EN BANC

[G.R. No. L-24170. December 16, 1968.]

ILLUH ASAALI, HATIB ABDURASID, INGKOH BANTALA, BASOK INGKIN, and MOHAMMAD BANTALA, petitioners, vs. THE COMMISSIONER OF CUSTOMS, respondent.

D E C I S I O N

FERNANDO, J p:

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

The principal question raised by petitioners, owners of five sailing vessels and the cargo loaded therein declared forfeited by respondent Commissioner of Customs for smuggling, is the validity of their interception and seizure by customs officials on high seas, the contention being raised that importation had not yet begun and that the seizure was affected outside our territorial waters.

Why such a plea could not be given the least credence without doing violence to common sense and placing the law in disrepute would be apparent from a statement of the case and the findings of facts as set forth in the decision now under review, of the Court of Tax Appeals, dated November 19, 1964, the opinion being penned by the late Associate Judge Augusto M. Luciano.

His opinion starts thus: "This is an appeal from the decision of the Acting Commissioner of Customs in Customs Case No. 113, dated September 26,1961, (Jolo Seizure Identification Cases Nos. 38, 39, 40, 41, & 42) decreeing the forfeiture of five (5) sailing vessels (kumpits) named 'Iroc-Iroc,' 'Lahat-lahat,' 'Liberal Wing 111,' 'Sulu Area Command,' and 'Business,' with their respective cargoes of blue seal cigarettes and rattan chairs, for violation of Section 1363(a) of the Revised Administrative Code and Section 20 of Republic Act No. 426 in relation with Section 1363(f) of The Revised Administrative Code." 1

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

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

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

Such a contention was advanced by petitioners before the Court of Tax Appeals. It met the repudiation that it deserved. Thus: "We perfectly see the point of the petitioners but considering the circumstances surrounding the apprehension of the vessels in question, we believe that Section 1363(a) of the Revised Administrative Code should be apprehended 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 the 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

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prows were pointed. As a matter of fact, they were about to cross our aquatic boundary but for the intervention of a customs patrol which, from all appearances, was more than eager to accomplish its mission." 4 The sense of realism and the vigorous language employed by the late Judge Luciano in rejecting such a plea deserve to be quoted. Thus: "To entertain even for a moment the thought that these vessels were probably not bound for a Philippine port would be too much a concession even for a simpleton or a perennial optimist. It is quite irrational for Filipino sailors manning five Philippines vessels to sneak out of the Philippines and go to British North Borneo, and come a long way back laden with highly taxable goods only to turn about upon reaching the brink of our territorial waters and head for another foreign port." 5

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

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

2.We thus could rest our decision affirming that of the Court of Tax Appeals on the above consideration. It might not be amiss however to devote some degree of attention to the legal points raised in the above two assignment of errors, discussed jointly by petitioners- appellants, alleging the absence of jurisdiction, the deprivation of property without due process of law and the abatement of liability consequent upon the repeal of Republic Act No. 426. Not one of the principles of law relied upon suffices to call for reversal of the action taken by the respondent Commissioner of Customs, even if the facts presented a situation less conclusive against the pretension of petitioners-appellants.

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

It is unquestioned that all vessels seized are of Philippine registry. The Revised Penal Code leaves no doubt as to its applicability and enforceability not only within the Philippines, its interior waters and maritime zone, but also outside of its

jurisdiction against those committing offense while on a Philippine ship . . . 8 The principle of law that sustains the validity of such a provision equally supplies a firm foundation for the seizure of the five sailing vessels found thereafter to have violated the applicable provisions of the Revised Administrative Code. 9

Moreover, it is a well settled doctrine of International Law that goes back to Chief Justice Marshall's opinion in Church v. Hubbart, 10 an 1804 decision, that a state has the right to protect itself and its revenues, a right not limited to its own territory but extending to the high seas. In the language of Chief Justice Marshall: "The authority of a nation within its own territory is absolute and exclusive. The seizure of a vessel within the range of its cannon by a foreign force is an invasion of that territory, and is a hostile act which it is its duty to repel. But its power to secure itself from injury may certainly be exercised beyond the limits of its territory."

The question asked in the brief of petitioners-appellants as to whether the seizure of the vessels in question and the cargoes on the high seas and thus beyond the territorial waters of the Philippines was legal must be answered in the affirmative.

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

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

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

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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 RepublicAct No. 426 abated whatever liability could have been incurred thereunder. This argument raised before the Court of Tax Appeals was correctly held devoid of any persuasive force. The decision under review cited our opinion in Golay-Buchel & Cie v. Commissioner of Customs 11 to the effect that the expiration of the Import Control Law "did not produce the effect of declaring legal the importation of goods which were illegally imported and the seizure and forfeiture thereof as ordered by the Collector of Customs illegal or null and void."

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

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

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

international law concepts and a misplaced reliance on a constitutional guaranty that has not in any wise been infringed.

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

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SECOND DIVISION

[G.R. No. 176380. June 18, 2009.]

PILIPINAS EN BANC

[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 YUCHENGCO; 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. cdll

People's Law Office for petitioners in G.R. No. 104604.

Nestor C. Lumba for petitioners in G.R. No. 111223.

Anunciatico M. Navarro for private respondents.

The Solicitor General for respondents.

D E C I S I O N

ROMERO, J p:

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

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

SO ORDERED."

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

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

These facts are the following:

On August 10, 1990, the Office of the Director, Enforcement and Security Services (ESS), Bureau of Customs, received information regarding the presence of allegedly untaxed vehicles and parts in the premises owned by a certain Pat Hao located along Quirino Avenue, Paranaque and Honduras St., Makati. After conducting a surveillance of the two places, respondent Major Jaime Maglipon, Chief of Operations and Intelligence of the ESS, recommended the issuance of warrants of seizure and detention against the articles stored in the premises.

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

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

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

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

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1990 against respondents. On the same date, the trial court issued a Temporary Restraining Order. cdt

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

On November 20, 1990, the trial court denied respondents' motion to dismiss.

On November 29, 1990, petitioners' application for preliminary prohibitory and mandatory injunction was granted conditioned upon the filing of a one million peso bond.

The Court also prohibited respondents from seizing, detaining, transporting and selling at public auction petitioners' vehicles, spare parts, accessories and other properties located at No. 2663 Honduras St., San Isidro, Makati and at No. 240 Quirino Avenue, Tambo, Paranaque, Metro Manila. Respondents were further prohibited from disturbing petitioners' constitutional and proprietary rights over their properties located at the aforesaid premises. Lastly, respondents were ordered to return the seized items and to render an accounting and inventory thereof. cdtai

On December 13, 1990, respondents filed a motion for reconsideration based on the following grounds:

a) the lower court having no jurisdiction over the subject matter of the complaint, it has no recourse but to dismiss the same; and

(b) the lower court had no legal authority to issue an injunction therein.

On January 3, 1991 the motion for reconsideration was denied. Respondents then went to the Court of Appeals on the ground that the judge acted with grave abuse of discretion in denying their motion to dismiss and in granting petitioners' application for preliminary injunction. They argued that the Regional Trial Court had no jurisdiction over seizure and forfeiture proceedings, such jurisdiction being exclusively vested in the Bureau of Customs.

The Court of Appeals set aside the questioned orders of the trial court and enjoined it from further proceeding with Civil Case No. 90-2382. The appellate court also dismissed the said civil case. aisadc

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

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

Respondent Ombudsman summarized the case before it as follows:

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

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

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

Respondents claimed in their consolidated and verified comment that they are not liable for violation of domicile because the places entered and searched by them appear not to be the residences of the complainants but only their warehouses. As proof of this allegation, the respondents presented the pictures of said warehouses, which are attached to their comment as Annexes "6," "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

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bar, the place entered into was used more of a warehouse than a dwelling place. cdasia

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

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

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

On March 15, 1993 respondent Ombudsman issued a Resolution recommending that the case be dismissed for lack of merit.

On May 17, 1993, petitioners moved for the reconsideration of said resolution, but the same was denied on July 8, 1993.

Hence, the petition in G.R. No. 111223, which was filed on August 16, 1993.

In G.R. No. 111223, petitioners claim that respondent Ombudsman gravely abused his discretion in dismissing the case and in denying petitioners' motion for reconsideration. cdtai

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

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

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

We will now discuss G.R. No. 104604.Petitioners contend: (1) that the Court of Appeals

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

We find no merit in petitioners' contentions.There is no question that Regional Trial Courts are

devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs and to enjoin or otherwise interfere with these proceedings. 4 The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive   jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded from assuming cognizance over such matters even through petitions of certiorari, prohibition or mandamus. 5

It is likewise well-settled that the provisions of the Tariff and Customs Code and that of Republic Act No. 1125, as amended, otherwise known as "An Act Creating the Court of Tax Appeals," specify the proper fora and procedure for the ventilation of any legal objections or issues raised concerning these proceedings. Thus, actions of the Collector of Customs are appealable to the Commissioner of Customs, whose decision, in turn, is subject to the exclusive appellate jurisdiction of the Court of Tax Appeals and from there to the Court of Appeals.

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

Even if the seizure by the Collector of Customs were illegal, which has yet to be proven, we have said that

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such act does not deprive the Bureau of Customs of jurisdiction thereon.

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

The allegations of petitioners regarding the propriety of the seizure should properly be ventilated before the Collector of Customs. We have had occasion to declare:

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

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

SO ORDERED. LexLibris

PETROLEUM CORPORATION, petitioner, vs. COMMISSIONER OF CUSTOMS, respondent.

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D E C I S I O N

BRION, J p:

Before us is the Petition for Review on Certiorari 1 filed by petitioner Pilipinas Shell Petroleum Corporation (Shell) questioning the Decision 2 of the Court of Appeals(CA) in CA-G.R. SP No. 78564. The CA decision set aside the 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 Shell's tax protest case.

BACKGROUND FACTSShell is a domestic corporation engaged, among others, in the importation of petroleum and its by-products into the country. For these importations, Shell was assessed and required to pay customs duties and internal revenue taxes.

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

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

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

The Center did not act on Shell's November 3 letter; instead, the respondent sent a letter dated November 19, 1999 (respondent's November 19 letter) to Shell requiring it to replace the amount equivalent to the amount of the cancelled

TCCs used by Shell to satisfy its customs duties and taxes. The pertinent portion of the respondent's November 19 letter states: DCIAST

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

Your immediate response to this demand letter shall be appreciated.

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

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

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

Please consider this as our last and final demand.

As mentioned, all three letters were signed by Atty. Valera.Shell replied to the respondent's February 15 and 20, 2002 collection letters via letters dated February 27 and March 4, 2002. Before it could reply to the respondent's April 12, 2002 collection letter, Shell received on April 23, 2002 the summons in one 5 of the three collection cases 6 filed by respondent against Shell before the Regional Trial Court (RTC) of Manila. In these collection cases, the respondent sought to recover the amounts covered by the cancelled TCCs; the complaints were all similarly worded except for the amount and TCCs involved, and were signed by Atty. Valera.

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On May 23, 2002, Shell filed with the CTA a Petition for Review questioning the BOC collection efforts for lack of legal and factual basis. To quote the issues Shell submitted in its CTA petition:

1. Whether or not the TCCs subject of the instant petition for are genuine and authentic;

2. Whether or not petitioner's right to due process of law was violated by the issuance of the 1999 collection letter and/or the filing of the collection cases, both of which seek to enforce the Excom Resolution;

3. Whether or not attempts to collect unpaid duties and taxes, being based on the bare allegation that the TCCs were fraudulently issued and transferred, can be given any effect considering that fraud is never presumed but must be proven; ADHaTC

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

5. Whether or not the respondent and the DOF/Center are stopped from invalidating the TCCs and the transfers and utilizations thereof;

6. Whether or not the TCCs, having been utilized, are already functus officio and can no longer be cancelled. 7

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

Shell countered by invoking the case of Yabes v. Flojo, 8 where this Court ruled, under the circumstances of that case, that a complaint for collection filed in court may be considered a final decision or assessment of the Commissioner 9 that opened the way for an appeal to the CTA. Applying that principle, Shell contends the 30-day reglementary period should be counted from the date it received the summons for one of the collection cases filed by respondent or, specifically, on April 23, 2002, not from the date that it received the respondent's collection letters. The petition for review, having been filed on May 23, 2002, was thus instituted within the period provided by law.

The CTA found the respondent's contentions unmeritorious, and thus denied his motion to dismiss in a Resolution dated January 28, 2003. 10 The tax court noted that the collection letters were issued and signed only by Atty. Valera, not by the respondent, so that Shell was justified in not heeding the demand. The CTA consequently declared that it is the filing of the collection cases in court that should instead be considered as the final decision of the respondent, and only then should the 30-day period to appeal commence. The respondent elevated the CTA decision to the CA after the CTA denied its motion for reconsideration. 11

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

Shell's attempt to have the CA decision reconsidered proved unsuccessful; hence, this petition.

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

On the assumption that the collection letters amounted to a decision on its protest, Shell submits that these are not "decision[s] of the Commissioner of Customs" appealable to the CTA under Section 7, Republic Act (RA) No. 1125, as amended by RA No. 9282. 14 It  maintains that  it   is   the Commissioner's decision on the taxpayer's liability for customs duties and taxes, not the decision of his subordinate, which is the proper subject of the appeal to the CTA, the delegation of authority under CMC No. 27-2001 and CMO No. 40-2001 notwithstanding. It additionally claims that Atty. Valera was prohibited from carrying out his delegated duties under the injunctive writ issued the RTC of Manila in its Order dated August 27, 2001, and the Temporary Restraining Order the CA issued on April 4, 2002.

