RUFINO LOPEZ & SONS, INC., petitioner, vs.

THE COURT OF TAX APPEALS,

1957-02-01 | G.R. No. L-9274

DECISION

MONTEMAYOR, J.:

Petitioner appellant Rufino Lopez & Sons, Inc. is appealing from a resolution of the Court of Tax Appeals
dismissing its appeal from a decision of the Collector of Customs for the Port of Manila, assessing additional
fees on petitioner for a certain importation of wire netting. The facts are simple and undisputed. Lopez & Sons
imported hexagonal wire netting from Hamburg, Germany. The Manila Collector of Customs assessed the
corresponding customs duties on the importation on the basis of consular and supplier invoices. Said customs
duties were paid and the shipments were released. Subsequently, however, the Collector reassessed the
dollar value of the cost and freight of said wire netting and as a result of the reassessment, additional customs
duties in the amount of P1,966.59 were levied and imposed upon petitioner. Failing to secure a
reconsideration of the reassessment and levy of additional customs duties, Lopez & Sons appealed to the
COurt of Tax Appeals. Acting upon a motion to dismiss the appeal, filed by the Solicitor General on the
ground of lack of jurisdiction, the Tax Court, by its resolution of May 23, 1955, dismissed the appeal on the
ground hat it had no jurisdiction to review decisions of the Collector of Customs of Manila, citing section 7 of
Republic No. 1125, creating said tax court. From said resolution of dismissal, Lopez & Sons appealed to us,
seeking reversal of said resolution of dismissal.

For purposes of reference, we are reproducing section 7 Republic Act No. 1125, relied upon by the Tax Court
of the Solicitor General, as well as Section 11 of the same Act invoked by the petitioner:

"SEC. 7. Jurisdiction. - The Court of Tax Appeals shall exercise exclusive appellate jurisdiction to review by
appeal, as herein provided -

"(1) Decisions of the Collector of Internal Revenue in cases involving disputed assessments, refunds of
internal revenue taxes, fees or other charges, penalties imposed in relation thereto, or her matters arising
under the National Internal Revenue Code other law or part of law administered by the Bureau of Internal
Revenue;

"(2) Decisions of the Commissioner of Customs in cases involving liability for customs duties, fees or other
money charges, seizure, detention or release of property affected; fines, forfeitures or other penalties
imposed in relation thereto, or other matters arising under the Customs Law or other law or part of law
administered the Bureau of Customs; and

"(3) Decisions of provincial or city Board of Assessment Appeals cases involving the assessment and taxation
of real property other matters arising under the Assessment Law, including rules and regulations relative
thereto."

xxx xxx xxx

"SEC. 11. Who may appeal; effect of appeal. - Any person, association or corporation adversely affected by a
decision or ruling the Collector of Internal Revenue, the Collector of Customs or provincial or city Board of
Assessment Appeals may file an appeal in the Court of Tax Appeals within thirty days after the receipt of such
decision or ruling.

"No appeal taken to the Court of Tax Appeals from the decision the Collector of Internal Revenue or the
Collector of Customs shall suspend the payment, levy, distraint, and/or sale of any property of the taxpayer
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for the satisfaction of his tax liability as provided by existing law: Provided, however, That when in the opinion
of the Court the collection by the Bureau of Internal Revenue or the Commissioner of Customs may
jeopardize the interests of the Government and/or the taxpayer the Court at any stage of the proceeding may
suspend the said collection and require the taxpayer either to deposit the amount claimed or to file a surety
bond for not more than double the amount with the Court." (Emphasis supplied.)

