JIMMY O. YAOKASIN, PETITIONER, VS. THE COMMISSIONER OF CUSTOMS, SALVADOR M. MISON AND THE DISTRICT COLLECTOR OF THE PORT OF TACLOBAN, VICENTE D. YUTANGCO, RESPONDENTS.

DISSENTING OPINION

MEDIALDEA, J.:

The present case involves two decisions of the Collector of
Customs of Tacloban City on a seizure case.  The first decision was rendered on June 7, 1988, ordering the release of 9,000
bags of sugar belonging to petitioner Jimmy Yaokasin
which were seized by the Philippine Coast Guard and turned over to the custody
of customs authorities.  The second,
rendered on July 15, 1988
reverses the first decision and orders the forfeiture of the sugar.  Petitioner did not appeal the June 7 –
decision and the Collector of Customs rendered the second decision predicated
on the automatic review powers of the Commissioner in decisions adverse to the
government, as embodied in Customs Memorandum Order (CMO) No. 20-87.

The memorandum was issued by then Acting Commissioner of Customs
Alexander Padilla on May 18, 1987,
and provides as follows:

“CUSTOMS
MEMORANDUM ORDER

NO. 20-87

TO: 
All Collectors of Customs and Others Concerned

“Effective immediately, you are hereby directed to implement
strictly the following –

‘Decisions of the Collector of Customs in
seizure and protest cases are subject to review by the Commissioner upon appeal
as provided under existing laws; provided, however, that where a decision of the Collector of
Customs in such seizure and protest
cases is adverse to the government, it shall automatically be reviewed
by the Commissioner of Customs.’

“In view thereof, no releases in any seizure or like cases may
be effected unless and until the decision of the Collector has been confirmed
in writing by the Commissioner of Customs.

“For immediate and strict compliance.

(Sgd.) ALEXANDER A. PADILLA

Acting
Commissioner of Customs”

(p. 436, Rollo)
(Emphasis Ours)

Petitioner disputes the validity of the memorandum, claiming
instead that the law applicable to his case is Sec. 2313 of the Tariff and
Customs Code of the Philippines
of 1982.

The main issue in this case is whether or not the Commissioner of
Customs has the power of automatic review over decisions of the Collector of Customs in seizure and protest cases.

The majority upholds the automatic review power, based on CMO No.
20-87.  I disagree, based on the
provisions of Section 2313 of the Tariff and Customs Code.

The facts of this case are similar to that involved in Sy Man v. Jacinto (93 Phil. 1093), briefly stated below:

On January 2, 1951,
the Manila Port Collector of Customs ordered the seizure of the shipments of
textile and a number of sewing machines, consigned to Sy Man.  On June
4, 1951, he ordered the release of the articles covered by the
seizure order, upon payment of the corresponding customs duties, except the sewing machines which were
declared forfeited to be sold, if saleable or otherwise, destroyed.

On June 27, 1951,
Sy Man received a copy of the decision.  Sy Man’s counsel
sought execution of the decision, based on the fact that the Commissioner of
Customs could no longer review the decision after the lapse of 15 days from
notification of said decision to Sy
Man.

The issue centered on the power of automatic review of the
Commissioner of Customs, based on his power and supervision and control over
the Collector of Customs, allegedly implemented by way of the Memorandum
promulgated by the Insular Collector of Customs, dated August 18, 1947, which
provides that as in protest cases, decisions of the Collector of Customs in
seizure cases, whether appealed or not, are subject to review by the Insular
Collector (now Commissioner).

We ruled that:

(1) Since the Memorandum Order dated August 18, 1947 was never approved by the department head
and was never published in the Official Gazette, as required by Sec. 551 of the
Revised Administrative Code, the same cannot be given legal effect;

(2) Additionally, the Memorandum is adjudged inconsistent with law,
since there is no law giving the Commissioner the power to review and revise unappealed decision of the Collector of Customs in seizure
cases;

(3) Under the law then in force, governing the Bureau of Customs,
the decisions of the Collector of Customs in a seizure case, if not protested
and appealed by the importer to the Commissioner of Customs on time becomes
final, not only to him, but also against the Government as well, and neither
the Commissioner nor the Department Head has the power to review, revise or
modify such unappealed decision.

