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.

Yaokasin versus Commissioner of Customs

The Case

This is a petition for review brought by Jimmy Yaokasin against the Commissioner of Customs, the District Collector of the Port of Tacloban, and the Economic Intelligence and Investigation Board. The petitioner asks the Supreme Court to strike down the power of automatic review exercised by the Commissioner of Customs over decisions of a Collector of Customs in seizure and protest cases. The case matters because it settles a quiet but powerful question: when a Collector rules in favor of the owner of seized goods and nobody appeals, does that ruling become final and beyond correction, or may the Commissioner still reach down and review it on his own initiative? The answer turns on whether a provision of the Integrated Reorganization Plan, carried into effect by a Customs Memorandum Order, may stand alongside the appeal machinery of the Tariff and Customs Code.

Procedural History

The dispute began before the District Collector of Customs of the Port of Tacloban, who conducted show-cause hearings and then ordered the release of the seized sugar to the petitioner. The records were transmitted to the Commissioner of Customs. The petitioner then went to the Regional Trial Court of Leyte, Branch Seven, and secured a writ of replevin through a petition for certiorari and prohibition with replevin and damages. The Collector answered and attacked the court's jurisdiction. The Collector and the Commissioner, in turn, filed a petition for certiorari and prohibition before the Court of Appeals to annul the replevin order. The Court of Appeals gave due course to that petition and restrained the trial judge from proceeding in the civil case and from enforcing his replevin order. The petitioner then elevated the matter to the Supreme Court by petition for review, and the Court issued a temporary restraining order in his favor.

Facts

On May 27, 1988, the Philippine Coast Guard seized 9,000 bags of refined sugar while they were being unloaded from the M/V Tacloban, and turned them over to the custody of the Bureau of Customs. The petitioner presented a sales invoice from Jordan Trading of Iloilo to show that the sugar had been purchased locally. The District Collector nonetheless proceeded with the seizure. Show-cause hearings were held on June 3 and June 6, 1988.

On June 7, 1988, the District Collector ordered the release of the sugar to the petitioner as consignee and claimant, and directed the immediate withdrawal of the Customs Guard from the bodega. On June 10, 1988, the decision and the entire records were transmitted to and received by the Commissioner of Customs. On June 14, 1988, without modifying his decision, the District Collector ordered the warehouse sealed. On June 19, 1988, the Economic Intelligence and Investigation Board filed a motion for reconsideration asking for a further hearing on the merits, based on evidence that the sugar was of foreign origin. The petitioner opposed it as pro forma, or in effect a motion for new trial.

On July 4, 1988, before the scheduled hearing, the Commissioner of Customs returned the folder to the District Collector, together with the proposed decision, for hearing and resolution of the government's motion for reconsideration. On that same day, the petitioner secured the writ of replevin from the Regional Trial Court of Leyte. On July 15, 1988, the District Collector reconsidered his June 7 decision, found the sugar to be of foreign origin and smuggled, and declared it forfeited in favor of the government. On the same day, the Court of Appeals restrained the trial judge from further proceeding in the civil case.

Issues

• Whether or not the Commissioner of Customs has the power of automatic review over a decision of the Collector of Customs in a seizure and protest case that is adverse to the government.
• Whether or not the June 7, 1988 decision of the District Collector became final and executory for want of an appeal by the aggrieved party within the fifteen-day period under Section 2313 of the Tariff and Customs Code.
• Whether or not Customs Memorandum Order No. 20-87 is invalid for not having been published in the Official Gazette.

Applicable Provisions

Section 12 of the Integrated Reorganization Plan provides:

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 cases 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.

This is the provision that supplies the automatic review power the petitioner challenges, and the Court holds that it has not been repealed.

Section 3 of Article Eighteen of the 1987 Constitution provides:

All existing laws, decrees, executive orders, proclamations, letters of instruction, and other executive issuances not inconsistent with this Constitution shall remain operative until amended, repealed, or revoked.

This keeps the Integrated Reorganization Plan, adopted as part of the law of the land by Presidential Decree No. 1, operative unless and until repealed.

Customs Memorandum Order No. 20-87 provides:

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.

This is the implementing issuance that directs all collectors to follow the automatic review strictly, and the Court treats it as a valid administrative order addressed to subordinates.

Ruling

On the first issue, the Court holds that the Commissioner of Customs does possess the power of automatic review. Section 12 of the Plan applies to the petitioner's shipment, and the Court explains its purpose in protecting the government's revenue. Taxes are the lifeblood of the Government. Without automatic review, a collector in a far-flung port would have absolute and unbridled discretion to declare seized goods locally produced and therefore not dutiable. His decision, unless appealed by the aggrieved party, would become final with no one the wiser except himself and the owner of the goods, and the owner will never appeal a ruling that favors him. The provision was conceived precisely to protect the government against corrupt and conniving customs collectors.

On the second issue, the Court holds that the June 7 decision did not become final. Section 12 of the Plan and Section 2313 of the Tariff and Customs Code do not conflict; they may co-exist. Section 2313 governs review upon appeal by the aggrieved party, while Section 12 governs the situation where the decision is adverse to the government. They address two different situations. The Court also distinguishes Sy Man versus Jacinto, because there the memorandum order directed automatic review even though no existing law expressly granted that power, whereas here the Commissioner was merely directing strict compliance with an existing provision of law.

On the third issue, the Court holds that publication was not required. The Plan itself was published in the Official Gazette. Article 2 of the Civil Code does not apply to Customs Memorandum Order No. 20-87, which is only an administrative order of the Commissioner addressed to his subordinates. Under Commonwealth Act No. 638, executive and administrative orders and proclamations shall also be published, except such as have no general applicability. The memorandum order is addressed only to a particular class of persons, the customs collectors, and need not be published, on the assumption that it has been circularized to all concerned.

Doctrine

First, the Commissioner of Customs has the power of automatic review over decisions of a Collector of Customs in seizure and protest cases that are adverse to the government, by virtue of Section 12 of the Integrated Reorganization Plan, which remains operative under Section 3 of Article Eighteen of the 1987 Constitution. Second, that power co-exists with the appeal procedure of Section 2313 of the Tariff and Customs Code: the Code governs appeals by the aggrieved importer or owner, while the Plan governs decisions adverse to the government. Third, an administrative order addressed only to a particular class of persons, such as customs collectors, need not be published in the Official Gazette, on the assumption that it has been circularized to all concerned. The rule to write in an answer is that the government is protected against a favorable-to-taxpayer ruling that nobody would ever appeal.

Disposition

The petition for review was denied for lack of merit, the temporary restraining order was made permanent, and costs were taxed against the petitioner.

Remember This

Memorize this line: a decision of the Collector of Customs adverse to the government is automatically reviewed by the Commissioner of Customs, and Section 2313 of the Tariff and Customs Code does not stand in the way. Examiners use this case to test the co-existence of the Integrated Reorganization Plan with the Tariff and Customs Code, and the publication exception for administrative orders of particular applicability.