Section 1403. – Duties of Customs Officer Tasked to Examine, Classify, and Appraise Imported Articles. – The
customs officer tasked to examine, classify, and appraise imported articles shall determine whether the packages
designated for examination and their contents are in accordance with the declaration in the entry, invoice and
other pertinent documents and shall make return in such a manner as to indicate whether the articles have been
truly and correctly declared in the entry as regard their quantity, measurement, weight, and tariff classification and
not imported contrary to law. He shall submit samples to the laboratory for analysis when feasible to do so and
when such analysis is necessary for the proper classification, appraisal, and/or admission into the Philippines of
imported articles.

 Likewise, the customs officer shall determine the unit of quantity in which they are usually bought and sold, and appraise
the imported articles in accordance with Section 201 of this Code. Failure on the part of the customs officer to comply with
his duties shall subject him to the penalties prescribed under Section 3604 of this Code. The provision mandates that the
customs officer must first assess and determine the classification of the imported article before tariff may be imposed.
 Unfortunately, CMO 23-2007 has already classified the article even before the customs officer had the chance to examine
it. In effect, petitioner Commissioner of Customs diminished the powers granted by the Tariff and Customs Code with
regard to wheat importation when it no longer required the customs officer’s prior examination and assessment of the
proper classification of the wheat.
 It is well-settled that rules and regulations, which are the product of a delegated power to create new and additional
legal provisions that have the effect of law, should be within the scope of the statutory authority granted by the
legislature to the administrative agency.
 It is required that the regulation be germane to the objects and purposes of the law; and that it be not in contradiction to,
but in conformity with, the standards prescribed by law.
Summary
 In summary, petitioners violated respondent’s right to due process in the issuance of CMO 27-2003 when they failed to
observe the requirements under the Revised Administrative Code.
 Petitioners likewise violated respondent’s right to equal protection of laws when they provided for an unreasonable
classification in the application of the regulation.
 Finally, petitioner Commissioner of Customs went beyond his powers of delegated authority when the regulation limited
the powers of the customs officer to examine and assess imported articles. WHEREFORE, in view of the foregoing, the
Petition is DENIED. SO ORDERED.

Issue: WON the petition met the requirements under declaratory relief?
Ruling: YES.
 Discuss the propriety of an action for declaratory relief.
 The requirements of an action for declaratory relief are as follows:
o (1) there must be a justiciable controversy;
o (2) the controversy must be between persons whose interests are adverse;
o (3) the party seeking declaratory relief must have a legal interest in the controversy; and
o (4) the issue involved must be ripe for judicial determination.
 We find that the Petition filed by respondent before the lower court meets these requirements.

 First, the subject of the controversy is the constitutionality of CMO 27-2003. In Smart Communications v. NTC, we held:
o The determination of whether a specific rule or set of rules issued by an administrative agency contravenes the law
or the constitution is within the jurisdiction of the regular courts. Indeed, the Constitution vests the power of
judicial review or the power to declare a law, treaty, international or executive agreement, presidential decree,
order, instruction, ordinance, or regulation in the courts, including the regional trial courts. This is within the scope
of judicial power, which includes the authority of the courts to determine in an appropriate action the validity of
the acts of the political departments. Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and enforceable, and 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. (Emphasis supplied)

 Meanwhile, in Misamis Oriental Association of Coco Traders, Inc. v. Department of Finance Secretary, we said:
o xxx [A] legislative rule is in the nature of subordinate legislation, designed to implement a primary legislation by
providing the details thereof. Xxx
 In addition such rule must be published. On the other hand, interpretative rules are designed to provide guidelines to the
law which the administrative agency is in charge of enforcing.
 Accordingly, in considering a legislative rule a court is free to make three inquiries: 
o (i) whether the rule is within the delegated authority of the administrative agency; 
o (ii) whether it is reasonable; and 
o (iii) whether it was issued pursuant to proper procedure.
 But the court is not free to substitute its judgment as to the desirability or wisdom of the rule for the legislative body, by its
delegation of administrative judgment, has committed those questions to administrative judgments and not to judicial
judgments.
 In the case of an interpretative rule, the inquiry is not into the validity but into the correctness or propriety of the rule.
 As a matter of power a court, when confronted with an interpretative rule, is free to 
o (i) give the force of law to the rule; 
o (ii) go to the opposite extreme and substitute its judgment; or 
o (iii) give some intermediate degree of authoritative weight to the interpretative rule. (Emphasis supplied)

