Gelmart Industries Philippines, Inc., et al. vs. Commissioner of Customs

DECISION -

2 bt~ol-<et~ f'r~ ept~ esentative of the consignee fat~ the pur--pose of ~n~ocessing and effecti ng t~elease of the afot~esaid impot~tation ft~om the But~eau of Customs, IY!anila;"

"3.

That, in the aftet~ noon of (~ugust 3, 1'387 at about 5:30 o'clock in the aftet-·noon, the cogsigne£~' s bt~ cd<et~Jt~ept~esentative, tht~u Not·'bet~ to f'r1aula, Jt~. and Oscat~ Y.

Mat~ inas, tt~ied to effect the t·'elease of the afot~esaid importation by inserting the description of the afot~ esaid ship ment in the boatnote covet~ing another ship ment of si milar kind of merchandise and J. i k e w i s e con s i g n e d t o G e 1 mat~ t I n d us t t~ i e s , Inc. ;

11 " '+.

That, when conf t~onted, Not~bet~to Maula, Jr.

and Oscar Marinas told the inv estigatot~s that van in the othet~ to save time and they included the 1 x 40' shipment because they wanted to be able to delivet~ both s hipments to theit~ pt~ incipal, Gelmat~t In d tt s t t"' i e s, Inc:;. ; •• "5.

That, the customs police did not allow the shipment to be t~eleased and instead, the s hipment was detained and subsequently ordered fully opened, examined to determine its actual contents;"

"6.

That, at the time the afot~esaid s hipm ent was being bt~ought out ft~om the Bm~eau of Customs as nat~ t~at ed in pat~agt~aph 3 h et~e of, the pertinent document s covering the aforementioned s hipment were already duly f i 1 ed, pt·oce s sed, BC pet•f ot·at ed and appt'O v ed as follows:

A.

Original Warehouse Entry ~o. 28886- 87 B.

Pt• ofot~mc.~ Chat·'~}eabl e Bond C.

Importer Sworn Statement D.

Co mmuni cation to the Collector E.

SGS clean report of findings F.

Packing list G.

Commercial Invoice H.

Bill landing I.

Warehousing Permit white copy <BC Fot~ m 198) J.

Cet·t if i catio n Impot·t Li ce nse;"

469 of Availability of

11 7.

That, the afot~ementioned impot~tation is exempt fl·~ om payment of advance sales taxes or compensating sales taxes and other sales duties because it is a duly approved met·-chandi s e f01·~ t~ e -- expot~t by the GTEB. 11 and adopted as common exhibits the following: Exhibits ll(.)ll/11111 "B"/ 2" "C"/ ·~II

•• J

liD"/ L,.

~~ "E"/ 5"

IIF"/ 611

"Gil/ 7"

IIHII/ 8"

"I"/ I '3 II

".J 11 / 11 10 "I-< II I I 1 1 "LII/ l .-· .

. c:.

IIIYI"/ 13

"0"/ 1 L~

IIPII/ 15

IIQ"/ 16

"H 11 1 17 II F~ - 1 !"

"S"/"1'3 11

11 T 11 /"20 11

8" Warehousing Entry No. 28886 87 Proforma, Chargeable Bond Importer's Sworn Statement Communication to the Collector SGS clean report of findings Pe:\C~< i ng L..i st Commercial Invoice Bill of Lading Warehousing Permit Certificate of Availability Certificate of Mr. Mardela Gate Pass No. 052840 Gate Pass No. 052849 S/S of Mr. Jose C. Corpus S/S of Mr. Norberta Maula, Jr. S/S of Mr. Oscar Marinas Boatnote No. 240703 - Ins et~t ion of 1 x 40' van in Boatnote No. 240703 Investigation re~ort of Mr. Sot~i na Endorsement of Lt. Honoria .Juan to the Collector of Custom, MICP 11 U"/ 11 2 l 11 ·-..

1-J S D

II v II jll ;:;~;::::It 2nd Endorsement of Collector Mendoza Counsel for the government likewise admitted as propo s ed by claimant, the existence of the following documents forming part of the t~ ecot~ ds, to wit:

(a) Memorandum of Principal Appraiser Aurelio Marcelo stating that a 100% examination showed no di~>ct~ epancy and that there ar~ e no findings to show that consignee and/or its bt~ol-<et~ tt~ied to conceal ot~ deft~ aud govet~nment r~ ev~?l'li.H? <Exh s . 11 1·\" and 11 11").

