CTA Case No. 5264 (Resolution)

REPUBL I C (F THE PHILIPPIIIES COURT OF TAX APPEALS OUEZON CITY HERMI NIGILDO PAHATE, doing business under the na~e and sty le "FIVE RINGS ENTERPRISES AND HEISEl SHOKAI LTD. <Japan)", represented by their Attys.-in- fact YOLANDO LIM and EDUARDO FR IYALDO, Petitioner, - versus - C.T.A. CASE NO. 5264 LI CE RIO EVANGELISTA, Deputy Co�� issioner, ARNEL ALCARAZ and MAGTANS601.... SUN IGUNOO, .JR., Office of the Co��issioner and District Collector of Custo�s, _F_EB_1_2_19_96_~ I'IICP, Respondent. X- - - - - - - - - ----------- X RESO L UTION Assailed by the respondent in the instant case, through a motion for reconsideration filed on Nove�ber 24, 1995, is the resolution promulgated by this Court on 1995, the dispositive portion of which reads: ..WI-EREFORE, finding Pet it i oners' Moti on �e�~i tori ous, We het~eby ADMIT the sa� e. Hence, Respondent's Motion to Dis�iss is hereby DENIED for lack of �erit. ACCORD INGLY, Petitioners' Jltotion to Ordfn"' the Release of Six Containers Und er Bond filed on A-..tgust 9, 1995 is hel"'eby 164

RESOLUTION - C. T . A. CASE NO. 5264 -2 GRANTED there being no clear show in g of f raud on the part of the Petitioner. ln this regard, Re spondent is h ereby ORDERED to SUBMIT to this Court within ten (10> days from receipt of this Resol ution an official inventory of the cargoes subject of this case. The inventory should be witnessed by a representative of the Petitioner. Together with the Inventory, Respondent is also ORDERED to SUBMIT a valuation report on the value of the cargoes i nc luding the taxes and duties thereof for this Court to determine the amount of the bond to be put up by the Petitioner. The bond should be from a reputable insurance or surety company duly registered with the SupreMe Court and the Office of the Insurance Co��ission. A certificate fro� the Office of the Insurance Commission should be secured to the effect that the surety co�pany is financially capable of underwriting the total amount of the bond. The bond should be for an indefinite period while the case is pending before the CTA and to guarantee unconditionally its obligation to pay the Bureau of Custo�s whatever amount will be adjudged against the petitioner. The a�ount of the bond shall be one and one-half the appraised value including duties and taxes due on the vehicles. SO ORDERED... Respondent contends that aside from the existence of a p}~j,.a facll? case, there was actual fraud committed in t he subject i�portation by the petitioner, as shown by t he discovery of undeclared ite�s, notable among which were the presence of motor vehicles; that the actions of petitioner in repeatedly applying for redemption were an admission that the forfeiture was in order; and, that to allow release of the i�portation under surety bond would contravene R.A. No. 7651 which requires cash bond only in 165

RESOLUTION - C. T. A. CASE NO. 526.1t - 3- the temporary release of under forfeiture proceedings. In addition, respondent vigorously insists on the lack of JUrisdiction of this Court and the non- e)(haustton of administrative remedies attendant to the case at bar. <Ibid., pp. 3-4; pp. 127-128, CTA records) After a painstaking re-scrutiny of all the facts and circumstances involved, we hereby rule 1n favor of respondent. Indeed, facts show that petitioner opted to redee� his seized property subject of forfeiture proceeding before the Collector of Customs, MlCP, Manila. CAnne)(es "C " and "C-1" of the Petition>. On the basis of such offer to redeem, said collector endorsed her favorable recommendation there in to the Office of the Commissioner of Customs. <Anne)( "G", ibid) In reply, the 1at t er office denied In separate occasions the recom�endation of the Col lector. <Annexes "H", "K", "P" and "P-1", Ibid.) The denials directed the Collector to continue with the forfeiture proceedings and to i��ediately dispose of the subject articles in accordance with law. (Jbid.) Petitioner deemed the above directive as a pt~ec 1 us ion of his right to appeal the denial to the Commissioner of Custo�s and a way of rendering hts case ineffectual, and moot and acade�ic, if not restrained .166.

RESOLUTION - C. T. A . CASE NO. 5264 - 4- <Pet ition, p. 13, Amended Appeal, p. 12; p. 13, 10'9 CTA records> Thus, his resort to the instant petition fot~ review. The judicial remedy taken by petit1oner is premature. He has not el<ha�.tst ed a 11 remedies available to him. What he considered as a wh i�sical and capricious ordel~ or declaration of forf eiture and disposal of his shipments by respondent, a fter the latter refused h1s offer of redemption <A�ended Appeal, p. 11' p. 108, CTA records) is on the contrary f ound by this Court to be well w1thin the legal mandate of respondent. The applicable provision of the Tariff and Custo�s Code of the Philippines governing rede�ption of forfeited property states, thusly: Sec. 2307. Settle�ent of Case by Pay�ent of Fine or Rede�ption of Forfeited Property. Subject to the approval of the Commissioner, the district collector may while the case lS still pendin~ accept the settlement of any seizure case provided that the owner, importer, or consignee or his agent shall offer to pay the fine that may be imposed upon the property, or in case of forfeiture, the owner, importer, or consignee or his agent shall offer to pay the domestic market vah&e of the pl~operty. The Com�is sioner may accept the settle�ent of any seizure case on appeal in the same �anner. Upon pay�ent of the f1ne imposed or the domest ic market value, the property shall be forthwith surrendered and all liabilit1es wh1ch 16 7

