Can the Trial
Court Pass Upon the Validity of Abandonment Proceedings
by the BoC?
NO. And this is the story.
On 12 April 1989, raw mate-rials consigned to
Ela's Manufac-turing, Inc. arrived in the Philippines
from Keelung, Taiwan. The BOC treated the raw
materials as subject to ordinary import taxes
and were not immediately released to the consignee.
Moreover, the consignee failed to file the requisite
import entry as well as claim the cargo.
The cargo was subsequently taken to the customs
bonded warehouse of Maran Freight, Inc. on 24
July 1989 for stripping and safekeeping.
Then the District Collector of Customs initiated
"abandonment proceedings" over the said
cargo. On 29 September 1989, he issued a Notice
to Ela's Manufacturing, Inc. giving it 15 days
from notice thereof to file the import entry.
Otherwise, the subject cargo would be deemed abandoned
and sold at public auction.
On 7 November 1989, the Chief of the Law Division
of the BOC issued a memorandum informing the Chief
for Auction and Cargo Disposal Division that the
declaration of abandonment in the aforestated
proceedings had already become final and executory
as of 30 October 1989 and that the subject cargo
should be inventoried and sold at public auction.
However, before the inventory and sale at public
auction of the goods could be accomplished, part
of the customs bonded warehouse owned and operated
by Maran Freight, Inc. was gutted by fire on 26
July 1990. The shipment of Ela's Manufacturing
was also burned and destroyed.
On 19 March 1991, Ela's Manufacturing, Inc., through
counsel, sent a letter to Maran Freight, Inc.
demanding the payment of the value of goods destroyed
by the fire. Maran Freight, Inc. rejected the
demand.
On 26 December 1991, or after more than two years
from arrival of the cargo in the Philippines,
Ela's Manufacturing, Inc. filed a complaint for
damages against Maran Freight, Inc. with the Regional
Trial Court of Pasig.
After trial, the court rendered judgment finding
Maran Freight, Inc. liable for the value of the
goods. According to the trial court, the BOC's
subsequent declaration that the subject shipment
was "abandoned cargo" was ineffective
for lack of notice to the consignee. Therefore,
it cannot be said that the consignee impliedly
abandoned the cargo and lost its ownership over
the same in favor of the government.
The Court of Appeals affirmed the decision of
the trial court. And Maran Freight, Inc. elevated
the case to the Supreme Court, which ruled:
"x x x The trial court was incompetent
to pass upon and nullify (1) the seizure of the
cargo in the abandonment proceedings and (2) the
declaration made by the District Collector of
Customs that the cargo was abandoned and ipso
facto owned by the government.
x x x .The trial court should have rendered judgment
dismissing the complaint, without prejudice to
the right of the private respondent (Ela's Manufacturing,
Inc.) to ventilate the issue before the Commissioner
of Customs and/or the Court of Tax Appeals as
provided for in the Tariff and Customs Code.
The District Collector of Customs did not lose
jurisdiction over the abandonment proceedings.
The loss of the cargo did not extinguish his incipient
jurisdiction in the said proceedings, nor render
functus officio his declaration that the subject
shipment had been abandoned."
Let us always bear in mind that the resolution
as to the validity of "abandonment proceedings"
is within the exclusive competence of the District
Collector of Customs, the Commissioner of Customs
and within the appellate jurisdiction of the Court
of Appeals and not with the trial court.
For questions or comments, email the author at
jtb@pac-atlantic.com.
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Foreigners in
Top Posts at International Airfreight Forwarding
Companies
CAN a foreigner occupy the top
position in an international airfreight forwarding
company?
No. And this is the story.
Rosal Cargo Corporation (RCC) is a stock corporation
duly organized and existing under and by virtue
of Philippine laws engaged in international airfreight
forwarding. Seventy percent (70%) of its equity
is owned by Filipinos and thirty percent (30%)
is owned by foreigners. Its President is a foreigner
while the other officers are all Filipinos.
On the day that its permit to operate was to expire,
it applied for renewal for another five (5) years
with the Civil Aeronautics Board (CAB). It alleged
that its President was a Japanese national.
The Air Carrier Accounts System and Field Audit
Division of the CAB recommended the granting of
the renewal of the permit to operate of RCC provided
that the position of President is transferred
to a Filipino national.
