Republic of the Philippin's | Court of Tax Appeals Quezon Cfry, et al. vs. C.TEAE Cage No, et al.

REPUBLIC OF THE PHILIPPIN'S |

COURT OF TAX APPEALS

QUEZON CFry ;

73

en

PHILIPPINE STTAN

BAVIGATION GO, in tts

capacity os count of

Petitioner, .

versus ; C.TeAe CAGE NO, 2385

COMMISSICHER oF

mS»

tere ee ee we He ow

DECcIsiIoON

The erueisl question raised in this case

is whether op not « collector of enetons of «

pert can legally impose an administrative fine

egainet e vessel for allegedly carrying unsani fested

cargo pursuant to Seeticn 2521 of the Tertff and

Customs Code without first inetiteting seizure

proeeedings in sceordanee with the pertinent and =~

applicable provisiane of the same Code, Otherwise

stated, can the penalty of fine be imposed under

the Customs Law without « fores! hearing gherein

the party adversely sffected is given a chanee to

be heard?

The facts of the cose, as found by the Col~

lector of Custons of Daveo in an investigation

condneted by his legal or hearing officer (net in a

prersrom ~

CTA CAGES N09. 2385

formal hearing wherein retitioner Philippine

Steamship Navigation Company in its capacity as

agent of the #V "Rleano” had been properly cherged |

for violation of Section 2921, Tariff and Costons

é

isthe fe siti | sei sitet,

ee | te Hate a

ect rit pale ei

i gaieks &

ma ae ae H ¥ ate a

j peers ha $3, dia

stihl cis tte i . eat iin ate

j

‘

———

Fa

sllegediy by o muslims

x “he ~

Tt has been noted thet there are

st least, three (3) members of the

crew of reese! “ete PR Rapes

question which ore pM A ay magne in

veesel in this perticuler trip when.

Oe ena Ser eee

Aecording to the Memorandum of petitianer

Philippine Steas “avigation Company in its espacity

as ogent of the B/Y “Blesnc"s

August 2 petitioner re-

ren cory met Fi erlas éated July

22, 1 t thd oned

Satase Tae Sets

1t, 1989, te to the -t leetor of Custons

PRECISION ~

CTA CASH NO, 2385

of Duveo City yousosting ¢ that the

nearing on latober 15th be ee

to eoincide with any edministreti

ease that might Lave been filed

. against petitioner,

on 11, ye after the

lapse of simost one bang He petitioner

(not the he attorneys)

ae a alg var ot dodiaien: ar ie

Ceclleetor one vg Davao City

dated © Fd 6 ms feeision

ea tion entitled iC aaa

tian Mog [20665" contains Ss

espects:

1. The sv hale Cigarettes are

ordered forfeited tn favor of the

goverrment; and

2s 4 fim Se aged 900.00 fe inn

posed on oy or

pag tee fon 2521 oe eliagedty

and Custous «

On appeal, respendert ake py

@® decision aff — @ecizi

6 Tenet, this

eace. (ips 4 , CTA records.)

In spite of the fact that reepomient was

given @ eeriod of thirty (3% days vithin vhi¢gh to

answer petitioner's mexcrandus, no menorendus wat

filed by him. We take it therefore that the above-

statement of the case of petitioner is eorreet,.

At any rate, the facts ae stated by neti tioner

an@ as quoted shove sre borne out by the records

of the case.

The present appeal refers, however, anly to

the Imposition of the adminietretive fine against

DRCcisiIo" ~

CTA CAS BO, 2395

5

the "/V “Ricano", it appearing that the decision

of the Colleetor of Customs with reepeet to the

seigure of the olgarettes im question has beaone

final and exea tory there being no ¢leinent to the

afore=nentioned cigarettes.

Vorth-wiile noting sre the follow'ng salient,

and thought~provoking, fnete whieh are borne aut

by the records of the cater

4. The noties of hearing sent by the inves-

tigating/nearing officer of the port of Davac

setting this case om lugeet 4, 1969 for triel,

together with the telegram cf the save officer re-

setting 4% te Cetober 1f vnfieh eleo served as t

forse] notice of hearing, refers to Sefaure !dene

tification Wo. 013-69, Republic of the Mhilippines

We 44 Sears Untaxed “nion Cigarettes Feund fn

Water Ten’ of W/V “Fleano". (pe St-52, Cnetoms

Record.) The decision rendered by the Collector

of Custoas of Davao, witeh we the @ecision

aprealed to and effirmed by respondent end sow the

gubjest scatter of this sppeal, ts eaptioned Setsure

Identifie¢ation No, 20869, Repubiie of the Mailip=

pines v. "/V “Sleand" Voy. 360, 232 Neams “Union”

Cigarettes, 1%) “eans "Champion® FS, eigerettes.

