CTA Case No. 2374 (Decision)

r ' tW ' ~T.IC OF THF PtiH PtNE8 R If fAA. APP . .J..b EZON ~ FABIAN DAHAL'HIO , Petitioner , - versus - C. T . A. C SE NO . 2374 COHHISGio:ilEH OF CUSTOltlS , Respondent. X- - - - - - - - - - - - X HADJI ��lOHAHH D ALI , Petitioner , - versus - C. T . A. CASE NO . 2375 C011HISSI ONZR OF CUSTOHS , Respondent . X- - - - - - - - - - - - X DECI S I 0 N Petitioners have appealed from the deci- sion of the Commissioner of Customs decreeing the forfeiture of (a ) 939 sacks of coffee beans loaded on board the vessel H/L "Hypha" for violation of Section 1 , Republic Act No . 2712 , other\�Jise entitled uAn .Act to Prohibit the Importation of Coffee" , in relation to Section 2530(f) of the Tariff and Customs Code; and (b) the vessel l-1/ L "Hyphan for violation of Section 2530(a ), ( b) and (c) of the sar1e Code . The appealed decision fu r ther ordered the Collector of Customs of Nanila to dispose of the 939 sacks of coffee beans in accordanc e with Section 2 , Republic Act No . 2712 , after }

DEClSION - CTA CASE NO . 2371.1- & 2375 2 the appraisal value thereof had been taken due to their perishable nature . The disposi- tion of the vessel H/1 " Hypha" -was , however , held in abeyance pending clarification of the presidential policy on seized and forfeited vessels used in smuggling . The above-entitled cases lllere jointly heard and tried administratively and judicially later on by this Court . In addition to the evidence already adduced at the administrative hearing , petitioner submitted additional evidence during the judicial hearing . Thereafter , res- pondent submitted the tvlO cases for decision based solely on the Customs ' record and the evidence adduced at the administrative hearing . The records show that the vessel M/1 "Hypha" and its cargo of coffee beans �\rlere seized by operatives of the Philippine Coast Guard and Agents of the Anti- Smuggling Action Center (ASAC) vihile it 1-vas docked at the Navo- tas Anchorage Area , Fasig River , near the Huelle de la Industria , Nanila . Thereafter , said vessel vras tm�Ted to the Yacht Basin of the Philippine Navy , Roxas Boulevard, Nanila . On December 26, 1969 , a thorough investigation vlas conducted by the apprehending officers and they found that the vessel }�/1 "Hypha" '\vas loaded vii th 939

DECISION - CTA CASE NO . 2374 & 2375 3 sacks of imported coffee beans and the said vessel vias not provided vlith (1) fire hose , (2) fire pump, (3) Certificate of Philippine Registry , (lr) Certificate of Ovmership , (5) Shipping Articles, and (6) Cargo Hanifest. (EY...hs . N and H, pp . 37- 38 , Folder II, Customs rec .) On January 5, 1970, the Collector of Cus- toms of Nanila issued a Harrant of' Seizure and Detention of the vessel and its cargo of coffee beans based on the denunciation of the appre- . hending officers . On January 8, 1970, petitioner Fabian Damalerio 1 s counsel filed a vlritten motion to dismiss the denunciation alleging , among others , that the seizure of the 939 sacks of coffee beans is baseless and unwarranted be- cause they1.vere not smuggled from Indonesia. The said motion v1as , hmrever , denied and the Col- lector of Customs of Manila proceeded with the joint trial of the two forfeiture cases . After the termination of the trial on July 20 , 1970 , the Hearing Officer prepared a decision for the Collector of Customs of Manila , the dispositive part of which ordered t1:1e re- turn of the vessel H/1 "Hypha" and the 939 sacks of coffee beans to their owners o C:Exl1s o 9- 9 to 9- 9 P, pp . 260- 276, Folder I, Customs rec .)

DECISION - CTA CASE NO . 2374 & 2375 4 The said Collector , however , disregarded the proposed decision and rendered another one dated September 9, 1970 , wherein he ordered the forfeiture of the 939 sacks of coffee beans and the vessel in question . (Pp o 294- 310 , Folder I , Customs rec .) The outright forfeiture of said vessel was modified in the decision of the Commissioner of Customs . The factual issues to be evaluated and re- solved by this Court are the follm-ring : (1) Whether or not the 939 sacks of coffee beans i.�ere smuggled by peti- t i oner Fabian Damalerio from In- donesia; and ( 2 ) -, hether or not the vessel H/ L fiHypha" was used in the smuggling of coffee beans from Indonesia . The lai..J allegedly violated by petitioner l!'abian Da:rnalerio provides , among others , as follO\AJS : Sec . 1 � 'I'he importation of roasted beans , r oasted ground coffee , instant and soluble coffee in povider form , extract or concentrate in liquid form or finished coffee products in any form , ravl coffee beans of the robusta , excelsa, and liberia varieties , is hereby prohibited; x x x x Xo (Rep . Act No . 2712) . The civil penalty for illegal importation of coffee beans and the unla\�Iful use of the ves- sel is prescribed in Section 2530 of the Tariff and Customs Code, the pertinent portions of J

