THE PEOPLE OF THE PHILIPPINES, PETITIONER, VS. HON. GUILLERMO P. VILLASOR, IN HIS CAPACITY AS PRESIDING JUDGE, COURT OF FIRST INSTANCE OF CEBU, BRANCH I, AND ERNESTO DACAY, RESP…

On January 15, 1966, four (4) search warrants, issued by
respondent Judge Guillermo P. Villasor, directed NBI
Agents:  (1) Antonio Aragon, to search an
“[u]nnumbered Warehouse in Lapu-lapu
St. x x x Cebu City” and to take possession of fraud­ulently
imported goods, wares, merchandise, articles and others as well as receipts,
invoices, letters, correspondence, papers and other documents pertinent to
fraudulent importations, in violation of Section 3602, Republic Act 1937;^[1]
(2) Salvador de Leon, to search an [u]nnumbered
residence of Ernesto Dacay in N. Escario
St. x x x Cebu City” and to take possession of property similar
to those just mentioned; and Sancho K. Chan, Jr., (3)
in one search warrant, to search premises “No. 292-294 (DACAY ENTERPRISES)
in Magallanes St. x x x Cebu City”, and seize
fraudulently imported goods, merchandise, articles, and docu­ments pertinent to
such fraudulent importation, in violation of Section 3602 of Republic Act 1937,
and (4) in the other, to search the same premises but to take possession of
“journals, ledgers, sales and purchase invoices, order slips, delivery
receipts, books of accounts and other papers and documents, entries of which
are at variance with each other, in violation of Sec. 336 in relation to Sec.
355, as amended, of the NIRC.”

On the same day that the search warrants were issued, NBI agents
searched the premises described in the respective warrants.  But, as the NBI agents later on were to
testify, they failed to see and seize any of the goods or articles specifically
mentioned in the search warrants.  Carted
away were goods different from those described in the search warrants.  Taken from the premises also were assorted
documents and books.  All of these were
inventoried and receipted for.  At first
in the pos­session of NBI, the goods, documents and books seized were, by court
order of July 9, 1966, turned over to the Clerk of Court.^[2]

The raid conducted by NBI Agent Sancho
K. Chan, Jr. requires elaboration.  While
the search warrants were being served at Dacay’s
premises, Nos. 292-294, Magallanes Street, Cebu City, Dacay’s counsel was in
court with a motion to strike down the two warrants.  Counsel argued that “the oaths
supporting the application for the issuance of the search warrants or the affi­davits
for the issuance of the search warrants are so general in that they do not describe
the quantity, quality and other particulars of the goods and the nature of the
books to be seized so that the said Ernesto Dacay is
at a loss to determine what are to be seized.”^[3]
Promptly on the same day, January 15, 1966 – while Agent Chan was serving the
search warrant – the court issued what it termed a “Clarificatory
Order”, in part reading:

“x x x In other
words, the peace officers concerned should conduct the search in a proper
manner and take possession only of articles specifically mentioned, namely,
bolts, or rolls of suiting materials, motorcycles, fish­ing hooks, bandanas
(ladies scarf), ladies nylon stockings, which have been fraudulently imported
and should not seize other articles not mentioned or those which have been
legally imported, considering that according to the evidence presented, this
defendant is a licensed general merchandise importer.  So also, with respect to the term ‘other
documents’ the same must necessarily refer to the words or to the documents
enumerated immediately preceding pertinent to the goods fraudulently
imported.”^[4]

A fifth search warrant simultaneously issued, this time by the
Municipal Judge of Mandawe, Cebu,
directed NBI Agent Ricardo P. Robles, Jr. to search Dacay’s
bodegas located in Barrio Tipolo, Mandawe,
Cebu.  Agent
Robles carted away several bales of cloth, allegedly remnants.  After examination by the customs authorities
and payment of the corresponding customs duties, they were released to Dacay.  A
reexamination of these goods by customs officials was conducted at Pier 2 of
the Port of Cebu. 
These bales were eventually brought to Cebu PC
Head­quarters for storage and safekeeping. 
Said goods were later ordered returned to Dacay
under bond.  Dacay
was directed to leave with the Deputy Clerk of Court representative samples of
the contents of each bale.

