CTA Case No. 4389 (Decision)

flEPUDL I C OF TilE Pill LIPPI NCS COURT or TAX APPEALS QUEZON CITY ALEMANVA INTERNATIONAL Tr~AD I NG CORPORATION, - versus - C.T.A. CASE N0.4309 TJIE HONORABLE COMMISSIONER OF CUSTOMS., RespondPnt. K �- -- -- �-- -- �- -- )C ENGf~. EDUARDO R. SOUlMILLO doing business under the name and style STAR MARINE ENTERPRISES, Pl?t it i oner, C.T.A. CASE N0.4404 l-ION. SALVADOR MISON, in Promulgatl?d : his official capacity as FEB 06 19115 ~ Co��issioner of CustoMs, Rl?spondl?nt. K- - - - - - - - -------------K DECISION These ar�e consolidated cases involving t�he forfeitur-e of a motor� tanker- <rnC--1> and its cargo of 1,200 metric tons, mo,~e or� less, of automotive diesel oil <ADO>. P e t i t i one,~ Aleman-r�a I n t el~nat ion a 1 C01~poration <ALEI'<IANYA) is a cOI"poration duly Ot~ganized and existing under� a.n22~ vir�tue of the laws of the

DECHHON �� C.T.R. Case No. 4309 ��- 2 - Republic of the Phi 1 ippines. It is the claimant of the One Thousand Two Hundr~ed ( 1, 200) mett~ic tons, more or less, of automotiYe diesel oil <ADO> Ol~iginally in CTA Case No. 4309. Edual"do n. Solamillo, doing Petitioner�, business under� the name and style 3TAR MARINE ENTERPRISES is the claimant of subject motor� tanker having acquired the same th1��ough auction sa 1e conducted by the Regional Trial Cotwt of Cebu to satisfy a final and e)(ecutory judgment in Civil Case No. CEB-3866 <see Cel~tificate of Sale, dated Ju 1 y G, 1'380, Exh. A>. He was later substituted to the rights of ALEMANYA by virtue of a Deed of Absolute Sale executed by and between him and Atty. Rolando Villacol~ta as the duly authorized t~ept~esentative of ALEMANYA (see Exh. B and the Remar�ks of the Clerk of Court, CTA Records, p. 15'3) making the former as the sole petitioner of these cases and thereby giving way to their consolidation <CTA Resolution dated Apt~il 29, 1991., CTA Records, p. 160-162). P1"ior� thel~eto, subject motor� tankel~ was fit~st levied by Yirtue of a Writ of Attachment duly issued on December 17, 1985 by the same Cebu Reg i ona 1 Tt~i al Court and was later on levied on execution on September 10, 1986 (Anne)( G, CTA Case No. 4404, p. 32--34> to satisfy the final and judgment in Civil Case No. CEB-3866

DECISION C.T.R. Case No. 4309 ... 3 -- <Cebu Shipyard & Enginee�-ing WOI"'ks, Inc., vs. N & S Lines and RICNOR Tankers Corporation). Meanwh i 1 e, on Ju 1 y 5, 1986, ALEMANYA contl~act ed the ser~vices of RICNOR for� the pur~pose of tJ~ansport i.ng One Thousand Two llundred <1,200) metric tons, more ol~ less of automotive diesel oil ft~om General Santos City ol~ its vicinity to Manila <see Fi>etur�e Note, Annex A, CTA Case No. 4389, p. 16). On the eve of July 15, 1986, while entel~ing the North Harbor, Port of Manila, MIT RTC--1 was appl~ehended by the e 1ement s of the Nationa 1 Customs Po 1 ice on the ground that "the tanket~ was found carl~Y i ng on boal~d o i 1 in four (4) compa�-tments without the l~eguisite manifest and failure to present evidence of payment of duties and t a>ee s on the importation" <Decision, Commissionel~ of Customs, Exh. E> and therefot~e, liable to fm~feiture as unmanifested cal~go under Section 2530 <g> in l~elation to Sections 906, 907, and 908 of the Tariff and Customs Code. The tanke1�' was 1 ikewise fol"feited under the s.:u11e Section for having been used in the abovesaid unmanifested cargo. In his defense, Petitioner argued that "in the absence of substantial proof on the alleged act of smuggling, the inescapable conclusion is that the offense charged has not been esta~zged. )()()( On t h i s scm~e,

