SOUTHERN CROSS CEMENT CORPORATION, vs.

CEMENT MANUFACTURERS ASSOCIATION

FACTS:

Republic Act No. 8800, the Safeguard Measures Act (SMA), which was one of the laws enacted
by Congress soon after the Philippines ratified the General Agreement on Tariff and Trade
(GATT) and the World Trade Organization (WTO) Agreement.[3] The SMA provides the
structure and mechanics for the imposition of emergency measures, including tariffs, to protect
domestic industries and producers from increased imports which inflict or could inflict serious
injury on them.

Petitioner Southern Cross Cement Corporation (Southern Cross) is a domestic corporation

engaged in the business of cement manufacturing, production, importation and exportation.
Private respondent Philippine Cement Manufacturers Corporation (Philcemcor) is an
association of domestic cement manufacturers.

The Tariff Commission received a request from the DTI for a formal investigation to determine
the imposition of safeguard measures.

Tariff Commission’s report: The elements of serious injury and imminent threat of serious injury
not having been established, it is hereby recommended that no definitive general safeguard
measure be imposed.

After reviewing the report, then DTI Secretary Manuel Roxas II (DTI Secretary) disagreed with
the conclusion of the Tariff Commission. In view of this disagreement, the DTI requested an
opinion from the Department of Justice (DOJ).

Subsequently, then DOJ Secretary Hernando Perez stated that Section 13 of the SMA precluded
a review by the DTI Secretary of the Tariff Commissions negative finding, or finding that a
definitive safeguard measure should not be imposed.

Philcemcor challenged this Decision of the DTI Secretary by filing with CA a Petition for
Certiorari, Prohibition and Mandamus seeking to set aside the DTI Decision, and Tariff
Commissions Report. (CA partially granted petition/ Remand the case to DTI for final
determination)

Southern Cross filed the present petition, arguing that the Court of Appeals has no jurisdiction
over Philcemcors petition, as the proper remedy is a petition for review with the CTA
conformably with the SMA, and; that the factual findings of the Tariff Commission on the
existence or non-existence of conditions warranting the imposition of general safeguard
measures are binding upon the DTI Secretary.(CA DENIED this petition)Remand to DTI

DTI Secretary issued a new Decision, despite CA decision is not yet final, contrary to the
findings of the Tariff Commission, and the local cement industry had suffered serious injury as a
result of the import surges. Accordingly, he imposed a definitive safeguard measure on the
importation of gray Portland cement, in the form of a definitive safeguard duty in the amount
of P20.60/40 kg. bag for three years on imported gray Portland Cement. Hence, the appeal.

ISSUE: WON, the decision of DTI Secretary, to impose safeguard measures is valid.

RULING
NO, due to the nature of this case, the Court found that the DTI should follow the regulations
prescribed by SMA.

1. DTI will make initial determination, if negative; no further action will be taken on the
application.

2. When his preliminary determination is positive, the Secretary immediately transmits the
records covering the application to the Tariff Commission for immediate formal investigation.

3. The Tariff Commission conducts its formal investigation, keyed towards making a final
determination. In the process, it holds public hearings, providing interested parties the
opportunity to present evidence or otherwise be heard, the final determination, which may be
either positive or negative.

To repeat, Section 5 enumerates what the Tariff Commission is tasked to determine:

(a) whether a product is being imported into the country in increased quantities, irrespective of
whether the product is absolute or relative to the domestic production; and

(b) Whether the importation in increased quantities is such that it causes serious injury or
threat to the domestic industry. The findings of the Tariff Commission as to these matters
constitute the final determination, which may be either positive or negative.

4. Under Section 13 of the SMA, if the Tariff Commission makes a positive determination, the
Tariff Commission "recommends to the [DTI] Secretary an appropriate definitive measure.

5. If the Tariff Commission makes a positive final determination, the DTI Secretary is then to
decide, within fifteen (15) days from receipt of the report, as to what appropriate safeguard
measures should he impose.

