December 2007 - Philippine Supreme Court Resolutions
Philippine Supreme Court Resolutions
Philippine Supreme Court Resolutions > Year 2007 > December 2007 Resolutions >
[G.R. Nos. 166309-10 : December 10, 2007] REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE COMMISSIONER OF CUSTOMS VERSUS UNIMEX MICROELECTRONICS GMBH.:
[G.R. Nos. 166309-10 : December 10, 2007]
REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE COMMISSIONER OF CUSTOMS VERSUS UNIMEX MICROELECTRONICS GMBH.
Sirs/Mesdames:
Quoted hereunder, for your information, is a resolution of the First Division of this Court dated 10 December 2007
G.R. Nos. 166309-10 - REPUBLIC OF THE PHILIPPINES, represented by the COMMISSIONER OF CUSTOMS versus UNIMEX MICROELECTRONICS GmBH.
Respondent Unimex Micro-electronics GmBH seeks clarification of our October 8, 2007 resolution. In particular, it asks to be enlightened on whether our March 9, 2007 decision in this case modifies or entirely reverses the Court's pronouncement in Eastern Shipping Lines, Inc. v. Court of Appeals (CA).[1] According to respondent, it was not awarded legal interest equivalent to 6% per annum on the ground that interest may be paid only either as compensation for the use of money (monetary interest) or as damages (compensatory interest). This holding, respondent continues, runs counter to Eastern Shipping Lines, Inc.
This case concerns respondent's shipment to Handyware Phils., Inc. in April 1985.[2] The Bureau of Customs (BOC) subjected the said shipment to seizure proceedings (as it allegedly did not tally with the description appearing on the cargo manifest) and subsequently forfeited the goods in favor of the government.
Respondent (as shipper and owner of the goods) subsequently filed a motion to intervene in the seizure proceedings. While the BOC granted respondent's motion, it affirmed the order of forfeiture. Thus, respondent filed a petition for review in the Court of Tax Appeals (CTA).
In its June 15, 1992 decision, the CTA declared the seizure as illegal, reversed the order of forfeiture and directed the release of the subject shipment to respondent subject to the payment of customs duties.
The CTA decision became final and executory on July 20, 1992. However, execution thereof had become impossible due to the loss[3] of respondent's shipment. Hence, respondent filed a petition for revival of the June 15, 1992 judgment praying that it be paid the commercial value of the shipment with legal interest from the time of the date of the entry of the June 15, 1992 decision.
In a decision dated September 19, 2002, the CTA partially granted the petition and ordered the BOC to pay respondent the commercial value of the goods based on the prevailing exchange rate at the time of their importation.
Respondent moved for reconsideration. It contended that the exchange rate prevailing at the time of actual payment should apply and legal interest should be imposed on the BOC's obligation. The CTA denied the motion.
Respondent appealed to the CA. The CA granted the appeal holding that, since the shipment was lost while in the custody of the BOC, respondent was entitled to the value of the shipment to be computed based on the prevailing rate at the time of actual payment with 6% p.a. legal interest from June 15, 1987 up to the finality of the decision and, thereafter, 12% p.a. legal interest until the value of the shipment is fully paid.
The Republic of the Philippines, represented by the Commissioner of Customs, challenged the CA decision in this Court. However, in our March 9, 2007 decision, we affirmed the ruling of the CA with modification:
Did our March 9, 2007 decision modify or reverse Eastern Shipping Lines, Inc.? No.
While judicial power includes a court's authority to reverse itself or modify prevailing doctrines, this power should be exercised within the parameters provided under the Constitution.[4] And the Constitution requires that the reversal or modification of a doctrine or principle of law previously laid down by the Court, whether in Division or en banc may be reversed or modified only by this Court sitting en banc. We are ever mindful of this.
The March 9, 2007 decision never discussed, applied, mentioned or cited Eastern Shipping Lines, Inc. There was no need to do so because the pertinent issue in this case was whether legal interest could be awarded in the first place. On the other hand, the entitlement to legal interest was not an issue in Eastern Shipping Lines, Inc. but when legal interest should be imposed at 6% or when it should be imposed at 12% p.a. Thus, there is no basis for the claim that the March 9; 2007 decision modified or reversed Eastern Shipping Lines, Inc.
Nonetheless, for reasons other than those advanced by respondent, we clarify that it should be awarded legal interest.
