G.R. No. 166039 , March 9, 2007
Republic of the Philippines, represented by the Commissioner of Customs, vs. Unimex Micro-Electronics GmBH

FACTS

Respondent Unimex shipped goods to a Philippine consignee in 1985. Upon arrival, the Bureau of Customs (BOC) found discrepancies with the cargo manifest and instituted seizure proceedings, ultimately forfeiting the goods. Unimex successfully intervened, and the Court of Tax Appeals (CTA) in a 1992 decision reversed the forfeiture, ordering the shipment’s release to Unimex upon payment of duties. This decision became final, but no writ of execution was secured. The goods were subsequently lost while in BOC custody.
In 2001, Unimex filed a petition to revive the 1992 judgment. The CTA, finding the goods lost, ordered the BOC Commissioner to pay Unimex the shipment’s commercial value. Both parties appealed to the Court of Appeals (CA). The CA affirmed the BOC’s liability but modified the computation, ruling the conversion to Philippine currency should be at the exchange rate prevailing at the time of actual payment, not at the time of importation. It also awarded legal interest. The BOC Commissioner appealed to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in: (1) holding the government liable for the value of the lost shipment; (2) applying the exchange rate at the time of payment; and (3) imposing legal interest on the award.

RULING

The Supreme Court denied the petition and affirmed the CA decision. On liability, the State is not immune from suit when it enters into a proprietary contract or when the case involves the recovery of a property wrongfully taken by public officials. Here, the BOC, through a final CTA decision, was ordered to release specific property. Its failure to do so due to the loss of the goods constituted a chargeable act or omission, making the government liable for damages equivalent to the property’s value.
On the exchange rate, the Court upheld the application of Republic Act No. 4100 , which mandates that obligations incurred abroad and payable in the Philippines shall be discharged in Philippine currency based on the prevailing rate at the time of payment. The CA correctly applied this law, as the obligation to pay the value of the lost shipment crystallized into a monetary judgment payable in the Philippines.
Regarding interest, the award was proper. The 6% annual interest from the date of the CTA’s 2002 decision (when the amount was reasonably ascertained) compensates for the delay. The 12% annual interest from finality until full payment is justified, as the period constitutes a forbearance of credit, given the government’s effective withholding of payment due to Unimex.