DECISION - C'I'A CASE NO . 2374 & 2375 5 lvhich provide as follows : Sec. 2530 o Property Subject to Forfeiture Under Tariff' and Cus - toms La.ws .�- Any vessel or aircraft , cargo , articles , and other objects shall , under the following conditions , be subject to forfeiture : a . Any vessel or aircraft , including cargo, which shall be used unlavlfully in the importation or ex- portation of articles into or from any Philippine port or place ex- cept a port of entry; and any vessel vrhich , being of' less than thirty tons capacity shall be used in the importation of articles into any Philippine port or place except into a port of the Sulu sea where import a tion in such vessel may be authorized by the Coiilmissioner , with the approval of the department head . b . Any vessel engaging in the coastwise trade which shall have on board any article of foreign grmvth, product or manufacture in excess of the amount necessary for sea stores , without such article having been properly entered or legally imported. c . Any vessel or aircraft into which shall be transferr ed cargo un- laden contrary to law prior to the arrival of the i mporting vessel or aircraft at her port of destination. f . Any article of prohibited import a tion or exportation , the im- portation or exportation of Hhich is effected or attempted contrary to lavT , and all other articles which, in the opinion of the Collector , have been used, are or were intended to be used as instrUit1ent in the importation or exportation of the former . Respondent claims that the seized 939 sacks of coffee beans were smuggled from Indonesia .J

D.ECISION - C'I'A CASE NO .. 2371t- & 2375 6 while petitioners contend that they came from Basilan City, Philippines . Consequently, the forfeiture of the vessel N/ 1 " Hypha" vvill de- pend upon the legality or illegality of the seizure of the coffee beans found aboard the seized vessel. A critical study and painstali:.ing analysis of the voluminous records and the lengthy testimonies of government l�ri tnesses reveal that respondent ' s evidence is neither persua- sive nor convincing in concluding that the 939 sacks of seized coffee beans vrere smuggled from Indonesi a . Apparently , respondent relied too much on the declarations of Hr . Barahim Ban- daeng vrho testified that : �~ He has been employed by peti- tioner Fabian Damalerio since 1967 as " patron" of the vessels that were chartered by said petitioner from time to time� in November 1969 , the vessels H/ L ?.June" and H/1 " Hypha" vier~ chartered by Fabian Damalerio; on November 22 , 1969 , he was hired by the said petitioner to act as "patron" of the vessel H/L "Juneu; on o.r� about the same date, the chartered vessels were docked at 1amitan vJharf , Zamboanga , vlhere he loaded sugar , :matches , milk , candies, rice , E<.nd petroleum products aboard the vessel H/ 1 fiJuneu; vrhen it sailed for Indonesia, it was not provided with a clearance certificate from the Philippine Coast Guard in Zam- boanga; during the trip to Indonesia, he used the old permit issued to him in J'uly 1969 as npatron11 of the vessel "Richardson" ; when the vessel

D~CISIO~ - CTA CAS:i!: N � 2374 & 2375 7 /L "June" sailedfor Indonesia , the vessel H/L "liypha11 1:1as left be- hind at Lami tan fuarf; he did not knm�l the eneineer and the other cre1.-T r1embers of his vessel except Ismael .dandaeng , his son, and Hessrs . Gapan Sali and Luis Delgado , Jr . ; tho vessels H/1 lf June" and H/1 11 Hypha" arrived in Marore , Indonesia, on December 1 and 2 , 1969, respectively; durint, his stay in :Jarore, he never approached the Border and Crossing Officer as his old clearance certifi- cate had already expired; the Philip- pine goods loaded on both vessels were bartered for Indonesian coffee beans and copra; he actually sa1tl the foreign markings of the sacks con- taining the coffee beans loaded on board tne vessel �1/1 " Hypha"-; on December 8, 1969 , upon arrival of the H/L " June" at 1amitan, Zam.boanga, he was instructed by petitioner Damalerio to unload the 300 sacks of coffee beans for storage "~ayt phhais" warehouse � the vessel 1� / 1 arrived af 1amitan, Zamboanga , on Decetaber 9, 1969 , but it never unloaded its cargo of coffee beans; the 300 sacks containing coffee beans which were already unloaded were painted t o remove their foreign markings; and the sai d 300 sacks of coffee beans were transferred and loaded aboard the vessel I/1 " Hypha11 vlhich subsequently left for 1� anila . The foregoing testimony of Barahim Bandaeng is replete with glaring contradictions and in- consistencies . As aptly pointed out by res- pondent ' s Iiearing Officer in the proposed decision submitted to the Collector of Customs , some of the major lapses of respondent ' s key witness are substantially as follows : 1 � Bandaeng declared that he \�las no lonber employed by Fabian Damalerio )

