R.V. Marzan Freight, Inc. vs. Court of Appeals

A declaration of implied abandonment by the Collector of Customs under Section 1801 of the Tariff and Customs Code is an administrative determination reviewable exclusively by the Commissioner of Customs and the Court of Tax Appeals; regular trial courts have no jurisdiction to nullify such a declaration or to determine the ownership of goods declared abandoned, even when the issue is raised collaterally in an action for damages.

Shiela’s Manufacturing, Inc., a garment exporter, imported raw materials from Taiwan. Upon arrival in April 1989, the Bureau of Customs treated the shipment as subject to ordinary import duties and did not immediately release it because the importer failed to file the requisite import entry and claim the cargo. The shipping line authorized the warehouseman, R.V. Marzan Freight, Inc., to take custody of the container for stripping and safekeeping. The District Collector of Customs subsequently initiated abandonment proceedings, posted a notice on the Bureau’s bulletin board, and declared the goods abandoned as of October 30, 1989. Before a public auction could be held, a fire destroyed the cargo while stored in the bonded warehouse. The importer then demanded the value of the goods from the warehouseman and, upon refusal, filed a complaint for damages in the Regional Trial Court.

• Parties and Initial Events: R.V. Marzan Freight, Inc. operated a customs-bonded warehouse. Shiela’s Manufacturing, Inc. was a garment manufacturer and consignee of raw materials. On April 12, 1989, raw materials consigned to Shiela’s arrived from Taiwan. The Bureau of Customs treated them as dutiable and did not release them because the consignee failed to file the required import entry and failed to claim the cargo.
• Transfer to Bonded Warehouse: On July 24, 1989, Sea-Land Service, Inc. authorized R.V. Marzan to take delivery of the container for stripping and safekeeping.
• Abandonment Proceedings: The International Container Terminal Services, Inc. requested clearance of abandoned cargo. The District Collector of Customs initiated Abandonment Proceedings No. 288-89. On September 29, 1989, a notice was posted on the Bureau’s bulletin board giving the consignee 15 days to file entry. No separate notice was sent to Shiela’s because, per ICTSI records, the consignee’s address was unknown. The declaration of abandonment became final on October 30, 1989.
• Fire and Insurance: On July 26, 1990, before the goods could be sold at public auction, a fire destroyed the warehouse and the shipment. Philfire paid Shiela’s P12,000,000 under the insurance policy, though the policy was issued in favor of the warehouse operator.
• Demand and Suit: In March 1991, Shiela’s demanded payment from R.V. Marzan for US$32,006.93, the invoice value. R.V. Marzan refused. On December 26, 1991, Shiela’s filed a complaint for damages in the RTC against R.V. Marzan and Philfire.
• RTC and CA Rulings: The trial court found that the abandonment was ineffective because no personal notice was given to Shiela’s, thereby denying due process; thus, the importer remained the owner and was entitled to recover from the warehouseman. The Court of Appeals affirmed, holding that the posting of notice on the bulletin board was insufficient when the consignee was known.

• Lack of Jurisdiction of the RTC: Petitioner maintained that the RTC had no jurisdiction over the central issue — whether the cargo had been validly declared abandoned — because such questions fall within the exclusive original jurisdiction of the Collector of Customs and are appealable only to the Commissioner of Customs and the Court of Tax Appeals. The RTC could not, therefore, nullify the Collector’s declaration.
• Finality of Abandonment: Petitioner argued that the abandonment proceedings had become final and executory on October 30, 1989, before the fire, and that by operation of Section 1802 of the Tariff and Customs Code the cargo had become government property, depriving the private respondent of ownership and a cause of action.
• No Privity and Fortuitous Event: Petitioner asserted it received the cargo from the Bureau of Customs, not from the private respondent, and that the fire was an act of God for which it could not be held liable.

• Invalidity of Abandonment for Lack of Notice: Respondent contended that the declaration of abandonment was void because the Bureau of Customs failed to give personal notice to a known consignee, in violation of Section 1801 of the Tariff and Customs Code and the due process clause.
• RTC Jurisdiction to Apply the Law: Respondent argued that the trial court did not review the administrative proceedings but merely applied the statutory notice requirement, and that the petitioner was barred by laches from raising the jurisdictional question for the first time in the Supreme Court.
• Futility of Administrative Appeal: Respondent asserted that an appeal to the Commissioner of Customs and the Court of Tax Appeals would be futile because the goods had already been destroyed, and that the Court of Appeals, as the ultimate reviewing court, was competent to rule on the validity of the abandonment.
• Bad Faith and Unjust Enrichment: Respondent maintained that the petitioner’s refusal to satisfy a valid claim evidenced bad faith, justifying the award of attorney’s fees.

• Jurisdiction: Whether the Regional Trial Court had jurisdiction to review and nullify the District Collector of Customs’ declaration that the imported shipment had been impliedly abandoned and had become government property, and consequently to determine the importer’s ownership at the time of loss.

