CTA Case No. 2181 (Decision)

.,EPU'BLIC OJ' THE PmLIPPINBI COURT OF TAX APPE.A.LI . QUEZON CITY PERFECTO M. NALA.TBALA.T , C.T.A. CASE NO. 2181 Petitioner, versus THE COMNISSIONER OF CUSTOMS, Respondent. X- - - - -----X DE C I S I 0 N Petitioner Perfecto M. Malatbalat appealed from the decision of Commissioner of Customs Rolando G. Geotina, affirming that of Collector of Cus- toms Salvador T. Mascardo of the Airport Custom- house in Seizure Identification No . 821, wherein he ordered, instead of forfeiture, the payment of duties, taxes and other charges on the 56 packages of assorted merchandise consisting of 3,914 men's, ladies' and boys' wrist watches, men's and ladies' watch bracelets, loose watch parts, ladies' leather flat shoes and hard rubber sole slippers, 3912 yards of nylon crepe dress materials made in Japan, 4961- yards of men's suiting materials made in England and Switzerland, Parker T-Ball Pen re- fills, leather watch straps, gold rings, pendants , men's tie pins and cuff-links, birthday and jewel- ry stones, medicines, tranquilizers, empty gela- tin capsules, 34 decks of Chinese playing cards,

�I DECISION - CTA CASE NO . 2181 2 etc ., \'Jhich were appraised and valued by Customs Examiner Paciente D. Gulle and Customs Appraiser Melquiades Ocampo at $28,406 . 22 (U.s . O.ollar) . At or the rate �3 . 90 to- a u.s . dollar at the time of the appraisal on June 5, 1968 of the above- mentioned ' merchandise, the same amounted to ~ 11 0 , 784 . 26 . (See. Customs Administrative Order No . 6-70 dated February 23, 1970. ) For a detailed description of the seized articles , their quantity , unit price and sources of origin, the same are itemized hereunder as follows: 147 pes . Seiko Men ' s wrist watch, . 21 j ewels , gold plated , automatic, calendar � � � $16. 25/pc - $2 , 388 . 75 5 pes. Seiko Men ' s wrist watch, 21 jewels,� gold plated � � 16. 25/ pc - 81 . 25 20 pes . Seiko Men ' s wrist watch, 21 jewels, gold plated, dia�hock � � � � � ~ � � 16 . 25/pc - 325. 00 20 pes . Seiko Men ' s wrist watch, 25 jewels, gold plated, automatic, calendar� . � � 19.50/pc 390. 00 30 pes . Seiko Men ' s wrist watch, 17 jewels, gold plated, automatic , calendar � � � 8. 00/pc 240. 00 50 pes . Seiko Men ' s wrist watch, 17 jew~ls, stainless, calendar � � � � � � � � 8. 00/pc 400 . 00 43 pes . Seiko Hen ' s wrist watch, 21 jewels, stainless, calendar, automatic � � � 16 . 25/pc 10 pes . Seiko Hen ' s wrist "'.vatch , 25 jewels, gold plated , day- date, automatic :� �� 19 . 50/pc 10 pes . Seiko Men ' s wrist watch, 195. 00 no jewels, gold plated . � 4.35/pc 43 . 50 130 pes . Tugaris Hen's wrist . watch , 25 jewels, gold plated, calendar, Incabloc, <I automatic � � � � � � � � 10. 00/pc 1,300. 00 ..

DECISION - CTA CASE NO. 2181 3 50 ~ cs . Tugaris Men ' s wrist wa t ch , 25 j ewels , gold plated , day- da t e � � � � � � � � � 10. 00/ pc - 500. 00 100 pes . Tugaris Men ' s wrist wat ch , 21 jewels ," gold plated , calendar � � � � � ~. � � � 8 . 50/ pc � 850 . 00 130 pes . Tug a~i s Men ' s wr i st watch , 21 j ewels , stainless , . calendar � � � � � � � � � 8 . 50/ pc 1,1 05. 00 80 pes. Tugaris Boy 's wri s t watch , 17 jewels , s t a i nless, calendar � � � � � � � � � 4 . 00/ pc 320 . 00 20 pes. Tugaris Boy 's wr i st watch , 17 jewels , stainles s � � � 4 . 00/ pc - 80 . 00 230 pes . Buler Men 's wris t watch , 21 jewels , gold plated , calendar � �. �. � � � � � � 5. 00/ pc - 1,1 50. 00 200 pes . Buler r~en ' s wr ist watch , 21 jewels , stainless , calendar � � � � � � � � � 5. 00/ pc 1, ooo . oo 270 pes . Buler Men ' s wr ist watch , 17 jewels , gold plated �� 4 . 00/ pc - 1, 080 . 00 50� pes . Buler Men ' s wrist wat ch , 21 jewels , gold plated �� 5. 00/ pc - 250 . 00 100 pes . Buler Men ' s wrist watch , 17 jewels , stainless � � � 4 . 00/ pc - 400. 00 20 pes . Seiko Hen' s wrist wat ch, 17 jewels , stainless , automatic Calendar � � � 8 . 00/ pc 160 . 00 1 pc . Buler Hen 1s wrist watch , 17 jewels , stainless , automatic, calendar with luminous arms and number- ings , S. N. 1356 A. C. � -� 5. 00/ pc 5. 00 1 pc . Buler Men ' s wrist watch , no j ewels , gold plated , anti- magneti c, s. N. 1349 . � 2. 50/ pc - 1 pc . Buler Hen ' s vrrist watch , 2. 50 no jewels , gold plated , anti- magneti c, wi t h Roman numeral numberings � � � � 2o50/ pc - 50 pes . Buler Boy ' s wrist watch , 2. 50 21 jewels , stainless , calendar � � � � � � � � � 5. 00/ pc - 250 . 00 31 pes . Buler Boy ' s wrist watch , 17 jewels , stainless � � � 4 . 00/ pc - 124. 00 170 pes . Buler Men ' s wrist wat ch , movements , less dial , case, back and arms � � � � � � 1 . 00/ pc - 170 . 00 240 ,pes . Ceba Hen ' s wrist �watch 5. 00/ pc - 1, 20o . OO (Golden Dragon) 21 jewels

