MONACAT TRADING v. COMMISSIONER OF CUSTOMS, BUREAU OF CUSTOMS

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY ENBANC MONACAT TRADING, CTA EB NO. 2728 (CTA Case No. 9851) Petitioner, Present: Del Rosario, P.J, Ringpis-Lib an, Manahan, Bacorro-Villena, Modesto-San Pedro, Re yes- Fajardo, Cui-David, Perrer-Flores, and Angeles,Jl - vers11s- COMMISSIONER OF CUSTOMS, P ro mulgated: BUREAU OF CU STOMS, R espondent. x---------------------------------------------------------------------------~--------------------x DECISION RINGPIS-LIBAN , .[; Before the Court En Bane is a Petition for Review1 flied by Monacat Trading on January 31, 2023. It seeks the reversal of the Decision dated August 4, 20222 (Assailed Decision) as well as the Resolution dated December 5, 20223 (Assailed Resolution) of the Special Second Division (Court in Division)4 of this Court in CTA Case No. 9851. 1 Court En Banes Docket, pp. 1-29. 2 !d., pp. 32-78. 3 !d., pp. 80-91. 4 Composed of Associate Justice Jean Maria A. Bacorro-Villena (ponente) and Associate Justice Lanee S. Cui-David.

DECISION CTA EB No. 2728 (CTA Case No. 9851) The respective dispositive portions of the Assailed Decision and Resolution are quoted hereunder: Assailed Decision: "WHEREFORE, the foregoing considered, pent10ner Monacat Trading's Petition for Review filed on 04 June 2018 is hereby DISMISSED for lack of jurisdiction. Assuming the Court has been solidly vested with jurisdiction, the petition will still fail for utter lack of merit. SO ORDERED." Assailed Resolution: "WHEREFORE, in view of the foregoing, pennoner Monacat Trading's "Motion for Reconsideration" filed on 23 August 2022 is hereby DENIED for lack of merit. SO ORDERED." THE FACTS , The facts of the present case were laid down by the Court in Division in the Assailed Decision as follows: 5 "Sometime in July 2015, several shipments of vehicles (subject vehicles) consigned to petitioner arrived at the Port of Batangas (PO B), with the following details: Import Entry and Bill of Lading Item Description Tariff Value per Unit Internal Revenue (BL) No. Heading (US$) Declaration (IEIRD) No. C:-6380 MCC830419.\ One (1) Unit Brand $29,280.00 New 2015 Land Rover 8703.2324 c 6375 ~1CC828737A Two (2) Units Brand 8703.2324 $21,684.00 New 201 5 Land Rov<:r C-6372. $122,153.00 Dd~:ndcr 90 ,.,v 567278555,\ One (1) Unit Brand 8703.2324 New l'crrari ( :alifornia Coup<: 5 Court En Bane's Docket, pp. 33-43. (Citations omitted).

DECISION CTA EB No. 2728 (CTA Case No. 9851) Import Entry and Bill of Lading Item Description Tariff I Internal Revenue (BL) No. Heading Value per Unit Declaration (US$) (IEIRD) No. C>6373 567278562.\ Two (2) Units Hrand 8703.2324 $26,985.00 N cw Mercedes Hcnz c 6381 ~ICC821022 On(' (1) Unit Hrand 8703.2324 $29,512.00 New 2015 Mcret;dcs 8703.2324 S60,000.00 C-6403 NS151'5485. \ 8703.2324 529,512.00 C-6374 MCC81665H Henz C200 Silver, S30,000.00 C:-6398 Sedan, 4 Cvlindcr ()as ( )n<: (1) Unit Hrand New Mel ,arcn 540C One (1) 2015 Unit Mercedes 1-km: C200 953754829.\ ( )nc (1) Unit Hrand New Toyota Prado SU\' 8703.2324 C-6395 954024094.\ Two (2) Units Brand 8703.2324 537,000.00 New 2015 Toyota Land Cruiser c;X SU\' The subject vehicles, as declared in the Import Entry and Internal Revenue Declarations (IEIRDs), were processed by Customs Examiners Marice! A. Manguiat (Manguiat) and Noralyn T. Asaria (Asaria). After examining the documents submitted in support of the subject shipments, said customs officers processed the subject vehicles and noted in the IEIRDs that these were under tentative liquidation as approved, and pending the submission of the issuance of the Import and Assessment Service (lAS) clearance, ESS Motor Vehicle Monitoring and Clearance Office (EMVMCO) clearance and Authority to Release Imported Goods (ATRIG) from the BIR. On 24 July 2015, then POB's Acting District Collector of Customs, Ernesto P. Benitez, Jr. (POB Acting District Collector Benitez) indorsed the subject vehicles and their supporting documents to lAS for value information. On even date, then BOC Deputy Commissioner of the Enforcement Group (EG), Ariel Nepomuceno (EG Deputy Commissioner Nepomuceno), issued Alert Orders (AOs) against the subject motor vehicles for alleged violation of Section 2503, in relation to Section 2530, of Presidential Decree (PD) No. 1464, otherwise known as the Tariff Customs and Code of the Philippines (TCCP), as amended. At the time of the subject vehicles' importation and the commission of the supposed violations, the TCCP was the prevailing law/

DECISION CTA EB No. 2728 (CTA Case No. 9851) On OS August 2015, the assigned Officers-on-Case, Alexander Ugay (Ugay) and Doy De Castro (De Castro), together with Customs Examiners Manguiat and Asaria, went to the POB for the conduct of the spot check or 100% physical examination of the subject vehicles. On 10 August 2015, Ugay and De Castro submitted a Memorandum of even date to EG Deputy Commissioner Nepomuceno, recommending the issuance of Warrants of Seizure and Detention (WSDs) against the subject vehicles by reason of misdeclaration and gross undervaluation, citing Section 2503, in relation to Section 2530, of the TCCP, as amended. On 11 August 2015, EG Deputy Commissioner Nepomuceno indorsed the aforementioned Memorandum to POB Acting District Collector Benitez, for his information and consideration. On 26 August 2015, POB Acting District Collector Benitez issued WSDs against the subject imported motor vehicles for alleged violation of Section 2503, in relation to Section 2530, of the TCCP, as amended, viz.: IEIRD Item Description Seizure Nos. Identification C-6380 One(!) Unit Brand New 2015 Land Rover (S.I.) No. 09-15 C-6375 Two (2) Units Brand New 2015 Land Rover Defender 90 08-15 C-6372 05-15 C-6373 One (1) Unit Brand New Ferrari California Coupe 06-15 C-6381 Two (2) Units Brand New ;\Iercedes Benz 10-15 C-6403 One (I) Unit Brand New 2015 Mercedes Benz C200 14-15 C-6374 Silver, Sedan, 6yl, Gas 07-15 C-6398 One (1) Unit Brand New McLaren 540C 12-15 One {1) 2015 Unit l\Iercedes Benz C200 One (1) Unit Brand New Toyota Prado SU\' C-6395 Two (2) Units Brand New 2015 Toyota Land Cruiser GX 11-15 On 08 September 2015, then BOC-IAS Deputy Commissioner of the Assessment and Operations Coordinating Group (AOCG), Agaton Teodoro 0. Uvero (AOCG Deputy Commissioner Uvero) issued the lAS 2nd Indorsement (lAS Values), indicating the values of the subject luxury vehicles consigned to petitioner and referred to the lAS for the proper valuation based on the model and/or series as found during the spot check or 100% physical examination/

