Peter C. Uy, et al. vs. The Commissioner of Customs and the District Collector of Customs, et al.

DECISION

The case at bar seeks for the reversal/setting aside o r the decision of the Commissioner of Customs dated December 8, 1999, afnrmin g the decision o f the MICP District Collector dated August 13, 1999, which ordered the forfeiture in favor of the Government the subject importation.

As represented, Petitioner PETER C. UY, is a f-'ilipino, of legal age, doing business under the name, firm or style of RITZ ENTERPRISES, with office address at Edison A venue, Paranaque City.

On March 5, 1999, the shi pment in question arri ved at the MICP on board the vessel "Yangj i" with Bill of Lading No. 52945380 <:n d for which Import Entry No. 19724-99 was fil ed. Subject of A lert Order No. A/MI/030399-02, the shipment was

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r subjected to a I 00% examination, the result of which yielded motors of three (3) different sizes (182W-l/4 l-IP, 375W-l/2 HP and 3/4 l-IP), contrary to Petitioner-consignee's declaration of 2.700 ctns. of Industrial Supplies and 2.700 sets of Mini Motor A04524- 25 W. On March 30, 1999, a warrant of seizure and distraint (WSD) was issued against the shipment.

On June 9, 1999, Petitioner fi·lect a fo rmal offer of settlement. After evaluation, the Customs District Collector's Office issued an Order accepting the same on June 2 1, 1999. But before the offer could be acted upon by the Customs Legal Service, Petitioner withdrew the settlement offer and the case was returned to the District Collector. During the continuation of the seizure proceedings on August 9, 1999, Petitioner confi rmed its withdrawal of the settlement offer and proceeded with the presentation of its documentary evidence. Without presenting any testimonial evidence, Petitioner rested and submitted the case for decision.

On August 13, 1999, Mr. Fellpe A. Bartolome, District Collector of Customs, MICP, rendered a decision on the above seizure case, ordering the forfe iture of the subject importation, the pertinent portion of which states, to wit: "After due evaluatiOil.,fllld careful study, we find that claimant has not satisfactorily proved that it~ ; shipm e nt should not be held liable as charged, and that it has not incurred the liability of forfeiture under the law.

Its

defense that it merely relied on the SGS-C RF fo r the shipment and that it is in good fa ith because of !i (sic) is insuffic ient to overcome the prima facie evidence of undervaluation and misdeclaration on record. WJ-IEREfORE, by virtue of the power vested in me by law, let the above descri bed shipment be FORFEITED in favo r of the government, the same to be disposed of in the manner provided by law.

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On December 8, 1999, the Commissioner of Customs, affirmed the aforesaid decision of the District Collector of Customs, M ICP, thus: "After evaluating the facts as presented and the evidence on record, We fi nd no cogent reason to disturb the findings of the District Collector. Claimant's reliance on the SGS-CRF issued for the shipment and that it is in good faith is insuffi cient to overcome the evidence of misdeclaration and undervaluation as shown by the records. The shipment was declared as Mini Motor with a rated output of 25 W.

However, the result of the inventory yielded that the shipment actually contain motors of different outputs, 182 W- 114 HP, 375 W-1/2 HP and 3/4 I-IP, a misdeclaration that warrants forfeiture of the subject shipment.

WHEREFORE, in view of the foregoing, the instant Appeal is hereby DENIED and the decision of the District Collector dated August 13, 1999 decreeing the fo rfeiture of the shipment under consideration is hereby AFF IRMED.

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measurement shall constitute a prima facie evidence of fraud penalized under Section 2530 of this Code: Provided, further, That any misdeclared ot· undeclared imported articles/items found upon examination shall ipsa facto be forfe ited in favor o f the Government to be disposed of pursuant to the provisions of this Code.

When

the undervaluation, misdeclaration, misclassification or misdeclaration in the import entry is intentional, the importer shall be subject to the penal provision under Sect! on 3602 of this Code. Section 2530.

