G.R. No.

L-24170

December 16, 1968

The first two errors assigned by petitioners would impugn the jurisdiction of the Bureau of
Customs to institute seizure proceedings and thereafter to declare the forfeiture of the vessels in
question and their cargo. They would justify their stand thus: "In the light of the fact that the
vessels involved with the articles laden therein were apprehended and seized on the high seas,
beyond the territorial waters of the Philippines, the said vessels could not have touched any place
or port in the Philippines, whether a port or place of entry or not, consequently, the said vessels
could not have been engaged in the importation of the articles laden therein into any Philippine
port or place, whether a port or place of entry or not, to have incurred the liability of forfeiture
under Section 1363(a) of the Revised Administrative Code." 3

ILLUH ASAALI, HATIB ABDURASID, INGKOH BANTALA, BASOK INGKIN, and MOHAMMAD
BANTALLA,petitioners, vs. THE COMMISSIONER OF CUSTOMS, respondent.
FERNANDO, J.:
The policy relentlessly adhered to and unhesitatingly pursued to minimize, if not to do away
entirely, with the evil and corruption that smuggling brings in its wake would be frustrated and set
at naught if the action taken by respondent Commissioner of Customs in this case, as affirmed by
the Court of Tax Appeals, were to be set aside and this appeal from the decision of the latter were
to succeed. Fortunately, the controlling principles of law do not call for a contrary conclusion. It
cannot be otherwise if the legitimate authority vested in the government were not to be reduced to
futility and impotence in the face of an admittedly serious malady, that at times has assumed
epidemic proportions.

Such a contention was advanced by petitioners before the Court of Tax Appeals. It met the
repudiation that it deserved. Thus: "We perfectly see the point of the petitioners but considering
the circumstances surrounding the apprehension of the vessels in question, we believe that
Section 1363(a) of the Revised Administrative Code should be applied to the case at bar. It has
been established that the five vessels came from Sandakan, British North Borneo, a foreign port,
and when intercepted, all of them were heading towards Tawi-tawi, a domestic port within the Sulu
sea. Laden with foreign manufactured cigarettes, they did not possess the import license required
by Republic Act No. 426, nor did they carry a permit from the Commissioner of Customs to engage
in importation into any port in the Sulu sea. Their course announced loudly their intention not
merely to skirt along the territorial boundary of the Philippines but to come within our limits and
land somewhere in Tawi-tawi towards which their prows were pointed. As a matter of fact, they
were about to cross our aquatic boundary but for the intervention of a customs patrol which, from
all appearances, was more than eager to accomplish its mission." 4

The principal question raised by petitioners, owners of five sailing vessels and the cargo loaded
therein declared forfeited by respondent Commissioner of Customs for smuggling, is the validity of
their interception and seizure by customs officials on the high seas, the contention being raised
that importation had not yet begun and that the seizure was effected outside our territorial
waters..
Why such a plea could not be given the least credence without doing violence to common sense
and placing the law in disrepute would be apparent from a statement of the case and the findings
of facts as set forth in the decision now under review, of the Court of Tax Appeals, dated November
19, 1964, the opinion being penned by the late Associate Judge Augusto M. Luciano.

The sense of realism and the vigorous language employed by the late Judge Luciano in rejecting
such a plea deserve to be quoted. Thus: "To entertain even for a moment the thought that these
vessels were probably not bound for a Philippine port would be too much a concession even for a
simpleton or a perennial optimist. It is quite irrational for Filipino sailors manning five Philippine
vessels to sneak out of the Philippines and go to British North Borneo, and come a long way back
laden with highly taxable goods only to turn about upon reaching the brink of our territorial waters
and head for another foreign port."5

His opinion starts thus: "This is an appeal from the decision of the Acting Commissioner of
Customs in Customs Case No. 113, dated September 26, 1961, (Jolo Seizure Identification Cases
Nos. 38, 39, 40, 41 & 42) decreeing the forfeiture of five (5) sailing vessels (kumpits) named 'IrocIroc,' 'Lahat-lahat,' 'Liberal Wing III,' 'Sulu Area Command,' and 'Business,' with their respective
cargoes of blue seal cigarettes and rattan chairs for violation of Section 1363(a) of the Revised
Administrative Code and Section 20 of Republic Act No. 426 in relation with Section 1363(f) of the
Revised Administrative Code."1

1. We find no plausible reason not to accept in its entirety such a conclusion reached by the Court
of Tax Appeals. Nor, even if the persuasive element in the above view were not so overwhelming,
could we alter the decisive facts as found by it. For it is now beyond question that its finding, if
supported by substantial evidence, binds us, only questions of law being for us to resolve. Where
the issue raised belongs to the former category, we lack the power of review.6

The facts according to the above opinion "are not controverted." Thus: "It appears that on
September 10, 1950, at about noon time, a customs patrol team on board Patrol Boat ST-23
intercepted the five (5) sailing vessels in question on the high seas, between British North Borneo
and Sulu while they were heading towards Tawi-tawi, Sulu. After ordering the vessels to stop, the
customs officers boarded and found on board, 181 cases of 'Herald' cigarettes, 9 cases of 'Camel'
cigarettes, and some pieces of rattan chairs. The sailing vessels are all of Philippine registry,
owned and manned by Filipino residents of Sulu, and of less than thirty (30) tons burden. They
came from Sandakan, British North Borneo, but did not possess any permit from the Commissioner
of Customs to engage in the importation of merchandise into any port of the Sulu sea, as required
by Section 1363(a) of the Revised Administrative Code. Their cargoes were not covered by the
required import license under Republic Act No. 426, otherwise known as the Import Control Law." 2

Moreover, for understandable reasons, we feel extreme reluctance to substitute our own discretion
for that of the Court of Tax Appeals in its appreciation of the relevant facts and its appraisal of
their significance. As we had occasion to state in a relatively recent decision: "Nor as a matter of
principle is it advisable for this Court to set aside the conclusion reached by an agency such as the
Court of Tax Appeals which is, by the very nature of its function, dedicated exclusively to the study
and consideration of tax problems and has necessarily developed an expertise on the subject, ...,
there has been an abuse or improvident exercise of its authority." 7
2. We thus could rest our decision affirming that of the Court of Tax Appeals on the above
consideration.

Respondent Commissioner of Customs, as noted at the outset, affirmed the decision rendered by
the Collector of Customs of Jolo, who found cause for forfeiture under the law of the vessels and
the cargo contained therein. He was, as also already made known, sustained by the Court of Tax
Appeals. Hence this petition for review.

It might not be amiss however to devote some degree of attention to the legal points raised in the
above two assignment of errors, discussed jointly by petitioners-appellants, alleging the absence of
jurisdiction, the deprivation of property without due process of law and the abatement of liability
consequent upon the repeal of Republic Act No. 426. Not one of the principles of law relied upon

suffices to call for reversal of the action taken by the respondent Commissioner of Customs, even
if the facts presented a situation less conclusive against the pretension of petitioners-appellants.

liability could have been incurred thereunder. This argument raised before the Court of Tax Appeals
was correctly held devoid of any persuasive force. The decision under review cited our opinion in
Golay-Buchel & Cie v. Commissioner of Customs11 to the effect that the expiration of the Import
Control Law "did not produce the effect of declaring legal the importation of goods which were
illegally imported and the seizure and forfeiture thereof as ordered by the Collector of Customs
illegal or null and void."

From the apprehension and seizure of the vessels in question on the high seas beyond the
territorial waters of the Philippines, the absence of jurisdiction of Commissioner of Customs is
predicated. Such contention of petitioners-appellants is without merit.

Roxas v. Sayoc 12 announced that principle earlier. Thus: "Herein, we are concerned with the effect
of the expiration of a law, not with the abrogation of a law, and we hold the view that once the
Commissioner of Customs has acquired jurisdiction over the case, the mere expiration of Republic
Act No. 650 will not divest him of his jurisdiction thereon duly acquired while said law was still in
force. In other words, we believe that despite the expiration of Republic Act No. 650 the
Commissioner of Customs retained his jurisdiction over the case and could continue to take
cognizance thereof until its final determination, for the main question brought in by the appeal
from the decision of the Collector of Customs was the legality or illegality of the decision of the
Collector of Customs, and that question could not have been abated by the mere expiration of
Republic Act No. 650. We firmly believe that the expiration of Republic Act No. 650 could not have
produced the effect (1) of declaring legal the importation of the cotton counterpanes which were
illegally imported, and (2) of declaring the seizure and forfeiture ordered by the Collector of
Customs illegal or null and void; in other words it could not have the effect of annulling or setting
aside the decision of the Collector of Customs which was rendered while the law was in force and
which should stand until it is revoked by the appellate tribunal."

It is unquestioned that all vessels seized are of Philippine registry. The Revised Penal Code leaves
no doubt as to its applicability and enforceability not only within the Philippines, its interior waters
and maritime zone, but also outside of its jurisdiction against those committing offense while on a
Philippine ship ...8 The principle of law that sustains the validity of such a provision equally supplies
a firm foundation for the seizure of the five sailing vessels found thereafter to have violated the
applicable provisions of the Revised Administrative Code.9
Moreover, it is a well settled doctrine of International Law that goes back to Chief Justice Marshall's
opinion in Church v. Hubbart,10 an 1804 decision, that a state has the right to protect itself and its
revenues, a right not limited to its own territory but extending to the high seas. In the language of
Chief Justice Marshall: "The authority of a nation within its own territory is absolute and exclusive.
The seizure of a vessel within the range of its cannon by a foreign force is an invasion of that
territory, and is a hostile act which it is its duty to repel. But its power to secure itself from injury
may certainly be exercised beyond the limits of its territory."

As late as 1965, in Bombay Dept. Store v. Commissioner of Customs,13 we had occasion to reaffirm
the doctrine in the above two decisions, the present Chief Justice, speaking for the Court, stating
that such expiration of the period of effectivity of Republic Act No. 650 "did not have the effect of
depriving the Commissioner of Customs of the jurisdiction, acquired by him prior thereto, to act on
cases of forfeiture pending before him, which are in the nature of proceeding in rem...."

The question asked in the brief of petitioners-appellants as to whether the seizure of the vessels in
question and the cargoes on the high seas and thus beyond the territorial waters of the Philippines
was legal must be answered in the affirmative.
4. The next question raised is the alleged denial of due process arising from such forfeiture and
seizure. The argument on the alleged lack of validity of the action taken by the Commissioner of
Customs is made to rest on the fact that the alleged offense imputed to petitioners-appellants is a
violation of Section 1363(a) and not Section 1363(f). The title of Section 1363 is clear, "Property
subject to forfeiture under customs laws." The first subsection thereof, (a) cover any vessel
including cargo unlawfully engaged in the importation of merchandise except a port of entry.
Subsection (f) speaks of any merchandise of any prohibited importation, the importation of which
is effected or attempted contrary to law and all other merchandise which in the opinion of the
Collector of Customs have been used are or were intended to be used as instrument in the
importation or exportation of the former.

It is thus most evident that the Court of Tax Appeals had not in any wise refused to adhere
faithfully to controlling legal principles when it sustained the action taken by respondent
Commissioner of Customs. It would be a reproach and a reflection on the law if on the facts as
they had been shown to exist, the seizure and forfeiture of the vessels and cargo in question were
to be characterized as outside the legal competence of our government and violative of the
constitutional rights of petitioners-appellants. Fortunately, as had been made clear above, that
would be an undeserved reflection and an unwarranted reproach. The vigor of the war against
smuggling must not be hampered by a misreading of international law concepts and a misplaced
reliance on a constitutional guaranty that has not in any wise been infringed.

From the above recital of the legal provisions relied upon, it would appear most clearly that the
due process question raised is insubstantial. Certainly, the facts on which the seizure was based
were not unknown to petitioners-appellants. On those facts the liability of the vessels and
merchandise under the above terms of the statute would appear to be undeniable. The action
taken then by the Commissioner of Customs was in accordance with law.

WHEREFORE, the decision of respondent Court of Tax Appeals of November 19, 1964, is affirmed.
With costs against petitioners-appellants.
--------------------------------------------------------------------------------------------------------------

How could there be a denial of due process? There was nothing arbitrary about the manner in
which such seizure and forfeiture were effected. The right to a hearing of petitioners-appellants
was respected. They could not have been unaware of what they were doing. It would be an affront
to reason if under the above circumstances they could be allowed to raise in all seriousness a due
process question. Such a constitutional guaranty, basic and fundamental, certainly should not be
allowed to lend itself as an instrument for escaping a liability arising from one's own nefarious
acts.

G.R. No. 176380

June 18, 2009

PILIPINAS SHELL PETROLEUM CORPORATION, Petitioner, vs. COMMISSIONER OF

CUSTOMS, Respondent.

5. Petitioners-appellants would further assail the validity of the action taken by the respondent
Commissioner of Customs by the plea that the repeal of Republic Act No. 426 abated whatever

DECISION

BRION, J.:

Shell submitted its reply letter dated December 23, 1999. 4 Shell maintained that the cancellation
was improper since this was done without affording the corporation its right to due process. It
further claimed that the existence of fraud in the issuance and transfer of the TCCs, or even Shells
participation in the alleged fraud, had not been sufficiently established.

Before us is the Petition for Review on Certiorari1 filed by petitioner Pilipinas Shell Petroleum
Corporation (Shell) questioning the Decision2 of the Court of Appeals (CA) in CA-G.R. SP No.
78564. The CA decision set aside the resolutions 3 issued by the Court of Tax Appeals (CTA) in CTA
Case No. 6484, which in turn denied the respondent Commissioner of Customs (respondent)
Motion to Dismiss the petition for review Shell filed with the tax court. The CA decision effectively
dismissed Shells tax protest case.

Three years later, through letters dated February 15, February 20, and April 12, 2002
(respondents collection letters), the respondent, through Atty. Gil Valera (Atty. Valera), Deputy
Commissioner for Revenue Collections Monitoring Group, formally demanded from Shell payment
of the amounts corresponding to the listed TCCs that the Center had previously cancelled. Except
for the amount due, the respondents collection letters were similarly worded, as follows:

BACKGROUND FACTS

In as much as the same [TCCs] were reported as having been utilized to pay your government
obligations earlier, formal demand is hereby being made upon you to pay back the total amount of
x x x within five (5) days from receipt thereof [sic]. Failure on your part to settle your obligation
would constrain the Bureau of Customs to initiate legal action in the regular court.

Shell is a domestic corporation engaged, among others, in the importation of petroleum and its byproducts into the country. For these importations, Shell was assessed and required to pay customs
duties and internal revenue taxes.
In 1997 and 1998, Shell settled its liabilities for customs duties and internal revenue taxes using
tax credit certificates (TCCs) that were transferred to it for value by several Board of Investment
(BOI)-registered companies. The transfers of the TCCs to Shell were processed by the transferorsBOI-registered companies and were eventually approved by the One Stop Shop Inter-Agency Tax
Credit and Duty Drawback Center (the Center). The Center is composed of the following
government agencies: the Department of Finance (DOF), the Bureau of Internal Revenue (BIR),
the Bureau of Customs (BOC), and the BOI. On the belief the TCCs were actually good and valid,
both the BIR and the BOC accepted and allowed Shell to use them to pay and settle its tax
liabilities.

Please consider this as our last and final demand.

As mentioned, all three letters were signed by Atty. Valera.
Shell replied to the respondents February 15 and 20, 2002 collection letters via letters dated
February 27 and March 4, 2002. Before it could reply to the respondents April 12, 2002 collection
letter, Shell received on April 23, 2002 the summons in one5 of the three collection cases6 filed by
respondent against Shell before the Regional Trial Court (RTC) of Manila. In these collection cases,
the respondent sought to recover the amounts covered by the cancelled TCCs; the complaints
were all similarly worded except for the amount and TCCs involved, and were signed by Atty.
Valera.

In a letter dated November 3, 1999 (Centers November 3 letter), the Center, through the
Secretary of the DOF, informed Shell that it was cancelling the TCCs transferred to and used as
payment by the oil company, pursuant to its EXCOM Resolution No. 03-05-99. The Center claimed
that after conducting a post-audit investigation, it discovered that the TCCs had been fraudulently
secured by the original grantees who thereafter transferred them to Shell; no categorical finding
was made regarding Shells participation in the fraud. In view of the cancellation, the Center
required Shell to pay the BIR and BOC the amounts corresponding to the TCCs Shell had used to
settle its liabilities.

On May 23, 2002, Shell filed with the CTA a Petition for Review questioning the BOC collection
efforts for lack of legal and factual basis. To quote the issues Shell submitted in its CTA petition:
1. Whether or not the TCCs subject of the instant petition for are genuine and authentic;

Shell objected to the cancellation of the TCCs claiming that it had been denied due process.
Apparently, Shell had sent a letter to the Center on November 3, 1999 (Shells November 3 letter)
adducing reasons why the TCCs should not be cancelled; Shell claimed that the Centers November
3 letter cancelling the TCCs was issued without considering its letter of the same date.

2. Whether or not petitioners right to due process of law was violated by the issuance of the
1999 collection letter and/or the filing of the collection cases, both of which seek to enforce
the Excom Resolution;
3. Whether or not attempts to collect unpaid duties and taxes, being based on the bare
allegation that the TCCs were fraudulently issued and transferred, can be given any effect
considering that fraud is never presumed but must be proven;

The Center did not act on Shells November 3 letter; instead, the respondent sent a letter dated
November 19, 1999 (respondents November 19 letter) to Shell requiring it to replace the amount
equivalent to the amount of the cancelled TCCs used by Shell to satisfy its customs duties and
taxes. The pertinent portion of the respondents November 19 letter states:

4. Assuming arguendo that fraud was present in the issuance of the original TCCs, whether or
not such fraud can work to the prejudice of an innocent purchaser for value who is not a
party to such fraud;

In view of such cancellation, it becomes apparent that the Customs Official Receipts previously
issued to [Shell] with the applications of the [TCCs] cited in said lists becomes null and void ab
initio. In view thereof, your corporation must have to replace amount of P209,129,141.00 which is
equivalent to the amount of the [TCCs] cancelled. The corresponding interest, surcharge and
penalties thereof shall be relayed to you in due time after the recomputation.

5. Whether or not the respondent and the DOF/Center are stopped from invalidating the TCCs
and the transfers and utilizations thereof;
6. Whether or not the TCCs, having been utilized, are already functus officio and can no
longer be cancelled.7

Your immediate response to this demand letter shall be appreciated.

The respondent filed a motion to dismiss Shells petition for review on the ground of prescription.
The respondent claimed that Shells petition was filed beyond the 30-day period provided by law
for appeals of decisions of the Commissioner of Customs to the CTA. The respondent also
contended that this 30-day period should be counted from the time Shell received the respondents
collection letters.

We resolve to DENY Shells petition; the present case does not involve a tax protest case within the
jurisdiction of the CTA to resolve.
The parties argue over which act serves as the decision of the respondent that, under the law, can
be the subject of an appeal before the CTA, and from which act the 30-day period to appeal shall
be reckoned. Shell insists it should be the filing of the collection suits as this was indicative of the
finality of the respondents action. The respondent, on the other hand, claims, it should be the
earlier act of sending the collection letters where the respondent finally indicated his resolve to
collect the duties due and demandable from Shell.

Shell countered by invoking the case of Yabes v. Flojo,8 where this Court ruled, under the
circumstances of that case, that a complaint for collection filed in court may be considered a final
decision or assessment of the Commissioner9 that opened the way for an appeal to the CTA.
Applying that principle, Shell contends the 30-day reglementary period should be counted from the
date it received the summons for one of the collection cases filed by respondent or, specifically, on
April 23, 2002, not from the date that it received the respondents collection letters. The petition
for review, having been filed on May 23, 2002, was thus instituted within the period provided by
law.

Section 7 of RA No. 1125, as amended, states:

Sec. 7. Jurisdiction. The CTA shall exercise:

The CTA found the respondents contentions unmeritorious, and thus denied his motion to dismiss
in a Resolution dated January 28, 2003.10 The tax court noted that the collection letters were
issued and signed only by Atty. Valera, not by the respondent, so that Shell was justified in not
heeding the demand. The CTA consequently declared that it is the filing of the collection cases in
court that should instead be considered as the final decision of the respondent, and only then
should the 30-day period to appeal commence. The respondent elevated the CTA decision to the
CA after the CTA denied its motion for reconsideration.11

(a) Exclusive appellate jurisdiction to review by appeal xxx;

xxx xxx xxx
4. Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or
other money charges, seizure, detention, or release or property affected, fines, forfeitures or other
penalties in relation thereto, or other matters arising under the Customs Law or other laws
administered by the Bureau of Customs;

The appellate court annulled and set aside the CTA rulings in its decision dated May 3, 2006. 12 It
found the collection letters written by Atty. Valera "indicative of [respondents] final rulings on the
assessments concerning the spurious TCCs xxx which were then already appealable to the
respondent CTA. Each letter carried a clear demand to pay within five (5) days from receipt, and
each also carried a warning that this [is] our last and final demand." On the authority of Atty.
Valera to issue the collection letters, the appellate court pointed to Customs Memorandum Circular
(CMC) No. 27-2001 that delegated the Commissioners authority on matters relating to tax credit
and transfers of tax credit to Atty. Valera, and to Customs Memorandum Order (CMO) No. 40-2001
that delegated the authority to sign, file, and prosecute civil complaints likewise to Atty. Valera.

These decisions of the respondent involving customs duties specifically refer to his decisions
on administrative tax protest cases, as stated in Section 2402 of the Tariff and Customs Code of
the Philippines (TCCP):
Section 2402. Review by Court of Tax Appeals. The party aggrieved by a ruling of the
Commissioner in any matter brought before him upon protest or by his action or ruling in any case
of seizure may appeal to the Court of Tax Appeals, in the manner and within the period prescribed
by law and regulations.

Shells attempt to have the CA decision reconsidered proved unsuccessful; hence, this petition.

Unless an appeal is made to the Court of Tax Appeals in the manner and within the period
prescribed by laws and regulations, the action or ruling of the Commissioner shall be final and
conclusive. [Emphasis supplied.]

THE PETITION
Shell insists, in this petition for review on certiorari, that its petition for review with the CTA was
filed within the 30-day reglementary period that, it posits, should be counted from the date it
received the summons for the collection cases filed by respondent against it before the regular
court. Shell cites this Courts ruling in Yabes v. Flojo.13

A tax protest case, under the TCCP, involves a protest of the liquidation of import entries. A
liquidation is the final computation and ascertainment by the collector of the duties on imported
merchandise, based on official reports as to the quantity, character, and value thereof, and the
collectors own finding as to the applicable rate of duty; it is akin to an assessment of internal
revenue taxes under the National Internal Revenue Code15 where the tax liability of the taxpayer is
definitely determined.

On the assumption that the collection letters amounted to a decision on its protest, Shell submits
that these are not "decision[s] of the Commissioner of Customs" appealable to the CTA under
Section 7, Republic Act (RA) No. 1125, as amended by RA No. 9282.14 It maintains that it is the
Commissioners decision on the taxpayers liability for customs duties and taxes, not the decision
of his subordinate, which is the proper subject of the appeal to the CTA, the delegation of authority
under CMC No. 27-2001 and CMO No. 40-2001 notwithstanding. It additionally claims that Atty.
Valera was prohibited from carrying out his delegated duties under the injunctive writ issued the
RTC of Manila in its Order dated August 27, 2001, and the Temporary Restraining Order the CA
issued on April 4, 2002.

In the present case, the facts reveal that Shell received three sets of letters:
a. the Centers November 3 letter, signed by the Secretary of Finance, informing it of the
cancellation of the TCCs;
b. the respondents November 19 letter requiring it to replace the amount equivalent to the
amount of the cancelled TCCs used by Shell; and

THE COURTS RULING

c. the respondents collection letters issued through Atty. Valera, formally demanding the
amount covered by the cancelled TCCs.

SO ORDERED.
--------------------------------------------------------------------------------------------------------------

None of these letters, however, can be considered as a liquidation or an assessment of Shells

import tax liabilities that can be the subject of an administrative tax protest proceeding before the
respondent whose decision is appealable to the CTA. Shells import tax liabilities had long been
computed and ascertained in the original assessments,16 and Shell paid these liabilities using the
TCCs transferred to it as payment. It is even an error to consider the letters as a "reassessment"
because they refer to the same tax liabilities on the same importations covered by the original
assessments. The letters merely reissued the original assessments that were previously settled
by Shell with the use of the TCCs. However, on account of the cancellation of the TCCs, the tax
liabilities of Shell under the original assessments were considered unpaid; hence, the letters and
the actions for collection. When Shell went to the CTA, the issues it raised in its petition were all
related to the fact and efficacy of the payments made, specifically the genuineness of the TCCs;
the absence of due process in the enforcement of the decision to cancel the TCCs; the facts
surrounding the fraud in originally securing the TCCs; and the application of estoppel. These are
payment and collection issues, not tax protest issues within the CTAs jurisdiction to rule
upon.1avvphi1

G.R. No. 104604 October 6, 1995

NARCISO O. JAO and BERNARDO M. EMPEYNADO, petitioners, vs. COURT OF APPEALS;
COMMISSIONER OF CUSTOMS; COLLECTOR OF CUSTOMS, Port of Manila; Col. SINDULFO
R. SEBASTIAN, Director, Enforcement and Security Services, Bureau of Customs; and
Maj. JAIME MAGLIPON, Chief, Operations and Intelligence Staff, Enforcement and
Security Services, Bureau of Customs, respondents.

G.R. No. 111223 October 6, 1995

NARCISO O. JAO and BERNARDO M. EMPEYNADO, petitioners, vs. THE HONORABLE
OMBUDSMAN CONRADO M. VASQUEZ, and SINDULFO SEBASTIAN, JAIME MAGLIPON;
JOSE YUCHONGCO; RICARDO CORONADO; VICTOR BARROS; DENNIS BANTIGUE; ROY
LARA; BENJAMIN SANTOS; RODOLFO GONDA; ADONIS REJOSO; DANIEL PENAS;
NICANOR BONES; ABUNDIO JUMAMOY; ARTEMIO CASTILLO; ANDRESITO ABAYON;
RUBEN TAGUBA; JAIME JAVIER; HERBERT DOLLANO, all with the Bureau of Customs;
JOVY GUTIERREZ of the Makati police, and 'JOHN DOES',respondents.

We note in this regard that Shell never protested the original assessments of its tax liabilities and
in fact settled them using the TCCs. These original assessments, therefore, have become final,
incontestable, and beyond any subsequent protest proceeding, administrative or judicial, to rule
upon.
To be very precise, Shells petition before the CTA principally questioned the validity of the
cancellation of the TCCs a decision that was made not by the respondent, but by the Center. As
the CTA has no jurisdiction over decisions of the Center, Shells remedy against the cancellation
should have been a certiorari petition before the regular courts, not a tax protest case before the
CTA. Records do not show that Shell ever availed of this remedy. Alternatively, as we held in Shell
v. Republic of the Philippines,17 the appropriate forum for Shell under the circumstances of this
case should be at the collection cases before the RTC where Shell can put up the fact of its
payment as a defense.

ROMERO, J.:
G.R. No. 104604 is a petition for certiorari of the decision 1 of the Court of Appeals, the dispositive
portion of which states:

Parenthetically, our conclusions are fully in step with what we held in Shell v. Republic18 that a case
becomes ripe for filing with the RTC as a collection matter after the finality of the respondents
assessment. We hereby confirm that this assessment has long been final, and this recognition of
finality removes all perceived hindrances, based on this case, to the continuation of the collection
suits. In Dayrit v. Cruz,19 we declared on the matter of collection that:

WHEREFORE, the petition is hereby GRANTED. The orders issued by the respondent judge
dated November 20, 1990, December 10, 1990, January 3, 1991 and all subsequent orders in
the Civil Case No. 90-2382 of the Regional Trial Court of Makati are SET ASIDE. Having no
jurisdiction over the case, the respondent judge is hereby enjoined from proceeding with Civil
Case No. 90-2382 and further, Case No. 90-2382 is hereby DISMISSED.

[A] suit for the collection of internal revenue taxes, where the assessment has already become
final and executory, the action to collect is akin to an action to enforce the judgment. No inquiry
can be made therein as to the merits of the original case or the justness of the judgment relied
upon.

SO ORDERED.
G.R. No. 111223 is a petition for certiorari of the resolution of the Ombudsman 2 dismissing the
case filed before it by herein petitioner.

In light of our conclusion that the present case does not involve a decision of the respondent on a
matter brought to him as a tax protest, Atty. Valeras lack of authority to issue the collection
letters and to institute the collection suits is irrelevant. For this same reason, the injunction against
Atty. Valera cannot be invoked to enjoin the collection of unpaid taxes due from Shell.

The above-docketed cases were consolidated per resolution of the Court on August 26, 1993, as
the facts in both cases were the same.
These facts are the following:

WHEREFORE, we DENY Shells petition for review on certiorari and AFFIRM the result of the
Decision of the Court of Appeals dated May 3, 2006 in CA-G.R. SP No. 78564, based on the
principles and conclusion laid down in this Decision. Shells petition for review before the Court of
Tax Appeals, docketed as CTA Case No. 6484, isDISMISSED.

On August 10, 1990, the Office of the Director, Enforcement and Security Services (ESS), Bureau
of Customs, received information regarding the presence of allegedly untaxed vehicles and parts in

the premises owned by a certain Pat Hao located along Quirino Avenue, Paranaque and Honduras
St., Makati. After conducting a surveillance of the two places, respondent Major Jaime Maglipon,
Chief of Operations and Intelligence of the ESS, recommended the issuance of warrants of seizure
and detention against the articles stored in the premises.

that the Regional Trial Court had no jurisdiction over seizure and forfeiture proceedings, such
jurisdiction being exclusively vested in the Bureau of Customs.
The Court of Appeals set aside the questioned orders of the trial court and enjoined it from further
proceeding with Civil Case No. 90-2382. The appellate court also dismissed the said civil case.

On August 13, 1990, District Collector of Customs Titus Villanueva issued the warrants of seizure
and detention.

On May 2, 1992, petitioners filed a petition with this Court to review the decision of the Court of
Appeals docketed as G.R. No. 104604.