THE COURT'S RULINGWe resolve to DENY Shell's petition; the present case does not involve a tax protest case within the jurisdiction of the CTA to resolve.

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The parties argue over which act serves as the decision of the respondent that, under the law, can be the subject of an appeal before the CTA, and from which act the 30-day period to appeal shall be reckoned. Shell insists it should be the filing of the collection suits as this was indicative of the finality of the respondent's action. The respondent, on the other hand, claims, it should be the earlier act of sending the collection letters where the respondent finally indicated his resolve to collect the duties due and demandable from Shell.

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

Sec. 7. Jurisdiction. — The CTA shall exercise:

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

xxx xxx xxx

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

These decisions of the respondent involving customs duties specifically refer to his decisions 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. EHcaAI

Unless an appeal is made to the Court of Tax Appeals in the manner and within the period prescribed by laws and regulations,

the action or ruling of the Commissioner shall be final and conclusive. [Emphasis supplied.]

A tax protest case, under the TCCP, involves a protest of the liquidation of import entries. A liquidation is the final computation and ascertainment by the collector of the duties on imported merchandise, based on official reports as to the quantity, character, and value thereof, and the collector's own finding as to the applicable rate of duty; it is akin to an assessment of internal revenue taxes under the National Internal Revenue Code 15 where the tax liability of the taxpayer is definitely determined.

In the present case, the facts reveal that Shell received three sets of letters:

a. the Center's November 3 letter, signed by the Secretary of Finance, informing it of the cancellation of the TCCs;

b. the respondent's November 19 letter requiring it to replace the amount equivalent to the amount of the cancelled TCCs used by Shell; and

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

None of these letters, however, can be considered as a liquidation or an assessment of Shell's import tax liabilities that can be the subject of an administrative tax protest proceeding before the respondent whose decision is appealable to the CTA. Shell's import tax liabilities had long been   computed   and   ascertained   in   the   original assessments, 16 and   Shell   paid   these   liabilities   using   the TCCs transferred to  it  as payment. It is even an error to consider the letters as a "reassessment" because they refer to the same tax liabilities on the same importations covered by the original assessments. The letters merely reissued the original assessments that were previously settled by Shell with the use of the TCCs. However, on account of the cancellation of the TCCs, the tax liabilities of Shell under the original assessments were considered unpaid; hence, the letters and the actions for collection. When Shell went to the CTA, the issues it raised in its petition were all related to the fact and efficacy of the payments made, specifically the genuineness of the TCCs; the absence of due process in the enforcement of the decision to cancel the TCCs; the facts surrounding the fraud in originally securing the TCCs; and the application of estoppel. These are payment and collection issues, not tax protest issues within the CTA's jurisdiction to rule upon.

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.

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To be very precise, Shell's petition before the CTA principally questioned the validity of the cancellation of the TCCs — a decision that was made not by the respondent, but by the Center. As the CTA has no jurisdiction over decisions of the Center, Shell's remedy against the cancellation should have been a certioraripetition 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 inShell 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. aSCHIT

Parenthetically, our conclusions are fully in step with what we held in Shell v. Republic 18 that a case becomes ripe for filing with the RTC as a collection matter after the finality of the respondent's assessment. We hereby confirm that this assessment has long been final, and this recognition of finality removes all perceived hindrances, based on this case, to the continuation of the collection suits. In Dayrit   v.   Cruz, 19 we declared on the matter of collection that:

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

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

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

THIRD DIVISION

[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

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Regional Trial Court, Branch XLVIII, San Fernando, Pampanga, and CESAR SONNY CARLOS/CVC TRADING, respondents.

Cruz,   Durian,   Agabin,   Atienza,   Alday   &   Tuason for private respondent.

D E C I S I O N

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

In the Resolution of 18 April 1988, this Court required the respondents to comment on the petition and issued a Temporary Restraining Order restraining the respondent Judge from further proceeding with the aforementioned Civil Case No. 8109 or from enforcing and/or carrying out his Resolution of 26 February 1988.1

Private respondent subsequently filed his Comment 2 to the petition, to which petitioners filed a Reply. 3 Private respondent then filed a Rejoinder 4 to the latter.

This Court gave due course to the petition and required the parties to submit their respective Memoranda. 5 Both manifested that they have sufficiently expounded on the relevant issues in their respective Memoranda, which the Court noted and granted.

The factual antecedents disclosed in the petition are as follows:

In a sworn letter 6 dated 7 February 1988 and addressed to the Commissioner of Customs, one Butch Martinez informed the former of the existence of both "assembled and disassembled" knocked-down vehicles, particularly Toyota Lite Aces, at the compound CVC Trading, which is owned by a certain Mr. Castro and located at St. Jude Avenue, St. Jude Village, San Fernando, Pampanga. Martinez requested for an immediate investigation thereon and prosecution for the violation of customs laws.

On the basis thereof, Gen. Benjamin C. Cruz, Acting Director of the National Customs Police, formed a team composed of National Customs Police (NCP) and Customs Intelligence and Investigation Division (CIID) members, issuing the same a Mission Order 7 on 11 February 1988. The team proceeded to

San Fernando, Pampanga on the same day, giving due notice of their presence to the PC Region III Command and the PC-INP Station at San Fernando, Pampanga.

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

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

At about 11:00 a.m. on 12 February 1988, when the team was about to haul the motor vehicles away, two (2) Regional Trial Court sheriffs arrived with a temporary restraining order issued on that date by the respondent Judge, as Executive Judge of the Regional Trial Court of San Fernando, Pampanga; the order was issued in connection with Civil Case No. 8109, entitled "Sonny Carlos, plaintiff, versus Bureau of Customs and/or Customs Police from seizing or confiscating the vehicles until further ordered, and directed the defendants to attend the raffle of the case on 26 February 1988 at 9:00 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

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

By virtue of the restraining order, the physical transfer of the vehicles was deferred, however, elements of the National Customs Police and the PC Regional Command remained

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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.

On 17 February 1988, the private respondent filed an Oppositions/Comment on the Motion to Dismiss 13 alleging, among others, that the Warrant of Seizure and Detention did not comply with the requirements for a valid search warrant under the Constitution, and that taxes for the vehicles have been paid to the Bureau of Internal Revenue (BIR).

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

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

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

"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.

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.

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."

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.

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.

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xxx xxx xxx

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

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."

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.

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

"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 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 byR.A. 3828] lodges in the Court of First Instance original jurisdiction in all cases in which the value of the property in controversy amounts to more than ten thousand pesos. This original jurisdiction of the Court of First Instance, when exercised in an action for recovery of personal property which is a subject of a forfeiture proceeding in the Bureau of Customs, tends to encroach upon, and to render futile, the jurisdiction of the Collector of Customs in seizure and forfeiture proceedings. This is precisely what took place in this case. The seizure and forfeiture proceedings against the M/B 'Bukang Liwayway' before the Collector of Customs of Manila, was stifled by the issuance of a writ of replevin by the Court of First Instance of Cavite.

Should Section 44(c) of the Judiciary Act of 1948 give way to the provisions of the Tariff and Customs Code, or vice versa? In Our opinion, in this particular case, the Court of First Instance should yield to the jurisdiction of the Collector of Customs. The jurisdiction of the Collector of Customs is provided for inRepublic 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

14 | P a g e

property for violation of Customs laws could easily be undermined by the simple device of replevin. prLL

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."

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

"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, toRepublic 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."

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

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

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:

"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

15 | P a g e

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."

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

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

SO ORDERED.

||| (Mison v. Natividad, G.R. No. 82586, [September 11, 1992])

SECOND DIVISION

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

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

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

Dennis M. Taningco for petitioner.

The Solicitor General for respondents.

D E C I S I O N

DE LEON, JR., J p:

Challenged in this petition for review on certiorari is the Decision 1 in CA-G.R. SP. No. 43188 2 dated September 23, 1997 of the Court of Appeals which affirmed the Decision 3 dated May 30, 1995 of the Court of Tax Appeals in C.T.A. Case No. 4478 4 dismissing 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 Resolution 5 dated June 9, 1998.

The antecedent facts are as follows.

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

On October 14, 1986, petitioner formally filed a claim for refund of allegedly overpaid advance sales taxes with the Bureau of Internal Revenue (BIR) amounting to Four Million Five Hundred Sixty-Four Thousand One Hundred Seventy-Nine Pesos and Thirty Centavos (P4,564,179.30) covering the same sixteen (16) importations of milk and milk products from

different countries. Not long after, on October 15, 1986 and within the two-year prescriptive period provided for under the National Internal Revenue Code (NIRC) for claiming a tax refund, petitioner filed the corresponding petition for review with the Court of Tax Appeals (CTA) which was docketed therein as C.T.A. Case No. 4114. On January 3, 1994, the tax court ruled in favor of petitioner and forthwith ordered the BIR to refund to the petitioner the sum of Four Million Four Hundred Eighty-Nine Thousand Six Hundred Sixty-One Pesos and Ninety-Four Centavos (P4,489,661.94) representing the overpaid Advance Sales Taxes on the aforesaid importations.

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

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

On May 30, 1995, the CTA rendered judgment dismissing C.T.A. Case No 4478 for want of jurisdiction. 6 The subsequent motion for reconsideration filed by the petitioner on July 11, 1995 was denied for lack of merit in a Resolution 7 dated January 6, 1997.

Aggrieved, petitioner appealed on February 10, 1999 the said judgment and resolution of the CTA in C.T.A. Case No. 4478 to the Court of Appeals by way of petition for review on certiorari under Rule 45 of the Rules of Court. However, this appeal was later dismissed by the appellate court on September 23, 1997 for lack of merit. The Court of Appeals opined, inter alia, that the 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.

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

Hence, this petition.

Petitioner assigns the following as errors, to wit:

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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;

2. RESPONDENT COURTS COMMITTED FUNDAMENTAL ERRORS AND ACTED WITH GRAVE ABUSE OF DISCRETIONS IN HOLDING THAT PETITIONER HAD FAILED TO EXHAUST ADMINISTRATIVE REMEDIES, NOTWITHSTANDING ALMOST 6 YEARS OF 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.

In this petition, petitioner asserts that tax refunds are based on quasi-contract or solutio indebiti, which under Article 1145 9 of the Civil Code, prescribes in six (6) years. Consequently, the pendency of its protest cases before the office of the Collector of Customs of Manila did not interrupt the running of the prescriptive period under the aforesaid provision of law considering that it is only an administrative body performing only quasi-judicial function and not a regular court of justice. 10 Thus, in like manner the thirty-day period for

appealing to the CTA must be made within the six-year prescriptive period.

Petitioner further contends that the fact of overpayment of customs duties has been duly established and resolved with finality by the Court of Tax Appeals on January 3, 1994 in C.T.A. Case No. 4114. 11 In that case, the tax court found that the Bureau of Customs erroneously used the wrong home consumption value in assessing the petitioner the Advance Sales Tax on its subject sixteen (16) importations. The tax court then ordered the Commissioner of Internal Revenue to refund to the petitioner the sum of Four Million Four Hundred 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.

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

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

On the other hand, respondent Commissioner of Customs, in his Comment 13 dated August 21, 2000, admitted with regret, their official inaction adverted to by the petitioner. Respondent Commissioner expressed the view that 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

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Customs, thru his special counsel, recommended that this case be remanded to the court of origin, namely, the CTA.

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

The right to claim for refund of customs duties is specifically governed by Section 1708 of the Tariff and Customs Code, which provides that —

"SECTION 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."

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 jurisdiction 14 under the Tariff and Customs Code is not concurrent with that of the respondent Commissioner of Customs due to the absence of any certification from the Collector of Customs of Manila. Accordingly, 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 correct in the light of the above-cited provision of the Tariff and Customs Code. cTEICD

"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 jurisagainst the claimants and liberally in favor of the taxing authority. 16 This power of taxation being a high prerogative of sovereignty, its relinquishment is never presumed. Any reduction or diminution thereof with respect to its mode or its rate must be strictly construed, and the same must be couched in clear and unmistakable terms in order that it may be applied. 17

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

The petitioner is mistaken in its contention that its claims for refund of allegedly overpaid customs duties are governed by Article 2154 18 of the New Civil Code on quasi-contract, or the rule on solutio  indebiti, which prescribes in six (6) years pursuant to Article 1145 of the same Code.

Sections 2308 and 2309 of the Tariff and Customs Code provide that:

"SECTION 2308. Protest and Payment upon Protest in Civil Matter. — When a ruling or decision of   the collector   is  made whereby liability   for   duties, taxes, fees, or other charges are   determined, except the fixing of fines in seizure cases, the party adversely affected   may   protest   such   ruling   or decision by presenting to the Collector at the  time when payment of the amount claimed to be due the government is made, or   within   fifteen   (15)   days   thereafter,   a written protest setting forth his objection to the ruling or decision in question, together with the reasons therefor. No protest shall be   considered unless   payment   of   the amount due after final liquidation has first been made and the corresponding docket fee, as provided for in Section 3301."

"SECTION 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, . . ."

"SECTION 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

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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. . ."

In the light of the above-cited provisions of the Tariff and Customs Code, it appears that in all cases subject to protest, the claim for refund of customs duties may be foreclosed only when the interested party claiming refund fails to file a written protest before the Collector of Customs. This written protest which must set forth the 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.

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

Here, it is undisputed that the inaction of the Collector of Customs of Manila for nearly six (6) years on the protests seasonably filed by the petitioner has caused the latter to immediately resort to the CTA. The petitioner did so on the mistaken belief that its claims are governed by the rule on quasi-contract or solutio   indebitiwhich prescribes in six (6) years under Article 1145 of the New Civil Code.

