Case Summary (G.R. No. L-4463)
Factual background
Unimex shipped a 40‑foot container and 171 cartons of electronic goods to Handyware. Upon arrival in Manila, Bureau of Customs (BOC) agents found the manifest description did not tally with the goods; the BOC instituted seizure proceedings, issued a warrant of seizure and detention, and the Collector of Customs issued a default forfeiture order against the consignee Handyware (June 5, 1987). Unimex later moved to intervene as owner/shipper (June 15, 1987), and the forfeiture was maintained as final. The CTA reversed the forfeiture in a June 15, 1992 decision and ordered release of the shipment to Unimex subject to payment of correct duties; that judgment became final and executory on July 20, 1992. Unimex failed to secure a writ of execution and initially pursued claims against the carrier and agent, which were dismissed.
Post‑judgment events and revival petition
Because the shipment could not be located in BOC warehouses, Unimex filed a petition in the CTA on September 5, 2001 to revive its 1992 judgment and to secure either immediate release or payment of the shipment’s value plus damages. The CTA found the shipment lost while in BOC custody and concluded the original judgment could no longer be executed in kind; it ordered payment of the commercial value of the shipment (September 19, 2002), subject to payment of duties and to be taken from sale(s) of goods or properties seized or forfeited by the BOC. The BOC defaulted in answering and both parties moved for reconsideration; the CTA denied reconsideration.
Court of Appeals rulings
The Court of Appeals consolidated appeals by the BOC Commissioner and Unimex. On August 30, 2004 (amended November 30, 2004), the CA affirmed the CTA’s finding of BOC liability for loss of the goods, converted the judgment into a monetary award computed in U.S. dollars (later amended to euros), and awarded legal interest: 6% per annum from the CTA decision of September 19, 2002 until finality, and 12% per annum thereafter until full payment. The CA further held that the appropriate exchange rate was that prevailing at actual payment (pursuant to RA 4100).
Issues presented to the Supreme Court
The BOC Commissioner challenged the CA and CTA rulings on several grounds: (1) impermissible alteration of a final and executory judgment (immutability of final judgments); (2) invocation of laches to bar Unimex’s revival action; (3) erroneous imposition of legal interest; and (4) alleged impossibility of charging government funds without an appropriation and the applicability of state immunity (jus imperii).
Supreme Court—modification of a final judgment due to supervening event
The Court acknowledged the general rule that final and executory judgments are immutable, but reiterated the long‑standing exception: where supervening facts occur after finality that render execution impossible or unjust, modification is permissible. The disappearance of the physical shipment while under BOC custody was an incontrovertible supervening event that made specific delivery (the original CTA remedy) impossible. Under these circumstances, the Court held the CTA properly modified its prior decree from specific performance to monetary compensation, because there was nothing left to deliver and the change responded to subsequent facts unforeseen at the time the judgment became final.
Supreme Court—laches and timeliness of revival
The Court rejected the BOC’s laches argument. It emphasized that laches is an equitable doctrine requiring negligence or unconscionable delay that makes assertion of a right unjust; mere lapse of time is insufficient. The record showed Unimex acted diligently: it intervened early, pursued remedies against carriers, and filed for revival within statutory periods. The Court relied on Rule 39, Section 6 (execution by motion within five years; revival and enforcement rules) and Article 1144 of the Civil Code (ten‑year prescriptive period for actions upon a judgment) to conclude that Unimex’s petition to revive (filed September 5, 2001) was within the allowable period (final judgment July 20, 1992) and thus not barred by laches or prescription.
Supreme Court—legal interest (monetary vs. compensatory) and its rejection
The Court agreed with the CTA’s legal reasoning that interest is exigible only where there is a monetary obligation—either as compensation for the use of money (per Article 1956) or as compensatory damages for delay (per Article 2209) once a debtor is in default. The original CTA judgment was toward release of goods (a non‑monetary obligation), and the monetary obligation only arose after the goods were lost and the CTA converted the remedy. The Supreme Court held that there was no legal basis to impose the CA’s awarded interest rates (6% then 12%) because interest against the government requires specific legal authority or express stipulation; it is not appropriately imposed merely as forbearance of credit absent statutory or contractual foundation. Accordingly, the CA’s legal interest awards were reversed.
