CTA Case No. 2210 (Decision)

I ,'\J!:PUBLIC OF THE PHILIPPIN& COURT OF TAX: APPEALI QUEZON eiTY TONAS VEI;ASCO, . CTA CASE NO. 2210 Petitioner, versus COHivliSSIONER OF CUSTOMS , . Respondent � X- - - - - - - - - X DE C I S I 0 N Petitioner Tomas Velasco appealed from the decision of Commissioner of Customs Rolando G. Geotina dated January 21 , 1971, ordering the for - feiture of the vessel 11Sta . Juliana Xrt1 and the 1, 147 s�?cks of coffee beans for alleged violation of Republic Act No ~ 2712, in relation to Section ~ 2530(a), (b), (c) , (f) and (m-1) of the Tariff and Customs Code . Petitioner , however, interposed no appeal with respect to the forfeiture of various I perfumes (Siboleys , Santalias, Matadoyong) , play- ing cards , Batik cloth, hair sprays , watches, vanishing creams, beans , ~ umbrellas , etc . found on board "M/V Sta. Juliana XI 11 under Nanila Seizure Identification No. 11360. Both parties submitted the case for decision on the basis of tbe testimonial and documentary evidence submitted to the Bureau of Customs during

.' DECI3ION CTA CASE NO . 2210 2 the administrative hearings thereof . The pertinent facts of this case as borne by the records are as follows: 1. At about 7:00 o' clock in the evening of December 14, 1969 , while the vessel 11Sta . Juliana XI 11 was docked at Pier 4, North Harbor , Hanila , a Philippine Navy Patrol Craft tied along the star- board side ' and the agents of the Anti- Smuggling Action Center (ASAC) and members of the Philippine Coast Guard boarded said vessel and ordered that / it be brought to the Phiiippine Navy Basin , Roxas Boulevar d , Hanila; 2. Thereafter , some member s of the crew were investigated and the vessel 11Sta . Juliana, XI 11 1:Jas searched by the raiding team , ,resulting in the dis - covery of various articles consisting of assorted perfumes, playing cards , Batik cloth, hair sprays , watches , vanishing creams , beans , umbrellas , etc . ; 1, 1'47 sacl{S of coffee be~ns; and pertinent papers and documents relative to the said vessel and its cargo; 3 . vlarrants of seizure and dte tention were issued and seizure proceedings instituted against said vessel and its cargo on December 17, 1969 and Jan- uary 5, 1970 , under Manila Seizure Identification Nos. 11360, 11360- A and 11360- B;

I .. DECISION CTA CASE NO . 2210 3 -4 . The seizure proceedings against the ves- sel and its cargo \vere jointly heard at the Law Division of the Nanila .Customshouse . The hearing officer of said Division, Atty . Raymundo Kendoza , recommended the release of both the vessel and its cargo as embodied in the draft of a decision dated Ju~y 17 , 1970; . 5. The recommendation contained in the said draft of the decision of the Law Division of the Hanila Customshouse \vas not adopted by the Col- .. lector of Customs of l'�1anila who ordered the for-: feiture of the vesseliiM/V Sta . Juliana XI" and its cargo for alleged violation of the provisions of the Tariff and Customs Co' de and Republic Act No . 2712; and 6 . The decision of the Collector of Customs of Manila was sustained by the Commissioner of Customs on appeal . Tne decision , therefore, ~f re- spondent was ~ppealed to this Court _with respect to the forfeiture of the vessel and the 1, 147 sacks of coffee beans . During the pendency of the appeal , this Court ordered the release to petitioner of the vessel . uM/V Sta . Juliana XI 11 on March 10, 1971 after the filing and approval of a surety bond of ~36 , 000 . 00

DECISION - CTA CASE NO . 2210 4 to guarantee t,he payment thereof in case the said vessel is finally declared forfeited to the Govern- ment . There are three (3) issues submitted to the Court for resolution, namely: 1. v~ether or not the 1,147 sacks of coffee beans were imported from Labuan , Sabah, Malaysia , in violation of Section 2530(f) of the Tariff and Customs Code, in relation to Republic Act No . 2712; 2. Whether or not the 11H/V Sta. Juliana XI " had been used in the import~tion of various merchandise and 1,1 47 sacks of coffee beans , in violation of Section 2530 (a), {b) and (c) of the Tariff and Customs Code; and � 3 . vJhether or not Sabah, Malaysia , is a part of the Philip- pine territory under the provisions of Republic Act No . 5446 , which was approved on -September 18, 1969 , for the purpose of determining whether or not there was importation in violation of law� .. The provisions of 'law alleged to have been violated by petitioner are the following: I I . SECTION 2530 . Property Subject to Forfeiture Under Tariff and Customs Laws . - .m. Any article sought to be imported or exported: (1) Without going through a customhouse, whether the act was consummated , frustrated or attempted; II . Republic -Act No . 2712 , the pertinent provision �of which provides : �-

DECISION / CTA CASE NO . 221 0 5 SECTION 1 . The importation of roasted coffee beans, roasted ground coffee , instant or soluble coffee in powder form,- extract or concentrate in 11quid form or finished coffee product� in any form , raw coffee bean$ of the robusta , excelsa and liberica " ~arieties , is hereby prohibited: ����� � III. SECTION 2530 . Property Sub- ject to Forfeiture Under Tariff and Customs Laws . - (f) Any article of pro- hibited importation or ex- portation, the exportation or importation of which is effected or attempted con- trary to law, and all other articles which, in the opinion of the Collector , have been used , are or were intended to be used as instrument in the importation or exporta- tion of the former . IV . SECTION 2530 . Property Sub- ject to Forfeiture Under Tariff and Customs Laws . - Any vessel or aircraft, cargo, articles and other objects shall , under the following conditions , be sub- ject to forfeiture: a . Any vessel or aircraft, including cargo , which shall be used unla't.vfully in the im- portation or exportation of � articles into or from any Philippine port or place ex- cept a port of entry; any � vessel which , being of less than thirty tons capacity shall be used in the importa- ation of articles into any Philippine port or place ex- cept into a port of the Sulu sea where importation in such vessel may be authorized by