This belief or contention of the petitioner is misplaced. In order for the rule on solutio   indebiti to apply it is an essential condition that petitioner must first show that its payment of the customs duties was in excess of what was required by the law at the time when the subject sixteen (16) importations of milk and milk products were made. Unless shown otherwise, the disputable presumption of regularity of performance of duty lies in favor of the Collector of Customs.

In the present case, there is no factual showing that the collection of the alleged overpaid customs duties was more than what is required of the petitioner when it made the aforesaid separate importations. There is no factual finding yet by the government agency concerned that petitioner is indeed

entitled to its claim of overpayment and, if true, for how much it is entitled. It bears stress that in determining whether or not petitioner is entitled to refund of alleged overpayment of customs duties, it is necessary to determine exactly how much the Government is entitled to collect as customs duties on the importations. Thus, it would only be just and fair that the petitioner-taxpayer and the Government alike be given equal opportunities to avail of the remedies under the law to contest or defeat each 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.

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 filing an appeal to the Commissioner of Customs   has   not   commenced   to   run. Moreover, delay or inaction of a subordinate official, does not constitute an exception to the afore-cited principle as the delay should be brought to the attention of a superior administrative officer for immediate adjudication (Commissioner   of Immigration   vs.   Vamenta,   Jr., 54 SCRA 342; Barte vs. Dichoso, 47 SCRA 77)."

WHEREFORE, the assailed Decision dated September 23, 1997 of the Court of Appeals in CA-G.R. SP. No. 43188 is hereby SET ASIDE; and C.T.A. Case No. 4478 is REINSTATED and REMANDED to the Court of Tax Appeals for hearing and reception of evidence relative to 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.

SO ORDERED.

||| (Nestle   Philippines,   Inc.   v.   Court   of   Appeals,   G.R.   No. 134114, [July 6, 2001], 413 PHIL 106-121)

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FIRST DIVISION

[G.R. No. 178759. August 11, 2008.]

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

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D E C I S I O N

CORONA, J p:

This is a petition for review on certiorari 1 of the decision 2 and resolution 3 of the Court of Tax Appeals (CTA) en banc dated March 1, 2007 and July 5, 2007, respectively, in CTA EB Nos. 121 and 122 which reversed the decision of the CTA First Division dated April 5, 2005 in CTA Case No. 6358. SIcEHD

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:

ARRIVALPRODUCT DATE VESSEL66,229,960 liters Ex MTNan Hai Crude Oil 3/8/1996 Bona Spray6,990,712 liters Ex MTReformate 3/18/1996 Orient Tiger16,651,177 liters Ex MTFCCU Feed Stock 3/21/1996 Probo Boaning236,317,862 litersOman/Dubai Ex MTCrude Oil 3/26/1996 Violet51,878,114 liters Ex MTArab Crude Oil 4/10/1996 Crown Jewel 5

The shipments were unloaded from the carrying vessels onto petitioner's 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 PRODUCT ARRIVAL IED IEIRD NO. DATE606-96 66,229,960 liters 3/8/1996 3/12/1996 5/10/1996 Nan Hai Crude Oil604-96 6,990,712 liters 3/18/1996 3/26/1996 5/10/1996 Reformate605-96 16,651,177 liters 3/21/1996 3/26/1996 5/10/1996 FCCU Feed Stock600-96 236,317,862 liters 3/26/1996 3/28/1996 5/10/1996601-96 Oman/Dubai Crude Oil602-96603-96818-96 51,878,114 liters 4/10/1996 4/10/1996 6/21/1996 Arab Crude Oil

The importations were appraised at a duty rate of 3% as provided under R.A. 8180 6 and petitioner paid the import duties amounting to P316,499,021. 7 Prior to the effectivity of R.A. 8180 on April 16, 1996, the rate of duty on imported crude oil was 10%. TCADEc

Three years later, then Finance Secretary Edgardo Espiritu received a letter (with annexes) dated June 10, 1999 from a certain Alfonso A. Orioste denouncing the deliberate concealment, manipulation and scheme employed by petitioner and Pilipinas Shell in the importation of crude oil, thereby resulting in huge losses of revenue for the government. This letter was endorsed to the Bureau of Customs (BOC) for investigation on July 19, 1999. 8

On January 28, 2000, petitioner received a subpoena   duces tecum/ad testificandum from Conrado M. Unlayao, Chief of the Investigation and Prosecution Division, Customs Intelligence and Investigation Service (IPD-CIIS) 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 petitioner's 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

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

In a letter petitioner received on October 12, 2000, respondent Commissioner of the BOC 11 stated that it was the IPD-CIIS which was authorized to handle the investigation, to the exclusion of the Legal Division and the District Collector. 12

The IPD-CIIS, through Special Investigator II Domingo B. Almeda and Special Investigator III Nemesio C. Magno, Jr., issued a finding dated February 2, 2001 that the import entries were filed beyond the 30-day non-extendible period prescribed under Section 1301 of the TCC. They concluded that the importations were already considered abandoned in favor of the government. They also found that fraud was committed by petitioner in collusion with the former District Collector. 13

Thereafter, respondent 14 wrote petitioner on October 29, 2001 informing it of the findings of irregularity in the filing and acceptance of the import entries beyond the period required by customs law and in the release of the shipments after the same had already been deemed abandoned in favor of the government. Petitioner was ordered to pay the amount of

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P1,180,170,769.21 representing the total dutiable value of the importations. 15 CSTEHI

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

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 petitioner's actual knowledge of the arrival of the shipments. It likewise agreed with the CTA Division's 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

Hence this petition.

There are three issues for our resolution:

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

2. whether fraud was perpetrated by petitioner and

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

"ENTRY" IN SECTIONS 1301 AND 1801 OF THETCC REFERS TO BOTH THE IED AND IEIRD

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

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

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

xxx xxx xxx

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

Petitioner argues that the IED is an entry contemplated by these sections. According to it, the congressional deliberations on R.A. 7651 which amended the TCC to provide a non-extendible 30-day period show the legislative intent to expedite the procedure for declaring importations as abandoned. Filing an entry serves as notice to the BOC of the importer's 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 importer's disinterest

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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 P.D. 1853, 20 it suffices as an entry under Sections 1301 and 1801 of the TCC. 21 TaEIAS

We disagree.

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

The IED serves as basis for the payment of advance duties on importations whereas the IEIRD evidences the final payment of duties and taxes. The question is: was the filing of the IED sufficient to constitute "entry" under the TCC?

The law itself, in Section 205, defines the meaning of the technical term "entered" as used in the TCC:

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

xxx xxx xxx

(Emphasis supplied)

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

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

It is disputed by the parties whether the application for the special permit. Exhibit A, containing the misdeclared weight of the

800 cases of eggs, comes within the meaning of the word "entry" used in section 1290 of the Revised Administrative Code, or said word "entry" means only the "original entry and importer's declaration". The court below reversed the decision of the Insular Collector of Customs on the ground that the provisions of section 1290 of the Revised Administrative Code refer to the regular consumption entry and not to a provisional declaration made in an application for a special permit, as the one filed by the appellee, to remove the cases of eggs from the customhouse. TSHEIc

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)

The congressional deliberations on House Bill No. 4502 which was enacted as R.A. 7651 25 amending the TCC lay down the policy considerations for the non-extendible 30-day period for the filing of the import entry in Section 1301:

MR. JAVIER (E.).

xxx xxx xxx

Under Sections 1210 26 and 1301 of the [TCC], Mr. Speaker, import entries for imported articles must be filed within five days from the date of discharge of the last package from the vessel. The five-day period, however, Mr. Speaker, is subject to an indefinite extension at the discretion of the collector of customs, which more often than not stretches to more than three months, thus resulting in considerable delay in the payment of duties and taxes.

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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. TEDAHI

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

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)

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 Petitioner's 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 petitioner's interpretation. It is the IEIRD which accompanies the final payment of duties and taxes. These duties and taxes must be

paid in full before the BOC can allow the release of the imported articles from its custody.

Taxes are the lifeblood of the nation. Tariff and customs duties are taxes constituting a significant portion of the public revenue which enables the government to carry out the functions it has been ordained to perform for the welfare of its constituents. 29 Hence, their prompt and certain availability is an imperative need 30and they must be collected without unnecessary hindrance. 31 Clearly, and perhaps for that reason alone, the submission of the IEIRD cannot be left to the exclusive discretion or whim of the importer.

We hold, therefore, that under the relevant provisions of the TCC, 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.

THE EXISTENCE OF FRAUDWAS 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. IcAaSD

Petitioner's arguments lack merit.

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". 33It 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.

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 petitioner's deliberate intention to defraud the government was its non-disclosure of discrepancies on the

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duties declared in the IEDs (10%) and IEIRDs (3%) covering the shipments. 36

It was not by sheer coincidence that, by the time petitioner filed its IEIRDs way beyond the mandated period, the rate of duty had already been reduced from 10% to 3%. Both the CTA Division and en banc found the explanation of petitioner (for its delay in filing) untruthful. The bills of lading and corresponding invoices covering the shipments were accomplished immediately after loading onto the vessels. 37 Notably, the memorandum of a district collector cited by petitioner as basis for its assertion that original copies were required by the BOC was dated October 30, 2002. 38 There is no showing that in 1996, the time pertinent in this case, this was in fact a requirement.

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

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

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

THE IMPORTATIONS WERE ABANDONEDIN 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:

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.

According to petitioner, the shipments should not be considered impliedly abandoned because none of its overt acts (filing of the IEDs and paying advance duties) revealed any intention to abandon the importations. 41

Unfortunately for petitioner, it was the law itself which considered the importation abandoned when it failed to file the IEIRDs within the allotted time. Before it was amended, Section 1801 was worded as follows:

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

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

After it was amended by R.A. 7651, there was an indubitable shift in language as to what could be considered implied abandonment: AcICTS

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

a. When the owner, importer, consignee of the imported article expressly signifies in writing to the Collector of Customs his intention to abandon; or

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

From the wording of the amendment, R.A. 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

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used in the old law (with respect to the intention to abandon) but opted to omit them. 43 It would be error on our part to continue applying the old law despite the clear changes introduced by the amendment.

NOTICE WAS NOT NECESSARY UNDERTHE CIRCUMSTANCES OF THIS CASE

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

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

xxx xxx xxx

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

Furthermore, it claims that notice and abandonment proceedings were required under the BOC's guidelines on abandonment (CMO 15-94): IDETCA

SUBJECT: REVISED GUIDELINES ON ABANDONMENT

xxx xxx xxx

B. ADMINISTRATIVE PROVISIONS

xxx xxx xxx

B.2 Implied abandonment occurs when:

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

xxx xxx xxx

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

entitled: "URGENT NOTICE TO FILE ENTRY" which is attached hereto as Annex A and made an integral part of this Order.

xxx xxx xxx

C. OPERATIONAL PROVISIONS

xxx xxx xxx

C.2 On Implied Abandonment:

C.2.1 When no entry is filed

C.2.1.1 Within twenty-four (24) hours after the completion of the boarding formalities, the Boarding Inspector must submit themanifests 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 certification addressed to the Collector of Customs (Attention: Chief, Entry Processing Division), copy furnished Chief, Data Monitoring Unit, specifically stating the time and date of discharge of the last package from the vessel/aircraft

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assigned to him. Said certificate must be encoded by Data Monitoring Unit in the Manifest Clearance System. THaDEA

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

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

thirty (30) day period within which to file the entry therefore has lapsed without the consignee/importer filing the entry and that the proper posting of notice as required has been complied with.

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.

xxx xxx xxx 44 (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 BOC's 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.

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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. AcTDaH

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

The minutes of the deliberations in the House of Representatives Committee on Ways and Means on the proposed amendment to Section 1801 of the TCC show that the phrase "after due notice" was intended for owners, consignees, importers of the shipments who live in rural areas or distant places far from the port where the shipments are discharged, who are unfamiliar with customs procedures and need the help and advice of people on how to file an entry:

xxx xxx xxx

MR. FERIA. 1801, your Honor. The question that was raised here in the last hearing was whether notice is required to be sent to the importer. And, it has been brought forward that we can dispense with the notice to the importer because the shipping companies are notifying the importers on the arrival of their shipment. And, so that notice is sufficient to . . . sufficient for the claimant or importer to know that the shipments have already arrived.

Second, your Honor, the legitimate businessmen always have . . . they have their agents with the shipping companies, and so they should know the arrival of their shipment.

xxx xxx xxx

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

xxx xxx xxx

HON. QUIMPO. Because I'm thinking, Mr. Chairman. I'm thinking of certain situations where the importer even though, you know, in the normal course of business sometimes they fail to keep up the date or something to that effect. cIEHAC

THE CHAIRMAN. Sometimes their cargoes get lost.

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

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

xxx xxx xxx

Petitioner, a regular, large-scale and multinational importer of oil and oil products, fell under the category of a knowledgeable importer which was familiar with the governing rules and procedures in the release of importations.

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. EcAISC

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The purpose of posting an "urgent notice to file entry" pursuant to Section B.2.1 of CMO 15-94 is only to notify the importer of the "arrival of its shipment" and the details of said shipment. Since it already had knowledge of such, notice was superfluous. Besides, the entries had already been filed, albeit belatedly. It would have been oppressive to the government to demand a literal implementation of this notice requirement.

AN ABANDONED ARTICLE SHALL IPSOFACTO BE DEEMED THE PROPERTY OFTHE GOVERNMENT

Section 1802 of the TCC provides:

Sec. 1802. Abandonment   of   Imported Articles. — An abandoned article shall ipso facto be deemed the property of the Government and shall be disposed of in accordance with the provisions of this Code. (Emphasis supplied)

The term "ipso facto" is defined as "by the very act itself" or "by mere act". Probably a closer translation of the Latin term would be "by the fact itself". 46 Thus, there was no need for any affirmative act on the part of the government with respect to the abandoned imported articles since the law itself provides that the abandoned articles 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 R.A. 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 importer's failure to file the required entries within the mandated period.

