Perfecto M. NALA.TBALA.T vs. The Comnissioner of Customs

DECISION -

™ etc., which were appraised and valued by Customs Examiner Paciente D. Gulle and Customs Appraiser Nelqutedes Ocampo at $28,406.22 (U.S. dollar). At the rate of 23.90 to a U.S. dollar at the time of the appraisal on June 5, 1968 of the above-mentioned ‘ merchandise, the same amounted to ?110,784.26. (See. Customs Administrative Order No. 6-70 dated February 23, 1970.) . | For a detailed description of the seized articles, their quantity, unit price and sources of origin, the same are itemized hereunder as follows: 7 .

147 pes. Seiko Men's wrist watch, 21 jewels, gold plated, automatic, calendar. . . $16.25/pe - $2,388.75 5 pes. Seiko Men's wrist watch, : 21 jewels, gold plated .. 16.25/pe - 81.25 20 pes. Seiko Men's wrist watch, 21 jewels, gold plated, di a sho ck e e ° e s * e e 20 pes. Seiko Men's wrist watch, 25 jewels, gold plated, automatic, calendar... 19.50/pe = 390.00 30 pes. Seiko Men's wrist watch, . 17 jewels, gold plated, automatic, calendar... 8.00/pe - 240.00 50 pes. Seiko Men's wrist watch, 17 jewels, stainless, calendar . . . « « « « « 43 pes. Seiko Men's wrist watch, 21 jewels, stainless, calendar, automatic ... 16625/pe 698.75 10 pes. Seiko Men's wrist watch, ; 25 jewels, gold plated, 16.25/pe - 325-00 8.00/pe 400.00 day-date, automatic... 19.50/pe 195.00 10 pes. Seiko Men's wrist watch, no jewels, gold plated. . %.35/pe 4.3.50 130 pes. Tugaris Men's wrist .

watch, 25 jewels, gold plated, calendar, Incabloc, eo

3 50 pes. Tugaris Men's wrist watch, 25 jewels, gold plated, day~date . . + + 2+ es pes. Tugaris Men's wrist watch, 21 jewels, gold plated, calendar . . e e ° e * e e pes. Tugaris Men's wrist watch, 21 jewels, stainless,.

‘@alendar o ° o e e e - eo e pes. Tugaris Boy's wrist watch, 17 jewels, stainless, calendar e e e es oO @ e pes. Tugaris Boy's wrist watch, 17 jewels, stainless ...

pes. Buler Men's wrist watch, 21 jewels, gold plated, calendar . « « «© «© «© «© « pes. Buler Men's wrist watch, 21 jewels, stainless, calendar ee © © © @ pes. Buler Men's wrist watch, 100 130 80 20 230 200 270 90 100 20 17 jewels, gold plated . .

pes. Buler Men's wrist watch, 21 jewels, gold plated...

pes. Buler Men's wrist watch, 17 jewels, stainless ...

pese Seiko Men's wrist gatch, 17 jewels, stainless, automatic, Calendar » « .

Buler Men's wrist watch, 17 jewels, stainless, automatic, calendar with luminous arms and number- ings, S.N. 1356 4.C. ..

Buler Men's wrist watch, no jewels, gold plated, anti-magnetic, S.N. 1349. .

Buler Men's wrist watch, no jewels, gold plated, anti-magnetic, with pe ol numeral numberings eee pes. Buler Boy's wrist watch, 21 jewels, stainless, calendar . 6 « «+ «© © «© « « pes. Buler Boy's wrist watch, 17 jewels, stainless ...

pes. Buler Men's wrist watch, movements, less dial, case, back and arms « « « «ee 1 pe.

1 pe.

1 pe.

50 31 170 240 pes. Ceba Men's wrist watch (Golden Dragon) 31 jewels 10.00/pe 8.50/pe - 8.50/pe - 4.00/pe 4.00/pe 5.00/pe 4.00/pe 5.00/pe 4,00/pe 8.00/pe 2.50/pe 5200/pe 4, 00/pe 1.00/pe 5.00/pe 500.00 - 850.00 1,105.00 320.00 80,00 1,150.00 1,000.00 1,080.00 250.00 4.00.00 160,00 5.00 2.50 2-50 250.00 124.00 170.00 1,200.00