DECISION CTA EB No. 2728 (CTA Case No. 9851) On 03 March 2017, POB OIC-District Collector Reynaldo M. Galeno (POB OIC-District Collector Galeno) rendered a Consolidated Decision, ordering the quashal of the WSDs issued against the subject shipments covered by IEIRD Nos. C-6372, C- 6375, C-6380, C-6373, C-6381, C-6403, C-6374, C-6398 and C- 6395. He likewise ordered the continuous processing of the import entries upon payment of additional duties and taxes. He further ordered that the surcharge be doubled for IEIRD Nos. C- 6398-15, C-6372-15, C-6380-15, C-6375-15, and a one-time surcharge for IEIRD No. C-6395-15. On 04 October 2017, respondent COC rendered the assailed Decision, reversing and setting aside POB OIC-District Collector Galeno's Consolidated Decision. In the assailed Decision, he ordered the forfeiture of the subject vehicles in favor of the government, to be disposed of in accordance with customs laws, rules and regulations. On 06 November 2017, petitioner filed before the Office of respondent COC an MR to the assailed Decision. On 19 April 2018, respondent COC issued the assailed Order, denying petitioner's MR and affirming his assailed Decision. Petitioner allegedly received a copy of the assailed Order on 03 May 2018. PROCEEDINGS BEFORE THE SECOND DIVISION Aggrieved by the aforesaid assailed Decision and Order, petitioner filed on 04 June 2018 the instant Petition for Review before the Court of Tax Appeals (CTA). The same was raffled to the Second Division and docketed as CTA Case No. 9851. On 28 June 2018, respondents received the summons dated 19 June 2018, requiring them to file an answer within fifteen (15) days from the receipt thereof, or until 13 July 2018. After being granted an extension of time, respondents filed their Answer on 28 September 2018. Later, or on 31 January 2019, the pre-trial conference proceeded. The parties filed their Joint Stipulations of Facts GSF) on 04 March 2019. Still later, the Court issued the Pre-trial Order dated 05 April 2019 adopting the parties' JSF and setting the trial dates. During the trial that thereafter ensued, petitioner presented the following witnesses, namely: (1) Mermelinda DeJa Cruz (Dela Cruz); (2) POB OIC-District Collector Galeno; (3) Customs Examiner Manguiat; and, (4) Customs Examiner Asaria. ,v'

DECISION CfA EB No. 2728 (CfA Case No. 9851) Through her Judicial Affidavit, Dela Cruz testified that: (1) petitioner filed the IEIRDs and correctly described each and every motor vehicle in their respective IEIRDs as appearing on their corresponding packing list and commercial invoices; (2) petitioner paid the government duties and taxes for each vehicle as assessed by the Customs Examiner; and, (3) the BIR issued the ATRIG for each vehicle after petitioner paid the assessed duties. On cross examination, Dela Cruz stated that: (1) she was duly authorized by petitioner's Licensed Customs Broker, Flaviano Dela Cruz (LCB Dela Cruz), to process the application and release of freight; and, (2) she was present during the spot check or 100% physical examination of the subject vehicles. On re-direct and re-cross examinations, Dela Cruz stated that the values appearing on the lAS Values were sourced from the internet. POB OIC-District Collector Galeno also testified through his Judicial Affidavit and declared that: (1) he was the Collector of Customs who issued the Consolidated Decision dated 03 March 2017; (2) the subject motor vehicles were found not subject to forfeiture as there was no misdeclaration and undervaluation; and, (3) the methods of valuation of the dutiable values of the imported vehicles should be applied sequentially pursuant to the TCCP, as amended. On cross examination, then POB OIC-District Collector Galeno admitted that he was not present when the subject vehicles were physically examined for assessment. However, when the AOs were issued, he personally and actually witnessed the opening of the containers that carried the subject vehicles. In addition, he insisted to have rendered the Consolidated Decision only after both parties were heard and their documents duly considered. On re-direct examination, POB OIC-District Collector Galeno expounded on the supposed meaning of 'misdeclaration' based on Customs Administrative Order (CAO) No. 006-93. No re-cross examination was conducted. For her part, Customs Examiner Manguiat testified through her Judicial Affidavit that: (1) she was the Customs Examiner who processed five (5) of the nine (9) subject motor vehicles covered by IEIRD Nos. C-6372, C-6375, C-6380, C-6395 and C-6403; (2) she examined the IEIRDs and compared them with the documents submitted by the importer/petitioner; and, (3) after examination of the documents, she noted in the IEIRDs that the /

DECISION CTA EB No. 2728 (CTA Case No. 9851) subject vehicles were being processed, subject to tentative liquidation as approved (pending the issuance of the lAS clearance and the ATRIG). During the cross examination, Manguiat stated that the IEIRDs contained only a general description of the subject vehicles as opposed to the specific description in the commercial invoices. However, since the chassis numbers in the commercial invoices and the IEIRDs are the same, she clarified that there was no misdeclaration. In addition, she explained that respondent BOC has a Memorandum mandating that imported vehicles shall be referred to the lAS for value verification. On re-direct examination, Manguiat reiterated that the declared chassis numbers in the IEIRDs are the same in all the subject vehicles when they were physically inspected. On re-cross examination, Manguiat confirmed that the chassis numbers only refer to the identity of the subject vehicles but not to the weight, measurement, price, brand and the model. Customs Examiner Asaria, who also testified through her Judicial Affidavit, declared that: (1) she was the Customs Examiner who processed four (4) of the nine (9) subject vehicles covered by IEIRD Nos. C-6373, C-6374, C-6381, and C-6398; (2) she examined the IEIRDs and compared it with the documents submitted by the importer/petitioner; and, (3) after examination of the documents, she noted in the IEIRDs that the subject vehicles were being processed, subject to tentative liquidation as approved (pending the issuance of the lAS clearance and the ATRIG). On cross examination, Customs Examiner Asaria explained that the lAS valuation may be used if the declarations in the invoice documents are unreliable. However, as the lAS clearance was issued only after the AOs on the subject vehicles were issued, she did not anymore use it as basis for the valuation. She added that the front page of the IEIRDs contained only a general description of the vehicles as opposed to the specific description in the commercial invoices. On re-direct examination, Customs Examiner Asaria confirmed that the make, brand, color, and chassis numbers appearing in the IEIRDs and in the invoices are the same. On re- cross examination, she confirmed that she was not able to adjust the valuation of the vehicles as they were already seized at the tim~

DECISION CTA EB No. 2728 (CTA Case No. 9851) After the presentation of the last witness, petitioner filed its Formal Offer of Exhibits (FOE) on 23 November 2020. Respondents flled their Comment/Opposition, thereto on 03 December 2020. In the Resolution dated 20 January 2021, the Court admitted petitioner's exhibits, except for Exhibits 'P-1' and 'P-25' for petitioner's failure to identify and to submit the marked documents, respectively. Later, upon motion and after petitioner was able to present in open court the certified true copy of Exhibit 'P-25', the Court ultimately admitted the same as part of petitioner's documentary evidence. Respondents, on the other hand, presented the assigned Officers-on-Case, De Castro and Ugay, who testified on direct examination by way of their respective Judicial Affidavits, and whose testimonies were completed after the respective cross, re- direct and re-cross examinations. On the witness stand, De Castro identified his Judicial Affidavit dated 25 January 2021, where he declared that: (1) he was one of the assigned Officers-on-Case who investigated the subject vehicles; (2) upon examination and investigation, he discovered several violations of customs, laws, rules and regulations; (3) upon issuance of the AOs, he conducted a spot check or 100% physical examination of the subject vehicles; (4) he noted that the subject vehicles were misdeclared and grossly undervalued; and, (5) he personally served the WSDs at petitioner's address but then discovered that there was no office or warehouse at the said location, On cross examination, De Castro admitted that petitioner processed the IEIRDs even if the lAS clearance and the ATRIG were not yet issued. In addition, respondent BOC did not use the lAS Values during the investigation since such a report resulting from the value verification was issued much later. On re-direct examination, De Castro confirmed that the subject red-tagged vehicles were not physically examined during the assessment as the shipping seals were still intact when they conducted their investigation. Also, the subject vehicles were deliberately misdeclared, particularly as regards their respective models or series, so they will be assessed with lower taxes or charges. On re-cross examination, De Castro stated that the import documents came from various sellers based abroad. ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) Ugay likewise identified his Judicial Affidavit dated 25 January 2021 wherein she corroborated De Castro's declarations above. On cross examination, Ugay also stated that the declared values that respondent BOC's EG used as the basis in issuing its Memorandum was supplied by the person tasked to perform the assessment. According to him, he is unaware of the EG's actual basis for the assessed amounts. On re-direct examination, Ugay testified that it is the customs broker who filled up, facilitated, and processed the IEIRDs. On re-cross examination, he confirmed that the subject vehicles were not released from respondent BOC's premises and that petitioner filed an application for ATRIG. After the presentation of the last witness, on 01 March 2021, respondents filed their FOE consisting of Exhibits 'R-1' to 'R-26', inclusive of sub-markings. Petitioner filed its Comment/Opposition thereto on 16 March 2021. In the Resolution dated 26 May 2021, the Court admitted all of respondents' documentary exhibits. In the same Resolution, the Court directed the parries to submit their respective memoranda within thirty (30) days from the receipt thereof. On 01 July 2021, respondents filed their Memorandum, while petitioner filed its Memorandum on 27 July 2021. Subsequently, the Court submitted the instant case for decision." On August 4, 2022, the Court in Division rendered the Assailed Decision dismissing the Petition for Review for lack of jurisdiction. Aggrieved, petitioner filed a Motion for Reconsideration on August 23, 2022 which the Court in Division denied in the Assailed Resolution. On January 31, 2023, petitioner ftled the present Petition for Review. In a Minute Resolution dated March 6, 2023, this Court directed respondent to file his Comment to the Petition for Review within ten (10) days from notice.6 On March 20, 2023, respondent ftled his Motion for Extension of Time to File Comment.~ 6 Court En Banes Docket, p. 97. 'Id, pp. 98-100.

