Professional Documents
Culture Documents
DECISION
CORONA , J : p
This is a petition for review on certiorari 1 of the decision 2 and resolution 3 of the
Court of Tax Appeals (CTA) en banc dated March 1, 2007 and July 5, 2007, respectively,
in CTA EB Nos. 121 and 122 which reversed the decision of the CTA First Division dated
April 5, 2005 in CTA Case No. 6358. SIcEHD
Three years later, then Finance Secretary Edgardo Espiritu received a letter (with
annexes) dated June 10, 1999 from a certain Alfonso A. Orioste denouncing the
deliberate concealment, manipulation and scheme employed by petitioner and Pilipinas
Shell in the importation of crude oil, thereby resulting in huge losses of revenue for the
government. This letter was endorsed to the Bureau of Customs (BOC) for
investigation on July 19, 1999. 8
On January 28, 2000, petitioner received a subpoena duces tecum/ad
testi candum from Conrado M. Unlayao, Chief of the Investigation and Prosecution
Division, Customs Intelligence and Investigation Service (IPD-CIIS) of the BOC, to
submit pertinent documents in connection with the subject shipments pursuant to the
investigation he was conducting thereon. It appeared, however, that the Legal Division
of the BOC was also carrying out a separate investigation. Atty. Roberto Madrid (of the
latter of ce) had gone to petitioner's Batangas Re nery and requested the submission
of information and documents on the same shipments. This prompted petitioner to
seek the creation of a unified team to exclusively handle the investigation. 9
On August 1, 2000, petitioner received from the District Collector of Customs of
the Port of Batangas (District Collector) a demand letter requiring the immediate
settlement of the amount of P73,535,830 representing the difference between the 10%
and 3% tariff rates on the shipments. In response, petitioner wrote the District Collector
to inform him of the pending request for the creation of a uni ed team with the
exclusive authority to investigate the matter. Furthermore, petitioner objected to the
demand for payment of customs duties using the 10% duty rate and reiterated its
position that the 3% tariff rate should instead be applied. It likewise raised the defense
of prescription against the assessment pursuant to Section 1603 of the Tariff and
Customs Code (TCC). Thus, it prayed that the assessment for de ciency customs
duties be cancelled and the notice of demand be withdrawn. 1 0
In a letter petitioner received on October 12, 2000, respondent Commissioner of
the BOC 1 1 stated that it was the IPD-CIIS which was authorized to handle the
investigation, to the exclusion of the Legal Division and the District Collector. 1 2
The IPD-CIIS, through Special Investigator II Domingo B. Almeda and Special
Investigator III Nemesio C. Magno, Jr., issued a nding dated February 2, 2001 that the
import entries were led beyond the 30-day non-extendible period prescribed under
Section 1301 of the TCC. They concluded that the importations were already
considered abandoned in favor of the government. They also found that fraud was
committed by petitioner in collusion with the former District Collector. 1 3
Thereafter, respondent 1 4 wrote petitioner on October 29, 2001 informing it of
the ndings of irregularity in the ling and acceptance of the import entries beyond the
period required by customs law and in the release of the shipments after the same had
already been deemed abandoned in favor of the government. Petitioner was ordered to
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pay the amount of P1,180,170,769.21 representing the total dutiable value of the
importations. 1 5 CSTEHI
This prompted petitioner to le a petition for review in the CTA First Division on
November 28, 2001, asking for the reversal of the decision of respondent. 1 6
In a decision promulgated on April 5, 2005, the CTA First Division ruled that
respondent was correct when he af rmed the ndings of the IPD-CIIS on the existence
of fraud. Therefore, prescription was not applicable. Ironically, however, it also held that
petitioner did not abandon the shipments. The shipments should be subject to the 10%
rate prevailing at the time of their withdrawal from the custody of the BOC pursuant to
Sections 204, 205 and 1408 of the TCC. Petitioner was therefore liable for de ciency
customs duties in the amount of P105,899,569.05. 1 7
Petitioner sought reconsideration of the April 5, 2005 decision while respondent
likewise led his motion for partial reconsideration. Both motions were denied in a
resolution dated September 9, 2005. 1 8
After both respondent and petitioner had led their petitions for review with the
CTA en banc, docketed as CTA EB No. 121 and CTA EB No. 122, respectively, the
petitions were consolidated.
In a decision dated March 1, 2007, the CTA en banc held that it was the ling of
the IEIRDs that constituted entry under the TCC. Since these were led beyond the 30-
day period, they were not seasonably "entered" in accordance with Section 1301 in
relation to Section 205 of the TCC. Consequently, they were deemed abandoned under
Sections 1801 and 1802 of the TCC. It also ruled that the notice required under
Customs Memorandum Order No. 15-94 (CMO 15-94) was not necessary in view of
petitioner's actual knowledge of the arrival of the shipments. It likewise agreed with the
CTA Division's nding that petitioner committed fraud when it failed to le the IEIRD
within the 30-day period with the intent to "evade the higher rate". Thus, petitioner was
ordered to pay respondent the total dutiable value of the oil shipments amounting to
P893,781,768.21. 1 9
Hence this petition.
There are three issues for our resolution:
1. whether "entry" under Section 1301 in relation to Section 1801 of the TCC
refers to the IED or the IEIRD;TSacCH
We disagree.
The term "entry" in customs law has a triple meaning. It means (1) the documents
led at the customs house; (2) the submission and acceptance of the documents and
(3) the procedure of passing goods through the customs house. 2 2
The IED serves as basis for the payment of advance duties on importations
whereas the IEIRD evidences the nal payment of duties and taxes. The question is:
was the filing of the IED sufficient to constitute "entry" under the TCC?
The law itself, in Section 205, de nes the meaning of the technical term "entered"
as used in the TCC:
Section 205. Entry, or Withdrawal from Warehouse, for Consumption . —
Imported articles shall be deemed "entered" in the Philippines for
consumption when the speci ed entry form is properly led and
accepted , together with any related documents regained by the provisions of
this Code and/or regulations to be led with such form at the time of entry, at
the port or station by the customs of cial designated to receive such entry
papers and any duties, taxes, fees and/or other lawful charges required to be
paid at the time of making such entry have been paid or secured to be paid with
the customs of cial designated to receive such monies, provided that the article
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has previously arrived within the limits of the port of entry.
xxx xxx xxx
(Emphasis supplied)
Clearly, the operative act that constitutes "entry" of the imported articles at the
port of entry is the ling and acceptance of the "speci ed entry form" together with the
other documents required by law and regulations. There is no dispute that the
"speci ed entry form" refers to the IEIRD. Section 205 de nes the precise moment
when the imported articles are deemed "entered".
Moreover, in the old case of Go Ho Lim v. The Insular Collector of Customs, 2 3 we
ruled that the word "entry" refers to the regular consumption entry (which, in our current
terminology, is the IEIRD) and not the provisional entry (the IED):
It is disputed by the parties whether the application for the special permit.
Exhibit A, containing the misdeclared weight of the 800 cases of eggs, comes
within the meaning of the word "entry" used in section 1290 of the Revised
Administrative Code, or said word "entry" means only the "original entry and
importer's declaration". The court below reversed the decision of the Insular
Collector of Customs on the ground that the provisions of section 1290 of the
Revised Administrative Code refer to the regular consumption entry and
not to a provisional declaration made in an application for a special permit,
as the one led by the appellee, to remove the cases of eggs from the
customhouse. TSHEIc
Under Sections 1210 2 6 and 1301 of the [TCC], Mr. Speaker, import
entries for imported articles must be led within ve days from the date of
discharge of the last package from the vessel. The ve-day period, however, Mr.
Speaker, is subject to an inde nite extension at the discretion of the
collector of customs , which more often than not stretches to more than three
months, thus resulting in considerable delay in the payment of duties
and taxes .
This bill, Mr. Speaker, seeks to amend Sections 1210 and 1301 by
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extending the ve-day period to thirty days, which will no longer be
extendible , within which import entries must be led for imported articles.
Moreover, to give the importer reasonable time, the bill prescribes a period of
fteen days which may not be extended within which to claim his importation
from the time he led the import entry. Failure to le an import entry or to claim
the imported articles within the period prescribed under the proposed measure,
such imported articles will be treated as abandoned and declared as ipso facto
the property of the government to be sold at public auction. TEDAHI
It was not by sheer coincidence that, by the time petitioner led its IEIRDs way
beyond the mandated period, the rate of duty had already been reduced from 10% to
3%. Both the CTA Division and en banc found the explanation of petitioner (for its delay
in ling) untruthful. The bills of lading and corresponding invoices covering the
shipments were accomplished immediately after loading onto the vessels. 3 7 Notably,
the memorandum of a district collector cited by petitioner as basis for its assertion
that original copies were required by the BOC was dated October 30, 2002 . 3 8 There is
no showing that in 1996, the time pertinent in this case, this was in fact a requirement.
More importantly, the absence of supporting documents should not have
prevented petitioner from complying with the mandatory and non-extendible period,
specially since the consequences of delayed ling were extremely serious. In addition,
these supporting documents were not conclusive on the government. 3 9 If this kind of
excuse were to be accepted, then the collection of customs duties would be at the
mercy of importers.
Hence, due to the presence of fraud, the prescriptive period of the nality of
liquidation under Section 1603 was inapplicable:
Section 1603. Finality of Liquidation. — When articles have been entered
and passed free of duty or nal adjustments of duties made, with subsequent
delivery, such entry and passage free of duty or settlements of duties will, after
the expiration of one (1) year, from the date of the nal payment of duties, in
the absence of fraud or protest or compliance audit pursuant to the
provisions of this Code, be nal and conclusive upon all parties, unless the
liquidation of the import entry was merely tentative. 4 0
EcSaHA
We disagree.
Under the peculiar facts and circumstances of this case, due notice was not
necessary. The shipments arrived in 1996. The IEDs and IEIRDs were also led in 1996.
However, respondent discovered the fraud which attended the importations and their
subsequent release from the BOC's custody only in 1999. Obviously, the situation here
was not an ordinary case of abandonment wherein the importer merely decided not to
claim its importations. Fraud was established against petitioner; it colluded with the
former District Collector. Because of this, the scheme was concealed from respondent.
The government was unable to protect itself until the plot was uncovered. The
government cannot be crippled by the malfeasance of its of cials and employees.
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Consequently, it was impossible for respondent to comply with the requirements under
the rules. AcTDaH
By the time respondent learned of the anomaly, the entries had already been
belatedly led and the oil importations released and presumably used or sold. It was a
fait accompli. Under such circumstances, it would have been against all logic to require
respondent to still post an "urgent notice to le entry" before declaring the shipments
abandoned.
The minutes of the deliberations in the House of Representatives Committee on
Ways and Means on the proposed amendment to Section 1801 of the TCC show that
the phrase "after due notice" was intended for owners, consignees, importers of the
shipments who live in rural areas or distant places far from the port where the
shipments are discharged, who are unfamiliar with customs procedures and need the
help and advice of people on how to file an entry:
xxx xxx xxx
MR. FERIA. 1801, your Honor. The question that was raised here in the
last hearing was whether notice is required to be sent to the importer. And, it has
been brought forward that we can dispense with the notice to the importer
because the shipping companies are notifying the importers on the arrival of
their shipment. And, so that notice is suf cient to . . . suf cient for the claimant
or importer to know that the shipments have already arrived .
Second, your Honor, the legitimate businessmen always have . . . they
have their agents with the shipping companies, and so they should know the
arrival of their shipment.
xxx xxx xxx
HON. QUIMPO. Okay. Comparing the two, Mr. Chairman, I cannot help but
notice that in the substitution now there is a failure to provide the phrase AFTER
NOTICE THEREOF IS GIVEN TO THE INTERESTED PARTY, which was in the
original. Now in the second, in the substitution, it has been deleted. I was rst
wondering whether this would be necessary in order to provide for due process.
