CTA Case No. 3751 (Decision)

���~ tJPlLIC 0 P nD! fi'�ILIPPlH~'t ~OUl\T OF TAX APP.f.:AU QU~Ott ClfJ SOUTHERN ISLES WOOD EXPORT, Petitioner, - versus - C.T.A. CASE O. 3751 COMMISSIONER OF CUSfOMS, x---�- - Respondent . -----X D ECIS IO N The basic que[->tion tendered for r esol ution is whether the shi pment involved in this case described as "Ni ne (9) Truck Loads Sawn Lumber Per 'S/ S Eastern Virgo'" is subject to forfeiture in fa vor of the govern - me nt for violation of Section 2530, paragraphs (f) and (1), s ub-para graphs 3, 4 and 5, of th e Tariff end Customs Code, whi ch provides: " SE C. 253 0. Property _Subject to Forfeiture Under Tariff and Customs ta w.- Any vehicl e , vessel or aircraft~ cargo, ar ticl e and other objects shall, under the following conditions be sub- ject to forfeiture: )(X X XXX XXX (f) Any article the im- portation or exportation of which is effected or attempt e d contrary to law, or a ny article of prohibited importation or exportation, and all other articles whi ch , in the opinion \ 337

DECISION - CTA CASE NO. 3751 - 2- of the Collector, have been used, are or were entered to be used as instruments in the importation or exportation of the former; '. XXX XXX X XX (1) Any article sought to be imported or exported: XXX XXX XXX (3) On the strength of a false declaration or affidavit executed by the owner, importer, exporter or consignee concerning the importation of such article; (4) On the strength of a false invoice or other document executed by the owner, importer, exporter or consignee concerning the importation or exportation of such article; and (5) Through any other practice or device contrary to law by means of which such articles wa s entered through a customhouse to the prejudice of the government." There is no dispute as to the facts, the parties having . submitted th~ case for decision on the ba s is of the pleadings and the records. As narrated by respon- dent: The records of the instant case show that subject shipment are to be exported to Guam on board the S/S Eastern Virgo, \ 333

DECISION - CTA CASE NO. 3751 - 3- but before it was loaded, a spot check was conducted by agents of the CIID due to some derogatory information about said cargo. It was found out after the initial verification of the covering papers and docum e nts that no Certificate oF Inspection was issued by the Bu reau of Forest Development and therefore no export duty was paid by the exporter, hence the seizure case instituted against the subject s hipment for violation of the above-cit e d l a w. During the hearing it has been duly established. t.hat subject shipment consisted of nine tr uck l oa ds of saw n lumber intended to be exported to Guam, and the same was declared on Export Dec lar a tion No. NLRO 82/9059, as 130 skids building materials "(A.D. Purlin , A.D. Rafter, A.D. Floor Joist, A.D. Girdle, A.D. Railding , K. D. Decer, K.D. Drawside, K.D. Siding , K. D. Pan e ling, K.D. Facial Board, Panel Board)" with an export value of US$24,406.12 . It was further established that subject s hipment was not covered by the required Certificate of Inspection issued by the Bureau of Forest Development and no ex- port duty was paid by the exporter . On the other hand, claimant through its General Manager i n his manifestations stated that the rea s on why a Certifica te of I nsp ec tion was not secured from the Bure a u of Forest De velopment was becau se the Southern Isles Wood Export is r e - lativ e ly new in th e l umber export busi- ~ess, and the omission to submit to the pre-shipment inspection by the Bureau of Forest Development was not an infraction willfully done by said firm and for that matter he would like to request the Office of the Collector of Customs that an inspection be made in order to comply with the regulation. \ 339

