Commissioner of Customs vs. Makasiar

Regional trial courts are devoid of jurisdiction to enjoin, prohibit, or otherwise interfere with seizure and forfeiture proceedings conducted by the Bureau of Customs over imported goods, even where those goods were first seized under search warrants issued by a regular court and are thus in custodia legis; the exclusive jurisdiction of the Collector of Customs over such proceedings is secured by his actual or constructive possession of the res, and judicial recourse lies only with the Court of Tax Appeals and ultimately the Supreme Court.

The Distillers Co. Ltd. of England is the claimed owner and exclusive manufacturer of Johnnie Walker Scotch Whisky. The Bureau of Customs exercises authority over seizure and forfeiture cases under the Tariff and Customs Code, with decisions of the Collector appealable to the Commissioner of Customs and thence to the Court of Tax Appeals under Republic Act No. 1125, as amended. Hercules Bottling Co., Inc. (HERCULES) operated premises at Isla de Provisor, Paco, Manila, where counterfeit Johnnie Walker materials were found. The CFI of Manila had issued search and seizure warrants in criminal cases involving violations of Republic Act No. 3720 (the Food, Drug, and Cosmetic Act) and Article 188 of the Revised Penal Code (substituting and altering trademarks, tradenames, or service marks).

On December 7, 1978, the Court of First Instance of Manila issued search and seizure warrants in Criminal Case Nos. 8602 and 8603, entitled "People of the Philippines vs. Howard J. Sosis, et al.," for violation of Section 11(a) and/or 11(e) of Republic Act No. 3720 and Article 188 of the Revised Penal Code, respectively. The warrants ordered the seizure of all whisky, bottles, labels, caps, cartons, boxes, machinery, equipment, and other materials used or intended for use in connection with counterfeiting or imitating Johnnie Walker Scotch Whisky, found under the control and possession of Howard J. Sosis, George Morrison Lonie, Hercules Bottling Co., Lauro Villanueva, Vicente Velasco, Manuel Esteban, and Eugenio Mauricio.

The following day, December 8, 1978, a composite team from the Ministry of Finance Bureau of Investigation and Intelligence, the Bureau of Customs, and the Integrated National Police enforced the warrants and seized from the premises of Hercules Bottling Co., Inc. at Isla de Provisor, Paco, Manila, among other articles, six tanks of Scotch whisky, 417 cartons each containing one dozen bottles of "Johnnie Walker Black Label Whisky," 109 empty bottles, and empty cartons numbering 900 to 2044. The seized articles remained in HERCULES' premises, guarded and secured by BII personnel.

On January 2, 1979, the Collector of Customs for the Port of Manila, after being informed of the seizure and upon verification that the goods were imported contrary to law, issued a warrant of seizure and detention in Seizure Identification No. 2-79, ordering the immediate seizure and turnover of the items to the Bureau of Customs' Auction and Cargo Disposal Division. Seizure and forfeiture proceedings were then initiated against the articles for alleged violation of Section 2530(f) of the Tariff and Customs Code, in relation to Republic Act No. 3720. On January 29, 1979, the CFI-Manila issued an order authorizing the transfer and delivery of the seized articles to the customs warehouse at South Harbor, Port of Manila, subject to conditions ensuring the Commissioner of Customs' guarantee of safekeeping in custodia legis, the presence of representatives of all parties during transfer, and the issuance of proper receipts for each article received by the Bureau of Customs.

The validity and constitutionality of the search and seizure warrants were subsequently contested in and upheld by the Court of Appeals in CA-G.R. No. SP-09153-R. HERCULES elevated the matter to the Supreme Court, but the petition was dismissed in a resolution dated November 26, 1986 in G.R. No. 55061. With the dismissal, the City Fiscal of Manila proceeded with the preliminary investigation of the criminal cases, where private respondent The Distillers Co. Ltd. of England, claiming to be the owner and exclusive manufacturer of Johnnie Walker Scotch Whisky, appeared as private complainant. The Bureau of Customs likewise resumed hearing the seizure and forfeiture proceedings.

On June 11, 1982, private respondent objected to the continuation of the seizure proceedings before the Collector of Customs, claiming that the proceedings would hamper or jeopardize the preliminary investigation being conducted by the fiscal. The Collector of Customs ignored the objections. On September 24, 1982, private respondent filed a petition for prohibition with preliminary injunction and/or temporary restraining order before the Regional Trial Court, Branch 35, Manila, docketed as Civil Case No. 82-12721, seeking to enjoin the Bureau of Customs Hearing Officer from taking further action in the seizure proceedings. The petition was filed not before the CFI-Manila that originally issued the search warrants, but before another sala. Respondent judge issued a temporary restraining order on September 29, 1982, and subsequently a writ of preliminary injunction. On July 20, 1987, respondent judge rendered a decision holding that the Collector of Customs acted in excess of jurisdiction in issuing the warrant of seizure and detention because the subject goods had already come under the legal custody of the CFI-Manila. Meanwhile, Howard Sosis and company had been charged for violation of Republic Act No. 3720 in Criminal Case No. 88-63157 before the RTC of Manila and for violation of Article 188 of the Revised Penal Code in Criminal Case No. 88-63156 before the Metropolitan Trial Court of Manila.