6. However, if the Tariff Commission makes a negative final determination, the DTI Secretary
cannot impose any definitive safeguard measure. Under Section 13, he is instructed instead to
return whatever cash bond was paid by the applicant upon the initiation of the action for
safeguard measure.

The Effect of the Court's Decision

The Court of Appeals erred in remanding the case back to the DTI Secretary, with the
instruction that the DTI Secretary may impose a general safeguard measure even if there is no
positive final determination from the Tariff Commission.

More crucially, the Court of Appeals could not have acquired jurisdiction over Philcemcor's
petition for certiorari in the first place, as Section 29 of the SMA properly vests jurisdiction on
the CTA. Consequently, the assailed Decision is an absolute nullity, and we declare it as such,
therefore the decision dated June 5 2003 was null and void for want of jurisdiction; hence the
order that remand the case before DTI is null and void also.

JARDELEZA vs PEOPLE

Facts:
SEC. 2505. Failure to Declare Baggage. – Whenever any dutiable article is found in the baggage
of any person arriving within the Philippines which is not included in the baggage declaration,
such article shall be seized and the person in whose baggage it is found may obtain release of
such article, if not imported contrary to any law, upon payment of treble and appraised value of
such article plus all duties, taxes and other charges due thereon unless it shall be established to
the satisfaction of the Collector that the failure to mention or declare said dutiable article was
without fraud.

Sec. 3601. Unlawful Importation. – Any person who shall fraudulently import or bring into the
Philippines, or assist in so doing, any article, contrary to law, or shall receive, conceal, buy, sell,
or in any manner facilitate the transportation, concealment, or sale of such article after
importation, knowing the same to have been imported contrary to law, shall be guilty of
smuggling.

Smuggling is committed by any person who:

(1) fraudulently imports or brings into the Philippines any article contrary to law;

(2) assists in so doing any article contrary to law; or

(3) receives, conceals, buys, sells or in any manner facilitate the transportation, concealment or
sale of such goods after importation, knowing the same to have been imported contrary to law.

Sec. 3602. Various Fraudulent Practices Against Customs Revenue. – Any person who makes or
attempts to make any entry of imported or exported article by means of any false or fraudulent
invoice, declaration, affidavit, letter, paper or by any means of any false statement, written or
verbal, or by any means of any false or fraudulent practice whatsoever, or

knowingly effects any entry of goods, wares or merchandise, at less than the true weight or
measures thereof or upon a false classification as to quality or value, or by the payment of less
than the amount legally due, or

knowingly and willfully files any false or fraudulent entry or claim for the payment of drawback
or refund of duties upon the exportation of merchandise, or makes or files any affidavit,
abstract, record, certificate or other document,

with a view to securing the payment to himself or others of any drawback, allowance or refund
of duties on the exportation of merchandise, greater than that legally due thereon, or who shall
be guilty of any wilful act or omission shall, for each offense, be punished in accordance with
the penalties prescribed in the preceding section.

When, upon trial for violation of this section, the defendant is shown to have had possession of
the article in question, possession shall be deemed sufficient evidence to authorize conviction
unless the defendant shall explain the possession to the satisfaction of the court: Provided,
however, That payment of the tax due after apprehension shall not constitute a valid defense in
any prosecution under this section
COMMISIONER vs MARINA SALES (Petition Denied)

FACTS:

Respondent Marina Sales, Inc. (Marina) is engaged in the manufacture of Sunquick juice
concentrates in the Philippines. As such, Marina usually... imports raw materials into the
country for the purpose.

In the past, the Bureau of Customs (BOC) assessed said type of importation... with a 1% import
duty rate.

Marina's importation... arrived at the Manila International Container Port (MICP) on board the
vessel... supported by... documents, Marina computed and paid the duties... at 1% import duty
rate.

However, the BOC examiners contested the tariff classification of Marina's Import Entry

BOC examiners recommended to the Collector of Customs... to reclassify Marina's

importation... as... covering composite concentrates for simple dilution with water to make
beverages) with a corresponding 7% import duty rate.

