TCC Complilation Jan 14 2012

Taxation Law 2 Tariff and Customs Law
Page 1 of 28 Prof. Lucenario
Rieta v. People, G.R. No. 147817, 12 Aug. 2004 Facts: Felicisimo Rieta, together with six (6) co-accused, were charged of smuggling various brands of cigarettes in violation Section 3601 of the Tariff and Customs Code. It appears that on 12 October 1979, Col. Panfilo Lacson obtained information that certain syndicated groups together elements of the Phil. Constabulary, were engaged in smuggling activities somewhere in the Port Area in Manila. Thus, Col. Lacson posted themselves within the vicinity of the Constabulary Off-Shore Anti-Crime Battalion (COSAC) detachment at the Port Authority, Manila. At around 4:00AM, a green cargo truck and light brown Toyota Corona came out of the COSAC detachment. Col. Lacson gave the order to intercept the cargo truck. After a brief chase, the accused were apprehended carrying 305 cases of blue seal or untaxed cigarettes together with various firearms. As their defense, the accused claimed that Metrocom soldiers framed them by planting the cases of blue seal cigarettes in their vehicles. Moreover, they argued that the evidence seized in the operation was inadmissible as the accused were arrested without a warrant and by virtue of an arrest and seizure order (ASSO) which had been declared and invalid by the Supreme Court. Issues: 1. Whether or not the accused were properly convicted for the crime of smuggling or illegal importation; and 2. Whether or not the cigarettes seized are admissible as evidence. Held: 1st issue: YES Tariff and Customs Code; Smuggling and Illegal Importation; Non-payment of taxes is a negative allegation It is not incumbent on the prosecution to prove
that taxes were unpaid on the cigarettes. It is not incumbent upon the prosecution to adduce positive evidence to support a negative averment the truth of which is fairly indicated by established circumstances and which, if untrue, could readily be disproved by the production of documents or other evidence within the defendants knowledge or control. The fact that taxes were unpaid for the cigarettes seized were duly proven by the following circumstances: (1) the cargo truck, which carried the contraband cigarettes and some passengers including petitioner, immediately came from the 2nd COSAC Detachment; (2) the truck was intercepted at the unholy hour of 4:00 a.m.; (3) it fitted the undisclosed informers earlier description of it as one that was carrying contraband; and (4) the driver ran away. Hence, it was up to petitioner to disprove these damning circumstances, simply by presenting the receipts showing payment of the taxes. But he did not do so; all that he could offer was his bare and self-serving denial. Tariff and Customs Code; Smuggling and Illegal Importation; Requisites In order that a person may be deemed guilty of smuggling or illegal importation under the foregoing statute three requisites must concur: (1) that the merchandise must have been fraudulently or knowingly imported contrary to law; (2) that the defendant, if he is not the importer himself, must have received, concealed, bought, sold or in any manner facilitated the transportation, concealment or sale of the merchandise; and (3) that the defendant must be shown to have knowledge that the merchandise had been illegally imported. Tariff and Customs Code; Smuggling and Illegal Importation; Presumption If the defendant, however, is shown to have had possession of the illegally imported merchandise, without satisfactory explanation, such possession shall be deemed sufficient to authorize conviction. Persons found to be in possession of smuggled items are presumed to be engaged in smuggling, pursuant to the last paragraph of
Section 3601 of the Tariff and Customs Code. The burden of proof is thus shifted to them. To rebut this presumption, it is not enough for petitioner to claim good faith and lack of knowledge of the unlawful source of the cigarettes. He should have presented evidence to support his claim and to convince the court of his non-complicity. 2nd issue: YES Criminal Procedure; Search and Seizure; Arrest and Seizure Order as operative fact Petitioner contends that his arrest by virtue of Arrest Search and Seizure Order (ASSO) No. 4754 was invalid, as the law upon which it was predicated -- General Order No. 60, issued by then President Ferdinand E. Marcos -- was subsequently declared by the Court, in Taada v. Tuvera, to have no force and effect. Thus, he asserts, any evidence obtained pursuant thereto is inadmissible in evidence. We do not agree. In Taada, the Court addressed the possible effects of its declaration of the invalidity of various presidential issuances. Whatever was done while the legislative or the executive act was in operation should be duly recognized and presumed to be valid in all respects. The ASSO that was issued in 1979 under General Order No. 60 -- long before our Decision in Taada and the arrest of petitioner -- is an operative fact that can no longer be disturbed or simply ignored. Criminal Procedure; Search and Seizure; Customs Search The search and seizure of goods, suspected to have been introduced into the country in violation of customs laws, is one of the seven doctrinally accepted exceptions to the constitutional provision against unreasonable searches and seizures. Under the Tariff and Customs Code, a search, seizure and arrest may be made even without a warrant for purposes of enforcing customs and tariff laws. Without mention of the need to priorly obtain a judicial warrant, the Code specifically allows police authorities to enter, pass through or search any land, enclosure, warehouse, store or building that is not a dwelling house; and also to inspect, search and examine any vessel or
aircraft and any trunk, package, box or envelope or any person on board; or to stop and search and examine any vehicle, beast or person suspected of holding or conveying any dutiable or prohibited article introduced into the Philippines contrary to law. Garcia v. Executive Secretary, G.R. No. 101273, 3 July 1992 Facts: On 27 November 1990, the President issued Executive Order (E.O.) No. 438 which imposed an additional 5% ad valorem tax on imported products including crude oil and other oil products. This was followed by E.O. No. 443 on 3 January 1991 which increased the 5% ad valorem tax to 9%. On 15 August 1991, the President issued E.O. No. 475 which reduced the 9% ad valorem tax to 5%, except on crude oil and other oil products which continued to be subject to the 9% rate. On 23 August 1991, the President issued E.O. No. 478 which imposed a special duty of 0.95/liter of crude oil and 1.00/liter of imported oil products. Petitioner filed an action for certiorari, prohibition and mandamus claiming that E.O. Nos. 475 and 478 violate Article VI, Section 24 of the 1987 Constitution which provide that all revenue and tariff bills shall originate exclusively in the House of Representatives. Issue: Whether or not the President has the power to issue E.O. Nos. 475 and 478. HELD: YES. Tariff and Customs Law; Flexible Tariff Clause; Power of the President Notwithstanding Article VI, Section 24 of the 1987 Constitution, the authority of the President to issue E.O. Nos. 475 and 478 is amply justified by Article VI, Section 28(2) of Constitution which provides that Congress may, by law, authorize the President to fix within specified limits, and subject to such limitations and restrictions as it may impose,
tariff ratesand other duties and imposts within the framework of the national development program of the Government. The law, which authorized the President to issue such EOs is the Tariff and Customs Code. Sec. 104 of which provides that [t]he rates of duty herein provided or subsequently fixed may be revised by the President upon recommendation of the National Economic Development Authority. On the other hand, Sec. 401 of the same Code states that [i]n the interest of national economy, general welfare and/or national securitythe President, upon recommendation of the National Economic Development Authority is hereby empowered (1) to increase, reduce or remove existing protective rates of import duty(3) to impose an additional duty on all imports not exceeding 10% ad valorem whenever necessary. Tariff and Customs Law; Nature of Tariff Rates There is no merit in the contention that the authority so granted under the aforecited provisions can be exercised only to pursue local protectionism. The Court took judicial notice of the fact that the Bureau of Customs, as the agency responsible for administering the Tariff and Customs Code, is one of the principal generators of revenue. Tariff rates function like taxes in that they are frequently imposed for both revenuegenerating and regulatory purposes. Thus, the exercise of the authority to fix tariff rates/customs duties cannot be limited to protection of local industries, inasmuch as they are also commonly imposed on articles/goods which are not locally produced. In such cases where no local industries are to be protected, tariff rates/customs duties are imposed to generate revenue or deter importations. Executive Secretary v. Southwing Heavy Industries, Inc., G.R. No. 164171, 20 February 2006 Facts:
On 12 December 2002, President Gloria Macapagal-Arroyo, through Executive Secretary Alberto G. Romulo, issued Executive Order (EO) No. 156 which prohibited the importation of used vehicles subject to certain exceptions enumerated therein. The validity of the said prohibition contained in the said EO was questioned in three (3) actions for declaratory relief before Branch 72 of the Regional Trial Court of Olongapo City on the ground that it constitutes an unlawful usurpation of legislative power and that it violates the mandate of Republic Act (R.A.) No. 7227 which allows the free flow of goods and capital within the Subic Freeport. The RTC rendered judgment in all three (3) cases declaring the questioned provision of EO No. 156 unconstitutional. A petition for certiorari was filed before the Court of Appeals (CA) which was however, denied. Thus, the present recourse. Issues: 1. Whether or not EO No. 156 is invalid. Held: YES Administrative Law; Exercise of Quasi-legislative Power; Requisites for Validity of Administrative Issuance To be valid, an administrative issuance, such as an executive order, must comply with the following requisites: (1) Its promulgation must be authorized by the legislature; (2) It must be promulgated in accordance with the prescribed procedure; (3) It must be within the scope of the authority given by the legislature; and (4) It must be reasonable. Tariff and Customs Law; Flexible Tariff Clause; Power of the President There are explicit constitutional and statutory permission authorizing the President to ban or regulate importation of articles and commodities into the country. Under Article VI, Section 28(2) of the 1987 Constitution, Congress may, by law, authorize the President to fix within