Supreme Court—government liability, state immunity, and appropriation concern
The Court addressed the contention that monetary liability against the government requires an appropriation and that state immunity (jus imperii) shields the government from such judicial decrees. The Court distinguished this case: BOC’s gross negligence in safekeeping the goods and its failure to account for their disappearance negated an absolute application of state immunity. Emphasizing justice and equity under the constitutional and judicial function, the Court held that t
...continue readingCase Syllabus (G.R. No. L-4463)
Citation, Court and Panel
- G.R. No. 166309-10; decision promulgated March 09, 2007; reported at 546 Phil. 658.
- Deciding Justice: Corona, J.
- First Division decision; Puno, C.J. (Chairperson), Sandoval-Gutierrez, Azcuna, and Garcia, JJ., concur.
- Case is an appeal by certiorari under Rule 45 of the Rules of Court, seeking to nullify and set aside the Court of Appeals (CA) decisions dated August 30, 2004 and its amended decision of November 30, 2004 in CA-G.R. SP No. 75359 and CA-G.R. SP No. 75366.
- Court of Appeals panel decision (Aug. 30, 2004) was penned by Justice Perlita J. Tria-Tirona (retired), with the concurrence of Justices Ruben T. Reyes and Jose C. Reyes.
Parties and Nature of Controversy
- Petitioner: Republic of the Philippines, represented by the Commissioner of Customs (Bureau of Customs, “BOC Commissioner”).
- Respondent: Unimex Micro-Electronics GmBH (“Unimex”), shipper and alleged owner of imported goods.
- Subject matter: Recovery of the value of imported goods lost while in the custody of the Bureau of Customs; revival and execution of a prior final CTA judgment ordering release of goods; claims for monetary recovery where physical delivery became impossible.
Material Facts — Shipment, Seizure and Forfeiture
- Sometime in April 1985, Unimex shipped a 40-foot container and 171 cartons containing Atari game computer cartridges, duplicators, expanders, remote controllers, parts and accessories to Handyware Phils., Inc. (Handyware).
- Don Tim Shipping Corporation transported the goods; Evergreen Marine Corporation acted as shipping agent.
- The shipment arrived at the Port of Manila on July 9, 1985.
- Bureau of Customs (BOC) agents discovered that the cargo did not tally with the description on the cargo manifest, prompting seizure proceedings and issuance of a warrant of seizure and detention against the shipment.
- On June 5, 1987, the Collector of Customs issued a default order against Handyware for failing to appear in the seizure proceedings; following an ex parte hearing, the goods were forfeited in favor of the government.
- On June 15, 1987, Unimex filed a motion to intervene as shipper and owner; the motion was granted but the Collector later declared the June 5, 1987 default order final and executory, affirming forfeiture.
Procedural History — CTA Proceedings and Initial Judgment
- Unimex filed a petition for review with the Court of Tax Appeals (CTA), docketed as CTA Case No. 4317 (entitled “Unimex Micro-Electronics GmBH v. Commissioner of Customs”).
- On June 15, 1992, the CTA reversed the forfeiture decree and ordered release of the shipment to Unimex, subject to payment of correct duties, taxes, fees and other charges based on the actual quality and condition of the shipments at the time of filing of the import entry, and subject to presentation of Central Bank Release Certificate.
- The CTA decision became final and executory on July 20, 1992.
- Respondent’s counsel did not secure a writ of execution to enforce the June 15, 1992 CTA decision; instead, respondent filed separate claims for damages against Don Tim Shipping Corporation and Evergreen Marine Corporation, both of which were dismissed.
