Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-41686 November 17, 1980

PEOPLE OF THE PHILIPPINES, petitioner,

vs.
COURT OF FIRST INSTANCE OF RIZAL, BRANCH IX, QUEZON CITY, presided by HON. ULPIANO SARMIENTO,
JESSIE HOPE and MONINA MEDINA, respondents.

GUERRERO, J.:

This original petition for certiorari seeks to nullify the Order dated August 20, 1975 issued by District Judge
Ulpiano Sarmiento in Criminal Case No. Q-3781 which stalled the prosecution of respondents Sgt. Jessie C. Hope
and Monina Medina for the alleged violation of section 3601 1 of the Tariff and Customs Code. The order declared
as inadmissible in evidence the allegedly smuggled articles obtained by apprehending agents in the course of a
warrantless search and seizure. Dispositively, the order decreed:

WHEREFORE, in accordance with Article IV, Sec. 4, paragraph 2 of the present Constitution, the
boxes and the watches and bracelets contained therein seized from the car of the accused Sgt. Jessie
C. Hope, are hereby declared inadmissible in evidence in this case; likewise, the pictures taken of
said items attempted to be presented as evidence in the instant case is hereby declared in
admissible as evidence against the accused.

SO ORDERED.

The records disclose that one week before February 9, 1974, the Regional Anti-Smuggling Action Center (RASAC)
was informed by an undisclosed Informer that a shipment of highly dutiable goods would be transported to Manila
from Angeles City on a blue Dodge car. Spurred by such lead, RASAC Agents Arthur Manuel and Macario Sabado, on
the aforesaid date and upon order of the Chief of Intelligence and Operations Branch, RASAC-MBA, Col. Antonio
Abad, Jr., stationed themselves in the vicinity of the toll gate of the North Diversion Road at Balintawak, Quezon
City.

At about 6:45 A.M. of the same day, a light blue Dodge car with Plate No. 21-87-73, driven by Sgt. Jessie Hope who
was accompanied by Monina Medina approached the exit gate and after giving the toll receipt sped away towards
Manila. The RASAC agents gave a chase and overtook Sgt. Hope's car. Agent Sabado blew his whistle and signaled
Sgt. Hope to stop but the latter instead of heeding, made a U-turn back to the North Diversion Road, but he could
not go through because of the buses in front of his car. At this point, the agents succeeded in blocking Sgt. Hope's
car and the latter stopped. Manuel and Sabado who were in civilian clothes showed their Identification cards to
respondents and introduced themselves as RASAC agents.

The Agents saw four (4) boxes on the back seat of the Dodge and upon inquiry as to what those boxes were, Sgt.
Hope answered "I do not know." Further, respondents were asked where they were bringing the boxes, to which
respondent Medina replied that they were bringing them (boxes) to the Tropical Hut at Epifanio de los Santos.
Agent Sabado boarded the Dodge car with respondents while Agent Manuel took their own car and both cars drove
towards Tropical Hut making a brief stop at the Bonanza where Agent Manuel called up Col. Abad by telephone.

Arriving at the Tropical Hut, the party, together with Col. Abad who had joined them waited for the man who
according to Monina Medina was supposed to receive the boxes. As the man did not appear, Col. Abad "called off
the mission" and brought respondents and their car to Camp Aguinaldo arriving there at about 9:00 A.M.
(Respondents' Memorandum, records, pp. 180-183).

An inspection of Sgt. Hope's car at Camp Aguinaldo yielded eleven (11) sealed boxes, four (4) on the rear seat and
seven (7) more in the baggage compartment which was opened on orders of Col. Abad. On the same order of the
intelligence officer, the boxes were opened before the presence of respondents Hope and Medina, representatives
of the Bureau of Internal Revenue, Bureau of Customs, P.C., COSAC and photographers of the Department of
National Defense. The contents of the boxes revealed some "4,441 more or less wrist watches of assorted brands;
1,075 more or less watch bracelets of assorted brands" (based on a later inventory), supposedly untaxed.
As consequence, thereof, ASAC Chairman General Pelagio Cruz requested the Bureau of Customs to issue a Warrant
of Seizure and Detention against the articles including the Dodge car. The Collector of Customs did issue the same
on February 12, 1974. It was admitted, however, that when the apprehending agents arrested respondents and
brought them together with the seized articles to the ASAC Office in Camp Aguinaldo, the former were not armed
with a warrant of arrest and seizure.

In conjunction with the Warrant of Seizure and Detention issued by the Collector of Customs, seizure proceedings
were instituted and docketed as Seizure Identification No. 14281 against the wrist watches and watch bracelets
pursuant to Section 2530 (m) — 1 of the Tariff and Customs Code, and Seizure Identification No. 14281-A against
the Dodge car pursuant to Section 2530(k) of the same Code.2

During the hearing of the aforesaid cases, respondents disclaimed ownership of the seized articles. Ownership was
instead claimed by one Antonio del Rosario who intervened in the proceedings. The claimant-intervenor testified
that he bought the watches and bracelets from Buenafe Trading as evidenced by a sales invoice certified to be
authentic by the BIR Revenue Regional Office No. 6 of Quezon City, which transaction was entered in the book of
accounts of aforesaid claimant; that the same articles were brought to a buyer in Angeles City, but when the sale
failed to materialize, claimant contracted respondent Monina Medina to transport back the boxes to Manila for a
consideration of P1,000.00 without disclosing the contents thereof which claimant simply represented as PX
goods; that when he bought the watches from Buenafe, he presumed that the corresponding duties have already
been paid, only to be surprised later on when he was informed that the same were seized for non-payment of taxes.

On the other hand, respondent Hope testified to the effect that at the time of apprehension, he had no knowledge of
the contents of the boxes, and granting that he had such knowledge, he never knew that these are untaxed
commodities that he consented to transport said boxes from Angeles City to Manila in his car upon request of his
girl friend Monina as a personal favor; that he was not present when the boxes were loaded in his car nor was he
ever told of their contents on the way. On the part of respondent Monina Medina, she testified that what she did
was only in compliance with the agreement with Mr. Del Rosario to transport the boxes and deliver them to a
certain Mr. Peter at the Tropical Hut who will in turn give her the contracted price; that Mr. Del Rosario did not
reveal the contents of the boxes which she came to know of only when the boxes were opened at Camp Aguinaldo.
As there was not enough evidence to controvert the testimonies of respondents and the narration of claimant
Antonio del Rosario, the Collector of Customs issued his decision in the seizure cases on April 1, 1975 declaring
that the seized articles including the car are not subject of forfeiture. The dispositive portion of this decision reads:

WHEREFORE, by virtue of Section 2312 of the Tariff and Customs Code, it is hereby ordered and
decreed that the subject motor vehicle, one (1) Dodge, Model 1965, Motor No. 33859, Serial No.
W357348361, File No. 2B-1884, with Plate No. EH 21-87, '73 covered by Seizure Identification No.
14281-A be, as it is hereby declared released to its registered owner, Jessie C. Hope, upon proper
Identification. Relative to Seizure Identification No. 14281, it is further ordered and decreed that
the subject matter thereof to wit: 4,606 pcs. of assorted brands of wrist watches, 1,399 pieces of
assorted brands of wrist bracelets and 100 pcs. of tools be, as they are hereby likewise declared
released to the rightful owner thereof, Antonio del Rosario, upon payment of the levitable duties,
taxes and other charges due thereon plus a fine equivalent to 100% of the duties and taxes thereof.
Furthermore, should claimant-intervenor fail to pay the assessable duties, taxes and other charges
owing from the aforestated articles within 30 days from the time this decision becomes final and
unappealable, the same shall be deemed abandoned in favor of the government to be disposed of in
the manner provided for by law.

Meanwhile, on March 14, 1974, after the requisite preliminary investigation, the City Fiscal of Quezon City, finding
the existence of a prima facie case against respondents Hope and Medina, filed Criminal Case No. Q-3781 in the
Court of First Instance of Rizal (Quezon City). Upon arraignment on April 23, 1974, respondents pleaded not guilty.
Trial commenced on January 28, 1975 and while the prosecution through its first witness, Agent Macario Sabado,
was adducing as evidence the pictures of the eleven (11) boxes containing the assorted watches and watch
bracelets, counsel for respondents objected to the presentation of the pictures and the subject articles on the
ground that they were seized without the benefit of warrant, and therefore inadmissible in evidence under Section
4(2), Article IV of the New Constitution. After the parties have argued their grounds in their respective
memoranda, respondent trial court issued the questioned order of August 20, 1975 as cited earlier. The
prosecutions motion for reconsideration was denied on September 30, 1975. Hence, this petition which was
treated as a special civil action in Our Resolution of May 5, 1976.

The substantive issue as urged in the petition is whether or not the seizure of the merchandise in a moving vehicle
by authorized agents commissioned to enforce customs laws without warrant of seizure breaches the
constitutional immunity against unreasonable search and seizure and therefore, such merchandise are
inadmissible in evidence. Corollary to the issue is, has the trial court gravely abused its discretion in finding the
affirmative?
The State holds on the proposition that the rules governing search and seizure had been liberalized when a moving
vehicle is the object of the search and the necessity of a prior warrant has been relaxed on the ground of
practicality, considering that before a warrant could be obtained, the place, things and persons to be searched must
be described to the satisfaction of the issuing judge — a requirement which borders on impossibility in the case of
smuggling effected by the use of a moving vehicle that can transport contraband from one place to another with
impunity. Petitioner vigorously contends that contraband may be seized without necessity of a search warrant
since the Constitution does not guaranty immunity to smugglers and that a warrantless seizure of contraband in a
moving vehicle is justified by the traditional exception attached to the Fourth Amendment of the U.S. Constitution,
and such exception must be adopted in interpreting the relevant provision in the new Philippine Constitution.

As counter argument, respondents maintain that the decision of the Collector of Customs in their seizure cases
which has now become final and unappealable has made no pronouncement that the subject articles are smuggled
items. More so, the decision has entirely cleared respondents of any liability or responsibility in the alleged
smuggling activity and as a consequence, the decision has the direct effect of deciding finally that the watches and
bracelets are not smuggled and that respondents have not violated the customs and tariff laws as charged in the
criminal complaint. Respondents argue further that the interception of accused Jessie Hope's car by RASAC Agents
while in the course of a normal trip without any order of the court and without having shown that the interception
was necessary in the interest of national security, public safety or public health, is an impairment of the liberty of
travel under section 5, Article IV of the 1973 Constitution. Finally, they claim that the agents had one week's time
before the date of apprehension to secure the necessary warrant but since they failed to get this court order, the
search of Hope's car and the spontaneous seizure of the boxes loaded therein and the contents thereof is a violation
of the constitutional guarantee against "unreasonable searches and seizure of whatever nature and for any
purpose" under section 3, Article IV of the fundamental law.

We find for petitioner. The opposing counsel's attempt to draw an Identity between the seizure cases and the
present criminal action to the ultimate end that the decision in the former should be made decisive of the issue of
criminal liability must be overruled. It is not accurate to say that the Collector of Customs made no findings that the
articles were smuggled. In fact, what the Collector stated was that the prosecution failed to present the quantum of
evidence sufficient to warrant the forfeiture of the subject articles (Pages 128 and 130 of Annex "E", Records, p.
109). In a general sense, this does not necessarily exclude the possibility of smuggling. But if the aim of a
confirmation that the goods are indeed smuggled, is to draw an inference to tie up respondents' criminal liability,
the Collector is not duty bound, nor is there any need for him to arrive at such a conclusion. It is quite clear that
seizure and forfeiture proceedings under the tariff and customs laws are not criminal in nature as they do not
result in the conviction of the offender nor in the imposition of the penalty provided for in section 3601 of the
Code 3 . As can be gleaned from Section 2533 of the code, seizure proceedings, such as those instituted in this case,
are purely civil and administrative in character, the main purpose of which is to enforce the administrative fines or
forfeiture incident to unlawful importation of goods or their deliberate possession. The penalty in seizure cases is
distinct and separate from the criminal liability that might be imposed against the indicted importer or possessor
and both kinds of penalties may be imposed. 4

In the case at bar, the decision of the Collector of Customs, as in other seizure proceedings, concerns the res rather
than the persona. The proceeding is a probe on contraband or illegally imported goods. These merchandise
violated the revenue law of the country, and as such, have been prevented from being assimilated in lawful
commerce until corresponding duties are paid thereon and the penalties imposed and satisfied either in the form
of fines or of forfeiture in favor of the government who will dispose of them in accordance with law. The importer
or possessor is treated differently. The fact that the administrative penalty befalls on him is an inconsequential
incidence to criminal liability. By the same token, the probable guilt cannot be negated simply because he was not
held administratively liable. The Collector's final declaration that the articles are not subject to forfeiture does not
detract his findings that untaxed goods were transported in respondents' car and seized from their possession by
agents of the law. Whether criminal liability lurks on the strength of the provision of the Tariff and Customs Code
adduced in the information can only be determined in a separate criminal action. Respondents' exoneration in the
administrative cases cannot deprive the State of its right to prosecute. But under our penal laws, criminal
responsibility, if any, must be proven not by preponderance of evidence but by proof beyond reasonable doubt.

Considering now the critical area of the dispute, under the law, the authority of persons duly commissioned to
enforce tariff and customs laws is quite exceptional when it pertains to the domain of searches and seizures of
goods suspected to have been introduced in the country in violation of the customs laws. This Court had occasion
to recognize this power granted to persons having police authority under Section 2203 of the Code, who in order to
discharge their official duties more effecttively —

... may at anytime enter, pass through, or search any land or inclosure of any warehouse, store or
other building not being a dwelling house. (Section 2208, emphasis supplied)

... (to) go aboard any vessel or aircraft within the limits of any collection district, and to inspect,
search and examine said vessel or aircraft and any trunk, package, box or envelope on board, and
search any person on board the said vessel or aircraft and to this end to hail and stop such vessel or
 aircraft if under way. to use all necessary force to compel compliance; and if it shall appear that any
breach or violation of the customs and tariff laws of the Philippines has been committed, whereby
or in consequence of which such vessels or aircrafts, or the article, or any part thereof, on board of
or imported by such vessel or aircrafts, is hable to forfeiture to make seizure of the same or any
part thereof.

The power of search herein above given shall extend to the removal of any false bottom, partition,
bulkhead or other obstruction, so far as may be necessary to enable the officer to discover whether
any dutiable or forfeitable articles may be concealed. (Section 2210)

or,

... (to) open and examine any box, trunk, envelope or other container wherever found when he has
reasonable cause to suspect the presence therein of dutiable or prohibited article or
articles introduced into the Philippines contrary to law, and likewise to stop, search and examine any
vehicle, beast or person reasonably suspected of holding or conveying such article as
aforesaid (Section 2211, emphasis supplied)

As enunciated in the leading case of Papa v. Mago 5, in the exercise of the specific functions aforecited, the Code
does not mention the need of a search warrant unlike Section 2209 which explicitly provides that a "dwelling
house may be entered and searched only upon warrant issued by a judge (or justice of the peace), upon swom
application showing probable cause and particularly describing the place to be searched and person or thing to be
seized." Aware of this delineation, the Court in that case expressed the considered view that "except in the case of
the search of a dwelling house, persons exercising police authority under the customs law may effect search and
seizure without a search warrant in the enforcement of customs laws.

The rationale of the Mago ruling was nurtured by the traditional doctrine in Carroll v. United States 6 wherein an
imprimatur against constitutional infirmity was stamped in favor of a warrantless search and seizure of such
nature as in the case at bar. On this stable foundation We refute the constitutional charge of respondents that the
warrantless seizure violated Article IV, Section 3 of the 1973 Constitution, which finds origin in the Fourth
Amendment of the American Constitution 7

The Carroll doctrine arose from the indictment and conviction of George Carroll and partner for transporting in an
automobile intoxicating liquor in violation of the National Prohibition Act. They assailed the conviction on the
ground that the trial court admitted in evidence two of the sixty-eight bottles found by searching the automobile
and eventual seizure of the same allegedly in violation of the 4th Amendment, and therefore that the use of the
liquor as evidence was improper. 8 To paraphrase the significant views of Mr. Chief Justice Taft, the legislative
history of the Act clearly established the intent of Congress to make a distinction between the necessity for a
search warrant in the search of private dwellings and that of automobiles and other road vehicles in the
enforcement of the Act. This distinction is consistent with the 4th Amendment since the latter does not denounce
an searches or seizures, but only such as are unreasonable. Searches and seizures without warrant are valid if made
upon probable cause, that is, upon a belief reasonably arising out of circumstances known to the seizing officer, that
an automobile or other vehicle contains that which by law is subject to seizure and destruction. 9 Similarly, other
statutes of the Union such as the Act of 1789, Act of August 4, 1790, and Act of March 3, 1815, among others,
construed in the light of the 4th Amendment had recognized the distinctive feature of a warrantless search of a
ship motorboat, wagon, or automobile for contraband goods where it is not practicable to secure a warrant
because the vehicle can be quickly moved out of the locality or jurisdiction in which the warrant must be
sought. 10 In such a situation, what appears to the measure of legality of the seizure was formulated in this sense:
"that the seizing officer shall have reasonable or probable cause for believing that the automobile which he stops
and seizes has contraband liquor therein which is being illegally transported. " Therein the guarantee of the 4th
Amendment was fulfilled. Where seizure is impossible except without warrant, the seizing officer acts unlawfully
and at his peril unless he can show the court probable cause. 11

The counsel for the State is candid enough to admit that the Anti-Smuggling Action Center tries its best to follow-up
the more promising tips and information from informers, but ever often, the information proves false or the
smugglers are forewarned. 12 It is quite true the ASAC received one such information several days or a week before
the encounter; but the fact that its agents failed to obtain a warrant in spite of the time allowance is not a sign that
they have been remiss in their duty. The records hardly reveal anything certain and confirmatory of the report
during the said period except the general knowledge that some highly dutiable goods would be transported from
Angeles City to Manila in a blue Dodge automobile. Not even the trial court has made any findings that ASAC has
established with exactitude the place to be searched and the person or thing to be seized. Lacking this essential
determination, the agents could not have possibly secured a valid warrant even if they had foreseen its compelling
necessity. For one thing, the information could have been just another false alarm. Providentially, however, things
turned out differently when in the morning of February 9, 1974, the undisclosed Informer himself went along with
the agents to the rendezvous point where at the appointed time he positively Identified an approaching car as the
one described by him a week earlier to be the suspected carrier of untaxed merchandise. Clearly therefore, the
agents acted not on the basis of a mere hearsay but on a confirmed information worthy of belief and probable
cause enough for them to adopt measures to freeze the fleeting event.

We need not argue that the subjective phase of the police action taken by the ASAC Agents to effect the
apprehension of the suspected violators can be anything less than the ensuing interception and stoppage of
respondents' vehicle after a short chase. Neither can We sustain the argument that in doing so, the agents violated
respondents' constitutional "liberty of travel". To recall again Mr. Chief Justice Taft: "(B)ut those lawfully within the
country, entitled to use the public highways, have a right to free passage without interruption or search unless
there is known to a competent official authorized to search, probable cause for believing that their vehicles are
carrying contraband or illegal merchandise." 13 What followed next in the scene was a simple inquiry as to the
contents of the boxes seen inside the car. Respondents' baffled denial of knowledge thereof could not but only
heighten the suspicion of a reasonable and inquisitive mind. Thus, the probable cause has not been any less
mitigated.