specified limits, and subject to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage and wharfage dues, and other duties or imposts within the framework of the national development program of the Government. Under Section 401 of the Tariff and Customs Code, the President is authorized to prohibit the importation of any commodity in the interest of national economy, general welfare and/or national security. Under Articles 4 and 7(12) of E.O. No. 226 or the Omnibus Investments Code, the President has the power to approve or reject the prohibition on the importation of any equipment or raw materials or finished products. Moreover, under R.A. No. 8800, otherwise known as the Safety Measures Act, the Secretaries of the Department of Trade and Industry (DTI) and the Department of Agriculture, in their capacity as alter egos of the President, may impose safeguard measures, which include, inter alia, modification or imposition of any quantitative restriction on the importation of a product into the Philippines Tariff and Customs Law; Flexible Tariff Clause; When Executive Issuance Invalid; Ultra Vires Act To be valid, an administrative issuance must not be ultra vires or beyond the limits of the authority conferred. It must not supplant or modify the Constitution, its enabling statute and other existing laws, for such is the sole function of the legislature which the other branches of the government cannot usurp. Tariff and Customs Law; Flexible Tariff Clause; When Executive Issuance Invalid ; As applied to case In the instant case, the subject matter of the laws authorizing the President to regulate or forbid importation of used motor vehicles, is the domestic industry. EO 156, however, exceeded the scope of its application by extending the prohibition on the importation of used cars to the Freeport, which RA 7227, considers to some extent, a foreign territory. The domestic industry which the EO seeks to protect is actually the "customs territory" which is defined as "the portion of the Philippines outside the Subic Bay
Freeport where the Tariff and Customs Code of the Philippines and other national tariff and customs laws are in force and effect." The proscription in the importation of used motor vehicles should be operative only outside the Freeport and the inclusion of said zone within the ambit of the prohibition is an invalid modification of RA 7227. Indeed, when the application of an administrative issuance modifies existing laws or exceeds the intended scope, as in the instant case, the issuance becomes void, not only for being ultra vires, but also for being unreasonable. Tariff and Customs Law; Flexible Tariff Clause; When Executive Issuance Invalid; Unreasonable There is no doubt that the issuance of the ban to protect the domestic industry is a reasonable exercise of police power. The problem, however, lies with respect to the application of the importation ban to the Freeport. The Court finds no logic in the all encompassing application of the assailed provision to the Freeport which is outside the customs territory. As long as the used motor vehicles do not enter the customs territory, the injury or harm sought to be prevented or remedied will not arise. The application of the law should be consistent with the purpose of and reason for the law. Ratione cessat lex, et cessat lex. When the reason for the law ceases, the law ceases. It is not the letter alone but the spirit of the law also that gives it life. To apply the proscription to the Freeport would not serve the purpose of the EO. Instead of improving the general economy of the country, the application of the importation ban in the Freeport would subvert the avowed purpose of RA 7227 which is to create a market that would draw investors and ultimately boost the national economy. Southern Cross Cement Corp. v. Phil. Cement Manufacturers Corp., G.R. No. 158540, 8 July 2004, 434 SCRA 65 Facts:
On 22 May 2001, the Department of Trade and Industry (DTI) received an application from Phil. Cement Manufacturers Corp. (Philcemcor) seeking the imposition of provisional and definitive safeguard measures against the importation of gray Portland cement. After preliminary investigation, the DTI imposed provisional measures and directed the Bureau of Customs (BOC) to implement the same. Thereafter, a formal investigation was conducted to determine the necessity of imposing definitive measures. The Tariff Commission recommended the denial of the application for definitive safeguard measures considering that the elements of serious injury or the threat of serious injury were absent. The DTI Secretary, however, disagreed with the findings of the Commission and requested for a legal opinion from the Secretary of Justice (SOJ) as to his options on acting on the recommendation of the Commission. The SOJ opined that Section 13 of the Safeguard Measures Act (SMA) precludes the DTI Secretary of discretion in reviewing the Commissions findings. Accordingly, the DTI Secretary denied the application. Aggrieved, Philcemcor filed a petition for certiorari, prohibition, and mandamus with the Court of Appeals (CA) seeking the injunction of the implementation of the decision of the DTI Secretary. The CA then held that the DTI Secretary is not bound by the factual findings of the Tariff Commission since such findings are merely recommendatory and they fall within the ambit of the Secretary's discretionary review. Thus, the CA remanded the case to the DTI Secretary for further proceedings. Southern Cross then filed a petition for review on certiorari questioning the judgment of the CA. In the meantime, the DTI Secretary found that the local cement industry suffered losses due to the importation of Portland cement and therefore issued a new Decision granting the application for the imposition of definitive safeguard measures. Issues: 1. Whether or not the CA properly took cognizance of Philcemcors petition in view of Section 29 of the SMA
which provides that any ruling of the DTI Secretary may be elevated for review to the Court of Tax Appeals; 2. Whether or not the Tariff Commissions factual determination is binding on the DTI Secretary. Held: 1st issue: YES Court of Tax Appeals; Nature It is not difficult to divine why the legislature singled out the CTA as the court with jurisdiction to review the ruling of the DTI Secretary in connection with the imposition of a safeguard measure. The Court has long recognized the legislative determination to vest sole and exclusive jurisdiction on matters involving internal revenue and customs duties to such a specialized court. By the very nature of its function, the CTA is dedicated exclusively to the study and consideration of tax problems and has necessarily developed an expertise on the subject. At the same time, since the CTA is a court of limited jurisdiction, its jurisdiction to take cognizance of a case should be clearly conferred and should not be deemed to exist on mere implication. Statutory Construction; Non-retroactivity of statutes; R.A. No. 9282 Court of Tax Appeals, Appellate Jurisdiction; Under the SMA Under Section 29 of the SMA, there are three requisites to enable the CTA to acquire jurisdiction over the petition for review contemplated therein: (i) there must be a ruling by the DTI Secretary; (ii) the petition must be filed by an interested party adversely affected by the ruling; and (iii)such ruling must be in connection with the imposition of a safeguard measure. The first two requisites are clearly present. The third requisite deserves closer scrutiny. Court of Tax Appeals, Appellate Jurisdiction; Under the SMA; As applied to case Where the DTI Secretary decides not to impose a safeguard measure, it is the CTA which has
jurisdiction to review his decision. The position of the respondents is untenable as it vests the power of judicial review of the DTI Secretarys ruling into two different courts, depending on whether or not it imposes a safeguard measure. The Court has consistently refused to sanction split jurisdiction as it is anathema to the orderly administration of justice. The power of the DTI Secretary to adopt or withhold a safeguard measure emanates from the same statutory source, and it boggles the mind why the appeal modality would be such that one appellate court is qualified if what is to be reviewed is a positive determination, and it is not if what is appealed is a negative determination. In deciding whether or not to impose a safeguard measure, provisional or general, the DTI Secretary would be evaluating only one body of facts and applying them to one set of laws. The reviewing tribunal will be called upon to examine the same facts and the same laws, whether or not the determination is positive or negative. Moreover, a plain reading of Section 29 of the SMA reveals that Congress did not expressly bar the CTA from reviewing a negative determination by the DTI Secretary nor conferred on the Court of Appeals such review authority. The clear text of the law is that the CTA is vested with jurisdiction to review the ruling of the DTI Secretary "in connection with the imposition of a safeguard measure." Had the law been couched instead to incorporate the phrase "the ruling imposing a safeguard measure," then respondent's claim would have indisputable merit. Undoubtedly, the phrase "in connection with" not only qualifies but clarifies the succeeding phrase "imposition of a safeguard measure." Finally, the Court is precluded from favoring an interpretation that would cause inconvenience and absurdity. Interpretatio Talis In Ambiguis Semper Fienda Est, Ut Evitur Inconveniens Et Absurdum. Adopting the respondents' position favoring the CTA's minimal jurisdiction would unnecessarily lead to illogical and onerous results. Indeed, it is illiberal to assume that Congress had intended to provide appellate relief to rulings imposing a safeguard measure but not to those declining to impose the measure.
2nd Issue: YES Tariff and Customs Law; Imposition of Safeguard Measure; Requisites All in all, there are two condition precedents that must be satisfied before the DTI Secretary may impose a general safeguard measure. First, there must be a positive final determination by the Tariff Commission that a product is being imported into the country in increased quantities (whether absolute or relative to domestic production), as to be a substantial cause of serious injury or threat to the domestic industry. Second, in the case of nonagricultural products the Secretary must establish that the application of such safeguard measures is in the public interest. Tariff and Customs Law; Imposition of Safeguard Measure; Functions of the Tariff Commission vis--vis the DTI Secretary The SMA establishes a distinct allocation of functions between the Tariff Commission and the DTI Secretary. The plain meaning of Section 5 shows that it is the Tariff Commission that has the power to make a "positive final determination." This power, which belongs to the Tariff Commission, must be distinguished from the power to impose general safeguard measure properly vested on the DTI Secretary. The distinction is vital, as a "positive final determination" clearly antecedes, as a condition precedent, the imposition of a general safeguard measure. At the same time, a positive final determination does not necessarily result in the imposition of a general safeguard measure. Under Section 5, notwithstanding the positive final determination of the Tariff Commission, the DTI Secretary is tasked to decide whether or not that the application of the safeguard measures is in the public interest. Section 5 plainly evinces legislative intent to restrict the DTI Secretary's power to impose a general safeguard measure by preconditioning such imposition on a positive determination by the Tariff Commission. Such legislative intent should be given full force and effect, as the executive power to impose
