CTA Case No. 2371 (Decision)

REPUB(,tC OF THE PHTLJPP1~E8 C< �CRT OF TAX APPEALS QU-, EZON CITY CONCEPCION CALALANG , C. T. A. Case No . 2371 Petitioner, - versus - ROLAIIDO G. GEOTINA , Acting Commissioner of Customs , . Respondent . X- - - - - - - - - - - - X DEC I S I 0 N Thi s i s an appeal from a decision of respondent Commissioner of Customs , dated December 16 , 1971 , affirming that of the Collector of Customs of Nanila i n Seizur e Identification No. 8235, declaring the for - feiture of one Chevrolet Car , Sedan, Model 1956 , with Motor No . 004o962 F56Y , for violation of Section 2530 (m-1 ) and (m- 5) of the Tariff and Customs Code . The parties have entered into a partial stipula- tion of facts stating as follows: 1� That on :t-Iay 24, 1967 , the Supreme Court pr omulgated its decision i n G. R. No . L- 23929 , ent i tled "The Acting Collec tor of Customs of the Port of Manila , Petitioner yer sus Hon. Hermogenes Caluag , as Judge of the Court of Fir st Insta nce of Rizal , Br anch sIV. , sitting at Quezon City and Concepcion Calalang , r esponde nts" i n which the Su- preme Court recited the facts of the case , and which the parties accept in this case insofar as material hereto (copy of the said decision is hereto attached as Annex 11A" , and made an integral part of this stipula- t i on) ; 2 . That on July 22 , 1964, Mr . Pedro N. R. Domingo , Chief, Registration Division, Land Transportation Commission, wrote the Collector of Customs , Port of Manila , stating that the motor vehicle involved nchevrolet Sta . Wagon bearing Motor No. 004o962 F56Y,

DECISION CTA CASE NO . 2371 2 with File No. 124051 was originally re guis. s- . t ered in the name of Robert A. Gibson, Nilitary Port , Manila under File No o 124051 on September 12 , 1956 as tax- exempt and was renewed by him on April 24, 1957 with tem- porary Plate No . 535. At present said car was registered with Plate No . H- 279650 series of 1964 in the name of Concepcion Calalang , 471 Espana Ext ., Cubao , Quezon City~' Fur- thermore , he stated that "our records fail to show that taxes have been paid . n (Copy . of the said letter is hereto attached as Annex B 11 11 and made an integral part of this stipulation); . 3. That the parties reserve the right to adduce evidence on points not covered by this partial stipulation. " (pp . 67- 68 , CTA rec. ) Despite their reservation to adduce further evidence , the parties no longer did so after their partial stipulation of facm was admitted by this Court . Instead they chose to submit this case for decision solely on the basis of said stipulation and the pleadings . In the aforesaid case of Collector of Customs v . Caluag , et al ., G. R. No . L- 23925, May 24, 1967 , the background facts and circumstances were recited by the Supreme Court as follows: An American military personnel assigned in the Philippines , Robert A. Gibson, pur- chased for $2 , 700 . 00 at the United S~ates sometime in March 1956 , a Chevrolet two- door station wagon. Shipped to the Phili p- pines , the car was landed in Manila on Sep- tember 11 , 1956. � by On September 12, 1956 i tthwe aMs orteogr is~teehriecdle~ Gibson, in his name , wi th Office in Quezon City . A certificate of re- gistration was issued with the statement of its exemption from payment of registration fees , for the reason that the Chief of the MVO had received an official communication from United States military authorities to the effect that said car was owned by Gibson and used in connection with his duties . A