Under the former Administrative Code, Act 2711, 47 Section 1323 of Article XV thereof provides:

Sec. 1323. When   implied   abandonment takes   effect. — Notice — An implied abandonment shall not take effect until after the property shall be declared by the collector to have been abandoned and notice to the party in interest as in seizure cases. aATCDI

Thereafter, R.A. 1937 48 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.

P.D. 1464 49 did not amend the provisions of the TCC on abandonment. The latest amendment was introduced by Section 1802 of R.A. 7651 which provides:

Sec. 1802. Abandonment   of   Imported Articles. — An abandoned article shall ipso facto be deemed the property of the Government and shall be disposed of in accordance with the provisions of this Code.

The amendatory law, R.A. 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 R.A. 7651, the legislature removed the need for abandonment proceedings and for a declaration that the imported articles have been abandoned before ownership thereof can be transferred to the government. 50

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

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

[a] law is deemed valid unless declared null and void by a competent court; more so when the issue has not been duly pleaded in the trial court. The question of constitutionality must be raised at the earliest opportunity. . . . 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:

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xxx xxx xxx

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

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

xxx xxx xxx

CONCLUSIONPetitioner's 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 of P893,781,768.21.

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.

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. cDTIAC

Costs against petitioner.

SO ORDERED.

||| (Chevron Philippines, Inc. v. Commissioner of the Bureau of Customs,  G.R.  No.  178759,  [August 11,  2008],  583 PHIL 706-737)

FIRST DIVISION

[G.R. Nos. 166309-10. March 9, 2007.]

REPUBLIC OF THE PHILIPPINES, represented by the COMMISSIONER OF CUSTOMS, petitioner, vs. UNIMEX MICRO-ELECTRONICS GmBH,respondent.

D E C I S I O N

CORONA, J p:

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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 1and its amended decision of November 30, 2004 2 in CA-G.R. SP No. 75359 and CA-G.R. SP No. 75366.

The antecedent facts follow.

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

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

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

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

Respondent filed a petition for review against petitioner Commissioner of Customs (BOC Commissioner) in the Court of Tax Appeals (CTA). This case was docketed as CTA Case No. 4317. 3 EcDSHT

In a decision 4 dated June 15, 1992, the CTA reversed the forfeiture decree and ordered the release of the subject shipment to respondent subject to the payment of customs duties. The CTA decision became final and executory on July 20, 1992. The decision read:

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

Unfortunately, however, respondent's counsel failed to secure a writ of execution to enforce the CTA decision. Instead, it filed

separate claims for damages against Don Tim Shipping Corporation and Evergreen Marine Corporation 6 but both cases were dismissed.

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

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

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

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

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

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

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

On August 30, 2004, the CA dismissed the BOC Commissioner's appeal and granted respondent's.

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

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respondent was also entitled to legal interest. According to the CA: CSDAIa

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

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

xxx xxx xxx

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

xxx xxx xxx

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

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

On November 30, 2004, the CA denied the BOC Commissioner's MR and granted respondent's. Accordingly, the decretal portion of its amended decision read:

WHEREFORE, the appealed Decision, dated 19 September 2002, is hereby AFFIRMED WITH MODIFICATION in that the Bureau of Customs is adjudged liable to Unimex for the value of the subject shipment in the amount of Euro 669,982.565. The Bureau of Custom's 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 SAHIaD

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, respondent's 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 respondent's claim without a corresponding appropriation.

MODIFICATION OF A FINALAND EXECUTORY JUDGMENT

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

We disagree.

Indeed, the general rule is that once a decision becomes final and executory, it cannot be altered or modified. However, this rule is not absolute. In some cases, 15we 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. SACEca

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

LACHES DID NOT SET IN TO FRUSTRATERESPONDENT'S PETITION TO REVIVE THEJUNE 15, 1992 CTA DECISION

Regarding petitioner's second argument, we hold that it cannot impugn respondent's 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

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passage of time but is principally a question of the inequity or unfairness of permitting a right or claim to be asserted. 17

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

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

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

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

Given the attendant circumstances, laches cannot stall respondent's right to recover what is due to it especially where BOC's negligence in the safekeeping of the goods appears indubitable. There is no denying that BOC exhibited gross carelessness and ineptitude in the performance of its duty as it could not even explain why or how the goods vanished while in its custody. With this, it is difficult to exonerate petitioner from liability; otherwise, we would countenance a wrong and exacerbate respondent's loss which to this day has remained unrecompensed.

More importantly, laches never set in because respondent filed its petition for revival of judgment within the period set by the Rules. In particular, Rule 39, Section 6 states: SDHTEC

SEC. 6. Execution   by   motion   or   by independent action. – A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of

limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations.

Furthermore, Article 1144 of the Civil Code, an action "upon a judgment" may be brought within ten (10) years from the time the right of action accrues.

The CTA judgment sought to be revived became final and executory on July 20, 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.

LEGAL INTEREST MAY BE IMPOSED FORUSE OF MONEY OR AS COMPENSATORYDAMAGES

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. TAIaHE

We agree with petitioner.

Interest may be paid only either as compensation for the use of money (monetary interest) 24 or as damages (compensatory interest). 25 We quote in agreement the CTA's disquisition in its decision dated September 19, 2002:

Interest may be paid either as compensation for the use of money (monetary interest) referred to in Article 1956 of the New Civil Code or as damages (compensatory interest) under Article 2209 above cited. As clearly provided in [Article 2209], interest is demandable if: a) there is monetary obligation and b) debtor incurs delay.

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

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other charges before the release of the goods can be had. In one case, the Supreme Court held:

"In a comprehensive sense, the term "debt" embraces not merely money due by contract, but whatever one is bound to render to another, either for contract or the requirement of the law, such as tax where the law imposes personal liability therefor." IacHAE

Therefore, the government was never a debtor to the petitioner in order that [Article] 2209 could apply. Nor was it in default for there was no monetary obligation to pay in the first place. There is default when after demand is made either judicially or extrajudicially. In other words, for interest to be demandable under Article 2209, there should be a monetary obligation and the debtor was in default. . .

In the instant case, [petitioner] was never under monetary obligation to [respondent], no demand can be made either judicially or extrajudicially. Parallel thereto, there could be no default. . . 26

No doubt, the present case does not fall within the first situation. Neither can it be considered as one involving interest based on damages under the second situation.

More importantly, interest is not chargeable against petitioner except when it has expressly stipulated to pay it or when interest is allowed by the legislature or in eminent domain cases where damages sustained by the owner take the form of interest at the legal rate. 27 Consequently, the CA's 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. EHcaDT

GOVERNMENT LIABILITYFOR ACTUAL DAMAGES

Finally, petitioner argues that a money judgment or any charge against the government requires a corresponding appropriation and cannot be decreed by mere judicial order.

Although it may be gainsaid that the satisfaction of respondent's demand will ultimately fall on the government, and that, under the political doctrine of "state immunity," it cannot be held liable for governmental acts (jus imperii), 28 we still hold that petitioner cannot escape its liability. The circumstances of this case warrant its exclusion from the purview of the state immunity doctrine.

As previously discussed, the Court cannot turn a blind eye to BOC's ineptitude and gross negligence in the safekeeping of respondent's 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 respondent's claim on the mere invocation of the doctrine of state immunity. Succinctly, the doctrine must be fairly observed and the State should not avail itself of this prerogative to take undue advantage of parties that may have legitimate claims against it. 29

In Department of Health v. C.V. Canchela & Associates, 30 we enunciated that this Court, as the staunch guardian of the people's 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 State's cloak of invincibility against suit and liability be shredded. AECIaD

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

WHEREFORE, the assailed decisions of the Court of Appeals in CA-G.R. SP Nos. 75359 and 75366 are hereby AFFIRMED 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. Petitioner's liability may be paid in Philippine currency, computed at the exchange rate prevailing at the time of actual payment.

SO ORDERED.

||| (Republic   v.   Unimex  Micro-Electronics   GmBH,   G.R.   Nos. 166309-10, [March 9, 2007], 546 PHIL 658-672)

THIRD DIVISION

[G.R. No. 147817. August 12, 2004.]

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

D E C I S I O N

PANGANIBAN, J p:

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

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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.

The CaseBefore us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to set aside the December 22, 2000 Decision 2 of the Court of Appeals (CA) in CA-GR CR No. 17338. The CA affirmed with modification the February 18, 1994 Consolidated Judgment 3 of the Regional Trial Court (RTC) 4 of Manila (Branch 46) in Criminal Case Nos. CCC-VI-137(79) and CCC-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.

(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. ETIcHa

Petitioner and his six co-accused — Arturo Rimorin, Fidel Balita, Gonzalo Vargas, Robartolo Alincastre, Guillermo Ferrer and Ernesto Miaco — were charged in an Information, which reads:

"That on or about October 15, 1979, in the City of Manila, Philippines, the said accused, conspiring and confederating together and helping one another, with the evident intent to defraud the government of the Republic of the Philippines of the legitimate duties accruing to it from merchandise imported into this country, did then and there [willfully], unlawfully [and] fraudulently import or bring into the Philippines or assist in so doing contrary to law, three hundred five (305) cases of assorted brands of blue seal cigarettes which are foreign articles valued at P513,663.47 including duties and taxes, and/or buy, sell, transport or assist and facilitate the buying, selling and transporting of the above-named foreign articles after importation knowing the same to have been imported contrary to law which was found in the possession of said

accused and under their control which articles said accused fully well knew have not been properly declared and that the duties and specific taxes thereon have not been paid to the proper authorities in violation of said Sec. 3601 of the Tariff and Customs Code of the Philippines, as amended by Presidential Decree No. 34, in relation to Sec. 3602 of said Code and Sec. 184 of the National Internal Revenue Code." 7

The Facts

Version of the Prosecution (Respondent)The Office of the Solicitor General (OSG) 8 presents the 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. ASEcHI

"At around 9:00 o’clock in the evening of October 14, 1979, Col. Lacson and his men returned to the same area, with Col. Lacson posting himself at the immediate vicinity of the 2nd COSAC Detachment in Port Area, Manila, because as per information given to him, the said cargo truck will come out from the premises of the 2nd COSAC Detachment. COSAC stands for Constabulary Off-Shore Anti-Crime Battalion. The night watch lasted till the wee hours of the following morning. About 3:00 a.m. an Isuzu panel came out from the place of the 2nd COSAC Detachment. It returned before 4:00 a.m. of [the] same day.

"At around 5 minutes before 4:00 o’clock that morning, a green cargo truck with Plate No. T-SY-167 came out from the 2nd

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COSAC Detachment followed and escorted closely by a light brown Toyota Corona car with Plate No. GR-433 and with 4 men on board. At that time, Lt. Col. Panfilo Lacson had no information whatsoever about the car, so he gave an order by radio to his men to intercept only the cargo truck. The cargo truck was intercepted. Col. Lacson noticed that the Toyota car following the cargo truck suddenly made a sharp U-turn towards the North, unlike the cargo truck [that] was going south. Almost by impulse, Col. Lacson’s car also made a U-turn and gave chase to the speeding Toyota car, which was running between 100 KPH to 120 KPH. Col. Lacson sounded his siren. The chase lasted for less than 5 minutes until said car made a stop along Bonifacio Drive, at the foot of Del Pan Bridge. Col. Lacson and his men searched the car and they found several firearms, particularly: three (3) .45 cal. Pistols and one (1) armalite M-16 rifle. He also discovered that T/Sgt. Ernesto Miaco was the driver of the Toyota car, and his companions inside the car were Sgt. Guillermo Ferrer, Sgt. Fidel Balita and Sgt. Robartolo Alincastre, [all] belonging to the 2nd COSAC Detachment. They were found not to be equipped with mission orders.

"When the cargo truck with Plate No. T-SY-167 was searched, 305 cases of blue seal or untaxed cigarettes were found inside. The cargo truck driver known only as 'Boy' was able to escape while the other passengers or riders of said truck were apprehended, namely: Police Sgt. Arturo Rimorin of Pasay City Police Force, Pat. Felicisimo Rieta of Kawit Police Force, and Gonzalo Vargas, a civilian.

"xxx 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

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: ESCTaA

"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. . . . After a week, Boy visited him at the Kawit Police Station and thereafter, met him four to five times. He learned that Boy was a businessman hauling slippers, fish and vegetables from Divisoria. For several times, he had accompanied Boy on his business trips when [the latter] hauled fish, vegetables and slippers from Divisoria to Cavite. He was requested by Boy to accompany him on his various trips because there were times when policemen on patrol were demanding money from [the latter]. At other times, other policemen accompanied Boy aside from him, on his trips.

