FELICIDAD VIERNEZA VS.

COMMISSIONER OF CUSTOMS

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-24348 July 30, 1968
FELIClDAD VIERNEZA, petitioner,
vs.
THE COMMISSIONER OF CUSTOMS, respondent.
Juan T. David for petitioner.
Office of the Solicitor General for respondent.
REYES, J.B.L., J.:
An appeal from the decision of the Court of Tax Appeals (C.T.A. Case No. 762) sustaining a decision of respondent
Commissioner of Customs forfeiting, in favor of the Government, 760 cartons of Chesterfield and Camel cigarettes
with blue seals but without internal revenue strip stamps.
Reproduced below are the undisputed findings of facts in the decision appealed from:

At about 2:00 a.m. on September 16, 1957 the M/V "Legaspi" a coastwise vessel coming from Jolo docked at
the port of Cebu on her way to Manila. Acting upon a confidential telegraphic report from an informer in Jolo
that the said vessel was carrying a substantial quantity of smuggled foreign cigarettes, the Customs authorities
of the port of Cebu conducted a search of the vessel which eventually led to the discovery of eight cases
containing SIX HUNDRED FIFTY (650) CARTONS of Chesterfield cigarettes and ONE HUNDRED TEN (110)
CARTONS of Camel cigarettes without the required Internal Revenue strip stamps. Upon investigation it was
also discovered that the subject merchandise was covered by Bill of Lading No. 24-A (Exhibit B) with "personal
belongings" as its declaration and correspondingly entered into the manifest of the vessel likewise with
"personal belongings" as the noted description, and with Sultan Pula of Jolo as the consignor and a certain
Carlos Valdez as the consignee in Manila. Upon further investigation, however, it was found that a woman
passenger was accompanying the subject merchandise appearing later to be Mrs. Felicidad Vierneza, the
present claimant, who all the while holds the bill of lading. It should be noted that when Mrs. Vierneza was
questioned during the course of the search she disclaimed under oath (Exhibit H) ownership of the
merchandise.

Believing that there is a strong evidence of violations of Customs laws, the Collector of Customs of Cebu seized
the merchandise and instituted the forfeiture proceedings for violation of Section 2530 (f), (g) and (m-4) of
the Tariff and Customs Code of the Philippines and Section 174 of the Internal Revenue Code. After complying
with the procedural requirement, of the law, the Collector of Customs of Cebu conducted a hearing of the
case ... (and) on February 5, 1958, ... rendered his decision forfeiting the subject merchandise in favor of the
Government ... (pp. 42-43, Customs records.)

The claimant of the merchandise, petitioner herein, appealed in due time from the decision of the Collector
of Customs of Cebu to the Commissioner of Customs who affirmed the decision of the Collector, with the
modification that the forfeiture was sustained, among others, under paragraph (m-1) of Section 2530 of the
Tariff and Customs Code instead of under paragraph (m-4) of the same section. ...

Elevated to the Court of Tax Appeals, the decision of respondent Commissioner of Customs was affirmed, the court
"(f)inding that the Collector of Customs of Cebu had jurisdiction to order the seizure and forfeiture of said cigarettes
and that the forfeiture of the same is in accordance with Section 2530 (f) of the Tariff and Customs Code". Thus,
petitioner, who claimed to have merely purchased the cigarettes in the open market in Jolo, now turns to us for relief,
advancing the following assignment of errors:
 1. The Court of Tax Appeals erred in affirming the decision of the respondent finding that the Collector of
Customs for the port of Cebu acted with jurisdiction in instituting seizure proceedings against the merchandise
herein involved.

2. The Court of Tax Appeals erred in affirming the decision of the respondent finding that the merchandise
involved are liable to the penalty of forfeiture (under Section 2530 (f) of the Tariff and Customs Code).

3. The Court of Tax Appeals erred in not finding that the merchandise involved which were seized and libeled
for alleged violation of particular provisions of law can not be legally forfeited for violation of any other
provision of law.

All three assigned errors are untenable.

1. Petitioner argues that the Collector of Customs of Jolo, who has "jurisdiction over all matters arising from the
enforcement of tariff and customs laws within his collection district", as provided for in Section 703 of the Tariff and
Customs Code, is exclusively authorized to proceed against the cigarettes in question inasmuch as the smuggling was
allegedly perpetrated in his collection district. Hence, petitioner concludes that the seizure and forfeiture thereof by
the Collector of Customs of Cebu is irregular and illegal for lack of jurisdiction.

We do not agree. First, because Section 703, on which petitioner's conclusion is premised, is legally non-existent, the
same having been vetoed by the President.1 Secondly, the Tariff and Customs Code clearly empowers the Bureau of
Customs to prevent and suppress smuggling and other frauds upon the Customs [Sec. 602 (b)] over all seas within the
jurisdiction of the Philippines and over all coasts, ports, airports, harbors, bays, rivers and inland waters navigable from
the sea and, in case of "hot pursuit", even beyond the maritime zone (Sec. 603). For the due enforcement of this
function, a Collector, among others, is authorized to search and seize (Sec. 2203), at any place within the jurisdiction
of the said Bureau (Sec. 2204, sec. par.), any vessel, aircraft, cargo, article, animal or other movable property when
the same is subject to forfeiture or liable for any fine imposed under customs and tariff laws (Sec. 2205). It is of no
moment where the introduction of the property subject to forfeiture took place. For, to our mind, "(i)t is the right of
an officer of the customs to seize goods which are suspected to have been introduced into the country in violation of
the revenue laws not only in his own district, but also in any other district than his own". [Taylor vs. U.S., 44 U.S. (3
How.) 197, 11 L. ed. 559]. Any other construction of the Tariff and Customs Code, such as the one proposed by
petitioner, would virtually place the Collector of Customs in a straitjacket and render inutile his police power of search
and seizure, thereby frustrating effective enforcement of the measures provided in the Code to prevent and suppress
smuggling and other frauds upon the Customs. This we can not sanction by subscribing to petitioner's conclusion. The
Code, as a revenue law, is to be construed to carry out the intention of Congress in enacting it and as would most
effectually accomplish its objects (15 Am. Jur. 304).

Petitioner also attacks the jurisdiction of the Collector of Customs of Cebu on the ground that the forfeiture of the
cigarettes is not in accordance with Section 2531 of the Code, as the same were, at the time of seizure, no longer in
the custody and control of the Bureau of Customs nor in the hands, or subject to control, of the importer, original
owner, consignee, agent or person with knowledge that the same were imported contrary to law.

Again, we disagree. The forfeiture is effected precisely in accordance with Section 2531 afore-cited, which plainly
provides "that forfeiture shall be effected when and while the article is in the custody or within the jurisdiction of the
customs authority ... or in the hands or subject to the control of ... some person who shall receive, conceal, buy, sell or
transport the same ... with knowledge that the article was imported ... contrary to law" (Emphasis supplied). There can
be no question that the cigarettes involved were seized and forfeited at the port of Cebu which is within the jurisdiction
of the Bureau of Customs and, as will be shown later, while the cigarettes were subject to the control of petitioner,
who bought, concealed, and transported the same aboard the M/V "Legaspi" with knowledge that they were imported
contrary to law. Besides, it is a settled jurisprudence that forfeiture proceedings are in the nature of proceedings in
rem wherein the jurisdiction to proceed against the res is vested in the court of the district where the same is found
or seized (25 C.J.S. 572). Therefore, the Collector of Customs of Cebu, who has the authority under the Tariff and
Customs Code to institute forfeiture proceedings, lawfully assumed jurisdiction to forfeit, in favor of the Government,
the smuggled cigarettes found and seized within his collection district.
2. Petitioner next argues that the cigarettes in question are not merchandise of prohibited importation inasmuch as
she had purchased the same in the open market in Jolo; which goes to show that she is not the importer, original
owner, consignee, agent or person who effected the importation thereof; and that in the absence of evidence that
she bought the same with knowledge that they were imported contrary to law in accordance with Section 2531, as
the lack of internal revenue stamps is not evidence of illegal importation much less her knowledge thereof, the said
cigarettes are not subject to forfeiture under Section 2530 (f) of the Code.

This is not the first time that this question has been posed before us. In the case of Gigare vs. Commissioner of
Customs (G.R. No. L-21376, August 29, 1966, 17 S.C.R.A. 1001), we disposed of the same by holding that "(s)ince,
admittedly, the internal revenue tax on the cigarettes indispute has not been paid, it is clear that said cigarettes fall
within the category of "merchandise of prohibited importation," the importation of which is contrary to law and may
justify its forfeiture, as provided in Sections 1363 (f) and 1364 of the Revised Administrative Code," which correspond
to Sections 2530 (f) and 2531, respectively, of the Tariff and Customs Code. "Moreover, the blue seals affixed on said
commodities prove satisfactorily that they are foreign products. Again, the importation thereof into the Philippines is
attested by the presence of said products within our jurisdiction" (Ibid.) And concerning petitioner's knowledge of
these facts, the following disquisition by the Court of Tax Appeals, lengthily quoted in the Gigare case, finds significant
application in the case at bar:

Were the cigarettes in question illegally imported into the Philippines? We are of the opinion that, the
Commissioner of Customs should be sustained in his finding that the cigarettes in question were imported
illegally. The absence of Philippine internal revenue strip stamps on cigarettes indicates that they are either
manufactured clandestinely within the Philippines or imported illegally into the country. In the case at bar,
concomitant circumstances militate against the clandestine manufacture within the Philippines of the
cigarettes. The affixture of blue seals on the packs of the cigarettes, the wrappers, the purchase of the
cigarettes in the open market of Jolo, a place where American and other foreign made cigarettes are, of
common knowledge, frequently smuggled from Borneo ... and the failure of petitioner to show that the
cigarettes in question were locally manufactured rule out the possibility that the cigarettes in question were
manufactured in the Philippines. Consequently, we are constrained to conclude that these cigarettes were
foreign (American) made. They were merchandise of prohibited importation, the importation of which was
contrary to law, and should be forfeited under Section 1363 (f) of the Revised Administrative Code.

xxx xxx xxx

The fact that petitioner is merely a buyer of the cigarettes in the open market of Jolo does not render the
cigarrettes immune from the penalty of forfeiture. This is so because forfeiture proceedings are instituted
against the res (cigarettes) ... and, by express provision of Section 1364 of the Revised Administrative Code,
the forfeiture shall occur while the merchandise is in the hands or subject to control of some person who shall
receive, conceal, buy, sell, or transport the same with knowledge that the merchandise was imported contrary
to law. Petitioner cannot but be charged with the knowledge that the cigarettes in question were imported
contrary to law, for if it were otherwise, why were these cigarettes concealed on board the vessel ... ? Why
did she deny ownership over said cigarettes? For what plausible reason was she afraid of detention? What
impelled her to believe that she would be detained by the customs authorities? To uphold the claim of
petitioner and forego the forfeiture would be giving a chance to accessories after the fact of smugglers of
foreign cigarettes to ply their trade with impunity and with sanction of the courts. What the executive
department could not curb, that is rampant smuggling of foreign cigarettes, the courts should not tolerate ...

3. Petitioner finally contends that the decision of the Commissioner of Customs libeling and forfeiting the cigarettes
involved in the present case for violation of Section 2530 (m-1) of the Tariff and Customs Code is unconstitutional, in
view of the fact that she was allegedly not afforded an opportunity to defend the cigarettes against such charge, said
section not being one of the original grounds cited by the Collector of Customs of Cebu in forfeiting the same.