DECISION - " 3 CTA CASE NO . 2371 special plate number was issued for the car . Said registration was renewed the following year by Gibson, in the same office. On September 11 , 1957 , Gibson iP~ormed the HVO Chief in writing that the same car was no longer used officially and requested to be allowed to pay its registration fees and that private number plates be issued to him. Stamped on said letter was the follow- ing: "Subject to duties and taxes when sold or transferred in the Philippines to non- exempt persons . 11 Subsequently, the car became the sub- ject of a series of transfers . On September 12 , 1957 , a registration certificate and the corresponding private plates were issued by the Cavite City MVO agency to one Bonifacio Alinsod with address at 471 Espana Ext., Q. C. On October 29 , 1957, Alinsod sold the car for P6,5oo . oo to one Silverio Espiritu. On November 30 1 1957 , Espiritu sold it to Ivlaximo Calalang . later, this sale was A month registered at the MVO pasig agency and a certificate of registration and private plates were issued to Ivlaximo Calalang . On December 6, 1957 , the car was sold to one Felisa San Jose , although the sale's registration was made only on February 13 , 1959. Felisa San Jose remained in possession of the car up s. to March 19 1963 , when she sold the same to Concepcion Calalang. Parenthetically, this last purchaser is the spouse of former purchaser Naximo Calalang and has the same address as that given by previous buyer Alinsod . The sale last made was oresented for registration to the MVO Fasig agency, but that office refused on the ground that the car in question was among those included in the master list of 11 hot cars", i . e . , motor vehicles brought into this country by tax-exempt persons or entities , for which the import taxes have not been paid . As the registrant failed to submit proof of payment of the advanced sales or the com- pensating taxes due on said car, registra- tion was not allowed . Pursuant however to a preliminary man- datory injunction writ issued by the Court of First Instance of Rizal at Quezon City, in a suit Concepcion So Calalang instituted, the registration certificates and plates

DECISION - CTA CASE NO . 2371 were later issued by the MVO Fasig agency for 1963 . And in 1964, because of an amend- ed preliminary mandatory injunction writ , ainneCwonrceegpicsiotrnasti.onC certifica te was issued alalang's favor On July 22 , 1964, the Chief of the Registr ation Division of the Land Transport- ation Commission certified to the Collector of Customs that the car in question was originally imported tax- free by one Robert A. Gibson and is registered i n the name of Concepcion S. Calalang. Acting thereon and finding that the advanced sales or com- pensating taxes due on the car have not been paid , the Acting Collector of Customs issued a warrant of Seizure and Detention, Identi- fication Warrant No . 8235, dated July 30 , 1964. Said warrant was forwarded for exe- cution to the Law Enforcement Command of the Bureau of Customs . No execution, how- ever, could be made by the latter as Con- cepcion s. Calalang refused to surrender the car . So the warrant was referred to the National Bureau of Investigation. And on August 13 , 1964, ~~I agents , armed with a copy of the said warrant of seizure and detention, seized the car from Concepcion s. Calalang 1 s house in Quezon City and brought the same to the NBI office in Manila . After seizure proceedings were instituted against the car in questi on, the Collector of Customs of Manila rendered a decision on August 24, 1970, decreeing the forfeiture of the ca r for violation of Section 2530 (m- 1) and (m- 5) of the Tariff a nd Customs Code , which decision, on appeal to the Commissioner of Customs , wa s affirmed by the latter on De cember 16 , 1971 . This case involves rticle XII (3) of the Philin- pine- United States Bases Agreement vJhich nrovides as follows: "(3) Eo pPrson referred to in para - grauhs 1 and 2 of this said -~~r ticle shall be liable to nay the government or local /

DECISION CTA CASE NO . 2371 5 ~al authorities of the PhiliPPines any poll or residence tax , or any import or export duties , or any other tax on per - sonal property imported for his own use pr ovided , that private owned vehicles shall be subject to payment of the following only: when certified as being used for military purposes by appropriate United States author - ities, the normal license plate fee; other- wise, the normal license plate and regis- tration fees;" (43 O. G. No . 3, p . 1020, 1025 . ) There is no controversy that under the foregeing provision automobiles of personnel of the United States Army imported for their own use are not subject to duties and taxes upon entry in the Philippines but are subject thereto if they are sold to non-exemp t persons . As a matter of fact when Gibson wrote to the Hotor Vehicles Offi ce , now Land Transportation Office , requesting that the car in question be registered, there was stamped on the letter: 11Subject to duties and taxes when sold to non- exemnt persons . 11 Agajn, Embassy Note No . 507 dated December 14 , 1966 as well as -Department of Foreign Affaj_rs Note ;Jo . 175 of even date acknovJledges the dutiable and taxable character of such cars uuon sale to non- exer' pt persons . Contrary to the pretension of petitioner , the Bureau of Customs had jurisdiction over the aforesaid automobile when respondent issued the warrant of seizure and detention in this case . Under Se ction 1202 of the Ta riff and Customs Code , the Bureau of Customs loses jurjsdiction over imported merchandise only after the

