SECOND DIVISION
[G.R. No. 218194. March 7, 2018.]
REPUBLIC OF THE PHILIPPINES represented by the DEPARTMENT OF FINANCE (DOF), petitioner,vs. GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC., herein represented by its President, ABELARDO GONZALEZ, 1respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, Second Division, issued a Resolution dated07 March 2018which reads as follows: HTcADC
"G.R. No. 218194 — REPUBLIC OF THE PHILIPPINES represented by the DEPARTMENT OF FINANCE (DOF), petitioner, versus GRANDTEQ INDUSTRIAL STEEL PRODUCTS, INC., herein represented by its President, ABELARDO GONZALEZ, 1respondent.
This is a petition for review on certiorari2 under Rule 45 of the Rules of Court filed by petitioner Republic of the Philippines, represented by the Department of Finance (petitioner), which seeks to reverse and set aside the Decision 3 dated October 30, 2014 and Resolution 4 dated May 11, 2015 of the Court of Tax Appeals (CTA) En Banc in CTA EB Case No. 981. The CTA En Banc affirmed in toto the September 27, 2012 Decision and January 17, 2013 Resolution of the CTA Second Division, 5 granting respondent's claim for refund or issuance of tax credit certificate in the amount of P156,101.00, representing unutilized advance deposit under Letter of Credit (L/C) No. 066/LC/001523/06. 6
Facts
The facts as narrated by the CTA En Banc are as follows:
Respondent [Grandteq Industrial Steel Products, Inc.] applied for a Letter of Credit (L/C) in the amount of One Hundred Fifty Six Thousand One Hundred One Pesos (P156,101.00) with Metropolitan Bank and Trust Company (Metrobank) on its shipment of tool steel from Germany. Upon payment of the pre-requisite advance deposit for the said L/C in the same amount of ONE HUNDRED FIFTY SIX THOUSAND ONE HUNDRED ONE PESOS (P156,101.00), [respondent] was issued L/C No. 001523/06 as reflected in Import Entry Declaration (IED) No. 25615091.
The said importation however, did not materialize. Consequently, the unutilized L/C was cancelled on January 18, 2007, as stated in the Metrobank letter of even date.
On February 16, 2007, respondent filed a claim for refund of the said unutilized advance deposit with the District Collector of the Bureau of Customs.
Acting on the said claim for refund, the Deputy Collector for Assessment of the Port of Manila, in his 1st Indorsement dated March 16, 2007, recommended that the request for refund through tax credit be given due consideration.
On November 17, 2008, respondent paid the refund processing fee of P700.00, as evidenced by BCOR No. 158096267.
The [Bureau of Customs], via Disposition Form dated April 20, 2009, recommended the approval of respondent's claim for refund of unutilized advance deposit under L/C No. 001523/06.
However, when the refund claim of respondent was elevated to the Secretary of Finance, the latter, through 2nd Indorsement dated June 17, 2010, denied the refund claim on the ground that respondent failed to pay the required processing fee within the statutory limit. Respondent's Motion for Reconsideration was likewise denied in the 3rd Indorsement dated October 11, 2010.
Aggrieved, respondent filed a Petition for Review before the [CTA] on December 16, 2010. 7 CAIHTE
On September 27, 2012, the CTA Second Division rendered a Decision, granting respondent's claim for refund, the dispositive portion of which reads as follows:
WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby GRANTED. Accordingly, [petitioner] is hereby ORDERED TO REFUND OR ISSUE A TAX CREDIT CERTIFICATE in favor of [respondent] in the amount of P156,101.00, allegedly representing unutilized advance deposit under Letter of Credit No. 066/LC/001523/06.