470

DECISION —- '

(b) ist Endorsement signed by Buenventura C. Maniego, Acting Collector of Customs dated August 6, 1987 (Exhs. "L" and "1e").

Ce) Gate Pass No. O52849 issued by the arrastre contractor (Exhs. "N" and "14"),

(d) 2nd Endorsement dated August 17,1987 of Mr. Raymundo R. Mendoza, GIC, MICF (Exhs. "Soa" and "V"),

(e) The imputed violations cited in the Warrant ares: (1) . That the articles are fraudentily removed contrary to law from a container yard under customs supervision (Sec.

2530 Ce) 5 (=) That the importation of the articles were effected contrary to law (Sec. 2530 (f)3s and (3) That the articles were imported through a practice or device contrary to law by means of which the articles were entered through a customhouse to the prejudice of the Government (Sec. £530(1) - &).

(Exh. X) In said Decision, the lady Acting Collector of Customs forfeited the subject shipment only on the ground that “there was an attempt to defraud the government through the use of a falsified boatnote." She said, thuslys On the first charge of the fraudulent removal from the container yard, it has been shown that a genuine gate pass has been issued {(Exhs. "N"/"14", TSN, p. G). As regards the second violation, sufficient proofs have been adduced to show that all’ related documents filed with the entry and the declaration tallied with the examiner's findings (Exh. "A" he ES gy and that such importation of raw materials is duly authorized by the GTEBR (Exh. "J"). With respect ta the third violation, the parties have stipulated that the insertion of the words "SEAU 464909-6 1 » 40 Van Yarn" in the boatnote was deliberately made by Norberto -- 5 -- Maula, Jr~.

\-'Jho is le~~itimately einployed as a checker of the brokerage firm servicing the impor~tation of the claimant in or~der~ to save time and to be able to deliver~ both shipmerits to the claimant.

It is worthy to note, in this conn e c t i on , t hat c 1 a i m ant i s an o per~ at or~ o f a c ustom s bonded warehouse engaged in the manufactur~ e of r~ aw mater~ials for r~e-expor~t as finished pr~ oducts on consignment basis.

Its importation of such materials are duty-free and t ax- exempt and that it has a timetable to follow in cn~ der~ to meet the deadlines of its export commitments abroad. There is no dispute that Maula indeed committed falsification punishable under our criminal law. As a matter of fact , Mr~.

Maula together~ with Mr~.

Mar~inas were both cri minally charged before the Fiscal's Office of Manila of the crime of theft, f a ls'ification of official docu ment and violation of sections 3609 and 3602 of the TCCP docl-<eted as I. S.

No.

87-2 1559 <Exhs.

11 8 - 1 11 and II 1 '3- n II • In vie\-'J ther~eof and it appear~ing that the inser~t ion was deliber~ate, the conclusion would be that ther~ e \-'Jas an attempt to defr~aud the government through the use of falsified boatnote.

Consequently, this Office finds and so holds that the ar~ticles in question have incurred the liability of forfeiture. (ibid.)

The is s 1.1e then is nar~ r~owed down on whet h er~ or~ not the Government was indeed defrauded of the needed duties and r·' e venue s to war~ r~a nt on the subject s hipment.

We answer in the negativ~. We have another ca s e which shows utter the disregard by t h e for~ m e r~ Co m m i s s i on e r~ o f C us t o m s Sa 1 v ad or~ M i s o n o f t h e 1 e g a 1 pro c e d u r~ e p r~ o v i d e d for~ by 1 a w i n for~ f e i t i n g goods. Thi s , of cour~se, is not the only ti me t h at h e 472 displayed such attitude. In the very recent case of Nusselts Industries Corporation vs. Gowaiaxtiner of Customs, (C.7.A. Case No. 4449, May 27, 1993), this Court commenteds Surprisingly, Aowever, inspite of the evidences presented, both documentary and testimonial, coupled with the accompanying recommendations from the Appellate and Legal Service Divisions as well as the endorsements from the District Collector and the Assistant Commissioner of Customs for the qualified release of the articles in question, herein respondent rejected all of these and instead, arbitrarily ordered District Collector Titus Villanueva to forfeit all the articles in question. Sadly, the District Collector in reversing his order, blindly obeyed and copied almost verbatim the Srd Endorsement of the respondent dated July 25, 1989 (Annex K).