Marina requested the District Collector of the BOC to release Import Entry... under its Tentative
Release System, Marina undertook to pay the reclassified rate of duty... should it be finally
determined that such reclassification was correct.

The District Collector granted the request, another importation of Marina arrived at the MICP...
accompanied following documents and again, the BOC examiners disputed the tariff
classification... and recommended the corresponding 7% rate

To be released, Marina once again signed an undertaking under the Tentative Release System.

Attended the VCRC deliberation and submitted its explanation. in support of its claim that the
imported goods. Should not be reclassified u.

VCRC reclassified Import Entry at 7% import duty rate, hence MARINA appeal the
reclassification.

The CTA Second Division ruled: that its classification under Tariff Heading H.S. 2106.90 10 or 1%
was the most appropriate and descriptive of the disputed importations, Commissioner argued
that Marina's importations were raw materials used for the manufacture of its Sunquick
products, is ready-to-drink because the concentrates are ready for consumption by mere
dilution with water.

Commissioner... elevated the case to the CTA-En Banc via a petition for review... the CTA En
Banc dismissed the petition: petitioner failed to file before the Second Division the required
Motion for Reconsideration before elevating his case to the CTA En Banc.

ISSUES:

Commissioner insists that Marina's two importations should be classified under Tariff Heading
H.S. 2106.90 50 with an import duty rate of 7% because the concentrates are ready for
consumption by mere dilution with water.
RULING:

the Commissioner failed to comply with the mandatory provisions of Rule 8, Section 1 of the
Revised Rules of the Court of Tax Appeals[31] requiring that "the petition for review of a
decision or... resolution of the Court in Division must be preceded by the filing of a timely
motion for reconsideration or new trial with the Division." The word "must" clearly indicate
the mandatory -- not merely directory -- nature of a requirement.

Before the CTA En Banc could take cognizance of the petition for review concerning a case
falling under its exclusive appellate jurisdiction, the litigant must sufficiently show that it sought
prior reconsideration or moved for a new trial with the... concerned CTA division.

The import duty rate of 1%... is correct, food preparations to be used as raw material in
preparing composite concentrates for making beverages

H.S. 2106.90 50

7% Covers composite concentrate for simple dilution with water to make beverages... to fit into
the category listed under the Tariff Harmonized System Headings calling for a higher import
duty rate of 7%, the imported articles must not lose its original character.

The report supported Marina's position that the subject importations are not yet ready for
human consumption, In other words, the concentrates, to be consumable, must have to lose
their original character.

to fall under the assailed Tariff Harmonized System Headings, petitioner's (herein respondent)
articles of importation, as fruit juices/mixtures, should not have lost its original character, in
spite of the addition of certain "standardizing... agents/constituents.

Since the item is compound which is composed of water, sugar, concentrated juice, flavourings,
citric acid, stabilizer, preservatives, vitamins C and colouring to produce beverage ready to
drink. Consequently the concentrated citrus juice has lost its original... character due to the
fact that it comprises only 12% of the total compound

To "manufacture" is to "make or fabricate raw materials by hand, art or machinery, and work
into forms convenient for use

Upon questioning by the counsel for respondent, Mr. Domingo said that while the imported
compounds (raw materials) can be mixed with water and may be drinkable, he is not sure if the
same is suitable for human consumption. None of us dared to taste the sample of imported
compounds (raw materials) diluted in water. The imported compounds (raw materials) mixed
with water produces bubbles on top of the mixture, not like the one that has gone through the
manufacturing process.

Stated differently, it is to transform by any process into another form suitable for its intended
use. Marina, as the. manufacturing arm of CO-RO Food A/S of Denmark, transforms said juice
compounds, being raw materials, into a substance suitable for human consumption.

Evidence shows that the subject importations would have to undergo a laborious method, to
achieve their. marketable juice consistency. Accordingly, the 1% tariff import duty rate under
Tariff Heading H.S. 2106.90 10 was correctly applied to the subject importations.
COMMISSIONER OF CUSTOMS, vs. AGFHA INCORPORATED, (CTA AFFIRMED)

FACTS:

petitioner, the Commissioner of Customs (Commissioner), liable to pay respondent AGFHA

Incorporated (AGFHA) the amount of US$160,348.08 for the value of the seized shipment which
was lost while in petitioner’s custody.

