CTA Case No. 4479 (Decision)

v REPUBLIC OF THE PHILIPPI NES COURT OF TAX APPEALS QUEZON CITY MAXIMO G. RI VERA , owner/claimant of Ten- Whee l er with Pl ate No. T-PBM 3 6 5 , On e of the Two (2) sub j ect Ten - wh eeler Trucks in Cu s t oms Case No. 89-39 (Batangas S.I. No. 5-88 ) , Petitioner, C . T.A. CASE NO. 4 4 7 9 HON. SALVADOR H. HISOH, in his official cap aci ty a s COMMISSIONER OF CUSTOMS, Respondent. x- - - - - - - - - - - - - - - -x DECI S I 0 N This i s an appeal from t he decision of the Respondent dated September 8, 1989 affirming the decision, dated February 14, 1 9 89, of the Di strict Collector of Customs, Port of Batangas, ord er ing and declaring the forfeiture, among o t hers, the ten - wheeler truc k , with Plate No . T- PBM 36 5, owned by here i n petitioner/claimant. On Febru ary 23 , 1 993, t h e Petiti o ner and Respondent entered into a stipulati on of fa c ts as follows : 1. On December 9, 198 8 a t a round 4:00 o 'c lock in the a f ternoon, the elements of Philippine Coastgu a rd, 5FS, CG2 and CGS Calapan, interce pted and conf i scated, a mong

DECISION - C.T.A. CASE NO. 4479 - 2- others , the te n - wh e eler truck with Plate No . T - PBM 365, owned by petitioner Maximo Rivera, in Sta Clara, Batangas City, loaded with allegedly imported garlic. 2. The said ten-wheeler truck, with a l legedly imported garlic, was turned over to the Bureau of Customs, Port of Batangas on December 10, 1988. 3. On December 10, 1988, Marcial F. Lopez, District Collector of Customs, Port of Batangas, issued Warrant of Seizure and Detention, dated December 10, 1988, Batangas Seizure Identification No. 05-88, ordering the Sector Commander, National Customs, Port o f Ba tangas and the Supply Officer, Bureau of Customs Police, Port of Ba tangas, to sei ze and take custody of the ten-wheeler truck mentione d abo ve, among others . 4 . The hearing of t he seizure case was conducted by Marcial F. Lopez, District Collector of Customs, Port of Batangas, on the following dates: a. December 16, 1988 b. December 21, 1988 c . Decembe r 2 3, 1988 d. December 28, 1988 e. January 5 , 1989, and f. January 6 I 1989. 5. '�he p roce ed i ngs i n the hearings conducte d on the dat es ment i oned above a r e duly recorded in the Transcripts of Stenographic Notes, the carbon copies of which, duly certified by Atty. Romeo Amadora, Acting Chief, Legal Divi sion, Bureau of Customs, Port of Batangas, are hereto attached and submitted to this Honorable Court to form part of the records of the ins t a nt case. 6 . I n the sai d seizure case , the g overnme nt, re p resented by said Atty. Ro meo A. Am adora, p rese n ted the fo l lowing witnesses: a. Cornelio Baylon, Jr. b. Capt. Ismael Hernandez

DECISION - C.T.A. CASE NO. 4479 - 3- c. Lt. Abundio T. Baybay d. Ernesto Carandang e. Aguinaldo C. Marquez f. Isidro Husmillo g. Dexter Dilay h. Ruperto P. Donato and offered the following exhibitsz B1bibit A � Inventory Receipt, dated Deceaber 10, 1988. A-1 - Signature of Cornelio s. Bayloo , Jr. A�2 � Signature of Pacifico Oxiaora . A-3 - Signature of Porfirio Bool. A-4 - Signature of Silvino Lapitan. B - Apprehension Report, dated Deceaber 11, 1988. C - Warrant of Seizure and Detention. D - The report of Acting &xaainer, Brnesto S. Carandang D-1 - Signature of Brnesto S. Carandang. K - Keaorandut of Aguinaldo C. Marquez, dated Deceaber 13, 1988 . F - Certification issued by Assistant Director, Augusto C.Baluyot. G - Reg istration Certificate of truck with Plate lo. T-PBK 365. G-1 - Bracketed portion (Plate No. T-PBK 365). G-2 - Bracketed portion (Classification-Private). H - Tbe Official Receipt No . 734416 of the truck with Plate Ro. T-PBK 365. All said exhibits are attached to the records of the case. 7. The then respondent (Maximo Rivera, petitioner herein presented the following witnesses: a. Maximo Rivera, the petitioner, and b. Meynardo Rivera and offered the following exhibitss Ktbibit 1 - Mayor's Pertit for tbe year 1988. 1-A - Tbe naae Kaxiao G. Rivera, portion of Bxhibit "1 '. 2 - Certification issued by the Buriau of Internal Revenue, Revenue District Office Ro. 42, vith Registry Mo. 80-019 -04. 3 - Registration Certificate Mo. 0061729. 3-A - fbe nate Kaxi1o G. Rivera, portion of Exhibit "3". 4 - Confiraation Receipt No. B15645325 4-A - Payaent Order Ro. c 2421146. 5 - Confiraation Receipt Mo. B 14312721.

