Cittirank, et al. vs. Cg. T. A. Casf. No. 3188 Commissioner of Customs, et al.

DECISION

CTA CASE NO.

~180 ·- 2 - institution duly lic~ns~d to ~ngRQP in husiness in Philippi n~s.

while co · p o t:i t· :i oner Tnvestors F'nance, Inr.. , <formerly known RR FNCR F:nance, Inc. >, doing business undl?r the name Rnd style "FNCB Finance", it=! a corpo atiiJn du.l y orgRnized and exj sting unrier And ·.n accord:"'ln c r-o "'i.t h th~ le~ws of the Phi.lippin'"" . . On var io\ s dR te:>s from DPcPmht:?r 29, .1 970 , ·the

ABS -- CBN

Broadcasting Corpor::Jtton

<ABS - CBN

for brPv it y) formerl y known as tht:? Rnl inao Electronics Corpor<ltion, corporation dilly and I'?Xi.sting under and by virtue of th<:?

lRws of the Philippini?R, ~ngRaed in t.hP hnsinens of radio and television broe~dcastin~. The payment a nd performance of the credit accnmoda tion extended by thE" r e t i. t ioners to

ABS -

CB N, including any and all obligat · ons for which

ABS -CB N

may bound to the petitioners, are secured by the Chat tel Mortgage executed by ABS - CBN on December 29, 1970 in favor of p<:?titioner Cit i bank, N. A.

over the colored television equi pment and accounts receivables enumerated and described in the schedule attached to the mortgage .)

DECISION CTA CASE NO.

3 188 - 3 - document a s fl.nnex "A" t her Pnf, e~ncl hy the Chat tel Mort g a ge exPcuted and deli vered by

ABS - CBN

on December 8, 1972, in fa vor of the pet.i tioners over the radio and television equipment, spare parts, accessories and other personal properties enumerated rtnd described in thP sc hedule att ached to the mortqage document as Annex "A" thereof (see Joint Stipulation of Facts with annexes , Annex "A", pp. 18 -20).

Inasmuch as the case at bar is considered o nly as ancillary to the consolid8t.ed ABS -· CBN cases, - we hereby adop t t he narration of facts therein, thus: "Pe titioners ABS - CRN, formerly known as the Bo l inao Electronics Corporation , a nd SCA N, Inc., are corporation s duly organiz ed and existing under the l aws of t he Philippines, · r e spec t ·. v~:>J.y.

ABS - CB N

was gr:=int~:>d temporar y p Prmi s under Republ ' c Acts Nos . 51t and 51 2 ~s ame nded by Republic Ac ts Nos.

5730 and 5731, res pe cti.v ~:> ly, to: ( 1) c on s tru c t, m<=dntRin and opera t<=> stations for international telecommunications a nd television stati on s i n the Philipp'nes: and <2> to c onstruct , main tai n a nd ope ra t e radio broadca s ting stations Rlso in the Philippines for a period of fifty years. The perm i t s granted by Republ ic Act s No s . 511 and 512, to operate radio and television s tation s were converted into regular franchises by t he amendatory acts and the name of the grantee was c hanged to "ABS - CB N Broadcasting Cor porat ion" . and Sec tion 4 of Sec tion :3 of 31u Republic Republic Act Act No.

No .

5 11 5 12 DECISION CTA CASE NO. 3188 - 4 -- contain an ipso facto clause whi c h reads: "I n the event of any compPti ng ."ndividual, p~ tnership or cor pnration rece"ving from the Congress R similar tempora y permit in wh' ch thPre shall be Any term _or :terms . more . fav.orable

t. h~n t hose herein granted or tend'ng to pl a e the herein grantee at any d · s~ dvantagt?, then Ru c h term or terms s hall, ipso .fReta, become a part of the terms hereof and s h:::tl.l operate equally in fRvor of the · ndividual, pAr nPrship or cor poration."

<Emphasis Ours > Subsequently , Co na Pss e n ac ed Republir.; Act tt o.

2036 gr:=!nting the Radio Co mmu n ic:::t t ions of the Phi 1 ippi nes , Inc.

<RCPI>, a franchisf'? to <=>stahl' s h radio stations for d omPstj c tPlecnmmunication whic h w s l ater :q mend e d by R<=>public Acts Nos. 29G3 and 4054.