DECISION -

CTA CASE NO, 2181 60 750 200 ‘ 59 ;

tb "350 180 80 50 20 150 35 34 17 26 600 hy pes. Philip Men's wrist watch ‘21 jewels, stainless, day- date eoeeee ee ee @ a) 10.00/pe oad pes. Lady de luxe, lady's wrist watch, 17 jewels, stainless . . .«. o ‘pes. Lady de Luxe, lady's wrist watch, 17 jewels, es lated « « « « « pes. >» Lady's wrist watch, 21 "ieakis gold plated...

pes. Seiko, La no jewels, gold plated ..

pe. Buler Lady's wrist Pendant watch, 17 jewels, gold plated, Nakar-faced, cal- endar with gold anodized chain. e e e Cd e e e e e e pe. Small box-containing assorted, loose watch parts . « « e a pes. Seiko Men's watch brace= lets, stainless .... « pes. Seiko Men's watch brace- lets, gold plated ....

pes. Seiko Lady's watch bracelets, stainless. ..

pes. Seiko Lady's watch bracelets, gold plated. .

pes. Seiko Lady's watch bracelets, gold plated with attached chain...

pes. Seiko, Men's leather watch straps with stain- less buckle . « « « « « e pes. Seiko, Men's leather watch straps with gold plated buckle . . . « « « prs. Lady's leather flat shoes prs. Lady's leather flat shoes with nylon mesh. .

prs. Lady's leather low- ;

heeled shoes « « 6 + « « prs. Lady's slippers of hard ‘rubber soles . . « « « » dy's wrist watch, 7.50/pe - 7250/pe - 5.90/pe 2.00/all 1.00/pe - 1.00/pe - 0.75/pe 0.75/pe 0.20/pe 0.20,pe 1.00/pr.

1.00/pr - 0.25/pr.

yds. Dress materials (Nylon Crepe de Chine) aquamarine color.)

$ 600,00 5,625.00 1,500.00 300,00 120.00 5.00 2.00 350.00 180,00 69.90 37.50 5.00 .

30.00 7.00 34,00 17,00 15.00 6.50 ' .

•

5 595 yds . Dress ~a terials (Nylon Drepe de Chine) yellow color . ) 550 yds . Dress materials (Nylon ) .

Crepe de Chine) salmon- pink ) color .

) 449 yds . Dress materials (Nylon · Crepe de Chine) mustard color) 539 yds . Dress materials (Nylon Crepe de Chine) white color .

) $0. 70/ yd.

516 yds. Dress materials (Nylon Crepe de Chine) light green color . ) 447 yds . Dress Materials (Nylon Crepe de Chine) light pink color .

) 100 yds . Dress materials (Nylon Crepe de Chine) light blue color .

) 50 yds . Dress materials (Nylon Crepe de Chine) sky-blue color .

) 66 yds . Dress materials (Rayon~ jersey) printed.

- 3, 912 yds . Total •••••••••• ) $0. 70/yd.

. $0. 70/ yd - $

NOTE:

All above dress materials are marked S!5IRIN, Japan made .

467 yds . Men' s suiting materials

(Terylene Worsted) Swiss-

made , double width, as- sorted dark colors.

29t yds. Men' s suiting materials

(Teryleri Worsted) England-

made, double width , as- .

sorted dark colors.

496f yads . Total • • • • • • • • • $2. 00/yd.

119 pes . Parker T-Ball Pen Refills

0. 20/ pc. -

NOTE:

The following are the list of articles found inside Bundle No . 24 which was 993 . 00 23 . 80 - previously set aside and sealed pending • the presen c ~ of Mr . Melquiades Ocampo , Customs Appraiser , MIA, an expert on examination of jewelries and precious stones , per in~truction of the Commissioner of Customs , Juan Ponce Enrile , and whose findings appears below:

ACTU L FINDINGS:

One (1) Tin Box (Creme crackers box - Jacob) containing:

One(1) pc. 14K lady ' s gold bracelet with 12 small jades hollow ••• ~ 8. 00/ pc - $