Property Subject to F01jeiture Under Tariff and Customs Law. - Any vehicle, vessel or aircraft, cargo, article and other objects shall, under the fo llowing conditions be subjected to fo rfeiture:

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(f) Any article the importation or ex portation of which is effected or attempted contrary to law, or any article of prohibited importation or exportation, and all other articles which, in the opinion of the Collector, have been used, are or were entered to be used as instruments in the importation or exportation of the former;

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(L) Any article sought to be imported or exported:

(J) XXX

(2) XXX (3) '\1! · \ · .....

~ -·=;t:~·:~~ On the strengtl1 ()f.n false declaration or affidavit executed by .. )

' the owner, : .. i!llpqrtcr, e?' porter or consignee concerning the importatio11. pJ ~·J.f~i article;

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- -~~~ On the strength pf a fal ~e invoice or other documents executed by the owperi ' 'ill{pp'ftf;,i':;:~x porte r or consignee co n~~ rt11pg the : ···: • .,., . ..,. ' J - .

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Importation or:exJ1ortatlon"of st1ch article; and ~: '<·· ,, :

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(4)

(5) Through any other practice or device contrary to law by means of which such articles was entered through a customhouse to the prejudice of the government.

On the other hand, Respondents maintain that there was prima facie evidence of fraud in the miscleclaration and/or undervaluation of the subject shipment.

They

proclaimed that it is undisputed that Petitioner had declared the subject shipment as 2,700 ctns. of Industrial Supplies and 2,700 sets of Mini motor A04524 with rated output of 25 W, contrary to Respondents' examination and inventory which showed that the shipment actually consisted of motors of different sizes and wattages, i.e., 182W-I /4 HP, 375W-l /2 l-IP and 3/4 HP (Petition, Annex A, p. 2; Annex C, p. 2; Annex E) which is a clear case of misdeclaration and/or undervaluation.

The Respondents stressed that Petitioner's contention that there was no fraud since it merely relied on the accompanying Societe Generale de Surveillance - Clean Report of Findings (SGS-CRF) is of no moment. They said that the report itself states that the "computed duties payable are for reference purposes only" and "Final Assessment is for the Philippine Bureau of Customs" pursuant to Customs Memorandum Order (CMO) No. 52-94 dated December 19, 1994.

furthermore, they argued th<\! ihe; citation of the case of Far·olan Jr. v. Court of Appeals, 217 SCRA 290 119~~~ j ~~ ~~.;~1ev~i1 t since the consignee therein made its entry ....

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on the cjata prepared by Hs fore!~~~ ~;~pp l i c 1:~ or shippers. In this case, they said Petition ~~ · ~ f

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.· ~ ,. • ~ ... it ., ,(_~ :~j "relieq" on the report of the SGS. whiCh i ~ p1erely an agent of the Bureq4 ."bf C u stpt~(::; . .

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Needless to state, it is uHimafely the consignee's obligation to pe rson al!.~ .· ... rify th .

' importation conforms to our customs laws.

Thus. they articulated that to uphold Petitioner's stance would result in an absurd situation wherein a misdeclared or undervalued shipment could be "legally imported" through the simple expedient of taking 516 the SGS-C RF at face value. lndeed. Sections 2503 and 2530 of the Tariff Code would be rendered ineffectual and nugatory.

Lastly, the Respondents likewise asseverated that there is nothing in CMO 39-92 or CMO 3-95 cited by Petitioner which precludes them from forfeiting the shipment pursuant to Section 2503 when there is prima facie e' '.idence of fraud penalized under Section 2530(£) and (I) - 3, 4 and 5. They propounded that the aforesaid CMOs merely refer to the procedure to be undertaken when there is a question regarding the value and classitication of the shi pment as reported by the SGS. The issue that comes to fore for our consideration IS WHETH ER OR NOT PETITIONER IS GUILTY OF MISDECLARA TION AND/OR UNDERVA LUATION UNDER SECTION 2503 OF TH E TA RI FF AND CUSTOMS CODE. AS AMENDED, THUS SU BJECTING THE IMPORTATI ON IN QUESTION TO FORFEITURE UNDER PARAGRAPHS (F) AND (L). SU B-PARAG R,\PHS 3, 4 AND 5 OF SECTION 2530 OF TI-lE SAM E CODE.

