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Between the
importer-assembler and buyer, who has the obligation
to pay duties and taxes? (June 3, 2003)
The importer-assembler has.
This is the story.
Sometime June 1987, Happy Motors Corporation,
a known importer, assembler and manufacturer,
assembled two (2) trucks using imported component
parts. The said trucks were subsequently sold
to JJ Lines, a franchise holder operating and
maintaining a fleet of cargo trucks in Luzon.
But prior to the sale, Happy Motors Corporation
represented to JJ Lines that all the taxes and
duties for the parts used on the two (2) trucks
have been paid.
On 10 September 1987, the Bureau of Internal
Revenue (BIR) and the Land Transportation Office
(LTO) entered into a Memorandum of Agreement which
provided that prior to registration in the LTO
of any assembled or re-assembled motor vehicle
which used imported parts, a Certificate of Payment
should first be obtained from the BIR to prove
payment of all taxes required under existing laws.
On 12 October 1987, the Bureau of Customs (BOC)
issued a Customs Memorandum Order promulgating
the rules, regulations and procedure for the voluntary
payment of duties and taxes on imported motor
vehicles assembled by non-assemblers.
Pursuant to the MOA between the BIR and the LTO,
the former issued a Revenue Memorandum Order which
provided the procedure governing the processing
and issuance of the Certificate of Payment of
internal revenue taxes for purposes of registering
motor vehicles.
On 16 June 1988, the BIR, BOC and LTO entered
into a tripartite MOA which provided that prior
to registration in the LTO of any locally assembled
motor vehicle using imported component parts,
a Certificate of Payment should first be obtained
from the BIR and the BOC to prove that all existing
taxes and customs duties have been paid.
Unfortunately in December 1988, government agents
seized and detained the two (2) trucks of JJ Lines
after discovering there were still unpaid taxes
and duties thereon. JJ Lines asked Happy Motors
Corporation to produce the receipts evidencing
its payment of taxes and customs duties. But Happy
Motors Corporation refused to do so.
JJ Lines paid the assessed BIR taxes and customs
duties but asked that it be reimbursed by Happy
Motors Corporation. When the latter ignored the
demand letter, JJ Lines filed a complaint for
a sum of money with the Regional Trial Court.
The trial court rendered a decision ordering
Happy Motors Corporation to reimburse JJ Lines
. The Court of Appeals subsequently sustained
the trial court and the case reached the Supreme
Court.
In the Supreme Court, Happy Motors Corporation
argued that it was no longer obliged to pay for
the additional taxes and duties as the administrative
regulations only took effect after the execution
of its contract of sale with JJ Lines.
Moreover, it claimed that it did pay all taxes
and duties. Otherwise, it would not have been
able to secure the release of the spare parts
from the BOC and register the vehicles with the
LTO.
The Supreme Court ruled in the following tenor:
"Thus, although private respondent (JJ Lines)
is the one required by the administrative regulations
to secure the Certificate of Payment for the purpose
of registration, petitioner (Happy Motors Corporation)
as the importer and assembler/manufacturer of
the two (2) Elf trucks is still the one liable
for payment of revenue taxes and customs duties.
Petitioner's obligation to pay does not arise
from the administrative regulations but from the
tax laws existing at the time of importation.
x x x.
It is also quite obvious that as between petitioner,
who is the importer-assembler/manufacturer, and
private respondent, who is merely the buyer, it
is petitioner, which has the obligation to pay
taxes to the BIR and BOC. x x x Imposing the tax
burden on private respondent would only encourage
the proliferation of smugglers whose scheme to
evade taxes by passing on their tax obligations
to the unsuspecting buyers.
Non-sequitor. The fact that petitioner was able
to secure the release of the parts from customs
and register the assembled trucks with the LTO
does not necessarily mean that all taxes and customs
duties were legally settled. x x x".
It is therefore always best for the buyer to ask
the importer-assembler to provide receipts evidencing
its payment of BIR taxes and customs duties before
the consummation of the sale.
For comments or inquiries, email the author at
jtb@pac-atlantic.com.ph.
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Can the
shipowner invoke the right of abandonment if he
is at fault? (May 19, 2003)
No.
On the evening of 6 July 1983, the
"MV Asilda" left the port of Zamboanga
for Cebu City carrying 7,500 cases of one-liter
softdrink bottles stowed on deck. At around four
o'clock in the morning of the next day, the vessel
hit a floating log. At that time, the weather
had deteriorated with strong southeast winds inducing
big waves. The vessel listed to starboard, then
listed dangerously to portside. The ship captain
ordered his crew to stop the engine and shift
the cargo to the starboard. Before the captain
could decide on his next move, some of the cargoes
were thrown overboard and seawater entered the
engine room and cargo holds of the vessel. The
captain ordered his crew to abandon ship. The
"MV Asilda" then capsized and sank.