(Pps 3538, Customs Record.) Since the records

4

of this case make no referener to any other notice

of hearing except with respect te Seigure iden-

tification Jc, 1369 5. nentianed stove, the stete-

ment of petitioner thet it and ite attorneys heve

never deen inforned of the proceedings in “Seizure

Identification No. 920-69", subjeetematter of this

instant apprel, ic correct.

2. When the Collestor of Custous of Davao

wae : eaten te respondent to transmit to his

office immediately #11 svaileble records of the

hearing of Srigure ‘dentifileation Soe 020859 as

they are vitel in the preperstion of the anewer

to be filed in this Court, the former enswered

thet the hearing condueted refers only to the in=

vastigetion dane by tie hearing officer. (Pp.

50, Customs Neecrd.) Clearly, therefore, there

wee ne formal brering wherein petitioner ves

given a chance to be heard in connmecticn with the

investigation of the case conducted by the Collector

of Custone of Davec.

Je Yor carrying the alleged unsentfeated

cargo of cigarettes, no seizure was usde by the

Celleetor of Costons of Davao of the &/¥ "Sl¢ano”

end nelther was ony seizure proceeding instituted .

ageinst petitioner for violation of Section 2521

~

pReistos~ st

- GFA CASS HO, 2365

7

‘of the Tariff and Customs Code, Wille a bond for

P10,000,00 wee peated by the W/V “Rleans" after.

the cigarettes were sel red, petitioner avers (pars

Ill, vetition for Review) and respondent sdeits

. (pare ty Answer) that it was anly te svotd deten-

tion of the vessel st Gaen Wiarf, Devas City. It

ig thus evident that thete hse never been en aie

‘ministrative case filed against petitioner or the

H/T sreario” for silegen vielation of Seation 2921 - .

of the Tarif? & Custos Code. Consequently, the

decisions of the Collector of Cnstons of Davac °

dated “etober 6, 1969 and thet of respondent

" dated Sovember 17, 1970 were rendered th sneh s

‘meener thet the ¥/*. “*teano” and vetitioner até

ie And styenge dst wey been, the Geateton -

of the Solieeter of Gustaus cf Davac tmpcsing an.

| administrative fine of 14,000.00 against the M/V .

dated Setober 6, 1969 we recived by petitioner

itself, although 1t wes represented by counsel,

on August 14, 1970,.0r almost one yeor after it

wae rendered. (ps My Customs Records)

.

.

.

Ro, 2965.

with this factual setting, let ve Sinbiad the

lew applicable to the CASE » ,

( at will be noted thet the administrative |

| penelties imposed by the “eriff and Cistons Code

in connection with the tmportetion or exportation —

of orticles are classified into (a) surchargess

Seations 2504 to 250% (b) fines, Seetions’ 2505

to 25295 and (e) forfeitures, Sections 2530 to

O5336 The Sapoat tion by respondent ef the emount

" ef-810, 000.00 as atntaistrative fine against the.

“/Y “Sieano” vas nade allegedly pursuant to Seetion ©

2521 of the same Code, Under reid Seetion e524)

tn relation to Section Wy of the vane Code, it

de tnoumbent upon the osster of the vessel to hens

on beard s complete manifest of #11 cargoes of

‘board. Peilare to comply with tule obligation |

would sxbject the vessel toa fine ef not exessding

ten thousand” pesos. (See Gels Ve Islas Pilipinas,

28 PHdtls 2914) 9

| Mak Sake Cia: Ralpreen: Aeihe they however, ine

éleated and deseribed in a manner clear, definite

and certain how aduintetrative fineo ad forfeltores

ore imponed. Tse, Section 2532, therest express- .

ly provides that “administrative finer and: for

feitures shall be enforced bythe eimure of the

DRCLsIOW .

CTA CASE NO, 2385

9

veesel or atroreft or other property subject to

the fine or forfeiture and by subsequent ordaeeed~

ings in conformity with the. provisions of Parts

2 (Mminiatrative Proceedings). and 3 (Judicial .

Progedings), Title VI (Adminfetrative and Judteiel

‘Prossetings), Mook Il of thie Code." And while =

the first part of deetion 2295 enjoins a custons

officiel or any person sothoriaed to effect ccarches,

seisures end arrests to uake seimre of any ves~

gel, etrersft or woperty when the seme is subject

to forfeiture or lisbie for any Tine imposed under

customs and tariff laws, the letter portion of |

the satd Seetion 2709 stresses thet such power

SR eal Es Ye, erect ont En emniteaty with te

lew and the provietons of this Code."