DECISIOn - CTk CASE NO . 2371 6 payment of duties and taxes . Thus in Go Cheng 'l'ee v . r:eer ( 87 Phil . 18) it vias held that eood s imnorted by the U. S . Army not subject to duties but later sold to non- exemut persons remain within the jurisdiction of the Customs until duties ind taxes thereon have been paid and the pur- chaser is deemed to be the importer . The warrant of seizure in question appears to have been issued under Section 2530(m-1 ) and (m- 5) of the 'fa riff and Customs Code vJhich provide as follm�Js : : SEC . 2530 . Property Subje ct to For - feiture Under Tariff and Customs ~2-~~ .- Jny vessel or aircraft , cargo, arti~le~ ~ and other objects shall, under the follow- ing conditions, be subject to forfeiture: X X X X X X m. Any article sought to be imported or exported~ ( 1) t-li thout going through a customhouse, whether the act -v1as consummated , frustrated or attempted; X X X X (5) Through any other fraud- ulent practice or device by means of \vhich such article vias entered through a customhouse to the prejudice of the govern- ment . Section 2530(m- 5) aforesaid is not applicable to this case. In Teodoro Luna v . Commissioner of Cus toms (C . T. � Case No . 1947 , November 29, 1968) we said that the term "entered through a customhouse 11 apPearing in said provision refers to the filing by the importer of an import entry covering art imported article , vlhich import

DECISION - CTA CASE NO . 237 1 7 entry must be made within fifteen days from the date of the discharge of the article . Respondent anchors the forfeiture 11 on the fact of fraudulent transfer" and ob- viously this is not the fraud in the entry contemplated by said provision . The record does not reveal that a fraudulent entry was made in connection with the car in question . As a matter of fact there is nothing therein that might show that an entry was made when it first landed in the Philippines or when the sale was made or sometime thereafter . Neither do we think that the vehicle in question is subject to forfeiture under Se ction 2530(m- 1) of the Ta riff and Customs Code , for the reason that the same was not entered through the customhouse but was landed in the D. S . Na vy port of Manila . It appears that the automobile did not }Ja ss through a customhouse because it 1vas exempt from duties and taxes under ~..rticle ~-II(3) of the Phili~pine -Uni ted_States Base Agreement and it is quite obvious that Se ction 2530(m- 1) does not cover such a case . Said law applies to cases where goods imported are not passed through a customhouse to avoid payment of duties and taxes , not to instances where there was no intention to avoid duties and taxes being exempt therefrom and the merchandi se need not pass through a customhouse by special arrangement . The car in question is subject to forf eiture under Section 2530(f) of the said Code for failure to pay duties

DECISION CTA CASE NO . 2371 8 and internal revenue taxes upon the sale to Alinsod, a non- exempt person, as merchandise of prohibited importation, the importation of \<Thich is contrary to law. "This is not the first time that this question has been posed before us o In the case of Gigare vs . Commissioner of Customs (G . R. No . L- 21376, August 29 , 1966 , 17 SCRA 1001) ~ we disposed of the same by holding that1 \s) ince , admittedly, the internal revenu~ tax on the cigarettes in dispute has not been paid, it is clear that said cigarettes fall within the category of � merchandise of prohibited importation, � the importation of which is contrary to law and may justify its forfeiture, as pro- vided in Sections 1363 (f) and 136'+ of the Revised Administrative Code , ' which correspond to Sections 2530 (f) and 2531 , respectively , of the Tariff and Customs Code . "(Vierneza v . Commissioner of Customs , 24 SCRA 394) We find no merit in petitioner ' s pretension that the duties and taxes must have been paid because the Certificate of Registration of Haximo Calalang appears to be stamped with the words "Presidential Action Committee . n The significance of the stamping of said words on said Certificate of Registration is too ambig- uous to be of value as proof of payment . ~vhat strikes us is that this claim was never made during .the admin- istrative proceedings on the basis of the records . Neither is there any proof of payment presented to this Court by petitioner . If payment was actually made, petitione could have presented the receipts of payment or present ed either Alinsod, Naximo Calalang or Espiritu, to explain

