CTA Case No. 4480 (Decision)

REPUBLIC OF THE PHILIPPINES COURT �OF TAX APPEALS QUEZON CITY HS & E SHIPPING INC., C.T.A. CASE HO~ 4480 � represented by DISPLACED, INC., PROSMEPULG3A0TE1D: 9 ~= Petitioner, 94- - versus - COHHISSIOHER OF CUSTOKS, Respondent. K- - - - - - - This is a petition for review seeking the reversal of the decision of re~pondent Commissioner of Customs dated April 2, 1990, affirming in toto the decision of the Collector of Customs, MICP ordering the forfeiture of petitioner's shipment of brand - new truck tires on the ground that these were misdeclared. Petitioner is a domestic corporation organized for the primary purpose of engaging in the business of overseas shipping. It is represented in these proceedings by DISPLACED, INC., a non-profit, non-stock corporation organized for the purpose of, among others, "support<ing) the present .program of the government under the National Reconciliation Development Program under and by virtue of the <sic) Executive Order No. 103." On March 31, 1987 the shipment in question arrived at the Manila International Container Port

- DECISION C.T.A. Case No. 4480 - 2- <MICP> �rom Singapore on board the vessel "Christine Maersk". Said shipment was covered by Bill o� Lading No. SIN-059102 and was consigned to petitioner MS & E Shipping, Inc. On June 30, 1987, be�ore the corresponding import entry could be made �or the shi~ment �in question, the Co llector o� Customs at the MICP issued a hold order against said shipment on the gr ound that the importation thereo� violated Section 2503 o� the Tari�� and Customs Code o� the Philippines ( TCCP). Subsequently, on October 26, 1987, respondent Commissioner o� Customs issued another hold order against the same shipment. On November 3, 1987, the O��icer-in-Charge� o� the CIID (now CIIS> recommended that abandonment proceedings be instituted against the a�oresaid shipment pursuant to Section 1801 o� the TCCP. However, on November 6, 1987, said recommendation was changed and the Collector a� Customs recommended instead, that seizure proceedings be instituted �or alleged violations a� Section 2503 in relation to Section 2530 <g> and <1>-3, 4 & 5 a� the TCCP. Pursuant to the latter recommendation, a warrant o� seizure and detention was issued against the shipment in question, and the corresponding seizure proceedings were commenced by the Collector o� Customs. 83 J

- DECISION C.T.A. Case No. 4480 -3- A�ter due proceedings, the Collector o� Customs rendered a proposed decision dated February 6, 1989 dismissing the seizure proceedings on the ground that since no import entry declaration had been �iled yet at the time the proceedings were commenced, no violation o� Section 2503 of the TCCP could be attributed to petitioner. The proposed decision was sent to respondent Commissioner �or review, who in his second indorsement dated September 20, denied clearance of the dra�t decision and the Collector of Customs was directed to order the forfeiture of �petitioner's shipment on the ground that petitioner violated Section 2530 <1>-3, 4 & 5 of the TCCP. Consequently, the Collector o� Customs eventually rendered and promulgated a decision dated September 28, 1989, ordering the �or�eiture o� the shipment in question. Petitioner appealed the decision o� the Collector o� Customs to respondent Commissioner. On April 2, 1990, respondent Commissioner rendered the questioned decision a��irming in toto the September 28, 1989 decision o� the Collector o� Customs. On June 25, 1990, petitioner �iled a motion �or reconsideration of the decision o� respondent Commissioner. Pending resolution o� said motion, petitioner, on August 6, 83 ~

- DECISION C.T.A. Case No. 4480 -4- 1990, �iled the instant petition. On October 8, 1990, respondent Commissioner �iled his Answer denying the material allegations o� the petition and contending, among others, that petitioner has no cause o� action and that it was not the real party in interest. A�ter both parties had presented their evidence, the Court resolved to require them to �ile their respective memoranda. However, only respondent Commissioner �iled his Memorandum on August 18, . 1993. A�ter a care�ul evaluation o� the records o� this case, the Court resolves to DENY the petition. Section 2, Rule 3 o� the Revised Rules o� Court provides in no uncertain terms that "every action must be prosecuted and de�ended in the name o� the real party in interest", and that "all persons having an i~terest in the subject o� the action and in obtaining the relie� demanded shall be joined as.plainti��s." A real party in interest is � de�ined as the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails o� the suit <Sa1onga vs. Warner, Barnes & Co., Ltd.~ G.R. No. 2246~ January 31~ 1951). It is not disputed that, prior to the �iling o� instant petition, petitioner had already disposed of ~3 2