-. DECISION - CTA CASE NO . 218 1 4 eO pes . Philip l�1en ' s wrist Wtj.tch t ' 21 jewels, stainless , day- date � � � � � � � � � � � $ 10. 00/ pc - $ 600. 00 750 pes -~ Lady de Luxe , lady ' s wrist watch , 17 jewels , stainless � � � � � � � � 7. 50/ pc - 200 �pcs . Lady de Luxe , lady ' s wrist watch , 17 jewels , gold plated � � � � � � � 7 . 50/ pc - 1' 500 . 00 50 pes . S\ilN, Lady ' s wrist watch , 300 . 00 21 je wels 1Lagdyo'lds plated � � 6 . 00/ pc 120. 00 30 pes . Sei ko , wrist watch, no jewels , gold plated � � 4 . 00/ pc - 5. 00 1 pc. Euler Lady ' s wrist Pendant watch , 17 jewels , gold plated , Nakar- faced , cal- endar vli th gold anodized chain. � � � � � � � � � � � 5.00/ pc 1 pc . Small box- containing assorted, loose watch parts � � � � � � � � � � 2. 00/ all 2. 00 350 pes . Seiko Men ' s watch brace- 1 . 00/ pc - 350 . 00 . lets, stainless � � � � � 1. 00/ pc - 180. 00 180 pes . Seiko Hen ' s watch brace- 0. 75/pc lets, gold plated � � � � 0. 75/pc - ~p . go 80 pes . Seiko Lady ' s watch bra celets , stainl~ss . � � 0. 75/pc - 37 - 50 50 pes . Seiko Lady ' s watch bracelets, gold plated�� 0.-20/ pc - 5. 00 20 pes . Seiko Lady's watch bracelets, gold plated .._ 30. 00 with attached chain ��� 150 pes . Seiko, Men's leather 0. 201pc - 7 . 00 watch straps with stain- 1 . 00/pJ:. 34. 00 less buckle � � � � � � � 1. 00/ pr - 17 . 00 35 pes . Seiko , Men ' s leather watch straps with gold plated buckle � � � � � � 34 p~:s . Lady ' s leather flat shoes 17 pes. Lady ' s leather flat shoes with nylon mesh �� 6 prs . Lady's leather low- 2. 50/ pr - 15. 00 heeled shoes � � � � � � 26 prs . Lady ' s slippers of hard �rubber soles � � � � � � 0. 25/ pr . 6. 50 600 yds . Dress materials (Nylon Crepe de Chine) aquamarine color. ) � '

.' DECISION - CTA CASE NO . 2181 5 595 yds . Dress ~a terials (Nylon Drepe de Chine) yellow color . ) 550 yds . Dress materials (Nylon ) . Crepe de Chine) salmon- pink ) color . ) 449 yds . Dress materials (Nylon � Crepe de Chine) mustard color) 539 yds . Dress materials (Nylon Crepe de Chine) white color . ) $0 . 70/ yd . 516 yds . Dress materials (Nylon Crepe de Chine) light green color . ) 447 yds . Dress Materials (Nylon Crepe de Chine) light pink color . ) 100 yds . Dress materials (Nylon Crepe de Chine) light blue color . ) 50 yds . Dress materials (Nylon Crepe de Chine) sky-blue color . ) 66 yds . Dress materials (Rayon~ ) $0. 70/yd . jersey) printed. -3 , 912 yds . Total � � � � � � � � � � . $0. 70/ yd - $ NOTE: All above dress materials are marked S!5IRIN, Japan made . 467 yds . Men ' s suiting materials (Terylene Worsted) Swiss- made , double width, as- sorted dark colors. 29t yds . Men ' s suiting materials (Teryleri Worsted) England- � made, double width , as- . sorted dark colors. 496f yads . Total � � � � � � � � � $2. 00/yd. 993 . 00 119 pes . Parker T-Ball Pen Refills 0. 20/ pc . - 23 . 80 NOTE: The following are the list of articles found inside Bundle No . 24 which was - previously set aside and sealed pending � the presenc~ of Mr . Melquiades Ocampo , Customs Appraiser , MIA , an expert on examination of jewelries and precious stones , per in~truction of the Commissioner of Customs , Juan Ponce Enrile , and whose findings appears below: ACTU L FINDINGS: One (1) Tin Box (Creme crackers box - 8. 00 Ja cob) containing: One ( 1) pc . 14K lady ' s gold bracelet with 12 small jades hollow��� ~ 8 . 00/ pc - $