The contention has no merit. Certainly, the appellate power of the Commissioner of Customs to review seizure and
protest cases is not limited to a review of the issues raised on appeal. He may affirm, modify or reverse the decision
of the Collector (Section 2313) on other questions provided that his findings and conclusions are, as in the case at bar,
supported by evidence. It is of no consequence whatsoever what were the original grounds of the seizure and
forfeiture if, in point of fact, the goods are by law subject to forfeiture [Wood vs. U.S., 16 Pet. (U.S.) 342, 10 L. ed. 987].
As there is evidence on record showing that the cigarettes in question were imported and introduced into the country
without passing through a customs house, the same may be forfeited under said Section 2530 (m-1) of the Code,
notwithstanding that it is not one of the original charges. As we held in Que Po Lay vs. Central Bank, et al. (104 Phil.
853), what counts is not the designation of the particular section of the law that has been violated but the description
of the violation in the seizure report.2

WHEREFORE, the decision appealed from is hereby affirmed, with costs against petitioner.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur.

ILLUH ASAALI, ET AL., VS. COMMISSIONER OF CUSTOMS

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 Customs11 to the effect that the
expiration of the Import Control Law "did not produce the effect of declaring legal the importation of goods which
were illegally imported and the seizure and forfeiture thereof as ordered by the Collector of Customs illegal or null
and void."

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.

662 Phil. 94
SECOND DIVISION
[ G.R. No. 187425. March 28, 2011 ]
COMMISSIONER OF CUSTOMS, PETITIONER, VS. AGFHA INCORPORATED, RESPONDENT.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the February 25, 2009
Decision[1] of the Court of Tax Appeals En Banc (CTA-En Banc), in CTA EB Case No. 136, which affirmed the October
18, 2005 Resolution[2] of its Second Division (CTA-Second Division), in CTA Case No. 5290, finding petitioner, the
Commissioner of Customs (Commissioner), liable to pay respondent AGFHA Incorporated (AGFHA) the amount of
US$160,348.08 for the value of the seized shipment which was lost while in petitioner's custody.

On December 12, 1993, a shipment containing bales of textile grey cloth arrived at the Manila International Container
Port (MICP). The Commissioner, however, held the subject shipment because its owner/consignee was allegedly
fictitious. AGFHA intervened and alleged that it was the owner and actual consignee of the subject shipment.

On September 5, 1994, after seizure and forfeiture proceedings took place, the District Collector of Customs, MICP,
rendered a decision[3] ordering the forfeiture of the subject shipment in favor of the government.

AGFHA filed an appeal. On August 25, 1995, the Commissioner rendered a decision[4] dismissing it.

On November 4, 1996, the CTA-Second Division reversed the Commissioner's August 25, 1995 Decision and ordered
the immediate release of the subject shipment to AGFHA. The dispositive portion of the CTA-Second Division
Decision[5] reads:

WHEREFORE, in view of the foregoing premises, the instant Petition for Review is hereby GRANTED. Accordingly, the
decision of the respondent in Customs Case No. 94-017, dated August 25, 1995, affirming the decision of the MICP
Collector, dated September 5, 1994, which decreed the forfeiture of the subject shipments in favor of the government,
is hereby REVERSED and SET ASIDE. Respondent is hereby ORDERED to effect the immediate RELEASE of the subject
shipment of goods in favor of the petitioner. No costs.

SO ORDERED.
On November 27, 1996, the CTA-Second Division issued an entry of judgment declaring the above-mentioned decision
final and executory.[6]

Thereafter, on May 20, 1997, AGFHA filed a motion for execution.

In its June 4, 1997 Resolution, the CTA-Second Division held in abeyance its action on AGFHA's motion for execution
in view of the Commissioner's appeal with the Court of Appeals (CA), docketed as CA-G.R. SP No. 42590 and
entitled "Commissioner of Custom v. The Court of Tax Appeals and AGFHA, Incorporated."

On May 31, 1999, the CA denied due course to the Commissioner's appeal for lack of merit in a decision,[7] the
dispositive portion of which reads:

WHEREFORE, the instant petition is hereby DENIED DUE COURSE and DISMISSED for lack of merit. Accordingly, the
Commissioner of Customs is hereby ordered to effect the immediate release of the shipment of AGFHA, Incorporated
described as "2 x 40" Cont. No. NYKU-6772906 and NYKU-6632117 STA 197 Bales of Textile Grey Cloth" placed under
Hold Order No. H/CI/01/2293/01 dated 22 January 1993.

No costs.

SO ORDERED.

Thereafter, the Commissioner elevated the aforesaid CA Decision to this Court via a petition for review on certiorari,
docketed as G.R. No. 139050 and entitled "Republic of the Philippines represented by the Commissioner of Customs
v. The Court of Tax Appeals and AGFHA, Inc."

On October 2, 2001, the Court dismissed the petition.[8]

On January 14, 2002, the Court denied with finality the Commissioner's motion for reconsideration of its October 2,
2001 Decision.

On March 18, 2002, the Entry of Judgment was issued by the Court declaring its aforesaid decision final and executory
as of February 5, 2002.

In view thereof, the CTA-Second Division issued the Writ of Execution, dated October 16, 2002, directing the
Commissioner and his authorized subordinate or representative to effect the immediate release of the subject
shipment. It further ordered the sheriff to see to it that the writ would be carried out by the Commissioner and to
make a report thereon within thirty (30) days after receipt of the writ. The writ, however, was returned unsatisfied.

On July 23, 2003, the CTA-Second Division received a copy of AGFHA's Motion to Show Cause dated July 21, 2003.

Acting on the motion, the CTA-Second Division issued a notice setting it for hearing on August 1, 2003 at 9:00 o'clock
in the morning.

In its August 13, 2003 Resolution, the CTA-Second Division granted AGFHA's motion and ordered the Commissioner to
show cause within fifteen (15) days from receipt of said resolution why he should not be disciplinary dealt with for his
failure to comply with the writ of execution.

On September 1, 2003, Commissioner's counsel filed a Manifestation and Motion, dated August 28, 2003, attaching
therewith a copy of an Explanation (With Motion for Clarification) dated August 11, 2003 stating, inter alia, that despite
diligent efforts to obtain the necessary information and considering the length of time that had elapsed since the
subject shipment arrived at the Bureau of Customs, the Chief of the Auction and Cargo Disposal Division of the MICP
could not determine the status, whereabouts and disposition of said shipment.

Consequently, AGFHA filed its Motion to Cite Petitioner in Contempt of Court dated September 13, 2003. After a series
of pleadings, on November 17, 2003, the CTA-Second Division denied, among others, AGFHA's motion to cite petitioner
in contempt for lack of merit. It, however, stressed that the denial was without prejudice to other legal remedies
available to AGFHA.
On August 13, 2004, the Commissioner received AGFHA's Motion to Set Case for Hearing, dated April 12, 2004,
allegedly to determine: (1) whether its shipment was actually lost; (2) the cause and/or circumstances surrounding the
loss; and (3) the amount the Commissioner should pay or indemnify AGFHA should the latter's shipment be found to
have been actually lost.

On May 17, 2005, after the parties had submitted their respective memoranda, the CTA-Second Division adjudged the
Commissioner liable to AGFHA. Specifically, the dispositive portion of the resolution reads.

WHEREFORE, premises considered, the Bureau of Customs is adjudged liable to petitioner AGFHA, INC. for the value
of the subject shipment in the amount of ONE HUNDERED SIXTY THOUSAND THREE HUNDRED FORTY EIGHT AND
08/100 US DOLLARS (US$160,348.08). The Bureau of Custom's liability may be paid in Philippine Currency, computed
at the exchange rate prevailing at the time of actual payment, with legal interests thereon at the rate of 6% per annum
computed from February 1993 up to the finality of this Resolution. In lieu of the 6% interest, the rate of legal interest
shall be 12% per annum upon finality of this Resolution until the value of the subject shipment is fully paid.

The payment shall be taken from the sale or sales of the goods or properties which were seized or forfeited by the
Bureau of Customs in other cases.

SO ORDERED.[9]

On June 10, 2005, the Commissioner filed his Motion for Partial Reconsideration arguing that (a) the enforcement and
satisfaction of respondent's money claim must be pursued and filed with the Commission on Audit pursuant to
Presidential Decree (P.D.) No. 1445; (b) respondent is entitled to recover only the value of the lost shipment based on
its acquisition cost at the time of importation; and (c) taxes and duties on the subject shipment must be deducted
from the amount recoverable by respondent.

On the same day, the Commissioner received AGFHA's Motion for Partial Reconsideration claiming that the 12%
interest rate should be computed from the time its shipment was lost on June 15, 1999 considering that from such
date, petitioner's obligation to release their shipment was converted into a payment for a sum of money.

On October 18, 2005, after the filing of several pleadings, the CTA-Second Division promulgated a resolution which
reads:

WHEREFORE, premises considered, respondent Commissioner of Customs' "Motion for Partial Reconsideration" is
hereby PARTIALLY GRANTED. The Resolution dated May 17, 2005 is hereby MODIFIED but only insofar as the Court
did not impose the payment of the proper duties and taxes on the subject shipment. Accordingly, the dispositive
portion of Our Resolution, dated May 17, 2005, is hereby MODIFIED to read as follows:

WHEREFORE, premises considered, the Bureau of Customs is adjudged liable to petitioner AGFHA, INC. for the value
of the subject shipment in the amount of ONE HUNDRED SIXTY THOUSAND THREE HUNDRED FORTY EIGHT AND 08/100
US DOLLARS (US$160,348.08), subject however, to the payment of the prescribed taxes and duties, at the time of the
importation. The Bureau of Custom's liability may be paid in Philippine Currency, computed at the exchange rate
prevailing at the time of actual payment, with legal interests thereon at the rate of 6% per annum computed from
February 1993 up to the finality of this Resolution. In lieu of the 6% interest, the rate of legal interest shall be 12% per
annum upon finality of this Resolution until the value of the subject shipment is fully paid.

The payment shall be taken from the sale or sales of the goods or properties which were seized or forfeited by the
Bureau of Customs in other cases.

SO ORDERED.

Petitioner AGFHA, Inc.'s "Motion for Partial Reconsideration" is hereby DENIED for lack of merit.

SO ORDERED.[10]

Consequently, the Commissioner elevated the above-quoted resolution to the CTA-En Banc.

On February 25, 2009, the CTA-En Banc promulgated the subject decision dismissing the petition for lack of merit and
affirming in toto the decision of the CTA-Second Division.
On March 18, 2009, the Commissioner filed his Motion for Reconsideration, but it was denied by the CTA-En Banc in
its April 13, 2009 Resolution.

Hence, this petition.

