CTA Case No. 4428 (Decision)

J \./ REPUBLIC OF THE PHILIPPINES COURT OF HlX 1-lPPEALS 11UElUN CI fY S ATURNINO A. GAZZINGAN, C. T.A. Case No. ~428 Pl~omu l gated: Pe1; it i oner- , _ S_EP_ 15_1_a94_ ~ COMMISSIONER OF CUSTOMS, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - K D E C I S 1~ Cl l'l lh1 s is a for�feitur� e ca s e of one(l) un 1t of 1978 MERCEDEZ BEN Z 230 from Bre men, West Germany . Petitioner, a Filipino of legal age, 1s a legi timate impor� ter�-c onsignee of one(!) un1t 1 '::U t1 f�H:. HCI::.lJI::.L f:II::.NL 230 which arr ived at the port of Manila on January 23 , 1989 from Hr� emen, I.-lest Germ any , on boar-d the ves sel SS "EVER GLOBE" w1th Re gistry No. DTS- 007 and covered by Bill . of Lading No. BREMNLO 20H05~RE . On !"larch 30, 1 '38'3, E ntl~ y No. 262 1 -/ - 89 was fi l ed by Petitione1�' declar- ing tile afor� es a 1d motor~ veh1cle which upon examination, th e sa me \.<las f ound as decla r ed in the entry. For fa1lur�e of Petitioner to secm~ e cleal~a nce from the Bureau o f Impo r t Services, the said motor ve hi c le was ordered se 1 ze d for' alleged vtolation of Sect1on 2530(f) 890

DECISION - C.T.A. CASE NO. 4428 ... .:::.. and ( 1 ) 3, 4 and 5 of and Customs Code, as amended. On June 27, 1 '::H::l9, P e t i t i onet~ y pet~sonall appeat~ed during the sch.eduled hearing ot the se1zure proceedings and requested that he be .:d lowed to avail of the pt~ovision of Section 2307 of the Tariff and Customs Code, as amended by Executive No. 38 by offer1ng imposable ta><es, dut1es and t1ne thet~eon, amounting to P123, 641.00. The govern me nt prosecutor did not interpose any objection. !::i a 1 d r e que s t was g ~~ ant e d by the L o 1 l e c t o t' of Customs and was for c learance to the �- Commissioner Df C ustom s, who, in h:is �:.:�nd Indorsement dated Septembet~ 11, 1989 Q_en~l::...!:.e..:::d :____t,'-h<..!..!:.e__,s~_a"'-'-'m'-'e,___ :i .t appearing t t"!_~- Pet i t ion e r' 1 s financial c apacit y to a nd ..!J!tr!or...t. the said motor vehicle :is doubtful. Hence, this appeal. In the meantime, the Re spondent, know1ng very well that there was a pending appeal before this Court on his f ot-- f e i t ut~ e decision, de l :i be~ ~ at e 1 y ot~ not, sold the vehicle in a public auction sale conducted by his office. Such vehicle was ne ver re cove r e d despite orders by this Court for Respondent to ~-�ett'i eve the same. The only issue raised by the Petitione r i s : Whether not Respondent ql'i:l Vt' J y abused hi !:� rJ :i SCT fd: ion in denying ~�etit:ionet~' s offer o f se ttlement ptwstaant to �.0. 898