DECISION - CTA CASE NO . 237'+ & 2375 8 since November 22 , 1969. If the allegation is true, how come that he was the acting patron of the vessel H/L "June,. in late Novem- ber: 1969? How come that he was instructed by petitioner Damalerio to load and unload goods from the vessels 1'1/L "June " and H/1 n Hypha'' before and after their arrivals in Harore City? 2 . Bandaeng saw personally that the sacks with foreign markings were painted over and over again to get rid of their foreign markings.. If the allegation is true, hov.r come that there were still foreign mark- ings found on said sacks vlhen the vessel lVI/L "Hyphau \�las apprehended in ~1anila? _. . 3 .. Bandaeng testified that \vhen the vessel M./1 11Hypha" arrived in Lamitan , Basilan, on December 9, 1969, he loaded on board said vessel 300 sacks of coffee beans, vlhile the pur- ser , Fred Santiago , loaded thereon an additional 600 sacks of coffee beans - a total of 900 sacl\:s . If it is true that the imported sacks of coffee beans aboard the vessel N/L 11 Hypha11 were not unloaded , how come that only 939 sacks of coffee beans were seized by the apprehending officers lvhen there should be more'?' '+ . Bandaeng declared that he knew all the activities of the vessel M/L "Hypha11 from the time it left Lamitan, Basilan, until it arrived in Marore City and vice-versaQ If the allegation is true , how come he knevJ less the identity of his own e ngineer and the members of his crevl'? (Exh . 9- 9-C, n . 269 , Folder I, Customs rec .) - \�!hat is more , Bandaeng's testimony was effectively contradicted on material points by respondent ' s corroborative witness , Lt . Felinor ( J I

DECISION - CT1 CASE NO . 2374 & 2375 9 R. Yeban . His declarations are substantially as follovls : Ie is an officer of the Philip- pine Coast Guard detailed 1--ri th the Department of :F'oreign Affairs a s Border and Crossing Officer ; he re- presented the Philippine panel in Harare , Indonesia; as such representa- tive he had to enforce the Border and Crossing agreement beb�reen tr1e t\.,Io countries; his duties �vJere to inspect special permits , cargo manifests , medical certificates , et c.. and to countersign papers of crew members of vessels going beyond the Border and Crossing station; said agreement provides that only bona fide residents of Balut and Sarangani Islands 1--1ere qualified and authorized to bring goods to Indonesia worth P5 , 000 oOO or less and to barter them for In- donesian goods� he was in Marore , Indonesia , on 6ecember 5 or 6, 1969 , v.rhere he inspected the vessel H/L 11 Eypha" and its cargo; among the passen ers thereof were Pedro Africa, Jesus Castro and Pedro Francisco - all of vihom are residents of Balut Islands; said persons were the owners of the Philippine goods on board said vessel consisting of 100 cases of condensed milk , 5 cases of Lux soaps, 50 cases of candies and 10 cases of other so3ps; said goods were bartered for Indonesian coffee beans; Philippine Bo goods valued at P5 000 . 00 could be bartered for only to 100 sacks of coffee beans - not 900 sacks; Mar ore, Indonesia has an area of 3 to 4 square miles; his office was only 200 meters avJay from the pier \vhere the vessel M/1 nHypha" was docked; from his office he could see or notice any vessel that will dock at Harare either during day or night time; in December 1969 , the vessel M/1 "June" never reached Marore� all passengers and crew member s of evefy Philippine vessel goine to and coming from Harore are given clearance by the Border and Crossing Officer of both countries; Barahi m Bandaeng never

DECISION = CTA CASE NO . 2374 & 2375 10 requested for such clearance in December 1969; in fact , in December 1969 he never saw Barahim Bandaeng in Marore; his record shows that Bandaeng \vas in Harore only in Sept- ember 1969; the official Border Crossing :ft~gort (Exh, 0) for Decem- ber 1 6o neither show that the vessel H 1 1 June has docked--at r�iarore , Indonesia, nor Barahim Bandaeng appeared among the persons listed therein; by tonnage, the coffee beans that were loaded on board the vessel N/L " Hypha" vJere estimated at 80 to 100 sacks; and the trip of the vessel � H/1 "Hypha11 was legal as it 1vas pro- perly documented and everything was in order. Considering the conflicting testimonies of :respondent's witnesses , this Court is inclined to give more weight and credence to the testi- mony of Lt . Felinor R. Yeban, a responsible government official, based on the presumption in lavr that he has performed his duties regular- ly. In contrast , Barahim Bandaeng admitted that he left Lamitan, Basilan, for Indonesia without securing any clearance from the Philippine Coast Guard as required by law and that he used an expired permit of another vessel during the voyageo Lt . Felinor R. Yeban, however, asserted that Barahim Bandaeng and his vessel vrere not seen by him in Marore , Indonesia, in December 1969 and that his official record disclosed that neither Bandaeng nor his vessel N/L UJune" ever _ reached Indonesia at the time . \.1Ihat is more ,

