CTA Case No. 4656 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS UUE ZON CITY MAYER STEEL PIPE CORPORATION, C.T.A. CASE NO. 4656 Petitioner, Promulgated : � _2..8_1!-1'!M- � ~ ~ COMMISSIONER OF CUSTOMS, OCT Respondent. -- )( - - - - - DECISION This is a forfeiture case involving 669 c oi ls of hot rolled steel sheets used by the Petitioner in the manufacture of steel pipes to be sold doaestically and internationally. On February 26, 1988, a ship�ent of 669 coils of hot rolled steel sheets from Bulgaria arrived in a the Port of Manila on board "SIS PEGASUS" which for alleged 1ack of the requi r ed c argo 111anifest was forfeited in favor of the government. Petitioner, however, vehemently den i ed that the cat' go was un111anifested "for in truth and in f~ct, there is a manifest, which petitioner will endeavor to prove dur ing the hearing of the Petition for Review." <Petition for Review, p. 5>

DECISION - C.T.R. Case No. 4656 - 2- On December 3, 1990, the Acting District Collector of Customs, Port of Manila in his Decision, "FORFEITED <the shipment> in favor of the government and to be disposed of in the manner provided for by law" for being "unmanifested and was transferred to claimant's warehouse in violation of existing rules and regulations." <CTA Records, p. 18) Pertinent portion of said Decision is hereby quoted, thus: We are afraid but it has reached a point where this Office could no longer give in and succumb to the pleas of counsel for the claimant without being placed in suspicion of being overly 1en i ent or even accused of abetting claimant's dilatory maneuvers. It is believed that this Office had accorded claimant every reasonable opportunity to present its case, but sadly, claimant has decided to abuse this generosity and just simply totally neglected its case. This Office feels that it may now proceed to rule against claimant without being accused of depriving it of due process. The l"ecords wi 11 bear us out. Claimant is hereby considered to have waived its right to present evidence and this case is submitted for resolution based on the documents obtaining. Consequently, there being in actuality no evidence submitted in favor of the claimant and considering further that the burden of � pt�oof in seizure cases lies on it, the only inescapable conclusion is that the subiect shipment was indeed unmanifested and .... was transferred to claimant's warehouse in violation of existing rules and regulations. Forfeiture therefore lies against the same. <CTA Records, p. 18) Such Decision of the Acting Collector of Customs was subsequently affirmed by the Respondent in his Decision 1 U6i

� DECISION - C.T.A. Case No. 4656 - 3- dated September 16, 1'3'31' the dispositive portion of which is hereby quoted: WHE REFORE, finding no cogent reason to disturb the forfeiture Decision of the Port of Manila Collector, the same is hereby AFFIRMED. SO ORDERED. Petitioner, before this Court by way of Petition for Review, challenged said Decision of the Respondent alledging that "the Decision of the Respondent Commissioner of Customs, affirming the Decree of Forfeiture of the merchandise issued by the Collector of Customs is, contrary to law and the principle of 'due process' "<Petition for Review, P� 2>. Said, the Petitioner: Hearing on the seizure proceedings were conducted and in the course of the prosecution' s evidence, one of the prosecution witnesses, was in the person of JUANITO A. BONOAN, then Chief of the Liquidation and Billing Division, Bureau of Custo�s, Port of Manila. In his testimony, as a witness for the pr�osecut ion, he admit ted that he "acted upon the matter <the issuance of a shipside per�it, to allow discharges of the cargo from carrying vessel to 1 ighter) based upon the request of the importer, which requirement would not have been made or consequent 1y acted upon by the Collector, had there been no . cargo e>epected to .,. ar�rive. However, al!ow 111e to sub�it herewith KeroK copy marked "B" of the Issued Foreign Cargo Manifest in question, duly certified by the Customs Boarding Office, Mr.� D.Z. Nacible which wi 11 d i spr�ove the all'egatirin of the Chief; EPD <Entry Processing Division>. Attached herewith is the e>eplanation of prosecution witness Bonoan, wh�ich was �arked