Came Civil Case R-9288 of the Court of First Instance of Cebu (“Ernesto Dacay,
Petitioner, versus Alejandro E. Mendoza, etc., et al., Respondents”), for
mandamus.  This case came about because Dacay sought the return of the goods seized by Agent
Robles.  His claim was that the search
warrant was null and void.  Having been
rebuffed by the Mandawe municipal judge, he
instituted the mandamus proceedings just adverted to.  Judgment was, on May 28, 1969, rendered by
Judge Alfredo C. Laya of the Cebu
Court of First Instance declaring that the search warrant in question did not
des­cribe with particularity the things to be seized, and ruling that said
warrant was null and void.  That decision
has become final, no appeal therefrom
having been taken.

Back to the four searches made at Cebu
City.  The seized goods, books and
documents were examined and evaluated by agents of the Bureau of Internal
Revenue and the Bureau of Customs who recommended prosecution of Ernesto Dacay for a number of offenses.  But the only complaint which reached
the court was that initiated by the Bureau of Internal Revenue for violation of
Section 336 in rela­tion to Section 355 of the National Internal Revenue Code
(Criminal Case V-10839, Court of First Instance of Cebu,
entitled “People of the Philippines, Plaintiff, versus Ernesto Dacay, Accused”). 
In essence, the information, filed on January 27, 1966, averred that Dacay willfully and feloniously kept records and subsidiary
books of accounts pertaining to his business written in Chinese characters
without attaching thereto a true and complete trans­lation into either English,
Spanish or a native dialect, and also made entries pertaining to said business
in his books written in Chinese characters which are in material variance with
corres­ponding entries in his other books or records written in English,
Spanish or native dialect.  Criminal Case
V-10839 was, on August 15, 1969, decided by Cebu
court of first instance Judge Santiago O. Tañada.  The verdict was one of acquittal for
Ernesto Dacay.

Meanwhile, Dacay took steps to nullify
the four search warrants issued by the Cebu court of
first instance and to get back the seized goods, books and documents.  To this effect was his motion of January 26,
1966 in an unnumbered criminal case of the Court of First
Instance of Cebu. 
Thereafter, on March 18, 1966, he amended this motion to stop the NBI, the
State Prosecutor, the City Fiscal of Cebu, and the
Commissioners of Internal Revenue and Customs from using as evidence any of the
goods, books and documents seized.  Dacay there contended that said goods, books and documents
were different from those described in the search warrants.  Upon the issues joined by the People’s
opposition, a hearing was had.  The trial
court, on July 25, 1966, issued an order, the dispositive
part of which is as follows:

“WHEREFORE, the amended motion to declare the search and
seizure illegal, and to return the goods and documents seized is in the main
denied, except in those cases where the articles seized belonged to third
parties or were not the ones described in the warrant.  It is therefore ordered and decreed that the searching
officers concerned, or their assistants and successors, return immediately to
their respective owners the arti­cles described in Items Nos. 1 to 9, of
Exhibit ‘A’, same as Exhibit ‘6-A’ (page 87 of Record), Items 1, 4, 6 to 75 of
Exhibit ‘T-5’ (page 103 of Record), and Items II-A to II-EE of Exhibit ‘T-2’
(page 99 of Record).”

The People appealed to the Court of Appeals from the order just
quoted “insofar as the said Order directs and decrees, as fol­lows:  ‘x x x It is
therefore ordered and decreed that the searching officers concerned, or their
assistants and successors, return immediately to their respective owners the
articles described in Items Nos. 1 to 9, of Exhibit ‘A’, same as Exhibit ‘6-A’
(page 87 of Record), Items 1, 4, 6 to 75 of Exhibit ‘T-5’ (page 103 of Record),
and Items II-A to II-EE of Exhibit ‘T-2’ (page 99 of Record).”^[5]
This case was docketed in the Court of Appeals as CA-G.R. 07473-Cr.