DECISION - CTA CASE NO . 2374 & 2375 11 Bandaeng claimed that he vras no l onger in the employ of Fabian Damalerio since November 22 , 1969 . From the foregoing conflicting declara- tions , the petulant and perverse testimony of Barahim Bandaeng as a 1.-1hole is of doubtful veracity. Bandaeng also testified that the 300 sacks containing coffee beans aboard the vessel H/ L "June" were unloaded at Lamitan, Basilan, for the purpose of painting the sacks to cover their foreign markings . If this is true , why ~>rere the sacks containing coffee beans on board the ves- sel N/ L "Hypha" not unloaded and like1.vise painted to cover their foreign markings? If Fabian Damalerio really intended to cover the evidence of his mi sdeed , it is only natural for him to erase all the foreign markings on the remai ning 639 sacks of coffee beans . The evidence , hm>Jever , shovrs otherviise . Assuming arguendo the correctness of the declaration of Bandaeng that , at the time material to this case , the vessel M/ L " June" was loaded with 300 sacks of coffee beans at Harore , Indonesia, and the vessel N/L nuypha", according to Lt . Yeban ' was loaded 'dth 100 sacks of coffee beans , then the total of both shipment would only be 4oo sacks . \vhere would the reamining 539 sacks of

DECISION - CTA CASE NO . 2374 & 2375 12 coffee beans , which V>Tere also seized by the appr~ending off~cers, come from? This point has neither been clarified nor explained by respondent ' s witnesses to the satisfaction of this Court as they were not presented during the judicial hearing of the above- entitled cases . In the administrative hearing , another pro- secution witness , Mrs . Jacoba Paterno , testified in substance as follows: She is the President of the Coffee and Cacao Association of the Philippines from 1957 to the present; she is also the Manager and Treasurer , Cooperative 1arketing .ssociation of the Philippines; she received representative samples of the seized coffee beans and examined them in compliance with the letter- request of General Pelagic Cruz , ASAC Chairman ; she found the seized coffee beans to� be of the Robusta variety mixed with Excelsa and other immatured beans; they were processed by the Dry Method ; said coffee beans vrere of old stoQ.k , very dusty , dirty and not fit for human consumption; the seized coffee beans are of the kind \vhich are gro1�rn all over the Philippines , especially in Basilan; she believes that the 939 sacks of the seized coffee beans could not have been produced in one province; the old and dirty sacks con- training the seized coffee beans v.rere not manufactured in the Philippines; and Itemcop (Industrial Textile Manufacturing Corp . ) is the only manufacturer of indus- trial sacks in the Philippines . From the highlights of the foregoing test!- mony , we are constrained to concur vli th peti- tioners ' view that the 939 s~cks of coffee beans were of local origin and not imported . Res -

DECISION - CTA CASE NO . 2374 & 2375 13 pondent 1 s v.Ii tness disclosed that the said coffee beans were of old stock, very dusty, and dirty . The finding of respondent ' s wit- ness tallies and corroborates v.rith the testi- monies given by the seller-farmers that , long before they sold cheir coffee beans to peti- tioner Fabian Damalerio, they \.�rere first stockoiled because, prior to 1969 , the price of coffee beans in the market l�Tas very low . (Exhs � 1-1 , 1-1 a, 1-1 - c ) � � � The declaration of respondent ' s witness that the seized coffee beans were not fit for human consumption strengthens our belief that the disputed coffee beans were not smuggled from Indonesia . The reason is obvious . Peti- tioner Fabian Damalerio is not expected to rj_sk his life and limb to transgress the law , sail back and forth through the rough waters of the Sulu Sea , and invest substantial amount of money in buying and smuggling from Indonesia 939 sacks of coffee beans which are not fit for human con- sumption. Verily, an astute and experienced businessman like petitioner cannot be expected to enter into a risky business venture of buying and selling inferior coffee beans vrhich are of \ old stock,._ very dusty , dirty and not fit for

D3JCISION - CTA CASE NO . 2374 & 2375 human consumption. As it is of public know- ledge that people engages in business for live- lihood and profit, we cannot see any justifi- cation for respondent ' s conclusion that the deteriorating coffee beans were i mported and smuggled from Indonesia . Respondent ' s 1vitness admitted that the variety of coffee beans seized from petitioner Damalerio are the type grm..rn all over the Philippines . She advanced the opinion, however , that the 939 sacks of the seized coffee beans could not have been produced in one province alone . The said opinion has no solid factual foundation . Mr . Eliseo c. Carandang , Director of the Bureau of Plant Industry, contradicted the said op~nion when he attested officially in a letter to the ASAC Chairman that the Jtnfiual Production (1968-1969) of Basilan City was 1, 939,100 kilos of dried coffee beans - equiva- lent to more than 29,833 sacks of 65 kilos each . Again, we give more vTeight and credit to the state- ment of a responsible government official. Respondent 's witness also declared that the seized sacks containing coffee beans were not made in the Philippines . She concluded , there- fore , that they came from Indonesia, as -vrell as the coffee beans placed therein. "s. I .)