definitive safeguard measures is but a delegated power the power of taxation, by nature and by command of the fundamental law, being a preserve of the legislature. Tariff and Customs Law; Imposition of Safeguard Measure; Measures that may be imposed The safeguard measures which the DTI Secretary may impose under the SMA may take the following variations, to wit: (a) an increase in, or imposition of any duty on the imported product; (b) a decrease in or the imposition of a tariff-rate quota on the product; (c) a modification or imposition of any quantitative restriction on the importation of the product into the Philippines; (d) one or more appropriate adjustment measures, including the provision of trade adjustment assistance; and (e) any combination of the above-described actions. Except for the provision of trade adjustment assistance, the measures enumerated by the SMA are essentially imposts, which precisely are the subject of delegation under Section 28(2), Article VI of the 1987 Constitution. Tariff and Customs Law; Safeguard Measures Act; Power of the Tariff Commission; Determination To better comprehend Section 13, note must be taken of the distinction between the investigatory and recommendatory functions of the Tariff Commission under the SMA. The word "determination," as used in the SMA, pertains to the factual findings on whether there are increased imports into the country of the product under consideration, and on whether such increased imports are a substantial cause of serious injury or threaten to substantially cause serious injury to the domestic industry. The SMA explicitly authorizes the DTI Secretary to make a preliminary determination, and the Tariff Commission to make the final determination. The distinction is fundamental, as these functions are not interchangeable. The Tariff Commission makes its determination only after a formal investigation process, with such investigation initiated only if there is a positive preliminary determination by the DTI Secretary under Section 7 of the SMA. On the other hand, the DTI Secretary may impose definitive safeguard measure only if
there is a positive final determination made by the Tariff Commission. Tariff and Customs Law; Safeguard Measures Act; Power of the Tariff Commission; Recommendation In contrast, a "recommendation" is a suggested remedial measure submitted by the Tariff Commission under Section 13 after making a positive final determination in accordance with Section 5. The Tariff Commission is not empowered to make a recommendation absent a positive final determination on its part. Under Section 13, the Tariff Commission is required to recommend to the [DTI] Secretary an "appropriate definitive measure." The Tariff Commission "may also recommend other actions, including the initiation of international negotiations to address the underlying cause of the increase of imports of the products, to alleviate the injury or threat thereof to the domestic industry and to facilitate positive adjustment to import competition. Tariff and Customs Law; Safeguard Measures Act; Power of the Tariff Commission; Determination vis--vis Recommendation The recommendations of the Tariff Commission, as rendered under Section 13, are not obligatory on the DTI Secretary. Nothing in the SMA mandates the DTI Secretary to adopt the recommendations made by the Tariff Commission. In fact, the SMA requires that the DTI Secretary establish that the application of such safeguard measures is in the public interest, notwithstanding the Tariff Commission's recommendation on the appropriate safeguard measure based on its positive final determination. The non-binding force of the Tariff Commission's recommendations is congruent with the command of Section 28(2), Article VI of the 1987 Constitution that only the President may be empowered by the Congress to impose appropriate tariff rates, import/export quotas and other similar measures. It is the DTI Secretary, as alter ego of the President, who under the SMA may impose such safeguard measures subject to the limitations imposed therein. A contrary conclusion would in essence unduly arrogate to the Tariff Commission the executive power to impose the appropriate tariff measures. That is why the SMA empowers the DTI
Secretary to adopt safeguard measures other than those recommended by the Tariff Commission. Unlike the recommendations of the Tariff Commission, its determination has a different effect on the DTI Secretary. Only on the basis of a positive final determination made by the Tariff Commission under Section 5 can the DTI Secretary impose a general safeguard measure. Clearly, then the DTI Secretary is bound by the determination made by the Tariff Commission. Tariff and Customs Law; Safeguard Measures Act; Power of the Tariff Commission The DTI Secretary does not have the power to review the findings of the Tariff Commission for it is not subordinate to the Department of Trade and Industry ("DTI"). It falls under the supervision, not of the DTI nor of the Department of Finance (as mistakenly asserted by Southern Cross), but of the National Economic Development Authority, an independent planning agency of the government of co-equal rank as the DTI. As the supervision and control of a Department Secretary is limited to the bureaus, offices, and agencies under him, the DTI Secretary generally cannot exercise review authority over actions of the Tariff Commission. Neither does the SMA specifically authorize the DTI Secretary to alter, amend or modify in any way the determination made by the Tariff Commission. The most that the DTI Secretary could do to express displeasure over the Tariff Commission's actions is to ignore its recommendation, but not its determination. Tariff and Customs Law; Safeguard Measures Act; Policy of Restrictive Imposition of Safeguard Measures pursuant to the GATT Finally, if this arrangement drawn up by Congress makes it difficult to obtain a general safeguard measure, it is because such safeguard measure is the exception, rather than the rule. The Philippines is obliged to observe its obligations under the GATT, under whose framework trade liberalization, not protectionism, is laid down. FEEDER INTERNATIONAL LINE vs. CA (May 31, 1991)
A vessel owned by Feeder anchored at Iloilo without notifying customs officials. Upon inspection, authorities found out that the vessel was cleared for Zamboanga but not for Iloilo. The Commissioner of Customs, CTA and CA found Feeder guilty illegal importation and its cargo of 1,100 metric tons of gas oil and 1,000 metric tons of fuel oil was forfeited in accordance with the TCC. Feeder appealed. 1. WON forfeiture improper because guilt was not proved beyond reasonable doubt? NO Proceedings for the forfeiture of goods illegally imported are not criminal in nature since they do not result in the conviction of the wrongdoer nor in the imposition upon him of a penalty, proof beyond reasonable doubt is not required in order to justify the forfeiture of the goods. In this case, the degree of proof required is merely substantial evidence which means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 2. WON there was an illegal importation committed, or at least an attempt thereof, which would justify a forfeiture of the subject vessel and its cargo? YES Section 1202 of the TCC provides that importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unload therein. Mere intention may commence importation and such intent was proved by substantial evidence in this case. It was evident that the vessel did not anchor at Iloilo for repairs: a. considering that the vessel came from Singapore, the route to Zamboanga was shorter and Iloilo lies further north. It is not
logical for the sailing vessel to travel a longer distance to get the necessary repairs. b. it did not notify the Iloilo port or Customs authorities of its arrival and the master of the vessel did not file a marine protest until 12 days after it had anchored, despite the supposed urgency of the repairs needed c. the required ship's and shipping documents were not on board except the clearance from Singaporean port officials clearing the vessel for Zamboanga d. that the barge and the tugboat were contracted by Consignee Far East Synergy to load the cargo of the vessel into the awaiting barge and to discharge the same to Manila Judgment affirmed. COMMISSIONER OF CUSTOMS vs. MILWAUKEE INDUSTRIES CORPORATION (December 9, 2004) Milwaukee is domestic corporation engaged in the importation of steel billets. In February 1994, Inspector Pastoriza issued Boat Notes on the entire shipment authorizing its transfer, with the instruction that the same should be "under guard" by the Bureau of Customs, and that the "guard remain in continuous duty until released by Customs Authorities or upon presentation of a Valid Delivery Permit or PDIG." Thus, the cargo was loaded and transported to the warehouse of Milwaukee, the consignee, in Apalit, Pampanga. Upon investigation, authorities found that the shipment was transported without an Import Entry having been filed and without payment of the duties and taxes and a warrant of seizure and detention was issued. Upon payment of around P10M for taxes, the Commissioner, on March 17, 1994, instructed its Special Assistant, Atty. Aaron Redubla, to accept the payment and to process the release of the shipment.
Notwithstanding the Bureau of Customs' acceptance of respondent's full payment of duties and taxes, District Collector Brillo still proceeded with the seizure and forfeiture proceedings. He rendered a Decision holding that "a violation of Section 2530 (f) and (l) - 3, 4 and 5 of the TCC was committed from the time the shipment was discharged from the vessel and taken to the warehouse of the consignee without legal documentation as required by laws and regulations for the same and without payment of duties and taxes due thereon. CTA reversed this decision, hence this appeal. 1. WON the shipment in question was released to respondent from the custody of the Customs authorities and not merely transferred to respondent's warehouse? MERELY TRANSFERRED It is expressly provided in the Boat notes that the discharge of the cargo was under guard and the guard to remain in continuous duty until released by Customs proper authorities. The goods were merely transferred to the warehouse but was not released from the custody of the Bureau. In its MR, the Commissioner even admitted that customs guards were posted at petitioner's premises in Apalit, Pamoanga, thereby showing that respondent never released the shipment to petitioner The transfer was by virtue of a permit issued by customs. 2. WON Milwaukee failed to comply with the customs requirements to justify the seizure and forfeiture of the shipment? NO Milwaukee complied with the requirements for termination of importation according to Sec 1202: "SECTION 1202. When Importation Begins and Deemed Terminated. Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein. Importation is deemed terminated upon
payment of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in case said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs." Requirements are: a. payment of the duties, taxes and other charges due & -I t is undisputed that Milwaukees payment of the customs duties and taxes on the shipment was duly accepted by the Bureau of Customs. OR was issued. b. legal permit for withdrawal shall have been granted - The on March 17, 1994 order of release upon payment of taxes and duties on the shipment is a sufficient legal permit for the official release of the shipment transferred to respondent's warehouse. Judgment affirmed. Secretary of Finance vs. Oro Maura Shipping Lines July 15, 2009 FACTS: MARINA authorized Glory Shipping Lines importation of the vessel MV Haruna with the Collector of the Port of Mactan. The vessel then had a declared dutiable value of P6,171,092.00 and the estimated customs duty was P1,296,710.00. It was allowed conditional entry on the basis of a re-export bond. After the re-export bond expired, it sent a Letter of Guarantee to the Collector guaranteeing to renew the bond, otherwise, it would pay the duties and taxes on said vessel. Glory Shipping Lines never complied with its Letter of Guarantee; neither did it pay the duties and taxes and other charges due on the vessel despite repeated demands made by the Collector of the Port of Mactan. Unknown to the Collector, Glory Shipping Lines had already offered to sell the vessel to Oro Maura Shipping Lines (respondent).