DECISION - C.T.A. Case No. 4656 - 4- during the seizure proceeding as Exh. "2-0" Annexes "D" to "D-15"), as claimant/petitioner's awn exhibit, because at that time of its presentation by the witness for the prosecution, the prosecution lawyer refused to marked it as prosecution evidence~ However, the c 1ai mant, due to supervening circumstances during the seizure proceedings, was not able to formally offer the same in evidence. The claimant/petitioner was not allowed, or shall � it be said, was denif:'d the r�ight to offer their material evidence, so much so, that as a result of such failure the claimant was left with no evidence to consider. This matter will be further discussed elsewhere in this petition. At any rate , when it was the claimant's term to present evidence, the witness it intended to pr�esent was not available because at first he was out of the country and � so tht:> hearing was re-set. Again, when the witness arrived and was supposed to testify at the next scheduled hearing, said witness was stricken ill. In spite of claimant counsels's representation, the prosecution represented by one Atty. Tugday, under the i nf 1uence of his former superior, Co 1. Si ndul fo Sebastian refused to have the case re-set, and witness insisted that the case be deemed submitted for decision, without any evidence formally offered by the claimant, as it had no opportunity to do so, thanks to the adamant objection of the prosecution. The Collector of Customs, through the prodding of unseen, but i nf 1uent i al hands, issued an Order denying � claimant's representation, and considered the case submitted. Thus, the case was decided and .,.. eventually, a decree .of forfeiture was issued, wherein, on appeal to the Commissioner of Customs, it was affirmed. (ibid., pp. 5-7). Hence, this appeal.

DECISION - C.T.A. Case No. 4656 - 5- The t wi n i s sue s for t h i s Court t o r e s o 1ve are the following: 1 ~ Whether or not the cargo in q~,lest ion is manifested; and 2 . Whether or not the transfer of the subject shipment to Petitioner's warehouse was in violation of existing rules and regulations there being no prior examination thereof and no bond was posted to guarantee the payment of the duties and taxes -- a means prejudicial to the government. We answer both issues in the affirmative~ The question of whether or not the shipment was manifested is simply a question of fact discernable through the evaluation of the evidences on hand. Records of the case reveal that there are seemingly two existing manifests touching on a singular shipment. One was presented by the Respondent which allegedly "indicated that it carried 'NIL CARGO' when in truth and in fact it transported 699 coils of Hot Rolled Steel r Plates ��� " <Underscoring supplied; Respondent's Formal Offer of Evidence, Exh. 1) while the other was offered by the Petitioner "to show that the cargo unloaded fro11 the 'M/V PEGASUS was duly manifested contrary imputation that the cargo was not 111anifested" <Underscoring supplied; Attachment "C", Exh. A, CTA Records, p. 93).

DECISION - C.T.A. Case No. 4656 - 6- We are inclined to believe that such ship�ent was indeed manifested under the obtaining circuMstances: 1. The issuance of a "Certification of Non - Availability of Locally Produced or Manufactured Competitive Substitutes for the Imported Materials to be Used in Philippine Export Products" by Director Agapito L. Kalingking, Jr. of the Board of lnvest�ent CExh. D). This Certification was sought by the Petitioner after having "failed to find any competitive local source". <T.S . N. May 25, 1992, p. 7) and in compliance with the condition precedent required by the BOl for the importation of raw materials used in the manufacture of steel pipes for export. 2. Letter-request of the Petitioner to the Secretary of Finance for Authority to Import 7,000 MIT of Hot Rolled Sheets in coils CExh. E> after having been certified by the BOl that such mat erial s are not 1 ocall y avai 1able. .... This showed that Petitioner had sought the proper authority from the Department of Finance prior to importation as required by law. 3. The request for Authority to l�port was granted by the then Ministry of Finance

DECISION - C.T.A. Case No. 4656 - 7- 3. The t'equest for Authority to Import was granted by the then Ministry of Fi nance through Antonio P. B.e l ic ena, Aeting Chief, Finance Revenue Service, saying that ''this Department int erposes no objection to your request under Section lOS (d) of the Tariff and Customs Code, as an eKception to CAO 3 ~ 7a insofar as your capitali zation retp..lirto!ll"rrt is concerned, provided that you wi 11 post a bond in an amount equal to one and one-half O~> times the ascertained duties, ta>ees and other charges conditioned for the e>eportation thereof or payment of the corresponding duties, and taxes within six <6) 11onths from the date of acceptance of the import entry ��� " <Exh. F). 4. Petitioner put up a Bond To Re- Export Merchandise in the amount of P15,500,586. 00 undertaken by AFISCO Insurance, Corp. <Exh ~ I, I-1 and 1-2>. This is to show that Petitioner again complied with what is required by law. 5. Petitioner opened a Letter of Credit . ..... in favor of the supplier "through the agent bank, Equitable Banking Corporation in the amount of 'S2, 334, 500 for 7, 000 aet ric tons of hot rolled steel sheets in coils" <T . S.N. P� 15, Exh. G>

