Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-35385 January 31, 1983

ALFREDO DE LA FUENTE, as Collector of Customs, Port of Sual, ROLANDO GEOTINA, as

Commissioner of Customs, HILARIO RUIZ, as Flag Officer In Command, Philippine Navy, and
GIL FERNANDEZ, as Commandant, Philippine Coast Guard, petitioners,
vs.
HON. JESUS DE VEYRA, in his capacity as Judge of the Court of First Instance of Manila, Branch
XIV, LUCKY STAR SHIPPING COMPANY, and TENG BEE ENTERPRISES CO. (HK) LTD.,
respondents.

GUTIERREZ, JR., J.:

On June 16, 1972, at 6:00 o'clock in the afternoon, the crew of a Q-boat of the Philippine Coast
Guard spotted a vessel, the M/V Lucky Star I, owned by the private respondent Lucky Star Shipping
Co., unloading cargo to several small watercrafts alongside the vessel off the coast of Zambales
approximately thirty (30) nautical miles east of Scarborough Shoal or twenty-three (23) miles east
of the International Treaty Limits.

As the Q-boat was approaching the M/V Lucky Star I, it was met by gunfire from the smaller
watercrafts which immediately fled from the scene. Only the M/V Lucky Star I was apprehended.

Upon boarding the vessel, the Philippine Coast Guard officers discovered 3,400 cases of foreign
made "Champion, menthol, filter-tipped, king-size cigarettes" allegedly owned by Teng Bee
Enterprises Co. (HK) Ltd., co-respondent herein. The coast guard officers, also saw on board a
certain Deogracias Labrador, Filipino Captain of the domestic watercraft, M/L Sangbay, one of the
boats seen alongside the M/V Lucky Star I.

The captain of the Lucky Star I, Li Tak Sin, was not able to present documents or papers for the
"Champion" cigarettes. He and the crew were arrested for smuggling. The boarding officers also
seized the Lucky Star I and ordered its complement, including Labrador, to proceed to Manila on
board said vessel.

The Lucky Star I arrived in Manila on June 17, 1972, at 11:00 p.m On June 18, 1972, Labrador gave a
statement before the personnel at the Philippine Navy Headquarters to the effect that his presence
on board the Lucky Star I was because of an attempt to smuggle blue seal cigarettes into the
country.

On June 20, 1972, a warrant of seizure and detention was issued by the Collector of Customs of the
Port of Sual-Dagupan in Seizure Identification No. 14-F-72 against the vessel and articles seized for
violation of Section 2530 (a) of the Tariff and Customs Code as to the vessel and Section 2530 (g)
and (m-1) as to the cigarettes.
On June 22, 1972, the Acting Provincial Fiscal filed before the Court of First Instance of Zambales,
Branch II, an information against Li Tak Sin, the crew of Lucky Star I, Deogracias Labrador, and
other persons for violation of Section 101 of the Tariff and Customs Code and penalized under
Section 3601 of Republic Act 1937, as amended by Republic Act 4712:

Meanwhile, on June 21, 1972, the private respondents Lucky Star Shipping Company and Teng Bee
Enterprises Company (HK) Ltd. filed before the Court of First Instance of Manila, Branch XIV,
presided over by respondent judge, the Hon. Jesus de Veyra. a complaint for injunction and
recovery of personal property against the petitioners praying for the return of the goods seized and
the release of the M/V Lucky Star I. The case was docketed as Civil Case No. 87435.

On June 23, 1972, the respondent judge issued an order which reads as follows:

With regard to the petition for mandatory preliminary injunction, this Court must
declare itself without jurisdiction, with reference to the alleged blue seal cigarettes
whose forfeiture is exclusively within the jurisdiction of the Bureau of Customs.
With regard to the vessel, as admittedly it is more than 30 tons dead weight and the
vessel may not be forfeited but the remedy of the Bureau of Customs would only be
the imposition of a fine, the Bureau of Customs is given until June 29, 1972 within
which to inform this Court the maximum fine that may be imposed on the vessel,
and this shall be the basis for a bond that would entitle Plaintiff to repossess the
vessel. In the meantime, until the vessel is released the members of the crew of the
vessel are in need of provisions and medicines and the Philippine Navy is ordered to
permit Plaintiff, under proper escort of Philippine Navy Guards, to furnish
provisions and medicines to the members of the crew.

The petitioners asked for a reconsideration of the aforequoted order insofar as it required them to
inform the respondent court of the maximum fine that may be the basis for a bond that would
entitle the private respondents to repossess the vessel. The petitioners contended that the court
had no jurisdiction over the subject matter of the, complaint inasmuch as the M/V Lucky Star I was
being subjected to forfeiture under Section 2530-A of the Tariff and Customs Code. It was further
contended that the court was devoid of jurisdiction to issue a writ of replevin or release order for
goods under the custody of the Bureau of Customs.

The respondent judge denied the petitioners' motion for reconsideration in his order of August 7,
1972 as follows:

Respondents question the jurisdiction of this Court, as well as the order of this Court
holding that as the vessel in question is less than 30 tons dead weight capacity, it
may not be the subject of forfeiture. The issue involves Sec. 2530 of the Tariff and
Customs lode. Respondents claim that any vessel engaged in smuggling may be
forfeited and add that this also includes a vessel less than 30 tons lead weight
capacity, because of a semicolon that separates the two phrases. The interpretation
of Respondents does not make sense for why should any semicolon appear when
regardless of dead weight capacity, according to Respondents, a vessel may be
forfeited? The only reasonable interpretation of this section is that if the vessel is of
more than 30 tons dead weight capacity, it may not be forfeited and only fined. This
stand of this Court is strengthened by a decision of the Court of Tax Appeals making
the same ruling and even the Bureau of Customs recently bewailed the defect in the
 law in the case of the M/V Don Isidro, found carrying smuggled cigarettes and fined
the paltry maximum sum of P10,000.00. As this vessel cannot be forfeited legally
and Respondents seek to do so, this Court has jurisdiction to grant relief.

The motion for reconsideration is, therefore, denied for lack of merit.

Hence, this petition for certiorari and prohibition filed by Alfredo de la Fuente, in his capacity as
Collector of Customs; Rolando Geotina, as Commissioner of Customs; Hilario Ruiz, as Flag Officer in
Command, Philippine Navy; and Gil Fernandez, as Commandant of the Philippine Coast Guard.

The sole issue is whether or not the Court of First Instance has jurisdiction to take cognizance of the
complaint filed by the private respondents for the release of the vessel M/V Lucky Star I, which is
the subject of a seizure and forfeiture proceedings before the Collector of Customs of the port of
Sual-Dagupan.

We find for the petitioners. It is well-settled that the exclusive jurisdiction over seizure and
forfeiture cases vested in the Collector of Customs precludes a Court of First Instance from
assuming cognizance over such cases. We, therefore, set aside the assailed orders of the respondent
judge.

In Hadji Mohamad Daud v. Collector of Customs of the Port of Zamboanga City (68 SCRA 157) this
Court ruled:

As early as June 30, 1955, the Court had already announced in Millarez v. Amparo
(97 Phil. 284-85 (1955) 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, involving 'seizure, 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 (L-30734, July 28, 1969, 25 SCRA 840; see also
Collector of Customs v. Arca, L-21389, July 17, 1964, 11 SCRA 537) 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 L-20266, January 31, 1967, 19 SCRA 234;
Auyong Hian v. Court of Tax Appeals, L-25181, January 11, 1967, 19 SCRA 10;
Auyong Hion v. Court of Tax Appeals, L-28782, September 12, 1974, Second
Division, per Zaldivar, J., 59 SCRA 130) beyond the interference of the Court of First
Instance. (Lopez v. Commissioner of Customs, L-28235, January 30, 1971, 37 SCRA
33-34) As expressed in Pacis v. Averia, (L-22526, November 29, 1966, 18 SCRA 907;
see also Ponce Enrile v. Vinuya, L-19043, January 30, 1971, 37 SCRA 38687) * * * the
Court of First Instance should yield to the jurisdiction of the Collector of
Customs.1äwphï1.ñët 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, L-22977, May 31, 1972, 45 SCRA 281, and cases cited). If the property
owned 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, L-19259, September 23, 1966, 18 SCRA 66-67, citing cases).

In Republic v. Bocar (93 SCRA 79) Chief Justice Enrique M. Fernando, speaking for the Court
asserted the doctrine anew:

The Congress of the Philippines was vested with the power to define, prescribe, and
apportion the jurisdiction of the various courts' of the Philippines Article VIII,
Section I of the 1935 Constitution) Now it is the National Assembly. (Article X,
Section I of the present Constitution, insofar as pertinent provides: The National
Assembly shall have the power to define, prescribe, and apportion the jurisdiction of
the various courts, but may not deprive the Supreme Court of its jurisdiction over
cases enumerated in Section five hereof.') 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. (Cf. Pascual v. Commissioner of
Customs, 105 Phil. 1039 (1959); Commissioner of Customs v. Serree Investment
Company, 108 Phil, 1 (1960); Commissioner of Customs v. Eastern Sea Trading Co.,
113 Phil. 333 (1961); Commissioner of Customs v. Santos, 114 Phil. 589 (1962);
Commissioner of Customs v. Nepomuceno, 114 Phil. 702 (1962) Pascual v.
Commissioner of Customs, 114 Phil. 953 (1962); Serree Investment Co. v.
Commissioner of Customs, L-19564, Nov. 28, 1964, 12 SCRA 493; Bombay
Department Store v. Commissioner of Customs, L- 20489, June 22,1965,14 SCRA
331; Yupangco and Sons v. Collector of Customs, L-22259, Jan. 19, 1966, 16 SCRA 1;
Chan Kian v, Collector of Customs, L-20803, Jan. 31, 1966, 16 SCRA 133; Capulong v.
Aseron, L- 22989, May 14, 1966, 17 SCRA 11; Lazaro v. Commissioner of Customs, L-
22511, May 16, 1966, 17 SCRA 36; Capulong v. Acting Commissioner of Customs, L-
22990, May 19, 1966, 17 SCRA 61; Gigare v. Commissioner of Customs, L-21376,
Aug. 29,1966,17 SCRA 1001.);
To sustain the assailed orders of the respondent judge, the private respondents would impress
upon this Court that the seizure of the M/V Lucky Star I was illegal and against the accepted
principles of international law for the following reasons: 1) the M/V Lucky Star I is a foreign vessel
registered under the laws of the Republic of Panama and flies the Panamian flag; 2) the crew of said
vessel is composed of aliens; and 3) the M/V Lucky Star I was seized by the Philippine Coast Guard
at a distance of eighty-five (85) miles to the nearest land point along the western coast of Luzon. It
is contended that inasmuch as the eighty five (85) mile distance where the Lucky Star I was seized
is outside the territorial jurisdiction of the Philippines, the Bureau of Customs is without power to
enforce the Philippine Customs law. Consequently, it is argued that the proper forum for the private
respondents to obtain relief for the release of the vessel is the ordinary court, more specifically, the
Court of First Instance.

The petitioners contend, on the other hand, that the M/V Lucky Star I was apprehended at a point
23 miles east of the International Treaty Limits, well within the territory of the Philippines as
defined in Article I of the 1935 Constitution, the Treaty of Paris, and Republic Act No. 3046. The
petitioners state that the vessel was caught in the act of smuggling. Deogracias Labrador, left
behind by the boat M/L Sangbay of which he was captain, stated he was instructed by Paquito
Bacolod of Capipisa, Cavite to meet the Lucky Star I, unload from it cases of blue seal Champion
cigarettes together with two other small boats-Pagdila and Nanding-owned Avelino Bocalan. He
admitted that on an earlier date, he had unloaded from the Lucky Star 1,500 cases of blue seal
cigarettes which he brought to Capipisa.

