REPUBLIC OF THE PHILIPPINES, CUSTODY AND DISPOSAL ADMINIS­TRATION AND THE COMMISSIONER OF CUSTOMS, PETITIONERS, VS. HON. JUAN BOCAR, AS JUDGE OF THE COURT OF FIRST INSTANCE OF M…

Republic versus Bocar

The Case

This is a petition for certiorari and prohibition filed by the Republic of the Philippines, joined by the Custody and Disposal Administration and the Commissioner of Customs, against Judge Juan Bocar and Judge Mariano Benedicto of the Court of First Instance of Manila, together with private respondents Premier Tobacco Trading Company and the heirs of See Seng. The Republic asks the Supreme Court to annul orders by which the lower courts took hold of goods and money that had already been finally forfeited in favor of the Government in customs proceedings. The case matters because it fixes a clean jurisdictional line: seizure and forfeiture belong exclusively to the customs authorities, with appeal to the Court of Tax Appeals, and a court of first instance that intrudes into that territory acts without jurisdiction.

Procedural History

The Commissioner of Customs conducted seizure and forfeiture proceedings and declared the goods forfeited for violating the Tariff and Customs Code in relation to certain Central Bank circulars. The claimant appealed to the Court of Tax Appeals, but the appeal was dismissed, and the forfeiture became final. Despite this, Premier Tobacco Trading Company filed a replevin suit with damages before the Court of First Instance of Manila, presided over by Judge Bocar. The Custody and Disposal Administration moved to dismiss on the ground that the goods, having been finally forfeited, were beyond the court's jurisdiction, but the court issued orders requiring delivery of the goods to an intervenor, the heirs of See Seng.

In a separate civil case for collection of a sum of money, Judge Benedicto issued an order directing the garnishment of 172,000 pesos held by the Custody and Disposal Administration, which had been paid as bid money by Fermin Correa as attorney-in-fact of See Seng. The Republic came to the Supreme Court on certiorari and prohibition, and the Court issued a temporary restraining order. The Republic later filed an amended and supplemental petition to include Judge Benedicto and Cesar Urbino as respondents, which the Court admitted, and the restraining order was amended to cover them. After the parties filed their memoranda instead of arguing orally, the case was submitted for decision.

Facts

The Commissioner of Customs seized goods for violating the Tariff and Customs Code in relation to Central Bank circulars, and after proceedings, declared them forfeited. The claimant appealed to the Court of Tax Appeals, but the appeal was dismissed, making the forfeiture final. Notwithstanding this, Premier Tobacco Trading Company brought a replevin suit with damages before the Court of First Instance of Manila, and Judge Bocar assumed jurisdiction and ordered the goods delivered to an intervenor, the heirs of See Seng.

Meanwhile, in a collection suit before Judge Benedicto, Fermin Correa confessed judgment in favor of Cesar Urbino, and a writ of execution issued. A special sheriff garnished 172,000 pesos that Correa had paid as attorney-in-fact of See Seng to the Custody and Disposal Administration as bid money for the forfeited goods, an award that was later set aside. Judge Benedicto ordered the sheriff to take possession of the amount and deliver it to Urbino upon a bond, or, in the alternative, ordered the Custody and Disposal Administration to deliver the amount to the court.

The Custody and Disposal Administration could not comply, partly because Judge Bocar had restrained it from delivering the amount to Correa, and more importantly because the money was not Correa's property, having been paid as attorney-in-fact of See Seng, and had in fact been turned over to the general fund of the national treasury. When the Administration moved for reconsideration and opposed the contempt motion, Judge Benedicto denied the motion verbally but gave fifteen days to elevate the question to the Supreme Court.

Issues

• Whether or not a court of first instance may assume jurisdiction over goods that are the subject of seizure and forfeiture proceedings before the customs authorities.
• Whether or not the amount of 172,000 pesos held by the Custody and Disposal Administration may be validly garnished and ordered delivered to a private claimant.

Applicable Provisions

Article X, Section 1 of the Constitution, as quoted in the decision, provides:

The National Assembly shall have the power to define, prescribe, and apportion the jurisdiction of the various courts, but may not deprive the Supreme Court of its jurisdiction over cases enumerated in Section five hereof.

This provision anchors the ruling that Congress defines and apportions jurisdiction, and that the limits it sets for customs seizure and forfeiture proceedings must be respected by the courts.

Ruling

On the first issue, the Court ruled that a court of first instance is devoid of power to act in a seizure and forfeiture proceeding. The customs authorities possess that competence, with appeal to the Court of Tax Appeals, and in appropriate cases further judicial review by the Supreme Court through certiorari. The Court stressed that the jurisdictional limits defined and apportioned by Congress under the Constitution must be respected, and that the respondent judges clearly failed to do so, ignoring a host of cases leaving no doubt as to their lack of authority.

On the second issue, the Court held that the garnished amount was not subject to garnishment. The amount had been paid by Fermin Correa as attorney-in-fact of See Seng to the Custody and Disposal Administration, had been turned over to the general fund, and even if held in trust for the rightful claimant, could not be reached by garnishment because the Custody and Disposal Administration, as an instrumentality of the government, is immune from suit.

The Court reinforced its ruling by quoting Commissioner of Customs versus Navarro, which in turn relied on Pacis versus Averia, decided in 1966, where the Court observed:

This original jurisdiction of the Court of First Instance, when exercised in an action for recovery of personal property which is a subject of forfeiture proceeding in the Bureau of Customs, tends to encroach upon, and to render futile, the jurisdiction of the Collector of Customs in seizure and forfeiture proceedings.

The Court also quoted the controlling principle restated in Ponce Enrile versus Vinuya, decided in 1971:

The prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture cases vested in the Collector of Customs precludes a court of first instance from assuming cognizance over such a matter.

Doctrine

First, the jurisdiction of the customs authorities over seizure and forfeiture proceedings is exclusive, and a court of first instance may not assume cognizance over goods that are the subject of such proceedings. The remedy of a claimant is an appeal to the Court of Tax Appeals, and thereafter, in appropriate cases, certiorari to the Supreme Court. This flows from the constitutional power of Congress to define, prescribe, and apportion the jurisdiction of the courts, which limits must be respected.

Second, funds held by a government instrumentality such as the Custody and Disposal Administration, even if claimed by a private party, are not subject to garnishment, because the instrumentality is immune from suit. A bar candidate should tie both rules to the constitutional provision quoted above and to the settled doctrine that the Collector of Customs sits as a tribunal with exclusive competence over forfeiture and the further disposition of the subject matter.

Disposition

The petition was granted; the orders of Judge Bocar and Judge Benedicto were nullified, set aside, and declared without force and effect; the restraining orders were made permanent; and costs were taxed against the private respondents.

Remember This

Memorize this line: the exclusive jurisdiction in seizure and forfeiture cases vested in the Collector of Customs precludes a court of first instance from assuming cognizance over such a matter. Examiners use this case to test jurisdiction over customs forfeiture proceedings and the immunity of government instrumentalities from garnishment.