CTA Case No. 4310 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SENBA SHOKAI, CO. LTD. <Represented by it Attorney- in-fact Takash i Shi�izu>, Petitioner, - versus - C.T.A. CASE NO. 4310 COMMISSIONER OF CUSTOMS, Re!! ponde nt. X- - - - - - - - - - - - - X SENBA SHOKAI, COMPANY, LTD. <Repr s -nt d by its President Yo hitaro Okazaki >, Petiti on e t", - vet" s u s - C.T.A. CASE NO. 4322 COMMISSIONER OF CUSTOMS, Rer.p ondent. X- - - - - - - - - - - - - X DEC s 0N Thi s is an appeal ft'om th~ decision of t he Respondent t'endet' ed on November' 21, 1988 or"der~ing the for' fe it tn'e of twenty - eight <2 8> bt'and-�new and t' econditioned Nissan and Toyo ta vehicles of the Pe tit ione r for' alle ged violation of Section 2530 p aragt"aphs d, g, and 1, S'-lbpat'agr'aphs (3) , <4>, a nd 937

DECISION - C.T.A. CASES NO. 4310 & 4322. - 2- <5 ) o f t h e Tat' i f f and C us t o ms Cod e i n t' e 1 at i on t o Centt~al Bani-< Cit'culat' No. 10c:9. Petitioner is a corporatio n duly org a n ize d a nd ex i sti ng i.n acco t~dance with the laws of Japan and e ng aged as shi ppet'/supplirH~ of used t~econditioned ) cars with principal offices at 1563-1 Imajiku, Himeji, J�apan and is t'ePt'esente d i n CTA Cases No . 4310 by i ts ~)ttor�ney-in-fact Ta k as h i Shimizu (see Annex "B" CT(~ Case No. '+310) a t~ e side n t of Room 21 4 IY! abi.ni JYiansion, Mabini, Ermita, Manila. Subsequently anothet~ case was fi led by Senba Shol-<ai, Co. Ltd. by its Pt�esiden t designating Raymundo Caberte as Attorney-in-Fact <see nnnex ~~~~" CTA Case No. 4322 ). Bot h cases wet�e later on consolidated since the y invol v ed the sa me The facts c.w�e stated in the opinion of the c0 tn--t. Some�ti.me in UctobtH' of 1'38�::., the vessel "Mat'ia VII" left Japan laden with abou t 135 Lmits of motor v e h i c 1 e s a 1 1 o f wh i c h were d i s ct1 a t� g e d t o v a t� i o us i ndividuals in Rangon, Burma and a firm i n Colo mbo , St�i Lan~<a e><cept th e questioned twenty-eight <28 ) un i �t s which wet~e cn' d et�e d to be t�et ut�n ed to Japa n ' 93<1 ~

DECISION - C.T.A. CASES NO. 4310 & 4322. - 3- due to the inability of the consignee to open the proper letters of credit. On its way back to Japan, th e carrying vessel , upon instructions of the ship's owner, proceeded to ) Penang, Malaysia for refueling and to pr~ oceed to Pol""'O Point, La Union, Pt1ilippines for~ a change of cr~w since ' their co ntracts have already expil'~ed. While en t~oute to t h e Philippines b�Jt st i 11 in the vessel encoun-tered "boistr:ro \ !!'� " we athe r~ <see Note of Sea Pr~otest, Ex h. "II"> which floo d e d its engine room causing 't to run aground . Co min g to the vessel 's aid, the Royal Malaysian Navy on Oece mbet' 30 , 1986 to~oo1ed i t to ~<ota ~<inabalu, Sa bah, Mala y sia wher~e th e ve ss e l ' s m.;\ ster~ , Capt . Cr~ is p i t10 Mendoza filed with the h~rbor a uthoriti es there a sworn Note of Sea Pt~ot est (See Exh. "I I">. Soon thet'eaft et~, the owner~ of the vessel sent the R a n ge r~ I te..1gboat to undertake emergency repairs and e v entually towed it to lvJanila. 1o, 1987' upon arrival of the ve ssel in Manila, Capt. IV1 e ndoza handed to Collectot~ Na"r~ciso Y. Santiago, Jr. among a typewt'itten b~ansit ca t~go manifest indicating that the subject c~B units of moto t~ vehicles wet~e in � 938

