Repoblic of the Fuilippines Court of Tax Appeals _. Ourzon City /Samhawa Company, LTD vs. ~ Commissioner of Customs

DECISION

The review of respondent's decision in Customs Case No. 79-42 dated May 8, 1980 forfeiting a shipment consisting of 100,000 bags of fertilizer imported in violation of Central Bank Circular No. 243 in relation to Section 2530(f) of the Tariff and Customs Code of 1978 which pet itaaeer alleges to be “erroneous and arbitrary, illegal and in- valid, inasmuch as it is contrary to Section 2193, Tariff and Customs Code, as amended, especiaily in the light of the evidence on record that the said 10,000 (sic) metric tons fertilizer in 100,000 bags was really inten- “ded for warehousing purposes in Manila and for transhipment into another country, par- ticularly Malaysia, and net for importation into, much less for sale in, the Philippines," with “undoubted implications in international DECI'.SION -· CTA CASE NO . 3099 - 2 - trade and its possibl e repercussions in diplomatic re l ations between the Phi~ip- pines and Korea" is the case at bar . As set forth: 1) petitioner, a Korean corporation , h ad a shipment of 100,000 bags of diamonium phospate fertilizer weighing 5, 00 0 metric tons on board the

S/ S

11Fides Venture" , Regi.stry No. 186, covered by bill of l adi ng No . SA(MA-1) consigned to Korphil Marketing Corporation or Samhwa Company, Ltd . , Manila Branch, which arrived at the Port of Manila from Samil ~ort, Korea~ on January 26 , 1979, declared under Wareshousing Entry No. 14983-79 , discharged shipside loaded on board lighte r and transferred per Specia l Permit to Transfer (SPT No. 01909) for storage in Customs Bonded Warehouse (CBW) No . 700 at E. Ramos Street, Makat i, Metro Manila, but actually delivered to and stored at CBW No. 161-A located at Panaderos Street , St~. Ana, Manila; 2 ) On March 30, 1979 , the Collector of Customs of Manila instituted Seizure Proceedings (Seizure

I

fl ~ :

{) • r t

DECISION -

CTA CASE NO . 3099 ·- 3 - Identification No. 79-79) against the article "the importation of which is effected contrary to law" under Section

2530(£) of the Tariff and Customs Code with

Samwha Company, Ltd . (petitioner) substituted for Korphil Marketing Corporation upon its own instance, as claimant; and 3) the art i cle ' in question was sold at auction in accordance

with Section 2607 of the Tariff and Customs

Code (Disposition of articles liable for deterioration) for P7,425,500.00 before the Collector of the Port of Manila finally ordered th~ forfeiture on October 26, 1979, which decree was upheld by the respondent Commissioner of Customs on May c.- 1980.

Hence, this appeal.

In disputing the decree of forfeiture, petitioner lays stress on the circumstances compelling its decision to have the shipment warehoused in the t·ort_ of Manila for t rans-- shipment purposes.

Petitioner avers that while in the process of loading the contracted order of 200 ,0 00 bags of diamonium phospate fertili zer or some 10,000 metric tons at

DECISION -

CTA CASE NO. 30 99 - 4 -· the Sami l Port , Korea, its Malaysian importer gav e due notice of its inability to accept the entir e quantity but only half t hereof or 100,000 bags fo r reasons dictated by nothing but warehousing cons - traints.

Notwithstanding such a timely advice, petitioner p r oceeded in shipping t he uncommitted half of 100,000 bags weighing 5 , 000 metric tons to take advantage of the freightage paid the chartered vessel S/S "Fides Venture 11 and have t.he cargo ware- housed a t the Port of Manila conditioned that "Transhi.prnent shall be d.one to another country (Malaysia) a·t charterer 1 .:; expenseu " And , conformably with the requi ~ ements of Philippine Customs Laws, more particularly section 2103 of the Tariff and Customs Code , which governs the spec ific underta}~i:1g of re-exportation , puyment. of the premiums covering the genera l warehousing and re- export bonds puportedly under corresponding policies - GISCOR No. 6482 and GISCOR No. 6483 was effected with the Executive Insur- ance Associates~ Inc .

