CTA Case No. 2573 (Decision)

ttEPUBLIC OP T HI P HILIPPINE .; 1URT �OF TAX APPF.ALS QUEZON CITY CALTEX (PH ILIPPINES ) INC., Pe ti t i oner , - .ver sus - C.T. A. CASE NO . 2573 ACTING ~OMMISSIONER OF CUSTOMS , Re s p o n d e n t . �x - .~ .- .- .- .- .- .- .- .- .- .- .x DE C I S I 0 N Di sputed by petitioner Caltex (Philippines) . �. Inc. in this appeal from the decision of r espondent Comm issioner o f Customs da ted November 21 , 1973 in Cus toms Cas e No . 7 3- ~38 is t he ri ght of the Bureau of Customs to the sum of P30 ,9 58 . 30 collected as check i ng charges on i ts twenty-one (21) .shipments --.... ; of l ubricating o il between May 197 0 t o May 19'73 . ' The antecedent facts that gave rise to t he pr esen t controversy , wh i ch are not disputed, are alleged i n the petition f or review of peti tioner and adm i tted in r espondent ' s an swer : 1 . Petitioner i s a cor poration organ i zed and existing unde r the law ~ of the Phil ippines with prin- . cipal office and place of business at 540 Padre Faura I St ., Ermita , Man ila~ r esponden t i s the duly qua~ified and ac ti ng Comm issioner of Customs and ma y be ser ved with summons at t he Bureau of Customs , Por t Area , Man ila . 221 J

DECISION - - 2- CTA CASE NO . 257 3 t. .~. 2. On twenty-one (21 ) .differen t occasions during the period covering the mon ths of May, 1970 to May, 1973 , i nclusi ve , petitioner i mported fr om abroad base lubricating oils and add itives which compris ed the entire cargo . of the i mporting vesse ls and were all cons i9ned t o pe t itioner; i temized as f ol lows: Reg . Date of Cargo Date of Arrival Vesse l !2.:..... 5-13-70 Product Quantity 'Applica- Vi sayan 5- 7-70 839 6- 8- 7.0 tion f or 6-17-70 Shipside Pe rmit 7- ~0 -7. 0 Lubricating 2, 756.52 5- 9-7.0 a- .8-70 oil m/t 4-~5-70 9- .4-7.0 Shosei Maru 795 - ~o- 1,393 . 90 3 6- 2-70 11-~1-7. 0 6- .9- 70 - do- 1 00 8 -(]o- m/t 1- .8-71 1,339 .. 305 7-~4-7 0 San Carlos 1054 1-~2- 71 m/t a- .5-70 4, 003.389 10- 2-7.0 -(]o- 8-27-70 3-12-7.1 11- 4- 7.0 Ferngate 1275 5- .6- 7.1 Addit i ves m/ t 5- 25-71 12-~7 - 7. 0 7- 2- 71 410 .125 f or l ub . o i l m/t 1-16-71 Vi sayan 139 9 s- .6-71 Lubricating '2 , 639 . 30 9-29- 70 2- 2.7-71 - (]o- ' 8-2.4-71 oil m/ t 5- J-7.1 5-19-71 1548 - (]o- 1,341. 48 5 6- 25-71 7-25-71 Yoshu Maru 1937 - do- m/ t s- 8-71 135. 71 Shose i Maru 52 - do- m/ t 294 . 29 Shizuura Maru 128 m/t - do- l f 689 . 29 Vi sayan 1715 m/t - c1o- 1,267 . 64 Yuyo Maru 421 m/t - do- 3, 322. 86 Lucky No. 1 762 m/t - do- 2,749. 808 Shosei Mar u 883 m/t - do- 852 . 336 Yuyo Mar u 1134 m/t . - do- 3 ,668.651 Stolt Sidr a 1358 i l os I SO Propyl 299,001 Alcohol Bonneville 1492 ki los Add iti ves 120 ,194 for lub. oil kilos 222 II