DECISION - C.T.A. Case No. 4656 - a- hot l"' Olled steel she ets in C'Oils 11 (T.S.I'-1~ p. 15, EKh . G) 6. Petitioner, t hrough Safewgy Customs Broke ra g e, filed an advan~e Import Entry Declaration <No. 395146) G-1) 7~ ln compliance with thP dir~~tiv& of the Department oF F i nan~e in its approval of Petition er's Autho ri ty t;o Import "that uppn arrival of the shipment the and commercial documents covering thP same shall be submitted to this DepartiiPnt for processing ��� " <EKh. F> Petitioner ~ub�itted said documents, to wit: a) Commercial Invoice No . 7018 from the supplier MT steel trading AG covering the ship�ent of the subject cargo <EKh. H-1>; b> Packing list from the s"'UIP supplier; <EKh. H-At tachment) and c> Bill of Lading of the shipment on board M/V "Pegasus" <E><h. H-Attachment> .._,. 8. SPrips of corrPspondPnce bPtween the PPtitionPr and thP DPpartmPnt of FinancP and the Burpau of Customs. a> LPttPr of MarcPlo N. FPrnando, Undersecretary .of the

DECISION - C.T.R. Case No. 4656 - 9- Department of Finance, dated April 8, 1988 denying Petitioner's request for exe111ption from the provision of CAO No. 3-78 and Section 105 (d > of the TCCP. "Therefore, aforesaid importation may only be released upon payment of duties and ta>tes" <E>th. J) ; b> Letter from the Petitioner dated April 18, 1988 asking for a reconsideration of the denial of the request "because our product would not be able to compete in the U.S. market espec ia 11 y with our toughest competitor from Malaysia, Singapore and Thailand who exports with the benefit of incentives similar to that of Section 105-d granted by their respective government" <Exh. K>; c) Letter from the Petitioner to the Chief, Law Division, Bureau of Customs dated June 6, 1988 requesting "Issuance of an order effecting tentative acceptance of said entry without advance payment of duty... >t x x � � � i n order that the BOC w i 1 1 have a basis on the assessment there from" <Exh. L > ; d) Follow-up letter of the counsel of the Petitioner to the Collector of Customs, dated January 6, 1989 showing Petitioner's consistent desire "that the entry <should) be allowed to be filed, so as to aid the basis for the co111putation of the rightful duties and taxes" <Exh. >. Attached to this . �~ letter was the previous letter of the Petitioner' s counse 1 "to accept the filing of the Entry conditionally, so as to have a basis for the computation of the duties and ta>tes, and other charges, due therein, and for eventual payment later on, should the Collector find no merit in our defense in the seizure proceedings, 1 068

DECISION - C.T.A. Case No. 4656 - 10 - or should the Depar tment o f Financ e finally declare their disapproval of the authority which the import Pr has requested" <E~h. 0-2>; e) Another letter by thP Petitioner's counsel to the BurPau of Customs through Col. Sindulfo Sebastian dated January 17, 1989 again uraina "the Entry Procpssing Division to accept the filing of thP Pntry, conditionally, . so as to havp a basis for the coMputation of thP dut iPS and taxes due there in. x x x WP reoeat, the importer is willing to pay whatever duties, taxes and other chargPs that may be due on thP imoortation". <Underscoring suppliPd; Exh. R and R-1). At this juncture, it can easily be gleaned and safe l y concluded that the Petitioner nevpr i ntended to dPprivP thP government of its duties and taxPs. In fact, it was the Petitioner which constantly and consistently prodded the Bureau of Customs to computE> thP dutiPs and taxes in order for them to be able to pay thPir dues. lnspite all these, the Respondent was adamantly rPluct~nt to heed the requests of the Petitioner which sadly only fe 11 on deaf ears, unt i 1 five (5) years therPaft Pr, or on February 26, 1993, when the Respondent frantically f i 1 Pd an Urgent Motion, averring~ 1. That repor�t s have been rPcP i ved by this Office that the shipment of 699 coils <6,999.9 MT> of Hot Rolled Steel ShePts subjPct � of this case could not be locatPd at Petitioner's preMises where it has bPPn deposited;

DECISION - C.T.A. Case No. 4656 11 - <P9,900,B57. 00) PESOS should be immediately collected. <CTA Records, p. 160) Petitioner, waiving any formal defect in th~ motion agpin expressed will ingn ess to pay said duties and taxes, T.S.N. March 2, 1993) after proper co�putii<ltion theV'eof, and "abat ement in favor of the pet i. t i oner of the cust OilS duties and taxes pertaining to the seven (7) eoils of Hot Rolled Steel Sheets no t actually received by respondent in his manifestation of March 11, 1993��� "<Resolution, dated Apri 1 1' 1993, p . 4). recomputation done by a Custo�s Appraise~<CTA Records, p. 233)' Petitioner iMmediately paid NINE MILLION NINE HUNDRED EIGHTY ONE THOUSAND FOUR HUNDRED SIXTY EIGHT PESOS <P9,981,468.00) as evidenced by O.R. No. 41931583 dated May 5, 1993 (CTA Records, p. 231). Surprisingly, however, on May 6, 1993 or 1ust a day after Petitioner paid the duties and ta>ees, Respondent again filed a Manifestation and Motion, asking this Court "that an Order be issued directing the Petitionl?r to deposit with the Honorable Court in escrow the su� of .... FIFTY TWO MILLION THREE HUI)IDRED SIXTY TWO THOUSAND FOUR HUNDRED TWENTY THREE PESOS AND TWENTY EIGHT CENTAVOS. <52, 362,423. 28) representing the landed cost of the shipment in question. � � to protect the interest of t e Gov ernment and to give meaning and substance to this