SO ORDERED. 8
The CTA Second Division ruled that there is nothing in the law nor in its implementing rules that the refund processing fee should be paid within one (1) year from the cancellation of the unutilized L/C to be entitled to a claim for refund of unutilized advance customs duties; 9 and the same does not run counter to Sections 3301 and 3303 of the Tariff and Customs Code of the Philippines (TCCP) requiring the payment of charges and fees before the Bureau of Customs (BOC) may recognize any document or render any service. 10 The CTA Second Division also noted that the BOC had already recommended the approval of respondent's claim for refund and found that respondent had complied with the requirements provided by law, rules and regulations; thus, there is no reason to deny the same in view of the established doctrine that findings of fact of administrative agencies are accorded not only respect but also finality when supported by substantial evidence. 11
In a Resolution dated January 17, 2013, petitioner's motion for reconsideration was denied for lack of merit. 12
On appeal, the CTA En Banc affirmed in toto the Decision and Resolution of the CTA Second Division. 13 The CTA En Banc reiterated that respondent was able to meet the requirements under pertinent provision of the TCCP which merited the favorable action by the BOC on its refund claim; thus, to deny respondent of its right would result to unjust enrichment on the part of the government. 14
Petitioner moved for reconsideration, 15 but the same was denied by the Court En Banc for lack of merit. 16
Hence, this petition. 17
Issue
Culled from the submissions of the parties, the singular issue for this Court's resolution is whether or not respondent's failure to pay the processing fee within one (1) year from the cancellation of the unutilized letter of credit is fatal to its claim for refund of unutilized advance deposit.
Petitioner contends that pursuant to Customs Administrative Order No. 5-92 18 (CAO 5-92), in relation to Sections 3301 and 3303 of the TCCP, the filing of a claim for refund of unutilized advance customs duties necessarily includes the payment of its processing fee within one (1) year from the cancellation of the unutilized letter of credit; 19 otherwise, the claim cannot be considered as having been received or recognized by the BOC and the taxpayer's cause of action shall be barred by prescription. 20
Respondent counters that only those acts specified in Section 1708 of the TCCP shall govern the right to claim for refund of customs duties and taxes, and they do not include a prescriptive period within which to pay for the refund processing fees. 21 DETACa
The Court's Ruling
The petition lacks merit.
At the outset, the Court finds as utterly misplaced petitioner's reliance on Sections 3301 22 and 3303 23 of the TCCP as bases to deny respondent's claim for refund for failure to pay the processing fee within the one (1) year period. Sections 3301 and 3303 plainly do notimpose any fee or charge on applications/claims for refund of custom duties and taxes. The fees and charges referred to therein are imposed on manifests, permits, import/export entries, bonds, formal protest, appeals in protest and seizure cases, and other certifications of such nature.
The applicable provision in this case is Section 1708 of the TCCP, which specifically governs claims for refunds of customs duties and taxes. Said provision reads:
SEC. 1708. Claim for Refund of Duties and Taxes and Mode of Payment. — All claims for refund of duties shall be made in writing and forwarded to the Collector to whom such duties are paid, who upon receipt of such claim, shall verify the same by the records of his Office, and if found to be correct and in accordance with law, shall certify the same to the Commissioner with his recommendation together with all necessary papers and documents. Upon receipt by the Commissioner of such certified claim he shall cause the same to be paid if found correct.
If a result of the refund of customs duties there would necessarily result a corresponding refund of internal revenue taxes on the same importation, the Collector shall likewise certify the same to the Commissioner who shall cause the said excess taxes to be paid, refunded, or tax credited in favor of the importer, with advice to the Commissioner of Internal Revenue.
