G.R. No. 238263, November 16, 2020
Department of Trade and Industry and its Bureau of Product Standards, Petitioners, vs. Steelasia Manufacturing Corporation, Respondent.

FACTS

Respondent Steelasia Manufacturing Corporation, a local steel manufacturer, filed a petition for declaratory relief seeking to nullify certain DTI regulations, specifically Department Administrative Order (DAO) No. 5 (2008), its Implementing Rules and Regulations, and DAO No. 15-01 (2015). These regulations allowed the conditional release of imported steel bars from Bureau of Customs custody to a secure warehouse pending mandatory product testing and the issuance of an Import Commodity Clearance (ICC). Steelasia argued that this conditional release mechanism contravened Republic Act No. 4109, which mandates that imported commodities must first be inspected and certified before release from customs. It further claimed the regulations violated the equal protection clause by granting importers a privilege not available to local manufacturers.
The DTI, through the Office of the Solicitor General, defended the regulations as a necessary administrative measure. It cited severe congestion at customs premises, significant delays in processing, and rising storage costs. For steel products, testing requires specialized equipment not available at ports, necessitating movement to accredited warehouses. The conditional release was characterized as a provisional physical transfer for safekeeping, with the goods remaining under DTI control and not for consumption or sale until full compliance.

ISSUE

Whether the DTI regulations allowing the conditional release of imported goods prior to testing and certification are ultra vires and unconstitutional.

RULING

The Supreme Court ruled in favor of the DTI, upholding the validity of the assailed regulations. The Court clarified that the conditional release is not a final discharge authorizing consumption or sale but a logistical measure to physically move goods from congested ports to secure, accredited warehouses where proper testing can be conducted. This interpretation is consistent with RA 4109’s ultimate objective of ensuring only compliant products enter the market. The law does not explicitly prohibit such interim custody transfers.
On the equal protection challenge, the Court found a substantial distinction between importers and local manufacturers that justifies the differential treatment. Imported goods arrive in bulk and require inspection at the point of entry to verify compliance with Philippine standards—a step unnecessary for locally manufactured goods, which are subject to a separate, continuous certification process. The conditional release addresses practical and unique logistical hurdles inherent to importation, such as port congestion and the unavailability of testing facilities at customs zones. The distinction is germane to the law’s purpose of ensuring product quality and safety. The regulations are a valid exercise of the DTI’s delegated rule-making power to implement RA 4109 effectively.