DECISION - C.T.A. Case No . 4656 - 12 - CENTAVOS. <52,362,423.28> representing the landed cost of the shipment i n question��� to protect the interest of the Government and to give meaning and substanc e to this proceeding s " <CTA Re c ord s , p . 22 7) . Th is motion is based on "the memorandum dated February 12, 1993 <c opy of which is attached as Anne~ � A'> of the Custo1111s Tea� created under Special Mission Order dated January 2 6 L 1993 stated that the sub iect shipme nt � ~ x x are no 1onger in the pre11ises.'" <Underscoring suppl i ed; ibid.) A clo ser scrutiny of the sa id motion l e d u s to a reasonable deduction that such was a . highly regrettable ploy to continuously harass herein Petitioner. Why did the Respondent f i 1e this motion on 1y on the day after Petitioner paid the duties and ta~es? It should be remembered that this motion was based on a me1111or a ndu� dated Febr u ary 12, 1'393 yet f i led it only on May G, 1993 or a day after Petitioner already paid tht> ta~es and duties. Why then, did the Respondent not f i 1 e it on tht> very day the memorandu� was received if indeed the report . was true? We could only surmise two things: first, tJ:lat there was no truth to the a 11 eged 11e111orandum; second, that the Respondent was remiss in his duties for not acting immediately on the same. We find for both conjectures. The ti�ing of the filing of tht> 111otion was

DECISION - C.T.A. Case No. 4656 - :13 - P52, 362, 423. 28 representi ng t he 1anded cost of the ship111ent in question, it is pet itioner's be 1 i e f that such would be very onerous, not to say without basis. This staggering a111ount does not grow on trees, so to speak, and this has no basis in law, and in fact, for such an imposition. Besid es , putting such a huge .a111ount of money in escrow, would c ause considerable damage to petitioner since such amount of 111oney will re111ain ''idle '' instead of s�ttting it free, to be used in more productive invest111ent~~ That duties and taxes, due on � the merchandise, h ad already been paid by petitioner, is an admitted fact. However, the allegations that the goods, subj ect of this petition "are no longer in the premises� as r eported by Customs Police!Den to Col S eba sti~n <ANNEX "A" of Pet �itioner' s Manifestation> i$, a bit misplaced. Such memoran~um/report i5 a unilateral act of the signatories therein~ Considering the serious i111plications of this ~emorandu111/report, the signatories sho uld not solely be the agents of the � pol ice, but it should have also been attested to, by the Customs guards who are all respectable officers having custody of the ~rticles. From petitioner's perspective, such memorandum/report unilaterally signed and submitted by said Customs Policemen, weakens their position. The Customs Guard who is responsible for the continuous guarding of the shipment, until ordered discharge from his duties, is liable for negligence and dere 1 ict ion of duty, if indeed the cargo is "no . ' 1anger in the premises " Yet, these Cust OlliS officials were not signatories to the memorandum/report <ANNEX "A") " <CTA Records, p. 242-243) ....,.. In o rder to rea 11 y ferre.t out the truth , "this Court created a committee to conduct an ocular inspection 11 <Resolution, dated October 21, 1993) " of the preaises of the, Petitiqner in orde r to determine, once and for al l, t he e x 'st~nce of the goo ds in ques ti on inside said

DECISION - C.T.A. Case No. 4656 - 14 - premises" <Reso 1uti on, dated November 9, 1993). Said committee co�posed of representatives fro� both the Petitioner and the Respondent and headed by a Court Attorney of this Court as its Chair�an, belied the allegation of the Re spondent and confir�ed thi& Cou'l"t' s apprehension that the allegation was a pure and siaple form of harass�ent. Said, the committee report : F I ND I NGS -This co�mittee found the Hot Rolled Steel Sheets subject goods of this ca~e properly filed in three (3) groups inside a big warehouse within the premises of the petitioner, Mayer Steel Pipe Corporati on <Anne~ A>. Then, we made a physical count of the said goods <Annex A> which yield the following results: Group I 330 Hot Rolled Coils Group II 180 Hot Rolled Coils Group III 152 Hot Rolled Coils Total 662 Hot Rolled Coils We also took the specifications of said hot rolled sheets (please see Anne:x C> which varies anywhere between 3 .0 mm. to 12.00 ma. in thickness and between 1,000 to 1,500 ��� in width which tally the specifications stated in the commercial shipping documents contained in . ..... the records of this case. C 0 N C L U S I 0 N ./RECOMMENDATION WHEREFORE, we find no aeri t on the governments apprehension that the subjec t goods �ay be lost and that its interest aay not be protected since the said goods are all intact as found and full v secured within the pre� i ses of the petitioner of this case. Moreover, the