� DECISION - .. CTA CASE NO . 2210 6 the Co~~issioner , with the approval of the Department head . b . Any v~ssel engaging in the coastwise trade which shall have on board any article of foreign growth, product or manufacture in excess of the amount neces- sary for sea stores, without such articles having been properly entered or legally imported . c . Any vessel or air- craft into which shall be transferred cargo unladen con- trary to law prior to the ar- rival of tne importing ves- sel or aircraft at her port of destination. Respondent Commissioner of Customs contends that the disputed 1,147 sacks of coffee beans � were illegally imported from Labuan, Sabah, Malaysia , sometime in the first v1eek of Decel!lber 1969 on the basis of the testimonial and documentary evidence presented by the Government , to wit: 1. Testimonial- a . Taja Salahudin b. Adjibon Abdugafar (Hadjibul Abdul -~ apal) � Both witnesses testified that about the second week of Novembel"', 1969 , they v1ere crew members of the ve-ssel 11M/V Sta . Juliana 11 which sailed from Ricodo, Zamboanga City , to Labuan, Sabah, Ealay- sia; upon arrival thereat, the Customs officials . '

.' DECISION - CTA CASE NO . 221 0 7 took their pictures and told them to go to the Quarantine Office for inspection and vaccination; Hr . Velas co, petitioner her�ein, was in the wharf supervising the loading of the coffee ,beans on the vessel usta. Juliana" from the Teck Guan bodega; . together vli th other members of the crew they arranged the sacks of coffee beans and painted the said sacks to cover the markings , 11Labuan, Indonesia & Halaysia11 ; they loaded the cargo for two days, more or less, then proceeded to Nanila. after securing the necessary clearance papers from the Customs in Labuan; they stayed i ,n Nan- ila for about ten days and then sailed again for Labua.n , Halaysia , where they again loaded more than 1, 000 sacks l. of coffee beans under the direction and supervision of :t~ir . Velasco; they again painted the sacks of coffee beans to conceal the country of their origin; on both occasions, they saw the vessel 11Sitti .Amina.11 ; upon their second arrival in Ha.nila in the evening of December 14, 1969 , they were apprehended by the members of the Philippine Coast Guard and investigated in the Headquarters of the Philippine Navy vJhere they stayed for at least tw6 weeks; - an errand boy of Mr . Velasco brought food to them during their confinement; they escaped therefrom and went to

DECISION - CTA CASE NO . 2210 8 the vessel 11!-1./V Alfonso", another boat operated by Nr . Velasco; subsequently, Mr . Velasco in- � structed them to proceed to Zamboanga; and while therein Abdulgafar received ' a telegram (Exhibit 0) from Tommy (Tomas Velasoo) telling hi'm to hide to avoid apprehension by the authori t .ies . c . Alcan Amping testified and � declared that during the last days of Nov.ember, 1969 , he v.1as a cre\..r member of 11Sj_tti Aminan , a vessel char- tered by Velasco ; the vessel nsitti Aminalf vJaS . in Labuan, Sabah , for about twenty days, during which period he 1..ritnessed on two occasions that the vessel "Sta . Julianau arrived and loaded cof- .. fee beans und.er the supervision of Tomas Velasco; the crew members of 11Sta.� Juliana 11 painted the ' sacks of coffee beans; he sav1 Abdulgafar �at the wharf in Labuan; their vessel 11 Sitti Amina 11 left Labuan without cargo because there v1as scarcity of coffee beans in I.abuan; and they v1ere told by Velasco to load blue seal cigarettes instead of coffee beans but the patton of their vessel re- fused to comply with said order; d . Captain Orlando Trinidad testified that he personally discov.ered the documents (Out,vard Hanifest , Exhibit U- 3), EKport Declara- tion (Exhibit U- 13) , and Crew List (Exhibit U- 7) ,

DECISION - CTA CASE NO . ~21 0 9 all of Halaysian origin hidden inside a compart- ment of the crew together with the assorted per- fumes , ,playing carcls , Batik cloth , hair sprays~ ,,'latches, etc .; e . Francisco Reyes , l�farcelo Tomagos and Manuel G~cia testified that a cablegram (Exhibit � s ) was sent by Te ck Guan and Co ., Ltd. of Labuan , Sabah , to Tomas Velasco , offering the sale of coffee beans at ~ 1 58.00 per bag; and a certain Tomas Chua of -483 Juan Luna , Binondo , l~anila (with Telephone No . _4-51-49) subsequently replied by cablegram also (Exhibit T) thru Eastern Exten- sion Australasia and China Telegraph Co . , Ltd ., �' offering a counterprice of �15@. 00 per bag of coffee �beans; f . Juan Orendain, Acting Detachment Com- mander , Bureau of Customs , in Rio Hondo ~ Zamboanga City , testified that his signature in the ~oasting. Manifest (EY.hibit 33- C) was a forgery ; and he ~'las tricked and misled into signing a certificate that the 11!1/V Juliana XI" arrived at Rio Hondo , Zamboanga , �on December 8 , 1969 and left Port loaded with cargo on December 10, 1969; g. Juanito de la Cruz , a PC Sergeant declared that he acted as int-erpreter of Ling Haw Kee, Manager , Beneficial Export Corporation , when

DECISION - CTA CASE N0 . - 2210 10 the afftant made a sworn statE?rnent before Asst . Fiscal Cornelio Hasan of Quezon City denying the reported sale of local co~fee beans to Velasco (pp � .596- 604- , t . s . n . , Folder No . VI I~ Customs rec . ) . However , Ling Haw Kee refused to testify during the administrative hearing (pp . 200~208 , t . s . n . , Folder VI, Customs rec . ); h . Aveline Tan, errand boy and confidante . o~ petitioner declared that he was paid � 1,000 ~ 00 per trip of the vessel'Bta . Juliana . 11 He testi- fied on the modus operapdi of petitioner in his previous illegal importations of coffee beans from Labuan , Sabah; i . J.acoba Tirona Vda . de Paterno , an experienced coffee planter and producer , declared that, after analysis of the coffee beans , she found that it was of the Robusta variety; said coffee beans were processed by the wet and dry methods; t hey were loosely packed to allow expan- sion while in transit; the sacks containing the coffee beans were new and larger than the sacks locally manufactured; and she admitted that the Robusta variety of cofiee is also extensively grown in the Philippines and that it v1as hard to differentiate locally grovm coffee beans from those of foreign origin;

