Armovit v. Court of Appeals

SECOND DIVISION [CA-G.R. SP No. 34130. January 12, 1998.] RAYMUNDO A. ARMOVIT , petitioner , vs . THE COURT OF APPEALS, and THE COMMISSIONER OF CUSTOMS , respondents . D E C I S I O N BUENA , J p : This is a Petition for Review of the decision of the Court of Tax Appeals in CTA Case No. 4578 which dismissed the petitioner's petition assailing the ruling of the Commissioner of Customs contained in the latter's letter of January 11, 1991, addressed to petitioner, thereby affirming the appraisal made by the Acting Collector of Customs, Manila International Container Port, relative to the assessment on a Mercedes Benz 300 SD brought into the Philippines under the "No-Dollar Used-Car Importation Scheme." The undisputed facts as summarized by the Court of Tax Appeals are as follows: "As it appears on the record, petitioner is the consignee of one 1982 model Mercedes Benz 300 SD Turbo-diesel automobile, with Engine No. 617952-12-088977 and Serial No. WB126120-12-030719 coming from his brother-donor, Dr. Herminio Armovit, which car entered the country under the "No-Dollar Used-Car Importation Rules" adopted by the Board of Investments (Annex X, Petition). Petitioner obtained a letter of authority from the Bureau of Import Services, Department of Trade and Industry, which stated in effect that said office, as required by regulations, interposes no objection to the release of said motor vehicle subject to certain conditions and exceptions as provided for in the aforesaid guidelines (Exh. A, p. 11, CTA records). Petitioner, through MOV International Forwarders, Inc., filed the corresponding Entry and Internal Revenue Declaration with the Bureau of Customs, MICP, declaring its own computation of taxes and duties in the total amount of P193,922.00 (Annexes A-1 and A-2). As propounded by the petitioner, MOV International Forwarders, Inc., his broker, used as basis in the computation of import tax and duty a publication of Maclean Hunter Market Reports, Inc., entitled "Older Car/Truck Red Book" Official Used Car Valuations for 1982-1970 Models (80th year; January 1 March 31, 1990) [Annex A-3 and A-4, Petition]. Thus, the actual market value in 1990 of a 1982 model year Mercedes Benz 300 Turbo-diesel was pegged at a 'high value' of U.S. $10,625.00. "In a letter, dated July 26, 1990, Acting District Collector of Customs Hermogenes F. Elfante at the Manila International Container Port (MICP), informed Atty. Armovit that the book value of the imported 1982 Mercedes Benz 300 SD is U.S. $36,830.00; that the total duties and taxes arrived at, per Customs computation applying existing schedules on depreciation rate on duties and taxes, is P623,639.00, and, in addition thereto, for violation of BIS preshipment authorization requirement under paragraph 3.2 of the guideline, the amount of P180,252.00 was imposed corresponding to a penalty of 30% of the total landed cost (Annex B-2, Petition, Exh. 4). "In his first endorsement of July 30, 1990, Acting Collector of Customs Elfante referred to Atty. Isauro C. Garcia, Deputy Commissioner of Customs, for his information the Customs Entry No. 55827 covering the importation of the 1982 Mercedes Benz 300 SD consigned to Atty. Raymundo A. Armovit. He also informed the Deputy Commissioner that the declared book value of U.S. $4,250.00 on the motor vehicle made by the petitioner was upgraded to U.S. $36,830.00 based on the U.S. Red Book used by the bureau of Customs. Applying therefore the existing schedules on depreciation and rate of duty and tax, the total amount of P623,639.00 has been assessed. In addition to this assessment and according to CMO No. 80-89, dated September 11, 1989, the amount of P180,252.00 corresponding to a penalty of 30% of the total landed cost was imposed for violation of the BIS pre-shipment authorization requirement under paragraph 3.2 of the 'Guidelines for the No-Dollar Importation of Second-Hand Motor Vehicles of Returning Residents/Immigrants/Qualified Donees.' (Exh. 5, p. 17, CTA records). "On August 10, 1990, Atty. Raymundo Armovit addressed a letter to the Commissioner of Customs through Atty. Benjamin Tenorio, Acting Chief, Legal, Bureau of Customs, 'appealing for the nullification' of the first Endorsement, dated 30 July 1990, coming from Collector of Customs H.F. Elfante, MICP, in effect questioning the 'basic assessment as excessive and the imposition of penalty as baseless' anchored on the following grounds: '1. the reference used in determining the value of a 1982 car is a 1989 book of value of cars, not the 1990 Red Book which enters actual market values for 1982 cars. '2. why should a 1982 model car in 1990 be given its value when its brand new in 1982 for customs-tax purposes in 1990. '3. the car value a taxpayer receives in 1990 when gifted with a 1982 car is not the car's brand new value in 1982 but its market value in 1990. '4. the computation is confiscatory and oppressive to taxpayers who are protected under the paramount rule of reasonableness of taxes. '5. the computation practically kills or runs against the policy at back of the no-dollar car importation rules. '6. discriminatory use for assessment purposes of the brand new value of undersigned's 1982 car, when in other car releases of Customs not the brand new but the 1990 actual market value of released vehicles were used [example Chevrolet Blazer T10 (Van)] of the Racelis, brokered by MOV International on 9 November 1989, Entry No. 59697-89, copy attached as Annex B.' (Annex C, Petition). llcd "On September 13, 1990, Atty. Armovit followed up his previous letter to the Commissioner of Customs, this time offering to pay the assessment under question without prejudice to the final determination by competent authority