The purpose of the constitutional guarantee against unreasonable searches and seizures is to prevent violations of
private security in person and property and unlawful invasion of the sanctity of the home by officers of the law
acting under legislative or judicial sanction and to give remedy against such usurpation when attempted. 14 The
right to privacy is an essential condition to the dignity and happiness and to the peace and security of every
individual, whether it be of home or of persons and correspondence. 15 The constitutional inviolability of this great
fundamental right against unreasonable searches and seizures must be deemed absolute as nothing is more closer
to a man's soul than the serenity of his privacy and the assurance of his personal security. Any interference
allowable can only be for the best of causes and reasons. We draw from the context of the Constitution that an
intended search or seizure attains a high degree of propriety only when a probable cause duly determined is
branded on a warrant duly issued by a judge or other responsible person as may be authorized by law. Not
invariably, however, the reasonableness or unreasonableness of the interference is not wholly defendent on the
presence of a warrant or the lack of it. In the ordinary cases where warrant is indispensably necessary, the
mechanics prescribed by the Constitution and reiterated in the Rules of Court must be followed and satisfied. But
We need not argue that there are exceptions. Thus, in the extraordinary events where warrant is not necessary to
effect a valid search or seizure, or when the latter cannot be performed except without warrant, what constitutes a
reasonable or unreasonable search or seizure becomes purely a judicial question, determinable from the
uniqueness of the circumstances involved, including the purpose of the search or seizure, the presence or absence
of probable cause, the manner in which the search and seizure was made, the place or thing searched and the
character of the articles procured. 16

The ultimate question then, if any, that should confront the actuations of the ASAC Agents in this case is whether
the warrantless search and seizure conducted by them is lawful or not. We have already seen that what they did
was a faithful performance of a duty authorized under the Tariff and Customs Code directing them as authorized
agents to retrieve articles reasonably suspected of having been possessed, issued or procured in violation of the
tariff laws for which the government has a direct interest. The official capacity of the agents has never been
questioned by respondents. Neither did respondents raise an issue on the constitutionality of the law giving the
agents the power to act as mandated. There 'is no question that the Agents have not exceeded their authority nor
have they acted so licentiously to bear upon respondents moral embarrassment or substantial prejudice beyond
what is necessary. The purpose of the search and seizure is more than clear to Us, hence, We rule out the suspicion
that the intention is only to elicit evidence to be used against respondents.

We do not see strong justification for the trial court's failure to recognize the circumstances at bar as among the
"rare cases" which it admittedly conceded to be exempted from the requirement of a warrant. 17 The lapse lies on
the dismal gap in the trial court's developmental treat- ment of the law on arrest, search and seizure. It missed the
vital distinction emphatically laid down in Boyd v. United States 18 which was cited in Carroll with "particular
significance and applicability." Thus, We quote Mr. Justice Bradley in Boyd:

... The search and seizure of stolen or forfeited goods, or goods liable to duties and concealed to avoid
the payment thereof, are totally different things from a search for and seizure of a man's private
books and papers for the purpose of obtaining information therein contained, or of using them as
evidence against him, The two things differ in toto coelo. In the one case, the government is entitled
to the possession of the property; in the other it is not. The seizure of stolen goods is authorized by
the common law; and the seizure of goods forfeited for a breach of the revenue laws or concealed to
avoid the duties payable on them, has been authorized by English statutes for at least two centuries
past; and the like seizure have been authorized by our revenue acts from the commencement of the
government. The first statute passed by Congress to regulate the collection of duties, the Act of July
31, 1789. 1 State at L. 29, 43, chap. 5, contains provisions to this effect. As this act was passed by the
same Congress which proposed for adoption the original Amendments to the Constitution, it is clear
that the members of that body did not regard searches and seizures of this kind as 'unreasonable'
and they are not embraced within the prohibition of the Amendment. So also the supervision
authorized to be exercised by officers of the revenue over the manufacture of custody of excisable
articles, and the entries thereof in books required by law to be kept for their inspection, are
 necessarily excepted out of the category of unreasonable searches and seizures. So also the laws
which provide for the search and seizure of articles and things which it is unlawful for a person to
have in his possession for the purpose of issue or disposition, such as counterfeit coin, lottery
tickets, implements of gambling, etc. are not within this category. Commonwealth v. Dana, 2 Met
329. Many other things of this character might be enumerated. (Emphasis supplied).

Recently, in Viduya v. Berdiago 19 " this Court reiterated the controlling force of the Papa v. Mago ruling
hereinbefore cited and the persuasive authority of the leading decision in Carroll v. U.S., supra, and in explaining the
rationale of the doctrine significantly said that "(i)t is not for this Court to do less than it can to implement and
enforce the mandates of the customs and revenue laws. The evils associated with tax evasion must be stamped out
— without any disregard, it is to be affirmed, of any constitutional right ...

The circumstances of the case at bar undoubtedly fall squarely within the privileged area where search and seizure
may lawfully be effected without the need of a warrant. The facts being no less receptive to the applicability of the
classic American ruling, the latter's force and effect as well as the Mago decision must be upheld and reiterated in
this petition. the find that the constitutional guarantee has not been violated and the respondent court gravely
erred in issuing the order of August 20, 1975 declaring as inadmissible evidence the items or articles obtained and
seized by the apprehending agents without any search warrant, as well as the pictures of said items attempted to
be presented as evidence against the accused.

Notwithstanding the reversal and setting aside of the order of respondent judge assailed herein, thereby allowing
the introduction and admission of the subject prohibited articles in the trial of the accused Jessie C. Hope and
Monina Medina for alleged smuggling, in the interest of speedy justice, the prosecution is directed forthwith to re-
assess and re-evaluate the evidence at its disposal, considering the lapse of time since the trial commenced on June
28, 1975 and was thus delayed due to the filing of the instant certiorari petition and that on April 1, 1975, after
seizure proceedings initiated by the Collector of Customs, the said articles were ordered released upon payment of
the leviable duties, taxes and other charges due thereon plus a fine equivalent to 100% of the duties and taxes
thereof. After such re-assessment and re-evaluation, the prosecution must promptly take the necessary action on
the premises for the protection of the rights and interests of all parties concerned.

WHEREFORE, the Order appealed from is hereby set aside and the case is ordered remanded for further trial and
reception of evidence without excluding the articles subject of the seizure or for such action as the prosecution
may take after the re-assessment and re-evaluation of its evidence as hereinabove directed.

This judgment is immediately executory.

SO ORDERED.

Makasiar, Fernandez, De Castro * and Melencio-Herrera, JJ., concur.

Teehankee, J., files a separate opinion.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-27360 February 28, 1968

HON. RICARDO G. PAPA, as Chief of Police of Manila; HON. JUAN PONCE ENRILE, as Commissioner of
Customs; PEDRO PACIS, as Collector of Customs of the Port of Manila; and MARTIN ALAGAO, as Patrolman
of the Manila Police Department, petitioners,
vs.
REMEDIOS MAGO and HILARION U. JARENCIO, as Presiding Judge of Branch 23, Court of First Instance of
Manila, respondents.

Office of the Solicitor General for petitioners.

Juan T. David for respondents.

ZALDIVAR, J.:
 This is an original action for prohibition and certiorari, with preliminary injunction filed by Ricardo Papa,
Chief of Police of Manila; Juan once Enrile, Commissioner of Customs; Pedro Pacis, Collector of Customs of the Port
of Manila; and Martin Alagao, a patrolman of the Manila Police Department, against Remedios Mago and Hon.
Hilarion Jarencio, Presiding Judge of Branch 23 of the Court of First Instance of Manila, praying for the annulment
of the order issued by respondent Judge in Civil Case No. 67496 of the Court of First Instance of Manila under date
of March 7, 1967, which authorized the release under bond of certain goods which were seized and held by
petitioners in connection with the enforcement of the Tariff and Customs Code, but which were claimed by
respondent Remedios Mago, and to prohibit respondent Judge from further proceeding in any manner whatsoever
in said Civil Case No. 67496. Pending the determination of this case this Court issued a writ of preliminary
injunction restraining the respondent Judge from executing, enforcing and/or implementing the questioned order
in Civil Case No. 67496 and from proceeding with said case.

Petitioner Martin Alagao, head of the counter-intelligence unit of the Manila Police Department, acting upon a
reliable information received on November 3, 1966 to the effect that a certain shipment of personal effects,
allegedly misdeclared and undervalued, would be released the following day from the customs zone of the port of
Manila and loaded on two trucks, and upon orders of petitioner Ricardo Papa, Chief of Police of Manila and a duly
deputized agent of the Bureau of Customs, conducted surveillance at gate No. 1 of the customs zone. When the
trucks left gate No. 1 at about 4:30 in the afternoon of November 4, 1966, elements of the counter-intelligence unit
went after the trucks and intercepted them at the Agrifina Circle, Ermita, Manila. The load of the two trucks
consisting of nine bales of goods, and the two trucks, were seized on instructions of the Chief of Police. Upon
investigation, a person claimed ownership of the goods and showed to the policemen a "Statement and Receipts of
Duties Collected in Informal Entry No. 147-5501", issued by the Bureau of Customs in the name of a certain
Bienvenido Naguit.

Claiming to have been prejudiced by the seizure and detention of the two trucks and their cargo, Remedios
Mago and Valentin B. Lanopa filed with the Court of First Instance of Manila a petition "for mandamus with
restraining order or preliminary injunction, docketed as Civil Case No. 67496, alleging, among others, that
Remedios Mago was the owner of the goods seized, having purchased them from the Sta. Monica Grocery in San
Fernando, Pampanga; that she hired the trucks owned by Valentin Lanopa to transport, the goods from said place
to her residence at 1657 Laon Laan St., Sampaloc, Manila; that the goods were seized by members of the Manila
Police Department without search warrant issued by a competent court; that anila Chief of Police Ricardo Papa
denied the request of counsel for Remedios Mago that the bales be not opened and the goods contained therein be
not examined; that then Customs Commissioner Jacinto Gavino had illegally assigned appraisers to examine the
goods because the goods were no longer under the control and supervision of the Commissioner of Customs; that
the goods, even assuming them to have been misdeclared and, undervalued, were not subject to seizure under
Section 2531 of the Tariff and Customs Code because Remedios Mago had bought them from another person
without knowledge that they were imported illegally; that the bales had not yet been opened, although Chief of
Police Papa had arranged with the Commissioner of Customs regarding the disposition of the goods, and that
unless restrained their constitutional rights would be violated and they would truly suffer irreparable injury.
Hence, Remedios Mago and Valentin Lanopa prayed for the issuance of a restraining order, ex parte, enjoining the
above-named police and customs authorities, or their agents, from opening the bales and examining the goods, and
a writ of mandamus for the return of the goods and the trucks, as well as a judgment for actual, moral and
exemplary damages in their favor.

On November 10, 1966, respondent Judge Hilarion Jarencio issued an order ex parte restraining the
respondents in Civil Case No. 67496 — now petitioners in the instant case before this Court — from opening the
nine bales in question, and at the same time set the hearing of the petition for preliminary injunction on November
16, 1966. However, when the restraining order was received by herein petitioners, some bales had already been
opened by the examiners of the Bureau of Customs in the presence of officials of the Manila Police Department, an
assistant city fiscal and a representative of herein respondent Remedios Mago.

Under date of November 15, 1966, Remedios Mago filed an amended petition in Civil Case No. 67496,
including as party defendants Collector of Customs Pedro Pacis of the Port of Manila and Lt. Martin Alagao of the
Manila Police Department. Herein petitioners (defendants below) filed, on November 24, 1966, their "Answer with
Opposition to the Issuance of a Writ of Preliminary Injunction", denying the alleged illegality of the seizure and
detention of the goods and the trucks and of their other actuations, and alleging special and affirmative defenses, to
wit: that the Court of First Instance of Manila had no jurisdiction to try the case; that the case fell within the
exclusive jurisdiction of the Court of Tax Appeals; that, assuming that the court had jurisdiction over the case, the
petition stated no cause of action in view of the failure of Remedios Mago to exhaust the administrative remedies
provided for in the Tariff and Customs Code; that the Bureau of Customs had not lost jurisdiction over the goods
because the full duties and charges thereon had not been paid; that the members of the Manila Police Department
had the power to make the seizure; that the seizure was not unreasonable; and the persons deputized under
Section 2203 (c) of the Tariff and Customs Code could effect search, seizures and arrests in inland places in
connection with the enforcement of the said Code. In opposing the issuance of the writ of preliminary injunction,
herein petitioners averred in the court below that the writ could not be granted for the reason that Remedios Mago
was not entitled to the main reliefs she prayed for; that the release of the goods, which were subject to seizure
proceedings under the Tariff and Customs Code, would deprive the Bureau of Customs of the authority to forfeit
them; and that Remedios Mago and Valentin Lanopa would not suffer irreparable injury. Herein petitioners prayed
the court below for the lifting of the restraining order, for the denial of the issuance of the writ of preliminary
injunction, and for the dismissal of the case.

At the hearing on December 9, 1966, the lower Court, with the conformity of the parties, ordered that an
inventory of the goods be made by its clerk of court in the presence of the representatives of the claimant of the
goods, the Bureau of Customs, and the Anti-Smuggling Center of the Manila Police Department. On December 13,
1966, the above-named persons filed a "Compliance" itemizing the contents of the nine bales.

Herein respondent Remedios Mago, on December 23, 1966, filed an ex parte motion to release the goods,
alleging that since the inventory of the goods seized did not show any article of prohibited importation, the same
should be released as per agreement of the patties upon her posting of the appropriate bond that may be
determined by the court. Herein petitioners filed their opposition to the motion, alleging that the court had no
jurisdiction to order the release of the goods in view of the fact that the court had no jurisdiction over the case, and
that most of the goods, as shown in the inventory, were not declared and were, therefore, subject to forfeiture. A
supplemental opposition was filed by herein petitioners on January 19, 1967, alleging that on January 12, 1967
seizure proceedings against the goods had been instituted by the Collector of Customs of the Port of Manila, and
the determination of all questions affecting the disposal of property proceeded against in seizure and forfeiture
proceedings should thereby be left to the Collector of Customs. On January 30, 1967, herein petitioners filed a
manifestation that the estimated duties, taxes and other charges due on the goods amounted to P95,772.00. On
February 2, 1967, herein respondent Remedios Mago filed an urgent manifestation and reiteration of the motion
for the release under bond of the goods.

On March 7, 1967, the respondent Judge issued an order releasing the goods to herein respondent Remedios
Mago upon her filing of a bond in the amount of P40,000.00, and on March 13, 1967, said respondent filed the
corresponding bond.

On March 13, 1967, herein petitioner Ricardo Papa, on his own behalf, filed a motion for reconsideration of
the order of the court releasing the goods under bond, upon the ground that the Manila Police Department had
been directed by the Collector of Customs of the Port of Manila to hold the goods pending termination of the
seizure proceedings.

Without waiting for the court's action on the motion for reconsideration, and alleging that they had no plain,
speedy and adequate remedy in the ordinary course of law, herein petitioners filed the present action for
prohibition and certiorari with preliminary injunction before this Court. In their petition petitioners alleged,
among others, that the respondent Judge acted without jurisdiction in ordering the release to respondent
Remedios Mago of the disputed goods, for the following reasons: (1) the Court of First Instance of Manila, presided
by respondent Judge, had no jurisdiction over the case; (2) respondent Remedios Mago had no cause of action in
Civil Case No. 67496 of the Court of First Instance of Manila due to her failure to exhaust all administrative
remedies before invoking judicial intervention; (3) the Government was not estopped by the negligent and/or
illegal acts of its agent in not collecting the correct taxes; and (4) the bond fixed by respondent Judge for the release
of the goods was grossly insufficient.

In due time, the respondents filed their answer to the petition for prohibition and certiorari in this case. In
their answer, respondents alleged, among others: (1) that it was within the jurisdiction of the lower court presided
by respondent Judge to hear and decide Civil Case No. 67496 and to issue the questioned order of March 7, 1967,
because said Civil Case No. 67496 was instituted long before seizure, and identification proceedings against the
nine bales of goods in question were instituted by the Collector of Customs; (2) that petitioners could no longer go
after the goods in question after the corresponding duties and taxes had been paid and said goods had left the
customs premises and were no longer within the control of the Bureau of Customs; (3) that respondent Remedios
Mago was purchaser in good faith of the goods in question so that those goods can not be the subject of seizure and
forfeiture proceedings; (4) that the seizure of the goods was affected by members of the Manila Police Department
at a place outside control of jurisdiction of the Bureau of Customs and affected without any search warrant or a
warrant of seizure and detention; (5) that the warrant of seizure and detention subsequently issued by the
Collector of Customs is illegal and unconstitutional, it not being issued by a judge; (6) that the seizing officers have
no authority to seize the goods in question because they are not articles of prohibited importation; (7) that
petitioners are estopped to institute the present action because they had agreed before the respondent Judge that
they would not interpose any objection to the release of the goods under bond to answer for whatever duties and
taxes the said goods may still be liable; and (8) that the bond for the release of the goods was sufficient.

The principal issue in the instant case is whether or not, the respondent Judge had acted with jurisdiction in
issuing the order of March 7, 1967 releasing the goods in question.

The Bureau of Customs has the duties, powers and jurisdiction, among others, (1) to assess and collect all
lawful revenues from imported articles, and all other dues, fees, charges, fines and penalties, accruing under the
tariff and customs laws; (2) to prevent and suppress smuggling and other frauds upon the customs; and (3) to
enforce tariff and customs laws. 1 The goods in question were imported from Hongkong, as shown in the
"Statement and Receipts of Duties Collected on Informal Entry". 2 As long as the importation has not been
terminated the imported goods remain under the jurisdiction of the Bureau of customs. Importation is deemed
terminated only upon the payment of the duties, taxes and other charges upon the articles, or secured to be paid, at
the port of entry and the legal permit for withdrawal shall have been granted. 3 The payment of the duties, taxes,
fees and other charges must be in full. 4

The record shows, by comparing the articles and duties stated in the aforesaid "Statement and Receipts of
Duties Collected on Informal Entry" with the manifestation of the Office of the Solicitor General 5 wherein it is
stated that the estimated duties, taxes and other charges on the goods subject of this case amounted to P95,772.00
as evidenced by the report of the appraiser of the Bureau of Customs, that the duties, taxes and other charges had
not been paid in full. Furthermore, a comparison of the goods on which duties had been assessed, as shown in the
"Statement and Receipts of Duties Collected on Informal Entry" and the "compliance" itemizing the articles found
in the bales upon examination and inventory, 6 shows that the quantity of the goods was underdeclared,
presumably to avoid the payment of duties thereon. For example, Annex B (the statement and receipts of duties
collected) states that there were 40 pieces of ladies' sweaters, whereas Annex H (the inventory contained in the
"compliance") states that in bale No. 1 alone there were 42 dozens and 1 piece of ladies' sweaters of assorted
colors; in Annex B, only 100 pieces of watch bands were assessed, but in Annex H, there were in bale No. 2, 209
dozens and 5 pieces of men's metal watch bands (white) and 120 dozens of men's metal watch band (gold color),
and in bale No. 7, 320 dozens of men's metal watch bands (gold color); in Annex B, 20 dozens only of men's
handkerchief were declared, but in Annex H it appears that there were 224 dozens of said goods in bale No. 2, 120
dozens in bale No. 6, 380 dozens in bale No. 7, 220 dozens in bale No. 8, and another 200 dozens in bale No. 9. The
articles contained in the nine bales in question, were, therefore, subject to forfeiture under Section 2530, pars. e
and m, (1), (3), (4), and (5) of the Tariff and Customs Code. And this Court has held that merchandise, the
importation of which is effected contrary to law, is subject to forfeiture, 7 and that goods released contrary to law
are subject to seizure and forfeiture. 8

Even if it be granted, arguendo, that after the goods in question had been brought out of the customs area the
Bureau of Customs had lost jurisdiction over the same, nevertheless, when said goods were intercepted at the
Agrifina Circle on November 4, 1966 by members of the Manila Police Department, acting under directions and
orders of their Chief, Ricardo C. Papa, who had been formally deputized by the Commissioner of Customs, 9 the
Bureau of Customs had regained jurisdiction and custody of the goods. Section 1206 of the Tariff and Customs
Code imposes upon the Collector of Customs the duty to hold possession of all imported articles upon which duties,
taxes, and other charges have not been paid or secured to be paid, and to dispose of the same according to law. The
goods in question, therefore, were under the custody and at the disposal of the Bureau of Customs at the time the
petition for mandamus, docketed as Civil Case No. 67496, was filed in the Court of First Instance of Manila on
November 9, 1966. The Court of First Instance of Manila, therefore, could not exercise jurisdiction over said goods
even if the warrant of seizure and detention of the goods for the purposes of the seizure and forfeiture proceedings
had not yet been issued by the Collector of Customs.

