Nestle Philippines, Inc. v. Court of Tax Appeals

SEVENTH DIVISION [CA-G.R. SP No. 43188. September 23, 1997.] NESTLE PHILIPPINES, INC. , (Formerly FILIPRO), petitioner , vs . COURT OF TAX APPEALS and COMMISSIONER OF CUSTOMS , respondents . D E C I S I O N GONZAGA-REYES , J p : Before us is a petition for review from the decision dated May 30, 1995 rendered by the Court of Tax Appeals in C.T.A. Case No. 4478 entitled "Nestle Philippines, Inc., (Formerly Filipro) vs. Commissioner of Customs". aisadc The antecedents of the case as summarized by the respondent court are as follows: "Petitioner is a domestic corporation duly organized and existing under the laws of the Philippines. It is a regular importer of milk and milk products for processing, distribution and sale in the Philippines. "On various dates between July and November 1984, petitioner made sixteen (16) separate importations of various milk and milk products from Belgium, France, Canada, Holland, New Zealand, and Australia. These importations were covered by separate consumption entries duly filed with the Bureau of Customs, to wit: consumption entries 42618, 46988, 52043, 46217, 45799, 45764, 48367, 51183, 45763, 20647, 21361, 21844, 22516, 22907, 51694, and 52540. "For each of these importations, the Bureau of Customs assigned the corresponding home consumption values based on existing published revision orders which in turn became the basis for the computation of the import duties that petitioner was required to pay. "xxx xxx xxx "Petitioner after payment filed various protests with the Collector of Customs which uniformly alleged that the Bureau of Customs used the wrong home consumption values in determining the dutiable value of the petitioner's importations. On various dates, petitioner claimed a refund of the alleged overpaid import duties totalling P5,008,029.08, broken down as follows: cdt "xxx xxx xxx "It appears from the petition for review that was filed before Us that neither the Collector of Customs nor the respondent Commissioner of Customs acted on the petitioner's various claims for refund." On May 30, 1995 the respondent Court of Tax Appeals rendered judgment dismissing the petition for lack of jurisdiction for petitioner's failure to attach the required customs documentary stamps on the protests filed before the Collector of Customs which are in the nature of docket fees, such failure being fatal to the protests. On July 11, 1995 a motion for reconsideration was filed by the petitioner from the said decision stating that it has fully complied with the requirement regarding the affixing of customs documentary stamps on the protests. The respondent court issued a resolution dated January 6, 1997 denying the motion for reconsideration on the ground that the petitioner failed to exhaust administrative remedies before the Commissioner of Customs as no appeal was taken by the petitioner after the Collector of Customs failed to act on the protests. The respondent court held that the exception to the rule that a petition for review to the Court of Tax Appeals may be filed even without a decision/order issued by the Commissioner of Customs when the latter failed to act on the protest for an unreasonable length of time and after having been given due notice that his failure to act on the matter will be taken by the petitioner as a denial of the claim, does not apply in this case because no appeal to the Commissioner of Customs was taken by the petitioner from the inaction of the Collector of Customs. This petition for review from the ruling of the Court of Tax Appeals was filed raising the following assignments of error: cdta "I THE RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT PETITIONER HAD FAILED TO EXHAUST ADMINISTRATIVE REMEDIES, DESPITE THE FACT THAT THE COLLECTOR OF CUSTOMS HAD FAILED FOR ALMOST SIX YEARS TO ACT ON PETITIONER'S PROTEST OR CLAIMS FOR REFUND OF OVERPAID DUTIES IN THE AGGREGATE AMOUNT OF P5,008,029.08; II THE RESPONDENT COURT GRAVELY ERRED IN HOLDING THAT IT HAS NO JURISDICTION TO ENTERTAIN THE INSTANT PETITION, EVEN WHEN THE SAME WAS FILED A FEW DAYS BEFORE THE EXPIRATION OF THE SIX YEAR PRESCRIPTIVE PERIOD, AS THE COLLECTOR AND COMMISSIONER OF CUSTOMS HAD FAILED TO ACT ON THE CLAIMS FOR REFUND FOR ALMOST SIX YEARS; III THE RESPONDENT COURT COMMITTED GRAVE ABUSE OF DISCRETION IN DISMISSING THE INSTANT PETITION ON FRIVOLOUS TECHNICALITIES AND IN NOT GRANTING THE REFUND OF OVERPAID DUTIES, WHEN IT ALREADY RULED IN C.T.A. CASE NO. 4114 THAT THERE WAS ERROR IN APPLICATION OF HOME CONSUMPTION VALUES WHICH RESULTED IN OVERPAYMENT OF DUTIES AND TAXES." The petitioner contends that the respondent court made contradictory findings to the prejudice of the petitioner's cause of action. In its decision the respondent court held that the petition for review would have been resolved on the merits even without a decision/order issued by the Commissioner