"In the early morning of October 15, 1979 he met Boy in front of the Kawit Town Hall. He learned that Boy will haul household appliances from Divisoria. They boarded a jeep driven by Boy and they proceeded to Cartimar, Pasay City. At Cartimar, Boy left him at a gasoline station, and told him to standby because Boy will get the cargo truck they will use. When Boy returned, he had companions, who were introduced to him as Gonzalo Vargas and Sgt. Rimorin, the petitioner’s co-accused in Criminal Case No. CC-VI-138 (79). From Cartimar, the four (4) of them proceeded to Divisoria and they passed under the Del Pan Bridge. While passing therein, he told Boy that he was hungry, so that when they passed by a small restaurant, he alighted and Sgt. Rimorin followed. Boy told them that he and Gonzalo will proceed to the Port Area and will be back. After thirty to forty five minutes, Boy and Gonzalo returned, and he and Sgt. Rimorin boarded the truck and proceeded to Roxas Boulevard. While they were along Roxas Boulevard near the Daily Express Building, two (2) vehicles intercepted them and ordered them to pull-over. The passengers of the said vehicles introduced themselves as Metrocom soldiers, and ordered them to alight and to raise their hands while poking guns at them. They were ordered to l[ie down] flat on their belly on the pavement and were bodily frisked and searched. The

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Metrocom soldiers did not find anything from their bodies. Thereafter, they (Rieta, Rimorin and Gonzalo) were ordered by the Metrocom soldiers to transfer to a jeep. While they were aboard the jeep, he overheard from the Metrocom soldiers that their driver was able to escape. Likewise, they were also informed by the Metrocom soldiers that the cargo truck was loaded with blue seal cigarettes. The cargo truck was not opened in their presence, nor were the contents thereof shown to them upon their apprehension. From the time he boarded the cargo truck in Cartimar until he and Sgt. Rimorin alighted to take their snacks, up to the time they were apprehended by the Metrocom soldiers, he had not seen a pack of blue cigarette in the cargo truck. He did not notice whether the Metrocom soldiers opened the cargo truck. At Camp Crame, he was investigated without the benefit of counsel, but, nonetheless, he executed and signed a statement because as far as he was concerned he has done nothing wrong. He was detained at Bicutan for more than a year.

"In the early morning of October 15, 1979 he was not carrying any firearm because he has no mission order to do so, and besides Manila was not his jurisdiction. He was suspended from the service, but was reinstated in January 1981. After he was released from Bicutan, he looked for Boy so that he could clear the matter, but he [did not find] Boy anymore. ACTaDH

"In corroboration with the testimony of petitioner Rieta, accused Rimorin, a policeman assigned at Pasay City, testified that the first time he met Boy was in 1978 in the wake and internment of the Late Police Officer Ricardo Escobal. Thereafter, Boy dropped by on several occasions at the Pasay Police Station to request for assistance. Prior to October 15, 1979, Boy again dropped by at the police station and asked him if he had an appointment on the next day. He told Boy that he had no appointment, and the latter requested to accompany him to Sta. Maria, Bulacan to get some rice. Prior thereto, in one of their casual conversations, he learned that Boy was a businessman engaged in hauling various merchandise. He agreed to the request of Boy to accompany him to Sta. Maria, Bulacan. At Sta. Maria, Bulacan, they

proceeded to a warehouse containing bags of rice, and they hauled several bags into a truck, and thereafter, proceed[ed] to Quezon City. As compensation Boy gave him a sack of rice. The said transaction was followed by another on October 15, 1979. In the afternoon of October 14, 1979, Boy again dropped by at the police station and requested him to accompany him to haul household fixtures. They usually haul vegetables and rice early in the morning to avoid the traffic and that was the reason why they met in the early morning of October 15, 1979. He told [Boy] that he will see if he will have [the] time, but just the same they made arrangements that they will see each other at Cartimar, Pasay City not later than 2:30 a.m. in the early morning of October 15, 1979. At the appointed time and place, he met Boy with a companion, who was introduced to him as Gonzalo Vargas, his co-accused in the instant case. Thereafter, they proceeded to a gasoline station nearby. At the gasoline station, at the corner of Taylo and Taft Avenue, near Cartimar, they picked up another person who was later on introduced to him as Felicisimo Rieta. Then the four of them (Boy, Gonzalo, Rieta and Rimorin) boarded the cargo truck and they proceeded to Divisoria. It was Boy who drove the cargo truck, while petitioner was seated next to Boy while accused Rimorin and Gonzalo to his right. While enroute to Divisoria, along Roxas Boulevard before reaching Del Pan Bridge, Boy turned right under the bridge. He commented that it was not the route to Divisoria, and Boy answered ‘meron lang ikakarga dito’. On the other hand, Rieta told Boy that he was hungry, and thus, Boy pulled-over at a carinderia at Del Pan Bridge near Delgado Bros. When Rieta alighted he followed, while Boy and Gonzalo proceeded. After less than an hour, Boy and Gonzalo returned. They then proceeded towards Roxas Boulevard, Bonifacio Drive, and Boy drove straight at the corner of Aduana to Roxas Boulevard. When he noticed that the truck was not bound for Divisoria as earlier informed, he asked Boy why they were not taking the route going to Divisoria. Boy replied 'bukas na lang wala ng espasyo'. Immediately, they were intercepted by two vehicles and one of the occupants thereof ordered the driver to pull over. The driver pulled over, and they were ordered to raise their hands and to lay flat on their belly on the pavement right in front of the truck,

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and they were bodily frisked but they found nothing. He asked the Metrocom soldiers what was it all about, but the Metrocom soldiers were shouting 'asan ang blue seal'. Then they were ordered to board a jeep owned by the Metrocom soldiers, and they were brought to Camp Crame. Before they left the area, he did not see the Metrocom soldiers open the cargo truck. He was brought to the MISG at Camp Crame. When they arrived at Camp Crame, the soldiers thereat were clapping their hands, thus he asked 'ano ba talaga ito' and he got an answer from Barrameda, 'yun ang dahilan kung bakit ka makukulong', pointing to a truck. When he saw the truck, it was not the same truck they boarded in the early morning of October 15, 1979. The truck they boarded was galvanized iron pale sheet covered with canvass while the one at Camp Crame was color red and not covered. He entertained the idea that they were being framed-up. Two days after, he was interrogated and the alleged blue seal cigarettes were shown to him, and he was informed by the investigator that the same blue seal cigarettes were the contents of the cargo truck. When the alleged blue seal cigarettes were taken out of the cargo truck, he was not asked to be present. He asked for the whereabouts of Boy, but he was informed that the latter escaped. The more he believed that there was something fishy or wrong in their apprehension. It was very [conspicuous] that the driver was able to escape because at the time they were apprehended they were the only people at Bonifacio Drive, and thus the possibility of escape was very remote, considering that they were unarmed and the Metrocom soldiers were all fully armed. In both cases at bar, there were about three Pasay policemen who were apprehended. He was detained at Camp Bagong Diwa for more than a year. He knew nothing about the charge against him. When he was at Camp Crame he tried getting in touch with a lawyer and his family, but the MISG did not let him use the telephone." 10

Ruling of the Court of AppealsAffirming 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.

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. ESTDcC

Hence, this Petition. 11

IssuesIn 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 RulingThe Petition has no merit.

First Issue:

Sufficiency of EvidencePetitioner contends that the existence of the untaxed blue seal cigarettes was not established, because the prosecution had not presented them as evidence. He further argues that there was no crime committed, as the corpus   delicti was never proven during the trial.

Corpus   Delicti   Established by Other Evidence

We do not agree. Corpus delicti refers to the specific injury or loss sustained. 13 It is the fact of the commission of the crime 14 that may be proved by the testimony of eyewitnesses. 15 In its legal sense, corpus   delicti does not necessarily refer to the body of the person murdered, 16 to the firearms in the crime of homicide with the use of unlicensed firearms, 17 to the ransom money in the crime of kidnapping

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for ransom, 18 or — in the present case — to the seized contraband cigarettes. 19

In Rimorin v. People, 20 the petitioner therein similarly equated the actual physical evidence — 305 cases of blue-seal cigarettes — with the corpus delicti. The appellate court allegedly erred in not acquitting him on reasonable doubt arising from the non-presentation in court of the confiscated contraband cigarettes. Holding that corpus   delicti could be established by circumstantial evidence, the Court debunked his argument thus:

"Since the corpus  delicti is the fact of the commission of the crime, this Court has ruled that even a single witness' uncorroborated testimony, if credible, may suffice to prove it and warrant a conviction therefor. Corpus   delicti may even be established by circumstantial evidence.

"Both the RTC and the CA ruled that the corpus   delicti had been competently established by respondent’s evidence, which consisted of the testimonies of credible witnesses and the Custody Receipt issued by the Bureau of Customs for the confiscated goods.

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

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

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

Q What did you notice thereat?

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.

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

A Three hundred five (305) cases, Sir.

Q Blue seal cigarettes?

A Yes, Sir.

Q What do you mean by blue seal cigarettes?

A Blue seal cigarettes are untaxed cigarettes, Sir.

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

A Yes, Sir, [there] were three.

Q Who?

A They were P/Sgt. Arturo Rimorin, Sr.

Q P/Sgt. Of what department?

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

Q Of that police department?

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

Q Who is this Gonzalo Vargas?

A Civilian Sir.

xxx xxx xxx

Fiscal Macaraeg:

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

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

COURT:

Mark it Exhibit 'A'.

Fiscal Macaraeg:

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

A This is the same receipt, Sir.

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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? cHSIAC

A Yes, Sir.

Q Do you have copies of these photographs?

A The copies are with our evidence custodian, Sir.

Q Can you bring those pictures if required next time?

A 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.

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

Petitioner argues that the receipt issued by Abrigo, a customs official, was beset with doubt because: 1) it did not state specifically that the blue-seal cigarettes identified therein had been confiscated from petitioner and turned over to Abrigo by Colonel Lacson and/or his men; and 2) it mentioned 371 (instead of 305) cases of confiscated blue-seal cigarettes.

We note, however, that Colonel Lacson himself identified the Custody Receipt as the same one issued for the 305 cases of cigarettes found in the cargo truck, in which petitioner and his co-accused rode, and from which the 66 cases of cigarettes — subject of Criminal Case No. CCC-VI-138(79) — were confiscated in Malabon, Metro Manila. 22 This fact (305 plus 66) explains why 371 cases were indicated therein. At any rate, petitioner argues on minor discrepancies that do not affect the integrity of the Receipt, issued in due course by a customs official who was duty-bound to put the seized contraband cigarettes in safekeeping. cCAIaD

The existence of the 305 cases of blue-seal cigarettes found in the possession of petitioner and his co-accused was duly proven by the testimonies of the prosecution witnesses — Lacson and Abrigo. They had testified in compliance with their duty as enforcers of the law. Their testimonies were rightly entitled to full faith and credit, especially because there was no showing of any improper motive 23 on their part to testify falsely against petitioner. Further, the Court accords great respect to the factual conclusions drawn by the trial court,

especially when affirmed by the appellate court as in this case. 24

Absurd is the claim of petitioner that, because Colonel Lacson was not the officer who had actually intercepted the cargo truck in which the former rode, the latter’s testimony was therefore hearsay. The testimony of the colonel on his participation in the apprehension of the truck sufficiently rebutted this contention.

Lacson testified that he had personally received information regarding the smuggling activities being conducted by a syndicated group in that place. He was also informed that smuggled items would be transported from the 2nd COSAC Detachment in the Port Area to Malabon by a cargo truck with Plate No. T-SY-167. During the stakeout surveillance on the night of October 14, 1979, he saw — from his post within the vicinity of the 2nd COSAC Detachment — the identified cargo truck coming out of the Port Area. While trailing behind, he radioed his men posted along Roxas Boulevard to stop the truck. Later in court, he described how his men had actually intercepted it. 25

Petitioner insists that Colonel Lacson, who had given chase to a Toyota car and was not among the officers who had intercepted the truck, could not have seen him as one of the passengers of the latter vehicle. Notably, however, the chase of the Toyota car had lasted no more than 5 minutes, and the colonel’s team immediately returned to the subject truck after the chase. 26 Lacson, however, categorically said that he had seen 305 cases of blue-seal cigarettes inside the cargo vehicle, and that petitioner was one of its passengers.

It should be borne in mind that Colonel Lacson — as head of that particular surveillance operation — had full knowledge, control and supervision of the whole process. He had organized the surveillance teams and given orders to his men prior to the apprehension of the vehicles suspected of carrying smuggled items. Furthermore, he was present during the surveillance operations until the apprehension of the cargo truck. Thus, he was clearly competent to testify on the matter.

The denial by petitioner that he was among the occupants of the truck is highly self-serving and riddled with inconsistencies. He had been directly identified as one of its passengers. Besides, he himself admitted that he had been on board the vehicle when it was intercepted, and that there were no other person in the area.

Courtroom Identification Unnecessary

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:

". . .. While positive identification by a witness is required by the law to convict an accused, it need not always be by means of

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a physical courtroom identification. As the Court held in People v. Paglinawan:

'. . .. Although it is routine procedure for witnesses to point out the accused in open court by way of identification, the fact that the witness . . . did not do so in this case was because the public prosecutor failed to ask her to point out appellant, hence such omission does not in any way affect or diminish the truth or weight of her testimony.'

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

In the present case, there is no doubt that petitioner was a passenger of the truck, that he was apprehended by the authorities, and that he was the same individual charged under the Information in Criminal Case No. CCC-VI-137(79). THAECc

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:

"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 . . ., the fact that he has a license is a matter which is peculiar[ly] within his knowledge and he must establish that fact or suffer conviction." 28(Emphasis supplied)

The truth of the negative averment that the duties and specific taxes on the cigarettes were not paid to the proper authorities is fairly indicated by the following circumstances that have

been established: (1) the cargo truck, which carried the contraband cigarettes and some passengers including petitioner, immediately came from the 2nd COSAC Detachment; (2) the truck was intercepted at the unholy hour of 4:00 a.m.; (3) it fitted the undisclosed informer’s earlier description of it as one that was carrying contraband; and (4) the driver ran away. Hence, it was up to petitioner to disprove these damning circumstances, simply by presenting the receipts showing payment of the taxes. But he did not do so; all that he could offer was his bare and self-serving denial.

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. STcADa

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.