On the same date, respondent Maglipon coordinated with the local police substations to assist
them in the execution of the respective warrants of seizure and detention. Thereafter, the team
searched the two premises.

As regards G.R. No. 111223, petitioners filed criminal charges against respondents, other officers
and employees of the Bureau of Customs and members of the Makati Police before the Office of
the Ombudsman for Robbery, Violation of Domicile and Violation of Republic Act No. 3019,
docketed as OMB Case No. 0-90-2027.

In Makati, they were barred from entering the place, but some members of the team were able to
force themselves inside. They were able to inspect the premises and noted that some articles were
present which were not included in the list contained in the warrant.. Hence, on August 15, 1990,
amended warrants of seizure and detention were issued by Villanueva.

Respondent Ombudsman summarized the case before it as follows:

This is an affidavit-complaint filed by the complainants against the respondents, Officers and
Employees of the Bureau of Customs and members of the Makati Police allegedly for violation
of Domicile and Robbery defined and penalized under Articles 128, 293 and 294 of the
Revised Penal Code and for violation of R.A. 3019 committed as follows, to wit:

On August 25, 1990, customs personnel started hauling the articles pursuant to the amended
warrants. This prompted petitioners Narciso Jao and Bernardo Empeynado to file a case for
Injunction and Damages, docketed as Civil Case No. 90-2382 with prayer for Restraining Order
and Preliminary Injunction before the Regional Trial Court of Makati Branch 56 on August 27, 1990
against respondents. On the same date, the trial court issued a Temporary Restraining Order.

That on August 11, 1990, after receiving intelligence information of the presence of
smuggled goods, some of the respondents headed by Jaime Maglipon posed themselves
as Meralco inspectors and entered complainants' stockyards and residence located at
2663 Honduras Street, Makati, Metro Manila and at 240 Quirino Avenue, Tambo
Paranaque for the purpose of searching smuggled goods found therein without the
consent of the owner thereof;

On September 7, 1990, respondents filed a Motion to Dismiss on the ground that the Regional Trial
Court has no jurisdiction over the subject matter of the complaint, claiming that it was the Bureau
of Customs that had exclusive jurisdiction over it.
On November 20, 1990, the trial court denied respondents' motion to dismiss.

That after the search, respondents on August 13, 1990 up to August 25, 1990, this time
clothed with a Warrant of Seizure and Detention, with the aid of the Makati Police and
several heavily armed men entered complainants stockyard located at 2663 Honduras
St., Makati, Metro Manila, and pulled out therefrom several machineries and truck spare
parts without issuing the corresponding receipts to the complainants to cover all the
items taken.

On November 29, 1990, petitioners' application for preliminary prohibitory and mandatory
injunction was granted conditioned upon the filing of a one million peso bond.
The Court also prohibited respondents from seizing, detaining, transporting and selling at public
auction petitioners' vehicles, spare parts, accessories and other properties located at No. 2663
Honduras St., San Isidro, Makati and at No. 240 Quirino Avenue, Tambo, Paranaque, Metro Manila.
Respondents were further prohibited from disturbing petitioners' constitutional and proprietary
rights over their properties located at the aforesaid premises. Lastly, respondents were ordered to
return the seized items and to render an accounting and inventory thereof.

Respondents claimed in their consolidated and verified comment that they are not liable for
violation of domicile because the places entered and searched by them appear not to be the
residences of the complainants but only their warehouses. As proof of this allegation, the
respondents presented the pictures of said warehouses, which are attached to their comment
as Annexes "6", "6-A" to "6-C" and the Sheriff's return likewise attached to their verified
comments as Annex "7". According to the respondents, a charge for violation of domicile may
apply only if the place entered into against the will of the owner is used exclusively for
dwelling. In the case at bar, the place entered into was used more of a warehouse than a
dwelling place.

On December 13, 1990, respondents filed a motion for reconsideration based on the following
grounds:
a) the lower court having no jurisdiction over the subject matter of the complaint, it has no
recourse but to dismiss the same; and

Further respondents also claimed not liable for robbery (sic) because the complainants appear
not to be the owners of the properties taken. Moreover, the respondents claimed that the
taking is lawful because the same proceeded from a warrant of Seizures and Detention; there
was no violence or intimidation of person committed and that there was no intent to gain on
the part of the respondents, the purpose of the seizure of the subject goods being to collect
customs duties and taxes due the government.

(b) the lower court had no legal authority to issue an injunction therein.
On January 3, 1991 the motion for reconsideration was denied. Respondents then went to the
Court of Appeals on the ground that the judge acted with grave abuse of discretion in denying their
motion to dismiss and in granting petitioners' application for preliminary injunction. They argued

Lastly, the respondents disclaimed liability for a violation of R.A. 3019 because they deny
having demanded from the complainants the sum of P100,000.00. Instead according to the
respondents, it was the complainants who offered them P70,000.00 to delay the hauling of
the seized goods as attested to in the joint affidavit of CPSGT, Ricardo Coronado and Dennis
Bantequi.

There is no question that Regional Trial Courts are devoid of any competence to pass upon the
validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs
and to enjoin or otherwise interfere with these proceedings 4 The Collector of Customs sitting in
seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions
touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded
from assuming cognizance over such matters even through petitions of certiorari, prohibition
ormandamus. 5

A preliminary investigation was conducted and on May 31, 1991, another hearing was held to give
the parties a chance to submit further evidence to support their respective claims.

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.

On March 15, 1993 respondent Ombudsman issued a Resolution recommending that the case be
dismissed for lack of merit.
On May 17, 1993, petitioners moved for the reconsideration of said resolution, but the same was
denied on July 8, 1993.

The rule that Regional Trial Courts have no review powers over such proceedings is anchored upon
the policy of placing no unnecessary hindrance on the government's drive, not only to prevent
smuggling and other frauds upon Customs, but more importantly, to render effective and efficient
the collection of import and export duties due the State, which enables the government to carry
out the functions it has been instituted to perform. 6

Hence, the petition in G.R. No. 111223, which was filed on August 16, 1993.
In G.R. No. 111223, petitioners claim that respondent Ombudsman gravely abused his discretion
in dismissing the case and in denying petitioners' motion for reconsideration.

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.

They allege that respondent Ombudsman ignored evidence incriminatory to the raiders; that the
receipts did not tally with petitioners' receipts nor with the Commission on Audit's inventory; that
the respondents are guilty of robbery and of violating petitioners' constitutional right against
violation of domicile. For these reasons, petitioners pray that the Ombudsman's resolution be
reversed and that the Court direct the Ombudsman to cause the filing of criminal charges as may
be warranted against respondents.

Respondents assert that respondent Judge could entertain the replevin suit as the seizure is
illegal, allegedly because the warrant issued is invalid and the seizing officer likewise was
devoid of authority. This is to lose sight of the distinction between the existence of the power
and the regularity of the proceeding taken under it. The governmental agency concerned, the
Bureau of Customs, is vested with exclusive authority. Even if it be assumed that in the
exercise of such exclusive competence a taint of illegality may be correctly imputed, the most
that can be said is that under certain circumstances the grave abuse of discretion conferred
may oust it of such jurisdiction. It does not mean however that correspondingly a court of
first instance is vested with competence when clearly in the light of the decisions the law has
not seen fit to do so. 7

We find the petition in G.R. No. 111223 devoid of merit.

The Court, recognizing the investigatory and prosecutory powers granted by the Constitution to
the Office of the Ombudsman and for reasons of practicality, declared, in an En Banc resolution
dated August 30, 1993, issued in G.R. Nos. 103446-47 3 that the Court will not interfere nor pass
upon findings of public respondent Ombudsman to avoid its being hampered by innumerable
petitions assailing the dismissal of investigatory proceedings conducted by the Office of the
Ombudsman with regard to complaints filed before it, and that it will not review the exercise of
discretion on the part of the fiscals or prosecuting attorneys each time they decide to file an
information in court or dismiss a complaint by a private complainant. The dismissal by the
Ombudsman of petitioners' complaint, therefore, stands.

The allegations of petitioners regarding the propriety of the seizure should properly be ventilated
before the Collector of Customs. We have had occasion to declare:
The Collector of Customs when sitting in forfeiture proceedings constitutes a tribunal
expressly vested by law with jurisdiction to hear and determine the subject matter of such
proceedings without any interference from the Court of First Instance. (Auyong Hian v. Court
of Tax Appeals, et al., 19 SCRA 10). The Collector of Customs of Sual-Dagupan in Seizure
Identification No. 14-F-72 constituted itself as a tribunal to hear and determine among other
things, the question of whether or not the M/V Lucky Star I was seized within the territorial
waters of the Philippines. If the private respondents believe that the seizure was made
outside the territorial jurisdiction of the Philippines, it should raise the same as a defense
before the Collector of Customs and if not satisfied, follow the correct appellate procedures. A
separate action before the Court of First Instance is not the remedy.8

We will now discuss G.R. No. 104604.

Petitioners contend: (1) that the Court of Appeals erred in not holding that the Collector of
Customs could no longer order the seizure for the second time of items previously seized and
released after amnesty payments of duties and taxes; (2) that the Bureau of Customs has lost
jurisdiction to order the seizure of the items because the importation had ceased; (3) that the
seizure of the items deprived the petitioners of their properties without due process of law; and (4)
that there is no need to exhaust administrative remedies.

WHEREFORE, the petitions in G.R. No. 104604 and in G.R. No. 111223 are hereby DISMISSED for
lack of merit.

We find no merit in petitioners' contentions.

SO ORDERED.

--------------------------------------------------------------------------------------------------------------

plaintiff, versus Bureau of Customs and/or Customs Police from seizing or confiscating the vehicles
until further ordered, and directed the defendants to attend the raffle of the case on 26 February
1988 at 9:00 o'clock in the morning and show cause why a writ of preliminary injunction should
not be issued against them. It further required plaintiff to submit within twenty four (24) hours
from that date the list of vehicles in question and "not to dispose any (sic) of them pending further
order of the court." 10

[G.R. No. 82586. September 11, 1992.]

HON. SALVADOR M. MISON, Commissioner of Customs, and CARLOS L. RAZO, Collector of
Customs of the Subport of Clark, petitioners, vs. HON. ELI G.C. NATIVIDAD, Presiding
Judge of the Regional Trial Court, Branch XLVIII, San Fernando, Pampanga, and CESAR
SONNY CARLOS/CVC TRADING, respondents.

In his Complaint 11 in the above-entitled case, private respondent alleges that he is the owner of
several vehicles which are legally registered in his name and that he has paid all the taxes and
"corresponding licenses" therefor; he further avers that elements of the defendant Bureau of
Customs and/or Customs Police have surrounded his residence threatening to take possession of
the vehicles. He finally prays that the latter be enjoined from doing so and that they be ordered to
pay damages in the sum of P50,000.00.

DECISION
DAVIDE, JR., J p:
This is a petition for certiorari and prohibition filed on 6 April 1988 to annul, for having been issued
without jurisdiction or with grave abuse of discretion, the 26 February 1988 Resolution of
respondent Judge denying petitioners' motion to dismiss Civil Case No. 8109 pending before
Branch 48 of the Regional Trial Court (RTC) of Pampanga and granting private respondent's motion
therein for the issuance of a writ of preliminary injunction and to enjoin respondent Judge from
proceeding further in said case. It resurrects a long-settled issue of the jurisdiction of the Regional
Trial Court over actions involving articles subject to seizure proceedings under the Tariff and
Customs Code. prLL

By virtue of the restraining order, the physical transfer of the vehicles was deferred, however,
elements of the National Customs Police and the PC Regional Command remained deployed in the
area to assert possession and control over the seized motor vehicles by the Bureau of
Customs. LLjur
On 16 February 1988, lawyers of the Bureau of Customs filed a Motion to Dismiss 12 Civil Case
No. 8109 alleging therein (a) the lack of jurisdiction of the Regional Trial Court over the subject
vehicles in view of the exclusive jurisdiction of the Collector of Customs over seizure and forfeiture
cases, and (b) the failure of the plaintiff to exhaust administrative remedies.

In the Resolution of 18 April 1988, this Court required the respondents to comment on the petition
and issued a Temporary Restraining Order restraining the respondent Judge from further
proceeding with the aforementioned Civil Case No. 8109 or from enforcing and/or carrying out his
Resolution of 26 February 1988. 1

On 17 February 1988, the private respondent filed an Oppositions/Comment on the Motion to

Dismiss 13 alleging, among others, that the Warrant of Seizure and Detention did not comply with
the requirements for a valid search warrant under the Constitution, and that taxes for the vehicles
have been paid to the Bureau of Internal Revenue (BIR).

Private respondent subsequently filed his Comment 2 to the petition, to which petitioners filed a
Reply. 3 Private respondent then filed a Rejoinder 4 to the latter.
This Court gave due course to the petition and required the parties to submit their respective
Memoranda. 5 Both manifested that they have sufficiently expounded on the relevant issues in
their respective Memoranda, which the Court noted and granted.

The Motion to Dismiss was heard on 19 February 1988 by the respondent Judge, to whose branch
the case was raffled off. After said hearing, the private respondent's motion and application for
preliminary injunction were deemed submitted for resolution.

The factual antecedents disclosed in the petition are as follows:

On 22 February 1988, private respondent filed an Amended Complaint 14 changing his name from
"Sonny Carlos" to "CESAR SONNY CARLOS" and naming as defendants, in place of the "BUREAU
OF CUSTOMS AND/OR CUSTOMS POLICE", "ATTY. CARLOS L. RAZO, in his capacity as Collector of
Customs; LOUIE ROMERO, BILLY BIBIT, their authorized deputies and JOHN DOES." In this
Amended Complaint, private respondent assails the subject warrant for being patently "illegal and
fatally defective" and void of any virtue; reiterates his willingness to post a bond "in an amount the
Court may fix conditioned upon the damages that the defendants may suffer as a consequence of
the issuance of the injunction;" and asks for P500,000.00 as actual damages, P100,000.00 as
exemplary and corrective damages, P50,000.00 as moral damages and P50,000.00 as attorney's
fees.

In a sworn letter 6 dated 7 February 1988 and addressed to the Commissioner of Customs, one
Butch Martinez informed the former of the existence of both "assembled and disassembled"
knocked-down vehicles, particularly Toyota Lite Aces, at the compound CVC Trading, which is
owned by a certain Mr. Castro and located at St. Jude Avenue, St. Jude Village, San Fernando,
Pampanga. Martinez requested for an immediate investigation thereon and prosecution for the
violation of customs laws.
On the basis thereof, Gen. Benjamin C. Cruz, Acting Director of the National Customs Police,
formed a team composed of National Customs Police (NCP) and Customs Intelligence and
Investigation Division (CIID) members, issuing the same a Mission Order 7 on 11 February 1988.
The team proceeded to San Fernando, Pampanga on the same day, giving due notice of their
presence to the PC Region III Command and the PC-INP Station at San Fernando, Pampanga.

In the meantime, the hearing of Seizure Identification No. CAB-01-88 was set for 18 and 19
February 1988, per Notice of Hearing dated 15 February 1988 and issued by petitioner Collector of
Customs. Since the owner/claimant CVC Trading refused to accept a copy of the said notice, a
follow-up notice of hearing was transmitted to it thru a telegram; the latter replied also by
telegram, 15 declaring that:

Upon arrival at the place pinpointed by Mr. Martinez at around 11:00 p.m., the team found a
fenced area containing twenty (20) units of fully and partly assembled Toyota Lite Ace vans. It
immediately took possession and control of the motor vehicles by cordoning off the enclosure.
Thereafter, at about 11:30 p m., two (2) members of the team were designated to secure a
warrant of seizure and detention from the Collector of Customs of the Subport of Clark, 8 herein
petitioner Carlos L. Razo. The latter instituted seizure proceedings against the abovementioned
vehicles (Seizure Identification No. CAB-01-88), entitled "Republic of the Philippines versus Twenty
(20) units Toyota Lite-Ace, CVC Trading St. Jude Ave., Dolores Homesite, San Fernando,
Pampanga, OWNER/CLAIMANT", for the violation of "Section 2530 (f) and (1)-1 & 5" of the Tariff
and Customs Code, in relation to Central Bank regulations. Accordingly, at about 8:00 a.m. on 12
February 1988, he issued a Warrant of Seizure and Detention. 9

"We are the legal possessors/owners (sic) of the vehicles in our compound there can be no
forfeiture since a case has been lodged before the civil courts hearing on Feb. 19, 1988 the
courts have assumed jurisdiction to your exclusion.
Moreover elementary due process requires service of documents complaint. There can be no
service of summon's (sic) or notice of hearing thru telegrams."
At the hearing on 18 February 1988, Attys. Napoleon Gatmaitan and Conrado Unlayao, CIID,
Bureau of Customs, appeared for the Government. No appearance was entered for the
owner/claimant. Thus, the Government was allowed to present evidence ex-parte.

Since receipt of the warrant was refused by the owner/claimant or any of his representatives, the
same was served by substituted service through the posting of a copy thereof on one of the
subject motor vehicles found near the gate of the stockyard. An inventory of the vehicles was
conducted and a copy thereof was attached to the return of the warrant made to the issuing
authority.

On 26 February 1988, petitioner Collector of Customs rendered a Decision 16 in the said seizure
proceedings, the dispositive portion of which reads: cdrep
"WHEREOF, by authority of law vested in the undersigned, it is hereby ordered that the
Twenty (20) Units Toyota Lite Ace covered by this seizure case be, as they are hereby,
declared forfeited in favor of the Government to be disposed of in the manner provided for by
law.

At about 11:00 a.m. on 12 February 1988, when the team was about to haul the motor vehicles
away, two (2) Regional Trial Court sheriffs arrived with a temporary restraining order issued on
that date by the respondent Judge, as Executive Judge of the Regional Trial Court of San Fernando,
Pampanga; the order was issued in connection with Civil Case No. 8109, entitled "Sonny Carlos,

Let copies of this Decision be furnished all parties and office (sic) concerned, with a copy
thereof posted in the Bulletin Board of this Customhouse, for their information guidance and
appropriate action."

aggrieved party may appeal from a judgment of the Court of Tax Appeals directly to this
Court [Section 18, R.A. 1125; Rule 44, Rules of Court]. On the other hand, Section 44(c) of
the Judiciary Act of 1948 [As amended by R.A. 3828] lodges in the Court of First Instance
original jurisdiction in all cases in which the value of the property in controversy amounts to
more than ten thousand pesos. This original jurisdiction of the Court of First Instance, when
exercised in an action for recovery of personal property which is a subject of a forfeiture
proceeding in the Bureau of Customs, tends to encroach upon, and to render futile, the
jurisdiction of the Collector of Customs in seizure and forfeiture proceedings. This is precisely
what took place in this case. The seizure and forfeiture proceedings against the M/B 'Bukang
Liwayway' before the Collector of Customs of Manila, was stifled by the issuance of a writ of
replevin by the Court of First Instance of Cavite.

On the same date, the respondent Judge issued a Resolution 17 in Civil Case No. 8109 denying the
motion to dismiss and granting the application for a writ of preliminary injunction. The pertinent
portions thereof read:
"I. Resolution on the Motion to Dismiss with Prayer to Lift Restraining Order
xxx xxx xxx
A reading of the complaint will show that it was alleged that the plaintiff is the owner of the
subject vehicles. He is in actual and physical possession of the same. Plaintiff enjoys the
presumption of ownership, to (sic) which he has to protect.

Should Section 44(c) of the Judiciary Act of 1948 give way to the provisions of the Tariff and
Customs Code, or vice versa? In Our opinion, in this particular case, the Court of First
Instance should yield to the jurisdiction of the Collector of Customs. The jurisdiction of the
Collector of Customs is provided for in Republic Act 1937 which took effect on July 1, 1957,
much later than the Judiciary Act of 1948. It is axiomatic that a later law prevails over a prior
statute [Herman v. Radio Corporation of the Philippines, 50 Phil. 490; Pampanga Sugar Mills
v. Trinidad, 279 U.S. 211, 73 L. ed. 665]. Moreover, on grounds of public policy, it is more
reasonable to conclude that the legislators intended to divest the Court of First Instance of
the prerogative to replevin a property which is a subject of a seizure and forfeiture
proceedings for violation of the Tariff and Customs Code. Otherwise, actions for forfeiture of
property for violation of Customs laws could easily be undermined by the simple device of
replevin. prLL

xxx xxx xxx

It is to be noted that the subject matter of the complaint is the legal ownership of the
vehicles and damages being asked by plaintiff, thus, this Court can assume jurisdiction over
the case. The mere allegation of the defendants that the subject vehicles were smuggled
based on 'reliable information' will not divest this Court of jurisdiction.
xxx xxx xxx
In this particular case, there is no showing that plaintiff is an importer who imported dutiable
goods, in entering the port of Clark Air Base, imported thru that port. The goods are in
private (sic) place owned by plaintiff, and not in the possession of the collector of customs.
xxx xxx xxx

Furthermore, Section 2303 of the Tariff and Customs Code requires the Collector of Customs
to give to the owner of the property sought to be forfeited written notice of the seizure and to
give him the opportunity to be heard in his defense. This provision clearly indicates the
intention of the law to confine in the Bureau of Customs the determination of all questions
affecting the disposal of property proceeded against in a seizure and forfeiture case. The
judicial recourse of the property owner is not in the Court of First Instance but in the Court of
Tax Appeals, and only after exhausting administrative remedies in the Bureau of Customs."

The numerous Supreme Court decisions cited by movant in his motion to dismiss have very
remote pertinence at the case at car. In the cited cases, dutiable imported goods or articles
were seized while on vessels and/or customs zone (sic), and the alleged owners filed cases of
replevin or recovery of personal properties.
II. Resolution in the Issuance of Writ of Preliminary Injunction
xxx xxx xxx

In De Joya vs. Lantin, 19 this Court, speaking again through Mr. Justice J.P. Bengzon, declared:

Having substantiated the said allegations, in his complaint with Annexes and considering the
oral arguments of the parties, it is hereby ordered and directed that after the plaintiff filed
(sic) the bond in the amount of P100,000.00 as fixed by this Court, all the defendants and
any other persons acting under their command, or for (sic) in their behalf, to (sic) desist and
refrain from guarding the area of the plaintiff and from seizing or confiscating the vehicles
involved in this case pending termination of this litigation and/or unless a contrary order is
issued by this Court. Thus, the defendants is (sic) hereby inhibited for the meantime to guard
the area or commit trespass of plaintiffs' premises in any manner restrain (sic) the movement
of herein plaintiff and his representatives or employees, considering that there is standing
(sic) of this Court that pending the termination of this case, the said vehicles should not be
disposed of."

"The goods in question are imported articles entered at the Port of Cebu. Should they be
found to have been released irregularly from Customs custody in Cebu City, they are subject
to seizure and forfeiture, the proceedings for which comes within the jurisdiction of the
Bureau of Customs pursuant, to Republic Act 1937.
Said proceedings should be followed; the owner of the goods may set up defenses therein
(Pacis vs. Averia, L-22526, Nov. 29, 1966). From the decision of the Commissioner of
Customs appeal lies to the Court of Tax Appeals, as provided in Sec. 2402 of Republic Act
1937 and Sec. 11 of Republic Act 1125. To permit recourse to the Court of First Instance in
cases of seizure of imported goods would in effect render ineffective the power of the
Customs authorities under the Tariff Code and deprive the Court of Tax Appeals of one of its
exclusive appellate jurisdiction. As this Court has ruled in Pacis vs. Averia, supra, Republic
Acts 1937 and 1125 vest jurisdiction over seizure and forfeiture proceedings exclusively upon
the Bureau of Customs and the Court of Tax Appeals. Such law being special in nature, while
the Judiciary Act defining the jurisdiction of Courts of First Instance is a general legislation,
not to mention that the former are later enactments, the Court of First Instance should yield
to the jurisdiction of the Customs authorities."

Hence, this petition which We find to be meritorious. It should be granted. cdll

The court a quo has no jurisdiction over the res subject of the warrant of seizure and detention.
The respondent Judge, therefore, acted arbitrarily and despotically in issuing the temporary
restraining order, granting the writ of preliminary injunction and denying the motion to dismiss,
thereby removing the res from the control of the Collector of Customs and depriving him of his
exclusive original jurisdiction over the controversy. Respondent Judge exercised a power he never
had and encroached upon the exclusive original jurisdiction of the Collector of Customs. By express
provision of law, amply supported by well-settled jurisprudence, the Collector of Customs has
exclusive jurisdiction over seizure and forfeiture proceedings and regular courts cannot interfere
with his exercise thereof or stifle or put it to naught.

This rule was subsequently reiterated in Romualdez vs. Arca, 20 De Joya vs. David, 21 Diosamito
vs. Balanque, 22 Lopez vs. Commissioner of Customs, 23 Ponce Enrile vs. Vinuya, 24 Collector of
Customs vs. Torres, 25 Pacis vs. Geronimo 26 and De la Fuente vs. De Veyra. 27

In the 1966 case of Pacis vs. Averia, 18 this Court, speaking through Mr. Justice J.P. Bengzon, held
that:

The language of the foregoing rule is simple, clear and leaves no doubt as to the Regional Trial
Court's lack of jurisdiction over the res which has already been made the subject of seizure and
forfeiture proceedings. Frankly, this Court is unable to understand why the respondent Judge
misread the same; perhaps, he simply chose to ignore it. At any rate, such behavior is highly
condemnable. LexLib

"The Tariff and Customs Code, in Section 2530 thereof, lists the kinds of property subject to
forfeiture. At the same time, in Part 2 of Title VI thereof, it provides for the procedure in
seizure and forfeiture cases and vests in the Collector of Customs the authority to hear and
decide said cases. [Section 2312, R.A. 1937] The Collector's decision is appealable to the
Commissioner of Customs Section 2313, R.A. 1937] whose decision is in turn appealable to
the Court of Tax Appeals. [Section 2402, R.A. 1937, Sections 7 and 11, R.A. 1125]. An

A warrant of seizure and detention having already been issued, presumably in the regular course
of official duty, 28 the Regional Trial Court of Pampanga was indisputably precluded from

interfering in the said proceedings. That in his complaint in Civil Case No. 8109 private respondent
alleges ownership over several vehicles which are legally registered in his name, having paid all
the taxes and corresponding licenses incident thereto, neither divests the Collector of Customs of
such jurisdiction nor confers upon the said trial court regular jurisdiction over the case. Ownership
of goods or the legality of its acquisition can be raised as defenses in a seizure proceeding; 29 if
this were not so, the procedure carefully delineated by law for seizure and forfeiture cases may
easily be thwarted and set to naught 30 by scheming parties. Even the illegality of the warrant of
seizure and detention cannot justify the trial court's interference with the Collector's jurisdiction. 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. In the second place, even if there be
such an irregularity in the latter, the Regional Trial Court does not have the competence to review,
modify or reverse whatever conclusions may result therefrom. In Ponce Enrile vs. Vinuya, 31 this
Court had the occasion to state:

Petitioner is a duly organized domestic corporation engaged in the importations of milk and milk
products for processing, distribution and sale in the Philippines. Between July and November 1984,
petitioner transacted sixteen (16) separate importations of milk and milk products from different
countries. Petitioner was assessed customs duties and advance sales taxes by the Collector of
Customs of Manila for each of these separate importations on the basis of the published Home
Consumption Value (HCV) indicated in the Bureau of Customs Revision Orders. Petitioner paid the
same but seasonably filed the corresponding protests before the said Collector of Customs from
October 25 to December 5, 1984, uniformly alleging therein that the latter erroneously applied
higher home consumption values in determining the dutiable value for each of these separate
importations. In the said protests, petitioner claims for refund of both the alleged overpaid import
duties amounting to Five Million Eight Thousand and Twenty-Nine Pesos (P5,008,029.00) and
advance sales taxes aggregating to Four Million Five Hundred Sixty-Four Thousand One Hundred
Seventy-Nine Pesos and Thirty Centavos (P4,564,179.30).

"2. Respondents, however, notwithstanding the compelling force of the above doctrines,
would assert that respondent Judge could entertain the replevin suit as the seizure is illegal,
allegedly because the warrant issued is invalid and the seizing officer likewise was devoid of
authority. This is to lose sight of the distinction, as earlier made mention of, between the
existence of the power and the regularity of the proceeding taken under it. The governmental
agency concerned, the Bureau of Customs, is vested with exclusive authority. Even if it be
assumed that in the exercise of such exclusive competence a taint of illegality may be
correctly imputed, the most that can be said is that under certain circumstances the grave
abuse of discretion conferred may oust it of such jurisdiction. It does not mean however that
correspondingly a court of first instance is vested with competence when clearly in the light of
the above decisions the law has not seen fit to do so. The proceeding before the Collector of
Customs is not final. An appeal lies to the Commissioner of Customs and thereafter to the
Court of Tax Appeals. It may even reach this Court through the appropriate petition for
review. The proper ventilation of the legal issues raised is thus indicated. Certainly a court of
first instance is not therein included. It is devoid of jurisdiction."

On October 14, 1986, petitioner formally filed a claim for refund of allegedly over paid advance
sales taxes with the Bureau of Internal Revenue (BIR) amounting to Four Million Five Hundred
Sixty-Four Thousand One Hundred Seventy-Nine Pesos and Thirty Centavos (P4,564,179.30)
covering the same sixteen (16) importations of milk and milk products from different countries.
Not long after, on October 15, 1986 and within the two-year prescriptive period provided for under
the National Internal Revenue Code (NIRC) for claiming a tax refund, petitioner filed the
corresponding petition for review with the Court of Tax Appeals (CTA) which was docketed therein
as C.T.A. Case No. 4114. On January 3, 1994, the tax court ruled in favor of petitioner and
forthwith ordered the BIR to refund to the petitioner the sum of Four Million Four Hundred EightyNine Thousand Six Hundred Sixty-One Pesos and Ninety-Four Centavos (P4,489,661.94)
representing the overpaid Advance Sales Taxes on the aforesaid importations.

