Vertex International Product and Exchange Corporation vs. Commissioner of Customs

EN BANC [C.T.A. EB CASE NO. 1160. March 4, 2015.] (C.T.A. Case No. 8193) VERTEX INTERNATIONAL PRODUCT AND EXCHANGE CORPORATION, THROUGH ITS PRESIDENT RICARDO LUZ , petitioner , vs . COMMISSIONER OF CUSTOMS, BUREAU OF CUSTOMS , respondent . DECISION CASANOVA , J p : This is an appeal, by way of a Petition for Review, 1 to nullify and set aside the Decision 2 dated February 4, 2014, which dismissed Vertex International Product and Exchange Corporation's petition on jurisdictional ground, and subsequent Resolution 3 dated April 1, 2014, which affirmed the said dismissal, both promulgated by the Court of Tax Appeal's (CTA) Third Division in CTA Case No. 8193. Petitioner is a corporation duly registered and existing under laws of the Republic of the Philippines with principal place of business at Unit 14 568-A Quirino Highway, Barangay Talipapa, Novaliches, Quezon City. 4 Respondent, on the other hand, is a government agency attached to the Department of Finance, with principal office at the Office of the Commissioner, Bureau of Customs, South Harbor, Manila. The facts of the case, 5 as found by the CTA Third Division, are as follows: "Sapang Primary Multi-Purpose Cooperative (SPMC) is a grantee of a grains business license by the National Food Authority (NFA) and/or the Philippine International Trading Corporation (PITC). On January 22, 2008, SPMC executed a Deed of Assignment in favor of petitioner over the sacks of rice subject of this case. In March 2008, a shipment of seventeen thousand eight hundred (17,800) sacks of rice consigned to PITC for the account of SPMC arrived at the Port of Manila. After assessment by respondent, the dutiable value of the shipment was determined at Five Million Two Hundred Seventy-Four Thousand Two Hundred Ninety Pesos and Eight Centavos (P5,274,290.08). PITC paid for SPMC the amount of Two Million One Hundred Ten Thousand Seven Hundred Eighteen Pesos (P2,110,718.00) as duties and taxes with a tariff rate of forty percent (40%). On March 31, 2008, the operatives of the Presidential Anti-Smuggling Group (PASG), by virtue of Mission Order No. 0108-2008 served on Adonis Carmona, entered petitioner's warehouse at No. 10 Manhattan corner Seattle Streets, Cubao, Quezon City where they found 20,000 sacks of rice inside. Parked in front of the warehouse was a 1x20 container van (No. OOLU8235734). DHETIS Per the documents submitted by the owner, the warehouse belonged to petitioner Vertex International Product and Exchange Corporation, with Ricardo Luz as its president and the rice found therein were imported by SPMC, to which a Certificate of Accreditation and Import License were respectively issued by the Customs Accreditation-Secretariat (CAS-BOC) and the NFA. The documents also showed that petitioner acquired the sacks of rice by virtue of a Deed of Assignment executed by SPMC in its favor. On April 10, 2008, the District Collector of the Port of Manila issued a Warrant of Seizure and Detention against the subject shipment for alleged violation of Section 2530 (f) and (1) (5) of the Tariff and Customs Code of the Philippines (TCCP), as amended, in relation to NFA rules and regulations. On April 16, 2008, petitioner filed a Motion to Quash the Warrant of Seizure and Detention claiming, among others, that the ownership of subject shipment was lawfully transferred by SPMC to petitioner and that PASG has no authority from COC to seize the shipment pursuant to Section 2536 of the TCCP, as amended. On April 22, 2008, the PASG filed its comment on the Motion to Quash raising the legality of the Deed of Assignment as the rights and privileges granted to SPMC cannot be assigned to a third party. Moreover, its authority to seize shipment is backed by Executive Order (E.O.) No. 624 and the deputation of the PASG Head to enforce the provisions of the TCCP, as amended issued by respondent. On May 20, 2008, the District Collector of Port of Manila quashed the Warrant of Seizure and Detention in the Order dated April 10, 2008 and ordered the release of the 20,000 sacks of rice, more or less, found in the warehouse located at No. 10 Manhattan corner Seattle Streets, Cubao, Quezon City, pursuant to Section 2313 of the TCCP, as amended. On January 7, 2010, respondent issued a Decision reversing the foregoing Order of the District Collector of Port of Manila and directed the forfeiture of