DECISION - C.T. A. Case No . 4656 - 15 - subj ect goo ds have been in con tinu ou~ guard since the first shipment in 1988 by no less than an employee of the Respondent of th is case in the person of customs gut:lr d Mr. Larry Cabuhat . Mr. Cabuhat co rroborate d our finding~ and swore to us that nothing has been taken out from the subject goods within the Petitioner9 s premises since 1988. ACCORDINGLY, no surety bond is recom mend ed. (CTA Records, p~ 295-296> All of the fo r egoing documents above-discussed point out to the fact that the cargo in question wa$ indeed ma n ifested. Qerta inl y,_ Pe tition er would never bother t_o go thro ugh th e hassle of all the preparat; pns if it even had the slightest intention to smuggle in the gpods. These documents are even corroborated by the testi�ony of an u nwi 1 1 i n g and ho st i 1e wi t n e s s i n t he per s on fl f Mr. Juan it o A. Bonoan, Chief, Liquidati on and aill:ing Divi s ion, BOC, Port of Manila who declared a�ong other s, that: 4. With r e gards to the certif ieati on by the Ch ief, Entry Processing DiVi5ion, d ated ~7 January 1988 that, the Inward Fore ign Manifest ~ubmitted did not decl ar ~ or 5how the shipment subject of thi s e>eplanati on, I believe this is already beyo nd my r each as I acted on .the matter based upon the - �~ request of the importer, whi c h request would not have been made or con sequent 1y acted upon by the Co 11 ecto r and me had there been no cargo eKpect ed t o arrive (KeroK copy of the letter attached �ark ed "A">. Howev er, allow �e to sub11 it, herewith attach ed, a KeroK cop y mar k~ d "B" <Attachment "C", EKh. A of th is Record)-R.f_ the , Inward Foreign Cargo Manifest

DECISION - C.T.R. Case No. 4656 - 16 - the shipment subject of this e><pl an at ion, I believe this is already beyond my reach as I acted on the matter based upon the request of the importer, which request would not have been made or consequent 1y acted upon by the Collector and me had there been no cargo e><pected to arrive <xerox copy of the letter attached �arked However, allow �e to sub11it, "A") . herewith attached, a xerox copy 11arked "B" <Attachment "C", Exh. A of this Record> of the Inward Foreian Carao Manifest in question, duly certified to by the Custo�s Boarding Officer, Mr. D.Z. Nacilla which will disprove the allegation i�olied in the certification of the Chief, EPD. If it is true that the Inward For.eign Manifest <IFM) in the possession of EPD declares nil cargo, I suppose clarification must be made with that off ice as to who submitted and received the said entry. In fact, as reported, the assigned Customs Inspector has assigned a Customs Guard to underguard the cargo, issued boatnotes xerox copy attached marked "C" through "J" to cover the movement of the same and up to this writing, the shipment is intact in the consignee's bodega. 1Underscoring supplied; E><h. A- 3, and A- 4) And by way of empirical deduction, the same witness declared that it is a condition precedent that a cargo manifest should e><ist, otherwise, no discharge should take place. Said, he: Q. Be that as i t may, Mr. Wi t n e s s, when ...... a cargo is discharged .from the vessel, it is a condition precedent that a cargo manifest should exist, otherwise, no discharge should take place, and on that presu�pt ion' wi 11 discharge of cargo. is that correct? A. Yes. )( )( )(

DECISION - C.T.A. Case No. 4656 - .17 A. Condition that there are cargos. As to whether this cargo manifest is genuine or if there is cargo manifest ��� JUDGE ACOSTA You just answer the question. WITNESS Yes, Your Honors. <T. S. N. Apr i 1 3, 1'3'32 pp. 25- 26 > Th i s testimony was fu r ther corroborated by the testimony of another witness in the person of Atty. Remigio E. Ramirez, Hearing Officer, Prosecution and Litigation Division, Legal Service, Bureau of Customs when he testified about the veracity of the existence of the cargo manifest. Said, he: Q. Will you tell the Court how it came about that y~u had investigated the manifest of the "SS Pegasus" and when was that ? A. The case for investigation by the Legal Prosecution Litigation Division was assigned to me in connection with the Bureau of Customs personne~ namely Collector Br'illo and Mr. Bunuan. That was assigned to me sometime in 1'388. Q. In the case of your investigation, .... what did you find qut particularly on- the manifest of this vessel Pegasus? A. I started my investigation by going to the office of the Marine Division, Your Honor, of the Bureau of Customs. The office under . the Port, Collector of Manila wherein all the records of shipments especially the cargo manifest, inward cargo manifest will be deposited from the vessel by the boarding