ISSUE

Whether or not the Court of Tax Appeals was correct in awarding the respondent the amount of US$160,348.08, as
payment for the value of the subject lost shipment that was in the custody of the petitioner.
In his petition, the Commissioner basically argues two (2) points: 1] the respondent is entitled to recover the value of
the lost shipment based only on its acquisition cost at the time of importation; and 2] the present action has been
theoretically transformed into a suit against the State, hence, the enforcement/satisfaction of petitioner's claim must
be pursued in another proceeding consistent with the rule laid down in P.D. No. 1445.
He further argues that the basis for the exchange rate of its liability lacks basis. Based on the Memorandum, dated
August 27, 2002, of the Customs Operations Officers, the true value of the subject shipment is US$160,340.00 based
on its commercial invoices which have been found to be spurious. The subject shipment arrived at the MICP on
December 12, 1992 and the peso-dollar exchange rate was P20.00 per US$1.00. Thus, this conversion rate must be
applied in the computation of the total land cost of the subject shipment being claimed by AGFHA or P3,206,961.60
plus interest.
The Commissioner further contends that based on Executive Order No. 688 (The 1999 Tariff and Customs Code of the
Philippines), the proceeds from any legitimate transaction, conveyance or sale of seized and/or forfeited items for
importations or exportations by the customs bureau cannot be lawfully disposed of by the petitioner to satisfy
respondent's money judgment. EO 688 mandates that the unclaimed proceeds from the sale of forfeited goods by the
Bureau of Customs (BOC) will be considered as customs receipts to be deposited with the Bureau of Treasury and shall
form part of the general funds of the government. Any disposition of the said unclaimed proceeds from the sale of
forfeited goods will be violative of the Constitution, which provides that "No money shall be paid out of the Treasury
except in pursuance of an appropriation made by law."[11]
Thus, the Commissioner posits that this case has been transformed into a suit against the State because the satisfaction
of AGFHA's claim will have to be taken from the national coffers. The State may not be sued without its consent. The
BOC enjoys immunity from suit since it is invested with an inherent power of sovereignty which is taxation.
To recover the alleged loss of the subject shipment, AGFHA's remedy here is to file a money claim with the Commission
on Audit (COA) pursuant to Act No. 3083 (An Act Defining the Condition under which the Government of the Philippine
Island may be Sued) and Commonwealth Act No. 327 (An Act Fixing the Time within which the Auditor General shall
render his Decisions and Prescribing the Manner of Appeal therefrom, as amended by P.D. No. 1445). Upon the
determination of State liability, the prosecution, enforcement or satisfaction thereof must still be pursued in
accordance with the rules and procedures laid down in P.D. No. 1445, otherwise known as the Government Auditing
Code of the Philippines.
On the other hand, AGFHA counters that, in line with prevailing jurisprudence, the applicable peso-dollar exchange
rate should be the one prevailing at the time of actual payment in order to preserve the real value of the subject
shipment to the date of its payment. The CTA-En Banc Decision does not constitute a money claim against the State.
The Commissioner's obligation to return the subject shipment did not arise from an import-export contract but from
a quasi-contract particularly solutio indebiti under Article 2154 of the Civil Code. The payment of the value of the
subject lost shipment was in accordance with Article 2159 of the Civil Code. The doctrine of governmental immunity
from suit cannot serve as an instrument for perpetrating an injustice on a citizen. When the State violates its own laws,
it cannot invoke the doctrine of state immunity to evade liability. The commission of an unlawful or illegal act on the
part of the State is equivalent to implied consent.
THE COURT'S RULING

The petition lacks merit.

The Court agrees with the ruling of the CTA that AGFHA is entitled to recover the value of its lost shipment based on
the acquisition cost at the time of payment.
In the case of C.F. Sharp and Co., Inc. v. Northwest Airlines, Inc. the Court ruled that the rate of exchange for the
conversion in the peso equivalent should be the prevailing rate at the time of payment:

In ruling that the applicable conversion rate of petitioner's liability is the rate at the time of payment, the Court of
Appeals cited the case of Zagala v. Jimenez, interpreting the provisions of Republic Act No. 529, as amended by R.A.
No. 4100. Under this law, stipulations on the satisfaction of obligations in foreign currency are void. Payments of
monetary obligations, subject to certain exceptions, shall be discharged in the currency which is the legal tender in the
Philippines. But since R.A. No. 529 does not provide for the rate of exchange for the payment of foreign currency
obligations incurred after its enactment, the Court held in a number of cases that the rate of exchange for the
conversion in the peso equivalent should be the prevailing rate at the time of payment.[12] [Emphases supplied]

Likewise, in the case of Republic of the Philippines represented by the Commissioner of Customs v. UNIMEX Micro-
Electronics GmBH,[13] which involved the seizure and detention of a shipment of computer game items which
disappeared while in the custody of the Bureau of Customs, the Court upheld the decision of the CA holding that
petitioner's liability may be paid in Philippine currency, computed at the exchange rate prevailing at the time of actual
payment.

On the issue regarding the state immunity doctrine, the Commissioner cannot escape liability for the lost shipment of
goods. This was clearly discussed in the UNIMEX Micro-Electronics GmBH decision, where the Court wrote:

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

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

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

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

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

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

SO ORDERED.[14] [Emphases supplied]

In line with the ruling in UNIMEX Micro-Electronics GmBH, the Commissioner of Customs should pay AGFHA the value
of the subject lost shipment in the amount of US$160,348.08 which liability may be paid in Philippine currency
computed at the exchange rate prevailing at the time of the actual payment.
WHEREFORE, the February 25, 2009 Decision of the Court of Tax Appeals En Banc, in CTA EB Case No. 136,
is AFFIRMED. The Commissioner of Customs is hereby ordered to pay, in accordance with law, the value of the subject
lost shipment in the amount of US$160,348.08, computed at the exchange rate prevailing at the time of actual
payment after payment of the necessary customs duties.

SO ORDERED.

Carpio, (Chairperson), Peralta, Bersamin,* and Abad, JJ., concur.

Designated as additional member in lieu of Associate Justice Antonio Eduardo B. Nachura, per Raffle dated July 15,
2009.

Rollo, pp. 44-63. Penned by Associate Justice Caesar A. Casanova with Associate Justice Ernesto D. Acosta, Associate
Justice Juanito C. Castañeda, Jr., Associate Justice Lovell R. Bautista, Associate Justice Erlinda P. Uy, and Associate
Justice Olga Palanca-Enriquez, concurring.

PILIPINAS SHELL PETROLEUM CORPORATION VS. COMMISSIONER OF CUSTOMS

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 176380 June 18, 2009

PILIPINAS SHELL PETROLEUM CORPORATION, Petitioner,

vs.
COMMISSIONER OF CUSTOMS, Respondent.

DECISION

BRION, J.:

Before us is the Petition for Review on Certiorari1 filed by petitioner Pilipinas Shell Petroleum Corporation (Shell)
questioning the Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 78564. The CA decision set aside the
resolutions3 issued by the Court of Tax Appeals (CTA) in CTA Case No. 6484, which in turn denied the respondent
Commissioner of Customs’ (respondent) Motion to Dismiss the petition for review Shell filed with the tax court. The
CA decision effectively dismissed Shell’s tax protest case.

BACKGROUND FACTS

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

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

In a letter dated November 3, 1999 (Center’s November 3 letter), the Center, through the Secretary of the DOF,
informed Shell that it was cancelling the TCCs transferred to and used as payment by the oil company, pursuant to its
EXCOM Resolution No. 03-05-99. The Center claimed that after conducting a post-audit investigation, it discovered
that the TCCs had been fraudulently secured by the original grantees who thereafter transferred them to Shell; no
categorical finding was made regarding Shell’s participation in the fraud. In view of the cancellation, the Center
required Shell to pay the BIR and BOC the amounts corresponding to the TCCs Shell had used to settle its liabilities.
Shell objected to the cancellation of the TCCs claiming that it had been denied due process. Apparently, Shell had sent
a letter to the Center on November 3, 1999 (Shell’s November 3 letter) adducing reasons why the TCCs should not be
cancelled; Shell claimed that the Center’s November 3 letter cancelling the TCCs was issued without considering its
letter of the same date.

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

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

Your immediate response to this demand letter shall be appreciated.

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

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

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

Please consider this as our last and final demand.

As mentioned, all three letters were signed by Atty. Valera.

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

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

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

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

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

4. Assuming arguendo that fraud was present in the issuance of the original TCCs, whether or not such fraud
can work to the prejudice of an innocent purchaser for value who is not a party to such fraud;
 5. Whether or not the respondent and the DOF/Center are stopped from invalidating the TCCs and the
transfers and utilizations thereof;

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

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

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

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

The appellate court annulled and set aside the CTA rulings in its decision dated May 3, 2006.12 It found the collection
letters written by Atty. Valera "indicative of [respondent’s] final rulings on the assessments concerning the spurious
TCCs xxx which were then already appealable to the respondent CTA. Each letter carried a clear demand to pay within
five (5) days from receipt, and each also carried a warning that ‘this [is] our last and final demand.’" On the authority
of Atty. Valera to issue the collection letters, the appellate court pointed to Customs Memorandum Circular (CMC) No.
27-2001 that delegated the Commissioner’s authority on matters relating to tax credit and transfers of tax credit to
Atty. Valera, and to Customs Memorandum Order (CMO) No. 40-2001 that delegated the authority to sign, file, and
prosecute civil complaints likewise to Atty. Valera.

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

THE PETITION

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

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

THE COURT’S RULING

We resolve to DENY Shell’s petition; the present case does not involve a tax protest case within the jurisdiction of the
CTA to resolve.

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

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

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

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

xxx xxx xxx

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

These decisions of the respondent involving customs duties specifically refer to his decisions on administrative tax
protest cases, as stated in Section 2402 of the Tariff and Customs Code of the Philippines (TCCP):

Section 2402. Review by Court of Tax Appeals. - The party aggrieved by a ruling of the Commissioner in any matter
brought before him upon protest or by his action or ruling in any case of seizure may appeal to the Court of Tax
Appeals, in the manner and within the period prescribed by law and regulations.

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

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

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

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

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

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

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

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

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

[A] suit for the collection of internal revenue taxes, where the assessment has already become final and executory,
the action to collect is akin to an action to enforce the judgment. No inquiry can be made therein as to the merits of
the original case or the justness of the judgment relied upon. In light of our conclusion that the present case does not
involve a decision of the respondent on a matter brought to him as a tax protest, Atty. Valera’s lack of authority to
issue the collection letters and to institute the collection suits is irrelevant. For this same reason, the injunction against
Atty. Valera cannot be invoked to enjoin the collection of unpaid taxes due from Shell.

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

SO ORDERED.

ARTURO D. BRION
Associate Justice
WE CONCUR:

LEONARDO A. QUISUMBING
Associate Justice
Chairperson

CONSUELO YNARES-SANTIAGO* MINITA V. CHICO-NAZARIO**

Associate Justice Associate Justice
TERESITA J. LEONARDO-DE CASTRO***
Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.

LEONARDO A. QUISUMBING
Associate Justice
Chairperson
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, it is hereby certified
that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of
the opinion of the Court’s Division.

REYNATO S. PUNO

Chief Justice
769 Phil. 231
EN BANC
[ G.R. No. 193253. September 08, 2015 ]
BUREAU OF CUSTOMS, PETITIONER, VS. THE HONORABLE AGNES VST DEVANADERA, ACTING SECRETARY,
DEPARTMENT OF JUSTICE; HONORABLE JOVENCITO R. ZUÑO, PEDRITO L. RANCES, ARMAN A. DE ANDRES, PAUL
CHI TING CO, KENNETH PUNDANERA, MANUEL T. CO, SALLY L. CO, STANLEY L. TAN, ROCHELLE E. VICENCIO, LIZA R.
MAGAWAY, JANICE L. CO, VIVENCIO ABAÑO, GREG YU, EDWIN AGUSTIN, VICTOR D. PIAMONTE, UNIOIL
PETROLEUM PHILIPPINES, INC., AND OILINK, INTERNATIONAL, INC., RESPONDENTS.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to reverse and set
aside the Court of Appeals (CA) Resolutions dated March 26, 2010[1] and August 4, 2010,[2] and to reinstate the petition
for certiorari in CA-G.R. SP No. 113069, or in the alternative, to issue a decision finding probable cause to prosecute
the private respondents for violation of Sections 3601 and 3602, in relation to Sections 2503 and 2530, paragraphs f
and 1 (3), (4) and (5) of the Tariff and Customs Code of the Philippines (TCCP), as amended.