.. DECISION - CTA CASENO . 2210 11 j . Constancio Sepulvida; Philippine Navy photographer, testified that he took pictures of the vessel 11H/V Sta . Juliana XI 11 and of the sacks of coffee beans with its foreign markings 11Labuan, Indonesia, Malaysia 11 and~ 11Robusta cJfee � - 20- 25% Produce of Indonesia, Nilakandi 11 ; k . Vicente�Cunanan, assistant to the Un- dersecretary of Foreign Affairs , testified that the Anti- Smuggling Action Center (ASAC) req~ested for attestation and authentication of Nalaysian shipping .documents found and seized from the .ves- sel 11Sta . Juliana XI-11 but the Ninistry of Foreign . Affairs of i:tlalaysia refused the issuance to the ' Philippine Government of the certified true copies of the Out1.vard ]v1anifest (Exh . U- 3), Export De- claration (Exh . U- 13) , and Crew List (Exh . U- 7) on the ground that compliance therewith would be in conflict with the law.of Halaysia under Offi- cial Secrets Ordinance � of 1950 (Exb& JJ- 1 and JJ- 2 , �PP � .168- 170, Folder V of the Customs rec . ; pp . 2123- 2131 , t . s . n ., Folder X, Customs rec . ); and 1 . Atty . Sigefredo Alcala , one of re- spondent's lawyers , identified a letter written by petitioner to General Cruz of _the ASAC claim- ing ownership of the 1, 147 sacks of coffee beans loaded on board the 11Sta . J'uliana XI 11 (Exh. Q, )

DECISION - CTA CASE NO. 2210 12 p. 19 , Folder v, Customs rec . ; p . 551 , t . s . n., Folder VII , Customs rec . ) . 2. Documentary - � a . Outward Hanifest (Exh . U-3) b . Crew List (Exh . U-7) c . Export Declaration (Exh . U- 13) d . Cablegram from �Teck Guan and Co ., Ltd . to Tomas Velasco (Exh . S) e . Cablegram from Tomas Velasco to Chua Teck Guan and Co . , Ltd . � (EY.h . T) f. Contract of Lease between Soledad Santos and Tomas Velasco Chua (Exhs . FF & FF- 1) g . Letter of Tomas Velasco Chua to Soledad Santos terminating the lease contract (EY~ . FF- 2) On the other hand, petitioner submitted the following testimonial and documentary evidence , to wit: Testimonial - 1� . Tomas Velasco testified that he is en- gaged in the business of buying and selling coffee beans and copra at Zatnboanga City; he is the ~ovme~ of Terra-Har Trada:; .he and his wife _are stockholders of the Beneficial Export Corporation; both firms are engaged in buying and selling coffee beans and copra; the vessel 11Sta . Juliana X"IJI 11 1.vas leased by him from the Santos- Gamboa Development Corporation to ferry his cargo of coffee beans from Zamboanga to H~nila; provisional permit was given by the Third Coast Guard District� at Zam- boanga to convert said fishing vessel to a cargo

DECISION - CTA CASE NO . 2210 13 vessel; subsequently , said vessel 1.vas found to be unseaworthy and was returned to Santos-Gamboa i Development Corporation for repairs as a s'ubsti:- tute , he purcha~ed the vessel 11S.ta . Juliana XI 11 on installment; it was allegedly cleared by the Manila North Harbor Authorities for a �trip to Zamboanga on December 1, 1969; said vessel ar- rived at the port of Zamboanga on- December 8 , 1969 where coffee beans were loaded on December fo , 1969; it left Zamboanga for Manila on the same date; and ~upon arrival at Pier 4 in the evening of December 14 , 1969 , it was boarded and apprehended by agents of the Coast Guard and ASAC; 2 . Francisco F� ernandez , Captain of the ves - sel 11N/V Sta . Juliana XI", testified that they left Manila on De cember 3 and arrived at Zamboanga on December 8 , 1969; the vessel 11Sta . Juliana XI!.! nhad been using the papers of the 11Sta . Juliana XVI 11 consisting of the Coasting Manifest (Exhs . 36 , 36-A, 36-B and 36- C) , Master ' s Oath (Exhs . 35, 35- A and 35- B) and Crew List ' (Exhs . 34, 34-A and 34-B) ; their destinations under the shipping documents were PalavJan and Basilan City , but he was instructed by petitioner Tomas Velasco to proceed to Zamboanga instead; in Zamboanga they \ ;.� l

DECISION - CTA CASE NO . 2210 14 loaded coffee beans under the supervision of a Chinese by the name of Kee; he was not able to secure a customs clearance in Zamboanga before they sailed for Manila on December 10, 1969 because their trip would be delayed; and upon their arrival at Pier 4 in the evening of December 14, 1969, agents of the ASAC and the q.oastguard boarded the vessel and ordered that the same 'be brought to the Philippine Navy Basin, Roxas Boulevard , Hanila; 3. Claudio Candelaria, a mechanic , testified that he was a crev-1 member of the vessel M/B Alfonso; on the nigh~ of December 14, 1969 , petitioner requested him to bring two companions to meet the vessel 11Sta. Juliana XI 11 ; he brought along Taja Salahudin and Hadjibon Abdul- gafar , also cre\v members of the vessel 1'1/B Alfonso , to meet the "Sta . J uliana XI"; and the three of them helped each other tie the ropes of said vessel when it arrived at North Harbor , Hanila; 4 . Exequiel Bafigayan , cover agent of the ASAC , declared that upon oral instructions of Col . Alpad he accompanied Atty . De Leon to the Bureau of Standards , Department of Commerce and Industry, Zamboanga City of- fice , to check on the certificate of inspection issued by Mr . Effendi Schuck , Standards Officer; said Hr . Scf?.uck , actually issued a certificate on the inspection of the said vessel; he said , however ~ that he did not notice certain erasures in the Certificate of Inspection (Exh � . 18- pe.ti tioner) vihich does not appea r in ~xhibit DD-2 for respondent based on )

