Tax2-Additional Cases for Tariff and Customs

8/9/2019 Tax2-Additional Cases for Tariff and Customs

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Republic of the PhilippinesSUPREME COURT

Manila

FIRST DIVISION

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

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

Commissioner of Customs, HILARIO RUIZ, as Flag Officer In Command, Philippine Navy, and

GIL FERNANDEZ, as Commandant, Philippine Coast Guard, petitioners,vs.HON. JESUS DE VEYRA, in his capacity as Judge of the Court of First Instance of Manila, BranchXIV, LUCKY STAR SHIPPING COMPANY, and TENG BEE ENTERPRISES CO. (HK) LTD.,

respondents.

GUTIERREZ, JR.,J.:

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

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

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

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

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

On June 20, 1972, a warrant of seizure and detention was issued by the Collector of Customs of thePort of Sual-Dagupan in Seizure Identification No. 14-F-72 against the vessel and articles seized forviolation of Section 2530 (a) of the Tariff and Customs Code as to the vessel and Section 2530 (g)and (m-1) as to the cigarettes.


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On June 22, 1972, the Acting Provincial Fiscal filed before the Court of First Instance of Zambales,Branch II, an information against Li Tak Sin, the crew of Lucky Star I, Deogracias Labrador, andother persons for violation of Section 101 of the Tariff and Customs Code and penalized underSection 3601 of Republic Act 1937, as amended by Republic Act 4712:

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

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

With regard to the petition for mandatory preliminary injunction, this Court mustdeclare itself without jurisdiction, with reference to the alleged blue seal cigaretteswhose forfeiture is exclusively within the jurisdiction of the Bureau of Customs.With regard to the vessel, as admittedly it is more than 30 tons dead weight and the

vessel may not be forfeited but the remedy of the Bureau of Customs would only bethe imposition of a fine, the Bureau of Customs is given until June 29, 1972 withinwhich to inform this Court the maximum fine that may be imposed on the vessel,and this shall be the basis for a bond that would entitle Plaintiff to repossess thevessel. In the meantime, until the vessel is released the members of the crew of thevessel are in need of provisions and medicines and the Philippine Navy is ordered topermit Plaintiff, under proper escort of Philippine Navy Guards, to furnishprovisions and medicines to the members of the crew.

The petitioners asked for a reconsideration of the aforequoted order insofar as it required them toinform the respondent court of the maximum fine that may be the basis for a bond that wouldentitle the private respondents to repossess the vessel. The petitioners contended that the court

had no jurisdiction over the subject matter of the, complaint inasmuch as the M/V Lucky Star I wasbeing subjected to forfeiture under Section 2530-A of the Tariff and Customs Code. It was furthercontended that the court was devoid of jurisdiction to issue a writ of replevin or release order forgoods under the custody of the Bureau of Customs.

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

Respondents question the jurisdiction of this Court, as well as the order of this Courtholding that as the vessel in question is less than 30 tons dead weight capacity, itmay not be the subject of forfeiture. The issue involves Sec. 2530 of the Tariff andCustoms lode. Respondents claim that any vessel engaged in smuggling may be

forfeited and add that this also includes a vessel less than 30 tons lead weightcapacity, because of a semicolon that separates the two phrases. The interpretationof Respondents does not make sense for why should any semicolon appear whenregardless of dead weight capacity, according to Respondents, a vessel may beforfeited? The only reasonable interpretation of this section is that if the vessel is ofmore than 30 tons dead weight capacity, it may not be forfeited and only fined. Thisstand of this Court is strengthened by a decision of the Court of Tax Appeals makingthe same ruling and even the Bureau of Customs recently bewailed the defect in the


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law in the case of the M/V Don Isidro, found carrying smuggled cigarettes and finedthe paltry maximum sum of P10,000.00. As this vessel cannot be forfeited legallyand Respondents seek to do so, this Court has jurisdiction to grant relief.

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

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

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

We find for the petitioners. It is well-settled that the exclusive jurisdiction over seizure andforfeiture cases vested in the Collector of Customs precludes a Court of First Instance from

assuming cognizance over such cases. We, therefore, set aside the assailed orders of the respondentjudge.

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

As early as June 30, 1955, the Court had already announced in Millarez v. Amparo(97 Phil. 284-85 (1955) that 'Republic Act No. 1125, Section 7, effective June 16,1954 gave the Court of Tax Appeals exclusive appellate jurisdiction to review anappeal decisions of the Commissioner of Customs, involving 'seizure, detention orrelease of property affected * * * or other matter arising under the Customs Law orother law administered by the Bureau of Customs'. Specifically, in Caltex

(Philippines) Inc. v. City of Manila (L-30734, July 28, 1969, 25 SCRA 840; see alsoCollector of Customs v. Arca, L-21389, July 17, 1964, 11 SCRA 537) it was held thatthe law affords the Collector of Customs sufficient latitude in determining whetheror not a certain article is subject to seizure or forfeiture and his decision on thematter is appealable to the Commissioner of Customs and then to the Court of TaxAppeals, not to the Court of First Instance. The fundamental reason is that theCollector of Customs constitutes a tribunal when sitting in forfeiture proceedings(Commissioner of Customs v. Cloribel L-20266, January 31, 1967, 19 SCRA 234;Auyong Hian v. Court of Tax Appeals, L-25181, January 11, 1967, 19 SCRA 10;Auyong Hion v. Court of Tax Appeals, L-28782, September 12, 1974, SecondDivision, per Zaldivar, J., 59 SCRA 130) beyond the interference of the Court of FirstInstance. (Lopez v. Commissioner of Customs, L-28235, January 30, 1971, 37 SCRA