DECISION �� C.T.A. Case No. 4389 - 4- the e)(treme penalty of forfeiture Will not lie" <Petition, CTA Records, p. 8) MOl~eover, Petitioner was "a mere purchaser� for value and in good faith" (ibid.; Memorandum for Petitioner, CTA Records, p. 525) The only issue brought for resolution is: Whethet~ or not subject motor tanker ana its cargo <ADO> are liable for forfeiture. Let us discuss the s�J.bject matters sepal~ately fro11 each other. As regards to the cargo, the applicable provisions of the Tariff and Customs Code are the following: SEC. 906. Requirement of' Manifest in Coastwise Trade. - Manifests shall be required for cargo and passengers tt~ansported fro� one pol~t in the Philippines to another onlv when one or both of such places is a port of entry. SEC. 907. Manifest Required Upon Departure From Port of' Entry. Pt~iot~ to departure from a port of entry, the master of a vesse 1 1 icensed for the coastwise tt~ade shall make out and subscribe duplicate manifests of the whole of the cargo and all of the passengers taken on board such vessels, specifying in the cargo manifests the marks and numbers of packages, the port of destination and names of the consignees, together with such further in fot�mat ion as may be requi t~ed and in the passenger manifests the name, se)(, age, residence, port of embarkation, and destination of all passengers, together with such furthet"' information as may be required. He shall deliver such manifests to the Collector of Customs or other customs officials duly authot~ized, before whom he shall sweat~ to the best of his knowledge and belief, in respect to the cargo manifests, that the goods therein described, if foreign, were i11ported legally 2�30

-- DECISION -- C.T.A. Case No. 4389 5- and that the duties, ta><es and other chat~ges thet~eon have been paid or secured to be paid, and with respect to the passenger manifests, that the information therein contained is true and correct as to all passengers taken on board. Thereupon, the said Collector of Customs or customs official, shall certify the same on the manifest, the original of which he shall return to the master with a permit specifying thereon, genera 11 y, the Iandi ng on board such vessel and authorizing him to pr�oceed to his port of destination retaining the duplicates. Sec. 908. ManiFests Requit~ed Pt~ioJ~ to Unlading at Port oF Entry. - Upon arrival at a port of entrv of a vessel engaged in the coastwise trade and orior to the unlading of anv part of the cargo, the master shall deliver to the Collector or other orooer customs official co�plete manifests of all the cargo and passengers brought into said port, together with the clearance manifests of cargo and passengers for said port granted at any port or ports of entry from which said vessel may have cleared during the voyage. <Emphases supplied) and in relation to the above sections, is Section 2530 (g) which provides, thus: Sec. 2530. Proper�t y Subject to Fo,~Fei ture Under TariFF and Customs Law. Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the following conditions be subiect to forfeiture: )()C)( )()()( )()()( (g) Unmanifested article found on any vessel or air.craft if manifest therefor is t~equi red; (Emphases supplied) The above-cited laws speak in unmistakable terms the fact that said cargo must be forfeited for being unmanifested. In fact, it was admitted~lthe Petitionet~ himself that

DECISION -- C.T.A. Case No. 4389 - 6- the above-quoted section is indeed the applicable law to the case at bar when he said, thus: "As to the fact that the cargo (die se 1 o i 1> was not manifested, the same, if at all, may only constitute mere violation of Section 2530 (g) "<Petition, p. 8). And rightly so. Hence, it should be forfeited. The defense of the Petitioner that the prosecution failed to establish substantial proof of the alleged act of smuggling is without merit since the fact remains that the cargo was of foreign origin and UNMANIFESTED when manifest therefor was required. Under the pri nci pl e of res ipsa loquitor, it is immatet'ial whether the act of smuggling was clearly established. Under the above quoted provisions of the Tariff and Custo111s Code, it is enough that the cargo was unmanifested and that there was no showing that payment of duties and ta~es thereon had been made for it to be subjected to forfeiture. This ruling finds its agreement in the com111entaries of the learned Prof. Montano A. Tejam, an acknowledged authority in Customs Law, when he said, thusly: In the contemplation of .Section 1363 <g> of the Rev. Adm. Code <now Sec. 2530 <g>, Cust o�s Law> it is not necessary to orove by direct and positive evidence that the goods in question were smuggled the Phi 1 ippines in order that the same c forfeited� neither

