G.R. No.
126634 January 25, 1999 then considered submitted for decision based on
TRANSGLOBE INTERNATIONAL, INC.,
petitioner, vs. COURT OF APPEALS and
COMMISSIONER OF CUSTOMS,
respondents.
On 27 April 1992 a shipment from Hongkong
arrived in the Port of Manila on board the "S/S
Sea Dragon." Its Inward Foreign Manifest
indicated that the shipment contained 1,054
pieces of various hand tools. Acting on
information that the shipment violated certain
provisions of the Tariff and Customs Code as
amended, agents of the Economic Intelligence
and Investigation Bureau (EIIB) seized the
shipment while in transit to the Trans Orient
container yard-container freight station. An
examination thereof yielded significant results
1. The 40 ft. van was made to appear as a
consolidation shipment consisting of 232
packages with Translink Int'l. Freight Forwarder
as shipper and Transglobe Int'l., Inc. as
consignee;
2. There were eight (8) shippers and eight (8)
consignees declared as co-loaders and co-
owners of the contents of the van, when in truth
the entire shipment belongs to only one entity;
3. Not one of the items declared as the contents
of the van, i.e., various hand tools, water
cooling tower g-clamps compressors, bright
roping wire and knitting machine w(as) found in
the van. Instead the van was fully stuffed with
textile piece goods. 1
On those accounts, which were deemed to
constitute a violation of Sec. 2503 in relation to
Sec. 2530, pars. (f) and (m), subpars. 3, 4 and
5, of the Tariff and Customs Code, the EIIB
recommended seizure of the entire shipment.
On 21 May 1992 District Collector of Customs
Emma M. Rosqueta issued the corresponding
warrant of seizure and detention.
The case was set for hearing on 2 June 1992 but
petitioner Transglobe International, Inc., or its
duly authorized representative, failed to appear
despite due notice. Resetting was ordered to 19
June 1992, yet, for the same reason was further
reset to 8 July 1992. Still petitioner or its
representative was unable to appear which thus
led to its being declared in default. The case was
1
existing documents. On 26 August 1992 after
finding that a violation of the cited provisions
was indeed committed, District Collector
Rosqueta decreed the forfeiture of the shipment
in favor of the government to be disposed of in
accordance with law.2
Thereafter petitioner filed a petition for
redemption of the shipment. On 2 October 1992
Hearing Officer Geoffrey G. Gacula
recommended that the petition be given due
course and that petitioner be allowed to effect
the release of the shipment upon payment of
P1,300,132.04 representing its domestic market
value. Hearing Officer Gacula took into
consideration the following
Record shows that the shipment consists of
good which are in legal contemplation not
prohibited, nor the release thereof to the
claimant contrary to law . . . . the spirit and
intent of Executive Order No. 38, to increase
and accelerate revenue collection by the
government thru redemption of forfeited
cargoes, which would also benefit importers by
giving them the chance to recover portions of
their investment . . . . 3
Chief of the Law Division Buenaventura S.
Tenorio concurred in the recommendation. On
the same day, District Collector Rosqueta
recommended approval thereof and forwarded
the case to respondent Commissioner of
Customs Gulliermo L. Parayno Jr. through
Deputy Commissioner Licerio C. Evangelista. 4
On 7 October 1992 the latter likewise
recommended favorable action thereon. 5
However respondent Commissioner Parayno Jr.
denied the offer of redemption in his 1st
Indorsement dated 27 November 1992 for these
reasons
1. The shipment was made to appear to be an
innocuous consolidation shipment destined for
stripping at an outside CY-CFS 6 in order to
conceal the textile fabrics;
2. The eight (8) co-loaders/consignee of the
shipment are all fictitious;
3. Under Section 3B, CMO 87-92, offers of
redemption shall be denied when the seized
shipment is consigned to a fictitious consignee.
7
Thus respondent Commissioner Parayno Jr.
instructed the Auction and Cargo Disposal
Division of the Port of Manila to include the
shipment in the next public auction. 8 On 8
February 1993 reconsideration was denied. 9
Petitioner moved for another reconsideration
which was referred to District Collector Rosqueta
for comment. Even after further review, she
maintained her previous recommendation
allowing redemption
1. Since no entry has been filed so far, the
consignee could not be faulted for
misdeclaration under Section 2503 of the Tariff
and Customs Code. While the shipment was
misdeclared in the rider and the manifest, the
consignee is innocent of the facts stated therein
as it had no hand in their preparation or
issuance. Law and regulation allow the
amendment of the manifest at any time before
the filing of entry in order to protect the
innocent consignee.
2. Transglobe International, Inc., is a juridical
person duly organized in accordance with the
laws of the Philippines and is qualified as a
consignee. It is not fictitious as evidenced by its
Articles of Incorporation registered with the
Securities and Exchange Commission.
3. The shipment consists of goods which are in
legal contemplation not prohibited, nor the
release thereof to the Claimant contrary to law,
and the redemption offer is well within the
purview of Executive Order No. 38. 10
Nevertheless, reconsideration was again denied
on 1 July 1993. 11 On 4 August 1993 the
forfeiture of the shipment and denial of the
request for redemption were affirmed by
respondent Commissioner Parayno Jr. 12
In the appeal which was solely concerned with
the propriety of redemption, the Court of Tax
Appeals (CTA) expressed a different view.