33-34) As expressed in Pacis v. Averia, (L-22526, November 29, 1966, 18 SCRA 907;see also Ponce Enrile v. Vinuya, L-19043, January 30, 1971, 37 SCRA 38687) * * * theCourt of First Instance should yield to the jurisdiction of the Collector ofCustoms.1wph1.tThe Jurisdiction of the Collector of Customs is provided for inRepublic Act 1937 which took effect on July 1, 1957, much later than the JudiciaryAct of 1948. It, is axiomatic that a later law prevails over a prior statute. Moreover,on grounds of public policy, it is more reasonable to conclude that the legislatorsintended to divest the Court of First Instance of the prerogative to replevin a


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property which is a subject of a seizure and forfeiture proceedings for violation ofthe Tariff and Customs Code, Otherwise, actions for forfeiture of property forviolation of Customs laws could easily be undermined by the simple device ofreplevin.' The judicial recourse of the owner of a personal property which has beenthe subject of a seizure and forfeiture proceedings before the Collector of Customs isnot in the Court of First Instance but in the Court of Tax Appeals, and only after

exhausting administrative remedies in the Bureau of Customs. (Collector of Customsv. Torres, L-22977, May 31, 1972, 45 SCRA 281, and cases cited). If the propertyowned believes that the Collector's conclusion was erroneous, the remedy is byappeal to the Commissioner of Customs, and then to the Court of Tax Appeals shouldthe Commissioner uphold the Collector's decision. The Court of Tax Appealsexercises exclusive appellate jurisdiction to review the ruling of the Commissionerin seizure and confiscation cases. and that power is to the exclusion of the Court ofFirst Instance, which may not interfere with the Commissioner's decisions even inthe form of proceedings for certiorari, prohibition or mandamus, which are inreality, attempts to review the Commissioner's actuations. (General 'Travel Service,Ltd, v. David, L-19259, September 23, 1966, 18 SCRA 66-67, citing cases).

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

The Congress of the Philippines was vested with the power to define, prescribe, andapportion the jurisdiction of the various courts' of the Philippines Article VIII,Section I of the 1935 Constitution) Now it is the National Assembly. (Article X,Section I of the present Constitution, insofar as pertinent provides: The NationalAssembly shall have the power to define, prescribe, and apportion the jurisdiction ofthe various courts, but may not deprive the Supreme Court of its jurisdiction overcases enumerated in Section five hereof.') Where the matter involved is a 'seizureand forfeiture proceeding, a court of first instance is devoid of power to act. The

customs authorities possess such competence with an appeal to the Court of TaxAppeals. In appropriate cases, there may be further judicial review by this Court inthe exercise of its certiorari jurisdiction. The jurisdictional limits thus defined andapportioned, according to the Constitution, must be respected. Respondent judgesclearly did not do so. No deference was paid to a host of cases that left no doubt as totheir lack of authority to assume jurisdiction. (Cf. Pascual v. Commissioner ofCustoms, 105 Phil. 1039 (1959); Commissioner of Customs v. Serree InvestmentCompany, 108 Phil, 1 (1960); Commissioner of Customs v. Eastern Sea Trading Co.,113 Phil. 333 (1961); Commissioner of Customs v. Santos, 114 Phil. 589 (1962);Commissioner of Customs v. Nepomuceno, 114 Phil. 702 (1962) Pascual v.Commissioner of Customs, 114 Phil. 953 (1962); Serree Investment Co. v.Commissioner of Customs, L-19564, Nov. 28, 1964, 12 SCRA 493; Bombay

Department Store v. Commissioner of Customs, L- 20489, June 22,1965,14 SCRA331; Yupangco and Sons v. Collector of Customs, L-22259, Jan. 19, 1966, 16 SCRA 1;Chan Kian v, Collector of Customs, L-20803, Jan. 31, 1966, 16 SCRA 133; Capulong v.Aseron, L- 22989, May 14, 1966, 17 SCRA 11; Lazaro v. Commissioner of Customs, L-22511, May 16, 1966, 17 SCRA 36; Capulong v. Acting Commissioner of Customs, L-22990, May 19, 1966, 17 SCRA 61; Gigare v. Commissioner of Customs, L-21376,Aug. 29,1966,17 SCRA 1001.);


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To sustain the assailed orders of the respondent judge, the private respondents would impressupon this Court that the seizure of the M/V Lucky Star I was illegal and against the acceptedprinciples of international law for the following reasons: 1) the M/V Lucky Star I is a foreign vesselregistered under the laws of the Republic of Panama and flies the Panamian flag; 2) the crew of saidvessel is composed of aliens; and 3) the M/V Lucky Star I was seized by the Philippine Coast Guardat a distance of eighty-five (85) miles to the nearest land point along the western coast of Luzon. It

is contended that inasmuch as the eighty five (85) mile distance where the Lucky Star I was seizedis outside the territorial jurisdiction of the Philippines, the Bureau of Customs is without power toenforce the Philippine Customs law. Consequently, it is argued that the proper forum for the privaterespondents to obtain relief for the release of the vessel is the ordinary court, more specifically, theCourt of First Instance.

The petitioners contend, on the other hand, that the M/V Lucky Star I was apprehended at a point23 miles east of the International Treaty Limits, well within the territory of the Philippines asdefined in Article I of the 1935 Constitution, the Treaty of Paris, and Republic Act No. 3046. Thepetitioners state that the vessel was caught in the act of smuggling. Deogracias Labrador, left behindby the boat M/L Sangbay of which he was captain, stated he was instructed by Paquito Bacolod ofCapipisa, Cavite to meet the Lucky Star I, unload from it cases of blue seal Champion cigarettestogether with two other small boats-Pagdila and Nanding-owned Avelino Bocalan. He admitted thaton an earlier date, he had unloaded from the Lucky Star 1,500 cases of blue seal cigarettes which hebrought to Capipisa.

