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Case Digest - Taxation

Commissioner of Customs vs Milwaukee Industries
GRN- 135253 December 9, 2004
Sandoval-Gutierrez, J.:

Facts:
Milwaukee Industries is engaged in the importation of steel billets and manufactures of them into plates, sheets, pipers, rods etc. for local market of Feb 1, 1994, the steel billets arrived a representative of customs broker for Milwaukee presented to customs inspector a shipside permute and it took 6 days to discharge the cargo. The cargo was transported to the warehouse of respondent but “under guard” until a valid delivery permit was presented. Custom Intelligence and Investigation Division questioned the shipment for being transformed without import entry or payment of duties and taxes. Respondent settled the account while Special Assistant to petitioner was instructed to accept payment and facilitate release of the shipment. North understanding the acceptance and respondent’s payment district collection proceed with the seizure and forfeiture proceedings. Commissioner of Customs affirmed the district collector’s decision. CTA reversed.

Issue:
Whether or not the shipment was released to respondent and that respondent failed to comply with customs requirements to justify seizure and for failure of shipment.

Ruling:
CTA found and held that at the time of the transfer to Milwaukee’s factory, the same was not released but merely transformed or discharged under continuous customs guarding. Since the shipment was merely transfer under the custody of the BOC for all legal intents and purposes.
Section 1202 of TCC provides “Importation is deemed terminated upon payment of the duties, taxes and other charges due upon the articles…and the legal permit for withdrawal shall have been granted.
The seizure proceeding must fail.





R.V Marzan Freight vs. CA/ Shiela’s Manufacturing
GRN 128064

Facts:
Philfire issued insurance policy to R.V Marzan, owner of a customs bonded warehouse. Shiela’s manufacturing engaged in the garment business, the consignee of raw materials from Taiwan. The BOC treated the materials as subject to ordinary import taxes and were not immediate released to respondent. The consignee failed to file the requisite import entry and to claim the cargo.BOC authorized petitioners for stripping and safekeeping after 5 months, notice of abandonment giving respondents 15 days from notice to file entry the file cargoes without prejudice to right of the consignee to redeem articles cargoes would redeemed abandoned and be sold at public auction. After a month the declaration of abandonment has become final and executory but before inventory and sale public auction of goods the warehouse was burned. Philfire paid 12,000.00 for the warehouse. After the Lapse of more than 2 years from the arrival of the cargo, the private respondent filed a complaint for damaged before RTC. Petitioner arrived that there is no private of Contract between them since the cargo was received from BOC and that respondent failed to claim the cargo, pay taxes thus not entitled to insurance proceeds.

Issue:
Whether or not the trial court had jurisdiction to review and declare ineffective the declaration of the BOC in abandonment proceedings and that the government ipso facto became the owner thereof.

Ruling:
The declaration that the cargo was abandoned for the failure to file the import entry was ineffective because notice of proceedings of abandonment was not given to the consignee. Evidently, the resolution of this issue is within the exclusive competence of the District Collector of Customs, the Commissioner of Customs and within the appellate jurisdiction of CTA.
The rule has RTC has no review powers over such proceedings is anchored upon the policy of placing un necessary hindrance on the government 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, which enables the government to carry out the functions it has been instituted to the perform. The trial court should have dismissed the complaint without prejudice to the right of the private respondent to ventilate the issue before the Commissioner of the Customs and/or CTA.



Terminal Facilities TEFASCO/ Vs. PPA
GRN 135826 February 27, 2002
De Leon, Jr. &:

Facts:
Tefasco proposed to construct as specialized terminal complex with part facilities and a provision for sport services in Davao City. On May 7, 1976, PPA accepted the projects TOCs and was authorized to start work. Tefasco contracted dollar lessons concern from private commercial institution abroad to construct its specialized facilities and long after the ground breaking, PPA passed a resolution which imposed a construction; PPA issued another permit the provision of which states that 10% of arrastre and stevedoring gross income and 100% wharf age and berthing charges be given as government share it had paid and for damage as a result of alleged illegal exaction from its clients of 100% berthing and wharf age fees. RTC ruled for Tefasco.

Issue:
Whether or not the collection of 100% wharf age fees and berthing charge are valid.

