G.R. No. 132929 ; March 27, 2000
COMMISSIONER OF CUSTOMS, petitioner, vs. COURT OF APPEALS and PHILIPPINE CASINO OPERATORS CORPORATION, respondents.

FACTS

The Philippine Casino Operators Corporation (PCOC) entered into a concessionaire’s contract with the Philippine Amusement and Gaming Corporation (PAGCOR), a government corporation with an exclusive gaming franchise. The contract authorized PCOC to procure imported equipment for casino operations. From 1982 to 1984, PCOC imported various articles, securing their release from the Bureau of Customs without paying duties based on endorsements of exemption from the Ministry of Finance. In 1988, the Bureau received information alleging PCOC obtained these exemptions through fraud. Consequently, the District Collector of Customs issued a seizure warrant, and various imported articles were detained. After proceedings, the Collector ordered the forfeiture of the articles, a decision affirmed by the Commissioner of Customs. PCOC appealed to the Court of Tax Appeals (CTA).
The CTA reversed the Commissioner’s ruling and ordered the release of the articles to PCOC. The Commissioner, represented by the Office of the Solicitor General (OSG), filed a motion for reconsideration with the CTA. The CTA denied this motion as filed out of time, counting the reglementary period from the date the CTA decision was received by lawyers of the Bureau of Customs’ Legal Service Division, whom the OSG had deputized as collaborating counsel. The OSG itself received the decision later. The Commissioner then filed a petition for certiorari with the Court of Appeals, which dismissed it, prompting this petition to the Supreme Court.

ISSUE

The primary issues are: (1) Whether service of the CTA decision on deputized lawyers of the Bureau of Customs binds the OSG for computing the period to appeal; (2) Whether the proper remedy from the CTA decision was certiorari or appeal; and (3) Whether PCOC is exempt from paying customs duties on its importations.

RULING

The Supreme Court granted the petition, reversing the Court of Appeals. On the procedural issue, the Court held that service of the CTA decision on the deputized lawyers of the Bureau of Customs was not binding on the OSG for determining the timeliness of an appeal or motion for reconsideration. Citing National Power Corp. v. NLRC, the OSG remains the principal counsel even when it deputizes agency lawyers. The reglementary period must be counted from the OSG’s actual receipt of the decision. Therefore, the OSG’s motion for reconsideration was timely filed, and the CTA erred in denying it. Consequently, the CA incorrectly dismissed the certiorari petition, as the CTA’s denial of the timely motion was a grave abuse of discretion correctible by certiorari.
On the substantive issue of tax exemption, the Court ruled that PCOC is not exempt from paying customs duties. PAGCOR’s tax exemption under its charter (P.D. 1869) is personal and does not extend to its concessionaires or agents. The contractual stipulation authorizing PCOC to procure imports did not constitute a delegation of PAGCOR’s legislative franchise or its tax-exempt status. Exemptions from taxation are construed strictly against the claimant, and PCOC failed to prove any clear grant of such exemption. Furthermore, the Court found prima facie evidence of fraud in PCOC’s importations. The endorsements from the Ministry of Finance were secured based on PCOC’s representations that it was “acting for and in behalf of PAGCOR,” which was a misrepresentation since PCOC was importing for its own use as a concessionaire, not as an agent performing governmental functions for PAGCOR. Thus, the importations were subject to forfeiture under the Tariff and Customs Code.