 Second, the controversy is between two parties that have adverse interests. Petitioners are summarily imposing a tariff rate
that respondent is refusing to pay.
 Third, it is clear that respondent has a legal and substantive interest in the implementation of CMO 27-2003. Respondent
has adequately shown that, as a regular importer of wheat, on 14 August 2003, it has actually made shipments of wheat
from China to Subic. The shipment was set to arrive in December 2003. Upon its arrival, it would be subjected to the
conditions of CMO 27-2003. The regulation calls for the imposition of different tariff rates, depending on the factors
enumerated therein. Thus, respondent alleged that it would be made to pay the 7% tariff applied to feed grade wheat,
instead of the 3% tariff on food grade wheat. In addition, respondent would have to go through the procedure under CMO
27-2003, which would undoubtedly toll its time and resources. The lower court correctly pointed out as follows:
o xxx As noted above, the fact that petitioner is precisely into the business of importing wheat, each and every
importation will be subjected to constant disputes which will result into (sic) delays in the delivery, setting aside of
funds as cash bond required in the CMO as well as the resulting expenses thereof. It is easy to see that business
uncertainty will be a constant occurrence for petitioner. That the sums involved are not minimal is shown by the
discussions during the hearings conducted as well as in the pleadings filed. It may be that the petitioner can later
on get a refund but such has been foreclosed because the Collector of Customs and the Commissioner of Customs
are bound by their own CMO. Petitioner cannot get its refund with the said agency. We believe and so find that
Petitioner has presented such a stake in the outcome of this controversy as to vest it with standing to file this
petition (Emphasis supplied)
 Finally, the issue raised by respondent is ripe for judicial determination, because litigation is inevitable for the simple and
uncontroverted reason that respondent is not included in the enumeration of flour millers classified as food grade wheat
importers. Thus, as the trial court stated, it would have to file a protest case each time it imports food grade wheat and be
subjected to the 7% tariff.
 It is therefore clear that a petition for declaratory relief is the right remedy given the circumstances of the case.

 Considering that the questioned regulation would affect the substantive rights of respondent as explained above, it
therefore follows that petitioners should have applied the pertinent provisions of Book VII, Chapter 2 of the Revised
Administrative Code, to wit:
o Section 3. Filing. – (1) Every agency shall file with the University of the Philippines Law Center three (3) certified
copies of every rule adopted by it. Rules in force on the date of effectivity of this Code which are not filed within
three (3) months from that date shall not thereafter be the bases of any sanction against any party of persons. x x x
x x x          x x x
o Section 9. Public Participation. - (1) If not otherwise required by law, an agency shall, as far as practicable, publish
or circulate notices of proposed rules and afford interested parties the opportunity to submit their views prior to
the adoption of any rule.
(2) In the fixing of rates, no rule or final order shall be valid unless the proposed rates shall have been published in
a newspaper of general circulation at least two (2) weeks before the first hearing thereon.
(3) In case of opposition, the rules on contested cases shall be observed.

 When an administrative rule is merely interpretative in nature, its applicability needs nothing further than its bare issuance,
for it gives no real consequence more than what the law itself has already prescribed. When, on the other hand, the
administrative rule goes beyond merely providing for the means that can facilitate or render least cumbersome the
implementation of the law but substantially increases the burden of those governed, it behooves the agency to accord at
 least to those directly affected a chance to be heard, and thereafter to be duly informed, before that new issuance is given
the force and effect of law.

 Likewise, in Tañada v. Tuvera, we held:

o The clear object of the above-quoted provision is to give the general public adequate notice of the various laws
which are to regulate their actions and conduct as citizens. Without such notice and publication, there would be no
basis for the application of the maxim "ignorantia legis non excusat." It would be the height of injustice to punish
or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a
constructive one.
o Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital
significance that at this time when the people have bestowed upon the President a power heretofore enjoyed
solely by the legislature. While the people are kept abreast by the mass media of the debates and deliberations in
the Batasan Pambansa – and for the diligent ones, ready access to the legislative records – no such publicity
accompanies the law-making process of the President. Thus, without publication, the people have no means of
knowing what presidential decrees have actually been promulgated, much less a definite way of informing
themselves of the specific contents and texts of such decrees. (Emphasis supplied)

Issue: WON CMO 27-2003 is unconstitutional?

Ruling: YES.
 Because petitioners failed to follow the requirements enumerated by the Revised Administrative Code, the assailed
regulation must be struck down.
 Going now to the content of CMO 27-3003, we likewise hold that it is unconstitutional for being violative of the equal
protection clause of the Constitution.
 The equal protection clause means that no person or class of persons shall be deprived of the same protection of laws
enjoyed by other persons or other classes in the same place in like circumstances. Thus, the guarantee of the equal
protection of laws is not violated if there is a reasonable classification.
 For a classification to be reasonable, it must be shown that
o (1) it rests on substantial distinctions;
o (2) it is germane to the purpose of the law;
o (3) it is not limited to existing conditions only; and
o (4) it applies equally to all members of the same class.
 Unfortunately, CMO 27-2003 does not meet these requirements . We do not see how the quality of wheat is affected by
who imports it, where it is discharged, or which country it came from.
 Thus, on the one hand, even if other millers excluded from CMO 27-2003 have imported food grade wheat, the product
would still be declared as feed grade wheat, a classification subjecting them to 7% tariff. On the other hand, even if the
importers listed under CMO 27-2003 have imported feed grade wheat, they would only be made to pay 3% tariff, thus
depriving the state of the taxes due.
o The regulation, therefore, does not become disadvantageous to respondent only, but even to the state.
 It is also not clear how the regulation intends to "monitor more closely wheat importations and thus prevent their
misclassification."
 A careful study of CMO 27-2003 shows that it not only fails to achieve this end but results in the opposite.
 The application of the regulation forecloses the possibility that other corporations that are excluded from the list import
food grade wheat; at the same time, it creates an assumption that those who meet the criteria do not import feed grade
wheat.
o In the first case, importers are unnecessarily burdened to prove the classification of their wheat imports;
o while in the second, the state carries that burden.