I'm thinking of certain cases, Mr. Chairman, where the owner might not have
known . This is now on implied abandonment not the express abandonment.
CONCLUSION
Petitioner's failure to le the required entries within a non-extendible period of
thirty days from date of discharge of the last package from the carrying vessel
constituted implied abandonment of its oil importations. This means that from the
precise moment that the non-extendible thirty-day period lapsed, the abandoned
shipments were deemed (that is, they became) the property of the government.
Therefore, when petitioner withdrew the oil shipments for consumption, it appropriated
for itself properties which already belonged to the government. Accordingly, it became
liable for the total dutiable value of the shipments of imported crude oil amounting to
P1,210,280,789.21 reduced by the total amount of duties paid amounting to
P316,499,021.00 thereby leaving a balance of P893,781,768.21.
By the very nature of its functions, the CTA is a highly specialized court
speci cally created for the purpose of reviewing tax and customs cases. It is dedicated
exclusively to the study and consideration of revenue-related problems and has
necessarily developed an expertise on the subject. Thus, as a general rule, its ndings
and conclusions are accorded great respect and are generally upheld by this Court,
unless there is a clear showing of a reversible error or an improvident exercise of
authority. There is no such showing here.
WHEREFORE, the petition is hereby DENIED. Petitioner Chevron Philippines, Inc. is
ORDERED to pay the amount of EIGHT HUNDRED NINETY THREE MILLION SEVEN
HUNDRED EIGHTY ONE THOUSAND SEVEN HUNDRED SIXTY EIGHT PESOS AND
TWENTY-ONE CENTAVOS (P893,781,768.21) plus six percent (6%) legal interest per
annum accruing from the date of promulgation of this decision until its nality. Upon
nality of this decision, the sum so awarded shall bear interest at the rate of twelve
percent (12%) per annum until its full satisfaction. cDTIAC
1. Under Rule 45 of the Rules of Court in relation to Rule 16 of the Revised Rules of the Court of
Tax Appeals. EASIHa
5. Rollo, p. 88.
6. Otherwise known as the Downstream Oil Industry Deregulation Act of 1996.
7. Rollo, p. 121.
8. Id., p. 89.
9. Id.
13. Id., pp. 90-93. The name of this former District Collector does not appear in the rollo.
14. Through Commissioner Titus B. Villanueva.
20. P.D. 1853 was the law that took effect on January 1, 1983, requiring deposits of duties
upon the opening of letters of credit to cover imports. Section 2 thereof states:
"Section 2. The amount of the duties due shall be based on the declaration of the applicant for
the letter of credit/importer, subject to the penalties prescribed under Sec. 2503 of the
[TCC] of 1978, as amended."
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21. Rollo, pp. 32-36.
22. Rodriguez v. CA, G.R. No. 115218, 18 September 1995, 248 SCRA 288, 297, citing the Tariff
and Customs Code, Section 1201 and IV Tejam, Commentaries on the Revised Tariff and
Customs Code 2230 [1987].
25. An Act to Revitalize and Strengthen the Bureau of Customs, Amending for the Purpose
Certain Sections of the Tariff and Customs Code of the Philippines, as Amended
(Approved on June 4, 1993).
26. Section 1210. — Disposition of Imported Articles Remaining on Vessel After Time for
Unlading. — Imported articles remaining on board any vessel after the expiration of the
said period for discharge and not reported for transshipment to another port, may be
unladen by the customs authorities and stored at the vessel's expense.
Unless prevented by causes beyond the vessel's control, such as port congestion, strikes, riots
or civil commotions, failure of vessel's gear, bad weather, and similar causes, articles so
stored shall be entered within thirty (30) days, which shall not be extendible, from the
date of discharge of the last package from the vessel or aircraft and shall be claimed
within fteen (15) days, which shall not likewise be extendible from the date of posting
of the notice to claim in conspicuous places in the [BOC]. If not entered or not claimed, it
shall be disposed of in accordance with the provisions of this Code.
29. Commissioner of Internal Revenue v. Court of Tax Appeals, G.R. No. 106611, 21 July 1994,
234 SCRA 348, 356; Commissioner of Customs v. Makasiar, G.R. No. 79307, 29 August
1989, 177 SCRA 27, 34. According to then Senator Gloria Macapagal-Arroyo (now
President of the Republic of the Philippines):
"The [BOC] is one of the premier revenue collecting arms of the Government, who together with
the Bureau of the Internal Revenue accounts for the collection of more than eighty
percent (80%) of government revenue." (March 29, 1993, Explanatory Note of Senate Bill
No. 451, p. 14)
30. Commissioner of Internal Revenue v. Goodrich International Rubber Co. , G.R. No. L-22265,
27 March 1968, 22 SCRA 1256, 1257; Commissioner of Internal Revenue v. Pineda, G.R.
No. L-22734, 15 September 1967, 21 SCRA 105, 110. cIaCTS
31. Philex Mining Corporation v. Commissioner of Internal Revenue, G.R. No. 125704, 28 August
1998, 294 SCRA 687, 696.
32. Sections 205, 1301 and 1801.
33. Commissioner of Internal Revenue v. Estate of Benigno P. Toda, Jr. , G.R. No. 147188, 14
September 2004, 438 SCRA 290, 300, citing Commissioner of Internal Revenue v. CA,
327 Phil. 1, 33 (1996).
34. Commissioner of Internal Revenue v. Ayala Securities Corporation, G.R. No. L-29485, 31
March 1976, 70 SCRA 205, 209.
39. Caltex (Philippines), Inc. v. CA, G.R. No. 104781, 10 July 1998, 292 SCRA 273, 284-285.
40. Before it was amended by R.A. 9135 (An Act Amending Certain Provisions of P.D. 1464,
Otherwise Known as the TCC of The Philippines, as Amended, and for Other Purposes
[2001]).
43. See Parras v. Land Registration Commission, 108 Phil. 1142, 1146 (1960) and Phil. Packing
Corp. v. Coll. of Internal Rev., 100 Phil. 545, 553 (1956).
44. Dated April 29, 1994; rollo, pp. 49-51. CaATDE
51. Tan v. Bausch & Lomb, Inc. , G.R. No. 148420, 15 December 2005, 478 SCRA 115, 123-124,
citing Olsen and Co., v. Aldanese, 43 Phil. 259 (1922); San Miguel Brewery v. Magno, 128
Phil. 328 (1967).
52. Philippine National Bank v. Palma, G.R. No. 157279, 9 August 2005, 466 SCRA 307, 323,
citations omitted.
53. Minutes of the Deliberations in the House of Representatives Committee on Ways and
Means, October 21, 1992, pp. I-2 to I-3.
* As replacement of Justice Adolfo S. Azcuna who is on of cial leave per Special Order No.
510. cdasia2005
DECISION
REYES , J : p
This appeal by Petition for Review on Certiorari 1 under Rule 45 of the Rules of
Court seeks to reverse and set aside the Decision 2 dated November 16, 2006 and the
Resolution 3 dated November 29, 2007 of the Court of Appeals (CA) in CA-G.R. SP No.
83282 a rming the Decision 4 dated November 18, 2003 and the Resolution 5 dated
March 22, 2004 of the Court of Tax Appeals (CTA) in CTA Case No. 6406, which
recalled and set aside the Warrant of Seizure and Detention (WSD) issued against the
vessel M/V Gypsy Queen and its cargo of 15,000 bags of rice. CAIHTE
The Facts
Triton Shipping Corporation (TSC) is the owner of M/V Gypsy Queen. The vessel
was loaded with 15,000 bags of rice shipped by Metro Star Rice Mill (Metro Star) of
Bocaue, Bulacan and consigned to William Singson (Singson). On September 5, 2001,
the elements of the Philippine Navy (PN) apprehended and seized the vessel and its
entire rice cargo somewhere in Caubayan Island, Cebu, for allegedly carrying suspected
smuggled rice. 6
During the inspection, the master of M/V Gypsy Queen presented the following
documents: (1) Master's Oath of Safe Departure dated August 14, 2001; (2) Coasting
Manifest indicating that the vessel was loaded with 15,000 bags of rice with Metro Star
of Bocaue, Bulacan as the shipper and Raybrig Marketing of Cebu City/Singson as
consignee; and (3) Roll Book showing that the vessel was cleared by the Philippine
Ports Authority (PPA), North Harbor O ce, Manila on August 14, 2001 and received by
a certain PO3 Fernandez of the Philippine Coast Guard (PCG) in Manila. 7
However, the PCG Station Commander in Manila, Jose G. Cabilo issued a
Certi cation stating that: (1) there was no vessel named M/V Gypsy Queen that logged
in or submitted any Master's Oath of Safe Departure on August 15, 2001; and (2) no
personnel by the name of PO3 Fernandez of the PCG was detailed at Pier 18, Mobile
Team, on August 15, 2001. 8 These matters were then conveyed to the District
Collector of Customs (DCC) by Captain Alvin G. Urbi (Capt. Urbi), Commander, Naval
Forces Central, PN in his letter dated September 12, 2001. Thereafter, Special
Investigator Alejandro M. Bondoc of the Bureau of Customs (BOC) in Cebu, issued a
memorandum dated September 17, 2001 recommending the issuance of a WSD
against the vessel and the 15,000 bags of rice loaded therein. 9
Accordingly, on September 18, 2001, the DCC of Port of Cebu, issued a WSD
against M/V Gypsy Queen and the 15,000 bags of rice for violating the Tariff and
Customs Code (TCC). Afterwards, forfeiture proceedings were conducted where both
parties submitted their respective evidence. 1 0
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On December 18, 2001, the DCC rendered a Decision 1 1 in favor of TSC and
Singson (respondents) and ordered the release of M/V Gypsy Queen and the said cargo
on the ground that there was no evidence to establish a cause of action, thus:
WHEREFORE, premises considered, and by virtue of the powers vested in
me by law, the [WSD] in the above[-]captioned case is hereby ordered RECALLED
and SET ASIDE. Accordingly, the subject 15,000 bags of rice and the vessel
"M/V GYPSY QUEEN" are ordered RELEASES [sic] to their respective claimants
or their duly authorized representative upon proper identi cation and
compliance with applicable laws, rules and regulations. 1 2
On December 19, 2001, the DCC issued a 1st Indorsement of the said decision
and forwarded the entire records of the case to the Commissioner of Customs
(petitioner), through its Legal Service, BOC, Manila. On January 29, 2002, the BOC, Legal
Service referred the decision of the DCC for approval to the petitioner. 1 3
On March 11, 2002, the petitioner issued the 2nd Indorsement 1 4 reversing and
setting aside the decision of the DCC and ordered the forfeiture of M/V Gypsy Queen
and its cargo. DETACa
The respondents led a motion for reconsideration of the said indorsement but
the same was denied. On March 12, 2002, the respondents led a petition for review 1 5
with the CTA, and the petitioner submitted its Comment 1 6 on April 16, 2002. 1 7
On November 18, 2003, the CTA reversed and set aside 1 8 the 2nd Indorsement
issued by the petitioner and adopted the ndings of the DCC. In arriving at the said
decision, the CTA found that the documents submitted by the respondents were
su cient to prove that the 15,000 bags of rice apprehended on board M/V Gypsy
Queen were locally sourced and were the same rice that were withdrawn from the
National Food Authority (NFA) of Zambales. 1 9
Undaunted, the petitioner moved for reconsideration 2 0 but it was denied; 2 1
hence, it filed a petition for review 2 2 under Rule 43 before the CA.