Ruling:
The authorization for a Tefasco to construct a port was truly a binding construct between the parties. It was a 2-way advantage for both parties which were the consideration for the contract. The right- privilege dechotomy came to an end when courts realized that individuals should not be subjected to the unfettered whims of government officials to withhold privileges previously given them.
In as much as the part is privately owned and maintained, we rule that applicable rate for imported or exported articles loaded or unloaded thereat is not more than 100% but only 50%.
As regards berthing charges, the Court’s opinion is that only vessels berthing at the national ports arte liable for berthing fees. The Berthing fees imposed upon vessels berthing are national ports are applied by the national government for the maintenance ports. The national ports does not maintain municipal ports which are solely maintain by private entities or municipalities. Thus, PPA erred in collecting berthing fees.




Nestle Philippines, Inc. vs. CA
GRN 134114 July 6, 2001
De Leon, Jr. &:

Facts:
CTA Dismissed petitioners motion to grant refund on allegedly overpaid impost duties, on its various importations of milk and milk products in the amount of 5M. Petitioners were assessed customs duties and advance sales taxes by Collector of Customs for each separate importations on the basis of the published Home Consumption Value. Petitioners paid the same but under protests. On October 1986, petitioner finally failed a claim for refund of before BIR and the following day, filed the petition for review with CTA which ordered BIR to refund P 4,489 representing the overpaid advance and Sales Taxes. The refund for alleged overpaid customs duties amounting to P 5.008M were left with the collector of customs undecided after almost 6 years. On Aug 22, 1990, petition filed a petition for review with CTA dismissed for what of jurisdiction. Case was filed with CA on certiorari (Rule 45) but dismissed for CTA jurisdiction is not concurrent with the appellate jurisdiction of Commissioner since there was no decision yet from Collector from Customs.

Issue:
Whether or not petitioner is entitled for alleged overpayment of customs duties on importations thus be remanded to CTA for further review.

Ruling:
We find that the recommended remand of the case to CTA is warranted. For the proper verification and determination of the factual basis and merits of this petition and in order that the ends of substantial justice and fair play my be sub served. Tariff and Customs Code provides that in all claims for refund of customs duties are paid and upon receipts of such claims is mandated to verify the same by the record of his office. In such claim is found correct and in accordance with law, the collector shall certify the same to the commissioner with his recommendation together with all the necessary papers and documents.
Solutio indebt it’s misplaced because there is no factual showing that the collection was more than what is required of the petitioner when it made the importations. There is no factual finding yet that petitioner is indeed entitled to its claim of overpayment and if how much is he entitled.



CIR vs. Wyeth Suaco Lab
GRN-76281 September 30, 1991

Facts:
An investigation and examination of the books of accounts of Wyeth disclosed that Wyeth was paying royalties to Wyeth International and have also declared cash dividends on September 27, 1973 and these were paid on October 3, 1973. It allegedly failed to remit withholding tax at source and accrued royalties resulting to tax deficiency. Assessment notice were received on December1974 whereas letters/reply were sent on Feb 1975 protesting assessment and requesting their cancellation or withdrawal. On December 10, 1979 petitioner rendered a decision reducing the assessment of withholding tax at source. There after, petitioner issued a warrant of distrait of personal; property and warrant of levy real property. CTA decided in favor of respondent ratiocinating that an assessment of any internal revenue tax within the 5 years period of limitation may be collected by distrait of personal property and warrant of levy of real property. CTA decided in favor of respondent ratiocinating that an assessment of any internal revenue tax within the 5 years period of limitation may be collected by distained or levy by a proceeding in count but only if begun within 5 years after the assessment of the tax.

Issue:
Whether or not the right to collect deficiency tax at source and sales tax liabilities from private respondent is barred by prescription.

Ruling:
Settled is a rule that the prescription period provided by law to make collection by distrait or levy by proceeding in court is interrupted once a tax payers requests of reinvestigation or reconsideration of assessment when Wyeth, through SGV and Co protests the assessment and sought its reconsideration on Feb 1975, the prescription period was interrupted. This period started to run again when the BIR served the final assessment of Wyeth on Jan 2, 1980. Since the warrant of distrait and levy were served on Wyeth on March 12, 1980 then only about for months of the five year prescriptive period was used.

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