The antecedents are as follows:

Private respondent UNIOIL Petroleum Philippines, Inc. is engaged in marketing, distribution, and sale of petroleum, oil
and other products, while its co-respondent OILINK International, Inc. is engaged in manufacturing, importing,
exporting, buying, selling, or otherwise dealing in at wholesale and retails of petroleum, oil, gas and of any and all
refinements and byproducts thereof. Except for respondent Victor D. Piamonte who is a Licensed Customs Broker, the
following private respondents are either officers or directors of UNIOIL or OILINK:

1. Paul Chi Ting Co - Chairman of UNIOIL and OILINK

2. Kenneth Pundanera - President/Director of UNIOIL
3. Manuel T. Co - Officer/Director of UNIOIL
4. Sally L. Co - Officer/Director of UNIOIL
5. Stanley L. Tan - Officer/Director of UNIOIL
6. Rochelle E. Vicencio - Corporate Administrative Supervisor of UNIOIL
7. Liza R. Magaway - President of OILINK
8. Janice L. Co - Director of OILINK
9. Vivencio Abaño - Director of OILINK
10. Greg Yu - Director of OILINK
11. Edwin Agustin - Corporate Secretary of OILINK

On January 30, 2007, Commissioner Napoleon L. Morales of petitioner Bureau of Customs (BOC) issued Audit
Notification Letter (ANL) No. 0701246,3 informing the President of OILINK that the Post Entry Audit Group (PEAG) of
the BOC will be conducting a compliance audit, including the examination, inspection, verification and/or investigation
of all pertinent records of OILINK's import transactions for the past three (3)-year period counted from the said date.

On March 2, 2007, a pre-audit conference was held between the BOC Audit Team[4] and the representatives of
OILINK.[5] During the conference, the Audit Team explained to OILINK representatives the purpose of the post-entry
audit and the manner by which it would be conducted, and advised it as to the import documents required for such
audit.

On March 14, 2007, OILINK submitted to the Audit Team the following documents: Post-Entry Audit Group General
Customs Questionnaire, General Information Sheet for the year 2006, SEC Registration, Articles of Incorporation,
Company By-laws, and Audited Financial Report for the year 2005.

On April 20, 2007, the Audit Team requested OILINK to submit the other documents stated in the List of Initial
Requirements for Submission, namely: 2004 Audited Financial Report, 2004-2006 Quarterly VAT Returns with the
accompanying schedule of importations, Organizational chart/structure, and List of foreign suppliers with details on
the products imported and the total amount, on a yearly basis.

On May 7, 2007, OILINK expressed its willingness to comply with the request for the production of the said documents,
but claimed that it was hampered by the resignation of its employees from the Accounting and Supply Department.
OILINK also averred that it would refer the matter to the Commissioner of Customs in view of the independent
investigation being conducted by the latter.

On June 4, 2007, OILINK sent a letter stating that the documents which the Audit Team previously requested were
available with the Special Committee of the BOC, and that it could not open in the meantime its Bureau of Internal
Revenue (BIR) - registered books of accounts for validation and review purposes.

In a letter dated July 11, 2007, the Audit Team informed OILINK of the adverse effects of its request for the
postponement of the exit conference and its continuous refusal to furnish it the required documents. It advised OILINK
that such acts constitute as waiver on its part to be informed of the audit findings and an administrative case would
be filed against it, without prejudice to the filing of a criminal action.

On July 24, 2007, Commissioner Morales approved the filing of an administrative case against OILINK for failure to
comply with the requirements of Customs Administrative Order (CAO) No. 4-2004.[6] Such case was filed on July 30,
2007.

On September 20, 2007, an Order was issued by the Legal Service of the BOC, submitting the case for resolution in
view of OILINK's failure to file its Answer within the prescribed period.

On December 14, 2007, the Legal Service of the BOC rendered a Decision finding that OILINK violated Section IV.A.2(c)
and (e) of CAO 4-2004[7] when it refused to furnish the Audit Team copies of the required documents, despite repeated
demands. The dispositive portion of the Decision states:

WHEREFORE, in view of the foregoing, this Office finds herein respondent liable for violating Sections IV.A.2 (c) and
(e) of Customs Administrative Order No. 4-2004, and a DECISION is hereby rendered:

1. Ordering OILINK INTERNATIONAL CORPORATION to pay the equivalent of twenty percent (20%) ad valorem on the
article/s subject of the Importation for which no records were kept and maintained as prescribed in Section 2504 of
the Customs Code in the amount of Pesos: Two Billion Seven Hundred Sixty-Four Million Eight Hundred Fifty-Nine
Thousand Three Hundred Four and 80/100 (Php 2,764,859,304.80);

2. Ordering the Bureau of Customs to hold the delivery or release of subsequent imported articles to answer for the
fine, any revised assessment, and/or as a penalty for failure to keep records.

This is without prejudice to the filing of a criminal case or any appropriate legal action against the importer in order to
protect the interest of the government and deter other importers from committing the same offense.

SO ORDERED[8]

Pursuant to the Decision dated December 14, 2007, Commissioner Morales, in a letter [9] of even date, directed the
President of OILINK to pay the BOC the administrative fine of P2,764,859,304.80 for violation of CAO No. 4-2004, in
relation to Section 2504 of the TCCP. Copy of the said Decision and letter were served to OILINK through personal
service on December 28, 2007.[10]

On March 13, 2008, Atty. Noemi B. Alcala, Officer-in-Charge, Collection Service, Revenue and Monitoring Group, sent
a final demand letter for OILINK to settle the administrative fine, otherwise, the BOC will be compelled to file the
necessary legal action and put in force Section 1508[11] of the TCCP against its succeeding shipments to protect the
government's interest.[12]

On April 23, 2008, a Hold Order[13] was issued by Horacio P. Suansing, Jr., District Collector, Port of Manila, against all
shipments of OILINK for failure to settle its outstanding account with the BOC and to protect the interest of the
government pursuant to Section 1508 of the TCCP.
On May 2, 2008, Rochelle E. Vicencio, Corporate Administrative Supervisor of UNIOIL, citing the existing Terminalling
Agreement dated January 2, 2008 with OILINK for the Storage of UNIOIL's aromatic process oil and industrial
lubricating oils (collectively, "base oils"), requested District Collector Suansing Jr. to allow it to withdraw base oils from
OILINK's temporarily closed Terminal.

On May 6, 2008, Commissioner Morales granted the request of UNIOIL to withdraw its base oils stored at OILINK's
terminal/depot based on the Terminalling Agreement between the two companies, subject to the following
conditions:

1. Only Unioil products shall be withdrawn subject to proper inventory by the BIR and BOC.
2. Appropriate duties and taxes due on the products to be withdrawn are fully paid or settled.
3. The company should allow the operation/withdrawal to be closely monitored and continuously underguarded by
assigned Customs personnel.[14]

On May 9, 2008, a Warrant of Seizure and Detention (WSD), docketed as Seizure Identification (S.I.) No. 2008-082, was
issued by District Collector Suansing Jr., directing the BOC officials to seal and padlock the oil tanks/depots of OILINK
located in Bataan.

On May 12, 2008, Kenneth C. Pundanera, Operations Manager of UNIOIL, requested Zaldy E. Almoradie, District
Collector of Mariveles, Bataan, for permission to release UNIOIL-owned products from OILINK's storage terminal.
Pertinent portion of the request letter reads:

Unioil is a licensed importer of various Petroleum Products by virtue of its import license LTAD-0-021-2002 issued on
March 26, 2002 which was revised to include all other petroleum products in 2007 through LTAMII (P) 001-10-07-
13639. To pursue its line of business, Unioil has an existing Terminalling Agreement with Oilink for the storage of
various Unioil products at the Oilink terminal located at Lucanin Pt, Mariveles, Bataan.

In view of the said temporary closure of Oilink's terminal, Unioil is currently unable to fully utilize its leased tanks as
well as make use of the products contained therein. We understand that there is still an unresolved issue between
Oilink and the Bureau of Customs. However, with all due respect, said issue should not affect Unioil because it is not
a party to the same, furthermore there is a legal and binding terminalling agreement between Oilink and Unioil which
should be honored.

Last May 8, 2008, an asphalt importation for Unioil Petroleum Philippines, Inc. arrived in Mariveles, Bataan. This was
issued the corresponding discharging permit by the Bureau of Customs. All duties, excise taxes and value added taxes
for this product have already been settled. However, we are still unable to withdraw these products in order to serve
our customers who are using the product to supply major government infrastructure projects in the country.

In line with the endorsement coming from the Bureau of Customs Commissioner Napoleon D. Morales issued last May
6, 2008, Unioil has complied with the conditions stipulated therein which are:

1. Only Unioil products shall be withdrawn subject to proper inventory by the BIR and BOC.

2. Appropriate duties and taxes due on the products to be withdrawn are fully paid or settled.

3. The company (Unioil) should allow the operation/withdrawal to be closely monitored and continuously
underguarded by assigned Customs personnel.

In this regard, may we respectfully request your good office to please allow Unioil to withdraw from Oilink's terminal
its products which are stored in the following tanks[:][15
]
 TANK PROD CONTENTS (Liters)

2 diesel 2,171,670.00

6 rexo 1,862,846.00

10 asphalt 4,573.14

13 gasoline 809,345.00

14 gasoline 746,629.00

17 diesel 360,097.00

19 sn500 203,659.00

20 sn500 643,236.00

In the same request letter, District Collector Almoradie approved the release of the above petroleum products through
a handwritten note dated May 12, 2008: "All concerned: Pls. allow the release of the Unioil-owned products from the
Oilink Storage Terminal per this request. Thanks."[16]

On May 15, 2008, Pundanera wrote a clarificatory letter pursuant to the verbal instruction of District Collector
Almoradie to explain the withdrawal of products from the Terminal of OILINK, to wit:

As far as Unioil is concerned, we affirm to your good office that the products withdrawn/loaded at the Terminal are
entirely Unioil products. Unioil owns these products pursuant to its supply and terminalling agreements with Oilink.
(We shall be submitting to you copies of these documents as soon as they arrive from our office in Manila.) In addition,
due to the issue involving Oilink and the Bureau of Customs, Unioil was forced to secure its petroleum products from
local sources in order to comply with its valid contractual commitments.

Unioil intended to withdraw these products because it believed in good faith and based on documents in its possession
that it is allowed to do so. Unioil based its intention pursuant to the Indorsements of the Collector of the Port of Manila
as well as the Office of the Commissioner that allowed the withdrawal of Unioil products subject to compliance with
the three (3) conditions specified in the abovementioned Indorsements.

This being the precedent, we believe in good faith that, since Unioil owns the products, and it is considered a stranger
to the issue between Oilink and the Bureau, then Unioil is allowed to withdraw the products it owns subject to the
compliance with the three (3) stated conditions. Besides, any withdrawal is covered by an appropriate delivery receipt,
which would clearly indicate that Unioil owns the products being withdrawn.[17]

In a complaint-affidavit dated December 15, 2008, Atty. Balmyrson M. Valdez, a member of the petitioner BOC's Anti-
Oil Smuggling Coordinating Committee that investigated the illegal withdrawal by UNIOIL of oil products consigned to
OILINK, valued at P181,988,627.00 with corresponding duties and taxes in the amount of P35,507,597.00, accused the
private respondents of violation of Sections 3601[18] and 3602,[19] in relation to Sections 2503[20] and
2530,[21] paragraphs f and 1 (3), (4) and (5), of the TCCP.

In a letter[22] dated December 15, 2008, Commissioner Morales referred to the Office of Chief State Prosecutor
Jovencito R. Zuno the said complaint-affidavit, together with its annexes, for preliminary investigation. During the said
investigation, BOC's counsel appeared and all of the private respondents submitted their respective counter-affidavits.

