CTA Case No. 5964 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF T AX APPEALS QUEZON CITY F. F. C R UZ & CO., INC., Petiti o ner, - versus - C.T.A. CASE NO. 5964 EDG ARDO ESPIRITU in his offici a l Promu lgated: capacity as Secretary of t he Dcpa��tm cn t of Finance, AUG 09 20Dl,A�aY"'#<, Res pondent. x--- - -- - - ----- - - ------- ------------ - - - - - - ---------- - - ----- -- x DEC ISION The case at bar seeks th e reco nsid erat io n/setting as ide of th e 211 ind o rse me nt dated d December 15, 1998, issued by Res pondent, a ffirmin g the reso lution of Custom s - SGS Imports Valuation and Class ifi catio n Co mmittee class ifyin g Pre-Stressed Concrete (PC) 7 - Wi re Strand under sub-heading 73 12. 10 90 with 20% rate of duty. The facts of the case are undi sputed. On May 27, 199 8, Petitio ner impo rted 264. 12 MT o f' 7 w ire PC Strand loaded in 13 x 20 con tainers and was dec lared un de r Entry No. C-30241 -98 under TH 73 12. 10.10 at 3% rate of duty. Based on the declared tari ff headin g, duti es and ta.xes were computed as fo ll ows: Customs Duty PI 59,403 .00 VAT 552,590.00 25 0.00 IPF 98 0

DECISION- CTA CASE NO. 5964 PAGE2 On October 15 , 1998. the Burea u of C usto ms SGS - Appeals Committee II issued a resolution classifying 7 Wire PC Strand und e r l-I S 7312.10.90 at 20% rate of duty. On October 30, 1998, Petitioner moved !"o r a reco nsid eration of said resolution. or On November 12, 1998 , the Burea u C ustom <: - SGS Appeals Committee II recommended to the Commissioner o f C usto ms that th e matter be elevated to public Respondent Secretary of Finance fo r rev ie w. On December 15 , 1998 , pub! ic Respo nd e nt Secretary of Finance affirmed the resolution of the Bureau of Customs - SGS Appeals Co mmittee II classifying Pre - Stressed Concrete (PC) 7 Wire Strand under sub-heading 7312.10.90 at 20% rate of duty. About eleven (11) months th erea f"lcr, or on November 26, 1999, Petitioner filed with this Court the instant Pe titi on for Review praying that the 211d Indorsement dated December 15 , 1998 of the Secretary of Finance be recOir;idered and set aside and that the 7 Wire PC Strand be classified und er 1-JS 7229.90 at 10% rate of duty and not under HS 7312 . 10.90 which carries a 20% rate o f duty. Petitioner prese nts the propos iti ons as reaso ns of the Petition for Review that the Secretary of Finance ac ted with grave abuse of discretion amounting to lack of jurisdiction when it affirmed th e reso luti o n of" th e BOC -- SGS Appeals Committee II reclassifying 7 Wire PC und er HS 7312 . 10.90 at 20% ra te o f duty while there is a pending motion for reconsideration be fo re sa id co mmittee when it was e levated to the Secretary of Finance. Petitioner likewise mguccl th a t th e Secretary of Finance has no authority to reve rse th e decision of thi s Co urt in CTA Case No. 2568 dated May 9, 1977 in the case entitled Domingo Jose vs. The Commissioner of Customs. Hence. it said

DEC ISION - CTA CASE NO. 5964 PAGE 3 that the 2 nd Indorsement dated December 15, 1998 is invalid and has no force and effect as it was issued beyond the scope of authority o f the Secretary of Finance. On the other hand, Res pond ent asseverated that the Secretary of Fi nance has the power of control, supervision and review of the ac ts done by subordinate officials and empl oyees in hi s department, like the Bureau of Customs, pursuant to Sections 6 and 7, Chapter 2 and Secti on 39(1 ), Chapter 8, Book fV of the 1987 Administrative Code, and that the Secretary of Finance has the power to make his own commodity classification or adopt the Tari ff Commission's classifi cati on pursuant to 'Section 13 13(a) of the Tariff and Customs Code. Respondent further stated that there is nothing in the law wh ich suggests that the onl y instance when the Secretary of Finance can exercise jurisdiction over the decisions of the Collector and Commissioner of Customs is when said dec isions are adverse to the government because what the law simpl y says is that the dec isio ns that are adve rse to the government are automati call y elevated to the Secretary of Finance fo r fi nal review. Hence, Respondent prayed for the di smissal of the case for lack of merit. As j ointly stipulated by the parties, thi s Co urt is tasked to resolve the fo llowing Iss ues: 1. WHETHER OR NOT RESPONDENT SECRETARY OF FINAN CE HAS THE POWER OF CONTROL, SUPERVISION AND REVIEW OF ACTS DONE BY SUBORDINATE OFFICIAL (s ic) AND EMPLOYEES OF HIS DEPARTMENT; 2. WHETHER OR NOT RESPONDENT SECRETARY OF riNANCE IS CORRECT IN CLASS IFYING PRE - STRESSED CONCRETE (PC) 7-WIRE