DECISION - ) C.T.A. CASES NO. 4310 & 4322. - 4- tt"ansit to Japan <see Exhs. "MM" and "NN"> . Subsequently, an E><tension of Note of Sea Pt'otest was filed by Capt. Mendoza with the Bureau of Customs (see Exh. "JJ">. Upon learning the unexpected development on the voyage of the ves sel and the questioned transit cargoes, herein Petitioner sent a Letter Advice and Noti ce of Cl.;"~im on the Contt~ac t of Afft'eightmen t dated J'un e 1987 to the shipping company, Yasukuni Kauin <Hongkong> Ltd. de manding the return o f t h e s u b j e c t mo t o t' v e h i c 1 e s t o 0 sa ~< a , Japan and also claiming compensation for wh ate ver loss or damage as well as e><penses at'isi ng from delay or non �-act ion in releasing the cargoes (s ee Exh. "LL II). ln its eat'nest desit'e t o hav e the subject ship me nt its to Osaka, Japan, Petit i onet' th~"Ol.IQh Attorney-in-fact, Atty. c. s . Quintanilla requested Acting Collector of Custo ms, z. Port of Manila, Cesar Daria for t he clearance of the st.lbject v hi cles fa t' the ev ent tal reshipment to On J uly 17 , 1987 a Notice of Levy upon this subject vehicles wa s issued by the sheriff of 840

DECISION - C.T.A. CASES NO. 4310 & 4322. - 5- IVIanil a <see Exh. "QQ - :1.") ptwsuant to an Order~ of Attachment issued by the Regional Tr~ial Com~t of Man i 1a <see Exh. "QQ") in connection with the co mp 1 a i n t for~ s u m o f mon e y f i 1 e d by t h e Mast e r~ o.f distr~essed ves se l Manning and Management Cot~porat ion. However~ , on Sept em bet~ 3 , 1 '387, said Not ice of L_evy wa s 1 i ft ed and cancelled and considered of no force and effect after it was fotmd out that subject vehicles wet~e not owned by Y n ~Hd <1 " ' i. I( 8 i u n ( H o n ~ I<a n g ) l... t d � , . n d t h _t t ll e 1 .\i\ wf 1..1 1 owner was Senba Shokai, he rein Petitioner. It s hou ld be noted het~e that the same Mastet~ of t he distr~essed vesse l, Ca pt. Cr~ispino Mendoza, J nev er~ a ppealed his case ft~om the adver~se decision of the Respondent Commissioner of Customs but only to file a IY!otion Fat~ Leave To Intervene in this Cout~ t on October~ '3, 1'3'31 or al mo st three (3) yeat~s f t~ o m t h e t i me i t '-'1 as p t~ o mu 1 gat e d on No v e mbet~ 21 , 1'388. Such Motion wa s not acted upon by this Court , it appear~ing on that the supposed intervenor Capt. Mendoza was not inter~ested in hi s case. Another~ c laim ant in the ad mini s t r~ a t i v e level, the Ecosystem Foundation, Inc., l ikewise did not appeal to this B4