Relying on Sec. 1 of Executive Order No. 38, as
applied in Gazzingan v. Commissioner of
Customs 13 since no fraud was found on the
part of the redemptioner, the CTA directed on
27 June 1995 that petitioner be allowed to
redeem the shipment upon payment of its
computed domestic market value. 14
However respondent Court of Appeals sustained
2
the denial of the redemption by respondent
Commissioner of Customs. On 28 June 1996 it
set aside the ruling of the CTA 15 on the
ratiocination that
The findings of the Economic Intelligence and
Investigation Bureau: "that the shipment was
made to appear to be an innocuous
consolidation shipment destined for stripping at
an outside CY-CFS in order to conceal the textile
fabrics," and "that the eight (8)
coloaders/consignees were all fictitious" had not
been refuted during the seizure proceedings by
respondent Transglobe International, Inc. The
failure of respondent Transglobe to refute this
fact negates its claim that no violation of the
above cited provisions (Sec. 2503 in relation to
Sec. 2530, pars. (f) and (m), subpars. 3, 4 and
5 of the Tariff and Customs Code as amended)
had been committed. The findings of the EIIB
above referred to remain unassailed and
uncontradicted. Said findings clearly show
badges of fraud . . . The seizure of the property
in question was made upon findings that the
documents covering the said shipment were
forged, thus:
FRAUD the following cases herein
enumerated demonstrate the presence of fraud:
1.a. The use of forged or spurious
documents . . . (Section 1, CMO-87-92). 16
On 3 September 1996 reconsideration was
denied. 17
We now resolve the issue of whether petitioner
should be allowed to redeem the forfeited
shipment.
Petitioner asserts that it is not guilty of fraud
because, as held in Farolan Jr. v. Court of Tax
Appeals 18 and Aznar v. Court of Tax Appeals,
19 the fraud referred to is one that is intentional
with the sole object of avoiding payment of
taxes. While petitioner admits that it is the only
consignee of the cargo and that the van
contains textiles, contrary to those declared in
the manifest and rider, it avers that these
discrepancies do not evince deliberate evasion
of taxes or payment of duties, especially
considering that it is a duly registered domestic
corporation, and that it has no knowledge or
participation in the execution of the manifest
and the rider thereon.
A violation of Sec. 2503 in relation to Sec. 2530,
pars. (f) and (m), subpars. 3, 4 and 5, of the
Tariff and Customs Code as amended was found
by the Bureau of Customs. Section 203 deals
with undervaluation, misclassification and
misdeclaration in entry. On the other hand, Sec.
2530, pars. (f) and (m), subpars. 3, 4 and 5
provides
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 subject to
forfeiture . . . .
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 . . . .
m. Any article sought to be imported or
exported . . . .
(3) On the strength of a false declaration 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 article
was entered through a customhouse to the
prejudice of the government.
From the decision of the District Collector of
Customs decreeing forfeiture, petitioner
Transglobe International, Inc., filed a petition
for redemption pursuant to Sec. 2307 of the
Tariff and Customs Code as amended by Sec. 1
of E.O. No. 38 20 which states
Sec. 2307. Settlement of Case by Payment of
Fine or 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
3
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
(emphasis supplied) . . . Settlement of any
seizure case by payment of the fine or
redemption of forfeited property shall not be
allowed in any case where the importation is
absolutely prohibited or where the release of the
property would be contrary to law.
As a means of settlement, redemption of
forfeited property is unavailing in three (3)
instances, namely, when there is fraud, where
the importation is absolutely prohibited, or
where the release of the property would be
contrary to law. Respondent Commissioner of
Customs disallowed the redemption on the
ground of fraud which consisted of the
following: "The shipment was made to appear to
be an innocuous consolidation shipment
destined for stripping at an outside CY-CFS in
order to conceal the textile fabrics; the eight (8)
co-loaders/consignees of the shipment are all
fictitious; and, under Section 3B, CMO 87-92,
offers of redemption shall be denied when the
seized shipment is consigned to a fictitious
consignee." 21 Respondent court sustained this
ruling which it considered based on undisputed
findings of the EIIB.
We rule that respondent Court of Appeals
committed reversible error in rendering the
assailed decision. The findings of respondent
Commissioner of Customs which provided the
bases for denying petitioner's offer of
redemption were his own, not of the EIIB, and
were merely stated in his 1st Indorsement with
no evidence whatsoever to substantiate them.
These findings prompted petitioner to seek
reconsideration and dispute them with these
claims
. . . First . . . . the shipment was not destined
for stripping. It was then being transported to a
CY-CFS operator where it would be examined by
a customs appraiser who would determine the
proper taxes and duties to be paid on the
shipment. Second . . . . the petitioner is a
legitimate corporation registered with the
Securities and Exchange Commission in
accordance with the laws of the Philippines . . . .
22
On petitioner's second motion for
reconsideration, District Collector Rosqueta was
silent on the first claim but upheld the second
claim. According to her, petitioner is a juridical
person duly organized in accordance with the
laws of the Philippines and is qualified as a
consignee; it is not fictitious as evidenced by its
Articles of Incorporation registered with the
Securities and Exchange Commission. 23
Despite these, respondent Commissioner of
Customs maintained his denial of the
redemption based on his previous
unsubstantiated findings. It is settled that
findings of fact of an administrative agency
must be respected so long as they are
supported by substantial evidence 24 or that
amount of relevant evidence which a reasonable
mind might accept as adequate to justify a
conclusion. 25 Lacking support, the factual
findings of respondent Commissioner of
Customs cannot stand on their own and
therefore not binding on the courts.