In a Resolution[23] dated May 29, 2009, public respondent Arman A. De Andres, State Prosecutor of the Department of
Justice (DOJ), recommended the dismissal of the complaint-affidavit for lack of probable cause. The Resolution was
approved by public respondents Assistant Chief State Prosecutor Pedrito L. Ranees and Chief State Prosecutor Zuño.
On automatic review, the Resolution was affirmed by then Secretary of Justice Raul M. Gonzales.[24]
Dissatisfied, the BOC filed a motion for reconsideration which was denied by the public respondent, the Acting
Secretary of Justice Agnes VST Devanadera, in a Resolution[25] dated December 28, 2009.

On March 11, 2010, the BOC filed a petition for certiorari with the CA. In the Resolution dated March 26, 2010, the CA
dismissed outright the petition due to procedural defects:

The instant petition (i) contains no explanation why service thereof was not done personally (Sec. 11, Rule 13, 1997
Rules of Civil Procedure); (ii) shows that it has no proper verification and certification against forum shopping and (iii)
the docket and other lawful fees payment is short by P1,530.00[26]

In the Resolution dated August 4, 2010, the CA denied the private respondents' motion for reconsideration of the
March 26, 2010 Resolution, as follows:

We made a cursory examination of the petition filed in this case as well as the whole rollo of the case. It is our finding
that, up to the date hereof, the petitioner has not duly submitted to this Court another set of petition with a
certification against forum shopping embodied therein or appended thereto. Thus, the petition really suffers from a
fatal defect until now, and so, the petitioner has to bear the consequence thereof.[27]

The CA stressed that procedural rules are not to be belittled or dismissed simply because their non-observance may
have resulted in prejudice to a party's substantive rights. Like all rules, they are required to be followed except only
when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate
with the degree of thoughtlessness in not complying with the procedure prescribed.

While it is true that litigation is not a game of technicalities, this does not mean that Rules of Court may be ignored at
will and at random to the prejudice of the orderly presentation and assessment of the issues and their just resolution.

Aggrieved, the BOC filed the instant petition for review on certiorari, raising the following issues:

WHETHER THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT DENIED PETITIONER'S MOTION FOR
RECONSIDERATION SOLELY ON THE GROUND THAT, ALLEGEDLY, IT DID NOT RECEIVE THE SECOND AND COMPLETE
COPY OF THE PETITION, CONTAINING THE VERIFICATION AND CERTIFICATION AGAINST FORUM SHOPPING.

WHETHER THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN LAW AND JURISPRUDENCE WHEN IT
AFFIRMED ITS 26 MARCH 2010 RESOLUTION, DISMISSING THE PETITION ON ACCOUNT OF MERE TECHNICALITIES.

WHETHER THE HONORABLE COURT OF APPEALS COMMITTED SERIOUS ERROR WHEN IT DID NOT LOOK INTO THE
MERITS OF THE CASE, WHERE IT WAS CLEARLY ESTABLISHED THAT THERE IS PROBABLE CAUSE TO INDICT
RESPONDENTS FOR TRIAL FOR VIOLATION OF SECTION 3601 AND 3602 IN RELATION TO SECTION 2530, PARAGRAPHS
(E), AND SECTION 3604 (D), (E), (F), AND (H) OF THE TCCP, AS AMENDED.[28]

The petition is partly meritorious.

Although the question of jurisdiction over the subject matter was not raised at bench by either of the parties, the
Court will first address such question before delving into the procedural and substantive issues of the instant petition.
After all, it is the duty of the courts to consider the question of jurisdiction before they look into other matters involved
in the case, even though such question is not raised by any of the parties.[29] Courts are bound to take notice of the
limits of their authority and, even if such question is neither raised by the pleadings nor suggested by counsel, they
may recognize the want of jurisdiction and act accordingly by staying pleadings, dismissing the action, or otherwise
noticing the defect, at any stage of the proceedings.30 Besides, issues or errors not raised by the parties may be
resolved by the Court where, as in this case, the issue is one of jurisdiction; it is necessary in arriving at a just decision;
and the resolution of the issues raised by the parties depend upon the determination of the unassigned issue or error,
or is necessary to give justice to the parties.[31]
On the issue of whether or not the CA has certiorari jurisdiction over the resolution of the Acting Secretary of Justice,
affirming the dismissal of the complaint-affidavit for violation of provisions of the TCCP due to lack of probable cause,
the Court rules in negative.

The elementary rule is that the CA has jurisdiction to review the resolution of the DOJ through a petition
for certiorari under Rule 65 of the Rules of Court on the ground that the Secretary of Justice committed grave abuse
of his discretion amounting to excess or lack of jurisdiction.[32] However, with the enactment[33] of Republic Act (R.A.)
No. 9282, amending R.A. No. 1125[34] by expanding the jurisdiction of the CTA, enlarging its membership and elevating
its rank to the level of a collegiate court with special jurisdiction, it is no longer clear which between the CA and the
CTA has jurisdiction to review through a petition for certiorari the DOJ resolution in preliminary investigations
involving tax and tariff offenses.

Apropos is City of Manila v. Hon. Grecia-Cuerdo[35] where the Court en banc declared that the CTA has appellate
jurisdiction over a special civil action for certiorari assailing an interlocutory order issued by the RTC in a local tax case,
despite the fact that there is no categorical statement to that effect under R.A. No. 1125, as well as the amendatory
R.A. No. 9282. Thus

x x x Section 5 (1), Article VIII of the 1987 Constitution grants power to the Supreme Court, in the exercise of its original
jurisdiction, to issue writs of certiorari, prohibition and mandamus. With respect to the Court of Appeals, Section 9 (1)
of Batas Pambansa Blg. 129 (BP 129) gives the appellate court, also in the exercise of its original jurisdiction, the power
to issue, among others, a writ of certiorari, whether or not in aid of its appellate jurisdiction. As to Regional Trial Courts,
the power to issue a writ of certiorari, in the exercise of their original jurisdiction, is provided under Section 21 of BP
129.

The foregoing notwithstanding, while there is no express grant of such power, with respect to the CTA, Section 1,
Article VIII of the 1987 Constitution provides, nonetheless, that judicial power shall be vested in one Supreme Court
and in such lower courts as may be established by law and that judicial power includes the duty of the courts of justice
to settle actual controversies involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of
any branch or instrumentality of the Government.

On the strength of the above constitutional provisions, it can be fairly interpreted that the power of the CTA includes
that of determining whether or not there has been grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of the RTC in issuing an interlocutory order in cases falling within the exclusive appellate jurisdiction of the
tax court. It, thus, follows that the CTA, by constitutional mandate, is vested with jurisdiction to issue writs
of certiorari in these cases.

Indeed, in order for any appellate court to effectively exercise its appellate jurisdiction, it must have the authority to
issue, among others, a writ of certiorari. In transferring exclusive jurisdiction over appealed tax cases to the CTA, it can
reasonably be assumed that the law intended to transfer also such power as is deemed necessary, if not indispensable,
in aid of such appellate jurisdiction. There is no perceivable reason why the transfer should only be considered as
partial, not total.

xxxx

Furthermore, Section 6, Rule 135 of the present Rules of Court provides that when by law, jurisdiction is conferred on
a court or judicial officer, all auxiliary writs, processes and other means necessary to carry it into effect may be
employed by such court or officer.

If this Court were to sustain petitioners' contention that jurisdiction over their certiorari petition lies with the CA, this
Court would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the
same subject matter - precisely the split-jurisdiction situation which is anathema to the orderly administration of
justice. The Court cannot accept that such was the legislative motive, especially considering that the law expressly
confers on the CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial review
over local tax cases without mention of any other court that may exercise such power. Thus, the Court agrees with the
ruling of the CA that since appellate jurisdiction over private respondents' complaint for tax refund is vested in the
CTA, it follows that a petition for certiorari seeking nullification of an interlocutory order issued in the said case should,
likewise, be filed with the same court. To rule otherwise would lead to an absurd situation where one court decides
an appeal in the main case while another court rules on an incident in the very same case.

Stated differently, it would be somewhat incongruent with the pronounced judicial abhorrence to split jurisdiction to
conclude that the intention of the law is to divide the authority over a local tax case filed with the RTC by giving to the
CA or this Court jurisdiction to issue a writ of certiorari against interlocutory orders of the RTC but giving to the CTA
the jurisdiction over the appeal from the decision of the trial court in the same case. It is more in consonance with
logic and legal soundness to conclude that the grant of appellate jurisdiction to the CTA over tax cases filed in and
decided by the RTC carries with it the power to issue a writ of certiorari when necessary in aid of such appellate
jurisdiction. The supervisory power or jurisdiction of the CTA to issue a writ of certiorari in aid of its appellate
jurisdiction should co-exist with, and be a complement to, its appellate jurisdiction to review, by appeal, the final
orders and decisions of the RTC, in order to have complete supervision over the acts of the latter.

A grant of appellate jurisdiction implies that there is included in it the power necessary to exercise it effectively, to
make all orders that will preserve the subject of the action, and to give effect to the final determination of the appeal.
It carries with it the power to protect that jurisdiction and to make the decisions of the court thereunder effective.
The court, in aid of its appellate jurisdiction, has authority to control all auxiliary and incidental matters necessary to
the efficient and proper exercise of that jurisdiction. For this purpose, it may, when necessary, prohibit or restrain the
performance of any act which might interfere with the proper exercise of its rightful jurisdiction in cases pending
before it.

Lastly, it would not be amiss to point out that a court which is endowed with a particular jurisdiction should have
powers which are necessary to enable it to act effectively within such jurisdiction. These should be regarded as powers
which are inherent in its jurisdiction and the court must possess them in order to enforce its rules of practice and to
suppress any abuses of its process and to defeat any attempted thwarting of such process.

In this regard, Section 1 of RA 9282 states that the CTA shall be of the same level as the CA and shall possess all the
inherent powers of a court of justice.

Indeed, courts possess certain inherent powers which may be said to be implied from a general grant of jurisdiction,
in addition to those expressly conferred on them. These inherent powers are such powers as are necessary for the
ordinary and efficient exercise of jurisdiction; or are essential to the existence, dignity and functions of the courts, as
well as to the due administration of justice; or are directly appropriate, convenient and suitable to the execution of
their granted powers; and include the power to maintain the court's jurisdiction and render it effective in behalf of
the litigants.

Thus, this Court has held that "while a court may be expressly granted the incidental powers necessary to effectuate
its jurisdiction, a grant of jurisdiction, in the absence of prohibitive legislation, implies the necessary and usual
incidental powers essential to effectuate it, and, subject to existing laws and constitutional provisions, every regularly
constituted court has power to do all things that are reasonably necessary for the administration of justice within the
scope of its jurisdiction and for the enforcement of its judgments and mandates." Hence, demands, matters or
questions ancillary or incidental to, or growing out of, the main action, and coming within the above principles, may
be taken cognizance of by the court and determined, since such jurisdiction is in aid of its authority over the principal
matter, even though the court may thus be called on to consider and decide matters which, as original causes of action,
would not be within its cognizance.