8. 00

6 Five (5) pes. 14k lady's gold brace- lets with engravings, hollow - $5.00/pe -$ 25.00 Two (2) pes. 14#k lady's gold brace- ; ets, streamlinede « « « « « 500/pe = 10.00 iF Seven (7) pes. 14k gold bracelets (lady's) - one set of 7 pcs. 0.30/pe - 2.10 Ten (10) pes. lady's white gold " pracelets (KWG) hollow, with engravings « « « « « « « « e 3.00/pe - 30.00 Twenty-one (21) pes. lady's thin bracelets - set of three (3) of 7 pcese each set .« « « « « 0.30/pe - 6.30 Two (2) pes. lady's bracelets (KWG) hollow with 12 small jades - each eeee#ee# ee # @® @® @# 8.00/pe roe 16.00 Two (2) pes. loose granate stones an: birth stones) . «+ + « « « 0.50/pe - 1.00 Two (2) pes. loose stones, sapphire, smal eo © © © © © © © ee le. 0.50/pe = 1.00 Three (3) pes. lady's small pendants, . 18k with small jade. eoee @ 5.00/pe 15.00 Two (2) pes. tie pins (Men's) ; with one small moonstone each 2.00/pc. - 2.00 Six (6) prs. 14k Men's cuff-links with one tie clip each 4.00/set -~ 16.00 Ten (10) pes. yellow lady's rings ‘ set with one jade each - $.50/set - 15.00 Ten (10) pes. white lady's rings set with one jade each m1.50/set - 15.00 Ten (10) pes. white lady's rings set with five (5) tiny jade each 1.50/set - 15.00 Two (2) pes. white lady's rings set with three (3) tiny jade each 1.50/set - 3.00 One (1) pair white Men's cuff-links set with one (1) jade each 3.00/set 3.00 ‘ Two (2) pes. white tie-clip (one .(1) with moonstone and the other with jade) . . ss» +.» » » 4.50/pe. 9.00 Sixty-three (63) pes. lady's rings (KwG) - 6 prs. with white Stones. ss « s we ete ese 1.50/pe. — 94.50 Four (4) pes. white stones (Moonstones) 0.50/pc. - 2.00 Two (2) pes. Turquoise stones .... 0.50/pe.- 1.00 - Four (4) pes. Star sapphires... « « «» 2.00/pc. - ,, 8.00 — Two (2) pes. Black Star sapphires. . . 0.50/pc. - ‘*4.00 Three (3) pes. Indian Star Ruby . .. .2.00/pe. - 6,00 Two (2) CSe Garnate stones eeoeee 0.75/pe. = 1-50 Three (3 pcse Golden Topaz eee ¢ 1.00/pe. at 3.00 Six (6) pes. Small red corral (Flower pe oe » & @ ee © © © @ 0.25/pce : 1.50 | sha .

Four (4) prs. white Men's cuff-links with one (1) tie-clip each . . 3.00/pr. - 12.00 Forty-seven (47) pes. lady's gold rings qkk. e e o eve e e e e J 1.00/pe. = 47,00 Four (4) Smoky Topaz .« « « «6 » « « « 3e00/pe. = 12.00

Note: Corresponding samples were taken by Mr. N. Ocampo, Customs Appraiser, as followss 7 pes. lady's rings, assorted.

Three (3) prs. cuff-links, assorted. 2 pes. thin bracelets.

9 pes. assorted stones.

1 pe. small pendant.

2 white gold bracelets of different sizes.

28,000 Dilantin capsules (dipheny- ldydantoin sodium) Parke Davis USA 0.1 gram each capsule. ) . - 95.00 all - $ 95.00 19,000 Chlormycin (Cloramphenicol) capsules - U.S.P.

Jones Pharmacal, U.5.A., 250 mg. each capsUle.

16,000 Empty Gelatin capsules (Parke 4,500 Librium - 5 dragees, 5 mg. each dragee (Roche) . ... 0.60/30 dragees 91.90 4,000 Librax dragees (Roche) . . .13.63/500 dragees 109.04 3,000 Sinutab tablets ...... 0,02/tablet ' 60,00 600 Dramamine tablets 50 mg.

each tablet (Searle) USA. . 0.03/tablet 18.00 300 Fe ay hem chewable dragees (Vitamin E) Roche, 160 mg.

each dragee « « « «© » « « « 3025/1000 dragees 9.75 - 192 tubes Chloromycetin - Opthal- mic Ointment (Parke Davis)... 0.24/tube 46.08 ' 34 Decks Chinese playing cards ;

(Pp. 111-114, Customs rec.)

The seizure proceedings were commenced by Collector of Customs Salvador T. Mascardo on June 1, 1968 by the issuance of the Warrant of Seizure and Detention. On June. 18, 1968, Messrs. Per- fecto Malatbalat and Ruperto Santiago instituted an action in the Court of First Instance of Manila against the Commissioner of Customs, docketed as Civil Case No. 73322, for Mandamus and Prohibi- tion with prayer for the issuance of a writ of

8 preliminary injunction to stop Collector of Customs Salvador T. Mascardo from conducting the seizure proceedings because he has no jurisdiction over the seized articles and merchandise which were purchased locally by claimant Perfecto Halatbalat . The seizure proceedings were held in abeyance while the judicial suit was in, progress.

