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The remedy of appeal due to delay or inaction

By Atty. Mark Anthony P. Tamayo on December 22,2022

THE exclusive appellate jurisdiction of the Court of Tax Appeals (CTA) covers decisions by the Bureau of Customs (BoC) commissioner in cases involving liability for customs duties, fees or other money charges, seizure, detention or release of property affected, fines, forfeitures or other penalties.

Unlike in Bureau of Internal Revenue tax cases, any delay or inaction on the part of the BoC commissioner on protest cases or refund claims does not yet make these ripe for review by the CTA. In compliance with the doctrines of exhaustion of administrative remedies and primary jurisdiction, there must generally be a categorical adverse action or decision on the part of the BoC commissioner before an aggrieved protestant or claimant could avail judicial recourse.

Doctrine of exhaustion of administrative remedies

The doctrine of exhaustion of administrative remedies requires that when an enabling statute indicates a procedure for administrative review and provides a system of administrative appeal or reconsideration, the courts shall generally not entertain a case unless the available administrative remedies have been resorted to and the appropriate authorities have been given an opportunity to act and correct the errors committed in the administrative forum. (Union Bank of the Philippines v. CA, GR 131729, May 19, 1998).

Corollary to the above doctrine is the doctrine of primary jurisdiction which requires that the remedy within the administrative machinery must be resorted to give the administrative officers every opportunity to decide a matter within their jurisdiction. (Garcia v. Tolentino, GR 153810, Aug. 12, 2015). Thus, the doctrine of primary administrative jurisdiction refers to the competence of a court to take cognizance of a case at first instance. (Republic v. Lacap, GR 158253, March 2, 2007; Republic vs Gallo, GR 207074, Jan. 17, 2018).

Both doctrines are judicial recognitions of certain matters that are particularly within the competence and expertise of the administrative agency to address. These rules operate as shields that prevent the overarching use of judicial power (Dimson (Manila) Inc. v. Local Water Utilities Administration, GR 168656, Sept. 22, 2010).

The courts, however, have applied certain exceptions to the principles, particularly in situations when: (1) there is an absence of any plain, speedy and adequate remedy calls for immediate judicial intervention, (2) there is unreasonable delay or official inaction leading to prejudice, (3) further recourse at the administrative level would be an exercise in futility, (4) the controversial acts violate due process, (5) strong public interest is involved, or (6) the party invoking the doctrine is estopped.

As applied to BoC cases

In the case of the BoC vs Jade Bros. Farm and Livestock Inc., GR 246343, Nov. 21, 2021, the Supreme Court reiterated the above-enumerated exceptions. In this case, the importer’s shipment of perishable goods was subjected to forfeiture proceedings by the BoC district collector. The importer filed a consolidated motion for the release of said goods under a cash bond. The BoC district collector failed to act on the motion for four months and instead directed the auction of the goods. Pending the resolution of the motion, the taxpayer filed a petition for review with the CTA. One of the issues raised was whether the CTA has jurisdiction over the case absent any decision from the BoC commissioner.Upon appeal, the Supreme Court applied the aforesaid exceptions to the doctrine in resolving the issue. The Supreme Court considered the nature of the goods and the fact that the importer would no longer be able to release the goods even if is appealed to the BoC commissioner.

In a more recent case, Commissioner of Customs vs Toyota Motor Phil. Corp. (CTA EB Case 2451, Nov. 24, 2022), a claim for refund filed by the importer with the BoC district collector was unacted upon for more than four years and hence, the claimant decided to seek judicial intervention for such inaction. On the issue of the CTA’s jurisdiction, the CTA en banc upheld the CTA division’s decision in applying the exceptions to the doctrine specifically on the ground of unreasonable delay in resolving the motion leading to prejudice.

Other BoC cases appealable to the CTA

Aside from refund, seizure and detention cases, the BoC’s audit powers cover the entry verification at the border stage (before the release of the shipments from the BoC custody) and the post-clearance audit (after the release of the imported goods from BoC custody).

At the border, any BoC valuation or classification upgrades can be the subject of a formal protest which has to be decided by the BoC district collector. The aggrieved party may then elevate the case to the BoC commissioner for review. If the decision is unfavorable to the importer, the case may then be elevated to the CTA by way of a petition for review.

In a post-clearance audit (PCA), any deficiency findings by the PCA Group may be contested by the importer-auditee. An unfavorable decision from the BoC assistant commissioner of PCAG can be elevated to the BoC commissioner for review, then ultimately to the CTA.

The above procedural rules are specifically provided under current customs laws, rules and regulations. As a rule, in compliance with the doctrines of exhaustion of administrative remedies and primary jurisdiction, these procedural steps must be observed before resorting to a judicial remedy. However, whenever any of the above grounds clearly exist, thereby warranting the application of the exceptions to the above doctrines, importers may explore the remedy of bypassing the BoC commissioner and seeking direct relief from the CTA.

The administrative appeals process for customs cases is quite tedious. The fact that the importer may go directly to the CTA based on valid grounds does not necessarily guarantee the speedy disposition of the case. What is therefore important is for importers to carefully plan the duty aspects of their importations and ensure compliance with customs laws rules and regulations to avoid costly after-the-fact controversies with the BoC.

On behalf of MTF, we wish everyone a season of reflection and celebration.

Mark Anthony P. Tamayo is a CPA-lawyer and a partner of Mata-Perez, Tamayo & Francisco (MTF) Counsel.

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