There is really a discrepancy between Sections 7 and 11 above reproduced. Section 7 provides that the Court
of Tax Appeals has exclusive appellate jurisdiction to review by appeal decisions of the Collector of Internal
Revenue, decisions of the Commissioner of Customs and decisions of provincial or city Board of Assessment
Appeals on cases mentioned in said section. On the other hand, section 11 of the same Republic Act in listing
and enumerating the persons and entities who may appeal as well as the effect of said appeal, mentions
those affected by a decision or ruling of the Collector of Internal Revenue, the Collector of Customs or any
provincial or City Board of Assessment Appeals, and fails to mention the Commissioner of Customs. Taken
literally, a person affected by a decision of the Collector of Customs may appeal to the Court of Tax Appeals;
and since no mention is made about decisions of the Commissioner of Customs, a person affected by said
decision may not appeal to the Court of Tax Appeals. However, section 7 of the Act above reproduced
specifically provides that the Court of Tax Appeals has appellate jurisdiction to review decisions of the
Commissioner of Customs. That legal provision conferring appellate jurisdiction on the Court of Tax Appeals
to review decisions of the Commissioner of Customs would be empty, meaningless, and unenforceable
because under Section 11, no person affected by the decision of the Commissioner of Customs may appeal
to the Tax Court. These two meaningless, and unenforceable because under Section 11, should be
harmonized and reconciled if possible, in order to give effect to the whole Act.

We are in entire accord with the Tax Court and the Solicitor General that a clerical error was committed in
section 11, mentioning therein the Collector of Customs. It should be, as it was meant to be, the
Commissioner of Customs. There are several reasons in support of this view. Under the Customs Law, found
in sections 1137 to 1419 of the Revised Administrative Code, the Commissioner of Customs (Insular Collector
of Customs) is the Chief of the Bureau of Customs and has jurisdiction over the whole country as regards the
enforcement of the Customs Law, whereas, there are about sixteen Collectors of Customs for the sixteen
collection districts and principal ports of entry into which the Philippines has been divided. These Collectors of
Customs are subordinates of the Commissioner of Customs over whom he has supervision and control
(section 1152, Revised Administrative Code). Pursuant to said supervision and control, under section 1405 of
the Revised Administrative Code, when any new or unsettled question shall be determined by the Collector of
Customs, he shall, if the matter is not otherwise carried upon for review in ordinary course, notify the
Commissioner of his decision, submitting an adequate statement of acts involved. What is more important is
the provision of section 1380, which we reproduce below:

"SEC. 1380. Review by Commissioner. - The person aggrieved by the decision of the Collector of
customs in any matter presented upon protest or by his action in any case of seizure may, within fifteen
days after notification in writing by the collector of his action or decision, give written notice to the
collector signifying his desire to have the matter reviewed by the Commissioner.

"Thereupon, the Collector of Customs shall forthwith transmit all the papers in the cause to the
Commissioner, who shall approve, modify, or reverse the action of his subordinate and shall take such
steps and make such order or orders as nay be necessary to give effect to his decision."

Under this section, any person affected or aggrieved by the decision of the Collector of Customs may appeal
the decision to the Commissioner of Customs. From all this, it is clear if we followed the literal meaning and
wording of section 11 of Republic Act No. 1125, in the sense that persons affected by a decision of the
Collector of Customs may appeal directly to the Court of Tax Appeals, then the supervision and control of the
Commissioner of Customs over his Collector of Customs, and his right to review their decisions upon appeal
to him by the persons affected by said decision would, not only be gravely affected, but even destroyed. We
cannot believe that was the intention of the Legislature in passing Republic Act No. 1125. It is more
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reasonable and logical to hold that in Section 11 of the Act, the Legislature meant and intended to say, the
Commissioner of Customs, instead of Collector of Customs in the first paragraph and the first part of the
second paragraph of said section. In thus holding, the Courts are not exactly indulging in judicial legislation.
They are merely endeavoring to rectify and correct a clearly clerical error in the wording of a statute, in order
to give due course and carry out the evident intention of the Legislature. This the Courts should and can
validly do. Under the rules of statutory construction, it is not the letter but rather the spirit of the law and
intention of the Legislature that is important and which matters. When the interpretation of a statute according
to the exact and literal import of its words would lead to absurd or mischievous results, or would contravene
the clear purposes of the Legislature, it should be construed according to its spirit and reason, disregarding as
far as necessary, the letter of the law. Statutes may be extended to cover cases not within the literal meaning
of the terms, for that which is clearly within the intention of the Legislature in enacting the law is as much
within the statute as if it were within the letter. Here the error (clerical and misprint) is plain and obvious. It is
within the province of the courts to collect, said error. This is not to correct the act of the Legislature, but
rather to carry out and give due course to the true intention of said Legislature. (Black on Interpretation of
Laws, 2nd edition, pp. 66-67; 157-158.)