A shipment containing bales of textile grey cloth arrived at the Manila International Container
Port (MICP). The Commissioner, however, held the subject shipment because its
owner/consignee was allegedly fictitious. AGFHA intervened and alleged that it was the owner
and actual consignee of the subject shipment.

Seizure and forfeiture proceedings took place, the District Collector of Customs, MICP, rendered
a decision ordering the forfeiture of the subject shipment in favor of the government. AGFHA
filed an appeal (Commissioner dismiss it.)AGFHA Filed petition to CTA

CTA-Second Division reversed Commissioner’s Decision and ordered the immediate release of
the subject shipment to AGFHA. CTA-Second Division Decision reads:

WHEREFORE, in view of the foregoing premises, the instant Petition for Review is hereby
GRANTED. Accordingly, the decision of the respondent affirming the decision of the MICP
Collector, which decreed the forfeiture of the subject shipments in favor of the government, is
hereby REVERSED and SET ASIDE. Respondent is hereby ORDERED to RELEASE of the subject
shipment of goods in favor of the petitioner.

CTA-Second Division issued an entry of judgment declaring the above-mentioned decision final
and executory. AGFHA filed a motion for execution.

CTA-Second Division held in abeyance its action on AGFHA’s motion in view of the
Commissioner’s appeal with the Court of Appeals (CA).(CA DENIED due course & DISMISSED for
lack of merit) ordered to effect the immediate release of the shipment of AGFHA.

Commissioner elevated the CA Decision to this Court via a petition for review on certiorari.(SC
DISMISSED PETITION) (DENIED WITH FINALITY THE COMMISSIONER’S MR)

In view thereof, the CTA-Second Division issued the Writ of Execution,(immediate release of the
subject cargo)

CTA-Second Division received a copy of AGFHA’s Motion to Show Cause dated July 21, 2003.
Acting on the motion, the CTA-Second Division issued a notice setting it for hearing (CTA
granted) ordered the Commissioner to show cause within 15 days why he should not be
disciplinary dealt with for his failure to comply with the writ of execution.

Commissioner’s counsel filed a Manifestation and Motion, attaching therewith a copy of an

Explanation, that despite diligent efforts to obtain the necessary information and considering
the length of time that had elapsed since the subject shipment arrived at the Bureau of
Customs, the Chief of the Auction and Cargo Disposal Division of the MICP could not
determine the status, whereabouts and disposition of said shipment.

AGFHA filed its Motion to Cite Petitioner in Contempt of Court.(CTA DENIED w/o prejudice to
other remedy available to AGHFA)
Commissioner received AGFHA’s Motion to Set Case for Hearing, dated April 12, 2004, allegedly
to determine:
(1) whether its shipment was actually lost;
(2) the cause and/or circumstances surrounding the loss; and
(3) the amount the Commissioner should pay or indemnify AGFHA should the latter’s shipment
be found to have been actually lost.

CTA-Second Division adjudged the Commissioner liable to AGFHA, (US$160,348.08).

Commissioner filed his MPR arguing that:

(a) the enforcement and satisfaction of respondent’s money claim must be pursued and filed
with the Commission on Audit pursuant to Presidential Decree (P.D.) No. 1445;
(b) respondent is entitled to recover only the value of the lost shipment based on its acquisition
cost at the time of importation; and
(c) taxes and duties on the subject shipment must be deducted from the amount recoverable
by respondent.

On the same day, the Commissioner received AGFHA’s Motion for Partial Reconsideration
claiming that the 12% interest rate should be computed from the time its shipment was lost on
June 15, 1999 considering that from such date, petitioner’s obligation to release their shipment
was converted into a payment for a sum of money.(LATER MODIFIED BY THE SAME COURT)

Petitioner AGFHA, Inc.’s "Motion for Partial Reconsideration" is hereby DENIED for lack of
merit.