DECISION - CTA CASE NO . 2573 - .3 - Chevron Genoa 1473 8 - ~1-71 Aviation � 1~028 s- ~3 -7. 1 Gasol ine Zuiko Ma ru 1520 8-2.8- 7.1 Lubricating m/t S-24-71 1 2 - 1,2-7.0 59 4 , 956 11-23-70 Shose i Maru 2120 oil � 5-3.0-7.3 -do- m/t . 5- ~2 -73 Stolt Boel 946 2,355 71 Lubr icating oi l m/ t 5,135 m/ t 3. The Col lector o f Customs of Manila lev i ed and collected in advance on said shipments the follo\'ling amoun ts aggr egating P30 , 958 . 30 as c hecking charges pursuant to Cus t oms Memorandun Order No . 55-69, dated October 3 , 1969 , which petitioner pa id under protest under the f ollowing off i c i al r eceipts and were liqui- . dated under the f ollowing voucher numbers and dates: Amount of Reg . Checking Official Receipt Vou c h e r Vessel ~ Charges Numbe r Date Number Date Visayan 839 P1,9 30 .00 1 5766 5-1, 3 - 7.0 .1 5 7 6 6 5-1, 3 - 7 0 Shose i Maru 5- .4-70 5- .4- 70 795 97 5 .7 4 1 438 1 14381 -do- ' 100 6 937.51 19048 6- .4-7:0 19048 . 6- .4-70 San Carlos 1054 2, 80 2. 37 19874 6-10-7.0 1987 4 6-1,0-7.0 Fe r n g a t e 1 275 28 7.09 �25045 7-2.4-7.0 25045 7-24-7.0 76.94 25046 -do- 25046 - ~o - Vi sayan 1399 1, 8 47. 51 26374 s- .6-70 26374 8- .6-7.0 -~o- 1548 939 . 04 29 451 8-2.8-7.0 29 451 8-2.8-7.0 Yoshu Mar u 1 937 122 .14 37 08 8 11- .6-7.0 37088 11- .6-7.0 Shose i Maru 52 264.86 41845 1 2-24-7_0 41845' 12-2_4- 7.0 Shi zuura Maru 128 1 ,520 .. 36 4431 2 1-~1-7.1 44312 1-2.1-,7.1 1, 1 40 . 88 33120 10- .2-7.0 33120 Visa a 1715 2, 990 . 57 510 92 3 12-71 51092 10- .2-70 3-1,2-7 1 Yuyo Maru 4 21 223

DECIS I ON - CTA CASE NO. 2573 - 4- Luck y No . 1 762 2 , 474.83 570 12 5- .5-71 570 12 ~- .5- 71 5-2 4-7.1 Shose i Ma ru 883 767 . 10 58955 5-24-71 58955 6 - ~ 0- 7. 1 Yuyo Maru 1134 3, 30 1. 79 63081 6-~0 - 71 63 08 1 269 .10 66822 66822 a- .2-71 Stolt Sidra 1358 s- .3- 71 8-16-71 Bonneville 1492 108 .17 68154 8-16- 71 68154 8-2.0-7.1 Chevron Genoa 1473 925. 20 688 19 B-20-7.1 688 19 8 - ~7-:7. 1 Zu iko Maru 1 520 535.46 6937 2 8-27-71 69372 12-1,0-7.0 6- 1-73 Shose i Mar u 212 0 2,120 . 14 40197 12-10-70 40197 Stolt Boel 946 4,62 ! .50 141415 6- .1- 73 "141415 4 . Pe t it ioner fil ed with the Collector of Customs of Manila t wenty- one ( 21) separate protes ts again s t the i mposition and collection of said checking char ges , which pro tests were docke ted unde r the protest case numbers lis ted bel ow and subsequently denied by the Coll'ector of Cu stoms of Manila i n a dec ision rendered on Augu st 27 , 1973 and r eceived by petitioner on October 8 , 197 3: Ves sel Registry No. Manila Protest No . Vi sayan 839 6036 Shose i Mar u 795 60 37 -do- 10 06 608 5 San Car l os 1054 60 94 Fer n g a te 1 275 7 025 Vi sayan 1 399 7039 1 548 7 06 2 224