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

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

'In order that a person may be deemed guilty of smuggling or illegal importation under the foregoing statute three requisites must concur: (1) that the merchandise must have been fraudulently or knowingly imported contrary to law; (2) that the defendant, if he is not the importer himself, must have received, concealed, bought, sold or in any manner facilitated the transportation, concealment or sale of the merchandise; and (3) that the defendant must be shown to have knowledge that the merchandise had been illegally imported. If   the   defendant, however,   is   shown   to   have   had possession of the illegally imported merchandise,  without   satisfactory explanation, such possession shall 

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be deemed sufficient to authorize conviction.'" 30 (Emphasis supplied)

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

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

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

The absence of any suspicious reaction on the part of petitioner was not in accordance with human nature. The involvement or participation he and his co-accused had in the smuggling of the goods was confirmed by their lack of proper and reasonable justification for the fact that they had been found inside the cargo truck, seated in front, when it was intercepted by the authorities. Despite his protestation, it is obvious that petitioner was aware of the strange nature of the transaction, and that he was willing to do his part in furtherance thereof. The evidence presented by the prosecution established his work of guarding and escorting the contraband to facilitate its transportation from the Port Area to Malabon, an act punishable under Section 3601 of the Tax Code. aEcHCD

Second Issue:

Validity of the Search and SeizurePetitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. 4754 was invalid, as the law upon which it was predicated — General Order No. 60, issued by then President Ferdinand E. Marcos — was subsequently

declared by the Court, in Tañada v. Tuvera, 33 to have no force and effect. Thus, he asserts, any evidence obtained pursuant thereto is inadmissible in evidence.

We do not agree. In Tañada, the Court addressed the possible effects of its declaration of the invalidity of various presidential issuances. Discussing therein how such a declaration might affect acts done on a presumption of their validity, the Court said:

". . .. 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. . . . 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.' aCTcDH

xxx xxx xxx

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"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 . . . that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.'" 34

The Chicot doctrine cited in Tañada advocates that, prior to the nullification of a statute, there is an imperative necessity of taking into account its actual existence as an operative fact negating the acceptance of "a principle of absolute retroactive invalidity." Whatever was done while the legislative or the executive act was in operation should be duly recognized and presumed to be valid in all respects. 35 The ASSO that was issued in 1979 under General Order No. 60 — long before our Decision in Tañada and the arrest of petitioner — is an operative fact that can no longer be disturbed or simply ignored.

Furthermore, the search and seizure of goods, suspected to have been introduced into the country in violation of customs laws, is one of the seven doctrinally accepted exceptions 36 to the constitutional provision. Such provision mandates that no search or seizure shall be made except by virtue of a warrant issued by a judge who has personally determined the existence of probable cause. 37

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

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

SO ORDERED.

||| (Rieta v. People, G.R. No. 147817, [August 12, 2004], 479 PHIL 943-968)

THIRD DIVISION

[G.R. No. 177188. December 4, 2008.]

EL GRECO SHIP MANNING AND MANAGEMENT CORPORATION, petitioner, vs. COMMISSIONER OF CUSTOMS, respondent.

D E C I S I O N

CHICO-NAZARIO, J p:

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Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, filed by petitioner El Greco Ship Manning and Management Corporation (El Greco), seeking to reverse and set aside the Decision 1 of the Court of Tax Appeals (CTA) En Banc dated 14 March 2007 in C.T.A. EB No. 162. In its assailed Decision, the CTA En Banc affirmed the Decision 2 dated 17 October 2005 of the CTA Second Division in CTA Case No. 6618, ordering the forfeiture of the vessel M/V Criston, also known as M/V Neptune Breeze, for having been involved in the smuggling of 35,000 bags of imported rice. IDCScA

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

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

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

To protect their property rights over the cargo, consignees Chua and Carillo filed before the Regional Trial Court (RTC) of Tabaco, Albay, a Petition for Prohibition with Prayer for the Issuance of Preliminary Injunction and Temporary Restraining Order (TRO) assailing the authority of the Legaspi District Collectors to issue the Warrants of Seizure and Detention and praying for a permanent injunction against the implementation of the said Warrants. Their Petition was docketed as Civil Case No. T-2170. 5

After finding the Petition sufficient in form and substance and considering the extreme urgency of the matter involved, the RTC issued a 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

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 cHAIES

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

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

Based on the above information and for failure of M/V Neptune Breeze to present a clearance from its last port of call, a Warrant of Seizure and Detention underSeizure Identification No. 2001-208 was issued against the vessel by the BOC District Collector of the Port of Manila. 10

For the same reasons, the Legaspi District Collector rendered a Decision on 27 June 2002 in Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A ordering the forfeiture of the M/V Criston, also known as M/V Neptune Breeze, and its cargo, for violating Section 2530 (a), (f) and (k) of the Tariff and Customs Code. 11

In the meantime, El Greco, the duly authorized local agent of the registered owner of M/V Neptune Breeze, Atlantic Pacific Corporation, Inc. (Atlantic Pacific), filed with the Manila District Collector, in Seizure Identification No. 2001-208, a Motion for Intervention and Motion to Quash Warrant of Seizure Detention with Urgent Prayer for the Immediate Release of M/V Neptune Breeze. El Greco claimed that M/V Neptune Breeze was a foreign registered vessel owned by Atlantic Pacific, and different from M/V Criston which had been involved in smuggling activities in Legaspi, Albay. 12

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

WHEREFORE, pursuant to the authority vested in me by law, it is hereby ordered and decreed that the Warrant of Seizure and Detention issued thereof be Quashed

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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. CacISA

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 Indorsement 14 to the Manila District Collector, decreed:

Respectfully returned to the District Collector, POM, the within case folders in POM S. I. No. 2001-208, EL GRECO SHIP MANNING AND MANAGEMENT CORPORATION, Claimant/Intervenor, with the information that the Decision of that Port in the aforesaid case is hereby REVERSED in view of the following reasons:

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

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

the subject vessel supercedes the Decision of that Port ordering its release.

Seeking the reversal of the Decision dated 15 January 2003 of the BOC Commissioner, El Greco filed a Petition for Review with the CTA which was lodged before its Second Division as CTA Case No. 6618. El Greco averred that the BOC Commissioner committed grave abuse of discretion in ordering the forfeiture of the M/V Neptune Breeze in the absence of proof that M/V Neptune Breeze and M/V Criston were one and the same vessel. 15 According to El Greco, it was highly improbable that M/V Criston was merely assuming the identity of M/V Neptune Breeze in order to evade liability since these were distinct and separate vessels as evidenced by their Certificates of Registry. While M/V Neptune Breeze was registered in St. Vincent and the Grenadines 16 as shown in its Certificate of Registry No. 7298/N, M/V Criston was registered in 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. HICATc

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

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

In a Resolution 19 dated 7 February 2006, the CTA Second Division denied the Motion for Reconsideration of El Greco for failure to present issues that had not been previously threshed out in its earlier Decision.

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

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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 Decision 21 promulgated on 14 March 2007, the CTA En Banc declared that the CTA Second Division did not commit any error in its disquisition, and dismissed the Petition of El Greco in C.T.A. EB No. 162 for lack of merit. According to the CTA En Banc, the appreciation and calibration of evidence on appeal (from the ruling of the BOC) lies within the sound discretion of its Division, and the latter's findings and conclusions cannot be set aside unless it has been sufficiently shown that they are not supported by evidence on record. The CTA En   Banc thus disposed:

WHEREFORE, the instant petition is hereby DISMISSED. Accordingly, the assailed Decision promulgated on October 17, 2005 and Resolution dated February 7, 2006 of the Second Division of this Court, are hereby AFFIRMED. 22 SHDAEC

Without filing a Motion for Reconsideration with the CTA, El Greco already sought recourse before this Court via this Petition for Review on Certiorari, raising the following issues:

I.

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

II.

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

III.

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.

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.

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.

Well-entrenched is the rule that findings of facts of the CTA are binding on this Court and can only be disturbed on appeal if not

supported by substantial evidence.23 Substantial evidence is that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 24

A review of the records of the present case unveils the overwhelming and utterly significant pieces of evidence that more than meets the quantum of evidence necessary to establish that M/V Neptune Breeze is the very same vessel as M/V Criston, which left the anchorage area at Legaspi, Albay, without the consent of the customs authorities therein while under detention for smuggling 35,000 bags of imported rice. CEDHTa

The crime laboratory report of the PNP shows that the serial numbers of the engines and generators of the two vessels are identical. El Greco failed to rebut this piece of evidence that decisively identified M/V Neptune Breeze as the same as M/V Criston. We take judicial notice that along with gross tonnage, net tonnage, length and breadth of the vessel, the serial numbers of its engine and generator are the necessary information identifying a vessel. In much the same way, the identity of a land motor vehicle is established by its unique motor and chassis numbers. It is, thus, highly improbable that two totally different vessels would have engines and generators bearing the very same serial numbers; and the only logical conclusion is that they must be one and the same vessel.

Equally significant is the finding of the Legaspi District Collector that all the documents submitted by M/V Criston were spurious, including its supposed registration in the Philippines. In a letter dated 14 March 2002, Marina Administrator Oscar M. Sevilla attested that M/V Criston was not registered with the Marina.

Finally, Customs Guard Adolfo Capistrano testified that the features of M/V Criston and M/V Neptune Breeze were similar; while Coast Guard Commander Cirilo Ortiz narrated that he found documents inside M/V Criston bearing the name M/V Neptune Breeze. These testimonies further fortified the conclusion reached by the Legaspi District Collector that M/V Criston and M/V Neptune Breeze were one and the same.

We also take note that the purported operator of M/V Criston, Glucer Shipping, was a total no-show at the hearings held in Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A before the Legaspi District Collector. Despite being sent several notices of hearing to its supposed address, Glucer Shipping still failed to appear in the said proceedings. It becomes highly unfathomable for an owner to ignore proceedings for the seizure of its vessel, risking the loss of a property of enormous value.

From the foregoing, we can only deduce that there is actually no Glucer Shipping and no M/V Criston. M/V Criston appears to be a mere fictional identity assumed by M/V Neptune Breeze so it may conduct its smuggling activities with little risk of being identified and held liable therefor.

We cannot give much credence to the self-serving denial by El Greco that M/V Neptune Breeze is not the same as M/V Criston in light of the substantial evidence on record to the contrary.

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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. HECaTD

Neither can we permit El Greco to evade the forfeiture of its vessel, as a consequence of its being used in smuggling activities, by decrying denial of due process.

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

Although it was not able to participate in the proceedings in Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A before the Legaspi District Collector, it had ample opportunity to present its side of the controversy in Seizure Identification No. 2001-208 before the Manila District Collector. To recall, full proceedings were held before the Manila District Collector in Seizure Identification No. 2001-208. Even the evidence presented by El Greco in the latter proceedings fails to persuade. The only vital evidence it presented before the Manila District Collector in Seizure Identification No. 2001-208 was the foreign registration of M/V Neptune Breeze. It was still the same piece of evidence which El Greco submitted to this Court. Even when taken into consideration and weighed against each other, the considerably sparse evidence of El Greco in Seizure Identification No. 2001-208 could not successfully refute the substantial evidence in Seizure Identification No. 06-2001 and Seizure Identification No. 06-2001-A that M/V Neptune Breeze is the same as M/V Criston.

Moreover, the claim of El Greco that it was denied due process flounders in light of its ample opportunity to rebut the findings of the Legaspi District Collector in Seizure Identification No. 06-2001 and No. 06-2001-A before the CTA Second Division in CTA Case No. 6618 and the CTA En Banc in C.T.A. EB No. 162, and now before this Court in the Petition at bar. Unfortunately, El Greco was unable to make full use to its advantage of these repeated opportunities by offering all possible evidence in support of its case. For example, evidence that could establish that M/V Neptune Breeze was somewhere else at the time when M/V Criston was being held by customs authority at the Port of Legaspi, Albay, would have been helpful to El Greco's cause and very easy to secure, but is glaringly absent herein.

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: TCADEc

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

xxx xxx xxx

f. Any article, the importation or exportation of which is effected or attempted contrary to law, or any article of prohibited importation or exportation, and 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;

xxx xxx xxx

k. Any conveyance actually being used for the transport of articles subject to forfeiture under the tariff and customs laws, with its equipage or trappings, and any vehicle similarly used, together with its equipage and appurtenances including the beast, steam or other motive power drawing or propelling the same. The mere conveyance of contraband or smuggled articles by such beast or vehicle shall be sufficient cause for the outright seizure and confiscation of such beast or vehicle, but the forfeiture shall not be effected if it is established that the owner of the means of conveyance used as

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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; cDTSHE

(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. CSIDTc

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

SEC. 2313. Review of Commissioner. — The person aggrieved by the decision or action of the Collector in any matter presented upon protest or by his action in any case of seizure may, within fifteen (15) days after notification in writing by the Collector of his action or decision, file a written notice to the Collector with a copy furnished to the Commissioner of his intention to appeal the action or decision of the Collector to the

Commissioner. Thereupon the Collector shall forthwith transmit all the records of the proceedings to the Commissioner, who shall approve, modify or reverse the action or decision of the Collector and take such steps and make such orders as may be necessary to give effect to his decision: Provided, That when an appeal is filed beyond the period herein prescribed, the same shall be deemed dismissed.

If in any seizure proceedings, the Collector renders a decision adverse to the Government, such decision shall be automatically reviewed by the Commissioner and the records of the case elevated within five (5) days from the promulgation of the decision of the Collector. The Commissioner shall render a decision on the automatic appeal within thirty (30) days from receipts of the records of the case. If the Collector's decision is reversed by the Commissioner, the decision of the Commissioner shall be final and executory. However, if the Collector's decision is affirmed, or if within thirty (30) days from receipt of the record of the case by the Commissioner no decision is rendered or the decision involves imported articles whose published value is five million pesos (P5,000,000.00) or more, such decision shall be deemed automatically appealed to the Secretary of Finance and the records of the proceedings shall be elevated within five (5) days from the promulgation of the decision of the Commissioner or of the Collector under appeal, as the case may be: Provided, further, That if the decision of the Commissioner or of the Collector under appeal as the case may be, is affirmed by the Secretary of Finance or if within thirty (30) days from receipt of the records of the proceedings by the Secretary of Finance, no decision is rendered, the decision of the Secretary of Finance, or of the Commissioner, or of the Collector under appeal, as the case may be, shall become final and executory.