DF;CISION - C.T.A. CASE NO. 4479 - 4- 5-A - Paytent Order Ro. C 146 73 84 - Confirtation Receipt No. B14330790. 6-A - Paytent Order Ro . C 2419060. 7 - Official Re ceipt Ro. 7344416. 8 - Con firaa tion Receipt Ro . B 14015009 6. 8-A � Payte nt Orde r Ro. C0802313. 9 - Confirtatioo Rec eipt No . BA19 1064. 10 - Confiraatioo Reeeipt No. B81 1304242. 10-A~ Pay1ent Orde r Ro. BA742769 . 11 ~ Confiraation Receipt No . B12239608 . 11-A- Payaent Order No . C0800530. 12 - Official Receipt No . AD 021368. 12-A- Offi cia l Ree eipt No . AD 122620 . 12�8 ~ Offieia l Receipt No. AD 143835 . 12- C - Off icial Receipt Ho. AD 216524, 12� 0 - Qffi eial R~eeipt No. AD216791. 12 �&- Offici l Reeeipt Mo . AD 011181. 12 -r R Of ficial Re ce ipt No. AD 01 1412 . 12-G- Off icia l Re ceipt No . AD058743 , 12-H� Official R e cei~t No . AD 121611 . 12-I � Of ficial Receipt No . AD 121846 . 12-J - officia l Receipt No. AD 21 1557. 12-K~ Offic ial Receipt Ro. AD178541 . All s aid ex h ibit s are att ac h e d to the r ecords of the c a se . 8. After he ar i ng, t he Collector of Customs rendered a decision, dated February 14, 1989, whereby, the ten-wheeler truck, with Plate No. T-PBM 365, was "ordered and declared forfeited in favor of the Republic of the Philippines". Said decision is attached to the records of the case. 9. The petit ioner appealed the decision of the Collector of Customs, Port of Batangas, in Seizure Case No. 05-88, to the Commissioner of Customs. Said appeal was docketed as Customs Case No. 89-39. t o . ~he Commissioner of Customs r e ndere d d e o i - ion at i rm ifi~ t he de c ision of the Co ll ec t o r of Customs, Po rt of Batangas, in Seizure Case No. 05-88 and dismissing petitioner's appeal for lack of merit. 11. The petitioner and the respondent, through their respective counsels, agree and stipulate that all the records of the proceedings in Seizure Case No. 05-88

DECISION - C.T.A. CASE NO. 4479 - 5- c onducted by the Collector of Customs, Port of Batangas, tho se i n Cu s tom s Ca s e No. 89 - 39, ) the t r anscript of ste nographic notes of t he he arings mentioned above , a s well as the e xh i b i ts offered by both t he government and t he petitioner herein in Se i z ure Case No . 05 - 88, be made parts of the r e cord s o f the instant case. 12. The petitioner and the respondent , further agree to submit the present case on the bas i s o f t he evidence presented by t he govern ment as well as by the petiti on er herein in t he hearing of Seizu re Case No. 05- 88. ( CTA Records, pp. 174 - 177) The provisions under the Tariff and Custo ms Code relevant to the resolution of the case a t bar r e a d as fo ll ows, ~s E c. 253 0 . Property Subject to Forfeiture Under Tariff and Customs Law. ~ Any ve hi cle, vesse l or a ircraft, cargo, article a nd other objects sha ll, under t he following condit i ons be s ubject to forfeit ure : XXX (a) Any ve hi c l e, vessel or aircraft , including cargo, which shall be use d unlawfu ll y i n the importation or exportation of articles or in conveying and/or transporting con � raband or smuggl d articles in commercial quantities into or from any Philippine port or place. The mere carrying or holding on board of contraband or smuggled articles in commercial quantities shall subject such vessel, vehicle, aircraft or any other craft to forfeit ure, Provided t hat the ves se l, aircraft or any other craft is not used as duly au th o rized commo n carri e r a nd as such a carr ie r it is not chartered or leased ; XXX XXX XXX 1 ~ ) ,-1I