• Jurisdiction: The RTC lacked jurisdiction over the validity of the abandonment declaration and the issue of ownership. The determination of whether an importation has been impliedly abandoned under Section 1801 of the Tariff and Customs Code, including the adequacy of the notice given, is exclusively vested in the Collector of Customs. The Collector’s actions are appealable to the Commissioner of Customs and then to the Court of Tax Appeals, not to the regular courts. The RTC was devoid of competence to interfere with or nullify customs abandonment proceedings, even on due process grounds, because the exclusive statutory hierarchy must be followed. The loss of the cargo did not divest the Collector of jurisdiction or render the declaration functus officio. The complaint should have been dismissed without prejudice to the importer’s right to pursue the matter before the proper administrative and tax court bodies.

• Exclusive Jurisdiction of the Bureau of Customs in Abandonment/Forfeiture Proceedings — The Collector of Customs, sitting in abandonment or forfeiture proceedings, has exclusive jurisdiction to hear and determine all questions touching on the seizure, forfeiture, or declaration of abandonment of dutiable goods. Regional trial courts are precluded from assuming cognizance over such matters even through petitions for certiorari, prohibition, or mandamus. Any legal objection must be ventilated through appeal to the Commissioner of Customs, then to the Court of Tax Appeals, and finally to the Court of Appeals. The rule is anchored on the policy of preventing unnecessary hindrance to the government’s customs enforcement and revenue collection functions. Applied here, the declaration of implied abandonment, even if allegedly defective, could not be collaterally attacked in an RTC action for damages.
• Implied Abandonment under Section 1801 of the Tariff and Customs Code — Implied abandonment occurs when the interested party fails to file the import entry within five days (or any extension) from the discharge of the vessel or, having filed such entry, fails to claim the importation within the prescribed period. The abandonment becomes effective only upon the Collector’s formal declaration after notice is given to the interested party as in seizure cases. Once declared abandoned, the owner or importer is deemed to have renounced all interests and property rights therein, and the goods become government property.

• "The resolution of the foregoing issues is within the exclusive competence of the District Collector of Customs, the Commissioner of Customs and within the appellate jurisdiction of the Court of Tax Appeals."
• "There is no question that Regional Trial Courts are devoid of any competence to pass upon the validity or regularity of seizure and forfeiture proceedings conducted by the Bureau of Customs and to enjoin or otherwise interfere with these proceedings. … Even if the seizure by the Collector of Customs were illegal, … such act does not deprive the Bureau of Customs of jurisdiction thereon."
• "The rule that Regional Trial Courts have no review powers over such proceedings is anchored upon the policy of placing no unnecessary hindrance on the government’s drive, not only to prevent smuggling and other frauds upon Customs, but more importantly, to render effective and efficient the collection of import and export duties due the State … ."
• "The trial court was incompetent to pass upon and nullify (1) the seizure of the cargo in the abandonment proceedings, and (2) the declaration made by the District Collector of Customs that the cargo was abandoned and ipso facto owned by the government."

• Alemar’s, Inc. v. Court of Appeals, 350 SCRA 333 (2001) — Followed as controlling authority that an action seeking to annul a Collector’s declaration of abandonment and order of sale falls within the jurisdiction of the Commissioner of Customs and the Court of Tax Appeals, not the RTC.
• Jao v. Court of Appeals, 249 SCRA 35 (1995) — Relied upon for the settled rule that RTCs cannot review seizure and forfeiture proceedings; the proper forum is the Collector of Customs, then the Commissioner of Customs, and ultimately the Court of Tax Appeals.

• Section 1801, Tariff and Customs Code — Defines expressed and implied abandonment; requires notice to the interested party as in seizure cases before implied abandonment becomes effective. The provision’s requirement that the Collector declare the abandonment after notice makes the declaration an administrative determination reviewable exclusively within the customs administrative and tax court hierarchy.
• Section 1802, Tariff and Customs Code — Prescribes the procedure for abandonment of imported articles and the renunciation of interests. Invoked by the petitioner to assert that the cargo had become government property upon finality of the declaration, a question the RTC could not resolve.
• Section 1902, Tariff and Customs Code — Holds the operator of a bonded warehouse liable for duties and taxes in case of loss of stored imported articles. Cited to show that the warehouseman’s liability ran to the government, not to the private importer whose ownership was extinguished by the abandonment declaration.
• Republic Act No. 1125, as amended (An Act Creating the Court of Tax Appeals) — Provides for the exclusive appellate jurisdiction of the Court of Tax Appeals over decisions of the Commissioner of Customs, confirming that the proper venue for review of customs abandonment proceedings is the CTA.

Quisumbing (Acting Chairman), Austria-Martinez, and Tinga, JJ., concurred. Puno (Chairman), J., was on leave.