• Exclusive Jurisdiction of the Bureau of Customs: Petitioner contended that the authority of the Bureau of Customs over seizure and forfeiture cases is beyond the judicial interference of the Regional Trial Court, even in the form of certiorari, prohibition, or mandamus, which are really attempts to review the Commissioner's actions.
• Proper Forum for Judicial Recourse: Petitioner argued that judicial recourse from the decision of the Bureau of Customs on seizure and forfeiture cases can only be sought in the Court of Tax Appeals and eventually in the Supreme Court, not before the regional trial courts.
• No Valid Cause of Action: Petitioner asserted that private respondent had no valid cause of action against the Commissioner of Customs, and that respondent judge gravely erred in taking cognizance of the petition and in proceeding to hear and render a decision in Civil Case No. 82-12721.

• Custodia Legis as Basis for Jurisdiction: Private respondent contended that while the law may have vested exclusive jurisdiction in the Bureau of Customs over forfeiture and seizure cases, respondent judge had jurisdiction to enjoin the Bureau of Customs because the articles were already in custodia legis by virtue of the search warrants issued by the CFI-Manila.
• Nature of the Prohibition Action: Private respondent argued that respondent judge may properly take cognizance of the case since, unlike the cases cited by petitioner, the action for prohibition was brought not to claim ownership or possession over the goods but only to preserve the same and to prevent the Bureau of Customs from doing anything prejudicial to the successful prosecution of the criminal cases.
• Potential Conflict in Disposition: Private respondent contended that a conflict may arise regarding the disposition of the subject goods if the proceedings before the Collector of Customs and the regular courts were allowed to proceed simultaneously, as a judgment in the forfeiture case—whether releasing the goods or ordering their destruction or sale—would hamper or jeopardize the ongoing criminal prosecutions, the goods comprising the substantial part of the evidence for the People.

• Jurisdiction to Enjoin Customs Proceedings: Whether respondent judge may enjoin the Collector of Customs from continuing with its seizure and forfeiture proceedings over goods earlier seized by virtue of search warrants issued by the CFI-Manila.
• Effect of Custodia Legis on Customs Jurisdiction: Whether the fact that the subject goods were already in custodia legis under the CFI-Manila's search warrants deprives the Collector of Customs of jurisdiction to issue a warrant of seizure and detention and to institute seizure and forfeiture proceedings.
• Simultaneity of Proceedings: Whether seizure and forfeiture proceedings before the Bureau of Customs and criminal prosecutions before the regular courts involving the same goods may proceed simultaneously.

• Jurisdiction to Enjoin Customs Proceedings: No. Regional trial courts are devoid of competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted in the Bureau of Customs and to enjoin or otherwise interfere with these proceedings. The Collector of Customs has exclusive jurisdiction to hear and determine all questions touching on seizure and forfeiture of dutiable goods.
• Effect of Custodia Legis on Customs Jurisdiction: No, custodia legis does not divest the Collector of Customs of jurisdiction. The CFI-Manila itself authorized the transfer and delivery of the goods to the Bureau of Customs, thereby entrusting the Bureau with actual possession and control. Actual possession of the res is the basic operative fact for instituting in rem forfeiture proceedings.
• Simultaneity of Proceedings: Yes. Proceedings before the regular courts for criminal prosecutions and seizure and forfeiture proceedings conducted by the Bureau of Customs may be maintained simultaneously and independently of each other, as their natures are entirely different and a resolution in one is not decisive of the issue in the other.

• Jurisdiction to Enjoin Customs Proceedings: Jurisprudence is replete with cases holding that regional trial courts are devoid of competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted in the Bureau of Customs. The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on seizure and forfeiture of dutiable goods. Regional trial courts are precluded from assuming cognizance over such matters even through petitions for certiorari, prohibition, or mandamus. The provisions of the Tariff and Customs Code and Republic Act No. 1125, as amended, specify the proper fora: decisions of the Collector of Customs are appealable to the Commissioner of Customs, whose decisions are subject to the exclusive appellate jurisdiction of the Court of Tax Appeals, and thereafter to the Supreme Court. This rule is anchored upon the policy of placing no unnecessary hindrance on the government's drive to prevent smuggling and frauds upon customs and to render effective the collection of import and export duties, which constitute a significant portion of public revenue. Even assuming a taint of irregularity in the Collector's exercise of jurisdiction—because he had accepted custody under conditions specified in the CFI-Manila order—this would not vest the respondent judge with jurisdiction to interfere with such proceedings.