I' DECISION - CTA CASE NO . 218 1 6 Five (5) pes . 14k lady's gold brace- lets with engravings , hollow - $5. 00/pc - $ 25.00 Two (2) pes . 14k lady's gold brace- lets , streamlined������ 5. 00/pc - 1 0 . �00 Seven (7) pes . 14k gold bracelets 0. 30/pc - 2. 10 (lady ' s) - one set of 7 pes . Ten (10) pes . lady ' s white gold � bracelets (KWG) hollow, with engravings � � � � � � � � � 3. 00/pc 30. 00 Twenty-one (21) pes . lady's thin bracelets - set of three (3) of 7 pes . each set ����� 0. 30/pc - 6.30 Two (2) pes . lady ' s bracelets (KWG) hollow with 12 small jades each � � � � � � � � � � � � 8. 00/pc - 16 . 00 Two (2) pes . loose granate stones 1. 00 (birth stones) � �. � � � � � 0. 50/pc - Two (2) pes . loose stones , sapphire , small � � � � � ~ � � � � � � 0 . 50/ pc - 1.00 Three (3) pes . lady's small pendants , 18k with small jade . � � � � , 5. 00/pc 15.00 Two (2) pes . tie pins (Men's) "lf.Ji th one small moonstone each 2. 00/pc . - 2. 00 Six (6) prs . 14k Hen ' s cuff-links 4 . 00/set - 16 . 00 with one tie clin each Ten (10) pes . yellow lady ' s rings 15. 00 set with one jade each t . 50/set Ten ( 10) pes . '"hite lady � s rings set v1ith one jade each r!l1. 50/set 15. 00 Ten (10) pes . white lady ' s rings set with five (5) tiny jade each 1. 50/set - 15.00 Two (2) pes . white lady ' s rings set with three (3) tiny jade each 1. 50/set - One (1) pair white Men's cuff- links 3 . 00 set ~th one (1) jade each 3.00/set 3 . 00 Two (2) pes . white tie- clip (one .(1) with moonstone and the other with jade) � � � � � � � � � 4. 50/pc. Sixty- three (63) pes . lady'.s rings 9 . 00 (KWG) - 6 prs . with white 1. 50/pc . - 94 . 50 stones . � � � � �. � � � � � Four (4) pes . white stones (Moonstones) 0 . 50/pc. - 2. 00 Two (2) pes . Turquoise stones � � � � 0. 50/pc . 1.00 ~our (4) pes . Star sapphires ��� � �� ~ 2. 00/pc . - I 8 . 00 - Two (2) pes . Black Star sapphires � � � -0. 50/pc. - Y1. 00 Three (3) pes . Indian Star Ruby � � � 2. 00/pc . Two (2) pes . Garnate stones � � � � � 0. 75/pc . 6. 00 Three (3) pes . Golden Topaz � � � � � 1. 00/pc. - Six (6) pes . Small red corral (Flower 1 . 50 3.00 shape) � � � � � � � � � � � � 0. 25/pc. 1. 50 Four (4) prs . white Men ' s cuff-links with one (1) tie-clip each �� 3 . 00/pr . - 12. 00 Forty-seven (47) pes . lady ' s gold rings 14k. � � � � . � � � � � � 1.00/nc . - 47 . 00 Four (4) Smoky Topaz �� �� . � � � � � 3 . 00/pe. - 12.00

