CTA Case No. 4184 (Decision)

REPUBL IC ' OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY CALTEX (PHILIPPINES ) INC.~ Peti t.i.oner� ~ -- ver�s u s -- C.T.A. CASE NO. 4184 COMMISSIONER OF CUSTOMS , Res pondent. X- - - - - - - - - - - - X DEC I I DN Petitioner Caltex (Philippines) Inc., under Section 106(c) of the Tariff and Customs Code~ i s seeking from respondent Commissioner of Customs duty drawback or refund/credit of cus toms duties in the aggregate amount of P59,823,090.00 paid on imported crude oil upon the exportation of certain petro 1 r.~um products r�ef ined the ref rom. Respondent. h,!:\s f .i.l ed an c,m~;wer ~ and inc:or� pc)ra ted therein as s p~:?c: ial and/or affirmative defensf.�?~ among others, is an allegation that this Court has no jurisdiction to entertain the appeal. The pf?ti t.ion for� review f i 1ed on August 3, 1987 alleges that=

DECISION �-�� CTA CASE NO. 4184 2 1. F'eti tioner- is a corporation duly organized and e:-:isting under and by virtue of the 1aws of t.h~? F'h.i 1 i ppines, with pr inc i pa 1 of �f .ice at. 540 Padre Faura Street, Manila, Philippines. 2. . F'etitioner!l on C:\ regtJlar-� basis, e~�~ports certain petroleum produc ts, such as naphtha and grea s e, which are refined out of ~mported crude oil on which Caltex pays customs duties. 3. f :O C'Jr- SLlC h e ~�~ pCJ r t s , f:le t .it ir.Jner .in V ar i ab J. y receives, on application with the Bureau of Customs and suppor�� t<:~d by cu. 1equa te f:?V .i.dence of actual f:?:-:portat.ion of product:; such as Bur-eau of Energy Utili zation export approval, Central Bank (CB) E:-: port Declaration, Bitl of Lading, Comm ercia l Invoice and CB or agent bank certificate of do 1 L"'r- r-�r:?mi t tance, duty dra~"back � �from the Commissioner of Customs in accordance with the provisions of Section 106( c ) of the Tariff and Cu<:stoms Codr:?. 4. Sometime on November 15, 1985, the Chief of the Dt-.::\ :back Unit of the Bureau of Customs denied six (6) of petitioner's claims far duty drawback in the total amount of P59,823,090.00.

DECISION CTA CASE NO. 4184 -._,:.1 G1��� ound for denial invoked was alleged failure of petition er to mark its e:�:port declarations/per-mit with the vmr�ds "SUB.JECT TO DRAWBACK" printed in red letters along the rig~t hand margin as required by Customs Memorandum Order No. 41 - 83. 5. Pr>ti tioner- requested reconsideration citing that l t had submitted unimpeachable proof of ac tua 1 e:-:porta t.ion of its produc t.s and payment. of Customs duty subject to drawback. 6. Aforementioned Drawback Unit Chief, on ,January 27, 1986, r-ep l i.ed to pet.i tioner-' s request. "for- r-E:!t:onsid(,?r-at.icm by advising that "he has passed on said request to the Legal a nd Intelligence Services for final disposition, being the legal arm of the Commi ssio ner- of Customs". 7. Desp ite petitioner 's repeated repre- sentations with the Legal and Intelligence Ser-vices, based � o�n the gr-ound that CMO #41 - 83 does not have legal effect., the sa me having been issued by the Customs Co'Ilm;i.ssi oner- in c lear violation of no action was undertaken on petitioner's request: drc.'\wback of customs duty of F'59,823,090.00.

DECISION -� CTA CASE Np. 4184 - 4- B. Thus, sometime in Marc h, 1986, petitioner's representativ~ met ~...,i th the then Commissioner of Customs, Mr . Wigberto Tanada at his office, to -request that the claims already long pending and having taken more than the pr�esc r i bed si :�: ty (60) day for Bureau action, be expeditious!)� processed. Commissioner Tanada then instructed the Bureau of Customs Legal Services to prepare .its opinion and recommend a ticm to aid him in arriving at a decision on petitioner's clai ms. 9. Despite further� repf?a te~ of �f ic ia 1 cal ls and letters to the respondent~ no action was taken on petitioner's c laims. 10. Sometime on July 2, 1987, petitioner ca me into possession of the indorsement letter from thP Deputy Commissioner� of Customs upholding the 1 ega 1 i ty of CMO #4�1-83 and ref err� ing peti ticmer' s claims for autho~itat.ive ruling to the Minister (now Secretary) of FinancR. For better ap~:~.r-ec ia tion of the legal and factual aspects .i. n-...'o 1ved in this case, quoted hereunder is the 1st Indorsement dated March 3, 1987 of Deputy Commissioner of Customs Vicente A. 4 ' "1