Subse-

quently, the court action was dismissed by Judge Jose Moya of the CFI of Manila and, therefore , the administrative proceedings, were resumed. The seizure proceedings were instituted for the reported violation of-Section 2530(m)- 1 of the .

Tariff and Customs Code, in relation 'tq Section · 1202 of the same Code , wpich provides as follows: SEC. 2530.

Property Subject to

Forfe1tute Upder Tariff and Custom~ ~ . - Any vessel or aircraft , cargo, articles and other objects shall, under the follo-vring conditions , be subject to forfeiture:

X

X

X

X

m.

Any article sought to be imported or exported:

(1) Without going through a customhouse , ·whether .the act was consummated, frustrated or attempted;

' SEC. 1202.

~'fu,en Importatiop Begins and Deemed Terminated.

Importation begins when the carry- ing vessel or aircraft enters the jurisdiction of the Philippines with intent to unlade therein.

..

9 Importation is deemed terminated upon payment of the duties, taxes and other charges due upon the articles, or secured to be paid, at a port of entry and the legal permit for withdrawal shall have been granted, or in case said .articles are free of duties, tax- es and o_ther charges until they have legally left the jurj.sdiction of the customs.

The opposing parties submitted the case to this Court for decision on the basis of their pleadings, customs record, transcript of the ad- ministrative hearings , oral and documentary evidences adduced thereat , and the partial stipulation of facts submitted to this Court which read as follows: COME NOvJ the parties in the above- entitled case, assisted by their re- spective counsel, and to this Honor- .. able Court respectfully submit the following stipulation of facts: 1.

That on June 1, 1968, the Collector of Customs , Airport Custom- house (I-1IA) .initiated seizure pro- ceedings against the merchandise of the herein petitioner which was docketed therein as &.I; No . 821, wherein the original claimants were the pet.i tioner herein with respect to the 56 packages of miscellaneous goods and Ruperto c. Santiago with respect to the delivery van, carrier of the said goods .

2.

That the parties herein are adopting the partial stipulation of facts entered into by the petitioner herein and his co-claimant Ruperto C. Santiago on the one hand and the re- presentative of the government on the other hand in the hearing on January 2, 1969 in said s.r. No. 821.

' .

,.

DF.CISION

10 3.

That the parties herein are also adopting 1n 1Q1Q the record of the proceedings in S. I . No. 821 , in- · eluding the testimony of' the witness- es and documentary exhibits presented therein.

4. That after due hearing in S. I . No. 821 , the Collector, Airport Customhouse , MIA, decreed the re- lease of the deliver y van to Ruperta

c. Santiago and, likewise.,- the release. of the 56 packages of assorted mer- chandise to the petitioner herein upon full payment of the duties , tax- es and other charges due thereon. 5.

That from the aforesaid deci- sion, petitioner Perfecto H. J.1alat- bala.t interposed an ap:Qeal to the Com- missioner of Customs (Customs. Case No. 953) insofar as the 56packages of assor~ed merchandise is concerned, · while claimant Ruperta c. Santiago, owner of the delivery van, took pos- session of 'the van on December 18, 1970.

6.

That the Commissioner of Cus-

toms affirmed the decision of the Collector, Airport Customhouse , MIP. on September 15, 1970.

7.

That claimant Perfecto H.

Malatbalat , ~g ain , not satisfied with the decision of the -Commissioner of Customs , now petitions this Honorable Court for the reviev.r of the decision rendered by the Commissioner of Cus- toms .

8.

That after the Commissioner of Customs had rendered his decision in, Customs Case . No. ·953 , the Commis- sioner of ' Customs , upon motion of Rup- erta c. Santiago, owner of the delivery van, authorized the release of the- said delivery van t6 its owner on December 2, 1970.

11 ..