In relation to the foregoing, CAO 5-92 lays down the requirements and procedures in filing a claim for refund for unutilized letter of credit, to wit:
II. GENERAL ADMINISTRATIVE PROVISIONS
A. Coverage
xxx xxx xxx
C. Period to File Claim for Refund
The importer/claimant shall have a period of one (1) year from the date the totally or partially unutilized L/C is cancelled by the [Authorized Agent Bank (AAB)].
xxx xxx xxx
III. OPERATIONAL PROVISIONS
A. Procedures
1. Application for Refund under this order shall be made in a Standard Application form (Annex "A") to be filed by the claimant or authorized representatives at the Collection Division/Unit of the Port. The application shall be supported by the following documents.
a. For Totally Unutilized Letter of Credit (L/C):
1. Importer's original copy of the Import Entry Declaration (IED) and BCOR; AaCTcI
2. Clearance number and date of issue by the Liquidation and Billing Division (LBD) and Collection Service;
3. Certification of AAB as to cancellation of L/C because there are no corresponding importation made whatsoever, no outward remittance of foreign exchange, and no automatic refund of the advance customs duties as allowed by CB 909 have ever been effected.
xxx xxx xxx
2. Collection Division/Unit of the Port, as main office of the District Collector of Customs level, receives the application, checks the same for completeness and attaches the checklist, (Annex "B"), gives the application its docket number, indicates the date of receipt thereof, initials the same and returns a copy of application to claimant. Claims not supported by all requirements are returned to the claimant.
xxx xxx xxx
3. The RAD verifies the claim from the list of cancelled LCs to be provided by Central Bank, Current Imports Commodity Classification Department (CB, CICCD), prepares certification of payment remittance and transmits all pertinent documents to the Accounting Division (AD).
4. The AD processes the claim and prepares the following:
a. Journal Voucher for the Commissioner's approval;
b. Tax Credit Certificate (TCC) and Disposition Form for the approval of the Deputy Commissioner for Revenue Monitoring Group.
5. The claim folder with signed TCC is returned to the Accounting Division for final recording and release to claimant or its authorized representative.
As can be gleaned from the foregoing, while CAO 5-92 sets the period within which to file a claim for refund to one (1) year from the cancellation of the unutilized L/C, nothing therein requires the payment of charges and fees within the same one (1) year period before the BOC may act on the refund claim or for the taxpayer to be entitled to the claimed amount. In fact, neither Section 1708 of the TCCP nor CAO 5-92 provides a prescriptive period within which to pay the processing fee or a penalty for non-payment thereof. It was therefore erroneous for petitioner to incessantly deny respondent's claim based on a ground not provided by law nor its implementing rules.
Moreover, the mandate under Section 1708 of the TCCP in relation to CAO 5-92 is clear and simple: in all claims for refund of customs duties and taxes, including unutilized advance deposit of custom duties, the Collector to whom such customs duties are paid and upon receipt of such claim, with supporting documents, shall verify the same by the records of his Office; and if it is found that there was indeed an advance payment of customs duties and the same was not utilized, the Collector shall issue a certification and the corresponding tax credit certificate for the Commissioner's or his authorized representative's approval. 24 ETHIDa
Notably, in this case, the Deputy Collector for Assessment of the Port of Manila found respondent's claim for refund in order and consequently issued the 1st Indorsement dated March 16, 2007 recommending respondent's request for refund to be given consideration. 25 The BOC, in turn, thru Disposition Form dated April 20, 2009, recommended the approval of respondent's claim for refund of its unutilized advance deposit under L/C No. 066/LC/001523/06. 26 Moreover, the CTA found that respondent's claim was timely filed and the corresponding processing fee was in fact paid. 27 Thus, the CTA was correct in ruling that to deny respondent of its right to the unutilized L/C would constitute unjust enrichment on the part of the government. 28
At this juncture, it is well to remind petitioner that technicalities and legalism, however exalted, must yield to the higher interest of substantial justice, equity and fair play. The government has no right to keep money not belonging to it, thereby enriching itself at the expense of its law-abiding citizens or entities who have faithfully complied with the requirements for tax refund provided by law. 29 Indeed, "[i]f the State expects its taxpayers to observe fairness and honesty in paying their taxes, so must it apply the same standard against itself in refunding excess payments. x x x No one, not even the State, should enrich oneself at the expense of another." 30
WHEREFORE, premises considered, the instant petition for review is hereby DENIED. The Decision dated October 30, 2014 and the Resolution dated May 11, 2015 of the CTA En Banc in CTA EB Case No. 981 are AFFIRMED.