DECISION - C.T.A. Case No. 4656 - 18 - officer for the Bureau of Customs to have a listings of all the importations co�ing in. And I discovered a manifest, ' inward foreign manifest with the recording nil cargo certified by the manifest clerk dated February 26, 1988. ATTY. ALBANO Witness handling to counsel a photocopy of inward foreign manifest, the M/V Pegasus which he claimed he got from the Marine Division which says nil cargo. Q. Now, I not iced i n t h i s man i fest , Mr. Witness, that the one who signed here was one Usop Candaros, manifest clerk. Did you ever try to find out, who should have been the proper officer to sign this manifest? A. It should have been signed by the boarding officer wh~ received it fro� the Captain of the vessel. Q. But in this case there is no signature of the boarding officer? A. Yes, sir. Q. Now, because there was no signature of the boarding officer, what then did you do if you did anything? A. I went further after knowing . the agent, shipping age.nt of the ves se 1. 1 issued a subpoena to the docum~ntation ~fficer of C.F. Sharp, the shipping agent and I obtained fro� the� a copy of the inward foreign �anifest dated February 26,1988 certified by the docu�entation services �anager. ��- ATTY. ALBANO . Witness handling to counsel, a copy of inward foreign manifest of the M/V Pegasus which states that there were on board GG9 coils hot rolled steel / sheets cosigned to Mayer Steel Pipe Corporation Manila. XXX XXX XXX

DECISION - C.T.A. Case No. 4656 - 19 - a. Now, dur ing the c ourse of the testi�ony of Collector Bunuan before this Court, he presented a manifest, inward foreign manifest also which was previously �arked as Exhibit "2-g". Will you go over this �anifest Mr. Witness, and compare the sa�e with the inward foreign manifest you got fro� the shipping agent? A. Your Hono r , th e manifest p r es e nted as Exhibit "2- g" has the signature of Nacilla B.O. or Boarding Officer. Q. Did you find out during the course of your investigation who was then the Boarding Officer of the ship Pegasus at that t i 111e when it was berth at the Port of Manila? A. It was Mr. Nac illa, Your Hono r. Q. Wi 11 you 1 ook at the signature here of D. C. Naci lla and te 11 the Court if you know whose signature is this? A. It is admitted by Mr. Nacilla that this is his signature. Q. The fact remains however, you will agree with me that there was a �anifest as shown by Mr. Naci lla and as shown by the copy given to You by the shipping co�pany, shipping agent? A. Yes, because I have co 11 ect ed this fro� the shipping company itself. <T.S.N. Febru~ry 2, 1994 pp. 6-12) In confor111 it y with the regular Cust o�s Procedure, the . �- manifest is handled by the boarding officer, Mr. Nacilla . from the vessel to the Marine Division <Entry Processing D:i. v ision>. It is not in any way handled by the import er �~i t h er b - t he , br o, er , t hu s , pre venting any f raudule nt RED IRECT E:(AMINAT I ON ~y ATT Yo ALBANO

DECISION - C.T.A. Case No. 4656 - 20 Q. In the course of your investigation Mr. Witness, as to the existence of the manifest, did you ever try to find out who handles the manifest from the ti�e it is accomplished up to the time it reaches the Entry Processing Division of Marine Division? A. The manifest is handled by the boarding officer from the vessel, fro� the captain to the Marine Division. Q. How about the importer, does he have anything to , do in the manifest? A. In the customs practice, the importer does not know of the arrival of the vessel. It was only monitored by the Pier Inspection Division where the boarding officer was instructed to meet the vessel at the breakwater. Q. Neither does the broker handle the manifest ? A. The broker participates on the filing of the entry. Q. How about the manifest? Does he handle the manifest from the time the boarding officer signs the manifest and sends it to the Marine Division? A. In practice, Your Honor, the broker does not have any participation in handling the manifest. <T.S.N. February 2, 1994, pp. 26- 27> The existence, there fore, of another manifest declaring "NIL CARGO" was, to the mind of the importer, proba.J;�.ly . the making of unseen hands out to exact some "fi 1thy lucre " at the expense of this legitimate importer. We tend to believe so. But certainly its existence cannot be imputed to the importer as it has nothing to do, 1 0 '{8

