Republic v. Court of Tax Appeals

FOURTH DIVISION [CA-G.R. SP No. 20481. December 19, 1990.] REPUBLIC OF THE PHILIPPINES (represented by the COMMISSIONER OF CUSTOMS) , petitioner , vs . COURT OF TAX APPEALS and ELECTRONIC POWER SYSTEMS CORPORATION, respondents . R E S O L U T I O N CHUA , J p : This petition for certiorari, prohibition and mandamus with preliminary injunction, which was originally filed in the Supreme Court as early as December 7, 1984 was finally referred and transferred to this Court by the former per Resolution dated April 2, 1990 pursuant to the ruling in Development Bank of the Philippines vs. The Court of Appeals and Commissioner of Customs , G.R. No. 86625, Dec. 22, 1989, to the effect that "final judgments or decrees of the Court of Tax Appeals are now within the exclusive appellate jurisdiction of the Court of Appeals" . . . and after the parties concerned had filed their required Comment, Reply, Rejoinder, Sur-rejoinder and respective Memoranda. (Rollo., pp. 169-170). The petition grounded on alleged grave abuse of discretion has the following objectives: "a) to nullify and set aside the Resolution dated August 6, 1984 (Annex 'A' hereof) issued by the respondent Court, granting the Motion for Release of Goods Under Bond filed by herein respondent Electronic Power Systems Corporation in CTA Case No. 3728, as well as the Resolution dated October 15, 1984 (Annex 'B' hereof) denying petitioner's motion for reconsideration thereof, approving the surety bond posted by respondent corporation in the amount of P2,500,000.00, and directing the Commissioner of Customs to release to the said respondent corporation the shipment in question pending final adjudication of the aforesaid CTA case; "b) the issuance of a writ of prohibition enjoining the respondent Court from executing the aforementioned impugned Resolutions; "c) the issuance of a writ of mandamus ordering the respondent Court to deny the respondent corporation's Motion for Release of Goods Under Bond; "d) the issuance of a writ of preliminary injunction and/or restraining order directing the respondent Court to desist from further acting on the matter of release under bond and/or from executing the same pending final adjudication of the instant petition." (Petition, pp. 2-3; Rollo, pp. 3-4) On December 17, 1984 the Supreme Court, without giving due course to the petition, resolved to issue and did issue a temporary restraining order enjoining respondent Court of Tax Appeals from enforcing and/or executing the challenged resolutions and from further proceeding with the matter of release of the goods under bond. (Rollo, p. 60). Since then, much water has passed under the bridge, in a manner of speaking, even as the shipment subject to seizure proceedings remain in the custody of the Bureau of Customs where, it has been widely reported recently in mass media, that goods and merchandise under seizure worth billions of pesos are rusting, rotting, deteriorating in quality, and depreciating in value due to "old-age" or obsolescence. The relevant facts on record are not disputed, viz: Private respondent is a domestic corporation engaged in the manufacture of electronic and air-conditioning equipments. On July 29, 1980 a shipment consisting of compressors, position rotary switch, thermostats and door mechanics arrived in Manila on board the S/S President Grant . This shipment was legally ordered by and consigned to private respondent. Upon arrival, said shipment was stored at Raymundo's Trading CY-CFS while awaiting the claim of its consignee, the private respondent. On December 3, 1980, private respondent caused the withdrawal of the said shipment by submitting to the Bureau of Customs what the latter subsequently discovered and believed to be falsified documents such as a Delivery Permit, a Central Bank Official Receipt and a Central Bank Release Certificate, all purporting to show that the release of said shipment to private respondent had been authorized and the corresponding duties and taxes thereon in the amount of P1,867,469.00 had been paid. Subject shipment was then transferred and brought to the warehouse of private respondent at Libis, Quezon City. On January 8, 1981, upon discovery that the supporting documents aforementioned were fake, the Collector of Customs issued a warrant of seizure and detention against the shipment in question. On January 10, 1981, the customs authorities located the subject shipment, immediately seized it, and brought it back and deposited the same in Warehouse No. 10 of the Bureau of Customs at South Harbor, Manila. Seizure proceedings was thus instituted against the shipment in question for alleged illegal withdrawal as defined under Section 2530(e) of the Tariff and Customs Code. The case was docketed as Seizure Identification No. 6-81. After hearing, where a representative of private respondent appeared, the Collector Customs on April 29. 1983 rendered a decision ordering the forfeiture of subject shipment in favor of the government. Private respondent appealed to the Collector of Customs. On January 18, 1984, the latter affirmed the decree of forfeiture. Aggrieved by the decision, private respondent on February 1, 1984 filed a Petition for Review before the Court of Tax Appeals praying that the decision of the Collector of Customs be reversed and set aside. This petition is known as CTA Case No. 3728 entitled "Electronic Power System Corporation vs. The Acting Collector of Customs" and is presently pending hearing on the merits before respondent court. The petition for review before the Court of Tax Appeals was undoubtedly filed pursuant to Section 7 of R.A. 1125 which states: " Jurisdiction The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by appeal as herein provided 1) . . . 2) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees and other money charges; seizure, detention or release of property affected; fines, forfeitures or other penalties imposed in relation thereto, or other matters under the Customs Laws or other law or part of law administered by the Bureau of Customs;" Under the foregoing provision, it is beyond question that the Court of Tax Appeals in the exercise of its exclusive appellate jurisdiction has the power to review both questions of fact and law. The proceedings therein is quite different from a special civil action under the Rules of Court where only grave abuse of discretion equivalent to error of jurisdiction constitutes the subject of review. On February 13, 1984, private respondent filed with respondent court a Motion for Release of Goods under Bond. Meanwhile, upon appropriate motion of private respondent, which petitioner did not oppose, a proper appraisal of the goods covered by subject shipment was conducted to determine the amount of the bond that might be required in the event the motion for release was granted. On August 6, 1984, after several hearings during which evidence on both sides was adduced, respondent court issued the first challenged resolution granting the release of the subject shipment pursuant to Section 11 of R.A. No. 1125 on condition that private respondent files a surety bond in the amount of P2,331,000.00 to be posted by a surety company of good standing, to guarantee the interest of the government in the event private respondent loses the main case, i.e., the seizure proceedings. Private respondent then filed a surety bond in the amount of P2,500,000.00. Petitioner moved to reconsider the order of release, but on October 15, 1984 the respondent court resolved to deny the reconsideration motion, and approved the surety bond posted. Petitioner posits three grounds in support of the instant petition, to wit: "a) The respondent corporation is not entitled to the said release as the subject shipment was seized and subsequently forfeited on account of respondent corporation's illegal withdrawal of the same from the customs warehouse through the submission of false, fictitious and falsified documents to defraud the Government of P1,867,469.00 in duties and taxes; "b) The release of subject goods under bond would in effect reward the perpetrators of the aforementioned crimes of falsification of commercial and public documents, and would render nugatory the imposition of the corresponding penalties therefor; "c) Under the circumstances, the release under bond of the articles in question would only encourage the commission of all kinds of smuggling." (pp. 4-5, Rollo) The petition is not impressed with merit. Only the first issue needs to be discussed as the others are mere conclusions derived from the first if the same is found to be tenable. That this issue is far from tenable will be shown hereafter. To begin with, the authority of respondent Court of Tax Appeals to issue the challenged resolutions is not disputed. The storm center of the controversy is whether or not respondent court grossly abused its discretion in issuing the order of release of the goods in question under bond as well as the order denying petitioner's motion for reconsideration thereof. It is quite obvious that these two challenged orders or resolutions were interlocutory in nature because, as aforestated, the hearing of the petition for review on the merits had not yet begun. As a rule, an interlocutory order is not appealable, and it may be challenged in a special civil action but only when clearly issued with grave abuse of discretion amounting to lack or excess of jurisdiction. Thus, the only question posed before us is whether or not respondent court committed grave abuse of discretion. We rule in the negative. Private respondent, as the petitioner in CTA Case No. 3728, had questioned the seizure and forfeiture orders of the Acting Collector of Customs as without legal and factual basis, and this is precisely the fundamental issue that respondent court has yet to resolve. While herein petitioner asserts that the documents presented by private respondent to the Bureau of Customs for the release of the subject shipment were fake and falsified, the truth or falsity of these assertions are still to be determined by the respondent court in a proper hearing. It is on the basis of these self-serving conclusions that petitioner, in effect, has denied private respondent possession and use of subject goods in its manufacturing business for the last nine (9) years. In support of the instant petition, petitioner cannot rely on the findings made by the Commissioner of Customs for the simple reason that the findings of fact and law made by him are not yet final and are subject to reversal by the respondent court. To rely on said findings, which are still tentative in nature, pending final adjudication by higher authority, is tantamount to putting the cart before the horse. Manifest on record are the following relevant considerations: (a) private respondent imported the subject goods for its manufacturing business; (b) said goods are not contraband or prohibited importation; (c) release of said goods is for legitimate industrial use; (d) both government and private respondent will be prejudiced by a prolonged and indefinite detention of the shipment; (e) the government's interest will be amply protected by an adequate surety bond, which has to be renewed annually, to answer for unpaid duties and taxes, if any, in the event private respondent loses its petition before the respondent court. Given the foregoing circumstances, We are not persuaded that respondent court committed grave abuse of discretion when it issued the assailed resolutions. WHEREFORE, for lack of merit, the petition is denied due course and is hereby DISMISSED. The restraining order previously issued herein is lifted and set aside. No costs. SO ORDERED. Mendoza and Victor , JJ ., concur.