DECISION - CTA CASE NO . 2374 & 2375 15 On the other hand , respondent ' s Hearing Officer opined otherwise. In substance, he disagreed with the conlusion of the prosecu- tion �Hitnesses that the seized coff ee beans came from Indonesia simply becaus e the vessel H/ 1 "Hypha" made a trip to Harore , Indonesia , and the seized coffee beans 1.vere placed in Indonesian sacks . It is argued that , if the theor y of the prosecution is correct , then the coffee beans placed in Chinese or l~alaysian sacks would be considered smuggled from China or Malays i a . ~he said Hearing Officer further observed that residents of Balut and Sarangani Islands are authorized by the Border and Cross- ing Agreement to barter their goods in Indonesia . Consequently , they accumulate sacks lvi th In- donesian markings Hhich vJere sold in the open market . It cannot be concluded , therefore , that local coffee beans placed in Indonesian sacks 1vere unla\'lfully imported from Indonesia o (~age 14 , Exh o 9- 9; p . 280 , Folder I , Customs rec .) ~;. e are in complete accord i>ri th the observa- tions of respondent ' s Hearing Officer because pe- titioner Fabian Damalerio presented in evidence an invoice dated November 24 , 1969 , shm'ling that the sacks in dispute -vrere purchased by him from Hadipe Her cantile , Zamboanga City o (Exh . 11 ).

DgCISION - CTA CASE HO . 2374 & 2375 In addition, former Commissioner of Customs Cesar Climaco testified that sometime �in September 1968 , some 1, 500 bales of jute sacks vri th foreign markings were smuggled by Hadip �ll Hercantile into the Philippines via Zamboanga ; the sa111e \�lere intercepted and apprehended by him; said firm secured their release from cus- tom ' s custody after payment of the taxes , duties , and fine due thereon; said smuggled jut a sacks -vrere splashed vTi th black paints to cover their foreign markings; and said jute sacks were later on sold in the open market in Zamboanga , Basilan , and Cebu . Petitioners ' evidence are supported and cor- roborated by the following uncontradicted testi- monies : 1. Petitioner Fabian Damalerio stated in his defense as follows : He "'.-Tas licensed as a general mer- chant since 1963; he was engaged in the buy- and- sell of coffee, copra , rice , corn, peanuts , cocoa , coconuts , and other agricultural products ; he vias provided since 1968 with a special license as a dealer in copra , coffee , corn grains as required by a City Ordinance which was passed for the first time in that year ; in November 1969 , he contacted the ov.rner 1 s representa- tive of the vessel N/ 1 " Hypha" for the purpose of chartering the s~me ; he was informed that the said vessel had al - ready been chartered by other persons up to Deceober 10, 1969 and that it was only available after said date; he denied having been to Harare , Indonesia ,

DECISION - C1'A CASE NO . 2374 & 2375 17 aboard the vessel 1:�1/1 nHypha" in Dec- ember 1969; he denied having chartered the vessel l�VL flJunen and made Barahim Bandaeng a upa.ti:'on'' thereof; the coffee beans stored in his bodega in 1969 were purchased from Basilan City Hayor Leroy Bro~>rn and other farmers of said City; h e is an 0\vner of a coconut and coffee plantation vli th an area of 48 hectares; he harvested t herefrom yearly 90 to 100 sacks of Robusta coffee per hectare during good harvest , othervrise 50 to 60 sacks; he purchased the contro- versial sacks from Hadipo Mercanti le as evidenced by a sales invoice (Exh. 11) ; the seized coffee beans were inspected and fumigated inside his bodega by e mployees of the Bureau of Standards and the Plant Quarantine Office of the Bttreau of Plant Industry , Zamboanga City ~ (Exhs . 7, 7-A, 8, 11, 11-A and 11-B;; the coffee beans in his bodega "rer e loaded aboard the vessel H/ 1 nHypha" after its arrival at Lamitan , Basilan , in December 1969; -vrhen the seized coffee beans were loaded aboard said vessel , Hr . Angel Sebastian, then Port Collector of Basilan City assigned at Lami tan 1vharf , collected the tax required by the ne\�T ordinance ; the City Treasurer of Basilan City thereafter sent him a letter demanding payment of the deficiency tax on the seized 939 sacks of coffee beans (Exh. 3- 3 , p . 815 T. s . n ., Folder V, ~1stoms rec o)� he stayed at the First Hotel , Manila , from 9, 1969 tso. nJ.a,nuFaorlyde1r3v, , December , 778 , up 1970 p. T. Cus - (Exh . 13 toms Hreycph. a)~� upon arrival of the vessel H/1 " in :Nanila on December 15, 1969 , it was apprehended by operatives of tre Philippine Coast Guard; there- after , he went to the Philippine Navy Headquarters to claim for the return of the seized coffee beans; he submitted to the investigators the documentary evi- dence supporting his claim; after meti- culously processing his claim, Atty. ~~tonio Umali , Legal Officer , ordered his assistant to help him prepare a motion to dismiss t,heFodldeenrunvc,iaCtiuosntom(Es xrhe. c . . ); 12 , p . 276 , T. s . n ( -I - )