the rice shipment in favor of the government. On February 17, 2010, petitioner, through its customs broker, Adonis C. Carmona, filed a Motion for Reconsideration, which respondent denied for lack of merit in the Decision dated April 16, 2010. Hence, the instant Petition for Review [was] filed on November 24, 2010. On April 5, 2011, petitioner moved to declare respondent in default for failure to file the required Answer within the period granted. It was however denied in the Resolution of April 20, 2011. On May 2, 2011, respondent filed her Comment, through registered mail, raising the following arguments: I. Petitioner was not denied due process of law in the seizure proceedings conducted below. II. The Commissioner of Customs retains jurisdiction over the subject shipment under Section 2313 of the TCC, as amended. III. The recall of the Warrant of Seizure and Detention was inappropriate because: DaECST A. There was a violation of the last paragraph of Section 2313 of the Tariff and Customs Code, as amended, in the release of subject shipment. B. Fraud attended the transfer of subject importation from the importer to petitioner. After the parties filed their respective pre-trial briefs, they submitted their Joint Stipulation of Facts and Issues and Proposed Witnesses and Exhibits on September 15, 2011 which the Court approved on September 22, 2011. During the trial, petitioner presented its lone witness Ricardo Luz . He testified, through a judicial affidavit, that as President of Vertex International Product and Exchange Corporation since 2005, he is familiar with the instant case involving the forfeiture by the BOC of bags of jasmine rice found in petitioner's warehouse located at 10 Manhattan corner Seattle Streets, Cubao, Quezon City. According to him, the bags of jasmine rice were already at petitioner's warehouse because the shipment had already been released by the BOC after the required documents such as the Import Entry and Internal Revenue Declaration (IEIRD) together with the 1) Commercial Invoice, 2) Packing List, 3) Bill of Lading, 4) Certificate of Quality, 5) Certificate of Weight, 6) Certificate of Fumigation, 7) Phytosanitary Certificate, 8) Certificate of Origin, 9) Import Permit, 10) Certification issued by PTIC, 11) Notice of Allocation and 12) Grains Business License, have been filed with the BOC. Moreover, the duties and taxes due on the said sacks of rice have already been paid at the rate provided for by law. Based on the IEIRD with Serial No. 86779831, the total amount of duties and taxes assessed against petitioner was P2,110,718.00, while the total amount paid as evidenced by Official Receipt No. 0192142 issued by the Land Bank of the Philippines on March 27, 2008 amounts to P2,110,838.00. Witness Luz further declared that all the originals of the cited documents were submitted to the PASG, which had been dissolved thus, he did not know where the documents could be retrieved. Nevertheless, he knew that petitioner owned the jasmine rice which it purchased from SPMC since he was its authorized representative in the Deed of Assignment with SPMC. The witness added that NFA granted the Import Permit to the PITC which further granted a permit to SPMC, a cooperative. Petitioner, on the other hand distributed the rice to the general public and to the members of SPMC. Petitioner rested its case as indicated in the Resolution dated July 20, 2012. For its part, respondent presented Louella D. Quevedo of the Bureau of Customs who in her Judicial Affidavit declared that as the Officer-in-Charge of the Docket Section of the Law Division of the Port of Manila, Bureau of Customs, she docketed the Seizure and Forfeiture case against petitioner as Seizure Identification No. 2008-060. She has in her custody the entire record of the said case. She was requested to certify on the authenticity of the following documents: 1) TSN of April 16, 2006, 2) Deed of Assignment dated January 22, 2008, 3) Warrant of Seizure and Detention issued by the District Collector of the Port of Manila on April 10, 2008, 4) Order dated May 20, 2008 issued by the District Collector of Manila, 5) COC's Decision dated January 7, 2010, and 6) COC's Decision dated April 16, 2010. aDSIHc Witness Quevedo further testified that she is responsible for all the incoming and outgoing documents of the Law Division as well as in the preparation of the Warrants of Seizure and Detention and docketing of protest