.. DECISION - C'l'A CASE NO . 2 21 0 15 the file copy of the Bureau of Standards , speci- fically as to the variety of coffee which v1as erased from III- C to II- C and the date October 3Q was made to appear as October 29, 1969; he did not notice that the certificates of f~~iga tfon and inspection were for the vessel H/B Al- . fonso and not for 11Sta . Juliana Xrt'; and he got from Ling Kaw Kee, manager of Beneficial Ex- port Corporation, a certificate that Peregrine Miguel really ' sold coffee beans to petitioner Tomas Velasco sometime in October 1969; 5. Ruperto Arquillano, Assistant Nanager of the Santos - Gamboa Development Corporation, testi- fied that on October 26 , 1969 , petitioner Velasco rented the vessel 11Sta . Juliana XVI 11 ; said vessel was returned by petitioner on November 15, 1969 for being unseaworthy; in lieu of said vessel, ''Sta . Juliana X~ 11 was bought on installment by peti- tioner; no tran$fer of equipment was made from 11Sta . Juliana XVI" to 11Sta . Juliana XI 11 except the list of said equipment; and he attended to the re- pair of the vessel 11Sta . Juliana 1.'l!I 11 and the loading and servicing of fuel and oil on the ves- sel 11Sta . Juliana XI 11 by Esso Company; 6 . Atty . Ro+ando de Leon , petitioner ' s counsel declared that he secured the necessary ,

DECISION - . CTA CASE NO . 2210 16 license allowing petitioner to engage in coffee and copra business; petitioner Velasco and his vlife mvned around 30% of the stock of Beneficial Export Corporation; in October 1969, petitioner ' s business was in full swing because big quantities . of coffee beans were purchased from farmers and traders in Zamboanga and Basilan; he secured the certificates of inspection and fumi gation from the Bureau of Standards; the confiscated coffee beans were those purchased locally by petitioner in October , 1969; the shipment of said coffee \ beans to Manila 1-1as delayed because qf the ab- sence of a seaworthy vessel; petitioner Velasco informed him by telephone of the interception of the vessel 11Sta . Juliana XI 11 ; he communicated by � letter to Teck Guan and � Co . , Ltd ;., Labuan , Sabah , addressed to Hock Teck Hing, manager, for con- firmatibn or denial of the genuineness of the foreign �shipping docmnents found inside the said vessel (Exhs . U- 3, D- 7 and U-1 3); and said addressee replied that the said documents were spurious and fake . We find p~titioner ' s defense and alle gations to be tainted with illegality, falsehoods , and damaging inconsistencies . For instance , peti- tioner Tomas Velasco and Captain Francisco Fer- nandez , admitted that the vessel used by them

DECISION - CTA CASE NO. 2210 17 ( 11 Sta . Jul:tana XI 11 ) and the shipping do~uments consisting of Oath of Ea,sters, Crew List, and 11Ianifest (Exhs . 3.1, 32 and 33) carried by said vessel pertained to another vessel , the 11Sta . Juliana 1."VI 11 � By their admission , it is very clear that, from the inception of the voyage of the vessel "Sta . Juliana XI 11 , they have agreed and conspired to violate the l>larine and Customs Lat-TS by making it appear that the ves se 1 11Sta � Juliana XI 11 was duly provided with the required official papers and doct~ents when in fact it has none . Noreover , the vessel "Sta . Juliana XI" was neither provided ~ith a Certificate of Philip- pine Regis~ry nor a Certificate of Ownership . Furthermore, the said vessel was not licensed to engage in coastwise trade , the . same being a fishing vessel registered with the .Philippine Fisheries Commission . To soften the impact of Velasco ' s fault and misgivings, Capt . Francisco Fernandez gave the flimsy excuse ~hat the documents pertaining to the vessel 11Sta . Juliana XVI 11 were used by the vessel "Sta . Juliana XI 11 because the former ves - sel was unseaworthy; arid the two vessels 'l.-tere sis- ter sh:i.ps of almost the same shape , size and appearance; and the vessel 11Sta . Juliana XI 11 would \

.. I I DECISION - CTA CASE NO. 2210 18 only be used for a short period, thereby dispensing with the legal requirement of requesting the transfer of the shipping documents of the vessel 11Sta . Juliana XVI" to ''Sta . Juliana XI 11 (p.� 132'-t t . s . n . , Folder IX, Customs rec . ) . The alibi and justification of Capt . Francisco Fernandez for vtolating the marine and customs laws betray the height of his gross negligence and irresponsibility . As an experienced marine officer, Capt . Francisco Fernandez vJas a'\.vare of the strict requirements of the marine and customs laws; yet , not even a sem- blance of compliance was made thereto . He cannot understand and comprehend the assertion of Capt . Fernandez that the vessel 11Sta . Juliana XI 11 \lrould be used for a period of short duration, despite the fact that said vessel had already been bought by petitioner Velasco who had �already abandQned the lease of the vessel 11Sta . Juliana XVI" which was unseaworthy . This Court is further .astounded by the contradictory statements of Capt . Fernandez , petitioner ' s counsel , and petitioner himself, ~.vho alleg,ed that since Novem- ber 15, 1969 the vessel� 11Sta . Juliana XVI", \IThich was unseaworthy , had been undergoing repairs . Barely three days thereafter , a certificate of in- spection as to the seaworthiness of said vessel

