CTA Case No. 4666 (Decision)

Republic of the Philippines COURT OF TAX APPEALS Quezon City COCA-COLA BOTTLERS PHILIPPINES. INC � � Petitioner, - versus - CTA CASE NO. 4666 COMMISSIONER OF CUSTOMS. Respondent. X- - - - - - - - - - - - - - - X DEC I I 0 N This is claim for refund of customs duties paid under protest by petitioner. The facts of the case are as follows: Sometime in / early 1989, petitioner imported an integrated unit of a Van Der Molen equipment from C. T. Struckman & Waege at Hamburg, West Germany. The importation was supposed to be effected in three different shipments, and the customs duties thereon totalling P9,993,565 were paid by petitioner in advance <pp. 13-14, Bu. of Customs Records). The first shipment arrived from Netherlands on board the vessel "Professor Tovstykh" on March 9, 1989, and was declared under Import Entry No. 13585 <pp. 15-16, Bu. of Customs Records>, for which petitioner paid taxes 254

- DECISION - C.T.A. Case No. 4666 - 2- in the amount of P541,316.00 (p. 21, ibid>. This shipment was temporarily stored at the Manila International Container Port <MICP>, and was withdrawn by petitioner's authorized broker Sapphire Cargo Movers, Inc. on March 15, 1989 (id). The second shipment arrived on April 2, 1989 on board the vessel "Sumiyoshi Maru", and was declared under Import Entry No. 29042. After paying the corresponding taxes thereon, petitioner withdrew said shipment from the MICP on April 6, 1989 ( id, pp. 6 - 12>. The third shipment arrived on board the vessel "Nadezhda Obukhova" on March 16, 1989, and was declared under Import Entry No. 12523. The taxes on this shipment were likewise paid by petitioner, after which it took complete delivery thereo� on March 15, 1989. Subsequently, however, on April 22, 1989 another shipment consigned to petitioner arrived on board the vessel "Khudoznik Prorokov", and was declared under Import Entry No. 43262 (p. 22, Bu. o� Customs Records). The covering documents �or this shipment showed that this contained one <1> unit of "Bel Tyne" brand sugar bag emptying system, and was allegedly shortshipped from Entry No. 12523 and, accordingly, was shipped free of charge to 255

- DECISION - C.T.A. Case No. 4555 -3- petitioner (ibid, PP� 22-23). The Bureau o� Customs assessed petitioner import duties and other taxes on this shipment totalling P1,187,130, which petitioner paid under protest on August 25, 1989 (id, pp. 31 - 32). Meanwhile, on August 24, 1989, petitioner �iled a protest with the Bureau o� Customs questioning the assessment o� additional import duties and taxes on the �ourth and last shipment. Petitioner contended that the equipment covered by this last shipment was actually supposed to have been included in the third shipment which arrived on March 16, 1989, �or which the corresponding duties and taxes had already been paid. However, the supplier o� said equipment allegedly did not include this particular equipment (i.e., sugar bag emptying system) because o� manu�acturing de�ects discovered during the �inal acceptance test prior to the �inal shipment. A�ter conducting the necessary hearings, District Collector Hermogenes F. El�ante rendered a decision dated April 24, 1991, denying petitioner's protest �or lack o� merit. Petitioner appealed the decision to respondent Commissioner o� Customs on June 7,

- DECISION - C.T.A. Case No. 4666 - 4- 1991. On September 25, 1991, respondent Commissioner denied the appeal and upheld the finding o� the collector o� customs that the equipment covered by the �ourth shipment was separate �rom those included in the �irst three shipments made to petitioner. Hence, this petition. The only issue raised by petitioner is whether or not respondent Commissioner o� Customs erred in upholding the finding o� the collector o� customs that the one (1) unit o� sugar emptying system covered by the �ourth and last shipment made to petitioner was not a shortshipment o� the �irst three shipments and, accordingly, constituted a separate importation �or which the corresponding duties and taxes must be paid. We �ind against petitioner. Petitioner disputes respondent Commissioner's findings that there was sugar bag emptying system already included in the third shipment covered by Import Entry No. 12523-89. It alleges that when the third shipment was opened and inspected at its Sta. Rosa, Laguna plant, its designated surveyor discovered that the equipment in question was not in either o� the two container ~ � 257