Based on the foregoing disquisitions, it can be reasonably concluded that the authority of the CTA to take cognizance
of petitions for certiorari questioning interlocutory orders issued by the RTC in a local tax case is included in the powers
granted by the Constitution as well as inherent in the exercise of its appellate jurisdiction.[36]

Since the Court ruled in City of Manila v. Hon. Grecia-Cuerdo[31] that the CTA has jurisdiction over a special civil action
for certiorari questioning an interlocutory order of the RTC in a local tax case via express constitutional mandate and
for being inherent in the exercise of its appellate jurisdiction, it can also be reasonably concluded based on the same
premise that the CTA has original jurisdiction over a petition for certiorari assailing the DOJ resolution in a preliminary
investigation involving tax and tariff offenses.
If the Court were to rule that jurisdiction over a petition for certiorari assailing such DOJ resolution lies with the CA, it
would be confirming the exercise by two judicial bodies, the CA and the CTA, of jurisdiction over basically the same
subject matter - precisely the split-jurisdiction situation which is anathema to the orderly administration of justice.
The Court cannot accept that such was the legislative intent, especially considering that R.A. No. 9282 expressly confers
on the CTA, the tribunal with the specialized competence over tax and tariff matters, the role of judicial review over
local tax cases without mention of any other court that may exercise such power.[38]

Concededly, there is no clear statement under R.A. No. 1125, the amendatory R.A. No. 9282, let alone in the
Constitution, that the CTA has original jurisdiction over a petition for certiorari. By virtue of Section 1, Article VIII of
the 1987 Constitution, vesting judicial power in the Supreme Court and such lower courts as may be established by
law, to determine whether or not there has been a grave abuse of discretion on the part of any branch or
instrumentality of the Government, in relation to Section 5(5), Article VIII thereof, vesting upon it the power to
promulgate rules concerning practice and procedure in all courts, the Court thus declares that the CA's original
jurisdiction39 over a petition for certiorari assailing the DOJ resolution in a preliminary investigation involving tax and
tariff offenses was necessarily transferred to the CTA pursuant to Section 7 of R.A. No. 9282,[40] and that such petition
shall be governed by Rule 65 of the Rules of Court, as amended. Accordingly, it is the CTA, not the CA, which has
jurisdiction over the petition for certiorari assailing the DOJ resolution of dismissal of the BOC's complaint-affidavit
against private respondents for violation of the TCCR

On the procedural issue of whether the CA erred in dismissing the petition for certiorari on the sole ground of lack of
verification and certification against forum shopping, the Court rules in the affirmative, despite the above discussion
that such petition should have been filed with the CTA.

In Traveño, et al. v. Bobongon Banana Growers Multi-Purpose Cooperative, et al.,[41] the Court restated the
jurisprudence on non-compliance with the requirements on, or submission of defective, verification and certification
against forum shopping:

1) A distinction must be made between non-compliance with the requirement on or submission of defective
verification, and non- compliance with the requirement on or submission of defective certification against forum
shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading fatally
defective. The court may order its submission or correction or act on the pleading if the attending circumstances are
such that strict compliance with the Rule may be dispensed with in order that the ends of justice may be served
thereby.

3) Verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of
the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been
made in good faith or are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in verification, is
generally not curable by its subsequent submission or correction thereof, unless there is a need to relax the Rule on
the ground of "substantial compliance" or presence of "special circumstances or compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case; otherwise, those
who did not sign will be dropped as parties to the case.' Under reasonable or justifiable circumstances, however, as
when all the plaintiffs or petitioners share a common interest and invoke a common cause of action or defense, the
signature of only one of them in the certification against forum shopping substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his counsel. If,
however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must execute a Special Power of
Attorney designating his counsel of record to sign on his behalf.[42]

While it admittedly filed a petition for certiorari without a certification against forum shopping on March 11, 2010, the
BOC claimed to have subsequently complied with such requirement by filing through registered mail a complete set
of such petition, the following day which was also the last day of the reglementary period. The problem arose when
the CA failed to receive such complete set of the petition for certiorari with the verification and certification against
forum shopping. In support of the motion for reconsideration of the CA's March 26, 2010 resolution which dismissed
outright the petition, the BOC asserted that it filed a complete set of petition by registered mail. It also submitted an
affidavit of the person who did the mailing as required by Section 12,43 Rule 13 of the Rules of Court, including the
registry receipt numbers, but not the receipts themselves which were allegedly attached to the original copy mailed
to the CA. Instead of ordering the BOC to secure a certification from the postmaster to verify if a complete set of the
petition was indeed filed by registered mail, the CA -after examining the whole case rollo and finding that no other set
of petition with a certification against forum shopping was duly submitted - denied the motion for reconsideration.

Faced with the issue of whether or not there is a need to relax the strict compliance with procedural rules in order
that the ends of justice may be served thereby and whether "special circumstances or compelling reasons" are present
to warrant a liberal interpretation of such rules, the Court rules -after a careful review of the merits of the case - in the
affirmative.

Despite the BOC's failed attempt to comply with the requirement of verification and certification against forum
shopping, the Court cannot simply ignore the CA's perfunctory dismissal of the petition on such sole procedural ground
vis-a-vis the paramount public interest in the subject matter and the substantial amount involved, i.e., the alleged
illegal withdrawal of oil products worth P181,988,627.00 with corresponding duties and taxes worth P35,507,597.00.
Due to the presence of such special circumstances and in the interest of justice, the CA should have at least passed
upon the substantive issue raised in the petition, instead of dismissing it on such procedural ground. Although it does
not condone the failure of BOC to comply with the said basic requirement, the Court is constrained to exercise the
inherent power to suspend its own rules in order to do justice in this particular case.

Given that the petition for certiorari should have been filed with the CTA, the mistake committed by the BOC in filing
such petition before the CA may be excused. In this regard, Court takes note that nothing in R.A. No. 1125, as amended
by R.A. No. 9282, indicates that a petition for certiorari under Rule 65 may be filed with the CTA. Despite the enactment
of R.A. No. 9282 on March 30, 2004, it was only about ten (10) years later in the case of City of Manila v. Hon. Grecia-
Cuerdo[44] that the Court ruled that the authority of the CTA to take cognizance of such petitions is included in the
powers granted by the Constitution, as well as inherent in the exercise of its appellate jurisdiction. While the rule on
perfection of appeals cannot be classified as a difficult question of law,[45] mistake in the construction or application
of a doubtful question of law, as in this case, may be considered as a mistake of fact, excusing the BOC from the
consequences of the erroneous filing of its petition with the CA.

As the CA dismissed the petition for certiorari solely due to a procedural defect without resolving the issue of whether
or not the Acting Secretary of Justice gravely abused her discretion in affirming the dismissal of the BOC's complaint-
affidavit for lack of probable cause, the Court ought to reinstate the petition and refer it to the CTA for proper
disposition. For one, as a highly specialized court specifically created for the purpose of reviewing tax and customs
cases,[46] the CTA is dedicated exclusively to the study and consideration of revenue-related problems, and has
necessarily developed an expertise on the subject.[47] For another, the referral of the petition to the CTA is in line with
the policy of hierarchy of courts in order to prevent inordinate demands upon the Court's time and attention which
are better devoted to those matters within its exclusive jurisdiction, and to prevent further overcrowding of its
docket.[48]

Be that as it may, the Court stressed in The Diocese of Bacolod v. Commission on Elections[49] that the doctrine of
hierarchy of courts is not an iron-clad rule, and that it has full discretionary power to take cognizance and assume
jurisdiction over special civil actions for certiorari filed directly with it for exceptionally compelling reasons or if
warranted by the nature of the issues clearly and specifically raised in the petition. Recognized exceptions to the said
doctrine are as follows: (a) when there are genuine issues of constitutionality that must be addressed at the most
immediate time; (b) when the issues involved are of transcendental importance; (c) cases of first impression where no
jurisprudence yet exists that will guide the lower courts on the matter; (d) the constitutional issues raised are better
decided by the Court; (e) where exigency in certain situations necessitate urgency in the resolution of the cases; (f)
the filed petition reviews the act of a constitutional organ; (g) when petitioners rightly claim that they had no other
plain, speedy, and adequate remedy in the ordinary course of law that could free them from the injurious effects of
respondents' acts in violation of their right to freedom of expression; and (h) the petition includes questions that are
dictated by public welfare and the advancement of public policy, or demanded by the broader interest of justice, or
the orders complained of were found to be patent nullities, or the appeal was considered as clearly an inappropriate
remedy.[50] Since the present case includes questions that are dictated by public welfare and the advancement of
public policy, or demanded by the broader interest of justice, as well as to avoid multiplicity of suits and further delay
in its disposition, the Court shall directly resolve the petition for certiorari, instead of referring it to the CTA.
On the substantive issue of whether the Acting Secretary of Justice gravely abused her discretion in affirming the
dismissal of the BOC's complaint-affidavit for lack of probable cause, the settled policy of noninterference in the
prosecutor's exercise of discretion requires the courts to leave to the prosecutor and to the DOJ the determination of
what constitutes sufficient evidence to establish probable cause. As the Court explained in Unilever Philippines, Inc. v.
Tan:[51

The determination of probable cause for purposes of filing of information in court is essentially an executive function
that is lodged, at the first instance, with the public prosecutor and, ultimately, to the Secretary of Justice. The
prosecutor and the Secretary of Justice have wide latitude of discretion in the conduct of preliminary investigation;
and their findings with respect to the existence or non-existence of probable cause are generally not subject to review
by the Court.

Consistent with this rule, the settled policy of non-interference in the prosecutor's exercise of discretion requires the
courts to leave to the prosecutor and to the DOJ the determination of what constitutes sufficient evidence to establish
probable cause. Courts can neither override their determination nor substitute their own judgment for that of the
latter. They cannot likewise order the prosecution of the accused when the prosecutor has not found a prima
facie case.

Nevertheless, this policy of non-interference is not without exception. The Constitution itself allows (and even directs)
court action where executive discretion has been gravely abused. In other words, the court may intervene in the
executive determination of probable cause, review the findings and conclusions, and ultimately resolve the existence
or non-existence of probable cause by examining the records of the preliminary investigation when necessary for the
orderly administration of justice.[52]

Probable cause for purposes of filing a criminal information is defined as such facts as are sufficient to engender a
well-founded belief that a crime has been committed and the respondent is probably guilty thereof, and should be
held for trial.[53] As explained in Sy v. Secretary of Justice,[54] citing Villanueva v. Secretary of Justice:[55]

x x x [Probable cause] is such a state of facts in the mind of the prosecutor as would lead a person of ordinary caution
and prudence to believe or entertain an honest or strong suspicion that a thing is so. The term does not mean "actual
or positive cause"; nor does it import absolute certainty. It is merely based on opinion and reasonable belief. Thus, a
finding of probable cause does not require an inquiry into whether there is sufficient evidence to procure a
conviction. It is enough that it is believed that the act or omission complained of constitutes the offense charged.
Precisely, there is a trial for the reception of evidence of the prosecution in support of the charge.[56]

To find out if there is a reasonable ground to believe that acts or ommissions complained of constitute the offenses
charged, the Court must first examine whether or not the allegations against private respondents in the BOC's
complaint-affidavit constitute the offenses of unlawful importation under Section 3601 and various fraudulent
practices against customs revenue under Section 3602 of the TCCP.

In Jardeleza v. People,[57] the Court discussed the concepts of unlawful importation under Section 3601 of the TCCP,
and various fraudulent practices against customs revenue under Section 3602 thereof, thus:

Section 3601 of the TCC was designed to supplement the existing provisions of the TCC against the means leading up
to smuggling, which might render it beneficial by a substantive and criminal statement separately providing for the
punishment of smuggling. The law was intended not to merge into one and the same offense all the many acts which
are classified and punished by different penalties, penal or administrative, but to legislate against the overt act of
smuggling itself. This is manifested by the use of the words "fraudulently" and "contrary to law" in the law.

