Yaokasin vs. Commissioner of Customs

The Commissioner of Customs possesses the power of automatic review over decisions of the Collector of Customs in seizure and protest cases that are adverse to the government, pursuant to Section 12 of the Integrated Reorganization Plan as adopted by P.D. No. 1 and implemented by Customs Memorandum Order No. 20-87, and this power coexists with — and does not conflict with — the appeal mechanism provided under Section 2313 of the Tariff and Customs Code.

Petitioner Jimmy O. Yaokasin was the consignee/claimant of 9,000 bags of refined sugar seized by the Philippine Coast Guard on May 27, 1988, while being unloaded from the M/V Tacloban, and turned over to the custody of the Bureau of Customs. The seizure and protest regime governing customs cases is governed by the Tariff and Customs Code, specifically Section 2313, which provides for review by the Commissioner upon appeal by the aggrieved party within fifteen days. Separately, the Integrated Reorganization Plan, adopted as law through Presidential Decree No. 1 dated September 24, 1972, contains Section 12 (Part IV, Chapter I, Article IV) governing the Bureau of Customs, which adds a proviso for automatic review by the Commissioner of decisions of Collectors of Customs in seizure and protest cases adverse to the government. Customs Memorandum Order No. 20-87, issued on May 18, 1987 by then Acting Commissioner Alexander Padilla, directed all collectors to strictly implement this automatic review provision.

On May 27, 1988, the Philippine Coast Guard seized 9,000 bags of refined sugar being unloaded from the M/V Tacloban and turned them over to the custody of the Bureau of Customs. Petitioner Jimmy O. Yaokasin, the consignee/claimant, presented a sales invoice from Jordan Trading of Iloilo to establish that the sugar was purchased locally. The District Collector of Customs at the Port of Tacloban nonetheless proceeded with seizure proceedings, conducting show-cause hearings on June 3 and 6, 1988.

On June 7, 1988, the District Collector ordered the release of the 9,000 bags of sugar to petitioner, directing the immediate withdrawal of the customs guard from the bodega premises. On June 10, 1988, the decision together with the entire records was transmitted to and received by the Commissioner of Customs. On June 14, 1988, without modifying his decision, the District Collector ordered the warehouse where the sugar was stored to be sealed.

On June 19, 1988, the Economic Intelligence and Investigation Board (EIIB) filed a motion for reconsideration seeking further hearing on the merits, based on evidence that the seized sugar was of foreign origin. Petitioner opposed the motion as merely pro forma and, in effect, a motion for new trial. The hearing officer set the motion for hearing on July 13, 1988. Before that date, however, on July 4, 1988, the Commissioner of Customs, by second indorsement, returned the records to the District Collector together with a proposed decision for hearing and resolution of the government's motion for reconsideration.

On the same day, July 4, 1988, petitioner applied for and secured a writ of replevin from the Regional Trial Court of Leyte, Branch VII, through a petition for certiorari, prohibition with replevin and damages with preliminary injunction. On July 12, 1988, the District Collector filed an answer assailing the court's jurisdiction, and both the District Collector and the Commissioner of Customs filed a petition for certiorari and prohibition in the Court of Appeals to annul the replevin order. On July 15, 1988, the District Collector reconsidered his June 7 decision, finding the sugar of foreign origin, smuggled into the country, and declaring it forfeited in favor of the government. On the same day, the Court of Appeals gave due course to the respondents' petition and restrained the RTC judge from further proceeding in the civil case.

• Finality of the Collector's Decision: Petitioner contended that the June 7, 1988 decision of the District Collector became final and executory due to the absence of an appeal by the aggrieved party within the fifteen-day period provided under Section 2313 of the Tariff and Customs Code, and that the release of the 9,000 bags of sugar must therefore be upheld.
• Inapplicability of Automatic Review: Petitioner invoked Sy Man vs. Jacinto as precedent for the proposition that the Commissioner of Customs has no power of automatic review over unappealed decisions of the Collector in seizure cases.
• Lack of Publication: Petitioner objected to the enforcement of Section 12 of the Integrated Reorganization Plan and Customs Memorandum Order No. 20-87 on the ground that they had not been published in the Official Gazette.

• Automatic Review Under CMO No. 20-87: The District Collector and the Commissioner of Customs argued that because the June 7, 1988 decision was adverse to the government, the case should go to the Commissioner of Customs on automatic review pursuant to Customs Memorandum Order No. 20-87, dated May 18, 1987, which implements Section 12 of the Integrated Reorganization Plan.
• Protection of Government Interest: Respondents maintained that the automatic review mechanism was intended to protect the government's interest in the collection of taxes and customs duties, preventing corrupt or conniving customs collectors from releasing goods without higher-level scrutiny.