'.)

t

•J

-~ 1

DECISION -

CTA

CA~E NO . 3099 - 5 ·- Respondent, in opposition, qu i te obviously differs with petitioner in respect to facts Qaterial to the determination of the question bearing on the intended warehousing and tran- shipment of the subject shipment. ~he enabling provision of Section 2103 of the Tariff and Customs Code relating to articles ern:ered for im.rnediat.e export.ation provides insofar as pertinent. tha·L "where an intent to export the articles is shown by the bill of lading, invoice, manifest, or other satisfactory evidence, the whole or a art of a bill (not less than one package) ma y be entered for immediate exportation u nder bond", and "no exportat.ion the reof will be permitted except under entry for immediate exportation under irrevoc0ble dornestic letter of credit, bank guaranty or bond in an amount equal to the ascertained duties , taxes and other charges. "

Section 1904 of the same Code equa lly applies, thus, 11After articles declared in the entry for warehousing shall h3ve been e xamined and the duties, taxes and other charges shall have been determined, 't <"') .. ,_o , l /..,.., DECl.SICN - CTA CASE NC. 3099 6 -· the Collector s1all require from the importer an irrevocable domestic letter of credit , bank guaran t ee or bond equivalent to the amount of such duties, t axes ana o ther charges." Section 2103 and 1904 , s unra., may val idly apply and effectively operate on subject ship- ment but pet:i tioner must prove compliance with the terms a nd conditions imposed thereby. The evidence aduuced as respondent justifiably dssert:s shows th.3t "No bonds Y>Jere rccorcled. to have been filed in favor of the Bureau of Custous.

In fact thi2 explains why petitioner failed to introduce the sai~ p2yments of prernit ms :Ln t: he proceedi.nc;rs had in the Bureau of Customs and this Honorable Court." The fact o: the alleged payment of premiums cannot legally be e c~ u ated vdth the f:i.J.ing or.- po~>ting of -r.::.he pre.sc.r.ibed bonds. 'I'o require less wculd sanction ar expedient arrangement un- sustl.linable el ther by OI)eration of l c1~,o: or application of settled princi~les. ~ hese prescriptions of securing t he integrity of the la~rJ:f:ul cl\H.".:; ure no mere i 'l ·~; e n~Joossophis ·- tr.ies c o njur(~d out of so1ne quirl;y insights

It~

!

f") .;_,~ . . L • •. )

DEClSION -

- 7 - but are tinged with strong issues of public policy to prevent fraud upon the r ev enues les t the cornerstone of eftec tive collection be p l aced in the quicksand of self-interest. We are less impressed by what petiti o ner alleged than wha t it failed t o comply. l-'eti- tioner has not proved its entitlement to a f avorabl e dete rmination as a matter of l aw. Be that as it may , there are other affiliating breaches too slickly practiced wh i.ch in firrned pet:itioner ' s cause. F~rst.l.Y.. , af t e r the advice on the unacceptability of th~ cargo, timely and properly serv ed, no c ogency ap~ears for the piggyback l oading of an additional 5 , 000 metr i c ton s of fert ilizer san§_ any d efi n ite commitment of disposit icm in po int of time.

To have thR prospects of quite substantial financial stakes rely upon the efficacy of auguries wou l d seem extremely unlikely un l ess for "c.iubi ous mo·tives" as surmised.

Of added signific~nce is the r·r=:rverting ci r cums t ance of C:t "nil" cargo c learance upon the carrying vessel ' ~ depar- ture from the Port of Monila as borne by the <' , 1

J

• 0 '.!.' DFCIS.LUtJ -

C'F A

Ct>.;_;I~ I.JL • ? 0 9 9 (") ·- u - ceclif:'.ca icms of the Custcrns personnel and the Ha.st.e.c of the S./S " J,'ides Ve!lture", more particularly reflected on the " OutvJctrd Man.i. - fe.s·t of Cargo 11 a nd "Stat.5.E.;t.ical ~:.; upplernent " apporently con£ inning thr-: fact that. t.he veE;sel had but the controversial shipment des .ined for the Port oi Mani l a, which aptly illustrates the clumsiness of the avow~d intended tran- sh tprnen t.