D �'CISION - CTA CASE NO . 2374 & 2375 18 when the said motion was finalized, Atty . Umali vJrote at the back thereof as follovrs: La\v Division, 3rd Floor , Bureau of Customs, Hanila , " indicating to pet itioner the place where to file said motion; and the Collector of Customs of Hanila denied the motion in questi on. 2 . l'.layor Leroy Brovm of Basilan City , another defense \-.ri tness , declared as follmvs: He has been the Hayer of Basilan City from 1954 up to the present; he m�rns around 210 hectares of farm land planted to coconut and coffee; he is the Cha�rman of the Anti- Smuggling Committee in their .1:1.rea under an Exeeu tive ��� orde:r of the President; as such , he and his men apprehended the vessel "Susan" loaded with copra and coffee beans v�Ihich were smuggled from Indonesia; the said vessel and its cargo were seized and confiscated; he has known Fabian Damalerio since he was a small boy; Fabian Damalerio is habitually engaged in the buy- and- sell of farm products; on or about December 1 , 1969 , he sold 10- 1/2 tons of coffee beans to Fabian Damaler io under Invoice No . 959 (Exhs . 6 and 6- A); he is interested in the case against p~titioner Damalerio because , as Chairman of the Anti- Smuggling Coramittee and as :Hayer of Basilan City, his in- tegrity and personal interest are in- volved; he has personal interes:t in the case because petitioner Damalerio mves him ?11 , 000 . 00 representing the balance of the purchase price of the coffee beans sold to said petitioner; as Chief Executive of the City, he has received many complaints against the RASAC and � ASAC agents for alleged harassment of merchants; he ivent to the P1�esident denouncing the irregular seizure of the vessel and coffee beans in question; and, he and the other planters of coffee in Basilan have staunchly opposed the importation and smuggling of coffee beans as it \-rculd compete vlith their m-rn products considering that Basilan

DECISION - CTA CASE NO . 2374 & 2375 19 Cit y has more than enough coffee beans to supply.1the entire Phi lippi nes o 3. Fred Santiago for the peti- t i oners declared as follows : He is the purser of the vessel H/ L nuypha11 vlhich is m�rned by Hadj i Nohammad Ali; on November 22 , 1969 , he left Lamitan, Basilan, for Habila, Balut Island , because said vessel was chartered by 1essrs . Pedro Africa , Jesus Castro , and Pedro Francisco ; said vessel left Balut for Indonesia on December 1, 1969 loaded with various goods owned by the above- named persons; it arrived in Marore, Indonesia , on December 2 , 1969 vlhere the same vlere bartered for Indonesian products; during his stay in Harare , Indonesia, from December 2 to 6, 1969 , he never sa\v Barahim Bandaeng or the vessel 11/ L " June"; after the vessel H/ 1 uHypha" was inspected by Lt . Yeban it returned to l1ahila, Balut I sl and; from Mabila , their vessel proceeded to Lamitan , Basilan, because of oth; eamc harte r contract -vri th Fabian Damaleri Dec - ember 10 , 1969 , Darnalerio 1 s coffee beans were loaded on their vessel vlhich subsequently left for Nanila; and their vessel was properly documented vli th : Costwise License No . 23 7, issued in Zarnboanga City on November 20 , 1969� Certificate of Inspection Ho . 11 55- 69 with expiry date on December 20 , 1969; and clearance paper issued in Zamboanga by the Philippine Coast Guard . 4. Angel Sebastian, petitioners ' witness , states and deposes as follows: He is the collector of City Port Inspector ' s Office , Basilan City� he held the job since February 9, 1967 and Has assigned at Lami tan ~vharf; it -vras his duty to collect fees imposed by City Ordinance Fo . 506 on coffee beans , copra, fowls , hogs , corn grains , corn starch, and other products exported from