On November 16, 2006, the CA a rmed the CTA's decision on the ratiocination
that the certi cation issued by PCG Station Commander in Manila cannot create a
presumption that M/V Gypsy Queen was involved in an illegal activity in violation of the
TCC. The said certi cation standing alone and by itself cannot prove the alleged
violation of the TCC. The record clearly showed that the vessel originated and sailed
from Manila to Cebu and that the 15,000 bags of rice on board the vessel were not
imported but locally purchased or sourced from NFA Zambales. 2 3 More so, the CA
expressly pointed out that: aDSIHc
1.3 That [Capt. Urbi], Commander, Naval Forces Central, [PN], in his
letter to the [DCC] of Cebu dated 12 September 2001, stated among others, that
veri cation made by his o ce with the O ce of the Station Commander, Coast
Guard Station, Manila, show that there was no vessel named MV "Gypsy Queen"
that logged-in or submitted any Master's Oath of Safe Departure on 15 August
2001. It also found that no personnel by the name [of] PO3 Fernandez, PCG, was
detailed at Pier 18, Mobile Team on said date. 2 9
This judicial admission, according to the petitioner, is more than enough to
establish that the rice shipment was illegally transported. 3 0
Clearly, this evidence does not su ce. The said certi cation is not su cient to
prove that the respondents violated the TCC. A reading of the said certi cation plainly
shows that if there is something which was admitted, it is nothing more than the fact
that Capt. Urbi sent a communication to the DCC of Cebu stating the information that
he gathered from the PCG Station Commander in Manila, and not the truthfulness or
veracity of those information.
The certi cation presented by the petitioner does not reveal any kind of
deception committed by the respondents. Such certi cation is not adequate to support
the proposition sought to be established which is the commission of fraud. It is
erroneous to conclude that the 15,000 bags of rice were smuggled simply because of
the said certi cation which is not conclusive and cannot overcome the documentary
evidence of the respondents showing that the subject rice was produced and acquired
locally.
Moreso, at the time the vessel and its cargo were seized on September 25, 2001,
the elements of the PN never had a probable cause that would warrant the ling of the
seizure proceedings. In fact, the petitioner ordered the forfeiture of the rice cargo and
its carrying vessel on the mere assumption of fraud. Notably, the 2nd Indorsement
issued by the petitioner failed to clearly indicate any actual commission of fraud or any
attempt or frustration thereof. cSEDTC
The Court has constantly pronounced that the policy is to place no unnecessary
hindrance on the government's drive, not only to prevent smuggling and other frauds
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upon Customs, but more importantly, to render effective and e cient the collection of
import and export duties due the State to enable the government to carry out the
functions it has been instituted to perform. 3 1
Nonetheless, the TCC requires the presence of probable cause before any
proceeding for seizure and/or forfeiture is instituted. The relevant provision governing
the present case is Section 2535 which provides as follows:
Sec. 2535. Burden of Proof in Seizure and/or Forfeiture. — In all
proceedings taken for the seizure and/or forfeiture of any vessel, vehicle,
aircraft, beast or articles under the provisions of the tariff and customs laws, the
burden of proof shall lie upon the claimant: Provided, That probable cause shall
be rst shown for the institution of such proceedings and that seizure and/or
forfeiture was made under the circumstances and in the manner described in
the preceding sections of this Code. SDAaTC
From the foregoing, it is clear that the respondents had su ciently established
that the 15,000 bags of rice were of local origin and there were no other circumstances
that would indicate that the same were fraudulently transported into the Philippines. As
such, the release of the rice cargo and its carrying vessel is warranted. HSAcaE
WHEREFORE , the petition is DENIED . The Decision dated November 16, 2006
and the Resolution dated November 29, 2007 of the Court of Appeals in CA-G.R. SP No.
83282 are AFFIRMED .
SO ORDERED.
Velasco, Jr., Perez and Jardeleza, JJ., concur.
Peralta, * J., is on official leave.
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Footnotes
* On official leave.
1. Rollo, pp. 19-34.
2. Penned by Associate Justice Isaias P. Dicdican, with Associate Justices Romeo F. Barza
and Priscilla Baltazar-Padilla concurring; id. at 36-43.
3. Id. at 44.
4. Penned by Associate Judge Lovell R. Bautista, with Presiding Judge Ernesto D. Acosta and
Associate Judge Juanito C. Castañeda, Jr. concurring; id. at 97-106.
5. Id. at 115.
6. Id. at 36-37.
7. Id. at 37.
8. Id.
9. Id.
10. Id. at 37-38.
11. Id. at 45-60.
12. Id. at 59-60.
13. Id. at 38.
14. Id. at 61.
15. Id. at 62-85.
16. Id. at 86-95.
17. Id. at 39.
18. Id. at 97-106.
19. Id. at 104.
20. Id. at 107-113.
21. Id. at 115.
22. Id. at 116-131.
23. Id. at 40-41.
24. Id. at 42.
25. Id. at 194-199.
26. Id. at 44.
27. Id. at 26.
28. Filinvest Development Corporation v. Commissioner of Internal Revenue , 556 Phil. 439,
446 (2007).
29. Rollo, p. 27.
30. Id.
31. Agriex Co., Ltd. v. Villanueva , G.R. No. 158150, September 10, 2014, 734 SCRA 533, 555-
556, citing Subic Bay Metropolitan Authority v. Rodriguez, et al. , 633 Phil. 196, 211
(2010).
32. See M/V "Don Martin" Voy 047 and its Cargoes of 6,500 Sacks of Imported Rice, Palacio
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Shipping, Inc., and Leopoldo "Junior" Pamulaklakin v. Hon. Secretary of Finance,
BOC, and the District Collector of Cagayan De Oro City, G.R. No. 160206, July 15,
2015.
33. Rollo, pp. 103-104.
DECISION
PEREZ , J : p
Before the Court is a Petition for Review on Certiorari seeking to reverse and set
aside the 13 May 2010 Decision 1 and the 22 February 2011 Resolution 2 rendered by
the Court of Tax Appeals (CTA) Former En Banc in C.T.A. EB No. 472 which dismissed
petitioner's petition, and accordingly af rmed with modi cation as to the additional
imposition of legal interest the 19 June 2008 Decision 3 of the CTA Former First
Division (CTA in Division) ordering petitioner to pay the amount of P936,899,883.90,
representing the total dutiable value of its 1996 crude oil importation, which was
considered as abandoned in favor of the government by operation of law.
The Facts
The factual antecedents of the case are as follows:
On 16 April 1996, Republic Act (R.A.) No. 8180, 4 otherwise known as the
"Downstream Oil Industry Deregulation Act of 1996" took effect. It provides, among
others, for the reduction of the tariff duty on imported crude oil from ten percent (10%)
to three percent (3%). The particular provision of which is hereunder quoted as follows:
Section 5. Liberalization of Downstream Oil Industry
and Tariff Treatment. — . . .
b) Any law to the contrary notwithstanding and starting
with the effectivity of this Act, tariff shall be imposed and
collected on imported crude oil at the rate of three percent (3%)
and imported re ned petroleum products at the rate of seven
percent (7%), except fuel oil and LPG, the rate for which shall be
the same as that for imported crude oil Provided, That beginning
on January 1, 2004 the tariff rate on imported crude oil and
re ned petroleum products shall be the same: Provided, further,
That this provision may be amended only by an Act of Congress.
Prior to its effectivity, petitioner's importation of 1,979,674.85 U.S. barrels of
Arab Light Crude Oil, thru the Ex MT Lanistels, arrived on 7 April 1996 nine (9) days
earlier than the effectivity of the liberalization provision. Within a period of three days
thereafter, or speci cally on 10 April 1996, said shipment was unloaded from the
carrying vessels docked at a wharf owned and operated by petitioner, to its oil tanks
located at Batangas City.
Subsequently, petitioner led the Import Entry and Internal Revenue Declaration
and paid the import duty of said shipment in the amount of P11,231,081.00 on 23 May
1996.
More than four (4) years later or on 1 August 2000, petitioner received a demand
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letter 5 dated 27 July 2000 from the Bureau of Customs (BOC), through the District
Collector of Batangas, assessing it to pay the de ciency customs duties in the amount
of P120,162,991.00 due from the aforementioned crude oil importation, representing
the difference between the amount allegedly due (at the old rate of ten percent (10%) or
before the effectivity of R.A. No. 8180) and the actual amount of duties paid by
petitioner (on the rate of 3%).
CAIHTE
In reply thereto, petitioner sent a letter dated 4 January 2002 1 4 to the BOC
Deputy Commissioner and expressed that it had already responded to the aforesaid
demand letter through the letters dated 7 November 2001 and 3 December 2001 sent
to respondent and to the Director of Legal Service of the BOC, respectively.
On 11 April 2002, the BOC led a civil case for collection of sum of money
against petitioner, together with Caltex Philippines, Inc. as co-party therein, docketed as
Civil Case No. 02103239, before Branch XXV, Regional Trial Court (RTC), of the City of
Manila. 1 5
Consequently, on 27 May 2002, petitioner led with the Court of Tax Appeals
(CTA) a Petition for Review, raf ed to the Former First Division (CTA in Division), and
docketed as C.T.A. Case No. 6485, upon consideration that the civil complaint led in
the RTC of Manila was the final decision of the BOC on its protest. 1 6
Respondent led on 2 August 2002 a motion to dismiss the said petition raising
lack of jurisdiction and failure to state a cause of action as its grounds, which the CTA
in Division denied in the Resolution dated 17 January 2003. Likewise, respondent's
motion for reconsideration led on 14 February 2003 was denied on its 16 June 2003
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Resolution. 1 7
Subsequently, respondent, through the Of ce of the Solicitor General, led on 13
August 2003 before the Court of Appeals (CA) a Petition for Certiorari and Prohibition
with Prayer for the Issuance of a Temporary Restraining Order and Writ of Preliminary
Injunction, docketed as CA-G.R. SP No. 78563, praying for the reversal and setting aside
of the CTA in Division's Resolutions dated 17 January 2003 and 16 June 2003. 1 8
In the interim, respondent led his Answer to the petition in C.T.A. Case No. 6485
on 20 October 2003 which reiterated the lack of jurisdiction and failure to state a cause
of action. Thereafter, trial on the merits ensued.
On 15 February 2007, the Former First Division of the CA dismissed respondent's
petition in CA-G.R. SP No. 78563. Similarly, respondent's motion for reconsideration of
the 15 February 2007 Decision was denied in its 24 July 2007 Resolution. 1 9
The Ruling of the CTA in Division
In a Decision dated 19 June 2008, 2 0 the CTA in Division ruled to dismiss the
Petition for Review on C.T.A. Case No. 6485 for lack of merit and accordingly ordered
petitioner to pay the entire amount of P936,899,883.90 2 1 representing the total
dutiable value of the subject shipment of Arab Light Crude Oil on the ground of implied
abandonment pursuant to Sections 1801 and 1802 of the TCCP.