MARINA granted the respondents importation of the vessel based on the proposed acquisition cost of P1,100,000.00, taking depreciation into account. The Collector of the Port of Manila accepted the declared value of the vessel and assessed duties and taxes amounting to P149,989.00, which the respondent duly paid. After discovering that the vessel had been sold to the respondent, the Collector of the Port of Mactan sent the respondent a demand letter for the unpaid customs duties and charges of Glory Shipping Lines. When the respondent failed to pay, the Collector of the Port of Mactan instituted seizure proceedings against the vessel for violation of Section 2530 (1), subpar. (1) to (5) of the Tariff and Customs Code of the Philippines (TCCP). The Collector of the Port of Mactan ordered the forfeiture of the vessel in favor of the Government, after finding that both Glory Shipping Lines and the respondent acted fraudulently in the transaction. The Cebu District Collector reversed the decision concluding that while there appeared to be fraud in the sale of the vessel, there was no proof that the respondent was a party to the fraud. The Commissioner of Customs affirmed the decision of the Cebu District Collector. The Secretary of Finance affirmed the Commissioners recommendation, but ordered a re-assessment of the vessel based on the entered value, without allowance for depreciation. CTA granted Petition for Review thus affirming the previous decision of the Commissioner of Customs. The CA affirmed the findings of the CTA. ISSUE 1: Whether the respondent was an innocent purchaser HELD: No When respondent Oro Maura requested for authorization to import the same vessel after a span of only 19 months when Glory Shipping Lines filed for importation (the declared value
was then P6,171,092.00), the respondent proposed an acquisition cost of only P1,100,000.00. In a little over a year and a half, the declared value of the vessel decreased by P5,000,000.00, or an astonishing 80% of its original price. Equally fantastic is the change in the customs duties, taxes and other charges due which fell from P1,296,710.00 in March 1993 to P149,989.00 in January 1995, all because of the sale, the new application by the vendee, and the change in the Port where the assessment and collection were made. The 80% drop alone is already a prima facie evidence of fraud (Section 2503, TCCP). Significantly, the respondent never explained the considerable disparity between the dutiable value declared by Glory Shipping Lines and the dutiable value it declared difference of P5,000,000.00 so as to overturn or contradict this prima facie finding of fraud. The exercise of due diligence alone would have alerted it to Glory Shipping Lines acquisition cost and the vessels declared value at its first entry. The respondent, being in the shipping business, should have known the standard prices of vessels and that the value it proposed to MARINA is extraordinarily low compared to the vessels originally declared valuation. Neither can the respondent hide behind the excuse that the vessels dutiable value at P1,100,000.00 was approved by MARINA via the Authority to Import, taking into consideration the vessels depreciation brought about by its ordinary wear and tear. In the first place, nowhere in the TCCP does it state that the depreciated value of an imported item can be used as the basis to determine an imported items dutiable value (Section 201). Even assuming that the depreciated value of the vessel can be considered in determining the vessels dutiable value, still, we find that the decrease of 80% from the original price after the passage of only 19 months cannot be believed and thus should not be accepted. Assuming further that MARINA merely committed a mistake in approving the vessels proposed acquisition cost atP1,100,000.00, and that the Collector of the Port of Manila
similarly erred, we reiterate the legal principle that estoppel generally finds no application against the State when it acts to rectify mistakes, errors, irregularities, or illegal acts, of its officials and agents, irrespective of rank. This principle is particularly true when it comes to the collection of taxes. The government cannot and must not be estopped particularly in matters involving taxes. Taxes are the lifeblood of the nation through which the government agencies continue to operate and with which the State effects its functions for the welfare of its constituents. Thus, it should be collected without unnecessary hindrance or delay (CIR v CTA). There was an original but incomplete importation by Glory Shipping Lines that the respondent could not have simply disregarded proceeds from knowledge of the vessels history and the application of the relevant law. In this respect, Section 1202 of the TCCP provides: Importation begins when the carrying vessel or aircraft enters the jurisdiction of the Philippines with intention to unlade therein. Importation is deemed terminated upon payment of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in case said articles are free of duties, taxes and other charges, until they have legally left the jurisdiction of the customs. In order for an importation to be deemed terminated, the payment of the duties, taxes, fees and other charges of the item brought into the country must be in full. For as long as the importation has not been completed, the imported item remains under the jurisdiction of the BOC. From the perspective of process, the importation that originally started with Glory Shipping Lines was therefore never completed and terminated, so that the respondents present importation is merely a continuation of that original process.
ISSUE 2: WON a lien in favor of the government and against the vessel exists HELD: Yes The finding of fraud leads us to conclude that the assessment of the Collector of the Port of Manila cannot become final and conclusive pursuant to: Section 1603, Finality of Liquidation When articles have been entered and passed free of duty or final 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 final payment of duties, in the absence of fraud or protest or compliance audit pursuant to the provisions of this Code, be final and conclusive upon all parties, unless the liquidation of the import entry was merely tentative. Without the renewal of the vessels re-export bond, the obligation to pay customs duties, taxes and other charges on the importation in the amount of P1,296,710.00 arose and attached to the vessel. This lien was never paid by Glory Shipping Lines, thus it continued to exist even after the vessel was sold to the respondent. Section 1204 of the TCCP in this regard states: Section 1204, Liability of Importer for Duties Unless relieved by laws or regulations, the liability for duties, taxes, fees and other charges attaching on importation constitutes a personal debt due from the importer to the government which can be discharged only by payment in full of all duties, taxes, fees and other charges legally accruing. It also constitutes a lien upon the articles imported which may be enforced while such articles are in custody or subject to the control of the government. As defined by Blacks Law Dictionary, a lien is a claim or charge on property for payment of some debt, obligation or
duty. In this particular instance, the obligation is a tax lien that attaches to imported goods, regardless of ownership. Consequently, when the respondent bought the vessel from Glory Shipping Lines on December 2, 1994, the obligation to pay the BOC P1,296,710.00 as customs duties had already attached to the vessel and the non-renewal of the re-export bond made this liability due and demandable. The subsequent transfer of ownership of the vessel from Glory Shipping Lines to the respondent did not extinguish this liability. While it is true that the respondent had already paid the customs duties assessed by the Collector of the Port of Manila, this payment did not have the effect of extinguishing the lien given the tax lien that had attached to the vessel and the fact that what had been paid was different from what was owed. From the point of amount alone, the customs duties paid to the Collector at the Port of Manila only amounted to P149,989.00, while the lien which had attached to the vessel based on the unpaid assessment by the Collector of the Port of Mactan amounted to P1,296,710.00. Dispositive: CA decision reversed; Finance Secretarys 4th Indorsement reinstated w/ modification. Chevron v. Commissioner of the Bureau of Customs (GR No. 178759, 11 August 2008)1 Corona, J: In 1996, several petroleum oil shipments of Chevron arrived, covered by eight bills of lading. The shipments were unloaded from the carrying vessels onto Chevrons tanks. Subsequently, the import entry declarations (IEDs) were filed, and 90% of customs duties were paid. The import entry and internal revenue declarations (IEIRDs) of the shipments, however, were dated almost 2 months later than the dates for IEDs; the IEDs
Leighton Sotto
dates were from 3/12/1996 to 4/10/1996, while corresponding IEIRDs were from 5/10/1996 to 6/21/1996.
the
the BOC will deem the imported goods impliedly abandoned under Section 1801. Thus: Section 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 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 x x x Section 1801. Abandonment, Kinds and Effect of. - An imported article is deemed abandoned under any of the following circumstances: xxx b. When the owner, importer, consignee or interested party after due notice, fails to file 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, or having filed such entry, fails to claim his importation within fifteen (15) days, which shall not likewise be extendible, from the date of posting of the notice to claim such importation. (Emphasis supplied) The term "entry" in customs law has a triple meaning. It means (1) the documents filed at the customs house; (2) the submission and acceptance of the documents and (3) the procedure of passing goods through the customs house. Boac v. People, G.R. No. 180597, 7 Nov. 2008 mere flagging of vehicle does not constitute search Facts: Raul Basilio Boac, Ramon Betuin Golong, Cesar Fantone Beltran, Roger Alcantara Basadre, and Benjamin Castaneda Alfonso are members of the PNP-CIDG
(Note: Petitioner bided its time to file the IEIRD so as to avail of a lower rate of duty. Because at or about the time these developments were taking place, the bill lowering the duty on these oil products from 10% to 3% was already under intense discussion in Congress.) The importations were appraised at a duty rate of 3% as provided under RA 8180. Prior to the effectivity of RA 8180 on April 16, 1996, the rate of duty on imported crude oil was 10%. The Finance Secretary received a tip from Alfonso Orioste, which revealed the deliberate concealment and manipulation scheme of Chevron and Shell. The BoC found that Chevron manipulated the dates of the IERID to pay a lower rate of duty. The BoC then assessed Chevron a deficiency amounting to P73.5M. In addition, because Chevron did not enter the imported articles in the customhouse within a non-extendible period of 30 days from the date of discharge from the vessel, the BoC deemed the imported goods as impliedly abandoned under Sec. 1801 of the TCC. With its appeals at the BoC having been denied, Chevron filed a petition for review with the CTA. The CTA dismissed Chevrons petition, holding that it was the filing of the IEIRDs that constituted entry under the TCC. Chevron committed fraud when it failed to file the IEIRD within the 30-day period with the intent to "evade the higher rate." Issue: Whether "entry" under Section 1301 in relation to Section 1801 of the TCC refers to the IED or the IEIRD. Held: Entry in Sections 1301 and 1801 of the TCC refers to both the IED and the IEIRD Under Section 1301 of the TCC, imported articles must be entered within a non-extendible period of 30 days from the date of discharge of the last package from a vessel. Otherwise,
Charged with violation of Sec. 2203 in relation to Sec. 3612 of the Tariff and Customs Code--- without lawful authority or delegation from the Collector of Customs, flag down, search and seize three (3) container vans consigned to Japan Trak surplus (Kakiage Surplus) on July 7, 2004. The said vans were said to be allowed to be brought to the warehouse of the consignee and the actual search was done the day after; No contrabands were found upon inspection The Sandiganbayan ruled IFO the Republic, against the accused.
Rieta v. People, supra Salvador v. People, GR No. 146706, July 15, 2005 Facts: On 03 June 1994, a Special Mission Group from the PAF Special Operations Squadron conducted routine surveillance operations at the Manila Domestic Airport to check on reports of alleged drug trafficking and smuggling being facilitated by certain PAL personnel. The group was ordered to keep close watch on Airbus 300 parked inside the airport. At around 11:30pm, three (3) persons had boarded the Airbus 300. The team did not move, but continued its surveillance. At 12:15 am the team leader reported that these 3 persons had disembarked with their abdominal areas bulging and then boarded an airplane tow truck with its lights off. At the Lima Gate of the Domestic Airport, the team blocked and stopped the tow truck. The passengers of the truck were asked to alight. The team leader approached Aurelio Mandin whose uniform was partly open, showing a girdle. Then, a package wrapped in brown packaging tape fell. Suspecting that the package contained smuggled items, the leader yelled Positive! and the rest of the team surrounded petitioner and his two co-accused who surrendered without a fight. The team searched their bodies and found that the 3 were wearing girdles beneath their uniforms, all containing packets wrapped in packaging tape. The team confiscated the packets and brought all the accused to the PAFSECOM Office. Issue: Whether or not the search and seizure was valid. Held: YES. Criminal Procedure; Search and Seizure; Exceptions It is well-settled that there are privileged areas where searches and seizures may lawfully be effected sans a search warrant. These recognized exceptions include: (1) search of moving vehicles; (2) search in plain view; (3) customs searches; (4)
Issue: WON there was a violation of the tariff and customs Code. Held: No. The petition is meritorious. Petitioners should be acquitted of the charge. 1. It is very clear that the search was not done by petitioners but by the Customs Police. Petitioners did not seize anything nor arrested anybody. They merely observed the search which they requested to be undertaken to check for contrabands. Notably, the consignee did not file any complaint against petitioners (the collector of Customs filed the case). 2. The act of flagging down the vehicles is not among those proscribed by Sec. 2203 of the Tariff and Customs Code. Mere flagging down of the container vans is not punishable under the said law. The jurisdiction of the Commissioner of Customs is clearly with regard to customs duties. Should the PNP suspect anything, it should coordinate with the BOC and obtain the written authority from the Collector of Customs in order to conduct searches, seizures, or arrests. Coordination is emphasized in the laws. While it is an admitted fact that there was no such coordination initiated by the PNP-CIDG in this instance, nevertheless, petitioners cannot be convicted under the Tariff and Customs Code since there is no evidence that they did actually search the container vans.