Section as amended provides:

l of Re public Act No.

by · Republi c Act No.

2036 ,

2963 ,

"SECTION 1 .

S ubj ect to th e provision s of the Co nstitut ·o n, and tr::~ the p ovisions, not incons:stent herewith, of Act n umbered t hree thousand eight hundred and forty - six, entitled "An Act providing for the regulation of radio stations and radio communications in the Philippine Isl ands, and for other purposes; Commonwealth Act numbered one hundred forty - six, known as the Public Service Act, and their amendments, and other applicable laws, :t.D.E.?.J::.§' ___ i£?.: .h.~:r..E?..PY .. g _r.ar.!t. .~d - to_ t .he. Radi.o. .. . Cpmmunicatiol) of the Phi 1 · ppine.s, .

Inc., its .)

DECTSION CTA CASE NO. 3188 successors or assigns, the right and privilege of constructing, installing, establishing and operating in the Philippines, at such places as the said corporation may select and the Secretary of Public Works and Communications may approve, radio stations for the reception and transmission of wireless messages on radioteleqraphy and/or radiotelephony, including both coastal and marine telecommunications, each station to consist of two radio apparatus comprising of a receiving and sending radio apparatus, Stations for international telecommunications and stations for broadcasting, including television." (Emphasis Ours) And Section 14 of the same Act, as amended by Republic Act No. 4054, reads:

"SECTION 14. In consider- ation of the franchise and rights hereby granted and any provision of Law to the contrary notwithstanding, the qriantee shall pay the same taxes as are now or may hereafter be required by law from other individual, copartnerships, private, public er quasi-public agssaociationg, corporations, or joint stock companies, on real estate, buildings and other personal property except radio equipment, machinery and spare parts needed in. connection with the business of the grantee, which shall be exempt. from. customs duties, tariffs and other taxes, as well ‘as those properties declared exempt in this section. In consideration of the franchise, a tax equal to one and one-half ois OECISlON CTA CASE NO.

3 1AA

- f., - per centum of gll grn s~ r~~~i rt n :fr om

t. h~ husine~:-- ~. T<'~Tt"~ct<=>rl und r ) ' thi.s frrtnrhi ;.:p r y t.h<"' gr:::>n~ eo sh~ ll ho pa.id to thr- Tr ..... ~c-;nn·,, nf t.h P rhi 1 i pp'i.n t=-r e? r h yr->ar, w ·thin ten riRys rtf ter

t. h "" ':' ll rf i t ;;! n d ::} r f' )" n v ~ 1 n f + h <=· ac r::-n Hnts :'lR prr->srrihpd :i.n thjr fl c t.

S aid t"'x sh:=!ll h<=> in lieu o:f any and all ta :es of any kind, nature or description ~evjed, establis hed nr col Ject.erl by :=!ny authority wha t.soever, m1n"cipal, provincial . o~ national, from _whi c h tax<=>s the grantee _is her eby expressly exempted."

<Emphasis Ours) It :"lppt=?Rrs t.h t AF.IS - CBN stFt:r ted importing Lelt=?vision hr nndcasting equ ipment from 1966 when it was s ill Bolinan Rrn~dcaPting Corpora on.

Upon conversjnn of the temporary permits into 1 egul<1r franchise, and the nam<=> of the g an tE"c:> was changed to "1\ F.IS - CB N Broadca ~t ing Corporat "on", i ~ paid the franch.' sr-> tAX"'S on its op<?rc:~tions of 1 1/2(. of · ts oross .receipt rithout payir q c t stems rfutjc:>s and ta :ns o n the .' mportr> t. i.on of te l evision r:?qu · pment, s pare parts and machineries. 1 S horlJy after the rlecJa:ration of tln.rtiaJ Law (under Proc lamation No. l<Jfl,Q, dated SPp t e mb<::>r 2l, 1972 > ·the Department of Finance fnrmed a Joint-.

CtJs toms l niR T~a m to j _ nvestigat~ alleged tax deficiency 0f ABS - CBN in the importations of television equipment. In a memorandum report to the Commissioner of Cust o ms dated July 6, 1973, Heracleo Pagtanac, Supervising Special Investigator, a member of the .Joi nt Te~m, indicated that ·the Department of Finance committed errors when it DECISION CTA CASE NO. 3188 - 7 - allowed the release of of television e quipment free.

thr:?

of 'mportationR .1\RS - CBN ta , As a consequence thereof, seizurP proceedings we e insti tutPd Again st the electronics and television <?f!Uipml?r t of ABS - CBN with the Collectors of Customs of Manila, D v o, Batangas, Iloilo, Cebu Rnd Sa n Fernando, La Union where said I? qui pmen t were released.