'' DECISION - CTA CASE NO . 2181 7 Note: Corresponding samples were taken by Mr . N. Ocampo , Customs Appraiser , as follows: / 2 white gold bracelets of different sizes . 7 pes . lady ' s rings , assorted. Three (3) prs . cuff- links , assorted . 2 pes . thin bracelets . 9 pes. assorted stones . 1 pc . small pendant . 28 , 000 Dilantin capsules (dipheny- . ldydantoin sodium) Parke Davis USA 0. 1 gram each capsule. ) � . $ 95. 00 all - $ 95 . 00 19 , 000 Chlormycin (Cloramphenicol) capsules - U. S. P. ) Jones Pharmacal , U. S.A., 250 mg . each capsUle . ) 16, 000 Empty Gelatin capsules (Parke Davis USA) � � ..� � � � � � 1._25/1 000 pap . - 200. 50 4 , 500 Librium - 5 dragees , 5 mg . each dragee (Roche) � � � � 0.50/30 dragees 91 . 90 4,ooo Librax �dragees (Roche) � � �13 . 63/500 dragees 109 . 04 60 . 00 3 , 000 Sinutab tablets � � � � � � 0. 02/tablet 18 . 00 600 Dramamine tablets 50 mg . each tablet (Searle) USA . � 0. 03/tablet 300 Ephynal chewable dragees (Vitamin E) Roche , 160 mg . ea ch dragee � � � � � � � � 3 . 25/ 100 dragees ~ . 75 . 192 tubes Chloromycetin - Opthal- . - mic Ointment (Parke Davi s) �� 0. 24/ tube 46 . 08 34 Decks Chinese playing cards (Gna jo) no brand � � � � � � 1. 00/deck 34. 00 (Pp . 111- 11l.j-, Customs rec . ) The seizure proceedings were commenced by Collecto,r of Cus toms Salvador T. Mascardo on June 1, 1968 by the issuance of the Warrant of Seizure and Detention. On June 18 , 1968 , Nessrs . Per- fecto Malatbalat and Ruperto Santiago instituted an action in the Court of First Instance of Manila against the Commissioner of Customs , docketed as Civil Case No . 73322, for Nandamus and Prohibi- tion with prayer for the issuance of a �writ of

DECISION - CTA CASE NO . 2181 8 preliminary injunction to stop Collector of Customs Salvador T. Mascardo from conducting the seizure proceedings because he has no jurisdiction over the seized articles and merchandise which were purchased locally by claimant Perfecto Halatbalat . The seizure proceedings were held in abeyance while the judicial suit was in, progress. Subse- quently , the court action was dismissed by Judge Jose Moya of the CFI of Manila and, therefore , the administrative proceedings, were resumed . The seizure proceedings were instituted for the rep.orted violation of -Section 2530(m) - 1 of the Tariff and Customs Code, in relation 'tq Section � 1202 of the same Code , wpich provides as follows: SEC. 2530 . Property Subject to Forfe1tute Upder Tariff and Custom~ ~ . - Any vessel or aircraft , cargo, articles and other objects shall, under the follo-vring conditions , be subject to forfeiture: X X X X m. Any article sought to be imported or exported: (1) Without going through a customhouse , �whether .the act was consummated, frustrated or attempted; SEC . ' ~'fu,en Importatiop 1202. Begins and Deemed Terminated . Importation begins when the carry- ing vessel or aircraft enters the jurisdiction of the Philippines with intent to unlade therein.

. DECISION - CTA CASE NO. 2181 9 Importation is deemed terminated upon payment of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in case said .articles are free of duties, tax- es and o_ther charges until they have legally left the jurj.sdiction of the customs. The opposing parties submitted the case to this Court for decision on the basis of their pleadings, customs record, transcript of the ad- ministrative hearings , oral and documentary evidences adduced thereat , and the partial stipulation of facts submitted to this Court which read as follows: COME NOvJ the parties in the above- entitled case, assisted by their re- spective counsel, and to this Honor- .. able Court respectfully submit the following stipulation of facts: 1. That on June 1, 1968 , the Collector of Customs , Airport Custom- house (I-1IA) .initiated seizure pro- ceedings against the merchandise of the herein petitioner which was docketed therein as &. I; No . 821, wherein the original claimants were the pet.i tioner herein with respect to the R56uppearctokacg.esSoafntmiaigsocewlliatnheoreusspgeocot ds and to the delivery van, carrier of the said goods . 2. That the parties herein are adopting the partial stipulation of facts entered into by the petitioner herein and his co-claimant Ruperto C. Santiago on the one hand and the re- presentative of the government on the other hand in idthes . hr e. aring on January 2, 1969 in sa No . 821.

'. DF.CISION CTA CASE NO . 2181 10 3. That the parties herein are also adopting 1n 1Q1Q the record of the proceedings in S. I . No . 821 , in- � eluding the testimony of' the witness- es and documentary exhibits presented therein. 4. That after due hearing in S. I . No . 821 , the Collector , Airport Customhouse , MIA , decreed the re- lease of the deliver y van to Ruperta c. Santiago and , likewise.,- the release. of the 56 packages of assorted mer- chandise to the petitioner herein upon full payment of the duties , tax- es and other charges due thereon. 5. That from the aforesaid deci- sion , petitioner Perfecto H. J.1alat- bala.t interposed an ap:Qeal to the Com- missioner of Customs (Customs . Case No . 953) insofar as the 56packages of assor~ed merchandise is concerned , � while claimant Ruperta c. Santiago, owner of the delivery van, took pos- session of 'the van on December 18 , 1970 . 6 . That the Commissioner of Cus- toms affirmed the decision of the Collector , Airport Customhouse , MIP. on September 15, 1970 . 7. That claimant Perfecto H. Malatbalat , ~g ain , not satisfied with the decision of the -Commissioner of Customs , now petitions this Honorable Court for the reviev.r of the decision rendered by the Commissioner of Cus- toms . 8. That after the Commissioner of Customs had rendered his decision in, Customs Case . No . �953 , the Commis- sio anecr . of ' Customs , upon motion of Rup- ert Santiago , owner of the delivery van , authorized the release of the- said delivery van t6 its owner on December 2, 1970. ,.