The contentions of the private respondents are untenable. 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.

WHEREFORE, the petition is hereby granted.1äwphï1.ñët The questioned orders of the respondent
court are set aside. The preliminary injunction dated August 24, 1972 is made permanent and the
respondent court is ordered to desist from further proceeding in Civil Case No, 87435.

SO ORDERED.

Teehankee (Chairman), Melencio-Herrera, Vasquez and Relova, JJ., concur.

Plana, J., is on leave.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-24170      December 16, 1968

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

FERNANDO, J.:

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

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

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

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

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

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

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

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

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

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

2. We thus could rest our decision affirming that of the Court of Tax Appeals on the above
consideration.

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

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

It is unquestioned that all vessels seized are of Philippine registry. The Revised Penal Code leaves
no doubt as to its applicability and enforceability not only within the Philippines, its interior waters
and maritime zone, but also outside of its jurisdiction against those committing offense while on a
Philippine ship ...8 The principle of law that sustains the validity of such a provision equally supplies
a firm foundation for the seizure of the five sailing vessels found thereafter to have violated the
applicable provisions of the Revised Administrative Code. 9

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

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

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

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

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

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

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

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

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

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

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro and Capistrano, JJ., concur.

Footnotes

1
Decision of the Court of Tax Appeals, Brief for Petitioners-Appellants, pp. I-II.

2
Ibid, p. II.

3
Brief for Petitioners-Appellants, pp. 9-10.

4
Decision of the Court of Tax Appeals, Brief for Petitioners-Appellants, pp. VIII-IX.

5
Ibid, p. IX.

6
Cf. Sanchez v. Commissioner of Customs, 102 Phil. 37 (1957); Castro v. Collector of Internal
Revenue, L-12174, April 26, 1962; Yupangco & Sons. Inc. v. Commissioner of Customs, L-
22259, Jan. 19, 1966; Commissioner of Internal Revenue v. Priscilla Estate, L-18282, May
29, 1964; Phil. Guaranty Co. v. Commissioner of Internal Revenue, L-22074, Sept. 6, 1965;
Republic v. Razon, L-17462, May 24, 1967; Balbas v. Domingo, L-19804, Oct. 23, 1967.

7
Alhambra Cigar v. Commissioner of Internal Revenue, L-23226, Nov. 28, 1967.

8
Article 2, Revised Penal Code (Act No. 3815).

9
Section 1363 (a) and (f).

10
2 Cranch 187, 234.

11
106 Phil. 777, 783 (1959).

12
100 Phil. 448. 452-453 (1956).

13
L-20460, September 30.

EN BANC

[G.R. No. 132527.  July 29, 2005]

COCONUT OIL REFINERS ASSOCIATION, INC. represented by its President, JESUS L. ARRANZA,
PHILIPPINE ASSOCIATION OF MEAT PROCESSORS, INC. (PAMPI), represented by its Secretary,
ROMEO G. HIDALGO, FEDERATION OF FREE FARMERS (FFF), represented by its President,
JEREMIAS U. MONTEMAYOR, and BUKLURAN NG MANGGAGAWANG PILIPINO (BMP), represented
by its Chairperson, FELIMON C. LAGMAN, petitioners, vs. HON. RUBEN TORRES, in his capacity as
Executive Secretary; BASES CONVERSION AND DEVELOPMENT AUTHORITY, CLARK
DEVELOPMENT CORPORATION, SUBIC BAY METROPOLITAN AUTHORITY, 88 MART DUTY FREE,
FREEPORT TRADERS, PX CLUB, AMERICAN HARDWARE, ROYAL DUTY FREE SHOPS, INC., DFS
SPORTS, ASIA PACIFIC, MCI DUTY FREE DISTRIBUTOR CORP. (formerly MCI RESOURCES, CORP.),
PARK & SHOP, DUTY FREE COMMODITIES, L. FURNISHING, SHAMBURGH, SUBIC DFS, ARGAN
TRADING CORP., ASIPINE CORP., BEST BUY, INC., PX CLUB, CLARK TRADING, DEMAGUS TRADING
CORP., D.F.S. SPORTS UNLIMITED, INC., DUTY FREE FIRST SUPERSTORE, INC., FREEPORT, JC MALL
DUTY FREE INC. (formerly 88 Mart [Clark] Duty Free Corp.), LILLY HILL CORP., MARSHALL,
PUREGOLD DUTY FREE, INC., ROYAL DFS and ZAXXON PHILIPPINES, INC., respondents.

DECISION

AZCUNA, J.:

This is a Petition for Prohibition and Injunction seeking to enjoin and prohibit the Executive
Branch, through the public respondents Ruben Torres in his capacity as Executive Secretary, the
Bases Conversion Development Authority (BCDA), the Clark Development Corporation (CDC) and
the Subic Bay Metropolitan Authority (SBMA), from allowing, and the private respondents from
continuing with, the operation of tax and duty-free shops located at the Subic Special Economic
Zone (SSEZ) and the Clark Special Economic Zone (CSEZ), and to declare the following issuances as
unconstitutional, illegal, and void:

1.  Section 5 of Executive Order No. 80,[1] dated April 3, 1993, regarding the CSEZ.

2.  Executive Order No. 97-A, dated June 19, 1993, pertaining to the SSEZ.

3.  Section 4 of BCDA Board Resolution No.  93-05-034,[2] dated May 18, 1993, pertaining to the
CSEZ.

Petitioners contend that the aforecited issuances are unconstitutional and void as they constitute
executive lawmaking, and that they are contrary to Republic Act No. 7227[3] and in violation of the
Constitution, particularly Section 1, Article III (equal protection clause), Section 19, Article XII
(prohibition of unfair competition and combinations in restraint of trade), and Section 12, Article
XII (preferential use of Filipino labor, domestic materials and locally produced goods).

The facts are as follows:

On March 13, 1992, Republic Act No. 7227 was enacted, providing for, among other things, the
sound and balanced conversion of the Clark and Subic military reservations and their extensions
into alternative productive uses in the form of special economic zones in order to promote the
economic and social development of Central Luzon in particular and the country in general. Among
the salient provisions are as follows:

SECTION 12.  Subic Special Economic Zone. — 

...
The abovementioned zone shall be subject to the following policies:

(a)     Within the framework and subject to the mandate and limitations of the Constitution and the
pertinent provisions of the Local Government Code, the Subic Special Economic Zone shall be
developed into a self-sustaining, industrial, commercial, financial and investment center to generate
employment opportunities in and around the zone and to attract and promote productive foreign
investments;

(b)     The Subic Special Economic Zone shall be operated and managed as a separate customs
territory ensuring free flow or movement of goods and capital within, into and exported   out of the
Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations
of raw materials, capital and equipment. However, exportation or removal of goods from the
territory of the Subic Special Economic Zone to the other parts of the Philippine territory shall be
subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws
of the Philippines;[4]

(c)     The provision of existing laws, rules and regulations to the contrary notwithstanding, no
taxes, local and national, shall be imposed within the Subic Special Economic Zone.  In lieu of paying
taxes, three percent  (3%) of the gross income earned by all businesses and enterprises within the
Subic Special Ecoomic Zone shall be remitted to the National Government, one percent (1%) each to
the local government units affected by the declaration of the zone in proportion to their population
area, and other factors.  In addition, there is hereby established a development fund of one percent
(1%) of the gross income earned by all businesses and enterprises within the Subic Special
Economic Zone to be utilized for the development of  municipalities outside the City of Olangapo
and the Municipality of Subic, and other municipalities contiguous to the base areas.

...

SECTION 15.             Clark and Other Special Economic Zones. — Subject to the concurrence by
resolution of the local government units directly affected, the President is hereby authorized to
create by executive proclamation a Special Economic Zone covering the lands occupied by the Clark
military reservations and its contiguous extensions as embraced, covered and defined by the 1947
Military Bases Agreement between the Philippines and the United States of America, as amended,
located within the territorial jurisdiction of Angeles City, Municipalities of Mabalacat and Porac,
Province of Pampanga and the Municipality of Capas, Province of Tarlac, in accordance with the
policies as herein provided insofar as applicable to the Clark military reservations.

The governing body of the Clark Special Economic Zone shall likewise be established by executive
proclamation with such powers and functions exercised by the Export Processing Zone Authority
pursuant to Presidential Decree No. 66 as amended.

The policies to govern and regulate the Clark Special Economic Zone shall be determined upon
consultation with the inhabitants of the local government units directly affected which shall be
conducted within six (6) months upon approval of this Act.

Similarly, subject to the concurrence by resolution of the local government units directly affected,
the President shall create other Special Economic Zones, in the base areas of Wallace Air Station in
San Fernando, La Union (excluding areas designated for communications, advance warning and
radar requirements of the Philippine Air Force to be determined by the Conversion Authority) and
Camp John Hay in the City of Baguio.

Upon recommendation of the Conversion Authority, the President is likewise authorized to create
Special Economic Zones covering the Municipalities of Morong, Hermosa, Dinalupihan, Castillejos
and San Marcelino.

On April 3, 1993, President Fidel V. Ramos issued Executive Order No. 80, which declared, among
others, that Clark shall have all the applicable incentives granted to the Subic Special Economic and
Free Port Zone under Republic Act No. 7227.  The pertinent provision assailed therein  is as follows:

SECTION 5. Investments Climate in the CSEZ. — Pursuant to Section 5(m) and Section 15 of RA
7227, the BCDA shall promulgate all necessary policies, rules and regulations governing the CSEZ,
including investment incentives, in consultation with the local government units and pertinent
government departments for implementation by the CDC.

Among others, the CSEZ shall have all the applicable incentives in the Subic Special Economic and
Free Port Zone under RA 7227 and those applicable incentives granted in the Export Processing
Zones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and new
investments laws which may hereinafter be enacted.

The CSEZ Main Zone covering the Clark Air Base proper shall have all the aforecited investment
incentives, while the CSEZ Sub-Zone covering the rest of the CSEZ shall have limited incentives.  The
full incentives in the Clark SEZ Main Zone and the limited incentives in the Clark SEZ Sub-Zone shall
be determined by the BCDA.

Pursuant to the directive under Executive Order No. 80, the BCDA passed Board Resolution No. 93-
05-034 on May 18, 1993, allowing the tax and duty-free sale at retail of consumer goods imported
via Clark for consumption outside the CSEZ. The assailed provisions of said resolution read, as
follows:

Section 4. SPECIFIC INCENTIVES IN THE CSEZ MAIN ZONE. – The CSEZ-registered

enterprises/businesses shall be entitled to all the incentives available under R.A. No. 7227, E.O. No.
226 and R.A. No. 7042 which shall include, but not limited to, the following:

I.        As in Subic Economic and Free Port Zone:

A.    Customs:

...

4.    Tax and duty-free purchase and consumption of goods/articles (duty free
shopping) within the CSEZ Main Zone.

5.    For individuals, duty-free consumer goods may be brought out of the CSEZ Main
Zone into the Philippine Customs territory but not to exceed US$200.00 per
month per CDC-registered person, similar to the limits imposed in the Subic SEZ.
This privilege shall be enjoyed only once a month. Any excess shall be levied
taxes and duties by the Bureau of Customs.
On June 10, 1993, the President issued Executive Order No. 97, “Clarifying the Tax and Duty Free
Incentive Within the Subic Special Economic Zone Pursuant to R.A. No. 7227.” Said issuance in part
states, thus:

SECTION 1.  On Import Taxes and Duties – Tax and duty-free importations shall apply only to raw
materials, capital goods and equipment brought in by business enterprises into the SSEZ. Except for
these items, importations of other goods into the SSEZ, whether by business enterprises or resident
individuals, are subject to taxes and duties under relevant Philippine laws.

