The Commissioner of Customs

versus AGFHA Incorporated

G.R. No. 187425, March 28, 2011
Second Division, Mendoza, J.

Facts: A shipment containing bales of textile cloth arrived at the Manila

International Container Port (MICP.) The Commissioner (CoC), however, held
the subject shipment because its owner was allegedly fictitious. AGFHA
intervened and alleged it was the owner of the said shipment. After forfeiture
proceedings, it was ruled by the District Collector of Customs, and MCIP to
forfeit said shipment in favor of the government. The CoC dismissed the
appeal, and in the Court of Tax Appeals (CTA) division, the decision was
reversed, the shipment was ordered for release. The CTA division decision
became final and executory, AGFHA then filed a motion for execution. This
was held in abeyance due to the CoC’s appeal to the Court of Appeals (CA.)
The CA, up to the Supreme Court denied the petition of CoC, where the
decision was entered final and executory. The CTA Division thus, issued a writ
of execution directing the CoC to cooperate and effect the immediate
release of the subject shipment within 30 days, to no avail. AGFHA filed a
motion to show cause, the CTA division thus set a hearing, and gave notice to
the CoC giving a period of 15 days for the latter to explain its non-compliance
with the writ of execution. CoC explained that they could not determine the
whereabouts and disposition of the shipment at issue. AGFHA then filed a
motion to cite CoC in contempt of court, which was denied. AFGHA set a
motion to set case for hearing to determine CoC’s indemnity if the shipment is
found to have actually been lost. The CTA division held CoC liable. CoC
elevated the case until the CTA En-banc which likewise denied the petition.
Hence, a petition for review under Rule 45 to the Supreme Court.

Issue(s): Whether or not the Court of Tax Appeals was correct in awarding the
respondent the amount of US$160,348.08, as payment for the value of the
subject lost shipment that was in the custody of the petitioner.

Decision: Yes. Decision affirmed. The Court agrees with the ruling of the CTA
that AGFHA is entitled to recover the value of its lost shipment based on the
acquisition cost at the time of payment pursuant to the rulings in CF Sharp and
Co v. Northwest Airlines, Zagala v. Jimenez and CoC v. UNIMEX Micro-
electronic GmBH. CoC also invokes State Immunity, the Court rules, that the
CoC cannot escape liability for the lost shipment of goods, following UniMex
Mico Electronic GmBH decision: Succinctly, the doctrine must be fairly
observed and the State should not avail itself of this prerogative to take undue
advantage of parties that may have legitimate claims against it. In
Department of Health v. CV Canchela and Associates the Court provided
that, upon payment of the necessary customs duties by respondent,
petitioner's "payment shall be taken from the sale or sales of goods or
properties seized or forfeited by the Bureau of Customs."

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