DECISION - CTA CASE NO. 3751 - 4- On July 15, 1982 a Certificate of Ins pection No. 23439 was issued by the Office of the Bureau of Forest Develop- '' ment after an ocular inspection was conducted by the Office of the Collector of Customs represented by its he a ring Officer, a representative of the CIID through its Prosecutor and the repre- sentative of the herein claimant. With the alleged violation o f non- payment of the co�rresponding export duty, the herein claimant cited Section 516 of the Revised Tariff and Customs Code which provide that the exporter is allowed to pay the export duty not later than thirty (30) days from date of ship- ment. After a thorough study of the facts and circumstances of the instant case, it appears that the failure of th e here - in claimant to secure the necessary Certificat e of Inspection from t he Bureau of Forest Development is not the question to be resolved or the violation neither the non-payment of the corresponding export duty, but the misdeclaration of the subject export cargo under Section 2530 (f) of the Re- vised Tariff and Customs Code. The here- in claimant declared it as bui l ding materials to evade the payment of export duty instead of sawn lumber . As per the analy~is and final classification made by the Chief, Export Coordination Division in his 3rd Indorsement of February 17, 1983, subject s hipment are Sawn Lumber and not building materials hence it is subject to export tax. At the outset, it should be stated that forfeitures are imposed by the seizure and subsequent institution \ 340

DECISION�- CTA CASE NO. 3751 - 5- of seizure proceedings pursuant to Sect ion 2532 of the Tariff and Customs Code. In seizu re cases, one important aspect of the proceedings in the consider- ' � ation of the issues involved, is the duty on the part of the governmen t of pre s enting evidence which indicates probable cause for instituting such proceedings. (Sanchez vs. Commissioner of Customs , B. T.A. Case No. 185, decided by the Court of Tax Appeals on November 2, 1954, citing U.S. vs. One Bag of Paradise and Choura Feathers, N.Y., 365 F. 301, 167, C. C.A. 473; Associate d Banking Corpo- ration vs. Commissioner of Customs, et al ., C.T .A . Case No. 2448 1 August 6, 1976; Metropolitan Garment Corpo- ration vs. Ramon J. Farolan , Acting Commissioner of Customs, C.T.A. Case No. 3959, Apri l 16, 1986; Mayer Steel Pipe Co rporation vs. Han. Alfr edo Pia de Roda, et al., C.T.A. Case No. 2823, February 18, 1987.)� The term "probable case" , which has been held synonymous with "reasonable cause", means less than the evidence which will justify condemnation. It imports a seizure made uhder ci r cumstances which warrant suspicion. (Sanchez vs. Commissioner of Customs, ~' citing Fooke vs. United States, 7 Cramch /U.S. 33.'�7; Associated Ban~ing Corporation vs. Commissioner of Cus toms, !upra; \ 34

DECISION - -� 6 - CTA CA SE NO . 3751 ,. Metropolitan Garment Corporation vs. Ramon J . Farol an, as Acting Commissioner of Cuatom s , supra; May er Steel Pipe Corpo ratio n vs. Hon. Alfredo Pio de Roda, e t al ., s uera.) And Sec tion 2535 of the 1ariff and Customs Code, as amended, provid es : " SEC. 2535. Burden of Proof in Seiz ure a nd/o r For-feiTl.Jre . - """""fi1all proceedings taken -1:-or:-ule seiz ure and/or forfei t ure of any vessel, vehicle, ai r craft, beast or articles und e r the provisions of the t a riff and customs laws , the burden of proof shall lie upon th e claimant: Provided, That probable cause shal l be fir st s ho wn for the in stitu t i on of such proc eed ings and th at seizure and/or forfeiture was made under the ci r c um - stances and in the manner desc ribe d in th e preceding sections of thi s Co de." When, therefore , the Bureau of Customs ordered a nd decre ed the seiz ure a nd forfeitu re in f a vor of the Government of the subject shipmen t und e r Seizure Iden- tific at ion No. 205-82, what are the circumsta nces which warrante d , or created t he suspici on, tha t petitioner misde clar ed the s am~ under Sect i o n 2530, p ara graph s (f) and (1), sub-paragraphs 3, 4 and 5 of the Tar iff and Customs Code? As clear ly show n in the records of th e ca se and concisely stated by respondent i n h is a nsw er a s s pecia l and affir mati ve def enses : \ 34 2