The contentions of the private respondents are untenable. The Collector of Customs when sitting inforfeiture proceedings constitutes a tribunal expressly vested by law with jurisdiction to hear anddetermine the subject matter of such proceedings without any interference from the Court of FirstInstance. (Auyong Hian v. Court of Tax Appeals, et al, 19 SCRA 10). The Collector of Customs of Sual-Dagupan in Seizure Identification No. 14-F-72 constituted itself as a tribunal to hear and determineamong other things, the question of whether or not the M/V Lucky Star I was seized within theterritorial waters of the Philippines. If the private respondents believe that the seizure was made

outside the territorial jurisdiction of the Philippines, it should raise the same as a defense beforethe Collector of Customs and if not satisfied, follow the correct appellate procedures. A separateaction before the Court of First Instance is not the remedy.

WHEREFORE, the petition is hereby granted.1wph1.tThe questioned orders of the respondentcourt are set aside. The preliminary injunction dated August 24, 1972 is made permanent and therespondent court is ordered to desist from further proceeding in Civil Case No, 87435.

SO ORDERED.

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

Plana, J., is on leave.


Manila

EN BANC


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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 awayentirely, with the evil and corruption that smuggling brings in its wake would be frustrated and setat naught if the action taken by respondent Commissioner of Customs in this case, as affirmed bythe Court of Tax Appeals, were to be set aside and this appeal from the decision of the latter were tosucceed. Fortunately, the controlling principles of law do not call for a contrary conclusion. Itcannot be otherwise if the legitimate authority vested in the government were not to be reduced tofutility and impotence in the face of an admittedly serious malady, that at times has assumedepidemic proportions.

The principal question raised by petitioners, owners of five sailing vessels and the cargo loadedtherein declared forfeited by respondent Commissioner of Customs for smuggling, is the validity oftheir interception and seizure by customs officials on the high seas, the contention being raised thatimportation 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 andplacing the law in disrepute would be apparent from a statement of the case and the findings offacts 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 blueseal cigarettes and rattan chairs for violation of Section 1363(a) of the Revised Administrative Codeand Section 20 of Republic Act No. 426 in relation with Section 1363(f) of the RevisedAdministrative Code."1

The facts according to the above opinion "are not controverted." Thus: "It appears that onSeptember 10, 1950, at about noon time, a customs patrol team on board Patrol Boat ST-23intercepted the five (5) sailing vessels in question on the high seas, between British North Borneoand Sulu while they were heading towards Tawi-tawi, Sulu. After ordering the vessels to stop, thecustoms 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, ownedand manned by Filipino residents of Sulu, and of less than thirty (30) tons burden. They came fromSandakan, British North Borneo, but did not possess any permit from the Commissioner of Customsto engage in the importation of merchandise into any port of the Sulu sea, as required by Section1363(a) of the Revised Administrative Code. Their cargoes were not covered by the requiredimport license under Republic Act No. 426, otherwise known as the Import Control Law."2


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

The first two errors assigned by petitioners would impugn the jurisdiction of the Bureau ofCustoms to institute seizure proceedings and thereafter to declare the forfeiture of the vessels inquestion and their cargo. They would justify their stand thus: "In the light of the fact that the vesselsinvolved with the articles laden therein were apprehended and seized on the high seas, beyond theterritorial waters of the Philippines, the said vessels could not have touched any place or port in thePhilippines, whether a port or place of entry or not, consequently, the said vessels could not havebeen 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 Section1363(a) of the Revised Administrative Code."3

Such a contention was advanced by petitioners before the Court of Tax Appeals. It met therepudiation 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 Section1363(a) of the Revised Administrative Code should be applied to the case at bar. It has beenestablished that the five vessels came from Sandakan, British North Borneo, a foreign port, andwhen 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 byRepublic Act No. 426, nor did they carry a permit from the Commissioner of Customs to engage inimportation into any port in the Sulu sea. Their course announced loudly their intention not merelyto skirt along the territorial boundary of the Philippines but to come within our limits and landsomewhere in Tawi-tawi towards which their prows were pointed. As a matter of fact, they wereabout to cross our aquatic boundary but for the intervention of a customs patrol which, from allappearances, was more than eager to accomplish its mission."4

The sense of realism and the vigorous language employed by the late Judge Luciano in rejectingsuch a plea deserve to be quoted. Thus: "To entertain even for a moment the thought that thesevessels were probably not bound for a Philippine port would be too much a concession even for asimpleton or a perennial optimist. It is quite irrational for Filipino sailors manning five Philippinevessels to sneak out of the Philippines and go to British North Borneo, and come a long way backladen with highly taxable goods only to turn about upon reaching the brink of our territorial watersand 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 ofTax 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, ifsupported 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 discretionfor that of the Court of Tax Appeals in its appreciation of the relevant facts and its appraisal of theirsignificance. As we had occasion to state in a relatively recent decision: "Nor as a matter of principleis it advisable for this Court to set aside the conclusion reached by an agency such as the Court ofTax Appeals which is, by the very nature of its function, dedicated exclusively to the study and


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consideration of tax problems and has necessarily developed an expertise on the subject, ..., therehas 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 aboveconsideration.

It might not be amiss however to devote some degree of attention to the legal points raised in theabove two assignment of errors, discussed jointly by petitioners-appellants, alleging the absence ofjurisdiction, the deprivation of property without due process of law and the abatement of liabilityconsequent upon the repeal of Republic Act No. 426. Not one of the principles of law relied uponsuffices to call for reversal of the action taken by the respondent Commissioner of Customs, even ifthe 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 theterritorial waters of the Philippines, the absence of jurisdiction of Commissioner of Customs ispredicated. Such contention of petitioners-appellants is without merit.

It is unquestioned that all vessels seized are of Philippine registry. The Revised Penal Code leavesno doubt as to its applicability and enforceability not only within the Philippines, its interior watersand maritime zone, but also outside of its jurisdiction against those committing offense while on aPhilippine ship ...8 The principle of law that sustains the validity of such a provision equally suppliesa firm foundation for the seizure of the five sailing vessels found thereafter to have violated theapplicable provisions of the Revised Administrative Code.9

Moreover, it is a well settled doctrine of International Law that goes back to Chief Justice Marshall'sopinion in Church v. Hubbart,10 an 1804 decision, that a state has the right to protect itself and itsrevenues, a right not limited to its own territory but extending to the high seas. In the language ofChief 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 injurymay 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 inquestion and the cargoes on the high seas and thus beyond the territorial waters of the Philippineswas legal must be answered in the affirmative.

