PHILIPPINE INTERNATIONAL SURETY COMPANY, INC., PETITIONER VS. COMMISSIONER, OF CUSTOMS, RESPONDENT.

From the resolution of the Court of Tax Appeals (in CTA Case No.
745) dismissing its petition for review of the decision of respondent
Commissioner of Customs, petitioner Philippine International Surety
Co., Inc., brought the present appeal.

On December 22, 1964, 7 cases of candy arrived at the Port of Manila
from San Francisco, California, U.S.A. aboard the S.S. “Doña Nati”,
consigned to Manuel Santos. The merchandise was accompanied by proper
shipping documents, such as a bill of lading and a commercial in-
voice, but was short of a Central Bank release certificate and consular
invoices. For being, allegedly, violative of Central Bank Circulars
Nos. 44 and 45, in relation to Sections 1363 (f) and 1250 of the
Etevised Administrative Code, the merchandise was seized by the
Collector of Customs.

During the pendency of the seizure proceedings (Seizure
Identification No. 2428), the Collector of Customs released the
merchandise seized to the consignee Manuel Santos, upon the posting by
the latter of a surety bond (No. 194), subscribed by petitioner (as
surety of the principal Manuel Santos), in the sum of P1,785.05,
“representing the local appraised value of the merchandise to guaranty
the payment of the amount that the Bureau of Customs or the courts of
the Philippines may decide to collect, depending upon the outcome of
the seizure-proceedings.”

Subsequently, or on April 30, 1955, the Collector of Customs
rendered a decision in the seizure case, the dispositive part of which,
reads:

“Wherefore, by authority of Section 1379 of the
Revised Administrative Code, it is ordered and decreed that the seven
(7) cases of candy covered “by Seizure Identification No. 2428 be, as
they are hereby declared forfeited in favor of the Government of the
Republic of the Philippines. As it appears that this shipment of
candies was released under Surety Bond No. 194, dated January 13, 1955,
issued by the Philippine International Surety Co., Inc. filed for the
release of the same, it is hereby ordered that the claimant be required
to pay in cash the amount of ONE THOUSAND SEVEN HUNDRED EIGHTY-FIVE AND
05/100 (P1,785.05) covered by the bond, and if said amount is not paid
within thirty (30) days from the date of the demand for payment, action
should he filed in court to effect collection thereof.”

Both Manuel Santos and herein petitioner were furnished copies of said decision on October 4, 1955.

Manuel Santos appealed from said decision of the Collector of
Customs to respondents Commissioner of Customs; not so the herein
petitioner surety company.

On January 14, 1960, respondent Commissioner of Customs affirmed said decision of the Collector of Customs, in this wise:

“Wherefore, by authority of Section 1380 of the
Revised Administrative Code, in relation to Section 3702 of the Tariff
and Customs Code of the Philippines, the Philippine International
Surety Co., Inc. Bond No. 194, dated January 13, 1955, which was filed
for the release of the articles in question is hereby confiscated and
the principal, Manuel Santos, as well as the aforesaid surety are
hereby ordered to pay in cash, jointly arid severally, the amount of
ONE THOUSAND SEVEN HUNDRED EIGHTY-FIVE & 05/100 PESOS (P1,785.05),
Philippine currency, to the Bureau of Customs within thirty (30) days
from receipt of a copy of this decision in accordance with the terms of
the said bond.”

Copies of said decision were furnished both Manuel Santos and herein petitioner on January 14, 1960.

On February 1, 1960, petitioner filed with the Court of Tax Appeals a petition for review.^[1]
Answering said petition (on March 3, I960), respondent Commissioner of
Customs (represented by the Solicitor General) alleged as special
defenses, inter alia, that “petitioner has no. legal capacity to sue”,
since it “did not appeal from the decision (dated April 30, 1955) of
the Collector of Customs of Manila”; and that “the petition states no
cause of action, because it does not state that the petitioner had
previously appealed from the decision of the Collector of Customs”.

On March 24, 1960, Manuel Santos filed with the Court of Tax Appeals
a petition for inclusion as party petitioner, to enable him to present
a common defense (with petitioner) to the seizure proceedings, which
petition was duly opposed by respondent Commissioner of Customs, on the
ground that Manuel Santos, due to laches, “has lost his remedy to
appeal” to the Court of Tax Appeals. On July 11, 1960, the Court of Tax
Appeals issued a resolution denying said petition of Manuel Santos for
inclusion as co-petitioner, as the decision of the Commissioner of
Customs has become final with respect to him for his failure to appeal.