DECISION CTA EB No. 2728 (CTA Case No. 9851) In a Minute Resolution dated March 30, 2023,8 the Court En Bane granted the respondent a period of thirty (30) days from March 25, 2023 or until April 24, 2023 within which to file his Comment. On April 24, 2023, respondent filed another Motion for Extension of Time to File Comment which the Court En Bant granted in a Minute Resolution dated June 5, 2023. The Court En Bant granted respondent an additional period of five (5) days or until April 29, 2023 within which to flle their Comment. On May 2, 2023, respondent filed his Comment.9 On June 5, 2023, the present case was submitted for decision. 10 THE ISSUES Petitioner flied the present Petition for Review on the basis of the following assignment of errors: ASSIGNMENT OF ERRORS I The Honorable 2nd Division erred in finding that it has no jurisdiction over the instant case because there is no clear and convincing evidence to prove petitioner's receipt of the assailed order. II The Honorable 2nd Division erred in finding that there is misdeclaration as to the description of the subject vehicles. III The Honorable 2nd Division erred in finding that the Import and Assessment Service (lAS) value recommendation is the transactional value of the identical goods under method two. IV The Honorable 2nd Division erred in finding that the consolidated decision is not an order of release. ~ 8 Id, p. 102. ' Jd, pp. 103-160. 10 Minute Resolution dated June 5, 2023, Court En Bane Docket, p. 165.

DECISION CfA EB No. 2728 (CfA Case No. 9851) THE COURT EN BANCS RULING The Petition for Review is unmeritorious. It bears noting that petitioner merely recycled the arguments it raised in the present Petition for Review as these matters had already been thoroughly discussed and resolved by the Court in Division in the Assailed Decision and Resolution. To put it bluntly, there is nothing in the present Petition for Review that was not sufficiently passed upon by the Court in Division in the Assailed Decision and Resolution. Petitioner utterly failed to raise any compelling reason to warrant the modification much less reversal of the Court in Division's findings. Jurisdiction of the Court Petitioner assails as inaccurate the Court in Division's finding that it has no jurisdiction over the present case. Petitioner maintains that forfeiture proceedings are administrative in nature and thus, the evidentiary standard of "clear and convincing evidence" shall not apply therein. Petitioner faults the Court in Division in requiring clear and convincing proof of petitioner's receipt of the assailed order on May 3, 2018 in order to establish its jurisdiction over the present case. According to petitioner, its timely receipt of the assailed order on May 3, 2018 is deemed established based on the following arguments: . L Petitioner's receipt of the assailed order on May 3, 2018 is the same exact date when the said order was received by the Bureau of Customs Port of Batangas (BOC-POB) precisely because petitioner was immediately furnished with a copy thereof. 2. May 3, 2018 is the earliest possible time that petitioner could have received the order of the Commissioner which would trigger the start of the 30-day reglementary period to flle the petition for review. 3. The May 3, 2018 stamp of the BOC-POB provides a definitive timeline of when the assailed order could have been first served. Petitioner's verified assertion that May 3, 2018 is its date of receipt of the assailed order is sufficient basis since the same remains uncontroverted. �4. Exhibit "P-1" is the same exhibit that embodies one of the admissions of both parties in their Joint Stipulation of Facts dated February 15, 2019 which was adopted in the Pre-Trial Order dated AprilS, 2019. 5. Section 1, Rule 129 of the Revised Rules on Evidence mandates judicial notice, without the introduction of evidence, official acts of the executive department of the National Government of the Philippines. ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) The assailed order, being an official act of an attached agency of the Department of Finance, is subject to mandatory judicial notice. 6. Section 8 of Republic Act (RA) No. 1125, as amended, provides that the proceedings before this Court shall not be governed strictly by technical rules of evidence. The merit of petitioner's arguments is more apparent than real. Basic is the rule that it is the duty of the courts to consider the question of jurisdiction before they look into other matters involved in the case, even though such question is not raised by any of the parties.11 Lack of jurisdiction is one of those excepted grounds where the court may dismiss a claim or a case at any time when it appears from the pleadings or the evidence on record that any of those grounds exists, even if they were not raised in the answer or in a motion to dismissY The reason is that jurisdiction is conferred by law, and lack of it affects the very authority of the court to take cognizance of and to render judgment on the action. 13 If the court has no jurisdiction over the nature of an action, it has no other option but to dismiss the case. It is true that forfeiture proceedings before the Bureau of Customs (BOC) are administrative in nature. But that point is irrelevant to the Court in Division's finding that it lacks jurisdiction over the present case. The administrative nature of the forfeiture proceedings before the BOC cannot, by any stretch of imagination, be extended to the Petition for Review filed before this Court, the latter being a judicial proceeding where party-litigants are required to prove every minute aspect of their cases.14 Although the nature of the proceedings before this Court cannot be characterized as administrative, the applicable evidentiary standards with regard to this Court's factual findings is also substantial evidence. As the Supreme Court aptly stated in Commissioner ofInternal Revenue v. Manila Medical Services, Im: (Manila Doctors Hospital), 15 to wit: "As to questions of fact, the Court accords the factual findings of the CTA with the highest respect. These findings of facts can only be disturbed on appeal if they are not supported by substantial evidence or there is a showing of gross error or abuse on the part of the CTA. In the absence of any clear and~ 11 Bureau ofCustoms v. Devanadera, G.R. No. 193253, September 8, 2015, 770 SCRA 24. 12 Section 1, Rule 9 of the Rules of Court; Heirs of Jose Fernando v. De Belen, G.R. No. 186366, July 3, 2013, 700 SCRA 562; Geonzon Vda. De Barrera v. Heirs of Vicente Legaspi, G.R. No. 174346, September 12, 2008, 565 SCRA 192, 198. 13 Bernardo v. Heirs of Eusebio Villegas, G.R. No. 183357, March 15, 2010, 615 SCRA 474-475; Sales v. Barra, G.R. No. 171678, December 10, 2008, 573 SCRA 464. 14 Commissioner ofInternal Revenue v. Philippine Bank of Communications, G.R. No. 211348, February 23, 2022; Commissioner ofInternal Revenue v. Ocier, G.R. No. 192023, November 21, 2018. 1' G.R. No. 255473, February 13, 2023.