In the present case, it is claimed that CMO No. 20-87 merely
implements Section 12 (Part IV, Chp. I, Art. IV) of the Integrated Reorganization Plan (Plan) of former President
Marcos.  The Plan was prepared by the
Commission on Reorganization (authorized under RA 5435) and submitted to former
President Marcos for the reorganization of the Executive Branch of the
government.  It was adopted as law,
pursuant to P.D. No. 1, issued on September
24, 1972.

Section 12 of the Plan provides in part as follows:

Part. IV – Revenue Administration

Chp. I – Department of Finance

x x x .

Art. IV – Bureau of Customs

12.  x
x x.  Decisions of the Collector of Customs in
seizure and protest cases are subject to review by the Commissioner upon appeal
as provided under existing laws; provided, however, that where a decision of a
Collector of Customs in such seizure and protest case is adverse to the
government, it shall automatically be reviewed by the Commissioner
of Customs which, if affirmed, shall automatically be elevated for final review
by the Secretary of Finance; provided, further, that if within thirty days from
receipt of the records of the case by the Commissioner of Customs or the Secretary
of Finance, no decision is rendered by the Commissioner of Customs or the
Secretary of Finance the decision under review shall become final and executory.  (Emphasis
ours)

As will be noted, the Plan grants the Commissioner of Customs the
power to review automatically, decisions of the Collector of Customs in seizure
and protest cases adverse to the government. 
Cases not decided by the Commissioner within 30 days from receipt of the
records become final and executory.

There is no question that P.D. No. 1/the Plan is still a valid
law.  However, I do not agree that this
is legal authority to uphold the Commissioner’s right to automatically review
decisions of the Collector of Customs in seizure cases, and, in the process,
allow a reversal of a decision favorable to the importer.  When the Plan became law pursuant to P.D. No.
1, Section 2313 of RA 1937 (Tariff and Customs Code of the Philippines)
already governed the review powers of the Commissioner of Customs.  Thus, while both Section 12 of the Plan and
2313 of the Tariff and Customs Code deal with the review powers of the
Commissioner of Customs, the Plan is a general law, as it concerns itself with
the reorganization of the executive branch of the government in a martial law
regime, whereas the Code is a special law, i.e., specifically on tariff and
customs duties.  Consequently, the Plan
is subservient to the Code and the automatic review power granted therein can
not be upheld.

Prior to subsequent amendments, Section 2313 of the Code provided
as follows:

“SEC. 2313.  Review by Commissioner.  – The person aggrieved by the decision or
action of the Collector in any matter presented upon protest or by his action in any case of seizure
may, within fifteen days after notification in writing by the collector
of his action or decision, give written notice to the Collector of his
desire to have the matter reviewed by the Commissioner.  Thereupon the Collector shall forthwith
transmit all the records of the proceedings to the Commissioner, who shall
approve, modify or reverse the action or decision of the Collector and take
such steps and make such orders as may be necessary to give effect to his
decision.” (Emphasis ours)

As will be noted, the foregoing provision does not contain any
automatic review powers of the Commissioner of Customs.

On October 27, 1972,
former President Marcos issued P.D. No. 34, amending the Tariff and Customs
Revision Act of 1972 (earlier issued by the former Congress, martial law having
been proclaimed) without any reference to the provisions of Sec. 12 of P.D.
No. 1.