DECISION - CTA CASE NO . 2181 11 .. WHEREFORE , the parties herein re- spectfully pray �that judgment be ren- dered in this case on the basis of the above stipulation of facts and the records of the proceedings afore- cited, with the reservation that the parties be allowed to submit their respective memorandum, the petitioner within fifteen (15) days from receipt of the order of this Honorable Court admitting this stipulation and the re- spondent within fifteen (15) days from � receipt of petitioner ' s memorandum . After the administrati.ve hearings , the Col- lector of Customs of the Airport Customhouse , Pasay City , rendered a decision on July 19 , 1969 , wherein he decreed the release of the Volk:S-t.-1agen Kombi de- livery van to claimant Ruperta Santiago as well as the release of the 56 packages of assort&d mer- � chandise to Perfecto Halatbalat provided that the duti~s , taxes and other charges due thereon are paid by the c~aimant in full . The said decision of the Collector of Customs was affirmed in the decision of the Commissioner of Customs dated Sep- tember 15, 1970. The principal and pivotal issue submitted to this Court for resolution is whether or not the � 56 packages of assorted merchandise in question were imported without going through the customs- _house , whether the act was consummated , frustrated, or attempt ed . As , a corollary issue , this Cot~t has to resolve whether or not the aforesaid mer-

I DECISION CTA CASE NO . 2181 1'2 :chanqise valued at ~110 , 784 . 26 are subject to for- feitu~e or the payment of tariff duties , internal revenue taxes and other� charges . To disprove the report that the 56 packages of assorted merchandise were imported by the claimant- petitioner without going through the customtlouse , Perfecto Malatbalat adduced testimonial and document- ary evidences showing that the mer chandise in ques- � tion were pur chased locally from three commercial establishments , namely: 1. M. R. Tolosa Trading R- 350 , Republic -Supermarket , Rizal ., Ave ., Manila Niguel R. Romualdez , Proprietor Sales Invoices: Exhs . 6 , 6- A, 6- B, 6- C and 6- D; 2 . J . M. s . Enterprises 752 Kings Road , Mandaluyong , Rizal Juanito H. Sa.avedra , Proprietor Sales Invoic~s: Exhs . 7, .7-A and 7- B; and . Farmacia Hosana- Aguilan 248 Kanlaon St ., corner Apo, Quezon Cit ~ Alejandro B. Aguilan, Proprietor Sales Invoices: Exhs . 8 , 8- A and 8- B. In the administrative hearing , Perfecto Malat- balat declared and testified that the sales in- voi~es of M. R. Tolosa Trading marked as Exhibits 6 to 6-D were issued and signed by Bonifacio Al- maden who is a sales agent of the said establish- ment , the details and particulars of l.-'lhich a:re as follows: �

DECISION - CTA CASE NO . 2181 13 In;g . No . Date Issued Quantity Articles Sold Unit Price Amount 652 May 18 , 1 68 230 pes , vlatches and Bracelets P25, 00 ~5 , 750 . 00 Terms: Cash 653 l.fay 20 , I 68 410 pes . II 25 . 00 10,250. 00 Terms: Cash 654 May; 21 , ' 68 542 pes . \-latches 15. 00 8,130. 00 r:erms: . 770 tl II 14. 00 10,780, 00 225 11 Bracelets 3 . 00 1119 , 6' ~~~. 0oo0 90 days . 655 . May 21 , �'68 11 set Cuff-link 10. 00 110, 00 Terms: Cash 3 pes . Brooch 8 . 00 24. 00 20 If Jade ring . 10. 00 10 II fl II 25. 00 200, 00 4 II 30. 00 250 . 00 2 ; II " bracelet 50, 00 200 , 00 77 11 11 II 7. 00 1o.o . oo 47 II 8 , 00 30 II w.s. Ring . 539 .oo 27 II K. G. tl 5. 00 375. 00 Assorted stone 15. 00 150. 00 �Bracelet 402.00 iF: 2 , 354 ~ 00 '' 656' May 21, 1 68 � 358 pes . Watches 9. 00 3, 222 . 00 20 II Bracelets 3. 00 60. 00 16 doz . Strap 3 . 00 48 . 00 Refill �~o.oo Terms: Cash 10 II 15. 00 ~~~-3 , 0 . 00 TarAL VALUE OF MERCHANDISE PURCHASED . � � � � � � � ~y.l , 412 . 00 Perfecto Nalatbalat also declared and testified that Sales Invoices Nos , 1002 and 1004 of J . M. s. Enter- ,. prises were issued and signed by the store employees , _ the details and particulars of which are as follows : Inv , No , Date Issued Quantity Articles Sold Unit Price Amount 1002 Hay 21 , 1 68 600 yds , Suiting Materja]a �4 , 00 ~ 2 'l-i-00 . 00 48 prs , Shoes 3. 00 �� 48 11 Slippers 144-.oo 1004 1. 50 Terms: 190 yds , Dress materials 1. 00 72. 00 1 1 00 lt-000 II 2. 50 :190. 00 4,ooo. oo II tl 117 pes , \'latch parts ' 292 . 50 1035 11 Watches 4,J40,0__Q 90 days per self- serving � 4 , 00 ~11,238 . 50 certificate of Perfecto Malatbalat (page 7, Cus- toms rec . ) May 21 , 1 68 53 pes . Watch part 2, 50 192 . 50 Cash � �:11 , 431 . 0( TOTAI, VALlJE OF MERCHANDISE PURCHASED