DECISION crA EB No. 2728 (crA Case No. 9851) convincing proof to the contrary, the Court presumes that the CTA rendered a decision which is valid in every respect." (Emphasis and underscoring supplied) After careful review of the records vis-a-vis the relevant laws, rules, and jurisprudence, the Court En Bant agrees with the Court in Division's ruling that it has no jurisdiction over the present case even when the pieces of evidence presented by petitioner are weighed under the substantial evidence standard. The Court En Bane agrees with the Court in Division's conclusion that with the denial of Exhibit "P-1", petitioner has no other evidence by which to prove its alleged receipt of the Commissioner of Customs (COC)'s assailed order on May 3, 2018. While it is true that proceedings before this Court are not governed strictly by technical rules of evidence, this rule cannot be construed as a license to disregard certain fundamental evidentiary rules. There must be sufficient amount of evidence upon which this Court shall base its factual findings. In this case, the jurisdictional facts must be duly alleged and proved and the same cannot be substituted by mere speculations, surmises, or conjectures. As these matters affect the very authority of this Court to act on the case, they cannot simply be dismissed as mere technicalities that may be dispensed with by the bare invocation of "interest of justice." Petitioner cannot also hide behind the rule on mandatory judicial notice under Section 1, Rule 129 of the Revised Rules on Evidence to excuse the non- admission of Exhibit "P-1" given that what is at issue before the present case is not the existence per se of the assailed order but the date of receipt thereof by the petitioner. Seizure and Forfeiture of the Subject Vehicles As to the merits, petitioner asserts that the Court in Division erred in ruling that there is misdeclaration as to the description of the subject vehicles due to the glaring variance in the model and/or series of the subject vehicles. According to petitioner, there was no misdeclaration as to description of goods because the nature and identity of the goods were sufficiently described in the Import Entry and Internal Revenue Declaration (IEIRD) as the petitioner provided therein the correct general description of the motor vehicles along with proper disclosure of the related Vehicle Identification Number (VIN) containing the specific description of the subject vehicles. While petitioner admits that it did not strictly follow Customs Administrative Order (CAO) No. 6-93 as it did not indicate the models and/ or series of the seven (7) motor vehicles in the IEIRDs, it maintains that it cannot be charged with deliberately misdeclaring such motor vehicles. It posits that whatever information was lacking in the IEIRDs was supplied by the chassis numbers or the VIN. ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) Petitioner postulates that the fact that the motor vehicles were described in a general manner does not mean that they were misdeclared as long as the general descriptions therein are not false, untruthful, erroneous, or inaccurate. As far as petitioner is concerned, what is controlling is the YIN/chassis number for purposes of identifying the motor vehicles for tariff classification and valuation. Petitioner admits that while the 7 motor vehicles were wrongly described in the invoices and packing lists, their chassis number/YIN were accurately declared. It submits that it cannot be faulted for the wrongful making of the invoices and packing lists as these were all prepared by its suppliers abroad. Petitioner claims that the Court in Division erred in ruling that probable cause existed justifying the seizure and forfeiture of the nine (9) motor vehicles due to undervaluation. Essentially, petitioner assails the use of reference values by the Bureau of Customs-Enforcement Group (BOC-EG) and the Bureau of Customs-Import Assessment Service (BOC-IAS) for the determination ofprima facie evidence of fraud. Petitioner postulates that reference values cannot be used for customs valuation except when the reference values are previously accepted transaction values of identical or similar articles in the Enhanced Value Reference Information System (e-VRIS) and there is valid reason to reject the declared values under Method One. In his Comment, respondent counters that Section 1307 of the Tariff and Customs Code (TCCP), in relation to CAO No. 8-2007 and Customs Memorandum Order (CMO) No. 28-2007, requires that imported motor vehicles be specifically described by indicating the description on make, series, body type, year model, gross weight, net weight, piston displacement, number of cylinders, engine number, chassis number, vehicle identification number, and fuel type. Respondent asserts that not only did petitioner violate Section 1307 of the TCCP, CAO No. 8-2007 and CMO 28-2007 by not specifically describing its imported motor vehicles but also misdeclared such motor vehicles as shown by the discrepancies in petitioner's declaration in the import entries from the description in the invoice and supporting documents, and the deScription of the vehicles imported as found during the spot check/100% physical examination conducted by the Bureau of Customs. Respondent also insists that petitioner undervalued the subject imported motor vehicles. He maintains that while under Section 201 of the TCCP the basis of dutiable value is the transaction value, the Collector of Customs has the right to satisfy himself as to the truth or accuracy of any statement, document, or declaration presented for customs valuation purposes. In the present case, according to respondent, District Collector Benitez, upon being informed of the apparent misdeclaration and other violations committed by petitioner, deemed it necessary to issue a Warrant of Seizure and Detention (WSD) against the subject motor vehicles. The issuance of the WSD triggered the seizure proceedings where petitioner was given an ample opportunity to provide further documents to prove that the transaction value as declared ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) should be the basis of the dutiable value. Respondent points out that petitioner failed to submit additional documents to support its claim. Without prejudice to the ruling that this Court has no jurisdiction over the present case, the Court En Bane finds no reason to deviate from the Court in Division's observation that there appears to be misdeclaration and undervaluation of the subject imported motor vehicles giving rise to probable cause for the seizure and forfeiture of the same. Notably, all of the arguments raised by petitioner in the present Petition for Review were already sufficiently discussed and passed upon by the Court in Division in its assailed Decision and Resolution. Accordingly, the Court En Bane quotes and adopts as part of this Decision the relevant discussion by the Court in Division in its assailed Decision, to wit: '~'\ review of the records discloses that probable cause existed to justify the seizure and/or forfeiture of the subject vehicles because petitioner deliberately failed to disclose the correct model and/or series of the subject vehicles in the IEIRDs and even after being notified of the BOC officials' findings, petitioner still failed to satisfactorily explain the discrepancies. It also appears that there was undervaluation of the subject vehicles. In the assailed Decision and Order, respondent COC held that the subject vehicles are liable for forfeiture because peuuoner committed misdeclaration and undervaluation, as defined in Section 2503 of the TCCP, as amended, which reads: SEC. 2503. Unden;afuation, MisdaSJiji<ation and Misdedaration in Entry. - When the dutiable value of the imported articles shall be so declared and entered tbat the duties, based on the declaration of the importer on the face of tbe entry would be less by ten percent (10%) than should be legally collected, or when the imported articles shall be so described and entered that tbe duties based on the importer's description on tbe face of the entry would be less by ten percent (10%) than should be legally collected based on the tariff classification, or when the dutiable weight, measurement or quantity of imported articles is found upon examination to exceed by ten percent (10%) or more tban the entered weight, measurement or quantity, a surcharge shall be collected from the importer in an amount of not less than the difference between the full duty and the estimated duty based upon the declaration of the importer, nor more than twice of such difference: Provided, That an undervaluation, misdeclaration in weight, measurement or quantity of more than thirty percent (30%) between the value, weight, measurement or quantity declared in the entry, and the actual value, weight, quantity, or measurement shall constitute a prima facie evidence of fraud penalized under Section 2530 of this Code: Provided, further, That any misdeclared or undeclared imported article/items found upon examination shall ipso fatto be forfeited /

DECISION CTA EB No. 2728 (CTA Case No. 9851) in favor of the Government to be disposed of pursuant to the provisions of this Code. When the undervaluation, misdescription, misclassification or misdeclaration in the import entry is intentional, the importer shall be subject to penal provision under Section 3602 of this Code. Relative thereto, Section 2530 (l) (3) (4) (5) of the TCCP, as amended, provides: SEC. 2530. Property Subject to lc<orfeiture under Tariff and CustomJ LawJ. - Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the following conditions be subjected to forfeiture: I. Any article sought to be imported or exported (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 mvoice 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 were entered through a customhouse to the prejudice of the government. The requisites for the forfeiture of goods under Section 2530 (l) (3) (4) (5) of the TCCP, as amended, are: (a) the wrongful making by the owner, importer, exporter or consignee of any declaration or affidavit, or the wrongful making or delivery by the same person of any invoice, letter or paper - all touching on the importation or exportation of merchandise; (b) the falsity of such declaration, affidavit, invoice, letter or paper; and (c) an intention on the part of the importer/consignee to evade the payment of the duties due. We shall now determine whether petltloner committed misdeclaration and undervaluation that warrants the forfeiture of the subject vehicles. A. SEVEN (7) OF THE NINE (9) SHIPMENTS OF THE SUBJECT VEHICLES WERE MISDECLARED. /