.. DECISION - CTA CASE NO. 2210 19 was .issued in Zamboanga on November 18, 1969 (Exh . 40) . Another fact which baffles us is the presence of ring buoys at th~ vessel "Sta . �Juliana XI 11 despite the testimony of the Assistant Hanager, . Santos- Gamboa Development �corporation , that no equipment was ever transferred from the vessel 11Sta . Juliana XVI1t to tts sister vessel 11Sta . Juliana XI 11 � Aside from the foregoing inconsistencies and discrepancies , the official papers of the vessel ttSta . ,Juliana XVItt show that its ports of des tina ~ �~ tion were Palawan -and Basilan . After the appre- hension of 11Sta . Juliana XI 11 , Capt . Francisco Fer.:.. nandez declared under oath befor~ the Legal Divi- sion , Philippine Navy, that they passed by Palawan before proceeding to Hanila.. On cross examination , t~ hovJever , he repudiated his sworn statemand and alleged that the vessel "Sta. Juliana XP' pro- ceeded . directly to l\1anila without passing Palalt/an . To our mind , all th;ese inconsistencies and dis- crepancies are indicative of bad faith with the end in view of protecting and concealing the ne- ftt.l?ious and illicit importations of :r;etitioner Tomas Velasco . � To bolster the de$ense theory that the coffee beans seized from the 11Sta . Juliana XI 11 came, from � . ,...-""""'--' ( .13 lf

DECISION CTA CASE NO . 2210 ... 20 Zamboanga instead of Labuan , Sabah, North Borneo , petitioner presented invoices j_ssued by Benefi- cial Export Corporation to Tera - Mar Trader show- ing -that the confiscated coffee beans vJere pur- chased in Zamboanga . After evaluating the evidence for respondent, 1.ve are prone to give little weight ' to the documentary evidence of petitioner on this point . In the first place, petitioner Tomas Ve- -lasco is the sole owner of Tera- 1'4ar Trader and that petitioner and his iilife mvn about 30% of the stocks of the Beneficial Export Corporation. Their control and financial interests in the t\.;o (2) business firms cast a cloud of doubt that the alleged sales were at arms length in rel~tion to the confiscated coff~e beans . In the second place , Sales Invoices Nos . 000018 and 000019 shovl that the confiscated coffee beans were purchased on October 20 and Octo'Q~r _28, 1969, respectively (Exhs. 13 and 14), while the vessel 11Sta. Juliana XIr.� left Zamboanga for :tvfanila on December 10 , 1962, thereby giving rise to the probability that the � said- invoices refer and cover transactions other than the present one. And finally, Ling Haw Kee , Hanager of Beneficial Export Corporation, at first . signed and subscribed to a sworn statement \vherein he denied the delivery to pe~itioner of the coffee

/ DECISION - CTA CASE NO . 2210 21 beans covered by the said sales invoices and the receipt of payment therefor . Later on~ the said Ling Haw Kee refused to testify on the vJi tness stand by alleging that_he does not want to favor any of the contending parties . To substantiate the allegation that the con- fiscated coffee beans reall~r came from Zamboanga , petitioner Tomas Velasco submitted in evidence various papers and documents su~h as the Certi- ficate of Inspection issued by the Bureau of Stan- dards, Zamboanga City , allegedly signed by Effendi Schuck, Provincial Standard Officer (Exhs . 18, 18- A, 19, 19 - A, 20 & ~0-A), Charge Slip for In- spection, Certificate of Fumigation, Disinfection, etc . issued by the Plant Quarantine Office , Bureau of Plant Industry, Hegion No . 7, Zamboanga City (Exh . 22) and the Certificate of Inspection and Fumigation of Plant Naterials and Parts thereof for Domestic Hovement or Shipment (Exhs . 23 , 24 and 25). However , a careful examination and scrutiny of the said docurnents reveal that they \vere issued sometime on October 29 (Exhs . 20, 20-A and 25); October 30 (Exhs . 18 , 18- A, 19, and 19-A); October 22 , 1969 (Exhs . 22 and 23);' and October ~7 , 1269 (Exhs . 24) , or long before the cleparture of the vessel 11Sta . Juliana XI 11

DECISION - CTA CASE NO . 2210 22 from the port � of Zamboanga on December 10, 1969. Moreover , some of the certificates submitted in evidence refer to the vessel 11E/V Alfonso" and not to 11Sta. Juliana XI" CE~1s . 18, 18-A, 22, 23 and 24) . It was found in certain documents such as Exhibits 18, 18-A, 20 and 20- A _that erasures v1ere made therein by altering and classi- fying the coffee beans as Variety I_I- Grad:e C, in- stead of Variety III- Grade C as recorded in the official file of the Bureau of Standards . There is also a discrepancy in the number of sacks of coffee beans referred to in one of the above- mentioned exhibits compared "1i th the number of sacks of the confiscated coffee beans . Peti- tioner 1 s eYJ1.ibi ts sh01>1 that the total coffee beans purchased nu.rnbered 1,300 sacks while the confis- cated coffee beans amounted to 1,147 sacks only . A critical analysis and study of petitioner 's exl:libj_ts in relation to time element, reference , to a wrong vessel, erasures and alteration in the exhibits and the discrepancy as to the nv~ber of sacks of coffee beans imported and locally pur- chased disclose serious contradictions which lead us to believe that the docTh~ents submitted by pe- titioner in evidence refer to transactions other than the 1,147 sacks of coffee beans here at issue . 1)/� )