DECISION - C.T. A. CASE NO . 4479 - 6- ) (k ) Any conveyance actually bei ng us e d for the transport of articles subject to forfeiture under the tariff and customs laws, with its equipage and appurtenances inc l uding the beast , steam or other motive power drawing or p ropelling t h e same. The mere conveyance of contraband or smuggled artic les by such beast or vehicle s ha l l be suff i cient cause for the outright seizure a nd confiscati on of s uch beast or vehicle, but the f orfe iture shall not be effecte d if it is established t hat the owner of the means of 92nveyance used as aforesaid, is engaged a s common carrier and not chartered or l e a sed, or his a2ent in charge thereof at the time, has no knowledge of the unl a wful act, ( Unde scoring suppli ed) XXX XXX XXX SEC . 2531. P oper ties Not Subject to Forfeiture in the Absenc e of Prima Facie Evidenc~. - The fo r f eit ure of the vehicle, vesse l , or aircraft s hall not be effected if it is established that the owner thereof or his age n t i n charge of the me a ns of conveyance used as a for esaid ha s n o knowledge of or p ar tic i eation in the unlawful acts Provided, however, That a pri ma fa c ie presumption shall exist against the vessel , vehicle or aircraft unde r a ny o f the f ollowi ng ci r cumstances: 1. If the conve ya nce has been used f o r smuggling a t l eas t twice before; 2 . If th e own er is not in th e business for whi c h t he conveyance is generally use d; and 3 . If the owner is not f i nancially in a position to own such c onveyance. The Petition for Review pos i ts the theory that the Petitioner with the s ubject ten- wheeler truck is a common carrier and that he and/or his agent has no knowl e dge o f t he unla wful ac t, th erefo r e, exempt from 1 ) �~,~ ~ i

DECISION - C.T.A. CASE NO . 4479 - 7- forfeitu re under Section 2530 (k) which is further buttre sse d by Section 2531 of the Tariff and Customs Code. Respondent, however, admitted that claimant while holding his truck as public utility is not a holder of a certificate of public convenience and hence, does not fal l within the purvi e w of "common carrier" as contemplated under the law. The defense of lack of knowledge by the owner/agent in charge at the time is, according to the Respondent, al so unavailing citing the case of Commissioner of Customs vs. Court of Tax Appeals, et al. G.R. No . L-31733 dated September 20, 1985 (sP.e Respondent's Memorandum , CTA Records p. 321). The Civil Code defines "common carriers" in the following terms: Article 1732. Common carriers are pe rsons , corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public. In the case of Lastimoso v. Doliente, 58 OG 5905 it sets out the distinctive characteristics of a common carrier which are: (1) that he holds himself out as ready to engage in the transportation of goods for hire as a public employment, and not as a casual occupation; and (2) that he undertakes to carry for all persons indifferently, within the limits of his capacity and

DECI S ION - C.T.A . CASE NO. 4479 - 8- the s phe re of the bu s iness require d of h im, so t ha t he is bou n d to serve all wh o apply , a n d is liab l e for r ef u sa l, wit hout suffi c i e nt re aso n, to do so . One can take notice, therefore, t hat t he Civil Code and the existing jurisprudence do no t make any distinction with regard to whether or not a certi f icate of public convenience (specifically on motor ve hicles) is necessary for one to be considered a common carrier. Neither does t he Tariff and Customs Code make any such distinction. In fact under Section 2530 ( k ) it provides: � ��� but the forfeiture shall not be effected i f it is estab l ished that the owner of t he mean s of c on veyance u sed as aforesaid, is engaged as c ommon carrier and not charte r ed or leased ... � It is admi tted , however , that under Section 2530 (a) , it provides: "Provided , that the vessel, aircraft or any oth er craft i s not used as duly authorized commo n car rier and as such a carrier it is not chartere d or leased 1 " (Emphasis supplied). But a careful anal ysis of the quoted article reveals that although inde e d i t made such distinction, meaning that the "common carrier" should be "duly authorized" f or it to be exempted, yet such distinction does not inc lude "vehicle". It only enu merated "vessel, aircraft or any other craft." We think the legislators intentionall y