DECISION - CTA CASE NO . 2181 14 �� Jul:- Petitioner further declared and testified that on May 21 , 1968 , he purchased for the first time from Farmacia Hosana-Aguilan assorted drugs and '- empty capsules valued at ~4 , 567 . 05 under Sales In- voice Nos . 294, 295 and 296. The purchases , t~erefore , of petitioner- claimant Perfecto Malatbalat of the 56 packages of assorted merchandise from Hay 18 to 21 , 1968 were -made in three places , namely: Manila, Mandaluyong , Rizal and Quezon City . The total value thereof amounted to F57 , 417 . 05 computed as follows: 1 . M. R. Tolosa Trading � � � � ~41 , lt19 . 00 2. J . N. S. _Enterprises � � � � 11,1+31 . 00 3. Farmacia Hosana-Aguilan . � � �4 , 267 . 05 T 0 T A L�� P57 ,417 . 02 Deducting the alleged purchases of petitioner- claimant amounting to ~57 , 417 . 05 from the sum of it110,784. 26 , representing the appraisal value of the seized merchandise made by the customs examiner � and appraiser , shows a substantial difference of ~53,367.21 . This staggering disparity in value may be attributed to the fact that , upon review and computation of the list and inventory of the seized watches alone in relation to the supposed � purchases made locally by the petitioner , it was ascertained that there is a difference of 569 wrist watches , that is , by deducting from the total

. DECISION - CTA CASE NO . 2181 15 seized wrist watches of 3,91~ the 3,345 pieces of / wrist watches purchased from M. R. Tolosa Trading ,I and J. M. s. Enterprises numbering 2,310 and 1,035 pieces~ respectively. Despite the huge difference in the number of -wrist watches, there is a big disparity between the appraisal and purchase value thereof. From � petitioner's documentary evidence, we gather the following data: No . of vJatches :Unit Price 1; 035 p_ieces 4.00 each 656 II 770 II 9.00 It 14.00 II 542 II 652 & 15.00 II . 563 pieces with . 25.00 II bracelet~ � On the other hand, from the conservative a,p- praisal made by Customs Examiner Paciente Gulle and Customs Appraiser He~quiades Ocampo, the seized Swiss wrist watches such as.Tugaris , Seiko, Euler , Lady de Luxe, Philip , Ceba and Swan were appraised at $2.50 to $16.25 u.s . dollar , or from ~~75 to ~53 .3 8 eacl)r. The unrealistic purchase prices of the wrist watches allegedly bought locally are, therefore, preposterous and deceptive to say the least. /. It is a settled doctrine that a party liti- ga~t who prays for judgment on the pleadings must be understood to have admitted the truth of all the material and relevant allegations of the op- \

DECISION - CTA CASE NO . 2181 16 posing party in the absence of proof to the con- trary . (Bauerman v . Casas , 10 Phil . 115; Evange- lista v . De la Rosa , � et al ., 76 Phil . 115; Tanchico _ v . Ramos , 48 Dff . Gaz . 654 . ) This is particularly true in customs seizure cases which are proceed- ings in ~ where the claimants or persons affected thereby must establish their l egitimate claim and legal right convincingly and satisfactorily. Petitioner- claimant Malatbalat claims that he is a merchant engaged in the business of general . merchandising at 4727 Road I , Mapa St ., Sta . Mesa Blvd ., Manila . But it is surprising to note that as a merchant of consequence he has no store but uses his residence as a place of business (p . 80 , t . s#n ., Customs rec . ) . He started in the buy- and- sell "of' second- hand appliances in 1967 with a capital of only ~ 5,000 . 00 . - On March 21 , 1968 , his application with the Bureau of Commerce for the registration of his firm name (Permalat Enter- prises) shows that his capital as a single pro- pr~etor was ~ 1 0 , 000 . 00 only . For the year 1967 , he has not paid any income tax because he was � exempt from the payment thereof. Despite his pre- tension as a merchant , the Mayor's Permit and Municipal License Receipt as a merchant (pp . 29-