,·Jou l d not petit loner do d i [ f eren tl y had ther e been no d~rnar:d for the co:ru-aodi ty in the ~ hilippines ?

~e thi nk Murphy ' s Law has taken over because e veryLhing that could delivery and storage of the questioned ship- ment. at CB·i No. 161-/\. located at. J',:uladeros Street , Sta. Ana, Manila, but rectrded t o have bee.

eceived a t CSW No. 700 at E. Ramos Street, Jl.lakati 1 f'ietro Hanila 1 t:.hc:;

~;pecif.ica1ly desig··· nated warehouse in the Specin l ~e~mi t to Transfer is a dclibera ce divers1on n egating pstit i cr:er ' s seerninq cieco.co~.J::.:; pan..;che of a -,-veLl rne;m 2-nq intent ion . r-·1or over, tr1e failure to ~fJ()r.;t.

t.f1c~ tJre-·.r~e(~_ui.::~l.te clr:.~r ~ c~r.Jit (if 100/~ of t_hc estj.rn,,,te::c: ccuties, ta.~<C~::> d!l·.:' ot:her ch acgc:s ~-:- , r' ..J•J.._)

DECISION -

CTA CASE NO. 309 9 - 9 - on t he c argo before transfe r can be effected under the Special Permit to Transfer as req uired in Customs Administrative Order No. 10-77 (Par. III 1 E-3) dated Oct ober 6, 1977, cannot y i e l d results but consequences. To be upheld, pet itioner ' s position must stand the scrutiny on both f actual a nd lega l foundations .

It aaseverations of good faith have been encrus ted with l ayers of lega l l apses a nd muddied wi t h narrative implausibilities an~ inte rna l contradictions. ~hatever brouhaha that may be entertained, petitioner a l one has to blame, h aving created its own morass. According l y , the 100, 000 bags or 5,000 metric tons of diamonium phosphate ferti li zer which arrived on boa r ci the S/S 11 Fi des Venture 11 on January 26, 1979 f r om samil Port , Korea, mu s t be deemed an importation into th e Philip- p ines and subject to t !le cornpl.i.ance of all requisites prescribed by l aw for valid entry thereof.

The record shows that the importation l a cked 1) prior ar..>proval of the I:'ertili zc r anu Pes ticid e Authority pursu ant to Pr Lsidentia l I )l

I

~~ ,.:, ' t .,_)

Decree Noe 1144, which provides that, no fertilizer shall be imported unless it has been duly registered with the FPA and that no person shall engage in the business of importing fertilizer except under license i ssued by the same, likewise, 2) the im~ ort license from the Central Bank of the Philippines required under its Circular Noo 243 0 that~ uAll imports must be covered by letters of credit except transactions involving not more than $100~oon; hencev the forfeiture under the compelling import of the pertinent provision of the Tariff and Customs Code of 1978• th• s, wpny article the importation or exportation of which is effected or attempted contrary to l aw or any article of prohibited importation or exportation 11 and n.ll c ·ther articles which in the opinion of t e Collector, have been use~ re or were entered to be used as instruments in the import- ation or exportation of the former." (Sec . 2530(f).

On the aspect of "diplomatic repercussion'' suffice it to state that we can do little more than offer the cold comfort that s uch kind of simpering c ockalorum cannot ~uffle the Court in the discha rge of its judic"al f ~ nction a s 0 ]d Pe r mJ.'t an in.;~··stl ' c.e to takL l ts toll.

wu.

--- .

- '"" ·' Petitioner need not stray in~o the exceediDgly murky area of international law for solace~ ' ~ \

I J

.J . ~ I

DECISION

CTA CASE NO . 3099 - 11 ""' After a Cc1rt::ful cons !deration of t.he facts on record q the Cou rt is u nabl e to find that petitioner has borne its b1rden of p roOf , a nd there~ore fi nd respondent $s decisio n t o be wel l fcu~ded and the same is hereby aff i rmed an the decree of forfeiture sustai ed . WHF !:~EE'ORE 11 t he pet.Jtion fo r rc~view i s hereby dismissed wi th costs against petitione r • . SO ORDERED " Qu e zon City. Phil i ppineu ; July 31 , 198lo l'tlE CONCUR :

.

} ' (' ·-' . t : ')