G.R. No. 174465. August 23, 2017

THIRD DIVISION: [G.R. No. 174465, August 23, 2017] NATIONAL FOOD AUTHORITY, REPRESENTED BY GREGORIO Y. TAN, JR., ADMINISTRATOR, PETITIONER, V. TINAYTAYAN AND CAPA ARB MULTI-PURPOSE COOPERATIVES, RESPONDENTS.

This appeal assails the decision promulgated on March 16, 2006,[1] whereby the Court of Appeals (CA) dismissed the petition for certiorari and prohibition filed by the petitioner to annul the orders issued on August 5, 2004 and August 20, 2004 by the Regional Trial Court (RTC), Branch 85, in Quezon City in Civil Case No. Q- 04-52981. The assailed orders of the RTC granted the respondents' application for temporary restraining order, and the respondents' motion to release their rice shipment.

Antecedents

The respondents entered into a contract of sale with Thai Hua Co., through Allied Ventures Ltd. of Bangkok, Thailand, for the importation to the Philippines of 18,800 bags of Thailand white rice to be delivered on or before September 21, 2003. The cargo of rice only arrived on October 7, 2003, which was way beyond the scheduled delivery date pursuant to Memorandum Circular AO-2K2-12-001 issued by the petitioner to regulate the importation of rice whenever the national situation required it.

Under Memorandum Circular AO-2K2-12-001, the rice shipment must arrive in the Philippines by September 30, 2003, and in case of delay, the importer would be meted the penalty of 50% of the landed cost of the rice cargo payable to the petitioner, or would forfeit 50% of the rice cargo.

Subsequently, because the rice cargo of the respondents did not arrive on time, the District Collector of the Port of Manila of the Bureau of Customs (BOC) issued a 1stIndorsement recommending the imposition of the 50% penalty or the forfeiture of the equivalent amount of the shipment of the respondents pursuant to Memorandum Circular AO-2K2-12-001. The Commissioner of Customs approved the recommendation, and issued a 2nd Indorsement on December 30, 2003 to be effective on January 29, 2004 and January 13, 2004 via the 3rd and 4th Indorsements, respectively. The respondents moved for reconsideration but their motion was denied on April 21, 2004.

In the meantime, or on January 13, 2004, the petitioner issued Memorandum Circular AO-2K3-12-002 to revise the 50% straight penalty to a table of graduated penalties depending on the number of days reckoned before or after the period set as the arrival date of the rice shipment. The respondents thus wrote the petitioner to request the retroactive application of Memorandum Circular AO-2K3-12-002. The petitioner denied the request on March 10, 2004.

Accordingly, the respondents brought their petition for certiorari and prohibition in the RTC (Civil Case No. Q-04-52981) to assail the constitutionality and validity of Memorandum Circular AO-2K2-12-001 and the actions taken by the petitioner and the BOC to implement the circular. They applied for the issuance of a temporary restraining order and a writ of preliminary injunction, and for the release of the rice shipment without penalty.

On August 5, 2004, the RTC issued the first assailed order, viz.:
WHEREFORE, premises considered, respondent NFA's omnibus motion to dismiss is hereby DENIED for lack of merit. Petitioners' prayer for temporary restraining order to restrain respondents Bureau of Customs and National Food Authority (NFA) from enforcing (a) 1st, 3rd and 4th Indorsements of respondent Bureau of Customs directing petitioner to pay the penalty of fifty percent (50%) of the landed cost of the rice cargo or to suffer the forfeiture of fifty percent (50%) of some 940 M/T cargo; (b) MC AO-2K2-12-001 of respondent National Food Authority, upon which the Indorsements of the Bureau of Customs were made is hereby GRANTED.

Likewise, petitioner's motion to release goods under bond is hereby GRANTED upon petitioners posting of a bond in the amount of THREE MILLION PESOS (P3,000,000.00) to answer for any penalties, charges or interests imposable should the Court sustain the constitutionality and propriety of NFA MC AO-2K2-12-001.

Upon posting and approval by the Court of said bond, respondents National Food Authority (NFA) and Bureau of Customs (BOC) are hereby ordered to release the 940 M/T rice cargo, without penalty under NFA MC AO-2K2-12-001, to petitioners, unless the shipment is being held for any other reason than the implementation of NFA MC AO-2K2-12-001.

SO ORDERED.[2]
The petitioner filed a motion for reconsideration but the RTC denied the motion through the second assailed order of August 20, 2004.

Hence, the petitioner commenced its special civil action for certiorari and prohibition in the CA.

