G.R. No. 179579; February 1, 2012
COMMISSIONER OF CUSTOMS and the DISTRICT COLLECTOR OF THE PORT OF SUBIC, Petitioners, vs. HYPERMIX FEEDS CORPORATION, Respondent.

FACTS

Petitioner Commissioner of Customs issued Customs Memorandum Order (CMO) No. 27-2003, which classified imported wheat for tariff purposes based on the importer/consignee, country of origin, and port of discharge. The CMO provided an exclusive list of flour millers; wheat imported by listed entities under specified conditions was classified as “food grade” subject to a 3% duty, while all other importations, including those by non-listed entities like respondent Hypermix Feeds Corporation, were deemed “feed grade” subject to a 7% duty. The regulation also required importers contesting the classification to post a cash bond for the tariff differential for the shipment’s release.
Anticipating the application of CMO 27-2003 to its inbound shipment of Chinese milling wheat, respondent filed a Petition for Declaratory Relief with the Regional Trial Court (RTC). Respondent argued the CMO was invalid for lack of prior notice, hearing, and publication; violated equal protection by arbitrarily distinguishing between flour millers and non-flour millers; and constituted a confiscatory retroactive application. The RTC declared CMO 27-2003 invalid, a decision affirmed by the Court of Appeals, prompting this petition.

ISSUE

Whether the RTC properly assumed jurisdiction over the action for declaratory relief challenging the validity of CMO 27-2003.

RULING

Yes, the RTC properly exercised jurisdiction. An action for declaratory relief under Rule 63 of the Rules of Court is appropriate when a party’s rights are affected by a governmental regulation, filed before its breach or violation, to determine questions of its validity. The requisites are present: a justiciable controversy existed regarding the constitutionality of the CMO; the interests of the government and the importer were adverse; respondent, as a regular importer immediately affected by the rule, had a direct legal interest; and the issue was ripe for adjudication as respondent’s shipment was in transit and the CMO’s application was imminent and certain. The petition was not premature, as respondent faced immediate and concrete injury from the higher tariff and bonding requirement. The Court affirmed that declaratory relief is the proper remedy to test the validity of an administrative regulation before its enforcement, especially when it imposes significant financial burdens and alters legal rights.