PHILIPPINES INTERNATIONAL SURETY CO., INC., PETITIONER, VS. THE COURT OF TAX APPEALS AND THE COMMISSIONER OF CUSTOMS, RESPONDENTS.

Philippines International Surety versus Court of Tax Appeals and Commissioner of Customs

The Case

This is a petition brought by the Philippines International Surety Company against the Court of Tax Appeals and the Commissioner of Customs, asking the Supreme Court to reverse the tax court's dismissal of its petition for review. The surety had posted bonds to secure the release of imported goods that were later declared forfeited, and it sought to challenge that forfeiture. The case matters for two reasons: it teaches the procedural rule that a party who fails to appeal from the Collector of Customs to the Commissioner of Customs loses the right to be heard, and it confirms the settled validity of Central Bank Circulars 44 and 45, which required a release certificate and an import license for imported goods.

Procedural History

The Collector of Customs of Manila instituted seizure proceedings against the goods, and later released them to the consignee after the surety posted its bonds. The Collector then rendered a decision declaring the importation forfeited and ordering payment. The consignee, J.D. Salva, appealed to the Commissioner of Customs, who affirmed the Collector. Salva did not appeal from the Commissioner's decision. The surety moved for reconsideration before the Commissioner, was denied, and then appealed to the Court of Tax Appeals. On a stipulation of facts, the Court of Tax Appeals dismissed the petition for review, upheld the validity of Central Bank Circulars 44 and 45, and declared the surety without personality to appeal because it was merely a surety. The surety's motion for reconsideration was denied, and it brought the present appeal to the Supreme Court.

Facts

On December 13, 1954, one package of fresh water peanuts and twenty three packages of various merchandise arrived at the Port of Manila from Hongkong, consigned to J.D. Salva. Because the shipment lacked the release certificate and import license required by Central Bank Circulars 44 and 45, the Collector of Customs of Manila instituted seizure proceedings against the goods. The goods were later released to the consignee after he posted two surety bonds issued by the Philippines International Surety Company.

In a decision dated April 20, 1955, the Collector of Customs declared the importation forfeited and ordered the payment of 4,733 pesos. Salva appealed to the Commissioner of Customs, who affirmed the Collector. Salva did not appeal from the Commissioner's decision. The surety moved for reconsideration, and when that was denied, it appealed to the Court of Tax Appeals.

Before the tax court, the surety claimed it could not have appealed from the Collector's decision because it was never notified of that decision. The Commissioner answered that notice was in fact served on the surety on April 30, 1955. The record forwarded to the Commissioner listed, among its documents, a letter dated April 23, 1955 addressed to the claimant's counsel, a letter dated April 27, 1955 addressed to the surety, and the Collector's decision dated April 20, 1955.

Issues

• Whether or not the surety had personality to appeal, and whether or not it lost that right by failing to appeal from the decision of the Collector of Customs to the Commissioner of Customs.
• Whether or not the surety was in fact notified of the Collector's decision, such that its claim of lack of notice should be believed.
• Whether or not the case should be returned to the Court of Tax Appeals for a hearing on the merits of the petition for review.
• Whether or not Central Bank Circulars 44 and 45 are valid and constitutional.

Applicable Provisions

The decision rests on the presumption that official duty has been regularly performed, stated in the Rules of Court as follows:

Section 5. Disputable presumptions. The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence: x x x (m) That official duty has been regularly performed.

This presumption supports the Court's finding that the transmittal letters listed in the customs record were actually sent, and therefore that the surety received notice of the Collector's decision.

Ruling

On the first issue, the Court held that the surety failed to appeal from the decision of the Collector of Customs to the Commissioner of Customs. Assuming it had personality to appeal, that right was lost. The Court relied on its prior rulings holding that a party who does not elevate the Collector's decision to the Commissioner cannot later be heard.

On the second issue, the Court rejected the surety's claim of lack of notice. The chief of the law division of the Bureau of Customs had listed the documents composing the record, and the Court presumed that official duty was regularly performed. Since the two letters, one to the claimant's counsel and one to the surety, came immediately after the Collector's decision in point of time and were addressed to the parties affected, it was reasonable to consider them transmittal letters of copies of the decision. The Court also noted that in its motion for reconsideration before the Commissioner, the surety twice mentioned the Collector's decision yet never intimated any lack of notice. It raised the omission only in its petition for review before the tax court, a behavior the Court said does not reflect the natural reaction of a party left without notice of a decision adversely affecting him.

On the third issue, the Court declined to return the case for hearing. The Court of Tax Appeals had in fact fully considered the petition for review on the merits, upon submission by the parties, and had resolved the substantive question.

On the fourth issue, the Court sustained the validity and constitutionality of Central Bank Circulars 44 and 45, noting that in a long line of decisions it had repeatedly upheld them.

Doctrine

A party who fails to appeal from the decision of the Collector of Customs to the Commissioner of Customs loses the right to question that decision, and the appellate court will not entertain the appeal. The presumption that official duty has been regularly performed supports a finding that transmittal letters listed in the customs record were actually sent to the parties affected, so that a bare claim of lack of notice, raised for the first time only on appeal and contradicted by the party's earlier silence, will not be believed. Central Bank Circulars 44 and 45, requiring a release certificate and an import license, are valid and constitutional.

Disposition

The Supreme Court affirmed the decision of the Court of Tax Appeals, with costs against the surety.

Remember This

The one line to memorize: failure to appeal from the Collector of Customs to the Commissioner of Customs forfeits the right to be heard, and the presumption of regular performance of official duty defeats a belated claim of lack of notice. Examiners use this case on the requisites and timeliness of administrative appeals in customs seizure proceedings, and on the settled validity of Central Bank Circulars 44 and 45.