DECISION - C.T.A. CASES NO. 4310 & 4322. - 6- In the me,:lnti me, on f:h.1gust 1 ':3 , 1987 , des pi.te alleged su bm iss i o n of Bil l of L a d i ng a n d other co mm ercia l d o cu me n ts sho w i ng t hat the shipm e nt wa s not intended to a n y local cons i g nee, the sa me was seized and eventually fo r'feited , i n view o f the al l eged findi ng s of t h e Po ~� t Co l lec tor t ha t the s ub jec t c.::n'goes were tmnt anl.f'acp t d a nd th at t he re was <1:>\n .:.\tte mpt to e f fect i'' .l eet ~e of t he se iz ed vehic l ns t h ~ou~h fet ke doc u men t~ , and n p ursua nt to <3 ) , (.1~) a t'ld <5 > o f the T a ri ff and Cust om s Code , of the P h l i ppi ne s , t h us= "SEt.~ . ..~. ,�>1. 30 . P~~ opet~ ty S b,jec t T o Farfeitur� Und r Tar iff and Cu : tams Law. �- ( ny Y hi .. le V'fHlse?l o~� a i~~c ~ � f �t , c a rg o , cr' i I~ 1 �� ~ 1'1 d o t h tH' o b � c t s h ci\ 1 l , 1.1 11 d 1':! r t h e folltwi n y t~n dition s bi � je ~t to 'fnr" f , it .n-' 1 >< >< X XXX ) 0 0( d. (-)ny p;,n � t of th 1:\t' g o , s tot~es Ot' s uppli es of vesse l tH' airct�af t at�t�iving ft� om a fot�eign pot�t which i s unl a den before arrival at the ve ss el; s Ot' a i t� c t�a ft's port of destin a tion s a nd without authority from the c u s tom s officials; but suc h ca r go, ship OY' a it�ct� a ft s t ot�e s a nd s upply s hall not b~ forfeited if s u c h unlo a ding wa s due to accident, s t r es s of weather or other neces si ty and i s sub s equent 1 y approved by th e colle c tot~; X><X XX>< XXX 942

DECISION - C.T.A. CASES NO. 4310 & 4322. - 7- X X >< XXX XXX g. Unmanife s ted article fou n d in any ve ssel air�cr�aft if man ifest therefor i s required; X X >< XXX XXX XXX XXX XXX 1. Any artic le s ought to be imported or exported: (1) XXX XX X XXX XXX XX X >< X )( (3) On the st r�e ng th of a false dec l arat ion or af fid av it execL1ted by the own er�, import er , exporter or co nsi gnee concerning the imp ortatio n of such a r� ticle; (4 ) On the stre ng t h of a false invoice ot' othe r docum e nt executed by the owner�, importe r , exporter or co n signe e co nc erning the mportat ion o r exportation of s uc h art icle; and <5> Through a ny other p ractice ot~ devise co 11t r~ .::u�y to 1 aw by means of which such articles were entered through a customs-hou se to the prejudice of the go VlH'n ment . " r�equir� es a rnonn other's , �the s ubmi ssio n of Cent ral B an ~< autho~� it y to i mpot' t or t he nece ssary release certif i cate fr om th e Ce n tral Bank or its agen t bank �� 943

DECISION - C.T.A. CASES NO. 4 3 10 & 4322. - 8- auth<n~izi n g t h e t~e1ease of .:n~ti.cles impot~ted or brought into the country. On November 21, 1 '3BB, t he Com mi ssioner of C�..1stt1ms affit~med the decision of t t1 e Collector of Customs, th �.<s t <see Annex "A"> " T h e C o 1 1 e c t o t� , i n h i s d e c i s i o n , mai11tained that "the said mo tor vehicles wer' ~? not manifested in �the Inward Cargo Manifest of the vessel and that no shipping a nd c ommercia l docu ments covoring th~ said s h ipment were submitte d in due course as required by law and �t h u s , as " t h e cha t' g e s i mp l.l t e d a g a i n s t t h e mo t or v e t1 i c 1 e i n q u e s t i on h a v e n o t be en refuted , the sa me ha ve therefore incurred and liability of forfeit ure under the law". "Claima n t-I ntet� venot�-f-)ppellant on a p p ., .::d , a v tH' t' e d i n e s s en c e t hat t h e Co ll ector of manila erred in d isre garding th�~ evidentiat~ y ;a nd pt� oba tive value of t h �~ <1) B i 11 s of Lading and the Commercial Invoices it s ubmi tte d which co1.1ld have est.!i\blished the OWTH~t� ship of the vehicles an d their destination whi ch was Sri Lanka as well as t he (2) official report of the Chief, P ier Inspection Division of thi s Bm~e au, that the M aste t~ of �l:;he vessel s ubm itted amon g othet~s, a typ~~wt~itten Tt~ansit Ca 1�~ go tr1 a n i f e s t indica�l:;ing thC~t the 28 un its of motor vehicles on board were onl y in transit . "The fb�st at~g ument o f f-)ppel lant is unt ~nab l e. The . 1.1thent ici t y of the documents it ad v erted to a bove, which was not seasonably offet�ed as e v i.dence , was not i nd �.lbitabl y established, i n as mu ch Ds ~ ppellant wa s n ot able to i mp ugn Billr of Lading OM- 101 and OM-011 $Ub mitt ed by the pt�osecut ion and the Clai ma n t Amit"ul din Islam indicating that th e 28 vehicle s were ciestined fot� Mc:m ila and that the vessel and the cargoes were owned by Yasul<un i K:i un Co., Ltd. We cannot ~ 944