WHEREFORE , the parties herein re- spectfully pray ·that judgment be ren- dered in this case on the basis of the above stipulation of facts and the records of the proceedings afore- cited, with the reservation that the parties be allowed to submit their respective memorandum, the petitioner within fifteen (15) days from receipt of the order of this Honorable Court admitting this stipulation and the re- spondent within fifteen (15) days from · receipt of petitioner ' s memorandum. After the administrati.ve hearings , the Col- lector of Customs of the Airport Customhouse, Pasay City, rendered a decision on July 19, 1969, wherein he decreed the release of the Volk:S-t.-1agen Kombi de- livery van to claimant Ruperta Santiago as well as the release of the 56 packages of assort&d mer- • chandise to Perfecto Halatbalat provided that the duti~s , taxes and other charges due thereon are paid by the c~aimant in full . The said decision of the Collector of Customs was affirmed in the decision of the Commissioner of Customs dated Sep- tember 15, 1970.

The principal and pivotal issue submitted to this Court for resolution is whether or not the 56 packages of assorted merchandise in question were imported without going through the customs- _house, whether the act was consummated, frustrated, or attempted.

As , a corollary issue , this Cot~t has to resolve whether or not the aforesaid mer- •

I

DECISION

CTA CASE NO . 2181 1'2 :chanqise valued at ~110 , 784 . 26 are subject to for- feitu~e or the payment of tariff duties , internal revenue taxes and other· charges . To disprove the report that the 56 packages of assorted merchandise were imported by the claimant- petitioner without going through the customtlouse , Perfecto Malatbalat adduced testimonial and document- ary evidences showing that the merchandise in ques- · tion were purchased locally from three commercial establishments , namely:

1. M. R. Tolosa Trading 2.

R- 350, Republic -Supermarket , Rizal., Ave., Manila Niguel R. Romualdez, Proprietor Sales Invoices: Exhs . 6, 6-A, 6- B, 6- C and 6-D; J . M. s. Enterprises 752 Kings Road, Mandaluyong , Rizal Juanito H. Sa.avedra , Proprietor Sales Invoic~s: Exhs . 7, .7-A and 7-B; and .

Farmacia Hosana-Aguilan

248 Kanlaon St., corner Apo, Quezon Cit ~ Alejandro B. Aguilan, Proprietor

Sales Invoices:

Exhs . 8, 8-A and 8- B.

In the administrative hearing , Perfecto Malat- balat declared and testified that the sales in- voi~es of M. R. Tolosa Trading marked as Exhibits 6 to 6-D were issued and signed by Bonifacio Al- maden who is a sales agent of the said establish- ment , the details and particulars of l.-'lhich a:re as follows:

•

DECISION - 2

Inv. No.

652 Terms?

Semmes

66

Termst

655.

Terms:

656

Termss

Cash

‘TOTAL VALUE OF MERCHANDISE PURCHASED. .....

13

Date Issued Quantity Articles Sold Unit Price Amount

May 18,'68 230 pes. Watches and. Bracelets £225.00 25,750.00 Cash age May 20,'68 410 pes. 1 25.00 10,250.00

Cash 7

- May 21, '68 542 pes. Watches 15.00 8, 130,00 .770 4" i 14.00 10,780.00 225 " Bracelets 3.00 00 90 days. #19,5 May 21, ‘68 11 set © Cuff-link 10.00 110.00 3 pes. Brooch - 8,00 24,00 20 8 Sade ring» 10.00 200.00 10 % " uJ 25.00 250.00 yh " pracelet 30.00 200.00 2,% wl = 6,00 100,00 fae W.S. Ring 7.00 539.00 7 KG. " 8,00 375200 30 = Assorted stone 5.00 150.00 a” Bracelet 15.00 05,00 Cash | 2 2,354.00 ' May 21, '68° 338 pes. Watches 9.00 3,222.00 Bracelets 3.00 60.00 rf doz. Strap 3.00 48.00

10. * Refill 15.00 pics eon eo 241 419.00 Perfecto Malatbalat also declared and testified that Sales Invoices Nos. 1002 and 1004 of J. M. S. Bnter- prises were issued and signed by the store employees, | the details and particulars of which are as follows:

Unit Price Amount

inv, No.

1002

- Perms:

1004

Terms:

Date Issued Quantity Articles Sold

May 21, '68 600 yds. Suiting Materials 2+, — prs. Shoes

Slippers

190 yds. Dress materials ooo tt | " "l 117 PCSe Watch parts

1035 Watches

90 days per sélf-serving *

Certificate of Perfecto

Malatbalat (page 7, Cus- toms rec.