In the appeal before the CTA, respondent
Commissioner of Customs contended that the
seizure of the shipment was made also upon a
finding that the documents covering it were
forged, thus constituting fraud as defined in
Sec. 1, par. 1.a. CMO-87-92. This Section is of
the same tenor as Sec. 2530, pars. (f) and (m),
subpars. 3, 4 and 5, which for emphasis deals
with falsities committed by the owner, importer,
exporter or consignee or
importation/exportation through any other
practice or device. In Aznar, as reiterated in
Farolan, we clarified that the fraud
contemplated by law must be actual and not
constructive. It must be intentional, consisting
of deception willfully and deliberately done or
resorted to in order to induce another to give up
some right. The misdeclarations in the manifest
and rider cannot be ascribed to petitioner as
consignee since it was not the one that prepared
them. As we said in Farolan, if at all, the
wrongful making or falsity of the documents can
only be attributed to the foreign suppliers or
shippers. 26 Moreover, it was not shown in the
forfeiture decision that petitioner had knowledge
of any falsity in the shipping documents. District
Collector Rosqueta's comment on petitioner's
4
second motion for reconsideration is
enlightening: "While the shipment was
misdeclared in the rider and the manifest, the
consignee is innocent of the facts stated therein
as it had no hand in their preparation or
issuance." 27 We mention in passing that in
having thus stated, she in effect nullified her
prior finding that petitioner violated the cited
provisions of the Tariff and Customs Code as
amended. Consequently, we agree with the
finding of the CTA that fraud was not committed
by petitioner in the importation of the shipment.
Taking into consideration the circumstances
obtaining in the present case, namely, the
absence of fraud, the importation is not
absolutely prohibited and the release of the
property would not be contrary to law, the Court
deems it proper to allow the redemption of the
forfeited shipment by petitioner upon payment
of its computed domestic market value. Doing
so is definitely in keeping with the two-way
intent of E. O. No. 38, to wit, to expedite the
collection of revenues and hasten the release of
cargoes under seizure proceedings to the end
that importers and exporters will benefit in the
form of reduction in expenditures and assurance
of return of their investments that have been
tied up with their importations. 28
Finally, one may be tempted to argue that for
failure to appear in the forfeiture proceedings
despite due notice, petitioner was in default and
deemed to have admitted its violation of Sec.
2503, in relation to Sec. 2530, pars. (f) and
(m), as found by District Collector of Customs
Rosqueta, interpreted by the Court of Appeals
as "badges of fraud," and, as a consequence,
petitioner is now estopped from claiming that in
the proceedings for redemption there was no
fraud on its part.
The argument surfs on a wrong premise.
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. 29 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. 30 The issue here is limited to whether
the imported goods should be forfeited and
disposed of in accordance with law for violation
of the Tariff and Customs Code. Hence, the
ruling of District Collector Rosqueta in the
forfeiture case, insofar as the aspect of fraud is
concerned, is not conclusive; nor does it
preclude petitioner from invoking absence of
fraud in the redemption proceedings.
Significantly, while District Collector Rosqueta
decreed the forfeiture of the subject goods for
violation of the Tariff and Customs Code, she
nevertheless recommended the approval of
petitioner's offer of redemption, 31 and
categorically acknowledged that as consignee
there was no fraud on its part.32
WHEREFORE, the petition is GRANTED. The
Decision of respondent Court of Appeals of 28
June 1996 sustaining the denial of the
redemption of the forfeited shipment and the
Resolution of 3 September 1996 denying
reconsideration are SET ASIDE. The Decision of
the Court of Tax Appeals of 27 June 1995
ordering respondent Commissioner of Customs
to allow petitioner Transglobe International,
Inc., to redeem the forfeited shipment upon
payment of its domestic market value
amounting to P1,300,132.04 is REINSTATED.
G.R. No. L-31733 September 20, 1985
COMMISSIONER OF CUSTOMS,
petitioner,vs.COURT OF TAX APPEALS and
JOSE PASCUAL, respondents,
MAKASIAR, J.:
This is a petition for review on certiorari of the
decision dated September 30, 1969 of
respondent Court of Tax Appeals which modified
the decision of petitioner Commissioner of
Customs by ordering only the payment of a fire
in lieu of the forfeiture of private respondent
Jose Pascual's vessel M/B "Maria Victoria-P",
used in the illegal importation of blue seal
cigarettes.
Private respondent Jose Pascual is the
registered owner of the M/B "Maria Victoria-P",
a motor boat of 63.25 gross tonnage duly
licensed by the Bureau of Customs to engage in
coastwise trade. On December 16, 1963, the
said vessel was apprehended by the elements of
the Philippine Navy five miles off the coast of
Naic, Cavite for carrying untaxed 105 cases and
5
90 parks of Salem cigarettes and 414 cases of
Union cigarettes. The authorities turned over
the vessel, its crew and its cargo of blue seal
cigarettes to the Small Craft Unit of the
Philippine Navy for disposition. Thereafter,
Seizure Identification Case Nos. 8006 and 8006-
A against the vessel and the cargo of blue seal
cigarettes, respectively, were instituted before
the Collector of Customs.
For failure of anybody to claim ownership over
the cigarettes, the same were forfeited in favor
of the Government.