- ,� DECISION - CTA CASE NO. 2181 17 30, Customs rec-.) shows that they were secured and issued about two weeks after the. seizure of the 56 packages of assorted merchand.ise on May 22, 1968. The records, both administrative and judi- cial, failed to show tha.t petitioner-claimant was either provid_e.d with an internal revenue Privilege Tax Receipt (C-13) as a merchant in 1968 or with the duly registered books of accounts, in violation of Sections 178 and 334 of the Revenue Code. Under the foregoing factual background, peti- tioner's pretension that he purchas~d locally the 56 packages of assorted merchandise and that the taxes due thereon have been paid is untenable. A critical analysis and thorough evaluation o:f petitioner 's evidences, documentary and testimonial, leads us to- the conclusion that Perfecto Halat... balat is a dummy-claimant of the seized merchandise or a puppet of an undisclosed importer for the . follow~ng reasons, to wit: First, petitioner-claimant is not a legitimate merchant because he was not provided with an in- ternal revenue privilege tax receipt, municipal license receipt and Mayor's permit from 1967 to May 22, 1968 when the 56 packages of� assorted mer- chandise were intercepted and seized by a g~oup of Pasay � City policemen. Neither was he provided 7f

DECISION CTA CASE NO . 2181 18 with the required books of accounts and duly re- gistered sales invoices considering the volume � and value of his alleged business transactions in May , 1968; Second , his capital of _�" 5, 000 . 00 in 1967 or the r~gistered capital of ~ 10 , 000 . 00 in 1968 is very small and insufficient in effecting the alleged purchases , in a few days of May , 1968 , of assorted merchandise from M.R. Tolosa Trading , J . M. S . En- terprises and Farmacia Hosana- Aguilan valued at \ �57 , 417 . 05 but actually worth ~ 110 , 784 . 26 accor- ding to the conservative appraisal made by the customs examiner and customs appraiser; Third, petitioner ' s self-serving certificate and purchase invoice shO'\ving that he bought on credit . (90-'day term) from M. R. Tolosa Trading and J .M. S. Enterprises assorted merchandise valued at it19,585. 00 and it11 , 238 . 50 are belied and contradicted by his own admission in the administrative hearing that he does not k~ow Tolosa Trading , Farmacia Ho- san-Aguilan a~d J . M. S. Enterprises (p . 72 , t . s . n �� , Customs rec . ) . � Moreover , the invoices allegedly covering the purchases on credit were issued and .signed by a sales agent and store employees with- out the knowledge and consent of the O\vner or manager of the commercial establishments concerned;

DECI SION - CTA CASE NO . 21 81 19 Fourth, the staggering difference of ~ 53,367 . 21 between the purchase price (�57,417 . 26) and the official appraisal value ( ~ 11 0 ,784.26~ of the 56 packages of assorted merchandise was never re- butted by the petitioner-claimant during the ad- ministrative hearings . Moreover, the sales invoices submitted as evidences were not properly identified by the parties concerned and , therefore, they are self- serving and without evidentiary value; Fifth , the 34 decks of Chinese playing cards listed in the inventory made by the customs exam- iner and appraiser are subject to s pecific tax � under Section 147 of the Revenue Code and the un- lawful possession or removal thereof is penalized under Section 174 of the same Code . n examination , hO\-Jever, of all the sales invoices adduced by peti- tioner- claimant failed to show where the said Chinese playing cards came from or from whom they were purchased, thereby impugning the truth' and veracity of petitioner's defense that all the seized merchandis~ were purchased locally; Sixth , the official inventory of the seized merchandise shows a total of 3, 914 pieces of men ' s , ladies ' and boys ' wrist watches while those alleged- l _y purchased from N. R. Tolosa Trading and J . M. S. Enter prises totalled 3,345 pieces only , thereby showing a difference of 569 wrist watches;