waiver or consented searches; (5) stop-and-frisk situations; and (6) search incidental to a lawful arrest. Criminal Procedure; Search and Seizure; Customs Search In the present case, it should be noted that the special mission of the PAF operatives was to conduct a surveillance operation to verify reports of drug trafficking and smuggling by certain PAL personnel in the vicinity of the airport. In other words, the search was in the nature of a customs search. As such, the team properly effected the search and seizure without a search warrant since it exercised police authority under the customs law. Law enforcers who are tasked to effect the enforcement of the customs and tariff laws are authorized to search and seize, without a search warrant, any article, cargo or other movable property when there is reasonable cause to suspect that the said items have been introduced into the Philippines in violation of the tariff and customs law. They may likewise conduct a warrantless search of any vehicle or person suspected of holding or conveying the said articles, as in the case at bar. Commissioner of Customs v. Court of Tax Appeals, No. L-31733, September 20, 1985, 138 SCRA 581 nature of forfeiture proceeding proceeding in rem Facts: Jose Pascual is the registered owner of the M/B "Maria Victoria-P", a motor boat of 63.25 gross tonnage duly licensed by the Bureau of Customs to engage in coastwise trade Jose Pascual claimed that his vessel was supposed to be used in fishing but that it failed to return after going out to sail; he said it was missing and worried that it might have been used illegally. Jose Joloc, captain of the vessel, claimed that they were indeed supposed to go fishing but someone whom he knew asked him if he could load some fishes for P20K;
he agreed but when they got to the where that person said the fishes were, armed men met them and at gun point, he was forced to load the blue seal cigarettes which allegedly belong to one Datu Jacob of Jolo, Sulu. On December 16, 1963, the said vessel was apprehended by the elements of the Philippine Navy five miles off the coast of Naic, Cavite for carrying untaxed 105 cases and 90 parks of Salem cigarettes and 414 cases of Union cigarettes. The authorities turned over the vessel, its crew and its cargo of blue seal cigarettes to the Small Craft Unit of the Philippine Navy for disposition. Thereafter, Seizure Identification Case Nos. 8006 and 8006-A against the vessel and the cargo of blue seal cigarettes, respectively, were instituted before the Collector of Customs. For failure of anybody to claim ownership over the cigarettes, the same were forfeited in favor of the Government.
Issue: WON the motor boat M/B "Maria Victoria-P" is subject to forfeiture under the Tariff and Customs Code, particularly paragraphs (a) and (b) of Section 2530 Held: YES 1. Pursuant to the aforesaid provision, the vessel is clearly subject to forfeiture in favor of the Government. Forfeiture proceedings are in the nature of proceedings in rem and are directed against the res. The fact that private respondent has allegedly no actual knowledge that M/B "Maria Victoria-P" was used illegally does not render the vessel immune from forfeiture. This is so because the forfeiture proceedings in this case was instituted against the vessel itself. Private respondent's defense that he has no actual knowledge that the vessel was used illegally is personal to him but cannot absolve the vessel from liability of forfeiture.
Valera v. Office of the Ombudsman 27 February 2008 FACTS: Petitioner Atty. Gil Valera was appointed Deputy Commissioner of Customs in July 2001, and filed in the RTC of Manila, for and on behalf of the Bureau of Customs, a collection case with prayer for the issuance of a writ of preliminary attachment for the collection of P37,195,859.00 in unpaid duties and taxes against Steel Asia Manufacturing Corporation (SAMC), which utilized fraudulent tax credit certificates in the payment of its duties. A writ of preliminary attachment was issued against SAMC and was duly implemented - the raw materials, finished products and plant equipment of SAMC were subsequently attached. Valera and SAMC entered into a compromise agreement wherein the latter offered to pay on a staggered basis through thirty (30) monthly equal installments the P37,195,859.00 duties and taxes sought to be collected in the civil case. The Director of the Criminal Investigation and Detention Group of the Philippine National Police, subsequently filed a lettercomplaint against petitioner with the Ombudsman, for compromising the case against the SAMC without proper authority from the Commissioner of the Bureau of Customs in violation of Section 2316 TCCP (Authority of the Commission to make Compromise) and without the approval of the President, in violation of Executive Order No. 156 and Executive Order No. 38, with such acts of Atty. Valera causing undue injury to the government by having deprived the government of its right to collect the legal interest, surcharges, litigation expenses and damages and gave the Steel Asia unwarranted benefits, violative of Sections 3(e) and (g) respectively of RA 3019. Further investigation disclosed that Atty. Gil A. Valera while being a Bureau of Customs official directly and indirectly had financial or pecuniary interest in the CACTUS CARGOES SYSTEMS a brokerage whose line of business or transaction, in connection with which, he intervenes or takes part in his official capacity by way of causing the employment of his brother-in-
law, Ariel Manongdo, thus, violating 3(h) of RA 3019 and RA 6713 and Section 4, RA 3019 as against Ariel Manongdo. Investigation also disclosed that on April 21, 2002 Atty. Gil A. Valera traveled to Hongkong with his family without proper authority from the office of the President in violation of Executive Order No. 298 (foreign travel of government personnel) dated May 19, 1995, thus, he committed an administrative offense of Grave Misconduct. The Office of the Ombudsman Special Prosecutor Villa-Ignacio made the finding that by entering into the compromise agreement, petitioner may have made concessions that may be deemed highly prejudicial to the government, i.e., waiver of the legal interest and the penalty charges imposed by law, as well as the virtual exoneration of SAMC of its fraudulent act of using spurious tax credit certificates. Respondent Deputy Ombudsman issued a Decision finding the petitioner administratively liable for grave misconduct and decreeing his dismissal from the service, with all the accessory penalties appertaining thereto, based on the following charges: (i) compromising the case against SAMC in Civil Case No. 01102504 before Branch 39, RTC Manila, without proper authority from the Commissioner of the Bureau of Customs in violation of Section 2316 of the Tariff and Customs Code, and without the approval of the President in violation of Section 4(d) of Executive Order (E.O.) No. 156 as amended by E.O. No. 38; (ii) causing the employment of his brother-in-law with the Cactus Cargoes Systems, Inc. whose principal business involves transactions with the Bureau of Customs in violation of Section 3(d) of Republic Act (R.A.) No. 3019;[13] and (iii) traveling to Hongkong without conforming with the guidelines on the application to travel abroad for private purposes of public officials. On petition for review, the CA found enough evidence to substantiate the second and third charges and affirmed the
decision of respondent Deputy Ombudsman finding petitioner guilty of grave misconduct. ISSUE 1: WON petitioner could validly compromise the case against SAMC without prior authorization from the Commissioner of Customs in violation of Section 2316 of the Tariff and Customs Code, and without prior approval of the President HELD: No Section 2401 of the TCCP covers the matter of the institution and filing of civil and criminal actions by customs officers, which is subject to the approval of the Commissioner if filed for the recovery of duties or the enforcement of any fine, penalty or forfeiture under the Code. It does not cover the compromise of such civil or criminal actions, while Section 2316 is the provision that deals with such a situation. The latter is categorical in providing an encompassing scope for the strict conditions for any compromise, including any case arising under this code or other laws or part of laws enforced by the Bureau of Customs involving the imposition of fines, surcharges and forfeitures unless otherwise specified by law. The SC held that the adoption of petitioners interpretation of these provisions would result in absurdity that could not have been intended by Congress since following his logic, the Commissioner of Customs has to actively participate and seek the approval of the Secretary of Finance in compromising administrative collection cases; whereas, customs officers without even seeking authority from the Commissioner or approval from the Secretary of Finance can proceed to bargain off much larger collection cases in courts. E.O. No. 156, as amended by E.O. No. 38, created a Special Task Force to investigate and prosecute the irregularities relative to the "tax credit scam" committed at the center of the Department of Finance and to recover and collect revenues lost
by the government through the "scam." Section 4(d) thereof provides: Section 4. Powers, Duties and Functions. The Task Force shall have the following powers, duties and functions: x x x d) To recommend the settlement of cases for approval of the President, subject to appropriate rules on the settlement of claims by the government; E.O. No. 156, as amended by E.O. No. 38, is clear in its requirement that in cases involving tax credit scams the favorable recommendation for approval by the Special Task Force and the approval by the President of the Republic are both required. The approval by the Chairmen of the Special Task Force is still subject to approval of the President. Prior presidential approval is the highest form of check and balance within the Executive branch of government and cannot be satisfied by mere failure of the President to reverse or reprobate the acts of subordinates. To sanction otherwise would be to ask the Court to reward passivity and render nugatory the fundamental safeguard required under the law. The SC found lamentable the utter disregard of the legal requirements for entering into a compromise displayed by petitioner, further aggravated by the fact that there were already sufficient properties of SAMC that were attached in the said case to satisfy not only the principal amount owed but also the penalties, surcharges and interests. Fundamental it is in law that taxes being the lifeblood of the government, such must be continuously replenished and carefully preserved and no public official should maintain a standard lower than utmost diligence in keeping our revenue system flowing. It is not for any government official to deem it within his complete control to let precious blood flow to the private sphere where it would have been rightfully and lawfully collected by the public through the government.