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A rter a circumspect study ol ~he . attending facts, the disquisition of the parties, the ~ ..

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~· ~ applicable laws, rules and rc ~~i tm i.·~ )s, the ~o urt find s fo r the Respondents. It is an undispute9 fac~ ·j ·,; ;~!W·~qse ~ ~ ~a r that the importation in question cons i stc~! .. ~ -~~ .. ~ -.. ~~·, __ .· __ -·:·.:..

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o fmo ~o rs of different sizes '1110 waH&ges, i.e., 182 W- 1/4 1-IP, 375 W- 1/2 li P and Jn ~ i· · . :

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·'.~ ;, '}.i . ~.: ~ ~ ) and not 2,700 ctns. of lndusfrial supplies and 2.700 sets of mini motui· AD 4524 .,.:it'! .: ' ~- rated output of 25 W as declared by Petitioner in the import entry. Thus, there was indeed an apparent misdeclaration of the shi pment on the part of Petitioner. This constituted a primafacie evidence of infringement of the provisions of the Tariff and Customs Code, 519 specifically Section 2530, thereof, and provided suffic'ent basis for the seizure of the subject importation.

lt should be stressed that both parties waived their rights to present evidence and merely submitted the case for decision on the basis of the records and pleadings. As to who has the burden of proof in seizure or fo rfeiture proceedings is explicitly answered by Section 2535 of the TCCP, which provides that the same shall lie upon the claimant, provided that the existence of probable cause Jirst be shown before the filing of the forfeiture proceedings. The term "probable cause", which has been held synonymous with "reasonable cause", means less than the evidence which will justify condemnation. It imports a seizure made under circumstances which warrant suspicion (Sanchez vs. Commissioner· of Customs, BTA Case No. 185, November 2, 1954, citing U.S. vs. One Bag of Paradise and Choura Feathers, N.Y., 365 F. 301, 167, CCA 473; Associate Banking Corp. vs. Commissioner of Customs. ct. al., CTA Case No. 2448, August 6, 1976; Metropolitan Garment Corp. vs. Ramon Farolan, CTA Case No . • : -::

_:l 3959, April 16, 1986; Mayer Stcefl~"i[)c t orp. vs. l-Ion. Alfredo Pio de Roda, ct. al., . ·· .. ,' CTA Case No. 2823, February I"'' ! 987). Said Section 2535 of the TCCP provides, th LIS:

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'·" SEC. 2535. Burrled' ·;:;'FP-roof In S~izure and/or FOJfeitit(·{! •.. In all proceedings taken for the,' se'l ·zl.{i·~ aiicilor . forfeiture of any vessel,. \ ~l1icle ; aircraft, beast or ar ti c l e~ ' ~111der the provision of the tariff and customs laws, the bunlcn of proof shall lie upon the claimant: Provided, That probable cause shall be first shown for the institution of such proceedings and that seizure and/or forfeiture was made under the circumstances and in the manner clescri bed in the preceding sections of this Code (emphasis Ours). 520

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As discussed above there was probable cause thus, it is incumbent upon Petitioner to prove that his allegations are correct and that the Respondents' assertions were wrong. Ironically, Petitioner failed to discharge this duty.

No evidence whatsoever was presented by Petitioner to support his allegations. He merely submitted his case on the basis of the pleadings and records.