DECISION - C.T.A. CASE NO. 4479 - 9- omitt e d the "vehicle " fr om a mo n g those to be considered as " dul y authorized co mmon ca rri e r." Settled is the ru 1 e on s t a t u t ory cons t r ue t 1. on that wh a t the law do~~ ~- not include, it nece ss ar i ly ex cl u des . We cannot inject a different interpre t a t ion on what is otherwise the clear import of law . Thi s i f urth r buttressed by the fact that under S ction 2 53 0 (k) the word s "duly authorized" are n o longer a p pende d befor~ the words "common carrier", and, hence, when the vehicle is used as such, it should be exempted from forfeiture. In the case at bar, uncontroverted is the fact �' that the Petitioner is a common carrier having declared himself to the government as such (Exhs. 1, to 12-k inclusive). Hence, he should be exempted from forfeiture. F~rthermore, herein Petitioner does not have knowledge of the unl awful import a t ion o f the garlic. This finds support in the fact that the loading of the alleged imported garlic was done under ordinary circumstances in broad daylight and in a public place (in f a c 1: , a market pla ce ) whi c h coul d never r a i s e any suspicion from the Petitioner and/or his agent. It is worth taking note that it is not easy to distinguish an imported garlic from a locally produced one. In fact, the government's witness Ruperta P. Donato, Supervising

DECISION - C . T.A. CASE NO. 4479 - 10 - Hort icu ltu ris t a n d Ch i ef of Vegetabl es and Legume Cr op Sectio n of th e Bu re a u of Plant Industry, made it c l ea r t h at it t akes e xperti se to be able t o d i stingu \~h i mp or t ed var i eties from lo c ally produc e d ones. Said Mr . Don a to dur i ng the customs hearing of De c e mber 2 8, 1988 : A'l'T� . DE HESA , Q . And it � was yo ur ex perti s e on the s ubject o f growing ga r l ic t hat made it easy for you to come into a conclusion that the garlic were of foreign origin? A. Yes sir. Q. As a matter of fact you made use of your knowledge and experience you have gathered and earned i n the performance of your fun c tion as superv i sing horticulturist in coming to a conclusion that this garlics were of foreign origin, am I correct? A. Yes sir. Q. You will agree with me that every person will not have s u c h an easy conclu s ion con s ide ri ng th at fact your co ncl usion is out of your expert ise ? A. If you are no t a n e xpe rt along the line probably, but for this one I am definite that this is imported garlic. Q. Are you telling the Honorable Collector that if one is not an expert, he may not be able to say easy that one garlic is imported or locally produced? A. Yes sir. HEARING OFFICER: Counsel for Mr. Marasigan.

DEClSION - C.T.A. CASE NO. 4479 - 11 - ATTY. MANALO: ( To the witness) Q. So in other words, it is not easy to differentiate a locally produced garlic from an imported garlic by just looking at th em ; it needs expert knowledge, is that correct? A. Yes sir. (T .S. N., December 28, 1988, pp.S-10 ) Accordingly , since neither the Petitioner nor his driver as an expert on garlics then it would be too much to exp ect fro m th em th knowledge that the garlics were imported. In fine, it is deduced that the Petitioner had no knowledge that the garlics were imported, much less smuggled. The case of Co mm issioner of Customs v. Court of Ta x App e als, 138 SCRA 587 relied upon by the Respondent is not on all fours with the case at bar and hence, not applicable. In the cited case, the Supreme Court ruled that "a ship found smuggling blue seal cigarettes is subject to forfeiture even if the owner thereof clai ms he does not know such illegal use ... " But a closer reading of� the cited decision reveals that there are in the facts of the case concomitant circumstances leading to a reasonable conclusion that the person in charge of the vessel had knowledge of the commission of the illegal act. The Supreme Court observed, thusz