WHEREFORE, the Resolution of respondent Judge of 26 February 1988 in Civil Case No. 8109
before Branch 48 of the Regional Trial Court of Pampanga, and all proceedings had therein, are
NULLIFIED and SET ASIDE and the said case is hereby ordered DISMISSED. cdll

On the other hand, the sixteen (16) protest cases for refund of alleged overpaid customs duties
amounting to Five Million Eight Thousand Twenty-Nine Pesos (P5,008,029.00) were left with the
Collector of Customs of Manila. However, the said Collector of Customs failed to render his decision
thereon after almost six (6) years since petitioner paid under protest the customs duties on the
said sixteen (16) importations of milk and milk products and filed the corresponding protests.

The temporary restraining order issued by this Court on 18 April 1988 is hereby made permanent.
SO ORDERED.
-------------------------------------------------------------------------------------------------------------G.R. No. 134114

Consequently, in order to prevent these claims from becoming stale on the ground of prescription,
petitioner immediately filed a petition for review docketed as C.T.A. Case No. 4478, with the Court
of Tax Appeals on August 2, 1990 despite the absence of a ruling on its protests from both the
Collector of Customs of Manila and the Commissioner of Customs.

July 6, 2001

NESTLE PHILIPPINES, INC., (FORMERLY FILIPRO, INC.), petitioner, vs. HONORABLE

COURT OF APPEALS, COURT OF TAX APPEALS and COMMISSIONER OF
CUSTOMS,respondents.

On May 30, 1995, the CTA rendered judgment dismissing C.T.A. Case No. 4478 for want of
jurisdiction.6 The subsequent motion or reconsideration filed petitioner on July 11, 1995 was
denied for lack of merit in a Resolution' dated January 6, 1997.

DELEON, JR., J.:

Aggrieved, petitioner appealed on February 10, 1999 the said judgment and resolution of the CTA
in C.T.A. Case No. 4478 to the Court of Appeals by way of petition for review on certiorari under
Rule 45 of the Rules of Court. However, this appeal was later dismissed by the appellate court on
September 23, 1997 for lack of merit. The Court of Appeals opined, inter alia, that the CTA's
jurisdiction is not concurrent with the appellate jurisdiction of the Commissioner of Customs since
there was no decision or ruling yet of the Collector of Customs of Manila on the matter; that the
petition does not fall under any of the recognized exceptions on exhaustion of administrative
remedies to justify petitioner's immediate resort to the CTA; that the petitioner failed to move for
the early resolution of its claims for refund nor was there any notice given that the said Collector
of Customs' continued inaction on its claims would be deemed a denial of its claims; and that
petitioner also neglected to cite any law or jurisprudence which prescribes a period for filing an
appeal in the CTA even if there was no action yet by the Commissioner of Customs.

Challenged in this petition for review on certiorari is the Decisio 1 in CA-G.R SP No. 431882 dated
September 23, 1997 of the Court of Appeals which affirmed the Decision 3 dated May 30, 1995 of
the Court of Tax Appeals in C.T.A. Case No. 44784 dismissing petitioner's petition for review to
compel the Commissioner of Customs to grant it a refund of allegedly overpaid import duties, on
its various importations of milk and milk products, amounting to Five Million Eight Thousand and
Twenty-Nine Pesos (P5,008,029.00).
Petitioner's motion for reconsideration thereof was denied by the Court of Appeals in a
Resolution5 dated June 9, 1998.
The antecedent facts are as follows.

10

On June 9, 1998, the appellate court issued a Resolution 8 denying petitioner's motion for
reconsideration for lack of merit.

protests it had filed before his office within six (6) years after it made the earliest payment of
advance customs duties on its importations.

Hence, this petition.

There was also no violation of the principle of exhaustion of administrative remedies in this case.
This doctrine does not apply to the case at bar since its observance would only result in the
nullification of the claim for refund being asserted nor would it provide a plain, speedy and
adequate remedy under the circumstances. This notwithstanding, however, the Solicitor General
further opined that this case should be remanded to the CTA in order for the tax court to
determine the veracity of petitioner's claim.

Petitioner assigns the following as errors, to wit:

1. RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION IN
HOLDING THAT THE FILING OF PROTEST CASES BEFORE THE COLLECTOR OF CUSTOMS HAD
EFFECTIVELY INTERRUPTED THE RUNNING OF THE SIX-YEAR PRESCRIPTIVE PERIOD;

On the other hand, respondent Commissioner of Customs, in his Comment 13 dated August 21,
2000, admitted with regret, their official inaction adverted to by the petitioner. Respondent
Commissioner expressed the view that petitioner's claim for refund of customs duties should not
outrightly be denied by virtue of the strict adherence to the rules to prevent grave injustice to
hapless taxpayers; that this does not justify, however, an outright award of the refund of alleged
overpayment of customs duties in favor of petitioner; and that there is no definite factual
determination yet that the customs duties and taxes in question were overpaid and refundable,
and if refundable how much is the refundable amount. The fact that the Collector of Customs of
Manila failed to act or decide on the petitioner's protest cases filed before his Office does not
relieve the petitioner of its burden to prove that it is entitled to the refund sought for. Thus,
respondent Commissioner of Customs, thru his special counsel, recommended that this case be
remanded to the court of origin, namely, the CTA.

2 RESPONDENT COURTS COMMITED FUNDAMENTAL ERRORS AND ACTED WITH GRAVE

ABUSE OF DISCRETIONS IN HOLDING THAT PETITIONER HAD FAILED TO EXHAUST
ADMINISTRATIVE REMEDIES, NOTWITHSTANDING ALMOST 6 YEARS OF PROTRACTED
HEARINGS OF THE 16 PROTEST CASES WITH THE CUSTOMS COLLECTOR AND FILING OF THE
PETITION ONLY WHEN THE SIX-YEAR PRESCRIPTIVE PERIOD WAS ABOUT TO EXPIRE TO
AVOID NULLIFICATION OF CLAIMS ON GROUND OF PRESCRIPTION;
3. THE RESPONDENT COURTS GRAVELY ERRED IN DISMISSING ON SHEER TECHNICALITIES
PETITIONER'S CLAIMS FOR THE REFUND OF P5,008,029.08 (SIC) OVERPAID DUTIES, WHEN
THE FACTS OF OVERPAYMENTS HAD BEEN EARLIER RESOLVED IN CTA CASE NO. 4114,
HOLDING THAT THE WRONG APPLICATION OF THE HIGHER HOME CONSUMPTION VALUES
RESULTED IN THE OVERPAYMENTS OF DUTIES AND TAXES, AND UPON WHICH, IT ORDERED
THE REFUND OF P4,489,661.94 IN OVERPAID TAXES. THERE IS NO VALID REASON
THEREFORE WHY THE CORRESPONDING OVERPAYMENTS IN CUSTOMS DUTIES CAN NOT
ALSO BE REFUNDED TO ITS RIGHTFUL OWNER, THE PETITIONER HEREIN.

The recommendations of both the Solicitor General and the respondent Commissioner of Customs
are well taken. After a meticulous consideration of this case, we find that the recommended
remand of this case to the CTA is warranted for the proper verification and determination of
the factual basis and merits of this petition and in, order that the ends of substantial justice and
fair play may be subserved. We are of the view that the said recommendation is in accord with the
provisions of the Tariff and Customs Code as hereinafter discussed.

In this petition, petitioner asserts that tax refunds are based on quasi-contract or solution
indebiti, which under Article 11459 of the Civil Code, prescribes in six (6) years. Consequently, the
pendency of its protest cases before the office of the Collector of Customs of Manila did not
interrupt the running of the prescriptive period under the aforesaid provision of law considering
that it is only an administrative body performing only quasi-judicial function and not a regular
court of justice.10 Thus, in like manner the thirty-day period for appealing to the CTA must be
made within the six-year prescriptive period.

The right to claim for refund of customs duties is specifically governed by Section 1708 of the Tariff
and Customs Code, which provides that "Sec. 1708. Claim for Refund of Duties and Taxes and Mode of Payment. - All claims for
refund of duties shall be made in writing and forwarded to the Collector to whom
such duties are paid, who upon receipt of such claim, shall verify the same by the
records of his Office, and if found to be correct and in accordance with law, shall certify the
same to the Commissioner with his recommendation together with all necessary papers and
documents. Upon receipt by the Commissioner of such certified claim he shall cause the same
to be paid if found correct."

Petitioner further contends that the fact of overpayment of customs duties has been duly
established and resolved with finality by the Court of Tax Appeal on January 3, 1994 in C.T.A. Case
No. 4114.11 In that case, the tax court found that the Bureau of Customs erroneously used the
wrong home consumption value in assessing the petitioner the Advance Sales Tax on its subject
sixteen (16) importations. The tax court then ordered the Commissioner of Internal Revenue to
refund to the petitioner the sum of Four Million Four Hundred Eighty-Nine Thousand Six Hundred
Sixty-One Pesos and Ninety-Four Centavos (P4,489,661.94), representing overpaid advance sales
tax covering the same sixteen (16) importations. It is also from the same sixteen (16) separate
importations of milk and milk products that petitioner based its claims for refund of overpayment
of customs duties. Thus, petitioner avers that its claims for refund of overpaid customs duties must
likewise be granted and awarded in its favor.

It is clear from the foregoing provision of the Tariff and Customs Code that in all claims for refund
of customs duties, the Collector to whom such customs duties are paid and upon receipt of such
claim is mandated to verify the same by the records of his Office. If such claim is found correct
and in accordance with law, the Collector shall certify the same to the Commissioner with his
recommendation together with all, the necessary papers and documents. This is precisely one of
the reasons why the Court of Appeals upheld the dismissal of the case on the ground that the
CTA's jurisdiction14 under the Tariff and Customs Code is not concurrent with that of the
respondent Commissioner of Customs due to the absence of any certification from the Collector of
Customs of Mani]a. Accordingly, petitioner's contention that its claims for refund of alleged
overpayment of customs duties may be deemed established from the findings of the tax court in
C.T.A. Case No. 4114 on the Advance Sales Tax is not necessarily corrupt in the light of the abovecited provision of the Tariff and Customs Code.

In lieu of Comment,12 the Solicitor General manifested that there is merit in petitioner's argument
considering that petitioner's cause of action to recover a tax erroneously paid is based on solutio
indebiti which is expressly classified as a quasi-contract under the Civil Code; that petitioner's
cause of action would have prescribed on August 2, 1990 if it did not bring the matter before the
CTA; and that the Collector of Customs has not even acted or resolved the petitioner's several

11

"Customs duties" is 'the name given to taxes on the importation and exportation of
commodities, the tariff or tax assessed upon merchandise imported from, or exported to, a foreign
country.15 Any claim, for refund of customs duties, therefore, take the nature of tax exemptions
that must be construed strictissimi juris against the claimants and liberal]y in favor of the taxing
authority.16 This power of taxation being a high prerogative of sovereignty, its relinquishment is
never presumed. Any reduction or diminution thereof with respect to its mode or its rate must be
strictly construed, and the same must be couched in clear and unmistakable terms in order that it
may be applied.17

Accordingly, once a written protest is seasonably filed with the Collector of Customs the failure or
inaction of the latter to promptly perform his mandated duty under the Tariff and Customs Code
should not be allowed to prejudice the right of the party adversely affected thereby. Technicalities
and legalisms, however exalted, should not be misused by the government to keep money not
belonging to it, if any is proven, and thereby enrich itself at the expense of the tax payers. If the
State expects its taxpayers to observe fairness and honesty in paying their taxes, so must it apply
the same standard against itself in refunding excess payments, if any, of such taxes. Indeed the
State must lead by its own example of honor, dignity and uprightness.

Thus, any outright award for the refund of allegedly overpaid customs duties in favor of petitioner
on its subject sixteen (16) importations is not favored in this jurisdiction unless there is a direct
and clear finding thereon. The fact alone that the tax court, in C.T.A Case No. 4114, has awarded
in favor of the petitioner the refund of overpaid Advance Sales Tax involving the same sixteen (16)
importations does not in any way excuse the petitioner from proving its claims for refund of
alleged over payment of customs duties. We have scrutulized the decision rendered by the tax
court C.T.A. Case No. 4114 and found no clear indication therein that the tax court has ruled on
petitioner's claims for alleged overpayment of customs duties.

Here, it is undisputed that the inaction of the Collector of Customs of Manila for nearly six (6)
years on the protests seasonably filed by the petitioner has caused the latter to immediately resort
to the CTA. The petitioner did so on the mistaken belief that its claims are governed by the rule on
quasi-contract or solutio indebiti which prescribes in six (6) years under Article 1145 of the New
Civil Code.
This belief or contention of the petitioner is misplaced. In order for the rule on solution indebiti to
apply it is an essential condition that petitioner must first show that its payment of the customs
duties was in "excess of what was required by the law at the time when the subject sixteen (16)
importations of milk and milk products were made. Unless shown otherwise, the disputable
presumption of regularity of performance of duty lies in favor of the Collector of Customs.

The petitioner is mistaken in its contention that its claims for refund of allegedly overpaid customs
duties are governed by Article 215418 of the New Civil Code on quasi-contract, or the rule
on solutio indebiti, which prescribes in six (6) years pursuant to Article 1145 of the same Code.

In the present case, there is no factual showing that the collection of the alleged overpaid customs
duties was more than what is required of the petitioner when it made the aforesaid separate
importations. There is no factual finding yet by the government agency concerned that petitioner is
indeed entitled to its claim of overpayment and, if true, for how much it is entitled. It bears stress
that in determining whether or not petitioner is entitled to refund of alleged overpayment of
customs duties, it is necessary to determine exactly how much the Government is entitled to
collect as customs duties on the importations. Thus, it would only be just and fair that the
petitioner-taxpayer and the Government alike be given equal opportunities to avail of the remedies
under the law to contest or defeat each other's claim and to determine all matters of dispute
between them in one single case.19 If the State expects its taxpayers to observe fairness and
honesty in paying their taxes, so must it apply the same standard against itself in refunding excess
payments, if truly proven, of such taxes. Indeed, the State must lead by its own example of honor,
dignity and uprightness.

Sections 2308 and 2309 of the Tariff and Customs Code provide that:
"Sec. 2308. Protest and Payment upon Protest in Civil Matter: When a ruling or decision of
the collector is made whereby liability for duties, taxes, fees, or other charges
are determined, except the fixing of fines in seizures cases, the party adversely affected
may protest such ruling or decision by presenting to the Collector at the time when
payment of the amount claimed to be due the government is made, or within fifteen (15)
days thereafter, a written protest setting forth his objection to the ruling or
decision in question, together with the reasons therefor. No protest shall be
considered unless payment of the amount due after final liquidation has first been
made and the corresponding docket fee, as provided for in Section 3301."
"Sec. 2309. Protest Exclusive Remedy in Protestable Case. In all cases subject to protest,
the interested party who desires to have the action of the collector reviewed, shall make a
protest, otherwise, the action of the collector shall be final and conclusive against
him, x x x. "

The ratiocination of the Court of Appeals is in accord with a ruling of this Court which is applicable
to the case at bar, to wit:
"As stated by the respondent court in its Resolution dated January 6, 1997, the petitioner's
claim cannot be deemed to prescribe because the Collector of Customs has not
acted on the protest, and the period for filling an appeal to the Commissioner of
Customs has not commenced to run. Moreover, delay or inaction of a subordinate official,
does not constitute an exception to the afore-cited principle as the delay should be brought to
the attention of a superior administrative officer for immediate adjudication (Commissioner of
Immigration vs. Vamenta, Jr., 54 SCRA 342; Barte vs. Dichoso, 47 SCRA 77)."

"SEC. 2312. Decision or Action by the collector in Protest and Seizure Cases. When a protest
in a proper form is presented in a case where protest is required, the collector shall issue
an order for hearing within fifteen (15) days from receipt of the protest and hear
the matter thus presented. Upon termination of the hearing, the Collector shall render
a decision within thirty (30) days, and if the protest is sustained, in whole or in part, he
shall make the appropriate order, the entry reliquidated necessary, xxx,"
In the light of the abovecited provisions of the Tariff and Customs Code, it appears that in all cases
subject to protest, the claim for refund of customs duties may be foreclosed only when the
interested party claiming refund fails to file a written protest before the Collector of Customs. This
written protest which must set forth the claimant's objection to the ruling or decision in question
together with the reasons therefor must be made either at the time when payment of the amount
claimed to be due the government is made or within fifteen (15) days thereafter. In conjunction
with this right of the claimant is the duty of the Collector of Customs to hear and decide such
protest in accordance and within the period of time prescribed by the law.

WHEREFORE, the assailed Decision dated September 23,1997 of the Court of Appeals in CA-G.R
SF No. 43188 is hereby SET ASIDE; and C.T.A. Case No. 4478
is REINSTATED and REMANDED to the Court of Tax Appeals for hearing and reception of
evidence relative to petitioner's claims for refund of alleged overpayment of customs duties. The
Court of Tax Appeals is directed to dispose of the said case with dispatch.1wphi1.nt
SO ORDERED.

12

-------------------------------------------------------------------------------------------------------------G.R. No. 178759

thereby resulting in huge losses of revenue for the government. This letter was endorsed to the
Bureau of Customs (BOC) for investigation on July 19, 1999.8
On January 28, 2000, petitioner received a subpoena duces tecum/ad testificandum from Conrado
M. Unlayao, Chief of the Investigation and Prosecution Division, Customs Intelligence and
Investigation Service (IPD-CIIS) of the BOC, to submit pertinent documents in connection with the
subject shipments pursuant to the investigation he was conducting thereon. It appeared, however,
that the Legal Division of the BOC was also carrying out a separate investigation. Atty. Roberto
Madrid (of the latter office) had gone to petitioners Batangas Refinery and requested the
submission of information and documents on the same shipments. This prompted petitioner to
seek the creation of a unified team to exclusively handle the investigation. 9

August 11, 2008

CHEVRON PHILIPPINES, INC., petitioner, vs. COMMISSIONER OF THE BUREAU OF

CUSTOMS, respondent.
DECISION
CORONA, J.:
This is a petition for review on certiorari 1 of the decision2 and resolution3 of the Court of Tax
Appeals (CTA) en banc dated March 1, 2007 and July 5, 2007, respectively, in CTA EB Nos. 121
and 122 which reversed the decision of the CTA First Division dated April 5, 2005 in CTA Case No.
6358.

On August 1, 2000, petitioner received from the District Collector of Customs of the Port of
Batangas (District Collector) a demand letter requiring the immediate settlement of the amount
of P73,535,830 representing the difference between the 10% and 3% tariff rates on the
shipments. In response, petitioner wrote the District Collector to inform him of the pending
request for the creation of a unified team with the exclusive authority to investigate the matter.
Furthermore, petitioner objected to the demand for payment of customs duties using the 10%
duty rate and reiterated its position that the 3% tariff rate should instead be applied. It likewise
raised the defense of prescription against the assessment pursuant to Section 1603 of the Tariff
and Customs Code (TCC). Thus, it prayed that the assessment for deficiency customs duties be
cancelled and the notice of demand be withdrawn.10

Petitioner Chevron Philippines, Inc.4 is engaged in the business of importing, distributing and
marketing of petroleum products in the Philippines. In 1996, the importations subject of this case
arrived and were covered by eight bills of lading, summarized as follows:
PRODUCT

ARRIVAL DATE

66,229,960 liters
Nan Hai Crude Oil

VESSEL

3/8/1996

Ex MT
Bona Spray

3/18/1996

Ex MT
Orient Tiger

16,651,177 liters
FCCU Feed Stock

3/21/1996

Ex MT
Probo Boaning

236,317,862 liters
Oman/Dubai Crude Oil

3/26/1996

Ex MT
Violet

6,990,712 liters
Reformate

51,878,114 liters

In a letter petitioner received on October 12, 2000, respondent Commissioner of the BOC 11 stated
that it was the IPD-CIIS which was authorized to handle the investigation, to the exclusion of the
Legal Division and the District Collector.12
The IPD-CIIS, through Special Investigator II Domingo B. Almeda and Special Investigator III
Nemesio C. Magno, Jr., issued a finding dated February 2, 2001 that the import entries were filed
beyond the 30-day non-extendible period prescribed under Section 1301 of the TCC. They
concluded that the importations were already considered abandoned in favor of the government.
They also found that fraud was committed by petitioner in collusion with the former District
Collector.13
Thereafter, respondent14 wrote petitioner on October 29, 2001 informing it of the findings of
irregularity in the filing and acceptance of the import entries beyond the period required by
customs law and in the release of the shipments after the same had already been deemed
abandoned in favor of the government. Petitioner was ordered to pay the amount
of P1,180,170,769.21 representing the total dutiable value of the importations.15

Ex MT

Arab Crude Oil

4/10/1996

Crown Jewel5

The shipments were unloaded from the carrying vessels onto petitioners oil tanks over a period of
three days from the date of their arrival. Subsequently, the import entry declarations (IEDs) were
filed and 90% of the total customs duties were paid. The import entry and internal revenue
declarations (IEIRDs) of the shipments were thereafter filed on the following dates:
ENTRY
NO.
606-96
604-96
605-96
600-96
601-96
602-96
603-96
818-96

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

51,878,114 liters
Arab Crude Oil

ARRIVAL
DATE
3/8/1996

3/12/1996

5/10/1996

3/18/1996

3/26/1996

5/10/1996

3/21/1996

3/26/1996

5/10/1996

3/26/1996

3/28/1996

5/10/1996

4/10/1996

IED

4/10/1996

This prompted petitioner to file a petition for review in the CTA First Division on November 28,
2001, asking for the reversal of the decision of respondent.16
In a decision promulgated on April 5, 2005, the CTA First Division ruled that respondent was
correct when he affirmed the findings of the IPD-CIIS on the existence of fraud. Therefore,
prescription was not applicable. Ironically, however, it also held that petitioner did not abandon the
shipments. The shipments should be subject to the 10% rate prevailing at the time of their
withdrawal from the custody of the BOC pursuant to Sections 204, 205 and 1408 of the TCC.
Petitioner was therefore liable for deficiency customs duties in the amount of P105,899,569.05.17

IEIRD

Petitioner sought reconsideration of the April 5, 2005 decision while respondent likewise filed his
motion for partial reconsideration. Both motions were denied in a resolution dated September 9,
2005.18
After both respondent and petitioner had filed their petitions for review with the CTA en banc,
docketed as CTA EB No. 121 and CTA EB No. 122, respectively, the petitions were consolidated.
In a decision dated March 1, 2007, the CTA en banc held that it was the filing of the IEIRDs that
constituted entry under the TCC. Since these were filed beyond the 30-day period, they were not
seasonably "entered" in accordance with Section 1301 in relation to Section 205 of the TCC.
Consequently, they were deemed abandoned under Sections 1801 and 1802 of the TCC. It also
ruled that the notice required under Customs Memorandum Order No. 15-94 (CMO 15-94) was not
necessary in view of petitioners actual knowledge of the arrival of the shipments. It likewise
agreed with the CTA Divisions finding that petitioner committed fraud when it failed to file the
IEIRD within the 30-day period with the intent to "evade the higher rate." Thus, petitioner was
ordered to pay respondent the total dutiable value of the oil shipments amounting
to P893,781,768.21.19

6/21/1996

The importations were appraised at a duty rate of 3% as provided under RA 81806 and petitioner
paid the import duties amounting to P316,499,021.7 Prior to the effectivity of RA 8180 on April 16,
1996, the rate of duty on imported crude oil was 10%.
Three years later, then Finance Secretary Edgardo Espiritu received a letter (with annexes) dated
June 10, 1999 from a certain Alfonso A. Orioste denouncing the deliberate concealment,
manipulation and scheme employed by petitioner and Pilipinas Shell in the importation of crude oil,

Hence this petition.

13

There are three issues for our resolution:

to receive such monies, provided that the article has previously arrived within the limits of the
port of entry.

1. whether "entry" under Section 1301 in relation to Section 1801 of the TCC refers to the
IED or the IEIRD;

xxx xxx xxx

2. whether fraud was perpetrated by petitioner and

(Emphasis supplied)

3. whether the importations can be considered abandoned under Section 1801.

Clearly, the operative act that constitutes "entry" of the imported articles at the port of entry is the
filing and acceptance of the "specified entry form" together with the other documents required by
law and regulations. There is no dispute that the "specified entry form" refers to the IEIRD. Section
205 defines the precise moment when the imported articles are deemed "entered."

"ENTRY" IN SECTIONS 1301 AND 1801 OF THE

TCC REFERS TO BOTH THE IED AND IEIRD
Under Section 1301 of the TCC, imported articles must be entered within a non-extendible period
of 30 days from the date of discharge of the last package from a vessel. Otherwise, the BOC will
deem the imported goods impliedly abandoned under Section 1801. Thus:

Moreover, in the old case of Go Ho Lim v. The Insular Collector of Customs,23 we ruled that the
word "entry" refers to the regular consumption entry (which, in our current terminology, is the
IEIRD) and not the provisional entry (the IED):

Section 1301. Persons Authorized to Make Import Entry. - Imported articles must be
entered in the customhouse at the port of entry within thirty (30) days, which shall
not be extendible from date of discharge of the last package from the vessel or
aircraft either (a) by the importer, being holder of the bill of lading, (b) by a duly licensed
customs broker acting under authority from a holder of the bill or (c) by a person duly
empowered to act as agent or attorney-in-fact for each holder: Provided, That where the
entry is filed by a party other than the importer, said importer shall himself be required to
declare under oath and under the penalties of falsification or perjury that the declarations and
statements contained in the entry are true and correct: Provided, further, That such
statements under oath shall constitute prima facieevidence of knowledge and consent of the
importer of violation against applicable provisions of this Code when the importation is found
to be unlawful. (Emphasis supplied)

It is disputed by the parties whether the application for the special permit. Exhibit A,
containing the misdeclared weight of the 800 cases of eggs, comes within the meaning of the
word "entry" used in section 1290 of the Revised Administrative Code, or said
word "entry" means only the "original entry and importer's declaration." The court below
reversed the decision of the Insular Collector of Customs on the ground that the provisions of
section 1290 of the Revised Administrative Code refer to the regular consumption entry
and not to a provisional declaration made in an application for a special permit, as the
one filed by the appellee, to remove the cases of eggs from the customhouse.
This court is of the opinion that certainly the application, Exhibit A, cannot be considered as a
final regular entry of the weight of the 800 cases of eggs imported by the appellee, taking
into account the fact that said application sought the delivery of said 800 cases of eggs "from
the pier after examination," and the special permit granted, Exhibit E, provided for "delivery
to be made after examination by the appraiser." All the foregoing, together with the
circumstance that the appellee had to file the regular consumption entry which he bound
himself to do, as shown by the application, Exhibit A, logically lead to the conclusion that the
declaration of the weight of the 800 cases of eggs made in said application, is merely a
provisional entry, and as it is subject to verification by the customhouse examiner, it cannot
be considered fraudulent for the purpose of imposing a surcharge of customs duties upon the
importer.24 (Emphasis supplied)

Section 1801. Abandonment, Kinds and Effect of. - An imported article is deemed
abandonedunder any of the following circumstances:
xxx xxx xxx
b. When the owner, importer, consignee or interested party after due notice, fails to file an
entry within thirty (30) days, which shall not be extendible, from the date of
discharge of the last package from the vessel or aircraft, 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)

The congressional deliberations on House Bill No. 4502 which was enacted as RA 765125 amending
the TCC lay down the policy considerations for the non-extendible 30-day period for the filing of
the import entry in Section 1301:

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

MR. JAVIER (E.).

xxx xxx xxx
Under Sections 121026 and 1301 of the [TCC], Mr. Speaker, import entries for imported
articles must be filed within five days from the date of discharge of the last package from the
vessel. The five-day period, however, Mr. Speaker, is subject to an indefinite extension at
the discretion of the collector of customs, which more often than not stretches to more
than three months, thus resulting in considerable delay in the payment of duties and
taxes.

We disagree.
The term "entry" in customs law has a triple meaning. It means (1) the documents filed at the
customs house; (2) the submission and acceptance of the documents and (3) the procedure of
passing goods through the customs house.22

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

The IED serves as basis for the payment of advance duties on importations whereas the IEIRD
evidences the final payment of duties and taxes. The question is: was the filing of the IED
sufficient to constitute "entry" under the TCC?
The law itself, in Section 205, defines the meaning of the technical term "entered" as used in the
TCC:

Under this new procedure, Mr. Speaker, importers will be constrained under the threat
of having their importation declared as abandoned and forfeited in favor of the
government to file import entries and claim their importation as early as possible
thus accelerating the collection of duties and taxes. But providing for a non-extendible
period of 30 days within which to file an import entry, an appeal of fifteen days within which
to claim the imported article, the bill has removed the discretion of the collector of Customs
to extend such period thus minimizing opportunity for graft. Moreover, Mr. Speaker, with
these non-extendible periods coupled with the threat of declaration of abandonment of

Section 205. Entry, or Withdrawal from Warehouse, for Consumption. - Imported articles
shall be deemed "entered" in the Philippines for consumption when the specified
entry form is properly filed and accepted, together with any related documents regained
by the provisions of this Code and/or regulations to be filed with such form at the time of
entry, at the port or station by the customs official designated to receive such entry papers
and any duties, taxes, fees and/or other lawful charges required to be paid at the time of
making such entry have been paid or secured to be paid with the customs official designated

14

imported articles, both the [BOC] and the importer are under pressure to work for the early
release of cargo, thus decongesting all ports of entry and facilitating the release of goods and
thereby promoting trade and commerce.

More importantly, the absence of supporting documents should not have prevented petitioner from
complying with the mandatory and non-extendible period, specially since the consequences of
delayed filing were extremely serious. In addition, these supporting documents were not
conclusive on the government.39 If this kind of excuse were to be accepted, then the collection of
customs duties would be at the mercy of importers.

Finally, Mr. Speaker, the speedy release of imported cargo coupled with the sanctions of
declaration of abandonment and forfeiture will minimize the pilferage of imported cargo at the
ports of entry.27 (Emphasis supplied)

Hence, due to the presence of fraud, the prescriptive period of the finality of liquidation under
Section 1603 was inapplicable:

The filing of the IEIRDs has several important purposes: to ascertain the value of the imported
articles, collect the correct and final amount of customs duties and avoid smuggling of goods into
the country.28 Petitioners interpretation would have an absurd implication: the 30-day period
applies only to the IED while no deadline is specified for the submission of the IEIRD. Strong issues
of public policy militate against petitioners interpretation. It is the IEIRD which accompanies the
final payment of duties and taxes. These duties and taxes must be paid in full before the BOC can
allow the release of the imported articles from its custody.