• Automatic Review Power: Whether the Commissioner of Customs has the power of automatic review over decisions of the Collector of Customs in seizure and protest cases that are adverse to the government.
• Conflict Between Section 12 of the Plan and Section 2313 of the Tariff and Customs Code: Whether Section 12 of the Integrated Reorganization Plan conflicts with Section 2313 of the Tariff and Customs Code such that one must prevail over the other.
• Applicability of Sy Man vs. Jacinto: Whether Sy Man vs. Jacinto is controlling precedent barring the Commissioner's automatic review power.
• Publication Requirement: Whether Section 12 of the Plan and Customs Memorandum Order No. 20-87 are invalid for lack of publication in the Official Gazette.

• Automatic Review Power: Yes. The Commissioner of Customs possesses the power of automatic review over decisions of the Collector of Customs in seizure and protest cases adverse to the government, pursuant to Section 12 of the Integrated Reorganization Plan as adopted by P.D. No. 1 and implemented by CMO No. 20-87.
• Conflict Between Section 12 of the Plan and Section 2313 of the Tariff and Customs Code: No conflict exists. Section 2313 governs review upon appeal by the aggrieved party (the importer or owner), while Section 12's proviso governs automatic review when the Collector's decision is adverse to the government; they refer to two different situations and may co-exist.
• Applicability of Sy Man vs. Jacinto: No. Sy Man is not in point because in that case the memorandum order was issued without express statutory authority, whereas CMO No. 20-87 directs compliance with an existing provision of law (Section 12 of the Plan) that mandates automatic review.
• Publication Requirement: No invalidity arises. The Plan, as part of P.D. No. 1, was published in the Official Gazette on October 2, 1972, and CMO No. 20-87, being an administrative order addressed only to customs collectors, need not be published under the exception recognized in Tanada vs. Tuvera.

• Automatic Review Power: Section 12 of the Integrated Reorganization Plan, adopted as part of the law of the land through P.D. No. 1, expressly provides that where a decision of a Collector of Customs in seizure and protest cases is adverse to the government, it shall automatically be reviewed by the Commissioner of Customs, and if affirmed, automatically elevated for final review by the Secretary of Finance. The 1987 Constitution (Section 3, Article XVIII) provides that all existing laws, decrees, and executive issuances not inconsistent with the Constitution shall remain operative until amended, repealed, or revoked. While some provisions of the Plan have ceased to be operative due to subsequent reorganizations, Section 12 has not been repealed by subsequent legislation. CMO No. 20-87 merely directs strict compliance with this existing legal provision. The automatic review mechanism was designed to protect the government's interest in tax and duty collection, as a Collector's decision favorable to the importer — and correspondingly unfavorable to the government — would become final if no aggrieved party appeals, and the owner of the goods cannot be expected to appeal a decision favorable to him, nor would the Collector appeal his own decision.

• Conflict Between Section 12 of the Plan and Section 2313 of the Tariff and Customs Code: Section 2313 provides the procedure for review of a Collector's decision upon appeal by the aggrieved party, i.e., the importer or owner of the goods. Section 12 of the Plan refers to the general procedure in appeals in seizure and protest cases with a special proviso on automatic review when the decision is adverse to the government. Although both relate to the review of seizure and protest cases, they refer to two different situations: when the decision is adverse to the importer or owner, and when the decision is adverse to the government. Accordingly, they may co-exist without conflict.

• Applicability of Sy Man vs. Jacinto: In Sy Man, the memorandum order of the Insular Collector of Customs directed the elevation of records for automatic review even though he had not been expressly granted such power under the then existing law. In the present case, by contrast, the Acting Commissioner issued CMO No. 20-87 to direct strict compliance with an existing provision of law — Section 12 of the Plan — which expressly mandates automatic review of decisions adverse to the government. The factual and legal contexts are therefore distinguishable.

• Publication Requirement: The Plan, as part of P.D. No. 1, was "adopted, approved and made as part of the law of the land" and was published in Volume 68, No. 40, page 7797 of the Official Gazette issue of October 2, 1972. As for CMO No. 20-87, Article 2 of the Civil Code, which requires laws to be published in the Official Gazette, does not apply because the memorandum is only an administrative order of the Commissioner of Customs addressed to his subordinates, the customs collectors. Commonwealth Act No. 638 provides that executive and administrative orders shall be published in the Official Gazette "except such as have no general applicability." CMO No. 20-87 is addressed only to particular persons — the customs collectors — and need not be published, on the assumption that it has been circularized to all concerned, pursuant to Tanada vs. Tuvera.

• Automatic Review in Customs Seizure Cases Adverse to the Government — When a decision of a Collector of Customs in seizure and protest cases is adverse to the government, it shall automatically be reviewed by the Commissioner of Customs, and if affirmed, automatically elevated for final review by the Secretary of Finance. If within thirty days from receipt of the records no decision is rendered, the decision under review becomes final and executory. This doctrine, rooted in Section 12 of the Integrated Reorganization Plan (P.D. No. 1), was applied to uphold the Commissioner's return of the records to the District Collector with a proposed decision, and the Collector's subsequent reconsideration and forfeiture order.