DECISION - C.T.A. CASE NO. 4428 -3 No. 38, as amended, which den1al led to the torfe1t1.we ot the subject vehicle. The applicable prov1s1on in the resolution of this case 1s SectlOfl 1, l::>l ecutive No. 3U, wh1ch l s hereby quoted, thusly: SECTION 1. Section 2307 of the Tariff and Customs Code of the Phil1ppine s is hereby amended to read as follows: "Sec. 2307. Settlement oF Case by Payment of Fine 01 ~ Redemption of 1- orfe1 ted J-lr~oper ~ t y. !:iub 1 ec_t__.:tQ____t ~ !ll>~Q.-~.2l__ __ o_ f____ __!<.h...!L___ C o!!! !!!..i..?.~.i.Q.IJ_g_r:_ s________t_b .�!_ d i s t ~~ i c t co 1 1 e c t o t:.....!!!El.l!..____r!b iJ ~l!=~-- -~- a s ~_i~ ~.t .i.!_l_____gg_Q.Qi..!:t9..s-. ..� ..!i c e R ~ -- -----~hgn__ J:_!"}.g c g__ i..?. . fJ ~ aud, accept the se tt 1 enH:nt of any ~_g__t_z ur:-g_ ___ !;~~g ___.QLQ_'L! ..Q �Q._ _ tb ~t ........thg_ __....Ql:1!1_g_c_, __ ~ QP t~ t e_:c ,__ _g_~!_Q p r~ :t_g_r~_,___f)J..::___ c O!:J~..uJ!}_g_ g__ g_!::_ ___..b___i_�_ ~ ggn_L____2_h�...LL_Qf.f e r' __i_Q__ ~ )!___!!...9______lhg__�.o L!_g_~~ r- �!._ fi ne imposed Qy_ him upon the pt~ opet~ ty, or in case ot fortetture, the owne r , exporter1 importer or c onsignee or h is agent sha ll offer to pay for the dome s tt c mar ket value of the se 1 zed a r ticle. The Commissioner may accept the settle ment of any sei z ur-e case on dppeal in the sa me manner� . Upon payment ot the t1ne as det er m1n~d by the district collector which shall be in an amount not less than twenty percentum C 20~J nor more than eighty percentum CBO~l of the landed cost ot the seized imported article or the F.O.B. value of the seized article for eMpo r t, o ,~ pay men t o t t 11 e IJ u Jill' !-.� l 1 c 111 a I"' k l' t v a l u e , the property shall b e fo r thwith re leased a nd all liabil 1ty which may or might at t a c h t o t h e p ,~ o p �n �t 'r' b y v 1 r �t u e o f t h e offense which wa s thl' occas1on ot the s eizure and a]] llab l llty whi c h might h a v e be t' n i n c lll" t~ e d u n d e , ~ an 'Y c a s h d e p o s 1 t o r� bun d y 1 v l' n L� r' ll1 t ' o vn 1l' ,~ o r � a g e n t 1 n J~ espect to such pt~op�n � t.y s hall thet"e upon be deemed to b e d1 scha,-� ged. 89 7

DECISION - C.T.A. CASE NO. 4428 4- Settlement of any seizure case by payment of the �fine or redemption of forfeited property shall not be allowed in any case where the importation is absolutely prohibited or where the release of the property would be contrary to law." <Underscoring supplied> It is to �be remembered that Petitioner offered to settle the case pursuant to the above mentioned law in the amount of P123,641 as payment for the duties and taxes of the subject vehicle and penalty thereon. Clearly, under the said law, Petitioner is entitled to the settlement of the case as there was no fraud on his part and that the sub.ject importation is not absolutely prohibited. In fact, the Law Division of the Bureau of Customs re~ommended for the settlement of the case since there was no fraud committed by the Petitioner and found "no legal impediment to deny his right to settlement enunciated in Executive Order No. 38." A pertinent portion of the memorandum to the Collector of Customs is hereby quoted, thus: After a careful review of the evidences thus adduced, this Office finds that there is no fraud in the importation of the subject motor vehicle. Claimant has properly declared in the covering entry the vehicle under litigation which t a llied to the findings of the Customs Examiner concerned. As further established from the submitted evidences, claimant is the registered owner of the said vehicle as evidenced by Certificate of Registration No. 6452 9458 i ssued on June 15, 1987. It should be noted that the subject motor vehicle was personally u s ed by the claimant during his s tay in Germany from June 3, 1988 to January 8, 1989 whel~ e he was employed at G. Belvan Merchandising. The

DECISION - C.T.A. CASE NO. 4428 5- reason why claimant failed to use the sa1d vehicle at the tim~ of registration because he was t~ equested by his daughter, who is living in Japan, to extend h1s stay 1n Japan unt1J they could find a trusted driver as his replacement . Not withstanding the foregoing circumstances, it is safe to state that claimant has been using the Ruestioned vehicle for more than six (6) months; thus there is sufficient compliance of six month use requirement as prescribed by CB Cit~ culat~ No. 1069 on 1"1otm~ Vehicles. Aside from his stay in Germany, claimant has stayed in Japan for more than one Cl> yeat~ as shown in his Passport No. 0542859. As borne out from the above facts, e tavot~ abl claimant's request mer1t impediment to consideration, finding no leoal enunciated 1n deny his right to settlement Executive Order No. 38. Yet, without rhyme on ,~eas but. solely because of s Petitioner~' "financial capac ity to acquit"e subject vehicle creates doubt to h1s good faith i n the importation thet~ eof", Respondent adamantly refused the off et~ of settlement and denied the recommendation of release by the Collector of Custom!:'. The specific reason advanced by the respondent is, S lW p I" i S i n g l y , not even a mong those provided by the Tariff and Customs Code. Q. Well anyway, what was the decision, in:it:i .:dly, of the Colle c tor of Customs':l I s i t. n o t f or t. h e c at�� t o be l" e 1 e i:1 !; 11 d a 1 l " e ad y t o y o u ? A. !yon and decision ng Col l ector.. . Q. You have t o d i s t i n g u i s h th e Co 1 l e c t o )' f l' o m t h e Co mmi s :;. 1 on e l ' � A. Yes. 899