RESOLUT ION - C.T. A. CASE NO. 5264 -5 may or might a t tach to t h e property by v i r tue o f t he offense which was t he occasion of the seizur e and all l i a b il ity which �i ght h ave been incurred under any cash deposit or bond given by the owner or agent in respect to s uc h proper ty shall thereupon be deemed to be discharged. Rede�pt1on of forfeited property shall not be allowed in any c ase wher e the i�portat1on is absolutely prohibited or wh e r e the surrender o f the p" operty to t h e pers on offer1ng to redeem the same would be contrary to l aw. <Underscoring supplied) I t must be observed that while the seizure c ase was sti ll pe nding, pet it ioner offere d t o r edeem his sh ip�en ts befor e the Collector. Pursuant to the above pro v is ion of law, sai d Collector made his reco� �endations and s ought t he approval of his Commissioner. Unf OJ~t unat e 1 y , t he rec o mm e n da t ions were n o t fa v orably ac t ed upon. The respondent , through Dept.tt y Co m�issio ner Licerio Eva n g elista instead directed the Col l ector~ "to co n ti nue wi t h the forfeiture proceeding s and to immed iately dispose of the subject articles in accordance with l aw." <Anne><es "H" and "P", pp. 44, 65, CTA records> Petitioner somehow misread the intentions of re s pond e nt. There was no final order or declaration of f orf eiture and disposal made by the latter. continuance of the forfeiture proceedings in accor dance wit h law was th e only directive given by respondent . 16-8

RESOLUTION - C. T. A. CASE NO. 5264 - 6- In such regard, petitioner should have followed the provision of Section 2312 of the same Code, which states, to quote: "SECTION 2312. Decision in Rction by Collector in Protest and Seizure Ca~es. ~xx In seizure cases, the Collector, aftel~ a hearing shall in writing make a declaration of forfe1ture or fix the amount of the f1ne or take such other action as may be proper." <Underscoring supplied) With the offer of redemption rejected, petitioner would have to await for the final action of the Collector on the fOJ~feitt..n~e case s t i l l pending. This, however, petitioner failed to do. He elevated his case straight up to this Court without any action of the Collector on the seizure case. Petitioner is obviously mixed-up on the procedure he has chosen. The settlement of a case by rede�ption is a separate and distinct ad�inistrative remedy with that of seizure proceedings. The former is initiated by the owner, i�porter, or consignee or his agent through an offer of payMent of the domestic market value of the sei zed property while the latter is pursued by the govern�ent at its end for alleged violation of customs law which �ay u 1t i 11at e 1 y end '-'P in forfeiture of the sei :zed propet~ty. The former can be availed of both at . 169

RESOLUTION - C. T.A. CASE NO. 5264 - 7- the level o f the Collector and th e Commissioner while a seizure c ase is conducted only at the level of the Collect or with a possible appeal to the Commissioner. It can be s aid that the resort to redemption of the seized propert y by the petitioner is in the nature of a co�pro�ise settlement by the government and itself as allowed b y custo�s law during seizure proceedings. On the ot her hand, a seizure proceeding is an onerous remedy availed o f by the government and has for its object the forf eiture or confiscation of the seized property in its favor f or alleged violation of customs law. dia�et rica lly different administrative re-medies prescr ibed by law. I t is importan t to note that the Collector of Customs rendered his final decision on the subj e ct se-izur e c a se three- (3) days after the herein petition was filed on J uly 10, 1993. ( Decision of the Collector of Cust o � s, p. 91, CTA records> Petitioner could have still shore-d up his case by filing an appeal before the Co��issioner of Custo�s within the 15-day reglement a ry period from the pro�ulgation of the decision of th e Collector and from there �ake an appeal before- this court. (Sections 2313 and 2402, Tariff and Custo�s Code of the Phili ppines) Unfort ...mat e 1 y, records fail to show 1 70

RESOLUTION - C. T. A. CASE NO. 5264 - 8- that petit ioner ever availed of such remedies up to this t i ~ne, thus rendering the decision of said Col lecto r already final and execttt ory. Also implied therefro� is the loss of petitioner's right to offer any redemption of the seized art1cles. We could only commiserate thus on the sit uation befall1ng him. another ang 1 e, pet1tioner likewise co�mitted a grave error in i�pleading wrong parties to the case at bar. The Commissioner of Customs is an indispensable party to any custo s case cognizable by the Court of Tax Appeals. It is only h1s final decision on any matter arising under the customs law or other law or part of law administered by the Bureau of Customs that is reviewable by this court. (Section 7 C2>, Republic Act No. 1 :1 i25) Deputy Com�issioner Licerio Evangelista, Messeurs Arnel Alcaraz and Magtanggol Gunigundo of the Office of the Commissioner, and the District Collector are subalterns of the Commissioner of Custo�s, and thus, have no legal standing on their own to be impleaded in this case. The only instance where they may be impleaded is when they are considered as proper parties to a case, but always with the Commissioner of Customs as the real party-in-interest. 171 .

RESOLUTION - C. T. A. CASE NO. 5261t - 9- Prescinding from the above, we find it therefore, to dwe ll on the substanti ve �erit of the issues raised by both parties due to lack of jurisdJction by he re in Com~t . WHEREFORE, In view of the foregoing, the Instant petition for review Js hereby DISMISSED for lack of meri t. SO ORDERED. t)~LG?~~ ERNESTO D. ACOSTA Pres1ding Judge SRUBA Judge ' ' L 172