.' DECISION ���� CTA CASE NO. 4184 - 5- F e r -� i a , forwar�d ing to the Minister� (now Secr-�etar�y) of Finance, for authoritative r-�uling, the drawback claims of petitioner: Respectfully forwarded to the Honorable, the Minister of Finance, t1anila~ �for-� author-�itative ruling, the within Dr-� a~A.Jbac:k Claim Nos. 44-62 - 84, 4367 - 84, 4612- 84, 4591 - 84 and 4722- 84 in the total amount of F'59,823,090.00 which was denied by our Drawback Unit for non- c:ompl ian c: e with Customs Memor� andum Or-�der-� (CMO) No. 41 -� 83 dated Sept-?mber-� 15, .199:3, the pertinent provisions thereof are as follows: "Ef�fr;;>c: t.i. ve immediate 1 y, a 11 export declarations/permits (ED/EF') to be filed with the Bureau of Customs beginning 15 S!7?ptember 1_.983 c:over� .ing shipments �for~ whid~l Dr� awb-:1 c: k Claims shall be applied for must be clearly mar� ked in n?d the word.s 9.J.J.~lJ.f::.G.T. I "Q__,J~_Bl~.W.t:~.B.~.~J~;. II !�~ !< !< .... .. "SEC. 2. r::..:~:_p_q_!�:::..t.~~:::5.~ !~.~~~~.Ds,~n-~~.--� i ..t>JJ. :i.t .Y.... t.P . ..!!l.S'.r.'J:.� -- It sha 1l be the responsibility of the exporter to mark all copies of the export declarations as described in Sec: t ion 1 above. No .... ..9.L~Y.:!..!:?..S'.f:.L ~. l .S'..i .!!!........._2. b.~_Ll..........l2.!?...___�\t:!.~.r..9g_g............P..IJ............~!.~.Y. 2..h..!..P.ftl.S!.f.J�.t...__.f. 9..L......!t:!.b. i.~. b...........tJ:.H?.........~..9..Y.i:?.Lt.f.lQ �!::..p_g _r.J:. ...... . g_!?_~J. �.c.~..t.. .i. 9.D............t..l~.? ....._o_g__t...........t>.S!_~;?.D. Pf.:PP.�.Ll..Y.:.....f.'!.l.~r.:L~_g__ �.� :-: :-: :-: II SEC . 5. t:~�!.L~S'..1..tY..............._. .~_GJ.�: t,,1~:;_g_. Failure to comply with an.y of the pnJvi.sions of this M�emorandum Or-der shall be gr-�oLtnd for deni..::\1 of the Dr� awbac::k Claim". ( Under� sc:or-�ing sup~J i.ed)

.. DECISION �- CTA CASE NO. 4184 _,. 6 �- Thi s Office upholds the legality of the said Customs Me~or-andum Or-der- No. 41 - 8 ~':: dated September- 15, 1983, as an i.mpor-tan t guide 1 ine in the i.m.p 1emen ta ti.on o �f Sec: ti.on 1.06 (c) of the � Tar- i �f f and Customs Code o �f the Phi 1 ipp .{hes and as a measur-e 1: o t pr-even ~ f .-a. Lid. on the r-e ~ enue. The con tr�ar� y v .i~w of the c 1 a iman t CAL..TEX (PHIL.) INC. is ccmta.ined .in their- letter dated September- 9, 1986 to this Bur-eau, a copy of which is attached. VICENTE A. FERIA, JR. Deputy Commiss ioner- of Customs Peti ti c. e r� Cal te:-: (Philippines) Inc. con tend s that the above- quoted 1st. Indor-sement of the Deputy Commi s sioner of Customs .is appealable or- r-e-:> vi. e wa ble by thi s Cour-t a s a decision of r-espondent Commissioner- of Customs . Hence, the pr-es ent r e cour-se. The contr-olling statute .is Section 7(2) of Re public Act No. 1125, which pr-ovides that the Cour� t o �f Ta:< Appeals has e:-:c 1 usi x.e appellate jur-isdiction to r-eview by appeal. < 2 > Q_g.~;..L~.!9.1J..?_____g_t________tJJ.E?.... ___~_g..rJ.!.m..!.~.?...!..9n.~.r.---�-�g_t C.h.~?.J;QJ!J?. in cases invo 1 v ing 1 i a b i 1 i ty for- customs duties, fees or- other- money c har�ges; seizur-e, detention or- r-elease of pr-oper-ty a f fee ted; fines, for�fei. tur-es or- c)ther- pen a 1 ties imposed in r-elation ther-eto; or- other- matter-s ar-ising under- the Customs Law