Section 1603. Finality of Liquidation. When articles have been entered and passed free of
duty or final adjustments of duties made, with subsequent delivery, such entry and passage
free of duty or settlements of duties will, after the expiration of one (1) year, from the date of
the final payment of duties, in the absence of fraud or protest or compliance audit pursuant
to the provisions of this Code, be final and conclusive upon all parties, unless the liquidation
of the import entry was merely tentative.40

Taxes are the lifeblood of the nation. Tariff and customs duties are taxes constituting a significant
portion of the public revenue which enables the government to carry out the functions it has been
ordained to perform for the welfare of its constituents. 29 Hence, their prompt and certain
availability is an imperative need30 and they must be collected without unnecessary
hindrance.31 Clearly, and perhaps for that reason alone, the submission of the IEIRD cannot be left
to the exclusive discretion or whim of the importer.

THE IMPORTATIONS WERE ABANDONED

IN FAVOR OF THE GOVERNMENT
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:

We hold, therefore, that under the relevant provisions of the TCC, 32 both the IED and IEIRD should
be filed within 30 days from the date of discharge of the last package from the vessel or aircraft.
As a result, the position of petitioner, that the import entry to be filed within the 30-day period
refers to the IED and not the IEIRD, has no legal basis.

Section 1801. Abandonment, Kinds and Effect of. xxx xxx xxx
Any person who abandons an article or who fails to claim his importation as provided for
in the preceding paragraph shall be deemed to have renounced all his interests and
property rights therein.

THE EXISTENCE OF FRAUD

WAS ESTABLISHED
Petitioner also denies the commission of fraud. It maintains that it had no predetermined and
deliberate intention not to comply with the 30-day period in order to evade the payment of the
10% rate of duty. Its sole reason for the delayed filing of IEIRDs was allegedly due to the late
arrival of the original copies of the bills of lading and commercial invoices which its suppliers could
send only after the latter computed the average monthly price of crude oil based on worldwide
trading. It claims that the BOC required these original documents to be attached to the IEIRD.

According to petitioner, the shipments should not be considered impliedly abandoned because none
of its overt acts (filing of the IEDs and paying advance duties) revealed any intention to abandon
the importations.41
Unfortunately for petitioner, it was the law itself which considered the importation abandoned when
it failed to file the IEIRDs within the allotted time. Before it was amended, Section 1801 was
worded as follows:

Petitioners arguments lack merit.

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

Fraud, in its general sense, "is deemed to comprise anything calculated to deceive, including all
acts, omissions, and concealment involving a breach of legal or equitable duty, trust or confidence
justly reposed, resulting in the damage to another, or by which an undue and unconscionable
advantage is taken of another."33 It is a question of fact and the circumstances constituting it must
be alleged and proved in the court below.34 The finding of the lower court as to the existence or
non-existence of fraud is final and cannot be reviewed here unless clearly shown to be
erroneous.35 In this case, fraud was established by the IPD-CIIS of the BOC. Both the CTA First
Division and en banc agreed completely with this finding.

Any person who abandons an imported article renounces all his interests and property
rights therein.42

The evidence showed that petitioner bided its time to file the IEIRD so as to avail of a lower rate of
duty. (At or about the time these developments were taking place, the bill lowering the duty on
these oil products from 10% to 3% was already under intense discussion in Congress.) There was
a calculated and preconceived course of action adopted by petitioner purposely to evade the
payment of the correct customs duties then prevailing. This was done in collusion with the former
District Collector, who allowed the acceptance of the late IEIRDs and the collection of duties using
the 3% declared rate. A clear indication of petitioners deliberate intention to defraud the
government was its non-disclosure of discrepancies on the duties declared in the IEDs (10%) and
IEIRDs (3%) covering the shipments.36

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
abandonedunder any of the following circumstances:
a. When the owner, importer, consignee of the imported article expressly signifies in writing to
the Collector of Customs his intention to abandon; or
b. When the owner, importer, consignee or interested party after due notice, fails to file an
entry within thirty (30) days, which shall not be extendible, from the date of
discharge of the last package from the vessel or aircraft xxxx

It was not by sheer coincidence that, by the time petitioner filed its IEIRDs way beyond the
mandated period, the rate of duty had already been reduced from 10% to 3%. Both the CTA
Division and en banc found the explanation of petitioner (for its delay in filing) untruthful. The bills
of lading and corresponding invoices covering the shipments were accomplished immediately after
loading onto the vessels.37 Notably, the memorandum of a district collector cited by petitioner as
basis for its assertion that original copies were required by the BOC was dated October
30, 2002.38 There is no showing that in 1996, the time pertinent in this case, this was in fact a
requirement.

From the wording of the amendment, RA 7651 no longer requires that there be other acts or
omissions where an intent to abandon can be inferred. It is enough that the importer fails to file
the required import entries within the reglementary period. The lawmakers could have easily
retained the words used in the old law (with respect to the intention to abandon) but opted to omit
them.43 It would be error on our part to continue applying the old law despite the clear changes
introduced by the amendment.

15

NOTICE WAS NOT NECESSARY UNDER

THE CIRCUMSTANCES OF THIS CASE

entry therefore has lapsed without the consignee/importer filing the entry and that the proper
posting of notice as required has been complied with.

Petitioner also avers that the importations could not be deemed impliedly abandoned because
respondent did not give it any notice as required by Section 1801 of the TCC:

xxx xxx xxx

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

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

xxx xxx xxx44 (Emphasis supplied)

b. When the owner, importer, consignee or interested party after due notice, fails to file an
entry within thirty (30) days, which shall not be extendible, from the date of discharge of the
last package from the vessel or aircraft xxx (Emphasis supplied)

We disagree.
Under the peculiar facts and circumstances of this case, due notice was not necessary. The
shipments arrived in 1996. The IEDs and IEIRDs were also filed in 1996. However, respondent
discovered the fraud which attended the importations and their subsequent release from the BOCs
custody only in 1999. Obviously, the situation here was not an ordinary case of abandonment
wherein the importer merely decided not to claim its importations. Fraud was established against
petitioner; it colluded with the former District Collector. Because of this, the scheme was concealed
from respondent. The government was unable to protect itself until the plot was uncovered. The
government cannot be crippled by the malfeasance of its officials and employees. Consequently, it
was impossible for respondent to comply with the requirements under the rules.

Furthermore, it claims that notice and abandonment proceedings were required under the BOCs
guidelines on abandonment (CMO 15-94):
SUBJECT: REVISED GUIDELINES ON ABANDONMENT
xxx xxx xxx
B. ADMINISTRATIVE PROVISIONS
xxx xxx xxx
B.2 Implied abandonment occurs when:

By the time respondent learned of the anomaly, the entries had already been belatedly filed and
the oil importations released and presumably used or sold. It was a fait accompli. Under such
circumstances, it would have been against all logic to require respondent to still post an "urgent
notice to file entry" before declaring the shipments abandoned.

B.2.1 The owner, importer, consignee, interested party or his authorized

broker/representative, after due notice, fails to file an entry within a non-extendible period of
thirty (30) days from the date of discharge of last package from the carrying vessel or
aircraft.

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:

xxx xxx xxx

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

xxxxxxxxx
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.

xxx xxx xxx

C. OPERATIONAL PROVISIONS
xxx xxx xxx

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.

C.2 On Implied Abandonment:

xxx xxx xxx

C.2.1 When no entry is filed

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

C.2.1.1 Within twenty-four (24) hours after the completion of the boarding
formalities, the Boarding Inspector must submit the manifests to the Bay Service or similar
office so that the Entry Processing Division copy may be put to use by said office as soon as
possible.
C..2.1.2 Within twenty-four (24) hours after the completion of the unloading of the
vessel/aircraft, the Inspector assigned in the vessel/aircraft, shall issue
a certificationaddressed to the Collector of Customs (Attention: Chief, Entry Processing
Division), copy furnished Chief, Data Monitoring Unit, specifically stating the time and date of
discharge of the last package from the vessel/aircraft assigned to him. Said certificate must
be encoded by Data Monitoring Unit in the Manifest Clearance System.

xxx xxx xxx

HON. QUIMPO. Because Im thinking, Mr. Chairman. Im thinking of certain situations where
the importer even though, you know, in the normal course of business sometimes they fail
to keep up the date or something to that effect.
THE CHAIRMAN. Sometimes their cargoes get lost.

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

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

C.2.1.4 The Chief, Data Monitoring Unit, shall submit a weekly report to the Collector of
Customs with a listing by vessel, Registry Number of shipments/ importations which shall be
deemed abandoned for failure to file entry within the prescribed period and with
certification that per records available, the thirty (30) day period within which to file the

16

He will probably have the problem of coming over to the urban centers, seek the
advice of people on how to file entry. And therefore, the five day extendible to
another five days might really be a tight period for some. But the majority of our
importers are knowledgeable of procedures. And in fact, it is in their interest to file the
entry even before the arrival of the shipment. Thats why we have a procedure in the bureau
whereby importers can file their entries even before the shipment arrives in the
country.45 (Emphasis supplied)

Sec. 1802. Abandonment of Imported Articles. An abandoned article shall ipso facto be
deemed the property of the Government and shall be disposed of in accordance with the
provisions of this Code.
The amendatory law, RA 7651, deleted the requirement that there must be a declaration by the
Collector of Customs that the goods have been abandoned by the importers and that the latter
shall be given notice of said declaration before any abandonment of the articles becomes effective.
No doubt, by using the term "ipso facto" in Section 1802 as amended by RA 7651, the legislature
removed the need for abandonment proceedings and for a declaration that the imported articles
have been abandoned before ownership thereof can be transferred to the government.50

xxxxxxxxx
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.

Petitioner claims it is arbitrary, harsh and confiscatory to deprive importers of their property rights
just because of their failure to timely file the IEIRD. In effect, petitioner is challenging the
constitutionality of Sections 1801 and 1802 by contending that said provisions are violative of
substantive and procedural due process. We disallow this collateral attack on a presumably valid
law:

Furthermore, notice to petitioner was unnecessary because it was fully aware that its shipments
had in fact arrived in the Port of Batangas. The oil shipments were discharged from the carriers
docked in its private pier or wharf, into its shore tanks. From then on, petitioner had actual
physical possession of its oil importations. It was thus incumbent upon it to know its obligation to
file the IEIRD within the 30-day period prescribed by law. As a matter of fact, importers such as
petitioner can, under existing rules and regulations, file in advance an import entry even before
the arrival of the shipment to expedite the release of the same. However, it deliberately chose not
to comply with its obligation under Section 1301.

We have ruled time and again that the constitutionality or validity of laws, orders, or such
other rules with the force of law cannot be attacked collaterally. There is a legal presumption
of validity of these laws and rules. Unless a law or rule is annulled in a direct proceeding, the
legal presumption of its validity stands.51
Besides,

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.

[a] law is deemed valid unless declared null and void by a competent court; more so when
the issue has not been duly pleaded in the trial court. The question of constitutionality must
be raised at the earliest opportunity. xxx The settled rule is that courts will not anticipate a
question of constitutional law in advance of the necessity of deciding it. 52
Be that as it may, the intent of Congress was unequivocal. Our policy makers wanted to do away
with lengthy proceedings before an importation can be considered abandoned:

AN ABANDONED ARTICLE SHALL IPSO FACTO BE DEEMED THE PROPERTY OF THE

GOVERNMENT

x x x x x x xxx

Section 1802 of the TCC provides:

MR. PARAYNO. Thank you, Mr. Chairman. The proposed amendment to Section 1801 on the
abandonment, kinds and effects. This aimed to facilitate, Mr. Chairman, the process by which
this activity is being acted upon at the moment. The intention, Mr. Chairman, is for the
Customs Administration to be able to maximize the revenue that can be derived from
abandoned goods, and the problem that we are encountering at the moment is that we have
to go through a lengthy process similar to a seizure proceedings to be able to finally declare
the cargo, the abandoned cargo forfeited in favor of the government and therefore, may be
disposed of pursuant to law. And that therefore, the proposed amendment particularly on
the implied abandonment as framed here will do away with the lengthy process of
seizure proceedings and therefore, enable us to dispose of the shipments through public
auction and other modes of disposal as early as possible.

Sec. 1802. Abandonment of Imported Articles. - An abandoned article shall ipso facto be
deemed the property of the Government and shall be disposed of in accordance with the
provisions of this Code. (Emphasis supplied)
The term "ipso facto" is defined as "by the very act itself" or "by mere act." Probably a closer
translation of the Latin term would be "by the fact itself."46 Thus, there was no need for any
affirmative act on the part of the government with respect to the abandoned imported articles
since the law itself provides that the abandoned articles shall ipso facto be deemed the property of
the government. Ownership over the abandoned importation was transferred to the government by
operation of law under Section 1802 of the TCC, as amended by RA 7651.
A historical review of the pertinent provisions of the TCC dispels any view that is contrary to the
automatic transfer of ownership of the abandoned articles to the government by the mere fact of
an importers failure to file the required entries within the mandated period.

THE CHAIRMAN. In other words, Commissioner, therell be no need for a seizure in the
case of abandonment because under the proposed bill its considered to be
government property.53

Under the former Administrative Code, Act 2711,47 Section 1323 of Article XV thereof provides:
Sec. 1323. When implied abandonment takes effect Notice An implied abandonment
shall not take effect until after the property shall be declared by the collector to have been
abandoned and notice to the party in interest as in seizure cases.

x x x xxx xxx
CONCLUSION
Petitioners failure to file the required entries within a non-extendible period of thirty days from
date of discharge of the last package from the carrying vessel constituted implied abandonment of
its oil importations. This means that from the precise moment that the non-extendible thirty-day
period lapsed, the abandoned shipments were deemed (that is, they became) the property of the
government. Therefore, when petitioner withdrew the oil shipments for consumption, it
appropriated for itself properties which already belonged to the government. Accordingly, it
became liable for the total dutiable value of the shipments of imported crude oil amounting
to P1,210,280,789.21 reduced by the total amount of duties paid amounting to P316,499,021.00
thereby leaving a balance ofP893,781,768.21.

Thereafter, RA 193748 was enacted. Section 1801 thereof provides:

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

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

PD 146449 did not amend the provisions of the TCC on abandonment. The latest amendment was
introduced by Section 1802 of RA 7651 which provides:

17

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

WHEREFORE, the decree of forfeiture of [petitioner] Commissioner of Customs is hereby reversed

and the subject shipment is hereby ordered released to [respondent] subject to the condition that
the correct duties, taxes, fees and other charges thereon be paid to the Bureau of Customs based
on the actual quality and condition of the shipments at the time of the filing of the corresponding
import entry in compliance with this decision and further subject to the presentation of Central
Bank Release Certificate.5

Costs against petitioner.

SO ORDERED.

Unfortunately, however, respondents counsel failed to secure a writ of execution to enforce the
CTA decision. Instead, it filed separate claims for damages against Don Tim Shipping Corporation
and Evergreen Marine Corporation6 but both cases were dismissed.
G.R. Nos. 166309-10

March 9, 2007
On September 5, 2001, respondent filed in the CTA a petition for the revival of its June 15, 1992
decision. It prayed for the immediate release by BOC of its shipment or, in the alternative,
payment of the shipments value plus damages. The BOC Commissioner failed to file his answer,
hence, he was declared in default.

REPUBLIC OF THE PHILIPPINES, represented by the COMMISSIONER OF

CUSTOMS, Petitioner, vs. UNIMEX MICRO-ELECTRONICS GmBH, Respondent.
DECISION

During the ex parte presentation of respondents evidence, BOC informed the court that the
subject shipment could no longer be found at its warehouses.

CORONA, J.:

In its decision of September 19, 2002,7 the CTA declared that its June 15, 1992 decision could no
longer be executed due to the loss of respondents shipment so it ordered the BOC Commissioner
to pay respondent the commercial value of the goods based on the prevailing exchange rate at the
time of their importation. The dispositive portion of the decision read:

This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to nullify and set aside
the decision of the Court of Appeals (CA) dated August 30, 2004 1 and its amended decision of
November 30, 20042 in CA-G.R. SP No. 75359 and CA-G.R. SP No. 75366.
The antecedent facts follow.

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. Accordingly,

[petitioner] is ORDERED to PAY [respondent] the amount of P8,675,200.22 representing the
commercial value of the shipment at the time of importation subject, however, to the payment of
the proper taxes, duties, fees and other charges thereon. The payment shall be taken from the
sale or sales of the goods or properties seized or forfeited by the Bureau of Customs. 8

Sometime in April 1985, respondent Unimex Micro-Electronics GmBH (Unimex) shipped a 40-foot
container and 171 cartons of Atari game computer cartridges, duplicators, expanders, remote
controllers, parts and accessories to Handyware Phils., Inc. (Handyware). Don Tim Shipping
Corporation transported the goods with Evergreen Marine Corporation as shipping agent.

The BOC Commissioner and respondent filed their respective motions for reconsideration (MRs) of
the above decision.

After the shipment arrived in the Port of Manila on July 9, 1985, the Bureau of Customs (BOC)
agents discovered that it did not tally with the description appearing on the cargo manifest. As a
result, BOC instituted seizure proceedings against Handyware and later issued a warrant of seizure
and detention against the shipment.

In his MR, the BOC Commissioner argued that the CTA altered its June 15, 1992 decision by
converting it from an action for specific performance into a money judgment. 9 On the other hand,
respondent contended that the exchange rate prevailing at the time of actual payment should
apply. It also argued that the CTA erred in not imposing legal interest on BOCs obligation.

On June 5, 1987, the Collector of Customs issued a default order against Handyware for failing to
appear in the seizure proceedings. After an ex parte hearing, the Collector of Customs forfeited the
goods in favor of the government.

The CTA denied both MRs. The BOC Commissioner and the respondent then filed separate petitions
in the CA. The BOC Commissioners appeal was docketed as CA-G.R. SP No. 75359 and
respondents as CA-G.R. SP No. 75366. The CA consolidated the two cases.

Subsequently, on June 15, 1987, respondent Unimex (as shipper and owner of the goods) filed a
motion to intervene in the seizure proceedings. The Collector of Customs granted the motion but
later on declared the June 5, 1987 default order against Handyware as final and executory, thus
affirming the goods forfeiture in favor of the government.

On August 30, 2004, the CA dismissed the BOC Commissioners appeal and granted respondents.
In CA-G.R. SP No. 75359, the CA held that the BOC Commissioner was liable for the value of the
subject shipment as the same was lost while in its custody. On the other hand, in CA-G.R. SP No.
75366, it ruled that the CTA erred in using as basis the prevailing peso-dollar exchange rate at the
time of the importation instead of the prevailing rate at the time of actual payment pursuant to RA
4100.10 It added that respondent was also entitled to legal interest. According to the CA:

Respondent filed a petition for review against petitioner Commissioner of Customs (BOC
Commissioner) in the Court of Tax Appeals (CTA). This case was docketed as CTA Case No. 4317. 3
In a decision4 dated June 15, 1992, the CTA reversed the forfeiture decree and ordered the release
of the subject shipment to respondent subject to the payment of customs duties. The CTA decision
became final and executory on July 20, 1992. The decision read:

18

Considering that the BOC was grossly negligent in handling the subject shipment, this Court finds
Unimex entitled to legal interests. Accordingly, the actual damages thus awarded shall be subject
to 6% interest per annum.

In support of its first argument, petitioner contends that once a judgment becomes final and
executory, it becomes immutable and unalterable, thus the CTA erred in changing the tenor of its
June 15, 1992 decision by ordering it to instead pay the value of the goods.14

Be that as it may, such interest shall accrue only from the date of the CTA Decision on 19
September 2002 since it is from that the quantification of Unimexs damages have been
reasonably ascertained

We disagree.
Indeed, the general rule is that once a decision becomes final and executory, it cannot be altered
or modified. However, this rule is not absolute. In some cases,15 we held that where facts or events
transpire after a decision has become executory, which facts constitute a supervening cause
rendering the final judgment unenforceable, said judgment may be modified. Also, a final
judgment may be altered when its execution becomes impossible or unjust.

xxx xxx xxx

Finally, Unimex is likewise entitled to 12% interest per annum in lieu of 6% per annum from the
time this Decision becomes final and executory until fully paid, in as much as the interim period is
equivalent to a forbearance of credit.

In the case at bar, parties do not dispute the fact that after the June 15, 1992 CTA decision
became final and executory, respondents goods were inexplicably lost while under the BOCs
custody. Certainly, this fact presented a supervening event warranting the modification of the CTA
decision. Even if the CTA had maintained its original decision, still petitioner would have been
unable to comply with it for the obvious reason that there was nothing more to deliver to
respondent.

xxx xxx xxx

WHEREFORE, the appealed Decision, dated 19 September 2002, is hereby AFFIRMED WITH
MODIFICATION in that the Bureau of Customs is adjudged liable to Unimex for the value of the
subject shipment in the amount of $466,885.54. The Bureau of Customs liability may be paid in
Philippine currency, computed at the exchange rate prevailing at the time of actual payment with
legal interest thereon at the rate of 6% per annum from 19 September 2002 up to its finality.
Upon finality of this Decision, the rate of legal interest shall be 12% per annum until the value of
the subject shipment is fully paid.11

Laches Did Not Set in to Frustrate Respondents Petition to Revive The June 15, 1992
CTA Decision
Regarding petitioners second argument, we hold that it cannot impugn respondents claim on the
basis of laches. Laches is the failure or negligence to assert a right within a reasonable time, giving
rise to a presumption that a party has abandoned it or declined to assert it.16 It is not a mere
question of lapse or passage of time but is principally a question of the inequity or unfairness of
permitting a right or claim to be asserted.17

The BOC Commissioner and respondent again filed their respective MRs of the above decision. The
Commissioner insisted that the BOC was not liable to respondent. On the other hand, respondents
MR sought payment of the goods value in euros, not in US dollars.12 It also demanded that the 6%
legal interest be reckoned from the date of its judicial demand on June 15, 1987.

It is clear from the records that respondent was not guilty of negligence or omission. Neither did it
abandon its claim against petitioner. We agree with the CTA (as later affirmed by the CA) that:

On November 30, 2004, the CA denied the BOC Commissioners MR and granted respondents.
Accordingly, the decretal portion of its amended decision read:

There was never negligence or omission to assert its right within a reasonable period of time on
the part of [respondent]. In fact, from the moment it intervened in the proceedings before the
Bureau of Customs up to the present time, [respondent] is diligently trying to fight for what it
believes is right. [Respondent] may have failed to secure a writ of execution with this court when
the [CTA decision] became final and executory due to wrong legal advice, yet it does not mean
that it was sleeping on its right for it filed a case against the shipping agent and/or the sub-agent.
Therefore, there [was never] an occasion wherein petitioner had abandoned or declined to assert
its right. 18

WHEREFORE, the appealed Decision, dated 19 September 2002, is hereby AFFIRMED WITH
MODIFICATION in that the Bureau of Customs is adjudged liable to Unimex for the value of the
subject shipment in the amount of Euro 669,982.565. The Bureau of Customs liability [may be]
paid in the Philippine currency, computed at the exchange rate prevailing at the time of actual
payment with legal interests thereon at the rate of 6% per annum from 15 June 1987 up to the
finality of this Decision. In lieu of the 6% interest, the rate of legal interest shall be 12% per
annum upon finality of this Decision until the value of the subject shipment is fully paid. 13

The rule is that the findings of fact by the lower court,19 if affirmed by the CA, are conclusive on
us.20 Absent any reason that compels us to deviate from the rule, as in this case, we shall not
disturb such findings.

The Republic of the Philippines, represented by the BOC Commissioner, now comes to us via this
petition assailing the CTA decision on the following grounds: (1) the June 15, 1992 CTA judgment
could not be altered after it became final and executory; (2) laches has already set in, hence,
respondents case (reviving the June 15, 1992 CTA judgment) should have been dismissed
outright; (3) the legal interest imposed was erroneous and (4) the government funds cannot be
charged with respondents claim without a corresponding appropriation.

Moreover, the doctrine of laches is based upon grounds of public policy and equity. It is invoked to
discourage stale claims but is entirely addressed to the sound discretion of the court. 21 Since it is
an equitable doctrine, its application is likewise controlled by reasonable considerations. Thus, the
better rule is that courts, under the principle of equity, should not be bound by the doctrine of
laches if wrong or injustice will result.22

Modification of a Final And Executory Judgment

Given the attendant circumstances, laches cannot stall respondents right to recover what is due to
it especially where BOCs negligence in the safekeeping of the goods appears indubitable. There is

19

no denying that BOC exhibited gross carelessness and ineptitude in the performance of its duty as
it could not even explain why or how the goods vanished while in its custody. With this, it is
difficult to exonerate petitioner from liability; otherwise, we would countenance a wrong and
exacerbate respondents loss which to this day has remained unrecompensed.

"In a comprehensive sense, the term "debt" embraces not merely money due by contract, but
whatever one is bound to render to another, either for contract or the requirement of the law, such
as tax where the law imposes personal liability therefor."
Therefore, the government was never a debtor to the petitioner in order that [Article] 2209 could
apply. Nor was it in default for there was no monetary obligation to pay in the first place. There is
default when after demand is made either judicially or extrajudicially. In other words, for interest
to be demandable under Article 2209, there should be a monetary obligation and the debtor was in
default

More importantly, laches never set in because respondent filed its petition for revival of judgment
within the period set by the Rules. In particular, Rule 39, Section 6 states:
SEC. 6. Execution by motion or by independent action. A final and executory judgment or order
may be executed on motion within five (5) years from the date of its entry. After the lapse of such
time, and before it is barred by the statute of limitations, a judgment may be enforced by action.
The revived judgment may also be enforced by motion within five (5) years from the date of its
entry and thereafter by action before it is barred by the statute of limitations.

In the instant case, [petitioner] was never under monetary obligation to [respondent], no demand
can be made either judicially or extrajudicially. Parallel thereto, there could be no default 26
No doubt, the present case does not fall within the first situation. Neither can it be considered as
one involving interest based on damages under the second situation.

Furthermore, Article 1144 of the Civil Code, an action "upon a judgment" may be brought within
ten (10) years from the time the right of action accrues.
The CTA judgment sought to be revived became final and executory on July 20, 1992 23 and was
accordingly entered into the book of judgments on the same date. On the other hand, the petition
to revive said judgment was filed on September 5, 2001. Clearly, the filing of the petition for the
revival of judgment was well within the reglementary period provided by law.

More importantly, interest is not chargeable against petitioner except when it has expressly
stipulated to pay it or when interest is allowed by the legislature or in eminent domain cases where
damages sustained by the owner take the form of interest at the legal rate.27 Consequently, the
CAs imposition of the 12% p.a. legal interest upon the finality of the decision of this case until the
value of the goods is fully paid (as forbearance of credit) is likewise bereft of any legal anchor.

Legal Interest May Be Imposed for Use of Money or as Compensatory Damages

Government Liability For Actual Damages

Petitioner likewise argues that the CA erred in imposing the 6% p.a. legal interest. According to
petitioner, the obligation to pay legal interest only arises by virtue of a contract or on account of
damages due to delay or failure to pay the principal on which the interest is exacted. It added that
since the June 15, 1992 CTA decision did not involve a monetary award but merely the release of
the goods to respondent, there was no basis for the computation and/or imposition of the 6% p.a.
legal interest.

Finally, petitioner argues that a money judgment or any charge against the government requires a
corresponding appropriation and cannot be decreed by mere judicial order.
Although it may be gainsaid that the satisfaction of respondents demand will ultimately fall on the
government, and that, under the political doctrine of "state immunity," it cannot be held liable for
governmental acts (jus imperii),28 we still hold that petitioner cannot escape its liability. The
circumstances of this case warrant its exclusion from the purview of the state immunity doctrine.

We agree with petitioner.

As previously discussed, the Court cannot turn a blind eye to BOCs ineptitude and gross
negligence in the safekeeping of respondents goods. We are not likewise unaware of its
lackadaisical attitude in failing to provide a cogent explanation on the goods disappearance,
considering that they were in its custody and that they were in fact the subject of litigation. The
situation does not allow us to reject respondents claim on the mere invocation of the doctrine of
state immunity. Succinctly, the doctrine must be fairly observed and the State should not avail
itself of this prerogative to take undue advantage of parties that may have legitimate claims
against it.29

Interest may be paid only either as compensation for the use of money (monetary interest) 24 or as
damages (compensatory interest).25 We quote in agreement the CTAs disquisition in its decision
dated September 19, 2002:
Interest may be paid either as compensation for the use of money (monetary interest) referred to
in Article 1956 of the New Civil Code or as damages (compensatory interest) under Article 2209
above cited. As clearly provided in [Article 2209], interest is demandable if: a) there is monetary
obligation and b) debtor incurs delay.

In Department of Health v. C.V. Canchela & Associates,30 we enunciated that this Court, as the
staunch guardian of the peoples rights and welfare, cannot sanction an injustice so patent in its
face, and allow itself to be an instrument in the perpetration thereof. Over time, courts have
recognized with almost pedantic adherence that what is inconvenient and contrary to reason is not
allowed in law.31 Justice and equity now demand that the States cloak of invincibility against suit
and liability be shredded.

This case does not involve a monetary obligation to be covered by Article 2209. There is no dispute
that this case was originally filed questioning the seizure of the shipment by the Bureau of
Customs. Our decision subject of this action for revival [of judgment] did not refer to any
monetary obligation by [petitioner] towards the [respondent]. In fact, if there was any monetary
obligation mentioned, it referred to the obligation of [respondent] to pay the correct taxes, duties,
fees and other charges before the release of the goods can be had. In one case, the Supreme
Court held:

Accordingly, we agree with the lower courts directive that, upon payment of the necessary
customs duties by respondent, petitioners "payment shall be taken from the sale or sales of goods
or properties seized or forfeited by the Bureau of Customs." 32

20

WHEREFORE, the assailed decisions of the Court of Appeals in CA-G.R. SP Nos. 75359 and 75366
are herebyAFFIRMED with MODIFICATION. Petitioner Republic of the Philippines, represented
by the Commissioner of the Bureau of Customs, upon payment of the necessary customs duties by
respondent Unimex Micro-Electronics GmBH, is hereby ordered to pay respondent the value of the
subject shipment in the amount of Euro 669,982.565. Petitioners liability may be paid in Philippine
currency, computed at the exchange rate prevailing at the time of actual payment.