r DEC ISION- CTA CASE NO. 5964 PAGE4 STRAND UNDER SUBHEADING 73 12.1 0.90 WIT H A 20% RATE OF DUTY. We do not agree with the co ntention of Petitio ner that the Respo ndent 's authority to review the decisions of the Co llector or Commissioner of Custom s is limited onl y to decisions that are adverse to the government. The Bureau of Customs is under the supervision and contro l of the Department of Finance as provided for in Book IV, T itle II , Chap ter 4, .Section 23 of the Administrati ve Code of 1997. Hence, the Secretary of Fi nance inherent in his power to revi ew shall have th e power to affirm , revise, modi fy or set aside rulings and other issuances of the Bureau of Customs, provided, the ruling or decision of the Commissioner is not yet appealed to the Court of Tax Appeals. In other words, the superv isory authority of the Secretary of Finance over the Bureau of Customs shall not extend to the administrati ve review of the ruling or decision of the Commiss ioner of C ustoms in matters already appealed to this Court. Thi s is clearl y provided in Section 23 15 of the Tari ff and Custom s Code of the Philippines (TCCP) w hich provides as fo ll ows: Section 2315. Supervisory A uthority of Commission er aiU[ of Secreta!)' of Finance in Certain Cases. If any case involving the assessment of duties, the Coll ector renders a decision adverse to the government, such decision shall automati call y be elevated to, and reviewed by, the Commissioner; and if the Collector's dec ision wo uld be affirmed by the Commissioner, such decision shall be automaticall y elevated to , and be fin all y be reviewed by, the Secretary of Finance: Provi ded, however, That if w ithin thi rty (30), days from rece ipt of the reco rd of the case by the Commi ssioner or by the Secretary of Finance, as the case may be, no dec ision is rendered by either of them, the decision under review shall become fina l and executory. Provided, further, That any party aggrieved by either the decision of the Commi ssion or of the Secretary of Finance may appeal to the

DECISION- CTA CASE NO. 5964 PAGES Court of Tax Appeals within thirty (30) days from receipt of a copy of such decision . For this purpose, Republic Act numbered eleven hundred and twenty-five is hereby amended accordingly. Except as provided in the preceding paragraph , the supervisory authority of the Secretary of Finance over the Bureau of Customs shall not extend to the administrative review of the ruling or decision of the Commissioner in matters appealed to the Court of Tax Appeals. There is nothing in the above proviso which states that the only instance when the Secretary of Finance can acquire jurisdiction over the decisions of the Collector and Commissioner of Customs is when said decisions are adverse to the government. The Jaw merely provides that decisions that are adverse to the government arc automatically elevated to the Secretary of Finance for :final review. This is intended to protect the interest of the government in the collection of taxes and customs duties in those seizure and protest cases which, without the automatic review provided therein, neither the Commissioner of Customs nor the Secretary of Finance would probably ever know the decision of a Collector of Customs in any of our far-flung ports which is favorable to the taxpayer. The owner of the goods cannot be expected to appeal the Collector' s decision when it is favorable to him . A decision that is favorable to the taxpayer would correspondingly be unfavorable to the Government, but who will appeal the Collector's decision in that case? Certainly not the collectors. Hence, the provision on automatic review (see Yaokasin vs. Commissioner of Customs, 180 SCRA 591). Further, Section 1313 ofthe TCCP, quoted below, is explicit that the rulings of the Tariff Commission is binding upon the Bureau of Customs, unless the Secretary of DG' ,'

DECISION- CTA CAS E NO. 5964 PAGE6 Finance rules otherwi se. Clearly, the Secretary of Finance has the power to make his own commodity class ification or adopt the Tariff Commission's classification. Section 1313. Information Fumished on Classification and Valu e. - a. As to classification. - When an article imported or intended to be imported is not specifically classified in this Code, the interested party, importer or foreign exporter may submit to the Tariff Commission a sample together with a full description of its component materials and uses, and request it in writing to indicate the heading under which the article is or shall be dutiable, and the Tariff Commission shall comply with such reques ts within thirty days from receipt thereof if it is satisfied that the applicati on is made in good faith , in which case class ification of the article in question upon the particular importation involved shall be made according to the headin g indicated by the Tariff Commission. Provided, however, That such rulin gs of the Tariff Commission on commodity classification, shall be binding upon the Bureau of Customs, unless the Secretary shall rul e otherwise. (Underscoring supplied) XXX XXX X XX The above provisions of law vest appellate jurisdir:tion on the Secretary of Finance over the rulings or decisions on commodity classification of the Tariff Commission which is mandated with original jurisdiction over cases of classification of imported articles not specifically classified in the Code. There is therefore no iota of doubt that the Secretary of Finance has j uri sdiction when he took cognizance of the instant case and affirmed the classificati on m ade by the Tariff Commission and by the Bureau of Customs classifying 7 Wire PC Strand under sub-heading 7312.10 90 at 20% rate of duty on December 15 , 1998. The Court is in acquiescence with Respondent' s ratiocination that the decision entitled Domingo Jose, Inc. vs. Commissioner of Customs, CTA Case No. 2568, (} ~}. .. (; ..J