' DECISION - CTA CASE NO . 2573 - 5- Yoshu Maru 1937 70 82 Shosei Mar u 52 800 4 Shi zuu ra Maru 128 8029 Vi sayan 1715 808 2 Yuyo Maru 421 810 6 Lucky. No . 1 762 8160 Shosei Maru 883 8178 Yuyo Maru 1134 820 8 Stolt Si dra 1358 824 2 Bonneville 1492 8245 Chevron Genoa 1473 8246 zuiko Maru 1 520 8247 Shosei Maru 2120 8316 Stol t Boel 946 8861 5. On October 23 , 1973 , petitione r a ppealed to respondent the decision of t he Collecto r of Cu stoms of Manila in said protest cases , which appeal was docketed as Customs Case No . 73-~ 38 . 6. On Novembe r 21, 1973, r espondent rendered h is decision in Customs Case No . 73-138 af firmi ng lu !�!� the dec ision of t he Collector of Cu stoms of Man ila i n s aid protest cases, copy of which deci s ion was r eceived by petitioner on November 28 , 197 3 and is hereto attached as Annex "A" and made an i ntegral par her eof . Hence the presen t r ecourse. Peti tioner assails the right of the Bureau of 225

DECISION - CTA CASE NO. 2573 -6 Cus toms to impose and ~ollect the checking c harges aforesaid . Argumen t advanced 's tha such charges � are i mprope r . easons : (1) ,t~o statutory author i t y � for the collection of checking charges at the Port . of Manila; and (2) .No check ing services were r endered to a uthor ize t he i mpos i t ion and collection of checki ng char ges . 1 . Petitioneris position of no statutory autho- r ity for the collecti on of chec king charges at t he Port of Manila calls t o mind Caltex (Philippines) .Inc . vs. Acting Commissioner of Customs, CTA Case Nc o 2564 , March 31, 1975, certiorar i denied in L- 41595 , Febru a r y 6, 1976 , the factua l setting of which i s on all fours with the case at bar, including the par ties involved and i ssues litiga ted , � and wher e this Court di ~posed of the same ~ontent i on in clear and unequivocal terms , in th~ following wise: The collection of c hecking charge s on lubr i cat ing oi l fr om pe tit i oner was made pursuant to Cus t oms Memorandum Orde r No . 55-69 dated Octobe r 3, .1969 , whic h states : "( 6) At the Cas h Division, the Bi ll i ng Cierk� t oge ther wi t h t he Liqu i dator a ssigned therea t fr om the Management Overseer Grou p and the r epresenta tive of the arrastre c ontract ors wi ll compute t he amoun t of c hecking charges and prepare the arrastre bills. The special permit s ha l l be val i dated upon paymen in advance of the corresponding c heck- . ing c harge s as c omput ed , in c ash or i n certnied check by the owner , 226