DECISION - CTA CASE NO~ 2181' 20 Seventh, the truth and veracity of the state- ments contained in the sale�s invoices submitted by petitioner-claimant as evidences can easily be corroborated by the entries in the duly registered books of accounts of the sellers and buyer of the merchandise in question but petitioner failed to do so for reasons beyond our comprehension; and Eight , petitioner-claimant allegedly purchased assorted merchandise from M. R. Tolosa Trading on May 18 and, 20, 1968 , under Invoice Nos . 652 and 653, for ~5 ,750. 00 and ~10 ,250.oo , respec~ively, without securing the delivery thereof on the same date but instead entrusted them to the custody of the alleged seller. With respect to the purchases made by petitioner on Maz 21, 1968 from M. R. To- �losa .Trading , Farmacia Hosana-A.guilan and J. s. M~ { ........ 1 Enterprises , petitioner again _failed to secure the delivery thereof but instead entrusted them to the 'custody of Ruperto Santiago, who is the regis- tered owner of the Volks\vagen Kombi delivery van, unt~l Nay 22, 1_968'when the sa~d delivery panel and the 56 packages of assorted merchandise were intercepted and seized by a group of Pasay City policemen along F. B. Harrison St ., Pasay City, corner of Polo Road. If petitioner is a legitimate merchant and the real owner of the seized �merchan-

DECISION - CTA CASE NO . 2181 21 dise valued at P110,784 . 26, we cannot understand and comprehend why he was in Oiongapo City on the date and time the merchandise in question were seized and apprehended . The unusual actuations and behavior of petitioner in this case baffle the logic of an ordinary man. / After pronouncing that petitioner is a dummy- claimant under the facts and circumstances of this case, we are constrained to hold that the merchan- dise in controversy were imported without going through a customhouse because they were seized in � Pasay City where the Airport Customhouse is ter- ritorially located; the merchandise in question were undoubtedly of foreign origin; and the tariff duties and internal revenue taxes due thereon have not been pa;d . We sustain, therefore, the power of the Commissioner of Customs to assess and col- lect the taxes and other charges due thereon under Section 1202 of the Tariff and Customs Code , �UDra . It may not be amiss to state that the Commissioner of Customs and his subordinates are agents of the Commissioner of Internal Revenue for the collection of the national internal revenue taxes on imported articles under the provisions of Section 6 of the National Internal Revenue Code , as amended by . I Section 1, Republic Act No . 2655. ~ Petitioner questioned the power of the Bureau of Customs for instituting the seizure proceedings because the merchandise in question. were seized �

. .'. DECISION - ... CTA CASE NO. 2181 '' 23 .. a petition praying that the lower court's order of July 9, 1946, be set aside , that said court be re- quired to order the return of the documents and things in question ' to petitioner , and that the pros- ecutor be restra~ned from using and presenting them as evidence at the trial of the criminal case for treason. The procedure adverted. to above was also followed in the case of H~rry s . Stonehill , -et al . v . Hon . Jose W. Diokno, et al�, G. R. No . L-19550, June 19, 1967 . In the said case, our Supreme Court, among others, said~ ��� on March 20, 1962, � said ~etitioners filed with the Supreme Court this original action fot cer- tiorari , prohibition , mandamus and injunction , and prayed that, ~pending f~nal disposition of the present case, a writ of preliminary injunction be issued restraining Respondent-Pros- ecutors , their agents and/or repre- sentativessfrom using the effects seized as .aforementioned, or any copies thereof,� in the deportation cases already adverted to, and that , in due course , thereafter , decision be rendered quashing the contested search warrants and declaring the same null and void , and commanding the respondents, their agents or representatives to return to peti- tioners herein, in accordance with Section 3, Rule 67 of the Rules of Court , the documenis, papers, things and cash moneys seized or confiscated under the search warrants in question. (Underscoring supplied. ) . ,... If we were to adhere to the rule denying the admissibility of the evidence procured by an il- legal search and seizure, the real party concern~d -.

'. .~l. ~ DECISION - CTA CASE NO . 2181 24 must ihterpose in court a timel y challenge to the va�lidity of the seizure and the competency of the evidence by means of a petition or original action. If upon such action , the real party in interest can show in fa ct that the seized articles and merchandise were secured by� an unlawful -search ; and seizure , the same if used as evidence will be suppressed following the Supreme Court decision in the Stonehill case , supra. In the case at bar , however , Perfecto Malatbalat failed to file a petition in this court praying for the return of the illegally seized merchandise and the sup- pression thereof as evidence . The original action for prohibition, mandamus and injunction filed with the Court of First Instance of M~nila under Civil Case No . 73322 was dismissed by the court . Consequently, the suppression of the il- legally seized assorted merchandise as evidences cannot .be entertained by this Court . ~ tmEREFORE , finding that petitioner Perfecto.M. Malatbalat is a dummy- claimant of the 56 packages of assorted merchandise here in controversy , the decision of the Commissioner of Customs appealed from has to be , as it is hereby, modified . It is hereby declared and ordered that under Section 2530(m)-1 of the Tariff and Customs Code , all the

ECI '"' ION - CT C SE NO . 2181 25 assorted me rchand ise in question are forfeited to the Government and disposed according to law. SO 0 DE ED . Quezon City , April 17 , 1971 . ~~-~4Elf f ' ssociate Judge lE CO CU � Presiding t-- --; ~- v �101~ L. 1TCE~J ssociate Judge