• Effect of Custodia Legis on Customs Jurisdiction: The subject goods were undeniably in custodia legis by virtue of the CFI-Manila's search and seizure warrants. However, this fact merely deprives any other court or tribunal, except one having supervisory control or superior jurisdiction, of the right to divest the CFI-Manila of its custody and control of the property, or to interfere with and change its possession without its consent. In this case, the CFI-Manila was not divested of its jurisdiction, nor were its processes interfered with by the Collector of Customs. The CFI-Manila in fact authorized the transfer and delivery of the goods to the Bureau of Customs warehouse, thereby entrusting the Bureau with actual possession and control. Since the Collector of Customs had actual possession and control over the goods, his jurisdiction over the goods was secured for the purpose of instituting seizure and forfeiture proceedings to determine whether the same were imported contrary to law. This is consistent with the principle that the basic operative fact for institution and perfection of in rem proceedings is the actual or constructive possession of the res. No legal infirmity attended the seizure and forfeiture proceedings.

• Simultaneity of Proceedings: The case does not involve a conflict of jurisdictions. Proceedings before the regular courts for criminal prosecutions against Howard Sosis, et al. and seizure and forfeiture proceedings conducted by the Bureau of Customs may be maintained simultaneously and independently of each other. The nature of the two proceedings is entirely different: the forfeiture proceeding, which is administrative and civil in nature, is directed against the res or articles imported and entails a determination of the legality of its importation, while the criminal proceeding is directed against the persons who may be held liable for violating penal laws in connection with the importation. A resolution in one is not decisive of the issue in the other. To forestall the conflict feared by private respondent regarding disposition of the goods, proper adherence by both tribunals to the rules of comity as defined in The Government of the Philippines vs. Gale should be observed: where the preservation and safekeeping of the subject matter of an action is demanded because the articles may prove vital as exhibits in the prosecution of other charges, the rules forbid the disposition or destruction thereof in one action which would prejudice the other, and vice versa. A representative quantity of the goods, as agreed upon by authorized customs officials and fiscals, shall be set aside as evidence and retained in custodia legis until final judgment in the criminal cases; the rest may be disposed of in accordance with the final decision in the forfeiture proceedings.

• Exclusive Jurisdiction of the Bureau of Customs over Seizure and Forfeiture Proceedings — The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. Regional trial courts are precluded from assuming cognizance over such matters even through petitions for certiorari, prohibition, or mandamus. Judicial recourse from decisions of the Bureau of Customs lies exclusively with the Court of Tax Appeals and ultimately the Supreme Court. The Court applied this doctrine to reverse the RTC's injunction, holding that the respondent judge lacked competence to nullify the Collector's warrant or to enjoin the forfeiture proceedings.

• Custodia Legis Does Not Divest the Collector of Customs of Jurisdiction — The fact that goods are in custodia legis under a regular court's search warrants merely deprives any other court or tribunal, except one with supervisory control or superior jurisdiction, of the right to divest that court of custody or to interfere with its possession without consent. Where the court that issued the search warrants itself authorizes transfer of the goods to the Bureau of Customs, the Collector's actual possession secures his jurisdiction to institute in rem forfeiture proceedings. The Court applied this principle to reject the RTC's conclusion that the Collector was precluded from assuming jurisdiction over the goods.

• Actual or Constructive Possession of the Res as Basis for In Rem Proceedings — The basic operative fact for the institution and perfection of in rem proceedings, such as seizure and forfeiture proceedings under the Tariff and Customs Code, is the actual or constructive possession of the res. The Court relied on this principle to confirm that the Collector of Customs' actual possession and control over the subject goods, pursuant to the CFI-Manila's transfer order, properly secured his jurisdiction.

• Simultaneity of Criminal and Administrative Forfeiture Proceedings — Proceedings before regular courts for criminal prosecutions and seizure and forfeiture proceedings before the Bureau of Customs may be maintained simultaneously and independently of each other, because their natures are entirely different: the forfeiture proceeding is administrative and civil, directed against the res, while the criminal proceeding is directed against the persons. A resolution in one is not decisive of the issue in the other. The Court applied this doctrine to reject private respondent's argument that the customs proceedings would jeopardize the criminal cases.

• Rules of Comity Between Tribunals — Where the preservation and safekeeping of the subject matter of an action is demanded, as the articles may prove vital as exhibits in the prosecution of other charges in another proceeding, the rules for the orderly course of proceedings forbid the disposition or destruction thereof in one action which would prejudice the other, and vice versa. The Court applied this rule by directing that a representative quantity of the goods be set aside as evidence for the criminal cases and retained in custodia legis until final judgment, while the rest may be disposed of per the forfeiture decision.