DECISION - CTA CASE NO . 2573 - 7- i mporter, c onsignee and/ o r broker of t he cargo subj ect to refund if it is l ater ver ified t hat no ac tual c heck ing services has been rendered. All payments in advance shall be received by t he telle r de s i gnated for s uch purpose by the Chief , Cash Division , and Offfcial Receipts shall be i s sue d for such paymen t to be credited to the Portworks Fund . A copy of the Official Re- ce i pt and a copy of the Arrastre Bill shal l be forwarded by the Cash Division to the Int ernal Audit Service afte r paymen t. HENCEFORTH NO PAYMENT TO THE ARRAGTRE CONTRACTORS OF CHECKING CHARGES FOR CHECKING SER- VICES AT THE BAY SHALL BE ALLOWED OR AUTHORIZED ." (Exh . " 4" pp. 33- ~5 , CTA rec.) The collection of checking charges as embodied in the aforesaid Customs Memorandum Order No. 55-69 i s authorized by Section 3302 of the Tar iff and Customs Code , wh ich pro- . vides as follows : "Sec . 3302 . Other charges ,- . When any artic le is sold or any services rendered by the Bureau of Cus toms in any ma tte r fo r which a charge ma y be collected legally , no fee therefor having been fixed by l aw, s uch charge shall be on such amoun t as may from time to time be fixed by r egulation or order of the Commissioner and appr oved by the department head: and the payment of such charge may be made by affixing and cancelling t he documentary customs stamp ." (Under lining �supplied.) . It i s apparent from the above quoted pro~ vis i ons of t he l aw that respondent can fix by regu lation or order the amount of c hecking c harges when the amou nt is no t fi xed by law. The cont ention of petitioner to t he effect that ther e exi s ts no statutory authority as a basis for the collection and imposition of checking charges on its lubricating oil is wit hout merit. 227

II II . f l� ' II I. Ir DECISION - CTA CASE NO. 2573 - .s - We fi nd no c ogent and valid reason to modify , much l ess depart from the conclusion r eached in Caltex (Philippines) _I nc ., as e xpres sed in the above quoted opinion of the Cou~t ~he~e , and the same shou ld ~esolve the i dentical p~oblem now brought before u s in this appeal. 2. Petitioner further contends that the amount of P30,958 . 30 paid as checking charges should be re funded to .it in accordance with paragraph 6 of Customs Administrative Order No . 55-~9, for t he rea son that there we re no actual checking services rend e ~ed by the Bureau o f Customs , or its ar~astre contractor, on the lubricating oil shipments consigned to i t . We find pet i tioner ' s contention well taken. In order to have a more effective means of colle'ct1.ng lawfu l revenues , dues, f ees , charges, fines and penalties accruing under the Ta riff a nd Customs Code , the Bureau of Customs promulgated Cu stoms Memorandum Order No. 55-69 dated October 3, 1969 providing for the collection of checking charges in advance ; and the summary report of the arrastre checker is proof of actual checking services rendered . (Special and affirma ti ve de fenses of r espondent in his answer to petitioner's petition f or review.) To quote f paragraph 8 of s aid memorandum order : 228

I. :\ . DECISION CTA CASE NO . 2573 .- 9 - '8) After the ships i de d ischarge at the bay i s completed , the Customs I nspector on board and the arrastre checke r who shal l be a qual i fied surveyor in cases of bulk cargoes shall sign on t he f ace of Special Permit i ndicating time of completion of shipside d ischarge. The Arrastre Checker shal l also submit to the Customs Inspector on board a _eummar y" report of actu a l s e r - . vi ce rendered to be attested by the inspector .in five (5) copies, the original to be sub- mitted t o t~e Cash Div i s ion by the Contrac tor �~ Head Checker, one copy to be reta ined by t he Customs I nspector , one copy for the broker/ consignee a nd one copy f or the Arrastre Contr ac tor. The summary_��port duly accomp- lished shall be proof t hat checkin services was rende~. x x x 1n 1ng suppl~ed . ) If the summary r epor t of the arrastre checker is 0h~ evidence tha t checking services had been rendered, why i s it tha t in deny ing the pr o t ests of petitioner aga i nst the imposit ion and col l ection of c hecking charges on i ts l ubricating oil sh i pments , the Collector of Cu s t oms of Man ila based its decision dated Augus t 27, ' 1973 on t he presumption of law that "offic i al duty has been regularly performed" under Section 5 , Rule� 131 of the Rules of Court and ~ on the summary reports of his ar r astre c hecker as provided for in Customs Memorandum Order No . 55-69? Then, when the protest cases were appealed to r espondent Commiss ioner of Custo~s, the decision of t he l atter dated November 21, 19 73, affirm- ing in !2!2 t he dec ision of t he Collector of Cutoms, merely no ted tha t Cu stoms Memorandum No. 55-69 � provi8es that t he s ummar y report of t he Arr a stre Checker s shall 229