4. The next question raised is the alleged denial of due process arising from such forfeiture andseizure. The argument on the alleged lack of validity of the action taken by the Commissioner ofCustoms is made to rest on the fact that the alleged offense imputed to petitioners-appellants is aviolation of Section 1363(a) and not Section 1363(f). The title of Section 1363 is clear, "Propertysubject 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 whichis effected or attempted contrary to law and all other merchandise which in the opinion of theCollector of Customs have been used are or were intended to be used as instrument in theimportation or exportation of the former.

From the above recital of the legal provisions relied upon, it would appear most clearly that the dueprocess question raised is insubstantial. Certainly, the facts on which the seizure was based were


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not unknown to petitioners-appellants. On those facts the liability of the vessels and merchandiseunder the above terms of the statute would appear to be undeniable. The action taken then by theCommissioner of Customs was in accordance with law.

How could there be a denial of due process? There was nothing arbitrary about the manner inwhich such seizure and forfeiture were effected. The right to a hearing of petitioners-appellantswas respected. They could not have been unaware of what they were doing. It would be an affrontto reason if under the above circumstances they could be allowed to raise in all seriousness a dueprocess question. Such a constitutional guaranty, basic and fundamental, certainly should not beallowed 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 respondentCommissioner of Customs by the plea that the repeal of Republic Act No. 426 abated whateverliability could have been incurred thereunder. This argument raised before the Court of TaxAppeals was correctly held devoid of any persuasive force. The decision under review cited ouropinion in Golay-Buchel & Cie v. Commissioner of Customs11 to the effect that the expiration of theImport 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 ofCustoms illegal or null and void."

Roxas v. Sayoc 12 announced that principle earlier. Thus: "Herein, we are concerned with the effectof the expiration of a law, not with the abrogation of a law, and we hold the view that once theCommissioner of Customs has acquired jurisdiction over the case, the mere expiration of RepublicAct No. 650 will not divest him of his jurisdiction thereon duly acquired while said law was still inforce. In other words, we believe that despite the expiration of Republic Act No. 650 theCommissioner of Customs retained his jurisdiction over the case and could continue to takecognizance thereof until its final determination, for the main question brought in by the appealfrom the decision of the Collector of Customs was the legality or illegality of the decision of theCollector 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 haveproduced the effect (1) of declaring legal the importation of the cotton counterpanes which wereillegally imported, and (2) of declaring the seizure and forfeiture ordered by the Collector ofCustoms illegal or null and void; in other words it could not have the effect of annulling or settingaside the decision of the Collector of Customs which was rendered while the law was in force andwhich 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 reaffirmthe doctrine in the above two decisions, the present Chief Justice, speaking for the Court, statingthat such expiration of the period of effectivity of Republic Act No. 650 "did not have the effect ofdepriving the Commissioner of Customs of the jurisdiction, acquired by him prior thereto, to act oncases 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 faithfullyto controlling legal principles when it sustained the action taken by respondent Commissioner ofCustoms. It would be a reproach and a reflection on the law if on the facts as they had been shownto exist, the seizure and forfeiture of the vessels and cargo in question were to be characterized asoutside the legal competence of our government and violative of the constitutional rights ofpetitioners-appellants. Fortunately, as had been made clear above, that would be an undeservedreflection and an unwarranted reproach. The vigor of the war against smuggling must not be


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hampered by a misreading of international law concepts and a misplaced reliance on aconstitutional guaranty that has not in any wise been infringed.

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

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

Footnotes

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

2Ibid, p. II.

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

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

5Ibid, p. IX.

6 Cf. Sanchez v. Commissioner of Customs, 102 Phil. 37 (1957); Castro v. Collector of InternalRevenue, L-12174, April 26, 1962; Yupangco & Sons. Inc. v. Commissioner of Customs, L-22259, Jan. 19, 1966; Commissioner of Internal Revenue v. Priscilla Estate, L-18282, May29, 1964; Phil. Guaranty Co. v. Commissioner of Internal Revenue, L-22074, Sept. 6, 1965;Republic v. Razon, L-17462, May 24, 1967; Balbas v. Domingo, L-19804, Oct. 23, 1967.

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

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

9 Section 1363 (a) and (f).

10 2 Cranch 187, 234.

11 106 Phil. 777, 783 (1959).

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

13 L-20460, September 30.

EN BANC

[G.R. No. 132527. July 29, 2005]

COCONUT OIL REFINERS ASSOCIATION, INC. represented by its President, JESUS L. ARRANZA,PHILIPPINE ASSOCIATION OF MEAT PROCESSORS, INC. (PAMPI), represented by its Secretary,


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ROMEO G. HIDALGO, FEDERATION OF FREE FARMERS (FFF), represented by its President,JEREMIAS U. MONTEMAYOR, and BUKLURAN NG MANGGAGAWANG PILIPINO (BMP), representedby its Chairperson, FELIMON C. LAGMAN,petitioners, vs. HON. RUBEN TORRES, in his capacity asExecutive Secretary; BASES CONVERSION AND DEVELOPMENT AUTHORITY, CLARKDEVELOPMENT CORPORATION, SUBIC BAY METROPOLITAN AUTHORITY, 88 MART DUTY FREE,FREEPORT TRADERS, PX CLUB, AMERICAN HARDWARE, ROYAL DUTY FREE SHOPS, INC., DFS

SPORTS, ASIA PACIFIC, MCI DUTY FREE DISTRIBUTOR CORP. (formerly MCI RESOURCES, CORP.),PARK & SHOP, DUTY FREE COMMODITIES, L. FURNISHING, SHAMBURGH, SUBIC DFS, ARGANTRADING CORP., ASIPINE CORP., BEST BUY, INC., PX CLUB, CLARK TRADING, DEMAGUS TRADINGCORP., D.F.S. SPORTS UNLIMITED, INC., DUTY FREE FIRST SUPERSTORE, INC., FREEPORT, JC MALLDUTY FREE INC. (formerly 88 Mart [Clark] Duty Free Corp.), LILLY HILL CORP., MARSHALL,PUREGOLD DUTY FREE, INC., ROYAL DFS and ZAXXON PHILIPPINES, INC., respondents.