Thereafter, the shipowner filed a notice of abandonment.
The case reached the Supreme Court.
The shipowner contended that the
filing of the notice of abandonment had absolved
him from any liability.
But the insurer-petitioner alleged
that the sinking and total loss of the "MV
Asilda" and its cargo were due to the vessel's
unseaworthiness as she was put to sea in unstable
condition. It further alleged that the vessel
was improperly manned and its officers were grossly
negligent in failing to take appropriate measures
to proceed to a nearby port or beach the vessel.
The Supreme Court ruled in the following
tenor:
"x x x the ship agent is liable
for the negligent acts of the captain in the care
of goods loaded on the vessel. This liability
however can be limited through abandonment of
the vessel, its equipment and freightage as provided
in Article 587 (Code of Commerce). Nonetheless,
there are exceptional circumstances wherein the
ship agent could still be held answerable despite
the abandonment, as where the loss or injury was
due to the fault of the shipowner and the captain.
The international rule is to the effect that the
right of abandonment of vessels, as a legal limitation
of a shipowner's liability, does not apply to
cases where the injury or average was occasioned
by the shipowner's own fault. It must be stressed
at this point that Art. 587 speaks only of situations
where the fault or negligence is committed solely
by the captain. Where the shipowner is likewise
to be blamed, Art. 587 will not apply, and such
situation will be covered by the provisions of
the Civil Code on common carriers.
It was also established at the outset
that the sinking of the "MV Asilda"
was due to its unseaworthiness even at the time
of its departure from the port of Zamboanga. It
was top-heavy as an excessive amount of cargo
was loaded on deck. Closer supervision on the
part of the shipowner could have prevented this
fatal miscalculation. As such, it was equally
negligent. It cannot therefore escape liability
through the expedient of filing a notice of abandonment
of the vessel by virtue of Art. 587 of the Code
of Commerce."
Thus, let us always remember that
the shipowner can only invoke his right of abandonment
if he is not at fault.
For comments or inquiries, contact
the author at jtb@pac-atlantic.com.ph.
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How soon
should a claim be filed with the arrastre operator?
(April 21, 2003)
It should be filed within fifteen
(15) days from the date of discharge of the last
package from the carrying vessel.
Sometime in April 1990, the MV "TAO
HE" loaded and received on board in San Francisco,
California, a shipment of five (5) lots of canned
foodstuff complete and in good order condition
for transport to Manila in favor of Food Enterprises
as the consignee. The consignee insured the said
shipment.
The shipment arrived at the Port
of Manila and was discharged in favor of the arrastre
operator for safekeeping.
The customs broker withdrew the shipment and delivered
the same to the consignee. On 4 June 1990, it
was discovered that 161 cartons were missing.
On 4 October 1990, the consignee filed a claim
for loss with the arrastre operator.
Claim for indemnification of the
loss having been denied by the arrastre operator
and the customs broker, the consignee sought payment
from its insurer under the marine cargo policy.
The consignee received a compromised
sum from the insurer. As subrogee, the insurer
filed a complaint against the vessel, customs
broker and the arrastre operator.
The arrastre operator interposed
the defense that the consignee failed to file
a formal claim within the 15-day prescriptive
period.
The trial court rendered a decision dismissing
the complaint based on the failure of the consignee
to file a timely claim.
However, the appellate court found
the arrastre operator negligent in its duty to
exercise due diligence over the shipment. It concluded
that the shortage was due to pilferage while the
sea vans were stored at the container yard of
the arrastre operator.
But the Supreme Court reversed the
ruling of the appellate court. It held:
"In order to hold the arrastre
operator liable for lost or damaged goods, the
claimant should file with the operator a claim
for the value of the said goods "within fifteen
days from the date of discharge of the last package
from the carrying vessel x x x". The filing
of the claim for loss within the 15-day period
is in the nature of a prescriptive period for
bringing an action is a condition precedent to
holding the arrastre operator liable. This requirement
is a defense made available to the arrastre operator,
who may use it or waive it as a matter of personal
discretion.
The said requirement is not an empty
formality. It gives the arrastre contractor a
reasonable opportunity to check the validity of
the claim, while the facts are still fresh in
the minds of the persons who took part in the
transaction, and while the pertinent documents
are still available. Such period is sufficient
for the consignee to file a provisional claim
after the discharge of the goods from the vessel.
For this reason, we believe that the 15-day limit
is reasonable."
It should be noted the Supreme Court
has chosen to interpret that the 15-day period
for filing claims should be counted from the date
the consignee learns of the loss, damage or misdelivery
of goods.
Thus, let us always remember to
file with the arrastre operator within 15 days
from the time of the discovery of the loss even
a provisional claim in order not to bar a subsequent
action in court.
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For comments or inquiries, contact
Atty. Banday at jtb@pac-atlantic.com.ph.
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