The Office of the Solicitor General (OSG)8 presents the prosecution's version of the facts as
follows:
"On October 12, 1979, Col. Panfilo Lacson, the[n] Chief of the Police Intelligence Branch of
the Metrocom Intelligence and Security Group (MISG for brevity), received information that
certain syndicated groups were engaged in smuggling activities somewhere in Port Area,
Manila. It was further revealed that the activities [were being] done at nighttime and the
smuggled goods in a delivery panel and delivery truck [were] being escorted by some police
and military personnel. He fielded three surveillance stake-out teams the following night
along Roxas Boulevard and Bonifacio Drive near Del Pan Bridge, whereby they were to watch
out for a cargo truck with Plate No. T-SY-167 bound for Malabon. Nothing came out of it. On
the basis of his investigation, [it was discovered that] the truck was registered in the name of
Teresita Estacio of Pasay City.

SO ORDERED.
-------------------------------------------------------------------------------------------------------------G.R. No. 147817

August 12, 2004

"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.

FELICISIMO RIETA, petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent.

DECISION
PANGANIBAN, J.:
Corpus delicti refers to the fact of the commission of the crime. It may be proven by the credible
testimonies of witnesses, not necessarily by physical evidence. In-court identification of the
offender is not essential, as long as the identity of the accused is determined with certainty by
relevant evidence. In the present case, there is no doubt that petitioner was the same person
apprehended by the authorities and mentioned in the Information. His possession of the smuggled
cigarettes carried the prima facie presumption that he was engaged in smuggling. Having failed to
rebut this presumption, he may thus be convicted of the crime charged.

"At around 5 minutes before 4:00 o'clock that morning, a green cargo truck with Plate No. TSY-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.

The Case
Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to set aside the
December 22, 2000 Decision2 of the Court of Appeals (CA) in CA-GR CR No. 17338. The CA
affirmed with modification the February 18, 1994 Consolidated Judgment 3 of the Regional Trial
Court (RTC)4 of Manila (Branch 46) in Criminal Case Nos. CCC-VI-137(79) and CCC-VI-138(79),
finding Felicisimo Rieta guilty of smuggling. The assailed CA Decision disposed as follows:
"WHEREFORE, the assailed Decision is hereby MODIFIED as follows:
(a) The Court AFFIRMS the decision of the trial court finding Felicisimo Rieta, Arturo Rimorin,
Pacifico Teruel and Carmelo Manaois GUILTY BEYOND REASONABLE DOUBT of the crime
charged.

"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.

(b) Appellants Ernesto Miaco, Guillermo Ferrer, Fidel Balita, Robartolo Alincastre and Ernesto
de Castro are ACQUITTED as recommended by the Solicitor General."5
Reconsideration was denied in the April 16, 2001 CA Resolution, 6 which petitioner also assails.
Petitioner and his six co-accused -- Arturo Rimorin, Fidel Balita, Gonzalo Vargas, Robartolo
Alincastre, Guillermo Ferrer and Ernesto Miaco -- were charged in an Information, which reads:

"x x x

xxx

xxx

"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."9

"That on or about October 15, 1979, in the City of Manila, Philippines, the said accused,
conspiring and confederating together and helping one another, with the evident intent to
defraud the government of the Republic of the Philippines of the legitimate duties accruing to
it from merchandise imported into this country, did then and there [willfully], unlawfully [and]
fraudulently import or bring into the Philippines or assist in so doing contrary to law, three
hundred five (305) cases of assorted brands of blue seal cigarettes which are foreign articles
valued at P513,663.47 including duties and taxes, and/or buy, sell, transport or assist and
facilitate the buying, selling and transporting of the above-named foreign articles after
importation knowing the same to have been imported contrary to law which was found in the
possession of said accused and under their control which articles said accused fully well knew
have not been properly declared and that the duties and specific taxes thereon have not been
paid to the proper authorities in violation of said Sec. 3601 of the Tariff and Customs Code of
the Philippines, as amended by Presidential Decree No. 34, in relation to Sec. 3602 of said
Code and Sec. 184 of the National Internal Revenue Code." 7

Version of the Defense (Petitioner)

Petitioner, on the other hand, denied any knowledge of the alleged smuggling of the blue-seal
cigarettes. He sets forth his version of the facts as follows:
"Petitioner Rieta testified that he was a policeman assigned at Kawit Cavite. In the early
morning of October 15, 1979, he was in Manila together with Boy. He met Boy in 1978 when
the latter figured in a vehicular accident in Kawit, Cavite. x x x After a week, Boy visited him
at the Kawit Police Station and thereafter, met him four to five times. He learned that Boy was
a businessman hauling slippers, fish and vegetables from Divisoria. For several times, he had
accompanied Boy on his business trips when [the latter] hauled fish, vegetables and slippers
from Divisoria to Cavite. He was requested by Boy to accompany him on his various trips
because there were times when policemen on patrol were demanding money from [the
latter]. At other times, other policemen accompanied Boy aside from him, on his trips.

The Facts
Version of the Prosecution (Respondent)

21

"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.

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 framedup. Two days after, he was interrogated and the alleged blue seal cigarettes were shown to
him, and he was informed by the investigator that the same blue seal cigarettes were the
contents of the cargo truck. When the alleged blue seal cigarettes were taken out of the cargo
truck, he was not asked to be present. He asked for the whereabouts of Boy, but he was
informed that the latter escaped. The more he believed that there was something fishy or
wrong in their apprehension. It was very [conspicuous] that the driver was able to escape
because at the time they were apprehended they were the only people at Bonifacio Drive, and
thus the possibility of escape was very remote, considering that they were unarmed and the
Metrocom soldiers were all fully armed. In both cases at bar, there were about three Pasay
policemen who were apprehended. He was detained at Camp Bagong Diwa for more than a
year. He knew nothing about the charge against him. When he was at Camp Crame he tried
getting in touch with a lawyer and his family, but the MISG did not let him use the
telephone."

"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.

Ruling of the Court of Appeals

Affirming the RTC, the CA noted that while petitioner and his co-accused had mainly raised
questions of fact, they had nonetheless failed to point out specific errors committed by the trial
court in upholding the credibility of the prosecution's witnesses. The defense of denial proffered by
petitioner was considered weak and incapable of overturning the overwhelming testimonial and
documentary evidence of respondent. Further, the appellate court ruled that the non-presentation
in court of the seized blue-seal cigarettes was not fatal to respondent's cause, since the crime had
sufficiently been established by other competent evidence.

"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

The CA rejected the belated claim of petitioner that his arrest was irregular. It ruled that the
alleged defect could not be raised for the first time on appeal, especially in the light of his
voluntary submission to and participation in the proceedings before the trial court.
The appellate court, however, found no sufficient evidence against the other co-accused who,
unlike petitioner, had not been found to be in possession of blue-seal cigarettes.
Hence, this Petition.11
Issues
In his Memorandum, petitioner submits the following issues for the Court's consideration:
"1. The respondents trial and appellate courts committed grave abuse of discretion
tantamount to lack and/or excess of jurisdiction when [they] convicted herein petitioner
notwithstanding the prosecution's failure to prove the guilt of the petitioner beyond
reasonable doubt.
"2. The evidence obtained against the accused is inadmissible in evidence because petitioner
and his co-accused were arrested without a warrant but by virtue of an arrest and seizure
order (ASSO) which was subsequently declared illegal and invalid by this Honorable Supreme
Court."12
The Court's Ruling
The Petition has no merit.

22

First Issue:
Sufficiency of Evidence

xxx

xxx

xxx

Fiscal Macaraeg:

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.

I am showing to you a Custody Receipt dated October 15, 1979, which states:
Received from Lt. Col. Rolando N. Abadilla, AC of S, M2/CC, MISG. PC
METROCOM

Corpus Delicti Established

by Other Evidence

(Thru S/Sgt. Rodolfo Bucao, PC) THREE HUNDRED SEVENTY ONE (371) cases
of assorted brands of 'Blue Seal' Cigarettes, which were intercepted and
confiscated by elements of the MISG, PC METROCOM on or about 0400 15
October 79 along Bonifacio Drive, Manila, which for [purposes] of identification
we respectfully request that it be marked [on] evidence as Exhibit 'A'.

We do not agree. Corpus delicti refers to the specific injury or loss sustained.13 It is the fact of the
commission of the crime14 that may be proved by the testimony of eyewitnesses.15 In its legal
sense, corpus delicti does not necessarily refer to the body of the person murdered, 16 to the
firearms in the crime of homicide with the use of unlicensed firearms,17 to the ransom money in
the crime of kidnapping for ransom,18 or -- in the present case -- to the seized contraband
cigarettes.19

COURT:
Mark it Exhibit 'A'.
Fiscal Macaraeg:

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:
20

Q
Let us go back to the truck after you apprehended the COSAC soldiers on board
the [C]orona car, what did you do thereafter?
What did you notice thereat?

Blue seal cigarettes?

Yes, Sir.

What do you mean by blue seal cigarettes?

Blue seal cigarettes are untaxed cigarettes, Sir.

Yes, Sir, [there] were three.

Who?

They were P/Sgt. Arturo Rimorin, Sr.

P/Sgt. Of what department?

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

Of that police department?

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

Who is this Gonzalo Vargas?

Civilian Sir.

Can you bring those pictures if required next time?

Yes, Sir.

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

Q
Did you find out how many were there on board the truck which was intercepted
by your men per your order?
A

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 coaccused rode, and from which the 66 cases of cigarettes -- subject of Criminal Case No. CCC-VI138(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.

Three hundred five (305) cases, Sir.

The copies are with our evidence custodian, Sir.

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.

Q
Now you stated that a search was made on the truck and you found how many
cases of blue seal cigarettes?
Q

Do you have copies of these photographs?

"We find no reason to depart from the oft repeated doctrine of giving credence to the
narration of prosecution witnesses, especially when they are public officers who are presumed
to have performed their duties in a regular manner." 21

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

Yes, Sir.

"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.

"Col. Panfilo Lacson's testimony on the apprehension of petitioner and on the seizure of the
blue seal cigarettes was clear and straightforward. He categorically testified as follows:

We took them to the place where the cargo truck was intercepted, Sir.

This is the same receipt, Sir.

"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.

Will you please do examine Exhibit 'A' and tell us whether this is the same receipt?

Q
By the way, were photographs taken of the car as well as the vehicle involved in
this case, together with the blue seal cigarettes that were confiscated?

"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.

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,

23

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. 25

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 selfserving denial.

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.

Knowledge of the Illegal

Nature of Goods
The fact that 305 cases of blue-seal cigarettes were found in the cargo truck, in which petitioner
and his co-accused were riding, was properly established. Nonetheless, he insists that his presence
there was not enough to convict him of smuggling, because the element of illegal possession had
not been duly proved. He adds that he had no knowledge that untaxed cigarettes were in the
truck.

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.

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.29 The burden of proof is thus shifted to them. To rebut this presumption,
it is not enough for petitioner to claim good faith and lack of knowledge of the unlawful source of
the cigarettes. He should have presented evidence to support his claim and to convince the court
of his non-complicity.

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.

In the case adverted to earlier, Rimorin v. People, we held thus:

Courtroom Identification Unnecessary

"In his discussion of a similarly worded provision of Republic Act No. 455, a criminal law
authority explained thus:

Next, 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:

'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)

"x x x. While positive identification by a witness is required by the law to convict an accused,
it need not always be by means of a physical courtroom identification. As the Court held
in People v. Paglinawan:
'x x x. Although it is routine procedure for witnesses to point out the accused in open
court by way of identification, the fact that the witness x x x did not do so in this case
was because the public prosecutor failed to ask her to point out appellant, hence such
omission does not in any way affect or diminish the truth or weight of her testimony.'

In the present case, the explanation given by petitioner was found to be unacceptable and
incredible by both the RTC and the CA, which said:

"In-court identification of the offender is essential only when there is a question or doubt on
whether the one alleged to have committed the crime is the same person who is charged in
the information and subject of the trial."27

"Now on the explanations of Police Sgt. Rimorin of Pasay City Police Force and Pat. Rieta of
Kawit Police Force, riders in the loaded cargo truck driven by 'Boy.' Their claim that they did
not have any knowledge about the cargo of blue seal cigarettes is not given credence by the
court. They tried to show lack of knowledge by claiming that along the way, 'Boy' and Gonzalo
Vargas left them behind at a certain point for snacks and picked them up later after the cargo
had been loaded. The Court cannot see its way through how two policemen, joining 'Boy' in
the dead of the night, explicitly to give him and his goods some protection, which service
would be paid, yet would not know what they are out to protect. And neither could the Court
see reason in '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."31

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(79).
Prima Facie Proof of
Nonpayment of Taxes Sufficient
There is no merit, either, in the claim of petitioner that the prosecution failed to prove the
nonpayment of the taxes and duties on the confiscated cigarettes. There is an exception to the
general rule requiring the prosecution to prove a criminal charge predicated on a negative
allegation, or a negative averment constituting an essential element of a crime. In People v.
Julian-Fernandez, we held:

Being contrary to human experience, his version of the facts is too pat and stereotyped to be
accepted at face value. Evidence, to be believed, not only must proceed from the mouth of a
credible witness; it must also be credible in itself, as when it conforms to common experience and
observation of humankind.32

"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." 28(Emphasis supplied)

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.

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

Second Issue:
Validity of the Search and Seizure

24

Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. 4754
was invalid, as the law upon which it was predicated -- General Order No. 60, issued by then
President Ferdinand E. Marcos -- was subsequently declared by the Court, in Taada v.
Tuvera,33 to have no force and effect. Thus, he asserts, any evidence obtained pursuant thereto is
inadmissible in evidence.
We do not agree. In Taada, the Court addressed the possible effects of its declaration of the
invalidity of various presidential issuances. Discussing therein how such a declaration might affect
acts done on a presumption of their validity, the Court said:

G.R. No. 177188

EL GRECO SHIP MANNING AND MANAGEMENT CORPORATION, petitioner, vs.

COMMISSIONER OF CUSTOMS, respondent.

"x x x. In similar situations in the past this Court had taken the pragmatic and realistic course
set forth in Chicot County Drainage District vs. Baxter Bank to wit:
'The courts below have proceeded on the theory that the Act of Congress, having been
found to be unconstitutional, was not a law; that it was inoperative, conferring no rights
and imposing no duties, and hence affording no basis for the challenged decree. x x x It
is quite clear, however, that such broad statements as to the effect of a determination of
unconstitutionality must be taken with qualifications. The actual existence of a statute,
prior to [the determination of its invalidity], is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent ruling as to invalidity may have to
be considered in various aspects with respect to particular conduct, private and official.
Questions of rights claimed to have become vested, of status, of prior determinations
deemed to have finality and acted upon accordingly, of public policy in the light of the
nature both of the statute and of its previous application, demand examination. These
questions are among the most difficult of those which have engaged the attention of
courts, state and federal, and it is manifest from numerous decisions that an all-inclusive
statement of a principle of absolute retroactive invalidity cannot be justified.'
xxxx

xx

December 4, 2008

DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, filed by petitioner El Greco Ship Manning and Management Corporation (El Greco), seeking
to reverse and set aside the Decision 1 of the Court of Tax Appeals (CTA) En Banc dated 14 March
2007 in C.T.A. EB No. 162. In its assailed Decision, the CTA En Banc affirmed the Decision2 dated
17 October 2005 of the CTA Second Division in CTA Case No. 6618, ordering the forfeiture of the
vessel M/V Criston, also known as M/V Neptune Breeze, for having been involved in the smuggling
of 35,000 bags of imported rice.

xxx

The factual and procedural antecedents of this case are as follows:

"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 allinclusive

On 23 September 2001, the vessel M/V Criston docked at the Port of Tabaco, Albay, carrying a
shipment of 35,000 bags of imported rice, consigned to Antonio Chua, Jr. (Chua) and Carlos Carillo
(Carillo), payable upon its delivery to Albay. Glucer Shipping Company, Inc. (Glucer Shipping) is
the operator of M/V Criston.3

statement of a principle of absolute retroactive invalidity cannot be justified.'" 34

The Chicot doctrine cited in Taada advocates that, prior to the nullification of a statute, there is
an imperative necessity of taking into account its actual existence as an operative fact negating
the acceptance of "a principle of absolute retroactive invalidity." Whatever was done while the
legislative or the executive act was in operation should be duly recognized and presumed to be
valid in all respects.35 The ASSO that was issued in 1979 under General Order No. 60 -- long before
our Decision in Taada and the arrest of petitioner -- is an operative fact that can no longer be
disturbed or simply ignored.
Furthermore, the search and seizure of goods, suspected to have been introduced into the country
in violation of customs laws, is one of the seven doctrinally accepted exceptions 36 to the
constitutional provision. Such provision mandates that no search or seizure shall be made except
by virtue of a warrant issued by a judge who has personally determined the existence of probable
cause.37

Upon the directive of then Commissioner Titus Villanueva of the Bureau of Customs (BOC), a
Warrant of Seizure and Detention, Seizure Identification No. 06-2001, was issued by the
Legaspi District Collector, on 23 September 2001 for the 35,000 bags of imported rice shipped by
M/V Criston, on the ground that it left the Port of Manila without the necessary clearance from the
Philippine Coast Guard. Since the earlier Warrant covered only the cargo, but not M/V Criston
which transported it, a subsequent Warrant of Seizure and Detention, Seizure Identification No.
06-2001-A, was issued on 18 October 2001 particularly for the said vessel. The BOC District
Collector of the Port of 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.4

Under the Tariff and Customs Code, a search, seizure and arrest may be made even without a
warrant for purposes of enforcing customs and tariff laws. Without mention of the need to priorly
obtain a judicial warrant, the Code specifically allows police authorities to enter, pass through or
search any land, enclosure, warehouse, store or building that is not a dwelling house; and also to
inspect, search and examine any vessel or aircraft and any trunk, package, box or envelope or any
person on board; or to stop and search and examine any vehicle, beast or person suspected of
holding or conveying any dutiable or prohibited article introduced into the Philippines contrary to
law.38

To protect their property rights over the cargo, consignees Chua and Carillo filed before the
Regional Trial Court (RTC) of Tabaco, Albay, a Petition for Prohibition with Prayer for the Issuance
of Preliminary Injunction and Temporary Restraining Order (TRO) assailing the authority of the
Legaspi District Collectors to issue the Warrants of Seizure and Detention and praying for a
permanent injunction against the implementation of the said Warrants. Their Petition was docketed
as Civil Case No. T-2170.5

WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against
petitioner.

After finding the Petition sufficient in form and substance and considering the extreme urgency of
the matter involved, 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. After Chua and
Carillo posted the required bond, the 35,000 bags of rice were released to them. 6

SO ORDERED.
--------------------------------------------------------------------------------------------------------------

25

The Legaspi District Collector held in abeyance the proceedings for the forfeiture of M/V Criston
and its cargo under Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A
pending the resolution by the RTC of Civil Case No. T-2170. When the RTC granted the Motion to
Dismiss Civil Case No. T-2170 filed by the BOC, the Legaspi District Collector set the hearing of
Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A. A notice of the
scheduled hearing of the aforementioned seizure cases was sent to Glucer Shipping but it failed to
appear at the hearing so set. After a second notice of hearing was ignored by Glucer Shipping, the
prosecutor was allowed to present his witnesses.7

Respectfully returned to the District Collector, POM, the within case folders in POM S. I. No.
2001-208, EL GRECO SHIP MANNING AND MANAGEMENT CORPORATION,
Claimant/Intervenor, with the information that the Decision of that Port in the aforesaid case
is hereby REVERSED in view of the following reasons:
1. Subject vessel MV "NEPTUNE BREEZE" and MV "CRISTON" are one and the same as shown
by the vessels documents retrieved by the elements of the Philippine Coast Guard from MV
"CRISTON" during the search conducted on board thereof when the same was apprehended in
Tabaco, Albay, indicating therein the name of the vessel MV "NEPTUNE BREEZE," the name of
the master of the vessel a certain YUSHAWU AWUDU, etc. These facts were corroborated by
the footage of ABS-CBN taken on board the vessel when the same was subjected to search.

In the meantime, while M/V Criston was berthing at the Port of Tabaco under the custody of the
BOC, the Province of Albay was hit by typhoon "Manang." In order to avert any damage which
could be caused by the typhoon, the vessel was allowed to proceed to another anchorage area to
temporarily seek shelter. After typhoon "Manang" had passed through Albay province, M/V Criston,
however, failed to return to the Port of Tabaco and was nowhere to be found.8

2. Hence, prior jurisdiction over the said vessel was already acquired by the Port of Legaspi
when the said Port issued WSD S.I. No. 06-2001-A and therefore, the Decision of the latter
Port forfeiting the subject vessel supercedes the Decision of that Port ordering its release.

Alarmed, the BOC and the Philippine Coast Guard coordinated with the Philippine Air Force to find
the missing vessel. On 8 November 2001, the BOC received information that M/V Criston was
found in the waters of Bataan sporting the name of M/V Neptune Breeze. 9

Seeking the reversal of the Decision dated 15 January 2003 of the BOC Commissioner, El Greco
filed a Petition for Review with the CTA which was lodged before its Second Division as CTA Case
No. 6618. El Greco averred that the BOC Commissioner committed grave abuse of discretion in
ordering the forfeiture of the M/V Neptune Breeze in the absence of proof that M/V Neptune Breeze
and M/V Criston were one and the same vessel.15According to El Greco, it was highly improbable
that M/V Criston was merely assuming the identity of M/V Neptune Breeze in order to evade
liability since these were distinct and separate vessels as evidenced by their Certificates of
Registry. While M/V Neptune Breeze was registered in St. Vincent and the Grenadines 16 as shown
in its Certificate of Registry No. 7298/N, M/V Criston was registered in the Philippines. Additionally,
El Greco argued that the Order dated 11 March 2002 of the Manila District Collector already
became final and executory for failure of the BOC Commissioner to act thereon within a period of
30 days in accordance with Section 2313 of the Tariff and Customs Code.

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. 2001208 was issued against the vessel by the BOC District Collector of the Port of Manila. 10
For the same reasons, the Legaspi District Collector rendered a Decision on 27 June 2002 in
Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A ordering the forfeiture
of the M/V Criston, also known as M/V Neptune Breeze, and its cargo, for violating Section 2530
(a), (f) and (k) of the Tariff and Customs Code.11
In the meantime, El Greco, the duly authorized local agent of the registered owner of M/V Neptune
Breeze, Atlantic Pacific Corporation, Inc. (Atlantic Pacific), filed with the Manila District Collector, in
Seizure Identification No. 2001-208, a Motion for Intervention and Motion to Quash Warrant of
Seizure Detention with Urgent Prayer for the Immediate Release of M/V Neptune Breeze. El Greco
claimed that M/V Neptune Breeze was a foreign registered vessel owned by Atlantic Pacific, and
different from M/V Criston which had been involved in smuggling activities in Legaspi, Albay.12

On 17 October 2005, the CTA Second Division rendered a Decision17 in CTA Case No. 6618
sustaining the 15 January 2003 Decision of the BOC Commissioner ordering the forfeiture of M/V
Neptune Breeze. Referring to the crime laboratory report submitted by the Philippine National
Police (PNP) stating that the serial numbers of the engines and the generators of both M/V Criston
and M/V Neptune Breeze were identical, the CTA Second Division concluded that both vessels were
indeed one and the same vessel. The CTA Second Division further ruled that nothing in the
provisions of Section 2313 of the Tariff and Customs Code could buttress El Grecos contention that
the Order dated 11 March 2002 of the Manila District Collector already became final and executory.
The dispositive portion of the Decision of the CTA Second Division reads:

Acting favorably on the motion of El Greco, the Manila District Collector issued an Order 13 dated 11
March 2002 quashing the Warrant of Seizure and Detention it issued against M/V Neptune Breeze
in Seizure Identification No. 2001-208 for lack of probable cause that the said vessel was the same
one known as M/V Criston which fled from the jurisdiction of the BOC Legaspi District after being
seized and detained therein for allegedly engaging in smuggling activities. According to the
decretal part of the Manila District Collectors Order:

WHEREFORE, premises considered, the present Petition for Review is hereby DISMISSED.
The Decision in the 2nd Indorsement dated January 15, 2003 of then Commissioner Bernardo
is hereby AFFIRMED.18

WHEREFORE, pursuant to the authority vested in me by law, it is hereby ordered and decreed
that the Warrant of Seizure and Detention issued thereof be Quashed for want of factual or
legal basis, and that the vessel "M/V Neptune Brreze" be released to [El Greco] after
clearance with the Commissioner of Customs, proper identification and compliance with
existing rules and regulations pertinent in the premises.

In a Resolution19 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.

On automatic review by BOC Commissioner Antonio Bernardo, the Order dated 11 March 2002 of
the District Collector of the Port of Manila was reversed after finding that M/V Neptune Breeze and
M/V Criston were one and the same and that the Legaspi District Collector had already acquired
prior jurisdiction over the vessel. The Decision dated 15 January 2003 of the BOC Commissioner,
contained in his 2nd Indorsement14 to the Manila District Collector, decreed:

26

Undaunted, El Greco elevated its case to the CTA En Banc through a Petition for Review, docketed
as C.T.A. EB No. 162, this time lamenting that it was being deprived of its property without due
process of law. El Greco asserted that the CTA Second Division violated its constitutional right to
due process when it upheld the forfeiture of M/V Neptune Breeze on the basis of the evidence
presented before the Legaspi District Collector in Seizure Identification No. 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.20

In its Decision21 promulgated on 14 March 2007, the CTA En Banc declared that the CTA Second
Division did not commit any error in its disquisition, and dismissed the Petition of El Greco in C.T.A.
EB No. 162 for lack of merit. According to the CTA En Banc, the appreciation and calibration of
evidence on appeal (from the ruling of the BOC) lies within the sound discretion of its Division, and
the latters findings and conclusions cannot be set aside unless it has been sufficiently shown that
they are not supported by evidence on record. The CTA En Banc thus disposed:

Albay, without the consent of the customs authorities therein while under detention for smuggling
35,000 bags of imported rice.
The crime laboratory report of the PNP shows that the serial numbers of the engines and
generators of the two vessels are identical. El Greco failed to rebut this piece of evidence that
decisively identified M/V Neptune Breeze as the same as M/V Criston. We take judicial notice that
along with gross tonnage, net tonnage, length and breadth of the vessel, the serial numbers of its
engine and generator are the necessary information identifying a vessel. In much the same way,
the identity of a land motor vehicle is established by its unique motor and chassis numbers. It is,
thus, highly improbable that two totally different vessels would have engines and generators
bearing the very same serial numbers; and the only logical conclusion is that they must be one
and the same vessel.

WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the assailed Decision
promulgated on October 17, 2005 and Resolution dated February 7, 2006 of the Second
Division of this Court, are hereby AFFIRMED.22
Without filing a Motion for Reconsideration with the CTA, El Greco already sought recourse before
this Court via this Petition for Review on Certiorari, raising the following issues:

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.

I.
WHETHER OR NOT EL GRECO WAS DENIED OF ITS RIGHT TO DUE PROCESS.

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.

II.
WHETHER OR NOT M/V NEPTUNE BREEZE AND M/V CRISTON ARE ONE AND THE SAME
VESSEL.

We also take note that the purported operator of M/V Criston, Glucer Shipping, was a total noshow at the hearings held in Seizure Identification No. 06-2001 and Seizure Identification No. 062001-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.

III.
WHETHER OR NOT M/V NEPTUNE BREEZE IS QUALIFIED TO BE THE SUBJECT OF FORFEITURE
UNDER SECTION 2531 OF THE TARIFF AND CUSTOMS CODE.
The primordial issue to be determined by this Court is whether M/V Neptune Breeze is one and the
same as M/V Criston which had been detained at the Port of Tabaco, Albay, for carrying smuggled
imported rice and had fled the custody of the customs authorities to evade its liabilities.

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.

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

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.

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

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.

Well-entrenched is the rule that findings of facts of the CTA are binding on this Court and can only
be disturbed on appeal if not supported by substantial evidence. 23 Substantial evidence is that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion.24

In administrative proceedings, such as those before the BOC, technical rules of procedure and
evidence are not strictly applied and administrative due process cannot be fully equated with due
process in its strict judicial sense.25 The essence of due process is simply an opportunity to be
heard or, as applied to administrative proceedings, an opportunity to explain one's side or an
opportunity to seek reconsideration of the action or ruling complained of.26

A review of the records of the present case unveils the overwhelming and utterly significant pieces
of evidence that more than meets the quantum of evidence necessary to establish that M/V
Neptune Breeze is the very same vessel as M/V Criston, which left the anchorage area at Legaspi,

27

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.

together with its equipage and appurtenances including the beast, steam or other motive
power drawing or propelling the same. The mere conveyance of contraband or smuggled
articles by such beast or vehicle shall be sufficient cause for the outright seizure and
confiscation of such beast or vehicle, but the forfeiture shall not be effected if it is established
that the owner of the means of conveyance used as aforesaid, is engaged as common carrier
and not chartered or leased, or his agent in charge thereof at the time has no knowledge of
the unlawful act.
The penalty of forfeiture is imposed on any vessel engaged in smuggling, provided that the
following conditions are present:
(1) The vessel is "used unlawfully in the importation or exportation of articles into or from" the
Philippines;

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. 062001 and No. 06-2001-A before the CTA Second Division in CTA Case No. 6618 and the CTA En
Banc in C.T.A. EB No. 162, and now before this Court in the Petition at bar. Unfortunately, El Greco
was unable to make full use to its advantage of these repeated opportunities by offering all
possible evidence in support of its case. For example, evidence that could establish that M/V
Neptune Breeze was somewhere else at the time when M/V Criston was being held by customs
authority at the Port of Legaspi, Albay, would have been helpful to El Grecos cause and very easy
to secure, but is glaringly absent herein.