DECISION - C.T.R. Case No. 4656 - 21 - neither its broker has anything to do, with the handling of the manifest. Finally, i t should be r e me mbered that Petit i oner had a pending application for a "Conditionally- Free Importations" under Section 105 (d) of the TaY'i ff Code, the condition precedent of which was "that upon arrival of the shipment, the shipping and co1111erc i al docu11ent s cover i ng the same shall be submitted to this Depart�ent for processing before the a c tual release thereof fro m the Bureau of Customs may be effected" <E)(h. F- 1- b) . Thus, it would be absurd for the Petitioner not to declare said cargo. It would then be improbable for the Petit i oner to do what the Respondent maliciously imputed to it . Just one last note . To support forfeiture, there must be fraud on the part of the importer to evade payment of the duties due. And fraud is never pY'esu�ed. It must be proved. Failure of proof of fraud is a baY' to forfeiture. (see also Far� l�ple�ent and Machinery Co. vs. Co�. of Custo�s, G. R. No. L- 22212" Aug. 30, 1968 citing Kasilag vs. Rodriguez, 69 Phil, 217, Republic vs. Ke..r.. & Co., Ltd., G.R. No. L-21609, 1966; Yu Phi Ki� vs. A�paro, 86 Ph i 1. 4 41> This is so since, forfeiture is a harsh measure and should be resorted to on 1 y with e)(t ra care. All doubts, therefore, should be resolved in favor of the

DECISION - C.T.A. Case No. 4656 - 22 - taKpayer <Max i�o G. Rivera vs. Salvador Mi son, CTA Case No. 4479, Dec. 24, 1993). As to the other issue of whether or not the transfer of the subject shipment to Petitioner's warehouse was in violation of eKisting rules and regulations, We find the eKplanation of Mr. Juanito A. Bunuan, Chief, Liquidation and Billing Division, BOC, Port of' Manila, meritorious. A substantial portion of his letter of eKplanation to the Respondent why no administrative charges should be filed against him for disregarding existing regulations is hereby reproduced, thus: J\.me 13, 1988 HONORABLE SALVADOR M. MISON Commissioner of Custo111s Ma n i 1 a Si r In compliance with your order to me to explain why no administrative charges should be filed against 111e for disregarding eKisting regulations, particularly� Par. III E-3 and 4 of CAO 3-79, in connection with the transfer of 6,999 MT of Hot Rolled Sheets consigned to Mayer Steel Pipe Corporation under Te�porary Transfer Permit No. 88-038, direct fro� the carrying vessel M/V Pegasus to the consignee's warehouse, herewith i~ my explanation: 1. Temporary Transfer Permi.t has been an old accepted practice not governed by CAO 3-79, and occasionally eKercised by the Collector for Operations due to operational exigencies such 1 as, the s it uatipn obtaining i n the port , safe t y, f t he vesse 1s, c arg oes and ~the pie rs . I t wa s ~iscretionary on the Coll e c t or for

DECISION - C.T.A. Case No. 4656 - 23 - Operations, to delegate to me in my capacity as Acting Chief, Port Operations Branch then, the function to issue Temporary Transfer Permits depending on the nature, kind, volume or weight of cargo, provided the government' s interest is properly protected and equally the transacting public is served well. 2. In connection the r eto, allow me to cite the following: 2. 1 The carrying vessel M/V Pegasus, considering its draft on arrival, and the weight and kind of its cargo, could not be berthed alongside the pier and even at the anchorage inside the breakwater. Thus, she was moored outside the breakwater <OBW>, where cargo discharging operations were conducted. 2.2 Among the cargoes discharged was the shipment of 6,999 MT of Steel Coil, the subject of this e>eplanation. The same could not be accommodated at any of the piers in the port, because of its weight, as it would surely impair the physical structure of the pier. Aside from this, there is the restriction imposed by the Philippine Ports . Authority <PPA> whereby, no more than 200 MT shall be discharged in any one landing point at the piers. . ...... 2.3 The carrying vessel was moored at th~ stream <OBW>, and therefore, there was no other means to discharge and transport the cargo to any landing point on land e>ecept by use of lighters <Shipside).