Commissioner elevated the resolution to the CTA-En Banc, (CTA-En Banc dismiss the petition
for lack of merit and affirming in toto the decision of the CTA)(Commissioner MR denied by
the CTA-En Banc).

ISSUE

Whether or not the Court of Tax Appeals was correct in awarding the respondent the amount
of US$160,348.08, as payment for the value of the subject lost shipment that was in the
custody of the petitioner.

Commissioner basically argues two (2) points: 1] the respondent is entitled to recover the value
of the lost shipment based only on its acquisition cost at the time of importation; and 2] the
present action has been theoretically transformed into a suit against the State, hence, the
enforcement/satisfaction of petitioner’s claim in pursuant to P.D. No. 1445.

He further argues that the basis for the exchange rate of its liability lacks basis US$160,340.00
based on its commercial invoices which have been found to be spurious. The subject shipment
arrived at the MICP on December 12, 1992 and the peso-dollar exchange rate was ₱20.00 per
US$1.00.(also want to pay base on the time of forfeiture)

The Commissioner further contends that based on Executive Order No. 688, the proceeds from
forfeited items for importations or exportations cannot be lawfully disposed of by the
petitioner to satisfy respondent’s money judgment. EO 688 mandates that the unclaimed
proceeds from the sale of forfeited goods will be considered as customs receipts to be
deposited with the Bureau of Treasury and shall form part of the general funds of the
government. Any disposition of the said unclaimed proceeds from the sale of forfeited goods
will be violative of the Constitution, which provides that "No money shall be paid out of the
Treasury except in pursuance of an appropriation made by law."11

Commissioner posits that this case has been transformed into a suit against the State because
the satisfaction of AGFHA’s claim will have to be taken from the national coffers. The State
may not be sued without its consent. The BOC enjoys immunity from suit since it is invested
with an inherent power of sovereignty which is taxation.

AGFHA counters that, in line with prevailing jurisprudence, the applicable peso-dollar
exchange rate should be the one prevailing at the time of actual payment in order to preserve
the real value of the subject shipment to the date of its payment. The CTA-En Banc Decision
does not constitute a money claim against the State. The Commissioner’s obligation to return
the subject shipment did not arise from an import-export contract but from a quasi-contract
particularly solutio indebiti under Article 2154 of the Civil Code. The payment of the value of the
subject lost shipment was in accordance with Article 2159 of the Civil Code. The doctrine of
governmental immunity from suit cannot serve as an instrument for perpetrating an injustice
on a citizen. When the State violates its own laws, it cannot invoke the doctrine of state
immunity to evade liability. The commission of an unlawful or illegal act on the part of the
State is equivalent to implied consent.

RULING:

THE PETITION LACKS MERIT.

The Court agrees with the ruling of the CTA that AGFHA is entitled to recover the value of its
lost shipment based on the acquisition cost at the time of payment. The rate of exchange for
the conversion in the peso equivalent should be the prevailing exchange rate at the time of
payment (C.F. Sharp and Co., Inc. v. Northwest Airlines, Inc. )

Finally, petitioner argues that a money judgment or any charge against the government
requires a corresponding appropriation and cannot be decreed by mere judicial order.

It maybe said that the satisfaction of respondent's demand will ultimately fall on the
government, and that, under the political doctrine of "state immunity," it cannot be held liable
for governmental acts (jus imperii), we still hold that petitioner cannot escape its liability. The
circumstances of this case warrant its exclusion from the purview of the state immunity
doctrine.

The Court cannot turn a blind eye to BOC's ineptitude and gross negligence in the safekeeping
of respondent's goods. We are not likewise unaware of its failing to provide an explanation on
the goods' disappearance, considering that they were in its custody and that they were in fact
the subject of litigation. The situation does not allow us to reject respondent's claim on the
mere invocation of the doctrine of state immunity.

Accordingly, we agree with the lower courts' directive that, upon payment of the necessary
customs duties by respondent, petitioner's "payment shall be taken from the sale or sales of
goods or properties seized or forfeited by the Bureau of Customs."