of the amounts properly due under the law (Annex D, Petition). Correspondingly, under date of September 19, 1990, petitioner was issued a Certificate of Payment No. 138129 for the amount of P803,891.00 under Informal Entry No. 55827, dated July 13, 1990, and Official Receipt No. 32741283, dated September 1990, covering duties, taxes and other charges on motor vehicle Mercedes Benz 300 SD Turbo-diesel '82 (Annexes E, E-1 and E-2, Petition). "Acting on the letter of August 10, 1990 of Atty. Armovit appealing for the nullification of the assessment made by the Acting District Collector of Customs on the aforesaid vehicle, the Commissioner of Customs in his letter of January 11, 1991, informed Atty. Armovit that he sees no cogent reason to reverse the questioned appraisal based on the following grounds: '1. Customs Memorandum Order Nos. 6-73 and 40-84 provide for the basis of valuation under the "no-dollar importation scheme." Under the said regulations, uniform valuation is obtained by getting the brand new value of the vehicle from the US Red Book, Japanese Red Book and World Car Book depending on the country of origin, duly depreciated according to year model and a deduction of 20% to arrive at the wholesale value. '2. The basis for the computation by your broker is not the official US Red Book that the Bureau is using. But as alleged, that the value is the "AS IS WHERE IS" value for a 1982 model car, then there will be no more depreciation as it would be the home consumption value. However, the fact is, we are not using that supplemental book from the United States. '3. The comparison of a utility vehicle to a luxury car is not realistic. The two are completely different. The value used as basis for the Chevrolet Blazer ($11,588.00) is what is reflected in the US Red Book under the suggested factory price. '4. Furthermore, another factor is the conversion rate used in arriving at the appraised value, plus the simple fact that your car is with penalty. '5. Lastly, the broker's computation is not binding for customs purposes. A broker is not capacitated to issue official appraisals of motor vehicles, as the final determination of the duties and taxes due to the government is a primary and vital function which the Bureau may not abdicate.' (CTA Decision, pp. 1-7; Rollo, pp. 51-57). On February 13, 1991, petitioner filed with the Court of Tax Appeals a petition assailing the ruling of the respondent Commissioner of Customs. On January 21, 1994, the Court of Tax Appeals rendered a decision, dismissing the petition. The Court of Tax Appeals ruled that the failure of petitioner to file a formal protest as required by law ( citing Sections 2308-2310 and 2312 of the Tariff and Customs Code ) was fatal to his cause; that the decision of the Collector has already become final and conclusive; and that having failed to register his protest as required by law to take exception to the ruling made by the Collector on his liability for duties, taxes and other charges which was formally communicated to the petitioner, he lost the opportunity to contest said assessment. The Court of Tax Appeals also ruled that the act of petitioner in raising his protest directly to the Commissioner of Customs as stated in his letter of August 10, 1990, is violative of the principle of exhaustion of Administrative remedies ; that the grounds raised by the petitioner before this Court could have been properly ventilated in the formal protest which he should have filed before the Collector of Customs; and that since petitioner did not avail of its remedies under the law, the Court of Tax Appeals is in no position to reopen the matter which has already been finally decided by the competent authority acting within its exclusive jurisdiction. LLpr Hence, the present recourse. Petitioner alleges that he filed a timely protest of the assessment in question and promptly paid the assessment in question, albeit under protest, in substantial compliance with controlling statute law ; that the questioned assessment for P803,891.00 dated July 30, 1990 of collector Elfante was appealed/protested by petitioner's letter-appeal filed and dated 10 August 1990 with respondent Commissioner of Customs; and that pending resolution of his letter-appeal/protest, petitioner, if only to enjoy use of his automobile, which had been gathering rust in Port Area since its arrival on 30 June 1990, with the risk of pilferage and cannibalization, offered to pay and did pay on 19 September 1990 the assessment in question, albeit under protest. Petitioner also alleges that he has exhausted all available administrative remedies before finally going to court; that respondent Commissioner of Customs never once ruled out petitioner on the technicality that he had not filed a proper protest, not even when respondent Commissioner of Customs rejected petitioner's appeal/protest, limiting his adverse decision to affirming the substantive validity of the customs collector's assessment; and that only when the dispute reached respondent Court of Tax Appeals did respondent Commissioner of Customs for the first time choke petitioner with the rope of technicality. The petitioner also argues that the Bureau of Customs' assessment is void ab initio and must be slain at sight because the use of the stale and old 79th year US Red Book by the Customs appraisers, instead of the updated and current 80th year US Red Book, in and of itself, is blatant bureaucratic tyranny and abuse , with absolutely no legal basis whatsoever. We find the petition to be without merit. For resolution are the following issues, to wit: 1. Whether or not petitioner had filed a timely protest of the assessment in question which would have prevented the decision assessment of the Collector of Customs from becoming final and executory. 