The exportation or removal of tax and duty-free goods from the territory of the SSEZ to other parts
of the Philippine territory shall be subject to duties and taxes under relevant Philippine laws.

Nine days after, on June 19, 1993, Executive Order No. 97-A was issued, “Further Clarifying the Tax
and Duty-Free Privilege Within the Subic Special Economic and Free Port Zone.” The relevant
provisions read, as follows:

SECTION 1.  The following guidelines shall govern the tax and duty-free privilege within the
Secured Area of the Subic Special Economic and Free Port Zone:

1.1          The Secured Area consisting of the presently fenced-in former Subic Naval Base shall be the
only completely tax and duty-free area in the SSEFPZ.  Business enterprises and individuals
(Filipinos and foreigners) residing within the Secured Area are free to import raw materials, capital
goods, equipment, and consumer items tax and duty-free.  Consumption items, however, must be
consumed within the Secured Area.  Removal of raw materials, capital goods, equipment and
consumer items out of the Secured Area for sale to non-SSEFPZ registered enterprises shall be
subject to the usual taxes and duties, except as may be provided herein.

1.2.         Residents of the SSEFPZ living outside the Secured Area can enter the Secured Area and
consume any quantity of consumption items in hotels and restaurants within the Secured Area.
However, these residents can purchase and bring out of the Secured Area to other parts of the
Philippine territory consumer items worth not exceeding US$100 per month per person. Only
residents age 15 and over are entitled to this privilege.

1.3.         Filipinos not residing within the SSEFPZ can enter the Secured Area and consume any
quantity of consumption items in hotels and restaurants within the Secured Area. However, they
can purchase and bring out [of] the Secured Area to other parts of the Philippine territory
consumer items worth not exceeding US$200 per year per person. Only Filipinos age 15 and over
are entitled to this privilege.

Petitioners assail the $100 monthly and $200 yearly tax-free shopping privileges granted by the
aforecited provisions respectively to SSEZ residents living outside the Secured Area of the SSEZ and
to Filipinos aged 15 and over residing outside the SSEZ.

On February 23, 1998, petitioners thus filed the instant petition, seeking the declaration of nullity of
the assailed issuances on the following grounds:

I.
EXECUTIVE ORDER NO. 97-A, SECTION 5 OF EXECUTIVE ORDER NO. 80, AND SECTION 4 OF BCDA
BOARD RESOLUTION NO. 93-05-034 ARE NULL AND VOID [FOR] BEING AN EXERCISE OF
EXECUTIVE LAWMAKING.

II.

EXECUTIVE ORDER NO. 97-A, SECTION 5 OF EXECUTIVE ORDER NO. 80, AND SECTION 4 OF BCDA
BOARD RESOLUTION NO. 93-05-034 ARE UNCONSTITUTIONAL FOR BEING VIOLATIVE OF THE
EQUAL PROTECTION CLAUSE AND THE PROHIBITION AGAINST UNFAIR COMPETITION AND
PRACTICES IN RESTRAINT OF TRADE.

III.

EXECUTIVE ORDER NO. 97-A, SECTION 5 OF EXECUTIVE ORDER NO. 80, AND SECTION 4 OF BCDA
BOARD RESOLUTION NO. 93-05-034 ARE NULL AND VOID [FOR] BEING VIOLATIVE OF REPUBLIC
ACT NO. 7227.

IV.

THE CONTINUED IMPLEMENTATION OF THE CHALLENGED ISSUANCES IF NOT RESTRAINED

WILL CONTINUE TO CAUSE PETITIONERS TO SUFFER GRAVE AND IRREPARABLE INJURY.[5]

In their Comments, respondents point out procedural issues, alleging lack of petitioners’ legal
standing, the unreasonable delay in the filing of the petition, laches, and the propriety of the remedy
of prohibition.

Anent the claim on lack of legal standing, respondents argue that petitioners, being mere suppliers
of the local retailers operating outside the special economic zones, do not stand to suffer direct
injury in the enforcement of the issuances being assailed herein.  Assuming this is true, this Court
has nevertheless held that in cases of paramount importance where serious constitutional
questions are involved, the standing requirements may be relaxed and a suit may be allowed to
prosper even where there is no direct injury to the party claiming the right of judicial review.[6]

In the same vein, with respect to the other alleged procedural flaws, even assuming the existence of
such defects, this Court, in the exercise of its discretion, brushes aside these technicalities and takes
cognizance of the petition considering the importance to the public of the present case and in
keeping with the duty to determine whether the other branches of the government have kept
themselves within the limits of the Constitution.[7]

Now, on the constitutional arguments raised:

As this Court enters upon the task of passing on the validity of an act of a co-equal and coordinate
branch of the Government, it bears emphasis that deeply ingrained in our jurisprudence is the time-
honored principle that a statute is presumed to be valid.[8] This presumption is rooted in the
doctrine of separation of powers which enjoins upon the three coordinate departments of the
Government a becoming courtesy for each other’s acts.[9] Hence, to doubt is to sustain.  The theory
is that before the act was done or the law was enacted, earnest studies were made by Congress, or
the President, or both, to insure that the Constitution would not be breached.[10] This Court,
however, may declare a law, or portions thereof, unconstitutional where a petitioner has shown a
clear and unequivocal breach of the Constitution, not merely a doubtful or argumentative one.[11]
In other words, before a statute or a portion thereof may be declared unconstitutional, it must be
shown that the statute or issuance violates the Constitution clearly, palpably and plainly, and in
such a manner as to leave no doubt or hesitation in the mind of the Court.[12]

The Issue on Executive Legislation

Petitioners claim that the assailed issuances (Executive Order No. 97-A; Section 5 of Executive
Order No. 80; and Section 4 of BCDA Board Resolution No. 93-05-034) constitute executive
legislation, in violation of the rule on separation of powers. Petitioners argue that the Executive
Department, by allowing through the questioned issuances the setting up of tax and duty-free shops
and the removal of consumer goods and items from the zones without payment of corresponding
duties and taxes, arbitrarily provided additional exemptions to the limitations imposed by Republic
Act No. 7227, which limitations petitioners identify as follows:

(1)   [Republic Act No. 7227] allowed only tax and duty-free importation of raw materials,
capital and equipment.

(2)   It provides that any exportation or removal of goods from the territory of the Subic Special
Economic Zone to other parts of the Philippine territory shall be subject to customs duties
and taxes under the Customs and Tariff Code and other relevant tax laws of the
Philippines.

Anent the first alleged limitation, petitioners contend that the wording of Republic Act No. 7227
clearly limits the grant of tax incentives to the importation of raw materials, capital and equipment
only. Hence, they claim that the assailed issuances constitute executive legislation for invalidly
granting tax incentives in the importation of consumer goods such as those being sold in the duty-
free shops, in violation of the letter and intent of Republic Act No. 7227.

A careful reading of Section 12 of Republic Act No. 7227, which pertains to the SSEZ, would show
that it does not restrict the duty-free importation only to “raw materials, capital and equipment.”
Section 12 of the cited law is partly reproduced, as follows:

SECTION 12.  Subic Special Economic Zone. —

...

The abovementioned zone shall be subject to the following policies:

...

(b)   The Subic Special Economic Zone shall be operated and managed as a separate customs
territory ensuring free flow or movement of goods and capital within, into and exported
out of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-
free importations of raw materials, capital and equipment. However, exportation or
removal of goods from the territory of the Subic Special Economic Zone to the other parts
of the Philippine territory shall be subject to customs duties and taxes under the Customs
and Tariff Code and other relevant tax laws of the Philippines.[13]
While it is true that Section 12 (b) of Republic Act No. 7227 mentions only raw materials, capital
and equipment, this does not necessarily mean that the tax and duty-free buying privilege is limited
to these types of articles to the exclusion of consumer goods. It must be remembered that in
construing statutes, the proper course is to start out and follow the true intent of the Legislature
and to adopt that sense which harmonizes best with the context and promotes in the fullest manner
the policy and objects of the Legislature.[14]

In the present case, there appears to be no logic in following the narrow interpretation petitioners
urge.  To limit the tax-free importation privilege of enterprises located inside the special economic
zone only to raw materials, capital and equipment clearly runs counter to the intention of the
Legislature to create a free port where the “free flow of goods or capital within, into, and out of the
zones” is insured.

The phrase “tax and duty-free importations of raw materials, capital and equipment” was merely
cited as an example of incentives that may be given to entities operating within the zone. Public
respondent SBMA correctly argued that the maxim expressio unius est exclusio alterius, on which
petitioners impliedly rely to support their restrictive interpretation, does not apply when words are
mentioned by way of example.[15] It is obvious from the wording of Republic Act No. 7227,
particularly the use of the phrase “such as,” that the enumeration only meant to illustrate incentives
that the SSEZ is authorized to grant, in line with its being a free port zone.

Furthermore, said legal maxim should be applied only as a means of discovering legislative intent
which is not otherwise manifest, and should not be permitted to defeat the plainly indicated
purpose of the Legislature.[16]

The records of the Senate containing the discussion of the concept of “special economic zone” in
Section 12 (a) of Republic Act No. 7227 show the legislative intent that consumer goods entering
the SSEZ which satisfy the needs of the zone and are consumed there are not subject to duties
and taxes in accordance with Philippine laws, thus:

Senator Guingona.  . . . The concept of Special Economic Zone is one that really includes the
concept of a free port, but it is broader.  While a free port is necessarily included in the Special
Economic Zone, the reverse is not true that a free port would include a special economic zone.

Special Economic Zone, Mr. President, would include not only the incoming and outgoing of vessels,
duty-free and tax-free, but it would involve also tourism, servicing, financing and all the
appurtenances of an investment center.  So, that is the concept, Mr. President.  It is broader.  It
includes the free port concept and would cater to the greater needs of Olangapo City, Subic Bay and
the surrounding municipalities.

Senator Enrile.  May I know then if a factory located within the jurisdiction of Morong, Bataan that
was originally a part of the Subic Naval reservation, be entitled to a free port treatment or just a
special economic zone treatment?

Senator Guingona.  As far as the goods required for manufacture is concerned, Mr. President, it
would have privileges of duty-free and tax-free.  But in addition, the Special Economic Zone could
embrace the needs of tourism, could embrace the needs of servicing, could embrace the needs of
financing and other investment aspects.
Senator Enrile.  When a hotel is constructed, Mr. President, in this geographical unit which we call
a special economic zone, will the goods entering to be consumed by the customers or guests of the
hotel be subject to duties?

Senator Guingona.  That is the concept that we are crafting, Mr. President.

Senator Enrile.  No.  I am asking whether those goods will be duty-free, because it is constructed
within a free port.

Senator Guingona.  For as long as it services the needs of the Special Economic Zone, yes.

Senator Enrile.  For as long as the goods remain within the zone, whether we call it an economic
zone or a free port, for as long as we say in this law that all goods entering this particular territory
will be duty-free and tax-free, for as long as they remain there, consumed there or reexported or
destroyed in that place, then they are not subject to the duties and taxes in accordance with the laws
of the Philippines?

Senator Guingona. Yes.[17]

Petitioners rely on Committee Report No. 1206 submitted by the Ad Hoc Oversight Committee on
Bases Conversion on June 26, 1995.  Petitioners put emphasis on the report’s finding that the
setting up of duty-free stores never figured in the minds of the authors of Republic Act No. 7227 in
attracting foreign investors to the former military baselands.  They maintain that said law aimed to
attract manufacturing and service enterprises that will employ the dislocated former military base
workers, but not investors who would buy consumer goods from duty-free stores.