cases, abandonments and seizures. She certifies documents based on record on file but she has no participation in the preparation and execution of the certified documents. In any event, she reads all the documents she receives before recording them in the logbook. Respondent rested after formal offer of its evidence which was resolved in the Resolution dated March 19, 2013. Despite directive, only petitioner filed a Memorandum on May 6, 2013." (Citations Omitted) On February 4, 2014, the CTA Third Division promulgated the assailed Decision, the dispositive portion of which reads as follows: " WHEREFORE , the Petition for Review dated November 24, 2010 filed by Vertex International Product and Exchange Corporation, through its President Ricardo Luz, is hereby DISMISSED , on jurisdictional ground. SO ORDERED ." On February 21, 2014, petitioner filed a Motion for Reconsideration, 6 praying for the reconsideration of the assailed Decision by reversing, annulling and setting aside respondent's Decision dated January 7, 2010 which reversed the District Collector's Order dated May 20, 2008. On April 1, 2014, the CTA Third Division rendered the assailed Resolution denying petitioner's Motion for Reconsideration for utter lack of merit. Hence, on April 25, 2014, petitioner filed the instant Petition for Review 7 with the Court En Banc . In the Resolution 8 dated May 26, 2014, the Court En Banc ordered respondent to file his comment within ten (10) days from receipt of the said Resolution. Complying thereon, respondent filed his Comment 9 on June 30, 2014. Thereafter, on August 4, 2014, the Court En Banc issued a Resolution, 10 giving due course to the instant Petition for Review and directing both parties to submit their respective Memorandum within thirty (30) days from receipt thereof. After which, the case shall be considered submitted for decision. On September 18, 2014, petitioner filed its Memorandum. 11 While, on September 23, 2014, respondent filed, via registered mail, a Manifestation and Motion (In Lieu of Comment), 12 praying that respondent be allowed to adopt his Comment as his Memorandum. Accordingly, the Court En Banc , in a Minute Resolution 13 dated October 3, 2014, noted respondent's manifestation. Thus, in the October 23, 2014 Resolution, 14 the instant case was deemed submitted for decision. Petitioner raised the following issues 15 in her Petition for Review, to wit: A. WHETHER OR NOT THE PETITION FOR REVIEW WAS FILED WITHIN THE REGLEMENTARY PERIOD aTEACS B. WHETHER OR NOT THE SEIZURE PROCEEDINGS IS VALID DESPITE THE FACT THAT THE BUREAU OF CUSTOMS HAS NOT ACQUIRED JURISDICTION OVER THE RICE C. WHETHER OR NOT THE SHIPMENT IS LEGAL Before going any further, the Court En Banc shall first delve into the propriety of petitioner's judicial appeal, being the pivotal focus of the instant Petition for Review. In its Petition, petitioner claims that the Court a quo erred in finding that petitioner's judicial appeal was belatedly filed. It stresses that a review of the records of the case reveals that there was no proof that it was furnished a copy of respondent's Decision dated January 7, 2010 and the 2nd Indorsement dated April 16, 2010. Petitioner elaborates that it only became aware of the proceedings when it obtained copies of the said Decision and 2nd Indorsement on October 25, 2010. Hence, bearing in mind that Section 11 of Republic Act (RA) No. 1125, 16 as amended, provides that an appeal shall be perfected within thirty (30) days after receipt of the decision and not on the date of its promulgation, petitioner insists that it timely filed its judicial appeal via a Petition for Review on November 24, 2010. After due consideration, We find no merit in the instant Petition for Review. Jurisdiction refers to the power of a court to hear and determine a case. To ascertain whether or not a court has jurisdiction, the provisions of the law should be inquired into. As such, Section 7 (a) (4) of RA No. 1125, as further amended by RA No. 9282, 17 enumerates one of the instances where the CTA may exercise its appellate jurisdiction. In relation thereto, Section 11 of the same Act provides the manner of appeal thereof. As quoted below: " Section 7. Jurisdiction . The CTA shall exercise: a. Exclusive appellate jurisdiction to review by appeal, as herein provided: xxx xxx 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;" (Underscoring and Emphases Ours) " Section 11. Who May