� DECISION - CTA CASE NO . 237t1- & 2375 20 Bas ilan City; on December 10, 1969 , he vTi tnessed the loading of Damalerio 1 s coffee beans on board the vessel 11/L " Hypha" from morning to evening; he issued to Darnalerio the corresponding receipt for local tax paid on account of the 600 sacks of coffee beans for export; he discovered later that 939 sacks of coffee beans vJere loaded on board the vessel instead of 6oo; he reported the discrepancy to the City rrreasurer � the City Treasurer in turn sent a letter to Fabian Damalerio demanding payment of the defic:lency fees . (pp . 83- 89 , CTA rec .) This Court cann.ot ignore and disregard the material evidence for the petitioners in the absence of any clear evidence vlhich vrould destroy and impeach the testimonies given by petitioners ' witnessesi Moreover , petitioners ' theory and defense are substantiated by the following documentary evidence : Exh. 2 - Letter of Director Carandang of the Bureau of Plant Industry, dated January 2 , 1970, addressed to the ASAC Chairman , shovring that Basilan City produces coffee beans far in excess of the quantity seized from the vessel H/L 11 Hypha11 ; Exh . 6 - List of coffee beans purchased by Fabian Damalerio in Basilan City from November 27 to December 7 , 1969 as verified by Rolando Saavedra , RASAC Team Leader , and one Pat . Hodolfo Aquino , showing that the seized coffee beans vlere purchased locally; EY~ . 6- A Sales Invoice of the coffee beans purchased by Fabian Damalerio from Eayor Leroy Brovm of l..3asilan City; Exh. 6- B - Purchase Invoice Nos . 951 - 973 issued to petitioner Damalerio ff)

DECISION - CTA CASE NO . 2374 & 2375 21 by local sellers of coffee beans ; Exh . 7 - Philippine Quarantine Service 7-A to Certificate and other support- 7- D ing papers , shovling that the seized coffee beans came from Basilan City ; Exh. 8 - Honey Order paid to the Bureau of Standards for the inspection of the seized coffee beans ; Exh.11-A Xerox copies of cash invoices of t o 11- D Hadipe Hercantile , proving that petitioner Damalerio purchased the empty sacks used as con- tainers of the seized coffee beans ; Exh.1-1 - Deposit i ons of seller- farmers , to 1~- a showing the sale of coffee beans to 1~ - c to petitioner Damalerio; and Exh. 5- 5 Depositions of seller- farmers , shovring the sale of coffee beans 5- 5- a to 5- 5- x to petitioner Damalerio . It appears to us that the Collector of Cus"boms .of Hanila and the Commissioner of Customs labored under a misapprehension of facts vJhen they sum- marily ordered the seizure and forfeiture of the disputed coffee beans and vessel o To shovl the inherent "\veakness of respondent 1 s d;and , we are reproducing hereunder the relevant portion of his decision vrhich reads : " Y...X xx XX o True , the excess of the aforementioned 100 sacks or coffee beans found on board the vessel H/ L " Hypha" by the apprehending officers in l'lanila cannot po ssibly be established by the orosecution panel as having actually come from Marore , Indonesia , but possib.].y \vere _taken from gther ship- ments also from foreign countries or from Indones i a itself and this ji~ es ( I)

D2CISIO ~ * C'rA CASE I'W . 23 7~- & . 2375 22 with the claim of the prosecution tha t vlhen Barahim Bandaeng was pre- sented as a 1.'litness , it (Prosecution) had decided to establish t he fact t a t the 939 sacks of coffee beans ~ - which were loaded on board t he vessel E/ L 11 Hypha" in Lamitan actuall y came from the vessel �.1/L "June" -and from the bodega of Fabian Dama.lerio in Lami tan , 1.;hic.h only proves that the coffee novr in quest ion is not local product ." (Exh. 10-1 OJ , p . 300 , Folder I , Customs rec .) XX XX XX XX �xx xx xx. If , on the basis of the allegations t hat those markings appearing on those sacks ( �xhs . 11 D", " D- 1" to " D- 9") vrhich contained the coffee bean s and tha t the vessel H/ 1 "Hypha" made a trip to Harare , Indonesia , it may be con cluded by the prosecution that said coffee beans �Here imported from Indonesia , then it may also be as.l.:ed vlhat about the markings appear- ing on the other sacks showing Philip- pine manufacture? The ans'lrJer is t ha t it having been established t hat coffee of this big quantity could not readily be obt ained i n Dapitan and immedi a te vicinity , then common sense dictates that imported coffee could have been placed in containers locally produced, to allay any suspicion that the coffee is not loc ally produced o" � By and large, this Office is con- vinced by the fact that coffee beans in quest ion , be cause of their d,eteriorating conQition and unusually big_quantity, originated and came fr om abroad , and that i s the ans1.ver to the main issue in this case . ' (Exh . 10-10- n , p . 000296 , Folder I , Customs rec . ) (Underlining supplied. ) It can pe ,gleaned f rom the f oregoing state- ments that the forfeiture of the disputed coffee beans and ves sel were based on mere presumptions