The ruling in the case of "Alberto de Joya, et al. v. Hon. Gregorio Lantin, et al.," G.R. No. L-24037, decided by this
Court on April 27, 1967, is squarely applicable to the instant case. In the De Joya case, it appears that Francindy
Commercial of Manila bought from Ernerose Commercial of Cebu City 90 bales of assorted textiles and rags, valued
at P117,731.00, which had been imported and entered thru the port of Cebu. Ernerose Commercial shipped the
goods to Manila on board an inter-island vessel. When the goods where about to leave the customs premises in
Manila, on October 6, 1964, the customs authorities held them for further verification, and upon examination the
goods were found to be different from the declaration in the cargo manifest of the carrying vessel. Francindy
Commercial subsequently demanded from the customs authorities the release of the goods, asserting that it is a
purchaser in good faith of those goods; that a local purchaser was involved so the Bureau of Customs had no right
to examine the goods; and that the goods came from a coastwise port. On October 26, 1964, Francindy Commercial
filed in the Court of First Instance of Manila a petition for mandamus against the Commissioner of Customs and the
Collector of Customs of the port of Manila to compel said customs authorities to release the goods.

Francindy Commercial alleged in its petition for mandamus that the Bureau of Customs had no jurisdiction
over the goods because the same were not imported to the port of Manila; that it was not liable for duties and taxes
because the transaction was not an original importation; that the goods were not in the hands of the importer nor
subject to importer's control, nor were the goods imported contrary to law with its (Francindy Commercial's)
knowledge; and that the importation had been terminated. On November 12, 1964, the Collector of Customs of
Manila issued a warrant of seizure and identification against the goods. On December 3, 1964, the Commissioner of
Customs and the Collector of Customs, as respondents in the mandamus case, filed a motion to dismiss the petition
on the grounds of lack of jurisdiction, lack of cause of action, and in view of the pending seizure and forfeiture
proceedings. The Court of First Instance held resolution on the motion to dismiss in abeyance pending decision on
the merits. On December 14, 1964, the Court of First Instance of Manila issued a preventive and mandatory
injunction, on prayer by Francindy Commercial, upon a bond of P20,000.00. The Commissioner of Customs and the
Collector of Customs sought the lifting of the preliminary and mandatory injunction, and the resolution of their
motion to dismiss. The Court of First Instance of Manila, however, on January 12, 1965, ordered them to comply
with the preliminary and mandatory injunction, upon the filing by Francindy Commercial of an additional bond of
P50,000.00. Said customs authorities thereupon filed with this Court, on January 14, 1965, a petition
for certiorari and prohibition with preliminary injunction. In resolving the question raised in that case, this Court
held:

This petition raises two related issues: first, has the Customs bureau jurisdiction to seize the goods
and institute forfeiture proceedings against them? and (2) has the Court of First Instance jurisdiction to
entertain the petition for mandamus to compel the Customs authorities to release the goods?

Francindy Commercial contends that since the petition in the Court of first Instance was filed (on
October 26, 1964) ahead of the issuance of the Customs warrant of seizure and forfeiture (on November 12,
1964),the Customs bureau should yield the jurisdiction of the said court.

The record shows, however, that the goods in question were actually seized on October 6, 1964, i.e.,
before Francindy Commercial sued in court. The purpose of the seizure by the Customs bureau was to
verify whether or not Custom duties and taxes were paid for their importation. Hence, on December 23,
1964, Customs released 22 bales thereof, for the same were found to have been released regularly from the
Cebu Port (Petition Annex "L"). As to goods imported illegally or released irregularly from Customs
custody, these are subject to seizure under Section 2530 m. of the Tariff and Customs Code (RA 1957).

The Bureau of Customs has jurisdiction and power, among others to collect revenues from imported
articles, fines and penalties and suppress smuggling and other frauds on customs; and to enforce tariff and
customs laws (Sec. 602, Republic Act 1957).

The goods in question are imported articles entered at the Port of Cebu. Should they be found to have
been released irregularly from Customs custody in Cebu City, they are subject to seizure and forfeiture, the
proceedings for which comes within the jurisdiction of the Bureau of Customs pursuant to Republic Act
1937.

Said proceeding should be followed; the owner of the goods may set up defenses therein (Pacis v.
Averia, L-22526, Nov. 20, 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 and Customs Code and deprive the Court
of Tax Appeals of one of its exclusive appellate jurisdictions. As this Court has ruled in Pacis v.
Averia, supra, Republic Acts 1937 and 1125 vest jurisdiction over seizure and forfeiture proceedings
exclusively upon the Bureau of Customs and the Court of Tax Appeals. Such law being special in nature,
while the Judiciary Act defining the jurisdiction of Courts of First Instance is a general legislation, not to
mention that the former are later enactments, the Court of First Instance should yield to the jurisdiction of
the Customs authorities.

It is the settled rule, therefore, that the Bureau of Customs acquires exclusive jurisdiction over imported
goods, for the purposes of enforcement of the customs laws, from the moment the goods are actually in its
possession or control, even if no warrant of seizure or detention had previously been issued by the Collector of
Customs in connection with seizure and forfeiture proceedings. In the present case, the Bureau of Customs actually
seized the goods in question on November 4, 1966, and so from that date the Bureau of Customs acquired
jurisdiction over the goods for the purposes of the enforcement of the tariff and customs laws, to the exclusion of
the regular courts. Much less then would the Court of First Instance of Manila have jurisdiction over the goods in
question after the Collector of Customs had issued the warrant of seizure and detention on January 12, 1967. 10And
so, it cannot be said, as respondents contend, that the issuance of said warrant was only an attempt to divest the
respondent Judge of jurisdiction over the subject matter of the case. The court presided by respondent Judge did
not acquire jurisdiction over the goods in question when the petition for mandamus was filed before it, and so
there was no need of divesting it of jurisdiction. Not having acquired jurisdiction over the goods, it follows that the
Court of First Instance of Manila had no jurisdiction to issue the questioned order of March 7, 1967 releasing said
goods.

Respondents also aver that petitioner Martin Alagao, an officer of the Manila Police Department, could not
seize the goods in question without a search warrant. This contention cannot be sustained. The Chief of the Manila
Police Department, Ricardo G. Papa, having been deputized in writing by the Commissioner of Customs, could, for
the purposes of the enforcement of the customs and tariff laws, effect searches, seizures, and arrests, 11 and it was
his duty to make seizure, among others, of any cargo, articles or other movable property when the same may be
subject to forfeiture or liable for any fine imposed under customs and tariff laws. 12 He could lawfully open and
examine any box, trunk, envelope or other container wherever found when he had reasonable cause to suspect the
presence therein of dutiable articles introduced into the Philippines contrary to law; and likewise to stop, search
and examine any vehicle, beast or person reasonably suspected of holding or conveying such article as
aforesaid. 13 It cannot be doubted, therefore, that petitioner Ricardo G. Papa, Chief of Police of Manila, could
lawfully effect the search and seizure of the goods in question. The Tariff and Customs Code authorizes him to
demand assistance of any police officer to effect said search and seizure, and the latter has the legal duty to render
said assistance. 14This was what happened precisely in the case of Lt. Martin Alagao who, with his unit, made the
search and seizure of the two trucks loaded with the nine bales of goods in question at the Agrifina Circle. He was
given authority by the Chief of Police to make the interception of the cargo. 15

Petitioner Martin Alagao and his companion policemen had authority to effect the seizure without any search
warrant issued by a competent court. The Tariff and Customs Code does not require said warrant in the instant
case. The Code authorizes persons having police authority under Section 2203 of the Tariff and Customs Code to
enter, pass through or search any land, inclosure, warehouse, store or building, not being a dwelling house; and
also to inspect, search and examine any vessel or aircraft and any trunk, package, 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, without mentioning the need of a
search warrant in said cases. 16 But in the search of a dwelling house, the Code provides that said "dwelling house
may be entered and searched only upon warrant issued by a judge or justice of the peace. . . ." 17 It is our considered
view, therefor, that except in the case of the search of a dwelling house, persons exercising police authority under
the customs law may effect search and seizure without a search warrant in the enforcement of customs laws.

Our conclusion finds support in the case of Carroll v. United States, 39 A.L.R., 790, 799, wherein the court,
considering a legal provision similar to Section 2211 of the Philippine Tariff and Customs Code, said as follows:

Thus contemporaneously with the adoption of the 4th Amendment, we find in the first Congress, and
in the following second and fourth Congresses, a difference made as to the necessity for a search warrant
between goods subject to forfeiture, when concealed in a dwelling house of similar place, and like goods in
course of transportation and concealed in a movable vessel, where readily they could be put out of reach of
a search warrant. . . .

Again, by the 2d section of the Act of March 3, 1815 (3 Stat. at L.231, 232, chap. 94), it was made lawful
for customs officers not only to board and search vessels within their own and adjoining districts, but also
to stop, search and examine any vehicle, beast or person on which or whom they should suspect there was
merchandise which was subject to duty, or had been introduced into the United States in any manner
contrary to law, whether by the person in charge of the vehicle or beast or otherwise, and if they should
find any goods, wares, or merchandise thereon, which they had probably cause to believe had been so
unlawfully brought into the country, to seize and secure the same, and the vehicle or beast as well, for trial
and forfeiture. This Act was renewed April 27, 1816 (3 Sta. at L. 315, chap. 100), for a year and expired. The
Act of February 28, 1865, revived § 2 of the Act of 1815, above described, chap. 67, 13 Stat. at L. 441. The
substance of this section was re-enacted in the 3d section of the Act of July 18, 1866, chap. 201, 14 Stat. at L.
178, and was thereafter embodied in the Revised Statutes as § 3061, Comp. Stat. § 5763, 2 Fed. Stat. Anno.
2d ed. p. 1161. Neither § 3061 nor any of its earlier counterparts has ever been attacked as
unconstitutional. Indeed, that section was referred to and treated as operative by this court in Von
Cotzhausen v. Nazro, 107 U.S. 215, 219, 27 L. ed. 540, 541, 2 Sup. Ct. Rep. 503. . . .

In the instant case, we note that petitioner Martin Alagao and his companion policemen did not have to make
any search before they seized the two trucks and their cargo. In their original petition, and amended petition, in the
court below Remedios Mago and Valentin Lanopa did not even allege that there was a search. 18 All that they
complained of was,

That while the trucks were on their way, they were intercepted without any search warrant near the
Agrifina Circle and taken to the Manila Police Department, where they were detained.

But even if there was a search, there is still authority to the effect that no search warrant would be needed
under the circumstances obtaining in the instant case. Thus, it has been held that:

The guaranty of freedom from unreasonable searches and seizures is construed as recognizing a
necessary difference between a search of a dwelling house or other structure in respect of which a search
warrant may readily be obtained and a search of a ship, motorboat, wagon, or automobile for contraband
goods, where it is not practicable to secure a warrant because the vehicle can be quickly moved out of the
locality or jurisdiction in which the warrant must be sought. (47 Am. Jur., pp. 513-514, citing Carroll v.
United States, 267 U.S. 132, 69 L. ed., 543, 45 S. Ct., 280, 39 A.L.R., 790; People v. Case, 320 Mich., 379, 190
N.W., 389, 27 A.L.R., 686.)

In the case of People v. Case (320 Mich., 379, 190 N.W., 389, 27 A.L.R., 686), the question raised by defendant's
counsel was whether an automobile truck or an automobile could be searched without search warrant or other
process and the goods therein seized used afterwards as evidence in a trial for violation of the prohibition laws of
the State. Same counsel contended the negative, urging the constitutional provision forbidding unreasonable
searches and seizures. The Court said:

. . . Neither our state nor the Federal Constitution directly prohibits search and seizure without a
warrant, as is sometimes asserted. Only "unreasonable" search and seizure is forbidden. . . .

. . . The question whether a seizure or a search is unreasonable in the language of the Constitution is a
judicial and not a legislative question; but in determining whether a seizure is or is not unreasonable, all of
the circumstances under which it is made must be looked to.

The automobile is a swift and powerful vehicle of recent development, which has multiplied by
quantity production and taken possession of our highways in battalions until the slower, animal-drawn
vehicles, with their easily noted individuality, are rare. Constructed as covered vehicles to standard form in
immense quantities, and with a capacity for speed rivaling express trains, they furnish for successful
commission of crime a disguising means of silent approach and swift escape unknown in the history of the
world before their advent. The question of their police control and reasonable search on highways or other
public places is a serious question far deeper and broader than their use in so-called "bootleging" or "rum
running," which is itself is no small matter. While a possession in the sense of private ownership, they are
but a vehicle constructed for travel and transportation on highways. Their active use is not in homes or on
private premises, the privacy of which the law especially guards from search and seizure without process.
The baffling extent to which they are successfully utilized to facilitate commission of crime of all degrees,
from those against morality, chastity, and decency, to robbery, rape, burglary, and murder, is a matter of
common knowledge. Upon that problem a condition, and not a theory, confronts proper administration of
our criminal laws. Whether search of and seizure from an automobile upon a highway or other public place
without a search warrant is unreasonable is in its final analysis to be determined as a judicial question in
view of all the circumstances under which it is made.

Having declared that the seizure by the members of the Manila Police Department of the goods in question
was in accordance with law and by that seizure the Bureau of Customs had acquired jurisdiction over the goods for
the purpose of the enforcement of the customs and tariff laws, to the exclusion of the Court of First Instance of
Manila, We have thus resolved the principal and decisive issue in the present case. We do not consider it necessary,
for the purposes of this decision, to discuss the incidental issues raised by the parties in their pleadings.

WHEREFORE, judgment is hereby rendered, as follows:

(a) Granting the writ of certiorari and prohibition prayed for by petitioners;

(b) Declaring null and void, for having been issued without jurisdiction, the order of respondent Judge
Hilarion U. Jarencio, dated March 7, 1967, in Civil Code No. 67496 of the Court of First Instance of Manila;

(c) Declaring permanent the preliminary injunction issued by this Court on March 31, 1967 restraining
respondent Judge from executing, enforcing and/or implementing his order of March 7, 1967 in Civil Case No.
67496 of the Court of First Instance of Manila, and from proceeding in any manner in said case;

(d) Ordering the dismissal of Civil Case No. 67496 of the Court of First Instance of Manila; and1äwphï1.ñët

(e) Ordering the private respondent, Remedios Mago, to pay the costs.

It is so ordered.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Sanchez, Castro, Angeles and Fernando, JJ.,
concur.1äwphï1.ñët
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-27149 March 14, 1979

KURT NILSEN, DAGPIN LUNOGREN, HELGE HELGSESEN, in their capacity as crew members of the S/S
"FERNSIDE" and MACONDRAY & COMPANY, INC., in its capacity agent of the S/S "FERNSIDE", petitioners,
vs.
COMMISSIONER OF CUSTOMS, respondent.

Ross, Salcedo, Del Rosario, Bito & Misa for petitioners.

Solicitor General Antonio P. Barredo, Assistant Solicitor General Frine' C. Zaballero and Solicitor Rosalio A. de Leon for
respondent.

FERNANDO, J.:

The failure to make out a case for the reversal of the assailed decision of respondent Court of Tax Appeals
sustaining the actuation of the Commissioner of Customs affirming a forfeiture decreed by the Acting Collector of
Customs, is understandable. The goods, subject of such proceedings, consisted of 108 cartons of unmanifested
cigarettes found inside the Cabins of petitioners, crew members of the vessel Fernside. The Customs authorities
started the seizure proceedings in accordance with the Tariff and Customs Code. 1

The nature of the case and the facts are set forth in the appealed decision thus: "This is a petition to review the
decision of the respondent Commissioner of Customs dated December 14, 1964, affirming that of the Acting
Collector of Customs in Seizure Identification No. 6496, decreeing the forfeiture of twelve (12) cartons Salem
cigarettes, nine (9) cartons Salem cigarettes, eight (8) cartons Salem cigarettes, one (1) carton Chesterfield
cigarettes, seventy-nine (79) cartons Salem cigarettes and two (2) cartons Kent cigarettes for violation of Section
2530(g) of the Tariff and Customs Code, in relation to Section 1005 of the same Code. It appears that the cigarettes
in question were discovered inside the cabin of three crew members of a foreign vessel, named S/S 'FERNSIDE',
during a search conducted by a team of customs agents in the Port of Manila on July 10, 1962. Since the said
cigarettes were not manifested at the time of discovery and were found in the cabin, apparently concealed, they
were seized by the customs agents for violation of Section 2530(g) of the Tariff and Customs Code, and,
subsequently, were made subject of Seizure Identification No. 6496 with Kurt Nilsen, Dagpin Lunogren and
Helgsesen, crew members of S/S 'FERNSIDE' and Macondray & Company, Inc., agent of said vessel, appearing as
claimants. On July 1, 1964, after due hearing, the Acting Collector of Customs rendered a decision decreeing the
forfeiture of the seized cigarettes, which decision, on appeal to the Commissioner of Customs, was affirmed by the
latter in his decision dated December 14, 1964. 2

The issue was set forth in the appealed decision thus: "The principal issue raised for our determination is whether
the articles in question are subject to forfeiture for violation of Section 2530(g) of the Tariff and Customs Code, in
relation to Section 1005 of the same Code, the pertinent portions of which, respectively, provide 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: ... (g) Unmanifested article found on any
vessel for aircraft, if manifest therefor is required ... Sec. 1005. Manifest Required of Vessel From Foreign Port. —
Every vessel from a foreign port must have on board a complete manifest of all her cargo. ... Every vessel from a
foreign port must have on board complete manifest of passengers and their baggage, in the prescribed form,
setting forth their destination and all particulars required by the immigration laws; and every such vessel shall
haveprepared for presentation to the proper customs official upon arrival in ports of the Philippines a complete list
of all sea stores then on board ... 3

The well-written decision of the late Associate Judge Ramon L. Avancena of respondent Court then proceeded to
set forth the contention of petitioners: "Petitioners maintain that under the above-quoted law the cigarettes in
question are not subject to forfeiture inasmuch as they do not constitute cargo of the vessel but are part of the sea
stores or provision of the ship that need no manifest. We are in accord with the petitioners that sea stores need to
manifest for the consistent ruling of the Supreme Court is that it is enough that they are contained in 'a complete
fist of all ship's stores.' ... However, it is not correct to say that said cigarettes were part of the sea stores because in
point of fact they were not. The cigarettes were not found in the slope chest where generally they are kept but in
the crew's cabin, apparently concealed, and were not in the list of sea stores. 4
Why the decision reached necessarily had to be adverse to petitioners was explained in a clear and logical manner:
"In fine, the cigarettes in question did not appear in the manifest, did not appear in the sea stores list, and no claim
has been made that they were in the passenger baggage manifest or crew's declaration. The only reasonable
inference is that they were unmanifested cargoes. Cargo has been construed by our Supreme Court to include all
goods, wares, and merchandise aboard ship which do not form part of the ship's stores (U.S. v. Islas
Filipinos, supra). It has also been said that the word ,cargo' refers to the 'entire lading of the ship which carries it'
and includes all goods, wares and merchandise, effects, and indeed everything of every kind or description, found
on board, except such things as are used or intended for use in connection with the management or direction of the
vessel, and are not intended for delivery at any port of call and except also, perhaps, 'passengers or immigrants and
their baggage.' (U.S. v. S.S. Rubi 32 Phil. 228). This broad definition of cargo obviously embraces the cigarettes in
question. 5

How then could petitioners nurture the legitimate expectation that a reversal of the Court of Tax Appeals decision
is warranted? As noted at the outset, we affirm.