DECISION - CTA CASE NO. 5964 PAGE 7 decided by this Court on May 6, 1977, which ruled that the Pre - Stressed Concrete Strand Wire should be classified under then Tariff Heading 73.15, which pe rtain to alloy steel and high carbon steel, no longer controls since the Tariff and Customs Code has undergone several amendments since that time. The present TCCP no longer contains a Tariff Heading corresponding to the said Tariff Heading 73.15. As explained by the Tariff Commission Pre - Stressed Concrete (PC) 7 Wire Strand is a stranded wire of high carbon steel used in pre - stressed concrete members to overcome the undesirable characteristics of ordinary reinforced concrete. It said that the subject article made of seven (7) solid wires had lost the essential character of an article falling within HS heading 72.29 which provides for wire of other alloy steel, as the same (7 piece solid wires) had undergone twisting operation which would conform with the coverage of HS heading 73 . 12 which provides for stranded wire, ropes, etc. Thus, the Secretary of Finance was correct when he affirmed the Tariff Commission's and the Customs' - SGS Imports Valuation and Classification Committee ruling classifying Pre - Stressed Concrete (PC) 7 Wire Strand under HS heading 7312.10.90 of the TCCP, as amended. It is settled to the point of being elementary that an administrative circul ar/ruling issued for the implementation of the law has the force and effect of law (see Peo ple vs. Que Po Lay, 94 Phil 640) and that once established and found in conform ity with the general purpose of the law, it is as much binding upon all the affected parti es as if it had been written in the original law itself (United States vs. Tupasi Molina, 29 Phil 125). Moreover, the records do not show that Petitioner filed any motion for reconsideration to the Secretary of Finance' second indorsement dated December 15,

DECISION- CTA CASE NO. 5964 PAGES 1998 despite allegations to this effect. Petitioner failed to produce the alleged February 16, 1999 letter requesting reconsideration of said second indorsement. Petitioner merely filed a Petition for Review with this Court using the letter of Undersecretary Solomon S. Cua dated October 13, 1999 as its point of reference (Annex "A", page 8, CTA records). Moreover, in the said letter, Undersecretary Solomon S. Cua made mention of an August 21, 1999 letter of Atty. Gregorio B. Chavez not the allf:ged letter of February 16, 1999. This Court believes that said letter is not the decision appealable to this Court. What should have been the subject of an appeal is the 2nd Indorsement issued by then Secretary of Finance, Edgardo B. Espiritu dated December 15, 1998 (Annex "B", page 10, CTA records). The Petition for Review was filed only on November 26, 1999 which is more than ten (1 0) months after the lapse of the thirty (30) day reglementary period. Hence, We rule that the right of the Petitioner to appeal the decision of the Secretary of Finance had already prescribed. Section 11 of Republic Act No. 1125 (The Law Creating the Court of Tax Appeals) clearly provides, thus: Section 11. Who may appeal; effect of appeal. Any person, association or corporation adversely affected by a decision or ruling of the Commissioner of Internal Revenue, the Collector of Customs or any provincial or city or Board of Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such deci sion or ruling. XXX XXX XXX The thirty-day period prescribed by the aforequoted Section 11 R. A. 11 25 . as amended, within which a taxpayer adversely affected by a decision of the Commi ssioner ~)�, 0

Dl:.CIS ION - CTA CA SE NO. 5964 PAG E 9 of lnternal Revenue, Commissioner of Customs and the Secretary of Finance should file hi s appea l in this Court, is a jurisdictional requirement, and failure of a taxpayer to lodge hi s appeal within the prescribed period bars his appeal and renders the questioned dec ision final and executory. Courts are bound to take notice of the limits of their authority and they may, by their own motion, even though the question is not raised by the pleadings, or not even suggested by counsel, recognize the want of jurisdiction and act accordingly by staying pl eadi ngs, dismissing the action or otherwise noticing the defect, at any stage of the proceedings (Ace Publications, Inc. vs. Commissioner of Customs and Collector of Customs, 11 SCRA 147). IN THE LIGHT OF ALL THE FOREGOING, .:he instant Petition for Review is DISMISSED with costs against Petitioner. SO ORDERED. ERNESTO D. ACOSTA Presiding Judge l CONCUR: Presiding Judge

DECISION- CTA CASE NO. 5964 PAGE 10 CERTIFICATION I hereby certify that the above decision was reached after due consultation with the members of the Court of Tax Appeals in accordance wi~h Section 13 , Article VHI of the Constitution. ~~-~ ERNESTO D. ACOSTA Presiding Judge B12