'. DECISION - CTA CASE NO. 221.0 / 23 To substantiate petitioner 1 s allegation that the vessel 11 Sta . Juliana XI 11 really docked at Rio Hondo, Zamboanga , and-loaded coffee beans thereat, petitioner pres�ented the unauthenticated certificate of Juan Orendain, Acting Detachment Comme;1nder , Bureau of Customs , . Rio Hondo , Zamboanga City , showing that the vessel 11Sta . Juliana XI 11 arrived in port at -Rio Hondo , .Zamboanga, on Decem- ber 8 , 1Q69 from Varadero Hecodo , \vi thout cargoes and lef~ port on December 10 , 1969 . without customs clearance but loaded with cargoes (Exh . 28 , p; 46 , Folder IV , .Customs rec . ) . It is alleged that the said Gertificate vJas issued upon the request of RASAC Agent Alejo Alvarez , Jr . RASA.C �Agent Alvarez , hor,.vever , denied during the administrative hearing that he requested the issuance of said certificate ~P � 2024 , 2025 , 2026 and 2037 , t . s . n ., Folder X, Customs rec . ) . In fact , Acting Detachm.ent Commander Juan Orendain of the Customs Office in Zamboanga categorically denied having made any handwritten entry in the Coasting l.Janifest giving c�ustoms clearance for the departure of the vessel 11Sta � .Juliana XI 11 (Exh . 33.. C) . He explained that he was not authorized to do so inasmuch as the authority to issue cus- toms clearance certificate per�tained to the I'l;:arine I

DECISION - CTA CASE NO. 221 0 24 Division of the Bureau of Customs . He likewise denied the contents of the certificate issued by him that the vessel 11Sta. . Juliana XI 11 was loaded v1i th cargo v7hen it left Rio Hondo , Zamboanga , for Manila on December 10, 1 96~ bec~use he was misled / by petitioner 1 s counsel who asked him to sign the certificate at the Bay View Hotel in the presence of petitioner when he was tipsy and without eye- glasses . In support of the denial , he explained that it was not possible for the vessel "Sta . Juliana XI 11 to enter the port of Rio Hondo even during high tide because said vessel is big and bulky and, therefore, it cannot enter said port . 'ile give credence to the testimony of Nr . Orendain that �not a single grain of the confist!ated coffee beans \.,as loaded by the vessel "Sta . J4liana XI" in Rio Hondo , Zamboanga , for h;is declaration is corroborated by the Customs radiogram made by then .Acting Commissioner Alfredo Pio de Roda , thru the Acting Chief, Legal Department , and the spontaneous answer thereto which readsas follows: NOVEMBER 6 , 1970 CUSTOHS COLLECTOR zw.f.BOANGA PLEASE VERIFY FROM YOlffi RECORDS WHETHER VESSEL STA . JULIANA CALlED AT RIO HONDO UNDER YOUR JURISDICTION ON DECENBER 10, 1969 CMA. itJHETHER IT LOADEb Al\iY CARGO CHA DESTINATION OF CA..BGO LOADED IF ANY CMA 1.A]l-IETHER VESSEL COMPLIED WITH I

DECISION - CTA CASE NO . 2210 25 ALL EXISTING HEQUIREMENTS Ul\lDER PRESENT LAviS AND REGUlATIONS STOP PlEASE HIRE YOUR REPLY DIRECT TO HEAD LEGAL DBFA.RT- :MENT THIS BUREAU SOONEST El\1) ACTING C0}1MISSIONER PIO DE RODA The radiogram reply of the Collector of Customs of Zamboanga reads as follows: - 111 1 550 NOV . TO BEAD lEGAL DEPT HIA FM COLt RAMIREZ ZAMBO CONPLIANCE TEJ.J COMM CUSTOMS EVEN DATE OUR RECORDS SHOvv VESSEL STA JULIAl\IA XVI DID NOT CALL AT RI.O HONDO UNDER THIS JURIS - DICTION ON DEC 10/ 69 STOP li'ALSE ENTRY HADE I:N CUSTOHS DAILY EVENT BOOK � T RIO H01TIO IS PRESENTLY SUBJECT OF I~NESTIGA TION BEING CONDUCTED BY THIS OFFICER END Orendain ' s testimony , although belated and delayed , is credible � and must be. given weight . The admission that he signed the disputed cer- tificate while he was tipsy 'and vJithout eyeglasses wo~ld only strengthen and aggravate the adminis - trative case already filed against him , thereby exposing himself to greater risk in the interest of truth and justice . Petitioner ' s claim that the Commissioner of Custqms disregarded the elementary rules of pro- . cedure in ac cepting the testimony of Mr . Orendain after the opposing parties have already submitted their resp~ctive memorandum , suffice it to state that the 11respondent Commissioner pf Customs ,

DECISION CTA C..llSE NO . 2210 26 acting admi.nistratively in revie\-1 of the Col- lector's decision, is nei~her bound by the techni- cal rules of evidence (Philippine Shipowner's Asso. v . The Public Utility Commission, 51 Phil. 957; 20 Am. Jur . 36-37), nor constrained by the technical rules as to the admissibility of proof (Interstate Commerce Commission v . Baird, 194 u.s . 25; 48 L. ed . 860) �� � � 11 (Javier Sulay, et al. , v . The Commissioner of Customs, and.the Collector of Customs, Jolo , Sulu, C. T.li . Case No . 1127, October 5, 1966) . Over and above the implausible evidence of pe.ti tioner:, we give credence to the testimonies of Adjibon Abdulga�ar and Taja Salahudin, be~ause their names appear in the crew list seized from the vessel� 11Sta. Juliana XVI" (Exh . U- 7) ;- they testified and admitted that they v1ere crew members of the vessel nsta . Juliana"; as members of the said crew they left Zamboanga City and proceeded ' to Labuan, Sabah; they testified that the confis- cated coffee beans were then loaded thereat under the supervision of petitioner Tomas Velasco; and they performed the job of painting the sacks of coffee beans to cover the markings of the country of their origin - Labuan, Indonesia, Halaysia .

