Case Digest (A.M. No. RTJ-19-2574)
Facts:
The case revolves around Ramon Farolan and Guillermo Parayno, who were public officers serving as the Acting Commissioner of Customs and Chief of the Customs Intelligence and Investigation Division, respectively, during the events leading to this legal dispute. It concerns a petition filed on March 13, 1991, by the Solicitor General on behalf of the petitioners against Solmac Marketing Corporation and the Court of Appeals. The controversy originated from the shipment of imported goods—a total of 202,204 kilograms of polypropylene film—owned by Solmac Marketing Corporation that arrived in December 1981. Upon application for entry, Solmac submitted a Board of Investments (BOI) authority to import scrap polypropylene film. However, an examination revealed the goods were not merely scrap but oriented polypropylene, whose importation was prohibited under Letter of Instructions (LOI) No. 658-B.
The Bureau of Customs withheld the release of these goods due to their non-compliance with
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Case Digest (A.M. No. RTJ-19-2574)
Facts:
- Parties and Representation
- Petitioners:
- Ramon Farolan, acting Commissioner of Customs (noting a naming error in the challenged resolution where he was erroneously identified as "Damian Farolan").
- Guillermo Parayno, acting Chief of Customs Intelligence and Investigation Division.
- Private Respondent:
- Solmac Marketing Corporation, a corporation organized under Philippine law, which was the assignee, transferee, and owner of the disputed import shipment.
- Lower Court Involvement:
- The Regional Trial Court (RTC) issued a writ of preliminary injunction ordering the immediate release of the subject importation.
- The Court of Appeals initially awarded damages to Solmac Marketing Corporation and later modified these awards.
- The Importation Shipment
- Nature and Description of Shipment:
- The shipment, known as the Clojus shipment, consisted of 17 containers with 202,204 kilograms of a polypropylene product.
- Petitioners and the Bureau of Customs initially classified the shipment as OPP film scrap (a defective material sold at a lower price), but later evidence indicated that it was actually oriented polypropylene, a stronger material.
- Legal and Regulatory Context:
- The product imported was subject to restrictions under Letter of Instructions (LOI) No. 658-B, which controlled the importation of cellophane, oriented polypropylene, and related products.
- The shipment did not conform with the authorized importation details as supported by the Board of Investment (BOI) authority presented by Solmac Marketing Corporation.
- Administrative and Procedural Developments
- Customs and BOI Involvement:
- Upon application for entry, the Bureau of Customs required proper government authorization, leading Solmac Marketing Corporation to present a BOI authority.
- The National Institute of Science and Technology (NIST) later confirmed that the fibers of the shipment were arranged in a manner that indicated the product was oriented polypropylene—and not the OPP film scrap as declared.
- Series of Exchanges among Concerned Government Agencies and Parties:
- On June 7, 1982, petitioner Parayno sought BOI advice regarding the release of the shipment.
- A letter dated August 17, 1982, from the BOI indicated that the goods might be released provided holes were drilled in them to prevent misuse.
- Subsequent communications included:
- Letters from the counsel of Solmac Marketing Corporation requesting release without drilling (January and October 1983).
- Conflicting instructions and clarifications from BOI Governors and, later, from Minister Roberto Ongpin (March 12, 1984) concerning the proper procedure for handling the importation.
- Judicial Proceedings and Developments:
- The RTC rendered a decision on February 5, 1985, mandating the immediate release of the shipment without drilling of holes, subject only to normal customs processing.
- The Court of Appeals, on its part, modified its earlier decision by awarding:
- P100,000 in temperate damages.
- Exemplary damages initially set at P100,000, later reduced to P50,000.
- Attorney’s fees and expenses initially P50,000, reduced to P25,000.
- The petitioners did not appeal the RTC ruling because they asserted that they had complied with their duty by releasing the shipment based on BOI advice prior to the RTC’s decision.
- Controversy over Good Faith and Liability
- The Central Issue:
- Whether the petitioners’ decision to withhold the release of the importation pending final BOI guidelines constituted an act done in good faith.
- Whether such administrative prudence could shield the petitioners from personal liability for damages imposed by lower courts.
- Evidence Supporting Good Faith:
- The NIST report and subsequent administrative documents rendered support to the petitioners’ position that the shipment was not as declared, prompting precautionary measures.
- Testimonies and correspondence from high-ranking BOI officials (including contradictory instructions) enhanced the claim that the petitioners acted based on the best available advice in the face of regulatory ambiguity.
Issues:
- Whether the trial court’s finding that the petitioners acted in good faith in withholding the release of the shipment pending BOI clarification should have been given effect, despite the controversy over the shipment’s proper classification.
- Whether the petitioners can be held personally and privately liable for damages to Solmac Marketing Corporation when evidence shows that their actions were taken in accordance with the existing administrative uncertainties and were rooted in a presumption of good faith.
- Whether the modification of the award of damages (specifically the reduction in exemplary damages and attorney’s fees) by the Court of Appeals was in accordance with legal principles applicable to the conduct of public officers and the notion of reasonable discretion in awarding damages.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)