On the other hand, during the forfeiture
proceedings against the vessel private
respondent claimed that on December 4, 1963,
his vessel with fourteen (14) crew and a captain
went to Bulalakao, Mindoro to catch fish; that
after three days of fishing, all the fishing nets
were destroyed; that Jose Joloc captain of the
boat, notified private respondent in Manila about
the nets and the latter ordered the former to
bring the boat back to Manila; that for failure of
the boat to arrive in Manila on the date
expected by private respondent, he sent a
telegram addressed to the captain reiterating
his previous order, but no answer was received;
that private respondent sent a certain Artemio
Buenvenuto to Mindoro on December 13, 1963
to fetch the boat; that on even date Buenvenuto
sent a telegram to private respondent that the
boat had left Mindoro; that after receiving the
telegram on the same date, private respondent
notified the Philippine Navy that his boat was
missing and expressed fear that it might be
used illegally.
Jose Joloc captain of the vessel claimed that he
was not able to bring the boat back to Manila
due to bad weather; that while in Mindoro,
Fructuoso Maniego, whom he knew since 1962
approached and asked him if he could load the
former's fishes on board M/B "Maria Victoria-P"
for a fee of P20,000.00; that the fishes were out
in the sea aboard a disabled boat; that he
agreed and upon reaching the place where the
boatload of fishes is located, they found a
kumpit with seven armed Muslims on board and
that the kumpit was loaded with blue seal
cigarettes; that at gun points, he was forced to
load the blue seal cigarettes which allegedly
belong to one Datu Jacob of Jolo, Sulo.
On July 3, 1964, the Collector of Customs
rendered a decision declaring the vessel
forfeited in favor of the Government. The
Collector of Customs ruled that since it was
established that the vessel was hired for a fee of
P20,000.00 thru its captain, to ferry the untaxed
cigarettes, there was a contract of carriage
entered into between Jose Joloc and the owner
of the cigarettes; that Jose Pascual, owner of
the vessel is bound by the acts of his agent,
On appeal by herein private respondent, the
decision was affirmed by the Commissioner of
Customs. Private respondent appealed before
the Court of Tax Appeals and on September 30,
1969, the said Court, as already stated,
modified the decision of the Commissioner of
Customs and ordered private respondent to pay
a fine of P5,000.00 instead of the forfeiture of
the vessel.
Respondent Court stated that there is no
question that the vessel was used in the illegal
importation of blue seal cigarettes; hence,
subject to penalty imposed by Section 2530 of
the Tariff and Customs Code. However, the
penalty of forfeiture appears to be excessive
since herein private respondent took all the
necessary action to prevent the vessel from
being used illegally by notifying the Philippine
Navy of the disappearance of the vessel.
From the aforesaid decision, petitioner instituted
the present petition.
The imperative question presented to Us in this
appeal is whether or not the motor boat M/B
"Maria Victoria-P" is subject to forfeiture under
the Tariff and Customs Code, particularly
paragraphs (a) and (b) of Section 2530.
After the petition was given due course, private
respondent in his answer stated that during the
pendency of the case before the Court of
Appeals, the vessel M/B "Maria Victoria-P" was
sold at public auction by the Auction and Sales
Division of the Bureau of Customs.
WE find merit in the petition.
M/B "Maria Victoria-P" was a vessel duly
authorized to engage in coastwise trade. It is
undisputed and, in fact, established that it was
used in the illegal importation of blue seal
6
cigarettes. Thus, the law applicable is
paragraphs (a) and (b), Section 2530 of the
Tariff and Customs Code which 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 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 article in commercial quantities into or
from any Philippine port or place, 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. 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, vehicle, aircraft or any other craft is not
used as a duly authorized common carrier and
as such a carrier it is not chartered or leased;
b. Any vessel engaging in the coastwise trade
which shall have on board any article of foreign
growth, produce, or manufacture in excess of
the amount necessary for sea stores, without
such article having been properly entered or
legally imported.
Pursuant to the aforesaid provision, the vessel is
clearly subject to forfeiture in favor of the
Government. Forfeiture proceedings are in the
nature of proceedings in rem (Vierneza vs.
Commissioner of Customs, 24 SCRA 394) and
are directed against the res. The fact that
private respondent has allegedly no actual
knowledge that M/B "Maria Victoria-P" was used
illegally does not render the vessel immune
from forfeiture. This is so because the forfeiture
proceedings in this case was instituted against
the vessel itself. Private respondent's defense
that he has no actual knowledge that the vessel
was used illegally is personal to him but cannot
absolve the vessel from liability of forfeiture.
Moreover, the aforequoted provision prescribes
in an unequivocal term the imposition of the
penalty of forfeiture in cases of unlawful
importation of foreign articles regardless of
whether such importation occurred with or
without the knowledge of the owner of the
vessel.
In United States vs. Steamship "Rubi" (32 Phil.
239), this Court, in resolving the question of
whether or not the innocence of the owner in
the illegal importation of foreign articles can
withdraw the ship from the penalty of
confiscation, said:
The vessel which commits the aggression is
treated as the offender, without any reference
whatsoever to the character or conduct of the
owner. ... This is done from the necessity of the
case, as the only adequate means of
suppressing the offense or wrong. ... The
doctrine also is familiarly applied to cases of
smuggling and other misconduct under our
revenue laws; and ... embargo and non-
intercourse acts. ... The same thing applies to
proceeding in rem or seizures in admiralty ...
The acts of the master and crew, in cases of this
sort, bind the interest of the owner of the ship,
whether he be innocent or guilty.
The claim of private respondent that while the
crew members of the vessel were fishing, all the
fishing nets were destroyed and that he was
even notified in this regard is hardly convincing.
