G.R. No. L-18629; May 31, 1963
NEGROS NAVIGATION CO., INC., petitioner, vs. THE COMMISSIONER OF CUSTOMS, ET AL., respondents.

FACTS

Negros Navigation Co., Inc. purchased two new marine engines to replace the old ones on its vessel “Don Julio.” The old engines were temporarily stored at the Iloilo wharf. The Collector of Customs of Iloilo assessed storage charges of P19,601.92 against the company, contending the engines were subject to such fees. The company disputed this, arguing the engines were not imported cargo but replacement parts and thus exempt.
The Collector, via an indorsement dated July 22, 1958, sought an opinion from the Commissioner of Customs on whether the engines constituted cargo for storage charge purposes. The Commissioner, in a second indorsement dated November 21, 1958, ruled they were cargo under applicable jurisprudence and directed collection. Following this, the Collector issued a final demand for payment on November 28, 1960. The company did not file a formal written appeal to the Commissioner from the Collector’s assessment but instead filed a petition directly with the Court of Tax Appeals, seeking a declaration of exemption from the charges.

ISSUE

Whether the Court of Tax Appeals correctly dismissed the petition for lack of jurisdiction due to the petitioner’s failure to first appeal the Collector of Customs’s decision to the Commissioner of Customs.

RULING

The Supreme Court affirmed the dismissal, upholding the Court of Tax Appeals’s lack of jurisdiction. The legal logic is anchored on the statutory procedure for appeals from customs rulings. Under Section 1380 of the Revised Administrative Code, a party aggrieved by a decision of a Collector of Customs must, within 15 days, give written notice to the Collector of its desire to have the matter reviewed by the Commissioner of Customs. Only after an adverse decision by the Commissioner may a party appeal to the Court of Tax Appeals under Section 7 of Republic Act No. 1125.
The Court rejected the petitioner’s contention that the Commissioner’s indorsements of November 21, 1958, and November 11, 1960, constituted appealable “decisions” that could vest jurisdiction in the Court of Tax Appeals. It ruled that these indorsements were merely advisory opinions given in response to a subordinate’s request for guidance in the performance of his duties. They were supervisory in nature and did not transform the Collector’s assessment into a decision of the Commissioner. The Court, citing Sampaguita Shoe & Slipper Factory v. Commissioner, emphasized that a decision must be one personally and directly prepared by the authorized official in a contested case. Since the petitioner failed to initiate the first phase of the appeal process by formally appealing the Collector’s ruling to the Commissioner, there was no final, reviewable decision from the Commissioner for the Court of Tax Appeals to act upon. The prescribed hierarchical appeal process is mandatory, and the Commissioner’s prior advisory opinion did not excuse compliance with this procedural requirement.