Dacay in turn moved for a
reconsideration of the order just adverted to,^[6]
later amended to a motion for new trial.^[7] Dacay’s main contentions were that the guidelines issued by
the Court of First Instance of Cebu in its order of
July 25, 1966 were not followed by NBI agents Salvador de Leon with respect to
the documents listed in the inventories designated as Annexes B, B-1 and C, and
Sancho K. Chan, Jr. in reference to those in Exhibits
P-1, P-2, T-4 and 4-A to 4-H.  He prayed
for the nullification of the searches and the return of the documents.  The court, ruling on Dacay’s
motion, issued the order of September 22, 1966 thus –

“WHEREFORE, the motion for new trial filed by the defendant is
granted.  Set this case for further
hearing on October 17, 1966, at 2:30 P.M. and every afternoon thereafter until
finished, and for this pur­pose the custodians of the documents listed in the
inventories of NBI Agents de Leon and Chan, Jr. are required to bring to Court
such documents as will be sufficient for examination at that particular
time.”

Failing in its move to reconsider, the People went direct to this
Court on certiorari and prohibition with prayer for a writ of
preliminary injunction.  We issued a
temporary restraining order on November 17, 1966.  This is the first of the two cases now before
us:  G.R. L-26828
(“People of the Philippines, Peti­tioner, versus Honorable Guillermo P. Villasor, in his capacity as Presiding Judge, Court of
First Instance of Cebu, Branch I, and Ernesto Dacay, Respondents.”)

The appeal taken by the People of the Philippines from the
order of July 25, 1966 heretofore transcribed was, on Sep­tember 7, 1968,
resolved by the Court of Appeals.  The
appellate court affirmed in toto
respondent judge’s order.  Not satisfied,
the People brought the case up to this Court on petition for review by
certiorari.  This is G.R.
L-29567, entitled “People of the Phil­ippines, Petitioner, versus
Ernesto Dacay and Honorable Court of Appeals,
Respondents” – the other case now under consideration.  Both G.R. L-26828 and L-29567 are ripe for
decision.

On August 19, 1969, respondent Ernesto Dacay
moved to dismiss the two cases just cited, upon the ground that the issues
raised therein have become moot and academic. 
The Solicitor General opposed.  We
are now called upon to decide the cases and to rule on the motion.

Dacay’s motion to dismiss is founded mainly
on his acquittal in Criminal Case V-10839 of the Court of First Instance of Cebu, and on the judgment, also final, of the same court in
Civil Case R-9288 nullifying the search warrant issued by the municipal judge
of Mandawe. 
There is also the fact that the goods seized by NBI agents by virtue of
the search warrants heretofore mentioned were destroyed by the fire which
gutted the Constabulary bodega in Cebu City.

1. To be recalled is that G.R. L-29567 is an appeal taken by the
People from the judgment of the Court of Appeals which affirmed in toto the order of the Court of First Instance of Cebu directing that the “searching officers concerned,
or their assistants and successors, return immediately to their respective
owners the articles described in Items Nos. 1 to 9, Exhibit ‘A’, same as
Exhibit ‘6-A’ (page 87 of Record), Items 1, 4, 6 to 75 of Exhibit ‘T-5’ (page
103 of Record), and Items II-A to II-EE of Exhibit ‘T-2’ (page 99 of
Record).”^[8]

Exhibit A or 6-A is an inventory of the things seized by NBI
Agent Antonio Aragon in the bodega of Dacay
Enterprises at Lapu-Lapu Street, Cebu
City.  Listed therein are one bale of
clothing materials, several cases of handkerchiefs, four cases of men’s socks.

If only for one reason, the case as to the properties seized by
NBI Agent Aragon should be dismissed.  It
is because these goods have been destroyed by fire which razed the PC bodega in
Cebu City. 
Since said goods (see Exhibit A or 6-A) no longer exist, then nothing
there is to discuss in L-29567.  There are
no more articles to return.

G.R. L-29567, as to the goods seized by NBI Agent Aragon, has
become moot and academic.