II ' DECISION - CTA CASE NO. 2573 - 10 be proof of actual check i ng services rende red"J and "With the summary r eport of the Arrastr e Checkers , he presumption of l aw is that checking services have been rende red in the i nstan t cases , since the presump tion of law is to the effect that official duty has been regular ly pe rformed". (pp. 6-7., CTA r ecords.) . Nothing - absolute- ly noth ing - is said in the dec is ions Of t he Collect or of Customs and Commissioner of Cu s toms of the summa ry reports duly accomplished by their arrastre con tractor that checking serv i ces were rendered, when these reports ar e supposed to be official records of the Bureau of Customs and unde r the customs memorandum , proof of actual checking services rendered. It i s to be fairly and justly pres ume d that the Comm issione r of Customs, which possesses a power so comparatively broad and searching as to fix by regulation or order checking charges for services rendered has so shaped the customs memo randum order as, without ambi - guity or doubt, to bring within it everything it was meant to be . Hence , where his memorandum order requires that the summary report' of t he arrastre checker is proof of actual checking services render ed , the right of the Bu r eau of Customs to col lec t chec king cha rges should not be planted upon the presumption, standing alone , that official duty has been regularly performed. Accordingly, 230

DEC I SION - CTA CASE NO ~ 2573 - .11 - as c ontended by pe t itioner , the pr esumption that checking services have been rendered should arise upon the existence of " s ummary reports duly accomp- lished" , and not based on another presumpti on that such summary reports e x i s t because offici a l duty has been performed . An assessment , wh i c h in this case is the l ia bili t y of petitioner to checking ch a rges, must be based on actual fac ts . The presumption of correct- ness of assessment be ing a mere presumption cannot be made t o r es t on another presump tion . (Colle ctor of Internal Revenue vs . Ben ipayo , L-~3 656 , Januar y 31, 1962, 4 SCRA 182 , 1 8 5o ) . At any rate, in accor dance with Section 2, Ru le 7 of the Rules _of the Cou rt of Tax Appeals, 'which pro- vides that the Commissi oner of Customs shal l certify and forward to this Court with in ten (10) _days after fili ng his ans wer , respondent , upon moti on of petitioner , was d irected to f orward and certify , as part of the Customs records bearing on thi s case , the summa ry re- ports of the arrastre checkers e Du r ing the hear ing of th is case on July 11 , 1983 , however , r espondent ' ~ counse l oral l y manife sted before thi s Cou rt th a t due to the lapse of almost t en (10) _years , t he summary reports of the arrastre checkers on the�impor tat i ons in question could no longer be l ocated desp ite diligent efforts. 231

DECISION - CTA CASE NO . 2573 - 12 - Nevertheless , if in t he dec isions of the Collector of Customs of Manila and r espondent Commiss ioner of Customs in the subject protest cases , which were pro- mulgated on August 27 , 1973 and November 21, 197 3, respectively, the summary reports of the arrastre checkers we re never cited or menti oned as evidence that checking serv ices were rendered pursuant to Memo r andum Orde r No . 55-691 the Cu s toms r ecords s ub- mitted to t hi s Cour t on Febr uar y 11, 1974 do not i n- elude or contain the summary r epor ts of check ing ser- vices performed on the oil shipments of petnioner; and the personnel o f t he Bureau o f Customs could not locate them , the only i mplication 5 tha t such s ummar y reports do not exist . Undou b tedly , it seems clear tha t no c hecking services were actually rendered by the Bureau of Customs or its arrastre contractor on the lu bricating oil shipments i nvolved in this case . As observed by this Court in Caltex (P h ilippines) .Inc. vs. Acting Commissioner of Customs, CTA Case No. 2564, March 31, 19 75 , c e rtiorar � denied in L-.1595, February 6, 1976, which as stated earlier , is on all fours wi t h the instan t case by r eason o f the exact i dentity of the f acts , par t i es and law i nvolved, as well as the i ssue l itigated: After t he vessel had arr i ved, three cargo inspectors headed by Mr . Conrado Mendo za of the E. R. Sande rson and Compa ny hired by the here in petitioner boarded 232