It may be possible that while in the course of
catching fish, one or two fishing nets may be
destroyed. But the destruction of all the fishing
nets at the same time is highly improbable.
Furthermore, private respondent reported to the
Philippine Navy instead of the Coast Guard that
his vessel was missing, only after a lapse of six
(6) days from the time he was informed of the
alleged destruction of all the fishing nets. Could
it be that all those notification of destruction of
fishing nets and eventually of the loss of vessel
are just a part of a scheme to prevent the
vessel from any liability should, as it happened
in this case, it be intercepted by the authorities?
The insistence of Jose Joloc captain of the vessel
that the boat could not be brought back to
Manila due to bad weather is not supported by
evidence. No weather report in Mindoro was
ever presented during the hearing of the case.
His insistence becomes even more dubious by
the fact that he agreed with Fructuoso Maniego
to load the latter's fishes on board M/B "Maria
Victoria-P" when the alleged fishes were even
7
out at sea aboard an alleged disabled boat. It is
unbelievable that he could risk going out to sea
to load the fish cargo of Maniego in the midst of
the storm, but could not sail back to Manila.
Taking all these circumstances, the conclusion is
inevitable that the vessel was not used in
catching fish but was used in the smuggling of
blue seal cigarettes.
WHEREFORE, THE QUESTIONED DECISION
DATED SEPTEMBER 30, 1969 OF RESPONDENT
COURT OF TAX APPEALS IS HEREBY SET ASIDE;
AND THE VESSEL M/B "MARIA VICTORIA-P" IS
HEREBY ORDERED FORFEITED IN FAVOR OF
THE GOVERNMENT. COSTS AGAINST PRIVATE
RESPONDENT. SO ORDERED.
G.R. No. 132929 March 27, 2000
COMMISSIONER OF CUSTOMS, petitioner,
vs. COURT OF APPEALS and PHILIPPINE
CASINO OPERATORS CORPORATION,
respondents.
D E C I S I O N MENDOZA, J.:
The issue for decision in this case is whether the
Philippine Casino Operators Corporation (PCOC)
is, by virtue of its concessionaire's contract with
the Philippine Amusement and Gaming
Corporation (PAGCOR), exempt from the
payment of duties, taxes and other imposts on
importations. Both the Court of Appeals and the
Court of Tax Appeals ruled in the affirmative.
Hence this petition.
The facts are as follows:
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, Paraaque City.
Both contracts contained the following
stipulation:1
Sec. 2(e). The CONCESSIONAIRE shall be
authorized in behalf of the FRANCHISE[E] to . . .
procure either local or imported equipment and
facilities from foreign sources as may
required in the casino operation . . . .
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. 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.2
After hearing, the District Collector of Customs
ordered on February 22, 1990 the forfeiture of
the imported articles. 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. But in its decision dated March 3,
1998, the Court of Appeals dismissed the
petition. Hence, this petition for review on
certiorari. Petitioner contends that the Court of
Appeals3
I. ERRONEOUSLY AFFIRMED THE DECISION OF
THE COURT OF TAX APPEALS THAT SERVICE TO
THE LEGAL SERVICE DIVISION OF THE BUREAU
OF CUSTOMS IS BINDING ON THE OSG.
II. [ERRONEOUSLY] DISMISSED THE PETITION
FOR CERTIORARI AS, ALLEGEDLY, THE PROPER
REMEDY IS AN APPEAL.
be III. ERRONEOUSLY AFFIRMED THE ORDER TO
RELEASE THE SEIZED ARTICLE ILLEGALLY
IMPORTED.
First. 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.4
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:
. . . 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. 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. 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
8
computing reglementary period to file an appeal
and for determining whether a decision had
attained finality is service on the OSG . . . .6
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. Soriano7 and National
Irrigation Administration v. Regino.8
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:9
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. The other counsel of record,
Atty. Basuil, was deputized by the NIA. 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.10 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. 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."11
Second. 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,
9
its error would be an error of judgment
committed in the exercise of its jurisdiction.12
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.
Third. Coming now into the merits of the case,
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.14 This is not
correct. It is settled that tax exemptions should
be strictly construed against those claiming to
be qualified thereto.15
The CTA's ruling in Philippine Casino Operators
Corporation v. Commissioner of Internal
Revenue,16 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
10
paying income tax, surtax of improperly
accumulated profits, and business tax.
Fourth. 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 .17 Contrary to
private respondent's contention, the forfeiture
proceedings were not barred by prescription as
the one year prescriptive period under Sec.
160318 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,19 to the effect that the
importations were exempt from taxes and
duties. The following letter20 is typical of the
requests he made:21
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 No. 1177, pursuant to the Joint Circular Issued
Importations by the Budget Commission and the Ministry of
Finance dated May 9, 1978 . . . .
All importations of equipment, vehicles,
boats, ships, aircrafts and other recreations or By Authority of the Minister:
amusement places to be established under and
by virtue of this Franchise shall be exempt from (SGD .)
the payment of duties, taxes and other imposts.