DECISION - CTA CJ~SE NO . 2374 & 2375 23 and inferences without sufficient valid justi- ficati on . What is more , respondent appreciated and sustained the evidence of the prosecution in capsule form and v1i thout explanation. Thus , it vias stated : On the basis of the evidence for the ~rosecution the following points are eloquently projected : 1 . That the coffee beans are of the obusta and Excelsa variety; 2 . That Fabian Damalerio ~~as really engaged in tile importation of coffee from Indonesia; 3 . That the 11/ L uHypha" "~�Jas chartered by Fabian Da.malerio for trips to Indonesia; Lt- . That the H/ L uHypha" via s actually in Indonesia on or before December 2 , 1969 prior to its appre- hension in Pas ig River , Hanila; 5. That the H/ L "Hypha" arrived at Lamitan '1Vharf on Dec- ember 9, 1969 ; 6. That the 900 sacks of coffee beans , more or less , were loaded on board the H/L "Hypha" in Indonesia; 7. That the N/L 11 Hypha" arrived at Lamitan vharf on December 9, 1969; So 'ThEt some of the sacks con- taining the coffee beans are painted \ofi th forei.,gn marlrings or characters ; � and 9. That the 11/L "Hypha" vras operating illegally without proper documentation . In rejecting petitioners ' defense, res- pondent in his decision stated as follmis :

DZCIS I ON - CTA C.ASE HO . 2374 & 2375 24 "For the defense , the signi- ficant points ti:1at are vwrthy of considerati on is the fact that the same varieties of coffee __Qeans in question could also be produced in the Phi lippines and also the allega- tion thg:t they viere l ocally pur- cl~aseus shovm b� t)1e .l:~Q.ei pts of purchase , On the first fact , this could be explained because Indonesia and the Philippines are \vi thin the same region in the tropics and , therefore , it is possible that they could produce the same varieties of coffee beans 'i.�Ti thout distinction i n quality and flavor . 11 0n the second point , it is true that receipts \�Tere produced purportedly to show that the coffee beans were purchased locally and that no less than Hayor Brm4n testified to the genuineness of some of purchases made by claimant Damalerio . A car eful exami nation of the re cei pts allegedl y coveri ng the sal es of coffee beans Hi ll , hm<Tever , show that they are sel f - serving and unc orroborated in their mater ial detai ls by competent evidence . Be- sides , they contain certain features vThich give the impression that they vJere designed purposely to be used as evidence for the claimant. " It is to be noted that the statements con- tained in paragraphs 1 , lt , 5, 7, and 8 of the decision , supra , were readily . admitted by petitioners because they are consistent with the testimonies of their witnesses . ~ s regards the statements in paragraphs 2 and 3, su-ora , they were based solely on the perverse testi- mony of Barahim .Bandaeng vlhose credibility as a witness was seriously doubted by this Court -for the reasons already explained . IVi th respect

DECISION - CTa CASE NO . 2374 & 23 75 25 to the statement found in paragraph 6 of the appealed decision , no evidence whatsoever was adduced by the opposing parties t~at the 900 sacks of seized coffee beans were loaded on board the vessel l�VL 11 Hypha11 in 11Iarore , In- donesia . On the contrary , respondent ' s evidence tends to s how that out of the 939 sack s of the seized coffee beans , 300 s acks thereof came from t he vessel H/ L 11J�une11 and transferred to the vessel H/ L 11 Hypha" \�Thile it itJas docked at Lamitan Wharf , Basilan, before it sailed for Manila . however , Lt . Yeban who is ano ther wit- nes s for the prosecution testified t hat the vessel N/ 1 11J'une11 has never been in Hc:uoore , Indonesia , thereby snowing a misapprehension of the f acts upon vrhich respondent based his conclusion t hat the .seized coffee beans came from Indonesia . Respondent claime d fur t her t hat the sales invoices submitted by petitioner Fabian Damalerio are self- serving and uncorroborated. Suffice it to say , Hr . Rolanda Saavedra , tHe RASAC Team Leader at Basilan , verified the said invoices and found them to be correct . (Page 963- 965 , Folder V, _Cu s toms rec .)

DiiCISION - CT t CA E ITOS . 237tl- & 2375 26 After sifting and evaluating the evidence adduced by the opposing parties , vre feel i're have reached the cross- road where we have to deviate and depart fror.J. the uncharted and ne b- ulou.s path trodden by the respondent Comrnissioner of Cu st oms in deciding the cases at bar on the merits .. I lJ 'II~IE'.'l OF 'ri-L!; FOREGOING , the decision of the respondent Commissioner of Customs appealed from is reversed. Said respondent is hereby ordered to release the seized 939 sacks of coffee beans to !J etitioner Fabian Damalerio and to re- lease the vessel H/1 " Hypha" to petitioner Had j i Hohammed .b.lio �vithout pronouncement as to costs . SO OH.DEB.ED . Quezon City, r�:ovember 29 , 197l.j.� \'1:!:.!. COHCUR : ~ Ch ./JL_J--~ ffisMAi( rvl.IDflU?'J Presiding Judge ('2 )