The original obligation of the BOC under the June 15, 1992 CTA decision was to release the shipment to respondent subject to the latter's payment of customs duties. Since the performance of this obligation (and the execution of the decision) became impossible, the obligation of the BOC was converted to a monetary obligation (pursuant to the September 19, 2002 CTA decision), that is, the payment to respondent of the commercial value of the goods.
Article 2209 of the Civil Code provides:
It would be manifestly unjust to deny respondent legal interest after its shipment was illegally seized and forfeited by the BOC and, subsequently, got lost while in the custody of the BOC. Thus, respondent is entitled to 6% p.a. legal interest from September 5, 2001 until the finality of the March 9, 2007 decision. Thereafter, in accordance with Eastern Shipping Lines, Inc., the rate of legal interest shall be 12% p.a. until the BOC fully pays its obligation.
WHEREFORE, the motion for clarification of respondent Unimex Micro-Electronics GmBH is hereby NOTED and the March 9, 2007 decision CLARIFIED in that legal interest on the amount awarded at the rate of 6% per annum from September 5, 2001 up to the finality of this decision may be imposed and that, thereafter, the rate of legal interest shall be 12% per annum until the value of the shipment is fully paid.
No further pleadings shall be entertained herein.
SO ORDERED.
G.R. Nos. 166309-10 - REPUBLIC OF THE PHILIPPINES, represented by the COMMISSIONER OF CUSTOMS versus UNIMEX MICROELECTRONICS GmBH.
Respondent Unimex Micro-electronics GmBH seeks clarification of our October 8, 2007 resolution. In particular, it asks to be enlightened on whether our March 9, 2007 decision in this case modifies or entirely reverses the Court's pronouncement in Eastern Shipping Lines, Inc. v. Court of Appeals (CA).[1] According to respondent, it was not awarded legal interest equivalent to 6% per annum on the ground that interest may be paid only either as compensation for the use of money (monetary interest) or as damages (compensatory interest). This holding, respondent continues, runs counter to Eastern Shipping Lines, Inc.
This case concerns respondent's shipment to Handyware Phils., Inc. in April 1985.[2] The Bureau of Customs (BOC) subjected the said shipment to seizure proceedings (as it allegedly did not tally with the description appearing on the cargo manifest) and subsequently forfeited the goods in favor of the government.
Respondent (as shipper and owner of the goods) subsequently filed a motion to intervene in the seizure proceedings. While the BOC granted respondent's motion, it affirmed the order of forfeiture. Thus, respondent filed a petition for review in the Court of Tax Appeals (CTA).
In its June 15, 1992 decision, the CTA declared the seizure as illegal, reversed the order of forfeiture and directed the release of the subject shipment to respondent subject to the payment of customs duties.
The CTA decision became final and executory on July 20, 1992. However, execution thereof had become impossible due to the loss[3] of respondent's shipment. Hence, respondent filed a petition for revival of the June 15, 1992 judgment praying that it be paid the commercial value of the shipment with legal interest from the time of the date of the entry of the June 15, 1992 decision.
In a decision dated September 19, 2002, the CTA partially granted the petition and ordered the BOC to pay respondent the commercial value of the goods based on the prevailing exchange rate at the time of their importation.
Respondent moved for reconsideration. It contended that the exchange rate prevailing at the time of actual payment should apply and legal interest should be imposed on the BOC's obligation. The CTA denied the motion.
Respondent appealed to the CA. The CA granted the appeal holding that, since the shipment was lost while in the custody of the BOC, respondent was entitled to the value of the shipment to be computed based on the prevailing rate at the time of actual payment with 6% p.a. legal interest from June 15, 1987 up to the finality of the decision and, thereafter, 12% p.a. legal interest until the value of the shipment is fully paid.
The Republic of the Philippines, represented by the Commissioner of Customs, challenged the CA decision in this Court. However, in our March 9, 2007 decision, we affirmed the ruling of the CA with modification:
WHEREFORE, the assailed decisions of the Court of Appeals in CA-G.R. SP Nos. 75359 and 75366 are hereby AFFIRMED with MODIFICATION. 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 hereby ordered to pay respondent 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 of actual payment.Both the Republic and the respondent moved for reconsideration (the Republic insofar as the BOC�s liability for the value of the shipment in the amount of Euro 669,982.565 and respondent with regard to the non-imposition of legal interest). We denied the parties' respective motions. Thus, respondent filed this motion for clarification.