of Customs due to the latter's inaction over the protest for an unreasonable length of time but the required customs documentary stamps, which are in the nature of docket fees, are not attached to the protests filed by the petitioner before the customs official; the petition was dismissed. A timely motion for reconsideration from the decision was filed wherein petitioner stated that the metered documentary customs stamps have been paid upon filing of the protest before the Collector of Customs and prayed that the petition be resolved on the merits. In its order denying the motion for reconsideration the respondent court held that the petition should be dismissed for failure to exhaust administrative remedies. The petitioner argues that the ground upon which the motion for reconsideration is denied was never considered in the decision on the merits and should not have been made the basis for the dismissal. The petitioner likewise contends that it had no other choice but to file the petition for review otherwise, the claim will be barred by prescription. The petitioner maintains that the Collector of Custom's inaction over the protest for almost six years serves as sufficient basis for the application of the exception to the rule on exhaustion of administrative remedies. Lastly, the petitioner cites the decision rendered by the Court of Tax Appeals in CTA Case No. 4114 wherein the petitioner's claim for excess payment of advance sales tax was granted based on the finding that the Collector of Customs used the wrong home consumption value. The petitioner claims that the said judgment is a clear indication of the merits of the petition. The Solicitor-General filed comment to the petition stating that the respondent court correctly dismissed the petition in view of the non-exhaustion of administrative remedies. It is on record that despite the alleged inaction of the Collector of Customs on the petitioner's protest for almost six (6) years, the petitioner did not appeal nor bring the matter to the attention of the Commissioner of Customs to whom an administrative appeal is required by law prior to resort to the Court of Tax Appeals. The case cited by the respondent court in its decision that the inaction of the Commissioner of Customs after a series of motions to resolve may be deemed a denial of the claim and that a petition for review may be filed by the Court of Tax Appeals does not apply to this case because no appeal to the Commissioner of Customs was taken by the petitioner. The petition lacks merit. The jurisdiction of the Commissioner of Customs to review on appeal the decision of the Collector of Customs is not concurrent with the appellate jurisdiction of the Court of Tax Appeals, as the adjudicative power of the former is purely administrative while the latter is judicial (Lopez and Sons Inc., vs. Court of Tax Appeals, 100 Phil. 850). Sections 2313 and 2402 of the Revised Tariff and Customs Code provide: "Section 2313. Review by the 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 days after notification in writing by the Collector of his action or decision, give written notice to the Collector and one copy furnished to the Commissioner of his desire to have the matter reviewed by the Commissioner. Thereupon the Collector shall forthwith transmit all the records of the proceedings to the Commissioner, who shall approve, modify, 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. "Section 2402. Review by the 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." Section 7 of Republic Act 1125 states: "Section 7. Jurisdiction . The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review on appeal, as herein provided: "1. . . . "2. 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 imposed in relation thereto; or other matters arising under the Customs Law or other law part of the law administered by the Bureau of Customs. cd "xxx xxx xxx" Thus, the Court of Tax Appeals has no jurisdiction to review a decision or ruling of the Collector of Customs until and unless a decision of the Commissioner of Customs is rendered and appealed to the said court. It has been uniformly held that the Court of Tax Appeals cannot take cognizance of an appeal directly filed from the ruling of the Collector of Customs without first bringing the matter on appeal with the Commissioner of Customs, as required by the Revised Customs and Tariff Code (Negros Navigation Co., Inc. vs. Commissioner of Customs and Collector of Customs of Iloilo, CTA Case No. 991, March 3, 1961; Reynolds Philippines vs. Commissioner of Internal Revenue and Collector of Customs, CTA Case No. 1101, August 1, 1961; Leuterio vs. Commissioner of Customs, CTA No. 61, June 23, 1955; See Tejam, Commentaries on the Revised Tariff and Customs Code, Vol. IV, pp. 2405-2408 and Compendium of Philippine Customs Laws and Regulations). On this ground alone, we hold that the respondent