DECISION CTA EB No. 2728 (CTA Case No. 9851) CAO No. 8-2007, as implemented by Customs Memorandum Order (CMO) No. 28-2007, states the requirement for filing of the IEIRD with specific description of the motor vehicle/s in accordance with following illustrative example: 2.1.1. Make ---------------------Nissan GX-4 2.1.2. Series ---------------------Infinity 2.1.3. Body Type --------------------- Wagon 2.1.4. Year Model ---------------------2006 2.1.5. Gross Weight ---------------------3,600 kilos 2.1.6. Net Weight ---------------------1,800 kilos 2.1.7. Piston Displacement -------------3,500 cc 2.1.8. No. of Cylinders ------------------6 cylinders 2.1.9. Engine No. ---------------------VK 45 (OF) 4494 2.1.1 0. Chassis No. -----------------------JNRBS08W25X402113 2.1.11. Vin No. ---------------------------xxxxxxxxxxxxxxxxxx 2.1.12. Fuel --------------------------- Gas Compliance with CAO No. 8-2007 is mandated under Part IV (2.1) of the DOF Joint Order No. 1-2010, which states: IV. ADMINISTRATIVE PROVISIONS: 2. For purposes of arrivmg at the total landed value, the following procedures shall be adopted: 2.1 The proper description of the automobile pursuant to CAO 8-2007 shall be mandatory. In the instant case, petitioner's declaration of the subject vehicles in the IEIRD are as follows: I IEIRD C-6372 C-6373 C-6374 C-6375 C-6380 C-6381 C-6395 C-6398 C-6403 2 units of 2 umts of Mclaren Descrintion Mercedes 2 unm. of l.anJ Rover Mcrc~:Jcs To)'ota l\krccJc~ lkn1. J.anJ Ron:r JJ{Z "l"oyota 5411C Make l�crrari DcfcnJcr 'Jtt Benz L1n<.l Crui~cr -- 211\5 lknt. C211tl suv 1,4511 kg Series (:ahfC,mia (;LK :'\Stt SL'V C2tltl 5,111111 k~ Prado 1,4511 kg Bodvn�p,. Coupe Sedan 211\5 2!115 s,umkg 2015 Sl'Y 2015 (,,]1111 kg .\1511 k)-\ Sedan -Sl:-V ~ Year MoJd l,.WS kv; 21115 1,7411 kg (,,]1111 kg .1,1511 k~ 2015 (;ross 1,:"\<JS k~ ],7411 k~ 1,6611 kg 21l\5 \\-ci �ht (o,4\4 kg (, ql 1,6611 kg 2,140 kg 1:1 crl 4 cyl 2,\411 kg NL�tWci�ht (i,414 k~ 4 cyl 0 cyl Pi�;ton (, C)-"1 J),s~1accmcnt No. of c1�linJcr~ EnL>tnc No

DECISION CTA EB No. 2728 (CTA Case No. 9851) IEIRD C~6372 C-6373 C-6374 C-6375 C-6380 C-6381 C-6395 C-6398 C-6403 Description <:ha~si> ZI,.I,.77XJIJ<ll��ll \\'\)(;4(i5272 \\'[)[)2114377 S_�\JJ.DYI\Til SAI.l�R21�:J�Sl� \\ Ul )211'.H42 Jl'M!IVII'J_IIll� Jl"I~Bl !3!"]7115 SHM11 J),\)�:1 2115504 l�X212M15 I�'I�'<J77WH, h\765512 ,\2:'11224 I�H37'.l411 4151l71l2 111l3427 \\'1111.)711,) No./VIN No. \\"J)(ACi5272 s,\JJJ)VMI'Il l�X2245HH }.',\44511\11 l�ucl lias (;a~ <Jas c;~, (ia> (ias lias As can be gleaned above, petitioner failed to completely fill up or supply all the required details of the subject vehicles, particularly the 'No. of Cylinders' and the 'Engine No.,' among others, in violation of the aforesaid customs regulations. Moreover, the Court cannot subscribe to petitioner's claim that there was no misdeclaration on the subject vehicles as the chassis number, brand and color in the IEIRDs are the same as those in the commercial invoices because the records disclose otherwise. The Court notes the discrepancies in the subject vehicles' descriptions both in the IEIRDs and the result of the spot check or 100% physical examination (conducted on 05 August 2015) as detailed in the 'Spotcheck Reports' prepared by the assigned Officers-on-Case, De Castro and Ugay. Their findings are summarized below: Alert Order IEIRD As Declared As Found No. (Description) Per (Description) Per .\/EG/20150724-101 .\(EG/20150724-102 C-6372 IEIRDs "Spotcheck .\/EG/20150724-104 C-6373 Reports" of assigned A/EG/20150724-108 C-6374 Ferrari California .VEG/20150724-107 C-6375 Officers-on-Case .VEG/20150724-106 C-6380 Coupe Brand New U2av and De Castro MEG /20150724-109 C-6381 .\/EG/20150724-103 C-6395 2015 Brand New Ferrari C-6398 458 Speciale 2015 2015 Brand New Mercedes Benz 2015 Mercedes Benz GLK350, SU\' G63AMG 2015 Brand New 2015 Mercedes Benz Mercedes Benz C200, G63AMG Sedan Land Rover Defender Land Rover Defender 90 SUV Brand New 90 suv Brand New 2015 Brand New Land 2015 Rover Range Rover 2015 Land Rover LR2 SUV Brand New 2015 2015 Mercedes Benz CLKDTMAMG 2015 Brand New Mercedes Benz C200, Sedan, Silver Toyota Land Cruiser Brand New Toyota GX SUV Brand New Landcruiser GXR 2015 Bulletproof 2015 2015 Brand New 2015 Brand New Toyota Prado Silver, gas, 6 cyl suv, Toyota Prado SUV, Silver, gas, 6 cyl ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) Alert Order IEIRD As Declared As Found No. (Description) Per (Description) Per .\/EG/20150724-110 C-6403 IEIRDs "Spotcheck Reports" of assigned Mclaren 540C Brand New 2015 Officers-on-Case U!!ay and De Castro Brand New Mclaren MP4-12C OR 6508 Clearly from the foregoing, petitioner misdeclared the importation of subject vehicles as there are discrepancies in seven (7) IEIRDs, specifically C-6372, C-6373, C-6374, C-6380, C-6381, C- 6395 and C-6403; particularly, as regards the vehicles' model and/ or senes. Notwithstanding the glaring discrepancies in the model and/or series, petitioner did not provide any reasons therefor. It simply argued that the Vehicle Identification Number (VIN) or the chassis number of the subject vehicles as declared in the IEIRDs were the same when the vehicles were physically inspected by the customs examiners; thus, insisting that there were no misdeclarations. It must be noted, however, the VIN or chassis number must be supplied only to determine the country of origin of the imported vehicle, as provided under Part IV (2.2) of the DOF Joint Order No. 1-2010, which states: IV ADMINISTRATIVE PROVISIONS: 2. For purposes of arnvmg at the total landed value, the following procedures shall be adopted: 2.2 In the determination of the country of origin, the first (1'~ digit of the vehicle's identification number or VIN or chassis number, shall be used as the basis thereof, i.e.[:] US Manufacture Motor Vehicles~ 1, 2, etc. European Manufactured- V, W Japan manufactured -J Hence, even if respondent BOC found the same VINs or chassis numbers on the subject vehicles, still, the discrepancies remain as regards the models and/ or series (of the said vehicles). In an attempt to justify the said discrepancies, petitioner contended that the term 'misdeclaration' has a specific technical description under CAO No. 006-93 and went on to claim that misdeclared articles are those that do not tally with the details as declared in the IEIRD, which details were used to identify the tariff classification. Petitioner thus maintained that the articles will be considered misdeclared only if they do not fall under the same tariff headings and subheadings as those of the articles declared in the IEIRD. Petitioner added that since the subject vehicles were properly ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) classified under the ASEAN Harmonized Tariff Nomenclature (AHTN) tariff heading of 8703.23.24 (motor vehicles with cylinder exceeding 2500 CC) at 30% rate duty using the descriptions made in the IEIRDs, there was no misdeclaration from its end. We disagree. Petitioner failed to consider that CAO No. 006-93 was issued to clarify the word 'misdeclared' and 'undeclared' as used in Section 2503 of the TCCP, as amended by RA 7651. The relevant parts thereof provide: I. For Information, Section 2503 of the Tariff and Customs of the Philippines as amended by R.A. No. 7651 and which pertinent, reads as follows: 'Section 2503. . . . Provided, further, That any misdeclared or undeclared imported articles /items found upon examination shall ipsofado be forfeited in favor of the Government to be disposed of pursuant to the provisions of the Code.' II. Definition: a. The word misdeclared as used in the proviso of Sec. 2503 as amended by RA 7651 shall mean that the article(s) as found upon examination does not tally with the details of the article(s) as declared in the entry, which details identify the declared articles in the entry both for tariff classification and statistical purposes and if the misdeclared article(s) found upon examination can be specifically classified in the Tariff and Customs Code, such misdeclared article(s) does not fall under the same tariff description in the terms of the headings and subheadings in the Code as those of the articles declared in the entry. b. The word undeclared as used in the proviso of Sec. 2503, as amended by RA 7651, shall refer to articles not specified in the entry or invoice. From the foregoing, it is clear that the word 'misdeclared' pertains to articles that when found will certainly not fall under the same tariff heading as those declared in the import entry; thus, can be ip.ro(ado forfeited in favor of the government. Such definition does not limit the meaning of misdeclaration, as used in Section 2503 of the TCCP, as amended, to inaccurate declarations in the entry that will yield an incorrect tariff classification. In fact, the term 'misdeclaration' was subsequently defined under Section 1400 of the CMTA which provides in part: ���~