(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." 27
There is no question that M/V Neptune Breeze, then known as M/V Criston, was carrying 35,000
bags of imported rice without the necessary papers showing that they were entered lawfully
through a Philippine port after the payment of appropriate taxes and duties thereon. This gives rise
to the presumption that such importation was illegal. Consequently, the rice subject of the
importation, as well as the vessel M/V Neptune Breeze used in importation are subject to
forfeiture. The burden is on El Greco, as the owner of M/V Neptune Breeze, to show that its
conveyance of the rice was actually legal. Unfortunately, its claim that the cargo was not of foreign
origin but was merely loaded at North Harbor, Manila, was belied by the following evidence - the
Incoming Journal of the Philippine Coast Guard, Certification issued by the Department of
Transportation and Communications (DOTC) Port State Control Center of Manila, and the letter
dated 4 October 2001 issued by the Sub-Port of North Harbor Collector Edward de la Cuesta,
confirming that there was no such loading of rice or calling of vessel occurring at North Harbor,
Manila. It is, therefore, uncontroverted that the 35,000 bags of imported rice were smuggled into
the Philippines using M/V Neptune Breeze.

After having established that M/V Neptune Breeze is one and the same as M/V Criston, we come to
another crucial issue in the case at bar, that is, whether the order of forfeiture of the M/V Neptune
Breeze is valid.
The pertinent provisions of the Tariff and Customs Code read:
SEC. 2530. Property Subject to Forfeiture Under Tariff and Customs Law. Any vehicle,
vessel or aircraft, cargo, articles and other objects shall, under the following conditions, be
subject to forfeiture:
a. Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully in the
importation or exportation of articles or in conveying and/or transporting contraband or
smuggled articles in commercial quantities into or from any Philippine port or place. The mere
carrying or holding on board of contraband or smuggled articles in commercial quantities shall
subject such vessel, vehicle, aircraft or any other craft to forfeiture; Provided, That the
vessel, or aircraft or any other craft is not used as duly authorized common carrier and as
such a carrier it is not chartered or leased;

We cannot give credence to the argument of El Greco that the Order dated 11 March 2002 of the
Manila District Collector, finding no probable cause that M/V Neptune Breeze is the same as M/V
Criston, has already become final and executory, thus, irreversible, pursuant to Section 2313 of
the Tariff and Customs Code. According to said provision:

xxxx

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.

f. Any article, the importation or exportation of which is effected or attempted contrary to law,
or any article of prohibited importation or exportation, and all other articles which, in the
opinion of the Collector, have been used, are or were intended to be used as instruments in
the importation or exportation of the former;
xxxx
k. Any conveyance actually being used for the transport of articles subject to forfeiture under
the tariff and customs laws, with its equipage or trappings, and any vehicle similarly used,

28

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 Collectors decision is reversed by the
Commissioner, the decision of the Commissioner shall be final and executory. However, if the
Collectors decision is affirmed, or if within thirty (30) days from receipt of the record
of the case by the Commissioner no decision is rendered or the decision involves
imported articles whose published value is five million pesos (P5,000,000.00) or more, such
decision shall be deemed automatically appealed to the Secretary of Finance and the
records of the proceedings shall be elevated within five (5) days from the promulgation of the
decision of the Commissioner or of the Collector under appeal, as the case may be: Provided,
further, That if the decision of the Commissioner or of the Collector under appeal as the case
may be, is affirmed by the Secretary of Finance or if within thirty (30) days from receipt of
the records of the proceedings by the Secretary of Finance, no decision is rendered, the
decision of the Secretary of Finance, or of the Commissioner, or of the Collector under appeal,
as the case may be, shall become final and executory.

CORONA, J.:
This petition for review on certiorari1 seeks to set aside the decision of the Court of Appeals (CA) in
CA-G.R. SP No. 717562 and its resolution denying reconsideration.3
The present controversy sprang from the cancellation of tax debit memos (TDMs) and the
corresponding tax credit certificates (TCCs) assigned to petitioner Pilipinas Shell Petroleum
Corporation (Shell) by various entities.4The assignment to Shell had the approval of the Board of
Investments and the One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center (Center).
Some of these TCCs were subsequently accepted as payment by the Bureau of Customs (BoC) for
petitioner's taxes and import duties in 1997 and 1998.5
On November 3, 1999, then Secretary Edgardo B. Espiritu of the Department of Finance (DOF)
informed petitioner that its TDMs and TCCs were fraudulently issued and transferred,6 and had to
be cancelled.7 He asked petitioner to immediately pay the BoC and the Bureau of Internal Revenue
the value of the canceled TCCs as well as the related penalties, surcharges and interests. 8

In any seizure proceeding, the release of imported articles shall not be allowed unless and
until a decision of the Collector has been confirmed in writing by the Commissioner of
Customs. (Emphasis ours.)

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

There is nothing in Section 2313 of the Tariff and Customs Code to support the position of El
Greco. As the CTAen banc explained, in case the BOC Commissioner fails to decide on the
automatic appeal of the Collectors Decision within 30 days from receipt of the records thereof, the
case shall again be deemed automatically appealed to the Secretary of Finance. Also working
against El Greco is the fact that jurisdiction over M/V Neptune Breeze, otherwise known as M/V
Criston, was first acquired by the Legaspi District Collector; thus, the Manila District Collector
cannot validly acquire jurisdiction over the same vessel. Judgment rendered without jurisdiction is
null and void, and void judgment cannot be the source of any right whatsoever.28

Despite petitioner's objections, Commissioner Nelson A. Tan of the BoC demanded from it the
amount ofP209,129,141.13 Thus, petitioner filed a formal protest on December 23,
1999.14 However, the BoC did not act on this protest. Consequently, petitioner filed a petition for
review questioning the legality of the cancellation of the TCCs in the Court of Tax Appeals (CTA). 15
Meanwhile, on April 3, 2002, respondent filed a complaint for collection 16 in the Regional Trial Court
(RTC) of Manila, Branch 19. It alleged that the TCCs petitioner purchased from Filipino Way
Industries amounting toP10,088,912 were spurious17 and were used by petitioner to pay customs
duties and taxes on its importations in 1997.18 Thus, in view of the invalidation, petitioner still
owed respondent the amount of P10,088,912 in unpaid customs duties and taxes.19

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.

Petitioner immediately moved to dismiss the collection case. 20 It contended that the RTC had no
jurisdiction over the subject matter and that the complaint for collection was prematurely filed in
view of its pending petition for review in the CTA. 21 On June 7, 2002, the RTC denied petitioner's
motion and instead ordered it to file an answer.22 On June 14, 2002, petitioner filed an answer ex
abundanti cautela.23

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.

Petitioner questioned the jurisdiction of the RTC. It averred that, in view of its pending petition for
review in the CTA, the RTC had no jurisdiction over the subject matter pursuant to Yabes v.
Flojo.24 According to Yabes, the RTC25 acquires jurisdiction over a collection case only if an
assessment made by the Commissioner of Internal Revenue has become final and incontestable.26

SO ORDERED.
-------------------------------------------------------------------------------------------------------------G.R. No. 161953

March 6, 2008

On June 21, 2002, the RTC issued a notice of pre-trial.27 Petitioner moved for the reconsideration
of the June 7, 2002 order28 but it was denied in an order dated June 28, 2002.29

PILIPINAS SHELL PETROLEUM CORPORATION, Petitioner, vs. REPUBLIC OF THE

PHILIPPINES, represented by the BUREAU OF CUSTOMS, Respondent.
DECISION

29

Aggrieved, petitioner filed a petition for certiorari in the CA assailing the June 7, 2002 and June 28,
2002 orders of the RTC.30 This petition was denied by the appellate court in a decision dated
October 23, 2003.31 According to the CA, the BoC's assessment had already become final and
conclusive. Hence, its written demand for payment was not an assessment that could still be
protested under the Tariff and Customs Code of the Philippines (TCCP).32 Thus, the jurisdiction over
the subject matter was well within the jurisdiction of the RTC, not the CTA.33

Section 1204 of the TCCP provides:

Section 1204. Liability of Importer for Duties. Unless relieved by laws or regulations,
the liability for duties, taxes, fees and other charges attaching on importation
constitutes 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. 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. (emphasis
supplied)

Petitioner moved for reconsideration but it was denied. Thus, this petition.
Petitioner essentially contends that the RTC had no jurisdiction over the collection case inasmuch
as the CTA had not yet decided the petition for review.34 Therefore, the RTC should have dismissed
the collection case and transfered it to the CTA where it should be treated as a counterclaim (in
the petition for review).35

Under this provision, import duties constitute a personal debt of the importer that must be paid in
full. The importers liability therefore constitutes a lien on the article which the government may
choose to enforce while the imported articles are either in its custody or under its control.

We deny the petition.

When respondent released petitioner's goods, its (respondents) lien over the imported goods was
extinguished. Consequently, respondent could only enforce the payment of petitioner's import
duties in full by filing a case for collection against petitioner.42

The Filing Of The Collection Case Was A Proper Remedy

The Subject Matter Falls Within The Jurisdiction Of The RTC

Assessments inform taxpayers of their tax liabilities. 36 Under the TCCP, the assessment is in the
form of a liquidation made on the face of the import entry return and approved by the Collector of
Customs.37 Liquidation is the final computation and ascertainment by the Collector of
Customs of the duties due on imported 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.38 A liquidation is considered to have been made when the entry is officially
stamped "liquidated."39

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

Petitioner claims that it paid the duties due on its importations. Section 1603 of the old TCCP
stated:

(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;

Section 1603. Finality of Liquidation. When articles have been entered and passed free of duty or
final adjustments of duties made, with subsequent delivery, such entry and passage free of duty or
settlement of duties will, after the expiration of one year from the date of the final payment of
duties, in the absence of fraud or protest, be final and conclusive upon all parties, unless the
liquidation of the import entry was merely tentative. 40

(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

An assessment or liquidation by the BoC attains finality and conclusiveness one year from the date
of the final payment of duties except when:

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

(a) there was fraud;

(b) there is a pending protest or

Inasmuch as the present case did not involve a decision of the Commissioner of Customs in any of
the instances enumerated in Section 7(2) of RA 1125, the CTA had no jurisdiction over the subject
matter. It was the RTC that had jurisdiction under Section 19(6) of the Judiciary Reorganization Act
of 1980, as amended:45

(c) the liquidation of import entry was merely tentative.

None of the foregoing exceptions is present in this case. There was no fraud as petitioner claimed
(and was presumed) to be in good faith. Respondent does not dispute this. Moreover, records show
that petitioner paid those duties 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 Yabes41 and because of the cancellation of the TCCs, respondent had the right to file a collection
case.

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

30

xxx

xxx

(6) In all cases not within the exclusive jurisdiction of any court, tribunal, person or body
exercising judicial or quasi-judicial functions, xxx.

measure on imports of gray Portland cement. The Tariff Commission held public hearings and
conducted its own investigation, then on 13 March 2002, issued its Formal Investigation Report
("Report"). The Report determined as follows:
The elements of serious injury and imminent threat of serious injury not having been established,
it is hereby recommended that no definitive general safeguard measure be imposed on the
importation of gray Portland cement.7

In view of the foregoing, the RTC should forthwith proceed with Civil Case No. 02-103191 and
determine the extent of petitioner's liability.1avvphi1

The DTI sought the opinion of the Secretary of Justice whether it could still impose a definitive
safeguard measure notwithstanding the negative finding of the Tariff Commission. After the
Secretary of Justice opined that the DTI could not do so under the SMA,8 the DTI Secretary then
promulgated a Decision9 wherein he expressed the DTIs disagreement with the conclusions of the
Tariff Commission, but at the same time, ultimately denying Philcemcors application for safeguard
measures on the ground that the he was bound to do so in light of the Tariff Commissions
negative findings.10

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.

Philcemcor challenged this Decision of the DTI Secretary by filing with the Court of Appeals
a Petition for Certiorari, Prohibition and Mandamus11 seeking to set aside the DTI Decision, as well
as the Tariff Commissions Report. It prayed that the Court of Appeals direct the DTI Secretary to
disregard the Report and to render judgment independently of the Report. Philcemcor argued that
the DTI Secretary, vested as he is under the law with the power of review, is not bound to adopt
the recommendations of the Tariff Commission; and, that the Report is void, as it is predicated on
a flawed framework, inconsistent inferences and erroneous methodology.12

WHEREFORE, this petition is hereby DENIED. The Regional Trial Court of Manila, Branch 19 is
ordered to proceed expeditiously with the pre-trial conference and trial of Civil Case No. 02103191.
Costs against petitioner.

The Court of Appeals Twelfth Division, in a Decision13 penned by Court of Appeals Associate Justice
Elvi John Asuncion,14 partially granted Philcemcors petition. The appellate court ruled that it had
jurisdiction over the petition for certiorari since it alleged grave abuse of discretion. While it
refused to annul the findings of the Tariff Commission,15 it also held that the DTI Secretary was not
bound by the factual findings of the Tariff Commission since such findings are merely
recommendatory and they fall within the ambit of the Secretarys discretionary review. It
determined that the legislative intent is to grant the DTI Secretary the power to make a final
decision on the Tariff Commissions recommendation. 16

SO ORDERED.
-------------------------------------------------------------------------------------------------------------G.R. No. 158540

August 3, 2005

SOUTHERN CROSS CEMENT CORPORATION, Petitioners, vs. CEMENT MANUFACTURERS

ASSOCIATION OF THE PHILIPPINES, THE SECRETARY OF THE DEPARTMENT OF TRADE
AND INDUSTRY, THE SECRETARY OF THE DEPARTMENT OF FINANCE and THE
COMMISSIONER OF THE BUREAU OF CUSTOMS, Respondent.

On 23 June 2003, Southern Cross filed the present petition, arguing that the Court of Appeals has
no jurisdiction over Philcemcors petition, as the proper remedy is a petition for review with the
CTA conformably with the SMA, and; that the factual findings of the Tariff Commission on the
existence or non-existence of conditions warranting the imposition of general safeguard measures
are binding upon the DTI Secretary.

RESOLUTION
TINGA, J.:
Cement is hardly an exciting subject for litigation. Still, the parties in this case have done their
best to put up a spirited advocacy of their respective positions, throwing in everything including
the proverbial kitchen sink. At present, the burden of passion, if not proof, has shifted to public
respondents Department of Trade and Industry (DTI) and private respondent Philippine Cement
Manufacturers Corporation (Philcemcor),1 who now seek reconsideration of our Decision dated 8
July 2004 (Decision), which granted the petition of petitioner Southern Cross Cement Corporation
(Southern Cross).

Despite the fact that the Court of Appeals Decision had not yet become final, its binding force was
cited by the DTI Secretary when he issued a new Decision on 25 June 2003, wherein he ruled that
that in light of the appellate courts Decision, there was no longer any legal impediment to his
deciding Philcemcors application for definitive safeguard measures.17 He made a determination
that, contrary to the findings of the Tariff Commission, the local cement industry had suffered
serious injury as a result of the import surges.18 Accordingly, he imposed a definitive safeguard
measure on the importation of gray Portland cement, in the form of a definitive safeguard duty in
the amount of P20.60/40 kg. bag for three years on imported gray Portland Cement. 19

This case, of course, is ultimately not just about cement. For respondents, it is about love of
country and the future of the domestic industry in the face of foreign competition. For this Court, it
is about elementary statutory construction, constitutional limitations on the executive power to
impose tariffs and similar measures, and obedience to the law. Just as much was asserted in
the Decision, and the same holds true with this presentResolution.

On 7 July 2003, Southern Cross filed with the Court a "Very Urgent Application for a Temporary
Restraining Order and/or A Writ of Preliminary Injunction" ("TRO Application"), seeking to enjoin
the DTI Secretary from enforcing hisDecision of 25 June 2003 in view of the pending petition
before this Court. Philcemcor filed an opposition, claiming, among others, that it is not this Court
but the CTA that has jurisdiction over the application under the law.

An extensive narration of facts can be found in the Decision.2 As can well be recalled, the case
centers on the interpretation of provisions of Republic Act No. 8800, the Safeguard Measures Act
("SMA"), which was one of the laws enacted by Congress soon after the Philippines ratified the
General Agreement on Tariff and Trade (GATT) and the World Trade Organization (WTO)
Agreement.3 The SMA provides the structure and mechanics for the imposition of emergency
measures, including tariffs, to protect domestic industries and producers from increased imports
which inflict or could inflict serious injury on them.4

On 1 August 2003, Southern Cross filed with the CTA a Petition for Review, assailing the DTI
Secretarys 25 June 2003 Decision which imposed the definite safeguard measure. Yet Southern
Cross did not promptly inform this Court about this filing. The first time the Court would learn
about this Petition with the CTA was when Southern Cross mentioned such fact in a pleading dated
11 August 2003 and filed the next day with this Court.20
Philcemcor argued before this Court that Southern Cross had deliberately and willfully resorted to
forum-shopping; that the CTA, being a special court of limited jurisdiction, could only review the
ruling of the DTI Secretary when a safeguard measure is imposed; and that the factual findings of
the Tariff Commission are not binding on the DTI Secretary.21

A brief summary as to how the present petition came to be filed by Southern Cross. Philcemcor, an
association of at least eighteen (18) domestic cement manufacturers filed with the DTI a petition
seeking the imposition of safeguard measures on gray Portland cement,5 in accordance with the
SMA. After the DTI issued a provisional safeguard measure,6 the application was referred to the
Tariff Commission for a formal investigation pursuant to Section 9 of the SMA and its Implementing
Rules and Regulations, in order to determine whether or not to impose a definitive safeguard

After giving due course to Southern Crosss Petition, the Court called the case for oral argument on
18 February 2004.22 At the oral argument, attended by the counsel for Philcemcor and Southern
Cross and the Office of the Solicitor General, the Court simplified the issues in this wise: (i)

31

whether the Decision of the DTI Secretary is appealable to the CTA or the Court of Appeals; (ii)
assuming that the Court of Appeals has jurisdiction, whether itsDecision is in accordance with law;
and, whether a Temporary Restraining Order is warranted.23

to determine whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government. At the same
time, the special civil action of certiorari is available only when there is no plain, speedy and
adequate remedy in the ordinary course of law.31 Philcemcors recourse of special civil action
before the Court of Appeals to challenge the Decision of the DTI Secretary not to impose the
general safeguard measures is not based on the SMA, but on the general rule on certiorari. Thus,
the Court proceeded to inquire whether indeed there was no other plain, speedy and adequate
remedy in the ordinary course of law that would warrant the allowance of Philcemcors special civil
action.

After the parties had filed their respective memoranda, the Courts Second Division, to which the
case had been assigned, promulgated its Decision granting Southern
Crosss Petition.24The Decision was unanimous, without any separate or concurring opinion.
The Court ruled that the Court of Appeals had no jurisdiction over Philcemcors Petition, the proper
remedy under Section 29 of the SMA being a petition for review with the CTA; and that the Court
of Appeals erred in ruling that the DTI Secretary was not bound by the negative determination of
the Tariff Commission and could therefore impose the general safeguard measures, since Section 5
of the SMA precisely required that the Tariff Commission make a positive final determination before
the DTI Secretary could impose these measures. Anent the argument that Southern Cross had
committed 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. Accordingly, the Decision of the Court of Appeals dated 5
June 2003 was declared null and void.

The answer hinged on the proper interpretation of Section 29 of the SMA, which reads:
Section 29. Judicial Review. Any interested party who is adversely affected by the ruling of the
Secretary in connection with the imposition of a safeguard measure may file with the CTA,
a petition for review of such ruling within thirty (30) days from receipt thereof.
Provided, however, that the filing of such petition for review shall not in any way stop, suspend or
otherwise toll the imposition or collection of the appropriate tariff duties or the adoption of other
appropriate safeguard measures, as the case may be.

The Court likewise found it necessary to nullify the Decision of the DTI Secretary dated 25 June
2003, rendered after the filing of this present Petition. This Decision by the DTI Secretary had cited
the obligatory force of the null and void Court of Appeals Decision, notwithstanding the fact that
the decision of the appellate court was not yet final and executory. Considering that the decision of
the Court of Appeals was a nullity to begin with, the inescapable conclusion was that the new
decision of the DTI Secretary, prescinding as it did from the imprimatur of the decision of the Court
of Appeals, was a nullity as well.

The petition for review shall comply with the same requirements and shall follow the same rules of
procedure and shall be subject to the same disposition as in appeals in connection with adverse
rulings on tax matters to the Court of Appeals. 32 (Emphasis supplied)
The matter is crucial for if the CTA properly had jurisdiction over the petition challenging the DTI
Secretarys ruling not to impose a safeguard measure, then the special civil action of certiorari
resorted to instead by Philcemcor would not avail, owing to the existence of a plain, speedy and
adequate remedy in the ordinary course of law.33The Court of Appeals, in asserting that it had
jurisdiction, merely cited the general rule on certiorari jurisdiction without bothering to refer to, or
possibly even study, the import of Section 29. In contrast, this Court duly considered the meaning
and ramifications of Section 29, concluding that it provided for a plain, speedy and adequate
remedy that Philcemcor could have resorted to instead of filing the special civil action before the
Court of Appeals.

After the Decision was reported in the media, there was a flurry of newspaper articles citing
alleged negative reactions to the ruling by the counsel for Philcemcor, the DTI Secretary, and
others.25 Both respondents promptly filed their respective motions for reconsideration.
On 21 September 2004, the Court En Banc resolved, upon motion of respondents, to accept the
petition and resolve the Motions for Reconsideration.26 The case was then reheard27 on oral
argument on 1 March 2005. During the hearing, the Court elicited from the parties their
arguments on the two central issues as discussed in the assailed Decision, pertaining to the
jurisdictional aspect and to the substantive aspect of whether the DTI Secretary may impose a
general safeguard measure despite a negative determination by the Tariff Commission. The Court
chose not to hear argumentation on the peripheral issue of forum-shopping,28 although this
question shall be tackled herein shortly. Another point of concern emerged during oral arguments
on the exercise of quasi-judicial powers by the Tariff Commission, and the parties were required by
the Court to discuss in their respective memoranda whether the Tariff Commission could validly
exercise quasi-judicial powers in the exercise of its mandate under the SMA.

Philcemcor still holds on to its hypothesis that the petition for review allowed under Section 29 lies
only if the DTI Secretarys ruling imposes a safeguard measure. If, on the other hand, the DTI
Secretarys ruling is not to impose a safeguard measure, judicial review under Section 29 could not
be resorted to since the provision refers to rulings "in connection with the imposition" of the
safeguard measure, as opposed to the non-imposition. Since the Decision dated 5 April 2002
resolved against imposing a safeguard measure, Philcemcor claims that the proper remedial
recourse is a petition for certiorari with the Court of Appeals.
Interestingly, Republic Act No. 9282, promulgated on 30 March 2004, expressly vests unto the CTA
jurisdiction over "[d]ecisions of the Secretary of Trade and Industry, in case of nonagricultural
product, commodity or article . . . involving . . . safeguard measures under Republic Act No.
8800, where either party may appeal the decision to impose or not to impose said
duties."34 It is clear that any future attempts to advance the literalist position of the respondents
would consequently fail. However, since Republic Act No. 9282 has no retroactive effect, this Court
had to decide whether Section 29 vests jurisdiction on the CTA over rulings of the DTI Secretary
not to impose a safeguard measure. And the Court, in its assailed Decision, ruled that the CTA is
endowed with such jurisdiction.

The Court has likewise been notified that subsequent to the rendition of the Courts Decision,
Philcemcor filed aPetition for Extension of the Safeguard Measure with the DTI, which has been
referred to the Tariff Commission.29 In an Urgent Motion dated 21 December 2004, Southern Cross
prayed that Philcemcor, the DTI, the Bureau of Customs, and the Tariff Commission be directed to
"cease and desist from taking any and all actions pursuant to or under the null and void CA
Decision and DTI Decision, including proceedings to extend the safeguard measure.30 In
a Manifestation and Motion dated 23 June 2004, the Tariff Commission informed the Court that
since no prohibitory injunction or order of such nature had been issued by any court against the
Tariff Commission, the Commission proceeded to complete its investigation on the petition for
extension, pursuant to Section 9 of the SMA, but opted to defer transmittal of its report to the DTI
Secretary pending "guidance" from this Court on the propriety of such a step considering this
pending Motion for Reconsideration. In a 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.

Both respondents reiterate their fundamentalist reading that Section 29 authorizes the petition for
review before the CTA only when the DTI Secretary decides to impose a safeguard measure, but
not when he decides not to. In doing so, they fail to address what the Court earlier pointed out
would be the absurd consequences if their interpretation is followed to its logical end. But in
affirming, as the Court now does, its previous holding that the CTA has jurisdiction over petitions
for review questioning the non-imposition of safeguard measures by the DTI Secretary, the Court
relies on the plain reading that Section 29 explicitly vests jurisdiction over such petitions on the
CTA.

I. Jurisdiction of the Court of Tax Appeals

Under Section 29, there are three requisites to enable the CTA to acquire jurisdiction over the
petition for review contemplated therein: (i) there must be a ruling by the DTI Secretary; (ii) the
petition must be filed by an interested party adversely affected by the ruling; and (iii) such ruling
must be "in connection with the imposition of a safeguard measure." Obviously, there are
differences between "a ruling for the imposition of a safeguard measure," and one issued "in
connection with the imposition of a safeguard measure." The first adverts to a singular type of
ruling, namely one that imposes a safeguard measure. The second does not contemplate only one

Under Section 29 of the SMA

The first core issue resolved in the assailed Decision was whether the Court of Appeals had
jurisdiction over the special civil action for certiorari filed by Philcemcor assailing the 5 April
2002 Decision of the DTI Secretary. The general jurisdiction of the Court of Appeals over special
civil actions for certiorari is beyond doubt. The Constitution itself assures that judicial review avails

32

kind of ruling, but a myriad of rulings issued "in connection with the imposition of a safeguard
measure."

Secretary of safeguard measures. The Court is simply asserting, as it should, the clear intent of
the legislature in enacting the SMA. Without "in connection with" or a synonymous phrase, the
Court would be compelled to favor the respondents position that only rulings imposing safeguard
measures may be elevated on appeal to the CTA. But considering that the statute does make use
of the phrase, there is little sense in delving into alternate scenarios.

Respondents argue that the Court has given an expansive interpretation to Section 29, contrary to
the established rule requiring strict construction against the existence of jurisdiction in specialized
courts.35 But it is the express provision of Section 29, and not this Court, that mandates
CTA jurisdiction to be broad enough to encompass more than just a ruling imposing the
safeguard measure.

Respondents fail to convincingly address the absurd consequences pointed out by the Decision had
their proposed interpretation been adopted. Indeed, suffocated beneath the respondents legalistic
tinsel is the elemental questionwhat sense is there in vesting jurisdiction on the CTA over a
decision to impose a safeguard measure, but not on one choosing not to impose. Of course, it is
not for the Court to inquire into the wisdom of legislative acts, hence the rule that jurisdiction must
be expressly vested and not presumed. Yet ultimately, respondents muddle the issue by making it
appear that the Decision has uniquely expanded the jurisdictional rules. For the respondents, the
proper statutory interpretation of the crucial phrase "in connection with" is to pretend that the
phrase did not exist at all in the statute. The Court, in taking the effort to examine the meaning
and extent of the phrase, is merely giving breath to the legislative will.

The key phrase remains "in connection with." It has connotations that are obvious even to the
layman. A ruling issued "in connection with" the imposition of a safeguard measure would be one
that bears some relation to the imposition of a safeguard measure. Obviously, a ruling imposing a
safeguard measure is covered by the phrase "in connection with," but such ruling is by no means
exclusive. Rulings which modify, suspend or terminate a safeguard measure are necessarily in
connection with the imposition of a safeguard measure. So does a ruling allowing for a provisional
safeguard measure. So too, a ruling by the DTI Secretary refusing to refer the application for a
safeguard measure to the Tariff Commission. It is clear that there is an entire subset of rulings
that the DTI Secretary may issue in connection with the imposition of a safeguard measure,
including those that are provisional, interlocutory, or dispositive in character.36 By the same token,
a ruling not to impose a safeguard measure is also issued in connection with the imposition of a
safeguard measure.

The Court likewise stated that the respondents position calls for split jurisdiction, which is
judicially abhorred. In rebuttal, the public respondents cite Sections 2313 and 2402 of the Tariff
and Customs Code (TCC), which allegedly provide for a splitting of jurisdiction of the CTA.
According to public respondents, under Section 2313 of the TCC, a decision of the Commissioner of
Customs affirming a decision of the Collector of Customs adverse to the government is elevated for
review to the Secretary of Finance. However, under Section 2402 of the TCC, a ruling of the
Commissioner of the Bureau of Customs against a taxpayer must be appealed to the Court of Tax
Appeals, and not to the Secretary of Finance.

In arriving at the proper interpretation of "in connection with," the Court referred to the U.S.
Supreme Court cases of Shaw v. Delta Air Lines, Inc.37 and New York State Blue Cross Plans v.
Travelers Ins.38 Both cases considered the interpretation of the phrase "relates to" as used in a
federal statute, the Employee Retirement Security Act of 1974. Respondents criticize the citations
on the premise that the cases are not binding in our jurisdiction and do not involve safeguard
measures. The criticisms are off-tangent considering that our ruling did not call for the application
of the Employee Retirement Security Act of 1974 in the Philippine milieu. The American cases are
not relied upon as precedents, but as guides of interpretation. Certainly, if there are applicable
local precedents pertaining to the interpretation of the phrase "in connection with," then these
certainly would have some binding force. But none avail, and neither do the respondents
demonstrate a countervailing holding in Philippine jurisprudence.

Strictly speaking, the review by the Secretary of Finance of the decision of the Commissioner of
Customs is not judicial review, since the Secretary of Finance holds an executive and not a judicial
office. The contrast is apparent with the situation in this case, wherein the interpretation favored
by the respondents calls for the exercise of judicial review by two different courts over essentially
the same questionwhether the DTI Secretary should impose general safeguard measures.
Moreover, as petitioner points out, the executive department cannot appeal against itself. The
Collector of Customs, the Commissioner of Customs and the Secretary of Finance are all part of
the executive branch. If the Collector of Customs rules against the government, the executive
cannot very well bring suit in courts against itself. On the other hand, if a private person is
aggrieved by the decision of the Collector of Customs, he can have proper recourse before the
courts, which now would be called upon to exercise judicial review over the action of the executive
branch.