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

There is nothing in Section 2313 of the Tariff and Customs Code to support the position of El Greco. As the CTA en banc explained, in case the BOC Commissioner fails to decide on the automatic appeal of the Collector's Decision within 30

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days from receipt of the records thereof, the case shall again be deemed automatically appealed to the Secretary of Finance. Also working against El Greco is the fact that jurisdiction over M/V Neptune Breeze, otherwise known as M/V Criston, was first acquired by the Legaspi District Collector; thus, the Manila District Collector cannot validly acquire jurisdiction over the same vessel. Judgment rendered without jurisdiction is null and void, and void judgment cannot be the source of any right whatsoever. 28

Finally, we strongly condemn the ploy used by M/V Neptune Breeze, assuming a different identity to smuggle goods into the country in a brazen attempt to defraud the government and the Filipino public and deprive them of much needed monetary resources. We further laud the efforts of the Commissioner of the Customs Bureau and the other executive officials in his department to curb the proliferation of smuggling syndicates in the country which deserves no less than our full support. IADaSE

WHEREFORE, in view of the foregoing, the instant Petition is DENIED. The Decision dated 17 October 2005 and Resolution dated 7 February 2006 of the Court of Tax Appeals En Banc in CTA EB No. 172 are AFFIRMED. Costs against the petitioner.

SO ORDERED.

||| (El  Greco Ship Manning and Management Corporation v. Commissioner   of   Customs,   G.R.   No.   177188,   [December   4, 2008], 593 PHIL 476-492)

SECOND DIVISION

[G.R. No. 163055. June 11, 2014.]

THE COMMISSIONER OF CUSTOMS & THE DISTRICT COLLECTOR OF CUSTOMS FOR THE PORT OF ILOILO, petitioners, vs. NEW FRONTIERSUGAR CORPORATION, respondent.

DECISION

PEREZ, J p:

Before the Court is a Petition for Review on Certiorari seeking to reverse and set aside the 29 March 2004 Decision 1 of the

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Court of Appeals (CA) in CA-G.R. SP No. 48842 which affirmed the Decision and Resolution dated 19 June 1998 and 23 July 1998, respectively, of the Court of Tax Appeals (CTA) 2 in C.T.A. Case No. 5347.

The FactsAs both found by the trial court and appellate court, the factual antecedents 3 of the case are as follows:

Petitioners are the duly appointed Commissioner of Customs, and the District Collector of Customs for the Port of Iloilo. Respondent, on the other hand, is a domestic corporation with office address at the 9th floor of Rufino Center Bldg., 6784 Ayala Avenue, Makati City. It is duly registered with the Board of Investments on a non-pioneer status and has been granted incentives to modernize and rehabilitate its sugar mill under Certificate of Registration No. 93-452 dated 28 January 1994.

On 25 September 1995, a contract of sale covering 15,000 metric tons of Thailand raw sugar was entered into by and between Ms. Margarita Chua Sia, buyer and President of respondent, and Osumo Nishihara of Maruha Corporation, a Japan based trading company, for and in behalf of the seller, Taiyo (U.K.) Limited.

On 3 October 1995, respondent applied with the United Coconut Planters Bank for a letter of credit for the above transaction and was issued L/C No. 95-61574-7 on 5 October 1995 after the payment of the advance import duty of P64,315,388.00.

In the meantime, said shipment of raw cane sugar arrived at the Port of Iloilo on 4 October 1995 on board the vessel M/V ALTAIR SS, Voyage No. 60, under Bill of Lading No. 1. Upon request of the respondent, the shipment was allowed by petitioner District Collector (Collector) to be discharged and transferred to its bodegaat Calinog, Iloilo under certain conditions. 4 aTEADI

On 6 December 1995, Director Ray M. Allas of the Customs and Intelligence & Investigation Service (CIIS) issued Alert Order No. ACI/120695/09 on the subject shipment declaring that it violated Joint   Order   No.   1-91 for lack of Clean Report of Findings (CRF). Thus, a Warrant of Seizure and Detention (WSD) against the shipment was recommended for violation of said Joint Order, in relation to Section 2530 (f) of the Tariff and Customs Code of the Philippines (TCCP). 5

On 22 December 1995, respondent wrote the petitioner Collector explaining that its lack of CRF should not be construed as intentional there being good faith on its part in complying with the requirements for the issuance of the Import Advice Note (IAN). Further, respondent explained that Taiyo (U.K.) Limited was aware of theSociete Generale de Surveillance (SGS) pre-shipment inspection requirements and instructed its agent in Thailand to allow an authorized third party, United Asia Supplier Co. Ltd. (United Asia), to inspect the samples of sugar. Respondent likewise clarified that they were not advised by the seller that the sugar ordered was initially shipped-out to China and that the Thailand agent failed to advise it of the SGS pre-

shipment inspection under the impression that the previous inspection and testing made by United Asia would suffice. 6

In view thereof, respondent requested for the tentative release of the shipment on the ground that the SGS pre-shipment inspection was not undertaken due to miscommunication and it was without intention to circumvent the Comprehensive Import Supervision Scheme (CISS). Petitioner Collector approved such request and the shipment was thereafter tentatively released. The CIIS however opposed the tentative release insisting that respondent was not able to prove that its failure to obtain a CRF was unintentional. Petitioner Commissioner of Customs (Commissioner) then directed the petitioner Collector to resolve the opposition of the CIIS. It was found out that the failure to secure CRF was due to the fault of the shipper and it was unintentional on the part of respondent; hence, there was no need to issue a WSD. 7

Upon respondent's issuance and submission of a post-dated guarantee/security check in the amount of P234,998,950.90, petitioner Collector recommended to the petitioner Commissioner that the imposition of penalty be dispensed with unless the SGS will not issue the required CRF. Petitioner Commissioner then created a three-man hearing body to resolve the issue on whether the lack of CRF was intentional or not, as ordered in Customs Special Order No. D-03-96 dated 16 January 1996. 8 IcHTAa

Pending said hearing, SGS-Manila Liaison Office issued on 18 January 1996 CRF No. THL017904 covering the subject shipment. Eventually, the three-man hearing body issued a Resolution dated 15 February 1996, the dispositive portion of which is quoted hereunder as follows:

WHEREFORE, in view of the foregoing and subject to the approval of the Commissioner of Customs, the District Collector of Customs, Port of Iloilo, is hereby ordered to initiate a seizure proceeding against the security/guarantee put up by NSFC (respondent herein) to secure the tentative release of the subject shipment for the imposition of appropriate penalty pursuant to CAO No. 4-94 and the collection of proper duties, taxes, penalties and other charges. 9

Afterwards, the aforesaid Resolution was approved by the petitioner Commissioner with the following handwritten modifications:

1. First demand for payment of penalty as instructed in the Commissioner's Memorandum dated 17 January 1996, i.e. "payment of 20% penalty of the landed cost for failure to undergo the pre-shipment inspection at the Port of exportation"; and

2. Upon failure by the importer to pay the penalty within (10) days from receipt of

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demand, proceed against the security/guarantee by initiating a seizure proceeding against the same and deposit immediately the guarantee in accordance with law in order to protect the interest of the government. 10

Respondent filed a Motion for Reconsideration of the said Resolution but the same was denied on 27 March 1996. Then, on 29 March 1996, petitioner Collector sent a demand letter to respondent for the payment of the twenty percent (20%) penalty within ten (10) days from its receipt, which the latter actually received on 3 April 1996. However, without waiting for the lapse of the ten-day grace period, the Bureau of Customs of the Port of Iloilo immediately deposited the security check on 2 April 1996, prompting respondent to order for a stop payment of said check. 11

Consequently, petitioner Collector demanded from respondent the payment of penalty indicated in the subject Resolution amounting to P41,858,550.00. Likewise, the subsequent shipment of 9,948,615 metric tons of raw sugar by respondent was withheld by petitioner Collector for the purpose of being sold at public auction to cover for the 20% penalty. 12 DCcSHE

Thereafter, on 10 April 1996, respondent filed a Petition for Review with prayer for the issuance of a Writ of Preliminary Injunction and/or Temporary Restraining Order (TRO) before the CTA, docketed as C.T.A. Case No. 5347. 13

The Ruling of the CTAIn a Decision dated 19 June 1998, 14 the CTA granted respondent's Petition and accordingly reversed and set aside the Decision of the petitioner Commissioner to impose a 20% penalty on respondent's subject shipment, the dispositive portion of which reads:

WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby GRANTED. Accordingly, the decision to impose a 20% penalty on [respondent] subject shipment of raw sugar is hereby REVERSED and SET ASIDE. The GSIS Surety Bond with No. G [16] GIF 027358 posted by the [respondent] before this Court in the amount of P83,717,100.00 is hereby CANCELLED and RELEASED of its undertaking. 15

The CTA based its ruling on the following factual and legal findings: (1) that since there was no valid seizure proceeding ever conducted by petitioners against respondent's case, it therefore failed to comply with Section 2301 of the TCCP, as amended, which requires the Collector to issue a WSD upon making any seizure, and also with Section 2303 of the same, which provides the need of a prior written notice of seizure and opportunity to be heard on the part of the owner or importer in reference to the alleged delinquency, a clear violation of respondent's constitutional right to procedural due process; 16 (2) that since there was no valid seizure as adverted to above, the imposition of the 20% penalty under Customs

Administrative Order (CAO) No. 4-94 is outright improper and without any legal basis; (3) that the subsequent issuance of the CRF over respondent's shipment under the provisions of Customs Memorandum Order (CMO) No. 9-95 satisfied the inspection and the CRF required under paragraph 12 of Joint Order  No.  1-91 considering that it cleared the said shipment from automatic seizure. Nonetheless, even if the subject shipment of respondent may have been subjected to an alleged automatic seizure, the eventual issuance of the CRF covering the same shipment cured all deficiencies; 17 (4) that respondent's act of issuing a "STOP PAYMENT" order was justified considering petitioners' act of depositing the post-dated guarantee/security check being improper and without any legal basis; 18 and (5) that petitioner Collector acted beyond his mandate under Section 1508 of theTCCP when he withheld respondent's subsequent shipment of raw sugar considering that there was still no outstanding and demandable amount (penalty of fine) to be paid. The fine which is the subject matter of the instant case was precisely the one being questioned by respondent; hence, its liability has yet to be determined.19 SaIEcA

Subsequently, on 23 July 1998, the CTA denied petitioners' Motion for Reconsideration for failure to raise any new matter which has yet to be considered and passed upon in its assailed 19 June 1998 Decision. 20

Aggrieved, and following the rules on court hierarchy then prevailing, petitioners appealed to the CA by filing a Petition for Review pursuant to Rule 43 of the 1997 Rules of Civil Procedure docketed as CA-G.R. SP No. 48842.

The Ruling of the CAThe CA affirmed 21 both the aforesaid Decision and Resolution rendered by the CTA in C.T.A. Case No. 5347, pronouncing that seizure of goods starts with the issuance of a WSD, being a part of the procedural due process, to which respondent is entitled to. Without it, respondent will then be deprived of its right to avail of the tentative release of the shipment which is expressly allowed under the conditions set forth in CMO No. 9-95.

In addition, the appellate court ruled that respondent cannot be faulted in ordering the stop payment of its guarantee/security check because it was deposited by petitioners on 2 March 1996, or exactly six (6) days ahead of respondent's deadline to pay the alleged 20% penalty. It failed to consider that before the lapse of the given period, the Bureau of Customs had no right to hold the value of the check against respondent. More so, since there was already the subsequent issuance of the CRF on 18 January 1996 by the SGS Manila Liaison, respondent in effect could not have violated any customs laws which would render it liable to pay for the 20% penalty.

Lastly, while it may be argued that the CRF is required to be issued before the shipment of the goods, the late issuance of the same to respondent amounts to substantial compliance with the provisions of Joint  Order  No.  1-91. The purpose for which the CRF is required has already been served since the imported goods were already inspected by the SGS. The CA

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therefore concluded that if the belated issued CRF will be ignored, then it will work against all the procedures conducted to determine the propriety of issuing the late CRF. AaIDHS

Not satisfied, petitioners are now in quest for redemption before this Court, raising that the CA committed serious and reversible error in ruling, that: (a) the issuance of a WSD was necessary; (b) the imposition of the 20% penalty on respondent's shipment was not justified; (c) the later issuance of the CRF over the subject shipment had the effect of full compliance with Joint Order No. 1-91; and (d) the deposit of respondent's check by petitioners was improper and without legal basis.

The IssueThe core issue for the Court's consideration is whether or not respondent has violated paragraph 12 of Joint Order No. 1-91, in relation to paragraph (f), Section 2530 of the TCCP, as amended, for failure to submit the subject raw cane sugar shipment to pre-shipment inspection and to present the corresponding CRF resulting therefrom. Consequently, if respondent indeed violated said provision, the question of the imposition of the 20% penalty pursuant to CAO No. 4-94, on respondent's subject shipment, then arises.

Our RulingWe find the petition unmeritorious.