Persons appointed to the revenue collection agencies of the government, like petitioner, ought to live up to the strictest standards of honesty and integrity in the public service and must at all times be above suspicion. Because of the nature of their office, the officials and employees of the Bureau of Customs should serve as the primary role models in the faithful observance of the constitutional canon that public office is a public trust. The totality of petitioners acts constitutes flagrant disregard of established rules constitutive of grave misconduct. Dispositive: Petition denied; CA Decision affirmed. Pilipinas Shell Petroleum Corporation v. Republic, GR No. 161953, March 6, 2008, 547 SCRA 701 collection may proceed while awaiting resolution of CTA case; protest Proton Pilipinas Corporation v. Republic, GR No. 165027, October 16, 2006, 504 SCRA 528 government need not wait for results of the criminal proceedings in Sandiganbayan before collecting customs duties and taxes Bureau of Customs v. Peter Sherman, et. al., GR No. 190487, April 13, 2011 Facts: Mark Sensing Philippines, Inc. (MSPI) caused the importation of finished bet slips and thermal papers from June 2005 to January 2007, without paying duties or taxes. Hence, the Bureau of Customs (petitioner) filed, under its Run After The Smugglers (RATS) Program, a criminal complaint before the Department of Justice against the agents of MSPI for violating Section 3601 vis--vis Sections 2530 (f) and (l) 5 and 101 (f) of the Tariff and Customs Code of the Philippines, as amended and R.A. No. 7916. The State Prosecutor found probable cause and accordingly recommended the filing of Information against them. Respondents filed a petition for review before the Secretary of
Justice during the pendency of which the Information was filed on April 11, 2009 before the Court of Tax Appeals (CTA). The Secretary of Justice reversed the State Prosecutors Resolution and accordingly directed the withdrawal of the Information. Petitioners motion for reconsideration having been denied, it elevated the case by certiorari before the Court of Appeals. In the meantime, the prosecutor filed a Motion to Withdraw Information with Leave of Court before the CTA, which granted the withdrawal of, and accordingly dismissed the Information. A motion for reconsideration was filed by the petitioner. The CTA issued a Resolution merely noting without action said motion. Hence, this petition. Issue: WON BOCs participation in criminal and civil aspects of the case is limited to that of a witness. Held: Yes The prosecution of crimes pertains to the executive department of the government whose principal power and responsibility is to insure that laws are faithfully executed. Corollary to this power is the right to prosecute violators. All criminal actions commenced by complaint or information are prosecuted under the direction and control of public prosecutors. In the prosecution of special laws, the exigencies of public service sometimes require the designation of special prosecutors from different government agencies to assist the public prosecutor. The designation does not, however, detract from the public prosecutor having control and supervision over the case. As stated in the Resolution, the CTA noted without action petitioner's motion for reconsideration. By merely noting without action petitioner's motion for reconsideration, the CTA did not gravely abuse its discretion because it is the public prosecutor who has control and supervision over the cases. The participation in the case of a private complainant,
like petitioner, is limited to that of a witness, both in the criminal and civil aspect of the case. CIR v. La Suerte Cigar and Cigarette Factory, GR No. 144942, June 28, 2011 Facts: In its 2000 Resolution, the Supreme Court denied the Petition for Review on Certiorari submitted by the Commissioner of Internal Revenue for non-compliance with the procedural requirement of verification explicit in Sec. 4, Rule 7 of the 1997 Rules of Civil Procedure and because the appeal was not pursued by the Solicitor General. When the motion for reconsideration filed by the petitioner was denied, petitioner filed the present motion seeking a clarification on the supposed discrepancy between the pronouncement of this Court requiring the participation of the Office of the Solicitor General and the pertinent provisions of the Tax Code allowing legal officers of the Bureau of Internal Revenue (BIR) to institute and conduct judicial action for and in behalf of the Government. Issue: WON the legal officer of the BIR is authorized to institute appeal proceedings (as distinguished from commencement of proceeding) without the participation of the Solicitor-General. Held: NO. The institution or commencement before a proper court of civil and criminal actions and proceedings arising under the Tax Reform Act which shall be conducted by legal officers of the Bureau of Internal Revenue is not in dispute. An appeal from such court, however, is not a matter of right. Sec. 220 of the Tax Reform Act must not be understood as overturning the long-established procedure before this Court in requiring the Solicitor-General to represent the interest of the Republic. This court continues to maintain that it is the Solicitor-General who has the primary responsibility to appear for the government in appellate proceedings. This pronouncement finds justification in the various laws defining the Office of the Solicitor-General, beginning with Act No. 135, which took effect on 16 June 1901, up to the present Administrative Code of 1987. Sec. 35, Chapter 12, Title III, Book
IV of the said code outlines the powers and functions of the Office of the Solicitor General which includes, but not limited to, its duty to a. Represent the Government in the Supreme Court and the Court of Appeals in all criminal proceedings; represent the Government and its officers in the Supreme Court, the Court of Appeals, and all other courts or tribunals in all civil actions and special proceedings in which the Government or any officer thereof in his official capacity is a party. b. Appear in any court in any action involving the validity of any treaty, law, executive order, or proclamation, rule or regulation when in his judgment his intervention is necessary or when requested by the Court.
Commissioner of Customs v. Court of Tax Appeals, Las Islas Filipinas Food Corporation and PAT-PRO Overseas Co., Ltd., GR Nos. 171516-17, Resolution dated February 13, 2009, 579 SCRA 289 administrative remedies - posting of bond GST Philippines, Inc. v. Commissioner of Customs & Sec. of Finance, CTA EB No. 449, June 15, 2009 effect of failure to protest Subic Bay Metropolitan Authority v. Rodriguez, GR No. 160270, April 23, 2010, 619 SCRA 176 BOC has exclusive original jurisdiction in seizure and forfeiture proceedings ASIAN TERMINALS V. 166901, Oct 27, 2006)2 Callejo, J: Sometime in April and May 1998, Noel Tabuelog, et al. imported 72 secondhand right-hand drive buses from Japan.
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BAUTISTA-RICAFORT
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No.
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The importation of right-hand vehicles without conversion kits were prohibited under RA 8506, the District Collector of Customs impounded the said shipment of vehicles, and ordered them stored at the warehouse of the Asian Terminals, Inc. (ATI), a customs-bonded warehouse. Conformably with Section 2607 of the Tariff and Customs Code, the District Collector of Customs issued Warrants of Distraint against the shipment and set the sale at public auction on September 10, 1998. The importers filed a complaint with the RTC of Paraaque, against the Sec. of Finance and Customs Commissioner for replevin with prayer for the issuance of a writ of preliminary and mandatory injunction and damages. The RTC granted the application for a writ of replevin on a bond of PhP 12M. Issue: Whether the RTC may pass upon the validity of seizure and forfeiture proceedings conducted by the BOC Held: No. RTCs are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs and to enjoin or otherwise interfere with these proceedings. It is the Collector of Customs, sitting in seizure and forfeiture proceedings, who has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded from assuming cognizance over such matters even through petitions of certiorari, prohibition or mandamus. The rule that Regional Trial Courts have no review powers over such proceedings is anchored upon the policy of placing no unnecessary hindrance on the governments drive, not only to prevent smuggling and other frauds upon Customs, but more importantly, to render effective and efficient the collection of import and export duties due the State, which enables the government to carry out the functions it has been instituted to perform. Ponce Enrile v. Vinuya, No. L-29043, January 30, 1971, 37 SCRA 381 RTC has no jurisdiction to entertain a replevin suit involving an article subject of customs seizure and forfeiture proceeding.
Facts: Collector of Customs of the Port of Manila issued a warrant of seizure and detention against the Cadillac car involved in this case, the owner-claimant being a certain Rodolfo Ceadoza, as the taxes and duties had not been paid Rodolfo Ceadoza, had sold such car to one Francisco Dee from whom respondent Vinuya acquired the same. Under claim that he was aggrieved by such seizure and detention of the car in question, Vinuya filed a complaint for replevin in the sala of Judge WALFRIDO DE LOS ANGELES, presiding judge of Branch IV, Court of First Instance of Rizal (sitting at Quezon City). After filing a bond of P60,000.00 an ex-parte order was issued on April 19, 1967 by respondent Judge directing a special sheriff to take possession of the Cadillac car in question. On the very same day respondent Judge likewise gave due course to the complaint for replevin and required petitioners to file their answer.
Issue: WON Judge de los Angeles is vested with jurisdiction to entertain a complaint for replevin filed by Vinuya, for the recovery of a Cadillac car, subject of a seizure and forfeiture proceeding. Held: NO. 1. The prevailing doctrine is that the exclusive jurisdiction in seizure and forfeiture cases vested in the Collector of Customs precludes a court of first instance from assuming cognizance over such a matter. 2. Section 2303 of the Tariff and Customs Code clearly indicates the intention of the law to confine in the Bureau of Customs the determination of all questions affecting the disposal of property proceeded against in a seizure and forfeiture case. The judicial recourse of the
property owner is not in the Court of First Instance but in the Court of Tax Appeals, and only after exhausting administrative remedies in the Bureau of Customs. 3. The Bureau of Customs, is vested with exclusive authority. Even if it be assumed that in the exercise of such exclusive competence a taint of illegality may be correctly imputed, the most that can be said is that under certain circumstances the grave abuse of discretion conferred may oust it of such jurisdiction. It does not mean however that correspondingly a court of first instance is vested with competence when clearly in the light of the above decisions the law has not seen fit to do so. Bureau of Customs v. Ogario, GR No. 138081, March 30, 2000 Facts: On 09 December 1998, the District Collector of Customs of Cebu issued a Warrant of Seizure and Detention of 25,000 bags of rice, bearing the name of SNOWMAN, Milled in Palawan. According to the Economic Intelligence and Investigation Bureau (EIIB), the rice was landed in Palawan by a foreign vessel and then placed in sacks marked SNOWMAN, Milled in Palawan. It was then shipped to Cebu City on board the vessel M/V Alberto. Thereafter, forfeiture proceedings were commenced. Aggrieved, the respondents filed a complaint for injunction with the RTC of Cebu City and prayed for the issuance of the Warrant of Seizure and Detention. The RTC ruled in favor of respondents and ordered the return of the goods. Meanwhile, in the forfeiture proceedings before the Collector of Customs, a decision was rendered ordering the goods forfeited in favor of the government. Issue: Whether or not the RTC has jurisdiction to determine the probable in a seizure case Held: NO
Tariff and Customs Law; Lack of Jurisdiction of RTCs to Determine Probable Cause in Customs Cases RTCs are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the BOC and to enjoin or otherwise interfere with these proceedings. The Collector of Customs sitting in seizure and forfeiture proceedings has exclusive jurisdiction to hear and determine all questions touching on the seizure and forfeiture of dutiable goods. The Regional Trial Courts are precluded from assuming cognizance over such matters even through petitions for certiorari, prohibition or mandamus. Tariff and Customs Law; Lack of Jurisdiction of RTCs to Determine Probable Cause in Customs Cases; Rationale The rule that RTCs have no review powers over such proceedings is anchored upon the policy of placing no unnecessary hindrance on the governments drive, not only to prevent smuggling and other frauds upon Customs, but more importantly, to render effective and efficient the collection of import and export duties due the State, which enables the government to carry out the functions it has been instituted to perform. Even if the seizure by the Collector of Customs were illegal, such act does not deprive the BOC of jurisdiction thereon. TOMAS CHIA vs. ACTING COLLECTOR OF CUSTOMS (September 26, 1989) Acting on a letter-request, Collector issued Warrants of Seizure and Detention of assorted electronic and electrical equipment and other articles illegally imported into the Philippines by a syndicate and offered for sale in Tom's Electronics and Sony Merchandising stores in Quiapo. A raid was conducted and the authorities seized articles on which customs duties allegedly had not been paid. Chia filed petition for certiorari assailing that validity of the warrants.