As mentioned, the CA, through its now assailed decision promulgated on March 16, 2006, dismissed the petitioner's petition for certiorari and prohibition. It observed that Memorandum Circular AO-2K2-12-001 was issued in the exercise of the petitioner's quasi-legislative functions; hence, the principle of exhaustion of administrative remedies need not be observed prior to filing of a case to challenge the issuance in court; and that the RTC did not commit grave abuse of discretion in issuing the assailed orders because Memorandum Circular AO-2K2-12-001 enjoyed the presumption of constitutionality and there was no showing of bad faith, harassment or any other unusual circumstance in regard to its implementation.

The CA upheld the order of the RTC for the release of the rice shipment as an equitable relief in favor of the respondents.

In this appeal, the petitioner contends that the RTC had no jurisdiction to order the release of the rice shipment considering that the jurisdiction belonged to the BOC.

The appeal lacks merit.

The jurisdiction of the BOC over seizure proceedings was explained in Agriex Co., Ltd v. Villanueva,[3]quoting Subic Bay Metropolitan Authority v. Rodriguez,[4] as follows:
It is well settled that the Collector of Customs has exclusive jurisdiction over seizure and forfeiture proceedings, and regular courts cannot interfere with his exercise thereof or stifle or put it at naught. 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 devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the BOC and to enjoin or otherwise interfere with these proceedings. Regional trial courts are precluded from assuming cognizance over such matters even through petitions for certiorari, prohibition or mandamus.

Verily, the rule is that from the moment imported goods are actually in the possession or control of the Customs authorities, even if no warrant for seizure or detention had previously been issued by the Collector of Customs in connection with the seizure and forfeiture proceedings, the BOC acquires exclusive jurisdiction over such imported goods for the purpose of enforcing the customs laws, subject to appeal to the Court of Tax Appeals whose decisions are appealable to this Court. As we have clarified in Commissioner of Customs v. Makasiar, the rule that RTCs have no review powers over such proceedings is anchored upon the policy of placing no unnecessary hindrance on the government's drive, not only to prevent smuggling and other frauds upon Customs, but more importantly, to render effective and efficient the collection of import and export duties due the State, which enables the government to carry out the functions it has been instituted to perform.
There is no dispute that the forfeiture of the rice shipment in question was not to be made for the purpose of enforcing the customs laws but to implement Memorandum Circular AO-2K2-12-001, an issuance of the petitioner. In fact, no seizure proceedings was initiated as basis for the BOC to assume jurisdiction. Accordingly, the RTC was not divested of its power to issue the order for the release of the rice cargo as a provisional remedy pending its resolution of the main case involving the legality of Memorandum Circular AO-2K2-12-001, a matter clearly within the jurisdiction of the RTC.

The CA also did not err in affirming the RTCs orders, and correctly observed in that regard that:
A balancing of interests is imperative to come up with a fair and equitable solution. Precisely, the court a quo, in ordering the release of the rice cargo even without the payment of the penalty prescribed under MC AO-2K2-12-001 afforded equitable relief to the multi-purpose cooperatives but without negating the interest of the petitioner NFA by requiring the multi-purpose cooperatives to post a bond in the amount of Three Million Pesos to answer for penalties, charges or interests should it sustain the constitutionality and propriety of MC AO-2K2-12-001. To our mind, the timing of the release of the subject imported rice after 20 August 2004 (when the Order denying the motion for reconsideration of NFA was issued) did not have the effect of flooding the market and did not coincide with the availability of the locally produced rice in the market as to cause the lowering of the price of rice, if We were to consider the timetable set forth in MC AO-2K2-12-001 that required the arrival of the rice shipment on or before 30 September 2003. It is of judicial knowledge that the harvest season of rice in the Philippines commences in the month of September/the release under bond of the rice shipment did not result in the oversupply of rice that the memorandum circular sought to prevent from happening. Likewise, it would serve no practical purpose to put in hostage the rice cargo pending the resolution of the instant case before the court a quo. The perishable nature of the rice cargo is a pivotal factor for its release, x x x[5]
WHEREFORE, the Court DENIES the petition for review on certiorari; and AFFIRMS the decision promulgated on March 16, 2006 and the resolution promulgated on August 17, 2006, without costs of suit.

SO ORDERED.

[1] Rollo, pp. 143-160; penned by Associate Justice Bienvenido L. Reyes (now a retired Member of this Court), with Associate Justice Arturo D. Brion (also now a retired Member of this Court) and Associate Justice Mariflor Punzalan-Castillo concurring.

[2] Rollo, p. 147.

[3] G.R. No. 158150, September 10, 2014, 734 SCRA 533, 555-556.

[4] G.R. No. 160270, April 23, 2010, 619 SCRA 176.

[5] Rollo, p. 158.

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