court correctly dismissed the petition for review. The respondent court can only take cognizance of an appeal from the decision of the Commissioner of Customs but not from the ruling of the Collector of Customs, which should be the subject of an administrative appeal. Moreover, the principle of exhaustion of administrative remedies requires that when an appeal to a higher administrative official is allowed, such an appeal within the administrative agency concerned should first be taken prior to resort to judicial intervention. The principle rests on the presumption that official function is regularly performed and that in the event a subordinate administrative officer committed an error, the superior administrative officer, if given the chance to review the matter, will correctly apply the administrative rule involved. Failure to exhaust administrative remedies within the administrative agency or immediate resort to court action prior to the final resolution by the administrative agency of the matter on hand is fatal to the cause of action of the aggrieved party (Sarmiento vs. Morato 203 SCRA 515; see Cortez, Philippine Administrative Law, 1984 ed., pp. 394-412). Thus, it has been held that it is the duty or legal obligation of the aggrieved party to determine if an appeal is allowed to a superior administrative officer within the agency concerned prior to filing an action in court (Quintos vs. National Stud Farm, 54 SCRA 210; Madrian vs. Sinco, 110 Phil. 160). The principle of exhaustion of administrative remedies admits of some exceptions, one of which is that invoked by the petitioner in the case before us, i.e. when due to the unreasonable delay of the administrative officer in acting on the movant's claim the movant after complying with all the procedural requirements and giving the administrative officer involved due notice that his continued inaction on the matter within a specified period will be deemed a denial of the claim, and in order to avoid the claim from being barred by prescription the aggrieved party may institute court action without waiting for the administrative resolution of his claim (Gravador vs. Mamigo, 20 SCRA 742). The exception does not apply because (1) no motion for resolution was filed nor was there any notice that continued inaction within a given period will be deemed a denial of the claim and (2) no law or jurisprudence has been brought to our attention and we are not aware of any, which prescribes a period for filing an appeal in the CTA, when there is no action as yet by the Commissioner of Customs. cd As stated by respondent court in its Resolution dated January 6, 1977, the petitioner's claim cannot be deemed to prescribe because the Collector of Customs has not acted on the protest, and the period for filing an appeal to the Commissioner of Customs has not commenced to run. Moreover, delay or inaction of a subordinate official, does not constitute an exception to the afore-cited principle as the delay should be brought to the attention of a superior administrative officer for immediate adjudication (Commissioner of Immigration vs. Vamenta, Jr., 54 SCRA 342; Barte vs. Dichoso, 47 SCRA 77). In the case before us, it was found by the respondent court, and it is not disputed by the petitioner, that while the protest was pending before the Collector of Customs for six years, the petitioner did not file any motion for early resolution of the protest before the said officer (CTA Resolution dated January 6, 1997, p. 6) nor did he appeal or bring the matter to the attention of the Commissioner of Customs, to whom an appeal is required by law, prior to invocation of the jurisdiction of the Court of Tax Appeals. When the claim was allegedly about to prescribe, a petition for review was directly filed with the Court of Tax Appeals for adjudication on the merits. The principle of "assumed denial" of the protest cannot be invoked with respect to the inaction of the Commissioner of Customs, for the reason that said Commissioner has not assumed jurisdiction over the protest. Finally, the contention raised by the petitioner that the respondent court changed its basis for denying the petition for review from non-payment of docket fees in the questioned decision to failure to exhaust administrative remedies in the resolution denying the motion for reconsideration deserves scant consideration. The change cannot be considered as reversible error as the decision of the respondent court dismissing the petition for review for non-payment of docket fees is a dismissal for non compliance with a formal requirement whereas the resolution denying the petitioner's motion for reconsideration addressed itself to the merits of the petition. We find no reversible error committed by the respondent court in dismissing the petition. WHEREFORE, the petition is DISMISSED for lack of merit. SO ORDERED. Verzola and Asuncion, JJ . , concur.