Smuggling is committed by any person who: (1) fraudulently imports or brings into the Philippines any article contrary
to law; (2) assists in so doing any article contrary to law; or (3) receives, conceals, buys, sells or in any manner facilitate
the transportation, concealment or sale of such goods after importation, knowing the same to have been imported
contrary to law.

The phrase "contrary to law" in Section 3601 qualifies the phrases "imports or brings into the Philippines" and "assists
in so doing," and not the word "article." The law penalizes the importation of any merchandise in any manner contrary
to law.
The word "law" includes regulations having the force and effect of law, meaning substantive or legislative type rules
as opposed to general statements of policy or rules of agency, organization, procedures or positions. An inherent
characteristic of a substantive rule is one affecting individual rights and obligations; the regulation must have been
promulgated pursuant to a congressional grant of quasi-legislative authority; the regulation must have been
promulgated in conformity to with congressionally-imposed procedural requisites.

xxxx

Section 3602 of the TCC, on the other hand, provides:

Sec. 3602. Various Fraudulent Practices Against Customs Revenue. — Any person who makes or attempts to make any
entry of imported or exported article by means of any false or fraudulent invoice, declaration, affidavit, letter, paper
or by any means of any false statement, written or verbal, or by any means of any false or fraudulent practice
whatsoever, or knowingly effects any entry of goods, wares or merchandise, at less than the true weight or measures
thereof or upon a false classification as to quality or value, or by the payment of less than the amount legally due, or
knowingly and wilfully files any false or fraudulent entry or claim for the payment of drawback or refund of duties
upon the exportation of merchandise, or makes or files any affidavit, abstract, record, certificate or other document,
with a view to securing the payment to himself or others of any drawback, allowance or refund of duties on the
exportation of merchandise, greater than that legally due thereon, or who shall be guilty of any wilful act or omission
shall, for each offense, be punished in accordance with the penalties prescribed in the preceding section.

The provision enumerates the various fraudulent practices against customs revenue, such as the entry of imported or
exported articles by means of any false or fraudulent invoice, statement or practice; the entry of goods at less than
the true weight or measure; or the filing of any false or fraudulent entry for the payment of drawback or refund of
duties.

The fraud contemplated by law must be intentional fraud, consisting of deception, willfully and deliberately dared or
resorted to in order to give up some right. The offender must have acted knowingly and with the specific intent to
deceive for the purpose of causing financial loss to another; even false representations or statements or omissions of
material facts come within fraudulent intent. The fraud envisaged in the law includes the suppression of a material
fact which a party is bound in good faith to disclose. Fraudulent nondisclosure and fraudulent concealment are of the
same genre.

Fraudulent concealment presupposes a duty to disclose the truth and that disclosure was not made when opportunity
to speak and inform was present, and that the party to whom the duty of disclosure as to a material fact was due was
thereby induced to act to his injury. Fraud is not confined to words or positive assertions; it may consist as well of
deeds, acts or artifice of a nature calculated to mislead another and thus allow one to obtain an undue advantage.[58]

In unlawful importation, also known as outright smuggling, goods and articles of commerce are brought into the
country without the required importation documents, or are disposed of in the local market without having been
cleared by the BOC or other authorized government agencies, to evade the payment of correct taxes, duties and other
charges. Such goods and articles do not undergo the processing and clearing procedures at the BOC, and are not
declared through submission of import documents, such as the import entry and internal revenue declaration.

In various fraudulent practices against customs revenue, also known as technical smuggling, on the other hand, the
goods and articles are brought into the country through fraudulent, falsified or erroneous declarations, to substantially
reduce, if not totally avoid, the payment of correct taxes, duties and other charges. Such goods and articles pass
through the BOC, but the processing and clearing procedures are attended by fraudulent acts in order to evade the
payment of correct taxes, duties, and other charges. Often committed by means of misclassification of the nature,
quality or value of goods and articles, undervaluation in terms of their price, quality or weight, and misdeclaration of
their kind, such form of smuggling is made possible through the involvement of the importers, the brokers and even
some customs officials and personnel.

In light of the foregoing discussion, the Court holds that private respondents cannot be charged with unlawful
importation under Section 3601 of the TCCP because there is no allegation in the BOC's complaint-affidavit to the
effect that they committed any of the following acts: (1) fraudulently imported or brought into the Philippines the
subject petroleum products, contrary to law; (2) assisted in so doing; or (3) received, concealed, bought, sold or in any
manner facilitated the transportation, concealment or sale of such goods after importation, knowing the same to have
been imported contrary to law.

The said acts constituting unlawful importation under Section 3601 of the TCCP can hardly be gathered from the
following allegations in the BOC's complaint-affidavit:

19.1 From May 23, 2007 to February 10, 2008, UNIOIL is not an accredited importer of the BOC;

19.2 From the time UNIOIL was accredited on February 11, 2008 until the time of its request to withdraw its oil
products on 02

May 2008, they did not import Gasoil (diesel) and Mogas Gasoline;

19.3 The Terminalling Agreement allegedly executed between OILINK and UNIOIL was obviously for the purpose of
circumventing the Warrant of Seizure and Detention issued against the shipments of OILINK aside from the fact that
it was only executed on 02 January 2008 after the decision of the Commissioner finding OILINK liable to pay an
administrative fine of Two Billion Seven Hundred Sixty-Four Million Eight Hundred Fifty-Nine Thousand Three Hundred
Four Pesos and 80/100 (Php2,764,859,304.80);

19.4 Only base oil should have been withdrawn by UNIOIL since it is the only product subject of its request and
approved by the Commissioner;

19.5 UNIOIL withdrew Gasoil (Diesel) and Mogas which were not covered by importations;

19.6 Finally, the illegal release/withdrawal of the oil products deprived the government of the supposed partial
payment on the Php2.7 billion liability of OILINK in the" approximate amount of Phpl81,988,627 representing the
customs value of the released/withdrawn oil products and estimated duties and taxes of Php35,507,597 due thereon
or the total amount of Php217,496,224.00.[59]

xxxx

21.1 When UNIOIL withdrew Gasoil (Diesel) and Mogas without filing the corresponding Import Entry, the shipment
becomes unlawful per se and thus falls under unlawful importation under Section 3601 of the Tariff and Customs Code
of the Philippines, as amended;

21.2 The fact that UNIOIL and OILINK executed a belated Terminalling Agreement after the issuance of the Warrant of
Seizure and Detention showed the fraudulent intent of the respondents whereby UNIOIL can still withdraw the oil
products stored at OILINK's depot likewise in clear violation of section 3601 and 3602 of the Tariff and Customs Code
of the Philippines, as amended;

21.3 The fact that the UNIOIL make [sic] it appear that they are the owner of Gasoil (Diesel) and Mogas when in truth
and in fact they did not import said products make them liable for [violation of] Section 3602 of the Tariff and Customs
Code of the Philippines, as amended and falsification;[60]

Since the foregoing allegations do not constitute the crime of unlawful importation under Section 3601 of the TCCP,
the Acting Secretary of Justice did not commit grave abuse of discretion when she affirmed the State Prosecutor's
dismissal the BOC's complaint-affidavit for lack of probable cause.

Neither could private respondents be charged with various fraudulent practices against customs revenue under
Section 3602 of the TCCP as the above allegations do hot fall under any of the following acts or omissions constituting
such crime/s: (1) making or attempting to make any entry of imported or exported article: (a) by means of any false
or fraudulent invoice, declaration, affidavit, letter, paper or by any means of any false statement, written or verbal; or
(b) by any means of any false or fraudulent practice whatsoever; or (2) knowingly effecting any entry of goods, wares
or merchandise, at less than the true weight or measures thereof or upon a false classification as to quality or value,
or by the payment of less than the amount legally due; or (3) knowingly and wilfully filing any false or fraudulent entry
or claim for the payment of drawback or refund of duties upon the exportation of merchandise; or (4) making or filing
any affidavit, abstract, record, certificate or other document, with a view to securing the payment to himself or others
of any drawback, allowance or refund of duties on the exportation of merchandise, greater than that legally due
thereon.

Related to various fraudulent practices against customs revenue by means of undervaluation, misclassification and
misdeclaration in the import entry is the following provision of R.A. No. 7651 - An Act to Revitalize and Strengthen the
Bureau of Customs, Amending for the Purpose Certain Sections of the Tariff and Customs Code of the Philippines, as
amended:[61]

Sec. 2503. Undervaluation, Misclassification and Misdeclaration in Entry. - When the dutiable value of the imported
articles shall be so declared and entered that the duties, based on the declaration of the importer on the face of the
entry, would be less by ten percent (10%) than should be legally collected, or when the imported articles shall be so
described and entered that the duties based on the importer's description on the face of the entry would be less by
ten percent (10%) than should be legally collected based on the tariff classification, or when the dutiable weight,
measurement or quantity of imported articles is found upon examination to exceed by ten percent (10%) or more than
the entered weight, measurement or quantity, a surcharge shall be collected from the importer in an amount of not
less than the difference between the full duty and the estimated duty based upon the declaration of the importer, nor
more than twice of such difference: Provided, that an undervaluation, misdeclaration in weight, measurement or
quantity of more than thirty percent (30%) between the value, weight, measurement, or quantity declared in the
entry, and the actual value, weight, quantity, or measurement shall constitute a prima facie evidence of fraud
penalized under Sec. 2530 of this Code: Provided, further, that any misdeclared or undeclared imported articles/items
found upon examination shall ipso facto be forfeited in favor of the Government to be disposed of pursuant to the
provisions of this Code.

When the undervaluation, misdescription, misclassification or misdeclaration in the import entry is intentional, the
importer shall be subject to the penal provision under Sec. 3602 of this Code.[62]

A careful reading of the BOC's complaint-affidavit would show that there is no allegation to the effect that private
respondents committed undervaluation, misdeclaration in weight, measurement or quantity of more than thirty
percent (30%) between the value, weight, measurement, or quantity declared in the entry, and the actual value,
weight, quantity, or measurement which constitute prima facie evidence of fraud. Nor is there an allegation that they
intentionally committed undervaluation, misdescription, misclassification or misdeclaration in the import entry. Since
the allegations in the BOC's complaint-affidavit fall short of the acts or omissions constituting the various fraudulent
acts against customs revenue under Section 3602 of the TCCP, the Acting Secretary of Justice correctly ruled that there
was no probable cause to believe that they committed such crime/s.

While it is true that the sole office of the writ of certiorari is the correction of errors of jurisdiction, including the
commission of grave abuse of discretion amounting to lack of jurisdiction, and does not include a correction of the
public respondents' evaluation of the evidence and factual findings thereon, it is sometimes necessary to delve into
factual issues in order to resolve the allegations of grave abuse of discretion as a ground for the special civil action
of certiorari[63] In light of this principle, the Court reviews the following findings of the Acting Secretary of Justice in
affirming the State Prosecutor's dismissal of the BOC's complaint-affidavit for lack of probable cause.

Respondents are being charged for unlawful importation under Section 3601, and fraudulent practices against customs
revenues under Section 3602, of the TCCP, as amended. For these charges to prosper, complainant must prove, first
and foremost, that the subject articles were imported. On this score alone, complainant has miserably failed.