DECISION - CTA CASE NO . 2371 9 why the receipt of payment is no longer available . These transferees are accessible -to her since Alinsod has the same address as petitioner , Maximo is her husband , and there is nothing to show that Espiritu can no longer be located. Petitioner urges that the seizure was illegal be - cause under Section 2209 of the Tariff and Cus~oms Code a dwelling house may be entered and searched only upon warrant issued by a judge or justice of the peace upon sworn application showing probable cause and particular- ly describing the place to search and person or thing to be searched . We find no merit in this pretension. I~ the first place, the warrant is not for search but for seizure and detention. In the second place , no dwelling has been entered by the peace officers who served it because the automobile was not inside a dwelling when it was seized . Such a vehicle is hardly a thing that is kept inside a dwelling. It is also urged that the agents of the National Bureau of Investigation who executed the warrant were not specially deputized by the Collector of Customs . There is nothing in the Tariff and Customs Code that requires a special form for deputizing officers general- � ly empowered to effect arrests to effect seizure . Under Section 2207 of said Code, any person exercising police authority under the customs a nd tarif f l aws may demand assista nce of a ny police officer when such assista nce shall be necessary to effect search, seizure or arrest ......

DECISION CTA C~SE NO . 237 1 r 10 and it shall be the duty of any police offi cer upon whom su ch requisition is made to make su ch lawful assistance in the matter as may be required . The re- quisition may be made on the spot . At any rate , the authorities are to th�e effect that it is wholly im- material who makes the seizure or \.:hether they are duly authorized or not � � � � 11 It is settled that where property declared by a federal statute to be forfeited, because used in violation of federal law , is seized by one having no authority to do so , the United States may adopt the seizure with the same effe c t as if it had origin- ally been made by one duly ~uthorized . The Caledonian , 4 ~fueat . 99L100/ 101 , ~ L. Ed . 523; Taylor v . United States , 3 How . 197 , 205, 11 L. Ed . 559 . See United States v . One_ Studebaker Seven- Passenger Sedan L9 Cir . /, 4 F . 2d 534 . II The foregoin g language was but a re- affirmance of the remar�s of Storey, J ., in Taylor v . United States , 3 How . 197 , at page 205 , 11 L. Ed . 559 ; 11 t the common law any person may , at his neril , seize for a forfeiture to the government , and , if the government adont s his seizure , and insti- tutes proceedings to enforce the forfeiture , and the pronerty is condemned , he will be completely justified . So that is wholly immaterial in such a case who makes the seizure , or whether it is irre gularly made or not , or whether the cause assigned origi- nally for the seizure be that for \�lhich the condemnation takes place, nrovided the ad- judication is for a sufficient cause . 11 Justice ~~olmes expressed the same view in Dodge v . United �States , 272 C. S . 530 , at page 532 , 47 S . Ct . 191 , 71 L. ~d . 392 , '.vhen discussing a nroceeding to forfeit a motor boat for viola t:i.on of the National Prohibition Act , the initial seizure of vlhich \�las by police officers of the City of Providence who T,.Jere not authorized to setze the liquor and Vhicle uncer the Act . ~1e said: 11 The ovrner of the "')ronPrty suf- fers nothing that he would not have suffer- ed if the seizure had been authorized .