Yet we should consider the claim that an "expansive interpretation" was favored in Shaw because
the law in question was an employees benefit law that had to be given an interpretation favorable
to its intended beneficiaries.39 In the next breath, Philcemcor notes that the U.S. Supreme Court
itself was alarmed by the expansive interpretation in Shaw and thus in Blue Cross, the Shaw ruling
was reversed and a more restrictive interpretation was applied based on congressional intent. 40

More fundamentally, the situation involving split review of the decision of the Collector of Customs
under the TCC is not apropos to the case at bar. The TCC in that instance is quite explicit on the
divergent reviewing body or official depending on which party prevailed at the Collector of
Customs level. On the other hand, there is no such explicit expression of bifurcated appeals in
Section 29 of the SMA.

Respondents would like to make it appear that the Court acted rashly in applying a discarded
precedent in Shaw, a non-binding foreign precedent nonetheless. But the Court did make the
following observation in its Decisionpertaining to Blue Cross:
Now, let us determine the maximum scope and reach of the phrase "in connection with" as used in
Section 29 of the SMA. A literalist reading or linguistic survey may not satisfy. Even the U.S.
Supreme Court in New York State Blue Cross Plans v. Travelers Ins.41 conceded that the phrases
"relate to" or "in connection with" may be extended to the farthest stretch of indeterminacy for,
universally, relations or connections are infinite and stop nowhere. 42 Thus, in the case the U.S.
High Court, examining the same phrase of the same provision of law involved in Shaw,
resorted to looking at the statute and its objectives as the alternative to an "uncritical
literalism." A similar inquiry into the other provisions of the SMA is in order to determine
the scope of review accorded therein to the CTA.43

Public respondents likewise cite Fabian v. Ombudsman45 as another instance wherein the Court
purportedly allowed split jurisdiction. It is argued that the Court, in ruling that it was the Court of
Appeals which possessed appellate authority to review decisions of the Ombudsman in
administrative cases while the Court retaining appellate jurisdiction of decisions of the Ombudsman
in non-administrative cases, effectively sanctioned split jurisdiction between the Court and the
Court of Appeals.46
Nonetheless, this argument is successfully undercut by Southern Cross, which points out the
essential differences in the power exercised by the Ombudsman in administrative cases and nonadministrative cases relating to criminal complaints. In the former, the Ombudsman may impose
an administrative penalty, while in acting upon a criminal complaint what the Ombudsman
undertakes is a preliminary investigation. Clearly, the capacity in which the Ombudsman takes on
in deciding an administrative complaint is wholly different from that in conducting a preliminary
investigation. In contrast, in ruling upon a safeguard measure, the DTI Secretary acts in one and
the same role. The variance between an order granting or denying an application for a safeguard
measure is polar though emanating from the same equator, and does not arise from the distinct
character of the putative actions involved.

In the next four paragraphs of the Decision, encompassing four pages, the Court proceeded to
inquire into the SMA and its objectives as a means to determine the scope of rulings to be deemed
as "in connection with the imposition of a safeguard measure." Certainly, this Court did not resort
to the broadest interpretation possible of the phrase "in connection with," but instead sought to
bring it into the context of the scope and objectives of the SMA. The ultimate conclusion of the
Court was that the phrase includes all rulings of the DTI Secretary which arise from the time an
application or motu proprio initiation for the imposition of a safeguard measure is taken. 44This
conclusion was derived from the observation that the imposition of a general safeguard measure is
a process, initiated motu proprio or through application, which undergoes several stages upon
which the DTI Secretary is obliged or may be called upon to issue a ruling.

Philcemcor imputes intelligent design behind the alleged intent of Congress to limit CTA review
only to impositions of the general safeguard measures. It claims that there is a necessary tax
implication in case of an imposition of a tariff where the CTAs expertise is necessary, but there is

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

33

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.

Congressional Limitations Pursuant

To Constitutional Authority on the
Delegated Power to Impose
Safeguard Measures
The safeguard measures imposable under the SMA generally involve duties on imported products,
tariff rate quotas, or quantitative restrictions on the importation of a product into the country.
Concerning as they do the foreign importation of products into the Philippines, these safeguard
measures fall within the ambit of Section 28(2), Article VI of the Constitution, which states:

In response to the Courts observation that the setup proposed by respondents was novel,
unusual, cumbersome and unwise, public respondents invoke the maxim that courts should not be
concerned with the wisdom and efficacy of legislation. 47 But this prescinds from the bogus claim
that the CTA may not exercise judicial review over a decision not to impose a safeguard measure,
a prohibition that finds no statutory support. It is likewise settled in statutory construction that an
interpretation that would cause inconvenience and absurdity is not favored. Respondents do not
address the particular illogic that the Court pointed out would ensue if their position on judicial
review were adopted. According to the respondents, while a ruling by the DTI Secretary imposing a
safeguard measure may be elevated on review to the CTA and assailed on the ground of errors in
fact and in law, a ruling denying the imposition of safeguard measures may be assailed only on the
ground that the DTI Secretary committed grave abuse of discretion. As stressed in the Decision,
"[c]ertiorari is a remedy narrow in its scope and inflexible in its character. It is not a general utility
tool in the legal workshop."48

The Congress may, by law, authorize the President to fix within specified limits, and
subject to such limitations and restrictions as it may impose, tariff rates, import and export
quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the
national development program of the Government.49
The Court acknowledges the basic postulates ingrained in the provision, and, hence, governing in
this case. They are:
(1) It is Congress which authorizes the President to impose tariff rates, import and
export quotas, tonnage and wharfage dues, and other duties or imposts. Thus, the
authority cannot come from the Finance Department, the National Economic Development
Authority, or the World Trade Organization, no matter how insistent or persistent these bodies may
be.

It is incorrect to say that the Decision bars any effective remedy should the Tariff Commission act
or conclude erroneously in making its determination whether the factual conditions exist which
necessitate the imposition of the general safeguard measure. If the Tariff Commission makes a
negative final determination, the DTI Secretary, bound as he is by this negative determination, has
to render a decision denying the application for safeguard measures citing the Tariff Commissions
findings as basis. Necessarily then, such negative determination of the Tariff Commission being an
integral part of the DTI Secretarys ruling would be open for review before the CTA, which again is
especially qualified by reason of its expertise to examine the findings of the Tariff Commission.
Moreover, considering that the Tariff Commission is an instrumentality of the government, its
actions (as opposed to those undertaken by the DTI Secretary under the SMA) are not beyond the
pale of certiorari jurisdiction. Unfortunately for Philcemcor, it hinged its cause on the claim that the
DTI Secretarys actions may be annulled on certiorari, notwithstanding the explicit grant of judicial
review over that cabinet members actions under the SMA to the CTA.

(2) The authorization granted to the President must be embodied in a law. Hence, the
justification cannot be supplied simply by inherent executive powers. It cannot arise from
administrative or executive orders promulgated by the executive branch or from the wisdom or
whim of the President.
(3) The authorization to the President can be exercised only within the specified limits
set in the law and is further subject to limitations and restrictions which Congress may
impose. Consequently, if Congress specifies that the tariff rates should not exceed a given
amount, the President cannot impose a tariff rate that exceeds such amount. If Congress
stipulates that no duties may be imposed on the importation of corn, the President cannot impose
duties on corn, no matter how actively the local corn producers lobby the President. Even the most
picayune of limits or restrictions imposed by Congress must be observed by the President.

Finally on this point, Philcemcor argues that assuming this Courts interpretation of Section 29 is
correct, such ruling should not be given retroactive effect, otherwise, a gross violation of the right
to due process would be had. This erroneously presumes that it was this Court, and not Congress,
which vested jurisdiction on the CTA over rulings of non-imposition rendered by the DTI Secretary.
We have repeatedly stressed that Section 29 expressly confers CTA jurisdiction over rulings in
connection with the imposition of the safeguard measure, and the reassertion of this point in
the Decision was a matter of emphasis, not of contrivance. The due process protection does not
shield those who remain purposely blind to the express rules that ensure the sporting play of
procedural law.

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.

Besides, respondents claim would also apply every time this Court is compelled to settle a novel
question of law, or to reverse precedent. In such cases, there would always be litigants whose
causes of action might be vitiated by the application of newly formulated judicial doctrines.
Adopting their claim would unwisely force this Court to treat its dispositions in unprecedented,
sometimes landmark decisions not as resolutions to the live cases or controversies, but as legal
doctrine applicable only to future litigations.

This being the case, the qualifiers mandated by the Constitution on this presidential authority
attain primordial consideration. First, there must be a law, such as the SMA. Second, there must
be specified limits, a detail which would be filled in by the law. And further, Congress is further
empowered to impose limitations and restrictions on this presidential authority. On this last power,
the provision does not provide for specified conditions, such as that the limitations and restrictions
must conform to prior statutes, internationally accepted practices, accepted jurisprudence, or the
considered opinion of members of the executive branch.

II. Positive Final Determination

By the Tariff Commission an
Indispensable Requisite to the

The Court recognizes that the authority delegated to the President under Section 28(2), Article VI
may be exercised, in accordance with legislative sanction, by the alter egos of the President, such
as department secretaries. Indeed, for purposes of the Presidents exercise of power to impose
tariffs under Article VI, Section 28(2), it is generally the Secretary of Finance who acts as alter
ego of the President. The SMA provides an exceptional instance wherein it is the DTI or Agriculture
Secretary who is tasked by Congress, in their capacities as alter 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.

Imposition of General Safeguard Measures

The second core ruling in the Decision was that contrary to the holding of the Court of Appeals, the
DTI Secretary was barred from imposing a general safeguard measure absent a positive final
determination rendered by the Tariff Commission. The fundamental premise rooted in this ruling is
based on the acknowledgment that the required positive final determination of the Tariff
Commission exists as a properly enacted constitutional limitation imposed on the delegation of the
legislative power to impose tariffs and imposts to the President under Section 28(2), Article VI of
the Constitution.

34

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.

But let us for the nonce pursue Philcemcors logic further. It claims that since Section 5 does not
allegedly limit the circumstances upon which the DTI Secretary may impose general safeguard
measures, it is a worthy pursuit to determine whether the entire context of the SMA, as discerned
by all the other familiar indicators of legislative intent supplied by norms of statutory
interpretation, would justify safeguard measures absent a positive final determination by the Tariff
Commission.
The first line of attack employed is on Section 5 itself, it allegedly not being as clear as it sounds.
It is advanced that Section 5 does not relate to the legal ability of either the Tariff Commission or
the DTI Secretary to bind or foreclose review and reversal by one or the other. Such relationship
should instead be governed by domestic administrative law and remedial law. Philcemcor thus
would like to cast the proposition in this manner: Does it run contrary to our legal order to assert,
as the Court did in its Decision, that a body of relative junior competence as the Tariff Commission
can bind an administrative superior and cabinet officer, the DTI Secretary? It is easy to see why
Philcemcor would like to divorce this DTI Secretary-Tariff Commission interaction from the confines
of the SMA. Shorn of context, the notion would seem radical and unjustifiable that the lowly Tariff
Commission can bind the hands and feet of the DTI Secretary.

When Congress tasks the President or his/her alter egos to impose safeguard measures
under the delineated conditions, the President or the alter egos may be properly deemed
as agents of Congress to perform an act that inherently belongs as a matter of right to
the legislature. It is basic agency law that the agent may not act beyond the specifically
delegated powers or disregard the restrictions imposed by the principal. In short, Congress may
establish the procedural framework under which such safeguard measures may be imposed, and
assign the various offices in the government bureaucracy respective tasks pursuant to the
imposition of such measures, the task assignment including the factual determination of whether
the necessary conditions exists to warrant such impositions. Under the SMA, Congress assigned
the DTI Secretary and the Tariff Commission their respective functions 50 in the legislatures scheme
of things.

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.

There is only one viable ground for challenging the legality of the limitations and restrictions
imposed by Congress under Section 28(2) Article VI, and that is such limitations and restrictions
are themselves violative of the Constitution. Thus, no matter how distasteful or noxious these
limitations and restrictions may seem, the Court has no choice but to uphold their validity unless
their constitutional infirmity can be demonstrated.

As stated earlier, the Court in its Decision found Section 5 to be clear, plain and free from
ambiguity so as to render unnecessary resort to the congressional records to ascertain legislative
intent. Yet respondents, on the dubitable premise that Section 5 is not as express as it seems,
again latch on to the record of legislative deliberations in asserting that there was no legislative
intent to bar the DTI Secretary from imposing the general safeguard measure anyway despite the
absence of a positive final determination by the Tariff Commission.

What are these limitations and restrictions that are material to the present case? The entire SMA
provides for a limited framework under which the President, through the DTI and Agriculture
Secretaries, may impose safeguard measures in the form of tariffs and similar imposts. The
limitation most relevant to this case is contained in Section 5 of the SMA, captioned "Conditions for
the Application of General Safeguard Measures," and stating:

Let us take the bait for a moment, and examine respondents commonly cited portion of the
legislative record. One would presume, given the intense advocacy for the efficacy of these
citations, that they contain a "smoking gun" express declarations from the legislators that the
DTI Secretary may impose a general safeguard measure even if the Tariff Commission refuses to
render a positive final determination. Such "smoking gun," if it exists, would characterize
our Decision as disingenuous for ignoring such contrary expression of intent from the legislators
who enacted the SMA. But as with many things, the anticipation is more dramatic than the truth.

The Secretary shall apply a general safeguard measure upon a positive final
determination of the [Tariff] Commission that a product is being imported into the country in
increased quantities, whether absolute or relative to the domestic production, as to be a
substantial cause of serious injury or threat thereof to the domestic industry; however, in the case
of non-agricultural products, the Secretary shall first establish that the application of such
safeguard measures will be in the public interest.51
Positive Final Determination

The excerpts cited by respondents are derived from the interpellation of the late Congressman
Marcial Punzalan Jr., by then (and still is) Congressman Simeon Datumanong. 55 Nowhere in these
records is the view expressed that the DTI Secretary may impose the general safeguard measures
if the Tariff Commission issues a negative final determination or otherwise is unable to make a
positive final determination. Instead, respondents hitch on the observations of Congressman
Punzalan Jr., that "the results of the [Tariff] Commissions findings . . . is subsequently submitted
to [the DTI Secretary] for the [DTI Secretary] to impose or not to impose;" and that "the [DTI
Secretary] here iswho would make the final decision on the recommendation that is made by a
more technical body [such as the Tariff Commission]."56

By Tariff Commission Plainly

Required by Section 5 of SMA
There is no question that Section 5 of the SMA operates as a limitation validly imposed by
Congress on the presidential52 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.

There is nothing in the remarks of Congressman Punzalan which contradict our Decision. His
observations fall in accord with the respective roles of the Tariff Commission and the DTI Secretary
under the SMA. Under the SMA, it is the Tariff Commission that conducts an investigation as to
whether the conditions exist to warrant the imposition of the safeguard measures. These
conditions are enumerated in Section 5, namely; that a product is being imported into the country
in increased quantities, whether absolute or relative to the domestic production, as to be a
substantial cause of serious injury or threat thereof to the domestic industry. After the
investigation of the Tariff Commission, it submits a report to the DTI Secretary which states,
among others, whether the above-stated conditions for the imposition of the general safeguard
measures exist. Upon a positive final determination that these conditions are present, the Tariff
Commission then is mandated to recommend what appropriate safeguard measures should be

Philcemcor attributes this Courts conclusion on the indispensability of the positive final
determination to flawed syllogism in that we read the proposition "if A then B" as if it stated "if A,
and only A, then B."53 Translated in practical terms, our conclusion, according to Philcemcor, would
have only been justified had Section 5 read "shall apply a general safeguard measure upon, and
only upon, a positive final determination of the Tariff Commission."
Statutes are not designed for the easy comprehension of the five-year old child. Certainly, general
propositions laid down in statutes need not be expressly qualified by clauses denoting exclusivity in
order that they gain efficacy. Indeed, applying this argument, the President would, under the
Constitution, be authorized to declare martial law despite the absence of the invasion, rebellion or
public safety requirement just because the first paragraph of Section 18, Article VII fails to state
the magic word "only."54

35

undertaken by the DTI Secretary. Section 13 of the SMA gives five (5) specific options on the type
of safeguard measures the Tariff Commission recommends to the DTI Secretary.

bonds previously collected as a provisional safeguard measure. Since the first paragraph of the
same provision states that it is the Tariff Commission which makes the positive determination, it
necessarily follows that it, and not the DTI Secretary, makes the negative final determination as
referred to in the penultimate paragraph of Section 13.60

At the same time, nothing in the SMA obliges the DTI Secretary to adopt the recommendations
made by the Tariff Commission. In fact, the SMA requires that the DTI Secretary establish that the
application of such safeguard measures is in the public interest, notwithstanding the Tariff
Commissions recommendation on the appropriate safeguard measure upon its positive final
determination. Thus, even if the Tariff Commission makes a positive final determination, the DTI
Secretary may opt not to impose a general safeguard measure, or choose a different type of
safeguard measure other than that recommended by the Tariff Commission.

The Separate Opinion considers as highly persuasive of former Tariff Commission Chairman Abon,
who stated that the Commissions findings are merely recommendatory.61 Again, the considered
opinion of Chairman Abon is of no operative effect if the statute plainly states otherwise, and
Section 5 bluntly does require a positive final determination by the Tariff Commission before the
DTI Secretary may impose a general safeguard measure. 62Certainly, the Court cannot give
controlling effect to the statements of any public officer in serious denial of his duties if the law
otherwise imposes the duty on the public office or officer.

Congressman Punzalan was cited as saying that the DTI Secretary makes the decision "to impose
or not to impose," which is correct since the DTI Secretary may choose not to impose a safeguard
measure in spite of a positive final determination by the Tariff Commission. Congressman Punzalan
also correctly stated that it is the DTI Secretary who makes the final decision "on the
recommendation that is made [by the Tariff Commission]," since the DTI Secretary may choose to
impose a general safeguard measure different from that recommended by the Tariff Commission or
not to impose a safeguard measure at all. Nowhere in these cited deliberations was Congressman
Punzalan, or any other member of Congress for that matter, quoted as saying that the DTI
Secretary may ignore a negative determination by the Tariff Commission as to the existence of the
conditions warranting the imposition of general safeguard measures, and thereafter proceed to
impose these measures nonetheless. It is too late in the day to ascertain from the late
Congressman Punzalan himself whether he had made these remarks in order to assure the other
legislators that the DTI Secretary may impose the general safeguard measures notwithstanding a
negative determination by the Tariff Commission. But certainly, the language of Section 5 is more
resolutory to that question than the recorded remarks of Congressman Punzalan.

Nonetheless, if we are to render persuasive effect on the considered opinion of the members of the
Executive Branch, it bears noting that the Secretary of the Department of Justice rendered an
Opinion wherein he concluded that the DTI Secretary could not impose a general safeguard
measure if the Tariff Commission made a negative final determination.63 Unlike Chairman Abons
impromptu remarks made during a hearing, the DOJ Opinion was rendered only after a thorough
study of the question after referral to it by the DTI. The DOJ Secretary is the alter ego of the
President with a stated mandate as the head of the principal law agency of the government. 64 As
the DOJ Secretary has no denominated role in the SMA, he was able to render his Opinion from the
vantage of judicious distance. Should not his Opinion, studied and direct to the point as it is, carry
greater weight than the spontaneous remarks of the Tariff Commissions Chairman which do not
even expressly disavow the binding power of the Commissions positive final determination?
III. DTI Secretary has No Power of Review
Over Final Determination of the Tariff Commission

Respondents employed considerable effort to becloud Section 5 with undeserved ambiguity in

order that a proper resort to the legislative deliberations may be had. Yet assuming that Section 5
deserves to be clarified through an inquiry into the legislative record, the excerpts cited by the
respondents are far more ambiguous than the language of the assailed provision regarding the key
question of whether the DTI Secretary may impose safeguard measures in the face of a negative
determination by the Tariff Commission. Moreover, even Southern Cross counters with its own
excerpts of the legislative record in support of their own view.57

We should reemphasize that it is only because of the SMA, a legislative enactment, that the
executive branch has the power to impose safeguard measures. At the same time, by
constitutional fiat, the exercise of such power is subjected to the limitations and restrictions
similarly enforced by the SMA. In examining the relationship of the DTI and the Tariff Commission
as established in the SMA, it is essential to acknowledge and consider these predicates.
It is necessary to clarify the paradigm established by the SMA and affirmed by the Constitution
under which the Tariff Commission and the DTI operate, especially in light of the suggestions that
the Courts rulings on the functions of quasi-judicial power find application in this case. Perhaps the
reflexive application of the quasi-judicial doctrine in this case, rooted as it is in jurisprudence,
might allow for some convenience in ruling, yet doing so ultimately betrays ignorance of the
fundamental power of Congress to reorganize the administrative structure of governance in ways it
sees fit.

It will not be difficult, especially as to heavily-debated legislation, for two sides with contrapuntal
interpretations of a statute to highlight their respective citations from the legislative debate in
support of their particular views.58 A futile exercise of second-guessing is happily avoided if the
meaning of the statute is clear on its face. It is evident from the text of Section 5 that there
must be a positive final determination by the Tariff Commission that a product is being
imported into the country in increased quantities (whether absolute or relative to
domestic production), as to be a substantial cause of serious injury or threat to the
domestic industry. Any disputation to the contrary is, at best, the product of wishful thinking.

The Separate Opinion operates from wholly different premises which are incomplete. Its main
stance, similar to that of respondents, is that the DTI Secretary, acting as alter ego of the
President, may modify and alter the findings of the Tariff Commission, including the latters
negative final determination by substituting it with his own negative final determination to pave
the way for his imposition of a safeguard measure.65 Fatally, this conclusion is arrived at without
considering the fundamental constitutional precept under Section 28(2), Article VI, on the ability of
Congress to impose restrictions and limitations in its delegation to the President to impose tariffs
and imposts, as well as the express condition of Section 5 of the SMA requiring a positive final
determination of the Tariff Commission.

For the same reason that Section 5 is explicit as regards the essentiality of a positive final
determination by the Tariff Commission, there is no need to refer to the Implementing Rules of the
SMA to ascertain a contrary intent. If there is indeed a provision in the Implementing Rules that
allows the DTI Secretary to impose a general safeguard measure even without the positive final
determination by the Tariff Commission, said rule is void as it cannot supplant the express
language of the legislature. Respondents essentially rehash their previous arguments on this point,
and there is no reason to consider them anew. The Decision made it clear that nothing in Rule 13.2
of the Implementing Rules, even though captioned "Final Determination by the Secretary,"
authorizes the DTI Secretary to impose a general safeguard measure in the absence of a positive
final determination by the Tariff Commission.59 Similarly, the "Rules and Regulations to Govern the
Conduct of Investigation by the Tariff Commission Pursuant to Republic Act No. 8800" now cited by
the respondent does not contain any provision that the DTI Secretary may impose the general
safeguard measures in the absence of a positive final determination by the Tariff Commission.

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.

Section 13 of the SMA further bolsters the interpretation as argued by Southern Cross and upheld
by theDecision. The first paragraph thereof states that "[u]pon its positive determination, the
[Tariff] Commission shall recommend to the Secretary an appropriate definitive measure", clearly
referring to the Tariff Commission as the entity that makes the positive determination. On the
other hand, the penultimate paragraph of the same provision states that "[i]n the event of a
negative final determination", the DTI Secretary is to immediately issue through the Secretary of
Finance, a written instruction to the Commissioner of Customs authorizing the return of the cash

Nonetheless, the Separate Opinion brings to fore the issue of whether the DTI Secretary, acting
either as alter ego of the President or in his capacity as head of an executive department, may
review, modify or otherwise alter the final determination of the Tariff Commission under the SMA.
The succeeding discussion shall focus on that question.

36

Preliminarily, we should note that none of the parties question the designation of the DTI or
Agriculture secretaries under the SMA as the imposing authorities of the safeguard measures, even
though Section 28(2) Article VI states that it is the President to whom the power to impose tariffs
and imposts may be delegated by Congress. The validity of such designation under the SMA should
not be in doubt. We recognize that the authorization made by Congress in the SMA to the DTI and
Agriculture Secretaries was made in contemplation of their capacities as alter egos of the
President.

Thus, in ascertaining the appropriate legal milieu governing the relationship between the DTI and
the Tariff Commission, it is imperative to apply foremost, if not exclusively, the provisions of the
SMA. The argument that the usual rules on administrative control and supervision apply between
the Tariff Commission and the DTI as regards safeguard measures is severely undercut by the
plain fact that there is no long-standing tradition of administrative interplay between these two
entities.
Within the administrative apparatus, the Tariff Commission appears to be a lower rank relative to
the DTI. But does this necessarily mean that the DTI has the intrinsic right, absent statutory
authority, to reverse the findings of the Tariff Commission? To insist that it does, one would have to
concede for instance that, applying the same doctrinal guide, the Secretary of the Department of
Science and Technology (DOST) has the right to reverse the rulings of the Civil Aeronautics Board
(CAB) or the issuances of the Philippine Coconut Authority (PCA). As with the Tariff CommissionDTI, 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.

Indeed, in Marc Donnelly & Associates v. Agregado66 the Court upheld the validity of a Cabinet
resolution fixing the schedule of royalty rates on metal exports and providing for their collection
even though Congress, under Commonwealth Act No. 728, had specifically empowered the
President and not any other official of the executive branch, to regulate and curtail the export of
metals. In so ruling, the Court held that the members of the Cabinet were acting as alter egos of
the President.67 In this case, Congress itself authorized the DTI Secretary as alter ego of the
President to impose the safeguard measures. If the Court was previously willing to uphold the alter
egos tariff authority despite the absence of explicit legislative grant of such authority on the alter
ego, all the more reason now when Congress itself expressly authorized the alter ego to exercise
these powers to impose safeguard measures.
Notwithstanding, Congress in enacting the SMA and prescribing the roles to be played therein by
the Tariff Commission and the DTI Secretary did not envision that the President, or his/her alter
ego, could exercise supervisory powers over the Tariff Commission. If truly Congress intended to
allow the traditional "alter ego" principle to come to fore in the peculiar setup established by the
SMA, it would have assigned the role now played by the DTI Secretary under the law instead to the
NEDA. The Tariff Commission is an attached agency of the National Economic Development
Authority,68 which in turn is the independent planning agency of the government.69

The Separate Opinion notes that notwithstanding above, the Secretary of Department of
Transportation and Communication may review the findings of the CAB, the Agriculture Secretary
may review those of the PCA, and that the Secretary of the Department of Environment and
Natural Resources may pass upon decisions of the Mines and Geosciences Board.75 These three
officers may be alter egos of the President, yet their authority to review is limited to those
agencies or bureaus which are, pursuant to statutes such as the Administrative Code of 1987,
under the administrative control and supervision of their respective departments. Thus, under the
express provision of the Administrative Code expressly provides that the CAB is an attached
agency of the DOTC76, and that the PCA is an attached agency of the Department of
Agriculture.77 The same law establishes the Mines and Geo-Sciences Bureau as one of the Sectoral
Staff Bureaus78 that forms part of the organizational structure of the DENR. 79

The Tariff Commission does not fall under the administrative supervision of the DTI. 70 On the other
hand, the administrative relationship between the NEDA and the Tariff Commission is established
not only by the Administrative Code, but similarly affirmed by the Tariff and Customs Code.
Justice Florentino Feliciano, in his ponencia in Garcia v. Executive Secretary71, acknowledged the
interplay between the NEDA and the Tariff Commission under the Tariff and Customs Code when he
cited the relevant provisions of that law evidencing such setup. Indeed, under Section 104 of the
Tariff and Customs Code, the rates of duty fixed therein are subject to periodic investigation by the
Tariff Commission and may be revised by the President upon recommendation of the
NEDA.72 Moreover, under Section 401 of the same law, it is upon periodic investigations by the
Tariff Commission and recommendation of the NEDA that the President may cause a gradual
reduction of protection levels granted under the law.73

As repeatedly stated, the Tariff Commission does not fall under the administrative control of the
DTI, but under the NEDA, pursuant to the Administrative Code. The reliance made by the Separate
Opinion to those three examples are thus misplaced.
Nonetheless, the Separate Opinion asserts that the SMA created a functional relationship between
the Tariff Commission and the DTI Secretary, sufficient to allow the DTI Secretary to exercise alter
ego powers to reverse the determination of the Tariff Commission. Again, considering that the
power to impose tariffs in the first place is not inherent in the President but arises only from
congressional grant, we should affirm the congressional prerogative to impose limitations and
restrictions on such powers which do not normally belong to the executive in the first place.
Nowhere in the SMA does it state that the DTI Secretary may impose general safeguard measures
without a positive final determination by the Tariff Commission, or that the DTI Secretary may
reverse or even review the factual determination made by the Tariff Commission.

At the same time, under the Tariff and Customs Code, no similar role or influence is allocated to
the DTI in the matter of imposing tariff duties. In fact, the long-standing tradition has been for the
Tariff Commission and the DTI to proceed independently in the exercise of their respective
functions. Only very recently have our statutes directed any significant interplay between the Tariff
Commission and the DTI, with the enactment in 1999 of Republic Act No. 8751 on the imposition
of countervailing duties and Republic Act No. 8752 on the imposition of anti-dumping duties, and
of course the promulgation a year later of the SMA. In all these three laws, the Tariff Commission
is tasked, upon referral of the matter by the DTI, to determine whether the factual conditions exist
to warrant the imposition by the DTI of a countervailing duty, an anti-dumping duty, or a general
safeguard measure, respectively. In all three laws, the determination by the Tariff Commission that
these required factual conditions exist is necessary before the DTI Secretary may impose the
corresponding duty or safeguard measure. And in all three laws, there is no express provision
authorizing the DTI Secretary to reverse the factual determination of the Tariff Commission. 74

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.
The Court has no issue with upholding administrative control and supervision exercised by the
head of an executive department, but only over those subordinate offices that are attached to the
department, or which are, under statute, relegated under its supervision and control. To declare
that a department secretary, even if acting as alter ego of the President, may exercise such control
or supervision over all executive offices below cabinet rank would lead to absurd results such as
those adverted to above. As applied to this case, there is no legal justification for the DTI
Secretary to exercise control, supervision, review or amendatory powers over the Tariff
Commission and its positive final determination. In passing, we note that there is, admittedly, a
feasible mode by which administrative review of the Tariff Commissions final determination could
be had, but it is not the procedure adopted by respondents and now suggested for affirmation.
This mode shall be discussed in a forthcoming section.