DECISION -- C.T.A. CASE NO. 4428 - 6- Q. So the J ~ eco mmend at ion of the Co l l t/cd: o ~~ was, what ') A. I t " e r e l e a s e n a i y on g ~< n t s e � u. Now, when the appr�oval/1ndorsement of document was s ubmitted to the �. Co mmi s s i on e ���, t h en Co mmi s s i on e ,~ M1son of Customs, what did Commissioner Mison do? Do yo4 I~ now? A. Dinenay iyong lwwan ng Collectot' . D. On what gt~ ound did he deny the favorable ,~ ecornmendat ion f ot~ the t~ elea s e of the vetncle on the pal ~ t of the Collectot~ of Customs ~~ I�Jhat was the r eason given by then Co mmi s!:. ionet" l>li son ? A. Because wala daw �.�!Q�!C i t y ___ _ I\_5!___ ma _g_~~t:. o o _n______!:L!l 1�1et~ced e :z Ben-z._ Q. ~.Q_ ____ th_e_ _Qn_!_y____ _c_~_?._o 11_ _o n_____Ji!:J_i cl!_ Commissionet~ Nison based h_i...?._ d e �.i s _i o n o t ' act 1 o f:L__ __t_Q___r:~__g__r- s e t h ~--!.-::. e c Q__!!!_lll e D d at i9. f!____Q_f_ _ _!:l i s ~o l l e_r ro t ' f _______Q ----- ~~-:\ ~ L9'!!~--- --� t!~?. ____t!!9 t _ ~ou have no financial capac ity_ !!_Q____Q.!lt~�_Q_9_s e __ a -~! g_r::__Q g~_L__~~!l~ ? n. s. N. PP� 14 - 16, Aug. 6 ' 1993> Be that as i t may, r ~c>ccwd s of the case-, showed that the subject vehicle was donated Be-l wan, a German national who wa s married to Petitioner's daugh t e,-., Len <-t tda Ga:z z ingan. ln the of Se-pt. eo m1:-.lP �., 30, 1993 , Atty. 1�1 arP.IE-l Re1rwcasa, Attm�� ney 111, Appe-llate Divi s ion Df of Cu ;:. tom s whD made a 900

DECISION - C.T.A. CASE NO. 44 2 8 - 7- review and subsequently ~ecommended f o r the settlement of the case, test1fied, thus: Q. What add1tional matter was the lawyer of Mr. Gazzingan able to show? A. ~1r. Gazzingan ��� I mean the lawyer of J'>k. Gazzingan shov1ed a donation paper fo~- m h i s so .fl -_!.!l:::-Ji!.!:'L.~-"Ih_lL__!_i a Ge r man natio!lal who is marri~~ :t.Q._ hi..~ -. Q~~y.D_tJ~. r:.. . Q. His daught et~ ? A. Yes, h i s daughte,~ . Q. In other wot~ds , th e heat~i ng co nducted by you, Mr . Gazz1ngan was able to prove that he did not buy the vehicle and he did not pay for that vehicle, 1n as much as, 1t was donated to him by his son in law who is a German national. In other words, in that hearing Mr. Gazzingan was able to adduce evidence that no cash amount involve. and his financial capacity was not required 1n o t~ de t~ t o a c q u ]t~ e t h e car, i n a s much as, 1t was don a ted to h1m by his son in law in the person of this German national who owned the vehicle in Ge r many. A. Yes. Aft ~- the_b_ear in.!h___ l.__f!r::!:f!areQ. f.Qr:._m_ i!_Dd [ ~-� ecommended for' the reversal of the decis i on of the collector at the Custgms to the Co mmi s s i on e !:.L___j:;__Q____Q_g___ a p p r o v e d a g a L!:L__.!":!_y__~!J_g_____b_g_g~l .___�_~r v .i.�.g_ Division but st1!l the Commissioner in sis ted to returQ back the records and ordered the Le_!@_l Ser~v i ~~ --____1_Q_ __j _s s~_e_ _ g_ f o r f e i t Lwe ot~d. et~ . So, 1-1hat we did, is to finally issue a seizur e order. Ag ai n, Mr . Gaz2:ingan appea l to th e c otn' t. 901