Appeal; Mode of Appeal; Effect of Appeal. Any party adversely affected by a decision , ruling or inaction of the Commissioner of Internal Revenue, the Commissioner of Customs, the Secretary of Finance, the Secretary of Trade and Industry or the Secretary of Agriculture or the Central Board of Assessment Appeals or the Regional Trial Courts may file an appeal with the CTA within thirty (30) days after the receipt of such decision or ruling or after the expiration of the period fixed by law for action as referred to in Section 7(a)(2) herein. xxx xxx xxx" (Underscoring and Emphases Ours) Clearly, the CTA, being a court of special jurisdiction, can take cognizance only of matters that are clearly within its jurisdiction. 18 Furthermore, Section 2313 in relation to Section 2402 of Book II of RA No. 1937, 19 as amended by RA No. 7651, 20 sanctions respondent's automatic review in cases of seizure proceedings where the Collector's decision is adverse to the Government and provides the CTA's review on appeal of respondent's decisions in said cases. Thus: CEDHTa " Sec. 2313. Review by Commissioner . The person aggrieved by the decision or action of the Collector in any matter presented upon protest or by his action in any case of seizure may, within fifteen (15) days after notification in writing by the Collector of his action or decision, file a written notice to the Collector with a copy furnished to the Commissioner of his intention to appeal the action or decision of the Collector to the Commissioner. Thereupon the Collector shall forthwith transmit all the records of the proceedings to the Commissioner, who shall approve, modify or reverse the action or decision of the Collector and take such steps and make such orders as may be necessary to give effect to his decision: Provided, That when an appeal is filed beyond the period herein prescribed, the same shall be deemed dismissed. If in any seizure proceedings, the Collector renders a decision adverse to the Government, such decision shall be automatically reviewed by the Commissioner and the records of the case elevated within five (5) days from the promulgation of the decision of the Collector. The Commissioner shall render a decision of the automatic appeal within thirty (30) days from receipt of the records of the case. If the Collector's decision is reversed by the Commissioner, the decision of the Commissioner shall be final and executory . However, if the Collector's decision is affirmed, or if within thirty (30) days from receipt of the records of the case by the Commissioner no decision is rendered or the decision involves imported articles whose published value is Five million pesos (P5,000,000) or more, such decision shall be deemed automatically appealed to the Secretary of Finance and the records of the proceedings shall be elevated within five (5) days from the promulgation of the decision of the Commissioner or of the Collector under appeal, as the case may be: Provided, further, That if the decision of the Commissioner or of the Collector under appeal, as the case may be, is affirmed by the Secretary of Finance, or if within thirty (30) days from receipt of the records of the proceedings by the Secretary of Finance, no decision is rendered, the decision of the Secretary of Finance, or of the Commissioner, or of the Collector under appeal, as the case may be, shall become final and executory. In any seizure proceeding, the release of imported articles shall not be allowed unless and until a decision of the Collector has been confirmed in writing by the Commissioner of Customs." " Sec. 2402. Review by Court of Tax Appeals . The party aggrieved by a ruling of the Commissioner in any matter brought before him upon protest or by his action or ruling in any case of seizure may appeal to the Court of Tax Appeals , in the manner and within the period prescribed by law and regulations. Unless an appeal is made to the Court of Tax Appeals in the manner and within the period prescribed by laws and regulations, the action or ruling of the Commissioner shall be final and conclusive ." (Emphases and Underscoring Ours) Based on the foregoing, what are appealable to the CTA are cases involving protest or seizure . 21 Stated differently, the Collector's decisions are appealable to the Commissioner of Customs, whose decisions, in cases involving seizure, detention or release of property, may in turn be reviewed only by the Court of Tax Appeals. 