Indeed, except for complainant's sweeping allegation, no clear and convincing proof was presented to show that the
subject petroleum products (gasoil and mogas) withdrawn by Unioil from the oil depot/terminal of Oilink were
imported. For, only when the articles are imported that the importer/consignee is required to file an import entry
declaration and pay the corresponding customs duties and taxes. The fact that complainant's record fails to show that
an import entry was filed for the subject articles does not altogether make out a case of unlawful importation under
Section 3601, or fraudulent practices against customs revenue under Section 3602, of the TCCP, without having first
determined whether the subject articles are indeed imported. Thus, in this case, complainant still bears the burden of
proof to show that the subject petroleum products are imported, by means of documents other than the import entry
declaration, such as but not limited to, the transport documents consisting of the inward foreign manifest, bill of
lading, commercial invoice and packing list, all indicating that the goods were bought from a supplier/seller in a foreign
country and imported or transported to the Philippines. Instead[,] complainant merely surmised that since the subject
products were placed under warrant of seizure and detention[,] they must necessarily be imported. Regrettably,
speculation and surmises do not constitute evidence and should not, therefore, be taken against the respondents, x x
x Taken in this light, we find more weight and credence in respondent Unioil's claim that the subject petroleum
products were not imported by them, but were locally purchased, more so since it was able to present local sales
invoices covering the same.

Even assuming gratia argumenti that the subject petroleum products were imported, it still behooves the complainant
to present clear and convincing proof that the importation was unlawful or that it was carried out through any
fraudulent means, practice or device to prejudice the government. But again, complainant failed to discharge this
burden.

As can be culled from the records, the warrant of seizure and detention docketed as Seizure Identification No. 2008-
082, which covers various gas tanks already stored at Oilink's depot/terminal located at Lucanin Pt, Mariveles, Bataan,
was issued pursuant to Section 2536, in relation to Section 1508, of the TCCP because of Oilink's failure to pay the
administrative fine of P2,764,859,304.80 that was previously meted against the company for its failure/refusal to
submit to a post entry audit. In fact, the delivery of all shipments consigned to or handled directly or indirectly by
Oilink was put on hold as per order of the Customs Commissioner dated April 23, 2008 pursuant to Section 1508 of
the TCCP, also for the same reason. There was nothing on record which shows, or from which it could be inferred, that
the warrant of seizure and detention or hold order were imposed pursuant to Section 2530 of the same Code which
relates, among others, to unlawfully imported articles or those imported through any fraudulent practice or device to
prejudice the government, much less due to non-payment of the corresponding customs duties and taxes due on the
shipments/articles covered by the warrant of seizure and detention. Again, what complainant's evidence clearly shows
is that Oilink's failure to pay the administrative fine precipitated the issuance of the warrant of seizure and detention
and hold order.[64]

After a careful review of records, the Court affirms the dismissal of the BOC's complaint-affidavit for lack of probable
cause, but partly digresses from the reasoning of the Acting Secretary of Justice in arriving at such conclusion. While
the Acting Secretary of Justice correctly stated that the act of fraudulent importation of articles must be first proven
in order to be charged for violation of Section 3601 of the TCCP, the Court disagrees that proof of such importation is
also required for various fraudulent practices against customs revenue under Section 3602 thereof.

As held in Jardeleza v. People,[65] the crime of unlawful importation under Section 3601 of the TCCP is complete, in the
absence of a bona fide intent to make entry and pay duties when the prohibited article enters Philippine territory.
Importation, which consists of bringing an article into the country from the outside, is complete when the taxable,
dutiable commodity is brought within the limits of the port of entry.[66] Entry through a customs house is not the
essence of the act.[67] On the other hand, as regards Section 3602 of the TCCP which particularly deals with the making
or attempting to make a fraudulent entry of imported or exported articles, the term "entry" in customs law has a triple
meaning, namely: (1) the documents filed at the customs house; (2) the submission and acceptance of the documents;
and (3) the procedure of passing goods through the customs house.[68] In view thereof, it is only for charges for
unlawful importation under Section 3601 that the BOC must first prove that the subject articles were imported. For
violation of Section 3602, in contrast, what must be proved is the act of making or attempting to make such entry of
articles.

The Court likewise disagrees with the finding of the Acting Secretary of Justice that the BOC failed to prove that the
products subject of the WSD were imported. No such proof was necessary because private respondents themselves
presented in support of their counter-affidavits copies of import entries which can be considered as prima
facie evidence that OILINK imported the subject petroleum products. At any rate, the Acting Secretary of Justice aptly
gave credence to their twenty (20) sales invoices[70] covering the dates October 1, 2007 until April 30, 2008 which tend
to prove that UNIOIL locally purchased such products from OILINK even before the BOC rendered the Decision dated
December 14, 2007 imposing a P2,764,859,304.80 administrative fine, and holding the delivery or release of its
subsequently imported articles to answer for the fine, any revised assessment and/or penalty for failure to keep
records.

The Court also finds as misplaced the BOC's reliance on the Terminalling Agreement dated January 2, 2008 and the
Certification[71] that UNIOIL made no importation of Gasoil (diesel) and Mogas gasoline from January 2007 up to June
2008 in order to prove that it illegally imported the said products. Such documentary evidence tend to prove only that
UNIOIL was engaged in the importation of petroleum products and that it did not import the said products during the
said period. Such documents, however, do not negate the evidence on record which tend to show that OILINK was the
one that filed the import entries,[72] and that UNIOIL locally purchased from OILINK such products as indicated in the
sales invoices.[73] Not being the importer of such products, UNIOIL, its directors and officers, are not required to file
their corresponding import entries. Hence, contrary to the BOC's allegation, UNIOIL's withdrawal of the Gasoil (Diesel)
and Mogas gasoline without filing the corresponding import entries can neither be considered as unlawful importation
under Section 3601 of the TCCP nor as a fraudulent practice against customs revenue under Section 3602 thereof.

Moreover, the fact that private respondent Paul Chi Ting Co is both the Chairman of UNIOIL and OILINK is not enough
to justify the application of the doctrine of piercing the corporate veil. In fact, mere ownership by a single stockholder
or by another corporation of a substantial block of shares of a corporation does not, standing alone, provide sufficient
justification for disregarding the separate corporate personality.[74] In Kukan International Corporation v. Hon. Judge
Reyes, et al.,[75] the Court explained the application of the said doctrine in this wise:

In fine, to justify the piercing of the veil of corporate fiction, it must be shown by clear and convincing proof that the
separate and distinct personality of the corporation was purposefully employed to evade a legitimate and binding
commitment and perpetuate a fraud or like wrongdoings. To be sure, the Court has, on numerous occasions, applied
the principle where a corporation is dissolved and its assets are transferred to another to avoid a financial liability of
the first corporation with the result that the second corporation should be considered a continuation and successor
of the first entity.

In those instances when the Court pierced the veil of corporate fiction of two corporations, there was a confluence of
the following factors:

1. A first corporation is dissolved;2. The assets of the first corporation is transferred to a second corporation to
avoid a financial
2. liability of the first corporation; and
3. 3. Both corporations are owned and controlled by the same persons such that the second corporation should
be considered as a continuation and successor of the first corporation.[76]
Granted that the principle of piercing the veil of corporate entity comes into play only during the trial of the case for
the purpose of determining liability,[77] it is noteworthy that even the BOC itself virtually recognized that OILINK and
UNIOIL are separate and distinct entities when it alleged that only the base oil products should have been withdrawn
by UNIOIL, since they were the only products subject of its request and approved by the Customs Commissioner. As
discussed above, however, private respondents were able to present sales invoices which tend to show that UNIOIL
locally purchased Gasoil (diesel) and Mogas gasoline products from OILINK. Hence, the BOC cannot invoke the doctrine
of piercing the veil of corporate entity in this case.
On a final note, the Court stresses that OILINK, its directors or officers, and Victor D. Piamonte, the Licensed Customs
Broker, may still be held liable for various fraudulent practices against customs revenue under Section 3602 of the
TCCP, if the final results of the post-entry audit and examination would show that they committed any of the following
acts or omissions: (1) making or attempting to make any entry of imported or exported article: (a) by means of any
false or fraudulent invoice, declaration, affidavit, letter, paper or by any means of any false statement, written or
verbal; or (b) by any means of any false or fraudulent practice; or (2) intentional undervaluation, misdescription,
misclassification or misdeclaration in the import entries; or (3) undervaluation, misdeclaration in weight,
measurement or quantity of more than thirty percent (30%) between the value, weight, measurement, or quantity
declared in the entries, and the actual value, weight, quantity, or measurement. This is consistent with Section
2301[78] (Warrant for Detention of Property-Cash Bond) of the TCCP which states that nothing therein shall be
construed as relieving the owner or importer from any criminal liability which may arise from any violation of law
committed in connection with the importation of articles, which in this case were placed under a WSD for failure of
the importer, OILINK, to submit the required post-entry audit documents under CAO No. 4-2004.
In addition, OILINK and its directors or officers may be held liable under Section 16 of R.A. No. 9135:[79]
SEC. 16. A new section to be known as Section 3611 is hereby inserted in Part 3, Title VII of the Tariff and Customs
Code of the Philippines, as amended, which shall read as follows:
SEC. 3611. Failure to Pay Correct Duties and Taxes on Imported Goods. - Any person who, after being subjected to
post-entry audit and examination as provided in Section 3515 of Part 2, Title VII hereof, is found to have incurred
deficiencies in duties and taxes paid for imported goods, shall be penalized according to three (3) degrees of
culpability subject to any mitigating, aggravating or extraordinary factors that are clearly established by the
available evidence:
(a) Negligence - When the deficiency results from an offender's failure, through an act or acts of omission or
commission, to exercise reasonable care and competence to ensure that a statement made is correct, it shall be
determined to be negligent and punishable by a fine equivalent to not less than one-half (1/2) but not more than two
(2) times the revenue loss.
(b) Gross Negligence - When a deficiency results from an act or acts of omission or commission done with actual
knowledge or wanton disregard for the relevant facts and with indifference to or disregard for the offender's obligation
under the statute, it shall be determined to be grossly negligent and punishable by a fine equivalent to not less than
two and a half (2 1/2) but not more than four (4) times the revenue loss.
(c) Fraud - When the material false statement or act in connection with the transaction was committed or omitted
knowingly, voluntarily and intentionally, as established by clear and convincing evidence, it shall be determined to be
fraudulent and be punishable by a fine equivalent to not less than five (5) times but not more than eight (8) times the
revenue loss and imprisonment of not less than two (2) years but not more than eight (8) years.
The decision of the Commissioner of Customs, upon proper hearing, to impose penalties as prescribed in this Section
may be appealed in accordance with Section 2402 hereof.[80]
With respect to the directors or officers of OILINK, they may further be held liable jointly and severally for all damages
suffered by the government on account of such violation of Sections 3602 and 3611 of the TCCP, upon clear and
convincing proof that they willfully and knowingly voted for or assented to patently unlawful acts of the corporation
or was guilty of gross negligence or bad faith in directing its corporate affairs.
WHEREFORE, the petition is PARTLY GRANTED. The Court of Appeals Resolutions dated March 26, 2010 and August
4, 2010, in CA-G.R. SP No. 113069, are REVERSED and SET ASIDE. The Resolution dated December 28, 2009 of the
Acting Secretary of Justice Agnes VST Devanedera, which upheld the State Prosecutor's dismissal of the complaint-
affidavit filed by the Bureau of Customs for lack of probable cause, is AFFIRMED. This is without prejudice to the filing
of the appropriate criminal and administrative charges under Sections 3602 and 3611 of the Tariff and Customs Code
of the Philippines, as amended, against private respondents OILINK, its officers and directors, and Victor D. Piamonte,
if the final results of the post-entry audit and examination would show that they violated the said provisions.
SO ORDERED.
Sereno, C.J., Carpio, Velasco, Jr., Leonardo-De Castro, Brion, Bersamin, Del Castillo, Villarama, Jr., Perez, Mendoza,
Perlas-Bernabe, Leonen, and Jardeleza, JJ., concur.
Reyes, J., on leave.