D E C I S I O N

AZCUNA,J.:

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

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

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

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

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

The facts are as follows:

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

SECTION 12. Subic Special Economic Zone.

. . .


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The abovementioned zone shall be subject to the following policies:

(a) Within the framework and subject to the mandate and limitations of the Constitution and thepertinent provisions of the Local Government Code, the Subic Special Economic Zone shall bedeveloped into a self-sustaining, industrial, commercial, financial and investment center to generateemployment opportunities in and around the zone and to attract and promote productive foreigninvestments;

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

(c) The provision of existing laws, rules and regulations to the contrary notwithstanding, no

taxes, local and national, shall be imposed within the Subic Special Economic Zone. In lieu of payingtaxes, three percent (3%) of the gross income earned by all businesses and enterprises within theSubic Special Ecoomic Zone shall be remitted to the National Government, one percent (1%) each tothe local government units affected by the declaration of the zone in proportion to their populationarea, and other factors. In addition, there is hereby established a development fund of one percent(1%) of the gross income earned by all businesses and enterprises within the Subic SpecialEconomic Zone to be utilized for the development of municipalities outside the City of Olangapoand the Municipality of Subic, and other municipalities contiguous to the base areas.

. . .

SECTION 15. Clark and Other Special Economic Zones. Subject to the concurrence by

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

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

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

Similarly, subject to the concurrence by resolution of the local government units directly affected,the President shall create other Special Economic Zones, in the base areas of Wallace Air Station inSan Fernando, La Union (excluding areas designated for communications, advance warning and


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radar requirements of the Philippine Air Force to be determined by the Conversion Authority) andCamp John Hay in the City of Baguio.

Upon recommendation of the Conversion Authority, the President is likewise authorized to createSpecial Economic Zones covering the Municipalities of Morong, Hermosa, Dinalupihan, Castillejosand San Marcelino.

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

SECTION 5. Investments Climate in the CSEZ. Pursuant to Section 5(m) and Section 15 of RA7227, the BCDA shall promulgate all necessary policies, rules and regulations governing the CSEZ,including investment incentives, in consultation with the local government units and pertinentgovernment departments for implementation by the CDC.

Among others, the CSEZ shall have all the applicable incentives in the Subic Special Economic and

Free Port Zone under RA 7227 and those applicable incentives granted in the Export ProcessingZones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and newinvestments laws which may hereinafter be enacted.

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

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

follows:

Section 4. SPECIFIC INCENTIVES IN THE CSEZ MAIN ZONE. The CSEZ-registeredenterprises/businesses shall be entitled to all the incentives available under R.A. No. 7227, E.O. No.226 and R.A. No. 7042 which shall include, but not limited to, the following:

I. As in Subic Economic and Free Port Zone:

A. Customs:

. . .

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

5. For individuals, duty-free consumer goods may be brought out of the CSEZ MainZone into the Philippine Customs territory but not to exceed US$200.00 permonth per CDC-registered person, similar to the limits imposed in the Subic SEZ.This privilege shall be enjoyed only once a month. Any excess shall be leviedtaxes and duties by the Bureau of Customs.


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On June 10, 1993, the President issued Executive Order No. 97, Clarifying the Tax and Duty FreeIncentive Within the Subic Special Economic Zone Pursuant to R.A. No. 7227. Said issuance in partstates, thus:

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

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

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

SECTION 1. The following guidelines shall govern the tax and duty-free privilege within the

Secured Area of the Subic Special Economic and Free Port Zone:

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

1.2. Residents of the SSEFPZ living outside the Secured Area can enter the Secured Area andconsume any quantity of consumption items in hotels and restaurants within the Secured Area.

However, these residents can purchase and bring out of the Secured Area to other parts of thePhilippine territory consumer items worth not exceeding US$100 per month per person. Onlyresidents age 15 and over are entitled to this privilege.

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

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

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

I.


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

II.

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

III.

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

IV.

THE CONTINUED IMPLEMENTATION OF THE CHALLENGED ISSUANCES IF NOT RESTRAINEDWILL CONTINUE TO CAUSE PETITIONERS TO SUFFER GRAVE AND IRREPARABLE INJURY.[5]

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

Anent the claim on lack of legal standing, respondents argue that petitioners, being mere suppliersof the local retailers operating outside the special economic zones, do not stand to suffer directinjury in the enforcement of the issuances being assailed herein. Assuming this is true, this Court

has nevertheless held that in cases of paramount importance where serious constitutionalquestions are involved, the standing requirements may be relaxed and a suit may be allowed toprosper even where there is no direct injury to the party claiming the right of judicial review.[6]

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

Now, on the constitutional arguments raised:

As this Court enters upon the task of passing on the validity of an act of a co-equal and coordinatebranch of the Government, it bears emphasis that deeply ingrained in our jurisprudence is the time-honored principle that a statute is presumed to be valid.[8] This presumption is rooted in thedoctrine of separation of powers which enjoins upon the three coordinate departments of theGovernment a becoming courtesy for each others acts.[9] Hence, to doubt is to sustain. The theoryis that before the act was done or the law was enacted, earnest studies were made by Congress, orthe President, or both, to insure that the Constitution would not be breached.[10] This Court,however, may declare a law, or portions thereof, unconstitutional where a petitioner has shown a


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clear and unequivocal breach of the Constitution, not merely a doubtful or argumentative one.[11]In other words, before a statute or a portion thereof may be declared unconstitutional, it must beshown that the statute or issuance violates the Constitution clearly, palpably and plainly, and insuch a manner as to leave no doubt or hesitation in the mind of the Court.[12]

The Issue on Executive Legislation

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

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

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

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

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

SECTION 12. Subic Special Economic Zone.