DECISIOK C1~ C SE NO . 2371 11 2owever effected it brings the object with- in the povJer of the Court , which is an end that the law seeks to attain , and justice to the ovmer is as safe in the one case as in the other � � � (united States v . ~ight Boxes , etc ., su�ora . ) Neither do we find merit in the pretension that the Collector of Customs of l1Ianila has no authority to make seizures in Quezon City because the latter is not within his collection district . In answer to this clai suffice it to quote the following language of the Supreme Court: � � � It is of no moment where the in- troduction of the property subject tc for- feiture tooL place . For to our mind, '1(i)t is the right of an officer of the customs to seize goods which are suspected to have been introduced into the country in viola- tion of the revenue laws not only in his own district, bu1 also in any other district than his ovm . 11 LTaylor_vs . u.s . 44 U. S . (3 ~Io�tl . ) 1S7 , 11 L. ed . 552/ . ~nY_oth~r construction of the Tariff and Customs Cod~such a~ the one proposed by petitioner , would vir- tually place the Collector of Customs in .9. straitjacket and render inuti1 e his .J29lice power of search and seizure , thereby frus - trating effective enforcerr-ent of the measures provided ~n the ode to nrevent qlld supDress smuggling and other frap,ds unon the customs . This we can not sanction by subscribing to petitioner ' s conclusion . The Code , as a revenue law , is to be construed to carry out the intention of Congress in enacting it and as would most effectively accomplish its ob- jects (15 Am . Jur . 304) . (Vierneza v . Comm . of Custons , G. R . l'lo . L-24348, July 30 , 1968; 24 SCIL~ 394-402 . ) Finally , it is contended by petitioner that the com- pensating tax on the car in question does not constitute a lien thereon and that the right to collect the same has already urescribed ~ This argument is beside the noint �

DECISION - CTA CASE NO . 237 1 12 becaus e the a ction of the Bureau of Customs here is not for colle ction of the taxes or duties on the imported article but for forfeitur e under Se ction 2530 of the Tariff and Customs Code and there is no provision in said Code that nrovides for a prescriptive neriod for the same . In Gibson vs . Chouteau , s~ , the court said: 11 It is a rna tter of common knovJlsdge that statutes of limitation do not run - against the State . That no laches can be imputed to the King , and that no time can bar his rights , was the maxim of the common law , and was founded on the principle of public policy , that as he was occupied with the cares of government he ought not to suf- fer from the neglicence of his officers a~d servants . The ~ rinci ~le is ao, licahle to all goverD.merts~, ':Jhich must n~cessarily act through numerous a~e2 ts, a~d is e~-s~tidl to 0'1 o"'""' 1 n .l. c'" ~ �- "' )-"r'Jf.:::)l~n�~vT '""+-~ ' - .. t"�,o -, ~.1. ~ '".",' �'l . 1 Y"--O�),- -o,~ ~�t7 1. .., _ _ .., \..1 �' . '-A. .......... ,":,) I... .:J ... of the publi c. It is upon this principle that in this country the statutes of a State pres cribing periods within which rj_ghts must be nrosecuted are not held to embrace the State i tself , unless it is expressly desi g- nated or the mischiefs to be remedied are of su ch a nature tha t it must nece ssari.l :/ be included . s legislation of a State can only anply to ner sons and things over which the State has- jurisdiction, the United States are also necessarily excluded from the operation of such statutes . " In 25 Cyc . , 1006 , the rule , supported by numerous autLorities , is stated as fol- lmvs: 11 In the absence of exnress statutory provision to the contrary, - statutes of limitations do not as a general rule run a~ainst the sovereign or government , -vrhether state or federal . But the rule is otherwi s e ~here the mischiefs to be ..

DECISI0I CTA CASE No�. 2371 13 remedied are of such a nature that the state must necessarily be included , where the state goes into business in concert or in competition with her citizens , or where a party seeks to enforce his private rights by suit in the name of the state or govern- ment , so that the latter is only a nominal party . " (Government of P. I . v . Monte de Piedad , 35 Phil . 752 . ) WHEREFORE , the decision of the Commissioner of Customs is hereby affirmed ~ With costs . SO ORDERED . Quezon City, February 12 , 1975. -J �~ tL___.- RAHON L . AVANCEl~A Associate Judge WE CONCUR: ~-_,(____ ' ROJvlAN M. UNALI ~ Pres idi ng Judge V / ~ L . LkAO MR."'<h'VrAfi.:~ Associate Judge ..