WON there was a violation of under Section 3 of the Bill of Rights of the 1973 Constitution (not having been issued by a judge)? NO Sec 3. The right of the people to be secured in their persons, houses, papers and effects against unreasonable searches and seizures of whatever nature and for any purpose shall not be violated, and no search warrant or warrant of arrest shall issue except upon probable cause to be determined by the judge or such other responsible officer as may be authorized by law after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched, and the persons or things to be seized. 1. The Collector of Customs was "a responsible officer authorized by law" to issue the warrants, under Sections 2208 and 2209 of the TCC. SEC. 2208. RIGHT OF POLICE OFFICER TO ENTER INCLOSURE For the more effective discharge of his official duties, any person exercising the powers herein conferred, may at any time enter, pass through or search any land or inclosure or any warehouse, store or other building, not being a dwelling house. A warehouse, store or other building or inclosure used for the keeping or storage of articles does not become a dwelling house within the meaning hereof merely by reason of the fact that a person employed SEC. 2209.- SEARCH OF A DWELLING HOUSE. A dwelling house may be entered and searched only upon warrant issued by a Judge of the court or such other responsible officers as may be authorized by law, upon sworn application showing probable cause and particularly describing the place to be searched and the person or thing to be seized. 2. Warrant was even unnecessary since under Section 2536 of the TCC, goods can be seized without a search and seizure warrant when they (the goods) are openly offered for sale or kept in storage in a store. SEC. 2536. SEIZURES OF OTHER ARTICLES-The Commissioner of Customs and Collector of Customs
and/or any other customs officer, with the prior authorization in writing by the Commissioner, may demand evidence of payment of duties and taxes on foreign articles openly offered for sale or kept in storage, and if no such evidence can be produced, such articles may be seized and subjected to forfeiture proceedings: Provided, however, that during such proceedings the person or entity from whom such articles have been seized shall be given the opportunity to prove or show the source of such articles and the payment of duties and taxes thereon. 3. Lastly, Chia did not exhaust his administrative remedies, so his recourse to the SC was premature. Upon effecting the seizure of the goods, the Bureau of Customs acquired exclusive jurisdiction not only over the case but also over the goods seized for the purpose of enforcing the tariff and customs laws. The proper remedy is that a party dissatisfied with the decision of the Collector may appeal to the Commissioner of Customs, whose decision is appealable to the Court of Tax Appeals. The decision of the Court of Tax Appeals may be elevated to the Supreme Court for review. El Greco Ship Manning and Management Corp. v. Commissioner of Customs 4 December 2008 FACTS: A Warrant of Seizure and Detention was issued by the Legaspi District Collector for the 35,000 bags of imported rice shipped by M/V Criston on the ground that it allegedly left the Port of Manila without the necessary clearance from the Philippine Coast Guard. Since the warrant merely covered the cargo, but not the M/V Criston which transported it, another warrant was subsequently issued particularly for the said vessel. The 35,000 bags of rice were consequently released to the consignees, Antonio Chua Jr. and Carlos Carillo, after the two have posted the P31,450,000.00 bond required by the RTC of Tabaco, Albay. Meanwhile, as M/V Criston was under the
custody of the Bureau of Customs of the Province of Albay, the vessel was allowed to temporarily transfer to another anchorage area in order to prevent any damage which could be caused by typhoon Manang. However, M/V Criston failed to return to the Port of Tabaco after Manang had passed through the area, and was thereafter found in the waters of Bataan sporting the name M/V Neptune Breeze. The BOC District Collector of the Port of Manila issued a Warrant of Seizure and Detention against M/V Neptune Breeze in view of the vessels failure to present a clearance from its last port of call. The Legaspi District Collector subsequently ordered the forfeiture of M/V Criston (M/V Neptune Breeze), and its cargo, for violating Section 2530 (a), (f) and (k) of the TCCP. El Greco filed a Motion for Intervention and Motion to Quash with the Manila District Collector asserting that M/V Neptune Breeze was a foreign registered vessel owned by Atlantic Pacific Corporation, Inc. and different from M/V Criston. The Manila District Collector ruled in favor of El Greco for lack of probable cause showing that M/V Nuptune Breeze is the same vessel known as M/V Criston. The abovementioned ruling by the Manila District Collector was reversed by BOC when the latter ruled that M/V Neptune Breeze and M/V Criston were one the same and that the Legaspi District Collector had already acquired prior jurisdiction over the vessel. El Greco sought the reversal and accordingly filed a Petition for Review with the CTA claiming that M/V Criston is entirely different from M/V Neptune Breeze the two have different and separate Certificates of Registry, and that the decision of the Manila District Collector already became final and executory in view of the BOC Commissioners failure to act thereon within the 30-day period required under Section 2313 of the tariff and Customs Code. The 2nd Division of the CTA denied the Petition and held that both vessels were indeed one and the same by giving credence to the crime laboratory report submitted by the Philippine National Police which indicated that the M/V Criston and M/V
Neptune Breeze have similar serial numbers in their respective engines and generators. The CTA En Banc dismissed the Petition for Review filed by El Greco for lack of merit. ISSUE 1: WON there is substantial evidence that M/V Neptune is the same as M/V Criston HELD: YES The Supreme Court sustained the findings of the CTA En Banc, taking judicial notice of the fact that along with the gross tonnage, net tonnage, length and breadth of the vessel, the serial numbers of its engine and generator are the necessary information identifying the vessel: (i)n as much the same way, the identity of a land motor vehicle is established by its unique motor and chassis numbers. It is, thus, highly improbable that two totally different vessels would have engines and generators bearing the very same serial numbers; and the only logical conclusion is that they must be one and the same vessel. The SC further said that the failure of the supposed operator to appear before the Legaspi District Collector is surprising since it is highly unfathomable for a purported owner to ignore proceedings for the seizure of its vessel since it risks the loss of a property of enormous value. While the foreign registration of M/V Neptune Breeze proves that it was registered in a foreign country, it does not render impossible the conclusions consistently reached by the Legaspi District Collector, the CTA Second Division, the CTA En Banc, and the SC that M/V Neptune Breeze was the very same vessel used in the conduct of smuggling activities in the name M/V Criston. The technical rules of procedure and evidence are not strictly applied in administrative proceedings. The essence of due process in BOC proceedings is simply an opportunity to be heard or, as applied to administrative proceedings, an opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling complained of. Hence,
El Greco cannot claim that it was denied due process since it was given ample opportunity to rebut the findings of the Legaspi District Collector. Further, the fact that M/V Neptune Breeze (a.k.a. M/V Criston), was caught carrying 35,000 bags of imported rice without the necessary papers showing that they were entered lawfully through a Philippine port after the payment of appropriate taxes and duties thereon, gives rise to the presumption that the importation involved was illegal. By reason of El Grecos failure to rebut such presumption, the 35,000 bags of rice and the concerned vessel are subject to forfeiture. The penalty of forfeiture is imposed on any vessel engaged in smuggling, provided that the following conditions are present: 1.) The vessel is used unlawfully in the importation or exportation of articles into or from the Philippines; 2.) The articles are imported to or exported from any Philippine port or place, except a port of entry; or 3.) If the vessel has a capacity of less than 30 tons and is used in the importation of articles into any Philippine port or place other than a port of the Sulu Sea, where importation in such vessel may be authorized by the Commissioner, with the approval of the department head. ISSUE 2: WON the decision of the Manila District Collector had become final and executory HELD: No Section 2313 of the Tariff and Customs Code provides that in the case the BOC Commissioner fails to decide on the automatic appeal of the Collectors Decision within 30 days from receipt of the records thereof, the case shall again be deemed automatically appealed to the Secretary of Finance. R.V. Marzan Freight, Inc. v. Court of Appeals, GR No. 128064, March 4, 2004, 424 SCRA 596 jurisdiction of Collector of Customs over abandonment proceedings
Republic of the Philippines, represented by the Commissioner of Customs v. Unimex Micro-Electronic (GMBH), GR No. 166309-10, March 9, 2007 Facts: The Bureau of Customs (BOC) discovered that the Unimexs shipment to Handyware did not tally with the description appearing on the cargo manifest. Hence, BOC instituted seizure proceedings against Handyware and later issued a warrant of seizure and detention against the shipment. In 1987, a default order and forfeiture decree was issued by the Collector of Customs against Handyware. In 1992, the CTA reversed the forfeiture decree and ordered the release of the subject shipment to Unimex subject to the payment of customs duties. Unfortunately, the respondent failed to secure a writ of execution to enforce the CTA decision. Hence, it filed in the CTA a petition for the revival of the 1992 decision and prayed for the immediate release of its shipment or, in the alternative, payment of the shipments value plus damages. During the presentation of evidence, the BOC informed the court that the subject shipment could no longer be found at its warehouses. Hence, the CTA ordered the BOC Commissioner to pay respondent the commercial value of the goods based on the prevailing exchange rate at the time of their importation. Issues: 1. WON the Bureau of Customs liable for interest? 2. WON the Bureau of Customs liable for actual damages? Held: 1. No Interest may be paid either as compensation for the use of money (monetary interest) referred to in Article 1956 of the New Civil Code or as damages (compensatory interest) under Article 2209 of the NCC. There is no dispute that the case was originally filed questioning the seizure of the shipment by the BOC. The decision subject of the action for revival of judgment did not