SO ORDERED.
Very truly yours,
MA. LOURDES C. PERFECTODivision Clerk of CourtBy:(SGD.) TERESITA AQUINO TUAZONDeputy Division Clerk of Court
Footnotes
1. Also spelled as Gonzales in some parts of the rollo.
2.Rollo, pp. 12-31.
3.Id. at 32-45. Penned by Associate Justice Esperanza R. Fabon-Victorino with Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Cielito N. Mindaro-Grulla and Ma. Belen M. Ringpis-Liban concurring. Presiding Justice Roman G. Del Rosario and Associate Justice Amelia R. Cotangco-Manalastas were on leave.
4.Id. at 46-53. Penned by Associate Justice Esperanza R. Fabon-Victorino with Presiding Justice Roman G. Del Rosario (with Concurring Opinion, id. at 54-56) and Associate Justices Juanito C. Castañeda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Cielito N. Mindaro-Grulla, Amelia R. Cotangco-Manalastas, and Ma. Belen M. Ringpis-Liban concurring.
5.Id. at 63.
6. Also referred to as L/C No. 001523/06 in some parts of the rollo.
7.Rollo, pp. 33-34.
8.Id. at 35.
9. See id. at 42.
10.Id.
11.Id. at 43.
12.Id. at 35.
13.Supra note 3, at 44.
14.Id. at 43.
15.Id. at 81-89.
16.Supra note 4.
17.Supra note 2.
18. GUIDELINES AND PROCEDURES FOR REFUND (TAX CREDIT) OF UNUTILIZED ADVANCE DEPOSITS OF CUSTOMS DUTIES WITH AUTHORIZED BANKS.
19. See rollo, pp. 19-21.
20.Id. at 21.
21.Id. at 98-99.
22. SEC. 3301. Customs Fees and Charges. — For services rendered and documents issued by the Bureau of Customs, the following fees shall be charged and collected, by affixing documentary customs stamps in the correct amount upon the document or any other paper which is the subject of the charge and by the cancellation of such stamps in the manner prescribed by the Commissioner, and no such document or any other paper shall be issued or granted by any customs official until the correct amount of stamps shall have been affixed and cancelled: Provided, however, That fees of twenty pesos or over may be paid in cash.
For each amendment allowed to a foreign inward manifest — P30.00
For each permit to others than passengers to take cigars aboard ship, per thousand cigars — 30.00
For each permit (to other than passengers) to take cigarettes aboard ship, per thousand cigarettes — 30.00
For each original import or export entry exceeding fifty pesos in value — 30.00
For each entry for immediate transportation in bond — 30.00
For each original internal revenue entry — 30.00
For each original withdrawal entry from any bonded warehouse — 30.00
For each bond accepted or renewed — 30.00
For each approval of application in respect to transaction covered by general bond — 30.00
For every formal protest filed before, the Collector of Customs — 50.00
For each appeal in protest and seizure cases — 50.00
For each certificate not hereinabove specified, exclusive of such are made in the course of routine administration in the bureau which do not subserve any special pecuniary interest of the party concerned therein — 30.00
23. SEC. 3303. Effect of Failure to Affix Stamp upon Document. — No document or any other paper upon which no documentary customs stamps have been affixed and cancelled shall be received or recognized by any customs officials.
24. See Nestle Philippines, Inc. v. Court of Appeals, 413 Phil. 106, 117 (2001).
25. Rollo, p. 33.
26. Id. at 34.
27. See id. at 42.
28. Id. at 43.
29. See Winebrenner & Iñigo Insurance Brokers, Inc. v. Commissioner of Internal Revenue, 752 Phil. 375, 397-398 (2015).
30. BPI-Family Savings Bank, Inc. v. Court of Appeals, 386 Phil. 719, 721 (2000).