Upon the merits, the People’s petition for review in L-29567 is
as vulnerable.  In the judgment of the
Court of Appeals subject of review, the appellate court found that –

“x x x
there is not even a single iota of evidence disclosing that the articles
actually seized by the raiding team of Aragon were in fact imported; much less
was it proven that they have been fraudulently brought into this country
through its backdoor.  It may sound trite
but in this jurisdiction the presumption of law is always in favor of
innocence; who­ever alleges otherwise assumes the burden of proof — something
which the State miserably failed to accomplish in this instance.  This becomes more so in view of the fact that
the goods consisting of clothing materials, hand­kerchief, men’s socks and
packing lists, seized by Aragon are not illegal articles per se.  Considering that in this country we also have
a good number of textile mills which are legi­timately engaged in the
manufacture of clothing materials, handkerchiefs, and men’s socks, the
possibility that those confiscated goods were locally produced is not too
remote at all so as to be lightly discounted. 
Consequently, since there is no positive evidence showing even prima
facie that the merchandise taken and seized by Aragon from the bodega of
the Dacay Enterprises were illegally imported goods,
their seizure and confiscation have no basis both in fact and in law.”^[9]

We are bound by the foregoing finding.  We have held in Moreno vs. Ago
Chi, 12 Phil. 439, 442, that “[i]f the
property was in no way connected with the commission of the offense, at the
termination of the trial it is the duty of the court to order the officer in
possession of the same to return it to the defendant.”

The result is the same. 
G.R. L-29567 should be dis­missed.

2.  G.R. L-26828, it will
be remembered, is a special civil action for certiorari and prohibition
instituted by the People.  It is directed
against respondent judge’s order of September 22, 1966 granting respondent Dacay a new trial. 
In said new trial, what Dacay seeks is the
return of the documents, books and papers listed in Exhibits B, B-1 and C and
Exhibits P-1, P-2 and T-4 and also those in Exhibits 4-A to 4-H.

Exhibits B, B-1 and C are inventories of books and docu­ments
(mainly delivery receipts, ledgers, columnar books, journals, folders and
checkbook stubs) seized by NBI Agent Salvador de Leon allegedly for violation
of Section 3602 of the Tariff and Customs Code. 
Exhibits 4-A to 4-H are inventories of papers and documents such as
bills of lading, commercial and consular invoices, packing lists, letters and
telegrams to suppliers abroad, price lists of suppliers abroad, sales notes and
certificates of origin.  They were seized
by NBI Agent Sancho K. Chan, Jr. also allegedly for
violation of Section 3602 of the Tariff and Customs Code.  Retention of Exhibits B, B-1 and C and 4-A to
4-H is sought by the State because they constitute relevant evidence to
prosecute the case for such infractions.

Coming now to Exhibits P-1, P-2 and T-4.  As aforesaid, these, together with Exhibits
T-2 and T-5, are inventories of books and documents seized by NBI Agent Sancho K. Chan, Jr. purportedly for violation of another
statutory provision – Section 336 in relation to Section 355 of the National
Internal Revenue Code.  Included in the
inventories are journals, ledgers, trial balances, cash invoices, official
receipts and other documents seized “a) [f]rom
the Office, Adjacent to the Office of Ernesto Dacay,
Air-conditioned Room – Exhibit ‘4-G-Dacay’, consisting of three pages and
contain­ing Items 1 to 27;^[10]
b) [f]rom the Office of the Accountant, Second Floor,
Adjacent to the Office of Ernesto Dacay, consisting
of two pages, containing Items 1-A to 2-0;^[11]
c) [f]rom the Office of Mrs. Mary Uy
Dacay and Conchita Sy, located at the First Floor, Air-conditioned Room,
consisting of six pages and containing Items 1 to 75;^[12]
d) [f]rom the Office, Adjacent to the Office of Mr. Dacay, Air-conditioned Room, consisting of one page and
containing Items 1 to 16;^[13]
e) [f]rom the Office of the Accountant, Second Floor,
Adjacent to the Air-conditioned Inner Office of Mr. Dacay,
consisting of two pages and containing Items II-A to II-EE,^[14]
both for alleged violations of Sec. 3602, Customs and Tariff Code, R.A. 1937
and of Sec. 336 in relation to Sec. 355, Revised National Internal Revenue Code
(Exhibits ‘P-1’, ‘P-2’, ‘T-2’, ‘T-4’ and ‘T-5’ – Order of July 25, 1966).”^[15]

The State would want to prevent return of possession of the
documents seized by Chan.  And amongst
these are Items 2, 3 and 5 of Exhibit T-5 – three books of accounts written in
Chinese lan­guage – which were not ordered returned by the trial court to Dacay.