' I I. DECISION - CTA CAS E O. 2573 - 13 - t he vessel for t he purpose of check ing the quantity of the cargo a nd to deter- mi ne if the l ubricating oil was con- tamin ated with f or e ign elements while on boar d the vessel . Inspec tor s of R.S. Del Pan Indu stries hired by Far Ea s t Mo lasse s also boarded t he vessel for the same purpose but with a view t o pro- tect the vessel's owne r should a claim be fil ed by a consignee . The said sur- veyors watched the opening of t he tank hatches by th e vessel's cr e w, a f ter which the surveyors measu red the lubrica ting oil before the s ame was pumped to th e lighter s and barges, a nd aga in it was measured when already at t he l igh ters and b Q~ ges . During all the t ime that pe titioner 's surveycr s were performing the job measuring the said lubricating oil, none of the personnel of the Bu reau of Cu s toms pre sent at the aforesaid ves~el ever pa rt i cipated. In the light of the above , and t he uncontroverted testimony of petitioner's witness, Mr . Con r ado Me ndoza , who su rveye d the cargo invo l ved herein , th a t: Q. Mr . Mendo za, i n performing the sur - vey ing funct ions in connection with � the shipments involved in this case, would you know if ther e we re any representative fr om t he Bureau of Customs or Arr astre which conducted the same? A. In ever y ve s sel , t hey have customs i nspector on board and customs guard . There a re cas e s whe r e checkers are boarding vesse ls al s o - wh ich are ar rastre checkers. Q. Now, on t hose cases wh ere there were r e presen ta ti ves f r om the arrastr e operato r, what did these r epr esen t- atives perform in connection wi t h these shi pme n t~? A. I don 't exactl y know t he scope of the ir wo rk . What I know is , some times 233

DECISION CTA CASE O. 2573 - 14 - they come t o us and get quantities we computed, some ti mes t he measure- ment. After tha t they j ust leave for somewhere . XXXX Q. When you s aid the~ came to you and got figures you computed , what figures were you re ferring to? A. Fi gu res on the q uan tities of the produc t. We compu te the quantities , l ater or a fter these figures have been alr eady prepared they came t o us and ask how much. Bu t if you mean ac tu a l gauging per for med by them together with us, I canno t remember whether they did the ac tu a l~ug ing. (TSN, July 1 , 1982 , pp. 6 & 7) We are convinced that no actua l checking s e rvices we re rendered by the Bureau of Customs personnel or its ar ras tre contractor on t he oil shipments of petit'oner . In line wi th the dec ' sion of the Supr eme Court in t he case of Caltex Phili pp ines , Inc ., et al ., vs. Delgado Bros ., Inc., 96 Phil . 30 8, and t he decision of th i s Courl in Caltex (Phil ippines ) .Inc . vs . Act ing Cqm- missioner of Customs , supra , we fin d pe titioner 110t liabl e for the c hecking cha rges i n ques tion as no checking ser v ice s were pe rfor med by t he Bureau of Customs or by the a rr as tre contr actor . Accordingly , the checking charges paid by petitioner are r efund- abl e . WHE REFORE , the decis i on appealed from i s hereby , rever sed . Respondent Acting Commissioner of Cu s toms 234

T . I . ,; DECISION - CTA CASE NO. 257 3 - 15 - is ordered to grant pe titioner a t ax refund or credit in the amount of P30,958 . 30 SO ORDERED. Quezon Ci ty, Metro Manila, Septembe r 26 , 1984 . WE CONCUR: - 235