DECISION - C.T.A. CASE NO. 4428 - 8- U. Yes, and dLw1ng that appeal Mt~ . Gazzingan was able to show that contrary to the finding of the Commissioner of Customs, he may not have the financial capacity to purchase it at all for it was donated to him by his son in law. Is it not what transp1red during that hear1ng conducted by you? Is it not correct? A. You know, one of the requirements of an importer 1s that, he must have the capacity to import for the program, the beneficiaries of the program are the bali kbayan, OJ' wot�kers abt'oad for 1t does not 1nvoJve dollars output out of the country. So, that is one of the requirements. Now, l honestly believe that ~..!2. Ga ~~.!.!!!l~n.?_..~----Qf fe~:__ t o set t 1 e is a substitute to the ab!::.t?nce of the requirement but at any rate. He wa s a b 1 e . _tQ______Q_CQ.Y.L_ t hat. h 1 s d a ~gb t e r i s marT i e d t ~!..___ib..L~ German national ~ho owns th1s �~____�_Q.1____ .!tHL_t!~!!l-~D...L~gg__t h e __!i!Y! on that aspect~ 1 recommended to the legal that it is still the Cummtss1oner who ha s the final say btAt did deny my recommendation. I cannot do anything except to follow the Co mm i s s i o n e r ��� <T. S. N. pp. 10-14, Sept. '3, 1':.1'33; underscoring supplied) From the fot- egoing test imony , it can be deduced that the Respondent indeed whimsically and capt'iciously e><ercised his powet' o f f OJ' f e i t tw e � And thi s is not the timE' that We have taken notice and in fact, admonished herein Respondent, then Commi ssionet' of Customs Sal vadot' Ni son, regarding his de s poti c manne r of forfeit1ng goods and ves se ls. F ot' f e i t ur e i s a 90 2

DECISION - C.T .A. CASE NO. 44 2 8 - 9- measur� e and should to only w1th extra care. Rivera vs. Custo111s, C.l. A. Case No. 4479, Dec. 24, 1993.>. Under the,c1rcumstance, We agree w1th the Petitioner that it is more in accord with justice and equity if Respondent would just impose taxes, duties and penalties on the old imported vehicle of Petit i onet~ who in good faith a donated old vehicle his own domest1 c use. 1'-l slight and r egulation done in good faith would the Respondent f t~ o m wh i ms i c a 1 1 y and capriciously ex e 1~ c i s i n g his authority. Hence, Petitioner� should have been allowed to set t 1 e the case p�.wsuant t. o No. 38, as amended. regard to the fact that the subject vehicle can no longer be recovered after Respondent, deliberately or not, so ld the same in an auction sale, such should not pr-ejudice the interest of the Petitioner. Hence, the amount pa1d by the buy er 1n good taith to the Respondent after deduction of the duties and taxes due ther-eon and fine ther�eo f amounting to P123,641.00 be turned over to the Petitioner 1n replacement of his motor vehicle. WHEREFORE, in a 11 the decision of Respondent dated December 18, 1989 is hereby REVERSED and SET him to DELIVER to the Petitioner the 90 3

.' DECISION - C.T.A. CASE NO. 44~8 - 10 - amount paid by the buyel~ in good faith, in that auction sale minus the dut1es and taxes due thereon and fine <amounting to P123,641.00), 1n replacement of his motot~ vehicle. SO ORDERED. ~~~ ERNESTO D. ACOSTA Pr~esidlng Judge WE CONCUR: ociatE' Judge ~ ~Jvfr.: RAMON 0. DE VE A Associate Jud e I I hereby certify that this decision was reached after due consultation among the member�s of the Court of Tax Appeals in accordance with Section 13 Arti c le VIII of the Constitution. ~Q , ~ EHNESTO D. ACOSTA Pl~es:iding Judge Court of Tax Appeals 90 ~