SO ORDERED.
Did our March 9, 2007 decision modify or reverse Eastern Shipping Lines, Inc.? No.
While judicial power includes a court's authority to reverse itself or modify prevailing doctrines, this power should be exercised within the parameters provided under the Constitution.[4] And the Constitution requires that the reversal or modification of a doctrine or principle of law previously laid down by the Court, whether in Division or en banc may be reversed or modified only by this Court sitting en banc. We are ever mindful of this.
The March 9, 2007 decision never discussed, applied, mentioned or cited Eastern Shipping Lines, Inc. There was no need to do so because the pertinent issue in this case was whether legal interest could be awarded in the first place. On the other hand, the entitlement to legal interest was not an issue in Eastern Shipping Lines, Inc. but when legal interest should be imposed at 6% or when it should be imposed at 12% p.a. Thus, there is no basis for the claim that the March 9; 2007 decision modified or reversed Eastern Shipping Lines, Inc.
Nonetheless, for reasons other than those advanced by respondent, we clarify that it should be awarded legal interest.
The original obligation of the BOC under the June 15, 1992 CTA decision was to release the shipment to respondent subject to the latter's payment of customs duties. Since the performance of this obligation (and the execution of the decision) became impossible, the obligation of the BOC was converted to a monetary obligation (pursuant to the September 19, 2002 CTA decision), that is, the payment to respondent of the commercial value of the goods.
Article 2209 of the Civil Code provides:
Article 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent per annum. (emphasis supplied)Pursuant to this, when there is an obligation to pay a sum of money and there is a delay on the part of the debtor, indemnity for damages equivalent to interest of 6% p.a. is imposed by law in the absence of stipulation. Applying it to this case, with the impossibility of the release of the shipment to respondent subject to the payment of customs duties, the BOC had the obligation to pay respondent a sum of money equivalent to the commercial value of the shipment. The BOC incurred delay when respondent made a judicial demand on September 5, 2001 by filing the petition for revival of the June 15, 1992 CTA decision praying for the payment of the commercial value of the shipment with legal interest.[5] Hence, respondent was entitled to 6% p.a. legal interest on the amount due it. This interest is compensatory in nature, a form of indemnity for the delay in the performance of an obligation.[6]
It would be manifestly unjust to deny respondent legal interest after its shipment was illegally seized and forfeited by the BOC and, subsequently, got lost while in the custody of the BOC. Thus, respondent is entitled to 6% p.a. legal interest from September 5, 2001 until the finality of the March 9, 2007 decision. Thereafter, in accordance with Eastern Shipping Lines, Inc., the rate of legal interest shall be 12% p.a. until the BOC fully pays its obligation.
WHEREFORE, the motion for clarification of respondent Unimex Micro-Electronics GmBH is hereby NOTED and the March 9, 2007 decision CLARIFIED in that legal interest on the amount awarded at the rate of 6% per annum from September 5, 2001 up to the finality of this decision may be imposed and that, thereafter, the rate of legal interest shall be 12% per annum until the value of the shipment is fully paid.
No further pleadings shall be entertained herein.
SO ORDERED.
Very truly yours,
(Sgd.) ENRIQUETA ESGUERRA-VIDAL
Clerk of Court
First Division
(Sgd.) ENRIQUETA ESGUERRA-VIDAL
Clerk of Court
First Division
Endnotes:
[1] G.R. No. 97412, 12 July 1994, 324 SCRA 78.
[2] The shipment consisted of a 40-foot container and 171 cartons of Atari game computer cartridges, duplicators, expanders, remote controllers, parts and accessories.
[3] It could no longer be found at the warehouse where the BOC supposedly stored it.
[4] See proviso of Section 4(3), Article VIII, Constitution.
[5] On this account, we disagree with the ruling of the CA that the delay and, hence, the datewhen legal interest should start to run, should be reckoned from June 15, 1987. That was the date respondent filed a motion for intervention and lift judgment by default praying for the release in its favor of the shipment. At that time, the obligation of the BOC was to release the shipment, not tp pay a sum of money. Respondent itself recognized this as evidenced by its prayer. This was a judicial admission and respondent was bound by it.
[6] See Crismina Garments, Inc. v. CA, 363 Phil. 701 (1999).