Subsequently, the CAB promulgated a resolution
directing RCC to transfer its top position to
a Filipino national.
Otherwise, its authority will be revoked. RCC
sought a reconsideration but the same was denied
by the CAB.
RCC elevated the case to the Court of Appeals.
But the Court of Appeals (CA) held that the CAB
did not err in ordering RCC to transfer its top
position to a Filipino national. The motion for
reconsideration of RCC was likewise denied by
the CA.
RCC brought the case to the Supreme Court (SC).
But pending the resolution of the case, RCC informed
the SC that the CAB had already renewed its authority
to operate as an international airfreight forwarder
for another five (5) years.
Thus, the SC ruled:
"Clearly, the instant petition has become
moot and academic. This is evident from the fact
that the permit to operate as an international
airfreight forwarder the respondent Board (CAB)
sought to withhold from the petitioner (RCC) for
failing to meet the constitutional Filipinization
requirement had already lapsed in 1995. Also,
with the current renewal of the petitioner's authority
to operate, it is to be assumed that it has finally
decided to comply with the citizenship requirement
mandated by the constitution for its line of business.
x x x."
Thus, let us always bear in mind that a foreign
national cannot occupy the top position of an
entity engaged in international airfreight forwarding
business as the same is a public utility enterprise
restricted by the Constitution.
For questions of comments, email the author at
jtb@pac-atlantic.com.ph.
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What is the Liability
of the Containership Operator?
SOMETIME in 1991, SL Services,
Inc. and Polar Lines, Inc. entered into a contract/agreement
entitled, "Co-operation in the Pacific".
Under the said contract, both parties agreed to
purchase, share and exchange needed space for
cargo in their respective containerships. And
under the said contract, they could be, depending
on the occasion, either as principal carrier (with
negotiable bill of lading or other contract of
carriage with respect to cargo) or a containership
operator (owner, operator or charterer of containership
on which the cargo is carried).
During the lifetime of the contract,
Flor International, Inc. delivered to Polar Lines,
Inc. various cargoes with Oakland, California
as port of discharge and San Francisco as place
of delivery. Polar Lines, Inc. issued the corresponding
bill of lading to Flor International, Inc. But
pursuant to the contract, Polar Lines, Inc. loaded
the subject cargoes on a vessel owned by SL Services,
Inc. And under this arrangement, Polar Lines,
Inc. was the principal carrier while SL Services,
Inc. was the containership operator.
The delivery of the cargoes was
delayed. And the consignee refused to pay for
the cargo. So, Flor International, Inc. filed
a case against Polar Lines, Inc. for reimbursement
of the value of the cargoes and other charges.
In its answer to the complaint
of Flor International, Inc., Polar Lines, Inc.
alleged that whatever damages sustained by Flor
International, Inc. were caused by SL Services,
Inc. as the owner of the vessel which actually
transported the subject cargoes. And it filed
a third-party complaint against SL Services, Inc.
SL Services, Inc. filed a motion
to dismiss the third-party complaint on the ground
of arbitration. It was denied by the trial court.
SL Services, Inc. elevated the
case to the Court of Appeals. But the Court of
Appeals dismissed its petition for certiorari.
SL Services, Inc. had no other
choice but to go to the Supreme Court, which ruled:
"For respondent Court of
Appeals to say that the terms of the contract
do not require arbitration as a condition precedent
to judicial action is erroneous. x x x
it is clear that arbitration
is the mode provided by which respondent (Polar
Lines, Inc.) as Principal Carrier can seek damages
and/or indemnity from petitioner (SL Services,
Inc.), as Containership Operator.
As the Principal Carrier with which Flor International,
Inc. dealth with, respondent can and should be
held accountable by the shipper. Pursuant to Clause
16.3 of the Agreement, respondent when faced with
such a suit "shall use all reasonable endeavors
to defend" itself or "settle such suits
for as low a figure as reasonably possible".
In turn, it can seek damages and/or indemnity
from petitioner as Containership Operator for
whatever final judgment may be adjudged against
it under the Complaint of Flor International,
Inc. x x x"
Let us always bear in mind that
the Principal Carrier can seek damages and/or
indemnity from the Containership Operator as may
be provided for in their Agreement.
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For questions or comments, email
the author at jtb@pac-atlantic.com.ph.
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Narrow Channel Archive
: 2004 Q3
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