As amended by P.D. No. 34, Section 2313 provided as follows:

“SEC. 2313.  Review by Commissioner.  – The person aggrieved by the decision
or action of the Collector in any matter presented upon protest or by
his action in any case of seizure may, within fifteen (15) days after
notification in writing by the Collector of his action or decision, give
written notice to the Collector and one copy furnished to the Commissioner
of his desire to have the matter reviewed by the Commissioner.  Thereupon the Collector shall forthwith
transmit all the records of the proceedings to the Commissioner, who shall
approve, modify or reverse the action or decision of the Collector and take
such steps and make such orders as may be necessary to give effect to his
decision.” (Emphasis Ours)

One notes that except for the phrase requiring a copy of the
notice to be furnished to the Commissioner of Customs, no other substantial
change was introduced by P.D. No. 34. 
Consequently, the right to elevate the case to the Commissioner of
Customs remained an exclusive authority of the aggrieved party.

On June 11, 1978,
P.D. No. 1464 was issued directing the consolidation and codification of the
tariff and customs laws of the Philippines
into a single code, to be known as the Tariff and Customs Code of 1978.  The Code was subsequently codified as the
“Tariff and Customs Code of 1982” pursuant to Executive Order No.
688, dated May 9, 1981, again without any reference to Section 12 of P.D.
No. 1.

Throughout the various amendments/codifications of the tariff and
customs laws, the review power of the Commissioner of Customs in seizure cases
has remained the same, i.e., it arises only upon appeal of the aggrieved
party.  Hence, if no appeal is made, the
decision of the Collector of Customs becomes final and executory,
even as against the government.

It is therefore clear that while it was intended by
the Plan to invest the Commissioner of Customs with automatic review powers
over decisions of the Collector of Customs in seizure case, more importantly in
cases adverse to the government, this intention was
never carried out.

As a matter of fact, despite the requirement of P.D. No. 1, viz:

“x x x.

“Implementation of the Integrated Reorganization Plan as
herein adopted, approved and decreed shall be carried out by Letters of Implementation which will be issued by me from time to
time, or by my duly elected authorized representative.

“x x x.” (Emphasis ours)

and the Plan
itself.

“I.  After this Plan shall have been approved, the
President of the Philippines shall, in consultation with the department or
agency head concerned, prepare the implementing details with the
assistance of such technical groups or agencies which he may designate, and
issue the necessary executive order or orders within three months after the
approval of this plan; x x x.”
(Emphasis ours)

no Letter of
Implementation as called for, was ever issued.

Private respondents contend that CMO No. 20-87 implements the
Plan on the automatic review powers.  I do not agree.  Section 12 of the Plan/P.D. No. 1 is no longer
good law, as earlier pointed out, since despite various presidential issuances
and amendments on customs laws, the Commissioner of Customs was never granted
any automatic review power.

The power of review of the Commissioner of Customs found in Sec.
2313 is different from the supervisory authority of the Commissioner of
Customs presently embodied in Sec. 2315 of the Tariff and Customs Code, quoted
below, and which gives him the authority of automatic review of the
decisions of the Collector of Customs in assessment of duties adverse to
the government:

“SEC. 2315.  Supervisory Authority of
Commissioner and of Secretary of Finance in Certain Cases.  – If in any case involving the assessment
of duties, the Collector renders a decision adverse to the government,
such decision shall automatically be elevated to, and reviewed by, the Commissioner; and if the Collector’s
decision would be affirmed by the
Commissioner, such decision shall be automatically elevated to, and be finally
reviewed by, the Secretary of Finance:  Provided,
however, That if within thirty (30) days from receipt of the record of the
case by the Commissioner or by the Secretary of Finance, as the case may be, no
decision is rendered by either of them, the decision under review shall become
final and executory: 
Provided, further, That any party aggrieved by either the
decision of the Commissioner or of the Secretary of Finance may appeal to the
Court of Tax Appeals within thirty (30) days from receipt of a copy of such
decision.  For this purpose Republic Act
Numbered Eleven Hundred and twenty-five is hereby amended accordingly.”
(Emphasis Ours)