1. This Court, in Balbas v. Domingo, 6 affirming a decision of the Court of Tax Appeals, reiterated the authoritative
doctrine with reference to the force and effect to which an appraisal of the facts by the Court of Tax Appeals is
entitled. Thus: "No other conclusion is possible in view of the well-settled principle that this Court is bound by the
finding of facts of the Court of Tax Appeals, only questions of law being open to it for determination. As stated in
another decision, 'only errors of law, and not rulings on the weight of evidence, are reviewable by this Court.' The
facts then as above ascertained cannot be disturbed. In our latest decision, there is a categorical assertion that
where the question is one of fact, it is no longer reviewable. 7 That doctrine has been adhered to in subsequent
cases. 8

2. Nor is the force of the above controlling concept minimized by allegations of petitioners which, if justified, could
give rise to a procedural due process question on the ground of arbitrariness on the part of respondent Court,
when it concluded that the cartons of cigarettes in question fen under the category of unmanifested cargoes. What
had been set forth earlier would indicate that it so considered them, but only after a thorough scrutiny of the
undoubted facts. As was set forth by the late Judge Avancena, the cigarettes "were not found in the slope chest
where generally they are kept but in the crew's cabin, apparently concealed, and were not in the Hat of sea
stores. 9 It thus arrived at the "reasonable inference" that they were in fact unmanifested cargoes as "the cigarettes
in question did not appear in the manifest, did not appear in the sea stores list, and no claims has been made that
they were in the passenger baggage manifest or crew's declaration. 10 Nor is that all. To indicate the circumspection
that characterized the decision-making process of respondent Court, there is this appraisal of the evidence for
petitioners: "We find no merit in the testimony of Dominador Bergano, Chief of Claims of petitioner Macondray &
Co. to the effect that the cigarettes in question were in the list of sea stores and that they had been to the crew for
consumption and receipted for by them This witness learned of the seizure two days after it took place after which
he conducted an investigation for petitioner Macondray & Co. that represented the vessel. He is in no position to
have knowledge of his own as to what transpired during the seizure. On the other hand, considering the
circumstances of this case, his testimony is hardly probable. If the same were true, for sure petitioners would have
presented the sea stores list, the receipts for the cigarettes, and the crew's declaration, for these are vital pieces of
evidence for them but this was never done. It is Idle for him to explain that these papers were brought by the
officers of the vessel. The ship is liable to penalties for unmanifested cargoes, and the ship's officers certainly had
every interest to leave said papers for evidence to forestall penalties against the ship. Port regulation, furthermore,
allows the vessel to release only 1 carton of cigarettes for each member of the crew for every 25 hours of stay in
port but significantly enough 12 cartons of Salem 9 cartons of Salem 8 cartons of Salem and 1 carton of
Chesterfield, quantities of cigarettes far in excess of regulations, were found in thepossession of Kurt Nilsen,
Dagpin Lunogren and Helge Hegsesen, respectively, while 79 cartons of Salem and 1 carton of Kent had no
claim. 11 There is nothing, therefore, in the appealed decision that could be fitly stigmatized as indicated of
arbitrariness or caprice, the presence of which would give rise to a valid procedural due process objection.

WHEREFORE, the appealed decision of respondent Court of Tax Appeal is affirmed. With costs.

Antonio, Concepcion, Jr., Santos and Abad Santos, JJ., concur. Barredo, J., took no part.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-28809 May 16, 1983

JULIO LLAMADO, petitioner-appellant,

vs.
COMMISSIONER OF CUSTOMS, respondent-appellee.
Armando & Padilla for petitioner.

The Solicitor General for respondent.

PLANA, J.:

The facts are undisputed. On April 9, 1966, at about 11:00 o'clock A.M., Cessna plane P.I. C-494 landed at the Alabat
airstrip, Quezon Province, with four persons on board, namely: Romeo Palencia, Osias Mission, Jacob Lim, and one
Identified only as a Chinese mestizo. A few minutes later the plane took off, piloted by Osias Mission, leaving
behind his three companions who told CAA employees at Alabat that they would have a picnic. The Chinese
mestizo later told Francisco de Leon, a CAA employee, that His group would use the airstrip in landing contraband
good and offered P1,500.00 to de Leon which the latter refused. Romeo Palencia, Jacob Lim, and the Chinese
mestizo were picked up by the same Cessna plane at about 1:00 P.M.

At about 5:00 P.M. of the same day, a DC-3 plane (P.I. C-718) landed at the Alabat airstrip. On board were Jesus
Granda and Osias Mission. It was followed by Cessna plane P.I. C494, which unloaded two boxes containing "de
gaza" lamps and two cases of kerosene, after which it took off leaving the DC-3.

At about 11:00 o'clock of that night, a motorized banca unloaded cases of "FORTUNE" blue seal cigarettes at the tip
of the Alabat airstrip, making several trips between the shore and a vessel lying offshore from where the cigarettes
were taken, From the shore, the cigarettes were loaded on board the DC-3 plane by laborers hired by the Chinese
mestizo. Some four hours later, after about 300 cases of blue seal cigarettes had been loaded, the DC-3 took off,
guided by the lighted "de gaza" lamps brought earlier by the Cessna plane.

The following: day, the DC-3 returned to Alabat, loaded the remaining cases of "FORTUNE" blue seal cigarettes, and
took off for Porac, Pampanga.

All the landings and take offs of the planes were not recorded in the logbook at Alabat because their pilots refused
to sign the same.

A warrant of seizure and detention of the Cessna plane, P.I. C-494, was issued on June 1, 1966 by the Collector of
Customs of the Port of Siain, Quezon Province, for violation of Section 2530 of the Tariff and Customs Code. After
hearing, a decision was rendered by the Collector of Customs declaring the forfeiture of the Cessna plane pursuant
to Section 2530 (a) of the said Code, which was later affirmed by the Commissioner Of Customs. Subsequently,
upon the filing by petitioner of a P30,000.00 surety bond, the Cessna plane was released to him.

On appeal the Court of Tax Appeals sustained the decision of the Commissioner of Customs, thus:

WHEREFORE, the decision appealed from is hereby affirmed. The forfeited Cessna plane P.I. C-494
having been released to petitioner and secured by the Philippine Motor Assurance Corporation
(PMAC) Bond No. 267... said bond is hereby forfeited in favor of the Government. Petitioner Julio
Llamado and the Philippine Motor Assurance Corporation are hereby ordered to pay, jointly and
severally, to the Collector of Customs of Slain, or any of his authorized representatives, the amount
of P30,000.00 corresponding to the appraised value of the forfeited Cessna plane within thirty days
from the date this decision becomes final.

Dissatisfied, petitioner has appealed to this Court by way of petition for review.

Petitioner-owner of the Cessna plane contends that the plane cannot be forfeited under Section 2530 (a) of the
Tariff and Customs Code for it did not come from a foreign country nor did it carry or unload cigarettes in any place
in the Philippines. While not claiming ignorance of the smuggling operation for which his plane was used,
petitioner further argues that the Cessna plane cannot be deemed to have been "used" in smuggling since it was
not actually used in transporting the cigarettes but was merely used to bring the "de gaza" lamps to the Alabat
airstrip. As averred in petitioner's brief-

The Cessna plane was used in the bringing of the "de Gaza" lanterns at Alabat Airstrip. That was its
purpose and nothing more. The "de Gaza" lanterns were used to light the airstrip so that the DC-3
plane P.I. C-718 may be able to take off. That was the purpose of the lanterns. The DC-3 plane P.I. C-
718 was used to carry the cigarettes from Alabat Island to Porac, Pampanga. That was its purpose.
What was used unlawfully in the importation of the blue seal cigarettes from outside the territorial
jurisdiction of the Philippine waters with intention to unload. ...
 The most that can be said of the Cessna plane in connection with this case is that it was used or
employed to aid in or facilitate the unlawful importation of the cigarettes. But unfortunately,
vehicles, vessels, or aircrafts used or employed to aid in or facilitate the unlawful importations of
articles into the Philippines are not subject to forfeiture under Philippine laws. (pp. 12-13.)

The issue thus raised is whether or not the Cessna plane was used in the unlawful importation of cigarettes within
the meaning of Section 2530 (a) of the Tariff and Customs Code, which reads:

Any vessel or aircraft, cargo or articles and other objects shall, under the following: conditions, be
subject to forfeiture:

(a) Any vessel or aircraft, including cargo, which shall be used unlawfully in the importation or
exportation of articles into or from any Philippine ports or place except a port of entry, and any vessel
which, being of less than thirty tons capacity shall be used in the importation of articles into any
Philippine port or place except into a port of the Sulu sea where importation in such vessel may be
authorized by the Commissioner, with the approval of the department head.

Under the foregoing legal provision, in order to warrant forfeiture, it is not necessary that the vessel or aircraft
must itself carry the contraband. There is nothing in the law that so requires.

Nor is it essential that the vessel or aircraft must come from a foreign country, as argued by the petitioner. The
same contention was urged without success by the owner of the forfeited vessel in C.F. Sharp & Co., Inc. vs.
Commissioner of Customs, 22 SCRA 760.

It is contended that the M/L Cheton should not be ordered forfeited because . . . it was not used to
transport said cigarettes from a foreign port to any port or place in the Philippines.

C.F. Sharp & Co., Inc. maintains proceedings. that paragraph a Section 2530 of the Tariff and
Customs Code does not apply to the instant case inasmuch as it was not proved that M/L Cheton
was unlawfully used in the importation of articles into any Philippine port.

There is no question that M/L Cheton was apprehended carrying untaxed cigarettes of foreign
origin without the necessary papers showing that they were entered lawfully through a port of
entry. There is no question also that said cigarettes were liable for forfeiture pursuant to the
Customs and Tariff Code. On the basis of the aforestated facts, the conclusion is inevitable that the
M/L Cheton was used in connection with unlawful importation of said cigarettes, The burden was
therefore shifted to the boat's owner to show that the carriage by M/L Cheton of the smuggled
cigarettes was lawful. No such showing was made. Hence, the Court of Tax Appeals committed no
error in ordering the forfeiture of the launch in question. (pp. 762-764.)

In the case at bar, it is undeniable that the Alabat adventure was entirely and solely a smuggling operation; and the
Cessna was deliberately used to insure its successful prosecution. It brought the smugglers to Alabat and
subsequently delivered the necessary lighting paraphernalia to enable the cargo plane to take off without peril and
transport the smuggled cigarettes to Luzon.

In our view, this complementary, if collateral, use of the Cessna for smuggling operation is sufficient for it to be
deemed to have been used unlawfully in the importation or smuggling of blue seal cigarettes. Note that
"importation", by law, commences when the carrying vessel or aircraft enters the jurisdiction of the Philippines
with intention to unload; and it is "deemed terminated (only) upon payment of the duties, taxes and other charges
due upon the articles, or (the same has been) secured to be paid ... and the legal permit for withdrawal shall have
been granted." (Tariff and Customs Code, Section 1202.) The participation of the Cessna, as above described, was
legally an active involvement of the said plane in, and constituted an unlawful use thereof for, smuggling or illegal
importation within the meaning of Section 2530 (a) of the Tariff and Customs Code.

WHEREFORE, the decision of the Court of Tax Appeals under review is hereby affirmed. Costs against the
petitioner.

SO ORDERED.

Teehankee (Actg.) C.J., Escolin, * Vasquez and Gutierrez, Jr., JJ., concur.

Melencio-Herrera and Relova, JJ., concur.

Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. Nos. L-31776-78 October 21, 1993

THE COMMISSIONER OF CUSTOMS, petitioner,

vs.
MANILA STAR FERRY, INC., UNITED NAVIGATION & TRANSPORT CORPORATION, CEABA SHIPPING AGENCY,
INC., and THE COURT' OF TAX APPEALS, respondents.

The Solicitor General for petitioner.

Tañada, Vivo & Tan for private respondents.

Valentino G. Castro & Associates for CEABA.

QUIASON, J.:

This is a petition for review under Rule 44 of the Revised Rules of Court filed by the Commissioner of Customs to
set aside the consolidated Decision dated September 30, 1969 of the Court of Tax Appeals in C.T.A. Cases Nos.
1836, 1837 and 1839, modifying his decision by ordering only the payment of a fine, in lieu of the forfeiture of
private respondents vessels used in the smuggling of foreign-made cigarettes and other goods.

Private respondents Manila Star Ferry, Inc. and the United Navigation & Transport Corporation are domestic
corporations engaged in the lighterage business and are the owners and operators, respectively, of the tugboat
Orestes and the barge-lighter UN-L-106. Private respondent Ceaba Shipping Agency, Inc. (Ceaba) is the local
shipping agent of the Chiat Lee Navigation Trading Co. of Hongkong, the registered owner and operator of the S/S
Argo, an ocean-going vessel.

On June 12, 1966, the S/S Argo, the Orestes and the UN-L-106, as well as two wooden bancas of unknown
ownership, were apprehended for smuggling by a patrol boat of the Philippine Navy along the Explosives
Anchorage Area of Manila Bay. the patrol boat caught the crew of the S/S Argo in the act of unloading foreign-made
goods onto the UN-L-106, which was towed by the Orestes and escorted by the two wooden bancas. The goods of
330 cases of foreign-made cigarettes, assorted ladies' wear, clothing material and plastic bags, all of which were
not manifested and declared by the vessel for discharge in Manila. No proper notice of arrival of the S/S Argo was
given to the local customs authorities.

Thereafter, seizure and forfeiture proceedings were separately instituted before the Collector of Customs for the
Port of Manila against the S/S Argo (Seizure Identification Case No. 10009, Manila) and its cargo (S.I. No. 10009-C,
Manila), the Orestes (S.I. No. 10009-A, Manila), the UN-L-106 (S.I. No. 1009-B, Manila) and the two bancas (S.I. No.
10009-D, Manila), charging them with violations of Section 2530 (a), (b) and (c) of the Tariff and Customs Code.
Criminal charges were likewise filed against the officers and crew of said vessels and watercraft.

In the seizure and forfeiture proceedings, the Collector of Customs rendered a consolidated decision dated
December 27, 1966, declaring the forfeiture of said vessels and watercraft in favor of the Philippine government by
virtue of Section 2530 (a) and (b) of the Tariff and Customs Code.

All respondents therein, except the owner of the two wooden bancas, separately appealed the consolidated
decision of the Collector of Customs for the Port of Manila to the Commissioner of Customs. In his Decision dated
February 1, 1967, the Acting Commissioner of Customs found the Collector's decision to be in order and affirmed
the same accordingly.

The same respondents separately elevated the matter to the Court of Tax Appeals (C.T.A. Cases Nos. 1836, 1837
and 1839), which in a consolidated decision dated September 30, 1989, substantially modified the decision of the
Commissioner of Customs, stating thus:
 IN VIEW OF THE FOREGOING, the Manila Star Ferry, Inc., petitioner in C.T.A. Case No. 1836, and the
United Navigation & Transport Corporation, petitioner in C.T.A. Case No. 1837, are each hereby
ordered to pay a fine of five thousand pesos (P5,000.00) and Ceaba Shipping Agency, Inc., petitioner
in C.T.A. Case No. 1839, a fine of ten thousand pesos (P10,000.00), within thirty days from the date
this decision becomes final (Rollo, p., 100).

It is this decision of the Court of Tax Appeals that is being questioned by the Commissioner of Customs before this
Court.

On February 7, 1978, petitioner filed a Motion to Allow Sale of the Vessel (S/S Argo), informing this Court that the
said vessel was deteriorating and depreciating in value, and was congesting the Cavite Naval Base where it was
berthed. Petitioner prayed that it be allowed to sell the S/S Argo at the best possible price. The Court granted
petitioner's motion.

An Urgent Motion for Modification was filed by respondent Ceaba, praying that it, instead of petitioner, be allowed
to sell the S/S Argo through a negotiated sale and not a public sale. In a resolution dated May 12, 1978, this Court
granted respondent Ceaba's motion, ordering it, however, to first pay the fine of P10,000.00 stated in the decision
of the Commissioner of Customs and then "deposit the proceeds of the sale with a reputable commercial bank in an
interest bearing account in trust for whosoever will prevail in the cases at bar" (Rollo, p. 317). A manager's check in
the amount of P10,000.00 was made payable to the Commissioner of Customs and was delivered y the respondent
Ceaba to the Cashier of the Supreme Court. In the Resolution of July 9, 1978, this payment was accepted, subject to
the Court's decision in the case (Rollo, p. 327). The S/S Argo was sold, with this Court's approval, for P125,000.00
to one Severino Caperlac. The proceeds were subjected to the charging lien of respondent Ceaba's attorneys in the
amount of P315,000.00 (Rollo, p. 402).

The petition for review posits the theory that the subject vessels and watercraft were engaged in smuggling, and
that the S/S Argo should be forfeited under Section 2530 (a), while the barge UN-L-106 and tugboat Orestes should
be forfeited under Section 2530 (c) of the Tariff and Customs Code.

Section 2530 (a) and (c) of said law reads 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:

(a) Any vessel or aircraft, including cargo, which shall, be used unlawfully in the importation or
exportation of articles into or from any Philippine port or place except a port of entry; and any
vessel which, being of less than thirty tons capacity shall be used in the importation of articles into
any Philippine port or place except into a port of the Sulu sea where importation in such vessel may
be authorized by the Commissioner, with the approval of the department head.

xxx xxx xxx

(c) Any vessel or aircraft into which shall be transferred cargo unladen contrary to law prior to the
arrival of the importing vessel or aircraft at her port of destination.

The penalty of forfeiture is imposed on any vessel, engaged in smuggling if the conditions enumerated in Section
2530 (a) are compresent.

These conditions are:

(1) The vessel is "used unlawfully in the importation or exportation of articles into or from" the Philippines;

(2) The articles are imported or exported into or from "any Philippine port or place, except a port of entry;" or

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

There is no question that the vessel S/S Argo was apprehended while unloading goods of foreign origin onto the
barge UN-L-106 and the tugboat Orestes, without the necessary papers showing that the goods were entered
lawfully though a port of entry and that taxes and duties on said goods had been paid. The claim that the S/S Argo
made an emergency call at the Port of Manila for replacement of crew members and had to stop at the Explosives
Anchorage Area because it was carrying nitric acid, a dangerous cargo, cannot be upheld, much less given credence
by this Court. The facts found by the Court of Tax Appeals are in consonance with the findings of the Collector of
Customs, and the Commissioner of Customs. Absent a showing of any irregularity, or arbitrariness, the findings of
fact of quasi-judicial and administrative bodies are entitled to great weight:, and are conclusive and binding on this
Court. (Feeder International Line, Pte., Ltd. v. Court of Appeals, 197 SCRA 842 [1991]; Jaculina v. National Police
Commission, 200 SCRA 489 [1991]). Moreover, the Collector of Customs in S.I. No. 10009-C, Manila, ordered on July
28, 1966 the forfeiture of the subject cargo after finding that they were, in truth and in fact, smuggled articles
(Rollo, p. 7). Respondent Ceaba did not appeal from said order and the same has become final.

In its decision, the Court of Tax Appeals held that while the S/S Argo was caught unloading smuggled goods in
Manila Bay, the said vessel and the goods cannot be forfeited in favor of the government because the Port of Manila
is a port of entry (R.A. 1937, Sec. 701).

The Commissioner of Customs argues that the phrase "except a port of entry" should mean "except a port of
destination," and inasmuch as there is no showing that the Port of Manila was the port of destination of the S/S
Argo, its forfeiture was in order.

We disagree.

Section 2530(a) in unmistakable terms provides that a vessel engaged in smuggling "in a port of entry" cannot be
forfeited. This is the clear and plain meaning of the law. It is not within the province of the Court to inquire into the
wisdom of the law, for indeed, we are bound by the words of the statute. Neither can we put words in the mouths
of the lawmaker. A verba legis non est recedendum.

It must be noted that the Revised Administrative Code of 1917 from which the Tariff and Customs Code is based,
contained in Section 1363(a) thereof almost exactly the same provision in Section 2530(a) of the Tariff and
Customs Code, including the phrase "except a port of entry." If the lawmakers intended the term "port of entry" to
mean "port of destination," they could have expressed facilely such intention when they adopted the Tariff and
Customs Code in 1957. Instead on amending the law, Congress reenacted verbatim the provision of Section 1363(a)
of the Revised Administrative Code of 1917. Congress, in the very same Article 2530 of the Tariff and Customs
Code, used the term "port of destination" in subsections (c) and (d) thereof. This is a clear indication that Congress
is aware of the distinction between the two wordings.