,. DECISION - CTA. CASE NO . 2210 27 The testimonies of said witnesses were con- firmed by Constancio Sepulvida., Philippine Navy Photographer , who took pictures of the confiscated sacks of coffee beans after the apprehension 'of the vessel 11Sta . Juliana XI" . He corroborated the statements of respondent ' s witnesses when he declared that the sacks of confiscated coffee beans were ne1.vly painted and the original markings thereon were still legible as reading 11Robusta Coft'ee 11 , 20- 25% , Produce of Indonesia , Nilakandi , 11HCC Labuan11 (Exhs . I - 3 , I - 4, I - 5, I-7, I - 8 , I - 11, I - 12, I - 13, I -1 4 and I - 15) . The importation of the 1, 147 sacks of coffee beans is evidenced by the cablegrams sent by Teck Guan and Co. Ltd ., Labuan , Sabah , to Tomas Velasco , 433 Juan Luna St ., Binondo , l�'lanila , dated Dec.ember 1, ~969, wherein the former offered to the latter 100 tons of coffee beans contained in 1650 bags available on the 7th of December at the - rate of P158 . 00 per bag and asking confirmation of the acceptance of the offer by cablegra~ (Exh . s, p . 14, Folder v, Customs rec.) . In reply there - to-, Tomas Chua , 43:3 Juan Luna, Binondo , Hanila , sent a cablegram on December 2, 1969 accepting the offer of the seller at a lower price of ~ 150 . 00 �

.. DECISION - CTA CASE NO . 221 0 , ' 28 per bag because the price of coffee beans here (Philippines) has gone do-vm (Exh . T, p ~ 13 , F'older v, Customs rec . ) . Three vii tnesses, namely: Francisco Reyes, Harcelo Tomagos, and Nannel Garcia testified that the cablegram (Exh . S) was sent by Teck Guan & Co . Ltd . to Tornas Velasco; a certain Chua replied thereto (Exh . T) . and that these t-v10 cablegrams reached their destination and addressees for the reason that .there was no notice of non-d'elivery thereof as is the usual procedure in case cable- grams are not received . Nanuel Garcia , a mes - senger of Eas tern Australasia and China Telegraph Co ., Ltd . for 22 years , confirmed the delivery of the cablegram sent by Teck Guan of Sabah to 483 Juan Luna , Binondo , Ma__nila , upon failure to locate the addressee at l'iio .- 433 Juan Luna , Manila. However , the persons found by the said messenger at 483 Juan Luna, Manila , claimed that the cable- gram belonged to them . The receipt thereof was even acknowledged by the signa.ture 6f C. Masaka - yan . Petitioner , however , disclaimed that he has an employee by the name of C. Nasakayan . It would appear , therefore , that the recipient of the cable- gram is a fictitious person. On the contrary ,

DECISION - CTA CASE NO . 2210 29 ;it was shown that the person alluded to was the 'one 1<rho received the 11Hanifestation and Objection to Exhibits" relative to these proceedings (EY..hs . HH . and HH- 1) . ~lloreover , pe.titioner admitted and confirmed that his correct address was 483 Juan Luna, !v!anila , 1.<Jith telephone number 4-51 - 49 as stated in the cabiliegram (p . 1904, t . s . n . , Folder F, Customs rec . ) . The aforementioned cablegrams are, therefore , admissible in evidence . nA reply letter, coming in due course of mail, containing references showing k..11owledge of the first letter addressed to the party purporting to sign the reply letter is admissible , for the knm�m usual accuracy of the . government mail service vmuld have delivered the first letter correctly to addressee . 11A reply telegram i-s admissible for a similar reason; here resting on the kn01.1n usual accuracy of com- mercial telegraphic service � � �.� (Gray , Communication by Telegraph, � par . 135, cited by 3 Noran 460).,fl (Salonga, Philippine Law on Evidence , p . 722 , 1964 ed . ) Hhen confronted� with the cablegrams clearly indicating that the � 1, 147 sacks of coffee beans t-Jere -imported from Labuan , Sabah , petitioner tried to wiggle h~s way out of a tight rope by claiming that his real name is Tomas Ve~SQ~~ not Tomas Chua . The flimsy excuse of petitioner � \vas belied by t-..vo documents, namely ( 1) .Contract of Lease betv1een Soledad P. Santos and r1r, Tomas

.. DECISION CTA CASE NO . 2210 �� I V�lasco Chua executed on the 13th of November, 1969 for the lease of three a~jacent lots (Exh . FF); and C2) the letter of petitioner under the name Tomas Velasco Chua, da~ed January 6, 1970 , to Soledad Santos terminating the lease co.i1tract (Exh . J:i'F-2) . To strengthen and justify the contention of respondent that 1, 147 sacks of coffee beans \-.rere imported from Labuan , Sabah, and that the vessel nsta . Juliana XI II \-laS used in the importation thereof , Captain Trinidad of the ASAC testified that certain documents of Malaysian origin, name - ly: (1) Outward Manifest of the 'State of Sabah (Exh . -U- 3) ; (2) Export Declaration (Exh. U-13) ; "' ' and (3) Crew List (Exh . U- 7) were seized from the compartment of the said vessel immediately after its apprehension. The contents of the foregoing documents over- throw and �render ineffective the defense of peti- tioner Tomas Velasco that the disputed coffee beans were purchased locally . The said documents con- tain the following description and information, to vii t: (1) Outward Nan;i.f�st (Exh . IT-3) . It bears the letterhead "State of Sabah11 � It contains the follow- ing data: Name of Vessel - M/V Sta . J lllliana; Agents -

.. ' DECISION CTA CASE NO . 2210 31 Teck Guan & Co . Ltd . , (Labuan); 1/'Jhither Bound - ." Sambuoanga , P. I . ? Date of Departure - 4- 12-1 969; From Port- Labuan, Sabah; Quantity - 1,147 sacks cqffee seed . (2) ' Crew List (Exh . U-7) . It gives the follow- ' ing information: Name of Vessel - Sta . Juliana; Left Labuan - 2-1 2- 1969; To - Sambuoanga , P. I . ; the names of ;Abdul Gapol (Hadjibon Abdulgafar) and Thaha Salahudin appear therein as crmv members . (3) Customs Ordinanc~ (Cap . 33) and' Export Declaration (Exh . U- 13) indicate the name of the exporter as Teck Guan & Co . (Labuan) Ltd ., Labuan; Name of Ship - M/V .Sta . Juliana; Date of Export - 4-12-1 969; Quantity - 1, 147 sacks unroasted coffee . The contents and information given in the aforesaid documents (Crew List , Outward Manifest , and Export Declaration) tally with the facts in this case , namely: 1. The exact quantity of coffee beans seized - 1 ,1 47 sacks; 2 . Nrune of vessel - Sta . Juliana; 3. Name of� agent or seller - Teck Guan & Co . Ltd . ; 4. Date of transaction or ship- ment - first week of December, 1969 ; 5. Members of the crew - names of Abdul Gapol (Hadjibon Abdulgafar) and Thaha Salahudin appear there - in; and