IGNACIO D. RAMIREZ
Likewise, we are requesting that the proper Chief Local Tax Adviser
[i]ndorsement be addressed to the and concurrently Officer-In-Charge
Commissioner of Customs and then to the Finance Revenue Service
Collector of Customs, South Harbor, Manila,
allowing release from Customs the above- However, during the hearings conducted by the
mentioned shipment. Collector of Customs, Francisco admitted that he
was not an employee, much less an officer, of
Very truly yours, PAGCOR.23 Despite this, Francisco used
PAGCOR's official stationery and signed his
PHILIPPINE AMUSEMENT & GAMING CORP. name below the printed words "Philippine
Amusement and Gaming Corporation" in his
letters to the Ministry of Finance. He thus gave
(SGD.) the false impression that he was connected to
CONSTANCIO D. FRANCISCO PAGCOR and that it was PAGCOR which asked
for the release of the imported equipment
The corresponding endorsement22 for such without paying tax.1wphi1
request reads:
Nor can we give merit to Francisco's claims that
REPUBLIKA NG PILIPINAS
MINISTRI NG PANANALAPI his representations were sanctioned under the
MAYNILA concessionaire's contract between PAGCOR and
PCOC.24 In light of Francisco's own admission
1st Indorsement that he is not in any way connected with
PAGCOR and the fact that the former Ministry of
April 26, 1983 Finance favorably acted on the requests for
exemptions on the basis of such
Respectfully referred to the Commissioner of
Customs Manila. misrepresentations, thereby causing enormous
losses to the government in the form of
In view of the representation of Mr. uncollected taxes, the Collector of Customs'
Constancio D. Francisco of the Philippine finding of fraud on the part of PCOC, as affirmed
Amusement and Gaming Corporation in his by petitioner, was therefore well founded. The
herein . . . letter dated April 22 . ., 1983, the essence of fraud is the intentional and willful
shipments consigned to the said Corporation for employment of deceit deliberately done or
the exclusive use of the Philippine Casino resorted to in order to induce another to give up
Operators Corporation consisting of: some right.25

Sixty two (62) packages of five (5) units WHEREFORE, the decision of the Court of
Geared Traction Elevators covered by Bill of Appeals is REVERSED and the decision of the
Lading No. YMA-20 of the vessel "EASTERN Commissioner of Customs, dated February 12,
METEOR" and Proforma Invoice dated My 18, 1991, is REINSTATED.1wphi1.nt
1982
SO ORDERED.
xxx xxx xxx
G.R. No. 138081 March 30, 2000
may be released without the pre-payment of
duties and taxes required by Section 23 6f PD
11
THE BUREAU OF CUSTOMS (BOC) and THE
ECONOMIC INTELLIGENCE AND
INVESTIGATION BUREAU (EIIB),
petitioners, vs.NELSON OGARIO and MARK
MONTELIBANO, respondents.
MENDOZA, J.:
The question for decision in this case is whether
the Regional Trial Court has jurisdiction to
enjoin forfeiture proceedings in the Bureau of
Customs. In accordance with what is now
settled law, we hold it does not.
The facts are as follows: On December 9, 1998,
Felipe A. Bartolome, District Collector of
Customs of Cebu, issued a Warrant of Seizure
and Detention1 of 25,000 bags of rice, bearing
the name of SNOWMAN, Milled in Palawan"
shipped on board the M/V "Alberto", which was
then docketed at Pier 6 in Cebu City. The
warrant was issued on the basis of the report of
the Economic Intelligence and Investigation
Bureau (EIIB), Region VII that the rice had been
illegally imported. The report stated that the
rice was landed in Palawan by a foreign vessel
and then placed in sacks marked "SNOWMAN,"
Milled in Palawan." It was then shipped to Cebu
City on board the vessel M/V "Alberto."
Forfeiture proceedings were started in the
customs office in Cebu, docketed as Cebu
Seizure Identification Case No. 17-98.
On December 10, 1998, respondent Mark
Montelibano, the consignee of the sacks of rice,
and his buyer, respondent Elson Ogario, filed a
complaint for injunction (Civil Case No. CEB-
23077) in the Regional Trial Court of Cebu City,
alleging:
4.) That upon arrival of the herein-mentioned
sacks of rice at the PIER 5 of Cebu City,
Philippines on the 7th day of December 1998 all
of the defendants rushed to the port with long
arms commanding the plaintiff's laborer[s] to
stopped [sic] the unloading of the same from
the vessel named M/V Alberto. The defendants
alleged that the herein-mentioned rice were
[sic] smuggled from abroad without even proof
that the same were [sic] purchased from a
particularly country.
5.) By the mere suspicion of the defendants that
the goods were smuggled from abroad, they
immediately put on hold the release of the
12
goods from the ship and at the same time they
jointly barred unloading and loading activities of
the plaintiffs' laborers of the herein-mentioned
rice.
6.) The plaintiffs then presented all the
pertinent and necessary documents to all of the
defendants but the latter refused to believe that
the same is from Palawan because their minds
are closed due to some reason or another Civil
[while] the plaintiffs believed that the same is
merely an act of harassment. The documents
are as follows:
A.) Certification from the National Food
Authority that the same is from Palawan. This is
hereto attached Annex A.
B) Bill of Lading issued by ANMA PHILIPPINES
Shipping Company. This is hereto attached as
Annex B.
7.) The acts of the defendants in stopping he
loading and unloading activities of the plaintiff's
laborers [have] no basis in law and in fact; thus,
unlawful and illegal. A mere suspicious which is
not coupled with any proof or evidence to that
effect is [a] matter which the law prohibits.
8.) That for more than three days and despite
the repeated plea of the plaintiffs that their
goods should be released to them and the
defendants should stop from barring the
unloading and loading activities, the latter
blindly refused [to] heed the same.