It was only in 1972, after this case was instituted, when the questioned exception ("except a port of entry") in
Section 2530(a) of the Tariff and Customs Code was deleted by P.D. No. 74.

Nevertheless, although the vessel cannot be forfeited, it is subject to a fine of not more than P10,000.00 for failure
to supply the requisite manifest for the unloaded cargo under Section 2521 of Code, which reads as follows:

Sec. 2521. Failure to Supply Requisite Manifests. — If any vessel or aircraft enters or departs from a
port of entry without submitting the proper manifest to the customs authorities, or shall enter or
depart conveying unmanifested cargo other than as stated in the next preceding section hereof,
such vessel or aircraft shall be fined in a sum not exceeding ten thousand pesos.

xxx xxx xxx

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

Forfeiture proceedings are proceedings in rem (Commissioner of Customs v. Court of Tax Appeals, 138 SCRA 581
[1985] citing Vierneza v. Commissioner of Customs, 24 SCRA 394 [1968]) and are directed against the res. It is no
defense that the owner of the vessel sought to be forfeited had no actual knowledge that his property was used
illegally. The absence or lack of actual knowledge of such use is a defense personal to the owner himself which
cannot in any way absolve the vessel from the liability of forfeiture Commissioner of Customs v. Court of
Appeals, supra; U.S. v. Steamship "Rubi.", 32 Phil. 228, 239 [1915]).

WHEREFORE, the consolidated Decision dated September 30, 1969 of respondent Court of Tax Appeals in C.T.A.
Cases Nos. 1836, I837 and 1839 is MODIFIED as follows: (1) that the S/S Argo through respondent Ceaba Shipping
Agency, Inc. is ordered to pay a fine of P10,000.00, to be satisfied from the deposit of the same amount by
respondent Ceaba to the Cashier of this Court per Resolution of July 9, 1978; (2) that the Cashier of this Court is
ordered to release the said amount for payment to the Commissioner of Customs, within thirty (30) days from the
date this decision becomes final; and 3) the tugboat Orestes and the barge-lighter UN-L-106 of respondents Manila
Star Ferry, Inc. and the United Navigation & Transport. Corporation respectively, are ordered forfeited in favor of
the Philippine Government.

SO ORDERED.

Cruz, Griño-Aquino, Davide, Jr. and Bellosillo, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 129680 September 1, 1999

CARRARA MARBLE PHILIPPINES, INC., petitioner,

vs.
COMMISSIONER OF CUSTOMS, respondent.

DAVIDE, JR., C.J.:

In this petition for review on certiorari, petitioner urges us to set aside the decision 1 and resolution 2 of the Court
of Appeals in CA-G.R SP No. 42976 affirming the decision of the Court of Tax Appeals (CTA). The CTA upheld the
legality of the forfeiture proceedings conducted by the Collector of Customs of articles illegally withdrawn from
Customs custody, and ordered their delivery to the winning bidder in the auction sale.

As summarized by the Court of Appeals, the antecedents of the case are as follows:

On April 10, 1987, the Collector of Customs conducted a public auction sale of various articles duly
declared abandoned after appropriate proceedings. Included in the sale was Lot 15 advertised as
"15 tons more or less, of marble processing machine and grinding machine, rusty and in junk
condition," stored at the Mina Amapola CY-CFS, Taguig, Metro Manila, since 1979. Lot 15 was
awarded to Engr. Franklin G. Policarpio as the highest bidder thereof, after payment of P61, 250.00.

On April 21, 1987, after Engr. Policarpio had taken delivery of said lot, he wrote the Collector of
Customs informing him that the following items supposed to be part of Lot 15 were missing: a
Special Circular Saw (for vertical and horizontal cutting of strips Model Block Tailor BK-1200 with
switch gear and contractor control and reinforcement main motor) and a Diamond Sawing Machine
(Model TBS 500D, including switch gear cabinet with contractor for all motors).

The missing machineries were later found installed in the compound of petitioner Carrara Marble
Philippines, Inc., Lipa City, Batangas, true to the information furnished by Engr. Policarpio himself.

Consequently, for alleged violations of Section 2536 (non-payment of duties and taxes) and Section
2530[e] (illegal removal of articles from the warehouse) of the Tariff and Customs Code (TCC), the
aforesaid machineries were seized (per Warrant of Seizure and Detention dated May 29, 1991)
from the compound of petitioner at Banay-banay, Lipa City.

During the seizure and forfeiture proceedings, Carrara Marble Philippines, Inc., failed to present
evidence of payment of duties and taxes on the subject machineries. In its defense, it claimed, that
the machineries were purchased locally from a certain Jaina Perez as evidenced by two notarized
deeds of absolute sale dated December 20, 1985 (for the trimming machine) and October 28, 1986
(for the high speed blocksaw). Meanwhile, Engr. Policarpio intervened in said proceedings, claiming
ownership over the subject machineries as the successful bidder in the public auction sale
conducted by the Bureau of Customs wherein said machineries were part of Lot 15.
 In a letter dated November 14, 1992, petitioner offered to settle the case in accordance with Article
2307 of the TCC. However, said offer was refused by the District Collector of Customs on the ground
that said articles were already auctioned off and awarded to Engr. Policarpio.

Thereafter, the Collector of Customs on June 24, 1992, declared the machineries forfeited in favor of
the government. Petitioner appealed from the Collector of Customs' decision to the Commissioner
of Customs who, on July 2, 1993, affirmed said decision.

From said Decision of the Commissioner of Customs, appeal by way of a petition for review was
further taken by herein petitioner Carrara Marble Philippines, Inc., to the Court of Tax Appeals.
Engr. Franklin Policarpio, as intervenor, also appealed the same decision of the Commissioner of
Customs to the Tax Court, which was docketed its CTA Case No. 5057, and entitled "Engineer
Franklin Policarpio vs. The Honorable Commissioner of Customs and Deputy Commissioner of Customs
Licerio Evangelista. 3

The CTA allowed Mary Ann Luz Puno and other individuals claiming to be minority stockholders and receivers of
petitioner to intervene in the proceedings. The intervenors' prayer for possession of the machineries was granted
conditioned upon the posting of a cash bond. However, they submitted the case for decision on 4 March 1996
without posting the bond.

On 7 May 1996, the CTA dismissed the petition for review filed by petitioner; affirmed the authority of the Customs
Commissioner to seize the machineries; and ordered the Commissioner to deliver the articles to Policarpio as the
highest bidder in accordance with its decision in CTA Case No. 5057. 4

The intervenors moved for the reconsideration 5 of the CTA's decision. On 8 October 1996, the CTA denied 6 the
motion for reconsideration.

On appeal, the Court of Appeals sustained the CTA and dismissed the petition for lack of merit, capitalizing on the
contract of sale between the Bureau of Customs and Policarpio, which allows a refund in case of loss or short-
delivery. In case a refund is made, it is as if duties, taxes and charges on the articles remained unpaid.
Consequently, importation could not be considered terminated, and the Collector of Customs was still authorized
to seize the articles pursuant to Section 2530(e) of the Tariff and Customs Code (TCC).

The Court of Appeals noted that petitioner's argument that with the termination of importation the Bureau of
Customs lost its jurisdiction over the res was premised upon Policarpio's ownership of the property. Such premise
conflicted with petitioner's pretension of being a buyer in good faith and for value, and foreclosed the possibility of
a compromise. The notarized deeds of sale were merely prima facie evidence of ownership which failed to prove
petitioner's claim over the property. Section 2535 of the TCC laying the burden of proof on the claimant still
applied. The Court of Appeals concluded that the jurisdiction of the Collector of Customs in forfeiture proceedings
extends to all questions incidental thereto including the authority to determine the true ownership of forfeited
property.

Petitioner then filed on 6 June 1997 a motion for reconsideration 7 of the decision of the Court of Appeals. That
motion was, however, denied for failure to state the material dates showing that it was filed on time, as required by
Section 1, Rule 9, of the Revised Internal Rules of the Court of Appeals.

Hence this petition.

Petitioner insists that the purpose of Section 1, Rule 9 of the Revised Internal Rules of the Court of Appeals
requiring motions for reconsideration to state material dates is to show that they were filed on time. It had
substantially complied with that requirement because its Compliance 8 dated 28 May 1997 indicated that it
received the challenged decision on 23 May 1997; thus, its filing of the motion for reconsideration was well within
the reglementary period prescribed by law.

Petitioner likewise contends that the Bureau of Customs had no jurisdiction over the res because importation had
terminated. Forfeiture as a remedy of the government is authorized under Section 2530 of the TCC only when and
while the articles are in the custody or within the jurisdiction of customs authorities or in the hands or subject to
the control of the importer. When the articles were awarded to Policarpio as the winning bidder in the auction sale,
taxes, duties and charges due on them were considered paid; the government was compensated, and so it no longer
stood to suffer damages from the importation. Furthermore, with the legal permit for withdrawal of the articles
having been granted, the government lost its lien over the property. The "possibility" of a refund in case of short
delivery under the warranty in Policarpio's deed of sale only extends the definition of importation.

Asserting its "prior right" over the machineries, petitioner also argues that the Bureau of Customs was without
authority to seize the same. There was no probable cause that would warrant seizure and forfeiture of the subject
articles. Neither was there evidence that the articles were part of Lot 15. Petitioner acquired the machineries in
good faith and for value, as confirmed by two notarized deeds of sale; and it was unaware that they were imported.
Hence, resort should have been through judicial process under Article 433 of the Civil Code. Besides, before
forfeiture proceedings can be instituted as provided for in Section 2530 of the TCC, there must be fraud upon the
government. Fraud cannot be presumed; and without evidence that petitioner acquired the machineries
fraudulently, it must be presumed the owner of the articles.

Moreover, petitioner maintains that no justifiable reason existed for denying its offer of a compromise in
accordance with Section 2307 of the TCC. There was no fraud in the importation of the property. Neither did
petitioner's offer signify that it waived previous defenses and admitted liability.

Finally, petitioner reiterates that the Bureau of Customs had neither authority to seize the articles to determine
their true ownership nor jurisdiction to decide questions of ownership.

Respondent sees the matter differently. It accuses petitioner of forum-shopping and of employing delaying tactics
and maneuvers which hamper the ends of justice. Respondent contends that petitioner's substantial compliance
with Section 1, Rule 9 of the Revised Internal Rules of the Court of Appeals notwithstanding, the law allows
dismissal of the motion for reconsideration for failure to comply with the material data rule.

Respondent also insists that the Bureau of Customs had jurisdiction over the machineries. As held by the CTA and
the Court of Appeals, the loss of the machineries would mean their non-delivery to Policarpio, thus creating an
obligation on the part of the government to refund a proportionate amount of the purchase price paid by
Policarpio. Fraudulent removal of the machineries from the warehouse under Customs supervision made Section
2530 of the TCC applicable.

Respondent further points out that petitioner was unable to prove that the subject items were indeed sold to it by
Jaina Perez. The latter and the notaries public who notarized the alleged deeds of sale were not presented as
witnesses. Besides, said items were stolen; so the alleged seller had no right to pass on to petitioner as buyer.
Likewise, petitioner's failure to present receipts validating its ownership of the property was sufficient cause for
instituting seizure and forfeiture proceedings. Pursuant to Section 2535 of the TCC, the burden of proof was shifted
to petitioner, who, however, failed to substantiate its good faith and lack of knowledge of the importation.

Finally, respondent claims that settlement of seizure cases is not allowed under Section 2307 of the TCC where the
importation is absolutely prohibited or the release of the property is contrary to law, which is what obtains in this
case. Petitioner's offer of compromise puts it in estoppel and negates its argument questioning the jurisdiction of
the Bureau of Customs.

The questions for our resolution are the following:

(1) Was the dismissal of the petition by the Court of Appeals under Section 1, Rule 9
of its Revised Internal Rules of Procedure correct?

(2) Was the forfeiture of articles in the possession of a third party made after the
sale at public auction proper?

(3) Has the importation been terminated?

(4) Who has the right to retain possession over the machineries?

Petitioner cannot find fault with the denial of its motion for reconsideration. It admitted non-compliance with the
requisites of Section 1, Rule 9 of the Revised Internal Rules of Procedure of the Court of Appeals, for indeed nothing
in the motion indicated that it was filed on time. Its Compliance anteriorly filed did not cure the defect. It must be
stressed that the rule was designed to save the Court of Appeals from reviewing the record to determine whether
the motion was indeed filed on time.

And now on the substantive issues.

The Tariff and Customs law subjects to forfeiture any article which is removed contrary to law from any public or
private warehouse under customs supervision, 9 or released irregularly from Customs custody. 10 Before forfeiture
proceedings are instituted the law requires the presence of probable cause. Once established, the burden of proof
is shifted to the claimant. 11 Under Section 2536 of the TCC, the Commissioner of Customs, Collector of Customs or
any other customs officer, with prior authorization in writing by the Commissioner, may demand evidence of
payment of duties and taxes on foreign articles openly offered for sale or kept in storage, and if no such evidence
can be produced, such articles may be seized and subjected to forfeiture proceedings; provided, however, that
during such proceedings the person or entity from whom such articles were seized shall be given an opportunity to
prove or show the source of such articles and the payment of duties and taxes thereon.

The findings of fact of the CTA on this matter is informative.

So it remains undisputed that after the auction sale and before delivery to Mr. Policarpio, as the
winning bidder, the subject articles were carted away mysteriously from customs custody and
reappeared thereafter in the premises of herein petitioner. There is no question that before
delivery of these items to Mr. Franklin Policarpio, these items were under the custody of the Bureau
of Customs and when they were about to be handed over to Mr. Policarpio, the latter discovered the
said items to be missing. 12

It is settled that the factual findings of the CTA, as affirmed by the Court of Appeals, are entitled to the highest
respect 13 and are well-nigh conclusive upon this court. 14 Based on the findings of the CTA, the subject machineries
were liable to forfeiture under customs law. Upon demand for evidence of payment of duties and taxes, petitioner
failed to present receipts. What it presented were two notarized deeds of sale executed in 1985 and 1986 between
petitioner as buyer and Jaina Perez as seller.

Despite ample opportunity to discharge the burden of proof, petitioner failed to prove its claim over the
machineries. Jaina Perez, the supposed seller, was subpoenaed to substantiate petitioner's claim; but she never
appeared. The notaries public before whom the deed of sale were notarized were not presented either. More
importantly, there was no intervening transaction between Perez and the Bureau of Customs concerning the
subject machineries that would have transferred their ownership to Perez and thereafter to petitioner. That the
goods were allegedly sold to petitioner in 1985 and 1986 while they were still under Customs custody and prior to
the auction sale is legally untenable and unacceptable.

Contrary to the CTA's rationale for sanctioning the forfeiture, importation was terminated after Policarpio signed
Gate Pass No. 5136 on 10 April 1987 evidencing withdrawal of Lot No. 15 from customs custody. Importation is
deemed terminated upon payment of duties, taxes and other charges due or secured to be paid upon the articles at
a port of entry, and upon the grant of a legal permit for withdrawal; or in case said articles are free of duties, taxes
and other charges, until they have legally left the jurisdiction of the customs. 15 The forfeiture of the subject
machineries however, is not dependent on whether or not the importation was terminated; rather it is premised
on the illegal withdrawal of goods from Customs custody.

Thus, regardless of the termination of importation, Customs authorities may validly seize goods which, for all
intents and purposes, still belong to the government. This is so because forfeiture takes effect immediately upon
the commission of the offense. The forfeiture of the subject machineries, therefore, retroactect to the date they
were illegally withdrawn from Customs custody. The government's right to recover the machineries proceeds from
its right as lawful owner and possessor thereof upon abandonment by Filipinas Marble. Such right may be asserted
no matter into whose hands the property may have come, and the condemnation when obtained avoids all
intermediate alienations. 16 To sanction petitioner's possession of the property would be to close our eyes to acts of
defraudation practiced upon the government.

Incidentally, the forfeiture of the subject machineries rests on a different statutory basis from Policarpio's right to
receive the property as winning bidder in the auction sale. The forfeiture proceedings were based upon the
government's right to recover property illegally withdrawn from its custody. On the other hand, Policarpio's right
stems from the government's contractual obligation to deliver the machineries to Policarpio as buyer in good faith
at the public auction sale.

Petitioner's contention of being a buyer in good faith and for value with a prior right over the property is likewise
untenable. Petitioner allegedly derived its right over the property through the deeds of sale executed by and
between it, as buyer, and a certain Jaina Perez, as seller, prior to the auction sale. The following, however, is worthy
to note:

[T]he subject pieces of machinery were part of lot 15 which was sold in an auction sale to satisfy the
unpaid taxes, duties and other charges. Such machineries were imported but later abandoned by
Filipinas Marble in favor of the government. The fact that this shipment formed part of lot 15 is
undisputed by both parties to this case. 17

Before such machineries were allegedly sold to petitioner they formed part of the mass of Customs
property stored inside the Mina Amapola CY-CFS in Taguig. Records of the Bureau of Customs indicated no
transactions concerning the subject machineries except the abandonment by Filipinas Marble and the
auction sale to Policarpio. Contrary to petitioner's contention, it is the sale of the subject machineries to
petitioner by Jaina Perez, not the sale to Policarpio, that is ineffective. The government never dealt with
Jaina Perez; hence Perez, having no right over the property, had nothing to transfer to petitioner 18 even if
petitioner's alleged acquisition of the property was in good faith and for value.
Lastly, as opined by the Collector of Customs, compromise could not be allowed anymore, since the subject
machineries had already been awarded to Policarpio, being the highest bidder in the public auction sale conducted
by the Bureau of Customs.

WHEREFORE, the instant petition is hereby DISMISSED, for lack of merit, and the challenged decision of the Court
of Appeals is AFFIRMED.

SO ORDERED.

Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-33756 October 23, 1982

SABINO RIGOR, RODOLFO AQUINO and SIMEON ANTICAMARA, Collector of Customs, Legal Officer and Chief
of the Port and Water Patrol Division, Respectively, Bureau of Customs, Port of Davao, Davao
City, petitioners,
vs.
SPOUSES EDUARDO ROSALES AND FLORA ROSALES and HONORABLE ALFREDO I. GONZALES (Presiding
Judge, Branch II, Court of First Instance of Davao (Sitting at Davao City), respondents.

Solicitor General for petitioner.

Dominador Suñga for respondent.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the respondent court's decision declaring null and void the decision of
the Collector of Customs in an administrative case "Seizure Identification No. 70-027" entitled "RP vs. LCT-759
Together With 103 Pieces of Logs Aboard Same Vessel".

The case originated from the issuance by the petitioner, Collector Sabino Rigor, of a Warrant of Seizure and
Detention in accordance with the provisions of Sections 2301 and 2205, in relation to Sections 2530 (g), 906 and
908 of Republic Act No. 1937, otherwise known as the Tariff and Customs Code of the Philippines, against the
vessel LCT-759 and its cargo, consisting of 103 pieces of logs for failure to present a manifest for the said logs
within the period prescribed by the Code.

A notice of hearing was issued by petitioner Rodolfo M. Aquino, Investigation Hearing Officer, on the Warrant of
Seizure and Detention. The parties who were duly notified and represented, voluntarily submitted to the
jurisdiction of the respondent Collector of Customs for the Port of Davao.

After hearing the parties, the respondent Collector of Customs rendered a decision ordering the seized logs
forfeited in favor of the government to be disposed of according to law. In the same decision, the respondent
Collector imposed a P10,000.00 fine against the vessel in accordance with the provisions of Section 2521 of
Republic Act No. 1937.

Instead of appealing the Collector's decision to the Commissioner of Customs, the private respondents filed an
original petition for certiorari with the Court of First Instance of Davao, Branch II, praying that the Collector's
decision in Seizure Identification No. 70-027 be annulled for having been issued without or in excess of jurisdiction
or with grave abuse of discretion.