Furthermore, section 11 of Republic Act 1125 may well be regarded as a mere complement or
implementation of section 7. Since section 7 provides that the Tax Court has jurisdiction to review by appeal,
decisions of the Collector of Internal Revenue, decisions of the Commissioner of Customs, and decisions of
provincial or city Boards of Assessment Appeals, so section 11 naturally provides that persons adversely
affected by said decisions may appeal to the Tax Court. However, in enumerating the governmental bodies or
agencies rendering said decisions that may be appealed, it erroneously listed the Coleceor instead of the
Commissioner of Customs. The error is plain.

As a matter of fact, the Court of Tax Appeals in its resolution of dismissal of May 23, 1955 cites in support
thereof a resolution promulgated by it on January 22, 1955 in C.T.A. Case No. 17, entitled "Acting Collector of
Customs vs. Acting Commissioner of Customs", wherein it said:

"The phrase 'Collector of Customs' appearing in the above- mentioned provision (section 11) of
Republic Act No. 1125 should clearly an oversight on the part of Congress. It should read
'Commissioner of Customs' to make the provision conform with section 7 of the said Republic Act and
section 1380 of the Revised Administrative Code."

Petitioner contends that the literal meaning of Section 11 of Republic Act No. 1125 should be adopted in the
sense that the Court of Tax Appeals has concurrent jurisdiction with the Commissioner of Customs over
appeals from decisions of Collectors of Customs, so that a person adversely affected by a decision of a
Collector of Customs is given the choice of appealing the said decision either to the Commissioner of
Customs or to the Courts of Tax Appeals. We find this contention untenable. In the first place, the two
remedies suggested are entirely different, one from the other; an appeal to the Commissioner of Customs is
purely administrative, whereas, appeal to the Court of Tax Appeal is manifestly judicial. And it is a sound rule
that before one resorts to the Courts, the administrative remedy provided by law should first be exhausted. In
the second place, the two remedies suggested by the petitioner would result in confusion because a person
adversely affected by a decision of a Collector of Customs could not be sure where to seek the remedy,
whether with the Commissioner of Customs or with the Court of Tax Appeals, and it might even be difficult for
him to decide because, if he took the appeal directly to the Tax Court, that would ordinarily cut off his remedy
before the Commissioner of Customs for the reason that, should the Court of Tax Appeals decide against him,
he may not appeal said decision to the Commissioner of Customs because the Commissioner as an
administrative officer may not review the decision of the Court. On the other hand, if the person affected by a
decision of a Collector of Customs took his appeal to the Commissioner of Customs, and there receives an
adverse decision, he may yet appeal therefrom to the Court of Tax Appeals. In the third place, even if the
person affected by an adverse ruling of the Collector of Customs took his appeal to the Court of Tax Appeals,
as advocated by counsel for the petitioner, under the literal meaning of section 11, the Tax Court may refuse
to entertain said appeal, as was done in the present case, on the ground that under section 7 of Republic Act

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No. 1125, it had no jurisdiction to review a decision of the Collector of Customs, section 7 clearly limiting its
appellate jurisdiction to review decisions of the Commissioner of Customs.

In view of the foregoing, we hold that under the law, particularly, the Customs Law and Republic Act No. 1125,
the Court of Tax Appeals has no jurisdiction to review by appeal, decisions of the Collector of Customs. The
appealed order of dismissal is hereby affirmed, with costs.

Paras, C.J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador; Concepcion, Reyes, J. B. L., Endencia
and Felix, JJ., concur.

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