DECISION CTA EB No. 2728 (CTA Case No. 9851) PaQe 21 of 33 SEC. 1400.Misdedaration, Misda.rJijication, Underl!aluation in Goods Declaration. ~ Misdeclaration as to quantity, quality, description, weight, or measurement of the goods, or misclassification through insufficient or wrong description of the goods or use of wrong tariff heading resulting to a discrepancy in duty and tax to be paid between what is legally determined upon assessment and what is declared, shall be subject to a surcharge equivalent to two hundred fifty percent (250%) of the duty and tax due. Misdeclaration was also given a much clearer definition under Section 3.6 of CAO No. 01-2019, which provides: 3.9. Misdeclaration - shall refer to a false, untruthful, erroneous or inaccurate declaration as to quantity, quality, description, weight or measurement of the goods resulting in deficiency between the duty and the tax that should have been paid and the duty and tax actually paid and/or to avoid compliance with government regulations related to the entry of Regulated, Prohibited or Restricted goods into Philippine customs territory. Applying the foregoing, 'misdeclaration' connotes a false, untruthful, erroneous or inaccurate declaration in quantity, quality, description, weight, or measurement of goods. It is not restricted to discrepancies that will result in an incorrect tariff classification of the imported articles. With the above disquisition, the Court could only deem that there had been misdeclarations of the subject vehicles covered by IEIRD Nos. C-6372, C-6373, C-6374, C-6380, C-6381, C-6395 and C- 6403. B. THE SUBJECT VEHICLES WERE UNDERVALUED. Apart from the finding of misdeclaration, BOC officials also discovered that the subject vehicles were undervalued as the models and/ or series thereof, as found, were higher and considerably more valuable compared to what was declared in the IEIRDs. Pending the determination of the lAS Values, respondent BOC's EG used reference values as preliminary basis for value verification. The table below summarizes the declared amounts in the IEIRDs viJ-a-viJ the EG reference values as used in the Memorandum submitted by the assigned Officers-on-Case, Ugay and De Castro: /

DECISION CTA EB No. 2728 (CTA Case No. 9851) IEIRDNo. As declared (Value in As found (Value in Discrepancy C-6372 USD Per IEIRD) USD PerEG 59% C-6373 66% C-6374 Ferrari California Coupe Memorandum) 66% C-6375 Brand New 2015 38% C-6380 Brand New Ferrari 64% C-6381 458 Speciale 2015 72% C-6395 64% C6398 122,152.00 (1 unit) 298,000.00 (1 unit) 33% C-6403 2015 Mercedes Benz 73% 2015 Brand New G63 .\i\!G ~Iercedes Benz GLK350, suv 53,970.00 (2 units) 160,126.26 (2 units) 2015 Brand New 2015 Mercedes Benz Mercedes Benz C200, G63AMG Sedan 26,985.60 (1 unit) 80,063.13 (1 unit) Land Rover Defender 90 Land Rover SUV Brand New 2015 Defender 90 SUV Brand New 2015 43,368.00 (2 units) 70,668.12 (2 units) Land Rover LR2 SUV Brand New Land Brand New 2015 Rover Range Rover 2015 29,780.00 (1 unit) 83,900.00 (1 unit) 2015 Brand New 2015 l\fercedes Benz Mercedes Benz C200, CLK DTl\! Al\!G Sedan, Silver 29,512.00 (1 unit) 106,279.60 (1 unit) Toyota Land Cruiser GX Brand New Toyota SUV Brand New 2015 Landcruiser GXR Bulletproof 2015 74,000.00 (2 units) 207,753.00 (2 units) 2015 Brand New Toyota 2015 Brand New Prado SUV, Silver, gas, 6 Toyota Prado SUV, cyl Silver, gas, 6 cyl 30,000.00 (1 unit) 45,000.00 (1 unit) ;\lclaren 540C Brand Brand New l\klaren New 2015 i\!P4-12C OR 650S 60,000.00 (1 unit) 228,080.00 (1 unit) Section 2503 of the TCCP, as amended, provides that an undervaluation, misdeclaration in weight, measurement or quantity of more than thirty percent (30%) between the value, weight, measurement or quantity declared in the entry, and the actual value, weight, quantity, or measurement shall constitute prima fade evidence of fraud penalized under Section 2530 of the TCCP, as amended. From the table above, there was an initial determination of primafa,ie evidence of fraud on the subject vehicles because they were misdeclared and, consequently, undervalued, with differences ranging from 33% to as high as 73% (see last column of the table above). Further, the findings of undervaluation were later confirmed when the lAS Values were issued. /

DECISION CTA EB No. 2728 (CTA Case No. 9851) As provided in Section 2535 of the TCCP, as amended, once probable cause is established, the burden of proof is shifted to the claimant who, in this case, is petitioner (the importer of the subject vehicles). However, petitioner failed to adduce evidence to overthrow the prima fa,ie evidence of fraud in the importation of the subject vehicles. In disputing the seizure and/or forfeiture of the subject vehicles, petitioner maintained that respondent BOC's EG improperly used reference values for customs valuation. Again, We disagree. Under Item 4.1 of CMO No. 16-2010, where the Collector of Customs has reasons to doubt the truth and accuracy of the declare values, he or she can use published or established dutiable value as a risk management tool to alert customs or do a value verification check. The pertinent portion thereof provides: 4.0 CASES WHERE THE COLLECTOR OF CUSTOMS HAS REASONS TO DOUBT THE TRUTH OR ACCURACY OF THE DECLARED VALUE 4.1 Published or established dutiable value, or any other value reference from whatever source, cannot be used as substitute value for customs valuation. However, such value information may be used as a risk management tool to establish doubt or to alert customs to do a value verification check either upfront thru a system created for the purpose or on a post-entry basis through the Post Entry Audit infrastructure. Here, given the circumstances of the importation, where there was apparent misdeclaration, respondent BOC's EG could not be faulted for using reference values during its initial value verification. Such use of reference values was clearly done as a risk management tool to confirm any doubt on the truth or accuracy of the declared values (brought about by the finding of misdeclaration) and to prompt customs officers to do a value verification. Petitioner likewise averred that the dutiable values of the subject vehicles were based on the declared transaction values reflected in the commercial invoices. It repeatedly cited Section 201 of the TCCP, as amended, which mandates the use of Method One or the TranJadion Value in assessing the dutiable value of an imported good. The relevant provision states: SEC. 201. BaJiJ of Dutiable Value. - ~ .