9.) That the acts of all of the defendants which
are greatly unlawful and erroneous would
caused [sic] irreparable damage, injury, and
grave injustices to the plaintiffs.
10.) That by way of example or correction for
the public good and to deter the defendants
from doing the same acts to other businessmen,
defendants should be held liable for exemplary
damages in amount of not less than One
Hundred Thousand Pesos (P100,000.00).
11.) That the plaintiffs are entitled to the relief
prayed in this complaint and the whole or part
of such reliefs consists in restraining perpetually
the defendants from holding the herein-
mentioned twenty-five thousand sacks of rice.
That defendants should be restrained
perpetually from barring the unloading and
loading activities of the plaintiffs' laborers.
12.) That allowing the defendants to continue
their unlawful acts would work grave injustice to
the plaintiffs. Unless a preliminary injunction be
granted ex-parte, grave and irreparable injury
and damage would result to the plaintiffs before
the latter can be heard on notice.
13.) That if the defendants be not restrained
perpetually from their unlawful acts, the herein-
mentioned rice will deteriorate and turn into
dusts [sic] if not properly disposed.1wphi1.nt
14.) That a Warrant of Seizure and detention
issued by the Collector of Custom[s] dated
December 9, 1998 be quashed because the
defendants' act of seizing and detaining the
herein-mentioned sacks of rice are illegal. The
continuing act of detaining the herein-
mentioned sacks of rice will led to the
deterioration of the same. That no public
auction sale of the same should be conducted by
the Bureau of Custom[s] or any government
agenc[y].
15.) That plaintiffs are ready and willing to file a
bond executed to the defendants in an amount
to be fixed by this Honorable Court to the effect
that plaintiffs will pay to the defendants all
damages which they may sustain by reason of
the injunction if this Honorable Court should
finally decide that the plaintiffs are not entitled
thereto.
PRAYER
WHEREFORE, Premised on the foregoing, it is
most respectfully prayed before this Honorable
Court that a restraining order or temporary
injunction be immediately issued prohibiting the
defendants from holding plaintiffs' above-
mentioned goods. That it is further prayed that
a restraining order or temporary injunction be
issued prohibiting the defendants from barring
the unloading and loading activities of the
plaintiffs' laborers. Further, the plaintiffs prayed
that the warrant of seizure and detention issued
by the Collector of Custom[s] dated December
9, 1998 be quashed and no public auction sale
of the same should be conducted by any
government agency or authority.
13
It is further prayed that after due hearing,
judgment be rendered:
1.) Making the restraining order and/or
preliminary injunction permanent.
2.) Ordering the defendants jointly to pay
exemplary or corrective damages to the
plaintiff[s] in the amount of One Hundred
Thousand Pesos (P100,000.00)
Such other relief which are just and demandable
under the circumstances are also prayed for.2
In separate motions, petitioners Bureau of
Customs (BOC), Port of Cebu3 and the EIIB, as
well as the Philippine Navy and Coast Guard,
sought the dismissal of the complaint on the
ground that the RTC had no jurisdiction, but
their motions were denied. In its resolution,
dated January 11, 1999, the RTC said:
The Warrant of Seizure and Detention issued by
the Bureau of Customs cannot divest this court
of jurisdiction since its issuance is without legal
basis as it was anchored merely on suspicion
that the items in question were imported or
smuggled. It is very clear that the defendants
are bereft of any evidence to prove that the
goods were indeed imported or smuggled, that
is why the plaintiffs have very vigorously
protested against the seizure of cargoes by the
defendants. In fact, as revealed by defendants'
counsel, the Warrant of Seizure and Detention
was issued merely to shift the burden of proof
to the shippers or owners of the goods to prove
that the bags of rice were not imported or
smuggled. However, the court feels this is unfair
because the settled rule is that he who alleges
must prove the same. Besides, at this time
when our economy is not good, it would be a
[dis]service to the nation to use the strong arm
of the law to make things hard or difficult for
the businessmen.4
The 25,000 bags of rice were ordered returned
to respondents upon the posting by them of an
P8,000,000.00 bond.
Petitioners BOC and EIIB moved for a
reconsideration, but their motion was denied by
the RTC in its order dated January 25, 1999.5 In
the same order, the RTC also increased the
amount of respondents' bond to
P22,500,000.00. On certiorari to the Court of
Appeals, the resolution and order of the RTC
were sustained.6
Accordingly, on April 26, 1999, upon motion of
respondents, the RTC ordered the sheriff to
place in respondents' possession the 25,000
bags of rice.
Meanwhile, in the forfeiture proceedings before
the Collector of Customs of Cebu (Cebu Seizure
Identification Case No. 17-98), a decision was
rendered, the dispositive portion of which reads:
WHEREFORE, by virtue of the authority vested
in me by law, it is hereby ordered and decreed
that the vessel M/V "Alberto"; the 25,000 bags
of rice brand "Snowman"; and the two (2)
trucks bearing Plate Nos. GCC 844 and GHZ 388
are all FORFEITED in favor of the government to
be disposed of in the manner prescribed by law
while the seven (7) trucks bearing Plate Nos.
GFX 557; GFX 247; TPV 726; GBY 874; GVE
989; and GDF 548 are RELEASED in favor of
their respective owners upon proper
identification and compliance with pertinent
laws, rules and regulations.