It is not amiss to mention that when an importer challenges by legal steps the correctness or the validity of the actions of the Commissioner of Customs, the question to be decided is not whether the Commissioner was wrong but whether the importer was right, the burden being on the latter to establish the correctness of his own intentions. In seizure and forfeiture proceedings, the burden of proof lies upon the claimant (see Feede1· International Line PTE., Ltd. vs. Court of Appeals, ct. al., 197 SCRA 843; Commissione1· of Customs vs. Stat Ferry, 227 SCRA 317). The good faith of tax assessors and the validity of their actions are presumed. They will be presumed to have taken into consideration all the facts to which their attention was called. No presumption '.'>:~)~}~:

can be indulged that pub lic oflicia!s of the state who have to do with the assessment of !:·· ;~~ .. · ... :,.

property for taxation will kn8~i ng l y violate the duties imposed upon them by law (see . ::

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Intc•:-p•·ovincial AutoJ~us ~~; fOf· JS- C~ llectOJ· of Internal Revenue, 19 PHIL 290). :

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This is true in the instapt cas~. 'w!1ere·Re;pondents' special and affirmative defenses, H!t. • ' 'f ~ I, " ' :

; I validity or which as slwwn }'rom the ~·ec~rds or the case, have the effect of nulli: · lr Petitioner's cause of action, if not controverted by adequate and competent evidence. Moreover, in the recent case entitled Com missione1· of the Bureau of Customs vs. Selective Timber Export Philippines, Incorporated, CA-G.R. SP No. 47643, October 5~1

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11, 1999, the Court of Appeals explicitly ruled that (I ) g, >Od faith cannot avoid forfeiture, as forfeiture proceedings are in the nature of proceedings in rem and, directed against the res, and not the persona, and (2) the importer cannot simply shift the blame o f the erroneous or defecti ve declaration in the import entry unto its supplier, over which our courts have no jurisdiction.

Pertinent portions of said decision are quoted below:

" Hence, the Respondent cannot sim ply shift the blame of the erroneous or defecti ve declaration in the import entry unto its supplier, over which our courts have no jurisdiction and cannot thus assert their coercive and punitive authority - reason enough for such supplier to scoi nfully and contumaciously snap its fingers at our courts, which can onl y watch helplessly by, as right and justice are being systematically subverted.

To sustain the Respondent' s stance is to put obedience to our customs and tariff laws at the mercy of the ex porter or supplier, who, even as the latter disdainfully runs rings around those laws, blatantly act in conspiracy with the likes of respondent herein who pharisaically make an outward show of fea lty to the same laws, while in fact ingeniously violating them. That would be legal suicide. That would be to furnish or equip the law with the very instrument of its own transgression and undoing. That would be to allow or permit indirectly what the law forbids or prohi bits directly. x x x Thus it is that to legal i ~tJ:~nt s and purposes, the respondent has failed to overcome the prima facie :¢vidence of knowledge, or scinter, that the shipment in question was fr~~d ule ntl y misdcclared. Needless to say, owing to the respondent's fa il ~1 r~ t{l:'·overthrow this prina facie presumption, such presumed or construed ~h()~ ~ t.:d l,?e b c:\~

Final ly. this Court stressed that it is in total acqUiescence with Respondents' contention that there is nothing in CMO 39-92 and CMO 3-95 which precludes the Respondents from forfeiting the shipment pursuant to Section 2503 of the TCCP when there is prima facie evidence of fraud penalized under Section 2530(f) and (1), 3, 4 and 5 of the same Code.

IN THE LIGHT OF ALL THE FOREGOING, the decision of the Commissioner of Customs dated December 8, 1999, forfeiting the subject shipment in favor of the government is hereby AFFIRMED in toto.

Accordingly, the Manila Insurance Co., Inc. Surety Bond in the amount of P612,538.00, which was earlier posted by Petitioner for the release of the said shipment is hereby ORDERED FORFEITED in favor of the Bureau of Customs - MfCP. No costs.

Presiding Judge

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C~HTI FICATION

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' r hereby certify that the above decision was reached after due consultation with the. members of the Court of Tax Appeals in accordance with Section 13, Article VIII of the Constitution.

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~&>· 0......-vL ERNESTO D. A COST A

Presiding Judge

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