Relevant thereto, the CTA in Division made the following factual and legal
ndings: (a) that petitioner led the speci ed entry form (Import Entry and Internal
Revenue Declaration) beyond the 30-day period prescribed under Section 1301 of the
TCCP; 2 2 (b) that for failure to le within the aforesaid 30-day period, the subject
importation was deemed abandoned in favor of the government in accordance with
Sections 1801 and 1802 of the TCCP; 2 3 (c) that petitioner's excuses in the delay of
ling its Import Entry and Internal Revenue Declaration were implausible; 2 4 (d) that
since the government became the owner of the subject shipment by operation of law,
petitioner has no right to withdraw the same and should be held liable to pay for the
total dutiable value of said shipment computed at the time the importation was
withdrawn from the carrying vessel pursuant to Section 204 of the TCCP; 2 5 (e) that
there was fraud in the present case considering that "the District Collector, in
conspiracy with the officials of Caltex and Shell acted without authority or [with] abused
(sic) [of] authority by giving undue bene ts to the importers by allowing the processing,
payment and subsequent release of the shipments to the damage and prejudice of the
government who, under the law is already the owner of the shipments . . .;" thus,
prescription under Section 1603 of the TCCP does not apply herein; 2 6 and (f) that the
ndings of facts of administrative bodies charged with their speci c eld of expertise,
are afforded great weight by the courts; and in the absence of substantial showing that
such ndings are made from an erroneous estimation of the evidence presented, they
are conclusive, and in the interest of stability of the government structure, should not be
disturbed. 2 7
On 24 February 2009, the CTA in Division denied petitioner's Motion for
Reconsideration for lack of merit citing Section 5 (b), 2 8 Rule 6 of the 2005 Revised
Rules of the CTA, as sole legal basis in considering the Memorandum dated 2 February
2001 issued by the Customs Intelligence & Investigation Service, Investigation &
Prosecution Division (CIIS-IPD) of the BOC as evidence to establish fraud, and the case
o f Chevron Phils., Inc. v. Commissioner of the Bureau of Customs , 2 9 as the
jurisprudential foundation therein. 3 0
Petitioner explains that, in issuing Customs Administrative Order (CAO) No. 5-93
dated 1 September 1993 and Customs Memorandum Order (CMO) No. 15-94 dated 29
April 1994, respondent even recognized the signi cance of the due notice requirement
before any goods may be deemed impliedly abandoned articles. Such notice
purportedly refers to notice to le entry, and not notice of arrival as mistakenly
interpreted by the CTA Former En Banc. Thus, in the absence of such notice in the
present case, there could have been no implied abandonment in favor of the
government of the said imported crude oil by petitioner pursuant to Section 1801 of
the TCCP.
Lastly, petitioner believes that af rmance of the ruling a quo, would be
tantamount to a clear violation of international laws, i.e. the Revised Kyoto Convention,
which generally prohibit the imposition of substantial penalties for errors when there is
no fraud or gross negligence on the part of an importer. Consequently, such current and
reasonable trend in the international and uniform application of customs rules and laws
shows how unreasonable, unjust, con scatory, iniquitous and incongruent the
disposition made against petitioner in the instant case; hence, the very need to set
aside the assailed Decision and Resolution of the CTA Former En Banc in C.T.A. EB No.
472, in order to prevent the creation of a legal precedent which contravenes State
commitments.
Respondent, on the other hand, counters that petitioner's failure to le its Import
Entry and Internal Revenue Declaration within the non-extendible period of 30 days was
fatal to its cause of action. Resultantly, the subject imported crude oil is deemed
abandoned in favor of the government by reason of such non- ling of the imported
entries within said prescriptive period. 3 8
Our Ruling
The submissions of the parties to this case bring to fore two timelines and the
consequences of the lapse of the prescribed periods. Petitioner appears to be covered
by Section 1801, in relation to Section 1301, which respectively states:
Sec. 1801. Abandonment, Kinds and Effects of . — An
imported article is deemed abandoned under any of the following
circumstances:
(a) When the owner, importer or consignee of the imported article expressly
signi es in writing to the Collector of Customs his intentions to abandon;
or
(b) When the owner, importer, consignee or interested party after due notice, fails
to le an entry within thirty (30) days, which shall not be extendible,
from the date of discharge of the last package from the vessel or aircraft,
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or having led such entry, fails to claim his importation within fteen (15)
days which shall not likewise be extendible, from the date of posting of the
notice to claim such importation. (Emphasis supplied)
Any person who abandons an article or who fails to claim
his importation as provided for in the preceding paragraph shall
be deemed to have renounced all his interests and property rights
therein.
xxx xxx xxx
Sec. 1301. Persons Authorized to Make Import Entry . —
Imported articles must be entered in the customhouse at the port
of entry within thirty (30) days, which shall not be extendible, from
the date of discharge of the last package from the vessel or
aircraft either (a) by the importer, being holder of the bill of lading,
(b) by a duly licensed customs broker acting under authority from
a holder of the bill or (c) by a person duly empowered to act as
agent or attorney-in-fact for each holder: Provided, That where the
entry is led by a party other than the importer, said importer shall
himself be required to declare under oath and under the penalties
of falsi cation or perjury that the declarations and statements
contained in the entry are true and correct: Provided, further, That
such statements under oath shall constitute prima facie evidence
of knowledge and consent of the importer of violations against
applicable provisions of this Code when the importation is found
to be unlawful.
Tersely put, when an importer after due notice fails to le an Import Entry and Internal
Revenue Declaration within an unextendible period of thirty (30) days from the
discharge of the last package, the imported article is deemed abandoned in favor of the
government.
Upon the other hand, respondent is covered in a manner likewise mandatory, by
the provisions of Section 1603 which states that:
Sec. 1603. Finality of Liquidation. — When articles have
been entered and passed free of duty or nal adjustment of duties
made, with subsequent delivery, such entry and passage free of
duty or settlement of duties will, after the expiration of one
year, from the date of the nal payment of duties, in the absence
of fraud or protest, be nal and conclusive upon all parties, unless
the liquidation of the import entry was merely tentative. (Emphasis
supplied) SDAaTC
We rule that in this case, Section 1603 is squarely applicable. The nality of
liquidation which arises one (1) year after the date of the nal payment of duties, which
is in this case 23 May 1996, renders inoperable the provisions of Section 1801.
Discussion
At the outset, it bears emphasis that the determination of the issues presented in
this case requires a comprehensive assessment of the pronouncements made in the
case of Chevron Philippines, Inc. v. Commissioner of the Bureau of Customs ; 3 9 thus,
we nd it imperative to reproduce hereunder the points there considered which are
germane to the controversy under review.
THE IMPORTATION WERE ABANDONED
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IN FAVOR OF THE GOVERNMENT
The law is clear and explicit. It gives a non-
extendible period of 30 days for the importer to le the
entry which we have already ruled pertains to both the IED
and IEIRD. Thus under Section 1801 in relation to Section
1301, when the importer fails to le the entry within the
said period, he "shall be deemed to have renounced all his
interests and property rights" to the importations and
these shall be considered impliedly abandoned in favor of
the government :
Section 1801. Abandonment, Kinds and Effect of. —
xxx xxx xxx
Any person who abandons an article or who fails to
claim his importation as provided for in the preceding paragraph
shall be deemed to have renounced all his interests and
property rights therein.
According to petitioner, the shipments should not be
considered impliedly abandoned because none of its overt acts
( ling of the IEDs and paying advance duties) revealed any
intention to abandon the importations.
Unfortunately for petitioner, it was the law itself
which considered the importation abandoned when it
failed to le the IEIRDs within the allotted time. Before it
was amended, Section 1801 was worded as follows:
Sec. 1801. Abandonment, Kinds and Effect of. — Abandonment
is express when it is made direct to the Collector by the interested
party in writing and it is implied when, from the action or
omission of the interested party, an intention to abandon
can be clearly inferred. The failure of any interested party to
le the import entry within fteen days or any extension thereof
from the discharge of the vessel or aircraft, shall be implied
abandonment. An implied abandonment shall not be effective
until the article is declared by the Collector to have been
abandoned after notice thereof is given to the interested
party as in seizure cases.
Any person who abandons an imported article renounces
all his interests and property rights therein.
After it was amended by RA 7651, there was an indubitable shift in
language as to what could be considered implied abandonment :
Section 1801. Abandonment, Kinds and Effect of. — An imported
article is deemed abandoned under any of the following
circumstances:
a. When the owner, importer, consignee of the imported article expressly
signi es in writing to the Collector of Customs his intention to
abandon;
b . When the owner, importer, consignee or interested party after
due notice, fails to le an entry within thirty (30) days,
which shall not be extendible, from the date of discharge of
the last package from the vessel or aircraft . . . .
From the wording of the amendment, RA 7651 no
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longer requires that there be other acts or omissions
where an intent to abandon can be inferred. It is enough
that the importer fails to le the required import entries
within the reglementary period. The lawmakers could have
easily retained the words used in the old law (with respect to the
intention to abandon) but opted to omit them. It would be error on
our part to continue applying the old law despite the clear changes
introduced by the amendment. 4 0 (Emphasis and underlining
supplied) acEHCD
Based on the foregoing, it appears that in the Chevron case, the Court simply
applied the clear provision of Section 1801 (b), in relation to Section 1301, of the TCCP,
as amended, which categorically provides that mere failure on the part of the owner,
importer, consignee or interested party, after due notice, to le an entry within a non-
extendible period of 30 days from the date of discharge of the last package (shipment)
from the vessel, would mean that such owner, importer, consignee or interested party is
deemed to have abandoned said shipment. Consequently, abandonment of such
shipment (imported article) constitutes renouncement of all his interests and property
rights therein.
The rationale of strict compliance with the non-extendible period of 30 days
within which import entries (IEIRDs) must be led for imported articles are as follows:
(a) to prevent considerable delay in the payment of duties and taxes; (b) to compel
importers to le import entries and claim their importation as early as possible under
the threat of having their importation declared as abandoned and forfeited in favor of
the government; (c) to minimize the opportunity of graft; (d) to compel both the BOC
and the importers to work for the early release of cargo, thus decongesting all ports of
entry; (e) to facilitate the release of goods and thereby promoting trade and commerce;
and (f) to minimize the pilferage of imported cargo at the ports of entry. 4 1 The
aforesaid policy considerations were signi cant to justify a rm observance of the
aforesaid prescriptive period.
It was observed that it is the law itself that considers an imported article
abandoned for failure to le the corresponding Import Entry and Internal Revenue
Declaration within the allotted time. No acts or omissions to establish intent to
abandon is necessary to effectuate the clear provision of the law. Since Section 1801
(b) does not provide any quali cation as to what may have caused such failure in ling
said import entry within the prescriptive period in order to render the imported article
abandoned, this Court shall likewise make no distinction and plainly apply the law as
clearly stated. Hence, upon the lapse of the aforesaid non-extendible period of 30 days,
without the required import entry led by the importer within said period, its imported
article is therefore deemed abandoned.
Moreover, Section 1802 of the same Code states to whom said abandoned
imported articles belong as a consequence of such renouncement by the owner,
importer, consignee or interested party. It provides:
Sec. 1802. Abandonment of Imported Articles. An
abandoned article shall ipso facto be deemed the property of
the Government and shall be disposed of in accordance with the
provisions of this Code.
xxx xxx xxx (Emphasis supplied)
In the Chevron case, we explained that the term "ipso facto" is de ned as "by the
very act itself" or "by mere act." Hence, there is no need for any af rmative act on the
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part of the government with respect to abandoned imported articles given that the law
itself categorically provides that said articles shall ipso facto be deemed the property
of the government. By using the term "ipso facto" in Section 1802 of the TCCP, as
amended by R.A. No. 7651, 4 2 the legislature removed the need for abandonment
proceedings and for any declaration that imported articles have been abandoned
before ownership thereof can be effectively transferred to the government. In other
words, ownership over the abandoned imported articles is transferred to the
government by operation of law.
The rulings in Chevron was generously applied by CTA Former En Banc in the
present case. Thus:
Petitioner Shell's failure to le the required entries,
within the prescribed non-extendible period of thirty (30)
days from the date of discharge of the last package from
the carrying vessel, constitutes implied abandonment of
its oil importation. This means, that from the precise
moment that the non-extendible thirty-day period had
lapsed, the abandoned shipment was deemed the property
of the government. Therefore, when petitioner withdrew the oil
shipment for consumption, it appropriated for itself properties
which already belonged to the government. . . .
