DOJ Opinion No. 006, s. 2000

DOJ OPINION NO. 006 , s. 2000 January 18, 2000 Secretary Edgardo J. Angara Department of Agriculture Elliptical Road, Diliman Quezon City Sir : Reference is made to that Department's request for opinion as to "whether the Department of Agriculture is authorized under the law to sell the confiscated smuggled sugar to the world market and use the proceeds thereof to resuscitate the Sugar Industry." It is stated that as a result of government efforts to curtail the smuggling of sugar which has caused the oversupply of said commodity and dragged down its price to the detriment of the sugar farmers and millers, several illegal shipments of sugar have been confiscated and are now in the custody of the National Food Authority and/or the Bureau of Customs; that the President has directed the Department of Agriculture to dispose the same to remove the excess inventory from the market; and that among the options being considered by the Department is to sell the smuggled sugar to the world market through International Traders by the process of bidding with the proceeds thereof to be deposited in a trust account to be used by the Department for the development requirements of the sugar industry. The subject matter of the query is "confiscated smuggled sugar" and the issue raised is whether the Department of Agriculture has the authority under the law to sell such confiscated smuggled sugar, and if so, whether the proceeds to be derived from its sale may be used by the said Department for the development of the sugar industry. Pursuant to settled doctrine that administrative bodies derive their powers from the laws of their creation and any power sought to be exercised must be found within the four corners of the statute under which the agency proceeds (American Brass Co. vs. Wisconsin State Board of Health, 15 NW 2d 27 [1977]; Union Pacific Co. vs. Public Service Commission, 134 P. 2d 469 [1943]; Bakers-Books Co. vs. Northern Pacific Bay Co., 21 Fed. Rep. 2d 5 [1927]), we have examined the powers and functions of the Department of Agriculture under the Administrative Code of 1987 (E.O. No. 292) and we find that the power to dispose of or sell the confiscated smuggled sugar does not vest under said law in the Department of Agriculture. A corollary question arises as to which agency, if not the Department of Agriculture, is vested by law with the authority to dispose of the subject confiscated smuggled sugar. Smuggling, under the law, is defined as "an act of any person who shall fraudulently import or bring into the Philippines , or assist in so doing, any article, contrary to law or shall receive, conceal, buy, sell or in any manner facilitate the transportation, concealment, or sale of such article after importation, knowing the same to have been imported contrary to law . . . . Articles subject to this paragraph shall be known as smuggled articles " (see Sec . 3514, Part 2, Title VIII, Book II, Tariff and Customs Code of the Philippines ). Under the Tariff and Customs Code, the Bureau of Customs is burdened with the duty to prevent and suppress smuggling and other frauds upon the customs (see Sec . 602[b] Part 1, Title I, Book II, Code ). Pursuant to the said duty, the Bureau of Customs has been clothed with the authority to " exercise exclusive original jurisdiction over seizure and forfeiture cases " involving smuggled articles (see Sec . 602 [ g ], in relation to Sec. 2530, ibid .). The exclusive jurisdiction of the Bureau of Customs commences to operate from the time of the confiscation of the goods until their eventual disposition which must be in accordance with the procedure laid down under the aforesaid law. From the foregoing, it is clear that the disposition of the smuggled shipments of sugar subject of this query pertains to the Bureau of Customs and shall be governed by the provisions of the Tariff and Customs Code. Section 2612 of the said Code specifically provides: "SECTION 2612. Disposition of Smuggled Articles . Smuggled articles, after liability to seizure or forfeiture shall have been established by proper administrative or judicial proceedings in conformity with the provisions of this Code, shall be disposed of as provided for in section twenty-six hundred and ten : Provided, That articles whose importation is prohibited under Section One hundred two sub-paragraphs b, c, d, e and j shall, upon order to the Collection in writing, be burned or destroyed, in such manner as the case may require as to render them absolutely worthless, in the presence of a representative each from the Commission on Audit, Ministry of Justice; Bureau of Customs, and if possible, any representative of the private sector." (emphasis supplied.) Section 2610, cited in Section 2612, provides: "SECTION 2610. Disposition of Unsold Articles for Want of Bidders . Articles subject to sale at public auction by Customs authorities shall be sold at a price not less than the wholesale value or price in the domestic market of these or similar articles in the usual wholesale quantities and in the ordinary course of trade as determined in accordance with section twenty-three hundred and five of this Code. When any article remains unsold in at least two public biddings for want of bidders or for lack of an acceptable bid , and the article is perishable and/or suitable for official use, then the Collector shall report the matter immediately to the Commissioner of Customs who may, subject to the approval of the Secretary of Finance, authorize the official use of that article by the Bureau of Customs to promote the intensive collection of taxes and/or to help prevent or suppress smuggling and other frauds upon the Customs, and if the article is not suitable for such use, then it may be channelled to the official use of other offices of the National Government. If the article is suitable for shelter or consists of foodstuffs , clothing materials or medicines then that article shall be given to government charitable institutions through the Department of Social Services and Development . If the article offered for sale is not suitable either for official use or charity, then the same may be re-exported as government property through the Department of Trade or any other government entity through barter or sale. If the article cannot be disposed of as provided above, the Collector shall report the matter immediately to the Commissioner who may, subject to the approval of the Secretary of Finance, dispose of the article to the best advantage of the government in a negotiated private sale which shall be consummated in the presence of a representative of the Commission on Audit, in the manner provided for by this Code." (emphasis supplied.) cdll The disposition of the proceeds of the sale of the smuggled sugar shall be governed by the following provisions of the Code: "SECTION 2605. Disposition of Proceeds . The following charges shall be paid from the proceeds of the sale in the order named: a. Expenses of appraisal, advertisement and sale. b. Duties except in the case of abandoned and forfeited articles. c. Taxes and other charges due the Government. d. Government storage charges. e. Arrastre and private storage charges. f. Freight, lighterage or general average, on the voyage of importation, of which due notice shall have been given to the Collector. "SECTION 2606. Disposition of Surplus from the Proceeds of Sale of Abandoned or Forfeited Articles . Except in the case of the sale of abandoned or forfeited articles, and all articles which are not claimed by payment of duties, taxes and other charges and compliance with all legal requirements within the prescribed period, any surplus remaining after the satisfaction of all lawful charges as aforesaid shall be retained by the Collector for ten (10) days subject to the call of the owner. Upon the failure of the owner to claim such surplus within this period, the Collector shall deposit such amount with the Treasurer of the Philippines as a special deposit, to be paid to the proper claimant demanding the same within one year thereafter, upon such evidence and in such manner as the Commission on Audit shall prescribe. In all such cases the Collector shall report fully his action in the matter, together with all the particulars, to the Commissioner and to the Chairman, Commission of Audit. After one year, all unclaimed special deposits shall be considered by the bureau of Treasury as customs receipts ." (emphasis supplied.) While it is noted that the objective of the Department of Agriculture in the disposition of the smuggled shipments of sugar is commendable, the nobility of the purpose does not, however, create an authority to dispose where there is none. In fact, even in the event that the sale is undertaken by the Bureau of Customs, the utilization of the proceeds thereof is not subject to its absolute discretion but must be undertaken in accordance with the clearly delineated procedures and processes under the Tariff and Customs Code of the Philippines. Please be guided accordingly. cdlex Very truly yours, (SGD.) JUSTICE SERAFIN R. CUEVAS Secretary