. . .


. . .

(b) The Subic Special Economic Zone shall be operated and managed as a separate customsterritory ensuring free flow or movement of goods and capital within, into and exportedout of the Subic Special Economic Zone, as well as provide incentives such as tax and duty-free importations of raw materials, capital and equipment. However, exportation orremoval of goods from the territory of the Subic Special Economic Zone to the other partsof the Philippine territory shall be subject to customs duties and taxes under the Customsand Tariff Code and other relevant tax laws of the Philippines.[13]


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While it is true that Section 12 (b) of Republic Act No. 7227 mentions only raw materials, capitaland equipment, this does not necessarily mean that the tax and duty-free buying privilege is limitedto these types of articles to the exclusion of consumer goods. It must be remembered that inconstruing statutes, the proper course is to start out and follow the true intent of the Legislatureand to adopt that sense which harmonizes best with the context and promotes in the fullest mannerthe policy and objects of the Legislature.[14]

In the present case, there appears to be no logic in following the narrow interpretation petitionersurge. To limit the tax-free importation privilege of enterprises located inside the special economiczone only to raw materials, capital and equipment clearly runs counter to the intention of theLegislature to create a free port where the free flow ofgoods or capital within, into, and out of thezones is insured.

The phrase tax and duty-free importations of raw materials, capital and equipment was merelycited as an example of incentives that may be given to entities operating within the zone. Publicrespondent SBMA correctly argued that the maxim expressio unius est exclusio alterius, on whichpetitioners impliedly rely to support their restrictive interpretation, does not apply when words are

mentioned by way of example.[15] It is obvious from the wording of Republic Act No. 7227,particularly the use of the phrase such as, that the enumeration only meant to illustrate incentivesthat the SSEZ is authorized to grant, in line with its being a free port zone.

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

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

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

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

Senator Enrile. May I know then if a factory located within the jurisdiction of Morong, Bataan that

was originally a part of the Subic Naval reservation, be entitled to a free port treatment or just aspecial economic zone treatment?

Senator Guingona. As far as the goods required for manufacture is concerned, Mr. President, itwould have privileges of duty-free and tax-free. But in addition, the Special Economic Zone couldembrace the needs of tourism, could embrace the needs of servicing, could embrace the needs offinancing and other investment aspects.


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Senator Enrile. When a hotel is constructed, Mr. President, in this geographical unit which we calla special economic zone, will the goods entering to be consumed by the customers or guests of thehotel be subject to duties?

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

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

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

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

Senator Guingona. Yes.[17]

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

The Court is not persuaded. Indeed, it is well-established that opinions expressed in the debatesand proceedings of the Legislature, steps taken in the enactment of a law, or the history of thepassage of the law through the Legislature, may be resorted to as aids in the interpretation of a

statute with a doubtful meaning.[18] Petitioners posture, however, overlooks the fact that the 1995Committee Report they are referring to came into being well after the enactment of Republic ActNo. 7227 in 1993. Hence, as pointed out by respondent Executive Secretary Torres, theaforementioned report cannot be said to form part of Republic Act No. 7227s legislative history.

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

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


(a) Within the framework and subject to the mandate and limitations of the Constitution and thepertinent provisions of the Local Government Code, the Subic Special Economic Zone shall bedeveloped into a self-sustaining, industrial, commercial, financial and investment center to generateemployment opportunities in and around the zone and to attract and promote productive foreigninvestments. [19]

The aforecited policy was mentioned as a basis for the issuance of Executive Order No. 97-A, thus:


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WHEREAS, Republic Act No. 7227 provides that within the framework and subject to the mandateand limitations of the Constitution and the pertinent provisions of the Local Government Code, theSubic Special Economic and Free Port Zone (SSEFPZ) shall be developed into a self-sustainingindustrial, commercial, financial and investment center to generate employment opportunities inand around the zone and to attract and promote productive foreign investments; and

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

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

The Court finds that the setting up of such commercial establishments which are the only ones dulyauthorized to sell consumer items tax and duty-free is still well within the policy enunciated inSection 12 of Republic Act No. 7227 that . . .the Subic Special Economic Zone shall be

developed into a self-sustaining, industrial, commercial, financial and investment center togenerate employment opportunities in and around the zone and to attract and promote

productive foreign investments. (Emphasis supplied.)

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

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

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

In that case, among the arguments raised was that the granting of tax exemptions to John Hay wasan invalid and illegal exercise by the President of the powers granted only to the Legislature.Petitioners therein argued that Republic Act No. 7227 expressly granted tax exemption only to

Subic and not to the other economic zones yet to be established. Thus, the grant of tax exemption toJohn Hay by Presidential Proclamation contravenes the constitutional mandate that [n]o lawgranting any tax exemption shall be passed without the concurrence of a majority of all themembers of Congress.[21]

This Court sustained the argument and ruled that the incentives under Republic Act No. 7227 areexclusive only to the SSEZ. The President, therefore, had no authority to extend their application toJohn Hay. To quote from the Decision:


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More importantly, the nature of most of the assailed privileges is one of tax exemption. It is thelegislature, unless limited by a provision of a state constitution, that has full power to exempt anyperson or corporation or class of property from taxation, its power to exempt being as broad as itspower to tax. Other than Congress, the Constitution may itself provide for specific tax exemptions,or local governments may pass ordinances on exemption only from local taxes.