May 21,'68 53 pes. Watch part €ash

TOTAL VALUE OF MERCHANDISE PURCHASED

* B® 2,400.00 .0 144. 00 1.50 72.00 1.00 490.00 .00. 4,000.00 2.50 "202. 50 : 271, ELM 2.50 192.50 211,431.0€ ' - 14

·· Jul:-

Petitioner further declared and testified that on May 21 , 1968 , he purchased for the first time from Farmacia Hosana-Aguilan assorted drugs and empty capsules valued at ~4 , 567 . 05 under Sales In- voice Nos . 294, 295 and 296.

The purchases , t~erefore , of petitioner- claimant Perfecto Malatbalat of the 56 packages of assorted merchandise from Hay 18 to 21 , 1968 were -made in three places , namely:

Manila, Mandaluyong , Rizal and Quezon City.

The total value thereof amounted to F57,417.05 computed as follows: 1.

M. R. Tolosa Trading •••• ~41 ,lt19. 00 2.

J . N. S. _Enterprises •••• 11,1+31 . 00 3.

Farmacia Hosana-Aguilan. • • ·4, 267. 05 T 0 T A L •• P57,417. 02 Deducting the alleged purchases of petitioner- claimant amounting to ~57 , 417 . 05 from the sum of it110,784. 26 , representing the appraisal value of the seized merchandise made by the customs examiner · and appraiser , shows a substantial difference of ~53,367.21 .

This staggering disparity in value may be attributed to the fact that , upon review and computation of the list and inventory of the seized watches alone in relation to the supposed · purchases made locally by the petitioner, it was ascertained that there is a difference of 569 wrist watches , that is , by deducting from the total / , I ..

15 seized wrist watches of 3,91~ the 3,345 pieces of wrist watches purchased from M. R. Tolosa Trading and J. M. s. Enterprises numbering 2,310 and 1,035 pieces~ respectively.

Despite the huge difference in the number of -wrist watches, there is a big disparity between the appraisal and purchase value thereof.

From ·

petitioner's documentary evidence, we gather the following data:

No. of vJatches 1; 035 p_ieces 656

II

770

II

542

II

652 & .

563 pieces with bracelet~ On the other hand, from

:Unit Price

4.00 9.00 14.00 15.00 each

It

II

II

. 25.00

II

the conservative a,p- praisal made by Customs Examiner Paciente Gulle and Customs Appraiser He~quiades Ocampo, the seized Swiss wrist watches such as.Tugaris , Seiko, Euler , Lady de Luxe, Philip, Ceba and Swan were appraised at $2.50 to $16.25 u.s. dollar , or from ~~75 to ~53 .3 8 eacl)r.

The unrealistic purchase prices of the wrist watches allegedly bought locally are, therefore, preposterous and deceptive to say the least. /. It is a settled doctrine that a party liti- ga~t who prays for judgment on the pleadings must be understood to have admitted the truth of all the material and relevant allegations of the op- \ •

DECISION -

CTA CASE NO . 2181 16 posing party in the absence of proof to the con- trary.

(Bauerman v . Casas , 10 Phil. 115; Evange- lista v . De la Rosa, · et al., 76 Phil. 115; Tanchico _ v . Ramos , 48 Dff . Gaz. 654. ) This is particularly true in customs seizure cases which are proceed- ings in ~ where the claimants or persons affected thereby must establish their l egitimate claim and legal right convincingly and satisfactorily. Petitioner- claimant Malatbalat claims that he is a merchant engaged in the business of general .

merchandising at 4727 Road I , Mapa St., Sta. Mesa Blvd., Manila .

But it is surprising to note that as a merchant of consequence he has no store but uses his residence as a place of business (p . 80, t . s#n., Customs rec . ) . He started in the buy- and- sell "of' second-hand appliances in 1967 with a capital of only ~ 5,000 . 00 . - On March 21 , 1968, his application with the Bureau of Commerce for the registration of his firm name (Permalat Enter- prises) shows that his capital as a single pro- pr~etor was ~ 1 0 , 000 . 00 only. For the year 1967, he has not paid any income tax because he was · exempt from the payment thereof. Despite his pre- tension as a merchant , the Mayor's Permit and Municipal License Receipt as a merchant (pp . 29- - , • 17 30, Customs rec-.) shows that they were secured and issued about two weeks after the. seizure of the 56 packages of assorted merchand.ise on May 22, 1968.

The records, both administrative and judi- cial, failed to show tha.t petitioner-claimant was either provid_ed with an internal revenue Privilege .