DECISION -- CTA CASE NO. 4184 �- 7 - or� other law or part o �f law administered by the Bureau of Cus toms. (Emphasis supplied.) Of course, Section 2402 of the Tariff and Customs Code al lm"is a par�ty a�ggr-ieved by a ruling of the Commissioner of Customs in any matter brought before him upon protest or by his action or ruling in any case rYf seizur-e to appeal to the Court of Tax Appeals, in the manner and within the period prescribed by law and regulation, but the ca s e at bar is ~d~ittedly not a protest case or a sei zun:? case. Neither does this case involve dumping duty wherai~ the amount imposed by the Secretary of Finance may be appealed to this Court under Sec tion 301- f of the Tariff and Customs Code; ass essment of cus toms duties automatically elevated to the Secretary of Finance whose decision is appealabl e to thi s Court if adverse to a private party under Section 2315 of the same Code. In the instant case, .neither the Commissioner of Customs nor the Secretary of Finance has rendered a decision on petitioner�~ .: claims for duty drawback in the amount of F'59,823,.090.00. After petitioner�' s c 1aims were denied by the Drawback Unit a�f the Bur-eau of Customs for non-compliance

DECISIOI\I ���- CTA CASE 1\10. 4184 -- B _.. with Cu ~-:;toms; Memor- ;:~ndum Or-der- l\lo. 41 - 8:3, ?..!:,tJJ..r..P.:., the only ac ticm taken by the Commissioner- of Customs, on the assumption that the Deputy Commissioner- of Customs was acting �for- and em his behalf, is to r-efer- or- indor-se the dr-awback claims of petitioner-, as clear-ly and plainl~ stated ther-ein, to the Minister� (now of � Finance for- l-<Jhile it is st;:~ted in th~~ indor-sement that "This Office upholds t.:he 1 ega 1 i ty of the said Customs Memor-andum Or-der- No. 41 - 83 dated September- 15, 1983'', the upholding, as E'.':�:pr-e~;;sed ther-ein~ is solely "a~; an impor-tant guicle 1 ine in the-'.' imp 1 ementa t.i.on of Sec t ..ic.m 106 (c) o�f the Tan >- �f and Customs Code of the Phi 1 i ppines c:mcl <::'l.S a measur-e to pn:�~Vf?n t. 'f r-�aud on the r-evenues". Simply put, the .i.ndor-s1:'.'ment in question is mer-ely for- the purpose of secur-ing a r-uling for- the guidance of officers and employees of the Bureau of Cu s tom~:; as the au thor-.i ty of the Commissioner- to .issue i:'l.nd pr-omulgate r-ules and r-egulations nec:ee.;sar-y to Em�for-ce the pr-ovisions of the Tar-iff ancl Customs Code is subject to appr-oval by the Secretary of Finance pursuant to Section 608 of the sa.i.d CodE�. The indor-sement did not in any manner-

DECISION CTA CASE NO. 4184 9 finally adjudicate or determine the c laims of petitioner for duty drawback . Neither did it settle petitioner's claims s o that petitioner would be i~b le to determine �when its right to '"'ppeal to this Court ace rues. Indeed, a dec ision connotes the adjudi cr. �1-.ion or� sett lem e nt of a controversy. (Phil . Amer ican Life Ins . Co. vs. Social Security Commission, L- 20383, May 2 4, 1967, 20 SCRA 163 .) It is a n elementary rule of prac:ti c:e and procedure that a decision must be in writing, pel"�sona 11 y and d i r~c: t 1 y prepar. ed by the judge (or� person or agency lawful! y au thor i zed to issue the sa me) , f::;ignE~d by him, s t a ting c learly and di st..i.nctly th<;~ fa cb; a nd the l a w em which .it is (Sec:. 1, Rule 36, Rul es of Court.) It .is thus to be fairly an d justly presumed that the term "decisions o �f the Commi ssio ner of Customs" appealable to the Court of Tax Appeals, pursuant to .its exclusive appellate juris di c tion und er Section - �.:.. 7( 2 ) of Republic Ac:t No . 1125, should comply substantially to the above r-equirements in ol"�der that, without ambiguity and difficulty, an a ggri eved t ax payer would be able to determine when hi s right to a ppeal accrues. 4 t-1 ( �u