- DECISION - C.T.A. Case No. 4666 -5- vans comprising said shipment. In support of this, petitioner points to the alleged Certificate of Survey prepared by its designated surveyor, Battad Adjusters & Surveyors, Inc. It should be noted, however, that the Certificate of Survey relied upon by petitioner was prepared only on October 20, 1989, nearly two (2) full months after the protest was filed and more than seven ( 7) months from the time the third shipment was withdrawn by petitioner from the MICP. More impor tantly, it appears from the records that the Certificate in question was the only one prepared by petitioner's surveyors (aside from that covering the fourth shipment>, despite the fact that there were three (3) shipments comprising the importation in question. The Court is thus led to conclude reasonably that the October 20, 1989 Certificate of Survey was prepared for the specific purpose of supporting petitioner's protest, rather than for the purpose of attesting to the facts that actually transpired during the survey. This conclusion is reinforced to a great extent by the fact that no representative of the Bureau of Customs was present during the alleged inspection and inventory. In this regard, it is worth noting 258

- DECISION - C.T . A. Case No. 4666 -6- that the alleged Certi�icate o� Survey is not even under oath, thereby greatly reducing its probative value to the level o� hearsay evidence. As �ar as respondent Commissioner was concerned, the records in his possession, speci�ically Import Entry No. 12523-89 showed that all the items covered by the importation, including the sugar bag emptying system were duly delivered and received by petitioner. We cannot agree with petitioner's contention that it has su��iciently overcome the presumption o� regularity o� the entries in Import Entry No. 12523-89. The mere �iling o� the protest certainly is not su��icient proo� that the entries in the a�oresaid documents were erroneous. It was incumbent upon petitioner to timely in�orm respondent Commissioner o� the �act o� shortshipment (assuming that there indeed was a shortshipment), so that the corresponding corrections could have been made. Yet, �rom the time it took delivery o� the third shipment until it �iled its protest, petitioner took no steps to noti�y respondent Commissioner o� the alleged shortshipment. It is rather incredible that petitioner opted to wait �or o��icial con�irmation 259

- DECISIO N - C.T.A. Case No. 4666 -7- �rom its supplier o� the �act o� shortshipment <despite the �act that it had actual knowledge thereo�> be�ore taking any steps to recti�y the alleged error. Petitioner should have requested �or a custom examiner and appraiser to attest or certi�y to the de�iciency. This is a procedure laid down by law which petitioner �ailed to observe, under Section 1703 o� the Tari�� & Customs Code. "Sec. 1703. Abatement of Refund for Deficiency in Contents of Packages. If, upon opening any package, a deficiency or absence of any article or of part of the contents thereof as called for by the invoice shall be found to exist, such deficiency shall be certified, under penalties of falsification or perjury, to the Collector by the examiner and appaiser, and upon the production of proof satisfactory to the Collector showing that the shortage occured before the arrival of the article in the Philippines, the proper abatement or refund of the duty shall be made. " That petitioner may have an unsullied record in respect of its compliance with the tax laws of this country is immaterial and irrelevant. Petitioner's proclivity to avoid taxes is not in issue here. The only question before the Court is whether, in this particular instance, petitioner should assess additional import duties and taxes on 260

- DECISION - C.T.A. Case No. 4666 -8 - the subject fourth shipment of sugar bag emptying machine under Import/Entry No. 43262. As earlier stated, we find no cogent reason for reversing the decision of respondent Commissioner. WHEREFORE, premises considered, the petition is hereby DENIED for lack of merit. SO ORDERED. Quezon City, Metro Manila, 07 April ~L GRUBA Judge WE CONCUR: C.k:(2. ~ ~TO D. ACOSTA ( � residing ;zude -P. . I IARA~O. ~ ~~ Associate J~~A CERTIFICATION I hereby certify that this decision was reached after due consultation among the members of the Court of Tax Appeals in accordance with Section 13 Article VIII of the Constitution. ~Q~~ ERNESTO D. ACOSTA Presiding Judge Court of Tax Appeals .... 261 .