Tax Receipt (C-13) as a merchant in 1968 or with the duly registered books of accounts, in violation of Sections 178 and 334 of the Revenue Code. Under the foregoing factual background, peti- tioner's pretension that he purchas~d locally the 56 packages of assorted merchandise and that the taxes due thereon have been paid is untenable. A critical analysis and thorough evaluation o:f petitioner 's evidences, documentary and testimonial, leads us to- the conclusion that Perfecto Halat ... balat is a dummy-claimant of the seized merchandise or a puppet of an undisclosed importer for the . follow~ng reasons, to wit:

First, petitioner-claimant is not a legitimate merchant because he was not provided with an in- ternal revenue privilege tax receipt, municipal license receipt and Mayor's permit from 1967 to May 22, 1968 when the 56 packages of· assorted mer- chandise were intercepted and seized by a g~oup of Pasay· City policemen.

Neither was he provided 7 f •

DECISION

CTA CASE NO . 2181 18 with the required books of accounts and duly re- gistered sales invoices considering the volume and value of his alleged business transactions in May, 1968;

Second, his capital of _¥"5, 000. 00 in 1967 or the r~gistered capital of ~ 10 , 000 . 00 in 1968 is very small and insufficient in effecting the alleged purchases , in a few days of May, 1968, of assorted merchandise from M.R. Tolosa Trading , J .M.S. En- terprises and Farmacia Hosana-Aguilan valued at \ ¥57 , 417 . 05 but actually worth ~ 110 , 784 . 26 accor- ding to the conservative appraisal made by the customs examiner and customs appraiser; Third, petitioner ' s self-serving certificate and purchase invoice shO'\ving that he bought on credit . (90-'day term) from M.R. Tolosa Trading and J .M. S. Enterprises assorted merchandise valued at it19,585. 00 and it11 , 238 . 50 are belied and contradicted by his own admission in the administrative hearing that he does not k~ow Tolosa Trading , Farmacia Ho- san-Aguilan a~d J .M. S. Enterprises (p. 72, t . s . n •• , Customs rec . ) . · Moreover , the invoices allegedly covering the purchases on credit were issued and .signed by a sales agent and store employees with- out the knowledge and consent of the O\vner or manager of the commercial establishments concerned;

DECISION -

CTA CASE NO . 21 81 19 Fourth, the staggering difference of ~ 53,367 . 21 between the purchase price (¥57,417 .26) and the official appraisal value ( ~ 11 0 ,784.26~ of the 56 packages of assorted merchandise was never re- butted by the petitioner-claimant during the ad- ministrative hearings .

Moreover, the sales invoices submitted as evidences were not properly identified by the parties concerned and , therefore, they are self- serving and without evidentiary value; Fifth , the 34 decks of Chinese playing cards listed in the inventory made by the customs exam- iner and appraiser are subject to specific tax under Section 147 of the Revenue Code and the un- lawful possession or removal thereof is penalized under Section 174 of the same Code . n examination, hO\-Jever, of all the sales invoices adduced by peti- tioner- claimant failed to show where the said Chinese playing cards came from or from whom they were purchased, thereby impugning the truth' and veracity of petitioner's defense that all the seized merchandis~ were purchased locally; Sixth, the official inventory of the seized merchandise shows a total of 3,914 pieces of men ' s , ladies ' and boys ' wrist watches while those alleged- l _y purchased from N.R. Tolosa Trading and J .M. S. Enterprises totalled 3,345 pieces only, thereby showing a difference of 569 wrist watches; •

DECISION -

CTA CASE NO~ 2181'

20 Seventh, the truth and veracity of the state- ments contained in the sale·s invoices submitted by petitioner-claimant as evidences can easily be corroborated by the entries in the duly registered books of accounts of the sellers and buyer of the merchandise in question but petitioner failed to do so for reasons beyond our comprehension; and Eight , petitioner-claimant allegedly purchased assorted merchandise from M. R. Tolosa Trading on May 18 and, 20, 1968, under Invoice Nos . 652 and 653, for ~5 ,750. 00 and ~10 ,250.oo , respec~ively, without securing the delivery thereof on the same date but instead entrusted them to the custody of the alleged seller. With respect to the purchases made by petitioner on Maz 21, 1968 from M. R. To- ·losa .Trading , Farmacia Hosana-A.guilan and J. s. M~ { ........