(‘me pertinent und applicable rrovistone of

. the Vertff and Customs Code witeh devertte in

Getatl the proeedure in wigure cases are Seotions

2205 to 22123 Sections 2301 to 2307; and Sections

(2392 te 2315, in reletion to Seetion 2532. Ine

sofar as pertinent hereto, the law exprensly re-

shall issue e warrant for the detention of the

property, (Section 27301, 14.) If the owner or

importer desires to secure the release of the prop~.

erty for legitimate use, the Collector may surrender

* €&&-

7; = ——T eo = a wo ae laa WF - ies ek ale WE all eet

10

it wren the ftling of a suffictent bend, except

"- epbtetes the importetion of wateh 1s prohibited

by Lew, conditioned for the peyment of the ap= -

praised value of the article and/or any tine, ox

pensee ané eests which may de adjudged in the case.

‘(Meetion 2301, id.) It was probebly under this

“previaton of the law that petitioner was allowed

te port a bond fer P19,000.00 te avoid the deten- a

tion of the 0/7 “Plesne". at the Snes wharf in Davac

Clty etter 1% ens: fount stlegetiy eesying -

nenifeste’d cores.

When © reigure te made for any eantey the

Collector 6f the district werein the seigure is

effected chsll imuedistely moke report thereof to

the Gonatnetoner f Customs and to the Auditor

General. (Section 2302) 18.) The Soliector shall

‘also cause © Mist end particular deseription of

the property seized to be prenared and an eppreise-

ment of the sane-at its wholesale value in the

“seat magnet in the ueual vtiolesale cunntities te

be mde hy at least two aporalettg offieera, if

there are mugh officers at or nest the plice of

seixnte; in the absence of cuch officers, then by

tuo competent and disinterested aitisens of the

Milippines, te be seleeted by hie for that purpose,

pectsiny «

CTs CASR BO, 2305

11. -

residing at OF near the plage of selaure, water

_ list and appreisement skull be properly attested

to by such eollector.end the persans waking the

appreiesl.- (eation 2305p te) |

Then comes the crucial wd decisive ce muaceand

"The Collector shell give the owner oF importer

of the property or his agent @ written astiee of ; '

the seigure asd shall give hin an opportunity to

be heard in refersner te‘the elingseney whieh

wes the secesion of such seigcre." (“egtion 2303,

14+) And to emphasize the duty of the Cclleetor to

eive the owner oF importer of the property seized |

that anuortusity te be beard Jn refercnes to the

delingesey vileh wea the cocasion of aun seigure

80 that ne can present his ease and addvee evidence

tenfing to establish his rights, the second part

of Seetion 2313 expressly requires that: "Ih

“selsure case, the Collector, after hearing, shall

in writing make @ declaration of forfeiture or fix —

the amount of the fine or take such other eetion

as may be proper." (nderseoring supplied.) | ‘

‘The law seous clear, speeific and wandatory.

There is, therefore, no foe for interoretations

it metely celle for ite avplication. Construed.

together, the shove provisions yield me other Gor

}

DECISION «

CTs CASF NO, 2385

. 12

clusion bet that the penalties of fines and forfeitures -

unter the ‘ertff end Costors Code cen not be im |

posed without » formel hraring wherein the perty

adversely affected tz given # chanee to be heard.

Consequently, to the extent that retitioner or ‘ts

counsel hes rever been informed of the croceedings

in Seisure Identification No. 02069, wnigh is the

subject matter involved in thie cases thet there

wae no seizure made by the “ollector of Customs of

Davec of the /V “Tlesno" ard no seisure orceseé>

ings were instituted sugsinst it for viclation of

Section 2521 of the ariff and Costes Code; thet -

no formal hearing wae condueted by the “collector of

Costoms of Davac wherein retitioner wae given an

opoortunity te be heard in reference to the impost-

tion of the fine of 915,000,003 and thet petitiorer

wee not given e chance to present ite side of the

Case and to submit evidence in support thereof, the

decision of the “ollector of Custone of Davan dated

. Getober 6, 1969, inelneding the affibmanee thereof

by respondent, is a millity for having been pronul.~

gated in @isregerd of the requirements of dee process

provided under the Tariff and Customs Code. )

( It is wellenettled that even in trials end in-

vestigations of an administrative character, the