DECISION - C.T.A. CASES NO. 4310 & 4322. - 9- but cast doubt on the genui n eness of the f ormer Bills of Lading as e v e n the ma ster of the v esse 1 h im s e 1 f, whose privity in the s hipper-carrier relati onship was not remote , utilized the l a tt er Bills of Lading i n the pt~osecution of t1is claim for unpaid wa ge s. "The second contention of appellant i s a lso devoid of met~it . Alt hough it is conceded that the mastet~ of the v essel indeed submitted to the Chief of the Pier Inspection Division of this Bm~eau, the Transit Cargo Manifest disclosing that the su bject cargoes were in transit, it wa s also the sa id offic i a l who upon evaluation of the said doc u men t, concluded per hi s Memoran du m to the Di s trict Co lle ctor of the Po r t o f Manila dated 14 l'l'lay 1'387 ot~ be fo t~e the seizm~e of the vehicles, tha t the said Tt~ansit ca~~go Mani fest "did no t confor~m in s u bs 'tance and in fot'm with the requit~ed Tnansit Cat~go Manifest, t hus, it i s as if no Tr~ ansit Ca r�go Manifest wa s subm itted at all''. On top elf this, is the dam aging evidence on hand the Inward Cargo Manifest , submitted to the Customs authorities on the date of th e arrival of the vessel , which decl at~ed the contents of tha vessel as ' NIL CARGO'. "Thr.~ f'a c:t 'l:hus t~ e main , that the forfeiture of the seized vehic l es was legal and proper. The sh ipment was �,m man i f t~ s t e d , t h e en t t~ y o f t h e v e s s e 1 i 11 the Philipp i ne s allegedl y under stress was not s u fficientl y established, the s hipm ent was illegally unlad e n he reat, there was an attempt to re lease the importation th t~oug h f a~<e do cu me nts violations of the customs laws warranting the forfeiture of the RE S. "WHEREFORE , the forfeiture decision appealed from s hould be, as it is hereby AFFinMED ." Hence, t hi s appeal. :. �� 84fi

.' . DECISION - C.T.A. CASES NO. 4310 & 4322. - 10 - only issue to be resolvep is : whe ther or not there was violation of Section 2530 paragraphs d, g, and 1, s �.tb -pe:n~a gt~aphs ( 3) , <4>, and <5> of the Ti~wiff and Cust oms Code in re lation to Centt~al Ban k Cit~ culat~ No. 1029. We , howevet~ , can only resolve the issue after the follo wi ng que stions are alread y c leared: a) Was t h et~e an impot~ta t io n of th e s ubject vehicles discharged and unladen a t the P ort of Manila? b) Did the carrying vessel ar t~i v e undet~ stress of weather ? c> the Bills of Lading and othet~ com mercic.'l documents prese nted by Petition et~ authentic and not falsified in view of the He s pan d en t ' s t~ e 1 i an c e o f B i 1 1 s o f Lad i n g No � OM - 010 and ON - 011 submi tted by the othet~ c laimant Din Islam A1-Philippines, Inc.'? d> Wa s the que s tioned s hipment covered b y a Transit Cargo Manifest ? e > Wa s the sa me s hipment cove t~e d by I nwat~d Foreign Manifest? f) Was t h ere an attempt by the Petiti on er to have the ship ment re leased docum�?nts? 946