Since this decision involves the release of some
of the articles subject matter of herein case
which is considered adverse to the government,
the same is hereby elevated to the
Commissioner of Customs for automatic review
pursuant to Republic Act 7651. 7
The District Collector of Customs found "strong
reliable, and convincing evidence" that the
25,000 bags of rice were smuggled. Said
evidence consisted of certifications by the
Philippine Coast Guard, the Philippine Ports
Authority, and the Arrastre Stevedoring Office in
Palawan that M/V "Alberto" had never docked in
Palawan since November, 1998; a certification
by Officer-in-Charge Elenita Ganelo of the
National Food Authority (NFA) Palawan that her
signature in NFA Grains Permit Control No.
00986, attesting that the 25,000 bags of rice
originated from Palawan, was forged; and the
result of the laboratory analysis of a sample of
the subject rice by the International Rice
Research Institute (IRRI) stating that the
sample "does not compare with any of our IRRI
released varieties."
14
Respondent Montelibano did not take part in the
proceedings before the District Collector of
Customs despite due notice sent to his counsel
because he refused to recognize the validity of
the forfeiture proceedings.8
On April 30, 1999, petitioners filed the present
petition for review on certiorari of the decision
of the Court of Appeals, dated April 15, 1999,
upholding the resolution of the RTC denying
petitioners' motions to dismiss. They contend
that:
I. SINCE THE REGIONAL TRIAL COURT OF CEBU
CITY DOES NOT HAVE JURISDICTION OVER THE
SUBJECT MATTER OF THE INSTANT
CONTROVERSY, AND THE BUREAU OF CUSTOMS
HAD ALREADY EXERCISED EXCLUSIVE
ORIGINAL JURISDICTION OVER THE SAME, THE
COURT OF APPEALS SERIOUSLY ERRED IN
SUSTAINING THE EXERCISE BY THE TRIAL
JUDGE OF JURISDICTION OVER THE CASE
BELOW AND IN AFFIRMING THE TRIAL JUDGE'S
RESOLUTION DATED JANUARY 11, 1999 AND
ORDER DATED JANUARY 25, 1999 IN CIVIL
CASE NO. CEB-23077.
II. SINCE RESPONDENTS HAVE NOT
EXHAUSTED ALL THE ADMINISTRATIVE
REMEDIES PROVIDED FOR BY LAW, THE COURT
OF APPEALS SERIOUSLY ERRED IN UPHOLDING
THE TRIAL JUDGE'S DENIALS OF PETITIONERS'
SEPARATE MOTIONS TO DISMISS AND
MOTIONS FOR RECONSIDERATION.9
In Jao v. Court of Appeals, 10 this Court,
reiterating its ruling in a long line of cases, said:
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, as amended, otherwise
known as "An Act Creating the Court of Tax
Appeals," specify the proper fora and procedure
for the ventilation of any legal objections or
issues raised concerning these proceedings.
Thus, actions of the Collector of Customs are
appealable to the Commissioner of Customs,
whose decision, in turn, is subject to the
exclusive appellate jurisdiction of the Court of
Tax Appeals and from there to the Court of
Appeals.
The rule that Regional Trial Courts have no
review powers over such proceedings is
anchored upon the policy of placing no
unnecessary hindrance on the government's
drive, not only to prevent smuggling and other
frauds upon Customs, but more importantly, to
render effective and efficient the collection of
import and export duties due the State, which
enables the government to carry out the
functions it has been instituted to perform.
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 cite the statement of the Court of
Appeals that regular courts still retain
jurisdiction "where, as in this case, for lack of
probable cause, there is serious doubt as to the
propriety of placing the articles under Customs
jurisdiction through seizure/forfeiture
proceedings" 11 They overlook the fact,
however, that under the law, the question of
whether probable cause exists for the seizure of
the subject sacks of rice is not for the Regional
Trial Court to determine. The customs
authorities do not have to prove to the
satisfaction of the court that the articles on
board a vessel were imported from abroad or
are intended to be shipped abroad before they
may exercise the power to effect customs'
searches, seizures, or arrests provided by law
and continue with the administrative hearings.
12 As the Court held in Ponce Enrile v. Vinuya:
13
The governmental agency concerned, the
Bureau of Customs, is vested with exclusive
authority. Even if it be assumed that in the
15
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.
It is noteworthy that because of the
indiscriminate issuance of writs of injunction,
the Supreme Court issued on June 25, 1999
Administrative Circular No. 07-99 to all judges
of lower courts entitled EXERCISE OF UTMOST
CAUTION, PRUDENCE, AND JUDICIOUSNESS IN
ISSUANCE OF TEMPORARY RESTRAINING
ORDERS AND WRITS OF PRELIMINARY
INJUNCTION. The circular states in part:
Finally, judges should never forget what the
Court categorically declared in Mison v.
Natividad (213 SCRA 734, 742 [1992]) that
"[b]y express provision of law, amply supported
by well-settled jurisprudence, the Collector of
Customs has exclusive jurisdiction over seizure
and forfeiture proceedings, and regular courts
cannot interfere with his exercise thereof or
stifle or put it to naught.
The Office of the Court Administrator shall see
to it that this circular is immediately
disseminated and shall monitor implementation
thereof.1wphi1.nt
STRICT OBSERVANCE AND COMPLIANCE of this
Circular is hereby enjoined.
WHEREFORE, the temporary restraining order
issued on May 17, 1999 is hereby made
permanent. The decision, dated April 15, 1999,
of the Court of Appeals is REVERSED and Civil
Case No. CEB-23077 in the Regional Trial Court,
Branch 5, Cebu City is DISMISSED.
SO ORDERED.