The State argues that these documents would show that there was
no translation of the Chinese books of accounts into English, Span­ish or local
dialect, and that, therefore, Dacay would be open for
prosecution for violation of Section 336 in connection with Section 355 of the
National Internal Revenue Code.

The flaw in this argument is that Dacay
was actually pro­secuted for violation of Section 355, in connection with
Section 336 of the National Internal Revenue Code, precisely in reference to
Items 2, 3 and 5 (Chinese books of accounts) in Exhibit T-5.  And he was acquitted.

There was no necessity then to retain the documents men­tioned in
Exhibits P-1, P-2 and T-4, and those other documents appearing in Exhibit T-2
and the rest of those in Exhibit T-5.

As for Exhibits P-1, P-2 and T-4, it bears remembering that in
the prosecution against Dacay in Criminal Case
V-10839, solely the three books of accounts in Chinese (Nos. 2, 3 and 5,
Exhibit T-5) were presented.  The
documents and papers covered by Exhibits P-1, P-2 and T-4 were intended to be
utilized in said case to prove the averment in the information that there was
no translation at all of those books into English, Spanish or any local
dialect.  But said documents and papers
were never offered in evidence therein. 
No need therefore there is to retain the items covered by Exhibits P-1,
P-2 and T-4.

Five years have elapsed since the searches and seizures.  No criminal prosecution was ever presented by
the State against Dacay except that involved in Criminal
Case V-10839 of the Court of First Instance of Cebu
for failure to have his Chinese books translated into English, Spanish or local
dialect.  But in that case, he was
acquitted.  Since then, no attempt has
ever been made by the State to further prosecute Dacay
in relation to the books, papers and documents taken by the government men.^[16]
It was the duty of the State either to institute such action as it may deem
proper or to return the properties to their owners.  An unreasonable length of time has passed.  Nothing has been done.  Because no further action has been taken
against Dacay, the properties so seized should be
returned to their owners.^[17]

It thus results that there exists no further cause or reason why
the two cases now before us should not be dismissed:  L-29567 on the merits and because the
questions therein involved have become moot and academic; and L-26828, it
appearing that the petition for certiorari and prohibition is without merit.

For the reasons given, these two cases (G.R. L-29567 and G.R.
L-26828) are hereby dismissed, and in consequence the temporary restraining
order issued in L-26828 is dissolved. 
Without costs.

SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Ruiz Castro, and
Fernando, JJ., concur.

Teehankee and Barredo, JJ., did not take part.

^[1]
Republic Act 1937 is otherwise known as the Tariff and Customs Code of the
Philippines.  Section 3602 thereof refers
to “Various Fraudulent Practices Against Customs Revenue.”

^[2] Rollo of L-26828, pp. 264, 265.

^[3] Id.,
p. 304.

^[4] Id.,
pp. 99-100.

^[5] Id.,
p. 172.

^[6] Id.,
p. 173.

^[7] Id.,
p. 178.

^[8]
The items in Exhibits T-2 and T-5 are to be discussed in rela­tion to G.R.
L-26828.

^[9] Rollo of L-29567, p. 42.

^[10] Rollo of L-26828, pp. 59-61.

^[11] Id.,
pp. 57-58.

^[12] Id.,
pp. 86-91.

^[13] Id.,
pp. 92-93.

^[14] Id.,
pp. 55-56.

^[15] Id.,
pp. 387-388.

^[16] See:  Certifications of:  Provincial Fiscal of Cebu
dated Feb­ruary 15, 1969; City Fiscal of Cebu dated
February 17, 1969; Clerk of Court of First Instance of Cebu
dated February 15, 1969.

^[17] Magdaluyo vs. Acting Director, NBI (Resolution), 10
SCRA 604, 607 (1964).