The Court is not persuaded.  Indeed, it is well-established that opinions expressed in the debates
and proceedings of the Legislature, steps taken in the enactment of a law, or the history of the
passage of the law through the Legislature, may be resorted to as aids in the interpretation of a
statute with a doubtful meaning.[18] Petitioners’ posture, however, overlooks the fact that the 1995
Committee Report they are referring to came into being well after the enactment of Republic Act
No. 7227 in 1993.  Hence, as pointed out by respondent Executive Secretary Torres, the
aforementioned report cannot be said to form part of Republic Act No. 7227’s legislative history.

Section 12 of Republic Act No. 7227, provides in part, thus:

SEC. 12.  Subic Special Economic Zone. -- . . .

The abovementioned zone  shall be  subject to the following policies:

(a)     Within the  framework and subject to the mandate and limitations of the Constitution and the
pertinent provisions of the Local Government Code, the Subic Special Economic Zone  shall be
developed into a self-sustaining, industrial, commercial, financial and investment center to generate
employment opportunities in and around the zone and to attract and promote productive foreign
investments. [19]

The aforecited policy was mentioned as a basis for the issuance of  Executive Order No. 97-A, thus:
WHEREAS, Republic Act No. 7227 provides that within the framework and subject to the mandate
and limitations of the Constitution and the pertinent provisions of the Local Government Code, the
Subic Special Economic and Free Port Zone (SSEFPZ) shall be developed into a self-sustaining
industrial, commercial, financial and investment center to generate employment opportunities in
and around the zone and to attract and promote productive foreign investments; and

WHEREAS, a special tax and duty-free privilege within a Secured Area in the SSEFPZ subject, to
existing laws has been determined necessary to attract local and foreign visitors to the zone.

Executive Order No. 97-A provides guidelines to govern   the “tax and duty-free privileges within
the Secured Area of the Subic Special Economic and Free Port Zone.”  Paragraph 1.6 thereof states
that “(t)he sale of tax and duty-free consumer items in the Secured Area shall only be allowed in
duly authorized duty-free shops.”

The Court finds that the setting up of such commercial establishments which  are the only ones duly
authorized  to sell consumer items tax and duty-free is  still well within  the policy enunciated in
Section 12 of Republic Act No. 7227 that  “. . .the Subic Special Economic Zone  shall be
developed into a self-sustaining, industrial, commercial, financial and investment center to
generate employment opportunities in and around the zone and to attract and promote
productive foreign investments.” (Emphasis supplied.)

However, the Court reiterates that the second sentences of paragraphs 1.2 and 1.3 of Executive
Order No. 97-A, allowing tax and duty-free removal of goods to certain individuals, even in a
limited amount, from the Secured Area of the SSEZ, are null and void for being contrary to
Section 12 of Republic Act No. 7227.  Said Section clearly provides that “exportation or removal
of goods from the territory of the Subic Special Economic Zone to the other parts of the Philippine
territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other
relevant tax laws of the Philippines.”

On the other hand, insofar as the CSEZ is concerned, the case for an invalid exercise of executive
legislation is tenable.

In John Hay Peoples Alternative Coalition, et al. v. Victor Lim, et al.,[20] this Court resolved an issue,
very much like the one herein, concerning the legality of the tax exemption benefits given to the
John Hay Economic Zone under Presidential Proclamation No. 420, Series of 1994, “CREATING AND
DESIGNATING A PORTION OF THE AREA COVERED BY THE FORMER CAMP JOHN AS THE JOHN
HAY SPECIAL ECONOMIC ZONE PURSUANT TO REPUBLIC ACT NO. 7227.”

In that case, among the arguments raised was that the granting of tax exemptions to John Hay was
an invalid and illegal exercise by the President of the powers granted only to the Legislature. 
Petitioners therein argued that Republic Act No. 7227 expressly granted tax exemption only to
Subic and not to the other economic zones yet to be established. Thus, the grant of tax exemption to
John Hay by Presidential Proclamation contravenes the constitutional mandate that “[n]o law
granting any tax exemption shall be passed without the concurrence of a majority of all the
members of Congress.”[21]

This Court sustained the argument and ruled that the incentives under Republic Act No. 7227 are
exclusive only to the SSEZ. The President, therefore, had no authority to extend their application to
John Hay.  To quote from the Decision:
More importantly, the nature of most of the assailed privileges is one of tax exemption. It is the
legislature, unless limited by a provision of a state constitution, that has full power to exempt any
person or corporation or class of property from taxation, its power to exempt being as broad as its
power to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions,
or local governments may pass ordinances on exemption only from local taxes.

The challenged grant of tax exemption would circumvent the Constitution’s imposition that a law
granting any tax exemption must have the concurrence of a majority of all the members of
Congress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are by
tradition and usage for Congress to legislate upon.

Contrary to public respondents’ suggestions, the claimed statutory exemption of the John Hay SEZ
from taxation should be manifest and unmistakable from the language of the law on which it is
based; it must be expressly granted in a statute stated in a language too clear to be mistaken. Tax
exemption cannot be implied as it must be categorically and unmistakably expressed.

If it were the intent of the legislature to grant to John Hay SEZ the same tax exemption and
incentives given to the Subic  SEZ, it would have so expressly provided in R.A. No. 7227.[22]

In the present case, while Section 12 of Republic Act No. 7227 expressly provides for the grant of
incentives to the SSEZ, it fails to make any similar grant in favor of other economic zones, including
the CSEZ.  Tax and duty-free incentives being in the nature of tax exemptions, the basis thereof
should be categorically and unmistakably expressed from the language of the statute. Consequently,
in the absence of any express grant of tax and duty-free privileges to the CSEZ in Republic Act No.
7227, there would be no legal basis to uphold the questioned portions of two issuances:   Section 5
of Executive Order No. 80 and Section 4 of BCDA Board Resolution No. 93-05-034, which both
pertain to the CSEZ.

Petitioners also contend that the questioned issuances constitute executive legislation for allowing
the removal of consumer goods and items from the zones without payment of corresponding duties
and taxes in violation of Republic Act No. 7227 as Section 12 thereof provides for the taxation of
goods that are exported or removed from the SSEZ to other parts of the Philippine territory.

 On September 26, 1997, Executive Order No. 444 was issued, curtailing the duty-free shopping
privileges in the SSEZ and the CSEZ “to prevent abuse of duty-free privilege and to protect local
industries from unfair competition.” The pertinent provisions of said issuance state, as follows:

SECTION 3. Special Shopping Privileges Granted During the Year-round Centennial Anniversary
Celebration in 1998. — Upon effectivity of this Order and up to the Centennial Year 1998, in
addition to the permanent residents, locators and employees of the fenced-in areas of the Subic
Special Economic and Freeport Zone and the Clark Special Economic Zone who are allowed
unlimited duty free purchases, provided these are consumed within said fenced-in areas of the
Zones, the residents of the municipalities adjacent to Subic and Clark as respectively provided in
R.A. 7227 (1992) and E.O. 97-A s. 1993 shall continue to be allowed One Hundred US Dollars
(US$100) monthly shopping privilege until 31 December 1998. Domestic tourists visiting Subic and
Clark shall be allowed a shopping privilege of US$25 for consumable goods which shall be
consumed only in the fenced-in area during their visit therein.
 SECTION 4. Grant of Duty Free Shopping Privileges Limited Only To Individuals Allowed by Law. —
Starting 1 January 1999, only the following persons shall continue to be eligible to shop in duty free
shops/outlets with their corresponding purchase limits:

a.    Tourists and Filipinos traveling to or returning from foreign destinations under E.O. 97-A s. 1993 —
One Thousand US Dollars (US$1,000) but not to exceed Ten Thousand US Dollars (US$10,000) in
any given year;

b.    Overseas Filipino Workers (OFWs) and Balikbayans defined under R.A. 6768 dated 3 November
1989 — Two Thousand US Dollars (US$2,000);

c.    Residents, eighteen (18) years old and above, of the fenced-in areas of the freeports under R.A. 7227
(1992) and E.O. 97-A s. 1993 — Unlimited purchase as long as these are for consumption within
these freeports.

The term "Residents" mentioned in item c above shall refer to individuals who, by virtue of domicile
or employment, reside on permanent basis within the freeport area. The term excludes (1) non-
residents who have entered into short- or long-term property lease inside the freeport, (2)
outsiders engaged in doing business within the freeport, and (3) members of private clubs (e.g.,
yacht and golf clubs) based or located within the freeport. In this regard, duty free privileges
granted to any of the above individuals (e.g., unlimited shopping privilege, tax-free importation of
cars, etc.) are hereby revoked.[23]

A perusal of the above provisions indicates that effective January 1, 1999, the grant of duty-free
shopping privileges to domestic tourists and to residents living adjacent to SSEZ and the CSEZ had
been revoked. Residents of the fenced-in area of the free port are still allowed unlimited purchase
of consumer goods, “as long as these are for consumption within these freeports.” Hence, the only
individuals allowed by law to shop in the duty-free outlets and remove consumer goods out of the
free ports tax-free are tourists and Filipinos traveling to or returning from foreign destinations, and
Overseas Filipino Workers and Balikbayans as defined under Republic Act No. 6768.[24]

Subsequently, on October 20, 2000, Executive Order No. 303 was issued, amending Executive Order
No. 444. Pursuant to the limited duration of the privileges granted under the preceding issuance,
Section 2 of Executive Order No. 303 declared that “[a]ll special shopping privileges as granted
under Section 3 of Executive Order 444, s. 1997, are hereby deemed terminated. The grant of duty
free shopping privileges shall be restricted to qualified individuals as provided by law.”

It bears noting at this point that the shopping privileges currently being enjoyed by Overseas
Filipino Workers, Balikbayans, and tourists traveling to and from foreign destinations, draw
authority not from the issuances being assailed herein, but from Executive Order No. 46[25] and
Republic Act No. 6768, both enacted prior to the promulgation of Republic Act No. 7227.

From the foregoing, it appears that petitioners’ objection to the allowance of tax-free removal of
goods from the special economic zones as previously authorized by the questioned issuances has
become moot and academic.

In any event, Republic Act No. 7227, specifically Section 12 (b) thereof, clearly provides that
“exportation or removal of goods from the territory of the Subic Special Economic Zone to the other
parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and
Tariff Code and other relevant tax laws of the Philippines.”

Thus, the removal of goods from the SSEZ to other parts of the Philippine territory without
payment of said customs duties and taxes is not authorized by the Act. Consequently, the following
italicized provisions found in the second sentences of paragraphs 1.2 and 1.3, Section 1 of Executive
Order No. 97-A are null and void:

1.2   Residents of the SSEFPZ living outside the Secured Area can enter and consume any
quantity of consumption items in hotels and restaurants within the Secured Area. 
However, these residents can purchase and bring out of the Secured Area to other  parts of
the Philippine territory consumer items worth not exceeding US $100 per month per person. 
Only residents age 15 and over are entitled to this privilege.

1.3   Filipinos not residing within the SSEFPZ can enter the Secured Area and consume any
quantity of consumption items in hotels and restaurants within the Secured Area. 
However, they can   purchase and bring out of the Secured Area to other parts of the
Philippine territory consumer items worth not exceeding US $200 per year per person. Only
Filipinos age 15 and over are entitled to this privilege.[26]

A similar provision found in paragraph 5, Section 4(A) of BCDA Board Resolution No. 93-05-034 is
also null and void.  Said Resolution applied the incentives given to the SSEZ under Republic Act No.
7227 to the CSEZ, which, as aforestated, is without legal basis.

Having concluded earlier that the CSEZ is excluded from the tax and duty-free incentives provided
under Republic Act No. 7227, this Court will resolve the remaining arguments only with regard to
the operations of the SSEZ.  Thus, the assailed issuance that will be discussed is solely Executive
Order No. 97-A, since it is the only one among the three questioned issuances which pertains to the
SSEZ.