In their answer, herein petitioners, in turn, pointed out the court's lack of jurisdiction.
In their reply, the private respondents averred that Section 2530 of the Tariff and Customs Code, which gives the
petitioners the power to seize and to declare forfeitures, refers to imported articles which should be covered by
manifest and since the logs in question were not imported nor smuggled articles from a foreign country, the
petitioners had no business collecting customs duties thereon nor did they have the power to seize and to declare
the same forfeited.

After requiring the parties to submit supplementary pleadings and subsequent to the petitioners submission of a
"Memorandum of Evidence with Motion for Judgment on the Pleadings", the respondent court promulgated the
judgment now subject of this petition, reversing and declaring null and void the decision of the Collector of
Customs in Seizure Identification No. 70-027. The court further directed the withdrawal of the proceeds of the sale
of the 103 pieces of seized logs from the Philippine National Bank for delivery to the private respondents.

Their motion for reconsideration having been denied, the petitioners filed the present petition.

At issue in this petition is the jurisdiction of a Court of First Instance to review the decision of a Collector of
Customs in seizure and detention proceedings under the Tariff and Customs Code of the Philippines (R.A. No.
1937).

The petitioners argue that the respondent court's review of the decision in Seizure Identification No. 70-027 was
devoid of validity as under Section 2313 of the Tariff and Customs Code of the Philippines, the Collector of
Customs' decision should have been brought on appeal to the Commissioner of Customs, not before the Court of
First Instance of Davao. The decision of the Commissioner of Customs, on the other hand, would have been
appealable to the Court of Tax Appeals pursuant to Section 2402 of the Code and Section 7 of Republic Act No.
1125. Since the Court of First Instance of Davao, Branch II, did not validly acquire jurisdiction over Special Civil
Case No. 7114, the proceedings taken therein and the decision rendered by the respondent court were a nullity
which cannot be validly enforced nor effectively executed.

Private respondents on the other hand, contend that their petition before the Court of First Instance was not an
appeal but a special civil action for certiorari under Section 1, Rule 65 of the Rules of Court where the court may
review the records and the entire proceedings conducted by the petitioners.

The private respondents try to make out a case of the administrative authorities having acted without or in excess
of jurisdiction or with grave abuse of discretion to justify their invocation of judicial power which is, of course,
available whenever administrative officials transgress the bounds of the jurisdiction or the powers given to them
by law.

The respondents' arguments have no merit.

The provisions of the Tariff and Customs Code empowering the customs authorities to act as they did are:

Sec. 2203. Persons Having Police Authority.-For the enforcement of the customs and tariff laws, the
following persons are authorized to effect searches, seizures and arrests conformably with the
provisions of said laws:

a. Officials of the Bureau of Customs, collectors, assistant collectors, deputy collectors, surveyors,
security and secret-service agents, inspectors, port patrol officers and guards of the Bureau of
Customs.

b. Officers of the Philippine Navy when authorized by the Commissioner.

c. Any person especially authorized in writing by the Commissioner.

d. Officers generally empowered by law to effect arrests and execute processes of courts, when
acting under the direction of the Collector.

e. Any person especially authorized by a Collector, subject to the restrictions stated in the next
succeeding section.

xxx xxx xxx

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

xxx xxx xxx

 g. Unmanifested article found on any vessel or aircraft, if manifest therefor is required.

xxx xxx xxx

Sec. 906. Requirement of Manifest in Coastwise Trade.—Manifests shall be required for cargo and
passengers transported from one place or port in the Philippines to another only when one or both
of such places is a port of entry.

xxx xxx xxx

Sec. 908. Manifests Required Prior to Unloading at Port of Entry.—Within twenty- four hours after
the arrival at a port of entry of a vessel engaged in the coastwise trade, and prior to the unloading of
any part of the cargo the master shall deliver to the Collector or other proper customs official
complete manifests of all the cargo and passengers brought into said port, together with the
clearance manifests of cargo and passengers for said port granted at any port or ports of entry from
which said vessel may have cleared during the voyage.

Contrary to the stand of the private respondents, articles subject to seizure do not have to be goods imported from
a foreign country. The provisions of the Code refer to unmanifested articles found on vessels or aircraft engaged in
the coastwise trade. The customs authorities do not have to prove to the satisfaction of a court of first instance that
the articles on board a vessel were imported from abroad or are intended to be shipped abroad before they may
exercise the power to effect customs' searches, seizures, or arrests provided by law and to continue with the
administrative hearings on whether or not the law may have been violated.

Regarding the nature of the port of origin and the port of destination, it is enough if one of the ports is a port of
entry. In the instant case, Daliao, Toril, Davao City is included in the Davao port of entry. The respondent court's
finding that "port of entry" must be limited to the wharves of Sta. Ana and Sasa where the customs house is located
and not extended "to every inch of the City of Davao" would unduly hamper if not cripple the effective enforcement
of customs and tariff laws. Customs officials cannot stand by helplessly for want of jurisdiction simply because a
restrictive interpretation of "port of entry" would enable coastwise vessels to load or unload unmanifested goods
with impunity outside of the specific area where the wharves and the customs house are located.

The records also show that the requirements on cargo manifest were not followed.

But more important than our sustaining the correctness of the findings and conclusions made by the customs'
officials is to state clearly their authority under the law to make the initial determination on the limits of their
administrative jurisdiction, to act speedily and to make decisions on the basis of that determination, and to have
such act or decision reviewable only in the manner provided by the Customs and Tariff Code.

It is our consistent ruling that the Collector's decisions are appealable to the Commissioner of Customs, whose
decisions, in cases involving seizure, detention or release of property, may in turn be reviewed only by the Court of
Tax Appeals.

We ruled in Señeres v. Frias (39 SCRA 536) that:

The collector's decision may be appealed to the commissioner of customs, whose decision, inter
alia, in cases involving seizure, detention or release of property affected, may in turn be reviewed
only by the Court of Tax Appeals under the exclusive appellate jurisdiction conferred on said court
under section 7 of Republic Act 1125.

xxx xxx xxx

As held by the Court in the 1966 leading case of Pacis vs. Averia, 18 SCRA 907, - where the court
emphasized the need of the cooperation of all branches of the Government for the success of the
law enforcement agencies in curbing smuggling - by virtue of the enactment of the Tariff and
Customs Code (Rep. Act 1937) as well as the Court of Tax Appeals Law (Rep. Act 1125), 'on grounds
of public policy, it is more reasonable to conclude that the legislators intended to divest the Court of
First Instance of the prerogative to replevin a property which is a subject of a seizure and forfeiture
proceedings for violation of the Tariff and Customs Code. Otherwise, actions for forfeiture of property
for violation of Customs laws could easily be undermined by the simple device of replevin.

'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 the case of Hadji Mohamad Daud v. Collector of Customs of the Port of Zamboanga City (68 SCRA 157) this Court
reiterated the doctrine as follows:

As early as June 30, 1955, the Court had already announced in Millarez v. Amparo, 97 Phil. 284-85,
that 'Republic Act No. 1125, Section 7, effective June 16, 1954 gave the Court of Tax
Appeals exclusive appellate jurisdiction to review an appeal, decisions of the Commissioner of
Customs, involvingseizure, detention or release of property affected ... or other matter arising under
the Customs Law or other law administered by the Bureau of Customs'. Specifically, in Caltex
(Philippines) Inc. v. City of Manila 25 SCRA 840, it was held that the law affords the Collector of
Customs sufficient latitude in determining whether or not a certain article is subject to seizure or
forfeiture and his decision on the matter is appealable to the Commissioner of Customs and then to
the Court of Tax Appeals, not to the Court of First Instance. The fundamental reason is that the
Collector of Customs constitutes a tribunal when sitting in forfeiture proceedings (Commissioner of
Customs v. Cloribel, 19 SCRA 234) beyond the interference of the Court of First Instance (Lopez v.
Commissioner of Customs, 37 SCRA 33-34). As expressed in Pacis v. Averia, 18 SCRA 907,'* * * the
Court of First Instance should yield to the jurisdiction of the Collector of Customs is provided for in
Republic Act 1937 which took effect on July 1, 1957, much later than the Judiciary Act of 1948. It is
axiomatic that a later law prevails over a prior statute. Moreover, on grounds of public policy, it is
more reasonable to conclude that the legislators intended to divest the Court of First Instance of the
prerogative to replevin a property which is a subject of a seizure and forfeiture proceedings for
violation of the Tariff and Customs Code. Otherwise, actions for forfeiture of property for violation
of Customs laws could easily be undermined by the simple device of replevin'. The judicial recourse
of the owner of a personal property which has been the subject of a seizure and forfeiture
proceedings before the Collector of Customs 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 (Collector
of Customs v. Torres, 45 SCRA 281).<äre||anº•1àw> If the property owner believes that the
Collector's conclusion was erroneous, the remedy is by appeal to the Commissioner of Customs, and
then to the Court of Tax Appeals should the Commissioner uphold the Collector's decision. The
Court of Tax Appeals exercises exclusive appellate jurisdiction to review the ruling of the
Commissioner in seizure and confiscation cases, and that power is to the exclusion of the Court of
First Instance, which may not interfere with the Commissioner's decisions even in the form of
proceedings for certiorari, prohibition or mandamus which are in reality attempts to review the
Commissioner's actuations (General Travel Service, Ltd. v. David, 18 SCRA 66-67).

Again, in Republic v. Bocar (93 SCRA 78) the Court said:

1. The Congress of the Philippines was vested with 'the power to define, prescribe, and apportion
the jurisdiction of the various courts' of the Philippines. Now it is the National Assembly. Where the
matter involved is a seizure and forfeiture proceeding, a court of first instance is devoid of power to
act. The customs authorities possess such competence with an appeal to the Court of Tax Appeals.
In appropriate cases, there may be further judicial review by this Court in the exercise of its
certiorari jurisdiction. The jurisdictional limits thus defined and apportioned, according to the
Constitution, must be respected. Respondent judges clearly did not do so. No deference was paid to
a host of cases that left no doubt as to their lack of authority to assume jurisdiction.

2. An excerpt from a recent decision, Commissioner of Customs v. Navarro, 77 SCRA 264, possesses
relevance. Thus: 'That such jurisdiction of the customs authorities is exclusive was made clear in
Pacis v. Averia, decided in 1966. This Court, speaking through Justice J.P. Bengzon, realistically
observed: 'This original jurisdiction of the Court of First Instance, when exercised in an action for
recovery of personal property which is a subject of 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.' The court 'should yield to the jurisdiction of the Collector of Customs,'
Such a ruling, as pointed out by Justice Zaldivar in Auyong Hian v. Court of Tax Appeals,
promulgated less than a year later, could be traced to Government v. Gale, a 1913 decision, where
there was a recognition in the opinion of Justice Carson that a Collector of Customs when sitting in
forfeiture proceedings constitutes a tribunal upon which the law expressly confers jurisdiction to
hear and determine all questions touching the forfeiture and further disposition of the subject
matter of such proceedings. The controlling principle was set forth anew in Ponce Enrile v. Vinuya,
decided in 1971. Thus: 'The prevailing doctrine is that the exclusive jurisdiction in seizure and
forfeiture cases vested in the Collector of Customs precludes a court of first instance from assuming
cognizance over such a matter.' Reference was then made in the opinion to previous cases.
WHEREFORE, the decision of the Court of First Instance of Davao, Branch II in Special Case No. 7114 as well as the
order denying the motion for reconsideration are nullified and set aside. The writ of preliminary injunction
heretofore issued by this Court is made permanent. Costs against private respondents.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 177188 December 4, 2008

EL GRECO SHIP MANNING AND MANAGEMENT CORPORATION, petitioner,

vs.
COMMISSIONER OF CUSTOMS, respondent.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court, filed by
petitioner El Greco Ship Manning and Management Corporation (El Greco), seeking to reverse and set aside the
Decision1 of the Court of Tax Appeals (CTA) En Banc dated 14 March 2007 in C.T.A. EB No. 162. In its assailed
Decision, the CTA En Banc affirmed the Decision2 dated 17 October 2005 of the CTA Second Division in CTA Case
No. 6618, ordering the forfeiture of the vessel M/V Criston, also known as M/V Neptune Breeze, for having been
involved in the smuggling of 35,000 bags of imported rice.

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

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

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

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

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

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 Order13 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 for want of factual or legal basis, and that the
vessel "M/V Neptune Brreze" be released to [El Greco] after clearance with the Commissioner of Customs,
proper identification and compliance with existing rules and regulations pertinent in the premises.

On automatic review by BOC Commissioner Antonio Bernardo, the Order dated 11 March 2002 of the District
Collector of the Port of Manila was reversed after finding that M/V Neptune Breeze and M/V Criston were one and
the same and that the Legaspi District Collector had already acquired prior jurisdiction over the vessel. The
Decision dated 15 January 2003 of the BOC Commissioner, contained in his 2nd Indorsement14 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 Grenadines16 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.

On 17 October 2005, the CTA Second Division rendered a Decision17 in CTA Case No. 6618 sustaining the 15
January 2003 Decision of the BOC Commissioner ordering the forfeiture of M/V Neptune Breeze. Referring to the
crime laboratory report submitted by the Philippine National Police (PNP) stating that the serial numbers of the
engines and the generators of both M/V Criston and M/V Neptune Breeze were identical, the CTA Second Division
concluded that both vessels were indeed one and the same vessel. The CTA Second Division further ruled that
nothing in the provisions of Section 2313 of the Tariff and Customs Code could buttress El 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 Resolution19 dated 7 February 2006, the CTA Second Division denied the Motion for Reconsideration of El
Greco for failure to present issues that had not been previously threshed out in its earlier Decision.

Undaunted, El Greco elevated its case to the CTA En Banc through a Petition for Review, docketed as C.T.A. EB No.
162, this time lamenting that it was being deprived of its property without due process of law. El Greco asserted
that the CTA Second Division violated its constitutional right to due process when it upheld the forfeiture of M/V
Neptune Breeze on the basis of the evidence presented before the Legaspi District Collector in Seizure
Identification No. 06-2001 and Seizure Identification No. 06-2001-A, of which El Greco was not notified and in
which it was not able to participate.20

In its Decision21 promulgated on 14 March 2007, the CTA En Banc declared that the CTA Second Division did not
commit any error in its disquisition, and dismissed the Petition of El Greco in C.T.A. EB No. 162 for lack of merit.
According to the CTA En Banc, the appreciation and calibration of evidence on appeal (from the ruling of the BOC)
lies within the sound discretion of its Division, and the 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

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.

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. The foreign registration of M/V Neptune
Breeze proves only that it was registered in a foreign country; but it does not render impossible the conclusions
consistently reached by the Legaspi District Collector, the CTA Second Division and the CTA en banc, and presently
by this Court, that M/V Neptune Breeze was the very same vessel used in the conduct of smuggling activities in the
name M/V Criston.

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

In administrative proceedings, such as those before the BOC, technical rules of procedure and evidence are not
strictly applied and administrative due process cannot be fully equated with due process in its strict judicial
sense.25The 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:

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

xxxx

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

xxxx

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

The penalty of forfeiture is imposed on any vessel engaged in smuggling, provided that the following conditions are
present:

(1) The vessel is "used unlawfully in the importation or exportation of articles into or from" the Philippines;

(2) The articles are imported to or exported from "any Philippine port or place, except a port of entry"; or

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

There is no question that M/V Neptune Breeze, then known as M/V Criston, was carrying 35,000 bags of imported
rice without the necessary papers showing that they were entered lawfully through a Philippine port after the
payment of appropriate taxes and duties thereon. This gives rise to the presumption that such importation was
illegal. Consequently, the rice subject of the importation, as well as the vessel M/V Neptune Breeze used in
importation are subject to forfeiture. The burden is on El Greco, as the owner of M/V Neptune Breeze, to show that
its conveyance of the rice was actually legal. Unfortunately, its claim that the cargo was not of foreign origin but
was merely loaded at North Harbor, Manila, was belied by the following evidence - the Incoming Journal of the
Philippine Coast Guard, Certification issued by the Department of Transportation and Communications (DOTC)
Port State Control Center of Manila, and the letter dated 4 October 2001 issued by the Sub-Port of North Harbor
Collector Edward de la Cuesta, confirming that there was no such loading of rice or calling of vessel occurring at
North Harbor, Manila. It is, therefore, uncontroverted that the 35,000 bags of imported rice were smuggled into the
Philippines using M/V Neptune Breeze.
We cannot give credence to the argument of El Greco that the Order dated 11 March 2002 of the Manila District
Collector, finding no probable cause that M/V Neptune Breeze is the same as M/V Criston, has already become final
and executory, thus, irreversible, pursuant to Section 2313 of the Tariff and Customs Code. According to said
provision:

SEC. 2313. Review of Commissioner. – The person aggrieved by the decision or action of the Collector in any
matter presented upon protest or by his action in any case of seizure may, within fifteen (15) days after
notification in writing by the Collector of his action or decision, file a written notice to the Collector with a
copy furnished to the Commissioner of his intention to appeal the action or decision of the Collector to the
Commissioner. Thereupon the Collector shall forthwith transmit all the records of the proceedings to the
Commissioner, who shall approve, modify or reverse the action or decision of the Collector and take such
steps and make such orders as may be necessary to give effect to his decision: Provided, That when an
appeal is filed beyond the period herein prescribed, the same shall be deemed dismissed.

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

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

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

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

SECOND DIVISION
G.R. No. 128064 March 4, 2004

R.V. MARZAN FREIGHT, INC., petitioner,

vs.
COURT OF APPEALS and SHIELA’S MANUFACTURING, INC., respondents.

DECISION

CALLEJO, SR., J.:

This is a petition for review under Rule 45 of the 1997 Rules of Civil Procedure of the Decision1 of the Court of
Appeals in CA-G.R. CV No. 49905 affirming with modification the Decision2 of the Regional Trial Court of Rizal,
Pasig, Branch 154, in Civil Case No. 61644.

THE FACTS

The petitioner RV Marzan Freight, Inc., owned and operated a customs-bonded warehouse located at the Bachrach
Corporation Building, where it accepted all forms of goods and merchandise for storage and safekeeping. Private
respondent Shiela’s Manufacturing, Inc., on the other hand, was a corporation organized and existing under
Philippines laws, and engaged in the garment business.

Philippine Fire and Marine Insurance Corporation (Philfire) issued Insurance Policy No. F-8952/4358-HO dated
December 11, 19893 in favor of the petitioner, covering its warehouse as well as "stocks in trade of every kind and
description usual to the warehouse operation of the Assured and/or other interest that may appear during the
currency of this policy whilst contained in the building, known as BACHRACH CORP."

On April 12, 1989, raw materials consigned to the private respondent covered by Invoice No. TG-891254 arrived in
the Philippines from Keelung, Taiwan on board the vessel SS World Lion V-302W owned by Sea-Land Service, Inc.
from its supplier, Tricon Enterprises Ltd. The materials were valued at US$32,006.93.5 The Bureau of Customs
treated the raw materials as subject to ordinary import taxes and were not immediately released to the private
respondent. Moreover, the consignee failed to file the requisite import entry6 and failed to claim the cargo.7

In a Letter8 to the Office of the District Collector of the Bureau of Customs dated July 24, 1989, Sea-Land Service
Inc. authorized the petitioner to take delivery of Container No. SEAU-462597 consigned to the private respondent
for stripping and safekeeping.

In a Letter9 addressed to Bureau of Customs District Collector Emma M. Rosqueta dated September 11, 1989, the
International Container Terminal Services, Inc. (ICTSI) requested for authority "to clear the storage areas of
cargoes which have been abandoned by their owners or seized by the Bureau of Customs." Included in the request
was the cargo of the private respondent. The District Collector of Customs initiated Abandonment Proceedings No.
288-89 over the cargo. On September 29, 1989, the District Collector issued a Notice10 to the consignee of various
overstaying cargo, including that of the private respondent, giving them fifteen (15) days from notice thereof to file
entry of the cargoes without prejudice to the right of the consignees to redeem articles pursuant to Section 1801 of
the Tariff and Customs Code within the prescribed period therein; otherwise, the cargoes would be deemed
abandoned and sold at public auction. As ordered, the Notice of the Abandonment Proceedings was posted on the
Bureau’s bulletin board on September 29, 1980.11 No separate notice was sent to the private respondent because
per the ICTSI’s records, the address of the consignee was unknown.