refer to any monetary obligation by petitioner to respondent. In fact, if there was any monetary obligation mentioned, it referred to the obligation of respondent to pay the correct taxes, duties, fees and other charges before the release of the goods can be had. Interest is not chargeable against petitioner except when it has expressly stipulated to pay it or when interest is allowed by the legislature or in eminent domain cases where damages sustained by the owner take the form of interest at the legal rate. Consequently, the CAs imposition of the 12% p.a. legal interest upon the finality of the decision of this case until the value of the goods is fully paid(as forbearance of credit) is likewise bereft of any legal anchor 2. Yes Although it may be gainsaid that the satisfaction of respondents demand will ultimately fall on the government, and that, under the political doctrine of "state immunity," it cannot be held liable for governmental acts (jus imperii), we still hold that petitioner cannot escape its liability. The circumstances of this case warrant its exclusion from the purview of the state immunity doctrine. The Court cannot turn a blind eye to BOCs ineptitude and gross negligence in the safekeeping of respondents goods. The Court is likewise aware of BOCs lackadaisical attitude in failing to provide a cogent explanation on the goods disappearance, considering that they were in its custody and that they were in fact the subject of litigation. The situation does not allow us to reject respondents claim on the mere invocation of the doctrine of state immunity. Succinctly, the doctrine must be fairly observed and the State should not avail itself of this prerogative totake undue advantage of parties that may have legitimate claims against it. Accordingly, upon payment of the necessary customs duties by respondent, petitioner's "payment shall be taken from the sale or sales of goods or properties seized or forfeited by the Bureau of Customs." Nestle Philippines, Inc. v. Court of Appeals, GR No. 134114, July 6, 2001, 360 SCRA 575. period within which to file claim for refund
Commissioner of Customs and Commissioner of Internal Revenue v. The Honorable Court of Tax Appeals and Planters Products, Inc., GR No. 82618, March 16, 1989 tax officials silence is a denial of claim (unreported) Commissioner of Customs v. Philippine Phosphate Fertilizer Corporation, GR No. 144440, September 1, 2004, 437 SCRA 452. claim allowed under solutio indebiti Facts: Philphos is a domestic corporation engaged in the manufacture and production of fertilizers for domestic and international distribution; base of operations is in the Leyte Industrial Development Estate, an export processing zone It is also registered with the Export Processing Zone Authority (EPZA), now known as the Philippine Export Zone Authority (PEZA). The manufacture of fertilizers required Philphos to purchase fuel and petroleum products for its machineries from Petron, which imports the same and pays the corresponding customs duties to the Bureau of Customs; and, the ad valorem and specific taxes to the BIRRevenue. Philphos reimburses Petron for the customs duties on the purchased fuels and petroleum products which are passed on by the Petron as part of the selling price. From October 1991 until June 1992, Philphos indirectly paid P20,149,473.77 as customs duties. Philphos sought the refund of customs duties it had paid for the period covering the months of October to December 1991, and January to June, 1992 claiming tax incentives under the EPZA Law which exempts from customs and internal revenue laws, supplies brought
into the export processing zone; Philphos argued that the customs duties billed by Petron on Philphos should be refunded. Issue: WON the said products are exempt from duties and other taxes by virtue of EPZA Law? Held: YES 1. The incentives offered to enterprises duly registered with the PEZA consist, among others, of tax exemptions. These benefits may, at first blush, place the government at a disadvantage as they preclude the collection of revenue. Still, the expectation is that the tax breaks ultimately redound to the benefit of the national economy, enticing as they do more enterprises to invest and do business within the zones; thus creating more employment opportunities and infusing more dynamism to the vibrant interplay of market forces. 2. Section 17 of the EPZA Law particularizes the tax benefits accorded to duly registered enterprises. Under this provision, fuel and petroleum products are not subject to customs and internal revenue laws and regulations, nor to local tax ordinances. It is clear that Section 17(1) considers such supplies exempt even if they are used indirectly, as they had been in this case. Since the EPZA Law is silent with regards the prescriptive period for claiming refund, the Civil Code provisions on solutio indebiti shall be applied - Solutio indebiti is a quasi-contract, thus the claim for refund must be commenced within six (6) years from date of payment pursuant to Article 1145(2) of the New Civil Code. Philphoss right to refund has not yet prescribed.. Grandteq Industrial Steel Products, Inc herein represented by its President, Abelardo Gonzalez v. Hon. Sec of the DPF, CTA Case No. 8201 effect of failure to pay refund processing fee (unavailable) Rubills International, Inc. et. al. v. Napoleon L. Morales, et. al., CTA EB No. 471 (CTA Case no. 7782), July 29, 2009
decision of the Collector of Customs is not appealable to the CTA (unavailable) UNIOIL V. MORALES (CTA Case No. 7879, August 15, 2010) Unioil imported aromatic hydrocarbon, a raw material. Upon its arrival, Unioil fully paid the corresponding taxes and duties over the said products. However, there were intelligence reports that Unioil misdeclared its import, and that the aromatic hydrocarbon is in fact petroleum oil obtained from bituminous minerals subject to excise tax. Laboratory conducted by the UP-NSRI and the US Dept of Homeland Security both revealed that the imported product was indeed petroleum oil. As a result, the Customs Intelligence and Investigation Service (CIIS) requested that the Customs Commissioner issue a Warrant of Seizure and Detention (WSD) against shipments of aromatic hydrocarbon (located in Mariveles, Bataan) of Unioil for blatant violation of Sec. 2503 (Misdeclaration) of the TCCP and recommended that Unioils import be forfeited, following Section 2350, sub-para. (f), (i), (l) 3, 4 and 5 of the TCCP, as amended. After receiving a 1st Indorsement from the CIIS, the Commissioner of Customs issued a 2nd Indorsement, wherein the Commissioner forwarded the Investigation Report of the CIIS to the District Collector of Bataan for appropriate action. The 2nd Indorsement also invited the attention of the District Collector to the recommendation that a WSD be issued against the shipment of hydrocarbons of Unioil stored in Bataan. Acting on the 2nd Indorsement, the District Collector issued a WSD against the shipment of Unioil; the CIIS then seized the subject shipment. Unioil filed a Petition for Review with a Prayer for the Issuance of TRO and/or Writ of Preliminary Injunction with the CTA. The former First Division of the CTA denied the application for
TRO/injunction and dismissed the Petition for Review. The Division held that the 2nd Indorsement was a mere referral letter, not a decision or order. Hence, the CTA has no jurisdiction. Issue: W/N the CTA former First Division of the CTA erred when it treated the 2nd Indorsement as a mere referral letter. Held: No. It is only after the Commissioner of Customs has rendered a decision adverse to the petitioner that the latter may appeal said decision to the CTA under Section 3 (a) (4), Rule 4 of the 2005 Revised Rules of the CTA, as amended. "SEC. 3. Cases within the jurisdiction of the Court in Division. The Court in Division shall exercise: (a) Exclusive original over or appellate jurisdiction to review by appeal the following: xxx (4) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees, or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties in relation thereto, or other matters arising under the Customs Law or other laws administered by the Bureau of Customs; x x x Pursuant to the above provision, the CTA Court in Division has exclusive appellate jurisdiction to review by appeal the decisions of the Commissioner of Customs. Settled is the rule that the decision or order which is appealable to this Court, is that which has resolved the case with finality, and in effect terminates or finally disposes of a case, as it leaves nothing to be done by the Commissioner of Customs, as the case has been decided on the merits. Indeed, a decision connotes the adjudication or settlement of a controversy. The tenor of the 2nd Indorsement did not indicate that the Commissioner ordered the District Collector to issue a WSD against the subject shipment. The subsequent issuance of a WSD by the OIC-District Collector of the Port of Limay was
based on the investigation report and evidence presented to him. To reiterate, the Commissioner merely referred the investigation report to the OIC-Collector, Port of Limay, for appropriate action. Nowhere in the assailed 2nd Indorsement can it be shown that the same constitutes a final decision of the respondent-Commissioner It is clear, therefore, that the Petition for Review filed in C.T.A. Case No. 7879 was premature, there being no decision yet rendered by the Commissioner of Customs, which finally and actually disposed and adjudicated the seizure of petitioner's Aromatic Hydrocarbon products. Thus, the Former First Division correctly ruled that it has no jurisdiction to entertain the Petition for Review. Philippine British Assurance Co. Inc. v. Republic of the Philippines, represented by the Bureau of Customs 2 February 2010 British Assurance Co., Inc. (BACI) is a domestic insurance company which issues customs bonds to its clients in favor of the BOC, securing the release of imported goods without payment of corresponding customs duties and taxes. The Republic, through BOC, filed a complaint for collection of sum of money against BACI for outstanding unliquidated customs bonds with the BOC. Trial court ruled in favor of the Republic; CA denied the MR for lack of jurisdiction. ISSUE: WON CA has jurisdiction over the appeal and the same does not lie with the Court of Tax Appeals because the instant case is a tax collection case HELD: Yes Republic Act No. (RA) 9282 amended Section 7 of RA 1125 to read as follows:Section 7. Section 7 of the same Act is hereby amended to read as follows:
Sec. 7. Jurisdiction. - The CTA shall exercise: a. Exclusive appellate jurisdiction to review by appeal, as herein provided: xxxx 3. Decisions, orders or resolutions of the Regional Trial Courts in local tax cases originally decided or resolved by them in the exercise of their original or appellate jurisdiction. In the instant case, the original complaint filed with the trial court was in the nature of a collection case, purportedly to collect on the obligation of petitioner by virtue of the bonds executed by it in favor of respondent, essentially a contractual obligation. As petitioner correctly points out, an action to collect on a bond used to secure the payment of taxes is not a tax collection case, but rather a simple case for enforcement of a contractual liability. In Republic v. Mambulao Lumber, the SC ruled that the NIRC was inapplicable to the case and that the Republic had ten (10) years from default of payment within which to collect the indebtedness of MLC since an action based upon a surety bond cannot be considered a tax collection case but rather, such would properly be a case based on a contract. The BOCs actions in purposefully not following the procedure in the proper prosecution of a tax collection case reveal its position that the case is an action for enforcement of a contractual obligation. The SC held that the instant case is not one for tax collection hence jurisdiction properly belongs to the CA.

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Taxation Law 2 Tariff and Customs Law

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