Prefatorily, in accordance with the pertinent customs laws at the time of the arrival of the subject shipment of this case, it must be pointed out that importers, such as respondent herein, are duty-bound to comply with the provisions of the CISS, 22 implemented by Joint Order No. 1-91, 23 particularly as to the requirement of a pre-shipment inspection of the quality, quantity, and price of the imports coming into the Philippines to be conducted at the country of export. Notably, the pre-shipment inspection was intended to prevent the possibility of the undervaluation, misdeclaration, and overvaluation of imports shipped to our country which may defraud the Philippine Government of revenues. 24

The aforesaid scheme aims to ensure the quality and quantity specifications of consignments, and achieved through advance cargo clearance and supplying the country's Bureau of Customs with accurate information about the quality and specification of bulk and break bulk cargo. 25 In other words, the pre-shipment inspection requirement simply helps the Governments around the world in protecting their import revenues, facilitate trade, and minimize the risk of illegal imports. 26

Thereafter, upon inspection and determination that the subject shipment is in order, a corresponding CRF shall be issued by the SGS. Only then may the imports be allowed in our country for release, after compliance with other equally significant requirements, such as but not limited to, filing of import entry and payment of duty.

In the case at bench, it is apropos to look into the allegation that, as stated in Alert Order No. A/CI/120695/09, respondent

violated Joint   Order   No.   1-91, which implements the CISS, particularly paragraph 12 thereof, to wit:

12. No Custom Entry shall be filed or accepted or any shipment released in respect of any goods which require a CRF as provided for by this Joint Order where the Importer is unable to produce to the Bureau of Customs the authenticated customs copy of the CRF. With or without fault on the part of the importer, such goods shall be subject to automatic seizure by the Bureau of Customs. The Seller is therefore warned against the shipment of goods which have not been inspected or for which a CRF has not been issued. (Emphasis supplied)

Petitioners argue that the above-quoted provision should be read in relation to paragraph (f), Section 2530 of the TCCP, as amended, quoted hereunder as follows:

Sec. 2530. Property   Subject   to   Forfeiture Under   Tariff   and   Customs   Laws. — Any vessel or aircraft, cargo, articles and other objects shall, under the following conditions, be subject to forfeiture: TacADE

xxx xxx xxx

f. Any article of prohibited importation or exportation, the importation or exportation of which is effected or attempted contrary to law, and all other articles which, in the opinion of the Collector, have been used, are or were intended to be used as instrument in the importation or exportation of the former. (Emphasis supplied)

Records of the case reveal that, at the time of the arrival of the shipment of respondent's raw cane sugar, it did not have the required CRF. Such lack of CRF was due to failure to undergo the needed pre-shipment inspection from its place of exportation. As a result thereof, pursuant to paragraph 12 of Joint Order No. 1-91, read in conjunction with Section 2530 (f) of the TCCP, as amended, petitioners assert that respondent's shipment of raw cane sugar "shall be subject to automatic seizure".

The phrase "shall be subject to automatic seizure" is not, however, an unrestrained mandate. It is not a roving commission to dispense with the procedural due process of seizure proceedings. This is the particular provision clearly expressed in Sections 2301 and 2303 of the TCCP, as amended, which say: DISTcH

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Sec. 2301. Warrant for Detention of Property-Cash Bond. — Upon making any seizure, the Collector shall issue a warrant for the detention of the property; and if the owner or importer desires to secure the release of the property for legitimate use, the Collector shall, with the approval of the Commissioner of Customs, surrender it upon the filing of a cash bond, in an amount to be fixed by him, conditioned upon the payment of the appraised value of the article and/or any fine, expenses and costs which may be adjudged in the case: Provided, That such importation shall not be released under any bond when there is a prima facie evidence of fraud in the importation of article: Provided, further, That articles the importation of which is prohibited by law shall not be released under any circumstance whatsoever: Provided, finally, That nothing in this section shall be construed as relieving the owner or importer from any criminal liability which may arise from any violation of law committed in connection with the importation of the article. 27 (Emphasis supplied)

Sec. 2303. Notification to Owner or Importer. — The Collector shall give the owner or importer of the property or his agent a written notice of the seizure and shall give him an opportunity to be heard in reference to the delinquency which was the occasion of such seizure.

xxx xxx xxx (Emphasis supplied).

Ut magis valeat quam pereat. A statute is to be interpreted as a whole. The provisions of a specific law should be read, considered, and interpreted together as a whole to effectuate the whole purpose of which it was legislated. A section of the law is not to be allowed to defeat another, if by any reasonable construction, the two can be made to stand together. In other words, the court must harmonize them, if practicable, and must lean in favor of a construction which will render every word operative, rather than one which may make the words idle and nugatory. 28 SDHAcI

Applying the foregoing principles herein, paragraph 12 of Joint Order No. 1-91 should be read in relation to Sections 2301 and 2303 of the TCCP, as amended, in order to effectuate the purposes of which they were enacted, particularly as to the procedural requirements set forth in conducting seizure proceedings. Thus, in the 19 June 1998 Decision in C.T.A. Case No. 5347, the CTA correctly articulated that a WSD is a condition precedent, before any seizure proceeding can be formally initiated. It therefore emphasized the constitutionally enshrined right to procedural due process of any person,

natural or juridical, under investigation especially if it will cause the person his/its life or property. As previously mentioned, the above-quoted sections clearly laid down the mandatory procedures to be observed in a seizure case, to wit: (1) that a WSD must first be issued upon making any seizure; and (2) that a written notice of such seizure must be served upon the owner or importer or his agent. Failure to comply with the foregoing procedural requirements would negate the propriety of having the subject shipment of respondent seized and forfeited in favor of the Government in all cases. Hence, even if the phrase "subject to automatic seizure" was used under paragraph 12 of Joint Order No. 1-91, the same must be construed together and harmonized with other related provision of law, i.e. Sections 2301 and 2303 of the TCCP, as amended, in order to form a uniform system of jurisprudence on seizure proceedings. EAICTS

Likewise, it would be improvident not to state at this juncture that the subject shipment could not be deemed liable for seizure or even forfeiture on the ground of violation of Section 2530 (f) of the TCCP, as amended, for it must be proven first that fraud has been committed by or there was bad faith on the part of the importer/consignee to evade payment of the duties due and demandable.

Time and again, and consistently, this Court has ruled that the onus probandi to establish the existence of fraud is lodged with the Bureau of Customs which ordered the forfeiture of the imported goods. Fraud is never presumed. It must be proved. Failure of proof of fraud is a bar to forfeiture. The reason is that forfeitures are not favored in law and equity. 29 The fraud contemplated by law must be intentional fraud, consisting of deception willfully and deliberately done or resorted to in order to induce another to give up some right. 30 Absent fraud, the Bureau of Customs cannot forfeit the shipment in its favor.

Significantly, based on the records of the present case, it was determined during the administrative proceedings before the petitioner Collector, that there was no intentional circumvention of the said CISS requirement on the part of respondent because the failure to subject the shipment to SGS pre-shipment inspection was purely attributable to the fault of the shipper; hence, respondent acted in good faith. In other words, since there was no deliberate circumvention of the CISS, the same therefore cannot be recommended for seizure and/or forfeiture. As a matter of fact, pursuant to CMO No. 9-95, it was no other than the petitioner Collector who recommended and thereafter allowed that the subject shipment be tentatively released, and that the imposition of the penalty against it be dispensed with unless the SGS will not issue the required CRF. 31 These factual circumstances further strengthened the position taken by respondent that it had indeed sufficiently proven its claim of good faith on the non-production of CRF, which likewise established lack of fraudulent intent to evade payment of duties on its part. Clearly, petitioners' failure to comply with the procedural requirements set forth under the applicable provisions of the TCCP, as amended, in pursuing for the seizure of the subject shipment under paragraph 12 of Joint Order No. 1-91, was fatal to their cause.

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Now this Court proceeds to determine whether or not the imposition of the 20% penalty on respondent's subject shipment is justified under the present factual and legal circumstances of this case.

The aforesaid 20% penalty being collected by petitioners against respondent was based on the imposition under CAO No. 4-94, 32 particularly Part II (C)(C.1) thereof, which reads:

SUBJECT: Schedule of fines to be imposed in the settlement of seizure cases pending hearing pursuant to Section 2307 of the Tariff and Customs Code, as amended by Executive Order No. 38.

xxx xxx xxx

II. SCHEDULE OF FINES ASCTac

In the settlement of seizure cases pending hearing, where settlement thereof is allowed under the existing laws and regulations, the following schedule of fines for the corresponding violations are hereby provided:

xxx xxx xxx C. ONLY VIOLATION IS LACK OF SGS CLEAN

REPORT OF FINDINGS (CRF)

C.1 First Violation — 20%

xxx xxx xxx (Emphasis supplied)Relevant thereto, Section 2307 of the TCCP, as amended, provides:

Sec. 2307. Settlement of Case by Payment of Fine of Redemption of Forfeited Property. — Subject to approval of the Commissioner, the district collector may while the case is still pending, except when there is fraud, accept the settlement of any seizure case provided that the owner, importer, exporter, or consignee or his agent shall offer to pay to the collector a fine imposed by him upon the property, or in case of forfeiture, the owner, exporter, importer or consignee or his agent shall offer to pay for the domestic market value of the seized article. The Commissioner may accept the settlement of any seizure case on appeal in the same manner. TAcDHS

xxx xxx xxx (Emphasis supplied)

Clearly from the foregoing, the law presupposes a pending seizure proceeding legally initiated against the shipment intended to be seized in accordance with the pertinent provisions of the TCCP, as amended. Absence of such pending proceeding against respondent's shipment renders CAO No. 4-

94 and Section 2307 inapplicable in the present case. Consequently, there would be no legal basis to hold the subject shipment liable for the aforesaid 20% penalty on the sole ground of lack of CRF.

Accordingly, this Court hereby adopts the factual and legal findings of the CTA in its 19 June 1998 Decision, 33 pertinent portions of which are quoted hereunder as follows:

It is to be readily observed that the aforequoted subject of said CAO pertains to fines imposed on seizure cases. Inasmuch as the instant case has not been put under a valid seizure as adverted to above, the imposition of the 20% penalty under CAO 4-94 is outright improper and without legal basis. The problem with [petitioners] is that in its desire to give more teeth to the administrative requirement for the production of a Clean Report of Findings (CRF) from the SGS, it overlooked one fundamental principle in law — that no fine, surcharge, forfeiture or any penalty may be imposed except in pursuance of a provision of law. In the instant case, the closest provision [petitioners] could cite is [S]ection 2307 of the Tariff and Customs Code as implemented by CAO 4-94, without realizing that the same pertains only to seizure cases. Under the provisions imposing fine found in Sections 2505 to 2529 of the same Code, not one pertains to non-production of CRF. The Secretary of Finance, Secretary of Trade and Industry and the Governor of the Central Bank in issuing the Joint Order No. 1-91, which serves as the basis of the requirement for the production of a CRF, did not provide for the imposition of fine or other penalties maybe because they realize that the imposition of penalties is a legislative prerogative. STHAaD

The non-production of CRF by itself does not give rise to any penalty but may serve as a basis to hold and to investigate the particular shipment which may lead to findings of undervaluation, misdeclaration or misclassification for which the law provides the corresponding penalty such as surcharge, fine or forfeiture under Sections 2503, 2530-2536 of the TCC[P]. These offenses were not shown in the records of the case. On the contrary, there was this finding by the [petitioners] that the non-production of the CRF was not intentional. The mistake or error was found to be committed by the supplier without prior knowledge on the part of the [respondent]. In fact, a CRF was later on produced and

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the discrepancy was not enough to constitute undervaluation under Sections (sic) 2503 of the said Code. The [respondent] was only required by the [petitioners] to pay additional duties and taxes corresponding to the difference of 4.79% in valuation. 34

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

CMO No. 9-95 categorically provides the revised procedures on the tentative release of shipments lacking the required CRF. Its objectives are as follows: (1) to avoid delays in the processing and releasing of shipments arising from the lack of SGS-CRF in relation to Joint  Order  No.  1-91, as amended; (2) to further facilitate trade and provide adequate security to government revenue; and (3) to enable the prompt collection of revenue due the government. 35 Simply put, the aforesaid Order provides a remedy for importers or consignees who have failed to undergo their shipments to pre-shipment inspections under the CISS which arrived in the country and entered in a customs house without the requisite CRF. More importantly, Part V (1), Step 5 of CMO No. 9-95 clearly states that the processing of the SGS-CRF by the SGS affiliate in the country of exportation shall be deemed "as if inspection has taken place" and that the issuance of the SGS-CRF shall be done by SGS-Manila Liaison Office. aICHEc

Verily, it was proper for the CTA and CA to rule that the subsequent issuance of the CRF over respondent's subject shipment pursuant to the provisions of CMO No. 9-95 substantially complied and satisfied the mandatory inspection and corresponding CRF required under paragraph 12 of Joint Order No. 1-91. Therefore, the subsequent issuance of the CRF on 18 January 1996 cleared the shipment from the alleged automatic seizure and 20% penalty imposable under CAO No. 4-94. The eventual issuance of the required CRF covering respondent's shipment had indeed cured all deficiencies; thus, leaving petitioners no right whatsoever in demanding for the value of the guarantee/security check previously issued by respondent for the sole purpose it was made.

Parenthetically, this Court finds no abusive or improvident exercise of authority on the part of the CTA. Since there is no showing of gross error or abuse on the part of the CTA, and its findings are supported by substantial evidence which were thoroughly considered during the trial, there is no cogent reason to disturb its findings and conclusions — and they carry even more weight when the CA affirms its factual and legal findings. SCIacA

WHEREFORE, the petition is hereby DENIED for lack of merit. No costs.

SO ORDERED.

||| (Commissioner of Customs v. New Frontier Sugar Corp., G.R. No. 163055, [June 11, 2014])

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