.. DECISION - CTA CASE NO � .2210 32 6. Destination of the vessel and its cargo �- Zamboanga where petitioner 1 s business interests are located . � Petitioner Velasco objected vigorously to the admission of the foregoing documents because . they were not authenticated by Malaysian officials � Suffice it to state that the said documents v1ere found immediately in on,e of the compartments of the vessel nsta . Juliana XI" during a iawful search . Petitioner neither que~tioned the legal- ity of the search and seizure nor brought an in- dependent court action for the return of the il- legally seized articles, papers and documents . Consequently , all the goods, papers and documents seized by the raiding team ar~ admissibl' in evi- dence (see Angel Nasiad , et al . v . The Commissioner � of Customs, C. T.A. Case No. 1855, April 25, 1968, doc keted in the Supreme Court as G. R. No. L- 29318; Perfecto Nalatbalat v . The Commissioner of Cus- toms , C. T.A. Case No. 2181 , April 18 , 1971; Stone- / hill v. Hon . Jose Diokno, G.R. No . L-19550, June 19 ' 1967). To refute and destroy the efficacy and validity of the contents of the foreign shipping documents, petitioner 1 s counsel submitted in evidence his letter to Hong Teck lUng, alleged l1anager of the

-� DECISION - CTA C SE No�. 2210 � 33 firm Teck Guan & Co ., Ltd . , and the reply thereto wherein the said manager claimed that the shipping documents in question 1r1ere fake . At the same time , petit~oner ' s counsel was advised to refer the aforesa, id shipping documents to the Acting Con- troller of Customs of Labuan , Sabah , �for verifi- cation . Said advice was not heeded by petitioner's counsel . At any rate , the said letters confirmed the genuineness of the controverted shipping documents because Hock Teck :r.ang noted and indicated at the lower part of the letter of petitioner ' s counsel the date of receipt as 3/3/70 and the date of reply as 7/ 3/70 following the British way of writing numerical dates , that is, the ~ first, the month second", and the ~ last (E~1 . 43 , p . 28, .Folder IV, Customs rec . ) in the same manner that the shipping documents in question were dated in the same numerical order . Petitioner assiduously contends that the Out-� ward Hanifest , Crew List, and Export De<;:laration must invariably be authenticated to prove their genuineness and due execution; otherwise , they are not admissible in evidence , in line with the provisions of Sections 25 and 26, Rule 32 of the Revised Rules of Court . In short, petitioner is invoking and relying on the strict application of I )

DECISION - CTA CASE NO . 2210 the t~chnical . ryl�� of eviq~nce . Unfortm1ately, petitioner failed to prove that the shipping documents in question were public or official re- cords . But even assuming arguendo that they were , still this Court, in ,the interest of truth and justice , is not bound. by the technical rules of evidence as exp.licitly pro-vided in Section 8 of Hepublic Act No . 1125 creating the Court of Tax Appeals . Section 2 of Republic Act No . �5446 , which amended Section 1 , Repl..l]),lic Act No. 3046, entitled 11An Act To Define The Baselines of the �r erri torial Sea of the P'nilippinesu- provides as follows: SECTION 2 . ~he definition of the baselines of the territorial sea �. of the P!li lippine Archipelago as provided in this l et is without prejudice to the delineation of the baselines of the territorial sea around the territory� of Sa bah , $it- uated in North Borneo , ever which the Republic of the Philippines has acquired dominion and sovereignty . The f oreg oing pr ovisions of Se ction 2, Re- pub~c Act No. 5446 , did not incorporate or make~ Sabah, North Borneo, a part of the Philippine territory . The said law merely contemplates that , in the event that the Philippines acquire.t domin- ion and sovereignty over Sabah, North Borneo, in accordance with the generally accepted pri~ciples of International Law , t here would be no necessity

DECISION - CTA CASE NO . 2210 35 of enacting another law defining the baselines of the Philippines. At present , the Federation of Nalaysia exercises dominion and sovereignty over Sabah , ) Jorth Borneo . Consequently, it is a foreign territory for all legal intents and pur- poses , unless the territorial claim of the Philip- pine Government thereto is recognized , admitted, and acquiesced by the Ivlalaysian Government. It may not be out of context to say that we are awed and impressed by the Herculean effort of petitioner to prove tha~ the 1, 147 sacks of coffee beans were purchased locally . After weighing , evaluating , and sifting , however, the mass of doc~~entary evidence and the 'voluminous records of testimonial evidence adduced by the opposing parties , we are constrained to sustaii?- the find- ings of Commissioner Rolando G. Geotina of the Bureau of Customs that the disputed 1, 147 sacks of coffee beans and also the articles of foreign manufacture consisting of assorted perfumes (Sibo- leys, Santalias, Hatadoyong), ' playing cards , Ba- tik' cloth , hair sprays, watches , vanishing creams , umbrellas , etc. were imported by petitioner in violation of la1.v . It follows, therefore , that the vessel 11Sta . Juliana XI 11 had been used in the

D 1'CISIOH CTA CASE ~JC . 2210 36 illegal importation fnto the Philippines'of the . articles 1erein mentioned . the decision of the respondent Commissionc.r of Customs appealed frorn is hereby affirmed . Accord:i_.ngly; the 1 ,1 47 sacks of coffee beans here in dispute are declared forfeited to the Government and shot1ld be dealt \vi th in accor - dance with lmlf . �,n th costs against petitioner . SO OHDERED � . Quezon City , Hay 5:-, 1971 . R~1ti.":i. -'NI.S:C..O ssociate Judge ~VE CONCUR: .. fL._ -~ ~ � RA~'ION t . i VANCEEA. ssociate Judge Ill