Case Summary (G.R. No. 156946)
Key Dates
• November 24, 1992 – MARINA authorizes temporary importation under bareboat charter
• March 22, 1993 – M/V “HARUNA” arrives at Mactan; entry declared at ₱6,171,092; bond posted
• March 22, 1994 – Re-export bond expires
• October 21, 1994 – Respondent applies for authority to import at depreciated value (₱1,100,000)
• December 2, 1994 – Vessel sold to respondent without notifying Mactan collector
• January 4, 1995 – Duties of ₱149,989 paid at Port of Manila
• November 5, 1997 – Mactan collector issues demand for ₱1,296,710 unpaid duties
• January 8, 1999 – Secretary of Finance orders reassessment without depreciation allowance
• March 29, 2001 – CTA sets aside reassessment, upholds Manila assessment as final
• August 26, 2002 – Court of Appeals affirms CTA decision
• July 15, 2009 – Supreme Court resolves petition
Applicable Law
• 1987 Constitution (post-1990 decision)
• Tariff and Customs Code of 1978 (P.D. No. 1464) – Sections 1202 (importation), 1204 (liens), 1407 & 1603 (finality of liquidation), 2503 & 2530 (fraud and penalties)
• RA 9135 (amended Section 1603 after 2001 – not retroactive)
• MARINA regulations on vessel importation and depreciation
Factual Background
The M/V “HARUNA” was temporarily imported under a five-year bareboat charter. Glory Shipping Lines posted a re-export bond in March 1993, which lapsed in March 1994. Despite a Letter of Guarantee and repeated demand letters, no duties were paid. In October 1994 Glory Shipping Lines sold the vessel to Oro Maura at a greatly reduced value (₱1.1 million). Oro Maura obtained MARINA’s authority and filed a fresh import entry at Port of Manila, paying duties on the ₱1.1 million valuation in January 1995.
Procedural History
After discovering the sale, the Mactan collector initiated forfeiture proceedings in September 1998, but the Cebu District Collector reversed the forfeiture, finding the respondent innocent of fraud and upholding the Manila assessment. The Commissioner of Customs and then the Secretary of Finance approved the exoneration but ordered reassessment on the original entry value (no depreciation). Oro Maura petitioned the CTA, which annulled the reassessment. The Court of Appeals affirmed. The Secretary of Finance elevated the matter to this Court.
Issues Presented
- Whether the Manila Customs assessment became final and conclusive under Sections 1407 and 1603 of the TCCP.
- Whether Oro Maura qualified as an “innocent purchaser.”
- Whether a government lien against the vessel survived the sale.
Finality of Assessment
Under Section 1603, an assessment becomes final after one year from final payment in the absence of fraud, protest, or compliance audit. The Court of Appeals held that Oro Maura’s January 1995 payment at Manila ripened into finality by January 1996 and that Mactan’s November 1997 demand lay outside the one-year window.
Evidence of Fraud and Valuation Discrepancy
The Court found a prima facie case of fraud in the 80% drop in declared value—from ₱6.17 million to ₱1.1 million—over 19 months. Section 2503 treats undervaluation exceeding 30% as presumptive fraud. Oro Maura failed to explain the drastic reduction or to exercise due diligence regarding the vessel’s original entry and duties.
Depreciation and Estoppel Principles
The Tariff and Customs Code bases dutiable value on fair market cost at export; it does not permit post-entry depreciation to supplant that basis. Even if MARINA and the Manila collector erred, estoppel does not bind the government in tax collection matte
Case Syllabus (G.R. No. 156946)
Factual Antecedents
- On November 24, 1992, MARINA authorized the importation of M/V “HARUNA” under a five-year bareboat charter, originally between Haruna Maritime S.A. and Glory Shipping Lines.
- DOF’s first indorsement (December 29, 1992) allowed temporary registration and tax-and-duty-free release to Glory Shipping Lines, subject to MARINA conditions.
- BOC required a re-export bond amounting to 150% of duties and taxes; Glory Shipping Lines posted a P1,952,000 bond on March 16, 1993, conditioned on re-export within one year.
- Import Entry No. 120-93 (March 22, 1993) declared the vessel’s dutiable value at P6,171,092 and estimated duties at P1,296,710.
- Re-export bond expired March 22, 1994; Glory Shipping Lines failed to renew or pay duties despite guarantee letter (May 10, 1994) and repeated demand letters.
- Collector of Port of Mactan assessed unpaid duties and charges of P1,952,000 (April 1996–March 1997); no payment by Glory Shipping Lines.
- Glory Shipping Lines sold M/V “HARUNA” to Oro Maura Shipping Lines on December 2, 1994, without notifying the Port of Mactan.
- Respondent applied for Authority to Import (October 21, 1994) at an acquisition cost of P1,100,000; MARINA approved December 5, 1994 based on depreciation.
- Kariton & Company (for respondent) secured DOF indorsements (December 13–14, 1994) leading to Import Entry No. 179260 at the Port of Manila; declared value P1,100,000, duties assessed at P149,989, paid January 4, 1995.
Procedural History
- November 5, 1997: Port of Mactan Collector demanded payment from respondent; seizure proceedings followed for Tariff and Customs Code violations.
- September 1998: Collector of Port of Mactan ordered vessel forfeiture for fraud by both sellers and respondent.
- December 1, 1998: Cebu District Collector reversed forfeiture, absolved respondent of fraud, upheld Manila assessment and MARINA appraisal.
- Commissioner of Customs (3rd indorsement, December 14, 1998) and Secretary of Finance (4th indorsement, January 8, 1999) affirmed absolution but ordered reassessment on entered value without depreciation.
- Respondent’s reconsideration denied; May 15, 2000: respondent petitioned CTA.
- March 29, 2001: CTA set aside Secretary’s 4th indorsement, affirmed Commissioner’s decision absolving respondent, and held Manila assessment fin