DECI S ION - & ~310 C.T.A. CASES NO. ~ 322. - 11 - T h f? an s wet' t o t h e f i t' s t q u e s t i rJ n i s i n t h e negative, the subject vehicles not being importation intended for the Port of Manila bt1t only t� r~t ur� n s hipment to J �. pan.. Impm� tation, gener�ally as well as et ym ologically, "consists of a voluntat� y bringing in of goods with intent to unlade the same" <Republic of Hawaii v. Flndet�s on, 10 Haw. 252) . "It tal<es place when the vessel at�t�ives at a port of entry , intending there .J to dischat�ge her cat�qo" CKidd v . Flagler�, 54 F. 3,7 , Undet�scot� ing supplied). In the case at bar, the fact of impot�tation was not established. On the contt�at�y, documentat�y evidences <Exhs. A to HH and thei.t� su b - m.:n� l<ings> , showed to the effect that all the 2 8 units of motor vehicles origi n ated from Osaka, Japan and the port of Discharge was Colombo, St�i Lanka. In shot� t, sai d motor vehicles were nevet� intended to be unladen in the Philippines. In fact, the pt�a yet� of the Petitioner wa s fat� the reshipm e nt of �the � cat�goes back to Osa~<a, Japan. Yes, thet�e was unloading of t h e subject vehicles but it was not illegal as it was upon the appro val o f the then Acting Distt� ict Collector of Cttsto ms z. Cesar Daria of the Port of Manila as embodied in his letter� to Deputy Shet�iff Melchot� Pena of the Hegion a l Tt' i a 1 Court of Ma nila Br�anch 94

DECISION - C.T.A. CASES NO. 4310 & 4322. - 12 - August 5 , 1987 wherein he informed the latter that th e discharge "may be effected at the pier at"ea with the coordination of the Philippi ne Ports Authority a nd the party in int et"est " <Exh. HR a nd it s s ub - markings>. Mot~eovet", the vessel ad mittedly arrived under stre~;s w st h �t-". This was s ufficiently establi s hed by the sworn Note of Sea Protest dated Decembet' 31, 198S filed by th ve ssel's master with aut horit ie$ of Kota Kinabalu, Sabah, Malaysia <seo EHh. I I II II } ... s w~ll as the sw orn Extension of Note of Sea Protest dated January 19, 1987 which he filed with the port authot"ities <see Exh. J"J and s ub -rna t~~<ings> . As such, Petitione r should n ot be liable unde r Section 2530 paragraph d of the Tariff and Customs Code. As succi n ctly put in .the case of Kisajit"O Okamoto v. Col l ectot' o f Customs, "t he right of asylu m f t'Om stt'ess of weather is a right well recogni zed by international law and is in accordance wi th the dictates of Christian ity . The only limitation is that t he weath er mu st be s uch as to crea te an hone st belief in the mind of a skil l ful and fir m mari ner" (60 Phil. 218, Ju 1 y 11 , 1934 >� That se tt les t h e sec ond question.

DECIS I ON - C.T.A. CASES NO. 43 10 & 4322. - 13 - l=ls to the thit~d que stio n, the Petitioner~ t1as reasonably established the authenticity of the bill s of lading a n d invoices through the documents submitt~d A to HH and their sub- markin gs) to this Ca urt nd the oral testimonies of witness Luce ro raneisco of S mith Be l l and Co., t he Atto r ney - in - fact o f the P t i tioner and that of Atty. c. S. Qllin �l: .s\rli. ll � d n"inu the seizm~e case at the Bureau of Customs <s ~a Ex s . TT and TT-1>. The Bills of Ladi t1g No s . OM- 010 and OM-011 submitted by Ami rul Din Islam Al - Philippines, Inc., heavil y relied upon by the Commis si oner of Customs are dubious in c haracter in view of the fact that its very own counsel fil ed a notice of Withdrawal since the "d o nor of my client by the name of Julie 1-<eneyoshi has failed to turn over the original documents consisting of bills of lading and other~ commet~ cial documents which are pr~ oof of ownership of the subject mattet~ of the case" (see Exh. "VV"). Undoubted 1 y, the questioned shipment was covered by a typewritten Transit Cargo Manifest handed by the master of the vessel to the customs authorities upon its ar~r~ival in Manila <see Exhs . MM an d NN with theit~ s ub - m at~ kings>. Hence , the fourth question necessitates a positive answer.