DECISION CTA EB No. 2728 (CTA Case No. 9851) (A) Method One. - Transaction Value. - The dutiable value of an imported article subject to an ad valorem rate of duty shall be the transaction value, which shall be the price actually paid or payable for the goods when sold for export to the Philippines, adjusted by adding: (1) The following to the extent that they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods: (a) Commissions and brokerage fees (except buying commissions); (b) Cost of containers; (c) The cost of packing, whether for labour or materials; (d) The value, apportioned as appropriate, of the following goods and services: materials, components, parts and similar items incorporated in the imported goods; tools; dies; moulds and similar items used in the production of imported goods; materials consumed in the production of the imported goods; and engineering, development, artwork, design work and plans and sketches undertaken elsewhere than in the Philippines and necessary for the production of imported goods, where such goods and services are supplied directly or indirectly by the buyer free of charge or at a reduced cost for use in connection with the production and sale for export of the imported goods; (e) The amount of royalties and license fees related to the goods being valued that the buyer must pay, either directly or indirectly, as a condition of sale of the goods to the buyer; (2) The value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues directly or indirectly to the seller; (3) The cost of transport of the imported goods from the port of exportation to the port of entry in the Philippines; (4) Loading, unloading and handling charges associated with the transport of the imported goods from the country of exportation to the port of entry in the Philippines; and (5) The cost of insurance. All additions to the price actually paid or payable shall be made only on the basis of objective and quantifiable data. No additions shall be made to the price actually paid or payable in determining the customs value except as provided in this Section.... "'/

DECISION CTA EB No. 2728 (CTA Case No. 9851) Also, petitioner cited Item 3.1 of CMO No. 16-2010 purportedly supporting the use Method One as the primary method in determining the dutiable value, viz.: 3.1 GENERAL PROVISIONS The primary method in determining the dutiable value of imported goods shall be Method One: The Transaction Value, whenever the conditions prescribed for its use are fulfilled. Moreover, petitioner claimed that if the dutiable value cannot be determined under Method One, then the methods of valuation are sequentially applied as stated in Section 201 of the TCCP, as amended, VlZ.: (B) Method Two. - Transaction Value of Identical Goods. - Where the dutiable value cannot be determined under method one, the dutiable value shall be the transaction value of identical goods sold for export to the Philippines and exported at or about the same time as the goods being valued. 'Identical goods' shall mean goods which are the same in all respects, including physical characteristics, quality and reputation. Minor differences in appearances shall not preclude goods otherwise conforming to the definition from being regarded as identical. (C) Method Three. - Transaction Value of Similar Goods. - Where the dutiable value cannot be determined under the preceding method, the dutiable value shall be the transaction value of similar goods sold for export to the Philippines and exported at or about the same time as the goods being valued. 'Similar goods' shall mean goods which, although not alike in all respects, have like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable. The quality of the goods, their reputation and the existence of a trademark shall be among the factors to be considered in determining whether goods are similar. If the dutiable value still cannot be determined through the successive application of the two immediately preceding methods, the dutiable value shall be determined under method four or, when the dutiable value still cannot be determined under that method, under method five, except that, at the request of the importer, the order of application of methods four and five shall be reversed: Provided, however, That if the Commissioner of Customs deems that he will experience real difficulties in determining the dutiable value using method five, the Commissioner of Customs may refuse such a request in which event the dutiable value shall be determined under method four, if it can be so determined. ~

DECISION CfA EB No. 2728 (CfA Case No. 9851) (F) Method Six. - Fallback Value. - If the dutiable value cannot be determined under the preceding methods described above, it shall be determined by using other reasonable means and on the basis of data available in the Philippines. Similarly, Items 2.6 and 2.7 in relation to 3.1 of CMO No. 16- 2010 provide for the sequential application of the valuation methods, mz.: Sequential Application of Valuation Methods 2.6 The methods of valuation are set out in a sequential order of application. The primary method for customs valuation is the Transaction Value and imported goods are to be valued in accordance with the provisions of this method whenever the conditions prescribed for its use are fulfilled. 2.7 Where the dutiable value cannot be determined under the Transaction Value method, it is to be determined by proceeding sequentially through the succeeding methods to the first such method under which the dutiable value can be determined. Except as provided under Section 3.1, paragraph 3 of this Order, it is only when the dutiable value cannot be determined under the provisions of a particular method that the provisions of the next method in the sequence can be used. 3.1 GENERAL PROVISIONS The primary method in determining the dutiable value of imported goods shall be Method One: The Transaction Value. whenever the conditions prescribed for its use are fulfilled. However. if the dutiable value cannot be determined with the use of Method One. the following valuation methods shall be applied in sequential order: Method Two: The Transaction Value of Identical Goods Method Three: The Transaction Value of Similar Goods Method Four: Deductive Value Method Five: Computed Value Method Six: Fallback Value However, at the request of the importer, the y order of application of Methods Four and Five

DECISION CTA EB No. 2728 (CTA Case No. 9851) may be reversed; provided, that the Commissioner of Customs agrees to such request taking into consideration that the reversal of the sequential order will not give rise to real difficulties for the BOC in determining the dutiable value under Method Five. If the importer does not request that the order of Method Four and Method Five be reversed, the normal order of the sequence shall be followed. If the importer does so request but it then proves impossible to determine the dutiable value under the provisions of Method Five, the dutiable value shall be determined under the provisions of Method Four, if it can be so determined. Where the dutiable value cannot be determined under the provisions of Methods One to Five, it shall be determined under the provisions of Method Six. Following the afore-quoted provlSlons, the dutiable value of imported articles shall be based on the valuation methods sanctioned by the TCCP, as amended, in successive order, with the Transaction Value System or Method One as the first among the six (6) and takes precedence over the other methods. Under the said method, the transaction value shall be the price actually paid or payable for the goods when sold for export to the Philippines, adjusted in accordance with Section 201 of the TCCP, as amended. Unfortunately, petitioner failed to appreciate that Method One may not be used if there is doubt in the truth and accuracy of the documents presented by the importer. Section 201 of the TCCP, as amended, states in part: Nothing in this Section shall be construed as restricting or calling into question the right of the Collector of Customs to satisfy himself as to the truth or accuracy of any statement, document or declaration presented for customs valuation purposes. When a declaration has been presented and where the customs administration has reason to doubt the truth or accuracy of the particulars or of documents produced in support of this declaration, the customs administration may ask the importer to provide further explanation, including documents or other evidence, that the declared value represents the total amount actually paid or payable for the imported goods, adjusted in accordance with the provisions of Subsection (A) hereof. /

DECISION CTA EB No. 2728 (CTA Case No. 9851) If, after receiving further information, or in the absence of a response, the customs administration still has reasonable doubts about the truth or accuracy of the declared value, it may, without prejudice to an importer's right to appeal pursuant to Article 11 of the World Trade Organization Agreement on customs valuation, be deemed that the customs value of the imported goods cannot be determined under Method One.... When a final decision 1s made, the customs administration shall communicate to the importer in writing its decision and the grounds therefor. Corollarily, Items 4.2 and 4.3 of CMO No. 16-2010 provide: 4.2 When an import declaration has been presented and where the Collector of Customs has reason to doubt the truth or accuracy of the particulars or of documents produced in support of this declaration, the Collector of Customs may ask the importer to provide further explanation, including documents or other evidence, that the declared value represents the total amount actually paid or payable for the imported goods, adjusted in accordance with the provisions of Section 3.2.8. 4.3 If, after receiving further information, or in the absence of a response from the importer, the Collector of Customs still has reasonable doubts about the truth or accuracy of the declared value, then it is deemed that the dutiable value of imported goods cannot be determined under Method One. The Collector of Customs shall then proceed to determine the dutiable value under alternative methods sequentially and in the order of succession as provided by this Order. In the case at bar, respondent COC sought additional documents from petitioner to support the declared transaction values as he was not satisfied with the commercial invoices, packing lists and bills of lading. However, petitioner failed to comply. Petitioner's own witness, Customs Examiner Manguiat, confirmed such failure, viz.: State Sol. Data: Q: So if the lAS clearance shows a value that is higher or lower than the transaction value, will use the lAS value, is that correct? Ms. Manguiat: A. Pag mayroon pong sinabmit na proof of payment ang importer, mas susundin po naming yung proof of payment dahil sa transaction value po iyong sinusunodpo natin. ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) State Sol. Dato: Q: So in this case, did the importer submit a proof of payment other than the invoice? Ms. Manguiat: A. Hindi pa po. State Sol. Data: Q: None as of when? Until now? Ms. Manguiat: A. Now. State Sol. Dato: Q: The importer has not submitted? Ms. Manguiat: A. Yespo. As stated earlier, given the circumstances under which the vehicles were imported, the Court finds that respondent BOC is justified in not using the TranJadion Value SyJtem or Method One as basis for the customs value. In other words, it was not erroneous for respondent BOC to not have used the values appearing on the commercial invoices as competent or reliable basis for valuation. Additionally, pursuant to Customs Memorandum Circular (CMC) No. 70-2014, all vehicles under tariff headings 87.02 and 87.03 shall be referred to lAS for value recommendations. In addition, no shipments of automobiles under these tariff headings should be released without prior clearance from respondent BOC's lAS. These directives have been consolidated in respondent BOC's Memo dated 30 March 2015, the pertinent portions thereof read: 2. All import entries covering automobiles propelled by gasoline, diesel, electricity, or any other motive power with engine displacement of 2,000 cc and above, except for those listed below, must be referred to the Imports and Assessment Service (lAS) prior to the final assessment. 4. The Import & Assessment Service (lAS) will provide value recommendations to the Formal Entry Division (FED) or equivalent units. As the records bear, the 'Spotcheck Reports' of petitioner's witnesses, Customs Examiners Asaria and Manguiat, state that the subject shipments were under tentative liquidation as approved, pending issuance of the lAS clearance. As earlier observed, the referral to the lAS appears to be a precautionary measure taken by the BOC to ~