The challenged grant of tax exemption would circumvent the Constitutions imposition that a lawgranting any tax exemption must have the concurrence of a majority of all the members ofCongress. In the same vein, the other kinds of privileges extended to the John Hay SEZ are bytradition and usage for Congress to legislate upon.

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

If it were the intent of the legislature to grant to John Hay SEZ the same tax exemption and

incentives given to the Subic SEZ, it would have so expressly provided in R.A. No. 7227.[22]

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

Petitioners also contend that the questioned issuances constitute executive legislation for allowing

the removal of consumer goods and items from the zones without payment of corresponding dutiesand taxes in violation of Republic Act No. 7227 as Section 12 thereof provides for the taxation ofgoods that are exported or removed from the SSEZ to other parts of the Philippine territory.

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

SECTION 3. Special Shopping Privileges Granted During the Year-round Centennial AnniversaryCelebration in 1998. Upon effectivity of this Order and up to the Centennial Year 1998, inaddition to the permanent residents, locators and employees of the fenced-in areas of the SubicSpecial Economic and Freeport Zone and the Clark Special Economic Zone who are allowed

unlimited duty free purchases, provided these are consumed within said fenced-in areas of theZones, the residents of the municipalities adjacent to Subic and Clark as respectively provided inR.A. 7227 (1992) and E.O. 97-A s. 1993 shall continue to be allowed One Hundred US Dollars(US$100) monthly shopping privilege until 31 December 1998. Domestic tourists visiting Subic andClark shall be allowed a shopping privilege of US$25 for consumable goods which shall beconsumed only in the fenced-in area during their visit therein.


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SECTION 4. Grant of Duty Free Shopping Privileges Limited Only To Individuals Allowed by Law. Starting 1 January 1999, only the following persons shall continue to be eligible to shop in duty freeshops/outlets with their corresponding purchase limits:

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

b. Overseas Filipino Workers (OFWs) and Balikbayans defined under R.A. 6768 dated 3 November1989 Two Thousand US Dollars (US$2,000);

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

The term "Residents" mentioned in item c above shall refer to individuals who, by virtue of domicileor employment, reside on permanent basis within the freeport area. The term excludes (1) non-

residents who have entered into short- or long-term property lease inside the freeport, (2)outsiders engaged in doing business within the freeport, and (3) members of private clubs (e.g.,yacht and golf clubs) based or located within the freeport. In this regard, duty free privilegesgranted to any of the above individuals (e.g., unlimited shopping privilege, tax-free importation ofcars, etc.) are hereby revoked.[23]

A perusal of the above provisions indicates that effective January 1, 1999, the grant of duty-freeshopping privileges to domestic tourists and to residents living adjacent to SSEZ and the CSEZ hadbeen revoked. Residents of the fenced-in area of the free port are still allowed unlimited purchaseof consumer goods, as long as these are for consumption within these freeports. Hence, the onlyindividuals allowed by law to shop in the duty-free outlets and remove consumer goods out of thefree ports tax-free are tourists and Filipinos traveling to or returning from foreign destinations, and

Overseas Filipino Workers and Balikbayans as defined under Republic Act No. 6768.[24]

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

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

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

In any event, Republic Act No. 7227, specifically Section 12 (b) thereof, clearly provides thatexportation or removal of goods from the territory of the Subic Special Economic Zone to the other


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parts of the Philippine territory shall be subject to customs duties and taxes under the Customs andTariff Code and other relevant tax laws of the Philippines.

Thus, the removal of goods from the SSEZ to other parts of the Philippine territory withoutpayment of said customs duties and taxes is not authorized by the Act. Consequently, the followingitalicized provisions found in the second sentences of paragraphs 1.2 and 1.3, Section 1 of ExecutiveOrder No. 97-A are null and void:

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

1.3 Filipinos not residing within the SSEFPZ can enter the Secured Area and consume anyquantity of consumption items in hotels and restaurants within the Secured Area.However, they can purchase and bring out of the Secured Area to other parts of the

Philippine territory consumer items worth not exceeding US $200 per year per person. OnlyFilipinos age 15 and over are entitled to this privilege.[26]

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

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

Equal Protection of the Laws

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

Petitioners contention cannot be sustained. It is an established principle of constitutional law thatthe guaranty of the equal protection of the laws is not violated by a legislation based on areasonable classification.[27] Classification, to be valid, must (1) rest on substantial distinction, (2)be germane to the purpose of the law, (3) not be limited to existing conditions only, and (4) applyequally to all members of the same class.[28]

Applying the foregoing test to the present case, this Court finds no violation of the right to equalprotection of the laws. First, contrary to petitioners claim, substantial distinctions lie between theestablishments inside and outside the zone, justifying the difference in their treatment. In Tiu v.


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Court of Appeals,[29] the constitutionality of Executive Order No. 97-A was challenged for beingviolative of the equal protection clause. In that case, petitioners claimed that Executive Order No.97-A was discriminatory in confining the application of Republic Act No. 7227 within a secured areaof the SSEZ, to the exclusion of those outside but are, nevertheless, still within the economic zone.

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

Certainly, there are substantial differences between the big investors who are being lured toestablish and operate their industries in the so-called secured area and the present businessoperators outside the area. On the one hand, we are talking of billion-peso investments andthousands ofnewjobs. On the other hand, definitely none of such magnitude. In the first, theeconomic impact will be national; in the second, only local. Even more important, at this time thebusiness activities outside the secured area are not likely to have any impact in achieving thepurpose of the law, which is to turn the former military base toproductive use for the benefit of thePhilippine economy. There is, then, hardly any reasonable basis to extend to them the benefits and

incentives accorded in R.A. 7227. Additionally, as the Court of Appeals pointed out, it will be easierto manage and monitor the activities within the secured area, which is already fenced off, toprevent fraudulent importation of merchandise or smuggling.