Prior to the amendment introduced by P.D. No. 34, Sec. 2315 read
as follows:

“SEC. 2315.  Supervisory Authority of
Commissioner and of Department Head in Certain Case.  — If in any case involving the assessment of
duties the importer shall fail to
protest the ruling of
the Collector, and the Commissioner shall be of the opinion that the ruling was erroneous and unfavorable to the Government, the latter may order a reliquidation; and if the ruling of the Commissioner in any unprotested case should, in the opinion of the
department head, be erroneous and unfavorable to the government, the department
head may require the Commissioner to order a reliquidation.  (Emphasis ours)

“x x x.”

Under the old provision, We note
that the Commissioner of Customs had the right to order a reliquidation in unprotested cases
of assessment of duties, where
he is “of the opinion that the ruling of the Collector of Customs was
erroneous and unfavorable to the government”.

As amended, Sec.
2315 has been rephrased, giving the Commissioner of Customs the power of “automatic review” (not
reliquidation) over adverse decisions of the
Collector of Customs in cases involving assessment of duties, but must do so
within a period of thirty days; otherwise, his decision becomes final and executory.

The 30-day period appears to be a response to a defect We noted in the Sy Man case found
in the old provision of Sec. 2315 which did not prescribe a period within which
a reliquidation may be undertaken.  The absence of a period was “decidedly
unsatisfactory and even unjust, if not oppressive” to the importer, who
was willing “to abide by the decision of the Collector, to pay the amounts
fixed, including the fines, and desired to get the goods released so as to be
able to dispose of them”, but was unable to do so because of the prolonged
inaction of the Commissioner.  (See Sy
Man, supra, p. 1101)

In the Sy Man case, We
noted two defects.  The first pertained
to the absence of the period found in Sec. 2315, while the second referred to a
need for a provision on review and revision by the Commissioner of Customs on unappealed seizure cases, as governed by Sec.
2313.  Thus,

“But if the Government deems it necessary to provide for
review and revision by the Commissioner or
even by the Department Head of the decisions of the Collector of Customs
in an unappealed seizure cases, the
Legislature may be requested to insert a section in the Revised Administrative
Code similar to Section 1393 (now Section of the Customs Law) which applies to unprotested cases of assessment duties.  The defect in said section however is that it does not fix the period within
which the automatic review and revision or reliquidation
to be ordered by the Commissioner and the Secretary of Finance must be effected.  This defect
should be remedied.” (p. 1107)

Unfortunately, as can be seen, our legislators merely acted on
the defect found in Sec. 2315 by providing for a period in cases of assessment
of duties.  Additionally, they invested
the Commissioner with automatic review powers where an assessment was adverse
to the government, thus, eliminating any possible prejudice to the
government.  They did not, however, provide any authority for automatic review in unappealed seizure cases, similar to that found in Sec.
2313, thus belying any intent to implement the Plan with respect to the automatic
review powers.

As in the Sy Man case, it is now argued
that the lack of automatic review causes prejudice to the
government.  We quote from Sy Man:

“It is argued that if this power of review and revision by the
Commissioner of unappealed seizure cases is not conceded, then in cases where
the Collector in his decision commits a blunder prejudicial to the interests of
the Government, or renders a decision through fraud or in collusion with the
importer, the Government cannot protect itself. 
The argument is not without merit; but we must bear in mind that the law
is promulgated to operate on ordinary, common, routine cases.  The rule is and the law presumes that in
seizure cases Collectors of Customs act honestly and correctly and as
Government officials, always with an eye to the protection of the interests of
the Government employing them.  If
mistakes are committed at all more often than not they are in favor of the
Government and not against it, and that is the reason why when the importer feels aggrieved by
their decision, he is given every chance and facility to protest the decision
and appeal to the Commissioner.  Cases of erroneous decisions against
the interest of the Government of decisions rendered in collusion and
connivance with importers are the
exception.  To protect the Government in such
exceptional cases, we find that in every seizure case, section 1378
(now Section 2302, Customs Law) of the Revised Administrative Code requires the
Collector to immediately notify the Commissioner and the Auditor General.  It may be that this requirement has for its
main purpose the recording of and accounting for the articles
seized so that in case of confiscation the Commissioner and the Auditor General
will know what articles have become government property.  But
the notice will also inform the Commissioner and the Auditor General of the
seizure.  If the seizure is important or
unusual, the Commissioner may, if he so desires, order the Collector as his
subordinate to withhold action on
the seizure, or hold in abeyance, within a reasonable time, the promulgation of
his decision until
after he had conferred with the Commissioner or the latter had studied the case
and given suggestions.  At that stage of
the proceedings before definite action is taken by the Collector, and a
decision rendered by him, it would seem that any action by him as a
subordinate is still subject to the supervisory authority and control of the
Commissioner as his chief, and the latter may still influence and direct the
Collector’s action if he finds occasion for doing so.” (Emphasis ours)

We believe that for as long as the procedure laid down in Sec.
2302 is observed, there can be no resulting prejudice to the government in unappealed seizure cases, since the Commissioner in the
exercise of his supervisory authority can ask the Collector to “withhold
action on the seizure or hold in abeyance within a reasonable time the
promulgation of a decision, until after he has conferred with the
Collector,” in cases of unusual or important seizure.

As it now stands therefore, there is no law allowing automatic
review in seizure cases.  For this
reason, CMO No. 20-87, issued supposedly in implementation of Sec. 12 of the
Plan/P.D. No. 1, which has since been amended/modified, is void and of no effect,
being inconsistent with law.

Assuming applicability of P.D. No. 1/Plan, CMO No. 20-87 would
still not be effective since it was not published as required by Section 551 of
the Revised Administrative Code (the law then in force since the 1987 Revised
Administrative Code took effect on September 21, 1988), which in part provides:

“Section 551.  Authority to prescribe
forms and make regulations.  – x x x.

“Regulations and orders shall become effective only when
approved by the Department Head and published in the Official Gazette or
otherwise publicly promulgated. 
Formal approval or publication shall not be necessary as regards
circulars of information or instructions for the guidance of officers and
employees in the internal administration of the affairs of the Bureau.”
(Emphasis ours)

Previous customs administrative orders had complied with this
requirement.  Thus, Customs
Administrative Order Nos. 225 and 226, issued by then Commissioner of Customs Eleuterio Capapas on August 15, 1957 and December 3, 1957, respectively, were
duly published in Vol. 54, No. 2, p. 300 of the Official Gazette.

CAO No. 226 deals, among others, with “protests and
appeals,” and implements Section 2313 of the Code.  Thus, Par. VII thereof similarly gives the
importer exclusive authority
to elevate the case to the Commissioner, viz:

“Customs Administrative
Order No. 226

December 3, 1957

PROTEST AND APPEALS:  REDEMPTION OF FORFEITED ARTICLES; AND
EXECUTION OF DECISIONS.

x x
x.

Par. VII.  The person
aggrieved by the decision or action of a collector of customs in any matter
presented upon protest or by his action in any case of seizure pursuant to
section 2312 of the Tariff and Customs Code of the Philippines may give a
written notice to the Collector of Customs of his desire to have the
matter reviewed by the Commissioner of Customs.” (Emphasis
ours)

In contrast, CMO No. 20-87 enlarges the power of the
Commissioner of Customs by investing him with automatic powers in seizure
cases, in effect amending COA No. 226. 
Expectedly, the memorandum must be published in accordance with Sec. 551
of the Revised Administrative Code not only for effectivity
but also to fully apprise third persons. 
Absent such publication, the same cannot be upheld for non­-compliance
with Sec. 551 of the Revised Administrative Code.

For these reasons, I vote to GRANT the petition.