Petitioner Shell's contention that the belated ling of its
import entries is justi ed due to the late arrival of its
import documents, which are necessary for the proper
computation of the import duties, cannot be sustained. SDHTEC
Petitioner insists that, in the absence of fraud, the right of respondent to claim
against it has already prescribed considering that an action involving the entry and
payment of customs duties involving imported articles demanded after a period of one
(1) year from the date of nal payment of duties, shall not succeed, pursuant to the
clear provision of Section 1603. It therefore contends that even if the subject imported
crude oil of petitioner is by law deemed abandoned by operation of law under Sections
1801 (b), in relation to Section 1301, of the Code, respondent's right to claim
abandonment had already lapsed since fraud is wanting in this case. On the other hand,
respondent counters that since there was a factual nding of fraud committed by
petitioner in the ling of its Import Entry and Internal Revenue Declaration beyond the
30-day period prescribed under Section 1301 of the TCCP, the 1-year prescriptive
period under Section 1603 therefore does not apply.
At this point, it bears emphasis that in a petition for review on certiorari under
Rule 45 of the Rules of Court, only questions of law may be raised. 4 6 The Court is not a
trier of facts and does not normally undertake the re-examination of the evidence
presented by the contending parties during the trial of the case considering that the
ndings of facts of the CA are conclusive and binding on the Court 4 7 — and they carry
even more weight when the CA af rms the factual ndings of the trial court. 4 8
However, it is already a settled matter that, the Court had recognized several
exceptions to this rule, to wit: (1) when the ndings are grounded entirely on
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speculation, surmises or conjectures; (2) when the inference made is manifestly
mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when
the judgment is based on a misapprehension of facts; (5) when the findings of facts are
con icting; (6) when in making its ndings the Court of Appeals went beyond the
issues of the case, or its ndings are contrary to the admissions of both the appellant
and the appellee; (7) when the ndings are contrary to the trial court; (8) when the
ndings are conclusions without citation of speci c evidence on which they are based;
(9) when the facts set forth in the petition as well as in the petitioner's main and reply
briefs are not disputed by the respondent; (10) when the ndings of fact are
premised on the supposed absence of evidence and contradicted by the
evidence on record; and (11) when the Court of Appeals manifestly overlooked
certain relevant facts not disputed by the parties, which, if properly considered,
would justify a different conclusion. 4 9
Records of this case reveal that the CTA in Division in its 19 June 2008 Decision
5 0 made a pronouncement that there was indeed fraud committed by petitioner based
on the factual nding contained in the Memorandum dated 2 February 2001 issued by
Special Investigator II Domingo B. Almeda and Special Investigator III Nemesio C.
Magno, Jr. of the CIIS-IPD of the BOC. Consequently, since such memorandum made
such factual nding of fraud against petitioner, the court a quo ruled that prescription
does not set in even if respondent's claim was made beyond the 1-year reglementary
period.
Upon an assiduous review of the factual nding of fraud, we nd petitioner's
contention meritorious. Hence, the instant case falls among the exceptions to the
general rule previously mentioned which would require this Court's judicial prerogative
to review the court a quo's findings of fact.
Generally, fraud has been de ned as "the deliberate intention to cause damage or
prejudice. It is voluntary execution of a wrongful act, or a willful omission, knowing and
intending the effects which naturally and necessarily arise from such act or omission.
5 1 For fraud to exist, it must be intentional, consisting of deception willfully and
deliberately done or resorted to in order to induce another to give up some right. 5 2 It is
never presumed and the burden of proof to establish lies in the person making such
allegation since every person is presumed to be in good faith. 5 3 To discharge this
burden, fraud must be proven by clear and convincing evidence. 5 4 Also, fraud must be
alleged and proven as a fact where the following requisites must concur: (a) the fraud
must be established by evidence; and (b) the evidence of fraud must be clear and
convincing, and not merely preponderant. Upon failure to establish these two (2)
requisites, the presumption of good faith must prevail.
Section 3611 (c) of the TCCP, as amended, de nes the term fraud as the
occurrence of a "material false statement or act in connection with the transaction
which was committed or omitted knowingly, voluntarily and intentionally, as established
by clear and convincing evidence." Again, such factual nding of fraud should be
established based on clear, convincing, and uncontroverted evidence.
Relevant thereto, in the landmark case of Aznar v. Court of Tax Appeals , 5 5 we
explained the general concept of fraud as applied to tax cases in the following fashion:
TAIaHE
Indubitably, the matters which become nal and conclusive against all parties
include the timeliness of ling the import entry within the period prescribed by law, the
declarations and statements contained therein, and the payment or non-payment of
customs duties covering the imported articles by the owner, importer, consignee or
interested party. Since the primordial issue presented before us focuses on petitioner's
non-compliance in ling its Import Entry and Internal Revenue Declaration within a non-
extendible period of 30 days from the date of discharge of the last package from the
vessel, respondent may only look into it within a limited period of one (1) year in
accordance with the above-quoted provision.
In the case at bench, it is undisputed that petitioner led its IEIRD and paid the
remaining customs duties due on the subject shipment only on 23 May 1996. Yet, it
was only on l August 2000, or more than four (4) years later, that petitioner received a
demand letter from the District Collector of Batangas for the alleged unpaid duties
covering the said shipment. Thereafter, on 29 October 2001, or after more than ve (5)
years, petitioner received another demand letter from respondent seeking to collect for
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the entire dutiable value of the same shipment amounting to P936,899,855.90.
Consequently, applying the foregoing provision and considering that we have
determined already that there is no factual nding of fraud established herein, the
liquidation of petitioner's imported crude oil shipment became nal and conclusive on
24 May 1997, or exactly upon the lapse of the 1-year prescriptive period from the date
of payment of nal duties. As such, any action questioning the propriety of the entry
and settlement of duties pertaining to such shipment initiated beyond said date is
therefore barred by prescription.
Since time immemorial, this Court has consistently recognized and applied the
statute of limitations to preclude the Government from exercising its power to assess
and collect taxes beyond the prescribed period, and we intend to abide by our rulings
on prescription and to strictly apply the same in the case of petitioner; otherwise, both
the procedural and substantive rights of petitioner would be violated. After all,
prescription is a substantive defense that may be invoked to prevent stale claims from
being resurrected causing inconvenience and uncertainty to a person who has long
enjoyed the exercise. Thus, symptomatic of the magnitude of the concept of
prescription, this Court has elucidated that:
The law prescribing a limitation of actions for the collection
of the income tax is bene cial both to the Government and to its
citizens; to the Government because tax of cers would be obliged
to act promptly in the making of assessment, and to citizens
because after the lapse of the period of prescription
citizens would have a feeling of security against
unscrupulous tax agents who will always nd an excuse
to inspect the books of taxpayers, not to determine the
latter's real liability, but to take advantage of every
opportunity to molest peaceful, law-abiding citizens.
Without such legal defense taxpayers would furthermore
be under obligation to always keep their books and keep
them open for inspection subject to harassment by
unscrupulous tax agents. The law on prescription being a
remedial measure should be interpreted in a way conducive to
bringing about the bene cient purpose of affording protection to
the taxpayer within the contemplation of the Commission which
recommend (sic) the approval of the law. 7 3 (Emphasis supplied)
Basic is the rule that provisions of the law should be read in relation to other
provisions therein. A statute must be interpreted to give it ef cient operation and effect
as a whole avoiding the nulli cation of cognate provisions. Statutes are read in a
manner that makes it wholly operative and effective, consistent with the legal maxim ut
res magis valeat quam pereat. EATCcI
This maxim applied, we read Sections 1301, 1801, and 1802, together with
Section 1603 of the TCCP. Thus, should there be failure on the part of the owner,
importer, consignee or interested party, after due notice of the arrival of its shipment
(except in cases of knowledgeable owners or importers), to le an entry within the non-
extendible period of 30 days from the date of discharge of the last package (shipment)
from the vessel, such owner, importer, consignee or interested party is deemed to have
abandoned said shipment in favor of the government. As imperative, however, is the
strict compliance with Section 1603 of the TCCP, which should be read as we have
ruled. Any action or claim questioning the propriety of the entry and settlement of
duties pertaining to such shipment made beyond the 1-year prescriptive period from
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the date of payment of nal duties, is barred by prescription. In the present case, the
failure on the part of respondent to timely question the propriety of the entry and
settlement of duties by petitioner involving the subject shipment, renders such entry
and settlement of duties nal and conclusive against both parties. Hence, respondent
cannot any longer have any claim from petitioner. Sections 1301, 1801, and 1802 of the
TCCP have been rendered inoperable by reason of the lapse of the period stated in
Section 1603 of the same Code.
Indeed, if the prescriptive period of one year speci ed in Section 1603 of the
TCCP is not applied against the respondent, the reality that the shipment has been
unloaded from the carrying vessels to petitioner's oil tanks and that import duty in the
amount of P11,231,081.00 has been paid would be obliterated by the application of the
principle of deemed abandonment four years after the occurrence of the facts of
possession and payment, as a consequence of which application, the petitioner would
be made to pay the government the entire value of the shipment it had as vendee of the
shipper already paid.
WHEREFORE, the petition is GRANTED . Accordingly, the Decision dated 13 May
2010 and Resolution dated 22 February 2011 of the Court of Tax Appeals Former En
Banc in C.T.A. EB No. 472 are hereby REVERSED and SET ASIDE on the ground of
prescription.
No costs.
SO ORDERED.
Reyes, J., concurs.
Velasco, Jr., J., see concurring opinion.
Peralta, J., pls. see dissenting opinion.
Jardeleza, J., I join the dissent of J. Peralta
Separate Opinions
VELASCO, JR. , J., concurring :
I register my concurrence with the ponencia.
The Latin maxim stare decisis et non quieta movere means stand by the thing
and do not disturb the calm — a bar from any attempt at relitigating the same issues. It
requires that high courts must follow, as a matter of sound policy, their own
precedents, or respect settled jurisprudence absent compelling reason to do
otherwise. 1 As a recognized exception, the salutary doctrine cannot be invoked when
the facts and circumstances in the succeeding case have so changed as to have
robbed the old rule of significant application or justification.
There is truth to the claim that the instant case bears striking resemblance to
that of Chevron Philippines v. Commissioner of the Bureau of Customs (Chevron) . 2 As
observed by Associate Justice Diosdado M. Peralta (Justice Peralta) in his dissent: 3
. . . As in Chevron, the imported crude oil subject of the
present case arrived in the Philippines and was discharged from
the carrying vessels prior to the effectivity of RA 8180. The import
entries in both cases were led beyond the 30-day period required
under Section 1301 of the [Tariff and Customs Code of the
Philippines]. In fact, it is on the bases of the facts obtaining in
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these importations of petitioner and Chevron (then known as
Caltex Phils., Inc.) that only one civil suit for collection of the
dutiable value of the imported articles was led by the [Bureau of
Customs] against these two corporations as defendants. It is from
this factual backdrop and the ensuing demand by the [Bureau of
Customs] to collect the dutiable value of the importations that the
case of Chevron reached this Court and was ultimately decided in
favor of the [Bureau of Customs]. . . .
Notwithstanding these glaring similarities, it cannot hastily be concluded that
Chevron is on all fours with the case at bar; the two cases are diametrically
opposed insofar as the issue of fraud on the part of the importer is
concerned . While the Court's ruling in Chevron was that the existence of fraud therein
was suf ciently established, no clear and convincing evidence was presented herein to
justify arriving at the same conclusion.