DECISION - - 7- CTA CASE NO. 3751 ,. It is undisputed that the subject s hipm e nt was to be exported to Guam on board the S/S ''Eastern t. Virgo''y and that petitioner declared the same as building matetials D The said declaration dispenses with the requirements of a Certificate of Inspection issued by the Bureau of Fo res t Development and the payment of export duty. Before the shipment was loaded, howev e r, a spot-check was conducted by the agents of the Custo n:s Int e llig e nce and Investig a tion Division, and it was found that the same was actually sawed lumber. This was confirm e d by the analysis and final classification made by the Chi e f, Export Coer- dination Division , as well as by the inspection r eport issued by the Bureau of Forest Develop me nt. Indubitably , when petitioner misd ec lared the aforesaid goo ds as building materials when in truth and in fact the same are sawed lumber, its intention was to evade payment of the corresponding export duty. Consequently, petitioner is guilty of gross mis- declaration warranting the penalty of forfeiture pursuant to Section 2530, pAragraphs (f) and (1), sub -p aragraphs 3, 4 and 5, of the Tariff a nd Customs Code. Petitione r has not been denied due pr ocess since during t~e hearing of the seizure case before the 343

DECISION - - 8- CTA CASE NO. 3751 J" Colle ct or of Customs it was given all the oppo rtunity to adduce evidence, as in fact it presented evidence in its defense. Moreover, its appeal before the Com- missioner of Customs was judiciously resolved. The merit of respondent's position as averred in the above-stated special and affirmative defenses is clear on the face of the 3rd Indorsement dated February 17, 1983 of the Chief, Export Coordination Division of the Bureau of Customs. (p. lOB, Customs record.) To quote: Res pec tf ully returned to the Honor- able Commissioner, Attn: Customs Service Chief, Legal & Intelligence Servic es~ the within case folder of Manila Seizure Identification No. 200-82, entitled "Re ublic of the Phili ines versus Nine 9 Truck Loads of sawn lumber Eer S/S "Eastern Virgo", SOUTHERN ISLES WOOD EXPORT", with the information that per stipulation of facts submitted by the parties during the hearing of this case as appearing in the herein prepared/ contemplated decision, and as shown in the Certificate of Inspection No. 23439 issued by the Bureau of Forest Development and submitted as Exhibit "9" for the claimant, the shipment concerned is "SA\'JN LUMBER '' , and not "b ui 1 ding mate r i a 1 s � " XXX XXX XXX And even in the "Urgent Motion to Render Decision" dated September 28, 1983, fil ed by counsel for petitioner Jose S. Santos, Jr. & Associat es with respondent in I Manila Seizure Identification No. 200-82, it is e xpressly sta ted th~t: (p. 110, Customs record.) 344

DECISION - CTA CASE NO. 3751 - 9- XXX XXX XXX The failure of the Honorable Commis- sioner of Customs to render his decision '. on the matter despite the lapse of more than one (1) year has caused great loss and irreparable damage on the part of Southern Isles Wood Export Inc., consider- inq that the items sub.iect of seizure and det ention are sawn lumber, the va]ue of which rapidly deteriorates. Moreover, South ern Isles Wood Export fail ed to come up with its commitments to its foreign customers. (Emphasis supplied.) XXX XXX XXX Upon the other hand, except the Gare statement of petitioner given to the CliO that subject shipment consists of building materials "because the same ha s undergo ne smooting (sic.) on all sides and cut accord- ing to its thickness, width and length in conformity wi th its final usage" (p. 76, CTA record), no evidence whatsoever was presented to support such statement~ Instead petitioner submitted this case on the basis of the pleadings and the records. Settled is the rule that the party who prays for judgment on the pleadings with- out offering proof as to the truth of his own allegations and without giving the opposing party an opportunity to introduce evidence, must be understood to admit the truth of all the material and relevant allegations of \ 34 5