DECISION .. . CTA CASE NO. 4184 -- .1 0 -�- Under the above provision of the Rules, it has been established that a decision contains three p<:\rts, one t he opinion, the oth,?r disposi t.ion of the case, and third the signature. The opinion is that. por- tion of the decision containing the findings of facts and conclusions o �f law. The disposition of the case is that part containing the final ~":l.nd actual disposition a.nd adjudication of the rights litigated. Findings and disposition are essential to the validity of decision judgment. (See Di rec: tot- of Lands vs. San z, 45 F'hi.l. .1.1.7; Aguirr� e vs. Aguirr-e, L-- 3 3 080, Aug . .15, 1.974, 58 SCRA 461. . ) There being no decision r� endered by the Commissioner of Custom~ which finally and ac t.ua 11 y disposed and adjudicated petitic:Hlc-?rr� 's claims �"' �for� duty drawback � or r�efund, I this Court has no j ur� isd ic tion to entertain the present appc-?a 1. Thus, i t has been held that ~'-lhere a decision of the Collector of Customs was appealed to the Secretary of Finance, and the latter ~equested the comment and rr�ecommenda tion of the Commissioner of Customs, the indor-sement of the Commissioner� is Q_gj:_ an appealable decision to the Court of Tax Appeals.

-.:. DECISION CTA CASE NO. 4184 ... .1 .1. ��. A recommendation made by a subordi nate official to his s uperior officer can in no sen se be considered a decision. (De Leon vs. Commissioner of Customs, CTA Case No. 381, Dec. 18, 1958.) The rulings of the Commissioner of Customs.~ontained in a circu lar letter is not a decision appealable to the Court of Tax Appeals. (Liberty Motors vs. Manahan, CTA Case No. 325, Jan . 22, .1957.) Even mon:0 , if the theory of petitioner Ca 1 te:-: (Philippin es , Inc:. that the 1st i ndor se ment letter of t he Deputy Commissioner of Customs is appealable or reviewable by this Court, petitioner's appeal is a lready time- barred, the petition for review in thi s case having been filed beyond the 30- day per� i.od provided under Sec: tion 11 of Republic Act No . 11.25 . As a ll eged in paragrap h 10 of the petition for� rc~vie w, "Somf.'?ti me on .July ,?.._ ' 1987, Petitioner came into possession of the indorsement l etter from the Deputy Commissioner of Customs upholding the legality of CMO #41 - 83 and referring our claims fo r au~horitative ruling to the Mini ster of F inan c:e ". The petition for review was filed on August �--:r�' 1987. ~qpnting thiri:y ( 30 ) days from cluly 2, 1987, the l <':'.St day for filing the petition

�. DECIBION ��-� CTA CASE NO . 4184 -- 12 �- for review was Augus t 1, 1987. The stat.utcH-y per-iod for appeal being jurisdict.lonal, the Court of Ta:�: Appeals � may IJ.l9..t..~�! ....R. C.9...R.J.9 di s miss the case if it is shown that the a ppea l was filed out of time. (Ker & Co. v s . Collector of Internal Re venue, L- 12396 , Jan. 31, 1962 , 4 SCRA 160.) WHEREFDF~E, the petition for� review f i 1 ed in the abovE � �m t i t 1ed case is di s mi sse cj at petitioner' s costs . S O ORDERED . Que z on City, Metro Ma nila, July 29, 1988. Pr�esi d ing ,Judg :! WE CONCUR:

...- DECISION - CTA CASE NO. 4184 - 13 - CERT I F I CAT I 0 N I hereby c ertify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13, Ar icle VIII of the Constitution. AMANTE F Pres idin Judge Court of Tax Appeals