Me<1nwh i. .le, the equi pmen t i n 'luestion wPrP suhjPcted to seizure in the ABS-CBN Rtations where they wer e located.

After due hearings, collector s of customs, following decisions:

the r PSpecti ve rendered the 1.

The Collector of Customs of the Port of Mc:miln ordered that all seizerl articles of ABS-CBN under S. I.

Nos.

14093, 14093- A and 14093- B, be released only after payment in full of the assessed duties <P8,824, 411.00> and the internal revenue taxes.

< P2, 321, 2 17. 00 >, exclusive of other charges, plus a fin e equal to twice the amount of the above assessed du~ies <Pl7, 618,922. 00>, or a grand total of P28,95 ,600.00 exclusive of other charges , fine and other charges; <CTA 3 162 > 2.

The Collector of Customs of the Port of Iloilo ordered that the articles seized under S.I. No. 15-73 be released only after payment in full of the assessed customs duties <P581, 148.00) and the internal revenue taxes <P69,51l.OO>, exclusive of o t her charges, plus a fine equivalent to twice the amount of the above assessed duties of <Pl, l62, 296 . 00) or a

DECIS ION

CTA CASE NO. 3188 - 8 - g rRnd total of P1,91 2 ,955.00, e xc lus ive of other charges~ <CTA Case No. 3163> :3.

The CollPct o < of Customs of the Port of Batan g as o rdPred that the arti~l e s seized under S. I. No.

~ - 76 bP re l Pased, only aftPr payment in full of the assessed customs duti PS <P10,7 26.00> and internal rr::> venue t axes < P 15, 638. 00), e xclu s ive of ot her char g es ~ <CTA Case No. 3164 > 1 .

The Collector of Cu s toms of the Port of Dav ao o rdered th a t the articles sei zed under S. I.

No .

73 - 009 be r eleased, only after pa yment in full of the assessed custo ms dut ies <P294,~72.00> and the interna l revenue taxes <P95, 5 19.00>, exclusivP o f other charges, plus a fine equivalen·t to twice the a mount of the above assessed duties <P598 ,484.00) o r a grand total of P988,745.00, exclusive of other charges~ <CTA Case No. 3165> 5.

The Customs of the Collector Port of of Cebu ordered that the articles se.· zed under th e unnumbered seizure identifi cation be re l eased only aftPr full payment of the assessed customs d tties <569 ,254.00) and internal reve nue taxes <P171,046.00>, exclus ive of other charges, and a fine equivalent to twice the amount of the above assessed duti e s <Pl, 138,508.00) or a gr a nd t o tal of P1,878,808.00, excl usive of other charges~ < CTA Case No. 3166) and .)

DECISION CTA CASE NO. 3188 - 9 - 6.

The Collector of Cust oms of t he Po t of San Fer nando , La Uni on, ordered that the articles seized under S. I. No.

7 - 76 be release d only after payment in full of the assessed customs duties <P248,959 . 00 > Rnd int erna l <P59, 491. 00) , revenue taxes exclusive of other charges, and a fin e equ vRlen t.

to twice the amount of the abov~ assessed duties CP497,918.00), o r a grand total of P80~,37t.OO exclusive of other chArges.

<CTA r,ase No. 3167> Not satisfi ed with the ruling of the different collectors of customs, petitioners a ppealed to t he Commissioner of Customs .

On Oc tober 8, 1990, th~?

Acting Commissioner of Customs rendered a decision i n Custo ms Case No .

79 - 44 a ffirming th e d ecisions of the different co llect o s and decreed the release , not to forfeit the articles invo l ved in the seizur e proceedings, s ub ject however , to the full payment by the c laima n ·ts- appel l ants of the corresponding tduti es, taxes and fines.

Hence, the petition for review . On August 14, 1981, petitioners' counsel requested to rest their case and to submit t heir memoranda after petitioner ABS -C BN had closed its cases.