DECISION - C.T.A. Case No. 4656 - 24 2. 4 Note: The weight of the cargo to be discharged was 6,999 MT. This needed at least seventeen <17) lighters with 400 MT capacity each to unload the cargo from the vessel. Considering at that time and up to now, there exists a critical shortage of lighters, there was no other recourse but to all ow the temporary transfer of the subject shipment to the consignee's bodega, to enable the consignee to im111ediately empty the limited m .uwber of lighters used and facilitate their turn around. Thus prevent the delay in discharging operations, as any de 1ay on the carrying vessel would necessarily entail costly demurrage chargeable against the importer. 2. 5 The cargo was Hot Rolled Steel Sheets as 111an i fested and, I therefore non-sensitive and non- pi l ferable. To 111ove the samE' from one point to another would not have been risky. 3. In view of the above citations, I had issued the Temporary T~ansft>r Pt>r�it, providing thereon adequate control and supervision as: 3. 1 Continuous undt>rguarding until its release from customs custody; . .... 3.2 NCP/CIID clearance should bt> st>cured prior to transft>r; 3.3 No withdrawal shall bE' allowed without orior approval by ,the Co 11 ector of Cust o�s, or prefE'ntation of valid dt>livt>ry p t>r r it to thE' Customs Guard;

-m- 3.. '4 IE:!!ll\U ""�'\ M f=i l M !!i\hiQ \b9 nplAI9JI!\M''$ MJ>:lMh Y!ll.. 3.s eu,,,,, hU\IjM!�i!-\ iW' ~99C3rfttd lh.ll '5\lbli\ tef>p.e.p\ Attach�d i t th� ~�l'\ifi~d ~~f"~* ~~~~ ~f the T��po~~v T~n,f�l' ~@~�ii til=~@ sfi@ Shipsid� P�~�tt tOtal u"lV ~~~~@~~~@ afi@ ~e~%!~ through tb� ~/CIID \lti iR e l l iRt eB6~@ conditions el��~lv tndt~~\@@, Allow �� \o IIAk@ �~"\ i Qfl \As\ Ref:~ \Rfr@ be�n so��tbinQ P@lli�� QP � irr@g"laP wi\R \A@ a~or���id p�r�tt�, I �"PPO�@ N�~l�llD �R8UlB have notifi�d �� or eall@d MY a\\@flti8fl 8P \Rei of the Deputy Coll@~\op foP �p@Pe\iBR� considering tn�t tn� ~�r�i\� h~d ps��f!~ \AP8Y~A w�� them. However, in thit par\ieul~tR ~a�f! fiDi\Af!F the Collector nor I notifild. fhtt \~Yth of the matter is th�t, NCP/CIID it WDll aWafAf! Of this �ode of tr�nsfer �� �vid�netd DV JAI~i~1� on file by �� �nd �v predec�ttort WRPt"fiDV sJl transfer per111its of this n�tur� pa��fld fR~iYjR their offices, � condition to IPfl~ifi~aJJv ��Y stated on the Te�por�ry Tr�n�f�r Pf!r�it, 6f!fB~D transfer of c�rgoet b� �ffD�tDd, "' "' "' """ There is no hard and fast rule in operations for any indecision in vessel and cargo operations tneans delay and delay means unnecessary and costly port e><pE>nses. Thus, suffice it to say, that the CollE>ctor of Operations is normally clothed with a wid�> range of discretion and as a well-�Paning . public servant, he is obliged to makE> decisions . �~ with dispatch considerjng not only the interest of the govprnment but a 1so of thE> transacting public as well. In the light of the foregoing considE>ring that the subject shipment is safe and intact in view of the appr~opriate �easure instituted by the undersigned and that the interest of the government as well as that of the importer are

DECISION - C.T.A. Case No. 4656 - 26 amply protected , I hope this e>epl anat ion wi.l 1 merit vour kind consideration. Very truly yours , Juanito A. Bonoan BOC Chief Liquidation & Bi lling Division, Port of Manila <Underscoring supplied; E>eh. 2, CTA Re c o r ds pp. 27 ~ 3e) Above explanation was supported by our f ind i ngs as above - discussed consistently s howing that Petit i on~ r was straight-forward and in good faith in its dealings with the Bureau of Customs. We cannot indict a legiti�ate importer based only on the minds of � thos~ whose intentions are underha nded. In all the foregoing, the decision of the Respondent dated Sept ember 16, 1991 is hereby S E T AS IDE and th :i s Court hereby ORDERS the RELEASE of 662 Hot Rolled Coils to the legal custody of the Petitioner, the ta>ees and duties having been fully settled. � SO ORDERED. ~'~ ERNESTO D. ACOSTA Presiding Judge

DECISION - C.T.A. Case No. 465 6 WE hJRJ: I 'J!kr:- K GRUBA ~ oc:at;,:r %A~O. DE Jp~~~~ � Associate I I CE R T I F I:CATl:ON I hereby certify that this decision wa s reached after due consultation between the members of the Court of Tax Appeals in accordance with Sect i on 13, Article VIII of the Constitution. ~0...~ ERNESTO D. ACOSTA Presiding Judge � Court of TaM Appeals � ,~.