Whether or not petitioner Pilipinas Shell Petroleum Corporation (Pilipinas Shell)
defrauded the Bureau of Customs (BOC) becomes pivotal in this case because of Sec.
1603 of the Tariff and Customs Code (TCC), to wit:
Section 1603. Finality of Liquidation. — When articles have
been entered and passed free of duty or nal adjustments of
duties made, with subsequent delivery, such entry and passage
free of duty or settlements of duties will, after the expiration
of one (1) year, from the date of the nal payment of
duties, in the absence of fraud or protest or compliance audit
pursuant to the provisions of this Code, be nal and conclusive
upon all parties , unless the liquidation of the import entry was
merely tentative. (emphasis added)
Pursuant to the above-quoted provision, the attendance of fraud would remove
the case from the ambit of the statute of limitations, and would consequently allow the
government to exercise its power to assess and collect duties even beyond the one-
year prescriptive period, rendering it virtually imprescriptible.
Exhaustively discussed by the ponencia was that no scintilla of proof was ever
offered in evidence by respondent Commissioner of Customs to reinforce the claim
that Pilipinas Shell acted in bad faith, then a fortiori, in a fraudulent manner, in its
settlement of duties on its imported crude oil. The February 2, 2001 Memorandum on
which the Court of Tax Appeals (CTA), both in division and en banc, chie y anchored the
nding of fraudulent intent was never formally offered, but was instead merely
included in the records of the proceedings before the Bureau of Customs. CAacTH
Petitioner protested the assessment but was denied by the District Collector.
Petitioner appealed the District Collector's decision to herein respondent
Commissioner of Customs.
Thereafter, on October 29, 2001, petitioner received from respondent a demand
letter for the payment of the amount of P936,899,885.90, representing the dutiable
value of the subject crude oil importation which was held to be abandoned for
petitioner's failure to file the required import entry on time.
On November 7, 2001, petitioner led a protest contending that the demand
letter has no factual and legal basis, and that such demand has already prescribed.
Subsequently, on April 11, 2002 the BOC filed a civil action for collection of a sum
of money against petitioner and Caltex Philippines, Inc., which also made crude oil
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importations like petitioner, for their refusal to pay the dutiable value of their
importations which they have consumed. 3
On May 27, 2002, petitioner led a petition for review with the Court of Tax
Appeals (CTA) questioning the BOC's demand letters which required petitioner to pay
de ciency customs duties as well as the dutiable value of its 1996 crude oil
importation. The case was raffled to the CTA First Division.
On June 19, 2008, the CTA First Division promulgated its Decision 4 dismissing
petitioner's petition for review for lack of merit. Petitioner's motion for reconsideration
was denied in a Resolution 5 issued by the CTA First Division on February 24, 2009.
Petitioner then filed a petition for review with the CTA Former En Banc.
On May 13, 2010, the CTA Former En Banc promulgated its Decision 6 dismissing
petitioner's petition for review and af rming with modi cation the CTA First Division's
assailed Decision and Resolution by imposing 6% interest on the sum awarded from the
date of promulgation until nality of the decision and 12% interest from nality of the
decision until full satisfaction.
Aggrieved, petitioner led a motion for reconsideration which was, however,
denied for lack of merit by the CTA Former En Banc in its Resolution 7 dated February
22, 2011.
Hence, the present petition for review on certiorari.
The basic issue that needs to be resolved in the instant petition is whether or not
respondent may still recover from petitioner the dutiable value of the latter's crude oil
importation which it has consumed despite its having been deemed abandoned by
operation of law.
T h e ponencia rules that "there being no evidence to prove that petitioner
committed fraud in belatedly ling its [Import Entry and Internal Revenue Declaration]
(IEIRD) within the 30-day period prescribed under Section 1301 of the [Tariff and
Customs Code of the Philippines] (TCCP), as amended, respondent's right to question
the propriety thereof and to collect the amount of the alleged de ciency customs
d ut ies, more so the entire value of the subject shipment, have already
prescribed." 8
I take exception to the above pronouncement as it is my considered view that it
runs counter to the pertinent provisions of the TCCP and of this Court's ruling in the
leading case of Chevron Philippines, Inc. v. Commissioner of the Bureau of Customs
(Chevron). 9
It bears stressing that the basic facts of the present case and those of Chevron,
which the Court follows as precedent, are practically the same. As in Chevron, the
imported crude oil subject of the present case arrived in the Philippines 1 0 and was
discharged from the carrying vessels prior to the effectivity of RA 8180. 1 1 The import
entries in both cases were led beyond the 30-day period required under Section 1301
of the TCCP. In fact, it is on the basis of the facts obtaining in these importations of
petitioner and Chevron (then known as Caltex Phils., Inc.) that only one civil suit for
collection of the dutiable value of the imported articles was led by the BOC against
these two corporations as defendants. It is from this factual backdrop and the ensuing
demand by the BOC to collect the dutiable value of the importations that the case of
Chevron reached this Court and was ultimately decided in favor of the BOC. Thus, since
the present case and the case of Chevron basically arise from the same factual
circumstances, it is the Court's duty to apply the ruling in Chevron to the present case.
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I n Chinese Young Men's Christian Association of the Philippine Islands v. Remington
Steel Corporation, 1 2 this Court ruled as follows: SaCIDT
It was also held in the same case that "[p]etitioner's failure to le the required
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entries within a non-extendible period of thirty days from date of discharge of the last
package from the carrying vessel constituted implied abandonment of its oil
importations. This means that from the precise moment that the non-extendible thirty-
day period lapsed, the abandoned shipments were deemed, ipso facto, (that is, they
became) the property of the government." 1 9
The term ipso facto is de ned as by the very act itself or by mere act. Probably a
closer translation of the Latin term would be by the fact itself. Thus, there was no
need for any affirmative act on the part of the government with respect to the
abandoned imported articles since the law itself provides that the abandoned
articles shall ipso facto be deemed the property of the government.
Ownership over the abandoned importation was transferred to the government by
operation of law under Section 1802 of the TCC[P], as amended by RA 7651.
Therefore, when petitioner withdrew the oil shipments for consumption, it
appropriated for itself properties which already belonged to the government.
Accordingly, it became liable for the total dutiable value of the shipments of
[its] imported crude oil. 2 0
It becomes apparent from the above discussions, that the issue of whether or
not an importer is guilty of fraud in the ling of its import entry is immaterial insofar as
its liability for the payment of the dutiable value of its abandoned importation is
concerned. As applied to the present case, petitioner becomes liable to pay the
dutiable value of its importation, regardless of whether or not it is guilty of fraud,
especially since it consumed or used its imported crude oil despite losing ownership
thereof. Thus, the CTA Former En Banc correctly held that:
As regards the issue on the existence of fraud, it should be
emphasized that fraud is not controlling in this case. Even in the
absence of fraud, petitioner Shell is still liable for the payment of
the dutiable value by operation of law. The liability of petitioner
Shell for the payment of the dutiable value of its imported crude
oil arose from the moment it appropriated for itself the said
importation, which were already a property of the government by
operation of law. Absence of fraud in this case would not exclude
petitioner Shell from the coverage of Sections 1810 and 1802 of
the TCCP. 2 1
The ponencia sustains petitioner's contention and rules that the provisions of
Sections 1301, 1801 and 1802 of the TCCP should be read in relation to Section 1603
to make the whole statute wholly operative and effective. I agree that a statute must be
read or construed as a whole or in its entirety and that all parts, provisions, or sections,
must be read, considered or construed together, and each must be considered with
respect to all others, and in harmony with the whole. 2 2 However, it would be error to
rely on petitioner's fallacious premise that, under Section 1603 of the TCCP, the
government's right to claim abandonment and recover the dutiable value of the
abandoned importation is dependent on whether or not it (petitioner) is guilty of fraud,
and its subsequent position that, if it is not guilty of fraud, the government's right to
claim abandonment will lapse after a period of one (1) year. How can the government's
right to claim abandonment lapse if the government's ownership over the abandoned
articles is already transferred to it by operation of law from the moment that petitioner
failed to le its import entry within the non-extendible 30-day period? In other words,
after the expiration of the 30-day period, the government, ipso facto, becomes the
owner of the abandoned articles and, being the owner, the government's exercise
of its rights of ownership over the abandoned imported article, which
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includes the right to recover the value of such abandoned article, which was
already consumed by the importer, is not conditioned upon any prior act or
proceeding nor is it subject to the prescriptive period provided under Section
1603.
Contrary to what has been stated in the ponencia, the government, in the present
case, is not exercising its power to assess and collect taxes. What it exercises is its
right of ownership over abandoned imported articles. AHDacC
Footnotes
1. Rollo, pp. 131-156; Penned by Associate Justice Olga Palanca-Enriquez with Presiding
Justice Ernesto D. Acosta, Associate Justices Juanito C. Castañeda, Jr., Lovell R.
Bautista and Erlinda P. Uy concurring.
2. Id. at 157-186; Penned by Associate Justice Juanito C. Castañeda, Jr. with Associate
Justices Erlinda P. Uy and Caesar A. Casanova concurring with a Dissenting Opinion
penned by Associate Justice Olga Palanca-Enriquez with Presiding Justice Ernesto D.
Acosta and Associate Justice Lovell R. Bautista concurring.
3. Id. at 341-353; Penned by Associate Justice Caesar A. Casanova with Presiding Justice
Ernesto D. Acosta and Associate Justice Lovell R. Bautista.
4. R.A. No. 8180 was declared unconstitutional in the consolidated cases of Tatad v. The Sec.
of the Dept. of Energy, 346 Phil. 321 (1997). However, the events and transactions
(importations) involved in the present case occurred when R.A. No. 8180 was still in
effect.
5. Rollo, p. 452.
6. Id. at 453-457.
7. Id. at 458-459.
8. Id. at 460-465.
9. Id. at 466.
10. Id. at 467-471.
16. Id.
17. Id. at 136-137.
18. Id. at 137.
19. Id.
20. Id. at 341-353.
21. Note that, as contained in the demand letters dated 29 October 2001 and 28 December
2001 sent by respondent to petitioner, the amount being collected was
P936,899,885.90.
22. Rollo, pp. 346-347.
26. Id. at 351-352; Citing pertinent portion of the Memorandum dated 2 February 2001 issued
by the Investigation and Prosecution Division (IPD) of the BOC.
27. Id. at 352.
28. SEC. 5. Answer. —
xxx xxx xxx
44. Chevron Phils., Inc. v. Commissioner of the Bureau of Customs, supra note 29 at 731-733.
45. Rollo, pp. 148-149.
46. Salcedo v. People, 400 Phil. 1302, 1304 (2000).
47. The Insular Life Assurance Co., Ltd. v. Court of Appeals, 472 Phil. 11, 22 (2004).
48. Borromeo v. Sun, 375 Phil. 595, 602 (1999).
49. The Insular Life Assurance Co., Ltd. v. Court of Appeals, supra note 47 at 22-23.
50. Rollo, pp. 341-353.
51. International Corporate Bank v. Guenco, 404 Phil. 353, 364 (2001).
52. Transglobe International, Inc. v. Court of Appeals, 361 Phil. 727, 739 (1999).
53. Astroland Developers, Inc. v. GSIS , 481 Phil. 724, 748 (2004).
57. Dizon v. CTA, 576 Phil. 111, 128 (2008); and Atlas Consolidated Mining and Dev't. Corp. v.
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Commissioner of Internal Revenue, 547 Phil. 332, 339 (2007); and Commissioner of
Internal Revenue v. Manila Mining Corp., 505 Phil. 650, 664 (2005).