DECISION CTA EB No. 2728 (CTA Case No. 9851) prevent the undervaluation of imported goods to evade payment of proper customs duties and taxes. A perusal of the IAS Values would reveal that the subject vehicles were valued based on the model and/or series as found during the spot check or 100% physical examination. Below is a table comparison of the model and/ or series of the subject vehicles (as found) per 'Spotcheck Reports' of the assigned Officers-on-Case, Ugay and De Castro, and per IAS Values. IEIRD As Found (Description) Per As Found (Description) Per No. ''Spotcheck Reports" of assigned lAS Values Officers-on-Case Ugay and De Castro C-6372 Brand New Ferrari 458 Speciale 2015 Brand New Ferrari 458 Speciale C-6373 2015 Brand New Mercedes Benz C-6374 2015 ~lercedes Benz G63 .\~!G G63 .\~IG C-6375 2016 Brand New l\Iercedes Benz C-6380 2016 Mercedes Benz G63 .\~!G G63 .\~!G C-6381 Brand New Landrover Defender C-6395 Land Rover Defender 90 SUV Brand 90 C-6398 New 2015 Brand New Land Rover Range C-6403 Brand New Land Rover Range Rover Rover 2015 2015 Brand New l\Iercedes Benz CLK DT:\l .\MG 2015 Mercedes Benz CLK D"Thl .\~!G Brand New Toyota Landcruiser GXR Bulletproof Brand New Toyota Landcruiser GXR Bulletproof 2015 2015 Brand New Toyota Prado 2015 Brand New Toyota Prado SUV, Silver, gas, 6 CYL Brand New ~klaren rviP4-12C or 650S Brand New Mclaren MP4-12C OR 650S Section 201 of the TCCP, as amended, defined 'identical goods' as goods which are the same in all respects, including physical characteristics, quality and reputation. Minor differences in appearances shall not preclude goods otherwise conforming to the definition from being regarded as identical. On that note, the summary above shows that the IAS Values were derived from identical goods of the subject vehicles (because the values were determined in reference to the model and/ or series of the said vehicles as they were found). Thus, there is reasonable basis for the Court to conclude that the amounts per IAS Values were arrived at using the next sanctioned valuation method, i.e., the Tran.radion Value o/ Identim! GoodJ or Method Two for purposes of determining the dutiable value of the subject vehicles. The table below summarizes the declared amounts in the IEIRDs JJt~r-a-vZ:r the IAS Values and the percentages (%) of discrepancy confirm that petitioner indeed undervalued the subject vehicles. IEIRD Description and Values Description and Values As Discrepancy No. As Declared Per IEIRDs Found Per lAS Values 48.76% C-6372 2015 Brand New Ferrari Brand New Ferrari 458 ~ California Coupe Speciale $122,153.00 $238.400 00

DECISION CTA EB No. 2728 (CTA Case No. 9851) IEIRD Description and Values Description and Values As Discrepancy No. As Declared Per IEIRDs Found Per lAS Values 75.40% C-6373 Two (2) Units of2015 2015 Brand New Mercedes Brand New ;\fercedes Benz Benz G63 ,\l\!G GLK 350 SU\', \'Vhite, Gasoline, 6cyl C-6374 $26,985.60 (I unit) or $109,720.00 (I unit) or 41.21% C-6375 $43,368.00 (2 units) $219,440 (2 units) 30.18% C-6380 2015 Brand New ~fercedes 80.37% C-6381 Benz C200 2015 Brand New Mercedes 81.59% C-6395 Benz C63 M-.IG 56.73% C-6398 $29,512.00 33.33% Two (2) Units of 2015 $50,200.00 Brand New Land Rover Brand New Land Rover Defender 90 SU\' Defender 90 $21,684.00 (I unit) or $31,054.92 (I unit) or $43,368.00 (2 units) $62,109.84 (2 units) 2015 Brand New Land Brand New Land Rover Rover LR2 Range Rover $29,280.00 $149,196.00 2015 Brand New l\lercedes 2015 Brand New Mercedes Benz C200 Sedan, Silver, Benz CLK DTM ,\MG 4cyl, Gas $160,317.60 $29,512.00 Two (2) Units of2015 Brand New Toyota Brand New Toyota Land Landcruiser GXR Cruiser GX SUV Bulletproof $37,000 (I unit) or $74,000 $85,522.84 (1 unit) or (2 units) $171,045.68 (2 units) 2015 Brand New Toyota 2015 Brand New Toyota Prado, SUV, Silver, Gas, Prado 6cyl C-6403 $30,000.00 $45,000.00 71.75% 2015 Brand New i\fclaren Brand New i\.klaren l\fP4- 540C 12C OR 650S $60,000.00 $212,400 Evidently, petitioner's declared values for the subject vehicles are significantly lower than the lAS Values (determined using the TranJadion Value o/ Jdentim! GoodJ or Method Two) by more than 30%. This goes to show that petitioner's declared values failed to disclose the actual value of the subject vehicles and this qualifies as 'undervaluation,' as defined in Section 2503 of the TCCP, as amended, and, given the discrepancy of more than 30%, such undervaluation unmistakably constitutes primafatie evidence of fraud. Taking everything into consideration, this Court is constrained to affirm respondent COC's finding that there exists probable cause for seizure and/ or forfeiture of the subject vehicles for misdeclaration and undervaluation under Section 2503, in relation to Section 2530, of the TCCP, as amended." ~

DECISION CTA EB No. 2728 (CTA case No. 9851) Finally, with respect to the argument that the Consolidated Decision of the POB OIC-District Collector ordering the quashal of the WSDs constitutes as an order of release pursuant to Section 1117 of the Customs Modernization and Tariff Act, suffice it to say that the said statute is not applicable to the present case given that the Tariff and Customs Code of the Philippines is still the applicable law thereto. WHEREFORE, the present Petition for Review is DENIED for lack of merit. The Assailed Decision dated August 4, 2022 and the Assailed Resolution dated December 5, 2022 issued by the Special Second Division in CTA Case No. 9851 are both AFFIRMED. SO ORDERED. Q~ ~ .-....._ MA. BELEN M. RINGPIS-LIBAN Associate Justice WE CONCUR� Presiding Justice c~�7-~ CATHERINE T. MANAHAN Associate Justice ~ JEAN ln.tuvn MARlAR

DEOSION CTA EB No. 2728 (CTA case No. 9851) Page33rl33 ~~(:~.fat~ MARIAN IVY D. REYE~-FAjARDO Associate Jusrice ~dfn:� LANEE s. CUI-DAVID Associate Jus rice s Associate Justice On Leave HENRYS. ANGELES Associate Jusrice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in above decision were reached in consultation before the case was assigned to the writer of the opinion of the Court. Presiding Jus rice