DECISION - C.T.A. CASES NO. 4310 & 4322. - 14 - n ~> 'to ttl f.~ f i f �t h que m'ti.on, tho qt..u~~ t :l. c1ned shipment being met~e 1 y in tt~ans i t tht~ u and not intfH1ded fot~ Ma nil a, the sa me would not be rofl ect�~ d on �th tJ lnw a r~ d FoY' ei nn M ni femt l)f tho vessel which e><plaitHI the "NIL" on the co 1 um �n for car go appearing in sa id manifest. it s h ould be re me mb . red th a t the vessel arrived under st t~ e s':2 of wa at h�n~ and was eve n desct~ ibed by the Collectot~ of and PID Ch ief � Narciso Sa ntiago, J ~~. � a s "de e d ship" to wed by the t1.1gboat "Rangfn~ I" of the Malayan To wa ge and Sa lvage Lastly, no iota of evide 11ce was pt~esente d by the Res pondent to prove directl y or indirectly the alleged attempt by the Pet itioner to h a ve the shipment relea s ed through fake documents. WHEREFORE, h a ving cleared all the pertinent questions, We het"'eby RE S OLVE t hat no violation of the C1.1 s tom s Liaws E.HI cha~�ge d was ever~ cornmitted by the Pet ition r.H~ ; n ei tht:n~ w s thet~e a viol ation of t he Bank C i t "' CIJ 1 .:u~ 102'3 s ince the pt~ ociJrement of impot~t a1.1tho r i ty from the Central Bank does not ap ply, the s ubject vehicles being not intend e d ta b e unl~den in the Philippines . .. 950

.. DECISION - C.T.A. CASES NO. 4310 & 4322. - 15 - ACCORDINGLY, thP deci.sio11 of the F~ espond�-~ nt is het'eb y REVERSED and the sa me Respondent is het'eby ORDERED to RELEASE the s ubject 28 units of Nissan and Toyota vehicles to the Petitioner for re- shipm�?nt to i; he place of a t'i ~Ji n <O sa ~< a, .J a pan) as herein prayed for. In view o f the inform atio n ft..tr n ish ed by Petit i onet'' s couns�~1 in the it' m<.Hlife~; ti.\tion <Htd Motion d;::\ted 17 AU!;.lU St 1':Y:J:3 that some of the vehicles \.'lere sold at Public Aucti on, t h e p t ' o c e e d s w i t h ~; u c h s i:.\ 1 e s h a 1 1 b e d e l i v �> t' e d t o 1: ht-~ f""'r�t :i. tionr.r� i.n l i. f!t.A nf thr~ velli clr~n wl1i c lt h~ve already bee n sold. This c ourt does not take cognizance of the Motion For Le ve To Intorveno filed by Ce pt. Crispino Mendez . on October 9 , 1991 it .appearing that i t was filed in order to c ircumvent procedural rules . Capt. Mendo za should have filed a Petition for Review in this Court within thirty ( 30 > days after receipt of th adv r e Decision of the Commissioner of Customs over h ia c laim s in the administrative le vel. Having failed to do so directly within the rogl montary period, he cannot do it indirectly by way of int ervention . For lack of .jurisdiction over his case, the s me is hereby DISMISSED.

------ ---- DECISION - C.T.A. CASES NO. & ~310 ~322. - 16 - SO ORDERED. Quezon City, Mett~o Manila , Septe mber~ 8, 1'393. GRUBA Judg e WE CON~UR q_ . \Q.. ~ E ESTO D. ACOSTA _/ivJ P~, RAMON 0. DE V Associate Judge I hereby certify that this decision wa s reached after due consultation among the members of the Court of Tax Appeals in acc ordance with Secti on 13, Article VIII of the Con�tit ution. ~- ~Q.. ~ ERNESTO D. ACOSTA Presiding Judg e Court of Tax Appeals .. 95 2