58. An Act Creating the Court of Tax Appeals.
59. An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating Its Rank to
the Level of a Collegiate Court with Special Jurisdiction and Enlarging Its
Membership, Amending for the Purpose Certain Sections or Republic Act No. 1125, as
Amended, Otherwise Known as the Law Creating the Court of Tax Appeals, and for
Other Purposes.
60. 264 Phil. 753, 759 (1990).
61. Mato v. CA, 320 Phil. 344, 349 (1995).
62. Section 5(b), Rule 6 of the Revised Rules of the Court of Tax Appeals requires, among
others, the Commissioner of Customs, within ten days after his answer, to certify and
forward to the court all the records of the case in their possession. Failure to transmit
the records within the time prescribed herein or within the time allowed by law by the
court may constitute indirect contempt of court.
63. Supra note 57 at 131-132 citing Heirs of Pasag v. Parocha, 550 Phil. 571, 578-579 (2007).
64. People v. Tundag, 396 Phil. 873, 887 (2000).
65. Rep. of the Phils. v. CA, 194 Phil. 476, 495 (1981).
73. Rep. of the Philippines v. Ablaza, 108 Phil. 1105, 1108 (1960).
5. Decision, p. 30.
11. Chevron's and petitioner's importations were unloaded from the carrying vessels three (3)
days after their arrival.
12. Supra note 2.
13. Id. at 337.
14. An Act to Revitalize and Strengthen the Bureau of Customs, Amending for the Purpose
Certain Sections of the Tariff and Customs Code of the Philippines, As Amended.
15. Emphasis ours.
16. Supra note 9, at 727.
17. Emphasis ours.
DECISION
BERSAMIN, J : p
The Court affirms the exclusive jurisdiction of the Bureau of Customs over
seizure cases within the Subic Freeport Zone.
The Case
This appeal by petition for review on certiorari is brought by Agriex Co., Ltd. to
reverse the decision promulgated on November 18, 2002 in CA-G.R. CV No.
67593, 1 whereby the Court of Appeals (CA) dismissed its petition for certiorari
and prohibition to nullify and set aside the Notice of Sale dated October 18, 2001
issued by respondent Billy C. Bibit as the Collector of Customs in the Port of
Subic.
Antecedents
On July 19, 2001, the petitioner, a foreign corporation whose principal office was
in Bangkok, Thailand, entered into a contract of sale with PT. Gloria Mitra
Niagatama International of Surabaya, Indonesia (PT. Gloria Mitra) for 180,000
bags (or 9,000 metric tons) of Thai white rice. 2 Later on, it entered into another
contract of sale with R&C Agro Trade of Cebu City (R&C Agro Trade) for 20,000
bags of Thai white rice. On July 27, 2001, it chartered the vessel MV Hung Yen to
transport the 200,000 bags of Thai white rice to the Subic Free Port for
transshipment to their designated consignees in the Fiji Islands and Indonesia
(for the 180,000 bags), and in Cebu City (for the 20,000 bags). 3 The MV Hung
Yen left Bangkok, Thailand on August 15, 2001 and arrived at the Subic Free Port
on August 20, 2001 with the inward foreign manifest indicating the final
destinations of the shipment. However, the Sea Port Department of the Subic
Bay Metropolitan Authority (SBMA) allowed the vessel to berth only 22 days
later, or on September 11, 2001. SBMA advised the vessel agent to secure from
the National Food Authority (NFA) an amendment of the import permit issued in
favor of R&C Agro Trade to change the discharging port from the Port of Cebu to
the Port of Subic. CDAHIT
Due to the delay in the berthing and unloading of the cargo from the vessel, the
petitioner, through its agent in Subic, applied for a vessel exit clearance to allow
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the MV Hung Yen to sail for the Labuan Free Port in Malaysia. On August 24,
2001, the Bureau of Customs issued a Clearance of Vessel to a Foreign Port,
granting the petitioner's request to allow the MV Hung Yen and cargo to exit for
Malaysia. 4 Despite the issuance of the clearance, the MV Hung Yen did not set
sail for the Labuan Free Port on August 26, 2001.
On September 10, 2001, the petitioner requested permission from the Bureau of
Customs to unload the entire shipment of 200,000 bags of Thai white rice
because the MV Hung Yen must return to Vietnam. 5 Upon the recommendation
of Atty. James F. Enriquez and Atty. Clemente P. Heraldo, as indicated in their
After Mission Report dated September 4, 2001, 6 respondent Commissioner Titus
B. Villanueva issued his 1st Indorsement on September 11, 2001 directing
respondent Collector of Customs Billy C. Bibit to issue a Warrant of Seizure and
Detention (WSD) against the 20,000 bags of Thai white rice consigned to R&C
Agro Trade. 7
Accordingly, Collector Bibit issued WSD No. 2001-13 dated September 12, 2001
against the 20,000 bags of Thai white rice consigned to R&C Agro Trade
notwithstanding that no bag of rice had yet been unloaded from the vessel. 8
After the unloading, transfer and storage of the rice shipment at SBMA's
warehouse, Collector Bibit issued amended WSDs on September 27, 2001 to
cover the MV Hung Yen and the remaining 180,000 bags of Thai white rice
intended for transshipment. 9
On October 4, 2001, the petitioner filed with the Bureau of Customs in the Port
of Subic an Urgent Motion to Quash Warrant of Seizure, inclusive of WSD No.
2001-13 (20,000 bags consigned to R&C Agro Trade), WSD No. 2001-13A (MV
Hung Yen) and WSD No. 2001-13B (180,000 bags for transshipment). 10 cDIaAS
On October 26, 2001, Collector Bibit quashed WSD No. 2001-13A over the MV
Hung Yen on the ground that the vessel was not chartered or leased. 11
Pending hearing of the seizure proceedings vis-à-vis the rice shipments, Collector
Bibit issued a Notice of Sale on October 18, 2001, setting therein the auction sale
of the 200,000 bags of Thai white rice on November 22, 2001 and November 23,
2001. 12
The petitioner filed a Manifestation and Urgent Motion for Reconsideration on
October 19, 2001, but Collector Bibit did not act on the motion. 13
Consequently, the petitioner instituted the petition for certiorari and prohibition
in the CA on November 12, 2001 (with prayer for the issuance of a temporary
restraining order and/or writ of injunction), alleging grave abuse of discretion on
the part of the respondents for issuing the October 18, 2001 Notice of Sale
notwithstanding that they had no jurisdiction over the 180,000 bags of Thai
white rice intended for transshipment to other countries. 14
Accordingly, Commissioner Villanueva issued his memorandum dated November
19, 2001 directing Collector Bibit not to proceed with the scheduled auction of
the 180,000 bags of Thai white rice until further orders from his office. 15
On November 22, 2001, the CA issued a temporary restraining order enjoining
the respondents to desist from holding the scheduled public auction. 16
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The respondents did not file their Comment vis-à-vis the petition for certiorari
and prohibition. Instead, they filed a Manifestation and Motion dated December
3, 2001, whereby they prayed for the dismissal of the petition on the ground of
mootness due to Commissioner Villanueva's November 19, 2001 memorandum.
17 cSHATC
Let copies of this Order be furnished to all parties and offices concerned
for information and guidance.
SO ORDERED. 21
On February 20, 2002, the petitioner filed in the CA its Comment on the
respondents' Manifestation and Motion dated December 3, 2001, arguing that
the issue concerning the October 18, 2001 Notice of Sale had not been rendered
moot and academic but merely suspended; that it would move for the
reconsideration of the February 4, 2002 Consolidated Order of Commissioner
Villanueva; and that should its motion for reconsideration be denied, it would
elevate the issues relative to the injunctive relief to the Court of Tax Appeals
(CTA) by petition for certiorari. 22 aTCAcI
On April 2, 2002, the CA denied the respondents' Manifestation and Motion dated
December 3, 2001. 23
On July 22, 2002, Commissioner Antonio M. Bernardo, who had meanwhile
succeeded Commissioner Villanueva, released the 2nd Indorsement directing the
sale of the 180,000 bags of Thai white rice at public auction. 24 Accordingly,
District Collector Felipe Bartolome issued a Notice of Sale scheduling the public
auction on July 29, 2002 and July 30, 2002. 25 The public auction was reset to
August 5, 2002 and August 6, 2002, however, following the CA's promulgation of
its resolution on July 29, 2002 granting the petitioner's motion for the issuance
of a writ of preliminary injunction. 26
Eventually, the auction sale went on as scheduled on August 5, 2002 and August
6, 2002, and the proceeds amounting to P116,640,000.00 were deposited in the
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Land Bank of the Philippines, Subic Branch, under Bureau of Customs Trust Fund
II Account No. 1572100800.
Judgment of the CA
On November 18, 2002, the CA rendered its assailed judgment on the petition for
certiorari and prohibition, viz.:
Although it is true that the Port of Subic is a free zone, being a portion of
the Subic Special Economic Zone, and as such, it shall be operated and
managed as a separate customs territory ensuring free flow or
movement of goods and capital within, into and exported out of the Subic
Special Economic Zone under Republic Act No. 2779 (sic), particularly
Section 12 thereof, yet, when probable cause is shown that the foreign
goods are considered as contraband or smuggled goods, the
Commissioner of Customs has the primary jurisdiction to have the goods
seized through the issuance of a warrant of seizure and detention order,
which is the situation obtaining in this instant case because when public
respondent Collector Billy C. Bibit as District Collector of Customs, Port of
Subic, issued an amended warrant of seizure and detention order S.I. No.
2001-13-B, dated September 27, 2001 to include in the seizure
proceeding the subject 180,000 bags of rice, it was done due to the
information supplied by the Directorate General of Customs and Excise
Directorate of Prevention and Investigation of the Ministry of Finance of
the Republic of Indonesia and the information obtained from the Director
for Enforcement of the Fiji Revenue and Customs Authorities of Fiji Island
Customs Service, that the alleged consignees in Indonesia are not actually
existing and that B.I. Naidu and Sons, Ltd. of Fiji Island is not engaged in
the importation of rice.AHEDaI
SO ORDERED. 27
The petitioner moved for reconsideration, but the CA denied the motion on May
8, 2003. 28
Issues
In its petition for review, the petitioner contends that:
1. THE COURT OF APPEALS ERRED IN NOT DECLARING THE SEIZURE
PROCEEDINGS NULL AND VOID FOR LACK OF JURISDICTION OVER
PETITIONER'S RICE SHIPMENT.
We note that a few days after the petitioner instituted the certiorari proceedings
in the CA on November 12, 2001, Commissioner Villanueva countermanded
Collector Bibit's October 18, 2001 Notice of Sale through his November 19, 2001
memorandum. Thereupon, the October 18, 2001 Notice of Sale could no longer
be enforced, thereby rendering the resolution of the validity of the October 18,
2001 Notice of Sale moot and academic. A moot and academic case is one that
ceases to present a justiciable controversy by virtue of supervening events, so
that a declaration thereon would be of no practical use or value. 30 DEIHSa
As matters stand, WSD No. 2001-13A issued against the MV Hung Yen was
quashed by the October 26, 2001 order of Collector Bibit; while WSD No. 2001-
13 issued against the 20,000 bags of rice consigned to R&C Agro Trade had been
effectively lifted by Commissioner Villanueva's Consolidated Order dated
February 4, 2002 following R&C Agro Trade's payment of the settlement value of
P8,400,000.00.
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The pending seizure proceedings under WSD No. 2001-13B of the 180,000 bags
of rice remained, and became the basis for the issuance of the subsequent notice
of sale by Collector Bartolome. Consequently, the controversy on the jurisdiction
of the Bureau of Customs over the seizure and forfeiture of goods and articles
entering the free port area lingers and requires the Court's intervention.
Ruling
The appeal lacks merit.