In fact, the SMA indubitably establishes that the Tariff Commission is no mere flunky of the DTI
Secretary when it mandates that the positive final recommendation of the former be indispensable
to the latters imposition of a general safeguard measure. What the law indicates instead is a
relationship of interdependence between two bodies independent of each other under the
Administrative Code and the SMA alike. Indeed, even the ability of the DTI Secretary to disregard
the Tariff Commissions recommendations as to the particular safeguard measures to be imposed
evinces the independence from each other of these two bodies. This is properly so for two reasons
the DTI and the Tariff Commission are independent of each other under the Administrative Code;
and impropriety is avoided in cases wherein the DTI itself is the one seeking the imposition of the
general safeguard measures, pursuant to Section 6 of the SMA.

The Separate Opinion asserts that the President, or his/her alter ego cannot be made a mere
rubber stamp of the Tariff Commission since Section 17, Article VII of the Constitution

37

denominates the Chief Executive exercises control over all executive departments, bureaus and
offices.80 But let us be clear that such "executive control" is not absolute. The definition of the
structure of the executive branch of government, and the corresponding degrees of administrative
control and supervision, is not the exclusive preserve of the executive. It may be effectively be
limited by the Constitution, by law, or by judicial decisions.

of Congress may validly curtail it."86 Laws are acts of Congress, hence valid confusion arises
whether the Separate Opinion truly believes the first proposition that executive control is bound by
law. This is a quagmire for the Separate Opinion to resolve for itself
The Separate Opinion unduly considers executive control as the ne plus ultra constitutional
standard which must govern in this case. But while the President may generally have the power to
control, modify or set aside the actions of a subordinate, such powers may be constricted by the
Constitution, the legislature, and the judiciary. This is one of the essences of the check-andbalance system in our tri-partite constitutional democracy. Not one head of a branch of
government may operate as a Caesar within his/her particular fiefdom.

The Separate Opinion cites the respected constitutional law authority Fr. Joaquin Bernas, in
support of the proposition that such plenary power of executive control of the President cannot be
restricted by a mere statute passed by Congress. However, the cited passage from Fr. Bernas
actually states, "Since the Constitution has given the President the power of control, with all its
awesome implications, it is the Constitution alone which can curtail such power." 81 Does the
President have such tariff powers under the Constitution in the first place which may be curtailed
by the executive power of control? At the risk of redundancy, we quote Section 28(2), Article VI:
"The Congress may, by law, authorize the President to fix within specified limits, and subject to
such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage
and wharfage dues, and other duties or imposts within the framework of the national development
program of the Government." Clearly the power to impose tariffs belongs to Congress and not to
the President.

Assuming there is a conflict between the specific limitation in Section 28 (2), Article VI of the
Constitution and the general executive power of control and supervision, the former prevails in the
specific instance of safeguard measures such as tariffs and imposts, and would thus serve to
qualify the general grant to the President of the power to exercise control and supervision over
his/her subalterns.
Thus, if the Congress enacted the law so that the DTI Secretary is "bound" by the Tariff
Commission in the sense the former cannot impose general safeguard measures absent a final
positive determination from the latter the Court is obliged to respect such legislative prerogative,
no matter how such arrangement deviates from traditional norms as may have been enshrined in
jurisprudence. The only ground under which such legislative determination as expressed in statute
may be successfully challenged is if such legislation contravenes the Constitution. No such
argument is posed by the respondents, who do not challenge the validity or constitutionality of the
SMA.

It is within reason to assume the framers of the Constitution deemed it too onerous to spell out all
the possible limitations and restrictions on this presidential authority to impose tariffs. Hence, the
Constitution especially allowed Congress itself to prescribe such limitations and restrictions itself, a
prudent move considering that such authority inherently belongs to Congress and not the
President. Since Congress has no power to amend the Constitution, it should be taken to mean
that such limitations and restrictions should be provided "by mere statute". Then again, even the
presidential authority to impose tariffs arises only "by mere statute." Indeed, this presidential
privilege is both contingent in nature and legislative in origin. These characteristics,
when weighed against the aspect of executive control and supervision, cannot militate
against Congresss exercise of its inherent power to tax.

Given these premises, it is utterly reckless to examine the interrelationship between the Tariff
Commission and the DTI Secretary beyond the context of the SMA, applying instead traditional
precepts on administrative control, review and supervision. For that reason, the Decision deemed
inapplicable respondents previous citations ofCario v. Commissioner on Human Rights and Lamb
v. Phipps, since the executive power adverted to in those cases had not been limited by
constitutional restrictions such as those imposed under Section 28(2), Article VI. 87

The bare fact is that the administrative superstructure, for all its unwieldiness, is mere putty in the
hands of Congress. The functions and mandates of the particular executive departments and
bureaus are not created by the President, but by the legislative branch through the Administrative
Code. 82 The President is the administrative head of the executive department, as such obliged to
see that every government office is managed and maintained properly by the persons in charge of
it in accordance with pertinent laws and regulations, and empowered to promulgate rules and
issuances that would ensure a more efficient management of the executive branch, for so long as
such issuances are not contrary to law.83 Yet the legislature has the concurrent power to reclassify
or redefine the executive bureaucracy, including the relationship between various administrative
agencies, bureaus and departments, and ultimately, even the power to abolish executive
departments and their components, hamstrung only by constitutional limitations. The DTI itself can
be abolished with ease by Congress through deleting Title X, Book IV of the Administrative Code.
The Tariff Commission can similarly be abolished through legislative enactment. 84

A similar observation can be made on the case of Sharp International Marketing v. Court of
Appeals,88 now cited by Philcemcor, wherein the Court asserted that the Land Bank of the
Philippines was required to exercise independent judgment and not merely rubber-stamp deeds of
sale entered into by the Department of Agrarian Reform in connection with the agrarian reform
program. Philcemcor attempts to demonstrate that the DTI Secretary, as with the Land Bank of the
Philippines, is required to exercise independent discretion and is not expected to just merely
accede to DAR-approved compensation packages. Yet again, such grant of independent discretion
is expressly called for by statute, particularly Section 18 of Rep. Act No. 6657 which specifically
requires the joint concurrence of "the landowner and the DAR and the [Land Bank of the
Philippines]" on the amount of compensation. Such power of review by the Land Bank is a
consequence of clear statutory language, as is our holding in the Decision that Section 5 explicitly
requires a positive final determination by the Tariff Commission before a general safeguard
measure may be imposed. Moreover, such limitations under the SMA are coated by the
constitutional authority of Section 28(2), Article VI of the Constitution.

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.

Nonetheless, is this administrative setup, as envisioned by Congress and enshrined into the SMA,
truly noxious to existing legal standards? The Decision acknowledged the internal logic of the
statutory framework, considering that the DTI cannot exercise review powers over an agency such
as the Tariff Commission which is not within its administrative jurisdiction; that the mechanism
employed establishes a measure of check and balance involving two government offices with
different specializations; and that safeguard measures are the exception rather than the rule,
pursuant to our treaty obligations.89

There are further limitations on the "executive control" adverted to by the Separate Opinion. The
President, in the exercise of executive control, cannot order a subordinate to disobey a final
decision of this Court or any courts. If the subordinate chooses to disobey, invoking sole allegiance
to the President, the judicial processes can be utilized to compel obeisance. Indeed, when public
officers of the executive department take their oath of office, they swear allegiance and obedience
not to the President, but to the Constitution and the laws of the land. The invocation of executive
control must yield when under its subsumption includes an act that violates the law.

We see no reason to deviate from these observations, and indeed can add similarly oriented
comments. Corollary to the legislative power to decree policies through legislation is the ability of
the legislature to provide for means in the statute itself to ensure that the said policy is strictly
implemented by the body or office tasked so tasked with the duty. As earlier stated, our treaty
obligations dissuade the State for now from implementing default protectionist trade measures
such as tariffs, and allow the same only under specified conditions. 90The conditions enumerated
under the GATT Agreement on Safeguards for the application of safeguard measures by a member
country are the same as the requisites laid down in Section 5 of the SMA. 91 To insulate the factual
determination from political pressure, and to assure that it be conducted by an entity especially
qualified by reason of its general functions to undertake such investigation, Congress deemed it

The Separate Opinion concedes that the exercise of executive control and supervision by the
President is bound by the Constitution and law.85 Still, just three sentences after asserting that the
exercise of executive control must be within the bounds of the Constitution and law, the Separate
Opinion asserts, "the control power of the Chief Executive emanates from the Constitution; no act

38

necessary to delegate to the Tariff Commission the function of ascertaining whether or not the
those factual conditions exist to warrant the atypical imposition of safeguard measures. After all,
the Tariff Commission retains a degree of relative independence by virtue of its attachment to the
National Economic Development Authority, "an independent planning agency of the
government,"92 and also owing to its vaunted expertise and specialization.

the "action, discretion, etc., of public administrative officers or bodies, who are required to
investigate facts, or ascertain the existence of facts, hold hearings, weigh evidence, and draw
conclusions from them, as a basis for their official action, and to exercise discretion of a judicial
nature."97
However, the Tariff Commission is not empowered to hear actual cases or controversies lodged
directly before it by private parties. It does not have the power to issue writs of injunction or
enforcement of its determination. These considerations militate against a finding of quasi-judicial
powers attributable to the Tariff Commission, considering the pronouncement that "quasi-judicial
adjudication would mean a determination of rights privileges and duties resulting in a decision or
order which applies to a specific situation." 98

The matter of imposing a safeguard measure almost always involves not just one industry, but the
national interest as it encompasses other industries as well. Yet in all candor, any decision to
impose a safeguard measure is susceptible to all sorts of external pressures, especially if the
domestic industry concerned is well-organized. Unwarranted impositions of safeguard measures
may similarly be detrimental to the national interest. Congress could not be blamed if it desired to
insulate the investigatory process by assigning it to a body with a putative degree of independence
and traditional expertise in ascertaining factual conditions. Affected industries would have cause to
lobby for or against the safeguard measures. The decision-maker is in the unenviable position of
having to bend an ear to listen to all concerned voices, including those which may speak softly but
carry a big stick. Had the law mandated that the decision be made on the sole discretion of an
executive officer, such as the DTI Secretary, it would be markedly easier for safeguard measures to
be imposed or withheld based solely on political considerations and not on the factual conditions
that are supposed to predicate the decision.

Indeed, a declaration that the Tariff Commission possesses quasi-judicial powers, even if
ascertained for the limited purpose of exercising its functions under the SMA, may have the
unfortunate effect of expanding the Commissions powers beyond that contemplated by law. After
all, the Tariff Commission is by convention, a fact-finding body, and its role under the SMA,
burdened as it is with factual determination, is but a mere continuance of this tradition. However,
Congress through the SMA offers a significant deviation from this traditional role by tying the
decision by the DTI Secretary to impose a safeguard measure to the required positive factual
determination by the Tariff Commission. Congress is not bound by past traditions, or even by the
jurisprudence of this Court, in enacting legislation it may deem as suited for the times. The sole
benchmark for judicial substitution of congressional wisdom is constitutional transgression, a
standard which the respondents do not even attempt to match.

Reference of the binding positive final determination to the Tariff Commission is of course, not a
fail-safe means to ensure a bias-free determination. But at least the legislated involvement of the
Commission in the process assures some measure of measure of check and balance involving
two different governmental agencies with disparate specializations. There is no legal or
constitutional demand for such a setup, but its wisdom as policy should be acknowledged. As
prescribed by Congress, both the Tariff Commission and the DTI Secretary operate within limited
frameworks, under which nobody acquires an undue advantage over the other.

Respondents Suggested Interpretation

We recognize that Congress deemed it necessary to insulate the process in requiring that the
factual determination to be made by an ostensibly independent body of specialized competence,
the Tariff Commission. This prescribed framework, constitutionally sanctioned, is intended to
prevent the baseless, whimsical, or consideration-induced imposition of safeguard measures. It
removes from the DTI Secretary jurisdiction over a matter beyond his putative specialized
aptitude, the compilation and analysis of picayune facts and determination of their limited causal
relations, and instead vests in the Secretary the broad choice on a matter within his
unquestionable competence, the selection of what particular safeguard measure would assist the
duly beleaguered local industry yet at the same time conform to national trade policy. Indeed, the
SMA recognizes, and places primary importance on the DTI Secretarys mandate to formulate trade
policy, in his capacity as the Presidents alter ego on trade, industry and investment-related
matters.

Of the SMA Transgresses Fair Play

Respondents have belabored the argument that the Decisions interpretation of the SMA,
particularly of the role of the Tariff Commission vis--vis the DTI Secretary, is noxious to traditional
notions of administrative control and supervision. But in doing so, they have failed to acknowledge
the congressional prerogative to redefine administrative relationships, a license which falls within
the plenary province of Congress under our representative system of democracy. Moreover,
respondents own suggested interpretation falls wayward of expectations of practical fair play.
Adopting respondents suggestion that the DTI Secretary may disregard the factual findings of the
Tariff Commission and investigatory process that preceded it, it would seem that the elaborate
procedure undertaken by the Commission under the SMA, with all the attendant guarantees of due
process, is but an inutile spectacle. As Justice Garcia noted during the oral arguments, why would
the DTI Secretary bother with the Tariff Commission and instead conduct the investigation
himself.99

At the same time, the statutory limitations on this authorized power of the DTI Secretary must
prevail since the Constitution itself demands the enforceability of those limitations and restrictions
as imposed by Congress. Policy wisdom will not save a law from infirmity if the statutory provisions
violate the Constitution. But since the Constitution itself provides that the President shall be
constrained by the limits and restrictions imposed by Congress and since these limits and
restrictions are so clear and categorical, then the Court has no choice but to uphold the reins.

Certainly, nothing in the SMA authorizes the DTI Secretary, after making the preliminary
determination, to personally oversee the investigation, hear out the interested parties, or receive
evidence.100 In fact, the SMA does not even require the Tariff Commission, which is tasked with the
custody of the submitted evidence,101 to turn over to the DTI Secretary such evidence it had
evaluated in order to make its factual determination.102Clearly, as Congress tasked it to be, it is the
Tariff Commission and not the DTI Secretary which acquires the necessary intimate acquaintance
with the factual conditions and evidence necessary for the imposition of the general safeguard
measure. Why then favor an interpretation of the SMA that leaves the findings of the Tariff
Commission bereft of operative effect and makes them subservient to the wishes of the DTI
Secretary, a personage with lesser working familiarity with the relevant factual milieu? In fact, the
bare theory of the respondents would effectively allow the DTI Secretary to adopt, under the
subterfuge of his "discretion", the factual determination of a private investigative group hired by
the industry concerned, and reject the investigative findings of the Tariff Commission as mandated
by the SMA. It would be highly irregular to substitute what the law clearly provides for a dubious
setup of no statutory basis that would be readily susceptible to rank chicanery.

Even assuming that this prescribed setup made little sense, or seemed "uncommonly silly," 93 the
Court is bound by propriety not to dispute the wisdom of the legislature as long as its acts do not
violate the Constitution. Since there is no convincing demonstration that the SMA contravenes the
Constitution, the Court is wont to respect the administrative regimen propounded by the law, even
if it allots the Tariff Commission a higher degree of puissance than normally expected. It is for this
reason that the traditional conceptions of administrative review or quasi-judicial power cannot
control in this case.
Indeed, to apply the latter concept would cause the Court to fall into a linguistic trap owing to the
multi-faceted denotations the term "quasi-judicial" has come to acquire.
Under the SMA, the Tariff Commission undertakes formal hearings,94 receives and evaluates
testimony and evidence by interested parties,95 and renders a decision is rendered on the basis of
the evidence presented, in the form of the final determination. The final determination requires a
conclusion whether the importation of the product under consideration is causing serious injury or
threat to a domestic industry producing like products or directly competitive products, while
evaluating all relevant factors having a bearing on the situation of the domestic industry.96 This
process aligns conformably with definition provided by Blacks Law Dictionary of "quasi-judicial" as

Moreover, the SMA guarantees the right of all concerned parties to be heard, an elemental
requirement of due process, by the Tariff Commission in the context of its investigation. The DTI
Secretary is not similarly empowered or tasked to hear out the concerns of other interested
parties, and if he/she does so, it arises purely out of volition and not compulsion under law.
Indeed, in this case, it is essential that the position of other than that of the local cement industry
should be given due consideration, cement being an indispensable need for the operation of other

39

industries such as housing and construction. While the general safeguard measures may operate to
the better interests of the domestic cement industries, its deprivation of cheaper cement imports
may similarly work to the detriment of these other domestic industries and correspondingly, the
national interest. Notably, the Tariff Commission in this case heard the views on the application of
representatives of other allied industries such as the housing, construction, and cement-bag
industries, and other interested parties such as consumer groups and foreign governments. 103 It is
only before the Tariff Commission that their views had been heard, and this is because it is only
the Tariff Commission which is empowered to hear their positions. Since due process requires a
judicious consideration of all relevant factors, the Tariff Commission, which is in a better position to
hear these parties than the DTI Secretary, is similarly more capable to render a determination
conformably with the due process requirements than the DTI Secretary.

by the Office of the President. The decision of the Office of the President then effectively
substitutes as the determination of the Tariff Commission, which now forms the basis of the DTI
Secretarys decision, which now would be ripe for judicial review by the CTA under Section 29 of
the SMA. This is the only way that administrative review of the Tariff Commissions determination
may be sustained without violating the SMA and its constitutional restrictions and limitations, as
well as administrative law.
In bare theory, the NEDA may review, alter or modify the Tariff Commissions final determination,
the Commission being an attached agency of the NEDA. Admittedly, there is nothing in the SMA or
any other statute that would prevent the NEDA to exercise such administrative review, and
successively, for the President to exercise in turn review over the NEDAs decision.
Nonetheless, in acknowledging this possibility, the Court, without denigrating the bare principle
that administrative officers may exercise control and supervision over the acts of the bodies under
its jurisdiction, realizes that this comes at the expense of a speedy resolution to an application for
a safeguard measure, an application dependent on fluctuating factual conditions. The further delay
would foster uncertainty and insecurity within the industry concerned, as well as with all other
allied industries, which in turn may lead to some measure of economic damage. Delay is certain,
since judicial review authorized by law and not administrative review would have the final say. The
fact that the SMA did not expressly prohibit administrative review of the final determination of the
Tariff Commission does not negate the supreme advantages of engendering exclusive judicial
review over questions arising from the imposition of a general safeguard measure.

In a similar vein, Southern Cross aptly notes that in instances when it is the DTI Secretary who
initiates motu proprio the application for the safeguard measure pursuant to Section 6 of the SMA,
respondents suggested interpretation would result in the awkward situation wherein the DTI
Secretary would rule upon his own application after it had been evaluated by the Tariff
Commission. Pertinently cited is our ruling in Corona v. Court of Appeals104 that "no man can be at
once a litigant and judge."105 Certainly, this anomalous situation is avoided if it is the Tariff
Commission which is tasked with arriving at the final determination whether the conditions exist to
warrant the general safeguard measures. This is the setup provided for by the express provisions
of the SMA, and the problem would arise only if we adopt the interpretation urged upon by
respondents.

In any event, even if we conceded the possibility of administrative review of the Tariff
Commissions final determination by the NEDA, such would not deny merit to the present petition.
It does not change the fact that the Court of Appeals erred in ruling that the DTI Secretary was not
bound by the negative final determination of the Tariff Commission, or that the DTI Secretary
acted without jurisdiction when he imposed general safeguard measures despite the absence of
the statutory positive final determination of the Commission.

The Possibility for Administrative Review

Of the Tariff Commissions Determination
The Court has been emphatic that a positive final determination from the Tariff Commission is
required in order that the DTI Secretary may impose a general safeguard measure, and that the
DTI Secretary has no power to exercise control and supervision over the Tariff Commission and its
final determination. These conclusions are the necessary consequences of the applicable provisions
of the Constitution, the SMA, and laws such as the Administrative Code. However, the law is silent
though on whether this positive final determination may otherwise be subjected to administrative
review.

IV. Courts Interpretation of SMA

In Harmony with Other
Constitutional Provisions
In response to our citation of Section 28(2), Article VI, respondents elevate two arguments
grounded in constitutional law. One is based on another constitutional provision, Section 12, Article
XIII, which mandates that "[t]he State shall promote the preferential use of Filipino labor,
domestic materials and locally produced goods and adopt measures that help make them
competitive." By no means does this provision dictate that the Court favor the domestic industry in
all competing claims that it may bring before this Court. If it were so, judicial proceedings in this
country would be rendered a mockery, resolved as they would be, on the basis of the personalities
of the litigants and not their legal positions.

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 Commissions
determination, administratively revised as it may be, that would serve as the basis for the DTI
Secretarys action.

Moreover, the duty imposed on by Section 12, Article XIII falls primarily with Congress, which in
that regard enacted the SMA, a law designed to protect domestic industries from the possible illeffects of our accession to the global trade order. Inconveniently perhaps for respondents, the SMA
also happens to provide for a procedure under which such protective measures may be enacted.
The Court cannot just impose what it deems as the spirit of the law without giving due regard to
its letter.
In like-minded manner, the Separate Opinion loosely states that the purpose of the SMA is to
protect or safeguard local industries from increased importation of foreign products. 106 This
inaccurately leaves the impression that the SMA ipso facto unravels a protective cloak that shelters
all local industries and producers, no matter the conditions. Indeed, our country has knowingly
chosen to accede to the world trade regime, as expressed in the GATT and WTO Agreements,
despite the understanding that local industries might suffer ill-effects, especially with the easier
entry of competing foreign products. At the same time, these international agreements were
designed to constrict protectionist trade policies by its member-countries. Hence, the median, as
expressed by the SMA, does allow for the application of protectionist measures such as tariffs, but
only after an elaborate process of investigation that ensures factual basis and indispensable need
for such measures. More accurately, the purpose of the SMA is to provide a process for the
protection or safeguarding of domestic industries that have duly established that there is
substantial injury or threat thereof directly caused by the increased imports. In short, domestic
industries are not entitled to safeguard measures as a matter of right or influence.

However, and fatally for the present petitions, such administrative review cannot be conducted by
the DTI Secretary. Even if conceding that the Tariff Commissions findings may be administratively
reviewed, the DTI Secretary has no authority to review or modify the same. We have been
emphatic on the reasons such as that there is no traditional or statutory basis placing the
Commission under the control and supervision of the DTI; that to allow such would contravene due
process, especially if the DTI itself were to apply for the safeguard measuresmotu proprio. To hold
otherwise would destroy the administrative hierarchy, contravene constitutional due process, and
disregard the limitations or restrictions provided in the SMA.
Instead, assuming administrative review were available, it is the NEDA that may conduct such
review following the principles of administrative law, and the NEDAs decision in turn is reviewable

40

Respondents also make the astounding argument that the imposition of general safeguard
measures should not be seen as a taxation measure, but instead as an exercise of police power.
The vain hope of respondents in divorcing the safeguard measures from the concept of taxation is
to exclude from consideration Section 28(2), Article VI of the Constitution.

is to simply uphold what the law says. Section 5 says that the DTI Secretary shall impose the
general safeguard measures upon the positive final determination of the Tariff Commission.
Nothing in the whereas clauses or the invisible ink provisions of the SMA can magically delete the
words "positive final determination" and "Tariff Commission" from Section 5.

This argument can be debunked at length, but it deserves little attention. The motivation behind
many taxation measures is the implementation of police power goals. Progressive income taxes
alleviate the margin between rich and poor; the so-called "sin taxes" on alcohol and tobacco
manufacturers help dissuade the consumers from excessive intake of these potentially harmful
products. Taxation is distinguishable from police power as to the means employed to implement
these public good goals. Those doctrines that are unique to taxation arose from peculiar
considerations such as those especially punitive effects of taxation, 107 and the belief that taxes are
the lifeblood of the state.108 These considerations necessitated the evolution of taxation as a
distinct legal concept from police power. Yet at the same time, it has been recognized that taxation
may be made the implement of the states police power.109

VI. On Forum-Shopping
We remain convinced that there was no willful and deliberate forum-shopping in this case by
Southern Cross. The causes of action that animate this present petition for review and the petition
for review with the CTA are distinct from each other, even though they relate to similar factual
antecedents. Yet it also appears that contrary to the undertaking signed by the President of
Southern Cross, Hironobu Ryu, to inform this Court of any similar action or proceeding pending
before any court, tribunal or agency within five (5) days from knowledge thereof, Southern Cross
informed this Court only on 12 August 2003 of the petition it had filed with the CTA eleven days
earlier. An appropriate sanction is warranted for such failure, but not the dismissal of the petition.
VII. Effects of Courts Resolution

Even assuming that the SMA should be construed exclusively as a police power measure, the Court
recognizes that police power is lodged primarily in the national legislature, though it may also be
exercised by the executive branch by virtue of a valid delegation of legislative
power.110 Considering these premises, it is clear that police power, however "illimitable" in theory,
is still exercised within the confines of implementing legislation. To declare otherwise is to sanction
rule by whim instead of rule of law. The Congress, in enacting the SMA, has delegated the power
to impose general safeguard measures to the executive branch, but at the same time subjected
such imposition to limitations, such as the requirement of a positive final determination by the
Tariff Commission under Section 5. For the executive branch to ignore these boundaries imposed
by Congress is to set up an ignoble clash between the two co-equal branches of government.
Considering that the exercise of police power emanates from legislative authority, there is little
question that the prerogative of the legislative branch shall prevail in such a clash.

Philcemcor argues that the granting of Southern Crosss Petition should not necessarily lead to the
voiding of theDecision of the DTI Secretary dated 5 August 2003 imposing the general safeguard
measures. For Philcemcor, the availability of appeal to the CTA as an available and adequate
remedy would have made the Court of AppealsDecision merely erroneous or irregular, but not
void. Moreover, the said Decision merely required the DTI Secretary to render a decision, which
could have very well been a decision not to impose a safeguard measure; thus, it could not be said
that the annulled decision resulted from the judgment of the Court of Appeals.
The Court of Appeals Decision was annulled precisely because the appellate court did not have the
power to rule on the petition in the first place. Jurisdiction is necessarily the power to decide a
case, and a court which does not have the power to adjudicate a case is one that is bereft of
jurisdiction. We find no reason to disturb our earlier finding that the Court of Appeals Decision is
null and void.

V. Assailed Decision Consistent

At the same time, the Court in its Decision paid particular heed to the peculiarities attaching to the
5 August 2003Decision of the DTI Secretary. In the DTI Secretarys Decision, he expressly stated
that as a result of the Court of Appeals Decision, "there is no legal impediment for the Secretary
to decide on the application." Yet the truth remained that there was a legal impediment, namely,
that the decision of the appellate court was not yet final and executory. Moreover, it was declared
null and void, and since the DTI Secretary expressly denominated the Court of Appeals Decision
as his basis for deciding to impose the safeguard measures, the latter decision must be voided as
well. Otherwise put, without the Court of Appeals Decision, the DTI Secretarys Decision of 5
August 2003 would not have been rendered as well.

With Ruling in Taada v. Angara

Public respondents allege that the Decision is contrary to our holding in Taada v. Angara, since
the Court noted therein that the GATT itself provides built-in protection from unfair foreign
competition and trade practices, which according to the public respondents, was a reason "why the
Honorable [Court] ruled the way it did." On the other hand, the Decision "eliminates safeguard
measures as a mode of defense."
111

This is balderdash, as with any and all claims that the Decision allows foreign industries to ride
roughshod over our domestic enterprises. The Decision does not prohibit the imposition of general
safeguard measures to protect domestic industries in need of protection. All it affirms is that the
positive final determination of the Tariff Commission is first required before the general safeguard
measures are imposed and implemented, a neutral proposition that gives no regard to the
nationalities of the parties involved. A positive determination by the Tariff Commission is hardly the
elusive Shangri-la of administrative law. If a particular industry finds it difficult to obtain a positive
final determination from the Tariff Commission, it may be simply because the industry is still
sufficiently competitive even in the face of foreign competition. These safeguard measures are
designed to ensure salvation, not avarice.

Accordingly, the Court reaffirms as a nullity the DTI Secretarys Decision dated 5 August 2003. As
a necessary consequence, no further action can be taken on Philcemcors Petition for Extension of
the Safeguard Measure. Obviously, if the imposition of the general safeguard measure is void as
we declared it to be, any extension thereof should likewise be fruitless. The proper remedy instead
is to file a new application for the imposition of safeguard measures, subject to the conditions
prescribed by the SMA. Should this step be eventually availed of, it is only hoped that the parties
involved would content themselves in observing the proper procedure, instead of making a
mockery of the rule of law.

Respondents well have the right to drape themselves in the colors of the flag. Yet these postures
hardly advance legal claims, or nationalism for that matter. The fineries of the costume pageant
are no better measure of patriotism than simple obedience to the laws of the Fatherland. And even
assuming that respondents are motivated by genuine patriotic impulses, it must be remembered
that under the setup provided by the SMA, it is the facts, and not impulse, that determine whether
the protective safeguard measures should be imposed. As once orated, facts are stubborn things;
and whatever may be our wishes, our inclinations, or the dictates of our passions, they cannot
alter the state of facts and evidence.112

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 CrosssPetition for Review with the Court of Tax Appeals,
as adverted to earlier in this Resolution.

It is our goal as judges to enforce the law, and not what we might deem as correct economic
policy. Towards this end, we should not construe the SMA to unduly favor or disfavor domestic
industries, simply because the law itself provides for a mechanism by virtue of which the claims of
these industries are thoroughly evaluated before they are favored or disfavored. What we must do

SO ORDERED.

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