Earlier, on November 7, 1989, Leonardo S. Doctor, Chief of the Law Division of the Bureau of Customs, issued a
Memorandum12 informing the Chief for Auction and Cargo Disposal Division that the declaration of abandonment
in the aforestated proceedings had already become final and executory as of October 30, 1989 and that the cargoes
subject matter thereof should be inventoried and sold at public auction.

However, before the inventory and sale at public auction of the goods could be accomplished, part of the
warehouse containing the shipment was burned on July 26, 1990. The private respondent’s shipment was,
likewise, burned and destroyed. The Philfire paid to the private respondent the amount of P12,000,000, for which
the latter was issued a receipt.

On March 19, 1991, the private respondent, through counsel, sent a letter to the petitioner demanding payment of
the value of the goods in the amount of US$32,006.93. However, the petitioner rejected the demands. Meanwhile,
on October 28, 1991, the petitioner executed a "Release of Claim and Hold Harmless Undertaking."13

On December 26, 1991, or after the lapse of more than two years from the arrival of the cargo in the Philippines,
the private respondent filed a complaint for damages before the RTC of Pasig City, Branch 154, against the
petitioner. The private respondent alleged, inter alia, that its goods were stored in the petitioner’s bonded
warehouse due to the problem it encountered at the Bureau of Customs; that the goods were gutted by fire on July
26, 1990 while stored in said bonded warehouse; and, despite demands for the release of the goods, the petitioner
refused to release the same. The private respondent prayed that the petitioner and Philfire be held jointly and
severally liable to pay the following:

a) the sum of US$32,006.93 or its peso equivalent computed based on the rate of exchange prevailing at the
time of payment with interest thereon from the time of the filing of complaint up to the time of actual
payment;

b) the sum of P30,000.00 as and for attorney’s fees;

c) the costs of suit;14

In its answer, the petitioner interposed special and affirmative defenses. Aside from alleging that there was no
privity of contract between it and the private respondent, the petitioner also alleged that the private respondent
lost the right of action against it as it was not the real party-in-interest in the case. The petitioner averred that the
goods in question were received not from the private respondent but from the Bureau of Customs, under Customs
Administrative Order No. 102-88 dated August 30, 1988, covering Forfeited Cargoes (FC), Abandoned Cargoes (AC)
and Cargoes held under Warrant/Seizure and Detention (CWSD). According to the petitioner, before the subject
cargo was destroyed by accidental fire, the private respondent had violated the Tariff and Customs Code and
related laws, rules and regulations, and failed to pay the corresponding taxes, duties and penalties for the
importation. Furthermore, the private respondent failed to make the corresponding claim for the release of the
said cargo, until the same was declared as "overstaying cargo," and later as "abandoned cargo." The petitioner
further asserted that the government, and not the private respondent, was the owner thereof. As such, the private
respondent was not entitled to the insurance proceeds arising out of the fire policy covering the petitioner as a
customs bonded warehouse. Furthermore, considering that the cause of the loss of the subject cargo was a
fortuitous event, an "act of God," and the petitioner, having exercised the required due care under the
circumstances, cannot be held legally liable for such loss. Finally, the petitioner alleged that its warehouse is legally
considered as an "extension of the Bureau of Customs" and all goods transferred therein continue to be in the
custody of the Bureau of Customs, with all its legal implications.15

Defendant Philfire, for its part, filed a motion to dismiss16 on the ground that it had no contractual obligation to the
private respondent; hence, the latter had no cause of action against it. The trial court deferred the resolution of the
said motion17 until the grounds appeared to be indubitable. In its answer,18 Philfire alleged that there was no
privity of contract between it and the private respondent, considering that the petitioner was the insured party.
Furthermore, the private respondent had no insurable interest in the goods that were burned in the petitioner’s
warehouse. Finally, Philfire alleged that the obligation sought to be enforced by the private respondent had already
been settled when it paid its obligation under the insurance policy19 as shown in the "Release of Claim and Hold
Harmless Undertaking" dated October 28, 1991, executed and signed for and in behalf of the petitioner by its Vice-
President, Mr. Cesar D. Catalan.

The private respondent filed its pre-trial brief proposing that the following issues to be litigated by the parties and
resolved by the Court:

1. Corporate personality of the plaintiff;

2. Value of plaintiff’s goods stored in R.V. Marzan’s warehouse and which were destroyed by fire;

3. Whether or not at the time of the fire on July 26, 1990. plaintiff’s goods were already "abandoned goods"
so that the plaintiff, at the time of the fire, was no longer the owner of the said goods.

4. Attorney’s fees and damages;20

However, the trial court did not issue a pre-trial order.

During the trial, the petitioner presented Atty. Leonardo S. Doctor, the Law Division Chief of the Bureau of
Customs, as one of its witnesses to prove that the cargo had already been declared by the District Collector of
Customs as "abandoned cargo" in Abandonment Proceedings No. 288-89, and that the cargo was destroyed by fire
before it could be sold at public auction.

Thereafter, the private respondent filed its memorandum stating, inter alia, that it did not abandon the goods
because it did not receive the notice of abandonment of the cargo from the Bureau of Customs. The petitioner
insisted that upon the abandonment of the cargo under Section 1802 of the Tariff and Customs Code of the
Philippines (TCCP), it became, ipso facto, the property of the government; hence, the private respondent had no
right to claim the value of the shipment.
After trial, the court rendered judgment, the decretal portion of which reads:

WHEREFORE, foregoing premises considered, defendant RV Marzan is held solely liable for the loss suffered by the
plaintiff and is hereby ordered to pay the plaintiff the following:

1. The sum of US$32,006.93 or its peso equivalent computed on the rate of exchange prevailing at the time
of payment with 6% interest thereon from the time of filing of complaint up to the time of actual payment;

2. The sum of P30,000.00 as and for attorney’s fees; and

3. Costs of suit.

The complaint against Philfire, the counterclaim against Shiela’s and the cross-claim against R.V. Marzan, are
hereby dismissed.21

According to the trial court, the Bureau of Customs’ subsequent declaration that the subject shipment was
"abandoned cargo" was ineffective, as the private respondent was not sent a copy of the September 29, 1989
Notice as required by Sec. 1801 of the Tariff and Customs Code. Under the law, notice of the proceedings of
abandonment should be given to the private respondent as the consignee or its agent, to enable it to adduce
evidence at a public hearing, conformably to the requirement of due process. Since the private respondent was
never notified of the abandonment proceedings, it cannot, thus, be said that it impliedly abandoned the shipment
and lost its ownership over the same in favor of the government.

The trial court rejected the petitioner’s claim that it could not be held liable for the private respondent’s loss
because the fire that destroyed the subject cargo was an "act of God." According to the trial court, this is precisely
one of the reasons why a bonded warehouse is required by law to insure the goods received and stored against
fire; otherwise, persons dealing with a bonded warehouse would not be afforded due protection. According to the
court, the policy procured by the petitioner inures equally and proportionately to the benefit of all the owners of
the property insured, even if the owner of the goods did not request or know of the insurance. Citing Section 1902
of the Tariff and Customs Code, the trial court pointed out that the petitioner’s bonded warehouse is considered as
an extension of the Bureau of Customs only insofar as it continues with the storage and safekeeping of goods
transferred to it by the latter.

Finally, the trial court ruled that the private respondent had no cause of action against the insurer Philfire, as it was
not a party to the insurance contract between the petitioner and Philfire. Since the terms of the insurance contract
do not confer a benefit upon a third person as required by Article 1311 of the Civil Code, the private respondent
had no right to the insurance proceeds.

The petitioner appealed the decision to the Court of Appeals, docketed as CA-G.R. CV No. 49905, and assigned the
following errors:

I – THE TRIAL COURT ERRED IN NOT DISMISSING THE COMPLAINT FOR LACK OF A VALID CAUSE OF ACTION
AND IN HOLDING THE DEFENDANT MARZAN LIABLE FOR THE LOSS SUFFERED BY PLAINTIFF IN SPITE OF THE
FACT THAT, LONG BEFORE THE FIRE OF JULY 26, 1990, WHICH GUTTED DEFENDANT’S WAREHOUSE, THE
PLAINTIFF’S SHIPMENT HAS ALREADY BEEN DECLARED ABANDONED BY FINAL ORDER OF THE BUREAU OF
CUSTOMS.

II – THE TRIAL COURT ERRED IN AWARDING ATTORNEY’S FEE[S] OF P30,000.00.22

The petitioner asserted that the private respondent renounced its interests over the cargo by its continued failure
and refusal, despite notice to it, to claim the cargo and pay the corresponding duties and taxes. It disclaimed
liability on the following grounds:

1. That contrary to the plaintiff’s submission, it was not exempt from the payment of customs duties and
taxes and hence, required to file entry within five (5) days from arrival of the shipment as provided for
under 1801 of the Tariff and Customs Code…;

2. The subject shipment was declared abandoned by the Bureau of Customs due to the failure of the
plaintiff-consignee to claim the same within the 15-day reglementary period from the date of posting of the
notice to claim as provided in Section 1801(b) of Republic Act No. 7651; and,

3. The abandonment of the cargo was already declared final as of October 30, 1989 in the abandonment
proceedings conducted by the Bureau of Customs, and, hence the plaintiff’s shipment ipso facto became the
property of the government pursuant to Section 1802 of the same Act.
 4. It was only on January 6, 1992, that plaintiff filed the present complaint against the defendant or more
than two years after the declaration of abandonment of subject shipment became final and executory.23

Anent the award of attorney’s fees in favor of the private respondent, the petitioner averred that, as there was no
finding of malice or bad faith in its refusal to pay the private respondent, there was no factual basis for the award.

In its brief, the private respondent contended that, as found by the trial court, there was no valid and effective
abandonment over the subject goods. It was also pointed out that if the petitioner’s claim that the subject goods
belonging to the private respondent had been declared abandoned cargo and the same had become government
property, then the government, through the Bureau of Customs, should have intervened in the case, considering
the private respondent’s vigorous stance in denying it had ever abandoned its goods. Despite the fact that the
Bureau of Customs was clearly apprised of the case when the petitioner presented Atty. Doctor as its witness, there
was no such attempt from the government to intervene and claim ownership over the cargo. The private
respondent also pointed out that the petitioner’s refusal to satisfy a valid, just and demandable claim had
compelled it to litigate and incur expenses to protect its interest. The petitioner’s refusal to satisfy the private
respondent’s claim was in furtherance of an intention to unjustly enrich itself, and was evidence of the latter’s
gross and evident bad faith.

The Court of Appeals upheld the trial court’s ruling in its Decision dated January 31, 1997. The appellate court held
that the District Collector of Customs failed to give due notice of the abandonment proceedings to the private
respondent, and that the same constituted denial of due process of law. Although notice of the declaration of
abandonment was posted on the Bureau of Customs bulletin board, the same was insufficient; such notice would
be proper only in cases where the owner or importer is unknown, pursuant to Section 2304 of the Tariff and
Customs Code. The appellate court averred that the private respondent is duly registered with the Garment and
Textile Export Board and with the Bureau of Customs as Garments Manufacturer and Exporter; as such, the Bureau
of Customs knew or should have known the address of the private respondent and should have sent the required
notice to it at said address. For the Collector of Customs’ failure to duly notify the private respondent, the goods in
question cannot be considered as impliedly abandoned cargo.

The decretal portion of the decision of the Court of Appeals reads, thus:

WHEREFORE, the appealed decision in Civil Case No. 61644 is hereby AFFIRMED by this Court, with costs against
defendant-appellant.24

The petitioner assails the decision of the Court of Appeals contending that:

The Court of Appeals erred in failing to consider the fact that the Regional Trial Court did not have jurisdiction over
the central issue of the case.

II

The Court of Appeals erred in not dismissing the Respondent’s Complaint outright for lack of cause of action.25

The petitioner asserts that the private respondent had a cause of action against it for the value of the shipment only
if the latter was still the owner of the shipment when it was gutted by fire on July 26, 1990. The ultimate issues
were as follows: whether the private respondent had impliedly abandoned the cargo and whether the declaration
of abandonment made by the Chief of the Law Division of the Bureau of Customs in the abandonment proceedings
had become final and executory. However, according to the petitioner, the resolution of such issues is within the
exclusive jurisdiction of the District Collector of Customs, and within the appellate jurisdiction of the Court of Tax
Appeals. Thus, the RTC had no jurisdiction to delve into and resolve the issue of whether or not the private
respondent was duly served with a copy of the notice of the abandonment proceedings and to pass upon the
validity of the abandonment proceedings itself. The petitioner asserts that the Bureau of Customs has exclusive and
original jurisdiction to hear and decide cases concerning the implementation of Customs Laws or any other law
that the Bureau is charged to implement. Even if there was a violation of due process in the seizure and forfeiture
case, the Bureau retained jurisdiction over the same, to the exclusion of the regular courts. According to the
petitioner, it behooved the RTC to dismiss the complaint of the private respondent for lack of jurisdiction, without
prejudice to the latter’s right to appeal the notice of abandonment to the Commissioner of Customs, and, from an
adverse ruling of the Commissioner of Customs, to the Court of Tax Appeals.

In its Comment, the private respondent avers that the petitioner raised for the first time only in this Court the issue
of the trial court’s jurisdiction, as well as the matter of its failure to appeal from the declaration of abandonment of
the District Collector of Customs with the Commissioner of Customs. The private respondent never raised the issue
in its pleading in the RTC and in the CA. Thus, the petitioner is barred by laches from raising such issue in this case.
The private respondent asserts that the petitioner’s motive is clearly to assail the factual findings of the trial court
as affirmed by the CA and introduce new matters in the case. According to the private respondent, this runs
counter to established jurisprudence that the Supreme Court is not a trier of facts.

The private respondent also asserts that the RTC did not pass upon the validity or invalidity of the administrative
proceedings before the Collector of Customs, but merely applied the law, particularly the last sentence of Sec. 1801
of the Tariff and Customs Code. Contrary to the private respondent’s contention, the trial court had jurisdiction
over its action. As admitted by the petitioner’s witness, Atty. Leonardo Doctor, the private respondent was not
furnished a notice giving it fifteen days to file the appropriate import entry documents. Hence, the private
respondent was not deemed to have abandoned the cargo. The private respondent also posits that considering that
actions of the Collector of Customs are reviewable to the Court of Tax Appeals, which are, in turn, ultimately
reviewable by the Court of Appeals, the latter court, to which the petitioner’s appeal had eventually found its way,
would therefore be fully competent to pass upon the validity of the abandonment proceedings. Furthermore,
according to the private respondent, an appeal of the abandonment proceedings before the District Collector of
Customs would be a futile exercise as the goods had already been burned and destroyed. The private respondent
further posits that if, indeed, the goods had been abandoned by the private respondent and became the property of
the government, as averred by the petitioner, the Bureau of Customs should have intervened in the case, pursuant
to Sec. 1, Rule 19 of the 1997 Rules of Civil Procedure. The fact that the government did not intervene gives rise to
doubts as to the petitioner’s claim that the subject goods had been declared abandoned by the Bureau of Customs
and, thus, became the property of the government. Finally, the private respondent argued, the Bureau of Customs
lost jurisdiction over the cargo when it was gutted by fire before the sale at public auction.

In its reply, the petitioner insists that the defense of lack of jurisdiction may be interposed at any time, during
appeal or even after final judgment, conformably to the previous rulings of the Court.

THE ISSUE

The core issue raised by the petitioner for resolution in this case is whether or not the trial court had jurisdiction to
review and declare ineffective the declaration of the District Collector of Customs in Abandonment Proceedings No.
288-89 that the subject shipment was abandoned cargo and that, thenceforth, the government ipso facto became
the owner thereof.

We uphold the contention of the petitioner. Irrefragably, the RTC had jurisdiction over the nature of the private
respondent’s action, which was one for the collection of the value of the cargo gutted by fire, while under the
custody and control of the petitioner preparatory to its sale at public auction by the Bureau of Customs. The
jurisdiction of the court or other tribunal is determined by the relevant allegations of the complaint and the
character of the relief sought, irrespective of whether or not the plaintiff is entitled to recover upon all or some of
the claims accorded therein. The jurisdiction of the trial court does not depend upon the defenses in the answer or
in a motion to dismiss.26 However, the jurisdiction of the court or tribunal over the issues, as gleaned from the
pleadings of the parties, is determined by the law which is determinative and decisive of said issue.

As gleaned from the pleadings of the parties in the trial court, the core issue therein was whether or not the private
respondent was the owner of the cargo when it was gutted by fire, as claimed by the private respondent, or owned
by the government after it was declared by the District Collector of Customs as abandoned cargo, as claimed by the
petitioner. Indeed, the private respondent, in its pre-trial brief, listed this as one of the issues to be resolved by the
Court, thus:

1. Whether or not at the time of the fire on July 26, 1990. plaintiff’s goods were already "abandoned goods" so that
the plaintiff, at the time of the fire, was no longer the owner of said goods."27

If the government owned the cargo before it was gutted by fire, then the private respondent had no cause of action
against the petitioner. But the resolution of the issue is riveted to and intertwined with the resolution of the issue
of whether the RTC is vested with jurisdiction to review and nullify a declaration made by the District Collector of
Customs that the shipment was abandoned cargo and, thus, ipso facto belonged to the government. The resolution
of both issues involved the application of Section 1801 and Section 1802 of the Tariff and Customs Code, which
read:

SEC. 1801. Abandonment, Kinds and Effects of. – Abandonment is expressed when it is made direct to the Collector
by the interested party in writing, and is implied when, from the action or omission of the interested party to file
the import entry within five (5) days or an extension thereof from the discharge of the vessel or aircraft, or having
filed such entry, the interested party fails to claim his importation within five (5) days thereafter or within an
extension of not more than five (5) days shall be deemed an implied abandonment. An implied abandonment shall
not be effective until the article shall be 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 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.

SEC. 1802. Abandonment of Imported Articles.- The owner or importer of any articles may, within ten days after
filing of the import entry, abandon to the Government all or a part of the articles included in an invoice, and,
thereupon, he shall be relieved from the payment of duties, taxes and all other charges and expenses due thereon:
Provided, That the portion so abandoned is not less than ten per cent of the total invoice and is not less than one
package, except in cases of articles imported for personal or family use. The articles so abandoned shall be
delivered by the owner or importer at such place within the port of arrival as the Collector shall designate, and
upon his failure to so comply, the owner or importer shall be liable for all expenses that may be incurred in
connection with the disposition of the articles.

Nothing in this section shall be construed as relieving such owner or importer from any criminal liability which
may arise from any violation of law committed in connection with the importation of the abandoned article.

The resolution of the issue also calls for the application of Section 2601 of the said Code which provides that the
property in customs’ custody, including abandoned articles, shall be subject to sale under the conditions provided
therein. Indeed, the trial court resolved the issues under Section 1801 of the Tariff and Customs Code and found
the petitioner liable to the private respondent, under Section 190228 of the said Code.

The trial court held ineffective the declaration made by the District Collector of Customs that the cargo was
abandoned because the notice to the consignee as mandated by Section 1801 of the Code was not complied with.
Thus, according to the trial court, the private respondent owned the cargo and had a cause of action against the
petitioner:

In trying to avoid liability, RV Marzan admits that the plaintiff was the consignee of the cargo upon its arrival in the
Philippines. However, RV Marzan avers that at the time of the fire, the goods were already the property of the
government. Before the fire, RV Marzan received the cargo from the Bureau of Customs pursuant to a
Memorandum Order declaring it as "abandoned cargo." This Memorandum Order which is in accordance with Sec.
1801 of the Tariff and Customs Code, provides as follows:

An examination of the records reveal that the subject shipment was subsequently declared abandoned by the
Bureau of Customs as "abandoned cargo" for the plaintiff’s failure to file the import entry.