Equal Protection of the Laws

Petitioners argue that the assailed issuance (Executive Order No. 97-A) is violative of their right to
equal protection of the laws, as enshrined in Section 1, Article III of the Constitution. To support
this argument, they assert that private respondents operating inside the SSEZ are not different from
the retail establishments located outside, the products sold being essentially the same. The only
distinction, they claim, lies in the products’ variety and source, and the fact that private
respondents import their items tax-free, to the prejudice of the retailers and manufacturers located
outside the zone.

Petitioners’ contention cannot be sustained. It is an established principle of constitutional law that

the guaranty of the equal protection of the laws is not violated by a legislation based on a
reasonable classification.[27] Classification, to be valid, must  (1) rest on substantial distinction, (2)
be germane to the purpose of the law, (3) not be limited to existing conditions only, and (4) apply
equally to all members of the same class.[28]

Applying the foregoing test to the present case, this Court finds no violation of the right to equal
protection of the laws. First, contrary to petitioners’ claim, substantial distinctions lie between the
establishments inside and outside the zone, justifying the difference in their treatment.  In Tiu v.
Court of Appeals,[29] the constitutionality of Executive Order No. 97-A was challenged for being
violative of the equal protection clause. In that case, petitioners claimed that Executive Order No.
97-A was discriminatory in confining the application of Republic Act No. 7227 within a secured area
of the SSEZ, to the exclusion of those outside but are, nevertheless, still within the economic zone.

Upholding the constitutionality of Executive Order No. 97-A, this Court therein found substantial
differences between the retailers inside and outside the secured area, thereby justifying a valid and
reasonable classification:

Certainly, there are substantial differences between the big investors who are being lured to
establish and operate their industries in the so-called “secured area” and the present business
operators outside the area. On the one hand, we are talking of billion-peso investments and
thousands of new jobs.  On the other hand, definitely none of such magnitude. In the first, the
economic impact will be national; in the second, only local. Even more important, at this time the
business activities outside the “secured area” are not likely to have any impact in achieving the
purpose of the law, which is to turn the former military base to productive use for the benefit of the
Philippine economy. There is, then, hardly any reasonable basis to extend to them the benefits and
incentives accorded in R.A. 7227. Additionally, as the Court of Appeals pointed out, it will be easier
to manage and monitor the activities within the “secured area,” which is already fenced off, to
prevent “fraudulent importation of merchandise” or smuggling.

It is well-settled that the equal-protection guarantee does not require territorial uniformity of laws.
As long as there are actual and material differences between territories, there is no violation of the
constitutional clause. And of course, anyone, including the petitioners, possessing the requisite
investment capital can always avail of the same benefits by channeling his or her resources or
business operations into the fenced-off free port zone.[30]

The Court in Tiu found real and substantial distinctions between residents within the secured area
and those living within the economic zone but outside the fenced-off area.  Similarly, real and
substantial differences exist between the establishments herein involved.  A significant distinction
between the two groups is that enterprises outside the zones maintain their businesses within
Philippine customs territory, while private respondents and the other duly-registered zone
enterprises operate within the so-called “separate customs territory.” To grant the same tax
incentives given to enterprises within the zones to businesses operating outside the zones, as
petitioners insist, would clearly defeat the statute’s intent to carve a territory out of the military
reservations in Subic Bay where free flow of goods and capital is maintained.

The classification is germane to the purpose of Republic Act No. 7227. As held in Tiu, the real
concern of Republic Act No. 7227 is to convert the lands formerly occupied by the US military bases
into economic or industrial areas. In furtherance of such objective, Congress deemed it necessary to
extend economic incentives to the establishments within the zone to attract and encourage foreign
and local investors.  This is the very rationale behind Republic Act No. 7227 and other similar
special economic zone laws which grant a complete package of tax incentives and other benefits.

The classification, moreover, is not limited to the existing conditions when the law was
promulgated, but to future conditions as well, inasmuch as the law envisioned the former military
reservation to ultimately develop into a self-sustaining investment center.
And, lastly, the classification applies equally to all retailers found within the “secured area.” As
ruled in Tiu, the individuals and businesses within the “secured area,” being in like circumstances
or contributing directly to the achievement of the end purpose of the law, are not categorized
further.  They are all similarly treated, both in privileges granted and in obligations required.

With all the four requisites for a reasonable classification present, there is no ground to invalidate
Executive Order No. 97-A for being violative of the equal protection clause.

Prohibition against Unfair Competition

and Practices in Restraint of Trade

Petitioners next argue that the grant of special tax exemptions and privileges gave the private
respondents undue advantage over local enterprises which do not operate inside the SSEZ, thereby
creating unfair competition in violation of the constitutional prohibition against unfair competition
and practices in restraint of trade.

The argument is without merit.  Just how the assailed issuance is violative of the prohibition against
unfair competition and practices in restraint of trade is not clearly explained in the petition.
Republic Act No. 7227, and consequently Executive Order No. 97-A, cannot be said to be
distinctively arbitrary against the welfare of businesses outside the zones. The mere fact that
incentives and privileges are granted to certain enterprises to the exclusion of others does not
render the issuance unconstitutional for espousing unfair competition. Said constitutional
prohibition cannot hinder the Legislature from using tax incentives as a tool to pursue its policies.

Suffice it to say that Congress had justifiable reasons in granting incentives to the private
respondents, in accordance with Republic Act No. 7227’s policy of developing the SSEZ into a self-
sustaining entity that will generate employment and attract foreign and local investment. If
petitioners had wanted to avoid any alleged unfavorable consequences on their profits, they should
upgrade their standards of quality so as to effectively compete in the market. In the alternative, if
petitioners really wanted the preferential treatment accorded to the private respondents, they
could have opted to register with SSEZ in order to operate within the special economic zone.

Preferential Use of Filipino Labor, Domestic Materials

and Locally Produced Goods

Lastly, petitioners claim that the questioned issuance (Executive Order No. 97-A) openly violated
the State policy of promoting the preferential use of Filipino labor, domestic materials and locally
produced goods and adopting measures to help make them competitive.

Again, the argument lacks merit. This Court notes that petitioners failed to substantiate their
sweeping conclusion that the issuance has violated the State policy of giving preference to Filipino
goods and labor. The mere fact that said issuance authorizes the importation and trade of foreign
goods does not suffice to declare it unconstitutional on this ground.

Petitioners cite Manila Prince Hotel v. GSIS[31] which, however, does not apply.  That case dealt
with the policy enunciated under the second paragraph of Section 10, Article XII of the Constitution,
[32] applicable to the grant of rights, privileges, and concessions “covering the national economy
and patrimony,” which is different from the policy invoked in this petition, specifically that of giving
preference to Filipino materials and labor found under Section 12 of the same Article of the
Constitution. (Emphasis supplied).

In Tañada v. Angara,[33] this Court elaborated on the meaning of Section 12, Article XII of the
Constitution in this wise:

[W]hile the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and
enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair. In other words, the Constitution did
not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and
services in the development of the Philippine economy. While the Constitution does not encourage
the unlimited entry of foreign goods, services and investments into the country, it does not prohibit
them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on
foreign competition that is unfair.[34]

This Court notes that the Executive Department, with its subsequent issuance of Executive Order
Nos. 444 and 303, has provided certain measures to prevent unfair competition. In particular,
Executive Order Nos. 444 and 303 have restricted the special shopping privileges to certain
individuals.[35] Executive Order No. 303 has limited the range of items that may be sold in the
duty-free outlets,[36] and imposed sanctions to curb abuses of duty-free privileges.[37] With these
measures, this Court finds no reason to strike down Executive Order No. 97-A for allegedly being
prejudicial to Filipino labor, domestic materials and locally produced goods.

WHEREFORE, the petition is PARTLY GRANTED.  Section 5 of Executive Order No. 80 and Section 4
of BCDA Board Resolution No. 93-05-034 are hereby declared NULL and VOID and are accordingly
declared of no legal force and effect. Respondents are hereby enjoined from implementing the
aforesaid void provisions. All portions of Executive Order No. 97-A are valid and effective, except
the second sentences in paragraphs 1.2 and 1.3 of said Executive Order, which are hereby declared
INVALID.

No costs.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-

Martinez, Carpio-Morales, Callejo, Sr., Tinga, Chico-Nazario, and Garcia, JJ., concur.

Carpio, J., no part.

Corona, J., on official leave.

[1] Executive Order No. 80 is entitled, “Authorizing the Establishment of the Clark Development
Corporation as the Implementing Arm of the Bases Conversion and Development Authority for the
Clark Special Economic Zone, and Directing all Heads of Departments, Bureaus, Offices, Agencies
and Instrumentalities of Government to Support the Program.”

[2] BCDA  Board Resolution No. 93-05-034 is entitled, “Prescribing the Investment Climate in the
Clark Special Economic Zone for Implementation by the Clark Development Corporation.”

[3] Bases Conversion and Development Act of 1992.

[4] Underscoring supplied.

[5] Rollo, pp. 13, 15, 17, and 18.

[6] Bayan (Bagong Alyansang Makabayan) v. Zamora, G.R. No. 138570, October 10, 2000, 342 SCRA
449, citing Kilosbayan v. Guingona, Jr., G.R. No. 113375, May 5, 1994, 232 SCRA 110.

[7] Osmeñ a v. Commission on Elections, G.R. Nos. 100318, 100417, and 100420, July 30, 1991, 199
SCRA 750.

[8] Basco v. Phil. Amusements and Gaming Corporation, G.R. No. 91649, May 14, 1991, 197 SCRA
52.

[9] Cawaling, Jr. v. Commission on Elections, G.R. Nos. 146319 and 146342, October 26, 2001, 368
SCRA 453.

[10] Association of Small Landowners in the Philippines., Inc., v. Secretary of Agrarian Reform, G.R.
No. 78742, July 14, 1989, 175 SCRA 343.

[11] Cawaling, Jr., v. Commission on Elections, supra, note 9.

[12] Misolas v. Panga, G.R. No. 83341, January 30, 1990, 181 SCRA 648.

[13] Underscoring supplied.

[14] Eugenio v. Drilon, G.R. No. 109404, January 22, 1996, 252 SCRA 106.

[15] Gomez v. Ventura and Board of Medical Examiners, No. 32441, March 29, 1930, 54 Phil. 726.

[16] Dimaporo v. Mitra, Jr.,  G.R. No. 96859, October 15, 1991, 202 SCRA 779; Primero v. Court of
Appeals, G.R. Nos. 48468-69, November 22, 1989, 179 SCRA 542.

[17] Emphasis supplied.

[18] Esso Standard Eastern, Inc. v. Commissioner of Internal Revenue, G.R. No. 28508-9, July 7,
1989, 175 SCRA 149.

[19] Emphasis supplied.

[20] G.R. No. 119775, October 24, 2003, 414 SCRA 356.
[21] Section 28(4), Article VI of the Constitution.

[22] Supra, note 20, at 377.

[23] Underscoring supplied.

[24] Republic Act No. 6768 entitled, “AN ACT INSTITUTING A BALIKBAYAN PROGRAM.”

[25] E.O. No. 46,  “GRANTING THE MINISTRY OF TOURISM, THROUGH THE PHILIPPINE TOURISM
AUTHORITY (PTA), AUTHORITY TO ESTABLISH AND OPERATE A DUTY AND TAX FREE
MERCHANDISING SYSEM IN THE PHILIPPINES” . . . .

 “SEC. 1.  The Ministry of Tourism, through the Philippine Tourism Authority (PTA) is
hereby authorized to establish a duty and tax free merchandising system in the Philippines to
augment the service facilities for tourists and to generate foreign exchange and revenue for the
government.  Under this system, the Philippine Tourism Authority shall have the exclusive
authority to operate stores and shops that would sell, among others, tax and duty free merchandise,
goods and articles, in international airports and sea ports throughout the country in accordance
with the rules and regulations issued by the Ministry of Tourism.”