22 In the instant case, the CTA Third Division held that "[T]here is no dispute that the Collector of Customs issued the Order quashing the WSD dated April 10, 2008 on May 20, 2008. The said Order was reversed by respondent in his Decision dated January 7, 2010 wherein he declared the forfeiture of the subject rice shipment in favor of the government. Aggrieved, petitioner filed a Motion for Reconsideration on February 17, 2010, which respondent denied for lack of merit in the Decision dated April 16, 2010. . . ." 23 Accordingly, it is clear therefrom that respondent's Decision was rendered on January 7, 2010. This fact was undisputed. What petitioner disputes is its alleged receipt of the said Decision. cTIESa Thus, in order to resolve the issue of receipt of the said Decision, We quote a portion of respondent Commissioner's Decision 24 dated April 16, 2010, as follows: "7. On 17 February 2010, herein claimant [petitioner herein] , through his customs broker, Adones C. Carmona, filed his Motion for Reconsideration dated 15 February 2010 against the abovesaid Decision of the Customs Commissioner by submitting therein that he received a copy of the Decision on 17 January 2010 ; that said Decision is not in accordance with the evidence presented and is contrary to law and procedures; that the subject shipment did not violate Section 2530 (f) and (l) of the Customs Code; that all the requirements for importation were complied with by importer Sapang Palay Multi Purpose Cooperative; that said importer filed the corresponding Import Entry and paid the corresponding duties and taxes thereon; that the transfer of ownership on the said importation to herein claimant is an exercise by Sapang Palay Multi Purpose Cooperative of its right as legitimate owner thereof; that granting without admitting that it is in violation of NFA rules and regulations, the same is not within the jurisdiction of the Bureau of Customs; and that, as such, the said Decision should be reversed and set aside. Hence this Review." (Emphasis and Underscoring Ours) Admittedly, petitioner submitted that it received respondent's January 7, 2010 Decision on January 17, 2010. Clearly, petitioner was then provided sufficient notice of the outcome of the said case. However, thereafter, in its appeal, petitioner assails the authority of its broker, asserting that "no authority to do so was given by petitioner", 25 thus, it was deprived of due process. Again, We are not convinced. The essence of procedural due process is embodied in the basic requirement of notice and a real opportunity to be heard. In administrative proceedings, such as in the case at bar, procedural due process simply means the opportunity to explain one's side or the opportunity to seek a reconsideration of the action or ruling complained of. "To be heard" does not mean only verbal arguments in court; one may be heard also through pleadings. Where opportunity to be heard, either through oral arguments or pleadings, is accorded, there is no denial of procedural due process. 26 In the administrative hearing for S. IDN. No. 2008-060 27 conducted on April 16, 2008, the hearing officer, Atty. Roberto Bauson, inquired the authority of Mr. Adones C. Carmona to represent petitioner, thus: "xxx xxx xxx HEARING OFFICER: xxx xxx xxx Before going further, I would like to ask Mr. Carmona if he has an authority to appear in behalf of Ricky Luz/Vertex? MR. CARMONA: Yes, Your Honor. HEARING OFFICER: What kind of Authority? CEASaT MR. CARMONA: Special Power of Attorney. HEARING OFFICER: Atty. Llagas, could you go over said document and tell us your comment? ATTY. LLAGAS: I have no objection with the SPA submitted which states that Mr. Adonis Carmona is the representative of Ricky Luz/Vertex International Product Exchange Corp. xxx xxx xxx." Evidently, the records of the case reveal that petitioner was aware of the January 7, 2010 Decision rendered by respondent. Therefore, We cannot give credence to petitioner's claim that it was deprived of due process. Suffice it so to say that if petitioner, indeed, was unaware of said proceedings or if the Mr. Adones C. Carmona really has no authority to represent petitioner, it should have presented evidence in addition to those already presented during its administrative appeal considering that the proceedings before the Court a quo was a trial de novo . 28 Mere allegation is not proof. 