<See remarks of De puty Clerk of Court, CTA record, p. 225. > It was granted by this Court. On June 24 , 1992, this Court, i n a resolution, directed the petitioners to file t heir memora nda in -' DECISION CTA CASE NO. 3188 - 10 - this case since "the ABS - CBN cases had long been terminated and, in fact, said cases were already decided by th is Court o n May 18, 1992 ... "

<See Resolution, p . 236 , CTA record.

It was only on September 24 , 1992 thAt the petitioners finally filed the'r memoranda. The respondent did not file hi s memor Andum. The issues submitted by t.h<?

pet itioners are the following:

.J a> Whether or not petitioners are entitled to foreclose the articles mortgaged to them but subsequent ly seized by the respondent~ b) Whether or not the seizur es proceedings were valid.

Foreclosure of mortgage, re:ferred to in the :first issue, is "a remedy by wh ich t 1he property covered may be subjected to sale to pay demRnrl :for which mortgaqe stands as SP.C\lrit.y" <Pacific Commercial Co.

v . Alvarez, 38 OG 758>. It is either done extrajudicially or judici a lly. Extrajud'cial :foreclosure o:f a chattel mortgage is carried out in the procedure outlined in Sec.

14 o:f the Chattel Mortgage Law.

The mortgagee causes the mortgaged property to be sold at public auction by a public officer. In judicial DECISION CTA CASE NO. 3 88 - 11 - foreclosure, the mortgagee br · ngs a case in court for the for ec l osure of said mortgage (Chana v. Du, 55373 - R, Jul y 3 1, 1981>.

That was precisel y what the petition~rs of this case had in min d. Only that they brought this case to the wronq forum.

They l?hou ld have brought this to the right co u rt wh' c h has co mpetent jurisdiction over t his case. Bu t certainly n ot before this Court . It is well to r-emi nd the petitioners that this Court does not p ossess a wid e - ra nging jurisdiction. It h as a very _I s pecia l and limite d jurisdiction affecti ng - 1.

Decisions o f the Commissioner of Internal Revenue in cases involving disputed assessments, refu nds of internal revenue taxes , f ees or other charges , p en"ll ties imposed in relatio n thereto, or ot h e r matters aris ng under the NI RC 1 or other law or part of law administered by t h e Bureau of Internal Revenue ; and 2 .

Decisio n s of the Commj ssioner of Customs in cases in vo lving liability for cus·toms duties, fees or other money charges; se i z ure, detention or release of pr o perty affected, fines, forfeitures or other penalties imposed in re ation thereto;

or o ther matters aris ing under the customs law or DECISION CTA CASE NO. 3188 - 12 ·- other law or p~rt of l~w admini s teT Pd by the Bureau of Customs;

<Sec .

7 , R. A.

11 25 , An Ac t of Creating the Court of T~x Appeals>. Suffice it to say, that nowh12re in the above- .)

quoted provision regarding th.' s Court's jurisdiction ca n one find the remedy of judicial for ec losure.

Hence, the first iss ue is rejected for lack of jurisdiction. The second iss ue is already moot an d acade mic having been sufficient ly answered in the nE?gati ve in the ABS-CBN cases decided on MAy 15, 1992.

To expound further the same iss ue w ".JJ. be An exercise in futility on what is already considered R "dead" issue.

Petitioners cannot the::> same issue.

Petitioners cannot utilj 7 e this case to rais e "new" mattr:>r which is E'lCttFll..lly A re hA s h o f the "dead" .i.ssuF.> rai sed in th e

AA S - C'BN

c a ses and which • as stated earlier, has be c:::>n aciPq lately and finally disposed of by this Court. Let this Court put that issue to rest where it rightly belongs.

WHEREFORE.

the pet:i t:ion :for revie w :filed by herein petitioner is hereby denied :for lack o:f jurisdiction and the other issue raised having been considered moot:

and academic by virtue o:f the DECTSION CTA CASE NO. 3188 - 413 - decision rendered by this Court in the ABS-CBN cases (Nos. 3162 to 3167) on May 15, 1992.

50 ORDERED.

Quezon City, Metro Manila, April .1, 19932.

é RAMON GO. DE fy d Associate Ju WE aq ONCUR:

+ Te Q. Roh ERNESTO PP. ACOSTA Presiding Judge MANUEL K. GRURA Associate Judge CERTIFICATION t I hereby certify that this decision was reached after due consultation between the members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution.

—, at ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals Ww > C3