2. Whether or not petitioner had exhausted all available administrative remedies before coming to court. 3. Whether or not the Bureau of Customs' assessment is void ab initio . As to the first issue, petitioner failed to file a timely protest of the assessment in question which became final and executory. The pertinent provisions of the Tariff and Customs Code provide as follows: "Section 2308. Protest and Payment upon Protest in Civil Matters . When a ruling or decision of the Collector is made whereby liability for duties, taxes, fees or other charges are determined, except the fixing of fines in seizure cases, the party adversely affected may protest such ruling or decision by presenting to the Collector at the time when payment of the amount claimed to be due the government is made, or within fifteen (15) days thereafter, a written protest setting forth his objection to the ruling or decision in question, together with the reasons therefor. No protest shall be considered unless payment of the amount due after final liquidation has first been made and the corresponding docket fee, as provided for in Section 3301 . "Section 2309. Protest Exclusive Remedy in Protestable Case . In all cases subject to protest, the interested party who desires to have the action of the Collector reviewed, shall make a protest, otherwise the action of the Collector shall be final and conclusive against him, except as to matters collectible for manifest error in the manner prescribed in section one thousand seven hundred and seven hereof. llcd "Section 2310. Form and Scope of Protest . Every protest shall be filed in accordance with the prescribed rules and regulations promulgated under this section and shall point out the particular decision or ruling of the Collector to which exception is taken or objection made, and shall indicate with reasonable precision the particular ground or grounds upon which the protesting party bases his claim for relief. "The scope of a protest shall be limited to the subject matter of a single adjustment or other independent transaction; but any number of issue may be raised in a protest with reference to the particular item or items constituting the subject matter of the protest. 'Single adjustment,' as hereinabove used, refers to the entire content of one liquidation, including all duties, fees, surcharges or fines incident thereto." "Section 2312. Decision or Action by Collector in Protest and Seizure Cases . When a protest in proper form is presented in a case where protest is required, the Collector shall issue an order for hearing within fifteen (15) days from receipt of the protest and hear the matter thus presented. Upon the termination of the hearing, the Collector shall render a decision within thirty (30) days, and if the protest is sustained, in whole or in part, he shall make the appropriate order, the entry reliquidated if necessary. ". . ." (Emphasis supplied). Petitioner did pay "under protest" on September 13, 1990, the corresponding duties and penalties assessed on the subject vehicle, and was correspondingly issued a Certificate of Payment and Official Receipts. However, petitioner failed to formally file or present to the Collector , the required protest setting forthwith his reasons therefor, in clear violation of the aforequoted provisions of law which categorically mandate that petitioner should file his written protest within fifteen (15) days after he paid the assessed duties, taxes and penalties due on the motor vehicle otherwise, the ruling of the Collector would become final and conclusive. As no formal written protest was made by petitioner before the Collector of Customs who made the ruling on his liability pursuant to the aforequoted provisions of law and the prescribed rules and regulations, the action of the Collector had become final and executory. As to the second issue, petitioner also failed to exhaust administrative remedies before coming to court. Instead of presenting his protest to the Collector as provided in Sections 2308 and 2312 , he raised his protest by way of his letter dated August 10, 1990 directly to the Commissioner of Customs. Anent the third issue, the appraisal/assessment made by the Collector and which was sustained by the Customs Commissioner is valid. Paragraph 3 . 3 of the Guidelines for the No-Dollar Importation of Second-Hand Motor Vehicle of Returning Residents/Immigrants/Qualified Donees states: "3.3 The authority issued for this purpose shall be valid for a period of 180 days from date of issue and shall indicate the taxes and duties payable on the motor vehicle for importation as estimated by the Bureau of Customs which shall be final without prejudice to foreign exchange fluctuations and/or legislative change(s) in the schedule of taxes and duties. In the assessment of taxes and duties the value shall be based on the brand new value of the vehicle taken from the U.S. Blue Book, Japan Red Book, or the World Car Year Book, depending upon the country of origin and the model of the vehicle, less applicable depreciation of ten percent (10%) per year but not to exceed fifty percent (50%) as per Customs Memorandum Order No. 1089." (Rollo, p. 24). cdll Thus, when the book value of petitioner's car used as basis for computation of taxes and duties was upgraded to US$36,830.00, the Collector was only following the procedure in the Guidelines for the No-Dollar Importation of Second-Hand Motor Vehicles of Returning Residents/Immigrants/Qualified Donees . WHEREFORE, the decision appealed from is hereby AFFIRMED and the instant petition DISMISSED. Costs against the petitioner. SO ORDERED. Guerrero and Alino-Hormachuelos, JJ . , concur.