[26] Italics supplied.

[27] People v. Cayat, G.R. No. 45987, May 5, 1939, 68 Phil. 12.

[28] Tiu v. Court of Appeals, G.R. No. 127410, January 20, 1999, 301 SCRA 278.

[29] Ibid.

[30] Id. at 291.

[31] G.R. No. 122156, February 3, 1997, 267 SCRA 408.

[32] Sec. 10, Art. XII, provides that:

...

In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos. . . .

[33] G.R. No. 118295, May 2, 1997, 272 SCRA 18.

[34] Id. at 58-59.

[35] Executive Order No. 303, Section 3; Executive Order No.  444, Section 4.

[36] Executive Order No. 303, Section 3.

[37] Executive Order No. 303, Section 5.

 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, involving seizure, 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.

Teehankee (Chairman), Melencio-Herrera, Plana, Vasquez and Relova, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-25783 February 25, 1975

MACONDRAY AND COMPANY INC., in its capacity as ship agent of the S/S "TAI PING",
petitioner,
vs.
ACTING COMMISSIONER OF CUSTOMS, respondent.

Ross, Selph, Salcedo, Del Rosario, Bito and Misa for petitioner.

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete and
Solicitor Sumilang Bernardo for respondent.

ESGUERRA, J.:

Petition for review on certiorari of a decision of the Court of Tax Appeals dated November 15, 1965,
affirming a decision of the Collector of Customs which imposed a fine of P1,000.00 upon petitioner
for violation of Section 1005 in relation to Section 2521 of the Tariff and Customs Code on
unmanifested cargoes.

On November 2, 1962, the vessel S/S TAI PING", of which petitioner is the local agent, arrived at the
port of Manila from San Francisco, California, U.S.A., conveying various shipments of merchandise,
among which was a shipment of one (1) coil carbon steel, one (1) bundle carbon steel flat and one
(1) carton containing carbon tool holders carbide cutters, ground, all of which appeared in the Bill
of Lading No. 22, consigned to Bogo Medellin Millings Co., Inc. The shipment, except the one (1) coil
carbon steel was not reflected in the Inward Cargo Manifest as required by Section 1005 in relation
to Section 2521 of the Tariff and Customs Code of the Philippines. Allied Brokerage Corporation,
acting for and in behalf of Bogo Medellin Milling Co. requested petitioner Macondray & Co., agent of
the vessel S/S TAI PING", to correct the manifest of the steamer so that it may take delivery of the
goods at Customs House. Meanwhile, the Collector of Customs required herein petitioner to explain
and show cause why no administrative fine should be imposed upon said vessel. On August 15,
1963, counsel for petitioner wrote a letter to the Collector of Customs pertinent portion of which
reads as follows:

It appears from our client's records that the disputed shipment was described in the
ship's manifest as "1 coil carbon steel" only. However, the bill of lading issued and
surrendered to our client, duly endorsed by the consignee, called for the delivery of
1 coil carbon steel, 1 bundle carbon steel flat and 1 carbon containing tool holders
carbide cutters ground. Upon investigation by our client, it was verified that the
vessel actually carried on board and discharged at Manila 3 as called for in the bill of
lading. By a letter dated November 15, 1962, our client immediately applied with
your Bureau for the appropriate amendment on an approved customs form to
reflect the true correct description of the shipment and to effect its release from the
customs house.

To said letter, the Collector of Customs replied on September 26, 1963, as follows:

On August 13, 1963 you wrote this Office informing that this case would be referred
to your lawyers who would in turn take the matter with us. However, this Office
would like to inform you that under Section 2308, in relation to Section 2312, of the
Tariff and Customs Code, you are free to contest by appropriate protest the action of
this Office in imposing the fine, but you have to pay the fine first.
 The records of this Office show that the vesels under your agency have oftentimes
failed to declare correctly the cargoes they convey as covered by the pertinent bill of
lading. Intentionally, or otherwise, such incorrect preparation of cargo manifests
cannot be tolerated for it does not only enhance the commission of fraud but also
makes smuggling suspicious since it renders difficult tracing of the source of
contraband goods. In passing, it may be stated that your vessels have been found
committing the same violations despite the warnings heretofore given and which your
company has not given any concern. As a matter of fact, your vessel have oftentimes
been reported committing the same violations, which conduct is tantamount to willful
and deliberate defiance of constituted authority. (p. 5 Customs Record)

The fine of P1,000 was paid by herein petitioner under protest on December 4, 1963.

Hearing on the protest, docketed as Manila Protest No. 812, proceeded thereafter. On August 24,
1964, the Collector of Customs of the Port of Manila ordered the dismissal of said protest for lack of
merit. (Customs Record pp. 92-95) On appeal to the Commissioner of Customs (Customs Case No.
725) the latter sustained the Collector of Customs. Herein petitioner filed a petition for review with
the Court of Tax Appeals where the parties submitted the case on the pleadings and the customs
record. The Court of Tax Appeals affirmed the decision of the Collector of Customs as affirmed by
the Commissioner of Customs. (p. 39 Customs Record) Hence this petition for review with the
petitioner assigning as errors the following:

1. The Court of Tax Appeals erred in holding that the bill of lading whereon the
shipment was correctly manifested was not a substantial compliance with the
provision of Section 1005 of the Tariff and Customs Code;

2. The Court of Tax Appeals erred in holding that the original manifest was not
amended to reflect the true and accurate description of the shipment;

3. The Court of Tax Appeals erred in affirming the decision of respondent with costs
against petitioner.

The sole question to be resolved is whether or not the Collector of Customs erred in imposing a fine
on the vessel, S/S TAI PING, for alleged violation of section 1005 in relation to section 2521 of the
Tariff and Customs Code for landing unmanifested cargo at the port of Manila.

On the first assigned error, petitioner herein contends that from "the fact the whole shipment was
indicated in the bill of lading, it is clear that the deficiency of the original vessel's manifest was
adequately supplied by the entries of said bill of lading and, therefore, no violation of the provision
of the Tariff and Customs Code, was committed." (Brief for petitioner pp. 6-7.)We do not subscribe
to such conclusion. Sections 1004 and 1005, in relation to section 2521 of the Tariff and Customs
Code, explicitly provide:

Section 1004. Documents to be produced by master upon entry of a vessel — For the
purpose of making entry of a vessel engaged in foreign trade, the master thereof shall
present the following documents, duly certified by him, to the customs boarding
official:.
 a. The original manifest of all cargo destined for the port, to be returned with the
indorsement of the boarding official;

b. Three copies of the same manifest, one of which upon certification by the
boarding official as to the correctness of the copy, shall be returned to the master;

c. ...

Section 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.

All of the cargo intended to be landed at a port, in the Philippines, must be described in
separate manifests for each port of call therein. Each manifest shall include the port
of departure and the port of delivery with the marks, numbers, quantity and
description of the packages and the names of the consignees thereof. Every vessel
from a foreign port must have on board complete manifests of passengers and their
baggage, in the prescribed form, setting forth their destination and all particulars
required by the immigration laws; ...

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

The same fine shall be imposed upon any arriving or departing vessel or aircraft if
the master or pilot in command shall fail to deliver or mail to the Auditor General a
true copy of the manifest of the incoming or outgoing cargo, as required by law.

The inclusion of the unmanifested cargoes in the Bill of Lading does not satisfy the requirement of
the aforequoted sections of the Tariff and Customs Code. It is to be noted that nowhere in the said
section is the presentation of a Bill of Lading required, but only the presentation of a Manifest
containing a true and accurate description of the cargoes. This is for the simple reason that while a
manifest is a declaration of the entire cargo, a bill of lading is but a declaration of a specific part of
the cargo and is a matter of business convenience based exclusively on a contract. 1 The object of a
manifest is to furnish the customs officers with a list to check against, to inform our revenue
officers what goods are being brought into the country, and to provide a safeguard against goods
being brought into this country on a vessel and then smuggled ashore. 2 In short, while a bill of
lading is ordinarily merely a convenient commercial instrument designed to protect the importer or
consignee, a manifest of the cargo is absolutely essential to the exportation or importation of
property in all vessels, the evident intent and object of which is to impose upon the owners and
officers of such vessel an imperative obligation to submit lists of the entire loading of the ship in the
prescribed form, to facilitate the labors of the customs and immigration officers and to defeat any
attempt to make use of such vessels to secure the unlawful entry of persons or things into the
country. 3 Since therefore, the purpose served by the manifest is far different from that of the bill of
lading, We cannot acceptor place an imprimatur on the contention of petitioner that the entries in
the bill of lading adequately supplied the deficiency of the manifest and cured it of its infirmity. The
mandate of the law is clear and We cannot settle for less. The law imposes the absolute obligation,
under penalty for failure, upon every vessel from a foreign port to have "on board complete written
or typewritten manifests of all her cargo, signed by the master". Where the law requires a manifest
to be kept or delivered, it is not complied with unless the manifest is true and accurate. (U.S. vs. The
S.S. Islas Filipinos, No. 8746, 28 Phil. 291.297).

II

On the second assigned error, petitioner would want Us to believe that an amendment was made on
the manifest to reflect the true and accurate description of the shipment. We have, however, gone
over the record very carefully but found no evidence to substantiate the allegation of herein
petitioner. The testimony of Irineo Lumabi, (t.s.n. March 2, 1964, p. 78 Customs Record), manifest
clerk of the Marine Division, that he prepared the amending entries himself is of no moment. In the
first place, Lumabi alleged in his testimony that he "made" the entries reflecting the unmanifested
cargoes without prior approval from either the Collector of Customs, his Deputy, or the chief of the
Marine Division and, therefore, in contravention of the usual and accepted office procedure.
Secondly, no amended manifest was ever presented during the hearing inspite of ample time
requested by and granted to petitioners to enable them to produce this document. Also, the
supposed amendments were never attached to the manifest itself as required by Section 1005 4 but
as mentioned earlier, said "amendments were allegedly annotated" by Irineo Lumabi on the
manifest itself after he "noted" the discrepancy between the entries in the original manifest and the
entry papers.

Likewise, petitioner Macondray & Co. presented Dominador Bergano, its chief of claims but whose
testimony did not in any way bolster up petitioner's stand. All he testified to was the fact that they
(Macondray & Co.) approved the amendment to the manifest and filed the same with the Bureau of
Customs (t.s.n. p. 68 Customs Record) without even knowing whether or not the same was
approved by the Collector of Customs. What is evident on record is the fact that no valid
amendment to the ship's manifest was made conformably with Section 1005 of the Tariff and
Customs Code supra. Since there was no valid amendment, liability attached as to the unmanifested
cargoes and this is clearly provided for in Section 2521, supra, of the Tariff and Customs Code. And
as ably argued by then Solicitor General, now Justice Antonio Barredo, in respondent's well
prepared brief; "that even granting arguendo, that the amendment was approved and therefore
valid it does not in any way relieve the vessel from the liability which she had already incurred
prior to the amendment. The philosophy and purpose behind the law authorizing amendment,
under paragraph 3 of Section 1005 of the Tariff and Customs Code, is to protect innocent importers
or consignees from the mistake or unlawful acts of the master. In the case of Dobbins Distillery vs.
US 96 US 295-400, it was held that by the General Maritime Law, vessels are made responsible for
the unlawful acts of their masters and crews. Likewise, in the case of Gillam vs. US (C.C.A, S.C. 1928)
27F (2d) 296, USCA-Title 19, 1994, it was ruled that '... statutory penalties are incurred where
vessel bound for US failed to produce manifest, or has on board unmanifested merchandise.' "

WHEREFORE, We affirm the decision appealed from.

Without pronouncement as to costs.

SO ORDERED.

Makalintal, C.J. (Chairman), Castro, Teehankee and Makasiar, JJ., concur.