• Coexistence of General and Special Provisions on Review — Section 2313 of the Tariff and Customs Code (governing review upon appeal by the aggrieved party) and the proviso in Section 12 of the Plan (governing automatic review when the decision is adverse to the government) do not conflict and may co-exist, as they refer to two different situations: decisions adverse to the importer or owner, and decisions adverse to the government.

• Publication Requirement for Administrative Orders Addressed to Subordinates — An administrative order addressed only to particular persons or a 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, pursuant to Tanada vs. Tuvera.

• "Section 12 of the Plan and Section 2313 of the Tariff and Customs Code do not conflict with each other. They may co-exist." — This passage articulates the ratio decidendi on the relationship between the two legal provisions governing review of customs seizure and protest cases, establishing that they address different situations and thus can operate simultaneously.

• "Evidently, it was to cure this anomalous situation (which may have already defrauded our government of huge amounts of uncollected taxes), that the provision for automatic review by the Commissioner of Customs and the Secretary of Finance of unappealed seizure and protest cases was conceived to protect the government against corrupt and conniving customs collectors." — This passage explains the legislative purpose behind the automatic review mechanism, identifying the mischief it was designed to remedy.

• "CMO No. 20-87 requiring collectors of customs to comply strictly with Section 12 of the Plan, is an issuance which is addressed only to particular persons or a class of persons (the customs collectors). 'It need not be published, on the assumption that it has been circularized to all concerned' (Tanada vs. Tuvera, 136 SCRA 27)." — This passage applies the publication-exemption doctrine for internal administrative orders addressed to a specific class of government officers.

• Sy Man vs. Jacinto, 93 Phil. 1093 (1953) — Distinguished. In Sy Man, the memorandum order directing automatic review was issued without express statutory authority and was never approved by the department head or published, rendering it ineffective. The Court found this case not in point because CMO No. 20-87 implements an existing provision of law (Section 12 of the Plan) that expressly mandates automatic review.

• Tanada vs. Tuvera, 136 SCRA 27 — Followed. Cited for the proposition that administrative issuances addressed only to particular persons or a class of persons need not be published in the Official Gazette, on the assumption that they have been circularized to all concerned.

• Section 12, Article IV, Part IV, Chapter I, Integrated Reorganization Plan (P.D. No. 1, September 24, 1972) — Provides that decisions of the Collector of Customs in seizure and protest cases are subject to review by the Commissioner upon appeal, with a proviso that where the decision is adverse to the government, it shall automatically be reviewed by the Commissioner, and if affirmed, automatically elevated to the Secretary of Finance, with a thirty-day finality period. Applied as the legal basis for the Commissioner's automatic review power over the District Collector's June 7, 1988 release order.

• Section 2313, Tariff and Customs Code — Provides that the person aggrieved by the decision or action of the Collector in protest or seizure cases may, within fifteen days after notification, give written notice of desire to have the matter reviewed by the Commissioner. Applied as governing review upon appeal by the aggrieved party, held to co-exist with Section 12's automatic review proviso.

• Section 3, Article XVIII, 1987 Constitution — Provides that all existing laws, decrees, executive orders, and other executive issuances not inconsistent with the Constitution shall remain operative until amended, repealed, or revoked. Applied to sustain the continued operative effect of P.D. No. 1 and Section 12 of the Plan.

• Customs Memorandum Order No. 20-87 (May 18, 1987) — Issued by Acting Commissioner Alexander Padilla, directing all collectors to strictly implement the automatic review provision of Section 12 of the Plan, and prohibiting releases unless the Collector's decision is confirmed in writing by the Commissioner. Applied as the implementing issuance that operationalized the automatic review mechanism.

• Commonwealth Act No. 638 — Enumerates what shall be published in the Official Gazette, with an exception for orders that have no general applicability. Applied to exempt CMO No. 20-87 from the publication requirement.

Narvasa, Melencio-Herrera, Cruz, Paras, Feliciano, Gancayco, Bidin, Sarmiento, and Cortes, JJ., concurred. Padilla, Jr., took no part.

• Medialdea, J. — The dissent argued that Section 12 of the Plan/P.D. No. 1 is a general law concerning executive reorganization, whereas the Tariff and Customs Code is a special law specifically governing tariff and customs duties; under the rule that a general law cannot prevail over a special law, the Plan is subservient to the Code, and the automatic review power granted in Section 12 cannot be upheld. The dissent traced the legislative history of Section 2313 through its amendments (P.D. No. 34, P.D. No. 1464, Executive Order No. 688) and noted that at no point was the Commissioner granted automatic review power in seizure cases — only in assessment-of-duties cases under Section 2315. The dissent further argued that no Letter of Implementation was ever issued for Section 12 of the Plan as required by P.D. No. 1 itself, and that CMO No. 20-87 was void for non-compliance with the publication requirement of Section 551 of the Revised Administrative Code, which mandates that regulations and orders become effective only when approved by the department head and published in the Official Gazette or otherwise publicly promulgated. The dissent relied on Sy Man vs. Jacinto as controlling precedent and voted to grant the petition. Chief Justice Fernan and Justices Gutierrez, Jr. and Regalado concurred with the dissent.