In the case at bar, the following pertinent documents covering the questioned shipment were duly filed, proecessed, BC perforated and approved:

A. Original Warehouse Entry No. &#8886-87 BRB. Froforma Chargeable Bond (Exh. B) C. Importer’s Sworn Statement (Exh. C) dD. Communication to the Collector (Exh. D) E. 865 clean report of findings (Exh. E) F. FPacking List (Exh. F) G. Commercial Invoice (Exh. G) H. Bill of Lading (Exh. H) IT. Warehousing Permit (BC Form 198) (Exh. I) J. Certification of Availability of Import License (Exh. J) Ke Gate Fass No. O52849 (Exh. M) Moreover, such shipment was exempt from payment of advance sales taxes or compensating sales taxes and other duties since it is intended to be re-exported as duly

-- 7 -- appt~ oved by the GTEB .

In fact, it was covet~ed by an E mbroidery Bond ( i. e .

the re - export bond) <Exh.

I I) •

A l s o , t h e t~ e was a n e ><am i nat i on o f t h e s h i p m en t by t h e Pt~incipal Appt~ais et~ (as dit~ected by the Commissionet~ of Customs) who confit~ med that, aftet~ a "100'1- e><aminaticm ", the s h ip ment confot~ nr s a nd tallies with that de c lat~ ed in the entries and there wa s no showi ng that the petitioner or the custo ms broker tried to conceal anything ot~ deft~a ud the govet~nnrent of t~eve nues, stt~o ngly t~ ecommended the release of the questioned shipment to the Petitioner. <Exh.

1·0 The fot~egoing led the

MI CP

Collector of Custo ms 1'1a n iego to "stt~o ngly t~ ecommend the immediate t~e lease" of t h e s h i p m en t t o t h e Pet i t i on e t~ ( Ex h • AA).

The same t~ ecommendation was by the succeeding MICP Co ll ectot~ of C u s toms Em m.3. Rosqueta <Exh.

W>.

The Legal Office of the Co mmi ss ion et~ of Custo ms in a pt~epa t~ ed 2 nd I End ot~s em ent elated Decem bet~ 9, 1987 "giving d•Je cout~se " to the

MI CP

Col lector of Custo m's "pt~oposed decision to release t h e ship ment in question it appearing t h at i t s i m pot~ t at i on s u f f e t~ s n o i n f t~ act i on o f t h e T ;:n~ i f f and Customs Code wh e:\t soevet~ " <Exh.

DD >.

This was followed by the t~ e c o m m end at i on of the Legal a nd Intelligence Services to the Commissi oner of Customs that the pt~ oposed Decision of the l"t1ICP Collectot~ of Custo ms

DECISION -

C.T.A. Case Na. 4371 “being legal and well taken may now be enforced" (Exh. FF). It is interesting to note that the one who prepared such favorable recommendation is the present counsel of the Respondent, Atty. Magdalena Soriano. The above recommendation was concurred by no less than Deputy Commissioner of Customs Vicente A. Feria, Jr. (Exhs. FF=1 and FF-2). Not satisfied with the first recommendation, the Customs Service Chief of the Legal and Intelligence Services reiterated to the Commissioner of Customs its "previous recommendation for eppruving Collector Roqueta’s proposed decision releasing containers SEAU- 464909-6" (Exh. GG). Again, it was prepared by the same present counsel af the Respondent.

However, despite the findings and recommendations of the foregoing offices and authorities of the Bureau of Customs, then Commissioner of Customs Salvador M. Mison refused to have the shipment released and instead ordered its forfeiture only because "I want this shipment seized" {Exh. HH).

Sadly, the District Collector blindly reversed herself. This should not be so.

"It is not too much to point out that it is an elementary rule in procedure that a decision of the Collector af Customs just like that of a judge (or a person or a body lawfully authorized to issue decisions) must be in writing personally, independently, and directly prepared by him (Sec. 1, Rule 36, Revised Rules 470