 
Footnotes

1 New York and Cuba Mail SS Co. vs. U.S. 125 F, 320, Words and Phrases Vol. 26.

2 The Sylvia II U.S. vs. Cargo of Liquors and Sea Stores 28 F (2d) 215, 216.

3 U. S. vs. Steamship "Rubi" 32, Phil. 228, 233.

4 Section 1005 —

xxx xxx xxx

"A cargo manifest shall in no case be changed or altered after entry of the vessel,
except by means of an amendment by the master, consignee or agent thereof, under
oath and attached to the original manifest: Provided, however, That after the invoice
and/or entry covering an importation have been received and recorded in the office
of the appraiser, no amendment of the manifest shall be allowed, except when it is
obvious that a clerical error or any other discrepancy has been committed in the
preparation of the manifest, without any fraudulent intent, discovery of which could
not have been made until after examination of the importation has been completed.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-29218 October 29, 1976

JOSE T. VIDUYA, as collector of Customs of the Port of Manila, petitioner,

vs.
EDUARDO BERDIAGO alias EDUARDO BERTIAGO; and HON. ANDRES REYES, as Presiding
Judge of Branch VI, Court of First Instance of Rizal, respondents.

Solicitor, General Antonio P. Barredo and Solicitor Augusto M. Amores for petitioner.

Amelito R. Mutuc for respondents.

FERNANDO, J.:p

An order of the lower court quashing a search warrant issued at the instance of petitioner Jose T.
Viduya, then Collector of Customs of Manila, to gain custody of a seized vehicle pursuant to a
warrant of seizure and detention against private respondent Eduardo Berdiago 1 was assailed in
this certiorari and mandamus proceeding with a prayer for mandatory preliminary injunction. 2
The invocation by the then Solicitor General, now Associate Justice of this Court, Antonio P.
Barredo, of the controlling force of Papa v. Mago 3 and the persuasive character attached to the
ruling of an American leading decision, Carroll v. United States, 4 clearly indicative of the tenuous
nature of the claim of private respondent that there was a violation of his constitutional right to be
free from unreasonable search and seizure, 5 led to a resolution by the Court of July 12, 1968,
requiring that respondents answer the petition and issuing the preliminary mandatory injunction
sought requiring respondent Berdiago "to deliver the custody and possession of said car to
respondent court; and furthermore requiring respondent court to take possession and custody of
the said Rolls Royce car from respondent Berdiago or from whomsoever has possession and
custody thereof and let petitioner to take delivery and custody thereof; ... ." 6 The stress, and quite
understandably, in the extensively-researched answer filed on behalf of respondents by their able
counsel, former Ambassador Amelito R. Mutuc, was on the primacy of the immunity the
Constitution guarantees against an unreasonable search and seizure. More specifically, it was
contended with vigor and plausibility that respondent Judge quashed the search warrant on
showing of lack of probable cause, a requirement not only of the Constitution but of the Rules of
Court 7 and the Tariff and Customs Code. 8 While no objection could validly be raised against such
a proposition, it cannot apply to this controversy. It is undoubted that prior to the issuance of a
search warrant, there was a previous discovery of the failure to pay the correct amount of customs
duties. That was probable cause enough. It let to the institution of a seizure and forefeiture
proceeding. Moreover, the law has always looked with disfavor on attempts at nonpayment or
underpayment of customs duties. It is essential that no undue obstacle be placed on intensive
efforts to assure the collection of what is properly due the government. The Mago decision was thus
merely a reflection of what has long been the settled doctrine on the matter in the Philippines. It is
futile to assert then, considering the circumstances to be more specifically referred to, that the
requirement of lack of probable cause was not met. We find for petitioner.

The petition includes as one of its Annexes the warrant of seizure and detention. 9 It was issued on
the basis of reliable intelligence that fraudulent documents were used by respondent Berdiago in
securing the release from the Bureau of Customs of a Rolls Royce car, Model 1966, 2 door, Hardtop
with Motor No. CRX 1379, which arrived in the Port of Manila on January 8, 1968 on board the
vessel, Jose Abad Santos, it being made to appear that such car was a 1961 model instead of a 1966
one, thus enabling respondent to pay a much lower customs duty in the amount of P3,255.00, when
the correct amount due was P219,783.00. 10 There was, accordingly, a formal demand for the
payment of the sum to cover the deficiency, respondent manifesting his willingness to do so but
failing to live up to his promise contained in a letter of April 24, 1968, leading to Seizure
Identification Case No. 10941 against the car. 11 As it was kept in a dwelling house at the Yabut
Compound, Wakas, Barrio San Dionisio, Parañ aque, Rizal, two officials of the Customs Police Service
as duly authorized agents of petitioner, applied to respondent Judge for a warrant to search said
dwelling house and to seize the Rolls Royce car found therein, pursuant to Section 2209 of the Tariff
and Customs Code; he issued the search warrant on May 30, 1968. 12 Thereafter, on June 3, 1968,
there was an urgent motion to quash the same by respondent Berdiago. 13 Then, on June 6, 1968,
an opposition to said motion to quash was filed by petitioner, based on the allegation of a violation
of Section 2209 of the Tariff and Customs Code. 14 It was moreover pointed out that respondent
Berdiago could not rely on the constitutional right against unreasonable search and seizure because
it was not shown that he owned the dwelling house which was searched. 15 Nonetheless,
respondent Judge in the challenged order quashed such search warrant. 16 Hence this petition.

To repeat, the plea of petitioner must be heeded. A case of a grave abuse of discretion on the part of
respondent Judge when he quashed the search warrant had been shown. What lessens the gravity
of such lapse from controlling doctrines was the commendable attitude displayed in stressing the
worth of a constitutional right. Where attempts at evasion of payment of customs duties are
concerned, however, this Court has not been indisposed to he as receptive to claims of its violation,
especially where they rest on no substantial basis.

1. In the leading case of Papa v. Mago, 17 with Justice Zaldivar as ponente, there is this
pronouncement, which he aptly noted by the then Solicitor-General Barredo, calls for application:
"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. The goods in question
were imported from Hongkong, as shown in the "Statement and Receipts of Duties Collected on
Informal Entry." 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
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. The payment of the duties,
taxes, fees and other charges must be in full. The record shows, ... 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, shows that
the quantity of the goods was underdeclared, presumably to avoid the payment of duties thereon. ...
The articles contained in the nine bales in question, were, therefore, subject to forfeiture .... And this
Court has held that merchandise, the importation of which is effected contrary to law, is subject to
forfeiture, and that goods released contrary to law are subject to seizure and forfeiture." 18

2. Nor did Mago announce a novel doctrine. It is merely a recognition of the state power to assure
that fraudulent schemes resorted to by importers would be doomed to failure. That same year in
1968, in Asaali v. Commissioner of Customs, 19 the opinion stressed in rather emphatic language
why it must be thus: "The policy relentlessly adhered to and unhesitatingly pursued to minimize, if
not to do away entirely, with the evil and corruption that smuggling brings in its wake would be
frustrated and set at naught if the action taken by respondent Commissioner of Customs in this
case, as affirmed by the Court of Tax Appeals, were to be set aside and this appeal from the decision
of the latter were to succeed. Fortunately, the controlling principles of law do not call for a contrary
conclusion. It cannot be otherwise if the legitimate authority vested in the government were not to
be reduced to futility and impotence in the face of an admittedly serious malady, that at times has
assumed epidemic proportions." 20 Moreover, as far back as 1920, in Uy Kheytin v. Villareal, 21
there was the explicit affirmation of the principle that "dutiable articles on which the duties have
not been paid" belong to a different category from the search and seizure "of a man's private
papers" as they "rightfully belong to the custody of the law." 22

3. There is this clarification of the matter in the opinion of Justice Zaldivar in Mago "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, box or envelope or any person on board, or 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. 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 ... .' It is our
considered view, therefore, 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. " 23 There is justification then for the insistence on
the part of private respondent that probable cause be shown. 24 So respondent Judge found in
issuing the search warrant. Apparently he was persuaded to quash it when he noted that the
warrant for seizure and detention came later than its issuance. In thus acting, respondent Judge
apparently overlooked that long before the search warrant was applied for, to be specific on April
15, 1968, the misdeclaration and underpayment was already noted and that thereafter on April 24,
1968, private respondent himself agreed to make good the further amount due but not in the sum
demanded. 25 As the car was kept in a dwelling house in Wakas, Barrio San Dionisio, Parañ aque,
Rizal, petitioner through two of his officers in the Customs Police Service 26 applied for and was
able to obtain the search warrant. Had there been no such move on the part of petitioner, the duties
expressly enjoined on him by law noted in the Mago opinion namely to assess and collect all lawful
revenues, to prevent and suppress smuggling and other frauds, and to enforce tariff and customs
law would not have been performed. While therefore, it is to be admitted that his warrant of seizure
and detention came later, on July 5, 1968 to be exact, than the search warrant, which was issued on
May 30, 1968, there were indubitable facts in existence at that time to call for its issuance. Certainly
there was probable cause as defined in United States v. Addison, 27 Identifying it with "such
reasons, supported by facts and circumstances, as will warrant a cautious man in the belief that his
action, and the means taken in prosecuting it, are legally just and proper." 28 There was evidently
need for the issuance of a search warrant. It ought not to have been thereafter quashed.

4. That is about all, except for a reference in the petition to an excerpt from Carroll v. United States,
29 tracing such an approach to the landmark Boyd decision cited in Uy Kheytin. It was emphasized
therein in the opinion of Chief Justice Taft that what was said by Justice Bradley in Boyd stated the
doctrine that had gained approval and acceptance. It was summarized thus: "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 seizures have been authorized by our own
revenue acts from the commencement of the government." 30 It is not for this Court to do less than
it can to implement and enforce the mandates of the customs and revenues laws. The evils
associated with tax evasion must be stamped out — without any disregard, it is to be affirmed, of
any constitutional right. The facts, appreciated in their true light, fail to show that the issuance of
the search warrant contravened the immunity against unreasonable search and seizure. Its being
quashed then amounted to a grave abuse of discretion.

WHEREFORE, the writ of certiorari is granted and the order of June 20, 1968 of respondent Judge
denying the petition for custody of the car by petitioner and quashing the search warrant nullified
and set aside. The writ of preliminary mandatory injuction issued by this Court is maintained in full
force and effect, the custody and possession of the Rolls Royce car, model 1966, 2 door Hardtop
with Motor No. CRX 1379 to remain in the custody of the Customs authorities until the termination
according to law of the seizure and forfeiture proceeding. Costs against private respondent.

Antonio, Aquino, Concepcion, Jr., and Martin, JJ., concur.

Barredo, J., took no part.

 
Footnotes

1 The caption of the petition stated that such a name is an alias for Eduardo
Bertiago. The other respondent is the then Judge Andres Reyes of the Court of First
Instance of Rizal, now an Associate Justice of the Court of Appeals.

2 Pars. II, IV, IX, Annex K.

3 L-27360, February 28, 1968, 22 SCRA 857.

4 267 US 132 (1925).

5 According to Article III, section 1, par. 3 of the 1935 Constitution then enforced:
"The right of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures shall not he violated, and no warrants
shall issue but upon probable cause, to be determined by the judge after
examination under oath or affirmation of the complaint and the witnesses he may
produce, and particularly describing the place to be searched and the persons or
things to be seized." Under the present Constitution, Article IV, section 3, this
provision has been expressly modified to include a warrant of arrest. Also, now for
the issuance of warrant, not only a judge but also "such other responsible officer
may be authorized by law."