DECISION - C.T.A. Case No. 4389 -7 is it necessary to prove their illegal importation and loss of revenue thereof. It is sufficient ground for forfeiture when the goods were not included in the shio' s 11anifests in violation of the Customs Law aforequoted. The transpot~tat ion from one pot~t of entry to another of goods not declared in the shipping manifest of the vessel is in violation of sections 1211 and 1212 of the Rev. Adm. Code (now Sees. 906, and 907, Customs Law>. Such goods become liable to forfe1ture in accordance with section 1363 Cg> Cnow Sec. 2530 <g>, Customs Law> of the same Code. To condone the forfeiture as decided by the Collector of Customs and affirmed by the court a quo would be giving a chance to accessories after the fact of smugglers of foreign cigarettes to ply their trade with impunity and with the sanction of the courts. What the eKecut ive deoat~tment could not then curb, the court should not tolerate. <Reo. of the Phil. vs. Goco, CA-G.R. No. 9543-R, Jan. 22, 1954; 50 O.G. 1662, April, 1954> <TEJAM, Co11mentaries on the Revised Tariff and Customs Code, 1988 ed. p. 2348; E11phasis supplied) Very well said. We cannot agree even more. As regards the motor tanker, the applicable provision of law should be Section 2521 which provides, thus: SEC. 2521. Failure to Supply Requisite ftlanirests. - If any vessel ot~ aircraft enters or deoarts from a port of entry without submitting the proper manifests to the customs authorities, or shall enter or depar~ conveying unmanifested cargo other than as stated in the next preceding hereof, such vesse 1 or aircraft shall be fined in a sum not less than ten thousand <P10,000.00> but not exceeding thirty thousand CP30,000.00> pesos. <Emphasis supplied> 233

DECISION - C.T.R. Case No. 4389 8- )()()( )()()( )()()( Again, the doctrine under res ipsa Joquito1~ applies. And since there is no showing on the records that Petitioner sub�itted the proper manifests to the customs authorities, he should therefore be liable for fine under this provision. In fact, Petitioner himself admitted that "at �ost, therefore, the vessel should be subjected only to a fine." <Petition, ibid) We agree. We cannot impose the e >ttreme penalty of fot~fei t ure as it was not proven beyond reasonable doubt by the Respondent that the cargo was inde~d s�uggled. Needless to state, what subjects the vessel to a fine under Sec. 2521 of the Tariff and c-ustoms Code is the fai 1 ure to have a �an i fest of its cargo. <TEJAM, ibid, p. 2333). Accordingly, the amount of thirty thousand pesos <P30,000.00) is hereby imposed as fine on the vessel. The argument of "purchaser in good faith and for value" raised by the Petitioner is unavailing as it was immaterial in the above discussions. Moreover, this Court is convinced that Petitioner is not co�pletely without fault as he bought the motor tanker only on July 6, 1988 when it was already seized by the Respondent two years before or on July 14, 1986. It is difficult for ?.34

DECISION �-� C.T.A. Case No. 4389 - 9- this Court to conceive that Petitioner did not know anything about the incident. WHEREFORE, in all the foregoing, the surety bond equivalent to P3,063,554.30 <which is the appraised value of the oil cargo as per appraisal report of the Auction and Cargo Disposal Division of the Bureau of Customs and made as basis by this Court in arl"'iving at the correct amount of bond as per Reso 1uti on dated June G, 1991, CTA Records, p. 176) which represents the unmani fest ed cargo, is hereby ORDERED FORFEITED in favor of the Government � Said aMount is to be taken from the P4,200,000.00 surety bond undertaken by SIOOCOR INSURANCE CORPORATION, put up by the Petitioner in case the decision would be adverse to him. In addition thereto, the Petitioner is also UEREBY ORDERED TO PAY the Respondent the SUII of P30,000.00 <to be taken also from the same P4,200,000.00 surety bond put up by the Petitioner) as fine on the motor tanker which conveyed said unmanifested cargo. SO ORDERED. ((,_;;;;- ~. c~ ERNESTO D. ACOSTA Presiding Jlldge 235

DECISION -- C.T.A. Case No. 4389 19 / WE CONCUR: j Judge ~ &;J::I RAMON 0. DE VEY Associate .Jud CERTIFICI=lTION I hereby certify that this decision was reached after due consu 1tat ion between the �e�bers 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 236