DECISION - CTA CASE NO. 37 51 - 10 - the opposing party. (Bauermann vs. Casas, et al., Since petitioner failed to controvert the fact appeari nq in the customs r~cords, and alleged by respondent in hls answer, that the subject shipment to be exported to Guam on board the S/S "Eastern Virqo"v.;as actually sawn lumber, petitioner misdeclared said goods as building materials in order to evade payment of the corresponding export duty. Accordingly, petitioner is guilty of mis- declaration warranting the penalty of fqrfeiture pur sua nt to Sec t ion 2530, paragraphs (f) , (1), sub-paragraphs 3 , 4 a n d 5 , o f the Ta r i f f a n d Cu s t o ms C(HJ e , ~up r a � It is hardl y necessary to add that when an impo rte r challenges by legal steps the correctne ss o~ v alidity of the actions of the Collector of Custom s , t he question to be decided is not whether the Collecto r was wro~g but whether the impo rt er (or exporter) was right, the burden being on the lat t er to establish the correctness of his O\'Jn contention. (See Behn, Meyer & Co . vs. Collector of Customs, 26 Phil. 647.) The good faith of tax assessors a nd the validity of their actions are presumed . Th ey will be presumed to have taken into consideration a l l the fact s to v~hich their attention was cal led. No pr es umption can 346

DECISION - - 11 - CTA CASE NO. 375 1 ,. bein d ulged that p ubl i c officials of the state who have to do wi t h the assessme nt of property for taxation will knowingly vio l a te the duti es imposed upon them by law. (See Inter -p ro vin cia l Autobus Co . , Inc. vs. Co llector of Internal R e venu e~ 90 Ph i l. 290.) This is s pe cially true in t his ca se where respondent's specia l and affi rm- ative defen ses, the validity of w tich as borne out from th e records of the case , have the effect, if not c011- trove r te d by ade qu ate and competent ev idence, of null- ifying petitioner's cause of action. Anent pet itio ne r' s allegation of lack of due process on the ground t hat t he misdeclaratlon was not sq uarely raised during t he he aring of this case before the hearing of ficer, hence , petiti oner failed to present evidence, or s how that there was no malicious intention to commit such violation, suffice it to say that the appellate power of the Com miss io ner of Customs to review seizure and pro test cas es is not limited to a r ev iew of th e i ss ue s rai se d on ap peal. He may affirm , modify or re- verse the decis ion of the Collector or1 other questions provided that his findings and conclusions are supporte d by e vid ence. (Vierneza 'S . Commissioner of Customs, \ u~4 -(

DECISION - CTA CASE NO. 3751 - 12 - L-24345, Ju ly 30 , 1968, 24 SCRA 394 .) Even more, peti - tioner, before this Court wherei n trial Je novo can be a vailed of, should have presented evidence t t1 at its ship- '. me nt consisted of building material s in stead of c hoosing t o waive the same by submitting the c ase fo. decioion on the basis of the records and the ple adings. What measure of diligence, therefore, can be claim ed by petitioner, or its counsel, in the pr~duction of said e v idence? Surely , we believe it would not be in consonance with th e rules of estab lished judicial p rocedure , nor in keepi ng wjth th principl es of justice, if a party who has waived trial 1 ca n raise lack of due proces s. WHEREFORE, the decisio n of respondent Commiss i o ner of Customs forfeiting the subject shipment of petitioner Southern Isles Wood Export in favor of the Government 1s hereby affirmed. Costs against petit io ne r . SO ORDERED. Quezon City, Metro ~1anila. , 'Ju ne 26 , ~-87,. ) ca]/IJd~e~~J M1 ANTE - I LL ER Presidi g Judge WE 34o