6 Petition, 15.

7 Rule 126, Section 3 of the Rules of Court provides: "Requisites for issuing search
warrant. — A search warrant shall not issue but upon probable cause in connection
with one specific offense to be determined by the municipal or city judge after
examination under oath or affirmation of the complainant and the witnesses he may
produce, and particularly describing the place to be searched and the persons or
thingss to be seized. No search warrant shall issue for more than one specific
offense."

8 Section 2209 of the Tariff and Customs Code, Rep. Act No. 1937 reads: "Search of
Dwelling House. — A dwelling house may be entered and searched only upon
warrant issued by a judge or justice of the peace, upon sworn application showing
probable cause and particularly describing the place to be searched and person or
thing to he seized."

9 Petition, Annex C of the Petition reads: "[Greetings:] [Whereas], the above-

described article is subject to forfeiture for having been imported in violation of
2530(m) 3, 4 and 5 of the Tariff and Customs Code. [Whereas,] the said articles are
at present in the custody of Eduardo Berdiago alias Eduardo Bertiago, with given
address at 70 Estrella St., Bel-Aire Village, Makati, Rizal. [Wherefore] by virtue of the
authority vested in me by law, and in compliance with Finance Department Ordr No.
96-67 as published in Customs Memorandum Circular No. 133-67 dated July 25,
1967, you are hereby ordered to forthwith seize the aformentioned articles and
detain them under your custody pending termination of the seizure proceedings
thereof and/or until further orders. [So Order.]"
10 Ibid, par. II.

11 Ibid.

12 Ibid, par. III.

13 Ibid, par. IV.

14 Ibid, par. VI.

15 Ibid. par. VII.

16 Ibid, Annex K.

17 L-27360, February 28, 1968, 22 SCRA 857.

18 Ibid, 865-867. In support of the view that seizure and forfeiture proceedings lie:
Pascual v. Commissioner of Customs, 105 Phil. 1039 (1959) and De Joya v. Lantin, L-
24037, April 27, 1967, 19 SCRA 893.

19 L-24170, December 16, 1968, 26 SCRA 382.

20 Ibid, 385.

21 42 Phil. 886.

22 Ibid, 899 citing Boyd v. United States, 116 US 616 (1886).

23 22 SCRA 857, 871-872.

24 Cf. Alvarez v. Court of First Instance, 64 Phil. 33 (1937); People v. Sy Juco, 64 Phil.
667 (1937); Rodriguez v. Villamiel, 65 Phil, 230 (1937); Pasion Vda. de Garcia v.
Locsin, 65 Phil. 689 (1938); Yee Sue Koy v. Almeda 70 Phil. 141 (1940); Cruz v.
Dinglasan, 83 Phil. 333 (1949); People v. De la Peñ a, 97 Phil. 669 (1955); Oca v.
Marquez, L-20749, July 30, 1965, 14 SCRA 735; Stonehill v. Diokno, L-19550, June
19, 1967, 20 SCRA 383; Bache and Co. v. Ruiz, L-32409, Feb. 27, 1971, 37 SCRA 823;
Asian Surety & Insurance Co. v. Herrera, L-25232, Dec. 20, 1973, 54 SCRA 312;
Roldan, Jr. v. Arca, L-25434, July 25, 1975, 65 SCRA 336; Lim v. Ponce de Leon, L-
22554, Aug. 29, 1975, 66 SCRA 299; Lopez v. Commissioner of Customs, L-27968,
Dec. 3, 1975, 68 SCRA 320.

25 Petition, par II and Answer II, 2nd paragraph.

26 Major Enricus Figueroa and Lieutenant Colonel Osmundo Victoriano.

27 28 Phil.566(1914).

28 Ibid, 570.
 29 267 US 132 (1925). Board, as previously noted, was an 1886 American Supreme
court decision reported in 116 US 616.

30 Ibid, 149-150.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-13284             February 29, 1960

PEOPLE OF THE PHILIPPINES, plaintiff-appellee,

vs.
FRANCISCO COLMERANES and CELSO LLORICO, defendants-appellants.

Assistant Solicitor General Florencio Villamor and Solicitor Dominador L. Quiroz for appellee.
Jose Sicangco, Jr. and Mario D. Lachica for appellants.

LABRADOR, J.:

This is an appeal from an order of the Court of First Instance of Negros Occidental, Hon. Jose
Teodoro, Sr., presiding, holding that the judgment of the Justice of the Peace court from which the
appeal was made to the Court of First Instance in Criminal Case No. 4567 of said court, had already
become final, by failure of the defendants to file their notice of appeal on time, and remanding the
record to the Justice of the Peace for the execution of the latter's judgment.

Defendants-appellants were charged in the Justice of the Peace court of La Castellana, for the crime
of theft of 15 cavans of palay, belonging to the complainant Pedro Monsale. A trial was held in the
Justice of the Peace Court, and on April 18, 1955, the Justice of the Peace found the accused guilty of
theft and sentenced each of them to pay a fine of P200.00, and in case of insolvency, to suffer
subsidiary imprisonment. Accused Liorico received a copy of the decision on April 27, 1955, and
accused Colmenares, on April 29, 1955. On May 2, 1955, the attorney for the accused filed a motion
to reconsider the judgment, on the ground that in accordance with the documentary evidence
presented during the trial it appears that the case involved the question of ownership of the land
from which the palay allegedly stolen was raised. Some of the documents presented at the trial
show that one J. L. Vda. de Colmenares is in possession of a parcel of land for which she had applied
for registration; that a portion thereof, evidently the one from which the palay was harvested, was
claimed by the District Forester to be part of the on the national park and as a matter of fact
accused Colmenares had been informed by the District Forester of the Government claim to this
portion of the land. The defendants also submitted tax receipts covering the property and two
applications to purchase fertilizers, accompanied by promissory notes signed by complainant Pedro
Monsale and Urbano Pamonel and guaranteed by one Modesto Colmenares.

The above motion for reconsideration was set for hearing on May 27. The private prosecutor filled
an opposition thereto and a petition to strike the same, on the ground that it was pro forma. We
have not able to locate the order of the court on this motion for reconsideration, but it appears that
on June 1, 1955, the record of the case was received by the clerk of Court of First Instance of Negros
Occidental. We presume that the Justice of the Peace court did not act on said motion for
reconsideration, or denied the same. Whichever happened is immaterial in this case. Appeal bonds
were filed by the accused on May 28, 1955.

Upon the docketing of the case in the Court of First Instance, and on April 10, 1956, the assistant
provincial fiscal immediately presented a motion to dismiss the appeal, on the ground that the
decision of the justice of the peace court sentencing the accused, having been received by the latter
on April 29 and the motion for reconsideration having been denied on May 28, 1955, a period of
more than 15 days had elapsed when the appeal was perfected, for the reason that the motion for
reconsideration did not interrupt the period to perfect an appeal, it being a pro forma motion and,
therefore, the decision of the Justice of the Peace court had become final when the appeal was
entered. The Court of First Instance sustained this motion to dismiss the appeal. From this order an
appeal was prosecuted to the Court of Appeals, which endorsed the case to Us as involving
exclusively questions of law.

It is argued on behalf of appellants that the motion filed in the Justice of the Peace court was not a
pro forma motion, and secondly, that said court had already ruled that the judgment had not
become final when it forwarded the record to the Court of First Instance after appellants filed their
notice of appeal. In reply, the Solicitor General supports the ruling of the court below that the
motion was pro forma and that the same was apparently devoid of merit, and it was therefore
presented only for delay.

If, as we find from the documentary evidence submitted at the trial, the accused Colmenares is
owner or possessor of a parcel of land belonging perhaps to his mother, which parcel of land that
has been declared and taxes thereon paid for, the complainant must have been his tenant, and the
claim that the motion was for purpose of delay is unfounded. In the motion for reconsideration in
question it is claimed that as the ownership of the land is involved the case should be suspended
until after such ownership shall have been decided by the competent court. In their supplemental
motion dated May 16, counsel for the accused again argued that the palay supposed to have been
stolen appears to have been owned jointly by the accused and the complainant and therefore could
not be the subject of theft. Both the first motion for reconsideration and the subsequent one cannot
be said to be pro forma; they raise valid questions of law and fact. Said motions point to an error of
law in the judgment prejudicial to the substantial rights of the accused. It can not therefore be said
to be merely pro forma; it satisfied paragraph (a) of Section 2 of Rule 117 of the Rules of Court,
which is as follows:

SEC. 2. Grounds for a new trial. — The court shall grant a new trial on any of the following
grounds:

(a) That errors of law or irregularities have been committed during the trial prejudicial to
the substantial rights of the defendant;

We also find that the pro forma rule in motions for reconsiderations has been incorrectly applied in
the case at bar, a criminal case. The pro forma motion for new trial was first established in Section
497 of the original Code of Civil Procedure, which reads as follows:

(2) If the excepting party filed a motion in the Court of First Instance for a new trial, upon
the ground that the evidence was insufficient to justify the decision, and the judge overruled
said motion, and due exception was taken to his overruling the same, the Supreme Court
 may review the evidence and make such findings upon the facts by a preponderance of the
evidence, and render such final judgment, as justice and equity may require. But, if the
Supreme Court shall be of the opinion that this exception is frivolous and not made in good
faith, it may impose double or treble additional costs upon the excepting party, and may
order them to be paid by the counsel prosecuting the bill of exception, if in its opinion
justice so requires.

The pro forma motion alleged that the evidence is insufficient to justify the decision and was a
requirement in order that the Supreme Court may review the evidence submitted and unless such a
motion for insufficiency of evidence is presented in the trial court, the Supreme Court could not
review the evidence and make its own findings of fact.

When the present Rules of Court were promulgated the above mentioned provision of Section 497
of the Code of Civil Procedure was eliminated. Under the present rules, Rule 37, the movant must
point out the findings or conclusions in the judgment which allgedly are not supported by the
evidence or are contrary to law. Hence if a motion only makes a general statement that the evidence
is insufficient to sustain the judgment or that the same is contrary to law, it can not be said to
satisfy Rule 37, Sec. 2, of the Rules of Court. Motions under the old Code of Civil Procedure were not
considered as motions pro forma or intended for delay, and were not considered as interrupting the
period to perfect an appeal. This change has been explained by Chief Justice Moran, as follows:

When the motion is made upon the causes mentioned in subdivision (c), that is, mistake of
fact or of law, it was not necessary, under the old procedure, to set forth, in detail, the
reasons in support of the grounds alleged in the motion. This ruling is repealed by the new
provision, which requires the motion to point out specifically the findings or conclusions of
the judgment which allegedly are not supported by the evidence or are contrary to law,
making express reference to the testimonial or documentary evidence or to the provisions
of law alleged to be contrary to such findings or conclusion. The reason for the old rule was
obvious, for a motion for new trial on the ground of mistake of fact was presented as a
matter of form, as necessary antecedent to appeal. Under the new procedure, motions of
that kind are no longer antecedents to appeal. For this reason, where a motion for a new
trial filed under the third paragraph of this section and fails to "point out specifically the
findings or conclusions of the judgment which are not supported by the evidence or which
are contrary to law, making express reference to the testimonial or documentary evidence
or to the provisions of law alleged to be contrary to such findings or conclusions," it shall be
treated as a motion pro forma intended merely to delay the proceedings and it shall not
interrupt or suspend the period of time for the perfection of an appeal. (1 Moran, 1957, pp.
515-516).

Rule 37 on new trial as found in the new Rules is applicable only in civil cases. The rule regarding
new trial criminal case is contained in Rule 117. The pro forma rule is, therefore, not applicable in
criminal cases, and the Court below erred in applying said rule to the criminal case now under
consideration.

Wherefore, the order of dismissal of the appeal must be reversed and the case remanded to the
Court of First Instance of origin for trial on the merits. Without costs.

Paras, C. J., Bengzon, Montemayor, Bautista Angelo, Endencia, Barrera, and Gutierrez David, JJ.,
concur.