- DECISION C.T.A. Case No. 4480 -5- all its rights and interest in the shipment in question in :favor o:f DISPLACED, INC., its purported "representative" in these proceedings, by way o:f an instrument denominated as a Deed o:f Donation dated June 7, 1988. There can be no question, therefore, that petitioner no longer has any interest in the subject of the instant proceedings. This being the case, petitioner does not stand to be adversely affec ted by, nor to bene:fit :from, the decision o:f this Court. In short, it is not the real party in interest in this case. The real party in interest in this case is DISPLACED, INC., the alleged done o:f the shipment in question. It is the latter that stands to bene:fit :from, or be adversely a:f:fected by, any disposition made by the Court o:f the instant case. In the words o:f Section 2, Rule 3 o:f the Rules o:f Court, it is the party "having an interest in the subject o:f the action and in obtaining the relie:f demanded", namely, the release o:f the shipment in question. We are not unmind:ful o:f the :fact that DISPLACED, INC. has actually appeared in and has prosecuted the instant proceedings. However, it appears that such appearance was not in its own behal:f, but as the alleged "representative" o:f petitioner MS & E Shipping, 93 3

- DECISION C.T.A. Case No. 4480 -6- Inc. In other words, DISPLACED, INC. has not been impleaded either as a party plaintiff or as a defendant in this case. ~ny decision rendered by this Court can have no binding effect on DISPLACED, INC. itself. If at all , the latter would be bound only in its capacity as the pur po rt ed "representative " of petit ioner MS & E S hipping, Inc. In Travel Wide Associa ted Sa les <Phil.), Inc. ~ ~ Court of Appeals (1 99 SCR A 205) , the Supreme Court h eld that an action that is n ot brought i n the name of the real party in interest may be dismissed on the ground t hat t he c omplaint states no cause of action . Thus: "As defined, a real party - in-interest is the party who stands to be benefi ted or injured by the judgment in the sui t, or the party e ntitled to the avails of the suit. Rule 3, Section 2, of the Rules of Court provides explicitly that 'every action must be prosecuted and defended in the name of the rea l party-in-interest. ' The party - in- interest is one who prosecutes or defends and is benefited or injured. The term applies not only to the plaintiff but to the defendant, and the suit must be dismissed i f neither of them is ~ real party - in-interest. If the suit is not brought in the !li!.!!!!t of or against the real party-in-interest, ~ motion to dismiss may be filed on the ground that the complaint states ~ cause of action . Indeed, even if the special defense is not invoked in the motion to dismiss, it would still not be deemed waived because i t is one of the two exceptions mentioned in Rule 9, Section 2, to the omnibus motion rule. The first is lack of jurisdiction, which can be invoked anytime, even on appeal.

- DECISION C.T.A. Case No. 4480 -7 - The second is lack o� a cause o� action, which can be raised even during the trial on the merits. " (ibid at 209; underscoring supplied> In the case at bar, respondent Commissioner squarely raised the defense that petitioner has no cause o� action and that the petition was not brought in the name o� the real party in interest , both in its Answer and in its Memorandum dated August 13, 1993. And as earlier stated , the records clearly show that the real party in interest, DISPLACED, INC. has not been impleaded either as a plainti�� or as a respondent . This being the case, the ruling laid down in Travel Wide Associated Sales <Phil.), Inc. (supra> is squarely applicable. WHEREFORE, in view o� the �oregoing, the Court hereby resolves to DISIHSS the petition. No pronouncement as to costs. SO ORDERED. K. GRUBA / Associate Judge 835

- DECISION C.T.A. Case No. 4480 -8 - CERTIFICATION I hereby certify that this decision was reached after du e consultation among the members of th e C o~ rt of Tax Appeals in accordance with Section 13 Article VIII of the Constitution. ~Q~~ ERNESTO D. ACOSTA Presiding J u dge Court of Tax Appeals 936