The Subic Special Economic Zone, or the Subic Bay Freeport, was established
pursuant to Section 12 of Republic Act No. 7227 (The Bases Conversion and
Development Act of 1992), to be operated and managed as a special customs
territory. On the other hand, the Subic Bay Metropolitan Authority (SBMA) was
created under Section 13 of RA No. 7227 to serve "as an operating and
implementing arm of the Conversion Authority" within the SBF.
The concept of a Freeport as a separate customs territory was described during
Senator Enrile's interpellations during the sponsorship of the bill that later on
became RA No. 7227, to wit: DEAaIS
On the basis of the concept, the petitioner claims that the Collector of Customs
had no jurisdiction to issue WSD No. 2001-13B and the October 18, 2001 Notice
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of Sale concerning the 180,000 bags of Thai white rice, which had entered the
SBF only for transshipment to other countries. 32 It insists that the auction sale
of the 180,000 bags was null and void for failing to comply with Executive Order
No. 272, which required presidential approval when the amount to be generated
from the sale was at least P50 Million; 33 that the sale disregarded the
memorandum of agreement between the Bureau of Customs and the NFA; 34
that the rice was sold at P785.00 per 50-kilo bag instead of P1,100.00, the price
established by the Bureau of Agricultural Statistics; 35 and that no notice of
auction sale was sent to the NFA or its accredited dealers. 36 acADIT
In contrast, the respondents sought the dismissal of the petition on the ground of
lack of jurisdiction, maintaining that an appeal to the Court of Tax Appeals (CTA)
was the proper remedy to assail the decision of the Commissioner of Customs,
which the petitioner itself expressly recognized in its February 20, 2002
Comment vis-à-vis their Manifestation and Motion dated December 3, 2001; and
that because the petitioner did not appeal to the CTA within the prescribed
period, the February 4, 2002 Consolidated Order of Commissioner Villanueva
became final and executory, and could no longer be the subject of review in the
present proceedings. 37
The Court declares that the Collector of Customs was authorized to institute
seizure proceedings and to issue WSDs in the Subic Bay Freeport, subject to the
review by the Commissioner of Customs. Accordingly, the proper remedy to
question the order or resolution of the Commissioner of Customs was an appeal
to the CTA, not to the CA.
Although RA No. 7227 is silent as to the person or entity vested with the
authority to seize and forfeit or detain goods and articles entering the Subic Bay
Freeport, the implementing rules and regulations (IRR) of R.A. No. 7227
contained the following provisions, to wit:
Sec. 11. Responsibilities of the SBMA. — Other than the powers and
functions prescribed in Section 10 of these Rules, the SBMA shall have
the following responsibilities:
xxx xxx xxx
f. Consistent with the Constitution, the SBMA shall have the following
powers to enforce the law and these Rules in the SBF: TAEcCS
The SBMA may secure the assistance of and/or coordinate with Customs
officers to arrest persons in the SBF for violations of the customs laws
for which arrest is authorized concerning articles in the Customs Territory
destined to the SBF or articles which have been removed from the SBF to
the Customs Territory. (Bold underscoring supplied for emphasis)
Customs Administrative Order No. 4-93 (CAO 4-93), also known as the Rules and
Regulations for Customs Operations in the Subic Special Economic and Freeport
Zone, similarly provides the following:
CHAPTER II. GENERAL PROVISIONS
xxx xxx xxx
Under these statutory provisions, both the SBMA and the Bureau of Customs
have the power to seize and forfeit goods or articles entering the Subic Bay
Freeport, except that SBMA's authority to seize and forfeit goods or articles
entering the Subic Bay Freeport has been limited only to cases involving
violations of RA No. 7227 or its IRR. There is no question therefore, that the
authority of the Bureau of Customs is larger in scope because it covers cases
concerning violations of the customs laws.
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The authority of the Bureau of Customs to seize and forfeit goods and articles
entering the Subic Bay Freeport does not contravene the nature of the Subic Bay
Freeport as a separate customs authority. Indeed, the investors can generally and
freely engage in any kind of business as well as import into and export out goods
with minimum interference from the Government. 39 The Court has thus
observed in Executive Secretary v. Southwing Heavy Industries, Inc.: 40
The Freeport was designed to ensure free flow or movement of goods
and capital within a portion of the Philippine territory in order to attract
investors to invest their capital in a business climate with the least
governmental intervention. The concept of this zone was explained by
Senator Guingona in this wise: DcHaET
Yet, the treatment of the Subic Bay Freeport as a separate customs territory
cannot completely divest the Government of its right to intervene in the
operations and management of the Subic Bay Freeport, especially when patent
violations of the customs and tax laws are discovered. After all, Section 602 of
the Tariff and Customs Code vests exclusive original jurisdiction in the Bureau of
Customs over seizure and forfeiture cases in the enforcement of the tariff and
customs laws.
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In this case, an examination of the shipment by the customs officials pursuant to
Mission Order No. 06-2001 initially revealed no cause to hold the release of the
180,000 bags of rice. In their September 4, 2001 After Mission Report, Atty.
Enriquez and Atty. Heraldo pertinently stated:
FINDINGS:
Prescinding from the foregoing factual environment, we find no reason to
hold the departure of the 180,000 bags of rice and the vessel unless we
could establish the falsity of the transhipment manifest of this shipment,
e.g., the alleged ultimate consignees are non-existing entities or if they
are existing, that they did not order for the shipment thereof. . . .
xxx xxx xxx
RECOMMENDATION:
However, further investigation led to the discovery that the consignees of the
180,000 bags of rice in Indonesia were non-existent, and the consignee in the Fiji
Islands denied being involved in the importation of rice. These findings were
summarized in Commissioner Villanueva's Consolidated Order, to wit:
. . . The information supplied by the Directorate General of Customs and
Excise Directorate of Prevention and Investigation of the Ministry of
Finance of the Republic of Indonesia, and the information supplied by the
Director for Enforcement of the Fiji Revenue and Customs Authorities of
Fiji Island Customs Service, that the alleged consignees in Indonesia are
not actually existing and that B.I. Naidu and Sons Ltd. of Fiji Island is not
engaged in the importation of rice to be a solid ground to hold the
remaining shipment of 180,000 bags of rice forfeited as charged.
Moreover it should be stressed that during the hearing on the Motion to
Quash the WSD issued against the carrying vessel, the witness who is
the General Manager of Overseas Vietnam Shipping testified that that
prefix BKK/PLP on the Bills of Lading stands for Bangkok/Philippines.
Stated differently, if indeed the 180,000 bags of rice were for
transhipment to Indonesia and Fiji Island, then why they were prefixed like
the 20,000 bags of rice covered by B/L No. BKK/PLP-01? The said Bills of
Lading should have been prefixed as BKK/IND for those shipments bound
for Indonesia and BKK/FJI for those bound for Fiji Island or in any similar
manner. Likewise, the TSN would bear us out that the witness for the
vessel also confirmed during his testimony that there were alterations
made on the Mate's Receipt of the cargo which were used as the basis in
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made on the Mate's Receipt of the cargo which were used as the basis in
the preparation of the questionable Bills of Lading. 42 CHIaTc
Petitioner contends that the imported 2,000 bags of rice were in the
actual physical control and possession of the BOC as early as 25 October
2001, by virtue of the BOC Subic Port Hold Order of even date, and of
the BOC Warrant of Seizure and Detention dated 22 May 2002. As such,
the BOC had acquired exclusive original jurisdiction over the subject
shipment, to the exclusion of the RTC.
The issuance of the October 18, 2001 Notice of Sale was merely an incident of
the seizure proceedings commenced by the Collector of Customs. Consequently,
the correctness of its issuance was necessarily subsumed to the determination of
the propriety of the seizure proceedings, a matter that was within the exclusive
jurisdiction of the Bureau of Customs. In that context, the proper recourse of the
petitioner from the February 4, 2002 Consolidated Order of Commissioner
Villanueva, which reviewed the November 14, 2001 action of Collector Bibit, 47
was an appeal in due course to the CTA, in accordance with Section 7 (4) of RA
No. 1125, as amended, 48 in relation to Section 2402 of the Tariff and Customs
Code, 49 within 30 days after the receipt of the order. 50 Without the appeal
having been timely filed in the CTA, the February 4, 2002 Consolidated Order
became final and executory.
WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS
the decision promulgated on November 18, 2002 in CA-G.R. CV No. 67593; and
ORDERS the petitioner to pay the costs of suit.
SO ORDERED.
Velasco, Jr., * Leonardo-de Castro, ** Perez and Perlas-Bernabe, JJ., concur.
Footnotes
* In lieu of Chief Justice Maria Lourdes P.A. Sereno, who is on Wellness Leave, per
Special Order No. 1772.
** Per Special Order No. 1771 dated August 28, 2014.
1. Rollo, pp. 29-39; penned by Associate Justice Mercedes Gozo-Dadole (retired) with
Associate Justice B.A. Adefuin-De La Cruz (retired) and Associate Justice
Mariano C. Del Castillo (now a Member of this Court), concurring.
2. CA rollo, p. 23.
3. Id. at 26-27.
4. Id. at 30.
5. Id. at 31.
6. Id. at 34-39.
7. Id. at 33.
8. Id. at 40.
9. Id. at 41.
30. Funa v. Ermita, G.R. No. 184740, February 11, 2010, 612 SCRA 308, 319.
31. RECORDS, SENATE 8TH CONGRESS, SESSION (JANUARY 14, 1992), cited and
quoted in Executive Secretary v. Southwing Heavy Industries, Inc. , G.R. Nos.
164171/164172/168741, February 20, 2006, 482 SCRA 673, 696.
Section 39. Rights and Obligations. — SBF Enterprises shall have the following
rights and obligations:
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a. To freely engage in any business, trade, manufacturing, financial or service
activity, and to import and export freely all types of goods into and out of the
SBF, subject to the provisions of the Act, these Rules and other regulations that
may be promulgated by the SBMA; . . .
Section 2530. Property Subject to Forfeiture under Tariff and Customs Laws . — Any
vehicle, vessel or aircraft, cargo, article and other objects shall, under the
following conditions be subjected to forfeiture:
a. Any vehicle, vessel or aircraft, including cargo, which shall be used unlawfully
in the importation or exportation of articles or in conveying and/or transporting
contraband or smuggled articles in commercial quantities into or from any
Philippine port or place. The mere carrying or holding on board of contraband
or smuggled articles in commercial quantities shall subject such vessel, vehicle,
aircraft, or any other craft to forfeiture:
(4) On the strength of a false invoice or other document executed by the owner,
importer, exporter or consignee concerning the importation or exportation of
such article; and
(5) Through any other practice or device contrary to law by means of which
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such articles was entered through a customhouse to the prejudice of the
government.
45. G.R. No. 160270, April 23, 2010, 619 SCRA 176.
46. Id. at 189-191.
49. Section 2402. Review by Court of Tax Appeals. — The party aggrieved by the
ruling of the Commissioner in any matter brought before him upon protest or
by his action or ruling in any case of seizure may appeal to the Court of Tax
Appeals, in the manner and within the period prescribed by law and regulations.
Unless an appeal is made to the Court of Tax Appeals in the manner and within the
period prescribe by laws and regulations, the action or ruling of the
Commissioner shall be final and conclusive.
50. Section 11. Who May Appeal; Mode of Appeal; Effect of Appeal. — Any party
adversely affected by a decision, ruling or inaction of the Commissioner of
Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the
Secretary of Trade and Industry or the Secretary of Agriculture or the Central
Board of Assessment Appeals or the Regional Trial Courts may file an appeal
with the CTA within thirty (30) days after the receipt of such decision or ruling
or after the expiration of the period fixed by law for action as referred to in
Section 7 (a) (2) herein. . . .