DECISION - C.T.A . CASE NO. 4479 - 12 - "Th' claim of private respondent that while the crew memb ers of the vessel were fis h ing , all the fishing nets were destroyed an d that he was e ven notified in this regard is hardly convinci ng. It ma y be possible that while in t he cou rse of catching f1sh, , one or t wo fi shing nets may b e destroyed . ' But the de struction of all the fishing nets at the same time is highly i mp roba ble. Furthermore, private respo ndent reported to the Phil ippin e N vy inste d of the Coast Guar d that his vessel was missing, only after a la p se o f s i ~ ( G) d a ys from the time he was ' nfo med of he a l l ged d stru ction of all the fishinq n et , Co ld i t be th t 11 those notif - aat ion of des truct on of fishing nets eventua lly o f the loss of vessel ar~ just a part of a scheme t o prevent th vessel from any liabi l ity should, as it happened in thi s case, it be intercepted by the authorities? The i nsistence of Jose Joloc, captain of the ves sel t hat the boat could not be brought back to Manila due to bad weather is not supported by evidence. No weather report in Mindoro was ever presented during the hearing of the case. His insistence becomes even more dubious by the fact that he agreed with Fructuoso Maniego to load the latter's fishes on board M/B "Maria Victoria - P" when the alleged fishes were even out at sea aboard an alleged disabled boat . It is unbelievable that he could risk going out to sea to load the fish cargo of Maniego in the midst of the storm, but could not sail back to Manila. Taking all these circumstances, the conclusion is inevitable that the vessel was n o u~ ~ d in catching fish but was useq in the smug gling of b lU@ seal cig rettes,� Hence, "the acts of the master and crew, in cases of this sort, bind the interest of the owner of the ship, whether he be innocent or guilty." (U.S. v. Steamship "Rubi" 22 Phil.239). When the Supreme Court applied Section 2530 (a) and (b) ruling that "the aforequoted

DECISION - C.T.A. CASE NO. 4479 - 13 - provision prescribes in an unequivocal term the imposition of the penalty of forfeiture in cases of unlawful importation of foreign articles regardless ~f whether such importation with or without the knowledge of the owner of the vessel" (Commissione~ of Customs v. Court of Tax Appeals, ibid.), should not be indiscriminately applied to all cases of the same nature but of different facts and surrounding circumstances. To do otherwise, therefore, would render Section 2530 (k) and Section 2531 inutile and nugatory. We believe it should not .be so. Moreover, in the same Commissioner of Customs v. Court of Tax Appea ls ca se ; relied upon by t he Respondent, the v ssel subject of the forfeiture was not a co mmon carri er falling as an exception under paragraph k of Section 2530 . Additionally, blue seal cigarettes are easi y recognizable as imported goods as compared with garlics . Petitioner's lack of knowledge on unlawful importation of the garli c loaded in hi s truck only fortifies his exemption from forfeiture because of his being a comm on carrier under Section 2530 (a) and (k). This lack of knowledge on the unlawful importation finds support under Section 2530 (k) and 2531. 1 '{ r I �=!

DECISION - C.T.A. CASE NO. 4479 - 14 - A contrary interpretation on the foregoing Sections would render said sections nugatory and prejudicial against the interest of an innocent par~. This is so since forfeiture is a harsh measure and should be resorted to only with extra care. All doubts should be resolved in favor of the taxpayer. WHEREFORE, in all the foregoing, this Court hereby RESOLVES to reverse and set aside the Decision of the Commissioner of Customs dated Septembe r 8, 1989 and ORDERS the release of the ten-wheeler truck with Plate No. T-PBM 365 to herein Petitioner. SO ORDERED. Quezon City, Metro Manila, December 24, 1993 ~'~ ERNESTO D. ACOSTA Presiding Judge WE CONCUR: GRUBA Judge ~~~ RAMON 0. DE VEYR Associate Judge

DECIS I ON - C.T.A. CASE NO. 4479 - 15 - CERT I F I CAT I 0 H I hereby certify tha t the decision was reached after due consultation among the me mbers of t he Court of Tax Appeals i n accordance with Section 13 , Article VIII of t he Constitution. /amf ~. ~~~ ERHESTO D. ACOSTA Pre s iding J udge Court of Tax Ap peals �'