Procedural History — Petition to Revive; CTA Amended Decision (2002)
- On September 5, 2001, Unimex filed in the CTA a petition for revival of its June 15, 1992 decision, praying for the immediate release of the shipment or, alternatively, payment of the shipment’s value plus damages.
- The BOC Commissioner failed to file an answer and was declared in default in the revival proceeding.
- During ex parte presentation of respondent’s evidence, BOC informed the court that the subject shipment could no longer be found in its warehouses.
- In a decision dated September 19, 2002, the CTA declared that the June 15, 1992 decision could no longer be executed due to loss of the shipment and ordered the BOC Commissioner to pay Unimex the commercial value of the shipment at the time of importation, computed in Philippine pesos using the prevailing exchange rate at time of import, for the amount of P8,675,200.22, subject to payment of proper taxes, duties, fees and other charges; payment to be taken from sale(s) of goods or properties seized or forfeited by the Bureau of Customs.
- Both parties filed motions for reconsideration (MRs) in the CTA: the BOC Commissioner argued the CTA altered its June 15, 1992 decision by converting it to a money judgment; Unimex argued the exchange rate prevailing at the time of actual payment should apply and that legal interest should be imposed. The CTA denied both MRs.
Procedural History — Court of Appeals Proceedings and Rulings
- Both parties appealed to the Court of Appeals; appeals were docketed as CA-G.R. SP No. 75359 (BOC Commissioner) and CA-G.R. SP No. 75366 (Unimex) and were consolidated.
- On August 30, 2004, the Court of Appeals dismissed the BOC Commissioner’s appeal and granted Unimex’s appeal:
- CA held the BOC Commissioner liable for the value of the shipment because the goods were lost while in its custody.
- CA ruled that the CTA erred in using the peso-dollar exchange rate at time of importation rather than the prevailing rate at the time of actual payment pursuant to RA 4100 (“An Act to Assure the Uniform Value of Philippine Coin and Currency”).
- CA awarded damages in the amount of $466,885.54; payment could be in Philippine currency computed at the exchange rate prevailing at time of actual payment.
- CA awarded legal interest: 6% per annum from September 19, 2002 (date of CTA decision) up to finality; upon finality, 12% per annum until fully paid (12% treated as interest in lieu of 6% for the interim period as forbearance of credit).
- Both parties filed motions for reconsideration of the CA decision. Unimex sought payment in euros (not U.S. dollars) and sought that 6% interest be reckoned from June 15, 1987 (date of its judicial demand). On November 30, 2004, the Court of Appeals denied the BOC Commissioner’s MR and granted Unimex’s MR:
- The CA amended its decretal portion to adjudge liability in the amount of Euro 669,982.565; payment may be in Philippine currency computed at exchange rate prevailing at time of actual payment.
- Legal interest: 6% per annum from June 15, 1987 up to finality of the CA decision; upon finality, 12% per annum until fully paid.
Issues Presented to the Supreme Court
- Petitioner (Republic of the Philippines, represented by the BOC Commissioner) advanced four principal grounds in its certiorari petition:
- Whether the CTA’s June 15, 1992 judgment, being final and executory, could be altered after finality such that a money judgment substituted the original decree directing release of the goods.
- Whether laches barred Unimex’s petition to revive the June 15, 1992 CTA judgment, warranting dismissal.
- Whether the legal interests imposed by the CA (6% and 12% per annum) were erroneous and legally justified.
- Whether a money judgment or any charge against the government requires a corresponding appropriation and thus cannot be decreed by mere judicial order.
Supreme Court Ruling — Disposition
- The Supreme Court affirmed the Court of Appeals’ decisions with modification.
- Final order: Petitioner Republic of the Philippines, represented by the Commissioner of the Bureau of Customs, upon payment of the necessary customs duties by respondent Unimex Micro-Electronics GmBH, is ordered to pay Unimex the value of the subject shipment in the amount of Euro 669,982.565.
- Petitioner’s liability may be paid in Philippine currency, computed at the exchange rate prevailing at the time