1 Enterprises , petitioner again _failed to secure the delivery thereof but instead entrusted them to the 'custody of Ruperto Santiago, who is the regis- tered owner of the Volks\vagen Kombi delivery van, unt~l Nay 22, 1_968'when the sa~d delivery panel and the 56 packages of assorted merchandise were intercepted and seized by a group of Pasay City policemen along F. B. Harrison St., Pasay City, corner of Polo Road. If petitioner is a legitimate merchant and the real owner of the seized ·merchan-

21 dise valued at P110,784. 26, we cannot understand and comprehend why he was in Oiongapo City on the date and time the merchandise in question were seized and apprehended .

The unusual actuations and behavior of petitioner in this case baffle the logic of an ordinary man.

/ After pronouncing that petitioner is a dummy- claimant under the facts and circumstances of this case, we are constrained to hold that the merchan- dise in controversy were imported without going through a customhouse because they were seized in · Pasay City where the Airport Customhouse is ter- ritorially located; the merchandise in question were undoubtedly of foreign origin; and the tariff duties and internal revenue taxes due thereon have not been pa;d.

We sustain, therefore, the power of the Commissioner of Customs to assess and col- lect the taxes and other charges due thereon under Section 1202 of the Tariff and Customs Code , §UDra. It may not be amiss to state that the Commissioner of Customs and his subordinates are agents of the Commissioner of Internal Revenue for the collection of the national internal revenue taxes on imported articles under the provisions of Section 6 of the National Internal Revenue Code , as amended by .

I

Section 1, Republic Act No. 2655. ~ Petitioner questioned the power of the Bureau of Customs for instituting the seizure proceedings because the merchandise in question.were seized • .

' ' ..

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23 a petition praying that the lower court's order of July 9, 1946, be set aside , that said court be re- quired to order the return of the documents and things in question ' to petitioner , and that the pros- ecutor be restra~ned from using and presenting them as evidence at the trial of the criminal case for treason.

...

The procedure adverted. to above was also followed in the case of H~rry s. Stonehill, -et al. v . Hon. Jose W. Diokno, et al•, G.R. No. L-19550, June 19, 1967.

In the said case, our Supreme Court, among others, said~ ••• on March 20, 1962, · said ~etitioners filed with the Supreme Court this original action fot cer- tiorari , prohibition, mandamus and injunction, and prayed that, ~pending f~nal disposition of the present case, a writ of preliminary injunction be issued restraining Respondent-Pros- ecutors , their agents and/or repre- sentativessfrom using the effects seized as .aforementioned, or any copies thereof,· in the deportation cases already adverted to, and that , in due course, thereafter , decision be rendered quashing the contested search warrants and declaring the same null and void , and commanding the respondents, their agents or representatives to return to peti- tioners herein, in accordance with Section 3, Rule 67

of the Rules of

Court , the documenis, papers, things and cash moneys seized or confiscated under the search warrants in question. (Underscoring supplied. )

.

,... If we were to adhere to the rule denying the admissibility of the evidence procured by an il- legal search and seizure, the real party concern~d -.

..

'. ~l ~ .

24 must ihterpose in court a timel y challenge to the va·lidi ty of the seizure and the competency of the evidence by means of a petition or original action. If upon such action , the real party in interest can show in fact that the seized articles and merchandise were secured by· an unlawful -search ;

and seizure , the same if used as evidence will be suppressed following the Supreme Court decision in the Stonehill case , supra. In the case at bar, however , Perfecto Malatbalat failed to file a petition in this court praying for the return of the illegally seized merchandise and the sup- pression thereof as evidence . The original action for prohibition, mandamus and injunction filed with the Court of First Instance of M~nila under Civil Case No. 73322 was dismissed by the court .

Consequently, the suppression of the il- legally seized assorted merchandise as evidences cannot be entertained by this Court . ~ .

tmEREFORE , finding that petitioner Perfecto.M. Malatbalat is a dummy- claimant of the 56 packages of assorted merchandise here in controversy, the decision of the Commissioner of Customs appealed from has to be , as it is hereby, modified.

It

is hereby declared and ordered that under Section 2530(m)-1 of the Tariff and Customs Code , all the

ECI '"' ION -

CT

C SE NO . 2181 25 assorted merchandise in question are forfeited to the Government and disposed according to law. SO 0 DE ED .

Quezon City, April 17, 1971 .

lE CO CU •

Presiding

t-- --; ~ - •101~ L.

v

1TCE~J

ssociate Judge

~~ -~4Elf

ssociate Judge f'