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

The Court in Tiu found real and substantial distinctions between residents within the secured areaand those living within the economic zone but outside the fenced-off area. Similarly, real and

substantial differences exist between the establishments herein involved. A significant distinctionbetween the two groups is that enterprises outside the zones maintain their businesses withinPhilippine customs territory, while private respondents and the other duly-registered zoneenterprises operate within the so-called separate customs territory. To grant the same taxincentives given to enterprises within the zones to businesses operating outside the zones, aspetitioners insist, would clearly defeat the statutes intent to carve a territory out of the militaryreservations in Subic Bay where free flow of goods and capital is maintained.

The classification is germane to the purpose of Republic Act No. 7227. As held in Tiu, the realconcern of Republic Act No. 7227 is to convert the lands formerly occupied by the US military basesinto economic or industrial areas. In furtherance of such objective, Congress deemed it necessary toextend economic incentives to the establishments within the zone to attract and encourage foreign

and local investors. This is the very rationale behind Republic Act No. 7227 and other similarspecial economic zone laws which grant a complete package of tax incentives and other benefits.

The classification, moreover, is not limited to the existing conditions when the law waspromulgated, but to future conditions as well, inasmuch as the law envisioned the former militaryreservation to ultimately develop into a self-sustaining investment center.


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And, lastly, the classification applies equally to all retailers found within the secured area. Asruled in Tiu, the individuals and businesses within the secured area, being in like circumstancesor contributing directly to the achievement of the end purpose of the law, are not categorizedfurther. They are all similarly treated, both in privileges granted and in obligations required.

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

Prohibition against Unfair Competitionand Practices in Restraint of Trade

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

The argument is without merit. Just how the assailed issuance is violative of the prohibition against

unfair competition and practices in restraint of trade is not clearly explained in the petition.Republic Act No. 7227, and consequently Executive Order No. 97-A, cannot be said to bedistinctively arbitrary against the welfare of businesses outside the zones. The mere fact thatincentives and privileges are granted to certain enterprises to the exclusion of others does notrender the issuance unconstitutional for espousing unfair competition. Said constitutionalprohibition cannot hinder the Legislature from using tax incentives as a tool to pursue its policies.

Suffice it to say that Congress had justifiable reasons in granting incentives to the privaterespondents, in accordance with Republic Act No. 7227s policy of developing the SSEZ into a self-sustaining entity that will generate employment and attract foreign and local investment. Ifpetitioners had wanted to avoid any alleged unfavorable consequences on their profits, they shouldupgrade their standards of quality so as to effectively compete in the market. In the alternative, if

petitioners really wanted the preferential treatment accorded to the private respondents, theycould have opted to register with SSEZ in order to operate within the special economic zone.

Preferential Use ofFilipino Labor, Domestic Materialsand Locally Produced Goods

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

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

Petitioners cite Manila Prince Hotel v. GSIS[31]which, however, does not apply. That case dealtwith the policy enunciated under the second paragraph of Section 10, Article XII of theConstitution,[32] applicable to the grant of rights, privileges, and concessions covering the nationaleconomy and patrimony, which is different from the policy invoked in this petition, specifically


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that of giving preference to Filipino materials and labor found under Section 12 of the same Articleof the Constitution. (Emphasis supplied).

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

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

This Court notes that the Executive Department, with its subsequent issuance of Executive Order

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

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

INVALID.

No costs.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Austria-Martinez, Carpio-Morales, Callejo, Sr., Tinga, Chico-Nazario, and Garcia, JJ., concur.

Carpio, J., no part.

Corona, J., on official leave.

[1] Executive Order No. 80 is entitled, Authorizing the Establishment of the Clark DevelopmentCorporation as the Implementing Arm of the Bases Conversion and Development Authority for the


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Clark Special Economic Zone, and Directing all Heads of Departments, Bureaus, Offices, Agenciesand Instrumentalities of Government to Support the Program.

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

[3] Bases Conversion and Development Act of 1992.

[4] Underscoring supplied.

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

[6]Bayan (Bagong Alyansang Makabayan) v. Zamora, G.R. No. 138570, October 10, 2000,342 SCRA449, citing Kilosbayan v. Guingona, Jr., G.R. No. 113375, May 5, 1994,232 SCRA 110.

[7] Osmea v. Commission on Elections, G.R. Nos. 100318, 100417, and 100420, July 30, 1991, 199SCRA750.

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

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

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

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

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


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

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

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

[17] Emphasis supplied.

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

[19] Emphasis supplied.

[20] G.R. No. 119775, October 24, 2003, 414 SCRA 356.


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[21] Section 28(4), Article VI of the Constitution.

[22]Supra, note 20, at 377.


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

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

SEC. 1. The Ministry of Tourism, through the Philippine Tourism Authority (PTA) ishereby authorized to establish a duty and tax free merchandising system in the Philippines toaugment the service facilities for tourists and to generate foreign exchange and revenue for thegovernment. Under this system, the Philippine Tourism Authority shall have the exclusiveauthority to operate stores and shops that would sell, among others, tax and duty free merchandise,

goods and articles, in international airports and sea ports throughout the country in accordancewith the rules and regulations issued by the Ministry of Tourism.

[26] Italics supplied.

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

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

[29]Ibid.

[30]Id. at 291.

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

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

. . .

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

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

[34]Id. at 58-59.

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

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

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


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Manila

FIRST DIVISION

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

SABINO RIGOR, RODOLFO AQUINO and SIMEON ANTICAMARA, Collector of Customs, Legal

Officer and Chief of the Port andWater Patrol Division, Respectively, Bureau of Customs,

Port of Davao, Davao City, petitioners,vs.SPOUSES EDUARDO ROSALES AND FLORA ROSALES and HONORABLE ALFREDO I. GONZALES(Presiding Judge, Branch II, Court of First Instance of Davao (Sitting at Davao City),

respondents.

Solicitor General for petitioner.

Dominador Suga for respondent.

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

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

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

After hearing the parties, the respondent Collector of Customs rendered

Documents

Tax2-Additional Cases for Tariff and Customs