Thereafter, the Court of Tax Appeals proceeded to consider the
special defenses raised by respondent Commissioner of Customs. On
January 12, 1961, said Court issued a resolution dismissing
petitioner’s petition for review holding that “petitioner does not fall
within the purview of Section 31 of Republic Act No. 1125 and,
consequently, does not have the legal capacity to institute the instant
petition for review before this Court.”

Its motion for reconsideration of said resolution of the Court of Tax Appeals having been denied, petitioner appealed to us.

The appeal is unmeritorious. Note that the decision of the Collector
of Customs in the seizure proceedings (Seizure Identification No. 2428)
against Manuel Santos, which specifically states:

“As it appears that this shipment of candies was release under
Surety Bond No. 194 dated January 13, 1956, issued by the Philippine
International Surety Co., Inc., filed for the release of the same,
it is hereby ordered that the claimant be required to pay in cash the
amount of ONE THOUSAND SEVEN HUNDRED EIGHTY-FIVE and 05/100 (P1,785.05)
covered by the bond, and if said amount is not paid within
thirty (30) days from the date of the demand for payment, action should
be filed in court to effect collection thereof.” (Emphasis supplied).

in effect, holds herein petitioner jointly and severally liable with
the principal Manuel Santos for the amount covered by the bond
(P1,785,05) furnished by petitioner as his surety, because should
Santos fail to pay said amount, said bond furnished by petitioner will
surely answer for said obligation in an action filed in court to
enforce its collection. Now, petitioner, although duly notified (on
October 4, 1955) of said decision, failed to appeal therefrom to herein
respondent Commissioner of Customs as required by law (Section 1380,
Rev. Adm, Code), Having failed to do so, said decision became final and
executory as to petitioner and, consequently, it lost its standing to
institute the present petition for review (appeal) in the Court of Tax
Appeals, In the case of Sampaguita Shoe & Slipper Factory vs. Commissioner of Customs, et al., 102 Phil., 850, involving a similar question, we held:

“As petitioner herein did not interpose an appeal to
the Commissioner of Customs from the decision of the Collector of
Customs of Cebu within the period of 15 days prescribed by law, paid
decision of the latter became final and executory; hence, petitioner
cannot take its case on appeal to the Court of Tax Appeals.”

Note also that petitioner, in its brief, expressly admits that it was a party to the seizure proceeding; aforementioned, to wit:

“Although petitioner surety was not an original
party in the seizure proceeding, it, however, became a party thereto
when and from the moment the seized merchandise was released to the
importer Manuel Santos in consideration of petitioner’s having put up
and underwritten the bond No. 194, which was accepted by the Collector
of Customs in substitution of the goods, so much so that when judgment
was finally rendered in the case, it could no longer be taken against
the goods, because they had already been long released to the importer,
but that judgment had to be rendered against petitioner’s surety bond,
which was ordered confiscated and the petitioner, together with the
importer Manuel Santos was ordered jointly and severally to pay the
amount of said bond. Now, as one of the parties hold jointly and
severally liable under the judgment, petitioner surety has every
legitimate, legal right, to appeal therefrom, being a party directly
prejudiced aggrieved, or adversely affected’ thereby.” (Pages 8-9,
Petitioner’s Brief.)

If it was such party as it expressly admits, “when and from the
moment the seized merchandise ums released to the importer Manuel
Santos in consideration of petitioners having put up and underwritten
the bond No. 194, which was accepted by the Collector of Customs in
substitution of the goods”, by reasons of “which it was always notified
of the seizure proceedings, then petitioner should have appealed from
said decision of the Collector of Customs, to protect its interest as
surety of the principal (importer Manuel Santos), considering that it
was duly notified of said decision. It chose, however, not to appeal.
It has no one, therefore, to blame but itself for its own laches.

Needless to say, claimant Manuel Santos (principal in the bond
furnished by herein petitioner as surety) appealed from said decision
of the Collector of Customs, but respondent Commissioner affirmed said
decision holding both Santos and petitioner jointly and solidarily
liable to pay the sum of P1,785.05 covered by the bond furnished by
petitioner. In other words, the appeal was unsuccessful. Such result
bound the surety, herein petitioner, in much the same way that had it
been successful, the success would have inured to its (petitioner’s)
benefit. Note, finally, that Santos, the principal, did not appeal from
the decision of the Commissioner of Customs to the Court of Tax Appeals.

Wherefore, the resolution appealed from ia hereby affirmed, with costs against the petitioner. So ordered.

Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Paredes, Dizon, Regala and Makalintal, JJ., concur.

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^[1] Manuel Santos did not appeal.