DOJ Opinion No. 089, s. 2002

DOJ OPINION NO. 089 , s. 2002 October 22, 2002 Commissioner Antonio M. Bernardo Bureau of Customs Manila Sir : This has reference to your request for legal opinion regarding the authority of the Bureau of Customs to enter into a compromise agreement with a party or parties in the collection cases filed in court. You state that the Bureau of Customs has filed several collection cases in the Regional Trial Court of Manila against (a) the insurance companies which have outstanding unliquidated surety bonds amounting to a total of P3.95 billion;. (b) the National Steel Corporation (NSC) amounting to a total of P691,812,932; and (c) the grantees and transferees of fraudulently secured Tax Credit Certificates (TCCs) for the sum of 1.7 billion. You expect the resolution of these cases to drag on for several years without gin assurance that the Government will be able to collect. Hence, you have entertained the idea of entering into a compromise agreement with the parties under certain parameters. 1 In the light of the above-mentioned disclosures and representations, this Department takes it that you seek an opinion on whether the Bureau of Customs may enter into judicial compromise agreements with the parties-defendants under the given parameters. After considering the provisions of law involved and established jurisprudence, this Department is of the opinion that the Bureau of Customs, through its Commissioner, may enter into a compromise agreement or agreements in civil cases for collection of the taxes and duties due to the Government, subject to the approval of the Secretary of finance and of the court where the case is pending. EAISDH The Bureau of Customs, which is headed and subject to the management and control of the Commissioner of Customs, 2 is empowered to assess and collect the lawful revenues from imported articles and all other dues, fees, charges, fines and penalties accruing under the tariff and customs laws. 3 In the exercise of such power, it may institute administrative or judicial proceedings. 4 Judicial proceedings may either be civil or criminal. Section 2401 of the Tariff and Customs Code, as amended by Republic Act No. 9135 (2001), provides: Sec. 2401. Supervision and Control over Criminal and Civil Proceedings Civil and criminal actions and proceedings instituted in behalf of the government under the authority of this Code or other laws enforced by the Bureau shall be brought in the name of the government of the Philippines and shall be conducted by customs officers, but no civil or criminal action for the recovery of duties or the enforcement of any fine, penalty or forfeiture under this Code shall be filed without the approval of the Commissioner. In civil cases or proceedings, amicable settlements and compromises are not only allowed but actually encouraged. 5 Article 2028 of the Civil Code expressly provides that "A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced." Article 2029 of the Civil Code also states that "The court shall endeavor to persuade the litigants in a civil case to agree upon some fair compromise." These legal provisions are complemented by the Rules of Court, as amended, which makes pre-trial in civil actions mandatory, whereupon the court shall consider the "possibility of an amicable settlement or of a submission to alternative modes of dispute resolution." 6 Thus, unless there is a law that prohibits the Bureau of Customs from entering into amicable settlements and compromise agreements in civil cases, it is believed that the Bureau of Customs may conclude settlements in such cases. It has been held that any settlement concluded in a civil case is valid unless it contravenes Article 2035 of the Civil Code 7 or if the stipulations thereof are contrary to law, morals, good customs, public order or public policy. 8 Hence, any settlement in a Government's collection case, to be valid, should be fair and should not be manifestly and grossly disadvantageous to the Government. 9 Needless to state, the power of the Bureau of Customs to enter into a compromise settlement in civil cases should be exercised through its Commissioner, as head of the Bureau 10 "and upon those approval such civil cases are filed," 11 subject to the concurrence of the Secretary of Finance. The approval of the Secretary of Finance should be obtained because he is the head of the Department of Finance that is statutorily responsible for the generation of the Government's financial resources 12 and mandated to "supervise, direct and control the collection of government revenues." 13 Please be guided accordingly. Very truly yours, (SGD.) HERNANDO B. PEREZ Secretary Footnotes 1. 15% to 50% of the bond amount sans fines/surcharges for unliquidated bonds; 50% of duties and taxes sans fines/surcharges against the NSC and 30% of duties and taxes without fines/surcharges against the NSC bonding companies; and 51% to 100% of duties and taxes sans fines/surcharges against original grantees of fraudulent TCCs, 30% to 70% of duties and taxes sans fines/surcharges against stockholders or officers of original, grantee-companies after piercing the veil of corporate entity and 30% to 70% of duties and taxes sans fines/surcharges against transferees of fraudulent TCCs with reservation to run after transferors for the balance. 2. Section 23, Chapter 4, Title II, Book IV of the Administrative Code of 1987. 3. See Section 23, Chapter 4, Title II, Book IV of the Administrative Code of 1987 (EO. No. 292) and Section 602(a) of the Tariff and Customs Code of the Philippines (PD No. 1464), as amended. 4. See Parts 2 and 3, Title IV of Book II of the Tariff and Customs Code of the Philippines. 5. Republic v. Sandiganbayan , 226 SCRA 314, 319 (1993); Republic v. Sandiganbayan , 173 SCRA 72, 83 (1989). 6. Section 2(a), Rule 18 7. ART. 2035.No compromise upon the following questions shall be valid: (1) The civil status of persons; (2) The validity of a marriage or a legal separation; (3) Any ground for legal separation; (4) Future support; (5) The jurisdiction of courts; (6) Future legitime. 8. First Philippine Holdings Corporation v. Sandiganbayan , 202 SCRA 212, 220 [1991]. 9. SEC. 3. Corrupt practices of public officers . In addition to acts or omissions of public officers already penalized under existing law, the following shall constitute corrupt practices of any public officer and are hereby declared to be unlawful: xxx xxx xxx (g) Entering, on behalf of the Government, into any contract or transaction manifestly and grossly disadvantageous to the same, whether or not the public officer profited or will profit thereby. (Anti-Graft and Corrupt Practices Act [RA No. 3019], as amended) 10. Section 23, Chapter 4, Title II, Book IV, Administrative Code of 1987. 11. Section 2401, Tariff and Customs Code, supra . 12. See second paragraph, Section 2, Chapter 1, Title II, Book IV of the Administrative Code of 1987 (E.O. No. 292). 13. Section 3(3), Chapter 1, Title II, Book IV of the Administrative Code of 1987.