29 It must be pointed out that in the exercise of its exclusive appellate jurisdiction over the decisions of the Commissioner of Customs in cases involving seizure, detention or release of property affected, the Court in Division must necessarily review and evaluate the pieces of evidence presented at the administrative level. 30 Moreover, it is worthy to note that there is nothing in Section 2313 of Book II of RA No. 1937, as amended, which would support petitioner's contention that failure of respondent to decide the automatic appeal within thirty (30) days from receipt of records will render his decision thereafter null and void. What is clear from the provision is that in case the Customs Commissioner fails to decide within the prescribed period, the case is deemed automatically appealed to the Secretary of Finance. 31 Thus, recalling that the reckoning point of a judicial appeal shall be from the receipt of respondent's Decision, petitioner only has until February 16, 2010 within which to file its judicial appeal. In view of the foregoing, this Court cannot disregard jurisdictional conditions mandated by law; non-compliance with mandatory prescriptive periods bars a taxpayer's claim for tax refund or credit. This Court should not establish the precedent that non-compliance with mandatory and jurisdictional conditions can be excused if the claim is otherwise meritorious, particularly in claims for tax refunds or credit. Such precedent will render meaningless compliance with mandatory and jurisdictional requirements, and will open the flood gates for unscrupulous claims. Having thus concluded, the Court En Banc finds it unnecessary to determine the merit of the other issues raised in the instant Petition in view of the finding that respondent's Decision dated January 7, 2010 has already become final and executory. WHEREFORE , the instant Petition for Review is hereby DENIED for lack of merit. Accordingly, the Decision dated February 4, 2014 and Resolution dated April 1, 2014, both rendered by the CTA Third Division in CTA Case No. 8193, are AFFIRMED . SO ORDERED. (SGD.) CAESAR A. CASANOVA Associate Justice Roman G. del Rosario, P.J., Juanito C. Castaeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, Amelia R. Cotangco-Manalastas and Ma. Belen M. Ringpis-Liban, JJ., concur. Footnotes 1. CTA En Banc Rollo , pp. 1-12. 2. Annex "D", Petition for Review, CTA En Banc Rollo , pp. 21-34. 3. Annex "E", Ibid. , pp. 36-40. 4. The Parties, Id. , p. 1. 5. Annex "D", Id. , pp. 22-27. 6. Division Docket, pp. 383-393. 7. Supra No. 1. 8. CTA En Banc Rollo , pp. 42-43. 9. Ibid. , pp. 48-67. 10. Id. , pp. 69-70. 11. Id. , pp. 71-82. 12. Id. , pp. 94-97. 13. Id. , p. 99. 14. Id. , pp. 101-102. 15. Statement of the Issues, Petition for Review, CTA En Banc Rollo , p. 5. 16. An Act Creating the Court of Tax Appeals. 17. An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating its Rank to the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership, Amending for the Purpose Certain Sections of Republic Act No. 1125, as Amended, Otherwise Known as The Law Creating the Court of Tax Appeals, and for Other Purposes. 18. Allied Banking Corporation vs. CIR , G.R. No. 175097, February 5, 2010. 19. An Act to Revise and Codify the Tariff and Customs Law of the Philippines. 20. An Act to Revitalize and Strengthen the Bureau of Customs, Amending for the Purpose Certain Sections of the Tariff and Customs Code of the Philippines, as amended. 21. Sergio Carbonilla, et al. vs. Board of Airlines Representatives, et al. , G.R. Nos. 193247 and 194276, September 14, 2011. 22. See Sabino Rigor, et al., vs. Sps. Eduardo Rosales and Flora Rosales, et al. , G.R. No. L-33756, October 23, 1982 citing Andres Seeres, et al. vs. Hon. Vicente Frias, et al. , G.R. Nos. L-32921-40, June 10, 1971. 23. Decision, p. 11 (Annex "D") and Resolution, p. 3 (Annex "E"). 24. S.I. No. 2008-060 (POM), attached as Annex "B", Petition for Review, Division Docket, pp. 25-29. 25. Par. 8, Petition for Review, Division Docket, p. 5; and Par. 6, Memorandum, Division Docket, p. 307. 26. Haydee Casimiro vs. Filipino Tandog , G.R. No. 146137, June 08, 2005. 27. Exhibit "1" for the respondent. 28. Kepco Phil. Corp. vs. CIR , G.R. No. 179356, December 14, 2009. 29. Malayan Insurance vs. Philippines First Insurance , G.R. No. 184300, July 11, 2012. 30. See El Greco Ship Manning and Management Corporation, vs. Commissioner of Customs , G.R. No. 177188, December 4, 2008. 31. Ibid.