This declaration is found by the Court to be ineffective. Under the law, notice of the proceedings of abandonment
was not given to the consignee or the plaintiff herein or his agent. The consignee in this case being known, should
have been notified of the abandonment of his property in favor of the government and that he should have been
given a chance at a public hearing to present evidence and to be heard with respect to the cargo subject of
abandonment. This is part of due process.29

Evidently, the resolution of the foregoing issues is within the exclusive competence of the District Collector of
Customs, the Commissioner of Customs and within the appellate jurisdiction of the Court of Tax Appeals. Indeed, in
Alemar’s, Inc. v. Court of Appeals,30 we held that:

Petitioner primarily seeks the annulment of the act of the Collector of Customs declaring the subject importation
abandoned and ordering it sold at public auction, claiming that the abandonment proceeding held by the Collector
of Customs was irregular since the latter did not give notice to petitioner of the abandonment before declaring the
importation abandoned.

Consequently, the case falls within the jurisdiction of the Commissioner of Customs and the Court of Tax Appeals
vis-à-vis the averments in the amended petition, not with the regional trial court.

In Jao v. Court of Appeals,31 we held that the RTC is devoid of any competence to pass upon the validity or
regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs, and to enjoin or otherwise
interfere with the said proceedings even if the seizure was illegal. Such act does not deprive the Bureau of Customs
of jurisdiction thereon. Thus, we held:

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

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

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

Even if the seizure by the Collector of Customs were illegal, which has yet to be proven, we have said that such act
does not deprive the Bureau of Customs of jurisdiction thereon.

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

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

"The Collector of Customs when sitting in forfeiture proceedings constitutes a tribunal expressly vested by law
with jurisdiction to hear and determine the subject matter of such proceedings without any interference from the
Court of First Instance (Auyong Hian v. Court of Tax Appeals, 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."

The trial court was incompetent to pass upon and nullify (1) the seizure of the cargo in the abandonment
proceedings, and (2) the declaration made by the District Collector of Customs that the cargo was abandoned and
ipso facto owned by the government. It, likewise, had no jurisdiction to resolve the issue of whether or not the
private respondent was the owner of the cargo before it was gutted by fire. The trial court should have rendered
judgment dismissing the complaint, without prejudice to the right of the private respondent to ventilate the issue
before the Commissioner of Customs and/or to the Court of Tax Appeals as provided for in the Tariff and Customs
Code.

The District Collector of Customs did not lose jurisdiction over the abandonment proceedings. The loss of the cargo
did not extinguish his incipient jurisdiction in the said proceedings, nor render functus officio her declaration that
the subject shipment had been abandoned.

The private respondent cannot argue that if its complaint against the petitioner is dismissed, the latter would be
enriching itself at the expense of the private respondent. In point of fact, the petitioner is liable to the government
for the duties and taxes due for the imported cargo under Section 1902 of the Tariff and Customs Code, which
reads:

SEC. 1902. Responsibility of Operators. – The operators of bonded warehouse in case of loss of the imported
articles stored shall be liable for the payment of duties and taxes due thereon.

The government assumes no legal responsibility in (sic) respect to the safekeeping of articles stored in any
customs warehouses, sheds, yards or premises.

Neither may the private respondent invoke estoppel, because the parties, in their pleadings in the trial court and in
the Court of Appeals, raised the same issues for resolution.
It must be stressed that the cargo arrived in the Philippines on April 12, 1989. The private respondent failed to
accomplish the required import entry declarations, pay the requisite taxes and duties, if any, and take delivery of
the cargo. It was only after the lapse of more than two years, or on December 21, 1991, that the private respondent
filed its complaint against the petitioner in the RTC. By then, the cargo had been gutted by fire. The private
respondent has not made any valid justification for its silence thereon and its inaction. In can be said then that the
private respondent went to court with unclean hands.

The refusal of the Bureau of Customs to intervene in the trial court does not, in any way, fortify the private
respondent’s claim that it is the owner of the cargo. The government had no legal obligation to intervene in the trial
court considering that the latter had no jurisdiction over the complaint. It was enough that then Bureau of Customs
Law Division Chief Atty. Doctor testified that the cargo was duly declared by the District Collector of Customs as
abandoned property, that the said declaration had become final, and that the government became ipso facto the
owner of the cargo. The government had every right to expect that the trial court would dismiss the complaint for
lack of jurisdiction over the issue raised therein.

IN THE LIGHT OF THE FOREGOING, the petition is GRANTED. The Decisions of the RTC and of the Court of Appeals
are SET ASIDE and REVERSED. The RTC is ORDERED to dismiss the complaint of the private respondent against
the petitioner, as well as the counterclaim of the latter against the private respondent.

SO ORDERED.

Quisumbing, (Acting Chairman), Austria-Martinez, and Tinga, JJ., concur.

Puno, (Chairman), J., on leave.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 126634 January 25, 1999

TRANSGLOBE INTERNATIONAL, INC., petitioner,

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

BELLOSILLO, J.:

On 27 April 1992 a shipment from Hongkong arrived in the Port of Manila on board the "S/S Sea Dragon." Its
Inward Foreign Manifest indicated that the shipment contained 1,054 pieces of various hand tools. Acting on
information that the shipment violated certain provisions of the Tariff and Customs Code as amended, agents of the
Economic Intelligence and Investigation Bureau (EIIB) seized the shipment while in transit to the Trans Orient
container yard-container freight station. An examination thereof yielded significant results —

1. The 40 ft. van was made to appear as a consolidation shipment consisting of 232 packages with
Translink Int'l. Freight Forwarder as shipper and Transglobe Int'l., Inc. as consignee;

2. There were eight (8) shippers and eight (8) consignees declared as co-loaders and co-owners of
the contents of the van, when in truth the entire shipment belongs to only one entity;

3. Not one of the items declared as the contents of the van, i.e., various hand tools, water cooling
tower g-clamps compressors, bright roping wire and knitting machine w(as) found in the van.
Instead the van was fully stuffed with textile piece goods. 1

On those accounts, which were deemed to constitute a violation of Sec. 2503 in relation to Sec. 2530, pars. (f) and
(m), subpars. 3, 4 and 5, of the Tariff and Customs Code, the EIIB recommended seizure of the entire shipment. On
21 May 1992 District Collector of Customs Emma M. Rosqueta issued the corresponding warrant of seizure and
detention.

The case was set for hearing on 2 June 1992 but petitioner Transglobe International, Inc., or its duly authorized
representative, failed to appear despite due notice. Resetting was ordered to 19 June 1992, yet, for the same reason
was further reset to 8 July 1992. Still petitioner or its representative was unable to appear which thus led to its
being declared in default. The case was then considered submitted for decision based on existing documents. On 26
August 1992 after finding that a violation of the cited provisions was indeed committed, District Collector Rosqueta
decreed the forfeiture of the shipment in favor of the government to be disposed of in accordance with law.2

Thereafter petitioner filed a petition for redemption of the shipment. On 2 October 1992 Hearing Officer Geoffrey
G. Gacula recommended that the petition be given due course and that petitioner be allowed to effect the release of
the shipment upon

payment of P1,300,132.04 representing its domestic market value. Hearing Officer Gacula took into consideration
the following —

Record shows that the shipment consists of good which are in legal contemplation not prohibited,
nor the release thereof to the claimant contrary to law . . . . the spirit and intent of Executive Order
No. 38, to increase and accelerate revenue collection by the government thru redemption of
forfeited cargoes, which would also benefit importers by giving them the chance to recover portions
of their investment . . . . 3

Chief of the Law Division Buenaventura S. Tenorio concurred in the recommendation. On the same day, District
Collector Rosqueta recommended approval thereof and forwarded the case to respondent Commissioner of
Customs Gulliermo L. Parayno Jr. through Deputy Commissioner Licerio C. Evangelista. 4 On 7 October 1992 the
latter likewise recommended favorable action thereon. 5 However respondent Commissioner Parayno Jr. denied
the offer of redemption in his 1st Indorsement dated 27 November 1992 for these reasons —

1. The shipment was made to appear to be an innocuous consolidation shipment destined for
stripping at an outside CY-CFS 6 in order to conceal the textile fabrics;

2. The eight (8) co-loaders/consignee of the shipment are all fictitious;

3. Under Section 3B, CMO 87-92, offers of redemption shall be denied when the seized shipment is
consigned to a fictitious consignee. 7

Thus respondent Commissioner Parayno Jr. instructed the Auction and Cargo Disposal Division of the Port of
Manila to include the shipment in the next public auction. 8 On 8 February 1993 reconsideration was
denied. 9Petitioner moved for another reconsideration which was referred to District Collector Rosqueta for
comment. Even after further review, she maintained her previous recommendation allowing redemption —

1. Since no entry has been filed so far, the consignee could not be faulted for misdeclaration under
Section 2503 of the Tariff and Customs Code. While the shipment was misdeclared in the rider and
the manifest, the consignee is innocent of the facts stated therein as it had no hand in their
preparation or issuance. Law and regulation allow the amendment of the manifest at any time
before the filing of entry in order to protect the innocent consignee.

2. Transglobe International, Inc., is a juridical person duly organized in accordance with the laws of
the Philippines and is qualified as a consignee. It is not fictitious as evidenced by its Articles of
Incorporation registered with the Securities and Exchange Commission.

3. The shipment consists of goods which are in legal contemplation not prohibited, nor the release
thereof to the Claimant contrary to law, and the redemption offer is well within the purview of
Executive Order No. 38. 10

Nevertheless, reconsideration was again denied on 1 July 1993. 11 On 4 August 1993 the forfeiture of the shipment
and denial of the request for redemption were affirmed by respondent Commissioner Parayno Jr. 12

In the appeal which was solely concerned with the propriety of redemption, the Court of Tax Appeals (CTA)
expressed a different view. Relying on Sec. 1 of Executive Order No. 38, as applied in Gazzingan v. Commissioner of
Customs 13 since no fraud was found on the part of the redemptioner, the CTA directed on 27 June 1995 that
petitioner be allowed to redeem the shipment upon payment of its computed domestic market value. 14
However respondent Court of Appeals sustained the denial of the redemption by respondent Commissioner of
Customs. On 28 June 1996 it set aside the ruling of the CTA 15 on the ratiocination that —

The findings of the Economic Intelligence and Investigation Bureau: "that the shipment was made
to appear to be an innocuous consolidation shipment destined for stripping at an outside CY-CFS in
order to conceal the textile fabrics," and "that the eight (8) coloaders/consignees were all fictitious"
had not been refuted during the seizure proceedings by respondent Transglobe International, Inc.
The failure of respondent Transglobe to refute this fact negates its claim that no violation of the
above cited provisions (Sec. 2503 in relation to Sec. 2530, pars. (f) and (m), subpars. 3, 4 and 5 of
the Tariff and Customs Code as amended) had been committed. The findings of the EIIB above
referred to remain unassailed and uncontradicted. Said findings clearly show badges of fraud . . .
The seizure of the property in question was made upon findings that the documents covering the
said shipment were forged, thus:

FRAUD — the following cases herein enumerated demonstrate the presence of fraud: 1.a. The use of
forged or spurious documents . . . (Section 1, CMO-87-92). 16

On 3 September 1996 reconsideration was denied. 17

We now resolve the issue of whether petitioner should be allowed to redeem the forfeited shipment.

Petitioner asserts that it is not guilty of fraud because, as held in Farolan Jr. v. Court of Tax Appeals 18 and Aznar v.
Court of Tax Appeals, 19 the fraud referred to is one that is intentional with the sole object of avoiding payment of
taxes. While petitioner admits that it is the only consignee of the cargo and that the van contains textiles, contrary
to those declared in the manifest and rider, it avers that these discrepancies do not evince deliberate evasion of
taxes or payment of duties, especially considering that it is a duly registered domestic corporation, and that it has
no knowledge or participation in the execution of the manifest and the rider thereon.

A violation of Sec. 2503 in relation to Sec. 2530, pars. (f) and (m), subpars. 3, 4 and 5, of the Tariff and Customs
Code as amended was found by the Bureau of Customs. Section 203 deals with undervaluation, misclassification
and misdeclaration in entry. On the other hand, Sec. 2530, pars. (f) and (m), subpars. 3, 4 and 5 provides —

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

f. Any article the importation or exportation of which is effected or attempted contrary to law, or
any article of prohibited importation or exportation, and all other articles which, in the opinion of
the Collector, have been used, are or were entered to be used as instruments in the importation or
exportation of the former . . . .

m. Any article sought to be imported or exported . . . .

(3) On the strength of a false declaration or affidavit executed by the owner, importer, exporter or
consignee concerning the importation of such article;

(4) On the strength of a false invoice or other document executed by the owner, importer, exporter
or consignee concerning the importation or exportation of such article; and

(5) Through any other practice or device contrary to law by means of which such article was
entered through a customhouse to the prejudice of the government.

From the decision of the District Collector of Customs decreeing forfeiture, petitioner Transglobe International,
Inc., filed a petition for redemption pursuant to Sec. 2307 of the Tariff and Customs Code as amended by Sec. 1 of
E.O. No. 38 20 which states —

Sec. 2307. Settlement of Case by Payment of Fine or Redemption of Forfeited Property. — Subject to
approval of the Commissioner, the District Collector may, while the case is still pending except
when there is fraud, accept the settlement of any seizure case provided that the owner, importer,
exporter, or consignee or his agent shall offer to pay to the collector a fine imposed by him upon the
property, or in case of forfeiture, the owner, exporter, importer or consignee or his agent shall offer
to pay for the domestic market value of the seized article. The Commissioner may accept the
settlement of any seizure case on appeal in the same manner (emphasis supplied) . . . Settlement of
any seizure case by payment of the fine or redemption of forfeited property shall not be allowed in
 any case where the importation is absolutely prohibited or where the release of the property would
be contrary to law.

As a means of settlement, redemption of forfeited property is unavailing in three (3) instances, namely, when there
is fraud, where the importation is absolutely prohibited, or where the release of the property would be contrary to
law. Respondent Commissioner of Customs disallowed the redemption on the ground of fraud which consisted of
the following: "The shipment was made to appear to be an innocuous consolidation shipment destined for
stripping at an outside CY-CFS in order to conceal the textile fabrics; the eight (8) co-loaders/consignees of the
shipment are all fictitious; and, under Section 3B, CMO 87-92, offers of redemption shall be denied when the seized
shipment is consigned to a fictitious consignee." 21 Respondent court sustained this ruling which it considered
based on undisputed findings of the EIIB.

We rule that respondent Court of Appeals committed reversible error in rendering the assailed decision. The
findings of respondent Commissioner of Customs which provided the bases for denying petitioner's offer of
redemption were his own, not of the EIIB, and were merely stated in his 1st Indorsement with no evidence
whatsoever to substantiate them. These findings prompted petitioner to seek reconsideration and dispute them
with these claims —

. . . First . . . . the shipment was not destined for stripping. It was then being transported to a CY-CFS
operator where it would be examined by a customs appraiser who would determine the proper
taxes and duties to be paid on the shipment. Second . . . . the petitioner is a legitimate corporation
registered with the Securities and Exchange Commission in accordance with the laws of the
Philippines . . . . 22

On petitioner's second motion for reconsideration, District Collector Rosqueta was silent on the first claim but
upheld the second claim. According to her, petitioner is a juridical person duly organized in accordance with the
laws of the Philippines and is qualified as a consignee; it is not fictitious as evidenced by its Articles of
Incorporation registered with the Securities and Exchange Commission. 23 Despite these, respondent
Commissioner of Customs maintained his denial of the redemption based on his previous unsubstantiated findings.
It is settled that findings of fact of an administrative agency must be respected so long as they are supported by
substantial evidence 24 or that amount of relevant evidence which a reasonable mind might accept as adequate to
justify a conclusion. 25 Lacking support, the factual findings of respondent Commissioner of Customs cannot stand
on their own and therefore not binding on the courts.

In the appeal before the CTA, respondent Commissioner of Customs contended that the seizure of the shipment
was made also upon a finding that the documents covering it were forged, thus constituting fraud as defined in Sec.
1, par. 1.a. CMO-87-92. This Section is of the same tenor as Sec. 2530, pars. (f) and (m), subpars. 3, 4 and 5, which
for emphasis deals with falsities committed by the owner, importer, exporter or consignee or importation/exportation
through any other practice or device. In Aznar, as reiterated in Farolan, we clarified that the fraud contemplated by
law must be actual and not constructive. It must be intentional, consisting of deception willfully and deliberately
done or resorted to in order to induce another to give up some right. The misdeclarations in the manifest and rider
cannot be ascribed to petitioner as consignee since it was not the one that prepared them. As we said in Farolan, if
at all, the wrongful making or falsity of the documents can only be attributed to the foreign suppliers or
shippers. 26 Moreover, it was not shown in the forfeiture decision that petitioner had knowledge of any falsity in
the shipping documents. District Collector Rosqueta's comment on petitioner's second motion for reconsideration
is enlightening: "While the shipment was misdeclared in the rider and the manifest, the consignee is innocent of
the facts stated therein as it had no hand in their preparation or issuance." 27 We mention in passing that in having
thus stated, she in effect nullified her prior finding that petitioner violated the cited provisions of the Tariff and
Customs Code as amended. Consequently, we agree with the finding of the CTA that fraud was not committed by
petitioner in the importation of the shipment.

Taking into consideration the circumstances obtaining in the present case, namely, the absence of fraud, the
importation is not absolutely prohibited and the release of the property would not be contrary to law, the Court
deems it proper to allow the redemption of the forfeited shipment by petitioner upon payment of its computed
domestic market value. Doing so is definitely in keeping with the two-way intent of E. O. No. 38, to wit, to expedite
the collection of revenues and hasten the release of cargoes under seizure proceedings to the end that importers
and exporters will benefit in the form of reduction in expenditures and assurance of return of their investments
that have been tied up with their importations. 28

Finally, one may be tempted to argue that for failure to appear in the forfeiture proceedings despite due notice,
petitioner was in default and deemed to have admitted its violation of Sec. 2503, in relation to Sec. 2530, pars. (f)
and (m), as found by District Collector of Customs Rosqueta, interpreted by the Court of Appeals as "badges of
fraud," and, as a consequence, petitioner is now estopped from claiming that in the proceedings for redemption
there was no fraud on its part.
The argument surfs on a wrong premise. Forfeiture of seized goods in the Bureau of Customs is a proceeding
against the goods and not against the owner. It is in the nature of a proceeding in rem, i.e., directed against
the res or imported articles and entails a determination of the legality of their
importation. 29 In this proceeding, it is in legal contemplation the property itself which commits the violation and is
treated as the offender, without reference whatsoever to the character or conduct of the owner. 30 The issue here is
limited to whether the imported goods should be forfeited and disposed of in accordance with law for violation of
theTariff and Customs Code. Hence, the ruling of District Collector Rosqueta in the forfeiture case, insofar as the
aspect of fraud is concerned, is not conclusive; nor does it preclude petitioner from invoking absence of fraud in
the redemption proceedings. Significantly, while District Collector Rosqueta decreed the forfeiture of the subject
goods for violation of the Tariff and Customs Code, she nevertheless recommended the approval of petitioner's offer
of redemption, 31 and categorically acknowledged that as consignee there was no fraud on its part.32

WHEREFORE, the petition is GRANTED. The Decision of respondent Court of Appeals of 28 June 1996 sustaining
the denial of the redemption of the forfeited shipment and the Resolution of 3 September 1996 denying
reconsideration are SET ASIDE. The Decision of the Court of Tax Appeals of 27 June 1995 ordering respondent
Commissioner of Customs to allow petitioner Transglobe International, Inc., to redeem the forfeited shipment upon
payment of its domestic market value amounting to P1,300,132.04 is REINSTATED.

SO ORDERED.

Mendoza, Quisumbing and Buena, JJ., concur.

Puno, J., Pls. see Dissent.