~ Q-

of Court). For the Commissioner to summarily dismiss or overturn whatever recommendations and dictate the Collector of Customs to decide whatever is in conformity to his whims = and caprices is a blatant usurpation of the latter’s powers under Section 2312 of the Revised Tariff and Customs Code. The Commissioner can not hide under the cloak of exercising the power of supervision and control over his subordinates for it will render the doctrine of exhaustion of administrative remedies and due process for naught. The palpably flagrant anomaly of the Commissioner of Customs reviewing the decision of the Collector of Customs, (which actually was that of the former) is a mockery of administrative justice. In order that the review of the decision of a subordinate officer might not turn out to be farce, must perforce not dictate his own view on the officer whose decision is under his reviews; otherwise, there could be no real review of the case. The decision of the reviewing officer would be biased view ... (see related cases of Zambales Chromite Mining Co., et. al. vs. Gozon, G.R. No. L-49711, November 7, #$.1979). In such case, needless to say, the appeal becomes a useless formality. It is reduced to an idle ceremony. There would thus be a denial of procedural due process (New Filipino Maritime Agencies, Inc. vs. Rivera, L- 45359-6909, June 15, 1978). Hence, in the interest of justice and fair play, this practice of the Commissioner dictating his Collector what to decide must be stopped.

Anyway, he can affirm or deny the decision of his subordinate Collector when the proper time comes as provided under Section 2313 of the Revised Tariff and Customs Code. ( Emphasis Supplied ) (Nusselts Industries, infra) We find no merit in the Respondent’s Decision. Such Decision was without rhyme or reason and found toa be arbitrary As can be gleaned from the foregoing discussions.

- 10 --· The Respondent advanced the that the shipment was forfeited since the broker falsified the boatnote to effect in violation of Section 2530<e> ,

(f) and (1)-5 of the Tariff and Customs Code, as amended does not hold water.

As aptly put in our F~esolution dated July L~, 1'3'30, thus:

On the incident that the inser'tion of the 11-JOr' ds "SEAU L~EAr::l09-6, 1 x L~O Van Yar'n" in the boat not e 11-1 as d e 1 i be r' at e 1 y mad e by on e Not' be r' t o Maula, Jr., which act should be seen as an atte mpt to defr' aud the gover'nment, it appear'S that only IY!aula, ,It' .

and Oscar Y.

Mar'inas have been chat'ged by the Br.weau of Customs of the cri me s of Theft, Falsification of Official Document ancl violation of Sections 3602, 360'3 and 3610 of the Tariff and Customs Code. These person s have also, by themselves, confessed th at they mad e the inset'tions in the boatnote on their' own.

It thus appear' that petitioner' did not consent, had no kno~t-Jledge nor' did it par' ticipate in t he acts of Maula, Jr'.

and tr1ar~ inas.

Cr~i minal r~es pcmsibility being per'sonal, we ar' e not now t~eady to impute any upon petitioner~.

XXX XXX

X X><

Upon the other hand, assuming arguendo that the pr'inciples of agency ar~e contr~olling i n t h i s case , it i s not en o r_fg h f o t' the t~ espondent to mer~ ely al lege that the illegal act!; of Maula, Jr~.

and IYI,:n~inas at~e co nsider~ed the acts of the petitioner. It is also t~ue in agency that the agent is pet~sonally l ia ble for' acts beyond the scope of his author'ity except when the principal ratifies the acts expressly or~ tacitly ((.h~t.

1'310, NCC>.

Consider~ing that here, these customs broker employees were obviously not a cti ng within their~ power~s when they made the inser' tion in the boatnote which act they eventually ad mitted to be theit~ own, unsupported allegations of the respondent would not suffice.

Failing to supp ly the necessat~ y pr~ oof to his hi s case at exception s - l1. --· allegations that lea s t within the to the r~ ule could bounds above have of put the r·' e s pond ent' s tenable.

posj,tion beco me s even stated , les s <C. T. A.

Re c or~ ds, pp. 115-1.1.7)

WHEREFORE, in all the fot~ e~loing we het~eby RESOLVE to ANNUL t h e Dec i s i on of the Co m m i s s i one r~ of C us t oms d at e d October~ 5, 1'388 a nd ORDER the per~ manent RELEASE of the shipment subject of thi s case. The surety bond posted by the Petitioner for the temporary release of the ship ment is hereby can c elled.

WE CONCUR:

I I n ss ociat~?

~NU ~1sso CERTIFICATION GRUBA Judge 1 j I het~ eby cer~ tify that this decision was r~eached after due consultation a mong the membe rs of t he Court of Tax Appe a ls in accordance with Section 13 Article VIII of the Con st itut i on. 4?8 G-Q .. ~ ERNESTO D. ACOSTA Presiding .Judge Co urt of Tax Appeals