• "Jurisprudence is replete with cases which have held that regional trial courts are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted in the Bureau of Customs, and to enjoin, or otherwise interfere with, these proceedings." — This passage states the controlling rule on the exclusivity of the Bureau of Customs' jurisdiction over seizure and forfeiture proceedings and the corresponding lack of RTC authority to interfere, forming the ratio decidendi of the case.

• "The basic operative fact for the institution and perfection of proceedings in rem like the seizure and forfeiture proceedings pursuant to the Tariff and Customs Code, is the actual or constructive possession of the res." — This formulation articulates the doctrinal basis for the Collector of Customs' jurisdiction over forfeiture proceedings and explains why custodia legis under a regular court's search warrants did not preclude the Collector from proceeding once he obtained actual possession.

• "Proceedings before the regular courts for criminal prosecutions against Howard Sosis, et al., and seizure and forfeiture proceedings for the subject goods conducted by the Bureau of Customs may be maintained simultaneously and independently of each other. For the nature of the two proceedings are entirely different such that a resolution in one is not decisive of the issue in the other." — This passage defines the doctrine of simultaneous proceedings and distinguishes the civil and administrative character of forfeiture from the penal character of criminal prosecution, resolving the perceived conflict of jurisdictions.

• General Travel Service vs. David, G.R. No. L-19259, September 23, 1966, 18 SCRA 59 — Followed as part of the consistent line of authority holding that regional trial courts lack jurisdiction to interfere with Bureau of Customs seizure and forfeiture proceedings.
• Pacis vs. Averia, G.R. No. L-22526, November 29, 1966, 18 SCRA 907 — Followed for the same proposition on exclusive customs jurisdiction.
• Ponce Enrile vs. Vinuya, G.R. No. L-29043, January 30, 1971, 37 SCRA 381 — Followed and specifically cited for the proposition that even a taint of irregularity in the Collector's exercise of jurisdiction does not correspondingly vest the RTC with jurisdiction to interfere.
• Commissioner of Customs vs. Navarro, G.R. No. L-33146, May 31, 1977, 77 SCRA 264 — Followed as part of the jurisprudential consensus on exclusive customs jurisdiction.
• Collector of Internal Revenue vs. Flores Vda. de Codinera, G.R. No. L-9675, September 28, 1957 — Followed for the principle that custodia legis deprives any other court or tribunal, except one with supervisory control or superior jurisdiction, of the right to divest the court of its custody and control of property.
• Papa vs. Mago, G.R. No. L-27360, February 28, 1968, 22 SCRA 857 — Followed for the principle that actual possession and control by the Collector of Customs secures his jurisdiction to institute seizure and forfeiture proceedings.
• The Government of the Philippines vs. Gale, 24 Phil. 95 (1931) — Followed as the leading case establishing the rules of comity between tribunals, prohibiting disposition or destruction of articles in one proceeding that would prejudice their use as exhibits in another proceeding.
• Diosamito vs. Balanque, G.R. No. L-30734, July 28, 1969, 28 SCRA 836 — Followed for the principle that criminal proceedings and administrative forfeiture proceedings are distinct in nature and may proceed independently.
• Hercules Bottling Co., Inc. vs. The Court of Appeals, G.R. No. 55061, November 26, 1986 — Referenced as the prior Supreme Court resolution dismissing HERCULES' petition challenging the validity of the search and seizure warrants, which paved the way for resumption of both the criminal proceedings and the customs forfeiture proceedings.

• Section 2530(f), Tariff and Customs Code — Provides that any article the importation or exportation of which is effected or attempted contrary to law, or any article of prohibited importation or exportation, and all other articles which in the opinion of the collector have been used or were intended to be used as instruments in the importation or exportation of the former, are subject to forfeiture. The Collector of Customs invoked this provision as the basis for the seizure and forfeiture proceedings over the counterfeit Johnnie Walker materials.
• Republic Act No. 1125, as amended — Creates the Court of Tax Appeals and specifies it as the proper appellate forum for decisions of the Commissioner of Customs in seizure and forfeiture cases, with further appeal to the Supreme Court. The Court relied on this statute to establish that regional trial courts do not share in the review of customs decisions.
• Section 11(a) and (e), Republic Act No. 3720 — The Food, Drug, and Cosmetic Act, provisions violated in the criminal cases against Howard Sosis, et al. The criminal prosecutions under this statute proceed independently of the customs forfeiture proceedings.
• Article 188, Revised Penal Code — Penalizes substituting and altering trademarks, tradenames, or service marks. The criminal cases for violation of this article proceed simultaneously with the customs forfeiture proceedings.

Gutierrez, Jr., Feliciano, and Bidin, JJ., concurred. Fernan, C.J., took no part.